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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
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KYSOR INDUSTRIAL CORPORATION
(NAME OF SUBJECT COMPANY)
K ACQUISITION CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SCOTSMAN INDUSTRIES, INC.
(BIDDERS)
COMMON STOCK, $1.00 PAR VALUE, AND 501566103
NOT AVAILABLE
SERIES A CONVERTIBLE VOTING (CUSIP Number of Class of
PREFERRED STOCK, $24.375 STATED Securities)
VALUE
(Title of Class of Securities)
SCOTSMAN INDUSTRIES, INC.
775 CORPORATE WOODS PARKWAY,
VERNON HILLS, ILLINOIS 60061
(847) 215-4500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
Copy to
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60603
(312) 853-7000
ATTENTION: THOMAS A. COLE
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CALCULATION OF FILING FEE
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TRANSACTION AMOUNT OF
VALUATION* FILING FEE
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$356,865,778 $71,374
</TABLE>
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* For the purpose of calculating the fee only, this amount assumes the
purchase of (i) 7,512,335 shares of Common Stock, $1.00 par value, of the
Subject Company, together with associated common share purchase rights, and
(ii) 786,869.1221 shares of Series A Convertible Voting Preferred Stock,
$24.375 stated value per share, at $43.00 per share. Such number of shares
includes all outstanding shares as of January 31, 1997 and assumes the
exercise of all stock options to purchase shares of Common Stock issued.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid:______________ Filing Party:_____________________
Form or Registration No.:____________ Date Filed:_______________________
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This Statement relates to a tender offer by K Acquisition Corp., a Michigan
corporation (the "Offeror") and an indirect wholly owned subsidiary of
Scotsman Industries, Inc., a Delaware corporation ("Parent"), to purchase all
outstanding shares of (i) Common Stock, $1.00 par value, of Kysor Industrial
Corporation, a Michigan corporation (the "Company"), including the associated
common share purchase rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of April 26, 1996, as amended (the "Rights Agreement"),
between the Company and Harris Trust and Savings Bank, as successor Rights
Agent (collectively, the "Common Stock"), and (ii) Series A Convertible Voting
Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Stock";
the shares of Common Stock and the shares of ESOP Preferred Stock being
collectively referred to herein as the "Shares"), at a purchase price of
$43.00 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated
February 7, 1997 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are filed
as Exhibits (a)(1) and (a)(2) hereof, respectively, and which are incorporated
herein by reference.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Kysor Industrial Corporation. The
address of the principal executive offices of the Company is set forth in
Section 8 ("Certain Information Concerning the Company") of the Offer to
Purchase and is incorporated herein by reference.
(b) The exact titles of the classes of equity securities being sought in the
Offer are the Common Stock, $1.00 par value, including the associated Rights,
and the Series A Convertible Voting Preferred Stock, $24.375 stated value per
share, of the Company. The information set forth in the Introduction to the
Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) through (d), (g): The information set forth in the Introduction and
Section 9 ("Certain Information Concerning Parent and the Offeror") of the
Offer to Purchase, and in Annex I thereto, is incorporated herein by
reference.
(e) and (f): Neither the Offeror nor Parent nor, to the best of their
knowledge, any of the persons listed in Annex I of the Offer to Purchase, has,
during the last five years, (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
(b) The information set forth in the Introduction and Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with
the Company") of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b): The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) through (e): The information set forth in the Introduction, Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with
the Company"), Section 12 ("Purpose of the Offer and the Merger;
2
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Plans for the Company") and Section 13 ("The Merger Agreement; the Asset
Purchase Agreement; and Certain Other Arrangements") of the Offer to Purchase
is incorporated herein by reference.
(f) and (g): The information set forth in Section 7 ("Certain Effects of the
Transaction") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b): None.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 11 ("Background of
the Offer; Past Contacts, Transactions or Negotiations with the Company") and
Section 13 ("The Merger Agreement; the Asset Purchase Agreement; and Certain
Other Arrangements") of the Offer to Purchase is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and in Section 18 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning
Parent and the Offeror") of the Offer to Purchase is incorporated herein by
reference.
The incorporation by reference herein of the above-mentioned financial
information does not constitute an admission that such information is material
to a decision by a security holder of the Company as whether to sell, tender
or hold Shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 13 ("The Merger Agreement; the
Asset Purchase Agreement; and Certain Other Arrangements") is incorporated
herein by reference.
(b) and (c) The information set forth in Section 17 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Certain Effects of the
Transaction") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase; the Letter of
Transmittal; the Agreement and Plan of Merger, dated as of February 2, 1997,
among Parent, the Offeror and the Company; the Asset Purchase Agreement, dated
as of February 2, 1997, among the Company, certain subsidiaries of the Company
named therein, Kuhlman Corporation ("Kuhlman") and Transpro Group, Inc.; the
Joinder dated February 2, 1997, of Parent in respect of certain provisions of
the Asset Purchase Agreement; and the Confidentiality and Standstill
Agreement, dated June 18, 1996, between the Company and Parent; the
Confidentiality and Standstill Agreement, dated December 26, 1996, between
Kuhlman and the Company; the Consulting and Noncompetition Agreement, dated as
of February 2, 1997, between Parent and George Kempton; the Consulting and
Noncompetition Agreement, dated as of February 2, 1997, between Parent and
Peter Gravelle; the Consulting and Noncompetition Agreement, dated as of
February 2, 1997, between Parent and Timothy Peterson; and Amendment No. 2 to
the Rights Agreement, dated as of February 1, 1997, between the Company and
the successor Rights Agent, copies of which are attached hereto as Exhibits
(a)(1), (a)(2), (c)(1), (c)(2), (c)(3), (c)(4), (c)(5), (c)(6), (c)(7), (c)(8)
and (c)(9), is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated February 7, 1997.
(a)(2) Letter of Transmittal.
3
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(a)(3) Letter from Morgan Stanley & Co. Incorporated, as Dealer Manager, to
Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees to Clients.
(a)(5) Letter from Old Kent Bank to participants in the Company Employee
Stock Ownership Plan.*
(a)(6) Letter from Bankers Trust Company to participants in the Company
Savings Plan and 401(k) Plan.
(a)(7) Letter from Old Kent Bank to participants in the Company Employee
Stock Purchase Plan.
(a)(8) Letter from Harris Trust and Savings Bank to participants in the
Company Dividend Reinvestment Plan.
(a)(9) Notice of Guaranteed Delivery.
(a)(10) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(11) Summary Advertisement, dated February 7, 1997.
(a)(12) Press Release issued by Parent and the Company on February 3, 1997.
(a)(13) Press Release issued by Parent on February 7, 1997.
(b)(1) Commitment Letter, dated as of January 31, 1997, among The First
National Bank of Chicago, as Administrative Agent, First Chicago Capital
Markets, Inc., as Arranger, and Scotsman Group Inc.
(c)(1) Agreement and Plan of Merger, dated as of February 2, 1997, among
Parent, the Offeror and the Company.
(c)(2) Asset Purchase Agreement, dated as of February 2, 1997, among the
Company, certain subsidiaries of the Company named therein, Kuhlman
Corporation and Transpro Group, Inc.
(c)(3) Joinder, dated February 2, 1997, of Parent in respect of certain
provisions of the Asset Purchase Agreement described in Exhibit (c)(2).
(c)(4) Confidentiality and Standstill Agreement dated June 18, 1996 between
the Company and Parent.
(c)(5) Confidentiality and Standstill Agreement, dated December 26, 1996,
between Kuhlman and the Company.
(c)(6) Consulting and Noncompetition Agreement, dated as of February 2,
1997, between Parent and George Kempton.
(c)(7) Consulting and Noncompetition Agreement, dated as of February 2,
1997, between Parent and Peter Gravelle.
(c)(8) Consulting and Noncompetition Agreement, dated as of February 2,
1997, between Parent and Timothy Peterson.
(c)(9) Amendment No. 2 to the Rights Agreement, dated as of February 1,
1997, between the Company and the successor Rights Agent.
(d) None.
(e) Not applicable.
(f) None.
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*To be filed by amendment to this Schedule 14D-1.
4
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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.
Dated: February 7, 1997 SCOTSMAN INDUSTRIES, INC.
/s/ Richard C. Osborne
By: _________________________________
Name: Richard C. Osborne
Title: Chairman, President and
Chief Executive Officer
K ACQUISITION CORP.
/s/ Richard C. Osborne
By: _________________________________
Name: Richard C. Osborne
Title: President and Chief
Executive Officer
5
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Exhibit (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of
Common Stock
and
Series A Convertible Voting Preferred Stock
of
Kysor Industrial Corporation
at
$43.00 Net Per Share
by
K Acquisition Corp.,
an indirect wholly owned subsidiary of
Scotsman Industries, Inc.
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED.
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THIS OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND
PLAN OF MERGER, DATED AS OF FEBRUARY 2, 1997 (THE "MERGER AGREEMENT"), AMONG
SCOTSMAN INDUSTRIES, INC., K ACQUISITION CORP. AND KYSOR INDUSTRIAL
CORPORATION (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS
UNANIMOUSLY APPROVED THE OFFER, THE MERGER, THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, HAS DETERMINED THAT THE OFFER, THE
MERGER (AS DEFINED HEREIN) AND THE TRANSACTIONS CONTEMPLATED BY THE
MERGER AGREEMENT ARE ADVISABLE AND THAT THE TERMS OF EACH OF THE OFFER
AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
SHAREHOLDERS AND RECOMMENDS THAT HOLDERS OF THE SHARES (AS DEFINED
HEREIN) ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
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THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER SUCH
NUMBER OF SHARES OF COMMON STOCK, $1.00 PAR VALUE, OF THE COMPANY, INCLUDING
THE ASSOCIATED COMMON SHARE PURCHASE RIGHTS (COLLECTIVELY, THE "COMMON
STOCK"), AND SHARES OF SERIES A CONVERTIBLE VOTING PREFERRED STOCK, $24.375
STATED VALUE PER SHARE (THE "ESOP PREFERRED STOCK"; AND, TOGETHER WITH THE
COMMON STOCK, THE "COMPANY CAPITAL STOCK"; THE SHARES OF COMMON STOCK AND THE
SHARES OF ESOP PREFERRED STOCK BEING COLLECTIVELY REFERRED TO HEREIN AS THE
"SHARES"), THAT WOULD CONSTITUTE A MAJORITY OF THE OUTSTANDING SHARES OF THE
COMPANY CAPITAL STOCK AT THE DATE OF EXPIRATION OF THE OFFER (ASSUMING THE
EXERCISE OF ALL OPTIONS TO PURCHASE SHARES OF COMPANY CAPITAL STOCK
OUTSTANDING AT THE EXPIRATION DATE OF THE OFFER), (II) THE WAITING PERIOD
UNDER THE HSR ACT (AS DEFINED HEREIN) APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED, (III) THE COMPANY AND
KUHLMAN (AS DEFINED HEREIN) HAVING CONSUMMATED THE TRANSACTIONS CONTEMPLATED
BY THE ASSET PURCHASE AGREEMENT (AS DEFINED HEREIN), OR KUHLMAN HAVING WAIVED
ANY CONDITIONS TO CONSUMMATE THE ASSET PURCHASE AGREEMENT, AGREEING TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED THEREBY CONTEMPORANEOUSLY WITH OR
IMMEDIATELY FOLLOWING THE CONSUMMATION OF THE OFFER, AND (IV) SATISFACTION OF
CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 15.
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IMPORTANT
Any shareholder desiring to tender Shares should either (i) complete and
sign the Letter of Transmittal or a facsimile thereof in accordance with the
instructions in the Letter of Transmittal and deliver the Letter of
Transmittal with the Shares and all other required documents to the Depositary
(as defined herein) or follow the procedure for book-entry transfer set forth
in Section 3 or (ii) request such shareholder's broker, dealer, commercial
bank, trust company or other nominee effect the transaction for the
shareholder. Shareholders having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
person if they desire to tender their Shares.
Any shareholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, may tender such
Shares pursuant to the guaranteed delivery procedure set forth in Section 3.
Questions and requests for assistance or additional copies of this Offer to
Purchase and the Letter of Transmittal may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase.
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The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
Incorporated
February 7, 1997
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TABLE OF CONTENTS
<TABLE>
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PAGE
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Introduction.............................................................. 1
1. Terms of the Offer.................................................... 3
2. Acceptance for Payment and Payment for Shares......................... 4
3. Procedure for Tendering Shares........................................ 5
4. Withdrawal Rights..................................................... 8
5. Certain Federal Income Tax Consequences............................... 8
6. Price Range of Shares; Dividends...................................... 10
7. Certain Effects of the Transaction.................................... 10
8. Certain Information Concerning the Company............................ 11
9. Certain Information Concerning Parent and the Offeror................. 12
10. Source and Amount of Funds............................................ 14
11. Background of the Offer; Past Contacts, Transactions or Negotiations
with the Company......................................................... 15
12. Purpose of the Offer and the Merger; Plans for the Company............ 18
13. The Merger Agreement; the Asset Purchase Agreement; and Certain Other
Arrangements............................................................. 20
14. Dividends and Distributions........................................... 29
15. Certain Conditions to the Offeror's Obligations....................... 30
16. The Company Employee Stock Ownership Plan............................. 31
17. Certain Legal Matters................................................. 33
18. Fees and Expenses..................................................... 35
19. Miscellaneous......................................................... 36
Annex I. Certain Information Concerning the Directors and Executive
Officers of Parent and the Offeror................................ A-1
</TABLE>
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TO THE HOLDERS OF COMMON STOCK, $1.00 PAR VALUE, OR SERIES A CONVERTIBLE
VOTING PREFERRED STOCK, $24.375 STATED VALUE PER SHARE, OF KYSOR INDUSTRIAL
CORPORATION:
INTRODUCTION
K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect
wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of Common Stock,
$1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the
"Company"), including the associated common share purchase rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of April 26, 1996,
as amended (the "Rights Agreement"), between the Company and Harris Trust and
Savings Bank, as successor Rights Agent (collectively, the "Common Stock"),
and all outstanding shares of Series A Convertible Voting Preferred Stock,
$24.375 stated value per share (the "ESOP Preferred Stock"; and, together with
the Common Stock, the "Company Capital Stock"; the shares of Common Stock and
the shares of ESOP Preferred Stock being collectively referred to herein as
the "Shares"), at a purchase price of $43.00 per Share, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Transmittal (which
together constitute the "Offer"). Tendering holders of Shares will not be
obligated to pay brokerage fees or commissions or, except as set forth in the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Offeror pursuant to the Offer. The Offeror will pay all charges and expenses
of Morgan Stanley & Co. Incorporated (the "Dealer Manager or "Morgan
Stanley"), First Chicago Trust Company of New York (the "Depositary") and
Morrow & Co., Inc. (the "Information Agent") in connection with the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
THE MERGER (AS DEFINED HEREIN), THE MERGER AGREEMENT (AS DEFINED HEREIN) AND
THE TRANSACTIONS CONTEMPLATED THEREBY, HAS DETERMINED THAT THE OFFER, THE
MERGER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT ARE ADVISABLE
AND THAT THE TERMS OF EACH OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS AND RECOMMENDS THAT THE HOLDERS
OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
William Blair & Company, L.L.C. ("William Blair"), the Company's financial
advisor, has delivered to the Company's Board of Directors its written opinion
that the consideration to be received in the Offer and the Merger by the
Company's shareholders is fair to such shareholders (other than Parent or any
of its affiliates) from a financial point of view. A copy of such opinion is
contained in the Company's Statement on Schedule 14D-9 which is being
distributed to the Company's shareholders.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
SHARES THAT WOULD CONSTITUTE A MAJORITY OF THE OUTSTANDING SHARES OF THE
COMPANY CAPITAL STOCK AT THE DATE OF THE EXPIRATION OF THE OFFER (ASSUMING THE
EXERCISE OF ALL OPTIONS TO PURCHASE SHARES OF THE COMPANY CAPITAL STOCK
OUTSTANDING AT THE EXPIRATION DATE OF THE OFFER) (THE "MINIMUM CONDITION").
THE OFFER IS ALSO CONDITIONED UPON THE WAITING PERIOD UNDER THE HART-SCOTT-
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"),
APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR
BEEN TERMINATED AND THE COMPANY AND KUHLMAN (AS DEFINED HEREIN) HAVING
CONSUMMATED THE TRANSACTIONS CONTEMPLATED BY THE ASSET PURCHASE AGREEMENT (AS
DEFINED HEREIN) OR KUHLMAN HAVING WAIVED ANY CONDITIONS TO CONSUMMATE THE
ASSET PURCHASE AGREEMENT, AGREEING TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED
THEREBY CONTEMPORANEOUSLY WITH OR IMMEDIATELY FOLLOWING THE CONSUMMATION OF
THE OFFER. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE
SECTION 15.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of February 2, 1997 (the "Merger Agreement"), among Parent, the Offeror and
the Company. The Merger Agreement provides that, among other things, as soon
as practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the
<PAGE>
Michigan Business Corporation Act, as amended (the "Michigan BCA"), the
Offeror will be merged with and into the Company (the "Merger"). If the
Offeror acquires at least 90% of the outstanding shares of each class of stock
of the Company pursuant to the Offer, the Offeror would be able to effect the
Merger pursuant to the "short-form" merger provisions of Section 450.1711 of
the Michigan BCA, without prior notice to, or any action by, any shareholder
of the Company. See Section 12. Following consummation of the Merger, the
Company will continue as the surviving corporation (the "Surviving
Corporation") and will be an indirect wholly owned subsidiary of Parent. At
the effective time of the Merger (the "Effective Time"), each share of Company
Capital Stock that is issued and outstanding (other than shares of Company
Capital Stock owned by the Company, any subsidiary of the Company, Parent, the
Offeror or any other subsidiary of Parent, which shares will be automatically
canceled and retired) will be converted into the right to receive from the
Surviving Corporation $43.00 (or any higher price that may be paid for each
Share pursuant to the Offer) in cash, without interest thereon (the "Offer
Price"). See Section 5 for a description of certain tax consequences of the
Offer and the Merger.
Concurrently with the execution of the Merger Agreement, the Company and
certain of its domestic subsidiaries entered into an Asset Purchase Agreement
(the "Asset Purchase Agreement") with Kuhlman Corporation, a Delaware
corporation, and Transpro Group Inc., a Delaware corporation (collectively,
"Kuhlman"). Pursuant to the Asset Purchase Agreement, and subject to the terms
and conditions thereof, the Company agreed to sell and Kuhlman agreed to
acquire substantially all of the assets (the "TPG Assets") of the Company's
transportation products group business ("TPG") for a purchase price of $86
million in cash and the assumption, with limited exceptions, of the
liabilities related to such assets and business. See Section 13.
The Merger Agreement provides that, promptly after the Offeror acquires
Shares pursuant to the Offer, the Offeror will be entitled to designate at its
option up to that number of directors of the Board of Directors of the Company
as will make the percentage of the Company's directors designated by the
Offeror equal to the aggregate voting power of the Shares held by Parent or
any of its subsidiaries (assuming the exercise of all outstanding options to
purchase shares of the Company Capital Stock). However, Parent shall cause the
Board of Directors of the Company to have at least three directors who were
directors on the date of the Merger Agreement (of whom at least two directors
are not officers of the Company). The Company has agreed, at the option of
Parent, either to increase the size of the Board of Directors of the Company
and/or obtain the resignation of such number of directors as is necessary to
enable the Offeror's designees to be elected or appointed to the Board.
Notwithstanding the foregoing, the size of the Board of Directors of the
Company shall not be larger than 10 persons (thereby limiting to seven the
number of directors who may be designated by Parent pending the consummation
of the Merger).
The Company has advised the Offeror that as of January 31, 1997, there were
(a) 5,961,665 shares of Common Stock issued and outstanding, (b) outstanding
stock options and rights to purchase not in excess of 1,550,670 shares of
Common Stock and (c) 786,869.1221 shares of ESOP Preferred Stock, which are
convertible into 786,869.1221 shares of Common Stock. As of the date hereof,
neither the Offeror nor Parent beneficially owns any Company Capital Stock. If
the Offeror acquires at least 4,149,603 Shares in the Offer, it will control a
majority of the outstanding shares of Company Capital Stock (assuming the
exercise of all options to purchase shares of the Company Common Capital Stock
outstanding at the expiration date of the Offer and the purchase, conversion
into Common Stock or redemption of all outstanding shares of ESOP Preferred
Stock). Accordingly, the Offeror would have sufficient voting power to approve
the Merger without the affirmative vote of any other shareholder. It is a
condition to the consummation of the Offer that there shall have been validly
tendered and not withdrawn all outstanding shares of ESOP Preferred Stock,
unless the Company shall have called all outstanding shares of ESOP Preferred
Stock for redemption on a date that is not later than one business day after
the consummation of the Offer. See Section 15.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
2
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1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4. The term "Expiration Date" means 12:00 Midnight,
New York City time, on Friday, March 7, 1997, unless the Offeror shall have
extended the period of time for which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Offeror, shall expire.
If the Offeror shall decide, in its sole discretion, to increase the
consideration offered in the Offer to holders of Shares and if, at the time
that notice of such increase is first published, sent or given to holders of
Shares in the manner specified below, the Offer is scheduled to expire at any
time earlier than the expiration of a period ending on the tenth business day
from, and including, the date that such notice is first so published, sent or
given, then the Offer will be extended until the expiration of such period of
10 business days. For purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or a federal holiday and consists of the time
period from 12:01 a.m. through 12:00 Midnight, New York City time.
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM CONDITION, THE
WAITING PERIOD UNDER THE HSR ACT APPLICABLE TO THE PURCHASE OF SHARES PURSUANT
TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED AND THE COMPANY AND KUHLMAN
HAVING CONSUMMATED THE TRANSACTIONS CONTEMPLATED BY THE ASSET PURCHASE
AGREEMENT OR KUHLMAN HAVING WAIVED ANY CONDITIONS TO CONSUMMATE THE ASSET
PURCHASE AGREEMENT, AGREEING TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED
THEREBY CONTEMPORANEOUSLY WITH OR IMMEDIATELY FOLLOWING THE CONSUMMATION OF
THE OFFER. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE
SECTION 15. THE MERGER AGREEMENT AND THE OFFER MAY BE TERMINATED BY THE
OFFEROR AND PARENT IF CERTAIN EVENTS OCCUR. The Offeror reserves the right
(but shall not be obligated), in accordance with applicable rules and
regulations of the United States Securities and Exchange Commission (the
"Commission"), subject to the limitations set forth in the Merger Agreement
and described below, to waive or reduce the Minimum Condition or to waive any
other condition to the Offer. If the Minimum Condition or any condition set
forth in Section 15 has not been satisfied by 12:00 Midnight, New York City
time, on Friday, March 7, 1997 (or any other time then set as the Expiration
Date), the Offeror may, subject to the terms of the Merger Agreement as
described below, elect to (1) extend the Offer and, subject to applicable
withdrawal rights, retain all tendered Shares until the expiration of the
Offer, as extended, (2) subject to complying with applicable rules and
regulations of the Commission, accept for payment all Shares so tendered and
not extend the Offer or (3) terminate the Offer and not accept for payment any
Shares and return all tendered Shares to tendering shareholders.
Under the terms of the Merger Agreement, the Offeror may not (except as
described in the next sentence), without the consent of the Company, reduce
the number of Shares subject to the Offer, reduce the Offer Price, modify or
add to the conditions to the Offer other than the conditions set forth in
Section 15 (other than to waive any such conditions to the extent permitted by
the Merger Agreement), extend the Offer, change the form of consideration
payable in the Offer or amend, waive or add any other term of the Offer in any
manner adverse to the Company or the holders of Shares. Notwithstanding the
foregoing, the Offeror may, without the consent of the Company, extend the
Offer (i) if at the then-scheduled Expiration Date of the Offer, any of the
conditions shall not have been satisfied or waived, until such time as such
conditions are satisfied or waived, (ii) for any period required by any rule,
regulation, interpretation or position of the Commission or the Commission
staff applicable to the Offer, (iii) on one or more occasions for an aggregate
period of not more than five business days beyond the then-scheduled
Expiration Date if, as of such Expiration Date, sufficient Shares have not
been tendered in order for the Merger to be effected pursuant to a "short-
form" merger pursuant to Section 450.1711 of the Michigan BCA, without prior
notice to, or any action by, any shareholders of the Company (which would
require that the Offeror has acquired at least 90% of the outstanding shares
of each class of stock of the Company and no shares of ESOP Preferred Stock
remain outstanding) or (iv) for any reason on one or more occasions for an
aggregate period of not more than five business days beyond the latest
expiration date that would be permitted under clause (i), (ii) or (iii) of
this sentence. The Offeror is also required to extend the Offer for up to
seven
3
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business days or approximately 22 days in the case of certain third party
takeover proposals for the Company or cure periods related to breaches of the
Merger Agreement by the Company, respectively. See Sections 13 and 15.
Subject to the limitations set forth in this Offer and the Merger Agreement,
the Offeror reserves the right (but will not be obligated), at any time or from
time to time in its sole discretion, to extend the period during which the
Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension. There can be
no assurance that the Offeror will exercise its right to extend the Offer.
Subject to the applicable rules and regulations of the Commission and subject
to the limitations set forth in the Merger Agreement, the Offeror expressly
reserves the right, at any time and from time to time, in its sole discretion,
(i) to delay payment for any Shares regardless of whether such Shares were
theretofore accepted for payment, or to terminate the Offer and not to accept
for payment or pay for any Shares not theretofore accepted for payment or paid
for, upon the occurrence of any of the conditions set forth in Section 15, by
giving oral or written notice of such delay or termination to the Depositary,
and (ii) at any time or from time to time, to amend the Offer in any respect.
The Offeror's right to delay payment for any Shares or not to pay for any
Shares theretofore accepted for payment is subject to the applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), relating to the
Offeror's obligation to pay for or return tendered Shares promptly after the
termination or withdrawal of the Offer.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer will
be followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of
Rules 14d-4(c) and 14e-1(d) under the Exchange Act. Without limiting the
obligation of the Offeror under such rule or the manner in which the Offeror
may choose to make any public announcement, the Offeror currently intends to
make announcements by issuing a press release to the Dow Jones News Service and
making any appropriate filing with the Commission.
If, subject to the terms of the Merger Agreement, the Offeror makes a
material change in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer (including, with the
consent of the Company, a waiver of the Minimum Condition), the Offeror will
disseminate additional tender offer materials and extend the Offer if and to
the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act or otherwise. The minimum period during which a tender offer must remain
open following material changes in the terms of the offer or the information
concerning the offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the terms or information changes. With respect to a
change in price or a change in percentage of securities sought, a minimum 10
business day period is generally required to allow for adequate dissemination
to shareholders and investor response.
The Company has provided the Offeror with the Company's list of shareholders
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares whose names appear on the Company's
shareholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose
nominees, appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Offeror will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4 promptly after the later to occur of (a) the
Expiration Date and (b) the satisfaction or waiver of the
4
<PAGE>
conditions set forth in Section 15 related to regulatory matters. Subject to
compliance with Rule 14e-1(c) under the Exchange Act, the Offeror expressly
reserves the right to delay payment for Shares in order to comply in whole or
in part with any applicable law. See Sections 1 and 17. In all cases, payment
for Shares tendered and accepted for payment pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for such
Shares or timely confirmation (a "Book-Entry Confirmation") of a book-entry
transfer of such Shares into the Depositary's account at The Depository Trust
Company or the Philadelphia Depository Trust Company (collectively, the "Book-
Entry Transfer Facilities"), pursuant to the procedures set forth in Section
3, (ii) a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) with all required signature guarantees or,
in the case of a book-entry transfer, an Agent's Message (as defined below)
and (iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against the participant.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as,
if and when the Offeror gives oral or written notice to the Depositary of the
Offeror's acceptance of such Shares for payment pursuant to the Offer. In all
cases, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from the Offeror
and transmitting such payment to tendering shareholders. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the
Offer is delayed, or the Offeror is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to the Offeror's
rights under Section 1, the Depositary may, nevertheless, on behalf of the
Offeror, retain tendered Shares, and such Shares may not be withdrawn, except
to the extent that the tendering shareholders are entitled to withdrawal
rights as described in Section 4 below and as otherwise required by Rule 14e-
1(c) under the Exchange Act. Under no circumstances will interest be paid by
the Offeror because of any delay in making such payment.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted
for more Shares than are tendered, certificates for such unpurchased or
untendered Shares will be returned, without expense to the tendering
shareholder (or, in the case of Shares delivered by book-entry transfer to a
Book-Entry Transfer Facility, such Shares will be credited to an account
maintained within such Book-Entry Transfer Facility), as promptly as
practicable after the expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Offeror increases the price being paid
for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all shareholders whose Shares are purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.
The Offeror reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates, the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve the Offeror of its obligations under the Offer or prejudice
the rights of tendering shareholders to receive payment for Shares validly
tendered and accepted for payment.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
either a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, must be received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date or the tendering shareholder must comply with the guaranteed delivery
procedure set forth
5
<PAGE>
below. In addition, either (i) certificates representing such Shares must be
received by the Depositary along with the Letter of Transmittal or such Shares
must be tendered pursuant to the procedure for book-entry transfer set forth
below, and a Book-Entry Confirmation must be received by the Depositary, in
each case prior to the Expiration Date, or (ii) the guaranteed delivery
procedures set forth below must be complied with. No alternative, conditional
or contingent tenders will be accepted. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at each Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in a Book-Entry
Transfer Facility's system may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through book-entry at a Book-Entry Transfer Facility prior to the
Expiration Date, (i) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer, and
any other required documents, must, in any case, be transmitted to and received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase or (ii) the guaranteed delivery procedures described below
must be complied with.
Signature Guarantee. Signatures on the Letter of Transmittal must be
guaranteed by a member in good standing of the Securities Transfer Agents
Medallion Program, or by any other bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Exchange Act (each of the
foregoing being referred to as an "Eligible Institution" and, collectively, as
"Eligible Institutions"), unless the Shares tendered thereby are tendered (i)
by a registered holder of Shares who has not completed either the box labeled
"Special Delivery Instructions" or the box labeled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of any
Eligible Institution. If the certificates evidencing Shares are registered in
the name of a person or persons other than the signer of the Letter of
Transmittal, or if payment is to be made, or delivered to, or certificates for
unpurchased Shares are to be issued or returned to, a person other than the
registered owner or owners, then the tendered certificates must be endorsed or
accompanied by duly executed stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed by an
Eligible Institution as provided in the Letter of Transmittal. See Instructions
1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the
Depositary prior to the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless be
tendered if all of the following guaranteed delivery procedures are duly
complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Offeror, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), and any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and any other documents required by the
Letter of Transmittal are received by the Depositary within three trading
days after the date of such Notice of Guaranteed Delivery. The term
"trading day" is any day on which the New York Stock Exchange ("NYSE") is
open for business.
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<PAGE>
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for such Shares or a Book-Entry
Confirmation, (ii) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), with all required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT "BACKUP" FEDERAL INCOME
TAX WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE OF SHARES
PURCHASED PURSUANT TO THE OFFER, EACH SHAREHOLDER MUST, SUBJECT TO CERTAIN
EXCEPTIONS, PROVIDE THE DEPOSITARY WITH SUCH SHAREHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER ("TIN") AND CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT
TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. FOREIGN HOLDERS MUST GENERALLY SUBMIT A
COMPLETED FORM W-8 TO AVOID BACKUP WITHHOLDING. THIS FORM MAY BE OBTAINED FROM
THE DEPOSITARY. SEE INSTRUCTIONS 8 AND 9 SET FORTH IN THE LETTER OF
TRANSMITTAL.
Determination of Validity. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Offeror, in its sole
discretion, and its determination will be final and binding on all parties.
The Offeror reserves the absolute right to reject any or all tenders of any
Shares that are determined by it not to be in proper form or the acceptance of
or payment for which may, in the opinion of the Offeror, be unlawful. The
Offeror also reserves the absolute right to waive any of the conditions of the
Offer, subject to the limitations set forth in the Merger Agreement, or any
defect or irregularity in the tender of any Shares. The Offeror's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the Instructions to the Letter of Transmittal) will be
final and binding on all parties. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. None of the Offeror, Parent, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Other Requirements. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
shareholder irrevocably appoints designees of the Offeror as such
shareholder's attorneys-in-fact and proxies, each with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the
full extent of such shareholder's right with respect to the Shares tendered by
such shareholder and accepted for payment by the Offeror (and any and all
other Shares or other securities issued or issuable in respect of such
Shares). All such powers of attorney and proxies shall be considered coupled
with an interest in the tendered Shares. This appointment is effective when,
and only to the extent that, the Offeror accepts for payment the Shares
deposited with the Depositary. Upon acceptance for payment, all prior powers
of attorney and proxies given by the shareholder with respect to such Shares
or other securities or rights will, without further action, be revoked and
subsequent proxies may be given or written consent executed (and, if given or
executed, will not be deemed effective). The designees of the Offeror will,
with respect to the Shares and other securities or rights, be empowered to
exercise all voting and other rights of such shareholder as they in their sole
judgment deem proper in respect of any annual or special meeting of the
Company's shareholders, or any adjournment or postponement thereof. The
Offeror reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Offeror's payment for such Shares, the
Offeror must be able to exercise full voting and other rights with respect to
such Shares and the other securities or rights issued or issuable in respect
of such Shares, including voting at any meeting of shareholders (whether
annual or special or whether or not adjourned) in respect of such Shares.
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<PAGE>
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the terms and
conditions of the Offer, as well as the tendering shareholder's representation
and warranty that (i) such shareholder has the full power and authority to
tender, sell, assign and transfer the tendered Shares (and any and all other
Shares or other securities issued or issuable in respect of such Shares), and
(ii) when the same are accepted for payment by the Offeror, the Offeror will
acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claims.
The Offeror's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering shareholder and the
Offeror upon the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment pursuant to the Offer, may also be withdrawn
at any time after Friday, March 7, 1997. If purchase of or payment for Shares
is delayed for any reason or if the Offeror is unable to purchase or pay for
Shares for any reason, then, without prejudice to the Offeror's rights under
the Offer, tendered Shares may be retained by the Depositary on behalf of the
Offeror and may not be withdrawn except to the extent that tendering
shareholders are entitled to withdrawal rights as set forth in this Section 4,
subject to Rule 14e-1(c) under the Exchange Act, which provides that no person
who makes a tender offer shall fail to pay the consideration offered or return
the securities deposited by or on behalf of security holders promptly after
the termination or withdrawal of the Offer.
For a withdrawal of Shares tendered pursuant to the Offer to be effective, a
written, telegraphic, telex or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase. Any notice of withdrawal must
specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name in which the certificates
representing such Shares are registered, if different from that of the person
who tendered the Shares. If certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer set forth in
Section 3, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and must otherwise comply with such Book-Entry Transfer
Facility's procedures. All questions as to the form and validity (including
time of receipt) of notices of withdrawal will be determined by the Offeror,
in its sole discretion, and its determination will be final and binding on all
parties. None of the Offeror, Parent, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to
the Expiration Date by following any of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to beneficial owners of Shares whose
Shares are purchased pursuant to the Offer or whose Shares are converted to
cash in the Merger. The discussion is for general information only and does
not purport to consider all aspects of federal income taxation that may be
relevant to beneficial owners of Shares. The discussion is based on current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing, proposed and temporary regulations promulgated thereunder and
administrative and judicial interpretations thereof, all of which are subject
to change. The discussion applies only to beneficial owners of Shares in whose
hands Shares
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<PAGE>
are capital assets within the meaning of Section 1221 of the Code, and may not
apply to Shares received pursuant to the exercise of employee stock options or
otherwise as compensation, or to certain types of beneficial owners of Shares
(such as insurance companies, tax-exempt organizations and broker-dealers) who
may be subject to special rules. This discussion does not discuss the federal
income tax consequences to a beneficial owner of Shares who, for United States
federal income tax purposes, is a non-resident alien individual, a foreign
corporation, a foreign partnership or a foreign estate or trust, nor does it
consider the effect of any foreign, state or local tax laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH BENEFICIAL OWNER OF SHARES
SHOULD CONSULT SUCH BENEFICIAL OWNER'S OWN TAX ADVISOR TO DETERMINE THE
APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH BENEFICIAL OWNER AND THE
PARTICULAR TAX EFFECTS TO SUCH BENEFICIAL OWNER OF THE OFFER AND THE MERGER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
Common Stock. The receipt of cash for shares of Common Stock pursuant to the
Offer or the Merger will be a taxable transaction for federal income tax
purposes. In general, for federal income tax purposes, a beneficial owner of
shares of Common Stock will recognize gain or loss equal to the difference
between the beneficial owner's adjusted tax basis in the shares of Common
Stock sold pursuant to the Offer or converted to cash in the Merger and the
amount of cash received therefor. Gain or loss must be determined separately
for each block of shares of Common Stock (i.e., shares of Common Stock
acquired at the same cost in a single transaction) sold pursuant to the Offer
or converted to cash in the Merger, although, under proposed legislation not
yet effective, gain or loss would be determined based on the average tax basis
of all Common Stock held by the beneficial owner. Such gain or loss will be
capital gain or loss and will be long-term capital gain or loss if the
beneficial owner held the shares of Common Stock for more than one year as of
the date of sale (in the case of the Offer) or the Effective Time (in the case
of the Merger). Long-term capital gain of individuals currently is taxed at a
maximum rate of 28%. The Company has advised the Offeror that the Company's
Employee Stock Ownership Plan and the Company's Employee Stock Ownership Trust
(such plan and such trust are referred to as the "ESOP") are, respectively, a
qualified plan described in section 401(a) of the Code and an exempt trust
under section 501(a) of the Code. Accordingly, receipt by the ESOP of cash for
shares of Common Stock pursuant to the Offer or the Merger should not result
in the imposition of federal income tax on either the ESOP itself or the
participants in the ESOP. For a general discussion concerning the taxation of
participants in the ESOP upon receiving distributions therefrom, see Section
16, "The Company Employee Stock Ownership Plan."
ESOP Preferred Stock. Assuming the ESOP is exempt from federal income tax as
described above, the receipt by the ESOP of cash for shares of ESOP Preferred
Stock pursuant to the Offer or the Merger should not result in the imposition
of federal income tax on the ESOP itself or the participants in the ESOP. If
the ESOP Trustee exercises its right to convert the ESOP Preferred Stock into
Common Stock, such conversion will not be a taxable transaction, and the
discussion above regarding Common Stock held by the ESOP will be applicable.
For a general discussion concerning the taxation of participants in the ESOP
upon receiving distributions therefrom, see Section 16, "The Company Employee
Stock Ownership Plan."
Backup Withholding. Payments in connection with the Offer or the Merger may
be subject to "backup withholding" at a rate of 31%, unless a beneficial owner
of Shares (a) is a corporation or comes within certain exempt categories and,
when required, demonstrates this fact or (b) provides a correct TIN to the
payor, certifies as to no loss of exemption from backup withholding and
otherwise complies with applicable requirements of the backup withholding
rules. A beneficial owner who does not provide a correct TIN may be subject to
penalties imposed by the Internal Revenue Service. Any amount paid as backup
withholding does not constitute an additional tax and will be creditable
against the beneficial owner's federal income tax liability. Each beneficial
owner of Shares should consult with his or her own tax advisor as to his or
her qualification for exemption from backup withholding and the procedure for
obtaining such exemption. Those tendering their Shares in the Offer may
prevent backup withholding by completing the Substitute Form W-9 included in
the Letter of Transmittal. See Section 3. Similarly, those who convert their
Shares into cash in the Merger may prevent backup withholding by completing a
Substitute Form W-9 and submitting it to the paying agent for the Merger.
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6. PRICE RANGE OF SHARES; DIVIDENDS.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 (the "1995 10-K"), the shares of Common Stock,
together with the associated Rights, are traded on the NYSE. The shares of
ESOP Preferred Stock are not publicly traded. The following table sets forth
for the periods indicated the high and low sales prices per share of Common
Stock on the NYSE as reported by the Company in the 1995 10-K with respect to
the years ended December 31, 1994 and December 31, 1995, and as reported by
published financial sources with respect to periods after December 31, 1995.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------- ------- ---------
<S> <C> <C> <C>
Year Ended December 31, 1994:
First Quarter................................. $18 $15 1/2 $.12
Second Quarter................................ 18 15 .13
Third Quarter................................. 20 3/4 17 1/4 .13
Fourth Quarter................................ 22 3/8 20 .13
Year Ended December 31, 1995:
First Quarter................................. $23 7/8 $20 $.15
Second Quarter................................ 21 3/4 20 .15
Third Quarter................................. 24 1/4 20 1/4 .15
Fourth Quarter................................ 25 1/4 20 7/8 .15
Year Ended December 31, 1996:
First Quarter................................. $26 1/2 $21 7/8 $.15
Second Quarter................................ 26 5/8 23 1/2 $.165
Third Quarter................................. 27 1/4 23 1/8 $.165
Fourth Quarter................................ 32 7/8 26 1/4 $.165
Year Ending December 31, 1997:
First Quarter (through February 6, 1997)...... $42 5/8 $32 5/8
</TABLE>
On January 31, 1997, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, the closing price per
share of Common Stock as reported on the NYSE was $37.00. On February 6, 1997,
the last full day of trading prior to the commencement of the Offer, the
closing price per share of Common Stock as reported on the NYSE was $42.50.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES OF
COMMON STOCK.
7. CERTAIN EFFECTS OF THE TRANSACTION.
The purchase of the shares of Common Stock by the Offeror pursuant to the
Offer will reduce the number of shares of Common Stock that might otherwise
trade publicly and will reduce the number of holders of shares of Common
Stock, which will adversely affect the liquidity and market value of the
remaining shares of Common Stock held by shareholders other than the Offeror.
The Company has advised the Offeror that, as of January 31, 1997, there were
approximately 1,200 holders of record and approximately 6,800 beneficial
owners of the shares of Common Stock. All of the outstanding shares of ESOP
Preferred Stock are held of record by Old Kent Bank, as Trustee, under the
ESOP.
Market for Shares. Depending upon the number of shares of Common Stock
purchased pursuant to the Offer, the shares of Common Stock may no longer meet
the standards for continued inclusion on the NYSE. According to the NYSE's
published guidelines, the NYSE would consider delisting such shares if, among
other things, the number of record holders of at least 100 of such shares
should fall below 1,200, the number of publicly held shares of Common Stock
(exclusive of holdings of officers, directors, their immediate families and
other concentrated holdings of 10% or more ("NYSE Excluded Holdings")) should
fall below 600,000 or the aggregate market value of publicly held shares of
Common Stock (exclusive of NYSE Excluded Holdings) should fall below
$5,000,000.
10
<PAGE>
In the event that the shares of Common Stock should no longer be listed or
traded on the NYSE, it is possible that such shares would continue to trade in
the over-the-counter market and that price quotations would be reported by
other sources. The extent of the public market for such shares and the
availability of such quotations would, however, depend upon the number of
holders of such shares remaining at such time, the interest in maintaining a
market in shares of Common Stock on the part of securities firms, the possible
termination of registration of such shares under the Exchange Act, as described
below, and other factors.
Exchange Act Registration. The shares of Common Stock are currently
registered under the Exchange Act. Such registration may be terminated upon
application by the Company to the Commission if there are fewer than 300 record
holders of such shares. It is the intention of the Offeror to seek to cause an
application for such termination to be made as soon after consummation of the
Offer as the requirements for termination of registration of such shares are
met. If such registration were terminated, the Company would no longer legally
be required to disclose publicly in proxy materials distributed to shareholders
the information which it now must provide under the Exchange Act or to make
public disclosure of financial and other information in annual, quarterly and
other reports required to be filed with the Commission under the Exchange Act;
and the officers, directors and 10% shareholders of the Company would no longer
be subject to the "short-swing" insider trading reporting and profit recovery
provisions of the Exchange Act. Furthermore, if such registration were
terminated, persons holding "restricted securities" of the Company may be
deprived of their ability to dispose of such securities under Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities
Act").
Margin Regulations. The shares of Common Stock are currently "margin
securities" under the regulations of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), which has the effect, among other
things, of allowing brokers to extend credit on the collateral of such shares.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the shares of
Common Stock would no longer constitute "margin securities" for the purposes of
the margin regulations of the Federal Reserve Board and therefore could no
longer be used as collateral for loans made by brokers. If registration of
shares of Common Stock under the Exchange Act were terminated, such shares
would no longer be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth herein, the information concerning the Company
contained in this Offer to Purchase, including financial information, has been
furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Although neither the Offeror nor Parent has any knowledge that would
indicate that statements contained herein based upon such documents are untrue,
none of the Offeror, Parent and the Dealer Manager assume any responsibility
for the accuracy or completeness of the information concerning the Company,
furnished by the Company, or contained in such documents and records or for any
failure by the Company to disclose events which may have occurred or may affect
the significance or accuracy any such information but which are unknown to the
Offeror, Parent or the Dealer Manager.
The Company is a Michigan corporation with its principal executive offices
located at One Madison Avenue, Cadillac, Michigan 49601-9785. The Company is a
leading international manufacturer of refrigerated display cases, refrigerated
building systems and commercial vehicle components.
Set forth below is certain summary consolidated financial data with respect
to the Company excerpted or derived from financial information contained in the
Company's 1995 Form 10-K and the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996. More comprehensive financial information
is included in such reports and other documents filed by the Company with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and such other documents and all the financial information
(including any related notes) contained therein. Such reports and other
documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below.
11
<PAGE>
KYSOR INDUSTRIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR YEARS ENDED DECEMBER NINE MONTHS ENDED
31, SEPTEMBER 30,
-------------------------- -----------------
1995 1994 1993 1996 1995
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statement of Income Data
Total sales and revenues..... $364,302 $314,379 $273,850 $291,815 $276,885
Income before income taxes
and accounting change....... 19,544 21,325 18,008 21,958 21,861
Net income................... 17,429 13,275 2,470(1) 14,925 12,576
Fully diluted earnings per
common share before
accounting change........... 2.42 1.81 .03(1) 2.06 1.76
</TABLE>
<TABLE>
<CAPTION>
AS OF
AS OF DECEMBER 31, SEPTEMBER 30,
------------------- -------------
1995 1994 1996
--------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data
Total current assets............... $ 108,436 $ 107,821 $123,657
Total assets....................... 186,973 177,511 232,588
Total current liabilities.......... 55,796 56,645 66,585
Total liabilities and deferred
credits........................... 106,738 109,593 136,487
Total common shareholders' equity.. 75,242 63,642 90,158
</TABLE>
- --------
(1) Includes a charge of $7,628 in respect of the cumulative effect of a
change in accounting for postretirement benefits (net of income tax
benefit of $4,435).
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files periodic reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interests of such persons in transactions with the Company. Such reports,
proxy statements and other information may be inspected at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained at prescribed
rates from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a World Wide Web
site on the internet at http://www.sec.gov that contains reports and other
information regarding registrants that file electronically with the
Commission. Such material may also be inspected at the offices of the NYSE, 20
Broad Street, New York, New York 10005.
9. CERTAIN INFORMATION CONCERNING PARENT AND THE OFFEROR.
The Offeror is a newly incorporated Michigan corporation. To date, the
Offeror has not conducted any business other than that incident to its
formation, the execution and delivery of the Merger Agreement and the
commencement of the Offer. Accordingly, no meaningful financial information
with respect to the Offeror is available. The Offeror is a wholly owned
subsidiary of Scotsman Group Inc., a Delaware corporation, which is a wholly
owned subsidiary of Parent. The principal executive office of each of the
Offeror and Scotsman Group Inc. is located at 775 Corporate Woods Parkway,
Vernon Hills, Illinois 60061.
12
<PAGE>
Parent, a Delaware corporation, has its principal executive office at 775
Corporate Woods Parkway, Vernon Hills, Illinois 60061. Parent is a holding
company with subsidiaries engaged in the manufacture and marketing of
refrigeration products primarily for the foodservice industry, including ice
machines, food preparation and storage equipment and drink dispensing
equipment.
Set forth below are certain summary consolidated financial data with respect
to Parent excerpted or derived from financial information contained in
Parent's Annual Report on Form 10-K for the year ended December 31, 1995, and
Parent's Quarterly Report on Form 10-Q for the quarter ended September 29,
1996. More comprehensive financial information is included in such reports and
other documents filed by Parent with the Commission, and the following summary
is qualified in its entirety by reference to such reports and such other
documents and all the financial information (including any related notes)
contained therein.
SCOTSMAN INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FOR YEARS ENDED DECEMBER 31, SEPTEMBER 29,
-------------------------------- ----------------------
1995 1994 1993 1996 1995
------------ ---------- -------- ------------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statement of Income Data
Net sales............. $324,291 $266,632 $163,952 $282,720 $253,512
Income from
operations........... 34,454 28,214 17,606 35,398 29,890
Net income............ 15,408 12,785 7,411 16,467 13,469
Fully diluted net
income per share..... 1.45 1.35 1.06 1.54 1.26
<CAPTION>
AS OF AS OF AS OF
DECEMBER 31, JANUARY 1, SEPTEMBER 29,
1995 1995 1996
------------ ---------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data
Total current assets.. $131,342 $116,382 $147,514
Total assets.......... 275,943 244,791 294,029
Total current
liabilities.......... 76,514 61,817 74,671
Total liabilities..... 163,624 158,328 165,514
Total shareholders'
equity............... 112,319 86,463 128,515
</TABLE>
Parent is subject to the informational requirements of the Exchange Act and
in accordance therewith files periodic reports and other information with the
Commission relating to its business, financial condition and other matters.
Such reports and other information are available for inspection and copying at
the offices of the Commission in the same manner as set forth with respect to
the Company in Section 8. Such material may also be inspected at the offices
of the NYSE, 20 Broad Street, New York, New York 10005.
The name, citizenship, business address, present principal occupation and
material positions held during the past five years of each of the directors
and executive officers of Parent and the Offeror are set forth in Annex I to
this Offer to Purchase.
Except as described in this Offer to Purchase, none of the Offeror, Parent,
or to the best knowledge of the Offeror or Parent, any of the persons listed
in Annex I hereto, owns or has any right to acquire any Shares and none of
them has effected any transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, none of the Offeror, Parent
or, to the best knowledge of the Offeror or Parent, any of the persons listed
in Annex I hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any
such securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss
13
<PAGE>
or the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, there have been no contacts, negotiations or transactions between
the Offeror or Parent, or, to the best of their knowledge, any of the persons
listed in Annex I hereto, on the one hand, and the Company or its affiliates,
on the other hand, concerning a merger, consolidation or acquisition, a tender
offer or other acquisition of securities, an election of directors or a sale
or other transfer of a material amount of assets. Except as described in this
Offer to Purchase, none of the Offeror, Parent or, to the best knowledge of
Parent or the Offeror, any of the persons listed in Annex I hereto, has had
any transaction with the Company or any of its executive officers, directors
or affiliates that would require disclosure under the rules and regulations of
the Commission applicable to the Offer.
10. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Offeror to consummate the Offer
and the Merger is expected to be approximately $330 million (before factoring
in the consideration to be received pursuant to the Asset Purchase Agreement),
which amount excludes related fees and expenses.
Scotsman Group Inc., a wholly owned subsidiary of Parent and the direct
parent of the Offeror ("Scotsman Group"), has received a written financing
commitment (the "Commitment Letter") from The First National Bank of Chicago
("First Chicago") in the aggregate principal amount of $500 million (the
"Credit Facility"). The terms of the definitive agreement providing for the
Credit Facility (the "Loan Agreement") have not yet been finalized. The
following is a summary of the anticipated principal terms of the Credit
Facility based upon the Commitment Letter. This summary is subject to
finalizing of the Loan Agreement and is qualified in its entirety by reference
to the Commitment Letter which is filed as an exhibit to the Schedule 14D-1 of
which this Offer to Purchase is an exhibit (the "Schedule 14D-1").
The Credit Facility consists of three subfacilities: (a) a $265 million
revolving loan facility (the "Revolving Facility") under which loans may be
borrowed, repaid and reborrowed by Scotsman Group (and certain of its
subsidiaries) from time to time for the purpose of providing funds to
consummate the Offer and the Merger, to refinance certain indebtedness, to
provide working capital and for other general corporate purposes; (b) a $150
million term loan facility (the "Term Facility") for the purpose of providing
funds to consummate the Offer and the Merger, to refinance certain
indebtedness and to pay certain expenses incurred in connection with the Offer
and the Merger; and (c) an $85 million bridge loan facility (the "Bridge
Facility") for the purpose of providing funds to consummate the Offer and the
Merger, to refinance certain indebtedness and to pay certain expenses incurred
in connection with the Offer and the Merger.
The Revolving Facility will mature in seven years. The aggregate principal
amount that may be borrowed thereunder will be reduced on December 31, 1998 by
$10 million and by $15 million on each December 31 thereafter until maturity,
at which time the remaining commitment amount under the Revolving Facility
will be reduced to zero. The Term Facility will mature in seven years and will
be amortized with semi-annual principal payments (in varying amounts) starting
on December 31, 1997 and continuing thereafter until maturity. The Bridge
Facility will mature in 45 days after the consummation of the Offer; provided,
however, that if not paid in full after 45 days, the Bridge Facility will
convert to a seven and one-half year term loan. It is anticipated that the
Bridge Facility will be paid in full on or prior to maturity with proceeds of
the sale of the TPG Assets.
Borrowings under the Credit Facility will bear interest at a floating rate
based upon, at the borrower's option, (i) the higher of First Chicago's
corporate base rate or the Federal funds rate plus 1/2% per annum, or (ii) the
rate offered by First Chicago for deposits in the relevant Eurocurrency, plus,
in each case, an applicable margin. The applicable margin will vary depending
upon the "Debt/Earnings Ratio" (as defined below). The Credit Facility will be
guaranteed by Parent and certain of its subsidiaries.
The Loan Agreement will contain conditions precedent, representations and
warranties, covenants, events of default and other provisions customary for
such financings. Covenants in the Loan Agreement will include the following
financial covenants: (a) the net worth of Parent on a consolidated basis shall
not be less than the sum of $120 million plus 60% of net income of Parent on a
consolidated basis for all quarters ending after December 31, 1996 plus 60% of
the proceeds of any equity issuances by Parent minus certain adjustment
14
<PAGE>
amounts; (b) the ratio (the "Debt/Earnings Ratio") of total indebtedness to
"EBITDA" (i.e., net income, plus income tax expense, minus equity in net
income of affiliates, plus interest expense, plus depreciation expense, plus
amortization expense, plus other non-cash charges, minus interest income), for
Parent and its subsidiaries on a consolidated basis, shall not exceed
specified amounts measured on a rolling four-quarter basis for each quarter
end commencing with the quarter ending in June 1997 (such ratio for such
quarter end not to exceed 4.25 to 1.00, calculated by multiplying one quarter
of EBITDA at such time by four); and (c) the ratio of EBITDAR" (i.e., EBITDA
plus rents) minus capital expenditures to "Fixed Charges" (i.e., interest
expense, plus scheduled principal repayments, plus income tax expense, plus
rents, plus dividends paid, plus mandatory Revolving Facility reductions minus
dividends received), for Parent and its subsidiaries on a consolidated basis,
shall not be less than 1.0 to 1.0 for all fiscal quarters ending in 1997 and
1.05 to 1.00 thereafter.
First Chicago's commitment to provide the Credit Facility is conditioned on,
among other things: initial funding under the Credit Facility occurring on or
before May 31, 1997; evidence satisfactory to First Chicago that requisite
legal and regulatory approvals for the Offer and the Merger have been
obtained; the absence of a material adverse change in the business, condition
(financial or otherwise), operations, properties or performance of (a) Parent
and its subsidiaries on a consolidated basis or the Company and its
subsidiaries on a consolidated basis (in each case from that reflected in the
September 30, 1996 financials for each such entity), or (b) Parent and the
Company and their respective subsidiaries taken as a whole, on a combined
basis after giving effect to the Offer and the Merger, from that reflected in
the consolidated pro forma financial statements to be delivered to First
Chicago prior to consummation of the Offer; the absence of any matured or
unmatured default under the Loan Agreement after giving effect to consummation
of the Offer and the Merger; the representations and warranties in the Merger
Agreement and the Asset Purchase Agreement being accurate as of the
consummation of the Offer and the conditions thereon having been satisfied;
the Minimum Condition being satisfied; and the concurrent repayment of
Scotsman Group's existing $90 million credit facility and $20 million private
placement indebtedness and all existing credit facilities of the Company and
its subsidiaries.
11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH
THE COMPANY.
On June 4, 1996, George R. Kempton, Chairman of the Board and Chief
Executive Officer of the Company, wrote to Richard C. Osborne, Chairman and
Chief Executive Officer of Parent, suggesting that the parties meet to discuss
a possible strategic alliance. On June 18, 1996, the chairmen of the
respective companies met and, following the execution of a mutual
Confidentiality and Standstill Agreement dated June 18, 1996, a copy of which
is filed as an exhibit to the Schedule 14D-1, discussed potential synergistic
advantages that might be obtainable through a combination of the companies'
respective product and marketing capabilities. At the time of the meeting, the
market price for the Common Stock was approximately $25 per share.
On June 19, 1996, Mr. Kempton wrote Mr. Osborne outlining several reasons
why an alliance of the Company and Parent may be mutually beneficial. The
reasons outlined by Mr. Kempton included: (i) the Company's walk-in cooler and
deli case product lines complemented Parent's product lines for the food
service industry (restaurants, fast food chains and convenience stores); (ii)
Parent's ice machines and food preparation work stations complemented the
Company's display case product lines for the supermarket industry; (iii) there
was little or no product overlap between the two companies; (iv) purchasing
trends of customers in the food service and supermarket industries suggested a
desire of those customers to reduce their numbers of individual suppliers and
to enter into longer-term supply relationships with full-line suppliers that
could provide acceptable quality, delivery and price; and (v) the companies'
manufacturing operations geographically complemented each other on a global
basis, particularly in light of Parent's strong presence and experience in the
European markets and the Company's market position in Australia and its
expansion in Southeast Asian markets.
Additional correspondence was exchanged by the parties during the month
following their initial meeting and another meeting between certain executive
officers of the companies was held on July 24, 1996. At that meeting the
parties continued to explore the potential advantages of combining the
Company's commercial products business with the commercial products business
of Parent.
15
<PAGE>
At the Company's regularly scheduled Board of Directors' meeting held July
26, 1996, Mr. Kempton reported to the Board on the meetings that had been held
with Parent and inquired whether the Board desired Mr. Kempton to explore
further a possible business combination with Parent. The Board authorized the
Company's management to continue dialogue with Parent to determine whether a
proposal could be obtained which would provide a premium value to the Company's
shareholders, although the Board emphasized that it was not making any decision
to sell the Company.
Following the July 26, 1996 Board meeting, Mr. Osborne contacted Mr. Kempton
and indicated that Parent had a continuing interest in a possible acquisition
of the Company's commercial products business. Mr. Osborne also informed Mr.
Kempton that Parent would engage Morgan Stanley as its investment banking firm
to assist in Parent's evaluation of the Company.
On September 6, 1996, Mr. Kempton and other executive officers of the Company
met with representatives of Parent and Morgan Stanley and continued discussions
concerning the possible acquisition of the Company by Parent. In that meeting,
Mr. Osborne stated that Parent had no interest in acquiring the Company's TPG
and he inquired whether the Company might be willing to sell its commercial
products group business separately. Due to the cyclical nature of the Company's
TPG, Mr. Kempton indicated that he did not believe it would be beneficial to
the Company's shareholders to retain the TPG, as it was currently constituted,
as a stand-alone business entity, but he acknowledged that a sale of the TPG to
a third party in connection with the acquisition of the Company by Parent might
maximize value to the Company's shareholders.
Also in September 1996, the Company engaged a regional investment banking
firm to conduct an evaluation of each of the Company's nine operating divisions
to assist the Company's management and Board of Directors in its long-range
strategic planning. The investment banking firm reported to the Company's
management on various potential strategic alternatives to enhance the value of
the Company to its shareholders, including: (i) maintaining the status quo and
carrying out current operating plan strategies; (ii) implementing an aggressive
campaign to increase the investing community's awareness of the Company; (iii)
issuing letter stock to reflect the value of one of the Company's two product
groups; (iv) spinning off one of the Company's two products groups in the form
of a dividend to existing shareholders; (v) partially divesting the TPG and
retaining isolated product lines (such as the fan and fan clutch cooling
product lines); (vi) divesting the TPG in its entirety; (vii) divesting the
Company's commercial products business; and (viii) selling the entire Company.
In late September 1996, Mr. Osborne contacted Mr. Kempton and reemphasized
that Parent would not make any acquisition proposal for the Company unless the
TPG could be sold to a third party in a prearranged transaction. Mr. Osborne
requested and received permission to contact a third party that had acquired
several transportation components companies to see if that party had an
interest in acquiring the TPG. Mr. Osborne subsequently informed Mr. Kempton
that the third party expressed an interest in the possible acquisition of the
TPG assets in a transaction in which the Company would receive a cash payment
of up to $85 million, although Mr. Osborne understood that the third party's
proposal would not include the assumption of pre-closing liabilities associated
with the TPG, other than perhaps current trade payables. The parties agreed
that they would continue to investigate whether a more advantageous sales
opportunity might be available for the TPG.
At its regularly scheduled meeting held October 24, 1996, Mr. Kempton updated
the Board on his discussions with Mr. Osborne. The Board also reviewed and
discussed the report of the regional investment banking firm concerning
possible alternatives to maximize value to the Company's shareholders and
additional discussions on this topic were scheduled for the Board's January
1997 meeting. The Board also authorized Mr. Kempton to discuss with two
executive managers of the TPG (the "MBO Proponents") whether they had an
interest in investigating a possible management buy-out of the TPG.
During late November and early December 1996, the MBO Proponents met with
independent financial advisers to determine the feasibility of a management-led
acquisition of the TPG. The MBO Proponents reported
16
<PAGE>
to Mr. Kempton that they did have an interest in bidding for the TPG and that,
based upon the meetings held with their financial advisers, they believed that
a transaction could be structured providing a purchase price of approximately
$90 million ($85 million in cash and $5 million in notes). The MBO Proponents
indicated, however, that any offer they would make would be conditioned upon
the Company retaining responsibility for pre-closing liabilities associated
with the TPG, other than trade payables and certain other designated
liabilities, and upon obtaining necessary financing.
On December 17, 1996, the Company's executive management, including the MBO
Proponents, met again with representatives of Parent and Morgan Stanley and
continued discussions concerning the possible acquisition of the Company by
Parent. The MBO Proponents were given an opportunity at that meeting to outline
their interest in acquiring the TPG and the proposed structure of a
transaction. In a subsequent conversation with Mr. Kempton, Mr. Osborne
expressed concerns as to the financing uncertainties associated with the MBO
Proponents' proposal and certain of the suggested terms of the proposal.
A special meeting of the Company's Board of Directors was held on December
17, 1996 to review and discuss the status of discussions with Parent, the
interest expressed by the MBO Proponents in the TPG and the response of Parent
to the MBO Proponents' proposal. Mr. Kempton noted that, within the preceding
month, Kuhlman had made an unsolicited inquiry as to whether the Company might
wish to explore some strategic alliance involving the TPG. He also noted that
several years earlier the Company had engaged in discussions with Schwitzer,
Inc. ("Schwitzer") concerning a possible business combination, and that after
the termination of those discussions Schwitzer had been acquired by Kuhlman. It
was determined that Mr. Kempton would contact Kuhlman to investigate whether it
might be interested in acquiring the TPG in a transaction that would facilitate
an acceptable proposal by Parent for the entire Company.
At its December 17, 1996 meeting, the Board also constituted a committee (the
"Special Committee") comprised of the non-employee directors serving on the
Board's Acquisition, Divestiture and Merger Committee (Messrs. Grant C. Gentry
(Chair), Robert W. Navarre and Robert J. Ratliff), together with Mr. Kempton
(ex-officio) and Paul K. Gaston, to assist the Board in evaluating any proposal
that might be made for the Company or the TPG. The Special Committee held its
first meeting on December 20, 1996.
Discussions continued with Parent during the remainder of December 1996, and
on December 26, 1996, Mr. Kempton and another executive officer of the Company
met with Gary G. Dillon, the Chairman, President and Chief Executive Officer of
Schwitzer, to discuss a possible acquisition of the TPG by Kuhlman. Based upon
preliminary evaluation materials made available pursuant to a mutual
Confidentiality and Standstill Agreement executed at that meeting, a copy of
which is filed as an exhibit to the Schedule 14D-1, Mr. Dillon expressed a
substantial interest in pursuing an acquisition transaction.
On December 27, 1996, legal counsel for the Company and Parent met and
discussed possible transaction structures, timing and due diligence.
Mr. Dillon visited various of the TPG facilities during the first week of
January 1997, and on January 6, 1997, contacted Mr. Kempton and confirmed
Kuhlman's interest in acquiring the TPG. At the time, Kuhlman was not aware
that the Company was discussing a possible sale transaction with Parent. Mr.
Kempton and Mr. Osborne discussed the preliminary indications of value
expressed by Mr. Dillon and they agreed that a three-way meeting should be held
among the parties to determine whether an acceptable proposal for the TPG could
be structured. Mr. Osborne indicated that Parent's valuation of the Company
would be adversely affected by any continuing exposure of the Company to
liabilities associated with the TPG.
On January 13, 1997, the Special Committee met to review and discuss the
status of discussions with Parent and Kuhlman. At that meeting, the Special
Committee authorized the engagement of William Blair as its investment banking
firm to evaluate the fairness from a financial point of view to the Company's
shareholders of the consideration to be received by such shareholders in any
offer that might be made by Parent, taking into consideration the possible sale
of the TPG as part of such a proposal. The scope of William Blair's engagement
was subsequently enlarged to include assisting the Company in its negotiations
with Parent.
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From January 20, 1997 through February 1, 1997, the Company engaged in
extensive negotiations with Parent and Kuhlman concerning the terms of the
definitive agreements under which Parent would acquire the Shares and Kuhlman
would acquire the TPG. Between January 21 and January 23, 1997,
representatives of each of the parties held extended meetings at the offices
of the Company's legal counsel, including a meeting held January 23, 1997
among Mr. Kempton, Mr. Osborne and Mr. Dillon. The contractual terms
negotiated with Parent during this period included, among others, the terms of
the Offer, the representations and warranties to be made by the Company in the
Merger Agreement, the conditions to the Offeror's obligations to consummate
the Offer and the Merger, and the size of the termination fee and instances in
which such fee would be payable in the event the transactions contemplated by
the Merger Agreement were not consummated. The terms negotiated with Kuhlman
concerning the Asset Purchase Agreement included, among others, the
liabilities to be assumed by Kuhlman as part of the transaction, the
representations and warranties to be made by the Company in the Asset Purchase
Agreement and the obligations of the Company with respect to such
representations and warranties following the closing and the conditions to
Kuhlman's obligations to consummate the Asset Purchase Agreement.
The terms of the respective definitive agreements and the ongoing
negotiations with respect to such agreements were reviewed by the Special
Committee in meetings held on January 30 and 31, 1997, and by the Company's
Board of Directors in a meeting on January 31, 1997. At the January 31, 1997
meeting, the Board of Directors also received a preliminary report from
William Blair. On January 31, 1997 and February 1, 1997, Parent also
negotiated with certain of the Company's key executive officers mutually
acceptable consulting and noncompetition agreements and modifications of
existing agreements between such individuals and the Company, each of which
was a condition to Parent entering into the Merger Agreement.
All substantive terms of the Merger Agreement and the Asset Purchase
Agreement were resolved on February 1, 1997, and the Company's Board of
Directors convened to review the terms of the respective agreements. At that
meeting, William Blair delivered its opinion to the Board of Directors, as
described below, to the effect that the consideration to be received by the
Company's shareholders in the Offer and the Merger is fair from a financial
point of view and the Board unanimously approved both the Merger Agreement and
the Asset Purchase Agreement, subject to the fulfillment of certain conditions
which were subsequently satisfied.
On February 2, 1997, the Merger Agreement and the Asset Purchase Agreement
were executed by the respective parties, and press releases announcing the
execution of such agreements and the transactions contemplated thereunder were
issued on the morning of February 3, 1997 before the opening of the NYSE.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY.
The purpose of the Offer, the Merger, the Merger Agreement and the other
transactions contemplated thereby, is to enable Parent to acquire control of,
and the entire equity interest in, the Company.
Pursuant to the Michigan BCA and the Articles of Incorporation (the
"Charter") of the Company, adoption by the Board of Directors of the Company
and the affirmative vote of the holders of a majority of the outstanding
shares of the Company entitled to vote thereon and, if a class or series is
entitled to vote as a class, the affirmative vote of the holders of a majority
of the outstanding shares of the class or series, is required to approve the
Merger Agreement. The Board of Directors of the Company has unanimously
approved the Offer, the Merger and the Merger Agreement and the transactions
contemplated thereby, and the only remaining required corporate action of the
Company is the approval of the Merger Agreement by the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock and the
affirmative vote of a majority of the outstanding shares of ESOP Preferred
Stock, each voting separately as a class. If the Minimum Condition is
satisfied and no shares of ESOP Preferred Stock are then outstanding, the
Offeror will have sufficient voting power to cause the approval of the Merger
Agreement without the affirmative vote of any other shareholder. The foregoing
assumes satisfaction of the condition to the Offer that there shall have been
validly tendered and not withdrawn prior to
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the expiration of the Offer all outstanding shares of ESOP Preferred Stock,
unless the Company shall have called all outstanding shares of ESOP Preferred
Stock for redemption on a date that is not later than one business day after
the consummation of the Offer.
In the Merger Agreement, the Company has agreed that if approval of the
shareholders of the Company is required by law, to take all action necessary
to convene a meeting of its shareholders as promptly as practicable after the
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement. Parent has agreed that, subject to applicable law, all
Shares owned by the Offeror or any other subsidiary of Parent will be voted in
favor of approval of the Merger Agreement. Pursuant to the Merger Agreement,
the Company has agreed as soon as practicable following the expiration of the
Offer, to duly call, give notice of, convene and hold a meeting of
shareholders for the purpose of obtaining the shareholders' approval. The
shareholders meeting shall be held as soon as practicable following the
purchase of Shares pursuant to the Offer. If the Offeror owns a majority of
the outstanding shares of Common Stock and the condition described above in
respect of the ESOP Preferred Stock is satisfied, approval of the Merger
Agreement can be obtained without the affirmative vote of any other
shareholder of the Company.
Under the Michigan BCA, if a corporation owns 90% or more of each
outstanding class of stock of another corporation, it can effect a "short-
form" merger with such corporation without prior notice to, or any action by,
any other shareholder of such corporation. Accordingly, if the Offeror
acquires at least 7,469,284 Shares in the Offer and the condition described
above in respect of the ESOP Preferred Stock is satisfied, the Offeror would
own more than 90% of the only class of stock of the Company then outstanding
and would be able to effect the Merger pursuant to the "short-form" merger
provisions of the Michigan BCA.
Appraisal Rights. No appraisal rights under the Michigan BCA are available
in connection with the Offer or the Merger because the holders of Shares will
receive cash in the Merger.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may,
under certain circumstances, be applicable to the Merger or another business
combination in which the Offeror seeks to acquire the remaining Shares not
held by it following the purchase of Shares pursuant to the Offer. The Offeror
believes, however, that Rule 13e-3 will not be applicable to the Merger if the
Merger is consummated within one year after the termination of the Offer at
the Offer Price. If applicable, Rule 13e-3 requires, among other things, that
certain financial information concerning the Company and certain information
relating to the fairness of the proposed transaction and the consideration
offered to minority shareholders in such transaction be filed with the
Commission and disclosed to shareholders prior to consummation of the
transaction.
Plans for the Company. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger. Parent intends to seek additional
information about the Company during this period. Thereafter, Parent intends
to review such information as part of a comprehensive review of the Company's
business, operations, capitalization and management with a view to optimizing
use of the Company's potential in conjunction with Parent's business.
Except as indicated in this Offer to Purchase, Parent does not have any
current plans or proposals which relate to or would result in any of the
following: an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company or any of its
subsidiaries; a sale or transfer of a material amount of assets of the Company
or any of its subsidiaries; any change in the present Board of Directors or
management of the Company; any material change in the Company's present
capitalization or dividend policy; or any other material change in the
Company's corporate structure or business. Notwithstanding the foregoing,
following the acquisition of Shares pursuant to the Offer, the Offeror may
designate up to that number of directors of the Board of Directors of the
Company as will make the percentage of the Company's directors designated by
the Offeror equal to the aggregate voting power of the Shares held by Parent
and any of its subsidiaries (assuming the exercise of all outstanding options
to purchase shares of the Company Capital Stock).
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In addition, assuming the designation of directors as aforesaid and so long as
there are holders of Shares other than Parent or any of its subsidiaries,
Parent expects that the Board of Directors would not declare dividends on the
shares of Common Stock.
13. THE MERGER AGREEMENT; THE ASSET PURCHASE AGREEMENT; AND CERTAIN OTHER
ARRANGEMENTS.
The following summary of certain provisions of the Merger Agreement, the
Asset Purchase Agreement and certain consulting agreements between Parent and
certain officers of the Company, copies of which are filed as exhibits to the
Schedule 14D-1, is qualified in its entirety by reference to the text of the
Merger Agreement, the Asset Purchase Agreement and such consulting agreements.
The Merger Agreement
The Offer. The Offeror commenced the Offer in accordance with the terms of
the Merger Agreement. Pursuant to the terms and conditions of the Merger
Agreement, each of the Company, Parent and the Offeror have agreed, subject to
certain exceptions, to use its reasonable best efforts to cause the purchase of
Shares pursuant to the Offer and the consummation of the Merger to occur as
soon as practicable. Without limiting the foregoing, each of the Company,
Parent and the Offeror have agreed to use its reasonable best efforts to take,
or cause to be taken, all actions necessary to comply promptly with all legal
requirements that may be imposed on itself with respect to the Offer and the
Merger and shall promptly cooperate with and furnish information to each other
in connection with any such requirements imposed upon any of them in connection
with the Offer and the Merger. Notwithstanding the foregoing, the Company is
not obligated to use its reasonable best efforts to take any action pursuant to
the Merger Agreement if the Board of Directors of the Company concludes in good
faith based on the advice of its outside counsel that failure to take such
action is necessary in order to comply with its fiduciary duties under
applicable law. In addition, neither Parent nor any of its subsidiaries is
obligated in connection with obtaining any required HSR Act or other
governmental approvals to divest or hold separate or to otherwise take or
commit to take any action that limits its freedom of action with respect to, or
its ability to retain, the Company or any of the businesses, product lines or
assets of Parent or any of its subsidiaries or that would have a material
adverse effect on Parent.
The Merger. The Merger Agreement provides that, upon the terms and subject to
the conditions of the Merger Agreement, and in accordance with the Michigan
BCA, the Offeror shall be merged with and into the Company at the Effective
Time. Following the Merger, the separate corporate existence of the Offeror
shall cease and the Company shall continue as the Surviving Corporation and
shall succeed to and assume all the rights and obligations of the Offeror in
accordance with the Michigan BCA. At the Effective Time, the Charter and By-
Laws of the Offeror shall be the Charter and By-Laws of the Surviving
Corporation. The directors of the Offeror shall become the directors of the
Surviving Corporation and the officers of the Company shall become the officers
of the Surviving Corporation.
Conversion of Securities. As of the Effective Time, by virtue of the Merger
and without any action on the part of the Offeror, the Company or the holders
of any securities of the Offeror or the Company, each share of Company Capital
Stock (other than shares of Company Capital Stock owned by the Company, any
subsidiary of the Company, Parent, the Offeror, or any other subsidiary of
Parent) shall be converted into the right to receive from the Surviving
Corporation, in cash, without interest, the Offer Price. Each share of stock of
the Offeror issued and outstanding immediately prior to the Effective Time
shall, at the Effective Time, by virtue of the Merger and without any action on
the part of the holder of any shares of stock of the Offeror, be converted into
and become one fully paid and nonassessable share of Common Stock, $1.00 par
value, of the Surviving Corporation.
Representations and Warranties. In the Merger Agreement, the Company has made
customary representations and warranties to Parent and the Offeror. The
representations and warranties of the Company relate, among other things, to
its organization and qualification; subsidiaries; capital structure; authority
to enter into the Merger Agreement and the Asset Purchase Agreement and to
consummate the transactions contemplated
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thereby; required consents and approvals; filings made by the Company with the
Commission under the Securities Act or the Exchange Act (including financial
statements included in the documents filed by the Company under these acts);
absence of any material adverse change; the absence of certain violations and
defaults; compliance with laws, licenses and permits; termination, severance
and employment agreements; environmental matters; tax matters; litigation; the
enforceability of certain contracts; employee benefits; liabilities;
intellectual property; propriety of certain payments; the inapplicability of
certain state takeover statutes and the execution of an amendment to the Rights
Agreement; and the Asset Purchase Agreement and the transactions contemplated
thereby.
The Offeror and Parent have also made customary representations and
warranties to the Company. Representations and warranties of the Offeror and
Parent relate, among other things, to: their organization and authority to
enter into the Merger Agreement and to consummate the transactions contemplated
thereby; required consents and approvals; and financing.
Covenants Relating to the Conduct of Business. During the period from the
date of the Merger Agreement to such time as Parent's designees shall
constitute a majority of the Board of Directors of the Company, the Company has
agreed that it will, and will cause its subsidiaries to, in all material
respects, carry on its business in, and not enter into any material
transactions other than in accordance with, the ordinary course of its business
as currently conducted and, to the extent consistent therewith, use reasonable
best efforts to preserve intact its current business organizations, keep
available the services of its current officers and key employees and preserve
its relationships with customers, suppliers and others having business dealings
with it to the end that its goodwill and ongoing business shall not be
impaired. The Company has agreed that, except as otherwise expressly
contemplated by the Merger Agreement, the Asset Purchase Agreement or required
by law, during such period, the Company will not, and will not permit any of
its subsidiaries to, without the prior written consent of Parent (which consent
shall not be unreasonably withheld):
(a) (x) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to its shareholders in their
capacity as such (other than regular quarterly dividends of not more than
$0.165 per share on the Common Stock and regular semi-annual dividends of
not more than $0.975 per share on the Preferred Stock, in each case
declared and paid on dates consistent with past practice), (y) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, except the issuance of shares
of Common Stock upon conversion of any share of ESOP Preferred Stock in
accordance with the terms thereof, or (z) except as required under existing
employee benefit plans, agreements, policies, awards or arrangements in
effect on the date of the Merger Agreement, purchase, redeem or otherwise
acquire any shares of its capital stock or those of any subsidiary or any
other securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(b) except as required under existing employee benefit plans, agreements,
policies, awards or arrangements in effect on the date of the Merger
Agreement, issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities, equity equivalent
or convertible securities (other than pursuant to the Rights Agreement or
the issuance of shares of Common Stock upon the exercise of stock options
of the Company outstanding on the date of the Merger Agreement in
accordance with their current terms and the issuance of shares of Common
Stock upon the conversion of any shares of ESOP Preferred Stock into shares
of Common Stock in accordance with the terms thereof);
(c) amend its Charter or By-laws or other similar organizational
documents;
(d) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire or
agree to acquire any assets, other than (y) the purchase of raw materials
and goods and services used in the manufacture of the
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products of the businesses of the Company and its subsidiaries, in each
case in the ordinary course of business consistent with past practice and
(z) other transactions that are in the ordinary course of business
consistent with past practice and which in the aggregate involve assets
having a purchase price not in excess of $1,000,000.
(e) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than the sale of products of
the businesses of the Company and its subsidiaries, in each case in the
ordinary course of business consistent with past practice and other
transactions that are in the ordinary course of business consistent with
past practice and which in the aggregate involve assets having a fair
market value or book value not in excess of $500,000;
(f) incur any new indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others or make any loans, advances or capital contributions
to, or other investments in, any other person, other than to or in the
Company or any wholly owned subsidiary of the Company and other than
customary travel and similar advances to employees in the ordinary course
of business consistent with past practice;
(g) alter (through merger, liquidation, reorganization, restructuring or
in any other fashion) the corporate structure or ownership of the Company
or any subsidiary of the Company;
(h) enter into or adopt, or amend any existing severance plan, agreement
or arrangement or enter into or amend any employee benefit plan or
employment or consulting agreement, other than as required by law;
(i) except as required under existing plans, agreements, policies, awards
or arrangements in effect on the date of the Merger Agreement, or as
otherwise disclosed to Parent, increase the compensation payable or to
become payable to its officers or employees, except, in the case of
employees who are not officers, for increases in the ordinary course of
business consistent with past practice, pay or commit to pay any bonus, or
grant any severance or termination pay to, or enter into any employment or
severance agreement, or establish, adopt, enter into, or amend in any
material respect or take action to enhance in any material respect or
accelerate any rights or benefits under, any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, stock ownership,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee, except,
in each case, as may be required to comply with applicable law or
regulation;
(j) violate or fail to perform any material obligation or duty imposed
upon it by any applicable federal, state or local law, rule, regulation,
guideline or ordinance;
(k) redeem the Rights or amend the Rights Agreement;
(l) breach in any material respect any of its material representations,
warranties, covenants or agreements contained in the Asset Purchase
Agreement (regardless of any provisions regarding notice or lapse of time,
or both) or waive any of its material rights under, amend or terminate the
Asset Purchase Agreement, other than a waiver of the condition regarding
the consummation of the Offer;
(m) make any material change in its accounting methods, policies or
procedures except as a result of any change in law or generally accepted
accounting principles;
(n) prepare or file any tax return inconsistent with past practice or, on
any such tax return, take any position, make any election or adopt any
method that is inconsistent with positions taken, elections made or methods
used in preparing or filing similar tax returns in prior periods, or give
certain approvals or consents under the Asset Purchase Agreement in respect
of the allocation of the purchase price for the TPG Assets; or
(o) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
No Solicitation. The Company has agreed in the Merger Agreement that, from
and after the date of the Merger Agreement, the Company will not, and will not
permit any of its or its subsidiaries' officers, directors or
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employees to, and the Company will use its reasonable best efforts to cause all
of its and its subsidiaries' attorneys, financial advisors, agents and other
representatives not to, directly or indirectly, solicit, initiate or knowingly
encourage (including by way of furnishing information) any Takeover Proposal
(as defined herein), or engage in or continue discussions or negotiations
relating thereto. Notwithstanding the foregoing, the Company may engage in
discussions or negotiations with, or furnish information concerning the Company
and its business, properties or assets to, any third party with respect to a
Takeover Proposal if the Board of Directors of the Company concludes in good
faith, based on the advice of its outside counsel, that it is necessary to do
so in order to comply with its fiduciary duties under applicable law. The
Company will promptly notify Parent of any Takeover Proposal, including the
material terms and conditions thereof and the identity of the person or group
making such Takeover Proposal, and will promptly notify Parent of any
determination by the Company's Board of Directors that a Superior Proposal (as
defined herein) has been made. For purposes of the Merger Agreement, (i)
"Takeover Proposal" means any proposal or offer, other than a proposal or offer
by Parent or any of its subsidiaries, for a tender or exchange offer, a merger,
consolidation or other business combination involving the Company or any of its
subsidiaries or any proposal to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets of (other than pursuant to
the Asset Purchase Agreement) the Company or any of its subsidiaries and (ii)
"Superior Proposal" means a bona fide proposal or offer made by a third party
to acquire the Company pursuant to a tender or exchange offer, a merger,
consolidation or other business combination or a sale of all or substantially
all of the assets of the Company and its subsidiaries (other than pursuant to
the Asset Purchase Agreement) on terms which a majority of the members of the
Board of Directors of the Company concludes in their good faith reasonable
judgment to be more favorable to the Company's shareholders than the
transactions contemplated by the Merger Agreement and for which any required
financing is committed or which a majority of such members reasonably concludes
is reasonably capable of being obtained by such third party.
The foregoing does not prohibit the Company or its Board of Directors from
taking or disclosing to its shareholders any position pursuant to Rules 14d-9
and 14e-2 under the Exchange Act or from making any disclosure to the Company's
shareholders if the Company's Board of Directors concludes in good faith based
on the advice of its outside counsel that it is necessary to do so in order to
comply with its fiduciary duties under applicable law.
Third Party Standstill Agreements. During the period from the date of the
Merger Agreement through the Effective Time, the Company has agreed not to
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of its subsidiaries is a party
(other than any involving Parent, but solely in respect of the Offer or any
increase in the Offer Price), unless the Board of Directors of the Company
concludes in good faith based on the advice of its outside counsel that it is
necessary to do so in order to comply with its fiduciary duties under
applicable law. During such period, the Company has agreed to enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreements, including, without limitation, obtaining injunctions to prevent any
breaches of such agreements and to enforce specifically the terms and
provisions thereof in any court of the United States of America or any state
thereof having jurisdiction, unless the Board of Directors of the Company
concludes in good faith based on the advice of its outside counsel that failure
to take such action is necessary in order to comply with its fiduciary duties
under applicable law.
Options. Prior to the commencement of the Offer, the Company has agreed to
adopt procedures pursuant to which each outstanding stock option of the
Company, stock appreciation right, and other stock based award ("Option") which
is exercisable immediately prior to the consummation of the Offer in accordance
with the terms of the applicable plan may be exercised or settled by the holder
thereof by the delivery to the Company of a notice of exercise or acceptance of
cash settlement prior to the consummation of the Offer. Upon the consummation
of the Offer, each Option so exercised or settled will be canceled and promptly
thereafter, the Company will deliver to the holder thereof a cash payment in an
amount equal to the product of (i) the number of shares of Common Stock subject
or related to such Option and (ii) the excess of the Offer Price over the
exercise or purchase price per share of Common Stock subject or related to such
Option (such payment to be net of applicable withholding taxes).
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Prior to the commencement of the Offer, the Company has agreed to take action
in accordance with the Company's stock option plans to cause each Option which
is outstanding immediately following the consummation of the Offer, whether or
not then exercisable, to become fully exercisable. The Company also has agreed
to adopt procedures pursuant to which each Option may be exercised or settled
by the holder thereof by the delivery to the Company of a notice of exercise or
acceptance of cash settlement prior to the Effective Time. At the Effective
Time, each such Option so exercised or settled shall be canceled and promptly
thereafter the Company shall deliver to the holder thereof cash in an amount
equal to the product of (i) the number of shares of Common Stock subject or
related to such Option and (ii) the excess of the Offer Price over the exercise
or purchase price per share of Common Stock subject or related to such Option
(such payment to be net of applicable withholding taxes).
Parent has agreed to provide the Company sufficient funds for the Company to
meet its payment obligations set forth in the preceding two paragraphs and,
notwithstanding any provisions of the Merger Agreement to the contrary, the
Company is permitted to borrow such funds to the extent they are not so
provided by Parent.
Following the Effective Time, each Option which has not theretofore been
exercised or settled by the holder thereof will be canceled and promptly
thereafter Parent will deliver to the holder thereof cash in an amount equal to
the product of (i) the number of shares of Common Stock subject or related to
such Option and (ii) the excess of the Offer Price over the exercise or
purchase price per share of Common Stock subject or related to such Option
(such payment to be net of applicable withholding taxes).
Restricted Stock. Prior to the commencement of the Offer, the Company has
agreed to cause the restrictions on restricted shares of Common Stock under the
Company's compensation plans and arrangements to lapse effective upon the
consummation of the Offer and to adopt procedures to enable all holders thereof
to tender such shares of Common Stock pursuant to the terms of the Offer.
Indemnification. From and after the consummation of the Offer, Parent has
agreed to (and to cause the Company or the Surviving Corporation to) exculpate,
indemnify and hold harmless all past and present officers, directors, employees
and agents of the Company and its subsidiaries to the same extent such persons
are currently exculpated and indemnified by the Company or any of its
subsidiaries pursuant to the Company's or any such subsidiary's Charter or By-
laws (or similar organizational documents), agreements in effect as of the date
of the Merger Agreement or applicable law for acts or omissions, or alleged
acts or omissions, occurring at or prior to the Effective Time, and Parent has
agreed to (and to cause the Company or the Surviving Corporation to), honor all
such obligations of the Company (including, if necessary, providing the Company
or the Surviving Corporation sufficient funds), including, without limitation,
obligations to advance expenses to such persons arising pursuant to the
Company's or any such subsidiary's Charter or By-laws (or similar
organizational documents), agreements in effect as of the date of the Merger
Agreement or applicable laws. However, Parent is not obligated to exculpate,
indemnify or hold harmless any person who becomes an employee of Kuhlman or any
of its subsidiaries in connection with the Asset Purchase Agreement, or the
transactions contemplated thereby, for any acts or omissions occurring at or
prior to the Effective Time in respect of the business previously conducted by
the Company using the TPG Assets (the "Excluded Matters"). Parent will cause
the Surviving Corporation to provide, for an aggregate period of not less than
six years from the Effective Time, the Company's current directors and officers
an insurance and indemnification policy that provides coverage for events
occurring prior to the Effective Time (the "D&O Insurance"), that is no less
favorable than the Company's existing policy or, if substantially equivalent
insurance coverage is unavailable, the best available coverage. Notwithstanding
the foregoing, the Surviving Corporation shall not be required to pay an annual
premium for the D&O Insurance in excess of 200% of the last annual premium paid
prior to the date hereof, but in such case shall purchase as much coverage as
possible for such amount.
Employee Benefits. Parent has agreed that it will provide and cause the
Surviving Corporation to provide benefits for the employees of the Company from
and after the Effective Time either under the employee benefits plans of the
Company and its subsidiaries ("Company Plans") or under other employee benefit
plans established
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by Parent or the Surviving Corporation. As soon as reasonably practicable after
the Effective Time, employer contributions to the Company's Employee Stock
Ownership Plan shall be discontinued and such plan will be merged into another
qualified defined contribution plan maintained by Parent or its affiliates.
Board Representation. The Merger Agreement provides that promptly after such
time as the Offeror acquires Shares pursuant to the Offer, the Offeror shall be
entitled to designate at its option up to that number of directors, rounded to
the nearest whole number, of the Company's Board of Directors, subject to
compliance with Section 14(f) of the Exchange Act, as will make the percentage
of the Company's directors designated by the Offeror equal to the aggregate
voting power of the Shares held by Parent or any of its subsidiaries (assuming
the exercise of all options to purchase shares of the Company Capital Stock
outstanding at the Expiration Date). However, in the event that the Offeror's
designees are elected to the Board of Directors of the Company, until the
Effective Time, such Board of Directors shall have at least three directors who
are directors on the date of the Merger Agreement (of which at least two
directors are not officers of the Company) (the "Independent Directors"). If
the number of Independent Directors shall be reduced below three for any reason
whatsoever, the remaining Independent Directors shall designate a person to
fill such vacancy who shall be deemed to be an Independent Director for
purposes of the Merger Agreement or, if no Independent Directors then remain,
the other directors of the Company as of the date of the Merger Agreement shall
designate three persons to fill such vacancies who shall not be officers or
affiliates of the Company or any of its subsidiaries, or officers or affiliates
of Parent or any of its subsidiaries, and such persons shall be deemed to be
Independent Directors for purposes of the Merger Agreement. In connection with
the foregoing, the Company will promptly, at the option of Parent, either
increase the size of the Company's Board of Directors and/or obtain the
resignation of such number of its current directors as is necessary to enable
the Offeror's designees to be elected or appointed to the Company's Board of
Directors as provided above. In no event, however, will the size of the
Company's Board of Directors be larger than 10 persons (thereby limiting to
seven the number of directors who may be designated by Parent pending the
consummation of the Merger).
Severance, Employment and Benefit Agreements. Parent has agreed to timely
honor, and following the consummation of the Offer and the Merger,
respectively, to cause the Company or the Surviving Corporation, as the case
may be, to timely honor (including by providing sufficient funds therefor), in
accordance with their terms, certain specified severance, employment and
benefit agreements, plans and arrangements with the Company's directors,
officers and employees that have previously been disclosed by the Company to
Parent.
Conditions Precedent. The respective obligations of each party to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions: (a) if required by applicable law, the shareholders
of the Company shall have approved the Merger Agreement (provided that Parent
and the Offeror vote all of their shares of Company Capital Stock entitled to
vote thereon in favor of the Merger); (b) no statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other governmental entity preventing the consummation of the Merger shall be in
effect (provided that each of the parties shall have used its reasonable best
efforts to prevent the entry of any such temporary restraining order,
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered); (c) the Offeror shall have previously
accepted for payment and paid for Shares pursuant to the Offer (this condition
being deemed satisfied with respect to the obligations of Parent or the Offeror
if the Offeror fails to accept for payment and pay for any Shares pursuant to
the Offer in violation of the terms of the Merger Agreement); and (d) any
waiting period (and any extension thereof) under the HSR Act applicable to the
Merger shall have expired or been terminated.
Termination. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time, whether before or after the approval of the
shareholders of the Company: (a) by mutual written consent of Parent and the
Company; (b) by either Parent or the Company: (i) if (x) as a result of the
failure of any of the conditions to the Offer as set forth in this Offer to
Purchase (see Section 15), the Offer shall have terminated or expired in
accordance with its terms without the Offeror having accepted for payment any
Shares pursuant to the Offer or (y) all of the conditions to the Offer set
forth in this Offer to Purchase have not been satisfied prior to
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June 30, 1997 or such later date as the parties may agree to (provided that the
right to terminate the Merger Agreement pursuant to this clause (b)(i) shall
not be available to any party whose failure to perform any of its obligations
under the Merger Agreement results in the failure of any such condition to the
Offer or if the failure of such condition to the Offer results from facts or
circumstances that constitute a breach of representation or warranty under the
Merger Agreement by such party); or (ii) if any governmental entity shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the transactions contemplated
by the Merger Agreement and such order, decree or ruling or other action shall
have become final and nonappealable, provided that the party seeking to
terminate the Merger Agreement shall have used its reasonable best efforts to
lift or vacate such order, decree or ruling; (c) by Parent or the Offeror prior
to the purchase of Shares pursuant to the Offer in the event of a breach by the
Company of any representation, warranty, covenant or other agreement contained
in the Merger Agreement which (i) would give rise to the failure of condition
(d) or (e) described below in Section 15 and (ii) cannot be or has not been
cured within 20 days after the giving of written notice to the Company; (d) by
Parent or the Offeror if either Parent or the Offeror is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph (c)
described below in Section 15; (e) by the Company if the Board of Directors of
the Company reasonably determines that a Takeover Proposal constitutes a
Superior Proposal and the Board of Directors of the Company determines in good
faith based on the advice of its outside counsel that termination of the Merger
Agreement is necessary in order to comply with its fiduciary duties under
applicable law; (f) by the Company, if (i) any of the representations or
warranties of Parent or the Offeror set forth in the Merger Agreement that are
qualified as to materiality shall not be true and correct in any respect or any
such representations or warranties that are not so qualified shall not be true
and correct in any material respect, or (ii) Parent or the Offeror shall have
failed to perform in any material respect any obligation or to comply in any
material respect with any agreement or covenant of Parent or the Offeror to be
performed or complied with by it under the Merger Agreement and, in the case of
(i) or (ii), such untruth or incorrectness or failure cannot be or has not been
cured within 20 days after the giving of written notice to Parent or the
Offeror, as applicable; or (g) by the Company, if the Offer has not been timely
commenced. Notwithstanding the foregoing, the Company may not terminate the
Merger Agreement pursuant to clause (e) unless and until five business days
have elapsed following delivery to Parent of a written notice (a "Section
9.1(e) Notice") of the conclusion by the Board of Directors of the Company
described in clause (e) and, during such five business day period, the Company
has cooperated fully with Parent, including, without limitation, informing
Parent of the terms and conditions of the Takeover Proposal and the identity of
the person making the Takeover Proposal, with the intent of enabling Parent to
agree to a modification of the terms and conditions of the Merger Agreement so
that the transactions contemplated thereby may be effected. Furthermore, the
Company may not terminate the Merger Agreement pursuant to clause (e) unless at
the end of such five business day period the Board of Directors of the Company
continues reasonably to believe its prior conclusion that the Takeover Proposal
constitutes a Superior Proposal and simultaneously with such termination the
Company pays to Parent the expenses described below. In connection with the
foregoing, the Offeror is required to extend the Offer (i) by the earlier of
seven business days following a Section 9.1(e) Notice or the termination by the
Company under clause (e) above and (ii) by up to two business days following
the 20-day cure period described in clause (c) above. In the event of a
termination of the Merger Agreement by either the Company or Parent, the Merger
Agreement shall forthwith become void (except for certain specified provisions,
including those pertaining to the payment of certain expenses and fees and
except for certain confidentiality obligations of the parties) and the Offer
and the Merger terminated and abandoned and there shall be no liability or
obligation on the part of Parent, the Offeror or the Company or their
respective officers, directors, employees or agents, other than for liability
for any willful or bad faith breach.
Fees and Expenses. Except as provided in the Merger Agreement, whether or not
the Merger is consummated, all costs and expenses incurred by a party to the
Merger Agreement in connection with the Merger Agreement and the transactions
contemplated thereby, including, without limitation, the fees and disbursements
of counsel, financial advisors and accountants, shall be paid by the party
incurring such costs and expenses.
The Company has agreed in the Merger Agreement that it will pay, or cause to
be paid, to Parent, up to $1,750,000 of Expenses (as defined herein) if: (i)
Parent or the Offeror terminates the Merger Agreement under
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clause (d) set forth above under "Termination"; or (ii) the Company terminates
the Merger Agreement pursuant to clause (e) set forth above under
"Termination". "Expenses" means documented out-of-pocket fees and expenses
reasonably incurred or paid by or on behalf of Parent or its subsidiaries in
connection with the Offer, the Merger or the consummation of any of the
transactions contemplated by the Merger Agreement, including all reasonable
fees and expenses of law firms, commercial banks, investment banking firms,
accountants, experts and consultants to Parent or any of its subsidiaries.
If Expenses are payable, or have been paid, as described in the preceding
paragraph and within 365 days after a termination described in such paragraph
a Takeover Proposal with a third party is consummated (other than a Takeover
Proposal relating to the sale of all or substantially all of the Company's
transportation products group), the Company has agreed to pay to Parent,
simultaneously with the consummation of such Takeover Proposal, by the
additional sum of $9,000,000.
Asset Purchase Agreement
Sale and Purchase of Assets; Consideration. In the Asset Purchase Agreement,
the Company and certain of its domestic subsidiaries (the "Sellers") have
agreed to sell to Kuhlman, and Kuhlman has agreed to purchase from Sellers, on
the terms and subject to the conditions set forth therein, all right, title
and interest that Sellers possess and have the right to transfer in all of the
properties, assets, rights, claims and goodwill relating exclusively to the
business of the TPG (the "Business"), including all of the outstanding capital
stock owned by the Company in certain foreign subsidiaries constituting part
of the TPG (the "Foreign Subsidiaries") (collectively the "Purchased Assets").
As consideration for the transfer of the Purchased Assets and Sellers' other
undertakings in the Asset Purchase Agreement, including certain restrictive
covenants, Kuhlman has agreed to pay to Sellers at closing $86,000,000 in
cash. As additional consideration for the transfer of the Purchased Assets and
Sellers' other undertakings in the Asset Purchase Agreement, Kuhlman has
agreed to assume and fully pay, satisfy and discharge when due (other than in
the case of any good faith disputes) all of Sellers' respective liabilities
and obligations to the extent relating to the Business other than specified
liabilities expressly excluded in the Asset Purchase Agreement.
Representations and Warranties. The Asset Purchase Agreement contains
customary representations and warranties of Sellers with respect to the
Business. The representations and warranties of Sellers relate to, among other
things: Sellers' organization and qualification and authority to enter into
the Asset Purchase Agreement and to consummate the transactions contemplated
thereby; the absence of conflicts and required consents and approvals; filings
made by the Company with the Commission under the Securities Act or the
Exchange Act (including financial statements included in the documents filed
by the Company under those acts); the absence of any material adverse change;
litigation; compliance with laws; tax matters; termination, severance and
employment agreements; employee benefit plans; environmental matters; labor
matters; title to the Purchased Assets; real property; intellectual property;
material contracts; and broker's fees.
The Asset Purchase Agreement also contains customary representations and
warranties of Kuhlman with respect to, among other things: Kuhlman's
organization and authority to enter into the Asset Purchase Agreement and to
consummate the transactions contemplated thereby; the absence of potential
conflicts and required consents and approvals; broker's fees; acceptance of
the Purchased Assets; and financing.
Survival of Representations, Warranties and Covenants. None of the
representations or warranties of Sellers and Kuhlman in the Asset Purchase
Agreement will survive the closing, other than Sellers' representations and
warranties with respect to broker's fees, title to the Purchased Assets and
authority to enter into and consummate the transactions contemplated by the
Asset Purchase Agreement, which will survive forever. The post-closing
covenants and agreements of the parties, including the indemnification
covenants described in "Indemnification" below, will survive the closing
without limitation, except for those that, by their terms, contemplate a
shorter survival period. Except for the covenants and agreements of Sellers
described in "Interim Operations of Sellers" below, which will survive for two
years after the closing, all pre-closing covenants and agreements of the
parties will not survive the closing.
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Interim Operations of Sellers. The Asset Purchase Agreement provides that,
except as contemplated thereby or as expressly agreed to in writing by
Kuhlman, during the period from the date of the Asset Purchase Agreement to
the closing: (i) each Seller will conduct its operations relating to the
Business in the ordinary course of business consistent with past practices;
(ii) each Seller will exercise its reasonable best efforts to preserve intact
the present business organizations and personnel relating to the Business,
preserve the present goodwill of the Business with all persons having business
dealings with it and comply with all laws applicable to the conduct of the
Business; (iii) Sellers will not take, or agree in writing or otherwise to
take, any action that would make any of the representations or warranties of
Sellers contained in the Asset Purchase Agreement untrue or incorrect in any
material respect as of the date when made; and (iv) the Foreign Subsidiaries
will not transfer any cash or cash equivalents to the Company.
Termination. The Asset Purchase Agreement may be terminated: (i) by either
the Company or Kuhlman if a court or other governmental body has taken action
to prohibit the transactions contemplated thereby or if the transactions
contemplated by the Asset Purchase Agreement have not closed by June 30, 1997;
(ii) by Kuhlman upon certain breaches of the Asset Purchase Agreement by
Sellers, following notice to, and an opportunity to cure such breaches by, the
Company; (iii) by the Company upon certain breaches of the Asset Purchase
Agreement by Kuhlman, following notice to, and an opportunity to cure such
breaches by, Kuhlman; and (iv) by the Company if the Merger Agreement is
terminated for any reason. If the Company terminates the Asset Purchase
Agreement pursuant to the immediately preceding clause (iv), it has agreed to
pay Kuhlman the sum of $100,000 within three business days of termination,
provided that Kuhlman is not in material breach of its representations,
warranties or obligations under the Asset Purchase Agreement.
Restrictive Covenants. Subject to certain exceptions, Sellers and their
respective subsidiaries have agreed not to compete with the Business or
solicit, divert or accept orders from certain customers of the Business for
five years following the closing of the transactions contemplated by the Asset
Purchase Agreement. In addition, Sellers and their respective subsidiaries
have agreed not to solicit certain employees of the Business for three years
following the closing. The foregoing covenants will not restrict the right of
a Seller or any subsidiary to own up to 5% of the outstanding capital stock of
certain publicly traded companies or to acquire a business any unit of which
engages in any activity restricted by the foregoing covenants, provided that
not more than 15% of the consolidated revenues of the acquired business is
derived from the unit and the acquired business divests itself of the unit
within one year after the purchase. The Parent has entered into a Joinder
dated February 2, 1997 under which it agrees, effective as of the consummation
of the Offer, to be responsible for Sellers' compliance with the restrictive
covenants described above. A copy of the Joinder is filed as an exhibit to the
Schedule 14D-1.
Conditions to the Transaction. The obligations of the parties to consummate
the transactions contemplated by the Asset Purchase Agreement are subject to
the satisfaction or waiver of certain conditions, including that no statutes,
rules, regulations or actions by governmental authorities must have been
enacted or taken that make illegal or prohibit the consummation of such
transactions or otherwise would materially adversely affect the Business. The
obligations of Kuhlman to consummate the transactions contemplated by the
Asset Purchase Agreement are subject to the satisfaction or waiver of certain
additional conditions, including that Sellers are not in breach of their
representations, warranties or covenants under the Asset Purchase Agreement
(subject to certain materiality standards and cure periods) and the absence of
certain developments with respect to the Business that have had or may
reasonably be expected to have a material adverse effect on the Business. The
obligation of Sellers to consummate the transactions contemplated by the Asset
Purchase Agreement are subject to the satisfaction or waiver of certain
additional conditions, including that Kuhlman is not in breach of its
representations, warranties or covenants under the Asset Purchase Agreement
(subject to certain materiality standards and cure periods) and that the Offer
must have been consummated.
Indemnification. Sellers have agreed to defend, indemnify and hold harmless
Kuhlman and certain related parties against certain losses and expenses
resulting from or relating to, among other things: (i) any breach of any
representation, warranty, covenant or agreement made by Sellers in the Asset
Purchase Agreement that
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survives the closing or any breach or nonperformance of any agreement entered
into by any Seller at closing; and (ii) any liabilities of Sellers not assumed
by Kuhlman pursuant to the Asset Purchase Agreement.
Kuhlman has agreed to defend, indemnify and hold harmless each Seller and
certain related parties against certain losses and expenses resulting from or
relating to, among other things: (i) any breach or nonperformance of any
covenant or agreement made by Kuhlman in the Asset Purchase Agreement that
survives the closing or any agreement entered into by Kuhlman at closing; (ii)
liabilities assumed by Kuhlman in the Asset Purchase Agreement, and (iii) the
conduct of the Business and the use of the Purchased Assets after closing.
The Asset Purchase Agreement limits in certain respects the indemnification
obligations of Sellers. In particular, except with respect to post-closing
covenants and agreements of Sellers and other limited matters set forth in the
Asset Purchase Agreement, Sellers will not be liable to Kuhlman for any
indemnification claims until the aggregate amount of the claims exceeds
$500,000 (the "Basket Amount"), and upon reaching the Basket Amount Sellers
will be liable to Kuhlman for all indemnification claims in excess of the
Basket Amount up to a maximum aggregate amount of $8,000,000.
Parent has entered into a Joinder dated February 2, 1997 under which it
agrees, effective as of the consummation of the Offer, to be responsible for
Sellers' performance of their indemnification obligations under the Asset
Purchase Agreement.
Consulting Agreements
Upon consummation of the Offer, Parent has agreed to engage Mr. Kempton,
Peter W. Gravelle, President and Chief Operating Officer of the Company, and
Timothy D. Peterson, Vice President, Marketing and International of the
Company (the "Consultants"), to act as consultants to Parent with respect to
Parent's operations and business development activities. In connection with
their engagement by Parent, the Consultants have agreed to refrain from
engaging in any activity in competition with Parent and to provide certain
consulting services for Parent. Under such consulting and noncompetition
agreements, Mr. Kempton will receive $49,400 per month for 36 months, Mr.
Gravelle will receive $44,600 per month for 72 months and Mr. Peterson will
receive $14,100 per month for 72 months.
14. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, among other things, from the date of the Merger Agreement
until the time Parent's designees shall constitute a majority of the Board of
Directors of the Company, (a) (x) declare, set aside or pay any dividends on,
or make any other actual, constructive or deemed distributions in respect of,
any of its capital stock, or otherwise make any payments to its shareholders
in their capacity as such (other than regular quarterly dividends of not more
than $0.165 per share on the Common Stock and regular semiannual dividends of
not more than $0.975 per share on the ESOP Preferred Stock, in each case
declared and paid on dates consistent with past practice), (y) split, combine
or reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for shares
of its capital stock, except the issuance of shares of Common Stock upon
conversion of any share of ESOP Preferred Stock in accordance with the terms
thereof, or (z) except as required under existing employee benefit plans,
agreements, policies, awards or arrangements in effect on the date of the
Merger Agreement, purchase, redeem or otherwise acquire any shares of its
capital stock or those of any subsidiary or any other securities thereof or
any rights, warrants or options to acquire any such shares or other
securities; or (b) except as required under existing employee benefit plans,
agreements, policies, awards or arrangements in effect on the date of the
Merger Agreement, issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities or
equity equivalent or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities, equity equivalent
or convertible securities (other than pursuant to the Rights Agreement or the
issuance of shares of Common Stock upon the exercise of stock options of the
Company outstanding on the date of the Merger Agreement in accordance with
their current terms and the issuance of shares of Common Stock upon the
conversion of shares of ESOP Preferred Stock in accordance with the terms
thereof).
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15. CERTAIN CONDITIONS TO THE OFFEROR'S OBLIGATIONS.
Notwithstanding any other term of the Offer or the Merger Agreement, the
Offeror shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-l(c)
under the Exchange Act (relating to the Offeror's obligation to pay for or
return tendered Shares after the termination or withdrawal of the Offer), to
pay for any Shares tendered pursuant to the Offer unless (i) there shall have
been validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares that would constitute a majority of the outstanding
shares of the Company Capital Stock at the Expiration Date (assuming the
exercise of all options to purchase shares of the Company Capital Stock
outstanding at the Expiration Date), (ii) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired
or been terminated, (iii) the Company and Kuhlman shall have consummated the
transactions contemplated by the Asset Purchase Agreement, or Kuhlman shall
have waived any conditions to consummate the Asset Purchase Agreement, agreeing
to consummate the transactions contemplated thereby contemporaneously with or
immediately following the consummation of the Offer, and (iv) there shall have
been validly tendered and not withdrawn prior to the expiration of the Offer
all outstanding shares of ESOP Preferred Stock, unless the Company shall have
called all outstanding shares of ESOP Preferred Stock for redemption on a date
that is not later than one business day after the consummation of the Offer.
Furthermore, notwithstanding any other term of the Offer or the Merger
Agreement, the Offeror shall not be required to accept for payment or, subject
as aforesaid, to pay for any Shares not theretofore accepted for payment or
paid for, and may terminate the Offer if, at any time on or after the date of
the Merger Agreement and before the acceptance of such Shares for payment or
the payment therefor, any of the following conditions exists (other than as a
result of any action or inaction of Parent or any of its subsidiaries that
constitutes a breach of the Merger Agreement):
(a) there shall be instituted by any governmental entity and pending as
of the Expiration Date any suit, action or proceeding (i) seeking to
prohibit or limit the acquisition by Parent or the Offeror of any Shares
pursuant to the Offer, seeking to prohibit or limit the making or
consummation of the Offer or the Merger or the performance of any of the
other transactions contemplated by the Merger Agreement or the Asset
Purchase Agreement, or seeking to obtain from the Company, Parent or the
Offeror any damages that are material in relation to the Company and its
subsidiaries taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their respective
subsidiaries of any material portion of the business or assets of the
Company and its subsidiaries, or Parent and its subsidiaries, or to compel
the Company or Parent to dispose of or hold separate any material portion
of the business or assets of the Company and its subsidiaries, or Parent
and its subsidiaries, as a result of the Offer, the Merger or any of the
other transactions contemplated by the Merger Agreement, (iii) seeking to
impose limitations on the ability of Parent or the Offeror to acquire or
hold, or exercise full rights of ownership of, any Shares to be accepted
for payment pursuant to the Offer, including, without limitation, the right
to vote such Shares on all matters properly presented to the shareholders
of the Company, or (iv) prohibiting Parent or any of its subsidiaries from
effectively controlling any material portion of the business or operations
of the Company or its subsidiaries (provided, that, in the case of clauses
(i) through (iv) above, Parent shall have used its reasonable best efforts
to resolve or eliminate same);
(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any governmental entity, any
statute, rule, regulation, judgment, order or injunction, other than the
application to the Offer, the Merger or the transactions contemplated by
the Asset Purchase Agreement of applicable waiting periods under the HSR
Act, that would reasonably be expected to result, directly or indirectly,
in any of the consequences referred to in clauses (i) through (iv) of
paragraph (a) above;
(c) the Board of Directors of the Company or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent or the Offeror its
approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any Takeover Proposal;
(d) any of the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct in any respect, in each
case as if such representations and warranties were made as of such time,
except for (i) failures to be true and correct that would not reasonably be
expected to result in a material adverse effect on the Company and (ii)
failures to comply that are capable of being and are cured
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within 20 days after written notice from Parent to the Company of such
failure (in which case Parent has agreed to and to cause the Offeror to,
extend the Expiration Date to two business days following the end of such
cure period or, if earlier, the date of cure, unless the Offer would
otherwise not expire prior thereto);
(e) the Company shall have failed to perform any obligation or to comply
with any agreement or covenant of the Company to be performed or complied
with by it under the Merger Agreement, except for (i) failures to so
perform or comply that would not reasonably be expected to result in a
material adverse effect on the Company and (ii) failures to perform or
comply that are capable of being and are cured within 20 days after written
notice from Parent to the Company of such failure (in which case Parent has
agreed to, and to cause the Offeror to, extend the Expiration Date to two
business days following the end of such cure period or, if earlier, the
date of cure, unless the Offer would otherwise not expire prior thereto);
(f) there shall have occurred and be continuing as of the Expiration Date
(i) any general suspension of trading in, or limitation on prices for,
securities on a national securities exchange in the United States
(excluding any coordinated trading halt triggered solely as a result of a
specified decrease in a market index), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) any limitation (whether or not mandatory) by any governmental
entity on, or other event that materially adversely affects, the extension
of credit by banks or other lending institutions, (iv) a commencement of a
war or armed hostilities or other national or international calamity
directly or indirectly involving the United States which in any case is
reasonably expected to have a material adverse effect on the Company or to
materially adversely affect Parent's or the Offerer's ability to complete
the Offer or the Merger, or (v) in case of any of the foregoing existing on
the date of the Merger Agreement, material acceleration or worsening
thereof which in any case is reasonably expected to have a material adverse
effect on the Company or to materially adversely affect Parent's or the
Offeror's ability to complete the Offer or the Merger; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions, other than the Minimum Condition, are for the sole
benefit of Parent and the Offeror and may, subject to the terms of the Merger
Agreement, be waived by Parent and the Offeror in whole or in part at any time
and from time to time in their sole discretion. The failure by Parent or the
Offeror at any time to exercise any of the foregoing rights will not be deemed
a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances will not be deemed a waiver with respect to
any other facts and circumstances and each such right will be deemed an ongoing
right that may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be
returned by the Depositary to the tendering stockholders.
16. THE COMPANY EMPLOYEE STOCK OWNERSHIP PLAN.
As the holder of record of the Shares owned by the ESOP and pursuant to the
terms of the ESOP, the trustee of the ESOP (the "ESOP Trustee") has the power
to tender to the Offeror the Shares owned by the ESOP and the power to exercise
with respect to the Merger any voting rights with respect to any Shares owned
by the ESOP that are not tendered. The terms of the ESOP also provide that each
participant or beneficiary in the ESOP (a "Participant") can direct the ESOP
Trustee (i) whether to tender to the Offeror the Shares owned by the ESOP that
are allocated to that Participant's accounts under the ESOP, and (ii) as to the
manner in which any voting rights with respect to the Merger are to be
exercised with respect to any such Shares that are not tendered. The terms of
the ESOP also provide that (i) the extent to which the ESOP Trustee tenders to
the Offeror the Shares owned by the ESOP that are not allocated to
Participants' accounts ("Unallocated ESOP Shares"), and (ii) the manner in
which any voting rights with respect to the Merger are to be exercised with
respect to such Shares that are not tendered and with respect to allocated ESOP
Shares that are not tendered for which no voting directions are given by the
Participants to whose accounts such Shares are allocated, are to be determined
by directions provided to the ESOP Trustee by the Participants for those
purposes, subject to certain conditions and
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limitations. The terms of the ESOP provide that the ESOP Trustee will follow
the directions of Participants described above regarding the tender and voting
of Shares owned by the ESOP to the extent consistent with applicable law. The
terms of the ESOP provide that if the ESOP Trustee determines that applicable
law provides that the ESOP Trustee cannot follow the directions of
Participants as to whether to tender to the Offeror any Shares owned by the
ESOP, or as to the extent to which any voting rights with respect to the
Merger are to be exercised with respect to any Shares owned by the ESOP that
are not tendered, the ESOP Trustee shall decide whether such Shares shall be
tendered and shall decide the extent to which such voting rights shall be
exercised with respect to such Shares.
The ESOP provides that the cash received by the ESOP pursuant to the Offer
or the Merger with respect to Shares allocated to a Participant's accounts
under the ESOP will be allocated to such accounts. The ESOP and the Exempt
Loan Agreement dated February 24, 1989 between the ESOP Trustee and the
Company also provide that cash received by the ESOP Trust pursuant to the
Offer or the Merger with respect to the Unallocated ESOP Shares will first be
used to repay the ESOP's outstanding indebtedness incurred during 1989 to
purchase ESOP Preferred Stock. Under the terms of the ESOP, the remainder of
such cash received with respect to Unallocated ESOP Shares, which Parent and
the Offeror expect to be approximately $2 to $3 million (assuming the
consummation of the Offer and the Merger), is considered investment earnings
and gains of Participants' ESOP accounts and is allocable to Participants'
accounts under the ESOP in proportion to the relative portions of such
accounts attributable to the Shares purchased by the ESOP in 1989.
The National Office of the Internal Revenue Service has on several recent
occasions issued private letter rulings to other taxpayers stating that the
limitations of Code section 415 apply to allocations to participant accounts
of a portion of the proceeds from the sale of unallocated shares held by an
employee stock ownership plan remaining after the repayment of an exempt loan
to the plan. If determined to be applicable with respect to a portion of the
remainder of the cash received by the ESOP with respect to Unallocated ESOP
Shares (the "Restricted Amount"), Code section 415 would limit the portion of
the Restricted Amount allocable to a Participant for any plan year to the
lesser of (i) 25% of the Participant's taxable compensation for such year from
the Company (and its affiliates) and (ii) $30,000, in either case reduced by
any contributions made for such year by or for the Participant to the ESOP or
any other qualified defined contribution plan maintained by the Company (or an
affiliate of the Company). Thus, if the limitations of Code section 415 are
determined to apply to allocations of the Restricted Amount, it may not be
possible to allocate fully the Restricted Amount to Participants' accounts in
any one year and, therefore, some of the Restricted Amount might have to be
allocated to Participants' accounts in one or more subsequent years. If this
were to occur, only Participants who remain employed by and receive taxable
compensation from the Surviving Corporation (or an affiliate of the Surviving
Corporation) during the plan years when such allocations are made will share
in such allocations.
It is also possible that the Internal Revenue Service may take the position
that the Restricted Amount must be allocated among Participants' accounts on a
basis different from that provided in the ESOP plan documents, such as in
proportion to Participants' relative amounts of compensation.
In order to resolve any issues relating to the allocation of the Restricted
Amount, the Surviving Corporation may request a determination letter from the
Internal Revenue Service that such allocations do not adversely affect the
ESOP's status as a qualified plan under section 401(a) of the Code.
In the event that such a determination is requested and the Internal Revenue
Service does not issue a favorable determination letter relating to the
allocation of the Restricted Amount, Kuhlman has the right under the Asset
Purchase Agreement to request that the account balances of TPG Participants
under the ESOP and the portion of the Restricted Amount attributable to such
Participants be transferred to a separate plan the sponsorship of which will
be assumed by Kuhlman for the benefit of the TPG Participants.
Following the Merger, the ESOP will no longer own or invest in Shares and
contributions to the ESOP will be discontinued. It is anticipated that, as
soon as reasonably practicable after the Merger, the ESOP will be merged into
another qualified defined contribution plan of the Surviving Corporation,
Parent or an affiliate of Parent. None of the Offer, the Merger,
discontinuance of contributions or merger of the ESOP into another plan will
by themselves cause or accelerate the distribution of benefits from the ESOP
to the Participants.
Generally, a distribution from the ESOP or any successor plan will be
subject to ordinary income tax and may be subject to an additional 10% tax if
the Participant has not attained age 59 1/2. Such taxes do not apply if
32
<PAGE>
the distribution is "rolled over," within 60 days of the date the distribution
is made, to another qualified plan or to an individual retirement account (an
"IRA"), but will apply upon any subsequent distribution from such other plan or
IRA.
Because Participants will no longer be entitled to distributions from the
ESOP in the form of Shares, the special income tax rules relating to "net
unrealized appreciation" in Shares distributed from the ESOP will no longer be
available.
17. CERTAIN LEGAL MATTERS.
Except as set forth in this Section, the Offeror is not aware of any approval
or other action by any governmental or administrative agency which would be
required for the acquisition or ownership of Shares by the Offeror as
contemplated herein. Should any such approval or other action be required, it
will be sought, but the Offeror has no current intention to delay the purchase
of Shares tendered pursuant to the Offer pending the outcome of any such
matter, subject, however, to the Offeror's right to decline to purchase Shares
if any of the conditions specified in Section 15 shall have occurred. There can
be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions, or that adverse
consequences might not result to the Company's business or that certain parts
of the Company's business might not have to be disposed of if any such
approvals were not obtained or other action taken.
U. S. Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a 15-day waiting period following the filing by the Parent of a
Premerger Notification and Report Form with respect to the Offer, unless Parent
receives a request for additional information or documentary material from the
Department of Justice, Antitrust Division (the "Antitrust Division") or the
Federal Trade Commission ("FTC") or unless early termination of the waiting
period is granted. Parent made such a filing on February 4, 1997 and,
accordingly, the initial waiting period will expire on February 19, 1997. If,
within the initial 15-day waiting period, either the Antitrust Division or the
FTC requests additional information or documentary material concerning the
Offer, the waiting period will be extended through the tenth day after the date
of substantial compliance by all parties receiving such requests. Complying
with a request for additional information or documentary material can take a
significant amount of time.
Under the provisions of the HSR Act, the acquisition of the TPG Assets under
the Asset Purchase Agreement may be consummated following the expiration of a
30-day waiting period following the filing by Kuhlman of a Premerger
Notification and Report Form with respect to that transaction, unless Kuhlman
receives a request for additional information or documentary material from the
Antitrust Division or the FTC or unless early termination of the waiting period
is granted. Kuhlman made such a filing on February 6, 1997 and, accordingly,
the initial waiting period will expire on March 8, 1997. If, within the initial
30-day waiting period, either the Antitrust Division or the FTC requests
additional information or documentary material concerning the sale of the TPG
Assets, the waiting period will be extended through the tenth day after the
date of substantial compliance by all parties receiving such requests.
Complying with a request for additional information or documentary material can
take a significant amount of time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition
of the Company. At any time before or after the Offeror's acquisition of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger, or seeking the divestiture of Shares
acquired by the Offeror or the divestiture of substantial assets of the Company
or its subsidiaries or Parent or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer, the consummation of the
Merger or the sale of the TPG Assets pursuant to the Asset Purchase Agreement
on antitrust grounds will not be made, or, if such a challenge is made, of the
result thereof.
33
<PAGE>
If any applicable waiting period under the HSR Act applicable to the Offer
has not expired or been terminated prior to the Expiration Date, the Offeror
will not be obligated to proceed with the Offer or the purchase of any Shares
not theretofore purchased pursuant to the Offer. See Section 15.
Michigan State Takeover Laws. Chapter 7A of the Michigan BCA (the "Michigan
Business Combination Law") requires two supermajority votes for certain
"business combinations" (including certain mergers, consolidations, share
exchanges, sales or dispositions of assets, issuances of stock, liquidations
and reclassifications) between a Michigan corporation and any interested
shareholder (defined generally as any person who, directly or indirectly,
beneficially owns 10 percent or more of the voting power of the outstanding
voting shares of the corporation or an affiliate of the corporation that, at
any time within the two-year period prior to the date in question, was the
beneficial owner of ten percent or more of the voting power of the
corporation's then outstanding voting shares). The requirement of two
supermajority votes for approval of a business combination will lapse five
years after the most recent date on which the interested shareholder became an
interested shareholder if, among other conditions, the corporation's common
shareholders receive a minimum price (as calculated pursuant to the Michigan
BCA) for their shares in cash or in the same form as previously paid by the
interested shareholder for its shares. These provisions of the Michigan BCA do
not apply to a business combination with an interested shareholder that is
approved or exempted from the supermajority vote requirements by the board of
directors of the corporation prior to the date on which the interested
shareholder became such. The Company's Board of Directors has approved the
Offer, the Merger, the Merger Agreement and the Asset Purchase Agreement.
Accordingly, the Michigan Business Combination Law is inapplicable to the
Offer, the Merger or the transactions contemplated by the Merger Agreement or
the Asset Purchase Agreement.
Chapter 7B of the Michigan BCA (the "Michigan Control Share Act") generally
prohibits an acquiring person from voting control shares (as defined herein) of
a Michigan issuing public corporation acquired pursuant to a control share
acquisition (as defined herein), unless voting rights for such shares shall
have been approved by the shareholders of the corporation by the affirmative
vote of a majority of all votes entitled to be cast (other than interested
shares, as defined herein) or unless the shares are acquired pursuant to a
merger agreement with the corporation or the corporation's charter or by-laws
contain a provision, adopted prior to the acquisition, permitting the
acquisition of such shares. "Control shares" generally mean shares of a
corporation acquired by a person within any of the following ranges of voting
power: (i) one-fifth or more, but less than one-third of all voting power; (ii)
one-third or more, but less than a majority of all voting power; or (iii) a
majority or more of all voting power. "Control share acquisition" generally
means the acquisition of ownership of, or the power to direct the exercise of
voting power with respect to, control shares, but does not include the
acquisition of shares in a merger, consolidation or share exchange to which the
corporation is a party. "Interested shares" generally mean shares of a
corporation in respect of which an acquiring person, an officer of the
corporation or an employee of the corporation who is also a director of the
corporation, is entitled to exercise voting power in the election of directors.
The Company's Board of Directors has adopted an amendment to the Company's By-
laws that exempts from the Michigan Control Share Act any acquisition of shares
of capital stock of the Company, including acquisitions by the Offeror in
connection with the transactions contemplated by the Merger Agreement.
Other State Takeover Laws. A number of other states have adopted laws and
regulations applicable to attempts to acquire securities of corporations which
are incorporated, or have substantial assets, stockholders, principal executive
offices or principal places of business or whose business operations otherwise
have substantial economic effects in such states. In Edgar v. MITE Corp., in
1982, the Supreme Court of the United States (the "U.S. Supreme Court")
invalidated on constitutional grounds the Illinois Business Takeover statute,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However in 1987, in CTS Corp. v.
Dynamics Corp. of America, the U.S. Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquirer from voting on the affairs of
a target corporation without the prior approval of the remaining stockholders.
The state law before the U.S. Supreme Court was by its terms applicable only to
corporations that had a substantial number of stockholders in the state and
were incorporated there.
34
<PAGE>
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. The Offeror does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, the Offeror will take
such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Offeror might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Offeror might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer and the Merger. In such event,
the Offeror may not be obligated to accept for payment any Shares tendered. See
Section 15.
Certain Charter and By-law Provisions. The Company's Charter and By-laws
contain certain provisions that may delay, defer or prevent a takeover of the
Company, including Article X of the Charter, which requires a supermajority
vote of the shareholders of the Company to approve certain business combination
transactions, and Article XII of the Charter, which also requires a
supermajority vote of the shareholders of the Company on certain business
combination transactions unless the transaction satisfies certain "fair price"
provisions. The Company's Board of Directors has approved the Offer, the Merger
and the Merger Agreement. Accordingly, the provisions of Articles X and XII of
the Charter, by their terms, are not applicable to the Offer, the Merger or the
Merger Agreement.
Rights Agreement. The Rights Agreement contains certain provisions that may
delay, defer or prevent a takeover of the Company. In connection with the
Merger Agreement, the Company's Board of Directors has amended the Rights
Agreement to provide that such provisions will not apply to the Offer, the
Merger, the Merger Agreement and the transactions contemplated thereby.
18. FEES AND EXPENSES.
Neither the Offeror nor Parent, nor any officer, director, shareholder, agent
or other representative of the Offeror or Parent will pay any fees or
commissions to any broker, dealer or other person (other than the Dealer
Manager, the Information Agent and the Depositary) for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by the Offeror
for customary mailing and handling expenses incurred by them in forwarding
materials to their customers.
Morgan Stanley is acting as Dealer Manager in connection with the Offer and
is providing certain financial advisory services to Parent and the Offeror in
connection with the Offer. Parent has agreed to pay Morgan Stanley reasonable
and customary compensation for such services. In addition, Parent has agreed to
reimburse Morgan Stanley for its out-of-pocket expenses related to its
engagement, including the reasonable fees and expenses of its counsel, and has
agreed to indemnify Morgan Stanley against certain liabilities and expenses,
including under the federal securities laws.
In the ordinary course of its business, Morgan Stanley engages in securities
trading, market-making and brokerage activities and may, at any time, hold long
or short positions and may trade or otherwise effect transactions in securities
of the Company. As of February 4, 1997, Morgan Stanley had a long position of
7,300 shares of Common Stock held for its own account and did not maintain a
short position.
The Offeror has retained Morrow & Co., Inc. as Information Agent and First
Chicago Trust Company of New York as Depositary in connection with the Offer.
The Information Agent and the Depositary will receive reasonable and customary
compensation for their services hereunder and reimbursement for their
reasonable out-of-pocket expenses. The Depositary will also be indemnified by
the Offeror against certain liabilities in connection with the Offer. The
Information Agent may contact holders of Shares by mail, telex, telegraph and
personal interviews and may request brokers, dealers and other nominee
shareholders to forward materials relating to the Offer to beneficial owners of
Shares.
35
<PAGE>
19. MISCELLANEOUS.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making
or acceptance thereof would not be in compliance with the securities, blue sky
or other laws of such jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Offeror by the
Dealer Manager or one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Offeror other than as contained in this Offer
to Purchase or in the Letter of Transmittal and, if any such information or
representation is given or made, it should not be relied upon as having been
authorized by the Offeror or Parent.
The Offeror and Parent have filed with the Commission the Schedule 14D-1,
pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3 promulgated
thereunder, furnishing certain information with respect to the Offer. The
Schedule 14D-1 and any amendments thereto, including exhibits, may be examined
and copies may be obtained at the same places and in the same manner as set
forth with respect to the Company in Section 8 (except that they will not be
available at the regional offices of the Commission).
K Acquisition Corp.
February 7, 1997
36
<PAGE>
ANNEX I
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF THE PARENT AND THE OFFEROR
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth below are the name,
current business address, citizenship, present principal occupation or
employment and employment history (covering a period of not less than five
years) of each director and executive officer of Parent. Years of service as a
director or executive officer of Parent may include service prior to April 14,
1989, on which date Parent was spun-off from Household International, Inc.
("Household") through the issuance to Household shareholders of one share of
Parent common stock for every five shares of Household common stock then
outstanding. Unless otherwise indicated, each such person's business address is
775 Corporate Woods Parkway, Vernon Hills, Illinois 60061. All persons listed
below are citizens of the United States of America, except for Messrs. Lanzani,
Faenza and Palmieri, who are citizens of Italy, Mr. Klein, who is a citizen of
Germany, and Michael de St. Paer, who is a citizen of the United Kingdom.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL
NAME POSITIONS HELD DURING PAST FIVE YEARS
- ---- ----------------------------------------------
<S> <C>
Richard C. Osborne.......... Mr. Osborne is Chairman of the Board of Parent and
has held that position since May 1991. He is also
President, Chief Executive Officer and a director
of Parent and has held those positions since April
1989.
Paolo Faenza................ Mr. Faenza is General Manager, Castel MAC, and has
Via del Lavoro, 9 held that position since 1986.
31033 Castelfranco
Veneto, Italy
Richard M. Holden........... Mr. Holden is Vice President--Human Resources of
Parent and has held that position since January
1990.
Donald D. Holmes............ Mr. Holmes is Vice President--Finance and
Secretary of Parent and has held those positions
since April 1989.
Christopher D. Hughes....... Mr. Hughes is a Vice President of Parent and has
2007 Royal Lane held that position since June 1994. Mr. Hughes is
Dallas, Texas 75229 also President of Booth, Inc., a wholly owned
subsidiary of Parent, and has held that position
since May 1994. From 1993 to May 1994, he was Vice
President/General Manager of the Central and
Western Transit Operations of Morrison Knudsen
Corporation, a division engaged in the business of
assembling new and overhauling used passenger rail
cars. From 1991 to 1993, Mr. Hughes was Vice
President of Operations of Scotsman Ice Systems
and Parent's former Glenco-Star division. From
1989 to 1991, he was President of Parent's former
Halsey Taylor/Consumer Products Division.
Ludwig H. Klein............. Mr. Klein is a Vice President of Parent and has
Otto-Hahn-Strabe 4 held that position since February 1996. Mr. Klein
D-42477 Radevormward, is also Managing Director of Hartek Beverage
Germany Handling GmbH and Hartek Awagem Vertriebsges
m.b.H., each a wholly owned European
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL
NAME POSITIONS HELD DURING PAST FIVE YEARS
- ---- ----------------------------------------------
<S> <C>
subsidiary of Parent (collectively, "Hartek") and
has held that position since February 1995. From
June 1994 until February 1995, he worked as an
independent consultant and provided, during that
period, consulting services to Hartek and in the
capital goods industry. From July 1986 until June
1994, Mr. Klein held the position of General
Manager of Haacon Hebetechnik GmbH, a manufacturer
of industrial lifting equipment.
Emanuele Lanzani........ Mr. Lanzani is an Executive Vice President of
Vio Puccini 22 Parent and has held that position since April
20010 Bettollino di 1989. He is also the Managing Director, Frimont
Pogliano S.p.A. ("Frimont") and Castel MAC S.p.A. ("Castel
Milan, Italy MAC"), each a wholly owned Italian subsidiary of
Parent. Mr. Lanzani has been Managing Director of
Castel MAC since its acquisition by a wholly owned
subsidiary of Household in October 1985 and has
been Managing Director of Frimont since 1968.
Gerardo Palmieri........ Mr. Palmieri is Director--Sales and Marketing,
Via Puccini 22 Frimont, and has held that position since 1980.
20010 Bettolino di
Pogliano
Milan, Italy
Randall C. Rossi........ Mr. Rossi is a Vice President of Parent and has
held that position since January 1995. Mr. Rossi
is also President of Scotsman Ice Systems and has
held that position since January 1995. From
January 1994 to January 1995, he was an Executive
Vice President of Scotsman Ice Systems. From 1989
to January 1994, he was Vice President--Sales and
Marketing of Scotsman Ice Systems.
William J. Rotenberry... Mr. Rotenberry is Vice President--Business
Development of Parent, has been employed by Parent
since January 1996 and became a Vice President of
Parent in February 1996. From 1990 until January
1996, he was Director of Corporate Development for
Joslyn Corporation, a diversified manufacturer.
Michael de St. Paer..... Mr. de St. Paer is a Vice President of Parent and
Chancel Way has held that position since April 1994. Mr. de
Halesowen Industrial St. Paer is also Managing Director of Whitlenge
Park Drink Equipment Limited, a wholly owned European
Halesowen, West Midlands subsidiary of Parent ("Whitlenge"), and has held
United Kingdom B62 85E that position since April 1993. From June 1992 to
April 1993 he was Assistant Managing Director of
Whitlenge. From 1991 until June 1992, he was the
Managing Director and a Group Technical Director
of Hartek.
Donald C. Clark......... Prior to his retirement in 1996, Mr. Clark was
One South Wacker Drive Chairman of the Board of Household from 1984 to
Suite 1495 1996 and was Chief Executive Officer of Household
Chicago, Illinois 60606- from 1982 to September 1994. Mr. Clark is also a
4616 director of Ameritech Corporation and Warner-
Lambert Co.
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL
NAME POSITIONS HELD DURING PAST FIVE YEARS
- ---- ----------------------------------------------
<S> <C>
Timothy C. Collins........... Mr. Collins is Chief Executive Officer and Senior
712 Fifth Avenue Managing Director of Ripplewood Holdings L.L.C.,
49th Floor an investment management company, and has held
New York, NY 10019 that position since October 1995. Mr. Collins was
Senior Managing Director of Onex Investment Corp.
(New York), a management company for the U.S.
investments of Onex Corporation, an Ontario
corporation from 1990 to October 1995. He also
serves on the board of directors of the
Metropolitan New York YMCA. He has been a director
of Parent since April 1994.
</TABLE>
<TABLE>
<S> <C>
Frank W. Considine........... Mr. Considine is Honorary Chairman of the Board,
One First National Plaza Chairman of the Executive Committee and a director
Suite 2530 of American National Can Company, a packaging
Chicago, Illinois 60603 manufacturer. He was Chairman of the Board of
American National Can Company from 1983 to 1990,
President from 1969 to 1988 and Chief Executive
Officer from 1973 to 1988. Mr. Considine is a
director of IMC Global, Inc. and Pechiney
International, S.A. Mr. Considine is also Chairman
of the Board of Trustees of Loyola University,
Chicago, and serves on the Board of Trustees of
the Field Museum of Natural History, Chicago. Mr.
Considine has been a director of Parent since
April 1989.
Matthew O. Diggs, Jr......... Mr. Diggs is the Chief Executive Officer of The
1630 Kettering Tower Diggs Group, a New York general partnership that
Dayton, Ohio 45423 provides investment banking services, and has held
that position since 1990. From 1987 to 1990, Mr.
Diggs was Vice Chairman of Copeland Corporation, a
refrigerator compressor manufacturer, having
served as President and Chief Executive Officer of
Copeland Corporation from 1975 to 1987. Mr. Diggs
is a director of Bank One Dayton NA and Tower
Automotive Inc. and serves as a trustee of Wright
State University and the Miami Valley School. He
has been a director of Parent since April 1994.
George D. Kennedy............ Mr. Kennedy was Chairman and a director of the
P.O. Box 559 Mallinckrodt Group Inc., a producer of medical
Winnetka, Illinois 60093 products and chemicals, from 1991 until his
retirement in October 1994. He was Chairman and
Chief Executive Officer of Mallinckrodt Group Inc.
from 1986 to 1991. Mr. Kennedy is also a director
of Brunswick Corporation, Illinois Tool Works,
Inc., American National Can Company, Kemper
National Insurance Company and Stone Container
Corporation. He has been a director of Parent
since April 1989.
James J. O'Connor............ Mr. O'Connor is Chairman, Chief Executive Officer
One First National Plaza and a director of Commonwealth Edison Company, an
P.O. Box 767 electric utility company, and has held those
Chicago, Illinois 60690 positions since 1980. Mr. O'Connor has also been
the Chairman, Chief Executive Officer and a
director of Unicom Corporation, a holding company
for Commonwealth Edison Company, since 1994. Mr.
O'Connor is a director of Corning Incorporated,
First Chicago NBD Corporation, The First National
Bank of Chicago, Tribune
</TABLE>
A-3
<PAGE>
<TABLE>
<S> <C>
Company, UAL Inc. and American National Can
Company. He has been a director of Parent since
April 1989.
Robert G. Rettig............. Mr. Rettig is a consultant to Illinois Tool Works,
3600 West Lake Avenue Inc., a manufacturer of industrial products and
Glenview, Illinois 60025 components, and a consultant to, and a director
of, The Tech Group, a custom molding company. He
was an Executive Vice President of Illinois Tool
Works, Inc. from 1983 to January 1990. Mr. Rettig
is also a director of Lawson Products, Inc. and
serves as a trustee of the Illinois Institute of
Technology. He has been a director of Parent since
April 1989.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE OFFEROR. Unless otherwise
indicated, for each person identified below all information concerning the
current business address, present principal occupation or employment and five-
year employment history for such person is the same as the information given
above. All persons listed below are citizens of the United States of America.
<TABLE>
<S> <C>
DIRECTORS
</TABLE>
Richard C. Osborne
Donald D. Holmes
Richard M. Holden
<TABLE>
<S> <C>
EXECUTIVE OFFICERS
</TABLE>
Richard C. Osborne, President and Chief Executive Officer
Donald D. Holmes, Vice President--Treasurer and Secretary
William J. Rotenberry, Vice President--Assistant Secretary and Assistant
Treasurer
A-4
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each shareholder of the Company or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at
one of the addresses set forth below:
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand: By Overnight Courier:
Tenders & Exchanges
First Chicago Trust Company of New York
Tenders & Exchanges
P.O. Box 2569--Suite Tenders & Exchanges 14 Wall Street
4660-KYS c/o The Depository Trust 8th Floor--Suite 4680-KYS
Jersey City, New Jersey Company New York, New York
07303-2569 55 Water Street, DTC TAD 10005
Vietnam Veterans Memorial
Plaza
New York, New York 10041
Facsimile for Eligible Institutions:
(201) 222-4720
or
(201) 222-4721
Confirm by Telephone:
(201) 222-4707
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal and Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. Shareholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 3rd Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free: (800) 566-9061
Banks and Brokerage Firms, please call: (800) 662-5200
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
Incorporated
One Financial Place
440 South LaSalle Street
Chicago, Illinois 60605
(312) 706-4424
<PAGE>
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
or Series A Convertible Voting Preferred Stock
of
Kysor Industrial Corporation
Pursuant to the Offer to Purchase
Dated February 7, 1997
by
K Acquisition Corp.,
an indirect wholly owned subsidiary of
Scotsman Industries, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME,
FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED.
The Depositary:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand: By Overnight Courier:
Tenders & Exchanges First Chicago Trust Company Tenders & Exchanges
P.O. Box 2569--Suite of New York 14 Wall Street
4660-KYS Tenders & Exchanges 8th Floor--Suite 4680-KYS
Jersey City, New Jersey c/o The Depository Trust New York, New York 10005
07303-2569 Company
55 Water Street, DTC TAD
Vietnam Veterans Memorial
Plaza
New York, New York 10041
Facsimile for Eligible Institutions only:
(201) 222-4720
or
(201) 222-4721
Confirm by Telephone:
(201) 222-4707
---------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR
PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders of Kysor
Industrial Corporation if certificates are to be forwarded herewith or, unless
an Agent's Message (as defined in the Offer to Purchase) is utilized, if
delivery of Shares (as defined below) is to be made by book-entry transfer to
the Depositary's account at The Depository Trust Company or the Philadelphia
Depository Trust Company (hereinafter collectively referred to as the "Book-
Entry Transfer Facilities") pursuant to the procedures set forth in Section 3
of the Offer to Purchase. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver their Shares and all other documents required hereby to the
Depositary by the Expiration Date (as defined in the Offer to Purchase), or
who cannot comply with the book-entry transfer procedures on a timely basis,
may nevertheless tender their Shares pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2.
<PAGE>
[_]
CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution _______________________________________________
Account Number ___________________________________________________________ at
Check Box of Applicable Book-Entry Transfer Facility:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company
Transaction Code Number _____________________________________________________
[_]
CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Shareholder(s) _________________________________________
Date of Execution of Notice of Guaranteed Delivery __________________________
Window Ticket Number (if any) _______________________________________________
Name of Institution which Guaranteed Delivery _______________________________
If delivery is by book-entry transfer _______________________________________
Name of Tendering Institution _______________________________________________
Account Number ___________________________________________________________ at
Check Box of Applicable Book-Entry Transfer Facility:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company
Transaction Code Number _____________________________________________________
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED SHARES TENDERED
HOLDER(S) (ATTACH ADDITIONAL LIST, IF NECESSARY)
(PLEASE FILL IN, IF BLANK)
- -------------------------------------------------------------------------------
NUMBER OF
SHARE SHARES NUMBER OF
CERTIFICATE REPRESENTED SHARES
NUMBER(S)* BY TENDERED**
CERTIFICATE(S)*
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total Shares
- -------------------------------------------------------------------------------
*Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares
represented by any certificates delivered to the Depositary are being
tendered. See Instruction 4.
[_]
CHECK HERE IF THE SHARES DESCRIBED ABOVE ARE SHARES OF ESOP PREFERRED STOCK
AND PLEASE SO INDICATE BY MARKING A "P" NEXT TO THE CERTIFICATE NUMBER.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to K Acquisition Corp. (the "Offeror"), a
Michigan corporation and an indirect wholly owned subsidiary of Scotsman
Industries, Inc., a Delaware corporation ("Parent"), the above-described shares
of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan
corporation (the "Company"), including the associated common share purchase
rights issued pursuant to the Rights Agreement, dated as of April 26, 1996, as
amended, between the Company and Harris Trust and Savings Bank, as successor
Rights Agent (collectively, the "Common Stock"), or Series A Convertible Voting
Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Stock";
the shares of Common Stock and/or the shares of ESOP Preferred Stock may be
referred to herein as the "Shares"), pursuant to the Offeror's offer to
purchase all of the outstanding Shares at a purchase price of $43.00 per Share,
net to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 7, 1997 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together with the Offer to Purchase constitute the
"Offer"). The Offer is being made in connection with the Agreement and Plan of
Merger, dated as of February 2, 1997 (the "Merger Agreement"), among Parent,
the Offeror and the Company.
Subject to, and effective upon, acceptance for payment of and payment for the
Shares tendered herewith, the undersigned hereby sells, assigns and transfers
to, or upon the order of, the Offeror all right, title and interest in and to
all the Shares that are being tendered hereby (and any and all other Shares or
other securities issued or issuable in respect thereof) and appoints First
Chicago Trust Company of New York (the "Depositary") the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares (and all
such other Shares or securities), with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (a) deliver certificates for such Shares (and all such other Shares or
securities), or transfer ownership of such Shares (and all such other Shares or
securities) on the account books maintained by any of the Book-Entry Transfer
Facilities, together, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of the Offeror, (b) present
such Shares (and all such other Shares or securities) for transfer on the books
of the Company and (c) receive all benefits and otherwise exercise all rights
of beneficial ownership of such Shares (and all such other Shares or
securities), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints each designee of the Offerer as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to exercise all voting and other rights of the undersigned in
such manner as each such attorney and proxy or his substitute shall in his sole
judgment deem proper, with respect to all of the Shares tendered hereby which
have been accepted for payment by the Offeror prior to the time of any vote or
other action (and any and all other Shares or other securities or rights issued
or issuable in respect of such Shares) at any meeting of shareholders of the
Company (whether annual or special and whether or not an adjourned meeting) or
otherwise. This proxy is irrevocable, shall be coupled with an interest, and is
granted in consideration of, and is effective upon, the acceptance for payment
of such Shares by the Offeror in accordance with the terms of the Offer. Such
acceptance for payment shall revoke any other proxy or written consent granted
by the undersigned at any time with respect to such Shares (and all such other
Shares or other securities or rights), and no subsequent proxies will be given
or written consents will be executed by the undersigned (and if given or
executed, will not be deemed effective).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or other securities or rights issued or
issuable in respect of such Shares) and that when the same are accepted for
payment by the Offeror, the Offeror will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claims. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or the
Offeror to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby (and all such other Shares or other
securities or rights).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and
the Offeror upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions," please issue
the check for the purchase price of any Shares purchased, and return any Shares
not tendered or not purchased, in the name(s) of the undersigned. Similarly,
unless otherwise indicated under "Special Delivery Instructions," please mail
the check for the purchase price of any Shares purchased and return any
certificates for Shares not tendered or not purchased (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature(s). In the event that both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please issue
the check for the purchase price of any Shares purchased and return any Shares
not tendered or not purchased in the name(s) of, and mail such check and any
certificates to, the person(s) so indicated. Unless otherwise indicated under
"Special Payment Instructions," please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that the Offeror has no obligation, pursuant to the "Special Payment
Instructions," to transfer any Shares from the name of the registered holder(s)
thereof if the Offeror does not accept for payment any of the Shares so
tendered.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check To be completed ONLY if the check
for the purchase price of Shares for the purchase price of Shares
purchased or certificates for purchased or certificates for
Shares not tendered or not Shares not tendered or not
purchased are to be issued in the purchased are to be mailed to
name of someone other than the someone other than the undersigned
undersigned, or if Shares tendered or to the undersigned at an address
hereby and delivered by book-entry other than that shown below the
transfer which are not accepted for undersigned's signature(s).
payment are to be returned by
credit to an account at one of the
Book-Entry Transfer Facilities
other than designated above.
Mail check and/or certificate(s)
to:
Name _______________________________
Issue [_] check [_] certificate(s) (Please Print)
to: ------------------------------------
Name _______________________________ Address ____________________________
(Please Print)
------------------------------------ ------------------------------------
(Zip Code)
Address ____________________________ ------------------------------------
------------------------------------ (Taxpayer Identification or Social Security Number)
(Zip Code)
(See Substitute Form W-9) ------------------------------------
(Taxpayer Identification No.
or Social Security Number)
(See Substitute Form W-9)
[_Credit]Shares delivered by book-
entry transfer and not purchased
to the account set forth below.
Check appropriate box
[_]The Depository Trust Company
[_]Philadelphia Depository Trust
Company
</TABLE>
<PAGE>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
- --------------------------------------------------------------------------------
Name(s) ________________________________________________________________________
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title) __________________________________________________________
Address ________________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Zip Code)
- --------------------------------------------------------------------------------
Area Code and Telephone Number _________________________________________________
Taxpayer Identification Number or Social Security Number _______________________
(See Substitute Form W-9)
Dated: __________________________________________________________________ , 199^
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by the person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 5).
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY, PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized signature(s) ________________________________________________________
Name ___________________________________________________________________________
(Please Print)
Name of Firm ___________________________________________________________________
Address ________________________________________________________________________
- --------------------------------------------------------------------------------
(Zip Code)
Area Code and Telephone Number _________________________________________________
Dated: __________________________________________________________________ , 199^
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, signatures
on all Letters of Transmittal must be guaranteed by a member in good standing
of the Securities Transfer Agents Medallion Program or by any other bank,
broker, dealer, credit union, savings association or other entity which is an
"eligible guarantor institution," as such term is defined in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (each of the foregoing
constituting an "Eligible Institution"), unless the Shares tendered thereby
are tendered (i) by a registered holder of Shares who has not completed either
the box labeled "Special Payment Instructions" or the box labeled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. See Instruction 5. If the certificates are registered
in the name of a person or persons other than the signer of this Letter of
Transmittal, or if payment is to be made or delivered to, or certificates
evidencing unpurchased Shares are to be issued or returned to, a person other
than the registered owner or owners, then the tendered certificates must be
endorsed or accompanied by duly executed stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates or stock powers, with the signatures on the certificates or stock
powers guaranteed by an Eligible Institution as provided herein. See
Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal
is to be used either if certificates are to be forwarded herewith or, unless
an Agent's Message is utilized, if the delivery of Shares is to be made by
book-entry transfer pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at one of
the Book-Entry Transfer Facilities of all Shares delivered electronically, as
well as a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) and any other documents required by this
Letter of Transmittal or an Agent's Message in the case of a book-entry
delivery, must be received by the Depositary at one of its addresses set forth
on the front page of this Letter of Transmittal by the Expiration Date.
Shareholders who cannot deliver their Shares and all other required documents
to the Depositary by the Expiration Date must tender their Shares pursuant to
the guaranteed delivery procedures set forth in Section 3 of the Offer to
Purchase. Pursuant to such procedures: (a) such tender must be made by or
through an Eligible Institution; (b) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the
Offeror, must be received by the Depositary prior to the Expiration Date; and
(c) the certificates for all tendered Shares, in proper form for transfer (or
a Book-Entry Confirmation), together with a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof), and
any required signature guarantees, or, in the case of a book-entry transfer,
an Agent's Message, and any other documents required by this Letter of
Transmittal must be received by the Depositary within three trading days after
the date of such Notice of Guaranteed Delivery, all as provided in Section 3
of the Offer to Purchase. The term "trading day" is any day on which the New
York Stock Exchange is open for business.
The method of delivery of Shares, the Letter of Transmittal and all other
required documents, including delivery through a Book-Entry Transfer Facility,
is at the option and risk of the tendering shareholder. If delivery is by
mail, registered mail with return receipt requested, properly insured, is
recommended.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal
(or a manually signed facsimile thereof), the tendering shareholder waives any
right to receive any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (not applicable to shareholders who tender by book-entry
transfer). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
which are to be tendered in the box entitled "Number of Shares Tendered." In
such case, a new certificate for the remainder of the Shares represented by
the old certificate will be sent to the person(s) signing this Letter of
Transmittal unless otherwise provided in the appropriate box on this Letter of
Transmittal, as promptly as practicable following the expiration or
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made, or
Shares not tendered
<PAGE>
or not purchased are to be returned, in the name of any person other than the
registered holder(s), in which case, the certificate(s) for such Shares
tendered hereby must be endorsed, or accompanied by, appropriate stock powers,
in either case, signed exactly as the name(s) of the registered holder(s)
appears(s) on the certificate(s) for such Shares. Signatures on any such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the certificate must be
endorsed or accompanied by, appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the
certificates for such Shares. Signature(s) on any such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Offeror of the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. The Offeror will pay any stock transfer taxes with
respect to the sale and transfer of any Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be returned in the name of, any
person other than the registered holder(s), then the amount of any stock
transfer taxes (whether imposed on the registered holder(s), such other person
or otherwise) payable on account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment
of such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instructions. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or
not purchased are to be returned, in the name of a person other than the
person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that
shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Shareholders tendering Shares by book-entry transfer may request
that Shares not purchased be credited to such account at any of the Book-Entry
Transfer Facilities as such shareholder may designate under "Special Payment
Instructions." If no such instructions are given, any such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facilities designated above.
8. Substitute Form W-9. The tendering shareholder is required to provide the
Depositary with such shareholder's correct Taxpayer Identification Number
("TIN") on Substitute Form W-9, which is provided below, unless an exemption
applies. Failure to provide the information on the Substitute Form W-9 may
subject the tendering shareholder to a $50 penalty and to 31% federal income
tax backup withholding on the payment of the purchase price for the Shares.
9. Foreign Holders. Foreign holders must submit a completed IRS Form W-8 to
avoid 31% backup withholding. IRS Form W-8 may be obtained by contacting the
Depositary at one of the addresses on the face of this Letter of Transmittal.
10. Requests for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offer to Purchase and this Letter of Transmittal may
be obtained from the Information Agent or the Dealer Manager at their
respective addresses or telephone numbers set forth below.
11. Waiver of Conditions. The conditions of the Offer may be waived by the
Offeror (subject to certain limitations in the Merger Agreement), in whole or
in part, at any time or from time to time, in the Offeror's sole discretion.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE COPY
HEREOF (TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND
ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
shareholder's correct TIN on the Substitute Form W-9. If such shareholder is
an individual, the TIN is such shareholder's social security number. If the
Depositary is not provided with the correct TIN, the shareholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such shareholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that shareholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. All exempt recipients (including foreign persons
wishing to qualify as exempt recipients) should see the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
<PAGE>
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding on payments that are made to
a shareholder with respect to Shares purchased pursuant to the Offer, the
shareholder is required to notify the Depositary of such shareholder's correct
TIN by completing the form certifying that the TIN provided on the Substitute
Form W-9 is correct.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security number
or employer identification number of the record owner of the Shares. If the
Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidelines on which number to
report.
<PAGE>
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- -------------------------------------------------------------------------------
PART I--PLEASE PROVIDE TIN: _____________________
YOUR TIN IN THE BOX AT Social Security
THE RIGHT AND CERTIFY
BY SIGNING AND DATING
BELOW.
SUBSTITUTE Number or Employer
Identification Number
---------------------------------------------------------
FORM W-9 PART II--For Payees exempt from backup withholding,
see the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form
W-9 and complete as instructed therein.
---------------------------------------------------------
Certification--Under penalties of perjury, I
certify that:
DEPARTMENT OF THE TREASURY,
INTERNAL REVENUE SERVICE
(1) The number shown on this form is my correct TIN
(or I am waiting for a number to be issued to
me); and
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER ("TIN")
AND CERTIFICATION ---------------------------------------------------------
(2) I am not subject to backup withholding because
(a) I am exempt from backup withholding, or (b)
I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends, or (c) the
IRS has notified me that I am no longer subject
to backup withholding.
SIGNATURE: ________________________ DATE: _________
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding, you
received another notification from the IRS that you were no longer subject to
backup withholding, do not cross out item (2). (Also see the instructions in
the enclosed Guidelines.)
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to
me, and either (1) I have mailed or delivered an application to receive a
TIN to the appropriate IRS Center or Social Security Administration
Officer or (2) I intend to mail or deliver an application in the near
future. I understand that if I do not provide a TIN by the time of
payment, 31% of all payments pursuant to the Offer made to me thereafter
will be withheld until I provide a number.
Signature: ______________________________________________ Date: __________
The Information Agent for the Offer is:
MORROW & CO., INC.
909 3rd Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll-Free: (800) 566-9061
Banks and Brokerage Firms, please call: (800) 662-5200
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
Incorporated
One Financial Place
440 South LaSalle Street
Chicago, Illinois 60605
(312) 706-4424
<PAGE>
EXHIBIT (A)(3)
MORGAN STANLEY & CO.
Incorporated
One Financial Place
440 South LaSalle Street
Chicago, Illinois 60605
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
and Series A Convertible Voting Preferred Stock
of
Kysor Industrial Corporation
at
$43.00 Net Per Share
by
K Acquisition Corp.,
an indirect wholly owned subsidiary of
Scotsman Industries, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MARCH 7, 1997,
UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks, February 7, 1997
Trust Companies and Other Nominees:
We have been appointed by K Acquisition Corp., a Michigan corporation (the
"Offeror") and an indirect wholly owned subsidiary of Scotsman Industries,
Inc., a Delaware corporation ("Parent"), to act as Dealer Manager in
connection with the Offeror's offer to purchase all outstanding shares of
Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan
corporation (the "Company"), including the associated common share purchase
rights issued pursuant to the Rights Agreement, dated as of April 26, 1996, as
amended, between the Company and Harris Trust and Savings Bank, as successor
Rights Agent (collectively, the "Common Stock"), and all outstanding shares of
Series A Convertible Voting Preferred Stock, $24.375 stated value per share
(the "ESOP Preferred Stock"; and, together with the Common Stock, the "Company
Capital Stock"; the shares of Common Stock and the shares of ESOP Preferred
Stock being collectively referred to herein as "Shares"), at a purchase price
of $43.00 per Share, net to the seller in cash, without interest, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
February 7, 1997 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together constitute the "Offer") enclosed herewith. The
Offer is being made in connection with the Agreement and Plan of Merger, dated
as of February 2, 1997, among Parent, the Offeror and the Company (the "Merger
Agreement"). Holders of Shares whose certificates for such Shares (the
"Certificates") are not immediately available or who cannot deliver their
Certificates and all other required documents to the Depositary or complete
the procedures for book-entry transfer prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) must tender their Shares
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
<PAGE>
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated February 7, 1997.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
(with manual signatures) may be used to tender Shares.
3. A letter to shareholders of the Company from George R. Kempton, the
Chairman of the Board and Chief Executive Officer of the Company, together
with the Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission by the Company and mailed to the
shareholders of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if neither of the two procedures for tendering Shares set forth in
the Offer to Purchase can be completed on a timely basis.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name, with space provided for
obtaining such clients' instructions with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MARCH 7, 1997, UNLESS
THE OFFER IS EXTENDED.
Please note the following:
1. The tender price is $43.00 per Share, net to the seller in cash,
without interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, March 7, 1997, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares that would constitute a majority of the outstanding
shares of the Company Capital Stock (assuming the exercise of all options
to purchase shares of Company Capital Stock outstanding at the expiration
date of the Offer). The Offer is also subject to the other terms and
conditions contained in the Offer to Purchase.
5. Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Offeror
pursuant to the Offer.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) and
any required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase) or other required
documents should be sent to the Depositary and (ii) Certificates representing
the tendered Shares or a timely Book-Entry Confirmation (as defined in the
Offer to Purchase) should be delivered to the Depositary in accordance with
the instructions set forth in the Offer.
2
<PAGE>
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender may
be effected by following the guaranteed delivery procedures specified in
Section 3 of the Offer to Purchase.
Neither the Offeror nor Parent, nor any officer, director, shareholder,
agent or other representative of the Offeror or Parent will pay any fees or
commissions to any broker, dealer or other person (other than the Dealer
Manager, the Depositary and the Information Agent as described in the Offer to
Purchase) for soliciting tenders of Shares pursuant to the Offer. The Offeror
will, however, upon request, reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to your
clients. The Offeror will pay or cause to be paid any stock transfer taxes
payable on the transfer of Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Morrow & Co., Inc., the Information Agent for the Offer, at 909 3rd Avenue,
20th Floor, New York, New York 10022, (800) 662-5200 or Morgan Stanley & Co.
Incorporated, the Dealer Manager for the Offer at One Financial Place, 440
South LaSalle Street, Chicago, Illinois 60605, (312) 706-4424.
Requests for copies of the enclosed materials may be directed to the
Information Agent at the above address and telephone number.
Very truly yours,
MORGAN STANLEY & CO.
Incorporated
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PARENT, THE OFFEROR, THE DEPOSITARY, THE
INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
EXHIBIT (A)(4)
Offer to Purchase for Cash
All Outstanding Shares of
Common Stock
and
Series A Convertible Voting Preferred Stock
of
Kysor Industrial Corporation
at
$43.00 Net Per Share
by
K Acquisition Corp.,
an indirect wholly owned subsidiary of
Scotsman Industries, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated February 7,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer"), relating to an offer by K Acquisition Corp.,
a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary
of Scotsman Industries, Inc., a Delaware corporation ("Parent"), to purchase
all outstanding shares of Common Stock, $1.00 par value, of Kysor Industrial
Corporation, a Michigan corporation (the "Company"), including the associated
common share purchase rights issued pursuant to the Rights Agreement, dated as
of April 26, 1996, as amended, between the Company and Harris Trust and
Savings Bank, as successor Rights Agent (collectively, the "Common Stock"),
and all outstanding shares of Series A Convertible Voting Preferred Stock,
$24.375 stated value per share (the "ESOP Preferred Stock"; and, together with
the Common Stock, the "Company Capital Stock"; the shares of Common Stock and
the shares of ESOP Preferred Stock being collectively referred to herein as
the "Shares"), at a purchase price of $43.00 per Share, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer. The Offer is being made in connection with the Agreement and
Plan of Merger, dated as of February 2, 1997, among Parent, the Offeror and
the Company (the "Merger Agreement"). This material is being forwarded to you
as the beneficial owner of Shares carried by us in your account but not
registered in your name.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR
YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender any or
all of the Shares held by us for your account, upon the terms and conditions
set forth in the Offer.
<PAGE>
Please note the following:
1. The tender price is $43.00 per Share, net to you in cash, without
interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, March 7, 1997, unless the Offer is extended.
4. The Board of Directors of the Company has unanimously approved the
Offer, the Merger (as defined in the Offer to Purchase), the Merger
Agreement and the transactions contemplated thereby, has determined that
the Offer, the Merger and the transactions contemplated by the Merger
Agreement are advisable and that the terms of each of the Offer and the
Merger are fair to and in the best interests of the Company's shareholders
and recommends that the holders of the Shares accept the Offer and tender
their Shares pursuant to the Offer.
5. The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares that would constitute a majority of the outstanding
shares of Company Capital Stock at the date of the expiration of the Offer
(assuming the exercise of all options to purchase shares of the Company
Capital Stock outstanding at the expiration date of the Offer). The Offer
is also subject to the other terms and conditions contained in the Offer to
Purchase.
6. Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Offeror
pursuant to the Offer.
If you wish to have us tender any or all of the Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction
form contained in this letter. An envelope to return your instructions to us
is enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise indicated in such instruction form. PLEASE FORWARD
YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US AMPLE TIME TO TENDER
YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in any jurisdiction in which the making or acceptance thereof would
not be in compliance with the securities, blue sky or other laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall
be deemed to be made on behalf of the Offeror by Morgan Stanley & Co.
Incorporated or by one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND
SERIES A CONVERTIBLE VOTING PREFERRED STOCK
OF
KYSOR INDUSTRIAL CORPORATION
BY
K ACQUISITION CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated February 7, 1997 (the "Offer to Purchase"), and the related
Letter of Transmittal (which together constitute the "Offer") in connection
with the offer by K Acquisition Corp., a Michigan corporation (the "Offeror")
and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a
Delaware corporation, to purchase all outstanding shares of Common Stock,
$1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the
"Company"), including the associated common share purchase rights issued
pursuant to the Rights Agreement, dated as of April 26, 1996, as amended,
between the Company and Harris Trust and Savings Bank, as successor Rights
Agent (collectively, the "Common Stock"), and all outstanding shares of Series
A Convertible Voting Preferred Stock, $24.375 stated value per share (the
"ESOP Preferred Stock"; the shares of Common Stock and the shares of ESOP
Preferred Stock being collectively referred to herein as the "Shares").
This will instruct you to tender to the Offeror the number of Shares
indicated below (or if no number is indicated below, all Shares) which are
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer.
Number of Shares to be
Tendered:*
SIGN HERE
Account Number: _____________________ -------------------------------------
Date: _________________________, 199 -------------------------------------
(Signature(s))
-------------------------------------
-------------------------------------
(Print Name(s))
-------------------------------------
-------------------------------------
(Print Address(es))
-------------------------------------
(Area Code and Telephone Number(s))
-------------------------------------
(Taxpayer Identification or
Social Security Number(s))
- --------
*Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE>
EXHIBIT (a)(6)
February 7, 1997
To: Participants in the Kysor Industrial Corporation
Savings Plan and 401(k) Plan:
As you are aware, K Acquisition Corp., a Michigan corporation and indirect
wholly-owned subsidiary of Scotsman Industries, Inc., a Delaware corporation,
has commenced a tender offer to purchase all outstanding shares of Common Stock,
par value $1 per share, and the associated common share purchase rights, and
Series A Convertible Voting Preferred Stock, $24.375 stated value per share, of
Kysor Industrial Corporation (the "Company") at $43.00 per share net to the
seller in cash (without interest). The tender offer commenced February 7, 1997
and will expire on March 7, 1997, unless extended.
As a result of this tender offer for all of the Company's shares, no new
investments or transfers into the Kysor Common Stock Fund will be permitted
effective as of February 6, 1997. Participants in the Savings Plan and 401(k)
Plan will not be permitted to increase their investments in the Kysor Common
Stock Fund from February 6, 1997 through March 7, 1997, or a later date to
coincide with the expiration of the tender offer.
Throughout this suspension period, all contributions and loan repayments
allocated to the Kysor Common Stock Fund will be redirected by The Principal
Financial Group (the administrator of the Savings Plan and 401(k) Plan) into the
Money Market Fund. You may contact The Principal Financial Group via TeleTouch
to change your investment direction for all future contributions. The Company
will notify all Savings Plan and 401(k) Plan participants at a later date if new
investments and transfers into the Kysor Common Stock Fund are again permitted.
If you hold shares of the Company's Common Stock in your Savings Plan or
401(k) Plan account, you will be receiving materials from Bankers Trust Company
(the holder of record of the Common Stock in the Savings Plan and 401(k) Plan)
regarding whether you wish to accept or reject the $43.00 offer. PLEASE REVIEW
THESE MATERIALS CAREFULLY AND RETURN THE INSTRUCTION PAGE TO BANKERS TRUST
COMPANY BY WEDNESDAY, MARCH 5, 1997.
Sincerely,
Terry M. Murphy
Vice President,
Chief Financial Officer
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
and
Series A Convertible Voting Preferred Stock
of
Kysor Industrial Corporation
at
$43.00 Net Per Share
by
K Acquisition Corp.,
an indirect wholly owned subsidiary of
Scotsman Industries, Inc.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
February 7, 1997
To Participants in the Kysor Industrial Corporation
Savings Plan and 401(k) Plan:
Enclosed for your consideration are the Offer to Purchase, dated
February 7, 1997 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer"), relating to an offer by K
Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly
owned subsidiary of Scotsman Industries, Inc., a Delaware corporation
("Parent"), to purchase all outstanding shares of common stock, $1.00 par value,
of Kysor Industrial Corporation, a Michigan corporation (the "Company"),
including the associated common share purchase rights, issued pursuant to the
Rights Agreement dated as of April 26, 1996, as amended, between the Company and
Harris Trust and Savings Bank, as successor Rights Agent (collectively, the
"Common Shares"), and all outstanding shares of Series A Convertible Voting
Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Shares" and
together with the Common Shares, the "Shares"), at a purchase price of $43.00
per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer. The Offer is being made in
connection with the Agreement and Plan of Merger dated as of February 2, 1997,
among Parent, the Offeror and the Company (the "Merger Agreement").
WE ARE THE HOLDER OF RECORD OF COMMON SHARES HELD FOR YOUR ACCOUNT AS
A PARTICIPANT IN THE COMPANY'S SAVINGS PLAN OR 401(K) PLAN (THE "PLANS"). A
TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD IN
ACCORDANCE WITH THE TERMS OF THE PLANS, TO THE EXTENT CONSISTENT WITH APPLICABLE
LAWS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY
AND CANNOT BE USED BY YOU TO TENDER SHARES HELD IN YOUR PLAN ACCOUNT.
<PAGE>
Accordingly, we request information as to whether you wish to have us
tender any or all of the Common Shares held in your Plan account, upon the terms
and conditions set forth in the Offer.
Please note the following:
1. The tender price is $43.00 per Share, net to the seller in cash,
without interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on March 7, 1997, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, there having
been validly tendered and not withdrawn prior to the expiration of the
Offer such number of Shares which would constitute a majority of the
outstanding Shares at the date of the expiration of the Offer (assuming the
exercise of all options to purchase Shares outstanding at the expiration
date of the Offer). The Offer is also subject to the other terms and
conditions in the enclosed Offer to Purchase. The Offeror reserves the
right (but shall not be obligated), in accordance with applicable rules and
regulations of the United States Securities and Exchange Commission and
subject to the limitations set forth in the Merger Agreement, to waive any
of the conditions to the Offer.
5. Common Shares in Plan accounts as to which we have not received
instructions from Participants will not be tendered in the Offer.
If you wish to have us tender any or all of the Common Shares held in your
Plan account, please so instruct us by completing, executing, detaching and
returning to us the instruction form contained in this letter. An envelope to
return your instruction to us is enclosed. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise indicated in such
instruction form. PLEASE FORWARD YOUR INSTRUCTIONS TO US SO THAT THEY ARE
RECEIVED BY US NO LATER THAN 5:00 P.M. NEW YORK TIME, ON MARCH 5, 1997, TO
ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION
OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in any jurisdiction in which the making or acceptance thereof would not
be in compliance with the securities, blue sky or other laws of such
jurisdiction. In any jurisdiction where the securities, blue sky, or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Offeror by Morgan Stanley & Co. Incorporated
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
Very truly yours,
Bankers Trust Company
<PAGE>
INSTRUCTION WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND
SERIES A CONVERTIBLE VOTING PREFERRED STOCK
OF
KYSOR INDUSTRIAL CORPORATION
To Bankers Trust Company:
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated February 7, 1997 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer"), in
connection with the offer by K Acquisition Corp., a Michigan corporation (the
"Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc.,
a Delaware corporation, to purchase all outstanding shares of Common Stock,
$1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the
"Company"), including the associated common share purchase rights, issued
pursuant to the Rights Agreement dated as of April 26, 1996, as amended, between
the Company and Harris Trust and Savings Bank, as successor Rights Agent
(collectively the "Common Shares"), and all outstanding shares of Series A
Convertible Voting Preferred Stock, $24.375 stated value per share.
This will instruct you to tender to the Offeror the number of Common Shares
indicated below (or if no number is indicated below, all Common Shares) which
are held by you for the account of the undersigned, upon the terms and subject
to the conditions set forth in the Offer.
NOTE: Shares in Plan accounts as to which we have not received instructions
will not be tendered in the Offer.
Number of Shares to be Tendered:/1/ _____ SIGN HERE
____________________________________
____________________________________
Signature(s)
____________________________________
____________________________________
Print Name(s)
____________________________________
Area Code and Telephone Number(s)
____________________________________
Taxpayer Identification or Social
Security Number(s)
- -------------------
/1/Unless otherwise indicated, it will be assumed that all Common
Shares held by us for your account are to be tendered.
<PAGE>
EXHIBIT (a)(7)
February 7, 1997
To: Employee Stock Purchase Plan Participants:
As you are aware, K Acquisition Corp., a Michigan corporation and
indirect wholly-owned subsidiary of Scotsman Industries, Inc., a Delaware
corporation, has commenced a tender offer to purchase all outstanding shares of
Common Stock, par value $1 per share, and the associated common share purchase
rights, and Series A Convertible Voting Preferred Stock, $24.375 stated value
per share, of Kysor Industrial Corporation (the "Company") at $43.00 per share
net to the seller in cash (without interest). The tender offer commenced
February 7, 1997 and will expire on March 7, 1997, unless extended.
As a result of this tender for all of the Company's shares, any
amounts withheld under the Employee Stock Purchase Plan by employees for pay
periods ending from February 7, 1997 through March 7, 1997, or a later date
to coincide with the expiration of the tender offer, will be held by the
Company, as Plan Trustee, in each employee's cash account. Upon expiration of
the tender offer, the Plan Trustee will notify all Employee Stock Purchase Plan
participants of the outcome of the tender offer and request instructions
regarding the disposition of each participant's cash account.
During this suspension period, participants are permitted to sell
shares of the Company's Common Stock from their accounts as described in the
Employee Stock Purchase Plan.
If you held shares of the Company's Common Stock in your Employee
Stock Purchase Plan account on February 6, 1997, you will find materials
enclosed from Old Kent Bank (the Plan Administrator) regarding whether you wish
to accept or reject the $43.00 offer. PLEASE REVIEW THESE MATERIALS CAREFULLY
AND RETURN THE INSTRUCTION PAGE TO OLD KENT BANK BY WEDNESDAY, MARCH 5, 1997.
Sincerely,
Terry M. Murphy
Vice President,
Chief Financial Officer
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND
SERIES A CONVERTIBLE VOTING PREFERRED STOCK
OF
KYSOR INDUSTRIAL CORPORATION
AT
$43.00 NET PER SHARE
BY
K ACQUISITION CORP.,
an indirect wholly owned subsidiary of
SCOTSMAN INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED.
February 7, 1997
To Participants in the Employee Stock Purchase Plan
of Kysor Industrial Corporation:
Enclosed for your consideration are the Offer to Purchase, dated February
7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer"), relating to an offer by K Acquisition Corp., a
Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of
Scotsman Industries, Inc., a Delaware corporation ("Parent"), to purchase all
outstanding shares of Common Stock, $1.00 par value, of Kysor Industrial
Corporation, a Michigan corporation (the "Company"), including the associated
common share purchase rights, issued pursuant to the Rights Agreement dated as
of April 26, 1996, as amended, between the Company and Harris Trust and Savings
Bank, as successor Rights Agent (collectively, the "Common Shares"), and all
outstanding shares of Series A Convertible Voting Preferred Stock, $24.375
stated value per share (the "ESOP Preferred Shares" and together with the Common
Shares, the "Shares"), at a purchase price of $43.00 per Share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer. The Offer is being made in connection with the Agreement
and Plan of Merger dated as of February 2, 1997, among Parent, the Offeror and
the Company (the "Merger Agreement").
WE ARE THE HOLDER OF RECORD OF COMMON SHARES HELD FOR YOUR ACCOUNT AS A
PARTICIPANT IN THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN (THE "PLAN"). A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD IN ACCORDANCE WITH
THE TERMS OF THE PLAN, TO THE EXTENT CONSISTENT WITH APPLICABLE LAWS. THE LETTER
OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED
BY YOU TO TENDER SHARES HELD IN YOUR PLAN ACCOUNT.
<PAGE>
Accordingly, we request information as to whether you wish to have us
tender any or all of the Common Shares held in your Plan account, upon the terms
and conditions set forth in the Offer.
Please note the following:
1. The tender price is $43.00 per Share, net to the seller in cash,
without interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on March 7, 1997, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, there having
been validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares which would constitute a majority of the outstanding
Shares at the date of the expiration of the Offer (assuming the exercise of all
options to purchase Shares outstanding at the expiration date of the Offer). The
Offer is also subject to the other terms and conditions in the enclosed Offer to
Purchase. The Offeror reserves the right (but shall not be obligated), in
accordance with applicable rules and regulations of the United States Securities
and Exchange Commission and subject to the limitations set forth in the Merger
Agreement, to waive any of the conditions to the Offer.
5. Common Shares in Plan accounts as to which we have not received
instructions from Participants will not be tendered in the Offer.
If you wish to have us tender any or all of the Common Shares held in
your Plan account, please so instruct us by completing, executing, detaching and
returning to us the instruction form contained in this letter. An envelope to
return your instruction to us is enclosed. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise indicated in such
instruction form. PLEASE FORWARD YOUR INSTRUCTIONS TO US SO THAT THEY ARE
RECEIVED BY US NO LATER THAN 5:00 P.M. NEW YORK TIME, ON MARCH 5, 1997, TO
ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION
OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in any jurisdiction in which the making or acceptance thereof would not
be in compliance with the securities, blue sky or other laws of such
jurisdiction. In any jurisdiction where the securities, blue sky, or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Offeror by Morgan Stanley & Co. Incorporated
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
Very truly yours,
Old Kent Bank
<PAGE>
INSTRUCTION WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND
SERIES A CONVERTIBLE VOTING PREFERRED STOCK
OF
KYSOR INDUSTRIAL CORPORATION
To Old Kent Bank:
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated February 7, 1997 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer"), in
connection with the offer by K Acquisition Corp., a Michigan corporation (the
"Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc.,
a Delaware corporation, to purchase all outstanding shares of Common Stock,
$1.00 par value per share, of Kysor Industrial Corporation, a Michigan
corporation (the "Company"), including the associated Common Share Purchase
Rights, issued pursuant to the Rights Agreement dated as of April 26, 1996, as
amended, between the Company and Harris Trust and Saving Bank, as successor
Rights Agent (collectively the "Common Shares") and all outstanding shares of
Series A Convertible Voting Preferred Stock, $24.375 stated value per share.
This will instruct you to tender to the Offeror the number of Common Shares
indicated below (or if no number is indicated below, all Common Shares) which
are held by you for the account of the undersigned upon the terms and subject to
the conditions set forth in the Offer.
NOTE: Shares in Plan accounts as to which we have not received instructions
will NOT be tendered in the Offer.
Number of Shares to be Tendered: /1/ _____ SIGN HERE
---------------------------------
---------------------------------
Signature(s)
---------------------------------
---------------------------------
Print Name(s)
---------------------------------
Area Code and Telephone Number(s)
---------------------------------
Taxpayer Identification or Social
Security Number(s)
- -----------------------------
/1/ Unless otherwise indicate, it will be assumed that all Common
Shares held by us for your account are to be tendered.
<PAGE>
EXHIBIT (a)(8)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND
SERIES A CONVERTIBLE VOTING PREFERRED STOCK
OF
KYSOR INDUSTRIAL CORPORATION
AT
$43.00 NET PER SHARE
BY
K ACQUISITION CORP.,
an indirect wholly owned subsidiary of
SCOTSMAN INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS
EXTENDED.
February 7, 1997
To Participants in the Kysor Industrial Corporation Dividend Reinvestment Plan:
Enclosed for your consideration are the Offer to Purchase, dated
February 7, 1997 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer"), relating to an offer by K
Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly
owned subsidiary of Scotsman Industries, Inc., a Delaware corporation
("Parent"), to purchase all outstanding shares of Common Stock, $1.00 par value,
of Kysor Industrial Corporation, a Michigan corporation (the "Company"),
including the associated common share purchase rights, issued pursuant to the
Rights Agreement dated as of April 26, 1996, as amended, between the Company and
Harris Trust and Savings Bank, as successor Rights Agent (collectively, the
"Common Shares"), and all outstanding shares of Series A Convertible Voting
Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Shares" and
together with the Common Shares, the "Shares"), at a purchase price of $43.00
per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer. The Offer is being made in
connection with the Agreement and Plan of Merger dated as of February 2, 1997,
among Parent, the Offeror and the Company (the "Merger Agreement").
WE ARE THE HOLDER OF RECORD OF COMMON SHARES HELD FOR YOUR ACCOUNT AS
A PARTICIPANT IN THE COMPANY'S DIVIDEND REINVESTMENT PLAN (THE "PLAN"). A
TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD IN
ACCORDANCE WITH THE TERMS OF THE PLAN, TO THE EXTENT CONSISTENT WITH APPLICABLE
LAWS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY
AND CANNOT BE USED BY YOU TO TENDER SHARES HELD IN YOUR PLAN ACCOUNT.
<PAGE>
Accordingly, we request information as to whether you wish to have us
tender any or all of the Common Shares held in your Plan account, upon the terms
and conditions set forth in the Offer.
Please note the following:
1. The tender price is $43.00 per Share, net to the seller in cash,
without interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on March 7, 1997, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, there having
been validly tendered and not withdrawn prior to the expiration of the
Offer such number of Shares which would constitute a majority of the
outstanding Shares at the date of the expiration of the Offer (assuming the
exercise of all options to purchase Shares outstanding at the expiration
date of the Offer). The Offer is also subject to the other terms and
conditions in the enclosed Offer to Purchase. The Offeror reserves the
right (but shall not be obligated), in accordance with applicable rules and
regulations of the United States Securities and Exchange Commission and
subject to the limitations set forth in the Merger Agreement, to waive any
of the conditions to the Offer.
5. Common Shares in Plan accounts as to which we have not received
instructions from Participants will not be tendered in the Offer.
If you wish to have us tender any or all of the Common Shares held in your
Plan account, please so instruct us by completing, executing, detaching and
returning to us the instruction form contained in this letter. An envelope to
return your instruction to us is enclosed. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise indicated in such
instruction form. PLEASE FORWARD YOUR INSTRUCTIONS TO US SO THAT THEY ARE
RECEIVED BY US NO LATER THAN 5:00 P.M. CHICAGO TIME, ON MARCH 5, 1997, TO ALLOW
US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF
THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in any jurisdiction in which the making or acceptance thereof would not
be in compliance with the securities, blue sky or other laws of such
jurisdiction. In any jurisdiction where the securities, blue sky, or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Offeror by Morgan Stanley & Co. Incorporated
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
Very truly yours,
Harris Trust and Savings Bank
<PAGE>
INSTRUCTION WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND
SERIES A CONVERTIBLE VOTING PREFERRED STOCK
OF
KYSOR INDUSTRIAL CORPORATION
To Harris Trust and Savings Bank:
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated February 7, 1997 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer"), in
connection with the offer by K Acquisition Corp., a Michigan corporation (the
"Offeror") and an indirect wholly-owned subsidiary of Scotsman Industries, Inc.,
a Delaware corporation, to purchase all outstanding shares of Common Stock,
$1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the
"Company"), including the associated common share purchase rights, issued
pursuant to the Rights Agreement dated as of April 26, 1996, as amended, between
the Company and Harris Trust and Savings Bank, as successor Rights Agent
(collectively the "Common Shares"), and all outstanding shares of Series A
Convertible Voting Preferred Stock, $24.375 stated value per share.
This will instruct you to tender to the Offeror the number of Common Shares
indicated below (or if no number is indicated below, all Common Shares) which
are held by you for the account of the undersigned, upon the terms and subject
to the conditions set forth in the Offer.
NOTE: Shares in Plan accounts as to which we have not received instructions
will not be tendered in the Offer.
Number of Shares to be Tendered:/1/ _____ SIGN HERE
----------------------------------
----------------------------------
Signature(s)
----------------------------------
----------------------------------
Print Name(s)
----------------------------------
----------------------------------
Area Code and Telephone Number(s)
----------------------------------
Taxpayer Identification or Social
Security number(s)
- ------------------
/1/Unless otherwise indicated, it will be assumed that all Common Shares held by
us for your account are to be tendered.
<PAGE>
EXHIBIT (A)(9)
NOTICE OF GUARANTEED DELIVERY
for
Tender of Shares of Common Stock
and Series A Convertible Voting Preferred Stock
of
Kysor Industrial Corporation
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED.
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates for shares of Common Stock, $1.00
par value, of Kysor Industrial Corporation, a Michigan corporation (the
"Company"), including the associated common share purchase rights issued
pursuant to the Rights Agreement, dated as of April 26, 1996, as amended,
between the Company and Harris Trust and Savings Bank, as successor Rights
Agent (collectively, the "Common Stock"), or certificates for shares of the
Company's Series A Convertible Voting Preferred Stock, $24.375 stated value
per share (the "ESOP Preferred Stock;" the shares of Common Stock and the
shares of ESOP Preferred Stock being collectively referred to herein as the
"Shares"), are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Depositary (as defined below) on or prior to
the Expiration Date (as defined in the Offer to Purchase). Such form may be
delivered by hand, facsimile transmission or mail to the Depositary. See
Section 3 of the Offer to Purchase, dated February 7, 1997 (the "Offer to
Purchase").
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand: By Overnight Courier:
Tenders & Exchanges First Chicago Trust Tenders & Exchanges
P.O. Box 2569--Suite Company of 14 Wall Street
4660-KYS New York 8th Floor--Suite 4680-KYS
Jersey City, New Jersey Tenders & Exchanges New York, New York 10005
07303-2569 c/o The Depository Trust
Company
55 Water Street, DTC TAD
Vietnam Veterans Memorial
Plaza
New York, New York 10041
Facsimile for Eligible Institutions only:
(201) 222-4720
or
(201) 222-4721
Confirm by Telephone:
(201) 222-4707
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE,
DOES NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" (as defined in the Offer to Purchase)
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message and certificates for Shares to the Depositary within the time
period shown herein. Failure to do so could result in a financial loss to such
Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to K Acquisition Corp., a Michigan
corporation, and an indirect wholly owned subsidiary of Scotsman Industries,
Inc., a Delaware corporation, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated February 7, 1997, and in the related
Letter of Transmittal, receipt of which are hereby acknowledged, Shares of the
Company, pursuant to the guaranteed delivery procedures set forth in Section 3
of the Offer to Purchase.
Number of Shares:____________________ Name(s) of Record Holder(s):
Certificate Number(s) (if
available):
-------------------------------------
- ------------------------------------- -------------------------------------
(Please Print)
- -------------------------------------
Address(es):__________________________
If Shares will be tendered by
book-entry transfer: -------------------------------------
(Zip Code)
Name of Tendering Institution:
Area Code and Telephone Number(s):
- -------------------------------------
-------------------------------------
Account Number:___________________ at
Signature(s): ________________________
(CHECK ONE BOX IF SHARES WILL BE
TENDERED BY BOOK-ENTRY TRANSFER)
-------------------------------------
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company-------------------------------------
Dated: ______________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member in good standing of the Securities Transfer Agents
Medallion Program or a bank, broker, dealer, credit union, savings association
or other entity which is an "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended,
guarantees the delivery to the Depositary of the Shares tendered hereby,
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile(s) thereof) and any other required documents, or an
Agent's Message (as defined in the Offer to Purchase) in the case of a book-
entry delivery of Shares, all within three New York Stock Exchange trading days
of the date hereof.
Name of Firm: _______________________ Title: _______________________________
- ------------------------------------- Name: ________________________________
(Authorized Signature) (Please Print or Type)
Address: ____________________________ Area Code and Telephone No.: _________
- ------------------------------------- Date: _________________________, 199
(Zip Code)
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM--CERTIFICATES SHOULD BE SENT
WITH YOUR LETTER OF TRANSMITTAL
2
<PAGE>
EXHIBIT (a)(10)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the Payer.
- ----------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ----------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first individual on
the account(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint funds,
the first individual on the
account(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult, or if the minor is
account) the only contributor, the
minor(1)
6. Account in the name The ward, minor or
of guardian or committee for incompetent person(3)
a designated ward, minor
or incompetent person
7. a. A revocable savings The grantor-trustee(1)
trust account (in which
grantor is also trustee)
b. Any "trust" account The actual owner(4)
that is not a legal or
valid trust under State law
- ----------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ----------------------------------------------------------------
8. Sole proprietorship account The owner(4)
9. A valid trust, estate or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local governmental school
district or prison) that
receives agricultural
program payments
- ----------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Card, or Form SS-4,
Application for Employer Identification Number (for businesses and all other
entities), or Form W-7 for Individual Taxpayer Identification Number (for alien
individuals required to file U.S. tax returns), at an office of the Social
Security Administration or the Internal Revenue Service.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on all payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under Section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An entity registered at all times during the tax year under the
Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT (A)(11)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated February 7, 1997 and the related Letter of
Transmittal and is not being made to (nor will tenders be accepted from) holders
of Shares in any jurisdiction in which the Offer or the acceptance thereof would
not be in compliance with the securities, blue sky or other laws of such
jurisdiction. In those jurisdictions where securities laws, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of the Offeror (as defined below) by Morgan
Stanley & Co. Incorporated or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of
Common Stock
and
Series A Convertible Voting Preferred Stock
of
Kysor Industrial Corporation
at
$43.00 Net Per Share
by
K Acquisition Corp.,
an indirect wholly owned subsidiary of
Scotsman Industries, Inc.
K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect
wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation
(the "Parent"), is offering to purchase all outstanding shares of Common Stock,
$1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the
"Company"), including the associated common share purchase rights issued
pursuant to the Rights Agreement, dated as of April 26, 1996, as amended,
between the Company and Harris Trust and Savings Bank, as successor Rights
Agent (collectively, the "Common Stock"), and all outstanding shares of Series
A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP
Preferred Stock"; and, together with the Common Stock, the "Company Capital
Stock"; the shares of Common Stock and the shares of ESOP Preferred Stock being
collectively referred to herein as the "Shares"), at a purchase price of $43.00
per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated February 7,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer"). Following the Offer, the Offeror intends to
effect the Merger described below.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, there having been validly
tendered and not withdrawn prior to the expiration date of the Offer such
number of Shares that would constitute a majority of the outstanding shares of
the Company Capital Stock at the date of the expiration of the Offer (assuming
the exercise of all options to purchase shares of the Company Capital Stock
outstanding at the expiration date of the Offer) (the "Minimum Condition"). The
Offer is also conditioned upon the waiting period under the HSR Act (as defined
in the Offer to Purchase) applicable to the purchase of Shares pursuant to the
Offer having expired or been terminated and the Company and Kuhlman (as defined
in the Offer to Purchase) having consummated the transactions contemplated by
the Asset Purchase Agreement (as defined in the Offer to Purchase) or Kuhlman
having waived any conditions to consummate the Asset Purchase Agreement,
agreeing to consummate the transactions contemplated thereby contemporaneously
with or immediately following the consummation of the Offer. The Offer is also
subject to other terms and conditions.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of February 2, 1997 (the "Merger Agreement"), among Parent, the Offeror and the
Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the Michigan Business Corporation
Act, as amended (the "Michigan BCA"), the Offeror will be merged with and into
the Company (the "Merger"). If the Offeror acquires at least 90% of the
outstanding shares of each class of stock of the Company pursuant to the Offer,
the Offeror would be able to effect the Merger pursuant to the "short-form"
merger provisions of Section 450.1711 of the Michigan BCA, without prior notice
to, or any action by, any shareholder of the Company. Following consummation of
the Merger, the Company will continue as the surviving corporation (the
"Surviving Corporation") and will be an indirect wholly owned subsidiary of
Parent. At the effective time of the Merger (the "Effective Time"), each share
of Company Capital Stock that is issued and outstanding (other than shares of
Company Capital Stock owned by the Company, any subsidiary of the Company,
Parent, the Offeror or any other subsidiary of Parent, which shares will be
automatically canceled and retired) will be converted into the right to receive
from the Surviving Corporation $43.00 (or any higher price that may be paid for
each Share pursuant to the Offer) in cash, without interest thereon.
The Board of Directors of the Company has unanimously approved the Offer,
the Merger, the Merger Agreement and the transactions contemplated thereby, has
determined that the Offer, the Merger and the transactions contemplated by the
Merger Agreement are advisable and that the terms of each of the Offer and the
Merger are fair to and in the best interests of the Company's shareholders, and
recommends that the holders of the Shares accept the Offer and tender their
Shares pursuant to the Offer.
<PAGE>
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as,
if and when the Offeror gives oral or written notice to First Chicago Trust
Company of New York (the "Depositary") of the Offeror's acceptance of such
Shares for payment pursuant to the Offer. Upon the terms and subject to the
conditions of the Offer, payment for Shares purchased pursuant to the Offer
will be made by deposit of the purchase price with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payment
from the Offeror and transmitting such payment to tendering shareholders. Under
no circumstances will interest be paid by the Offeror because of any delay in
making such payment. In all cases, payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for such Shares or timely confirmation of a
book-entry transfer of such Shares into the Depositary's account at one of the
Book-Entry Transfer Facilities (as defined in Section 2 of the Offer to
Purchase) pursuant to the procedures set forth in the Offer to Purchase, (ii) a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), with all required signature guarantees or, in the
case of a book-entry transfer, an Agent's Message (as defined in Section 2 of
the Offer to Purchase) and (iii) any other documents required by the Letter of
Transmittal.
If any of the conditions set forth in the Offer to Purchase that relate to
the Offeror's obligation to purchase the Shares have not been satisfied by
12:00 Midnight, New York City time, on Friday, March 7, 1997 (or any other time
then set as the expiration date of the Offer), the Offeror may, subject to the
terms of the Merger Agreement, elect to (i) extend the Offer and, subject to
applicable withdrawal rights, retain all tendered Shares until the expiration
of the Offer, as extended, (ii) subject to complying with applicable rules and
regulations of the Securities and Exchange Commission, accept for payment all
Shares so tendered and not extend the Offer or (iii) terminate the Offer and
not accept for payment any Shares and return all tendered Shares to tendering
shareholders. The term "Expiration Date" means 12:00 Midnight, New York City
time, on Friday, March 7, 1997, unless the Offeror shall have extended the
period of time for which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended by
the Offeror, shall expire.
Subject to the limitations set forth in the Offer and the Merger Agreement,
the Offeror reserves the right (but will not be obligated), at any time or from
time to time in its sole discretion, to extend the period during which the
Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension. There can be
no assurance that the Offeror will exercise its right to extend the Offer. Any
extension of the period during which the Offer is open will be followed, as
promptly as practicable, by public announcement thereof, such announcement to
be issued not later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date in accordance with the
public announcement requirement of Rules 14d-4(c) and 14e-1(d) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). During any such extension, all Shares previously tendered
and not withdrawn will remain subject to the Offer, subject to the rights of a
tendering shareholder to withdraw such shareholder's Shares.
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders
of Shares made pursuant to the Offer are irrevocable, except that such Shares
may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment pursuant to the Offer, may also be withdrawn
at any time after Friday, March 7, 1997. For a withdrawal of Shares tendered
pursuant to the Offer to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name in which the certificates representing such Shares are registered, if
different from that of the person who tendered the Shares. If certificates for
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
serial numbers shown on such certificates must be submitted to the Depositary
and, unless such Shares have been tendered by an Eligible Institution (as
defined in Section 3 of the Offer to Purchase), the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution. All questions as to
the form and validity (including time of receipt) of notices of withdrawal will
be determined by the Offeror, in its sole discretion, and its determination
will be final and binding on all parties.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Exchange Act is contained in the Offer
to Purchase and is incorporated herein by reference.
The Company has provided the Offeror with the Company's list of shareholders
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares whose names appear on the Company's
shareholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose
nominees, appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read before any decision is made with
respect to the Offer.
Any questions or requests for assistance or copies of the Offer to Purchase
and the related Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager as set forth below, and
copies will be furnished promptly at the Offeror's expense. Shareholders may
also contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Offer. No fees or commissions will be
payable to brokers, dealers or other persons other than the Information Agent,
the Dealer Manager and the Depositary for soliciting tenders of Shares pursuant
to the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 3rd Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
Incorporated
One Financial Place
440 South LaSalle Street
Chicago, Illinois 60605
(312) 706-4424
February 7, 1997
<PAGE>
EXHIBIT (a)(12)
FOR IMMEDIATE RELEASE
- ---------------------
Contacts:
Donald Holmes Terry Murphy Paul Verbinnen/Judy Brennan
Scotsman Industries Kysor Industrial Sard Verbinnen & Co.
847-215-4600 616-779-2200 212-687-8080
SCOTSMAN INDUSTRIES AGREES TO ACQUIRE
KYSOR INDUSTRIAL CORPORATION
FOR $43.00 CASH PER SHARE
----------------
Strategic Transaction Will Increase Scotsman Revenues To Nearly $600 Million;
Reinforces Leadership As "Cold" Equipment Supplier
To Restaurants, Institutions, Supermarkets and Convenience Stores
----------------
Kysor Has Definitive Agreement For Simultaneous Sale
Of Kysor's Transportation Products Group To Kuhlman Corporation
----------------
VERNON HILLS, IL, and CADILLAC, MI, February 3, 1997 -- Scotsman
Industries, Inc. (NYSE: SCT), a leading international manufacturer of commercial
refrigeration products and food preparation workstations, and Kysor Industrial
Corporation (NYSE: KZ), a quality producer of commercial refrigeration systems,
today jointly announced they have signed a definitive agreement under which
Scotsman will acquire Kysor in a cash tender offer of $43.00 per Kysor common
and preferred share. The agreement has been unanimously approved by the boards
of directors of both companies.
The transaction, which is expected to close in the first quarter and will
also include the assumption of approximately $30 million in Kysor debt, is
expected to be non-dilutive to modestly accretive in 1997 and meaningfully
accretive in 1998 to Scotsman's earnings.
In a related transaction, Kysor announced it has entered into a definitive
agreement for the simultaneous sale of the assets of its Transportation Products
Group to Kuhlman Corporation for $86 million in cash with the assumption of the
liabilities associated with the unit.
- more -
<PAGE>
-2-
The acquisition of Kysor is subject to a majority of Kysor's shares being
tendered and not withdrawn, the closing of the sale of the Transportation
Products Group to Kuhlman, expiration of the Hart-Scott-Rodino Antitrust review
period, and other customary conditions.
Scotsman, which had 1995 net sales of $324 million, manufactures ice
machines, beverage dispensing systems, food preparation and storage equipment
and related foodservice products. The company markets primarily to commercial
customers in the foodservice, hospitality, beverage and health care industries.
Customers include leading restaurant chains such as McDonald's, Taco Bell, KFC,
Hardee's and Boston Market, supermarket chains such as Wal*Mart, Kroger and
Publix, convenience and specialty store chains such as 7-Eleven, and
institutional food service operators and soft drink bottlers including Coca-Cola
and Pepsi.
Kysor had 1995 sales of approximately $364 million. The Company's
Commercial Products Group had 1995 sales of $207 million and is a quality
producer of refrigerated display cases, commercial refrigeration systems and
insulated panels for supermarkets, convenience stores and the foodservice
industry. Major customers include Wal*Mart, Food Lion and Winn Dixie. The
Company's Transportation Products Group, which manufactures components for the
medium- and heavy-duty commercial vehicle market, accounted for $157 million of
Kysor's 1995 sales.
Said Richard C. Osborne, Chairman, President and Chief Executive Officer of
Scotsman: "This is an important strategic step which we believe puts Scotsman in
a new league. The Kysor acquisition underscores our commitment to stay focused
and grow strategically by acquiring companies that build on our strong position
in foodservice equipment and strengthens our position in the supermarket
industry. By acquiring the second largest commercial refrigeration equipment
provider to supermarkets and a significant supplier to the convenience store
market, we will expand the depth and breadth of both our product lines and
customer base."
Osborne continued: "This transaction makes strategic sense not only because
of excellent cross selling opportunities, but also because of the annual cost
savings we will achieve from reducing corporate overhead, leveraging material
purchases, and instilling best practices at all operations."
Said George R. Kempton, Chairman and Chief Executive Officer of Kysor: "In
an era of consolidation in our industry, this transaction makes great strategic
sense and results from our long-standing efforts to obtain maximum value for our
stakeholders."
- more -
<PAGE>
-3-
Scotsman's and Kysor's commercial products groups together had combined pro
forma 1996 annual revenue of approximately $600 million.
Morgan Stanley & Co. Incorporated is acting as financial advisor to
Scotsman and is acting as dealer manager for the tender offer. William Blair &
Co., LLC represents Kysor in this transaction.
Kysor Industrial Corporation is a quality producer of refrigerated display
cases, commercial refrigeration systems and insulated panels for the supermarket
and foodservice industry and a manufacturer of components for the medium- and
heavy-duty commercial vehicle market. The Company has 14 manufacturing
operations in 10 states as well as Great Britain and South Korea.
Scotsman Industries, Inc. is a leading international manufacturer of
refrigeration products -- ice machines, beverage dispensing systems, food
preparation and storage equipment and related products. The Company markets
primarily to commercial customers in the foodservice, hospitality, beverage and
health care industries. Scotsman's products are sold in more than 100 countries
through multiple distribution channels.
***
The press release contains forward looking statements that involve risks
and uncertainties that could cause actual results to differ materially from
those projected. Forward looking statements are necessarily projections which
are subject to change upon the occurrence of events that may affect business.
The Company also points out that the acquisition involves a number of risks that
can cause actual results to be materially different from expected results.
###
<PAGE>
EXHIBIT (a)(13)
Contact: Donald D. Holmes
(847) 215-4600
SCOTSMAN INDUSTRIES COMMENCES TENDER OFFER
FOR KYSOR INDUSTRIAL CORPORATION
Vernon Hills, IL, February 7, 1997 -- Scotsman Industries, Inc. (NYSE: SCT)
today announced that an indirect wholly owned subsidiary has commenced its
previously announced tender offer for shares of Common Stock, $1.00 par value,
and shares of Series A Convertible Voting Preferred Stock, $24.375 stated value
per share, of Kysor Industrial Corporation, at $43.00 per share, net to the
seller, in cash. The tender offer is being made pursuant to an Agreement and
Plan of Merger dated as of February 2, 1997. The tender offer is scheduled to
expire on Friday, March 7, 1997.
First Chicago Trust Company of New York is the depositary for the tender offer.
Morrow & Co., Inc. is the information agent. The dealer manager is Morgan
Stanley & Co. Incorporated.
-more-
<PAGE>
Scotsman Industries, Inc. is a leading manufacturer of refrigeration products --
ice machines, beverage dispensing systems, food preparation and storage
equipment and related products. The company markets primarily to commercial
customers in the foodservice, hospitality, beverage and health care industries.
Scotsman's products are sold in more than 100 countries through multiple
distribution channels.
<PAGE>
EXHIBIT (b)(1)
One First
National Plaza
Chicago,
Illinois 60670
Telephone: (312)
732-4000
January 31, 1997
Scotsman Group Inc.
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Attn: Donald D. Holmes
Vice President--Finance
Re: Commitment Letter
Gentlemen/Ladies:
The Scotsman Group Inc. (the "Company") has requested credit facilities (the
"Facilities") in the aggregate principal amount of $500,000,000 (the
"Aggregate Commitment"). The Company has indicated that it intends to acquire
a public company which you have identified to us with the code name "Caesar"
(hereinafter, the "Target") pursuant to a two-step acquisition. The first step
will consist of an all cash tender offer by means of an offer to purchase (as
amended from time to time, the "Tender Offer") to be made by a newly formed
subsidiary (the "Acquisition Sub") of the Company or one of its existing
subsidiaries for all of the outstanding common stock and preferred stock of
the Target (the "Stock"). Prior to the making of the Tender Offer, Acquisition
Sub and the Target shall have entered into a definitive agreement and plan of
merger (the "Merger Agreement") to merge Acquisition Sub and the Target,
subject to shareholder approval by the shareholders of Acquisition Sub and the
Target if required by applicable law (the "Merger") (the Tender Offer and the
Merger, collectively, the "Acquisition"). The Tender Offer will be conditioned
on the tender and purchase of at least the minimum number of shares, on a
fully diluted basis, required under applicable state law and the Target's
articles or certificate of incorporation and by-laws to vote for and effect a
merger of the Target and Acquisition Sub. The second step of the acquisition
will consist of the Merger. The borrowers and guarantors under the Facilities
will be those entities described as such in the term sheet attached hereto
("Term Sheet").
The First National Bank of Chicago is pleased to provide you with its
financing commitment for, and to agree to act as administrative agent bank
(the "Agent") in connection with, the entire amount of the Facilities on the
terms and conditions set forth in this commitment letter ("Commitment Letter")
and the Term Sheet, and First Chicago Capital Markets, Inc. (the "Arranger"),
an affiliate of the Agent, is pleased to provide the Company with its
undertaking to syndicate all or a portion of the Facilities to the Lenders.
While the Agent's agreement herein is to provide the entire amount of the
Facilities on a fully underwritten basis, the Arranger reserves the right to
syndicate all or a portion of the Facilities to additional Lenders with a
corresponding reduction in the Agent's commitment.
Agents, officers and employees of each of The First National Bank of Chicago
and First Chicago Capital Markets, Inc. will have the right to share
information received from the Company and its affiliates and their respective
agents, officers, and employees.
The Company agrees to (i) reimburse the Agent and the Arranger for all
reasonable out-of-pocket expenses (including the reasonable fees of outside
counsel and time charges for inside counsel) incurred in connection with this
Commitment Letter, the Fee Letter (as hereinafter defined), the Term Sheet
(the Commitment Letter, Fee Letter and Term Sheet collectively the
"Commitment"), the transactions contemplated by the Commitment and the Agent's
and the Arranger's on-going work in connection with such transactions,
including without limitation travel expenses and costs incurred in connection
with the preparation, negotiation, execution, administration, syndication, and
enforcement of any document relating to this transaction and its role
hereunder,
1
<PAGE>
CONTINUING OUR LETTER OF JANUARY 31, 1997
(ii) indemnify and hold harmless the Agent, the Arranger, the Lenders and
their respective officers, employees, agents and directors (collectively, the
"Indemnified Persons") against any and all losses, claims, damages, or
liabilities of every kind whatsoever to which the Indemnified Persons may
become subject in connection in any way with the transaction which is the
subject of this Commitment, including without limitation expenses incurred in
connection with investigating or defending against any liability or action
whether or not a party thereto, except to the extent any of the foregoing is
found in a final judgment by a court of competent jurisdiction to have arisen
solely from such Indemnified Person's gross negligence or wilful misconduct;
and (iii) assert no claim against any Indemnified Persons seeking
consequential damages on any theory of liability in connection in any way with
the transaction which is the subject of this Commitment. The obligations
described in this paragraph are independent of all other obligations of the
Company hereunder and under the Loan Documents (as defined below), shall
survive the expiration, revocation or termination of this Commitment, and
shall be payable whether or not the financing transactions contemplated by
this Commitment shall close. The Agent's and the Arranger's respective
obligations under this Commitment are enforceable solely by the party signing
this Commitment and may not be relied upon by any other person. For purposes
of enforcing this indemnity, the Company irrevocably submits to the non-
exclusive jurisdiction of any court in which a claim arising out of or
relating to the services provided under this Commitment is properly brought
against the Agent, the Arranger, or the Lenders and irrevocably waives any
objection as to venue or inconvenient forum. IF THIS COMMITMENT, OR ANY ACT,
OMISSION OR EVENT DESCRIBED IN THIS PARAGRAPH BECOMES THE SUBJECT OF A
DISPUTE, THE PARTIES HERETO EACH HEREBY WAIVE TRIAL BY JURY. The Company
agrees not to settle any claim, litigation or proceeding relating to this
transaction (whether or not the Agent or the Arranger is a party thereto)
unless such settlement releases all Indemnified Persons from any and all
liability in respect of such transaction.
This Agent's Commitment and the Arranger's undertaking are subject to (i)
the preparation, execution, and delivery of a mutually acceptable credit
agreement ("Credit Agreement") and other loan documents (collectively, the
"Loan Documents") incorporating, without limitation, substantially the terms
and the conditions outlined in the Commitment; and (ii) the Agent's and the
Arranger's respective determination that there is an absence of a material
adverse change in the business, condition (financial or otherwise),
operations, performance or properties of either (a) the Parent and its
subsidiaries on a consolidated basis or (b) the Target and its subsidiaries on
a consolidated basis from that reflected in the September 30, 1996 financials
for each such entity already provided to the Agent.
The Arranger will, in consultation with the Company, manage all aspects of
the syndication, including, without limitation, decisions as to the selection
of institutions to be approached and when they will be approached, when their
commitments will be accepted, which institutions will participate, the
allocations of the commitments among the Lenders and the amount and
distribution of the fees discussed herein among the Lenders. Upon the
Arranger's acceptance of any such commitment from a Lender the identity of
which is reasonably acceptable to the Company, the Agent shall be relieved of
its commitment to fund such amount. To assist the Arranger in its syndication
efforts, the Company shall (a) provide the Arranger upon request with all
information deemed reasonably necessary by it to complete successfully the
syndication, including, without limitation, all information and projections
prepared by the Company or on the Company's behalf relating to the
transactions contemplated hereby; (b) actively participate in both the
preparation of an information package regarding the operations and prospects
of the Company and the Target (including, without limitation, information with
respect to environmental issues) and the presentation of the information to
prospective Lenders; (c) not make any statement publicly about the Commitment
or the Facilities which might reasonably be expected to negatively affect the
Arranger's ability to syndicate the Facilities; and (d) assist, if the
Arranger so requests, restructuring in a manner mutually acceptable to the
Arranger and the Company, of the terms and conditions of the Facilities if, in
the Arranger's judgment, any portion of the syndication shall have been
unsuccessful.
After the Company has publicly announced the transaction, the Company
authorizes each of the Agent and the Arranger to communicate with and answer
inquiries from financial services media with respect to specific terms of the
Facilities. The foregoing authorization shall remain in effect unless the
Company notifies the Agent in writing that such authorization is revoked.
2
<PAGE>
CONTINUING OUR LETTER OF JANUARY 31, 1997
Please indicate your acceptance of this Commitment by the Agent and
undertaking by the Arranger in the space indicated below and return a copy of
this letter so executed to the Agent and the Arranger. This Commitment and
undertaking will expire at 5 p.m., Chicago time, February 2, 1997, unless on or
prior to such time the Agent and the Arranger shall have received a copy of
this letter executed by the Company. Notwithstanding timely acceptance of the
Commitment pursuant to the preceding sentence, the Commitment will
automatically terminate unless definitive Loan Documents are executed on or
before May 31, 1997. By its acceptance hereof, the Company agrees to pay the
Agent and the Arranger the fees described in the fee letter ("Fee Letter") of
even date herewith.
By its acceptance hereof, the Company hereby authorizes each of the Agent and
the Arranger, at their respective sole expense but without any prior approval
by the Company, to publish such tombstones as each may from time to time
determine in its sole discretion.
By accepting delivery of this Commitment, the Company hereby agrees that,
prior to executing this Commitment Letter, the Company will not disclose either
expressly or impliedly, without the Agent's and the Arranger's consent, to any
person any of the terms of this Commitment, except that the Company may
disclose the foregoing to the Target and to any employee, financial advisor
(but not to a financial advisor known by the Company to be a provider or
potential provider of senior debt in this transaction) or attorney of the
Company or the Target to whom, in each case, it is necessary to disclose such
information so long as any such employee, advisor or attorney is directed to
observe this confidentiality obligation. Following the Company's execution of
this Commitment, the Company may make public disclosure of the existence and
the amount of the Commitment and the terms of the Term Sheet; and the Company
may file a copy of the Commitment Letter, or make such other disclosures if
such disclosure is, in the opinion of the Company's counsel, required by law.
If the Company does not accept this Commitment, the Company is to immediately
return it and all copies of it to the Agent.
This Commitment Letter and Term Sheet supersede any and all prior versions
thereof. This Commitment Letter shall be governed by the internal laws of the
State of Illinois, and may only be amended by a writing signed by both parties.
Very truly yours,
The First National Bank of Chicago,
individually and as Agent
By: /s/Julia A. Bristow
---------------------------------
Title: Managing Director
First Chicago Capital Markets, Inc.,
as Arranger
By: /s/ Darric A. Brambora
---------------------------------
Title: Managing Director
Accepted and agreed:
SCOTSMAN GROUP INC.
By: Donald D. Holmes
Title: Vice President
Date: 2/2/97
3
<PAGE>
SCOTSMAN GROUP INC.
TERM SHEET
JANUARY 31, 1997
This term sheet is delivered with a commitment letter of even date herewith
(the "Commitment Letter"). Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Commitment Letter.
BORROWERS: Scotsman Group Inc. (the "Company"), Castel MAC
S.p.A., The Delfield Company, Frimont S.p.A.,
Scotsman Drink Limited, Whitlenge Drink Equipment
Limited, and a public company identified by the
Company and given the code name Caesar
(hereinafter, the "Target") via a public tendering
for shares (the "Acquisition"). Any proposal to
change which entity or entities is a Borrower must
be reasonably acceptable to the Agent.
GUARANTORS: Each of the Borrowers, Booth, Inc., DFC Holding
Corporation, Scotsman Industries, Inc. (the
"Parent"), the Target, and any current or newly
acquired or formed direct or indirect subsidiaries
of any of the foregoing with assets greater than
$15,000,000. To the extent that the assets at non-
guarantor subsidiaries with assets less than
$15,000,000 individually exceed $50,000,000 in the
aggregate, all such non-guarantor subsidiaries will
become guarantors and a new $50,000,000 "basket"
will commence. Notwithstanding the foregoing, (i)
foreign subsidiaries will only guarantee the
obligations of foreign Borrowers and (ii) certain
subsidiaries which would be restricted from
entering into guarantees due to significant tax
considerations will instead issue promissory notes
to affiliates which will be pledged to the Agent on
behalf of the Lenders.
AMOUNT: Up to $500,000,000 (the "Aggregate Commitment")
unsecured credit facility comprised of loans and
letters of credit under the facilities described
below (the "Facilities").
ADMINISTRATIVE AGENT: The First National Bank of Chicago (the "Agent").
ARRANGER: First Chicago Capital Markets, Inc. ("FCCM" or the
"Arranger").
LENDERS: The Agent or a group of lenders selected by the
Agent and reasonably satisfactory to the Company
(collectively, together with the Agent in its
capacity as lender, the "Lenders").
SYNDICATION MANAGEMENT: The Agent and Arranger will manage all aspects of
the syndication including, without limitation, the
timing of offers to potential Lenders, the amounts
offered to potential Lenders, the acceptance of
commitments and the allocation thereof, and the
compensation provided.
DOCUMENTATION: The Facilities will be evidenced by a Credit
Agreement and other Loan Documents mutually
satisfactory to the Company and the Lenders.
FACILITY A: REDUCING REVOLVING CREDIT FACILITY
AMOUNT:
Up to $265,000,000 (the "Facility A Commitment").
4
<PAGE>
PURPOSE: To provide funds for the purchase of the Target
pursuant to the Acquisition; to refinance certain
indebtedness of the Company, the Target, and their
respective subsidiaries; and for working capital,
friendly acquisitions, and other general corporate
purposes, with a sublimit to be determined for
letters of credit.
MATURITY: Seven years from the date of closing of the
Facilities (the "Closing Date").
COMMITMENT REDUCTIONS: Annual reductions in availability as follows:
<TABLE>
<CAPTION>
Reduction Date Facility A Commitment Reduced By
-------------- --------------------------------
<S> <C>
12/31/98 $10,000,000
12/31/99 $15,000,000
12/31/00 $15,000,000
12/31/01 $15,000,000
12/31/02 $15,000,000
12/31/03 $15,000,000
Final maturity Remaining balance
</TABLE>
CURRENCIES: U.S. Dollars and, to the extent freely transferable
and convertible into U.S. Dollars, the lawful
currencies of France, Germany, Italy, Japan,
Switzerland, Canada and the United Kingdom and,
subject to availability and to the terms and
conditions of the Credit Agreement, such other
freely transferable and convertible foreign
currencies as requested by the Company and
acceptable to the Agent and the Required Lenders,
in their reasonable discretion.
LETTERS OF CREDIT: A portion of Facility A (to be determined by the
Company and the Agent) shall be available for the
issuance of commercial and standby letters of
credit (including, without limitation, standby
letters of credit providing liquidity support for
tax-exempt bonds). Letters of credit will be issued
for the account of a Borrower by the Agent or
another Lender selected by such Borrower (in such
capacity, the "Issuer"). Lenders will hold pro rata
risk participations in each letter of credit.
FACILITY B: TERM LOAN FACILITY
AMOUNT: Up to $150,000,000 (the "Facility B Commitment").
PURPOSE: To provide funds for the purchase of the Target
pursuant to the Acquisition; to refinance certain
indebtedness of the Company, the Target, and their
respective subsidiaries; and for payment of
expenses incurred in connection with the
Acquisition.
MATURITY: Seven years from the Closing Date.
5
<PAGE>
AMORTIZATION: Semi-annual principal payments commencing on
December 31, 1997 in the following amounts:
<TABLE>
<CAPTION>
Date Amount
---- -----------
<S> <C>
12/31/97 $10,000,000
6/30/98 $ 7,500,000
12/31/98 $ 7,500,000
6/30/99 $ 7,500,000
12/31/99 $ 7,500,000
6/30/00 $12,500,000
12/31/00 $12,500,000
6/30/01 $12,500,000
12/31/01 $12,500,000
6/30/02 $15,000,000
12/31/02 $15,000,000
6/30/03 $15,000,000
Maturity Date $15,000,000
</TABLE>
FACILITY C: BRIDGE FACILITY
AMOUNT: Up to $85,000,000 available only in a single
drawing (the "Facility C Commitment").
PURPOSE: To provide funds for the purchase of the Target
pursuant to the Acquisition; to refinance certain
indebtedness of the Company, the Target, and their
respective subsidiaries; and for payment of
expenses incurred in connection with the
Acquisition.
MATURITY: Forty-five days from the Closing Date.
REFINANCING: It is contemplated that Facility C will be repaid
with the proceeds of the asset sale referred to
below in the Conditions Precedent section under the
heading "Asset Sale Agreement." If Facility C is
not repaid at maturity, it will convert to a 7 1/2
year term loan with amortization to be determined.
FEES
The Company will pay the following fees:
COMMITMENT FEE: A commitment fee at the per annum rate set forth on
the attached pricing grid attached as Exhibit A
hereto (the "Pricing Grid") on the average daily
unused portion of the Facility A Commitment payable
quarterly in arrears to the Lenders (including the
Agent) ratably from the Closing Date until
termination of the Facility A Commitment.
L/C FEES:
COMMERCIAL: Customary fees.
STANDBY: A letter of credit fee at a rate equal to the
Applicable Margin for Eurocurrency Loans as set
forth on the Pricing Grid on the undrawn stated
amount of each letter of credit, payable quarterly
in arrears to the Agent for the account of the
Lenders. In addition, a letter of credit fronting
fee equal to .15% of the face amount of each letter
of credit payable to the Issuer thereof for its own
account and, in connection with the issuance of or
any draw under any letter of credit, customary
processing and other fees.
6
<PAGE>
AGENT AND OTHER FEES: Such additional fees payable to the Agent and the
Arranger as are specified in the fee letter among
the Agent, the Arranger, and the Company.
INTEREST RATES
At the Company's option:
FACILITIES A AND B: ABR (in the case of U.S. Dollar loans), plus the
Applicable Margin Eurocurrency Rate plus the
Applicable Margin
FACILITY C: Prior to conversion to a 7 1/2 year term loan:
ABR plus 0.375% per annum
Eurocurrency Rate plus 1.375% per annum
After conversion to a 7 1/2 year term loan:
ABR plus 1.0% per annum
Eurocurrency Rate plus 2.0% per annum
Applicable Margin is determined by the ratio of (a)
total indebtedness to (b) earnings before interest,
taxes, depreciation, and amortization ("EBITDA"),
all as set forth on the pricing grid attached as
Exhibit A hereto.
The Applicable Margin shall be adjusted (upward or
downward) effective 10 days after the Agent has
received the Parent's quarterly financial
statements required to be delivered under the
Credit Agreement.
"ABR" means the Alternate Base Rate and is the
larger of CBR, and the federal funds rate plus 1/2%
per annum.
"CBR" means the corporate base rate of interest
announced by the Agent from time to time, changing
when and as said corporate base rate changes.
"Eurocurrency Rate" means the rate offered by the
Agent at 11:00 a.m. (London time) two business days
prior to the borrowing date for deposits in the
relevant Eurocurrency and in the approximate amount
of, and for a maturity corresponding to, the
Agent's portion of the relevant loan, as adjusted
for maximum statutory reserves.
Eurocurrency Rate interest periods shall (except as
set forth below) be one, two, three, or six months.
Interest on ABR loans shall be payable on the 15th
day of each month, upon any prepayment (whether due
to acceleration or otherwise), and at final
maturity. Interest on Eurocurrency Rate loans shall
be payable in arrears on the last day of each
interest period and, in the case of an interest
period longer than three months, quarterly, upon
any prepayment (whether due to acceleration or
otherwise), and at final maturity. Interest on all
loans (other than ABR loans) and fees shall be
calculated for actual days elapsed on the basis of
a 360-day year; interest on ABR loans shall be
calculated for actual days elapsed on the basis of
a 365/6-day year.
The Credit Agreement will include customary
provisions relating to yield protection,
availability, and capital adequacy. After default,
the interest rate for each advance will be equal to
the then-current rate for such advance plus 2% per
annum.
7
<PAGE>
Eurocurrency Rate interest periods will not, for
the first 90 days following the initial funding of
the loans, exceed 14 days in length, and the
Company will pay any breakfunding costs incurred to
accommodate the syndication.
PREPAYMENTS
MANDATORY--SALE OF Upon the sale, transfer, or other disposition of
ASSETS: assets of the Parent or any subsidiary which (a) on
a cumulative basis during the term of the Credit
Agreement (i) exceed (measured by their book value)
20% of the consolidated assets of the Parent (and
its subsidiaries) or (ii) are responsible for more
than 20% of the Parent's (and its subsidiaries')
consolidated net sales or net income (other than
the sale of inventory in the ordinary course of
business) or (b) during any fiscal year of the
Parent (i) exceed (measured by the their book
value) 10% of the consolidated assets of the Parent
(and its subsidiaries) or (ii) are responsible for
more than 10% of the Parent's (and its
subsidiaries') consolidated net sales or net income
(other than the sale of inventory in the ordinary
course of business), the Company shall make a
mandatory prepayment in an amount equal to 100% of
the net proceeds realized from any such sale,
transfer, or other disposition, such prepayment to
be applied pro rata among the Facilities and any
other senior debt of the Parent or any subsidiary
permitted under the Credit Agreement the terms of
which require such a prepayment, with that portion
of such prepayment dedicated to the Facilities to
be applied to Facility C until paid in full, then
to Facility B until paid in full, and then to
reduce outstandings under Facility A. This
provision shall not apply to (x) sales of inventory
in the ordinary course of business, (y)
intercompany transfers or sales of assets (among
wholly-owned subsidiaries of the Parent) or (z) to
the extent that an amount equal to such net
proceeds is spent within the period from 90 days
prior to such disposition to 180 days after such
disposition on the purchase of other like kind
assets for use in the business of the Parent and
its subsidiaries.
MANDATORY--EXCESS CASH Upon delivery of the Parent's audited financial
FLOW: statements in each year commencing with the fiscal
year ending December 31, 1997, the Company shall,
if such financial statements show a Leverage Ratio
(as defined in Exhibit A) of 3.0 to 1.0 or greater,
make a mandatory prepayment equal to 50% of Excess
Cash Flow, if positive, for the most recently ended
fiscal year, of Facility C until paid in full, then
to Facility B until paid in full. "Excess Cash
Flow" means, for any period of determination, for
the Parent and its subsidiaries on a consolidated
basis: (a) the sum of (i) net income plus (ii)
amortization, depreciation, and other non-cash
charges; minus (b) the sum of (i) capital
expenditures, (ii) principal payments made on all
indebtedness for borrowed money (inclusive of
mandatory prepayments made for Excess Cash Flow
during such period), (iii) any increase or decrease
(as the case may be) as of the last day of a fiscal
year from the last day of the previous fiscal year
in the excess of current assets over current
liabilities, and (iv) any cash dividends paid by
the Parent in accordance with the terms of the
Credit Agreement. For the purpose of this mandatory
prepayment provision, "Excess Cash Flow" will
exclude income from foreign operations up to
$25,000,000 during the term of the Credit
Agreement.
8
<PAGE>
SALE OF DEBT OR EQUITY: Upon the issuance of any debt or common stock,
preferred stock, warrant, or other equity, the
Company shall make a mandatory prepayment in an
amount equal to (i) 50% of the net proceeds of any
equity issuance or (ii) 100% of the proceeds of any
debt issuance (other than debt permitted to be
issued after the Closing Date pursuant to the
indebtedness covenant), to be applied pro rata
among the Facilities and any other senior debt of
the Parent or any subsidiary permitted under the
Credit Agreement the terms of which require such a
prepayment, with that portion of such prepayment
dedicated to the Facilities to be applied to
Facility C until paid in full, then to Facility B
until paid in full, and then to reduce outstandings
under Facility A. This provision shall not apply to
certain permitted issuances of equity securities
pursuant to employee stock option or other employee
compensation plans, subject to limits to be
negotiated.
VOLUNTARY PREPAYMENTS: Facility B and Facility C may be prepaid in whole
or in part without premium (but subject to
breakfunding payments) on five days' notice
provided that such payments will be in amounts of
at least $2,000,000 and multiples of $1,000,000 in
excess thereof; and the Facility A Commitment may
be permanently reduced without premium on five
days' notice in an amount of at least $5,000,000
and multiples of $1,000,000 in excess thereof.
ALLOCATION OF Any mandatory prepayment required to be applied to
PREPAYMENTS: either Facility B or Facility C as described above
shall be applied to the remaining principal
installments of such Facility in the inverse order
of maturity.
CONDITIONS OF LENDING
The Loan Documents shall be in form and substance acceptable to the Agent.
The Credit Agreement shall include terms consistent with this Term Sheet
including, without limitation, conditions precedent, representations and
warranties, covenants, events of default, indemnification, yield protection and
capital adequacy, and other provisions customary for such financings.
CONDITIONS PRECEDENT
Usual and customary conditions to each loan (including absence of default or
unmatured default and lack of material adverse change from, in the case of the
Parent and its subsidiaries and the Target and its subsidiaries taken on a
combined basis, their combined financial condition and operations as reflected
in the Parent's and the Target's consolidated financial statements as of
September 30, 1996, previously delivered to the Agent). Additional conditions
precedent to the initial loan will include those set forth below.
INITIAL FUNDING: Initial funding shall occur no later than May 31,
1997.
APPROVAL: Evidence satisfactory to the Agent that the boards
of directors (and, to the extent required by
applicable law, the shareholders) of the Parent,
the Company, and the Target shall have approved the
Acquisition; and all regulatory and legal approvals
for the Acquisition shall have been obtained
including, without limitation, approvals under the
Hart-Scott-Rodino Antitrust Improvements Act of
1976.
9
<PAGE>
LITIGATION: Absence of injunction or temporary restraining
order which, in the judgment of the Agent or the
Required Lenders would prohibit the making of the
loans or the consummation of the Acquisition; and
absence of litigation which would reasonably be
expected to result in a material adverse effect on
(i) the Parent and its subsidiaries taken as a
whole or (ii) the Target and its subsidiaries taken
as a whole.
DUE DILIGENCE: The Agent shall be satisfied that, with respect to
pension, environmental and other contingent
liabilities, the exposure of the Company and its
subsidiaries (including, without limitation, the
Target and its subsidiaries) is not sufficiently
worse than has been represented by the Company
(either orally or in written disclosures) to date
so as to have a material adverse effect on the
financial condition of the Company and its
subsidiaries and the Target and its subsidiaries,
taken as a whole.
ACQUISITION AGREEMENT: The representations and warranties in the Agreement
and Plan of Merger for the Acquisition (the
"Acquisition Agreement") shall be accurate in all
material respects as of the date of the Acquisition
closing, the conditions to closing therein shall
have been satisfied and there shall have been no
amendments of any material terms therein (unless
consented to by the Agent).
TENDER OFFER: The Lenders' funding shall be conditioned upon the
tendering of the minimum number of shares required
to consummate a merger by any applicable corporate
statute, anti-takeover statute, or provision in the
Company's or the Target's articles of
incorporation, by-laws, or other constitutive
documents.
ASSET PURCHASE The Company will have an executed Asset Purchase
AGREEMENT: Agreement for the sale of certain assets and
subsidiaries comprising the transportation products
group of the Target (the "Asset Purchase
Agreement"). The representations and warranties in
the Asset Purchase Agreement shall be accurate in
all material respects as of the date of the Asset
Purchase Agreement closing, the conditions to
closing therein shall have been satisfied and there
shall have been no amendments of any material terms
therein (unless consented to by the Agent).
FINANCIAL STATEMENTS: The Agent and the Required Lenders shall have
received (i) pro forma opening financial statements
giving effect to the Acquisition which must not be
materially less favorable, in the Agent's and the
Required Lenders' reasonable judgment, than the
projections previously provided to them and which
must demonstrate, in their reasonable judgment,
together with all other information then available
to the Agent and the Required Lenders, that the
Parent and its subsidiaries (including the Target
and its subsidiaries) can repay their debts and
satisfy their respective other obligations as and
when due, and can comply with the financial
covenants acceptable to the Agent and the Required
Lenders; and (ii) such information as the Agent and
the Required Lenders may reasonably request to
confirm the tax, legal, and business assumptions
made in such pro forma financial statements.
10
<PAGE>
VALUATION: The Agent and the Required Lenders shall have
received an officer's certificate as to value,
solvency, and other appropriate factual information
and advice in form and substance satisfactory to
them from the Parent's Chief Financial Officer
supporting conclusions that after giving effect to
the Acquisition, the Parent and its subsidiaries
(including the Target and its subsidiaries) are
solvent and will be solvent subsequent to incurring
the indebtedness in connection with the
Acquisition, will be able to pay their debts and
liabilities as they become due, and will not be
left with unreasonably small capital with which to
engage in their businesses.
LEGAL: All legal (including tax implications) and
regulatory matters shall be reasonably satisfactory
to the Agent.
REGULATIONS: Compliance with all applicable requirements of
Regulations G, T, U, and X of the Board of
Governors of the Federal Reserve System.
NO DEFAULT; NO MAC: No default or unmatured default shall exist on the
initial funding date; and there shall have occurred
no material adverse change in the business,
condition (financial or otherwise), operations,
performance or properties of (i) the Parent and its
subsidiaries, taken as a whole, from that reflected
in the Parent's consolidated financial statements
as of September 30, 1996; (ii) the Target and its
subsidiaries, taken as a whole, from that reflected
in the Target's consolidated financial statements
as of September 30, 1996; or (iii) the Parent and
the Target and their respective subsidiaries taken
as a whole, on a combined basis after giving effect
to the Acquisition, from that reflected in the
consolidated pro forma financial statements to be
delivered to the Agent prior to closing.
EXISTING CREDIT Contemporaneously with the initial loan, all
FACILITIES: obligations under (i) the Company's existing credit
agreement, (ii) all existing credit facilities at
the Target or any of its subsidiaries, and (iii)
the private placement with CIGNA in the principal
amount of $20,000,000 dated April 1989 shall be
paid in full and (if applicable) the commitments of
the lenders thereunder shall be terminated.
CUSTOMARY DOCUMENTS: Receipt of other customary closing documentation
including, without limitation, legal opinions of
the Company's counsel, reasonably acceptable to the
Agent.
11
<PAGE>
COVENANTS
The Credit Agreement will contain customary covenants including, without
limitation, restrictions substantially similar (except as noted) to those set
forth in the Company's existing credit agreement with the Agent on the
following:
--financial reporting
--maintenance of property and insurance
--payment of taxes
--rate hedging (notional amount equal to $150,000,000
--for three years)
sale of assets (certain asset securitizations will
--be permitted)
liens and encumbrances
--restricted payments
--guarantees
--sale and leaseback transactions
--consolidations and mergers
--investments
--loans and advances
--indebtedness (with certain existing indebtedness
--permitted)
compliance with pension, environmental, and other
--laws
operating leases
--transactions with affiliates
--changes in line of business
--permit inspection of records and assets
The Credit Agreement will contain the following financial covenants:
FINANCIAL COVENANTS:
--Consolidated Minimum Net Worth shall not be less
than the sum of $120,000,000 plus 60% of net income
for all quarters ending after 12/31/96 plus 60% of
the proceeds of any equity issuances, minus certain
carve-outs substantially identical to those in the
Company's current credit agreement with the Agent.
--Total Indebtedness/EBITDA (as defined below) Ratio,
measured on a rolling four-quarter basis*, shall
not exceed:
<TABLE>
<CAPTION>
Quarters Ending Ratio
--------------- -----------
<S> <C>
6/97-12/97 4.25 to 1.0
3/98-12/98 4.00 to 1.0
3/99-12/99 3.75 to 1.0
3/00-9/00 3.50 to 1.0
12/00-9/01 3.25 to 1.0
12/01 and after 3.00 to 1.0
</TABLE>
*6/97 test will multiply one quarter of EBITDA
times 4, 9/97 test will multiply two quarters of
EBITDA times 2, and 12/97 test will multiply three
quarters of EBITDA times 4/3.
--Fixed Charge Coverage Ratio (as defined below)
shall not be less than 1.0 to 1.0 for all fiscal
quarters ending in 1997 and 1.05 to 1.0 thereafter.
"EBITDA" means the sum of net income, plus income
tax expense, minus equity in net income of
affiliates, plus interest expense, plus
depreciation expense, plus amortization expense,
plus other non-cash charges, minus interest income.
12
<PAGE>
"EBITDAR" means the sum of EBITDA plus rents.
"Fixed Charge Coverage Ratio" means the ratio of
EBITDAR minus capital expenditures to Fixed
Charges.
"Fixed Charges" means the sum of interest expense,
plus scheduled principal repayments, plus income
tax expense, plus rents, plus dividends paid, plus
mandatory revolver reductions above outstandings,
minus dividends received.
REPRESENTATIONS AND WARRANTIES
Usual representations and warranties in connection with each loan shall be
included in the Credit Agreement including, but not limited to, absence of
material adverse change, absence of material litigation, absence of default or
unmatured default, continued accuracy of representations, representations
regarding environmental issues, compliance with all material requirements of
law and contracts, and compliance with regulation G, T, U, and X.
DEFAULTS
Customary events of default including, without limitation, cross-default to
occurrence of a default (whether or not resulting in acceleration) under any
other agreement governing indebtedness for borrowed money (in excess of
$10,000,000) of the Parent or any of its subsidiaries, and change of control.
ASSIGNMENTS AND PARTICIPATIONS
Each Lender may, in its sole discretion, sell participations and may, with
the consent of the Agent and the Company (which consent shall not be
unreasonably withheld), sell assignments in the loans and in its commitment
and disclose information to prospective participants and share, at its option,
any fees with such participants. Assignments shall be in principal amounts of
at least $5,000,000. The assignee shall pay an assignment fee of $3,500 to the
Agent upon any assignment by a Lender of its rights and obligations under the
Facilities (including, but not limited to, an assignment by a Lender to
another Lender).
OTHER
This Term Sheet is intended as an outline only and does not purport to
summarize all the conditions, covenants, representations, warranties and other
provisions which would be contained in definitive legal documentation for the
financing contemplated hereby. The Loan Documents will be governed by the laws
of the State of Illinois, giving effect to federal laws applicable to national
banks. "Required Lenders" shall mean Lenders holding 66 2/3% or more of the
Aggregate Commitment.
13
<PAGE>
EXHIBIT A
PRICING GRID
INTEREST RATES AND FEES--APPLICABLE MARGIN
The Applicable Margin is determined by the ratio of (a) total indebtedness to
(b) EBITDA (the "Leverage Ratio") as per the following schedule:
APPLICABLE MARGIN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LEVERAGE ABR EUROCURRENCY COMMITMENT FEE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Level 1 ^ 4.0 0.375% 1.375% 0.35%
- --------------------------------------------------------------------------------------------
Level 2 ^ 3.5 < 4.0 0.250% 1.25% 0.35%
- --------------------------------------------------------------------------------------------
Level 3 ^ 3.0 < 3.5 0.125% 1.125% 0.30%
- --------------------------------------------------------------------------------------------
Level 4 ^ 2.5 < 3.0 0% 0.875% 0.25%
- --------------------------------------------------------------------------------------------
Level 5 ^ 2.0 < 2.5 0% 0.750% 0.20%
- --------------------------------------------------------------------------------------------
Level 6 < 2.0 0% 0.50% 0.175%
</TABLE>
provided that, notwithstanding the then-current Leverage Ratio, Level 1 pricing
shall be in effect for the first six months following the Closing Date.
14
<PAGE>
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
SCOTSMAN INDUSTRIES, INC.,
K ACQUISITION CORP.
AND
KYSOR INDUSTRIAL CORPORATION
DATED AS OF FEBRUARY 2, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
THE OFFER................................ 2
SECTION 1.1 The Offer..................................................... 2
SECTION 1.2 Company Actions............................................... 4
ARTICLE II
THE MERGER................................ 6
SECTION 2.1 The Merger.................................................... 6
SECTION 2.2 Closing....................................................... 6
SECTION 2.3 Effective Time................................................ 6
SECTION 2.4 Effects of the Merger......................................... 7
SECTION 2.5 Articles of Incorporation and By-laws; Officers and Directors. 7
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES........... 7
SECTION 3.1 Effect on Capital Stock....................................... 7
SECTION 3.2 Surrender of Certificates..................................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............. 10
SECTION 4.1 Organization.................................................. 10
SECTION 4.2 Subsidiaries.................................................. 11
SECTION 4.3 Capital Structure............................................. 11
SECTION 4.4 Authority..................................................... 12
SECTION 4.5 Consent and Approvals; No Violations.......................... 13
SECTION 4.6 SEC Documents and Other Reports............................... 14
SECTION 4.7 Absence of Certain Changes or Events.......................... 15
SECTION 4.8 Information Supplied.......................................... 15
SECTION 4.9 No Existing Violation, Default, Etc........................... 16
SECTION 4.10 Licenses and Permits.......................................... 17
SECTION 4.11 Termination, Severance and Employment Agreements.............. 18
SECTION 4.12 Environmental Matters......................................... 19
SECTION 4.13 Tax Matters................................................... 19
SECTION 4.14 Actions and Proceedings....................................... 20
SECTION 4.15 Contracts..................................................... 20
SECTION 4.16 ERISA......................................................... 21
SECTION 4.17 Liabilities................................................... 22
SECTION 4.18 Intellectual Properties....................................... 22
SECTION 4.19 Propriety of Past Payments.................................... 23
SECTION 4.20 Opinion of Financial Advisor.................................. 23
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 4.21 State Takeover Statutes; Rights Agreement; Charter Provisions. 23
SECTION 4.22 Asset Purchase Agreement...................................... 24
SECTION 4.23 Brokers....................................................... 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB............ 26
SECTION 5.1 Organization.................................................. 26
SECTION 5.2 Authority..................................................... 26
SECTION 5.3 Consents and Approvals; No Violations......................... 26
SECTION 5.4 Information Supplied.......................................... 27
SECTION 5.5 Interim Operations of Sub..................................... 28
SECTION 5.6 Brokers....................................................... 28
SECTION 5.7 Financing..................................................... 28
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS................ 28
SECTION 6.1 Conduct of Business by the Company Pending the Merger......... 28
SECTION 6.2 No Solicitation............................................... 31
SECTION 6.3 Third Party Standstill Agreements............................. 32
SECTION 6.4 Other Actions................................................. 33
ARTICLE VII
ADDITIONAL AGREEMENTS.......................... 33
SECTION 7.1 Shareholder Approval; Preparation of Proxy Statement.......... 33
SECTION 7.2 Access to Information......................................... 34
SECTION 7.3 Fees and Expenses............................................. 35
SECTION 7.4 Options....................................................... 36
SECTION 7.5 Public Announcements.......................................... 37
SECTION 7.6 Real Estate Transfer Tax...................................... 37
SECTION 7.7 State Takeover Laws........................................... 38
SECTION 7.8 Indemnification; Directors and Officers Insurance............. 38
SECTION 7.9 Notification of Certain Matters............................... 39
SECTION 7.10 Board of Directors............................................ 39
SECTION 7.11 Reasonable Best Efforts....................................... 40
SECTION 7.12 Certain Litigation............................................ 41
SECTION 7.13 Employee Benefits............................................. 42
SECTION 7.14 Employee Stock Ownership Plan and Trust....................... 42
SECTION 7.15 Severance..................................................... 42
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VIII
CONDITIONS PRECEDENT........................... 42
SECTION 8.1 Conditions to Each Party's Obligation to Effect the Merger.... 42
ARTICLE IX
TERMINATION AND AMENDMENT......................... 43
SECTION 9.1 Termination................................................... 43
SECTION 9.2 Effect of Termination......................................... 45
SECTION 9.3 Amendment and Certain Other Actions........................... 45
SECTION 9.4 Extension; Waiver............................................. 46
ARTICLE X
GENERAL PROVISIONS............................ 46
SECTION 10.1 Non-Survival of Representations and Warranties................ 46
SECTION 10.2 Notices....................................................... 47
SECTION 10.3 Interpretation................................................ 47
SECTION 10.4 Counterparts.................................................. 48
SECTION 10.5 Entire Agreement; No Third-Party Beneficiaries................ 48
SECTION 10.6 Governing Law................................................. 48
SECTION 10.7 Assignment.................................................... 49
SECTION 10.8 Severability.................................................. 49
SECTION 10.9 Enforcement of this Agreement................................. 49
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of February 2, 1997 (this
"Agreement"), among SCOTSMAN INDUSTRIES, INC., a Delaware corporation
("Parent"), K ACQUISITION CORP., a Michigan corporation and a wholly owned
subsidiary of Parent ("Sub"), and KYSOR INDUSTRIAL CORPORATION, a Michigan
corporation (the "Company") (Sub and the Company being hereinafter collectively
referred to as the "Constituent Corporations").
W I T N E S S E T H:
--------------------
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have unanimously approved the acquisition of the Company by Parent
pursuant to a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") by Sub for (i) all of the outstanding shares
of Common Stock, $1.00 par value (the "Common Stock"), together with the related
Rights (as defined in Section 4.3), and (ii) all of the outstanding shares of
Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the
"ESOP Preferred Stock"), of the Company, each at a price of $43.00 per share
(the "Offer Price"), net to the seller in cash, without interest thereon,
followed by a merger (the "Merger") of Sub with and into the Company upon the
terms and subject to the conditions set forth herein (the shares of Common
Stock, together with all associated Rights (except as the context otherwise
requires), and ESOP Preferred Stock subject to the Offer are hereinafter
referred to collectively as the "Shares");
WHEREAS, the Company has advised the Parent and Sub that, simultaneous
with the execution and delivery of this Agreement, the Company and certain of
its Subsidiaries are entering into an Asset Purchase Agreement dated as of the
date hereof (the "Asset Purchase Agreement") with Kuhlman Corporation, a
Delaware corporation ("Kuhlman"), and Transpro Group, Inc., a Delaware
corporation (together with Kuhlman, the "Private Buyer"), pursuant to which the
Company has agreed to sell to the Private Buyer, and the Private Buyer has
agreed to purchase from the Company, on a going concern basis, substantially all
of the assets and properties of the transportation products business conducted
by the Company (the "TPG Assets"), all on the terms and subject to the
conditions set forth in the Asset Purchase Agreement;
<PAGE>
WHEREAS, the Board of Directors of the Company has (i) determined that
the consideration to be paid for each Share in the Offer and for the TPG Assets
by the Private Buyer under the Asset Purchase Agreement are fair to and in the
best interests of the shareholders of the Company, (ii) approved and adopted
this Agreement and the Asset Purchase Agreement and the transactions
contemplated hereby and thereby and (iii) adopted resolutions unanimously
determining that, subject to the terms and provisions of this Agreement, the
Offer, the Merger, this Agreement and the Asset Purchase Agreement, and the
transactions contemplated thereby, are advisable, approving such transactions
and recommending that the Company's shareholders accept the Offer and, if
required by applicable law, approve this Agreement and the Merger; and
WHEREAS, pursuant to the Merger, each issued and outstanding share of
Company Capital Stock (as defined in Section 3.1) not owned directly or
indirectly by Parent or the Company will be converted into the right to receive
the consideration paid per Share pursuant to the Offer.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE OFFER
---------
SECTION 1.1 The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of this
Agreement, Sub shall, and Parent shall cause Sub to, commence the Offer. The
obligation of Sub to, and of Parent to cause Sub to, commence the Offer and
accept for payment, and pay for, any Shares tendered pursuant to the Offer shall
be subject only to the conditions set forth in Exhibit A (the "Offer
Conditions") (any of which may be waived in whole or in part by Sub in its sole
discretion, provided that, without the consent of the Company, Sub shall not
waive the Minimum Condition (as defined in Exhibit A)). Sub expressly reserves
the right to modify the terms of the Offer, except that, without the consent of
the Company, Sub shall not (i) reduce the number of Shares subject to the Offer,
(ii) reduce the Offer Price, (iii) modify or add to the Offer Conditions (other
than to waive any Offer Conditions to the extent permitted by this Agreement),
(iv) except as provided in the next sentence, extend the Offer, (v) change the
form of consideration payable in
2
<PAGE>
the Offer or (vi) amend, waive or add any other term of the Offer in any manner
adverse to the Company or the holders of Shares. Notwithstanding the foregoing,
Sub may, without the consent of the Company, (i) extend the Offer if at the
scheduled or extended expiration date of the Offer any of the Offer Conditions
shall not be satisfied or waived until such time as such conditions are
satisfied or waived, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer, (iii) extend the Offer
on one or more occasions for an aggregate period of not more than five business
days beyond the scheduled or extended expiration date if as of such expiration
date sufficient Shares have not been tendered in order for the Merger to be
effected without a vote of the Company's shareholders pursuant to Section
450.1711 of the MBCA and (iv) extend the Offer for any reason on one or more
occasions for an aggregate period of not more than five business days beyond the
latest expiration date that would otherwise be permitted under clause (i), (ii)
or (iii) of this sentence. So long as this Agreement is in effect and the Offer
Conditions have not been satisfied or waived, Sub shall, and Parent shall cause
Sub to, cause the Offer not to expire. In the event that the Company delivers to
Parent a Section 9.1(e) Notice (as defined in Section 9.1(e)), Sub shall extend
the Offer to the earlier of (i) a date that is not earlier than seven business
days following the date of such delivery, unless the Offer would otherwise not
expire prior thereto, or (ii) the termination of this Agreement by the Company
pursuant to Section 9.1(e). In the event that Parent delivers to the Company the
notice contemplated in paragraph (d) or (e) of Exhibit A, Sub shall extend the
Offer to a date not earlier than two business days following the end of the 20-
day cure period contemplated in such paragraph (d) or (e) or, if earlier, the
date on which the breach or failure to perform or comply, as the case may be, is
cured, unless the Offer would otherwise not expire prior thereto. Subject to the
terms and conditions of the Offer and this Agreement, Sub shall, and Parent
shall cause Sub to, accept for and pay for, all Shares validly tendered and not
withdrawn pursuant to the Offer that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer as soon as practicable after the
expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-
1") with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and summary advertisement (such Schedule 14D-1 and
the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents").
Parent, Sub and the Company each agrees
3
<PAGE>
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and Parent and Sub further agree to take all
steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the
SEC and the other Offer Documents as so corrected to be disseminated to holders
of Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their filing
with the SEC or dissemination to the shareholders of the Company. Parent and Sub
agree to provide the Company and its counsel any comments Parent, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
(c) Prior to the expiration of the Offer, Parent shall provide or
cause to be provided to Sub all funds necessary to accept for payment, and pay
for, any Shares that Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer.
SECTION 1.2 Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents that the Board of Directors of the Company,
at a meeting duly called and held, at which all directors were present, has,
subject to the terms and provisions of this Agreement, duly and unanimously
adopted resolutions approving this Agreement, the Offer, the Merger and the
Asset Purchase Agreement and the transactions contemplated hereby and thereby,
determining that the Offer, the Merger and the transactions contemplated by this
Agreement and the Asset Purchase Agreement are advisable and that the terms of
the Offer, the Merger and the Asset Purchase Agreement are fair to, and in the
best interests of, the Company's shareholders and recommending that holders of
Shares accept the Offer and, if required by applicable law, that the Company's
shareholders approve this Agreement and the Merger; provided, however, that such
approval, determination, recommendation or other action may be withdrawn,
modified or amended at any time or from time to time if the Board of Directors
of the Company concludes in good faith based on the advice of its outside
counsel that it is necessary to do so in order to comply with its fiduciary
duties under applicable law. The Company represents that its Board of Directors
has received the opinion of William Blair & Company, LLC (the "Financial
Advisor") that the proposed consideration to be received by Company's common
shareholders pursuant to the Offer and the Merger is fair to the Company's
common shareholders (other than Parent or any of its affiliates) from a
financial point of view. The Company has been authorized by Financial Advisor to
permit, subject to prior review and consent by
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Financial Advisor (such consent not to be unreasonably withheld), the inclusion
of such fairness opinion (or a reference thereto) in the Offer Documents and in
the Schedule 14D-9 referred to below. The Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Company's Board of
Directors described in this Section 1.2(a), subject to the immediately preceding
proviso. The Company has been advised by each of its directors and executive
officers that each such person intends, as of the date of this Agreement, to
tender, or cause the tender of, all Shares owned by such person pursuant to the
Offer, including any shares of ESOP Preferred Stock over which such person has
the power to direct the tender, regardless of whether such shares are allocated
to such person's account.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendation described in
paragraph (a) above (subject to the proviso in Section 1.2(a)) and shall mail a
copy of the Schedule 14D-9 to the shareholders of the Company. Each of the
Company, Parent and Sub agrees promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that such information
shall have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to amend or supplement the Schedule
14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed
with the SEC and disseminated to the Company's shareholders, in each case as and
to the extent required by applicable federal securities laws. Parent and its
counsel shall be given reasonable opportunity to review and comment upon the
Schedule 14D-9 prior to its filing with the SEC or dissemination to shareholders
of the Company. The Company agrees to provide Parent and its counsel any
comments the Company or counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders of shares of Common Stock as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of shareholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Shares, and shall
furnish to Sub such information and assistance (including updated lists of
shareholders, security position listings and computer files) as Parent or Sub
may reasonably request in communicating the Offer to the Company's
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shareholders. Subject to the requirements of applicable law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Sub and their agents
shall hold in confidence the information contained in any such labels, listings
and files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will, upon request, deliver,
and will use their reasonable best efforts to cause their agents to deliver, to
the Company all copies of such information then in their possession or control.
(d) The Company shall use its reasonable best efforts to assist the
trustee (the "ESOP Trustee") under the Employee Stock Ownership Trust between
the Company and Old Kent Bank and Trust Company dated January 1, 1989, as
amended (the "ESOP Trust"), in the solicitation of directions from the
participants in the Company's Employee Stock Ownership Plan (the "Employee Stock
Plan") with respect to the tender of the shares of the ESOP Preferred Stock held
thereunder in accordance with the terms of the ESOP Trust and the Employee Stock
Plan.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the Business Corporation Act of the State of
Michigan (the "MBCA"), Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 2.3). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the "rights and obligations of Sub in accordance with the MBCA." The
name of the Surviving Corporation shall be "Kysor Industrial Corporation".
SECTION 2.2 Closing. The closing of the Merger will take place at
10:00 a.m. on a date to be specified by Parent or Sub, which shall be no later
than the second business day after satisfaction or waiver of the conditions set
forth in Article VIII (the "Closing Date"), at the offices of Sidley & Austin,
One First National Plaza, Chicago, Illinois 60603, unless another date, time or
place is agreed to in writing by the parties hereto.
SECTION 2.3 Effective Time. The Merger shall become effective when a
Certificate of Merger (the "Certificate of Merger"), executed in accordance with
the relevant provisions of the MBCA, is accepted by the administrator (as
defined in the
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MBCA, the "Administrator"); provided, however, that, upon mutual consent of the
Constituent Corporations, the Certificate of Merger may provide for a later date
of effectiveness of the Merger not more than 10 days after the date the
Certificate of Merger is delivered to the Administrator. When used in this
Agreement, the term "Effective Time" shall mean the later of the date and time
at which the Certificate of Merger is accepted by the Administrator or such
later time established by the Certificate of Merger. The filing of the
Certificate of Merger shall be made as soon as practicable after the
satisfaction or waiver of the conditions to the Merger set forth herein.
SECTION 2.4 Effects of the Merger. The Merger shall have the effects
set forth in Section 450.1724 of the MBCA.
SECTION 2.5 Articles of Incorporation and By-laws; Officers and
Directors. (a) Subject to Section 2.1, the Articles of Incorporation of Sub, as
in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-Laws of the Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by the Articles of
Incorporation of the Surviving Corporation or by applicable law.
(c) The directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, until the next annual
meeting of shareholders (or the earlier of their death, resignation or removal)
and until their respective successors are duly elected and qualified, as the
case may be.
(d) The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, for a term of one year
(or until the earlier of their death, resignation or removal) and until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES
---------------------------------------------------
SECTION 3.1 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on
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the part of Sub, the Company or the holders of any securities of the Constituent
Corporations:
(a) Capital Stock of Sub. Each issued and outstanding share of stock
of Sub shall be converted into and become one fully paid and nonassessable
shares of Common Stock, $1.00 par value, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each
share of capital stock of the Company (including, without limitation, the
Shares purchased pursuant to the Offer) owned by the Company or any
Subsidiary of the Company, Parent, Sub or any other Subsidiary (as defined
in Section 10.3) of Parent (other than the shares into which the
outstanding shares of capital stock of Sub were converted pursuant to
Section 3.1(a)) automatically shall be canceled and retired and shall cease
to exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Each share of (i) the Common Stock, together
with the related Right, or (ii) the ESOP Preferred Stock (the Common Stock
and the ESOP Preferred Stock are hereinafter collectively referred to as
the "Company Capital Stock"), in each case, that is issued and outstanding
(other than shares to be canceled in accordance with Section 3.1(b)), shall
be converted into the right to receive from the Surviving Corporation in
cash, without interest, the price paid per share of Common Stock in the
Offer (the "Merger Consideration"). As of the Effective Time, all such
Shares, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration, without interest.
(e) Company Stock Options. Each Company Stock Option (as defined in
Section 4.3) that is outstanding shall be canceled and converted into the
right to receive the amount of cash specified in Section 7.4.
SECTION 3.2 Surrender of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company to act as paying agent in the Merger (the "Paying
Agent"), and prior to the Effective Time, Parent shall deposit in trust with, or
cause the Surviving Corporation to deposit in trust with, the Paying Agent cash
in amounts necessary for the payment of the Merger
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Consideration upon surrender of certificates representing Shares as part of the
Merger (it being understood that any and all interest earned on funds made
available to the Paying Agent pursuant to this Agreement shall be turned over to
Parent). If the amount of cash deposited with the Paying Agent pursuant to this
Section 3.2 is insufficient to pay all of the amounts required to be paid
pursuant to Section 3.1, Parent from time to time after the Effective Time shall
take all steps necessary to enable or cause the Surviving Corporation to deposit
with the Paying Agent additional cash in an amount sufficient to make all such
payments.
As soon as reasonably practicable after the Effective Time, the Paying
Agent shall mail to each holder of record of a certificate or certificates that
immediately prior to the Effective Time represented Shares (the "Certificates"),
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall be in a form and have
such other provisions as Parent may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the Paying Agent
shall, and Parent shall cause the Paying Agent to, pay the holder of such
Certificate in exchange therefor the amount of cash into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.1, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 3.2, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of capital
stock theretofore represented by such Certificate shall have been converted
pursuant to Section 3.1. No interest will be paid or will accrue on the cash
payable upon the surrender of any Certificate.
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(c) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article III shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
shares of capital stock theretofore represented by such Certificates. At the
Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of capital stock that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and exchanged as provided in this
Article III.
(d) No Liability. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Any funds deposited with the Paying Agent that remain unclaimed by the
shareholders of the Company on the first anniversary of the Effective Time shall
be repaid to the Surviving Corporation (including, without limitation, all
interest and other income received by the Paying Agent in respect of all such
funds), and thereafter shareholders of the Company shall look only to Parent or
the Surviving Corporation (subject to the terms of this Agreement, abandoned
property, escheat and other similar laws) as general creditors thereof with
respect to any Merger Consideration that may be payable upon due surrender of
the Certificates held by them.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows,
except that the following representations and warranties (other than those
contained in Section 4.22) do not pertain to, and the Company Letter (as defined
in Section 4.2) need not include, matters included among the Purchased Assets or
Assumed Liabilities (as defined in the Asset Purchase Agreement) (it being
understood that the inclusion of such matters shall not be interpreted to mean
that by implication such matters are not included among such Purchased Assets or
Assumed Liabilities):
SECTION 4.1 Organization. The Company and each of its Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now being conducted, except
where the failure to be so organized, validly existing or in good standing would
not have a Material Adverse Effect (as defined in Section
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10.3) on the Company or prevent or materially delay the consummation of the
Offer or the Merger. The Company and each of its Subsidiaries is duly qualified
or licensed to do business and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the Offer or the Merger. The Company has,
or will prior to consummation of the Offer, deliver to Parent complete and
correct copies of its Articles of Incorporation and By-laws and the Articles of
Incorporation and By-laws (or similar organizational documents) of its
Subsidiaries.
SECTION 4.2 Subsidiaries. Item 4.2 of the letter from the Company to
Parent dated the date hereof, which letter relates to this Agreement and is
designated therein as the Company Disclosure Letter (the "Company Letter"),
lists each Subsidiary of the Company existing as of the date hereof. Except as
set forth in Section 4.2 of the Company Letter, all the outstanding shares of
capital stock of each Subsidiary of the Company are owned by the Company, by
another wholly owned Subsidiary of the Company or by the Company and another
wholly owned Subsidiary of the Company, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"), and are duly authorized, validly issued,
fully paid and nonassessable. Except as set forth in Item 4.2 of the Company
Letter and except for the capital stock of its Subsidiaries, the Company does
not own, directly or indirectly, any capital stock or other ownership interest
in any corporation, partnership, joint venture or other entity.
SECTION 4.3 Capital Structure. The authorized capital stock of the
Company consists of 30,000,000 shares of Common Stock and 5,000,000 shares of
preferred stock (the "Preferred Stock"), of which 820,513 shares of Preferred
Stock have been designated as the ESOP Preferred Stock. At the close of business
on January 31, 1997, (i) 5,961,665 shares of Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
free of preemptive rights, and (ii) 786,869.1221 shares of ESOP Preferred Stock
were issued and outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights. As of the date of this Agreement,
except for (i) the rights to purchase shares of Common Stock (the "Rights")
issued pursuant to the Rights Agreement dated as of April 26, 1996 (the "Rights
Agreement"), between the Company and State Street Bank, as Rights Agent; (ii)
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the rights of holders of shares of ESOP Preferred Stock to convert such shares
into shares of Common Stock; and (iii) stock options covering not in excess of
1,550,670 shares of Common Stock, including shares offered under the Company's
1980 Nonqualified Stock Option Plan, Stock Option and Stock Appreciation Rights
Plan of 1980, 1983 Incentive Stock Option Plan, 1984 Stock Option Plan, 1987
Stock Option and Restricted Stock Plan and 1993 Long-Term Incentive Plan
(collectively, the "Company Stock Options"), there are no options, warrants,
calls, rights or agreements to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of the Company or any Subsidiary or
obligating the Company or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, call, right or agreement.
Except as set forth in the Company Letter and except in respect of the
ESOP Preferred Stock, as of the date of this Agreement, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries (i) to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or (ii) to vote or to dispose of any shares of the capital stock of any
of the Company's Subsidiaries.
SECTION 4.4 Authority. The Board of Directors of the Company has
approved and adopted this Agreement and the Asset Purchase Agreement and the
transactions contemplated hereby and thereby and adopted resolutions unanimously
determining that, subject to the terms and provisions of this Agreement, the
Offer, the Merger, this Agreement and the Asset Purchase Agreement, and the
transactions contemplated thereby, are advisable, approving such transactions
and recommending that the Company's shareholders accept the Offer and, if
required by applicable law, approve this Agreement and the Merger; and the
Company has all requisite corporate power and authority to enter into this
Agreement and the Asset Purchase Agreement and, subject to approval by the
shareholders of the Company of this Agreement and the Merger (if required), to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Asset Purchase Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to approval by the shareholders of the
Merger (if required). This Agreement and the Asset Purchase Agreement have been
duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub and of
the Asset Purchase Agreement
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by the Private Buyer) constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms. The only shareholder action required in order to effect the Merger is
approval of the Merger by the holders of a majority of the shares of the Company
Capital Stock outstanding as of the record date for the Shareholders Meeting (as
defined in Section 7.1), all holders of each of the Common Stock and the ESOP
Preferred Stock voting separately as a class to the extent any ESOP Preferred
Stock is outstanding as of such record date; provided, however, that if Sub
purchases an amount of Shares pursuant to the Offer sufficient to permit the
Merger to be effected in accordance with Section 450.1711 of the MBCA (which
would include all of the outstanding shares of ESOP Preferred Stock, unless the
same were converted into Common Stock pursuant to the terms thereof or
redeemed), no shareholder approval will be required. No action by the
shareholders of the Company is required under the MBCA or the Company's Articles
of Incorporation or By-laws in order to effect the transactions contemplated by
the Asset Purchase Agreement.
SECTION 4.5 Consent and Approvals; No Violations. Except as set forth
in Item 4.5 of the Company Letter, the execution and delivery of this Agreement
do not, and the consummation by the Company and its shareholders of the
transactions contemplated hereby and compliance with the provisions hereof will
not, result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a benefit under, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries under, any provision of (i) the Articles of Incorporation or
By-laws of the Company, (ii) any provision of the Articles of Incorporation, By-
laws or other organizational documents of any of its Subsidiaries, (iii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
the Company or any of its Subsidiaries or (iv) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or any of their respective properties or assets, other than, in
the case of clauses (ii), (iii) or (iv), any such violations, defaults, rights,
losses or Liens that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Offer or the Merger. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state), foreign
or supranational court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or with respect
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to the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or is necessary for the consummation
of the Offer, the Merger and the other transactions contemplated by this
Agreement, except for (i) in connection, or in compliance, with the provisions
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder, the "Exchange Act"), (ii) the
filing of a Certificate of Merger with the Administrator and appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, (iii) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Offer, the Merger or the other transactions contemplated by
this Agreement, (iv) such filings, authorizations, orders and approvals as may
be required by state takeover laws (the "State Takeover Approvals"), (v) such
filings as may be required in connection with the taxes described in Section
7.6, (vi) filings with and approvals of the New York Stock Exchange, Inc. and
the SEC with respect to the delisting and deregistration of the Common Stock,
(vii) such other consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the laws of any foreign
country in which the Company or any of its Subsidiaries conducts any business or
owns any property or assets and (viii) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Offer or the Merger.
SECTION 4.6 SEC Documents and Other Reports. The Company has filed
all required documents with the SEC since January 1, 1993 (the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and as
of their respective dates none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply as of
their respective dates as to form in all material respects with their applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of
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the unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly present the consolidated financial position
of the Company and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to the
lack of footnotes thereto, to normal year-end audit adjustments and to any other
adjustments described therein). The Company has not, since December 31, 1995,
made any change in the accounting practices or policies applied in the
preparation of its financial statements.
SECTION 4.7 Absence of Certain Changes or Events. Except as disclosed
in Item 4.7 of the Company Letter or in the Company SEC Documents filed and
publicly available prior to the date of this Agreement (the "Company Filed SEC
Documents") and except for the transactions contemplated by the Asset Purchase
Agreement, since December 31, 1995, (A) the Company and its Subsidiaries have
not incurred any material liability or obligation (indirect, direct or
contingent), or entered into any material oral or written agreement or other
material transaction, that is not in the ordinary course of business or that
could reasonably be expected to result in a Material Adverse Effect on the
Company; (B) the Company and its Subsidiaries have not sustained any loss or
interference with their business or properties from fire, flood, windstorm,
accident or other calamity (whether or not covered by insurance) that has had or
that could reasonably be expected to have a Material Adverse Effect on the
Company; (C) there has been no material change in the indebtedness of the
Company and its Subsidiaries, no change in the capital stock of the Company,
except for the issuance of shares of Common Stock pursuant to Company Stock
Options or pursuant to conversion rights in existence at the date of this
Agreement, and no dividend or distribution of any kind declared, paid or made by
the Company on any class of its stock, except for regular semi-annual dividends
of not more than $0.975 per share on the ESOP Preferred Stock, regular quarterly
dividends of not more than $0.165 per share on the Common Stock and the
distribution of the Rights; and (D) there has been no event causing a Material
Adverse Effect on the Company, nor any development that could, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect
on the Company.
SECTION 4.8 Information Supplied. None of the information supplied or
to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the
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Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the
"Information Statement") or (iv) the proxy statement (together with any
amendments or supplements thereto, the "Proxy Statement") relating to the
Shareholders Meeting will, in the case of the Offer Documents, the Schedule 14D-
9 and the Information Statement, at the respective times the Offer Documents,
the Schedule 14D-9 and the Information Statement are filed with the SEC or first
published, sent or given to the Company's shareholders, or, in the case of the
Proxy Statement, at the time the Proxy Statement is first mailed to the
Company's shareholders or at the time of the Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Schedule 14D-9, the Information Statement and the Proxy Statement will comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder, except that no representation or warranty
is made by the Company with respect to statements made or incorporated by
reference therein based on information supplied by Parent or Sub specifically
for inclusion or incorporation by reference therein.
SECTION 4.9 No Existing Violation, Default, Etc. Except as disclosed
in Item 4.9 of the Company Letter or the Company Filed SEC Documents, neither
the Company nor any of its Subsidiaries is in violation of (A) its Articles of
Incorporation, By-Laws or other organizational documents, (B) any applicable
law, ordinance, administrative or governmental rule or regulation or (C) any
order, decree or judgment of any Governmental Entity having jurisdiction over
the Company or any of its Subsidiaries, except, in each case, for any violations
that, individually or in the aggregate, would not have a Material Adverse Effect
on the Company or prevent or materially delay the consummation of the Offer or
the Merger. Except as disclosed in Item 4.9 of the Company Letter or the Company
Filed SEC Documents, the properties, assets and operations of the Company and
its Subsidiaries are in compliance in all material respects with all applicable
federal, state, local and foreign laws, rules and regulations, orders, decrees,
judgments, permits and licenses relating to public and worker health and safety
(collectively, "Worker Safety Laws") and the protection and clean-up of the
environment and activities or conditions related thereto, including, without
limitation, those relating to the generation, handling, disposal, transportation
or release of hazardous materials (collectively, "Environmental Laws"), except
for any violations that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Offer or the Merger. Except as disclosed in Item 4.9 of the
Company Letter or the Company Filed
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SEC Documents, with respect to such properties, assets and operations, including
any previously owned, leased or operated properties, assets or operations, to
the Company's knowledge, there are no past, present or reasonably anticipated
future events, conditions, circumstances, activities, practices, incidents,
actions or plans of the Company or any of its Subsidiaries that may interfere
with or prevent compliance or continued compliance in all material respects with
applicable Worker Safety Laws or Environmental Laws, other than any such
interference or prevention as would not, individually or in the aggregate with
any such other interference or prevention, have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Offer or the
Merger.
Except as set forth in the Company Letter or the Company Filed SEC
Documents, no event of default or event that, but for the giving of notice or
the lapse of time or both, would constitute an event of default exists or, upon
the consummation by the Company of the transactions contemplated by this
Agreement, will exist under (i) any indenture, mortgage, loan agreement, note or
other agreement or instrument for borrowed money, or any guarantee of any
agreement or instrument for borrowed money or (ii) any lease, permit, license or
other agreement or instrument, in each case, to which the Company or any of its
Subsidiaries is a party or by which the Company or any such Subsidiary is bound
or to which any of the properties, assets or operations of the Company or any
such Subsidiary is subject, other than, in the case of clause (ii), any events
of default that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Offer or the Merger.
SECTION 4.10 Licenses and Permits. Except as set forth in Item 4.10 of
the Company Letter or the Company Filed SEC Documents, the Company and its
Subsidiaries have such certificates, permits, licenses, franchises, consents,
approvals, orders, authorizations and clearances from appropriate Governmental
Entities (the "Company Licenses") as are necessary to own, lease or operate
their properties and to conduct their businesses in the manner described in the
Company SEC Documents and as currently owned or leased and conducted, and all
such Company Licenses are valid and in full force and effect, except such
licenses which the failure to have or to be in full force and effect,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company or prevent or materially delay the consummation of the Offer or the
Merger. Except as set forth in Item 4.10 of the Company Letter or the Company
Filed SEC Documents, the Company and its Subsidiaries are in compliance in all
material respects with their respective obligations under the Company Licenses,
with such exceptions as, individually or in the
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aggregate, would not have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the Offer or the Merger, and, to the
Company's knowledge, no event has occurred that allows, or after notice or lapse
of time would allow, revocation or termination of the Company Licenses, other
than such revocations or terminations that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company or prevent or materially
delay the consummation of the Offer and the Merger.
SECTION 4.11 Termination, Severance and Employment Agreements. The
Company has provided to Parent a complete and accurate list and a copy of each
of the following as it relates to the businesses conducted by the Company and
its Subsidiaries: (a) employment or severance agreement or arrangement (whether
written or oral) with any director, executive officer or other key employee that
is not terminable without material liability or obligation (either individually
or collectively) on 60 days' or less notice; (b) agreement of employment with
any director, executive officer or other key employee that provides any term of
employment or other compensation guarantee or extending severance benefits or
other benefits after termination of employment not comparable to benefits
generally available to employees of the Company and its Subsidiaries; (c)
agreement, plan or arrangement (whether written or oral) of employment with any
director, executive officer or other key employee under which that person may
receive payments that may be subject to tax imposed by (Section) 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or included in the
determination of that person's "parachute payment" under (Section) 280G of the
Code; and (d) agreement or arrangement (whether written or oral) or plan,
including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan, with or affecting any director, executive
officer or other key employee any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the Asset Purchase
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement or the Asset
Purchase Agreement. Except as set forth in Item 4.11 of the Company Letter or
the Company Filed SEC Documents, since December 31, 1995, neither the Company or
any of its Subsidiaries has entered into or amended in any material respect, any
employment or severance agreement or arrangement (whether written or oral) with,
or granted any severance or termination pay to, any director, executive officer
or other key employee of the Company or any of its Subsidiaries. As used in this
Agreement, "key employee" means an employee whose aggregate annual compensation
in 1996 or 1997 exceeded, or is scheduled to exceed, $100,000.
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SECTION 4.12 Environmental Matters. Except as set forth in the
Company Filed SEC Documents or Item 4.12 of the Company Letter, and except, in
each case, for matters that would not have a Material Adverse Effect on the
Company, neither the Company nor any of its Subsidiaries is the subject of any
federal, state, local or foreign investigation, and neither the Company nor any
of its Subsidiaries has received any notice or claim (or is aware of any facts
that would form a reasonable basis for any claim), or entered into any
negotiations or agreements with any third party, and there are not facts or
conditions associated with the properties or operations of the businesses of the
Company and its Subsidiaries, giving rise or relating to any material liability
or remedial action or potential material liability or remedial action under any
Environmental Laws, nor are there any pending, reasonably anticipated or, to the
knowledge of the Company, threatened actions, suits or proceedings against or
affecting the Company, any of its Subsidiaries or any of their properties,
assets or operations seeking any such liability or remedial action in connection
with any Environmental Laws.
SECTION 4.13 Tax Matters. Except as may be disclosed in Item 4.13 of
the Company Letter or in the Company Filed SEC Documents and except for matters
that individually or in the aggregate would not have a Material Adverse Effect
on the Company, (i) the Company and each Subsidiary have filed all Tax Returns
required to have been filed and have paid all Taxes shown to be due on such Tax
Returns; (ii) all Tax Returns filed by the Company and each Subsidiary are
complete and accurate and disclose all Taxes required to be paid by the Company
and each Subsidiary for the periods covered thereby; (iii) neither the Company
nor any Subsidiary has waived any statute of limitations in respect of Taxes of
the Company or such Subsidiary; (iv) the Tax Returns referred to in clause (i)
relating to federal income Taxes have been examined by the Internal Revenue
Service or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired; (v) no issues that have been
raised by the relevant taxing authority in connection with the examination of
the Tax Returns referred to in clause (i) are currently pending; (vi) no taxing
authority has proposed any adjustments to tax against the Company or any
Subsidiary; (vii) all deficiencies asserted or assessments made as a result of
any examination of the Tax Returns referred to in clause (i) by a taxing
authority have been paid in full; (viii) there are no Liens for Taxes upon the
assets of the Company or any Subsidiary except Liens relating to current Taxes
not yet due; and (ix) all Taxes which the Company or any Subsidiary are required
by law to withhold or to collect for payment have been duly withheld and
collected, and have been paid or accrued, reserved against and
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entered on the books of the Company. For purposes of this Agreement (a) "Tax"
(and, with correlative meaning, "Taxes" and "Taxable") means, any federal,
state, local or foreign income, gross receipts, property, sales, use, goods and
services, license, excise, franchise, employment, payroll, withholding,
alternative or added minimum, ad valorem, value added, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed by
any governmental authority, and (b) "Tax Return" means any return, report or
similar statement required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax.
SECTION 4.14 Actions and Proceedings. Except as set forth in the
Company Filed SEC Documents or Item 4.14 of the Company Letter, there are no
outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving the Company or any of its Subsidiaries,
any of its or their present or former directors, officers, employees,
consultants, agents or shareholders, as such, or any of its or their properties,
assets or business or any Company Plan (as defined in Section 4.17) that,
individually or in the aggregate, would have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Offer or the
Merger. Except as set forth in the Company Filed SEC Documents or Item 4.14 of
the Company Letter, as of the date of this Agreement, there are no actions,
suits or claims or legal, administrative or arbitrative proceedings or
investigations pending or, to the knowledge of the Company, threatened against
or involving the Company or any of its Subsidiaries or any of its or their
present or former directors, officers, employees, consultants, agents or
shareholders, as such, or any of its or their properties, assets or business or
any Company Plan that, individually or in the aggregate, would have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Offer or the Merger.
SECTION 4.15 Contracts. Except as disclosed in Item 4.15 of the
Company Letter, all of the material contracts of the Company and its
Subsidiaries that are required to be described in the Company SEC Documents or
to be filed as exhibits thereto have been described in the Company SEC Documents
or filed as exhibits thereto. Neither the Company or any of its Subsidiaries
nor, to the knowledge of the Company, any other party is in breach of or default
under any material contracts which are currently in effect, except for such
breaches and defaults as in the aggregate have not had or would not have a
Material Adverse Effect on the
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Company or prevent or materially delay the consummation of the Offer or the
Merger.
SECTION 4.16 ERISA. Prior to the consummation of the Offer, the
Company will deliver to Parent a complete and accurate list of each Company Plan
and each Company Multiemployer Plan. Except as to matters which would not have a
Material Adverse Effect on the Company, each Company Plan complies with the
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code and all other applicable statutes and
governmental rules and regulations, and (i) no "reportable event" (within the
meaning of Section 4043 of ERISA) has occurred with respect to any Company Plan,
(ii) neither the Company nor any of its ERISA Affiliates has withdrawn,
completely or partially, from any Company Multiemployer Plan (as hereinafter
defined in this Section 4.16) or instituted, or is currently considering taking,
any action to do so, and (iii) no action has been taken, or is currently being
considered other than as contemplated by this Agreement, to terminate any
Company Plan subject to Title IV of ERISA. Except as provided in the Company
Filed SEC Documents, no Company Plan, nor any trust created thereunder, has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, which would have a Material Adverse Effect on the
Company. There are no actions, suits or claims pending or, to the knowledge of
the Company, threatened (other than routine claims for benefits) with respect to
any Company Plan which would have a Material Adverse Effect on the Company.
Neither the Company nor any of its ERISA Affiliates has incurred or reasonably
expects to incur any liability under or pursuant to Title IV of ERISA which
would have a Material Adverse Effect on the Company. No prohibited transactions
described in Section 406 of ERISA or Section 4975 of the Code have occurred
which would have a Material Adverse Effect on the Company. All Company Plans
that are intended to be qualified under Section 401(a) of the Code have been
determined by the Internal Revenue Service to be so qualified, and the Company
is not aware of any reason why any Company Plan is not so qualified in
operation. Neither the Company nor any of its ERISA Affiliates has been notified
by any Company Multiemployer Plan that such Company Multiemployer Plan is
currently in reorganization or insolvency under and within the meaning of
Section 4241 or 4245 of ERISA or that such Company Multiemployer Plan intends to
terminate or has been terminated under Section 4041A of ERISA. As used herein,
(i) "Company Plan" means a "pension plan" (as defined in Section 3(2) of ERISA
(other than a Company Multiemployer Plan)) or a "welfare plan" (as defined in
Section 3(1) of ERISA) established or maintained by the Company or any of its
ERISA Affiliates or as to which the Company or any of its ERISA Affiliates has
contributed or otherwise may have any liability; (ii) "Company Multiemployer
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Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
to which the Company or any of its ERISA Affiliates is or has been obligated to
contribute or otherwise may have any liability; and (iii) "ERISA Affiliate"
means (A) any corporation which at any time on or before the Effective Time is
or was a member of the same controlled group of corporations (within the meaning
of Section 414(b) of the Code) as the Company, (B) any partnership, trade or
business (whether or not incorporated) which at any time on or before the
Effective Time is or was under common control (within meaning of Section 414(c)
of the Code) with the Company and (C) any entity which at any time on or before
the Effective Time is or was a member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as either the Company, any
corporation described in clause (A) of this clause (iii) or any partnership,
trade or business described in clause (B) of this clause (iii). Except as set
forth in Item 4.16 of the Company Letter or the Company Filed SEC Documents, no
Company Plan (i) provides health, life insurance, or other welfare benefits to
former employees (or their dependents or beneficiaries) after retirement or
termination of employment except as required by section 601 et seq. of ERISA,
and (ii) no Company Plan provides additional benefits or contains other
provisions that would become effective upon or as a result of the consummation
of any of the transactions contemplated by this Agreement.
SECTION 4.17 Liabilities. Except as fully reflected or reserved
against in the financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, or disclosed in the footnotes
thereto, the Company and its Subsidiaries had no liabilities (including, without
limitation, tax liabilities) at the date of such financial statements, absolute
or contingent, that are of a nature required under generally accepted accounting
principles to be recorded or reflected on such financial statements that have
had or would reasonably be expected to have a Material Adverse Effect on the
Company. Except as so reflected, reserved or disclosed or as disclosed in Item
4.17 of the Company Letter or the Company Filed SEC Documents, the Company and
its Subsidiaries have no commitments which have had or would reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 4.18 Intellectual Properties. Except as disclosed in Item
4.18 of the Company Letter and matters which would not have a Material Adverse
Effect on the Company, the Company and its Subsidiaries own or have a valid
license to use all inventions, patents, trademarks, service marks, trade names,
copyrights, trade secrets, software, mailing lists and other intellectual
property rights (collectively, the "Company Intellectual Property") necessary to
carry on their respective
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businesses as currently conducted; and, to the knowledge of the Company, neither
the Company nor any such Subsidiary has received any notice of infringement of
or conflict with, and there are no infringements of or conflicts with, the
rights of others with respect to the use of any of the Company Intellectual
Property that, in either such case, has had or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
SECTION 4.19 Propriety of Past Payments. Since January 1, 1991, (i) no
funds or assets of the Company or any of its Subsidiaries have been used for
illegal purposes, (ii) no unrecorded fund or assets of the Company or any of its
Subsidiaries has been established for any purpose, (iii) no accumulation or use
of the corporate funds of the Company or any of its Subsidiaries has been made
without being properly accounted for in the respective books and records of the
Company or such Subsidiary, (iv) all payments by or on behalf of the Company or
any of its Subsidiaries have been duly and properly recorded and accounted for
in the books and records of the Company and its Subsidiaries, (v) no false or
artificial entry has been made in the books and records of the Company or any of
its Subsidiaries for any reason, (vi) no payment has been made by or on behalf
of the Company or any of its Subsidiaries with the understanding that any part
of such payment is to be used for any purpose other than that described in the
documents supporting such payment and (vii) neither the Company nor any of its
Subsidiaries has made any illegal contributions to any political party or
candidate, either domestic or foreign, except for such uses, payments,
contributions or actions described in clauses (i) through (vii) which, or the
cessation of which, would not have a Material Adverse Effect on the Company or
result in material adverse publicity for the Company.
SECTION 4.20 Opinion of Financial Advisor. The Company has received
the opinion of Financial Advisor, dated the date hereof, to the effect that, as
of the date hereof, the consideration to be received in the Offer and the Merger
by the Company's common shareholders is fair to the Company's common
shareholders (other than Parent or any of its affiliates) from a financial point
of view, a copy of which opinion has been delivered to Parent.
SECTION 4.21 State Takeover Statutes; Rights Agreement; Charter
Provisions. The Company has taken all actions necessary to provide that the
provisions of the Stacey, Bennett, and Randall Shareholder Equity Act, Sections
450.1790 et seq. of the MBCA, do not apply to the Company and the transactions
contemplated by this Agreement and the Asset Purchase Agreement. Chapter 7A of
the MBCA does not apply to this Agreement and the
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transactions contemplated hereby by reason of the prior approval requirements of
Section 450.1782(1)(b) of the MBCA. The Company has heretofore provided Parent
with a complete and correct copy of the Rights Agreement, including all
amendments and exhibits thereto. The Board of Directors of the Company has
approved an amendment to the Rights Agreement (which amendment will be presented
to the Rights Agent with directions to execute promptly following the execution
of this Agreement) to provide that a Shares Acquisition Date, a Distribution
Date, any of the events set forth in Section 11(a)(ii) of the Rights Agreement
or a Section 13 Event (as such terms are defined in the Rights Agreement) shall
not occur or be deemed to occur, the Rights shall not separate from the shares
of the Common Stock, the Rights shall not be become exercisable, and neither
Parent nor Sub shall become an Acquiring Person (as defined in the Rights
Agreement) as a result of the execution, delivery or performance of this
Agreement, the announcement, making or consummation of the Offer, the
acquisition of shares of capital stock of the Company pursuant to the Offer or
the Merger, the consummation of the Merger or any other transactions
contemplated by this Agreement. The Board of Directors has taken all actions
necessary to exempt this Agreement and the Asset Purchase Agreement, and the
transactions contemplated hereby and thereby, from the provisions of Articles X
and XII of the Company's Articles of Incorporation.
SECTION 4.22 Asset Purchase Agreement. The Asset Purchase Agreement
has been duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of the Asset Purchase Agreement by the
Private Buyer) constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. Except as set
forth in Item 4.22 of the Company Letter, the execution and delivery by the
Company of the Asset Purchase Agreement do not, and the consummation by the
Company of the transactions contemplated thereby and compliance with the
provisions thereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or the loss of a
benefit under, or result in the creation of any Lien upon any of the properties
or assets of the Company or any of its Subsidiaries under, any provision of (i)
the Articles of Incorporation or By-laws of the Company, (ii) any provision of
the Articles of Incorporation, By-laws or other organizational documents of any
of its Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its Subsidiaries or (iv) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to
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the Company or any of its Subsidiaries or any of their respective properties or
assets, other than, in the case of clauses (ii), (iii) or (iv), any such
violations, defaults, rights, losses or Liens that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the transactions contemplated by the Asset
Purchase Agreement. No filing or registration with, or authorization, consent or
approval of, any Governmental Entity is required by or with respect to the
Company or any of its Subsidiaries in connection with the execution and delivery
of the Asset Purchase Agreement by the Company or is necessary for the
consummation of the transactions contemplated thereby, except for (i) in
connection, or in compliance, with the provisions of the HSR Act, (ii) such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the transactions contemplated by the Asset Purchase
Agreement, (iii) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the laws of any
foreign country in which the Company or any of its Subsidiaries conducts any
business or owns any property or assets and (iv) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the transactions contemplated by the Asset Purchase Agreement. The
representations and warranties of the Company set forth in the Asset Purchase
Agreement are true and correct in all material respects, and, immediately prior
to the consummation of the Offer, the Company will have complied in all material
respects with all material agreements or covenants of the Company to be
performed or complied with by it under the Asset Purchase Agreement by such
time. The Company has delivered to Parent a complete and correct copy of the
Asset Purchase Agreement.
SECTION 4.23 Brokers. No broker, investment banker, financial advisor
or other person, other than Financial Advisor, the fees and expenses of which
will be paid by the Company (and are reflected in an agreement between Financial
Advisor and the Company, a copy of which has been furnished to Parent), is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
-----------------
Parent and Sub represent and warrant to the Company as follows:
SECTION 5.1 Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, validly existing or in good standing would not have
a Material Adverse Effect on Parent or Sub or prevent or materially delay the
consummation of the Offer or the Merger.
SECTION 5.2 Authority. Parent and Sub have all requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Sub and the consummation by Parent and Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and (assuming the valid authorization,
execution and delivery of this Agreement by the Company) constitutes a valid and
binding obligation of each of Parent and Sub enforceable against each
respectively in accordance with its terms.
SECTION 5.3 Consents and Approvals; No Violations. The execution and
delivery by Parent and Sub of this Agreement do not, and the consummation by
Parent and Sub of the transactions contemplated hereby and compliance with the
provisions hereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or the loss of a
benefit under, or result in the creation of any Lien upon any of the properties
or assets of Parent or any of its Subsidiaries under, any provision of (i) the
Certificate of Incorporation, By-laws or comparable organizational documents of
Parent, Sub or any other Subsidiaries of Parent, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Parent or any
of its Subsidiaries (other than any agreement or note that will be paid or
discharged in full at or prior to the consummation of the Offer) or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation
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applicable to Parent or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clause (ii) or (iii), any such
violations, defaults, rights, losses or Liens that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent or Sub or prevent
or materially delay the consummation of the Offer or the Merger. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Parent or Sub or
is necessary for the consummation of the Offer, the Merger and the other
transactions contemplated by this Agreement, except for (i) in connection, or in
compliance, with the provisions of the HSR Act and the Exchange Act, (ii) the
filing of Certificate of Merger with the Administrator and appropriate documents
with the relevant authorities of other states in which Parent or any of its
Subsidiaries is qualified to do business, (iii) such filings and consents as may
be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Offer, the Merger or the other transactions contemplated by this Agreement, (iv)
such filings, authorizations, orders and approvals as may be required to obtain
the State Takeover Approvals, (v) such filings as may be required in connection
with the taxes described in Section 7.6, (vi) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
the laws of any foreign country in which Parent or any of its Subsidiaries
conducts any business or owns any property or assets and (vii) such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Parent or Sub or prevent or
materially delay the consummation of the Offer or the Merger.
SECTION 5.4 Information Supplied. None of the information supplied or
to be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
shareholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's shareholders or at the time of the
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
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under which they are made, not misleading. The Offer Documents will comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation or warranty is
made by Parent or Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company specifically for
inclusion or incorporation by reference therein.
SECTION 5.5 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
SECTION 5.6 Brokers. No broker, investment banker, financial advisor
or other person, other than Morgan Stanley & Co. Incorporated, the fees and
expenses of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
SECTION 5.7 Financing. Scotsman Group Inc. has entered into, and
furnished to the Company a copy of, the Financing Commitment Letter with First
Chicago Capital Markets, Inc. (the "Lender"). Subject to the terms and condition
specified therein, the Financing Commitment Letter will provide Sub funds
sufficient in amount to consummate the Offer and Merger pursuant to this
Agreement. The Financing Commitment Letter is in full force and effect as of the
date of the Agreement.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
SECTION 6.1 Conduct of Business by the Company Pending the Merger.
Except for actions reasonably necessary to effect the consummation of the
transactions contemplated by, and in accordance with the terms of, the Asset
Purchase Agreement, during the period from the date of this Agreement until such
time as Parent's designees shall constitute a majority of the Board of Directors
of the Company, the Company shall, and shall cause each of its Subsidiaries to,
in all material respects carry on its business in, and not enter into any
material transaction other than in accordance with, the ordinary course of its
business as currently conducted and, to the extent consistent therewith, use
reasonable best efforts to preserve intact its current business organizations,
keep available the services of its current officers and key employees and
preserve its relationships with customers, suppliers and others having business
dealings with it
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to the end that its goodwill and ongoing business shall not be impaired. Without
limiting the generality of the foregoing, and except as referred to in Item 6.1
of the Company Letter or as otherwise expressly contemplated by this Agreement
or the Asset Purchase Agreement or required by law, during such period, the
Company shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of Parent (which consent shall not be unreasonably
withheld):
(a) (w) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to its shareholders in their capacity as
such (other than regular quarterly dividends of not more than $0.165 per share
on the Common Stock and regular semi-annual dividends of not more than $0.975
per share on the ESOP Preferred Stock, in each case declared and paid on dates
consistent with past practice), (x) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
except the issuance of shares of Common Stock upon conversion of any share of
ESOP Preferred Stock in accordance with the terms thereof, or (y) except as
required under existing employee benefit plans, agreements, policies, awards or
arrangements in effect on the date of this Agreement, purchase, redeem or
otherwise acquire any shares of its capital stock or those of any Subsidiary or
any other securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(b) except as required under existing employee benefit plans,
agreements, policies, awards or arrangements in effect on the date of this
Agreement, issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock, any other voting securities or equity equivalent or
any securities convertible into, or any rights, warrants or options to acquire
any such shares, voting securities, equity equivalent or convertible securities
(other than pursuant to the Rights Agreement or the issuance of shares of Common
Stock upon the exercise of Company Stock Options outstanding on the date of this
Agreement in accordance with their current terms and the issuance of shares of
Common Stock upon the conversion of any shares of ESOP Preferred Stock into
shares of Common Stock in accordance with the terms thereof);
(c) amend its Articles of Incorporation or By-laws or other similar
organizational documents;
(d) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the
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assets of or equity in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets, other than the purchase of raw
materials and goods and services used in the manufacture of the products of the
businesses of the Company and its Subsidiaries, in each case in the ordinary
course of business consistent with past practice, and other transactions that
are in the ordinary course of business consistent with past practice and which
in the aggregate involve assets having a purchase price not in excess of
$1,000,000;
(e) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than the sale of products of the
businesses of the Company and its Subsidiaries, in each case in the ordinary
course of business consistent with past practice, and other transactions that
are in the ordinary course of business consistent with past practice and which
in the aggregate involve assets having a fair market value or book value not in
excess of $500,000;
(f) incur any new indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or guarantee any debt
securities of others or make any loans, advances or capital contributions to, or
other investments in, any other person, other than to or in the Company or any
wholly owned Subsidiary of the Company and other than customary travel and
similar advances to employees in the ordinary course of business consistent with
past practices;
(g) alter (through merger, liquidation, reorganization, restructuring
or in any other fashion) the corporate structure or ownership of the Company or
any Subsidiary;
(h) enter into or adopt, or amend any existing, severance plan,
agreement or arrangement or enter into or amend any Company Plan or employment
or consulting agreement, other than as required by law;
(i) except as required under existing plans, agreements, policies,
awards or arrangements in effect on the date of this Agreement or as described
in Item 6.1 of the Company Letter, increase the compensation payable or to
become payable to its officers or employees, except, in the case of employees
who are not officers, for increases in the ordinary course of business
consistent with past practice, pay or commit to pay any bonus, or grant any
severance or termination pay to, or enter into any employment or severance
agreement, or establish, adopt, enter into, or amend in any material respect or
take action to
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enhance in any material respect or accelerate any rights or benefits under, any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, stock ownership, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer or
employee, except, in each case, as may be required to comply with applicable law
or regulation;
(j) violate or fail to perform any material obligation or duty imposed
upon it by any applicable federal, state or local law, rule, regulation,
guideline or ordinance;
(k) redeem the Rights or amend the Rights Agreement;
(l) breach in any material respect any of its material
representations, warranties, covenants or agreements contained in the Asset
Purchase Agreement (regardless of any provisions regarding notice or lapse of
time, or both) or waive any of its material rights under, amend or terminate the
Asset Purchase Agreement, other than a waiver of the condition regarding the
consummation of the Offer contained in Section 5.3(d) of the Asset Purchase
Agreement;
(m) make any material change in its accounting methods, policies or
procedures, except as a result of any change in law or generally accepted
accounting principles;
(n) prepare or file any Tax Return inconsistent with past practice or,
on any such Tax Return, take any position, make any election or adopt any method
that is inconsistent with positions taken, elections made or methods used in
preparing or filing similar Tax Returns in prior periods, or give any approval
or consent under Section 4.13, or agree to any allocation under Section 1.2(c),
of the Asset Purchase Agreement without the prior written consent of Parent; or
(o) authorize, recommend, propose or announce an intention to do any
of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
The Company shall promptly advise Parent orally and in writing of any
change or event having, or which could reasonably be expected to have, a
Material Adverse Effect on the Company or which could prevent or materially
delay the consummation of the Offer or the Merger.
SECTION 6.2 No Solicitation. From and after the date hereof, the
Company shall not, and shall not permit any of its or its Subsidiaries'
officers, directors or employees to, and the
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Company shall use its reasonable best efforts to cause all of its and its
Subsidiaries' attorneys, financial advisors, agents and other representatives
not to, directly or indirectly, solicit, initiate or knowingly encourage
(including by way of furnishing information) any Takeover Proposal (as
hereinafter defined in this Section 6.2), or engage in or continue discussions
or negotiations relating thereto; provided, however, that the Company may engage
in discussions or negotiations with, or furnish information concerning the
Company and its business, properties or assets to, any third party with respect
to a Takeover Proposal if the Board of Directors of the Company concludes in
good faith based on the advice of its outside counsel that it is necessary to do
so in order to comply with its fiduciary duties under applicable law. The
Company promptly will notify Parent of any Takeover Proposal, including the
material terms and conditions thereof and the identity of the person or group
making such Takeover Proposal, and will promptly notify Parent of any
determination by the Company's Board of Directors that a Superior Proposal (as
hereinafter defined in this Section 6.2) has been made. As used in this
Agreement, (i) "Takeover Proposal" shall mean any proposal or offer, other than
a proposal or offer by Parent or any of its Subsidiaries, for a tender or
exchange offer, a merger, consolidation or other business combination involving
the Company or any of its Subsidiaries or any proposal to acquire in any manner
a substantial equity interest in, or a substantial portion of the assets of, the
Company or any of its Subsidiaries and (ii) "Superior Proposal" shall mean a
bona fide proposal or offer made by a third party to acquire the Company
pursuant to a tender or exchange offer, a merger, consolidation or other
business combination or a sale of all or substantially all of the assets of the
Company and its Subsidiaries on terms which a majority of the members of the
Board of Directors of the Company concludes in their good faith reasonable
judgment to be more favorable to the Company's shareholders than the
transactions contemplated hereby and for which any required financing is
committed or which a majority of such members reasonably concludes is reasonably
capable of being obtained by such third party. Notwithstanding anything else in
this Agreement, including this Section 6.2, to the contrary, the Company and its
Board of Directors shall not be prohibited from taking or disclosing to its
shareholders any position pursuant to Rules 14d-9 and 14e-2 under the Exchange
Act or from making any disclosure to the Company's shareholders if the Company's
Board of Directors concludes in good faith based on the advice of its outside
counsel that it is necessary to do so in order to comply with its fiduciary
duties under applicable law.
SECTION 6.3 Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any
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provision of any confidentiality or standstill agreement to which the Company or
any of its Subsidiaries is a party (other than any involving Parent, including
the standstill agreement included in the Confidentiality Agreement dated June
18, 1996, between Parent and the Company, which standstill agreement the parties
hereto acknowledge the Company has waived only in respect of the Offer
(including any Offer involving any increase in the Offer Price), the Merger and
the other transactions contemplated hereby), unless the Board of Directors of
the Company concludes in good faith based on the advice of its outside counsel
that it is necessary to do so in order to comply with its fiduciary duties under
applicable law. During such period, the Company agrees to enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreements, including, without limitation, obtaining injunctions to prevent any
breaches of such agreements and to enforce specifically the terms and provisions
thereof in any court of the United States of America or any state thereof having
jurisdiction, unless the Board of Directors of the Company concludes in good
faith based on the advice of its outside counsel that failure to take such
action is necessary in order to comply with its fiduciary duties under
applicable law.
SECTION 6.4 Other Actions. Except as expressly contemplated or
permitted by this Agreement or except as set forth in the Company Letter, the
Company shall not, and shall not permit any of its Subsidiaries to, take any
action that would, or that could reasonably be expected to, result in (i) any of
the representations and warranties of the Company set forth in this Agreement
that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect, or (iii) any of the Offer Conditions not being satisfied
(subject to the Company's right to take actions specifically permitted by
Section 6.2).
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
SECTION 7.1 Shareholder Approval; Preparation of Proxy Statement. (a)
If approval of this Agreement and the Merger by shareholders of the Company (the
"Company Shareholder Approval") is required by law, the Company shall, as soon
as practicable following the consummation of the Offer, duly call, give notice
of, convene and hold a meeting of its shareholders (the "Shareholders Meeting")
for the purpose of obtaining the Company Shareholder Approval. The Shareholders
Meeting shall be held as soon as practicable following the purchase of Shares
pursuant to the Offer. The Company shall, through its Board of Directors,
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but subject to the fiduciary duties of its Board of Directors under applicable
law as determined by the Board of Directors in good faith based on the advice of
the Company's outside counsel, recommend to its shareholders that the Company
Shareholder Approval be given. Notwithstanding the foregoing, if Sub or any
other Subsidiary of Parent shall acquire ownership of not less than 90% of the
outstanding shares of each class of the Company, the parties shall, at the
request of Parent, take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after the expiration of the Offer
without a Shareholders Meeting in accordance with Section 450.1711 of the MBCA.
(b) If the Company Shareholder Approval is required by law, the
Company shall, as soon as practicable following the consummation of the Offer,
prepare and file a preliminary Proxy Statement with the SEC and shall use its
reasonable best efforts to respond to any comments of the SEC or its staff and
to cause the Proxy Statement to be mailed to the Company's shareholders as
promptly as practicable after responding to all such comments to the
satisfaction of the staff. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Shareholders Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company promptly shall prepare and mail to its shareholders such
an amendment or supplement. Except as required by law, the Company shall not
mail any Proxy Statement, or any amendment or supplement thereto, to which
Parent reasonably objects without first attempting in good faith to resolve such
objections. Parent shall cooperate with the Company in the preparation of the
Proxy Statement or any amendment or supplement thereto.
(c) Parent agrees to cause all shares of the Company Capital Stock
purchased pursuant to the Offer entitled to vote on the Merger owned by Parent
or any Subsidiary of Parent to be voted in favor of the Company Shareholder
Approval. Parent also agrees that if the transactions contemplated by the Asset
Purchase Agreement have not been consummated prior to consummation of the Offer,
Parent shall take all actions as are reasonably required to consummate such
transactions.
SECTION 7.2 Access to Information. Subject to currently existing
contractual and legal restrictions applicable to the Company, the Company shall,
and shall cause each of its
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Subsidiaries to, afford to Parent and to the officers, employees, accountants,
counsel, actuaries, financial advisors and other representatives of Parent
reasonable access to, and permit them to make such inspections as they may
reasonably require of, during normal business hours during the period from the
date of this Agreement through the Effective Time, all their respective
properties, books, contracts, commitments and records (including, without
limitation, the work papers of independent accountants and actuaries) and,
during such period, the Company shall, and shall cause each of its Subsidiaries
to, promptly furnish to Parent (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all other information
concerning its business, properties and personnel as Parent may reasonably
request; provided, however, that no invasive soil or groundwater tests may be
performed without the prior written consent of the Company, which shall not be
unreasonably withheld. No investigation pursuant to this Section 7.2 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto. All information obtained
by Parent pursuant to this Section 7.2 shall be kept confidential in accordance
with the Confidentiality Agreement dated June 18, 1996, between Parent and the
Company.
SECTION 7.3 Fees and Expenses. (a) Except as provided in this Section
7.3 and Section 7.6, regardless of whether the Merger is consummated, all costs
and expenses incurred by a party hereto in connection with this Agreement and
the transactions contemplated hereby, including, without limitation, the fees
and disbursements of counsel, financial advisors and accountants, shall be paid
by the party incurring such costs and expenses.
(b) The Company shall pay, or cause to be paid, in same day funds by
wire transfer to an account specified by Parent up to $1,750,000 of Expenses (as
hereinafter defined in this Section 7.3) if: (i) Parent or Sub terminates this
Agreement under Section 9.1(d) or (ii) the Company terminates this Agreement
pursuant to Section 9.1(e). If Expenses are payable, or have been paid, under
the preceding sentence and within 365 days after a termination described in such
sentence a Takeover Proposal with a third party is consummated (other than a
Takeover Proposal relating to the sale of all or substantially all of the
Company's transportation products group), the Company shall pay to Parent,
simultaneously with the consummation of such Takeover Proposal, by wire transfer
of same day funds, the additional sum of $9,000,000.
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"Expenses" shall mean documented out-of-pocket fees and expenses
reasonably incurred or paid by or on behalf of Parent or its Subsidiaries in
connection with the Offer, the Merger or the consummation of any of the
transactions contemplated by this Agreement, including all reasonable fees and
expenses of law firms, commercial banks, investment banking firms, accountants,
experts and consultants to Parent or any of its Subsidiaries.
SECTION 7.4 Options. (a) Prior to the commencement of the Offer, the Board
of Directors of the Company or the Compensation Committee of the Board of
Directors of the Company (the "Committee") shall adopt procedures pursuant to
which each outstanding Company Stock Option, stock appreciation right and other
stock based award (an "Option") which is exercisable immediately prior to the
consummation of the Offer in accordance with the terms of the applicable plan
(collectively, the "Stock Option Plans"), may be exercised or settled by the
holder thereof by the delivery to the Company of a notice of exercise or
acceptance of cash settlement prior to the consummation of the Offer. Upon the
consummation of the Offer, each Option so exercised or settled shall be canceled
and promptly thereafter the Company shall deliver to the holder thereof cash in
an amount equal to (i) the product of (x) the number of shares of Common Stock
subject or related to such Option and (y) the excess, if any, of the Merger
Consideration over the exercise or purchase price per share of Common Stock
subject or related to such Option, minus (ii) all applicable federal, state,
local and other Taxes required to be withheld by the Company.
(b) Prior to the commencement of the Offer, the Board of Directors of
the Company or the Committee shall take action in accordance with the terms of
the Stock Option Plans to cause each Option outstanding immediately following
the consummation of the Offer, whether or not then exercisable, to become fully
exercisable. The Board of Directors of the Company or the Committee shall also
adopt procedures pursuant to which each such Option may be exercised or settled
by the holder thereof by the delivery to the Company of a notice of exercise or
acceptance of cash settlement prior to the Effective Time. At or prior to the
Effective Time, each such Option so exercised or settled shall be canceled and
promptly thereafter the Company shall deliver to the holder thereof cash in an
amount equal to (i) the product of (x) the number of shares of Common Stock
subject or related to such Option and (y) the excess, if any, of the Merger
Consideration over the exercise or purchase price per share of Common Stock
subject or related to such Option minus (ii) all applicable federal, state,
local and other Taxes required to be withheld by the Company.
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(c) Following the Effective Time, each outstanding Option which has
not theretofore been exercised or settled by the holder thereof shall be
canceled (whether or not such holder has delivered the acknowledgment referred
to in the proviso to this sentence), and promptly thereafter Parent shall
deliver to the holder thereof cash in an amount equal to (i) the product of (x)
the number of shares of Common Stock subject or related to such Option and (y)
the excess, if any, of the Merger Consideration over the exercise or purchase
price per share of Common Stock subject or related to such Option, minus (ii)
all applicable federal, state, local and other Taxes required to be withheld by
the Company; provided, however, that any such payment to a holder of an Option
so canceled shall be conditioned upon the delivery to Parent by such holder of a
receipt in writing acknowledging the receipt by such holder of such payment in
exchange for the cancellation of all Options held by such holder. No further
options shall be granted under any Stock Option Plan after the date of this
Agreement. The Company shall take such actions as may be reasonably requested by
Parent in connection with the cancellation of the Options pursuant to the Merger
and this Agreement.
(d) Prior to the commencement of the Offer, the Board of Directors of
the Company or the Committee shall take action in accordance with the terms of
the Stock Option Plans and pursuant to all other plans and agreements providing
for the award of restricted Common Stock to cause the restrictions on the shares
of restricted Common Stock granted under such plans and agreements to lapse
effective upon the consummation of the Offer and to adopt procedures to enable
all holders thereof to tender such shares of Common Stock pursuant to the terms
of the Offer.
(e) Parent shall provide the Company sufficient funds for the Company
to meet its payment obligations set forth in Sections 7.4(a) and 7.4(b) and,
notwithstanding any provisions of this Agreement to the contrary, the Company
may borrow such funds to the extent they are not provided by Parent pursuant to
this Section 7.4(e).
SECTION 7.5 Public Announcements. Parent and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange.
SECTION 7.6 Real Estate Transfer Tax. Parent and the Company agree
that the Company (or, following the Merger, the
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Surviving Corporation) shall pay any state or local tax which is attributable to
the transfer of the beneficial ownership of the Company's or its Subsidiaries'
real property, if any (collectively, the "Transfer Taxes"), to Parent and any
penalties or interest with respect to the Transfer Taxes, payable in connection
with the consummation of the Offer and the Merger. The Company agrees to
cooperate with Parent in the filing of any returns with respect to the Transfer
Taxes, including supplying in a timely manner a complete list of all real
property interests held by the Company and its Subsidiaries and any information
with respect to such property that is reasonably necessary to complete such
returns. The portion of the consideration allocable to the real property of the
Company and its Subsidiaries shall be determined by Parent in its reasonable
discretion. The shareholders of the Company shall be deemed to have agreed to
be bound by the allocation established pursuant to this Section 7.6 in the
preparation of any return with respect to the Transfer Taxes.
SECTION 7.7 State Takeover Laws. If any "fair price" or "control
share acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, Parent and the Company and
their respective Boards of Directors shall use their reasonable best efforts to
grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to minimize the effects of
any such statute or regulation on the transactions contemplated hereby.
SECTION 7.8 Indemnification; Directors and Officers Insurance. From
and after the consummation of the Offer, Parent shall, and agrees to cause the
Company or the Surviving Corporation to, exculpate, indemnify and hold harmless
all past and present officers, directors, employees and agents of the Company
and its Subsidiaries (the "Indemnified Parties") to the same extent such persons
are currently exculpated and indemnified by the Company or any of its
Subsidiaries pursuant to the Company's or any such Subsidiary's Articles of
Incorporation or By-Laws (or similar organizational documents), agreements in
effect as of the date hereof or applicable law for acts or omissions, or alleged
acts or omissions, occurring at or prior to the Effective Time, and Parent
shall, and shall cause the Company or the Surviving Corporation to, honor all
such obligations of the Company (including, if necessary, providing the Company
or the Surviving Corporation sufficient funds), including, without limitation,
obligations to advance expenses to such Indemnified Parties arising pursuant to
the Company's or any such Subsidiary's Articles of Incorporation or By-laws (or
similar organizational documents), agreements in effect as of the date
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hereof or applicable law; provided, however, that Parent shall not be obligated
to exculpate, indemnify or hold harmless any Indemnified Party who shall become
an employee of the Private Buyer or any of its Subsidiaries in connection with
the Asset Purchase Agreement, or the transactions contemplated thereby, for any
acts or omissions occurring at or prior to the Effective Time in respect of the
business previously conducted by the Company using the TPG Assets (the "Excluded
Matters"); and, provided, further, that this Section 7.8 shall not be deemed to
limit, modify or affect any rights of indemnification, including the advancement
of expenses, under any provisions of the Company's or any of its Subsidiaries'
Articles of Incorporation or By-laws (or similar organizational documents), any
agreements in effect on the date hereof or applicable law with respect to the
Excluded Matters. Parent shall cause the Surviving Corporation to provide, for
an aggregate period of not less than six years from the Effective Time, the
Company's current directors and officers an insurance and indemnification policy
that provides coverage for events occurring prior to the Effective Time (the
"D&O Insurance"), that is no less favorable than the Company's existing policy
or, if substantially equivalent insurance coverage is unavailable, the best
available coverage; provided, however, that the Surviving Corporation shall not
be required to pay an annual premium for the D&O Insurance in excess of 200
percent of the last annual premium paid prior to the date hereof, but in such
case shall purchase as much coverage as possible for such amount.
SECTION 7.9 Notification of Certain Matters. Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent, of:
(i) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would be likely to cause (x) any material representation or
warranty contained in this Agreement that is not qualified as to materiality to
be untrue or inaccurate in any material respect, (y) any material representation
or warranty contained in this Agreement that is qualified as to materiality to
be untrue or inaccurate in any respect or (z) any material covenant, condition
or agreement contained in this Agreement not to be complied with or satisfied;
and (ii) any failure of Parent, Sub or the Company, as the case may be, to
comply with or satisfy any material covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 7.9 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
SECTION 7.10 Board of Directors. Promptly after such time as Sub
acquires Shares pursuant to the Offer, Sub shall be entitled to designate at its
option up to that number of
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directors, rounded to the nearest whole number, of the Company's Board of
Directors, subject to compliance with Section 14(f) of the Exchange Act, as
shall make the percentage of the Company's directors designated by Sub equal to
the aggregate voting power of the Shares held by Parent or any of its
Subsidiaries (assuming the exercise of all outstanding options to purchase, and
the conversion or exchange of all securities convertible or exchangeable into
shares of the Company Capital Stock); provided, however, that the size of the
Company's Board of Directors shall not be larger than 10 persons; provided,
further, that in the event that Sub's designees are elected to the Board of
Directors of the Company, until the Effective Time, such Board of Directors
shall have, and Parent shall cause the Board to have, at least three directors
who are directors on the date of this Agreement (of which at least two directors
are not officers of the Company) (collectively, the "Independent Directors");
and provided, further that, in such event, if the number of Independent
Directors shall be reduced below three for any reason whatsoever, the remaining
Independent Directors shall designate a person to fill such vacancy who shall be
deemed to be an Independent Director for purposes of this Agreement or, if no
Independent Directors then remain, the other directors of the Company as of the
date of this Agreement shall designate three persons to fill such vacancies who
shall not be officers or affiliates of the Company or any of its Subsidiaries,
or officers or affiliates of Parent or any of its Subsidiaries, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.
Subject to applicable law, the Company shall take all action requested by Parent
that is reasonably necessary to effect any such election, including mailing to
its shareholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company agrees to make such mailing with the mailing of the Schedule 14D-9
(provided that Sub shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
Sub's designees). In connection with the foregoing, the Company promptly shall,
at the option of Parent, either increase the size of the Company's Board of
Directors and/or obtain the resignation of such number of its current directors
as is necessary to enable Sub's designees to be elected or appointed to the
Company's Board of Directors as provided above.
SECTION 7.11 Reasonable Best Efforts. Subject to the terms and
provisions of this Agreement and applicable law, each of the Company, Parent and
Sub agrees to use its reasonable best efforts to cause the purchase of Shares
pursuant to the Offer and the consummation of the Merger to occur as soon as
practicable. Without limiting the foregoing, (a) each of the Company, Parent and
Sub agree to use its reasonable best efforts to take, or
40
<PAGE>
cause to be taken, all actions necessary to comply promptly with all legal
requirements that may be imposed on itself with respect to the Offer, the Merger
and the transactions contemplated by the Asset Purchase Agreement (which actions
shall include furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
shall promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with the Offer, the Merger and the transactions
contemplated by the Asset Purchase Agreement and (b) each of the Company, Parent
and Sub shall, and shall cause its Subsidiaries to, use its reasonable best
efforts to obtain (and shall cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, Sub, the Company or any of their Subsidiaries in
connection with the Offer, the Merger and the transactions contemplated by the
Asset Purchase Agreement or the taking of any action contemplated thereby or by
this Agreement. Notwithstanding anything to the contrary contained in this
Agreement, (i) the Company shall not be obligated to use its reasonable best
efforts or to take any action pursuant to this Section 7.11 if the Board of
Directors of the Company shall conclude in good faith based on the advice of its
outside counsel that such action is necessary in order to comply with its
fiduciary duties under applicable law, and (ii) in connection with any filing or
submission required or action to be taken by Parent, the Company or any of their
respective Subsidiaries to consummate the Offer, the Merger or the other
transactions contemplated in this Agreement or the Asset Purchase Agreement, the
Company shall not, without Parent's prior written consent, commit to any
divestiture transaction and neither Parent nor any of its Subsidiaries shall be
required to divest or hold separate or otherwise take or commit to take any
action that limits its freedom of action with respect to, or its ability to
retain, the Company or any of the businesses, product lines or assets of Parent
or any of its Subsidiaries or that would have a Material Adverse Effect on
Parent.
SECTION 7.12 Certain Litigation. The Company agrees that it shall not
settle any litigation commenced after the date hereof against the Company or any
of its directors by any shareholder of the Company relating to the Offer, the
Merger, this Agreement or the Asset Purchase Agreement without the prior written
consent of Parent, which shall not be unreasonably withheld.
41
<PAGE>
SECTION 7.13 Employee Benefits. Parent shall provide or shall cause
the Surviving Corporation to provide benefits for the employees of the Company
from and after the Effective Time either under the Company Plans or under other
employee benefit plans established by Parent or the Surviving Corporation;
provided, however, that this Section 7.13 shall not be deemed to affect in any
way any rights of the employees of the Company under the Company Plans that are
vested as of the Effective Time.
SECTION 7.14 Employee Stock Ownership Plan and Trust. As soon as
reasonably practicable after the Effective Time, employer contirbutions to the
Employee Stock Plan shall be discontinued and the Employee Stock Plan shall be
merged into another qualified defined contribution plan maintained by Parent or
the Surviving Corporation.
SECTION 7.15 Severance, Employment and Benefit Agreements. Parent
shall timely honor, and following the consummation of the Offer and the Merger
(respectively) shall cause the Company or the Surviving Corporation, as the case
may be, to timely honor (including by providing sufficient funds therefor), in
accordance with their terms, all severance, employment and benefit agreements,
plans and arrangements, including, without limitation, those arrangements
referred to in Item 7.15 of the Company Letter (other than any Company Plans or
other employee benefit plans, which are addressed in Section 7.13), with the
Company's directors, officers and employees that are disclosed in the Company
Letter or the Company Filed SEC Documents.
ARTICLE VIII
CONDITIONS PRECEDENT
--------------------
SECTION 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Company Shareholder Approval. If required by applicable law, the
Company Shareholder Approval shall have been obtained; provided, however,
that Parent and Sub shall vote all of their shares of capital stock of the
Company entitled to vote thereon in favor of the Merger.
(b) No Injunction or Restraint. No statute, rule, regulation,
executive order, decree, temporary
42
<PAGE>
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other Governmental Entity
preventing the consummation of the Merger shall be in effect; provided,
however, that each of the parties shall have used its reasonable best
efforts to prevent the entry of any such temporary restraining order,
injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for payment
and paid for Shares pursuant to the Offer; provided, however, that this
condition will be deemed satisfied with respect to the obligations of
Parent or Sub if Sub fails to accept for payment and pay for any Shares
pursuant to the Offer in violation of the terms of this Agreement.
(d) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated.
ARTICLE IX
TERMINATION AND AMENDMENT
-------------------------
SECTION 9.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Shareholder Approval (if required by applicable law):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions set forth in Exhibit A the Offer shall have terminated or
expired in accordance with its terms without Sub having accepted for
payment any Shares pursuant to the Offer or (y) all of the Offer
Conditions have not been satisfied prior to June 30, 1997 or such
later date as the parties may agree to; provided, however, that the
right to terminate this Agreement pursuant to this Section 9.1(b)(i)
shall not be available to any party whose failure to perform any of
its obligations under this Agreement results in the failure of any
such Offer
43
<PAGE>
Condition or if the failure of such Offer Condition results from facts
or circumstances that constitute a breach of representation or
warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree or ruling or other action shall
have become final and nonappealable, provided that the party seeking
to terminate this Agreement shall have used its reasonable best
efforts, subject to Section 7.11, to lift or vacate such order, decree
or ruling;
(c) by Parent or Sub prior to the purchase of Shares pursuant to the
Offer in the event of a breach by the Company of any representation,
warranty, covenant or other agreement contained in this Agreement which (i)
would give rise to the failure of a condition set forth in paragraph (d) or
(e) of Exhibit A and (ii) cannot be or has not been cured within 20 days
after the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph
(c) of Exhibit A to this Agreement;
(e) by the Company if the Board of Directors of the Company
reasonably determines that a Takeover Proposal constitutes a Superior
Proposal and the Board of Directors of the Company concludes in good faith
based on the advice of its outside counsel that termination of this
Agreement is necessary in order to comply with its fiduciary duties under
applicable law; provided, however, that the Company may not terminate this
Agreement pursuant to this Section 9.1(e) unless and until five business
days have elapsed following delivery to Parent of a written notice (a
"Section 9.1(e) Notice") of such conclusion by the Board of Directors of
the Company and during such five business day period the Company has
cooperated fully with Parent, including, without limitation, informing
Parent of the terms and conditions of the Takeover Proposal and the
identity of the Person making the Takeover Proposal, with the intent of
enabling Parent to agree to a modification of the terms and conditions of
this
44
<PAGE>
Agreement so that the transactions contemplated hereby may be effected; and
provided, further, that the Company may not terminate this Agreement
pursuant to this Section 9.1(e) unless at the end of such five business day
period the Board of Directors of the Company continues reasonably to
believe its prior conclusion that the Takeover Proposal constitutes a
Superior Proposal and simultaneously with such termination the Company pays
to Parent the Expenses specified under Section 7.3(b);
(f) by the Company, if (i) any of the representations or warranties of
Parent or Sub set forth in this Agreement that are qualified as to
materiality shall not be true and correct in any respect or any such
representations or warranties that are not so qualified shall not be true
and correct in any material respect, or (ii) Parent or Sub shall have
failed to perform in any material respect any obligation or to comply in
any material respect with any agreement or covenant of Parent or Sub to be
performed or complied with by it under this Agreement and, in the case of
(i) or (ii), such untruth or incorrectness or failure cannot be or has not
been cured within 20 days after the giving of written notice to Parent or
Sub, as applicable; or
(g) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.1.
SECTION 9.2 Effect of Termination. In the event of a termination of
this Agreement by either the Company or Parent as provided in Section 9.1, this
Agreement shall forthwith become void and the Offer and the Merger terminated
and abandoned and there shall be no liability or obligation on the part of
Parent, Sub or the Company or their respective officers, directors, employees or
agents, except with respect to the last sentence of Section 1.2(c), Section
4.23, Section 5.6, the last sentence of Section 7.2, Section 7.3, this Section
9.2 and Section 10.7 (which designated Section or sentence shall survive any
termination), and each of the parties hereto hereby releases and waives any
claim that may otherwise exist upon such termination; provided, however, that
nothing herein shall relieve any party for liability for any willful or bad
faith breach hereof.
SECTION 9.3 Amendment and Certain Other Actions. Subject to applicable
law, this Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors at any time before or after
obtaining the Company Shareholder Approval (if required by law), but, after the
45
<PAGE>
purchase of Shares pursuant to the Offer no amendment shall be made which
decreases the Merger Consideration and after the Company Shareholder Approval no
amendment shall be made which by law requires further approval by the
shareholders of the Company without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto. Following the election or appointment of the
Sub's designees pursuant to Section 7.10 and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors then in office shall
be required by the Company to (i) amend or terminate this Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
this Agreement, (iii) extend the time for performance of Parent and Sub's
respective obligations under this Agreement or (iv) give or authorize any
consent, approval, authorization or recommendation of the Company or its Board
of Directors required hereunder.
SECTION 9.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (i) subject to the
provisions of Section 9.3, extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) subject to the
provisions of Section 9.3, waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) subject to the provisions of Section 9.3, waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
ARTICLE X
GENERAL PROVISIONS
------------------
SECTION 10.1 Non-Survival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time, or, in
the case of the Company, shall survive the consummation of the Offer. The
covenants and agreements of the parties hereto and the Surviving Corporation
shall survive the Effective Time without limitation (except for those that, by
their terms, contemplate a shorter survival period).
46
<PAGE>
SECTION 10.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to
Scotsman Industries, Inc.
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Telecopy: (847) 634-8823
Attention: Richard C. Osborne,
Chairman, President and
Chief Executive Officer
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Telecopy: (312) 853-7036
Attn: Thomas A. Cole, Esq. and
Frederick C. Lowinger, Esq.
(b) if to the Company, to
Kysor Industrial Corporation
One Madison Avenue
Cadillac, Michigan 49601
Telecopy: (616) 775-2661
Attention: George R. Kempton,
Chairman and
Chief Executive Officer
with a copy to:
Warner Norcross & Judd LLP
900 Old Kent Building
111 Lyon Street, N.W.
Grand Rapids, Michigan 49503
Telecopy: (616) 752-2500
Attention: Tracy T. Larsen, Esq. and
R. Paul Guerre, Esq.
SECTION 10.3 Interpretation. When a reference is made in this
Agreement to a Section or Exhibit, such reference shall be to a Section or
Exhibit of this Agreement unless otherwise
47
<PAGE>
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." As used in this Agreement, the term "subsidiary"
or "Subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.
As used in this Agreement, "Material Adverse Change" or "Material Adverse
Effect" means, when used in connection with the Company or Parent, as the case
may be, any change or effect (or any development that, insofar as can reasonably
be foreseen, is likely to result in any change or effect) that is materially
adverse to the business, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole or Parent and
its Subsidiaries taken as a whole, as the case may be. As used in this
Agreement, "consummation of the Offer" means the purchase of Shares pursuant to
the Offer. As used in this Agreement, "to the Company's knowledge" (or words of
similar import) and references to the Company's awareness of certain facts mean
or refer to the actual knowledge of a director or executive officer of the
Company.
SECTION 10.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 10.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, and the Confidentiality Agreement referred to in the last sentence of
Section 7.2, constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof. This Agreement, except for the provisions of
Sections 7.8 and 7.15 (which shall be for the benefit of, and shall be
enforceable by, the described beneficiaries thereto and their heirs, legal
representations, successors and assigns), is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
SECTION 10.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the
48
<PAGE>
State of Michigan, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
SECTION 10.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties, except that Sub
may assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned Subsidiary of Parent, but no such assignment shall relieve Sub of any of
its obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
SECTION 10.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.
SECTION 10.9 Enforcement of this Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, such remedy being in addition to
any other remedy to which any party is entitled at law or in equity.
49
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
SCOTSMAN INDUSTRIES, INC.
By: /s/ Richard C. Osborne
-------------------------
Name: Richard C. Osborne
Title: Chairman, President and
Chief Executive Officer
Attest:
/s/ Donald D. Holmes
- --------------------------
Name: Donald D. Holmes
Title: Vice President-Finance
and Secretary
K ACQUISITION CORP.
By: /s/ Richard C. Osborne
-------------------------
Name: Richard C. Osborne
Title: Chairman, President and
Chief Executive Officer
Attest:
/s/ Donald D. Holmes
- -------------------------------------
Name: Donald D. Holmes
Title: Vice President-Finance
and Secretary
KYSOR INDUSTRIAL CORPORATION
By: /s/ George R. Kempton
------------------------
Name: George R. Kempton
Title: Chairman and
Chief Executive Officer
Attest:
/s/ David W. Crooks
- -------------------------
Name: David W. Crooks
Title: Vice President,
General Counsel
and Secretary
50
<PAGE>
EXHIBIT A
---------
CONDITIONS OF THE OFFER
-----------------------
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that would constitute
a majority of the outstanding shares of Company Capital Stock at the date of the
expiration of the Offer (assuming the exercise of all options to purchase, and
the conversion or exchange of all securities convertible or exchangeable into,
shares of the Company Capital Stock outstanding at the expiration date of the
Offer) (the "Minimum Condition"), (ii) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated, (iii) the Company and the Private Buyer shall have consummated
the transactions contemplated by the Asset Purchase Agreement or the Private
Buyer shall have waived any conditions to consummate the Asset Purchase
Agreement, agreeing to consummate the transactions contemplated thereby
contemporaneously with or immediately following the consummation of the Offer
and (iv) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer all outstanding shares of ESOP Preferred Stock, unless
the Company shall have called all outstanding shares of ESOP Preferred Stock for
redemption on a date that is not later than one business day after the
consummation of the Offer. Furthermore, notwithstanding any other term of the
Offer or this Agreement, Sub shall not be required to accept for payment or,
subject as aforesaid, to pay for any Shares not theretofore accepted for payment
or paid for, and may terminate the Offer if, at any time on or after the date of
this Agreement and before the acceptance of such Shares for payment or the
payment therefor, any of the following conditions exists (other than as a result
of any action or inaction of Parent or any of its Subsidiaries that constitutes
a breach of this Agreement):
(a) there shall be instituted by any Governmental Entity and pending
as of the expiration date of the Offer any suit, action or proceeding (i)
seeking to prohibit or limit the acquisition by Parent or Sub of
<PAGE>
any Shares pursuant to the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any
of the other transactions contemplated by this Agreement or the Asset
Purchase Agreement, or seeking to obtain from the Company, Parent or Sub
any damages that are material in relation to the Company and its
Subsidiaries taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their respective
Subsidiaries of any material portion of the business or assets of the
Company and its Subsidiaries, or Parent and its Subsidiaries, or to compel
the Company or Parent to dispose of or hold separate any material portion
of the business or assets of the Company and its Subsidiaries or Parent and
its Subsidiaries, as a result of the Offer, the Merger or any of the other
transactions contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of Parent or Sub to acquire or hold, or exercise
full rights of ownership of, any Shares to be accepted for payment pursuant
to the Offer, including, without limitation, the right to vote such Shares
on all matters properly presented to the shareholders of the Company, or
(iv) prohibiting Parent or any of its Subsidiaries from effectively
controlling any material portion of the business or operations of the
Company or its Subsidiaries provided, however, that, in the case of clauses
(i) through (iv) above, Parent shall have used its reasonable best efforts,
subject to Section 7.11, to resolve or eliminate the same;
(b) as of the expiration date of the Offer, there shall be enacted,
entered, enforced, promulgated or deemed applicable to the Offer or the
Merger by any Governmental Entity any statute, rule, regulation, judgment,
order or injunction, other than the application to the Offer, the Merger or
the transactions contemplated by the Asset Purchase Agreement of applicable
waiting periods under the HSR Act, that would reasonably be expected to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (iv) of paragraph (a) above;
(c) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or Sub its
approval or recommendation of the Offer, the Merger or this
A-2
<PAGE>
Agreement, or approved or recommended any Takeover Proposal;
(d) any of the representations and warranties of the Company set forth
in this Agreement shall not be true and correct in any respect, in each
case as if such representations and warranties were made as of such time,
except for (i) failures to be true and correct that would not reasonably be
expected to result in a Material Adverse Effect on the Company and (ii)
failures to comply that are capable of being and are cured within 20 days
after written notice from Parent to the Company of such failure (in which
case Parent shall, and shall cause Sub to, extend the expiration date of
the Offer to two business days following the end of such cure period or, if
earlier, the date of cure, unless the Offer would otherwise not expire
prior thereto);
(e) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant of the Company to be performed or
complied with by it under this Agreement, except for (i) failures to so
perform or comply that would not reasonably be expected to result in a
Material Adverse Effect on the Company and (ii) failures to perform or
comply that are capable of being and are cured within 20 days after written
notice from Parent to the Company of such failure (in which case Parent
shall, and shall cause Sub to, extend the expiration date of the Offer to
two business days following the end of such cure period or, if earlier, the
date of cure, unless the Offer would otherwise not expire prior thereto);
(f) there shall have occurred and be continuing as of the expiration
date of the offer (i) any general suspension of trading in, or limitation
on prices for, securities on a national securities exchange in the United
States of America (excluding any coordinated trading halt triggered solely
as a result of a specified decrease in a market index), (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks
in the United States of America, (iii) any limitation (whether or not
mandatory) by any Governmental Entity on, or other event that materially
adversely affects, the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or
A-3
<PAGE>
indirectly involving the United States of America which in any case is
reasonably expected to have a Material Adverse Effect on the Company or to
materially adversely affect Parent's or Sub's ability to complete the Offer
or the Merger or (v) in case of any of the foregoing existing on the date
of this Agreement, material acceleration or worsening thereof which in any
case is reasonably expected to have a Material Adverse Effect on the
Company or to materially adversely affect Parent's or Sub's ability to
complete the Offer or the Merger; or
(g) this Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions, other than the Minimum Conditions, are for
the sole benefit of Parent and Sub and may, subject to the terms of this
Agreement, be waived by Parent and Sub in whole or in part at any time and from
time to time in their sole discretion. The failure by Parent or Sub at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A-4
<PAGE>
Exhibit (c)(2)
ASSET PURCHASE AGREEMENT
among
KUHLMAN CORPORATION,
TRANSPRO GROUP, INC.,
KYSOR INDUSTRIAL CORPORATION,
and certain subsidiaries of
KYSOR INDUSTRIAL CORPORATION
dated as of
February 2, 1997
<PAGE>
TABLE OF CONTENTS
----- -- --------
<TABLE>
<CAPTION>
ARTICLE I
<S> <C> <C>
THE BASIC TRANSACTION................................................... 1
Section 1.1. Agreement to Purchase and Sell Assets..................... 1
Section 1.2. Purchase Price; Allocation................................ 3
Section 1.3. Closing................................................... 4
Section 1.4. Deliveries at Closing..................................... 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS............................... 5
Section 2.1. Organization.............................................. 5
Section 2.2. Authority................................................. 5
Section 2.3. No Violations; Consents and Approvals..................... 6
Section 2.4. Financial Statements...................................... 6
Section 2.5. SEC Documents............................................. 7
Section 2.6. Absence of Certain Changes................................ 7
Section 2.7. Litigation................................................ 7
Section 2.8. Compliance with Applicable Law............................ 7
Section 2.9. Taxes..................................................... 8
Section 2.10. Termination, Severance and Employment Agreements.......... 8
Section 2.11. Employee Benefit Plans; ERISA............................. 9
Section 2.12. Environmental Matters..................................... 10
Section 2.13. Labor Matters............................................. 10
Section 2.14. Title to and Condition of the Purchased Assets............ 11
Section 2.15. Real Property............................................. 11
Section 2.16. Intellectual Property..................................... 11
Section 2.17. Contracts................................................. 11
Section 2.18. Broker's Fees............................................. 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER.............. 12
Section 3.1. Organization.............................................. 12
Section 3.2. Authority................................................. 12
Section 3.3. No Violations; Consents and Approvals..................... 12
Section 3.4. Broker's Fees............................................. 13
Section 3.5. Acceptance of Purchased Assets............................ 13
Section 3.6. Financing................................................. 13
ARTICLE IV
COVENANTS............................................................... 13
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 4.1. Conduct of Business....................................... 13
Section 4.2. Names..................................................... 14
Section 4.3. Access to Information..................................... 14
Section 4.4. Reasonable Best Efforts................................... 14
Section 4.5. Public Announcements...................................... 14
Section 4.6. Notification of Certain Matters........................... 15
Section 4.7. Expenses.................................................. 15
Section 4.8. HSR Filing................................................ 15
Section 4.9. Employees................................................. 15
Section 4.10. Preparation of Financial Statements....................... 15
Section 4.11. Post-Closing Access to Records............................ 15
Section 4.12. Bulk Transfer Laws........................................ 16
Section 4.13. Section 338 Election; Tax Returns......................... 16
Section 4.14. Consents.................................................. 16
Section 4.15. Litigation Matters........................................ 16
Section 4.16. Insurance Matters......................................... 17
Section 4.17. Collectively Bargained Qualified Plans.................... 18
Section 4.18. Other Qualified Plans..................................... 19
Section 4.19. Welfare Plans............................................. 20
Section 4.20. Further Assurances........................................ 21
Section 4.21. Restrictive Covenants..................................... 22
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES............................ 22
Section 5.1. Conditions to Obligations of the Parties.................. 22
Section 5.2. Additional Conditions to Obligations of Parent
and the Purchaser......................................... 22
Section 5.3. Additional Conditions to Obligations of Sellers........... 23
ARTICLE VI
TERMINATION............................................................. 24
Section 6.1. Termination............................................... 24
Section 6.2. Termination by Parent..................................... 24
Section 6.3. Termination by Kysor...................................... 24
Section 6.4. Notice of Termination..................................... 25
Section 6.5. Effect of Termination..................................... 25
Section 6.6. Termination Fee........................................... 25
ARTICLE VII
INDEMNIFICATION AND RELATED MATTERS..................................... 25
Section 7.1. Survival of Representations, Warranties and Covenants..... 25
Section 7.2. Indemnity by Sellers...................................... 26
Section 7.3. Indemnity by Parent and the Purchaser..................... 26
Section 7.4. Limits on Indemnification................................. 26
</TABLE>
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<TABLE>
<CAPTION>
Section 7.5. Third Party Claims.........................................27
ARTICLE VIII
MISCELLANEOUS............................................................28
<S> <C> <C>
Section 8.1. Modification and Waiver....................................28
Section 8.2. Notices....................................................28
Section 8.3. Assignment.................................................29
Section 8.4. Governing Law..............................................29
Section 8.5. Counterparts...............................................30
Section 8.6. Interpretation.............................................30
Section 8.7. Entire Agreement...........................................30
Section 8.8. Severability...............................................30
</TABLE>
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of February 2, 1997
by and among KUHLMAN CORPORATION, a Delaware corporation ("Parent"), TRANSPRO
GROUP, INC., a Delaware corporation and wholly owned subsidiary of Parent (the
"Purchaser"), KYSOR INDUSTRIAL CORPORATION, a Michigan corporation ("Kysor"),
and the corporations listed on Annex A, each a direct or indirect wholly owned
domestic subsidiary of Kysor (each individually a "Subsidiary" and collectively
the "Subsidiaries"). Kysor and the Subsidiaries are sometimes collectively
referred to as "Sellers" and individually as a "Seller." Sellers, Parent and
the Purchaser are sometimes collectively referred to as the "Parties" and
individually as a "Party."
Kysor, through the Subsidiaries, certain direct or indirect wholly owned
foreign subsidiaries listed on Annex B (the "Foreign Subsidiaries"), and certain
divisions of its own ("Divisions") (collectively, "TPG"), designs, manufactures
and markets engine-performance systems, engine-protection systems and components
and accessories for heavy-duty trucks, other commercial vehicles and marine
equipment (the "Business"). This Agreement sets forth the terms and conditions
under which Sellers are willing to sell to the Purchaser, and the Purchaser is
willing to purchase from Sellers, with respect to the Divisions and Subsidiaries
located in the United States, substantially all of the Divisions' and
Subsidiaries' respective assets relating to the Business, including all of the
capital stock of the Foreign Subsidiaries.
ACCORDINGLY, the Parties agree as follows:
ARTICLE I
THE BASIC TRANSACTION
Section 1.1. Agreement to Purchase and Sell Assets. On the terms and
subject to the conditions of this Agreement, at the Closing (defined below) the
Purchaser will purchase from Sellers, and Sellers will sell and transfer to the
Purchaser, all of the right, title and interest that Sellers possess and have
the right to transfer in all of the properties, assets, rights, claims and
goodwill relating exclusively to the Business (collectively, the "Purchased
Assets"), including without limitation the following:
(a) Current Assets. All accounts and notes receivable, prepaid
expenses, deposits, rights or claims to refunds or rebates of any kind and
all other current assets;
(b) Inventory. All inventories of raw materials, work-in-process,
finished goods (including all inventories consigned to dealers, sales
representatives and others) and supplies, wherever located;
<PAGE>
(c) Equipment. All machinery, equipment, tooling, dies, molds, tools,
fixtures, furniture, office equipment, computer equipment and software,
showroom models and displays, automobiles, trucks, trailers, other
vehicles, fuel, spare parts and leasehold improvements, together with all
express and implied warranties by the manufacturers or sellers of those
items, and all maintenance records, brochures, catalogues and other
documents relating to those items or to the installation or functioning of
those items;
(d) Real Property. The real property owned by Sellers described on
attached Exhibit 1.1(d) (the "Real Property"), together with all related
land rights, easements, rights of way and other appurtenances to the
property, and all blueprints, building drawings, architectural
specifications and other documents relating to the property;
(e) Real Property Leases. The real property leases listed on attached
Exhibit 1.1(e), and any leasehold improvements and security or similar
deposits relating to those leases;
(f) Contracts. All customer and supplier purchase orders, personal
property leases and other contracts, agreements and commitments, and any
security or similar deposits relating to those contracts, agreements and
commitments;
(g) Intellectual Property. All registered and unregistered domestic
and foreign patents, patent applications, inventions upon which patent
applications have not yet been filed, service marks, trade names,
trademarks, trademark registrations and applications, logos, copyrighted
works, copyright registrations and applications, trade secrets, formulae,
technology, designs, processes, inventions, know-how and other intellectual
property rights (collectively, the "Intellectual Property Assets");
(h) Records. All records, customer and supplier lists, payroll and
personnel records, product information, product drawings, production
documentation, material specifications, equipment lists, formulae,
specifications, drawings, plans, reports, data, notes, correspondence,
contracts, labels, catalogues, brochures, art work, photographs,
advertising materials, marketing and production literature, files and other
records and documents, including books of account, ledgers, and other
financial records;
(i) Permits and Licenses. All permits, licenses, orders, franchises,
and approvals to the extent transferable;
(j) Intangible Property Rights. All suits, claims, actions,
proceedings or investigations and other intangible property rights;
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(k) Insurance Policies. The life insurance policies upon the life of
Timothy Campbell, William Cobb and William Venema and all insurance
policies solely relating to the Business or the Purchased Assets to the
extent assignable; and
(l) Foreign Subsidiaries. All of the issued and outstanding capital
stock of the Foreign Subsidiaries.
Notwithstanding the foregoing, the Purchased Assets do not include those
assets set forth on attached Exhibit 1.1(m) (the "Excluded Assets"). The
Purchased Assets will be transferred to the Purchaser free and clear of all
claims, liens, mortgages, security interests, encumbrances, charges,
obligations, rights of third parties and other restrictions ("Liens"), except
for those Liens described on attached Exhibit 1.1(n) (the "Permitted Liens").
Section 1.2 Purchase Price; Allocation.
(a) In consideration of the transfer of the Purchased Assets to the
Purchaser and Sellers' other undertakings set forth in this Agreement, the
Purchaser will, and Parent will cause the Purchaser to (including providing
sufficient funds), pay to Sellers an aggregate of Eighty-Six Million
Dollars ($86,000,000) (collectively, the "Purchase Payment"), payable at
Closing by wire transfer of immediately available funds to an account or
accounts designated by Sellers.
(b) As additional consideration for the transfer of the Purchased
Assets to the Purchaser and Sellers' other undertakings set forth in this
Agreement, at Closing the Purchaser will, and Parent will cause the
Purchaser to (including providing sufficient funds), assume and fully pay,
satisfy and discharge when due (other than in the case of any good faith
disputes) all of Sellers' respective liabilities and obligations to the
extent relating to the Business (whether due or to become due, known or
unknown, absolute or contingent, or liquidated or unliquidated), including
without limitation all liabilities for taxes (other than income taxes
imposed on any Seller relating to the Business and other than income taxes
imposed on any Foreign Subsidiary with respect to taxable periods ending
prior to the Closing and, with respect to any taxable periods beginning
before and ending after the Closing, the portion of such taxable periods
ending on and including the Closing, determined on the basis of a "closing
of the books" as of the time of Closing but with items determined on an
annual basis (such as depreciation) allocated pro rata on a daily basis and
with any net operating loss carryforwards allocated first to reduce income
allocable to the period prior to the Closing), all liabilities and
obligations in respect of any Litigation Claim (as defined below)
constituting an Assumed Liability, all employee benefit and welfare
obligations and other employment-related liabilities, including any
severance obligations to employees of the Divisions and the Subsidiaries
not hired
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by the Purchaser and obligations to Timothy Campbell, William Cobb and
William Venema under their respective Supplemental Executive Retirement
Plans with Kysor, as amended, all employee benefit-related obligations to
the extent provided in Sections 4.17, 4.18 and 4.19 below, all liabilities
and obligations arising under the contracts, agreements and other
commitments included in the Purchased Assets, obligations under that
certain Indemnity Agreement between Kysor and Timothy Campbell with respect
to acts or omissions occurring at or prior to the Closing with respect to
the Business, and all environmental liabilities and all other liabilities
associated with the Business, in each case regardless of whether disclosed
to Parent or the Purchaser and regardless of whether consistent with the
representations and warranties of Sellers in this Agreement (collectively,
the "Assumed Liabilities"). Notwithstanding the foregoing, (i) the Assumed
Liabilities will not include those liabilities described in attached
Exhibit 1.2(b), and (ii) Kysor, on the one hand, will be liable for one-
half of all sales, use, excise, transfer, documentary, recording and other
taxes and fees associated with the transfer of the Purchased Assets to the
Purchaser (the "Transfer Taxes") and Parent and the Purchaser, on the other
hand, will be liable for one-half of all Transfer Taxes, and the Parties
will reimburse each other as appropriate to effect the foregoing allocation
of responsibility. The Parties acknowledge and agree that the Assumed
Liabilities include any environmental liabilities to the extent they relate
to properties owned, operated or utilized, or to which any materials or
substances were sent or disposed of, by or with respect to the Business, in
each case before or after Closing. The Purchase Payment and the Assumed
Liabilities are collectively referred to in this Agreement as the "Purchase
Price."
(c) The Purchase Price will be allocated among the Purchased Assets as
mutually determined by the Parties not later than the Closing in accordance
with Section 1060 of the Code (as defined below) and the regulations
thereunder, which allocation will be binding on the Parties for tax
purposes.
Section 1.3. Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") will take place in the office of Rudnick & Wolfe,
203 North LaSalle Street, Chicago, Illinois 60601 at 10 a.m. local time on the
second business day after the satisfaction of the conditions set forth in
Article V below. The Closing will be effective as of the close of business on
the actual day of Closing, and possession of the Purchased Assets shall be
delivered to Purchaser immediately after the Closing on the Closing Date.
Section 1.4. Deliveries at Closing. At the Closing: (a) Sellers will (i)
deliver to Parent and the Purchaser the various certificates, instruments and
documents referred to in Section 5.2 below, (ii) execute, acknowledge (if
appropriate) and deliver to the Purchaser instruments of sale, transfer,
conveyance and assignment (in form and substance acceptable to the Purchaser)
sufficient to transfer the Purchased Assets to the Purchaser, provided that no
such instrument shall expand in any manner the representations and warranties
made by Sellers in this Agreement, (iii) deliver to the Purchaser resignations
of members of the respective Boards of
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Directors of each Foreign Subsidiary as requested by the Purchaser before
Closing, and (iv) deliver to Parent and the Purchaser any other documents
required under this Agreement or reasonably requested by Parent or the Purchaser
so long as they do not expand in any manner the representations and warranties
made by Sellers in this Agreement; and (b) Parent and/or the Purchaser, as
applicable, will (i) deliver to Sellers the Purchase Payment, (ii) execute,
acknowledge (if appropriate) and deliver to Sellers an instrument or instruments
(in form and substance acceptable to Sellers) effecting the assumption of the
Assumed Liabilities, provided, that no such instrument will expand in any manner
the assumption of obligations of Parent and Purchaser in this Agreement, (iii)
deliver to Sellers the various certificates, instruments and other documents
referred to in Section 5.3 below, and (iv) deliver to Sellers any other
documents required under this Agreement or reasonably requested by any Seller.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers (which for purposes of this Article II are deemed to include the
Foreign Subsidiaries) represent and warrant to Parent and the Purchaser, jointly
and severally, as follows, except as previously disclosed by Sellers in an SEC
Document (defined in Section 2.5 below) or in a disclosure letter dated of the
date of this Agreement and delivered to Parent and the Purchaser on the date
hereof, including the materials referenced in that letter (the "Disclosure
Letter"):
Section 2.1. Organization. Each Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each Seller has all requisite corporate power
and authority to own, lease and operate its properties relating to the Business
and to conduct its operations relating to the Business as now being conducted.
Each Seller is duly qualified or licensed and in good standing to do business in
each jurisdiction in which the property owned, leased or operated by it with
respect to the Business or the nature of its operations relating to the Business
makes such qualification necessary, except in those jurisdictions where the
failure to be duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a material adverse effect on the
business, operations, assets or condition of Sellers taken as a whole with
respect to the Business (a "Seller Material Adverse Effect"). Complete copies
of each Seller's charter and bylaws, including all amendments, will be delivered
to the Purchaser before the Closing. Kysor owns directly or indirectly all of
the outstanding capital stock of each Subsidiary.
Section 2.2. Authority. Each Seller has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly and validly authorized and approved by the Board of
Directors of each Seller and the shareholder of each Subsidiary and no other
corporate proceedings are necessary to authorize this Agreement or the
consummation of the transactions
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<PAGE>
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by each Seller and, assuming this Agreement constitutes a
legal, valid and binding agreement of Parent and the Purchaser, it constitutes a
legal, valid and binding agreement of each Seller, enforceable against it in
accordance with its terms.
Section 2.3. No Violations; Consents and Approvals.
(a) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement nor
compliance by any Seller with any of the provisions of this Agreement will
(i) violate any provision of any Seller's charter or bylaws, (ii) result in
a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default under, any of the terms, conditions or
provisions of any license, franchise, permit or agreement, or (iii) violate
any statute, rule, regulation, order or decree of any public body or
authority by which any Seller or any of the Purchased Assets are bound,
excluding from the foregoing clauses (ii) and (iii) any violations,
breaches, defaults or rights that either would not have a Seller Material
Adverse Effect or materially impair any Seller's ability to consummate the
transactions contemplated by this Agreement or for which any Seller has
received, or on or before Closing will have received, appropriate consents
or waivers.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any governmental entity is required in connection
with the execution and delivery of this Agreement by Sellers, or the
consummation by Sellers of the transactions contemplated by this Agreement,
except (i) expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) any
filings and consents that may be required under any environmental law
pertaining to any notification, disclosure or required approval triggered
by the transactions contemplated by this Agreement, (iii) any filings,
consents or approvals as may be required under the laws of any foreign
country in which Sellers, or any of them, conduct business or own any
property or assets and (iv) any other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings not
obtained or made before the Closing the failure of which to be obtained or
made would not have a Seller Material Adverse Effect.
Section 2.4. Financial Statements. Copies of unaudited consolidated
financial statements of Sellers with respect to the Business for the fiscal
years ending December 31, 1996 and 1995 (collectively, the "Financial
Statements") have been provided to Parent and the Purchaser. The Financial
Statements, including all notes and schedules to the Financial Statements, if
any, are in accordance with Sellers' books and records relating to the Business,
accurately and fairly reflect Sellers' transactions, assets and liabilities
relating to the Business, and present fairly Sellers' financial position with
respect to the Business as of the respective dates indicated and the results of
Sellers' operations and changes in cash flows with respect to
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the Business for the respective periods then ended, in conformity with generally
accepted accounting principles (except as may be indicated in the notes
accompanying the Financial Statements).
Section 2.5. SEC Documents. Kysor has made available to Parent and the
Purchaser accurate and complete copies of each registration statement, report,
proxy statement, information statement or schedule, together with all
amendments, that were required to be filed with the Securities and Exchange
Commission ("SEC") by Kysor since January 1, 1994 (the "SEC Documents"), each of
which was timely filed with the SEC. As of their respective dates, the SEC
Documents complied, or will comply, in all material respects with the applicable
requirements of the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, as the case may be, and none of the SEC
Documents contained, or will contain, any untrue statement of a material fact or
omitted, or will omit, to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were or are made, not misleading.
Section 2.6. Absence of Certain Changes. Since December 31, 1996, no
Seller has (a) incurred any liabilities or obligations of any nature, whether
accrued, contingent or otherwise, or suffered any event or occurrence that would
have a Seller Material Adverse Effect, or (b) made any changes in accounting
methods, principles or practices with respect to the Business. Since December
31, 1996, each Seller has operated the Business according to its ordinary course
of business consistent with past practice.
Section 2.7. Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Sellers, threatened against any
Seller, with respect to the Business, before any court or governmental entity
that would have a Seller Material Adverse Effect or prevent or delay the
consummation of the transactions contemplated by this Agreement. No Seller is
subject to any outstanding order, writ, injunction or decree that, to the extent
reasonably foreseen, in the future would have a Seller Material Adverse Effect
or would prevent or delay the consummation of the transactions contemplated by
this Agreement.
Section 2.8. Compliance with Applicable Law. With respect to the
Business:
(a) Sellers hold all permits, licenses, variances, exemptions, orders and
approvals of all governmental entities necessary for the lawful conduct of
the Business (the "Permits"), except for failures to hold any Permits that
would not have a Seller Material Adverse Effect;
(b) Each Seller is in compliance with the Permits applicable to it, except
where the failure to comply would not have a Seller Material Adverse
Effect;
(c) The operations of the Business have not been and are not being
conducted in violation of any law, ordinance, rule or regulation of any
governmental entity,
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except for violations or possible violations that do not and, insofar as
reasonably can be foreseen, in the future will not have a Seller Material
Adverse Effect; and
(d) No investigation or review by any governmental entity with respect to
any Seller is pending or, to the knowledge of Sellers, threatened nor, to
the knowledge of Sellers, has any governmental entity indicated an
intention to conduct the same, other than, in each case, those that would
not have a Seller Material Adverse Effect.
Section 2.9. Taxes. Each Seller, with respect to the Business, has filed
or caused to be filed all federal, state, local and foreign income and other
material tax returns required to be filed by them, and has paid or withheld or
caused to be paid or withheld all taxes of any nature whatsoever, with any
related penalties, interest and liabilities (any of the foregoing being referred
to in this Agreement as a "Tax") that are shown on those tax returns as due and
payable or otherwise required to be paid, other than Taxes being contested in
good faith and for which adequate reserves have been established, except where
the failure to file, pay or withhold would not have a Seller Material Adverse
Effect. There are no material claims, assessments or audits pending or, to
Sellers' knowledge, threatened against any Seller with respect to the Business
for any alleged deficiency in any Tax that, if upheld, would have a Seller
Material Adverse Effect, and no Seller knows of any threatened Tax claims or
assessments against any Seller that if upheld would have a Seller Material
Adverse Effect. There are no waivers or extensions of any applicable statute of
limitations to assess any Taxes relating to the Business. All returns filed
with respect to Taxes relating to the Business are true and correct, except
where any failure to be true and correct would not have a Seller Material
Adverse Effect. There are no outstanding requests for any extension of time
within which to file any return or within which to pay any Taxes shown to be due
on any return. There are no Liens for any Taxes upon the assets of the Business
(other than statutory Liens for Taxes not yet due and payable and Liens for real
estate taxes being contested in good faith) which would have a Seller Material
Adverse Effect.
Section 2.10. Termination, Severance and Employment Agreements. Sellers
have provided to Parent or the Purchaser a complete and accurate list of each of
the following as it relates to the Business: (a) employment or severance
agreement with any director, officer or other key employee that is not
terminable without material liability or obligation (either individually or
collectively) on 60 days' or less notice; (b) agreement with any director,
officer or other key employee that provides any term of employment or other
compensation guarantee or extending severance benefits or other benefits after
termination not comparable to benefits generally available to employees of the
Business; (c) agreement, plan or arrangement with any director, officer or other
key employee under which that person may receive payments that may be subject to
tax imposed by (Section) 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), or included in the determination of that person's "parachute
payment" under (Section) 280G of the Code; and (d) agreement, plan or
arrangement with or affecting any director, officer or other key employee any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of
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the transactions contemplated by this Agreement. Since December 31, 1996, no
Seller has entered into or amended, in any material respect, any employment or
severance agreement with, or granted any severance or termination pay to, any
director, officer or other key employee of the Business. For purposes of this
Agreement, "key employee" means an employee whose aggregate annual compensation
in 1996 or 1997 exceeded, or is expected to exceed, $100,000.
Section 2.11. Employee Benefit Plans; ERISA.
(a) With respect to the Business: (i) each "employee benefit plan" (as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), and all other employee benefit, bonus,
incentive, stock option (or other equity-based), severance, change in
control, welfare (including post-retirement medical and life insurance) and
fringe benefit plans (whether or not subject to ERISA) maintained or
sponsored by any Seller or any trade or business, whether or not
incorporated, that would be deemed a "single employer" within the meaning
of Section 4001 of ERISA (an "ERISA Affiliate"), for the benefit of any
employee or former employee of a Division or Subsidiary or any of Sellers'
ERISA Affiliates (the "Plans") has been operated in accordance with its
terms and is in compliance (including the making of governmental filings)
with all applicable laws, including ERISA and the applicable provisions of
the Code, except for failures that would not have a Seller Material Adverse
Effect, (ii) each of the Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code (the "Qualified Plans") has been
determined by the Internal Revenue Service to be so qualified, and, since
the date of such determination, no event has occurred that would adversely
effect a Plan's qualified status, (iii) no "reportable event," as that term
is defined in Section 4043(c) of ERISA (for which the 30-day notice
requirement to the Pension Benefit Guaranty Corporation ("PBGC") has not
been waived), has occurred with respect to any Plan that is subject to
Title IV of ERISA that presents a risk of liability to any governmental
entity or other person that would have a Seller Material Adverse Effect,
and (iv) there are no pending or, to Sellers' knowledge, threatened claims
(other than routine claims for benefits) audits, investigations or
litigation by, on behalf of, against or relating to, any of the Plans or
any trusts related thereto that would have a Seller Material Adverse
Effect. No Plan is a "multiemployer plan" (within the meaning of Sections
3(37) or 4001(a)(3) of ERISA) nor has any Seller or any ERISA Affiliate
ever contributed or been required to contribute to any multiemployer plan.
(b) (i) No Plan relating to the Business has incurred an "accumulated
fund deficiency" (as defined in Section 302 of ERISA or Section 412 of the
Code), whether or not waived and (ii) neither any Seller nor any ERISA
Affiliate has incurred any liability under Title IV of ERISA except for
required premium payments to the PBGC, which payments have been made when
due, and no events have occurred that are reasonably likely to give rise to
any liability of any
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Seller or an ERISA Affiliate under Title IV of ERISA or that could
reasonably be anticipated to result in any claims being made against the
Purchaser by the PBGC that present a risk of liability that would have a
Seller Material Adverse Effect.
(c) With respect to each Plan relating to the Business that is subject
to Title IV of ERISA, (i) Sellers have provided to Parent or the Purchaser
copies of the most recent actuarial valuation report prepared for the Plan
before the date of this Agreement, (ii) the assets and liabilities in
respect of the accrued benefits as set forth in the most recent actuarial
valuation report prepared by the Plan's actuary fairly presented the funded
status of the Plan in all material respects, and (iii) since the date of
the valuation report there has been no adverse change in the funded status
of any of those Plans that would have a Seller Material Adverse Effect.
(d) Neither any Seller nor any ERISA Affiliate has failed to make any
contribution or payment to any Plan relating to the Business that has
resulted or could result in the imposition of a lien or the posting of a
bond or other security under ERISA or the Code that would have a Seller
Material Adverse Effect.
Section 2.12. Environmental Matters. Each Seller, with respect to the
Business, has obtained and is in compliance with the terms and conditions of all
required permits, licenses, registrations and other authorizations required
under Environmental Laws (as defined below), except for failures that would not
have a Seller Material Adverse Effect. Each Seller, with respect to the
Business, is in compliance with all Environmental Laws, except for failures to
comply that would not have a Seller Material Adverse Effect. No Seller, with
respect to the Business, has received notice of any past or present events,
conditions, circumstances, activities, practices, incidents, actions or plans
that have resulted in or threaten to result in any liability, or otherwise form
the basis of any claim, action, suit, proceeding, hearing or investigation
under, any Environmental Laws that would have a Seller Material Adverse Effect.
For purposes of this Section 2.12, (a) "Environmental Laws" mean applicable
federal, state, local and foreign laws, regulations and codes relating in any
respect to human health and safety, pollution or protection or the environment
and (b) "Hazardous Substances" means any toxic, caustic or otherwise dangerous
substance (whether or not regulated under federal, state or local environmental
statutes, rules, ordinances, or orders), including (i) "hazardous substance" as
defined in 42 U.S.C. (Section) 9601, and (ii) petroleum products, derivatives,
byproducts and other hydrocarbons.
Section 2.13. Labor Matters. Since January 1, 1995, no Seller, with
respect to the Business, (a) has been subject to, or to Sellers' knowledge
threatened with, any strike, lockout or other labor dispute or engaged in any
unfair labor practice, the result of which had or constituted, or could
reasonably be expected to have or constitute, a Seller Material Adverse Effect,
or (b) has received notice of any pending petition for certification before the
National Labor Relations Board with respect to any material group of employees
of any Subsidiary or
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Division who are not currently organized. Sellers have provided to Parent or the
Purchaser true, correct and complete copies of each collective bargaining
agreement to which employees of any Subsidiary or Division are subject.
Section 2.14. Title to and Condition of the Purchased Assets. Each Seller
has or will have by Closing good, valid and marketable title to the Purchased
Assets (including the outstanding capital stock of the Foreign Subsidiaries)
purported to be owned by that Seller, free and clear of all Liens other than the
Permitted Liens. All of the capital stock of the Foreign Subsidiaries is owned
directly or indirectly by Kysor, and there are no outstanding options, warrants,
rights or agreements respecting the issuance, disposition or acquisition of any
such capital stock. With respect to the condition of the Purchased Assets, all
of the Purchased Assets will be transferred to the Purchaser on an "AS IS, WHERE
IS" basis, and SELLERS MAKE NO AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR
IMPLIED, WITH RESPECT TO THE PURCHASED ASSETS, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Section 2.15. Real Property. No building or improvement on the Real
Property encroaches on any easement or property owned by another and no building
or improvement owned by another encroaches on the Real Property, other than any
encroachment that would not have a Seller Material Adverse Effect. The Real
Property, and the applicable Seller's use of the Real Property, comply in all
respects with all laws, regulations, rules, orders, zoning ordinances and
requirements applicable to the Real Property, other than any failure to comply
that would not have a Seller Material Adverse Effect. There are no pending or,
to Sellers' knowledge, threatened condemnation proceedings against any portion
of the Real Property which if adversely determined would have a Seller Material
Adverse Effect.
Section 2.16. Intellectual Property. To Sellers' knowledge, there is no
infringement or unlawful use by any person or entity of any of the Intellectual
Property Assets, other than any infringement or use that would not have a Seller
Material Adverse Effect. No Seller, with respect to the Business, has
manufactured or sold products that conflict with or infringe upon any
proprietary rights of others, except where the conflict or infringement would
not have a Seller Material Adverse Effect.
Section 2.17. Contracts. All material contracts, leases and other
agreements included in the Purchased Assets (the "Assigned Contracts") are
valid, binding and enforceable in all material respects in accordance with their
terms. Each Seller that is a party to an Assigned Contract and, to Sellers'
knowledge, each other party to that Assigned Contract, has complied and is
complying in all material respects with the terms of that Assigned Contract, and
to Sellers' knowledge no event has occurred or circumstances exist that (with or
without notice or lapse of time) may contravene, conflict with or result in a
violation or breach of, or give any Seller or any other person or entity the
right to declare a default under, any Assigned Contract that would have a Seller
Material Adverse Effect.
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Section 2.18. Broker's Fees. Neither Sellers nor anyone acting on any
Seller's behalf have incurred any liability for any broker's fees, commissions
or financial advisory or finder's fees in connection with any of the
transactions contemplated by this Agreement for which Parent or the Purchaser
would become liable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant, jointly and severally, to
each Seller as follows:
Section 3.1. Organization. Each of Parent and the Purchaser is a
corporation duly incorporated, validly existing and in good standing under the
laws of its state of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
Section 3.2. Authority. Each of Parent and the Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly and validly authorized and approved by the
respective Boards of Directors of Parent and the Purchaser and no other
corporate proceedings are necessary to authorize this Agreement or the
consummation of the transactions contemplated by this Agreement. This Agreement
has been duly and validly executed and delivered by Parent and the Purchaser
and, assuming this Agreement constitutes a legal, valid and binding agreement of
Sellers, it constitutes a legal, valid and binding agreement of Parent and the
Purchaser, enforceable against each of them in accordance with its terms.
Section 3.3. No Violations; Consents and Approvals.
(a) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement nor
compliance by Parent and the Purchaser with any of the provisions of this
Agreement will (i) violate any provision of its charter or bylaws, (ii)
result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default under, any of the terms,
conditions or provisions of any license, franchise, permit or agreement to
which Parent or the Purchaser is a party or by which Parent or the
Purchaser or any of its properties is bound, or (iii) violate any statute,
rule, regulation, order or decree of any public body or authority by which
Parent or the Purchaser or any of its properties is bound, excluding from
the foregoing clauses (ii) and (iii) violations, breaches, defaults or
rights that, either individually or in the aggregate, would not have a
material adverse effect on
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Parent's or the Purchaser's ability to perform its obligations pursuant to
this Agreement or consummate the transactions contemplated by this
Agreement (a "Parent Material Adverse Effect") or for which Parent or the
Purchaser has received or on or before Closing will have received
appropriate consents or waivers.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any governmental entity is required by Parent or
the Purchaser in connection with the execution and delivery of this
Agreement, or the consummation by Parent or the Purchaser of the
transactions contemplated by this Agreement, except (i) expiration of the
waiting period under the HSR Act and (ii) any other consents, orders,
authorizations, registrations, declarations and filings not obtained or
made before Closing the failure of which to be obtained or made would not
have a Parent Material Adverse Effect.
Section 3.4. Broker's Fees. Neither Parent, the Purchaser nor anyone
acting on their behalf has incurred any liability for any broker's fees,
commissions or financial advisory or finder's fees in connection with any of the
transactions contemplated by this Agreement for which any Seller could become
liable.
Section 3.5. Acceptance of Purchased Assets. Parent and the Purchaser
accept the Purchased Assets in their present condition on an "AS IS, WHERE IS"
basis.
Section 3.6. Financing. The Purchaser has available to it committed funds
sufficient to allow it to timely consummate the transactions contemplated by
this Agreement.
ARTICLE IV
COVENANTS
Section 4.1. Conduct of Business. Except as contemplated by this
Agreement or as expressly agreed to in writing by Parent, during the period from
the date of this Agreement to the Closing: (a) each Seller will conduct its
operations relating to the Business in the ordinary course of business
consistent with past practices; (b) each Seller will exercise its reasonable
best efforts to maintain and preserve its assets included in the Purchased
Assets, keep its insurance with respect to the Business in full force and
effect, preserve intact the present business organizations and personnel
relating to the Business, preserve the present goodwill of the Business with all
persons having business dealings with it and comply with all laws applicable to
the conduct of the Business; (c) Sellers will not take, or agree in writing or
otherwise to take, any action that would make any of the representations or
warranties of Sellers contained in this Agreement untrue or incorrect in any
material respect as of the date when made; and (d) the Foreign Subsidiaries will
not transfer any cash or cash equivalents to Kysor.
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Section 4.2. Names. Effective as of the Closing, Kysor hereby grants to
Parent and the Purchaser a royalty-free perpetual license to use in connection
with the Business the name "Kysor" (and any derivatives of that name) in the
form currently used by Sellers in connection with the Business. As soon as
practicable after the Closing, Kysor International Distribution Company will
amend its articles of incorporation to change its corporate name to a name that
does not include "Kysor."
Section 4.3. Access to Information. From the date of this Agreement to
the Closing, Sellers will give Parent, the Purchaser and their authorized
representatives (including legal counsel, environmental and other consultants,
financial advisors, accountants, banks, financial institutions and auditors)
full access during normal business hours to all facilities, personnel and books
and records of the Divisions and the Subsidiaries, will permit Parent and the
Purchaser to make any inspections that Parent and the Purchaser reasonably
require and will cause their respective officers to furnish Parent and the
Purchaser with any financial and operating data and other information (of which
Parent and the Purchaser will have the right to make copies at their own
expense) with respect to the Business that Parent and the Purchaser may from
time to time reasonably request; provided, however, that no invasive soil or
groundwater tests may be performed without the prior written consent of Kysor,
which consent will not be unreasonably withheld. All of the foregoing
information will be held in confidence in accordance with the terms of the
Confidentiality Agreement (the "Confidentiality Agreement") between Parent and
Kysor dated December 26, 1996, the terms of which are incorporated by reference
in this Agreement and which will survive the termination of this Agreement.
Section 4.4. Reasonable Best Efforts. Subject to the terms and conditions
in this Agreement and applicable law, each Party will use its reasonable best
efforts promptly to take, or cause to be taken, all actions and do, or cause to
be done, all things necessary, proper or appropriate under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using reasonable best efforts to (i) obtain necessary
consents, approvals or waivers under its material contracts relating to the
Business, (ii) cooperate in making available information and personnel to the
lenders to the Purchaser with respect to any financing for the transactions
contemplated by this Agreement and (iii) lift any legal bar to the transactions
contemplated by this Agreement.
Section 4.5. Public Announcements. Before issuing any press release or
otherwise making any public statements with respect to this Agreement, the
Parties will consult with each other as to its form and substance and will not
issue the press release or make the public statement before such consultation,
except in either case as may be required by law or any obligations pursuant to
any listing agreement with any national securities exchange.
Section 4.6. Notification of Certain Matters. Prior to Closing, Kysor and
Parent will give prompt notice to the other of (a) the occurrence, or non-
occurrence, of any event the occurrence, or non-occurrence, of which would be
likely to cause either (i) any representation or warranty of any Party contained
in this Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Closing, or (ii) any condition set forth
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in Article V to be unsatisfied at any time from the date of this Agreement to
the Closing, (b) any material failure of any Party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement, and (c) any capital expenditure made by any Seller with respect
to the Business in excess of $500,000. The delivery of any notice pursuant to
this Section 4.6 will not limit or otherwise affect the remedies available prior
to Closing under this Agreement to the Party receiving the notice.
Section 4.7. Expenses. Except as expressly provided in this Agreement,
each Party will each bear its own expenses incurred in connection with the
preparation, execution and performance of this Agreement and the transactions
contemplated by this Agreement.
Section 4.8. HSR Filing. Each Party will use its reasonable best efforts
to file as promptly as practicable after the date of this Agreement its pre-
merger notification under the HSR Act and to respond as promptly as practicable
to all inquiries and requests resulting from the filing. Each Party will
furnish to the other a copy of its filing and will cooperate with each other and
keep each other informed concerning the status of its filing and communications
with any governmental authorities with respect to its filing.
Section 4.9. Employees. Effective as of the date of Closing, the
Purchaser will hire and continue the employment of such numbers of employees of
the Divisions and the Subsidiaries and on such terms, and will take all other
steps, that may be necessary to eliminate any obligation of Sellers under the
Worker Adjustment and Retraining Notification Act of 1988, including any
obligation to give notice of the transfer of operations or any loss of
employment or loss of pay or termination benefits. The Parties agree that the
provisions of this Section 4.9 are solely between and for the benefit of the
Parties and do not inure to the benefit of or confer rights upon any third
party, including any employees of the Parties.
Section 4.10. Preparation of Financial Statements. After Closing Sellers
will use their reasonable best efforts to cooperate with Parent and the
Purchaser to cause the preparation and delivery to the Purchaser of audited
consolidated financial statements of Sellers with respect to the Business for
the fiscal years ending December 31, 1996 and 1995 within 45 days after Closing.
The expenses associated with such preparation will be shared equally between
Kysor and the Parent, except that Parent's responsibility will not exceed
$75,000.
Section 4.11. Post-Closing Access to Records. The Parties will preserve
until December 31, 2002 all business records relating to the Purchased Assets,
the Assumed Liabilities and the transactions contemplated by this Agreement.
Each Party will afford the other Parties and their representatives and agents,
during normal business hours and upon reasonable advance notice, reasonable
access to (and the right to copy at the other's expense) those records for any
legitimate purpose, including a tax audit, governmental inquiry or litigation.
Section 4.12. Bulk Transfer Laws. Parent and the Purchaser waive
compliance with any bulk sale and transfer laws applicable to the transactions
contemplated by this Agreement.
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Section 4.13. Section 338 Election; Tax Returns. Without the prior
written consent of Kysor, neither Parent, the Purchaser nor any affiliate
thereof will make any election under Section 338 of the Code, or any similar
provision of state, local or foreign law, in connection with the transactions
contemplated by this Agreement. Parent and the Purchaser agree that no income
tax return of any Foreign Subsidiary with respect to any taxable period (or
portion thereof) prior to the Closing shall be filed or amended after the
Closing without the prior review and written approval of Kysor.
Section 4.14. Consents. The Parties will use their reasonable best
efforts to cooperate with each other to obtain any consents to assignment or
transfer of the Purchased Assets to the Purchaser. If consent to assignment is
not obtained or if such assignment is not permitted irrespective of consent,
Sellers will use their reasonable best efforts to cooperate with the Purchaser
in any reasonable arrangement designed to provide for the Purchaser all benefits
under such Purchased Assets, including enforcement for the benefit of the
Purchaser of any and all rights of the applicable Seller against any other
person with respect to the Purchased Assets; provided, however, that the
Purchaser will bear all costs and expenses relating to such enforcement.
Section 4.15. Litigation Matters. Following the Closing, the Purchaser
will assume the defense of or settle, to the extent permitted under applicable
Policies (as defined below) covering the Insured Claim (as defined below), each
Litigation Claim included among the Assumed Liabilities (the "Defendant Claims")
and will use its reasonable best efforts to cause Kysor and its affiliates
(other than the Foreign Subsidiaries) to be removed as named parties therefrom,
provided such removal would not prejudice any rights or any potential remedies
or recoveries. Following the Closing, the Purchaser shall, in its sole
discretion, prosecute, settle, compromise or cause to be dismissed each
Litigation Claim included among the Purchased Assets (the "Plaintiff Claims")
and will use its reasonable best efforts to cause Kysor and its affiliates
(other than the Foreign Subsidiaries) to be removed as named parties therefrom,
provided such removal would not prejudice any rights or any potential remedies
or recoveries. Whether or not Parent effects the removal of Kysor and its
affiliates (other than the Foreign Subsidiaries) from any such Defendant Claim
or Plaintiff Claim, and in furtherance and not limitation of the provisions of
Article VII, Parent and the Purchaser will defend, indemnify and hold harmless
each Seller and its directors, officers, employees, shareholders,
representatives and agents pursuant to Section 7.3 against any Indemnified Loss
(as defined below) in respect of any Defendant Claim or Plaintiff Claim.
Section 4.16. Insurance Matters.
(a) Kysor will use its reasonable best efforts, consistent with past
practice, to maintain in full force and effect after the Closing Date its
liability insurance policies, including without limitation product
liability, general liability, workers' compensation and environmental
liability policies (collectively, the "Policies" and, individually, a
"Policy") that relate to the Business in respect of acts, events or
conditions that occurred or existed prior to the Closing (the
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"Insured Claims") and will not, without the prior written consent of
Parent, waive any rights of Parent or Purchaser as insureds (or, if Parent
or the Purchaser is not permitted to be an insured under a Policy, any
rights or benefits that the Parent or the Purchaser would have under that
Policy if it were so permitted (an "Intended Insured Party")) under the
Policies. At Parent's or the Purchaser's request in its discretion, Kysor
will use its reasonable best efforts to cause Parent and the Purchaser to
be named as additional insureds under the Policies in respect of the
Insured Claims; provided, however, that Parent and the Purchaser will be
liable for any additional premiums or other charges and will be responsible
for any other obligations to the extent related to naming Parent and the
Purchaser as additional insureds. Parent and the Purchaser may elect to
discontinue coverage as an insured under any Policy upon written notice to
that effect to Kysor.
(b) To the extent that as of the Closing the aggregate deductible,
retention, reimbursement or similar liability (collectively, the "Aggregate
Retention") for any Policy described in the first sentence of Section
4.16(a) above with respect to any Policy year or other applicable period
has not been fully met, the remaining portion (the "Remaining Portion") of
such Aggregate Retention shall, to the extent of claims made thereafter in
respect of such Policy year or period, be borne one-half by Sellers, on the
one hand, and one-half by Parent and the Purchaser (as insured party or
Intended Insured Party), on the other hand (it being understood that in no
event shall Sellers, on the one hand, or Parent and the Purchaser (as
insured parties or Intended Insured Parties), on the other hand, bear a
portion of the Aggregate Retention in excess of its or their, as the case
may be, claims). Subject to the foregoing, each insured party (or Intended
Insured Party) will bear all individual per-claim deductibles, retentions,
reimbursement and similar liabilities in respect of each claim by such
insured party or Intended Insured Party in accordance with the terms of the
Policy. If by reason of the timing of claims made after the Closing with
respect to such Policy, the Remaining Portion of any Aggregate Retention is
borne other than in accordance with the principles reflected in the first
sentence of this Section 4.16(b), then the appropriate party will make such
arrangements to compensate the other party or parties that have borne the
disproportionate amount of such Remaining Portion as is reasonably
acceptable to such latter party or parties (it being understood that such
latter party or parties shall be placed in the same economic position as
intended by the first sentence of this Section 4.16(b)).
(c) The aggregate amount of insurance coverage available as of the
Closing under a Policy with respect to any year or other applicable period
thereunder shall be shared one-half by Sellers, on the one hand, and one-
half by Parent and the Purchaser (as insured party or Intended Insured
Party ), on the other hand. Any allocable portion of insurance coverage
available as of the Closing under any Policy with respect to any year or
other applicable period
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thereunder that is not used by Sellers, on the one hand, or Parent and the
Purchaser (as insured party or Intended Insured Party ), on the other hand,
may be used by the other party. If with respect to any year or other
applicable period under a Policy the aggregate amount of insurance coverage
available thereunder as of the Closing shall have been exhausted and
Sellers or Parent and the Purchaser, as the case may be, shall have
exhausted a portion of the aggregate amount of such insurance coverage
greater than its allocable share as determined in accordance with the
second preceding sentence, Sellers or Parent and the Purchaser, as the case
may be, shall promptly make such arrangements to compensate such party for
its loss of insurance coverage as are reasonably acceptable to such party
(it being understood that such party shall be put in the same economic
position as if the sharing of aggregate insurance coverage provided in this
Section 4.16(c) had initially occurred). Notwithstanding the foregoing, the
Parent and the Purchaser shall share in the aggregate insurance coverage
described above solely in respect of claims relating to the Business.
(d) Each Party agrees that it shall comply with the terms of each
Policy in respect of any Insured Claim, including the claims administration
procedures thereof.
(e) After Closing Sellers, on the one hand, and Parent and the
Purchaser, on the other hand, shall provide information reasonably
requested by the other regarding the status of claims, utilization of
coverage, exhaustion of all deductibles, retentions, reimbursement and
similar liabilities, and other matters regarding the Policies.
Section 4.17. Collectively Bargained Qualified Plans. This Section 4.17
applies to all Qualified Plans sponsored or maintained by a Seller solely
relating to employees in a collective bargaining agreement covering TPG.
Sellers have disclosed all such Qualified Plans covered by this Section 4.17 to
Purchaser and will furnish a list of such Qualified Plans prior to the Closing
Date. With respect to all such plans, effective as of the Closing Date: (a)
each Seller sponsoring such a plan shall take any and all action necessary under
the plan and applicable law to transfer the sponsorship of the plan to the
Purchaser; (b) all records relating to the operation and administration of such
a plan shall be delivered to the Purchaser; (c) Sellers shall secure the
resignation or removal of all trustees or fiduciaries of such a plan, unless
Purchaser specifically informs Sellers in writing that it desires to continue
the appointment of a trustee or other fiduciary; and (d) Sellers shall, or shall
cause any other applicable named fiduciary under such a plan to, direct the
trustee of the plan to transfer all assets to a successor trustee designated by
the Purchaser.
Section 4.18. Other Qualified Plans. This Section 4.18 applies to all
Qualified Plans sponsored or maintained by a Seller relating to TPG employees
which also cover employees of that Seller who are not related to TPG. The
Sellers have disclosed to Purchaser all such
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Qualified Plans covered by this Section 4.18 and will furnish a list of such
Qualified Plans prior to the Closing Date.
(a) Defined Benefit Pension Plans. With respect to all such defined
benefit pension plans, effective as of the Closing Date: (i) each Seller
sponsoring such a plan shall take necessary action to prepare a successor
plan document in contemplation of a spin-off of assets and liabilities for
current and former employees relating to TPG into a separate and successor
plan with terms that are substantially similar to the original plan; (ii) a
list of such current and former employees shall be furnished to Purchaser
prior to the Closing Date; (iii) each Seller shall take all other necessary
action to transfer assets and liabilities to each successor plan (including
the Applicable Percentage of any Excess Assets (both as defined in Code
section 414(1)(2)), and the calculation of the present value of the
liabilities transferred to a successor plan shall be based on the mortality
tables used by the original plans as of January 1, 1997 and the interest
rates used by the PBGC for terminations of defined benefit pension plans as
of the first day of the month that the transfer takes place; (iv) each
Seller sponsoring a successor plan shall take all action necessary under
the successor plan and applicable law to transfer the sponsorship of the
plan to the Purchaser; (v) all records corresponding to the original plans
relating to the operation and administration of the successor plans shall
be delivered to the Purchaser; (vi) Sellers shall secure the resignation or
removal of all trustees or fiduciaries of the successor plans, unless the
Purchaser specifically informs Sellers in writing that it desires to
continue the appointment of a trustee or other fiduciary; and (vii) Sellers
shall, or shall cause any other applicable named fiduciary under the plan
to, direct the trustee of a successor plan to transfer all assets to a
successor trustee designated by the Purchaser.
(b) Defined Contribution Plans. For each Qualified Plan covered by
this Section 4.18 that is a defined contribution plan, except an employee
stock ownership plan, effective as of the Closing Date: (i) each Seller
sponsoring such a plan shall take necessary action to prepare a successor
plan document in contemplation of a spin-off of assets and liabilities for
current and former employees relating to TPG into a separate and successor
plan with terms that are substantially similar to the original plan; (ii) a
list of such current and former employees shall be furnished to the
Purchaser prior to the Closing Date; (iii) each Seller shall take all other
necessary action to transfer assets and liabilities to each successor plan
attributable to current and former employees relating to TPG; (iv) each
Seller sponsoring a successor plan shall take all action necessary under
the successor plan and applicable law to transfer sponsorship of the plan
to the Purchaser; (v) all records corresponding to the original plans
relating to the operation and administration of the successor plans shall
be delivered to the Purchaser; (vi) Sellers shall secure the resignation or
removal of all trustees or fiduciaries of the successor plans, unless the
Purchaser specifically informs
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Sellers in writing that it desires to continue the appointment of a trustee
or other fiduciary; and (vii) Sellers shall, or shall cause any other
applicable named fiduciary under the plan to, direct the trustee of a
successor plan to transfer all assets to a successor trustee designated by
the Purchaser.
(c) Employee Stock Ownership Plan. Effective as of the Closing Date,
the Sellers shall: (i) take all action necessary to permanently discontinue
employer contributions to the employee stock ownership plan ("ESOP")
sponsored by a Seller and to fully vest the accounts of all participants;
(ii) take all action necessary to make final allocations of all unallocated
amounts, in accordance with terms of the ESOP document (which allocations
shall include all participants who are active TPG employees at the Closing
Date); (iii) submit the ESOP to the Internal Revenue Service for a
determination that the allocation of ESOP unallocated assets on the basis
of account balances does not adversely affect the ESOP's qualification
under Sections 401(a) and 4975(e)(7) of the Code; and (iv) after receipt of
the favorable determination letter, provide for the distribution of
benefits from the ESOP to the participants as soon as reasonable feasible.
Provided, however, if the Internal Revenue Service does not issue a
favorable determination letter with respect to allocation of ESOP
unallocated assets on the basis of account balances, or if all of the ESOP
unallocated assets cannot be allocated during 1997, if requested by
Purchaser, Sellers shall prepare a successor plan document for TPG
participants and take necessary action to transfer assets and liabilities
attributable to the TPG participants (including a percentage of the
unallocated assets that would be allocable to TPG participants under
Section 5.6(a) of the ESOP as in effect January 1, 1997) to the successor
plan, in accordance with clauses (i)-(vii) of Section 4.18(b), and such
successor plan shall be assumed by Purchaser.
Section 4.19. Welfare Plans.
(a) Medical Benefits Provided to Active Employees by the Purchaser.
Effective immediately after the Closing Date, the Purchaser shall make
available group medical plan coverage to all TPG active employees (and
their dependents and beneficiaries who had such coverage under a group
medical plan sponsored by Sellers on the Closing Date. The group medical
plan coverage provided by the Purchaser under this Section 4.19(a) shall,
to the extent permissible under applicable law, be based on such terms and
conditions as the Purchaser deems appropriate, in its sole discretion;
provided, however, that any such plan shall not preclude an employee from
receiving coverage for a preexisting illness or other medical condition to
the extent that the employee had coverage for that particular medical
condition under a group health plan maintained by a Seller on the Closing
Date.
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(b) Medical Benefits Provided to Retired Employees by the Purchaser.
Effective immediately after the Closing Date, the Purchaser shall assume
the obligation of Sellers to provide medical coverage to those TPG
employees (and their dependents and beneficiaries) who retired prior to the
Closing Date and as of the Closing Date were provided with retiree medical
benefits (other than COBRA coverage) by a Seller. A list of such employees
will be furnished to the Purchaser prior to the Closing Date.
(c) Benefits Provided by Sellers. Except with respect to a plan
described in Section 4.19(e) below, any claim incurred by a TPG employee
under any Welfare Plan (as defined below) sponsored or maintained by a
Seller on or prior to the Closing Date shall remain the sole liability and
responsibility of the Sellers and/or its particular Welfare Plan. A TPG
employee covered by a Welfare Plan maintained by a Seller on or before the
Closing Date shall have 180 days (or such longer or, in the case of a plan
not self-funded by such Seller, shorter period of time that applies under
the Seller's Welfare Plan) to submit a claim for benefits under the
Seller's Welfare Plan. "Welfare Plan" means an "employee welfare benefit
plan" as defined in Section 3(1) of ERISA maintained by a Seller for the
benefit of any TPG employee.
(d) COBRA Requirements. After the Closing Date: (i) Sellers shall be
responsible for providing the COBRA Coverage for all TPG employees (and
their dependents and beneficiaries) who incur a COBRA qualifying event on
or prior to the Closing Date; and (ii) the Purchaser shall be responsible
for providing COBRA Coverage for all TPG employees (and their dependents
and beneficiaries) who incur a COBRA qualifying event after the Closing
Date.
(e) Section 125 Plan. The provisions of this Section 4.19(e) shall
apply to any Plan maintained by a Seller under Code section 125 covering
TPG employees. Effective as of the Closing Date, Sellers shall take all
action necessary to: (i) spin-off that portion of such a plan covering TPG
employees into a separate plan with substantially similar terms and
conditions that are contained in the original plan; (ii) transfer an
appropriate amount of assets consisting of all unreimbursed salary
reduction contributions to the successor plan; and (iii) transfer
sponsorship of the successor plan to the Purchaser.
Section 4.20. Further Assurances. After Closing each Party will use its
reasonable best efforts to cooperate with each other to further effect the
transfer of the Purchased Assets to, and the assumption of the Assumed
Liabilities by, the Purchaser and the other transactions contemplated by this
Agreement, including (a) remitting to the Purchaser (i) payments received by
Sellers with respect to accounts receivables included in the Purchased Assets
and (ii) invoices and other bills received by Sellers with respect to
liabilities included in the Assumed Liabilities, and (b) providing each other
notice of any claim, obligation or liability for which the Party to be notified
is responsible under this Agreement. Within three business days after Closing,
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Parent will cause the Foreign Subsidiaries to pay and satisfy all inter-company
accounts or liabilities to Kysor and any other Seller.
Section 4.21. Restrictive Covenants. After Closing the Parties agree to
abide by the provisions set forth in Exhibit 4.21.
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
Section 5.1. Conditions to Obligations of the Parties. The obligations of
each Party to consummate the transactions contemplated by this Agreement will be
subject to the satisfaction at or before Closing of each of the following
conditions unless waived in writing by that Party:
(a) No statute, rule or regulation will have been promulgated,
enacted, entered or enforced, and no other legally binding, final and
nonappealable action will have been taken, by any domestic, foreign or
supranational government or governmental, administrative or regulatory
authority or agency of competent jurisdiction or by any court or tribunal
of competent jurisdiction, domestic, foreign or supranational, that in any
of the foregoing cases has the effect of (i) making illegal or directly or
indirectly prohibiting or significantly restricting the consummation of the
transactions contemplated by this Agreement, or (ii) that otherwise would
materially adversely affect Sellers or the Business taken as a whole;
provided, however, that Parent, the Purchaser and each Seller must have
complied with Section 4.4 of this Agreement;
(b) Any waiting period applicable to the transactions contemplated by
this Agreement under the HSR Act must have terminated or expired and all
other material consents and approvals of, and filings with any other
governmental entities or other third parties must have been received or
made, as applicable; and
(c) This Agreement must not have been terminated by any Party in
accordance with its terms.
Section 5.2. Additional Conditions to Obligations of Parent and the
Purchaser. The obligations of Parent and the Purchaser to consummate the
transactions contemplated by this Agreement will be subject to the satisfaction
at or before Closing of each of the following additional conditions unless
otherwise waived in writing by the Purchaser:
(a) the representations or warranties of Sellers contained in this
Agreement that are qualified by materiality must be true and correct in all
respects, and those that are not so qualified must be true and correct in
all material respects, when made and at the Closing as if made again at
that time,
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except in each case for failures to comply that are capable of being and
are cured (other than by mere disclosure of the breach) within 10 days
after written notice from Parent to Kysor of the failure but in any event
before Closing;
(b) Sellers must have complied in all material respects with their
obligations under this Agreement, except for failures to comply that are
capable of being and are cured within 10 days after written notice from
Parent to Kysor of the failure but in any event before Closing;
(c) there must not have occurred on or after the date of this
Agreement any development or developments with respect to the Business that
have had or may reasonably be expected to have a Seller Material Adverse
Effect; and
(d) Kysor must have delivered to Parent and the Purchaser an officer's
certificate certifying that as of the Closing all the conditions set forth
in Sections 5.1 and Sections 5.2(a), (b) and (c) have been complied with.
Section 5.3. Additional Conditions to Obligations of Sellers. The
obligations of each Seller to consummate the transactions contemplated by this
Agreement will be subject to the satisfaction at or before the Closing of each
of the additional following conditions unless otherwise waived in writing by
Sellers:
(a) the representations or warranties of Parent and the Purchaser
contained in this Agreement that are qualified by materiality must be true
and correct in all respects, and those that are not so qualified must be
true and correct in all material respects, when made and at the Closing as
if made again at that time, except in each case for failures to comply that
are capable of being and are cured (other than by mere disclosure of the
breach) within 10 days after written notice from Kysor to Parent of the
failure but in any event before Closing;
(b) Parent and the Purchaser must have complied with their obligations
under this Agreement, except for failures to comply that are capable of
being and are cured within 10 days after written notice from Kysor to
Parent but in any event before Closing;
(c) Parent and the Purchaser must have delivered to each Seller an
officer's certificate certifying that as of the Closing all the conditions
set forth in Section 5.1 and Section 5.3(a) and (b) have been complied
with; and
(d) The cash tender offer for all of the outstanding capital stock of
Kysor by Scotsman Industries, Inc. ("Scotsman") or a subsidiary thereof
must have been consummated.
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ARTICLE VI
TERMINATION
Section 6.1. Termination. This Agreement may be terminated at any time
before the Closing:
(a) by mutual written consent of Kysor and Parent;
(b) by either Kysor or Parent if any court of competent jurisdiction
in the United States or other governmental body in the United States has
issued an order (other than a temporary restraining order), decree or
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and the order,
decree, ruling or other action has become final and nonappealable; provided
that the party seeking to terminate this Agreement will have used its
reasonable best efforts to remove or lift the order, decree or ruling; or
(c) by either Kysor or Parent if the Closing has not occurred by June
30, 1997.
Section 6.2. Termination by Parent. This Agreement may be terminated by
Parent at any time before Closing if (a) the representations or warranties of
Sellers contained in this Agreement are not true and correct as if made at and
as of that time, except for (i) failures to be true and correct that could not
reasonably be expected to result in a Seller Material Adverse Effect and (ii)
failures to comply that are capable of being and are cured (other than by mere
disclosure of the breach) within 10 days after written notice from Parent to
Kysor of the failure; or (b) Sellers have failed to comply with their
obligations under this Agreement, except for (i) failures to comply that could
not reasonably be expected to result in a Seller Material Adverse Effect and
(ii) failures to comply that are capable of being and are cured within 10 days
after written notice from Parent to Kysor of the failure.
Section 6.3. Termination by Kysor. This Agreement may be terminated by
Kysor (a) if the Agreement and Plan of Merger dated as of February 2, 1997
among Kysor, Scotsman and K Acquisition Corp. is terminated for any reason; or
(b) at any time before the Closing if (i) the representations and warranties of
Parent and the Purchaser contained in this Agreement are not true and correct as
if made at and as of that time, except for (A) failures to be true and correct
that could not reasonably be expected to result in a Parent Material Adverse
Effect and (B) failures to comply that are capable of being and are cured (other
than by mere disclosure of the breach) within 10 days after written notice from
Kysor to Parent of the failure; or (ii) Parent or the Purchaser has failed to
comply with its obligations under this Agreement, except for (A) failures to
comply that could not reasonably be expected to result in a Parent Material
Adverse Effect and (B) failures to comply that are capable of being and are
cured within 10 days after written notice from Kysor to Parent of the failure.
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Section 6.4. Notice of Termination. If Parent or Kysor terminates this
Agreement pursuant to this Article VI, that Party will promptly give written
notice to that effect to the other Party.
Section 6.5. Effect of Termination. In the event of termination of this
Agreement pursuant to this Article VI, this Agreement will become void, except
as provided in the last sentence of Section 4.3 and in Sections 4.7 and 6.6
(which provisions will survive any termination of this Agreement), without
liability on the part of any Party or its affiliates, directors, officers,
employees, stockholders, representatives or agents; provided, however, that the
foregoing will not release a party for liability for any willful or bad faith
breach of any obligation or undertaking under this Agreement. Each of the
Parties by this Agreement waives and releases any other claim that may otherwise
exist upon the termination.
Section 6.6. Termination Fee. If this Agreement is terminated by Kysor
(a) due to the failure of the condition set forth in Section 5.3(d) or (b) under
Section 6.3(a), Kysor will promptly pay to Parent (but in any event within three
business days after termination) the sum of $100,000, provided that the fee will
not be payable if Parent or the Purchaser is in material breach of any of its
material representations, warranties or obligations under this Agreement as of
the date of termination.
ARTICLE VII
INDEMNIFICATION AND RELATED MATTERS
Section 7.1. Survival of Representations, Warranties and Covenants. The
representations and warranties contained in this Agreement and any agreement,
document, instrument or certificate delivered under this Agreement will
terminate and expire at the Closing, except for the representations and
warranties set forth in Section 2.2, Section 2.14 and Section 2.18, all of which
will survive the Closing forever. The post-Closing covenants and agreements of
the Parties, including the indemnification covenants set forth in this Article
VII, will survive the Closing without limitation (except for those that, by
their terms, contemplate a shorter survival period). Except for the covenants
and agreements of Sellers in Section 4.1, which will survive for two years after
the Closing, all pre-Closing covenants and agreements of the Parties will not
survive the Closing. This Article VII constitutes the sole and exclusive remedy
of the Parties with respect to any subject matters addressed in this Agreement,
and each Party hereby waives and releases the other Parties from any and all
claims and other causes of action, including claims for contribution, relating
to those subject matters, other than claims for intentional fraud and for
injunctive relief. The making of a claim for indemnification under this Article
VII (a "Claim") will toll the running of the limitation period with respect to
that Claim. For purposes of the preceding sentence, a Claim will be deemed made
upon the commencement of an independent judicial proceeding with respect to a
matter or receipt by the indemnifying Party of a written notice of a Claim
setting forth in detail the factual and contractual bases for the Claim.
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Section 7.2. Indemnity by Sellers. Sellers, jointly and severally, will
defend, indemnify and hold harmless Parent, the Purchaser and their respective
directors, officers, employees, shareholders, representatives and agents against
any loss, cost, damage, liability, obligation, claim or expense (including
reasonable attorney fees and court costs but excluding any consequential,
incidental, exemplary or similar damages) (collectively the "Indemnified
Losses") resulting from or relating to (a) any breach of any representation,
warranty, covenant or agreement made by Sellers in this Agreement that under
Section 7.1 survives the Closing or any breach or nonperformance of any
agreement entered into by any Seller at Closing, (b) any liabilities of Sellers
not assumed by the Purchaser pursuant to this Agreement, and (c) the successful
enforcement of Sellers' indemnification obligations under the Agreement.
Section 7.3. Indemnity by Parent and the Purchaser. Parent and the
Purchaser, jointly and severally, will defend, indemnify and hold harmless each
Seller and its directors, officers, employees, shareholders, representatives and
agents against any Indemnified Losses resulting from or relating to (a) any
breach or nonperformance of any covenant or agreement made by Parent or the
Purchaser in this Agreement that under Section 7.1 survives the Closing or any
agreement entered into by Parent or the Purchaser at Closing, (b) the Assumed
Liabilities, (c) the conduct of the Business and the use of the Purchased Assets
after Closing, and (d) the successful enforcement of Parent's and the
Purchaser's indemnification obligations under this Agreement.
Section 7.4. Limits on Indemnification. The indemnification obligations
of the Parties will be limited as follows:
(a) Sellers will not be liable to Parent or Purchaser for Claims until
the aggregate amount of Claims exceeds Five Hundred Thousand Dollars
($500,000) (the "Basket Amount"). Upon reaching the Basket Amount Sellers
will be liable to Parent and the Purchaser for all Claims in excess of the
Basket Amount up to an aggregate amount of Eight Million Dollars
($8,000,000) (the "Maximum Amount"). Under no circumstances will the
aggregate amount of Sellers' indemnification obligations exceed the Maximum
Amount. Notwithstanding the foregoing, nothing in this Section 7.4(a) will
limit Seller's obligations under Section 4.1(d) or with respect to any
post-Closing covenants and agreements of Sellers, including the
indemnification covenants set forth in this Article VII, or with respect to
any claims for intentional fraud.
(b) Any amounts recoverable by an Indemnitee will be net of any tax
benefits, insurance proceeds or other recoveries or reimbursements obtained
by the Indemnitee. To the extent the tax benefits, insurance proceeds or
other recoveries or reimbursements are incurred or received after any
recovery pursuant to this Article VII, there will be a corresponding
adjustment among the Parties without regard to the time limitations imposed
under this Article VII. The Parties agree that all indemnification payments
will be treated for tax purposes as an adjustment to the Purchase Price.
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Section 7.5. Third Party Claims. If any action, suit, investigation or
proceeding (including negotiations with federal, state, local or foreign tax
authorities) (the "Action") is threatened or commenced by a third party in
respect of which a Party or other person described in Section 7.2 and Section
7.3 (an "Indemnitee") may make a Claim under this Agreement, the Indemnitee will
notify the Party obligated to indemnify that Party (the "Indemnitor") to that
effect with reasonable promptness (so as to not prejudice the Indemnitor's
rights) after the commencement or threatened commencement of the Action, and the
Indemnitor will have the opportunity to defend against the Action (or, if the
Action involves to a significant extent matters beyond the scope of the
indemnity agreement contained in this Article VII, those claims that are covered
hereby) subject to the limitations set forth below. If the Indemnitor elects to
defend against any Action (or, as described in the preceding parenthetical, one
or more claims relating thereto), the Indemnitor will notify the Indemnitee to
that effect with reasonable promptness. In that case, the Indemnitee will have
the right to employ its own counsel and participate in the defense of the
Action, but the fees and expenses of such counsel will be at the expense of the
Indemnitee unless the employment of such counsel at the expense of the
Indemnitor is authorized in writing by the Indemnitor. Any Party granted the
right to direct the defense of a threatened or actual Action under this Section
7.5 will: (a) keep the other Parties fully informed of material developments in
the Action at all stages of the Action; (b) promptly submit to the other Parties
copies of all pleadings, responsive pleadings, motions and other similar legal
documents and papers received in connection with the Action; (c) permit the
other Parties and their counsel, to the extent practicable, to confer on the
conduct of the defense of the Action; and (d) to the extent practicable, permit
the other Parties and their counsel an opportunity to review all legal papers to
be submitted prior to their submission. The Parties will make available to each
other and each other's counsel and accountants all of their books and records
relating to the Action, and each Party will render to the other Parties any
assistance that may be reasonably required in order to insure the proper and
adequate defense of the Action. The Parties will use their respective good
faith efforts to avoid the waiver of any privilege of any Party. The assumption
of the defense of any matter by an Indemnitor will not constitute an admission
of responsibility to indemnify or in any manner impair or restrict that party's
rights to later seek to be reimbursed its costs and expenses if indemnification
with respect to the matter was not required. An Indemnitor may elect to assume
the defense of a matter at any time during the pendency of the matter, even if
initially the Party did not elect to assume the defense, so long as the
assumption at the later time would not prejudice the rights of the Indemnitee.
No settlement of a matter by the Indemnitee will be binding on an Indemnitor for
purposes of the Indemnitor's indemnification obligations. No settlement of a
matter by the Indemnitor will be binding on an Indemnitee without the prior
written consent of the Indemnitee (which consent will not be unreasonably
withheld) unless the settlement involves only the payment of money that
Indemnitor pays simultaneously with such settlement. Notwithstanding the
foregoing, with respect to any Action for which a claim has been or may be made
under any insurance policy, the Parties will comply with any procedures in such
policy for filing, maintaining or prosecuting such claim, and to the extent the
procedures in such policy are inconsistent with this Section 7.5, the procedures
in such policy will control.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1. Modification and Waiver. At any time before the Closing,
subject to applicable law, this Agreement may be amended, modified or
supplemented only by the written agreement (referring specifically to this
Agreement) of the Parties. At any time before the Closing, Parent and the
Purchaser, on the one hand, and Sellers, on the other hand, may (a) extend the
time for the performance of any of the obligations or other acts of the other,
(b) waive any inaccuracies in the representations and warranties of the other
contained in this Agreement or in any documents delivered pursuant to this
Agreement and (c) waive compliance by the other with any of the agreements or
conditions contained in this Agreement that may legally be waived. Any
extension or waiver will be valid only if set forth in an instrument in writing
specifically referring to this Agreement and signed on behalf of the extending
or waiving Party.
Section 8.2. Notices. All notices and other communications under this
Agreement will be in writing and will be delivered personally or by next-day
courier or telecopied with confirmation of receipt, to the Parties at the
addresses specified below (or at any other address for a Party that will be
specified by like notice; provided that any notice of a change of address will
be effective only upon actual receipt of the notice). Any notice will be
effective upon receipt, if personally delivered or telecopied, or one day after
delivery to a courier for next day delivery.
(a) if to any Seller:
Kysor Industrial Corporation
One Madison Avenue
Cadillac, Michigan 49601-9785
Fax: (616) 775-2661
Attention: General Counsel
with a copy to:
Tracy T. Larsen, Esq.
Warner, Norcross & Judd LLP
900 Old Kent Building
111 Lyon Street, NW
Grand Rapids, Michigan 49503
Fax: (616) 752-2500
(b) if to Parent or the Purchaser:
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Kuhlman Corporation
Three Skidaway Village Square
Savannah, Georgia 31411
Fax: (912) 598-0737
Attention: Richard A. Walker, Esq.
with a copy to:
Stephen A. Landsman, Esq.
Rudnick & Wolfe
203 North LaSalle Street
Chicago, Illinois 60601
(312) 236-7516
Section 8.3. Assignment. This Agreement and all of the provisions of
this Agreement will be binding upon and inure to the benefit of the Parties and
their respective successors and permitted assigns. In addition, this Agreement
will inure to the benefit of and be enforceable by any person or entity
acquiring beneficial ownership of 50% or more of Kysor's outstanding capital
stock, whether by tender offer, merger or otherwise, and such person's or
entity's successors or assigns; provided that such person or entity assumes and
agrees to perform the obligations of Kysor under Article VII. Neither this
Agreement nor any of the rights, interests or obligations under this Agreement
will be assigned by any of the Parties without the prior written consent of the
other Parties. No assignment will relieve any Party of its obligations under
this Agreement. Except for the individuals identified in Article VII as
entitled to indemnification under the terms of that Article, this Agreement is
not intended to confer any rights or remedies upon any other person or entity
except the Parties.
Section 8.4. Governing Law. This Agreement will be governed by the laws
of the State of Michigan as to all matters, including matters of validity,
construction, effect, performance and remedies, without regard to conflict of
law principles.
Section 8.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
Section 8.6. Interpretation. The Article and Section headings contained
in this Agreement are solely for convenience of reference, are not part of the
agreement of the Parties and will not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, the term"including"
and words of similar import will mean "including, without limitation," unless
the context otherwise requires or unless otherwise specified, the term "to the
knowledge of Sellers" (or words of similar import) will mean to the knowledge of
any executive officer of any Seller, and the term "Litigation Claim" means any
pending or threatened suit, action, proceeding or investigation, whether as a
plaintiff or as a defendant, and whether existing on or after the date of this
Agreement.
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Section 8.7. Entire Agreement. This Agreement, the Disclosure Letter and
the Confidentiality Agreement (collectively, the "Transaction Documents")
embody the entire agreement and understanding of the Parties in respect of the
subject matter contained in the Transaction Documents and supersede all prior
agreements and understandings among the Parties with respect to that subject
matter. There are no representations, promises, warranties, covenants or
undertakings in respect of that subject matter, other than those expressly set
forth or referred to in the Transaction Documents.
Section 8.8. Severability. The invalidity or unenforceability of any
particular provision of this Agreement will be construed in all respects as if
the invalid or unenforceable provision were omitted. All provisions of this
Agreement will be enforced to the fullest extent permitted by law.
* * * * * * *
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The Parties have caused this Agreement to be signed by their respective
duly authorized officers as of the date first written above.
KUHLMAN CORPORATION
By: /s/ Robert S. Jepson, Jr.
-----------------------------------
Name: Robert S. Jepson, Jr.
Title: Chairman and Chief
Executive Officer
"Parent"
TRANSPRO GROUP, INC.
By: /s/ Robert S. Jepson, Jr.
-----------------------------------
Name: Robert S. Jepson, Jr.
Title: Chairman and Chief
Executive Officer
"Purchaser"
KYSOR INDUSTRIAL CORPORATION
By: /s/ George R. Kempton
-----------------------------------
Name: George R. Kempton
Title: Chairman & CEO
"Kysor"
KYSOR INTERNATIONAL DISTRIBUTION
COMPANY
By: /s/ George R. Kempton
-----------------------------------
Name: George R. Kempton
Title: President
"Subsidiary"
AUSTIN TRAILER EQUIPMENT COMPANY
By: /s/ George R. Kempton
-----------------------------------
Name: George R. Kempton
Title: President
"Subsidiary"
WESTRAN CORPORATION
By: /s/ George R. Kempton
-----------------------------------
Name: George R. Kempton
Title: President
"Subsidiary"
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ANNEX A
SUBSIDIARIES
------------
Kysor International Distribution Company, a Michigan corporation
Austin Trailer Equipment Company, a Michigan corporation
Westran Corporation, a Michigan corporation
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ANNEX B
FOREIGN SUBSIDIARIES
------- ------------
Kysor Europe Ltd., a United Kingdom corporation
Kysor/Asia Ltd., a Korean corporation
Dynair, Ltd., a United Kingdom corporation
Kysor Industries, S.A., a Belgium corporation
Kysor Do Brasil LTDA, a Brazilian corporation
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EXHIBIT 1.1(d)
OWNED REAL PROPERTY
----- ---- --------
1. Plant, warehouse and office located in Byron, Illinois
2. Plant and office located in Scottsburg, Indiana
3. The following Michigan properties:
(a) Cadillac: Plant, warehouse and office
(b) Spring Lake: Plant and office
(c) Rothbury: Plant, warehouse and office
(d) Walker: Plant and office
(e) White Pigeon: Plant and office
4. Plant and office in Charlotte, North Carolina
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EXHIBIT 1.1(e)
REAL PROPERTY LEASES
---- -------- ------
Leases respecting the following facilities:
(a) Plant and office located in Hengoed, South Wales
(b) Plant and office located in Nailsworth, England
(c) Plant and office located in Changwon, South Korea
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EXHIBIT 1.1(m)
EXCLUDED ASSETS
-------- ------
The Purchased Assets do not include the following assets of Sellers:
(a) except for that which exists within the Foreign Subsidiaries, any cash,
investments and other cash equivalents, (b) inter-company accounts (except with
respect to the Foreign Subsidiaries, which will be settled within three business
days after Closing), (c) the corporate charter, corporate records, seals, stock
transfer books, blank stock certificates, minute books and other documents
relating to the organization, maintenance and existence of each Seller as a
corporation, (d) all qualifications to transact business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, (e) any assets of
Sellers relating to their respective operations exclusive of the Business, (f)
the equity interest of any Seller in the cogeneration facility located in
Cadillac, Michigan, or any proceeds from the sale thereof, (g) the name "Kysor"
and any derivatives of that name, and (h) the following amounts received or to
be received in connection with the settlement of insurance claims with respect
to environmental matters: (i) approximately $500,000 received from Wausau in
1996 (global settlement), (ii) approximately $1,350,000 received from Royal
Globe Insurance in January, 1997 (global settlement), and (iii) amounts to be
received from Firemen's Fund (global settlement except with respect to Cadillac,
MI superfund site (settlement for past costs only)).
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EXHIBIT 1.1(n)
PERMITTED LIENS
--------- -----
"Permitted Liens" means (a) Liens for water, sewage and similar
charges and current taxes and assessments not yet due and payable or being
contested in good faith, (b) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar Liens arising or incurred in the
ordinary course of business, (c) Liens arising or resulting from any action
taken by Parent or the Purchaser, (d) easements, rights of way, restrictions and
other similar Liens that do not materially interfere with the ordinary conduct
of the operations of any Division or any Subsidiary, (e) any Liens set forth in
any leases, agreements or other documents included in the Purchased Assets that
evidence the applicable Seller's rights in or to title to a particular Purchased
Asset, (f) any Liens associated with the Assumed Liabilities, (g) minor
imperfections or defects in title which do not effect the value or use of the
Purchased Assets and (h) any other Liens to which Parent or the Purchaser
consents in writing.
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EXHIBIT 1.2(b)
EXCLUDED LIABILITIES
-------- -----------
The following liabilities are Excluded Liabilities: (a) except as
provided in Section 1.2(b), any severance or benefit obligations respecting
central staff (headquarters) employees of Kysor, (b) liabilities arising under
the Termination Agreement between Kysor and Timothy Campbell, (c) liabilities
associated with Kysor's equity interest in the cogeneration facility located in
Cadillac, Michigan, (d) Sellers' expenses associated with the transactions
contemplated by this Agreement to the extent not specifically allocated to
Parent or the Purchaser, (e) Sellers' post-Closing contractual obligations under
this Agreement, and (f) inter-company accounts (except with respect to the
Foreign Subsidiaries, which will be settled within three business days after
Closing).
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EXHIBIT 4.21
------------
RESTRICTIVE COVENANTS
---------------------
Section 1. From and after the Closing, each Seller and each of their
respective subsidiaries (each, a "Restricted Party" and, collectively, the
"Restricted Parties") shall not, except on behalf of the Purchaser, either
directly or indirectly, on its own account, or as an independent contractor,
consultant, agent, partner, joint venture or owner of any other person, firm,
partnership, corporation or other entity, or in any other capacity, in any way:
(a) Throughout the period of five (5) years from and after the date
of this Agreement (the "Term") within the United States of America,
including its possessions and territories, or within any foreign country or
foreign jurisdiction in which TPG operates or sells any of its products,
conduct, engage in or aid or assist anyone in the conduct of a business (or
any portion thereof) which is substantially similar or directly competitive
with the Business (or any portion thereof), as currently conducted or as
currently planned to be conducted during the Term; or
(b) Throughout the Term solicit, divert, take away or accept orders
from, or attempt to solicit, divert, take away or accept orders from, any
person, firm, partnership, corporation or other entity, wherever located,
for whom any member of TPG performed any services or to whom any member of
TPG sold any product within the eighteen (18) month period immediately
preceding the date of this Agreement with respect to any product or service
which is the same or substantially similar (in either function or use) to
the products or services sold or provided during said eighteen (18) month
period by any member of TPG in respect of the Business; or
(c) Throughout the three (3) year period after the date of this
Agreement, solicit for employment any person who was employed by or engaged
by any Restricted Party with respect to the Business within the twelve (12)
month period immediately preceding the date of this Agreement (other than
in the course of a general hiring solicitation program which is not
specifically targeted, in whole or in part, to employees of the Business or
Purchaser); or
(d) Use for itself or for any other person, firm, corporation,
partnership, association or other entity, or divulge or disclose in any
manner to any person, firm, corporation, partnership, association or other
entity, the methods of operation, financial data, sources of supply, know-
how, pricing information, records, books, agreements, techniques,
procedures, systems or other trade secrets or confidential or proprietary
information included with the Purchased Assets (hereinafter referred to as
the "Confidential Information"). Notwithstanding anything to the contrary
contained in this Exhibit 4.21, the restrictions on disclosure and use of
the Confidential Information shall not apply to (i) information or
techniques which are or become available to the public other than through
disclosure (whether deliberate or inadvertent) by any Restricted Party
-39-
<PAGE>
in violation of this Section 1 (d); (ii) disclosure of Confidential
Information in judicial or administrative proceedings or other
requirements of the law to the extent any Restricted Party is legally
compelled to disclose such information in the opinion of such Restricted
Party's counsel, provided that such Restricted Party shall have used its
reasonable efforts to obtain an appropriate protective order or other
assurance of confidential treatment for the information required to be so
disclosed; (iii) such Confidential Information becomes available to a
Restricted Party from a third party who is under no confidential or
fiduciary obligation to Purchaser with respect to such Confidential
Information or (iv) the disclosure of Confidential information in
connection with submitting proof or evidence in any legal or
administrative proceeding to enforce any rights or remedies of Sellers
under this Agreement or any of the documents contemplated hereby.
Notwithstanding the foregoing, nothing set forth in this Exhibit 4.21 shall
prohibit a Restricted Party from: (i) owning for investment purposes not in
excess of 5% in the aggregate of any class of capital stock of any corporation
if such capital stock is publicly traded and listed on any national or regional
stock exchange or quoted on the Nasdaq National Market; and (ii) purchasing, and
following such purchase, actively engaging in, any business that has a
subsidiary, division, group, franchise or segment that is engaged in any
activity that, without taking into account this sentence, cannot be engaged in
by a Restricted Party under this Exhibit 4.21, so long as (x) on the date of
such purchase not more than 15% of the consolidated revenues of such business
are derived from such activity and (y) such business divests itself of such
subsidiary, division, group, franchise or segment as soon as practicable after
the date of such purchase (but in any event within one year after the date of
such purchase).
Section 2. Each Restricted Party hereby agrees that the periods of
time, geographical scope and other limitations provided for in Section 1 above
are the minimum such terms necessary to protect the Purchaser and each of its
affiliates, successors and assigns in the use and employment of the goodwill
respecting the Business. Each Restricted Party further agrees that damages
cannot adequately compensate Purchaser in the event of its breach of any of the
covenants contained in Section 1 above. Accordingly, each Restricted Party
agrees that in the event of a breach of any of such covenants, Purchaser shall
be entitled to obtain injunctive relief against such Restricted Party, without
bond but upon due notice, in addition to such other relief as may appertain at
law or in equity. Obtainment of any such injunction by Purchaser shall not be
deemed an election of remedies or a waiver of any right to assert any other
remedies Purchaser may have at law or in equity. The existence of any claim or
cause of action of any Restricted Party against Purchaser, of whatever nature,
shall not constitute a defense of Purchaser's enforcement of the covenants
contained in Section 1 above. To the extent any of the covenants contained in
Section 1 above are deemed unenforceable by virtue of their scope, in terms of
geographical area or length of time or otherwise, but may be made enforceable by
limitations thereon, each Restricted Party agrees that the same shall be
enforceable to the fullest extent permissable under the laws and public policies
of the jurisdiction in which enforcement is sought. The parties hereto hereby
authorize any court of competent jurisdiction to modify or reduce the scope of
the covenants contained in Section 1 above to the extent necessary to make such
covenants enforceable.
-40-
<PAGE>
EXHIBIT (c)(3)
JOINDER
-------
Effective at the consummation of the tender offer contemplated by the
Agreement and Plan of Merger dated as of February 2, 1997 among Scotsman
Industries, Inc., a Delaware corporation ("Scotsman"), K Acquisition Corp., a
Michigan corporation, and Kysor Industrial Corporation, a Michigan corporation
("Kysor"), and in order to induce Kuhlman Corporation, a Delaware corporation
("Kuhlman"), and Transpro Group, Inc., a Delaware corporation ("Kuhlman Sub"),
to enter into the Asset Purchase Agreement dated as of February 2, 1997 (the
"Asset Purchase Agreement") among Kuhlman, Kuhlman Sub, Kysor and certain
subsidiaries of Kysor named therein, Scotsman hereby agrees to be bound by the
provisions of Section 4.21 and Exhibit 4.21 of the Asset Purchase Agreement as a
Restricted Party (as such term is defined therein) and by the provisions of
Article VII of the Asset Purchase Agreement.
Date: February 2, 1997 SCOTSMAN INDUSTRIES, INC.
By: /s/ Richard C. Osborne
-----------------------------------
Name: Richard C. Osborne
Title: Chairman, President and
Chief Executive Officer
<PAGE>
Exhibit (c)(4)
[LETTERHEAD OF KYSOR INDUSTRIAL CORPORATION]
June 18, 1996
CONFIDENTIAL
Scotsman Industries, Inc.
c/o Mr. Richard C. Osborne
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Gentlemen:
We have entered into preliminary discussions concerning a possible
negotiated business transaction between Kysor Industrial Corporation ("Kysor")
and Scotsman Industries, Inc. ("Scotsman"). In connection therewith, each party
has been, or may in the future be, furnished certain information concerning the
business, financial condition, operations, assets and liabilities of the other
from officers, directors, employees, representatives, advisors and/or agents of
such other party. In consideration of the foregoing, we each hereby agree to the
following (it being understood that we are also each agreeing to cause our
respective affiliates, including persons who may become our affiliate or a
successor to us or to a substantial portion of our business or assets after the
date hereof, to comply with all of the provisions hereof):
(I) Use of Evaluation Material. The Evaluation Material (as defined
below) will be used solely for the purpose of evaluating a possible negotiated
business transaction between Kysor and Scotsman. Unless and until we have
completed such a transaction pursuant to a definitive agreement (a "Definitive
Agreement"), all the Evaluation Material will be kept confidential by us and our
Representatives (as defined below); provided, however, that we may disclose the
Evaluation Material or portions thereof to those of our directors, officers,
employees, agents or advisors (the persons to whom such disclosure is
permissible being collectively called "Representatives") who need to know such
information for the sole purpose of evaluating a possible negotiated business
transaction between us and who, prior to the receipt of Evaluation Material,
agree to keep such information confidential. We each agree to be responsible for
compliance with this agreement by any of our respective Representatives, and we
each agree, at our sole expense, to take all reasonable measures (including but
not limited to court proceedings) to restrain our Representatives from
prohibited or unauthorized disclosure or use of the other's Evaluation Material.
<PAGE>
(2) Legally Required Disclosures. In the event that either of us or
any of our respective Representatives are requested or required (by deposition,
interrogatory, requests for information or documents in legal proceedings,
subpoena, civil investigative demand or similar process) to disclose any of the
Evaluation Material of the other, the party requested or required to make such
disclosure shall provide the other with prompt prior written notice of any such
request or requirements so that such other party may seek a protective order or
other appropriate remedy or, if appropriate, waive compliance with the terms of
this agreement. If, in the absence of a protective order or other remedy or the
receipt of a waiver, either of us or any of our respective Respresentatives are
nonetheless, in the written opinion of counsel, legally compelled to disclose
Evaluation Material of the other or else stand liable for contempt or suffer
other censure or penalty, such party or its Representatives may, without
liability hereunder, disclose that portion of the Evaluation Material of the
other which such counsel advises is legally required to be disclosed, provided
that the disclosing party shall exercise its best efforts to preserve the
confidentiality of the Evaluation Material, including, without limitation, by
cooperating with the other party to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Evaluation Material by such tribunal, regulatory authority or other entity to
which such Evaluation Material is required to be disclosed.
(3) Definition of Evaluation Material. The term "Evaluation Material"
as used in this agreement shall mean, with respect to a particular party, all
information and documents concerning such party (whether prepared by such party,
its advisors or otherwise and irrespective of the form of communication) which
such party has furnished or disclosed now or in the future furnishes or other-
wise discloses to the other or any of its Representatives, together with all
notes, analyses, compilations, studies, interpretations or other documents,
records or data prepared by the receiving party or any of its Representatives
which contain, reflect or are otherwise based upon, in whole or in part, such
information and documents. The term "Evaluation Material" does not include any
information which:
i) at the time of disclosure or thereafter is generally available
to and known by the public or trade (other than as a result of a disclosure
by a receiving party or any of its Representatives),
ii) was within a receiving party's possession prior to its being
furnished to such party pursuant hereto, provided that the source of such
information was not known by the receiving party, after reasonable inquiry,
to be bound by a confidentiality agreement with or other contractual, legal
or fiduciary obligation of confidentiality to the disclosing party or any
other party with respect to such information,
iii) after disclosure hereunder becomes available to the
receiving party on a nonconfidential basis from a source other than the
disclosing party, provided that such source is not bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the disclosing party or any other party
with respect to such information, or
2
<PAGE>
iv) has been independently acquired or developed by the
receiving party without violation of law or any obligation under this
agreement.
(4) Return or Destruction of Material. If either of us decides that
we do not wish to proceed with a business transaction, we will promptly inform
the other of that decision. In such case, or otherwise upon written request (a
"Return Notice"), we each agree to return to the other, within five business
days, all Evaluation Material (and all copies thereof) then in our possession or
in the possession of any of our respective Representatives; provided, however,
with respect to any Evaluation Material prepared by either of us or any of our
respective Representatives (including any analyses, compilations, studies or
other documents, records or data, and any material contained on any computer
tapes, computer disks or any other form of electronic or magnetic media) we each
agree to destroy within five business days, in lieu of returning to the other,
all such Evaluation Material, and we each agree to certify to the other in a
letter delivered within ten business days of receipt of a Return Notice that the
return required hereunder and/or such destruction have been accomplished.
Notwithstanding the return or destruction of the Evaluation Material, we each
agree to continue to be bound by our obligations of confidentiality and other
obligations hereunder, and we will not use any Evaluation Material for any
purpose or disclose any Evaluation Material to another person.
(5) Nondisclosure of Possible Transaction. Without the prior written
consent of the other, we will not, and will direct and cause our respective
Representatives not to, now or at any time in the future, disclose to any person
other than our respective Representatives, the fact that the Evaluation Material
has been made available, that any investigations, discussions or any of the
terms, conditions, status of discussions or other facts with respect to any such
possible transaction, provided that we may make such disclosure if we are
advised in the written opinion of our counsel that such disclosure must be made
in order that we not commit a violation of law, but only after notifying the
other of such opinion and advising the other of the substance of the
contemplated disclosure.
(6) Contacts with the Company and Personnel. Until the earliest of
(i) the execution by us of a Definitive Agreement; or (ii) three years from the
date of this agreement, we each agree not to initiate or maintain contact
(except for those contacts made in the ordinary course of business) with the
other, or any of the other's affiliates or advisors, regarding its business,
assets, operations, prospects, finances, or Evaluation Material, except with
the express permission of the Chief Executive Officers of our respective
companies. It is understood that all (i) communications regarding a possible
transaction between us and (ii) requests for additional information will be
submitted or directed to each other or our designated advisors on a confidential
bases. We each further agree that, for a period of three years from the date
hereof, we will not solicit for employment any of the officers, directors or key
employees of the other.
(7) No Representation or Warranty. We each understand and acknowledge
that neither the other nor any of its Representatives has made or makes any
representations or warranty, express or implied, as to the accuracy or
completeness of the Evaluation Material. We further each
3
<PAGE>
agree that neither the other nor its Representatives shall have any liability
relating to or resulting from the use of the Evaluation Material or any errors
therein or omissions therefrom. Only those representations or warranties that
are made in a Definitive Agreement when, as, and if one is executed, and subject
to such limitations and restrictions as may be specified in such Definitive
Agreement, will have any legal effect.
(8) Definitive Agreement. We each understand and agree that no
contract or agreement providing for any transaction involving Kysor and Scotsman
shall be deemed to exist between us unless and until a Definitive Agreement has
been executed and delivered, and we, except for breach of this agreement, hereby
waive, in advance, any claims, (including, without limitation, claims of breach
of contract) in connection with any transaction involving Kysor and Scotsman
unless and until we have entered into a Definitive Agreement. We also each agree
that unless and until a Definitive Agreement regarding a transaction between us
has been executed and delivered, neither of us will be under any legal
obligation of any kind whatsoever with respect to such a transaction by virtue
of this agreement, except for the matters specifically agreed to herein. We each
further acknowledge and agree that we each reserve the right to terminate
discussions and negotiations with the other at any time. Neither this paragraph
nor any other provision in this agreement can be waived or amended except by
written consent of both parties, which consent shall specifically refer to this
paragraph (or such other provision) and explicitly make such waiver or
amendment.
(9) Standstill Agreement. For a period of three years from the date
of this agreement, we each agree that we and our respective controlled
affiliates will not, directly or indirectly, except pursuant to a Definitive
Agreement:
(i)acquire or agree, offer, seek or propose to acquir e, or
cause to be acquired, ownership of any of the other party's assets or
businesses or any voting securities issued by the other party, or any other
rights or options to acquire such ownership (including from a third party),
(ii) seek or propose to influence or control the other party's
management or policies, or
(iii) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing.
The restrictions contained in this paragraph, shall not be applicable to
purchases solely for investment purposes aggregating less than 5% of the other's
outstanding voting securities.
(10) Remedies. We each agree that money damages would not be a
sufficient remedy for any breach of this agreement and that we each shall be
entitled to equitable relief, including injunction and specific performance, in
the event of any breach or threatened breach of the provisions of this agreement
by the other, in addition to all other remedies available at law or in equity.
4
<PAGE>
(11) No Waiver. No failure or delay in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
(12) Person. The term "person" as used in this agreement will be
interpreted broadly to include, without limitation, the media and any
corporation, company, group, partnership or other entity or individual.
(13) Governing Law. This agreement is for the benefit of Kysor and
Scotsman and our respective directors, officers, stockholders, owners,
affiliates and agents, and will be governed by and construed in accordance with
the laws of the State of Michigan, without giving effect to the choice of law
rules thereof. If any provision of this agreement is found to be contrary to
Michigan law or otherwise unenforceable, this agreement shall be construed as if
such unenforceable provision were absent from the agreement, but the remainder
of this agreement shall remain in full force and effect.
Very truly yours,
KYSOR INDUSTRIAL CORPORATION
By /s/ George R. Kempton
-----------------------------------
George R. Kempton
Its Chairman and CEO
--------------------------------
AGREED AND ACCEPTED:
SCOTSMAN INDUSTRIES, INC.
By /s/ Richard C. Osborne
----------------------
Richard C. Osborne
Its Chairman of the Board, President
and Chief Executive Officer
Dated June 18, 1996
<PAGE>
Exhibit (c)(5)
[LETTERHEAD OF KYSOR INDUSTRIAL CORPORATION]
December 26, 1996
CONFIDENTIAL
Kuhlman Corporation
c/o Mr. Gary G. Dillon
Three Skidway Village Square
Savannah, Georgia 31411
Gentlemen:
We have entered into preliminary discussions concerning a possible
negotiated business transaction between Kysor Industrial Corporation ("Kysor")
and Kuhlman Corporation ("Kuhlman"). In connection therewith, each party has
been, or may in the future be, furnished certain information concerning the
business, financial condition, operations, assets and liabilities of the other
from officers, directors, employees, representatives, advisors and/or agents of
such other party. In consideration of the foregoing, we each hereby agree to the
following (it being understood that we are also each agreeing to cause our
respective affiliates, including persons who may become our affiliate or a
successor to us or to a substantial portion of our business or assets after the
date hereof, to comply with all of the provisions hereof):
(I) Use of Evaluation Material. The Evaluation Material (as defined
below) will be used solely for the purpose of evaluating a possible negotiated
business transaction between Kysor and Kuhlman. Unless and until we have
completed such a transaction pursuant to a definitive agreement (a "Definitive
Agreement"), all the Evaluation Material will be kept confidential by us and our
Representatives (as defined below); provided, however, that we may disclose the
Evaluation Material or portions thereof to those of our directors, officers,
employees, agents or advisors (the persons to whom such disclosure is
permissible being collectively called "Representatives") who need to know such
information for the sole purpose of evaluating a possible negotiated business
transaction between us and who, prior to the receipt of Evaluation Material,
agree to keep such information confidential. we each agree to be responsible for
compliance with this agreement by any of our respective Representatives, and we
each agree, at our sole expense, to take all reasonable measures (including but
not limited to court proceedings) to restrain our Representatives from
prohibited or unauthorized disclosure or use of the other's Evaluation Material.
<PAGE>
(2) Legally Required Disclosures. In the event that either of us or
any of our respective Representatives are requested or required (by deposition,
interrogatory, requests for information or documents in legal proceedings,
subpoena, civil investigative demand or similar process) to disclose any of the
Evaluation Material of the other, the party requested or required to make such
disclosure shall provide the other with prompt prior written notice of any such
request or requirement so that such other party may seek a protective order or
other appropriate remedy or, if appropriate, waive compliance with the terms of
this agreement. If, in the absence of a protective order or other remedy or the
receipt of a waiver, either of us or any of our respective Representatives are
nonetheless, in the written opinion of counsel, legally compelled to disclose
Evaluation Material of the other or else stand liable for contempt or suffer
other censure or penalty, such party or its Representatives may, without
liability hereunder, disclose that portion of the Evaluation Material of the
other which such counsel advises is legally required to be disclosed, provided
that the disclosing party shall exercise its best efforts to preserve the
confidentiality of the Evaluation Material, including, without limitation, by
cooperating with the other party to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Evaluation Material by such tribunal, regulatory authority or other entity to
which such Evaluation Material is required to be disclosed.
(3) Definition of Evaluation Material. The term "Evaluation Material"
as used in this agreement shall mean, with respect to a particular party, all
information and documents concerning such party (whether prepared by such party,
its advisors or otherwise and irrespective of the form of communication) which
such party has furnished or disclosed now or in the future furnishes or
otherwise discloses to the other or any of its Representatives, together with
all notes, analyses, compilations, studies, interpretations or other documents,
records or data prepared by the receiving party or any of its Representatives
which contain, reflect or are otherwise based upon, in whole or in part, such
information and documents. The term "Evaluation Material" does not include any
information which:
i) at the time disclosure or thereafter is generally available
to and known by the public or trade (other than as a result of a disclosure
by a receiving party or any of its Representatives),
ii) was within a receiving party's possession prior to its being
furnished to such party pursuant hereto, provided that the source of such
information was not known by the receiving party, after reasonable inquiry,
to be bound by a confidentiality agreement with or other contractual,
legal or fiduciary obligation of confidentiality to the disclosing party or
any other party with respect to such information,
iii) after disclosure hereunder becomes available to the
receiving party on a nonconfidential basis from a source other than the
disclosing party, provided that such source is not bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the disclosing party or any other party
with respect to such information, or
2
<PAGE>
iv) has been independently acquired or developed by the receiving
party without violation of law or any obligation under this agreement.
(4) Return or Destruction of Material. If either of us decides that we
do not wish to proceed with a business transaction, we will promptly inform the
other of that decision. In such case, or otherwise upon written request (a
"Return Notice"), we each agree to return to the other, within five business
days, all Evaluation Material (and all copies thereof) then in our possession or
in the possession of any of our respective Representatives; provided however,
with respect to any Evaluation Material prepared by either of us or any of our
respective representatives (including any analyses, compilations, studies or
other documents, records or data, and any material contained on any computer
tapes, computer disks or any other form of electronic or magnetic media) we each
agree to destroy within five business days, in lieu of returning to the other,
all such Evaluation Material, and we each agree to certify to the other in a
letter delivered within ten business days of receipt of a Return Notice that the
return [required hereunder and/or such destruction have been accomplished.
Notwithstanding the return] or destruction of the Evaluation Material, we each
agree to continue to be bound by our obligations of confidentiality and other
obligations hereunder, and we will not use any Evaluation Material for any
purpose or disclose any Evaluation Material to another person.
(5) Nondisclosure of Possible Transaction. Without the prior written
consent of the other, we will not, and will direct and cause our respective
Representatives not to, now or at any time in the future, disclose to any person
other than our respective Representatives, the fact that the Evaluation Material
has been made available, that any investigations, discussions or any of the
terms, conditions, status of discussions or other facts with respect to any
such possible transaction, provided that we may make such disclosure if we are
advised in the written opinion of our counsel that such disclosure must be made
in order that we not commit a violation of law, but only after notifying the
other of such opinion and advising the other of the substance of the
contemplated disclosure.
(6) Contacts with the Company and Personnel. Until the earliest of (i)
the execution by us of a Definitive Agreement; or (ii) three years from the date
of this agreement, we each agree not to initiate or maintain contact (except for
those contacts made in the ordinary course of business) with the other, or any
of the other's affiliates or advisors, regarding its business, assets,
operations, prospects, finances, or Evaluation Material, except with the express
permission of the Chief Executive Officers of our respective companies. It is
understood that all (i) communications regarding a possible transaction between
us and (ii) requests for additional information will be submitted or directed to
each other or our designated advisors on a confidential basis. We each further
agree that, for a period of three years from the date hereof, we will not
solicit for employment any of the officers, directors or key employees of the
other.
(7) No Representation or Warranty. We each understand and acknowledge
that neither the other nor any of its Representatives has made or makes any
representations or warranty, express or implied, as to the accuracy or
completeness of the Evaluation Material. We further each
3
<PAGE>
agree that neither the other nor its Representatives shall have any liability
relating to or resulting from the use of the Evaluation Material or any errors
therein or omissions therefrom. Only those representations or warranties that
are made in a Definitive Agreement when, as, and if one is executed, and subject
to such limitations and restrictions as may be specified in such Definitive
Agreement, will have any legal effect.
(8) Definitive Agreement. We each understand and agree that no
contract or agreement providing for any transaction involving Kysor and Kuhlman
shall be deemed to exist between us unless and until a Definitive Agreement has
been executed and delivered, and we hereby waive, in advance, any claims,
(including, without limitation, claims of breach of contract) in connection with
any transaction involving Kysor and Kuhlman unless and until we have entered
into a Definitive Agreement. We also each agree that unless and until a
Definitive Agreement regarding a transaction between us has been executed and
delivered, neither of us will be under any legal obligation of any kind
whatsoever with respect to such a transaction by virtue of this agreement,
except for the matters specifically agreed to herein. We each further
acknowledge and agree that we each reserve the right to terminate discussions
and negotiations with the other at any time. Neither this paragraph nor any
other provision in this agreement can be waived or amended except by written
consent of both parties, which consent shall specifically refer to this
paragraph (or such other provision) and explicitly make such waiver or
amendment.
(9) Standstill Agreement. For a period of three years from the date of
this agreement, we each agree that we and our respective affiliates will not,
directly or indirectly, except pursuant to a Definitive Agreement:
(i) acquire or agree, offer, seek or propose to acquire, or cause
to be acquired, ownership of any of the other party's assets or businesses
or any voting securities issued by the other party, or any other rights or
options to acquire such ownership (including from a third party),
(ii) seek or propose to influence or control the other party's
management or policies, or
(iii) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing.
The restrictions contained in this paragraph, shall not be applicable to
purchases solely for investment purposes aggregating less than 5% of the other's
outstanding voting securities.
(10) Remedies. We each agree that money damages would not be a
sufficient remedy for any breach of this agreement and that we each shall be
entitled to equitable relief, including injunction and specific performance, in
the event of any breach or threatened breach of the provisions of this agreement
by the other, in addition to all other remedies available at law or in equity.
4
<PAGE>
(11) No Waiver. No failure or delay in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
(12) Person the term "person" as used in this agreement will be
interpreted broadly to include, without limitation, the media and any
corporation, company, group, partnership or other entity or individual.
(13) Governing Law. This agreement is for the benefit of Kysor and
Kuhlman and our respective directors, officers, stockholders, owners, affiliates
and agents, and will be governed by and construed in accordance with the laws of
the State of Michigan, without giving effect to the choice of law rules thereof.
If any provision of this agreement is found to be contrary to Michigan law or
otherwise unenforceable, this agreement shall be construed as if such
unenforceable provision were absent from the agreement, but the remainder of
this agreement shall remain in full force and effect.
Very truly yours,
KYSOR INDUSTRIAL CORPORATION
BY /s/ David W. Crooks
---------------------------
David W. Crooks
Its Vice President-General Counsel
and Secretary
-----------------------------
AGREED AND ACCEPTED:
KUHLMAN CORPORATION
By /s/ Gary G. Dillon
-------------------------
Gary G. Dillon
Its Chairman, President and
C.E.O., Schwitzer, Inc.
----------------------------
Dated: 12-26, 1996
<PAGE>
EXHIBIT (c)(6)
CONSULTING AND NONCOMPETITION AGREEMENT
---------------------------------------
This Consulting and Noncompetition Agreement (this "Agreement") is entered
into as of February 2, 1997 between SCOTSMAN INDUSTRIES INC., a Delaware
corporation (the "Company"), and GEORGE KEMPTON (the "Consultant").
WHEREAS, the Consultant has acquired extensive knowledge of and experience
in the business conducted by the Company;
WHEREAS, the Company desires to obtain the benefit of the Consultant's
knowledge and experience by retaining the Consultant, and the Consultant desires
to accept such position, for the term and upon the other conditions hereinafter
set forth;
WHEREAS, concurrently herewith, the Company, K Acquisition Corp. and Kysor
Industrial Corporation are entering into an Agreement and Plan of Merger dated
as of the date hereof (the "Merger Agreement"), pursuant to which K Acquisition
Corp. is acquiring Kysor Industrial Corporation and Kysor Industrial Corporation
is becoming a wholly-owned subsidiary of the Company;
WHEREAS, the Consultant will cease to be Chairman of Kysor Industrial
Corporation's Board of Directors and Chief Executive Officer of Kysor Industrial
Corporation effective as of the consummation of the tender offer contemplated by
the Merger Agreement (the "Tender Offer"); and
WHEREAS, the Company has required as a condition to its entering into the
Merger Agreement that the Consultant (i) agree to certain modifications to his
existing employment agreement with Kysor Industrial Corporation (the "Employment
Agreement") and (ii) enter into this Agreement.
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company and the Consultant hereby agree as follows:
1. Consulting Services; Expenses. The Company hereby engages the
Consultant as a consultant, subject to the terms and conditions hereof, for the
period commencing at the consummation of the Tender Offer and ending on the date
which is the third anniversary of such consummation (the "Consulting Period"),
subject to earlier termination pursuant to Section 4 hereof; provided, however,
that this Agreement shall terminate and shall be of no further force or effect
if the Merger Agreement shall be terminated and the Tender Offer shall not be
consummated pursuant to the terms thereof. During the Consulting Period, the
Consultant shall make himself available to perform consulting services with
respect to the businesses conducted, or in development, by the Company, upon
reasonable advance notice. Such consulting services shall be related to such
matters as the Chief Executive Officer of the Company may designate from time to
time and as are commensurate with the Consultant's years of experience and level
of skill, and shall include consulting services to the Board of Directors of the
Company (the "Board") with respect to the businesses conducted by the Company.
The Consultant shall accommodate reasonable requests for the Consultant's
consulting services, and shall devote reasonable time and his reasonable best
efforts, skill and attention to the performance of such consulting services,
including travel reasonably required in the performance of such consulting
services. The parties will arrange consulting and travel dates and times so as
not to interrupt any pre-planned business or personal activities, or employment
obligations, of the Consultant. The Company shall reimburse the Consultant for
all necessary travel and
<PAGE>
other expenses incurred by the Consultant in providing such consulting services.
Notwithstanding the foregoing, the Consultant shall not be required to be
available more than three (3) days per month nor to travel on more than three
(3) occasions per year.
2. Independent Contractor. The Consultant shall perform the
consulting services described in Section 1 hereof as an independent contractor
without the power to bind or represent the Company for any purpose whatsoever.
The Consultant shall not, by virtue of being a consultant hereunder, be eligible
to receive any benefits for which officers or other employees of the Company are
eligible at any time, such as insurance, participation in the Company's pension
plans or other employee benefits. Consultant acknowledges that Company will not
make provision for federal or state withholding taxes or FICA.
3. Compensation. As compensation for the Consultant's agreement to
make himself reasonably available for consulting as provided in Section 1, and
for his covenants contained in Section 5 of this Agreement, the Company shall
pay to the Consultant on a monthly basis at the end of each month for each of
the thirty-six (36) months during the Consulting Period an amount equal to
$49,400 per month (the "Compensation"). Except in the event of termination of
this Agreement as provided in Section 4, such payments shall not be reduced,
withheld, discontinued, or subjected to setoff, for any reason whatsoever. If
the Company fails to make Compensation payments required by this Agreement, and
such failure continues for ten (10) days after Consultant notifies the Company
in writing of such breach, Consultant's obligations under this Agreement shall
continue, but Company shall be obligated to immediately pay to Consultant, in
one lump sum, all of the remaining unpaid Compensation that would have been
payable through the end of the Consulting Period; discounted, however, to the
then present value, using a discount rate of 7.5 percent. Notwithstanding any
failure by the Company to utilize the consulting services, or any disability of
the Consultant resulting in his inability to perform consulting services
hereunder, the remaining unpaid installments of the Compensation payable
pursuant to this Agreement shall be paid by the Company to the Consultant or to
his legal representative on the dates such payments otherwise would have been
paid hereunder. In the event of the death of the Consultant during the
Consulting Period, the then present value, using a discount rate of 7.5 percent,
of the remaining unpaid Compensation payable through the remainder of the
Consulting Period shall be paid by the Company as a death benefit to the
beneficiary or beneficiaries designated in writing by the Consultant, or if no
beneficiary is so designated, to the executor of the Consultant's estate.
4. Termination of Agreement. (a) The obligation of the Consultant set
forth in Section 1 of this Agreement may be terminated at any time by the
Consultant on thirty (30) days prior written notice to the Company. In the event
of such termination by the Consultant, the obligations of the Company to pay the
Consultant pursuant to Section 3 hereof shall cease, effective on the date of
such termination.
(b) The obligations of the Company set forth in Section 3 of this
Agreement may be terminated at any time by the Company upon written notice to
the Consultant in the event that the Consultant shall willfully be in material
breach of any covenant contained in Section 1 or 5 hereof and the Consultant
shall fail to cure such material breach within 30 days following such notice (in
the event
-2-
<PAGE>
of an alleged breach of Section 5, Consultant may cure any such breach by
ceasing the activities in question).
(c) This Agreement may be terminated by the Consultant upon ten (10)
days prior written notice to the Company in the event that the Company shall
breach any of its obligations under Section 3, 9 or 10 hereof; provided,
however, that the Consultant shall not be entitled to terminate this Agreement
pursuant to this Section 4(c) in the event that the Company shall cure any such
breach within such ten (10) day period. In the event of such termination by the
Consultant, the Company shall pay to the Consultant all remaining payments which
would have become due under this Agreement had it continued in effect until its
expiration date, within five (5) business days of such termination.
5. Noncompetition. During the Consulting Period, except with the
prior written consent of the Board, the Consultant shall not directly or
indirectly:
(a) engage in any activities, whether as employer, proprietor,
partner, stockholder (other than the holder of less than 5% of the stock of any
corporation the securities of which are traded on a national or regional
securities exchange or on the NASDAQ (National Market System) or over the
counter), director, officer, employee, consultant or otherwise, in competition
with the businesses conducted, or in development, by the Company at any time
during the Consulting Period, which covenant not to compete shall be on a
worldwide basis and shall include all industries in which the Company competes
at any time during the Consulting Period; or
(b) solicit, in competition with the Company, any person who is a
customer or prospective customer of the businesses conducted, or in development,
by the Company at any time during the Consulting Period.
6. Confidentiality. The Consultant shall not, at any time during the
Consulting Period or thereafter, make use of or disclose directly or indirectly,
any trade secret or other confidential or secret information of the Company or
Kysor Industrial Corporation or other technical, business, proprietary or
financial information of the Company or Kysor Industrial Corporation not
available to the public or to the competitors of the Company ("Confidential
Information"), except to the extent that such Confidential Information (a)
becomes a matter of public record or is published in a newspaper, magazine or
other periodical available to the general public, (b) is required to be
disclosed by any law, regulation or order of any court or regulatory commission,
department or agency, or (c) as the Board may so authorize in writing.
7. Nonsolicitation. During the Consulting Period except with the
prior written consent of the Board, the Consultant shall not directly or
indirectly induce or attempt to persuade any employee of the Company to
terminate his or her employment relationship with the Company.
8. Scope of Covenants: Remedies. The following provisions shall apply
to the covenants of the Consultant contained in Sections 5 and 6:
-3-
<PAGE>
(a) the covenants contained in Section 5 shall apply on a worldwide
basis, which is the basis on which the Company is actively engaged in conduct of
its businesses and in which customers are being solicited;
(b) without limiting the right of the Company to pursue all other
legal and equitable remedies available for violation by the Consultant of the
covenants contained in Section 5, 6 and 7, it is expressly agreed by the
Consultant and the Company that such other remedies cannot fully compensate the
Company for any such violation and that the Company shall be entitled to
injunctive relief to prevent any such violation or any continuing violation
thereof;
(c) the Company and the Consultant each intends and agrees that the
covenants contained in Sections 5, 6 and 7 are reasonably designed to protect
the legitimate business interests of the Company without unnecessarily or
unreasonably restricting the Consultant's business opportunities during or after
the termination of the consulting Period, but that if in any action before any
court or agency legally empowered to enforce the covenants contained in Sections
5, 6 and 7 any term, restriction, covenant or promise contained therein is
found to be unreasonable and accordingly unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency; and
(d) the Company shall advise the Consultant in writing of all
businesses, industries and activities the Company believes are covered by the
prohibitions in Section 5, not so identified; provided, that neither the
Company's listing of a business, industry or activity as covered by Section 5
nor the Consultant's failure to specifically object to such listing shall be
conclusive as to such coverage. If Consultant notifies the Company in writing of
a specific business, industry or activity in which the Consultant proposes to
engage, the Company will notify Consultant promptly, in writing, of whether the
Company would consider such business, industry or other activity to violate
Section 5 and Consultant shall not be obliged to refrain from engaging in any
such business, industry or activity if Company fails to do so within 30 days.
Company agrees that Consultant may continue to serve as a director of Simpson
Industries, Inc. and JLG Industries, Inc. notwithstanding any other provision of
this Agreement.
9. Expenses. The Company shall promptly pay the Consultant for all
costs and expenses (including, without limitation, court costs and attorney's
fees) incurred by the Consultant as a result of any claim, action or proceeding
(including, without limitation, a claim, action or proceeding by the Consultant
against the Company to collect amounts due to the Consultant or to otherwise
enforce this Agreement) arising out of, or challenging the validity,
advisability or enforceability of, this Agreement or any provision hereof;
provided, however, that no such payment or reimbursement shall be made to the
Consultant if the Consultant is the plaintiff in such claim, action or
proceeding and a final nonappealable judgment is rendered against the Consultant
with respect to all his claims.
10. Indemnification. The Company shall defend, indemnify and hold
the Consultant harmless from and against all damages, costs and expenses
(including attorney's fees) as a result of claims made by third parties arising
out of the Consultant's performance of services under this agreement; provided,
however, that the Company shall not indemnify and hold the Consultant harmless
for conduct
-4-
<PAGE>
found by a final nonappealable judgment of a court of competent jurisdiction
that the damage, cost or expense results from the Consultant's own willful
misconduct.
11. Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Consultant and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and its respective successors and assigns.
12. Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered, when delivered by courier or
overnight express service or five days after having been sent by certified or
registered mail, postage prepaid, addressed (a) if to the Consultant, to the
Consultant's address set forth in the records of the Company, or if to the
Company, to Scotsman Industries, Inc., 775 Corporate Woods Parkway, Vernon
Hills, Illinois 60061, Attention: Richard C. Osborne, with a copy to Sidley &
Austin, One First National Plaza, Chicago, Illinois 60603, Attention: Thomas A.
Cole, Esq., or (b) to such other address as either party may have furnished to
the other party in writing in accordance herewith, except that notices of change
of address shall be effective only upon receipt.
13. Governing Law; Validity; Jurisdiction and Venue. The
interpretation, construction and performance of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the State
of Michigan without regard to the applicable principles of conflicts of laws.
The parties agree and agree to stipulate that the United States District Court
for the Western District of Michigan (Southern Division) shall be the proper
jurisdiction and venue for litigation of any claim arising out of or relating to
this Agreement. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any of the other
provisions of this Agreement, which other provisions shall remain in full force
and effect.
14. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original and both of which
together shall constitute one and the same instrument.
15. Miscellaneous. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and executed
by the Consultant and by a duly authorized officer of the Company. No waiver by
a party hereto at any time of any breach by the other party hereto of, or
failure to comply with, any condition or provision of this Agreement to be
performed or complied with by such other party shall be deemed a waiver of any
similar or dissimilar conditions or provisions at the same or at any prior or
subsequent time. This Agreement does not affect any other agreement between the
Consultant and the Company or any of its affiliates. Failure by the Consultant
or the Company to insist upon strict compliance with any provision of this
Agreement or to assert any right which the Consultant or the Company may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Consultant has executed this
Agreement as of the day and year first above written.
SCOTSMAN INDUSTRIES INC.
By /s/ Richard Osborne
------------------------------------
Chairman and Chief Executive Officer
CONSULTANT:
/s/ George Kempton
--------------------------------------
George Kempton
<PAGE>
EXHIBIT (c)(7)
CONSULTING AND NONCOMPETITION AGREEMENT
---------------------------------------
This Consulting and Noncompetition Agreement (this "Agreement") is
entered into as of February 2, 1997 between SCOTSMAN INDUSTRIES, INC., a
Delaware corporation (the "Company"), and PETER GRAVELLE (the "Consultant").
WHEREAS, the Consultant has acquired extensive knowledge of and
experience in the business conducted by the Company.
WHEREAS, the Company desires to obtain the benefit of the Consultant's
knowledge and experience by retaining the Consultant, and the Consultant desires
to accept such position, for the term and upon the other conditions hereinafter
set forth;
WHEREAS, concurrently herewith, the Company, K Acquisition Corp. and
Kysor Industrial Corporation are entering into an Agreement and Plan of Merger
dated as of the date hereof (the "Merger Agreement"), pursuant to which K
Acquisition Corp. is acquiring Kysor Industrial Corporation and Kysor
Industrial Corporation is becoming a wholly-owned subsidiary of the Company;
WHEREAS, the Consultant will cease to be the President and C.E.O. and
a Director of Kysor Industrial Corporation effective as of the consummation of
the tender offer contemplated by the Merger Agreement (the "Tender Offer"); and
WHEREAS, the Company has required as a condition to its entering into
the Merger Agreement that the Consultant (i) agree to certain modifications to
his existing employment agreement with Kysor Industrial Corporation (the
"Employment Agreement") and (ii) enter into this Agreement.
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company and the Consultant hereby agree as follows:
1. Consulting Services; Expenses. The Company hereby engages the
Consultant as a consultant, subject to the terms and conditions hereof, for the
period commencing at the consummation of the Tender Offer and ending on the
date which is the sixth anniversary of such consummation (the "Consulting
Period"), subject to earlier termination pursuant to Section 4 hereof; provided,
however, that this Agreement shall terminate and shall be of no further force or
effect if the Merger Agreement shall be terminated and the Tender Offer shall
not be consummated pursuant to the terms thereof. During the Consulting Period,
the Consultant shall make himself available to perform consulting services with
respect to the businesses conducted, or in development, by the Company, upon
reasonable advance notice. Such consulting services shall be related to such
matters as the Chief Executive Officer of the Company may designate from time to
time and as are commensurate with the Consultant's years of experience and level
of skill, and shall include consulting services to the Board of Directors of the
Company (the "Board") with respect to the businesses conducted by the Company.
The Consultant shall accommodate reasonable requests for the Consultant's
consulting services, and shall devote reasonable time and his reasonable best
efforts, skill and attention to the performance of such consulting services,
including travel reasonably required in the performance of such consulting
services. The parties will arrange consulting and travel dates and times so as
not to interrupt any pre-planned business or personal activities, or employment
obligations, of the Consultant. The Company shall reimburse the Consultant for
all necessary travel and
<PAGE>
other expenses incurred by the Consultant in providing such consulting services.
Notwithstanding the foregoing, the Consultant shall not be required to be
available more than three (3) days per month nor to travel on more than three
(3) occasions per year.
2. Independent Contractor. The Consultant shall perform the
consulting services described in Section 1 hereof as an independent contractor
without the power to bind or represent the Company for any purpose whatsoever.
The Consultant shall not, by virtue of being a consultant hereunder, be eligible
to receive any benefits for which officers or other employees of the Company are
eligible at any time, such as insurance, participation in the Company's pension
plans or other employee benefits. Consultant acknowledges that Company will not
make provision for federal or state withholding taxes or FICA.
3. Compensation. As compensation for the Consultant's agreement to
make himself reasonably available for consulting as provided in Section 1, and
for his covenants contained in Section 5 of this Agreement, the Company shall
pay to the Consultant on a monthly basis at the end of each month for each of
the seventy-two (72) months during the Consulting Period an amount equal to
$44,600 per month (the "Compensation"). Except in the event of termination of
the Agreement as provided in Section 4, such payments shall not be reduced,
withheld, discontinued, or subjected to setoff, for any reason whatsoever. If
the Company fails to make Compensation payments required by this Agreement, and
such failure continues for ten (10) days after Consultant notifies the Company
in writing of such breach, Consultant's obligations under this Agreement shall
continue, but Company shall be obligated to immediately pay to Consultant, in
one lump sum, all of the remaining unpaid Compensation that would have been
payable through the end of the Consulting Period; discounted, however, to the
then present value, using a discount rate of 7.5 percent. Notwithstanding any
failure by the Company to utilize the consulting services, or any disability of
the Consultant resulting in his inability to perform consulting services
hereunder, the remaining unpaid installments of the Compensation payable
pursuant to this Agreement shall be paid by the Company to the Consultant or to
his legal representative on the dates such payments otherwise would have been
paid hereunder. In the event of the death of the Consultant during the
Consulting Period, the then present value, using a discount rate of 7.5 percent,
of the remaining unpaid Compensation payable through the remainder of the
Consulting Period shall be paid by the Company as a death benefit to the
beneficiary or beneficiaries designated in writing by the Consultant, or if no
beneficiary is so designated, to the executor of the Consultant's estate.
4. Termination of Agreement. (a) The obligation of the Consultant
set forth in Section 1 of this Agreement may be terminated at any time by the
Consultant on thirty (30) days prior written notice to the Company. In the
event of such termination by the Consultant, the obligations of the Company to
pay the Consultant pursuant to Section 3 hereof shall cease, effective on the
date of such termination.
(b) The obligations of the Company set forth in Section 3 of this
Agreement may be terminated at any time by the Company upon written notice to
the Consultant in the event that the Consultant shall willfully be in material
breach of any covenant contained in Section 1 or 5 hereof and the Consultant
shall fail to cure such material breach within 30 days following such notice (in
the event)
-2-
<PAGE>
of an alleged breach of Section 5, Consultant may cure any such breach by
ceasing the activities in question).
(c) This Agreement may be terminated by the Consultant upon ten (10)
days prior written notice to the Company in the event that the Company shall
breach any of its obligations under Section 3, 9 or 10 hereof; provided,
however, that the Consultant shall not be entitled to terminate this Agreement
pursuant to this Section 4(c) in the event that the Company shall cure any such
breach within such ten (10) day period. In the event of such termination by the
Consultant, the Company shall pay to the Consultant all remaining payments which
would have become due under this Agreement had it continued in effect until its
expiration date, within five (5) business days of such termination.
5. Noncompetition. During the Consulting Period, except with the prior
written consent of the Board, the Consultant shall not directly or indirectly:
(a) engage in any activities, whether as employer, proprietor,
partner, stockholder (other than the holder of less than 5% of the stock of any
corporation the securities of which are traded on a national or regional
securities exchange or on the NASDAQ (National Market System) or over the
counter), director, officer, employee, consultant or otherwise, in competition
with the businesses conducted, or in development, by the Company at any time
during the Consulting Period, which covenant not to compete shall be on a
worldwide basis and shall include all industries in which the Company competes
at any time during the Consulting Period; or
(b) solicit, in competition with the Company, any person who is a
customer or prospective customer of the businesses conducted, or in development,
by the Company at any time during the Consulting Period.
(6) Confidentiality. The Consultant shall not, at any time during the
Consulting Period or thereafter, make use of or disclose directly or indirectly,
any trade secret or other confidential or secret information of the Company or
Kysor Industrial Corporation or other technical, business, proprietary or
financial information of the Company or Kysor Industrial Corporation not
available to the public or to the competitors of the Company ("Confidential
Information"), except to the extent that such Confidential Information (a)
becomes a matter of public record or is published in a newspaper, magazine or
other periodical available to the general public, (b) is required to be
disclosed by any law, regulation or order of any court or regulatory commission,
department or agency, or (c) as the Board may so authorize in writing.
7. Nonsolicitation. During the Consulting Period except with the prior
written consent of the Board, the Consultant shall not directly or indirectly
induce or attempt to persuade any employee of the Company to terminate his or
her employment relationship with the Company.
8. Scope of Covenants; Remedies. The following provisions shall
apply to the covenants of the Consultant contained in Sections 5 and 6:
-3-
<PAGE>
(a) the covenants contained in Section 5 shall apply on a worldwide basis,
which is the basis on which the Company is actively engaged in conduct of its
businesses and in which customers are being solicited;
(b) without limiting the right of the Company to pursue all other legal
and equitable remedies available for violation by the Consultant of the
covenants contained in Section 5, 6 and 7, it is expressly agreed by the
Consultant and the Company that such other remedies cannot fully compensate the
Company for any such violation and that the Company shall be entitled to
injunctive relief to prevent any such violation or any continuing violation
thereof;
(c) the Company and the Consultant each intends and agrees that the
covenants contained in Sections 5, 6 and 7 are reasonably designed to protect
the legitimate business interests of the Company without unnecessarily or
unreasonably restricting the Consultant's business opportunities during or after
the termination of the consulting Period, but that if in any action before any
court or agency legally empowered to enforce the covenants contained in Sections
5, 6 and 7 any term restriction, covenant or promise contained therein is found
to be unreasonable and accordingly unenforceable, than such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency; and
(d) the Company shall advise the Consultant in writing of all businesses,
industries and activities the Company believes are covered by the prohibitions
in Section 5, not so identified; provided, that neither the Company's listing of
a business, industry or activity as covered by Section 5 not the Consultant's
failure to specifically object to such listing shall be conclusive as to such
coverage. If Consultant notifies the Company in writing of a specific business,
industry or activity in which the Consultant proposes to engage, the Company
will notify Consultant promptly, in writing, of whether the Company would
consider such business, industry or other activity to violate Section 5, and
Consultant shall not be obliged to refrain from engaging in any such business,
industry or activity if Company fails to do so within 30 days.
9. Expenses. The Company shall promptly pay the Consultant for all costs
and expenses (including, without limitation, court costs and attorney's fees)
incurred by the Consultant as a result of any claim, action or proceeding
(including, without limitation, a claim, action or proceeding by the Consultant
against the Company to collect amounts due to the Consultant or to otherwise
enforce this Agreement) arising out of, or challenging the validity,
advisability or enforceability of, this Agreement or any provision hereof;
provided, however, that no such payment or reimbursement shall be made to the
Consultant if the Consultant is the plaintiff in such claim, action or
proceeding and a final nonappealable judgment is rendered against the Consultant
with respect to all his claims.
10. Indemnification. The Company shall defend, indemnify and hold the
Consultant harmless from and against all damages, cost and expenses (including
attorneys' fees) as a result of claims made by third parties arising out of the
Consultant's performance of services under this agreement; provided, however,
that the Company shall not indemnify and hold the Consultant harmless for
conduct found by a final nonappealable judgment of a court of competent
jurisdiction that the damage, cost or expense results from the Consultant's own
willful misconduct.
-4-
<PAGE>
11. Successor. Binding Agreement. This Agreement shall insure to the
benefit of and be enforceable by the Consultant and by his personal or legal
representatives, executors, administrators, heirs, distributees, devises and
legatees and by the Company and its respective successors and assigns.
12. Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered, when delivered by courier or
overnight express service or five days after having been sent by certified or
registered mail, postage prepaid, addressed (a) if to the Consultant, to the
Consultant's address set forth in the records of the Company, or if to the
Company, to Scotsman Industries, Inc., 775 Corporate Woods Parkway, Vernon
Hills, Illinois 60061, Attention: Richard C. Osborne, with a copy to
Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, Attention:
Thomas A. Cole, Esq., or (b) to such other address as either party may have
furnished to the other party in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
13. Governing Law: Validity: Jurisdiction and Venue. The
interpretation, construction and performance of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the State
of Michigan without regard to the applicable principles of conflicts of laws.
The parties agree and agree to stipulate that the United States District Court
for the Western District of Michigan (Southern Division) shall be the proper
jurisdiction and venue for litigation of any claim arising out of or relating
to this Agreement. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any of the other
provisions of this Agreement, which other provisions shall remain in full force
and effect.
14. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.
15. Miscellaneous. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and executed
by the Consultant and by a duly authorized officer of the Company. No waiver by
a party hereto at any time of any breach by the other party hereto of, or
failure to comply with, any condition or provision of this Agreement to be
performed or complied with by such other party shall be deemed a waiver of any
similar or dissimilar conditions or provisions at the same or at any prior or
subsequent time. This Agreement does not affect any other agreement between the
Consultant and the Company or any of its affiliates. Failure by the Consultant
or the Company to insist upon strict compliance with any provision of this
Agreement or to assert any right which the Consultant or the Company may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Consultant has executed this
Agreement as of the day and year first above written.
SCOTSMAN INDUSTRIES INC.
/s/ Richard Osborne
By ____________________________________
Chairman and Chief Executive Officer
CONSULTANT:
/s/ Peter Gravelle
_______________________________________
Peter Gravelle
-6-
<PAGE>
Exhibit (c)(8)
CONSULTING AND NONCOMPETITION AGREEMENT
This Consulting and Noncompetition Agreement (this "Agreement") is
entered into as of February 2, 1997 between SCOTSMAN INDUSTRIES INC., a
Delaware corporation (the "Company"), and TIMOTHY PETERSON (the "Consultant").
WHEREAS, the Consultant has acquired extensive knowledge of and
experience in the business conducted by the Company;
WHEREAS, the Company desires to obtain the benefit of the Consultant's
knowledge and experience by retaining the Consultant, and the Consultant desires
to accept such position, for the term and upon the other conditions hereinafter
set forth;
WHEREAS, concurrently herewith, the Company, K Acquisition Corp. and
Kysor Industrial Corporation are entering into an Agreement and Plan of Merger
dated as of the date hereof (the "Merger Agreement"), pursuant to which K
Acquisition Corp. is acquiring Kysor Industrial Corporation and Kysor Industrial
Corporation is becoming a wholly-owned subsidiary of the Company;
WHEREAS, the Consultant will cease to be a Vice President of Kysor
Industrial Corporation effective as of the consummation of the tender offer
contemplated by the Merger Agreement (the "Tender Offer"); and
WHEREAS, the Company has required as a condition to its entering into
the Merger Agreement that the Consultant (i) agree to certain modifications to
his existing employment agreement with Kysor Industrial Corporation (the
"Employment Agreement") and (ii) enter into this Agreement.
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company and the Consultant hereby agree as follows:
1. Consulting Services; Expenses. The Company hereby engages the
Consultant as a consultant, subject to the terms and conditions hereof, for the
period commencing at the consummation of the Tender Offer and ending on the date
which is the sixth anniversary of such consummation (the "Consulting Period"),
subject to earlier termination pursuant to Section 4 hereof; provided, however,
that this Agreement shall terminate and shall be of no further force or effect
if the Merger Agreement shall be terminated and the Tender Offer shall not be
consummated pursuant to the terms thereof. During the Consulting Period, the
Consultant shall make himself available to perform consulting services with
respect to the businesses conducted, or in development, by the Company, upon
reasonable advance notice. Such consulting services shall be related to such
matters as the Chief Executive Officer of the Company may designate from time to
time and as are commensurate with the Consultant's years of experience and level
of skill, and shall include consulting services to the Board of Directors of the
Company (the "Board") with respect to the businesses conducted by the Company.
The Consultant shall accommodate reasonable requests for the Consultant's
consulting services, and shall devote reasonable time and his reasonable best
efforts, skill and attention to the performance of such consulting services,
including travel reasonably required in the performance of such consulting
services. The parties will arrange consulting and travel dates and times so as
not to interrupt any pre-planned business or personal activities, or employment
obligations, of the Consultant. The Company shall reimburse the Consultant for
all necessary travel and
<PAGE>
other expenses incurred by the Consultant in providing such consulting services.
Notwithstanding the foregoing, the Consultant shall not be required to be
available more than three (3) days per month nor to travel on more than three
(3) occasions per year.
2. Independent Contractor. The Consultant shall perform the
consulting services described in Section 1 hereof as an independent contractor
without the power to bind or represent the Company for any purpose whatsoever.
The Consultant shall not, by virtue of being a consultant hereunder, be eligible
to receive any benefits for which officers or other employees of the Company are
eligible at any time, such as insurance, participation in the Company's pension
plans or other employee benefits. Consultant acknowledges that Company will not
make provision for federal or state withholding taxes or FICA.
3. Compensation. As compensation for the Consultant's agreement to
make himself reasonably available for consulting as provided in Section 1, and
for his covenants contained in Section 5 of this Agreement, the Company shall
pay to the Consultant on a monthly basis at the end of each month for each of
the seventy-two (72) months during the Consulting Period an amount equal to
$14,100 per month (the "Compensation"). Except in the event of termination of
this Agreement as provided in Section 4, such payments shall not be reduced,
withheld, discontinued, or subjected to setoff, for any reason whatsoever. If
the Company fails to make Compensation payments required by this Agreement and
such failure continues for ten (10) days after Consultant notifies the Company
in writing of such breach, Consultant's obligations under this Agreement shall
continue, but Company shall be obligated to immediately pay to Consultant, in
one lump sum, all of the remaining unpaid Compensation that would have been
payable through the end of the Consulting Period; discounted, however, to the
then present value, using a discount rate of 7.5 percent. Notwithstanding any
failure by the Company to utilize the consulting services, or any disability of
the Consultant resulting in his inability to perform consulting services
hereunder, the remaining unpaid installments of the Compensation payable
pursuant to this Agreement shall be paid by the Company to the Consultant or to
his legal representative on the dates such payments otherwise would have paid
hereunder. In the event of the death of the Consultant during the Consulting
Period, the then present value, using a discount rate of 7.5 percent, of the
remaining unpaid Compensation payable through the remainder of the Consulting
Period shall be paid by the Company as a death benefit to the beneficiary or
beneficiaries designated in writing by the Consultant, or if no beneficiary is
so designated, to the executor of the Consultant's estate.
4. Termination of Agreement. (a) The obligation of the Consultant set
forth in Section 1 of this Agreement may be terminated at any time by the
Consultant on thirty (30) days prior written notice to the Company. In the
event of such termination by the Consultant, the obligations of the Company to
pay the Consultant pursuant to Section 3 hereof shall cease, effective on the
date of such termination.
(b) The obligations of the Company set forth in Section 3 of this
Agreement may be terminated at any time by the Company upon written notice to
the Consultant in the event that the Consultant shall willfully be in material
breach of any covenant contained in Section 1 or 5 hereof and the Consultant
shall fail to cure such material breach within 30 days following such notice (in
the event
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<PAGE>
of an alleged breach of Section 5, Consultant may cure any such breach by
ceasing the activities in question).
(c) This Agreement may be terminated by the Consultant upon ten (10)
days prior written notice to the Company in the event that the Company shall
breach any of its obligations under Section 3, 9 or 10 hereof; provided,
however, that the Consultant shall not be entitled to terminate this Agreement
pursuant to this Section 4(c) in the event that the Company shall cure any such
breach within such ten (10) day period. In the event of such termination by the
Consultant, the Company shall pay to the Consultant all remaining payments which
would have become due under this Agreement had it continued in effect until its
expiration date, within five (5) business days of such termination.
5. Noncompetition. During the Consulting Period, except with the
prior written consent of the Board, the Consultant shall not directly or
indirectly:
(a) engage in any activities, whether as employer, proprietor,
partner, stockholder (other than the holder of less than 5% of the stock of any
corporation the securities of which are traded on a national or regional
securities exchange or on the NASDAQ (National Market System) or over the
counter), director, officer, employee, consultant or otherwise, in competition
with the businesses conducted, or in development, by the Company at any time
during the Consulting Period, which covenant not to compete shall be on a
worldwide basis and shall include all industries in which the Company competes
at any time during the Consulting Period; or
(b) solicit, in competition with the Company, any person who is a
customer or prospective customer of the businesses conducted, or in development,
by the Company at any time during the Consulting Period.
6. Confidentiality. The Consultant shall not, at any time during the
Consulting Period or thereafter, make use of or disclose directly or indirectly,
any trade secret or other confidential or secret information of the Company or
Kysor Industrial Corporation or other technical, business, proprietary or
financial information of the Company or Kysor Industrial Corporation not
available to the public or to the competitors of the Company ("Confidential
Information"), except to the extent that such Confidential Information (a)
becomes a matter of public record or is published in a newspaper, magazine or
other periodical available to the general public, (b) is required to be
disclosed by any law, regulation or order of any court or regulatory commission,
department or agency, or (c) as the Board may so authorize in writing.
7. Nonsolicitation. During the Consulting Period except with the
prior written consent of the Board, the Consultant shall not directly or
indirectly induce or attempt to persuade any employee of the Company to
terminate his or her employment relationship with the Company.
8. Scope of Covenants; Remedies. The following provisions shall
apply to the covenants of the Consultant contained in Sections 5 and 6;
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<PAGE>
(a) the covenants contained in Section 5 shall apply on a worldwide
basis, which is the basis on which the Company is actively engaged in conduct of
its businesses and in which customers are being solicited;
(b) without limiting the right of the Company to pursue all other
legal and equitable remedies available for violation by the Consultant of the
covenants contained in Section 5, 6 and 7, it is expressly agreed by the
Consultant and the Company that such other remedies cannot fully compensate the
Company for any such violation and that the Company shall be entitled to
injunctive relief to prevent any such violation or any continuing violation
thereof;
(c) the Company and the Consultant each intends and agrees that the
covenants contained in Sections 5, 6 and 7 are reasonably designed to protect
the legitimate business interests of the Company without unnecessarily or
unreasonably restricting the Consultant's business opportunities during or after
the termination of the consulting Period, but that if in any action before any
court or agency legally empowered to enforce the covenants contained in Sections
5, 6 and 7 any term, restriction, covenant or promise contained therein is
found to be unreasonable and accordingly unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency; and
(d) the Company shall advise the Consultant in writing of all
businesses, industries and activities the Company believes are covered by the
prohibitions in Section 5, not so identified; provided, that neither the
Company's listing of a business, industry or activity as covered by Section 5
nor the Consultant's failure to specifically object to such listing shall be
conclusive as to such coverage. If Consultant notifies the Company in writing of
a specific business, industry or activity in which the Consultant proposes to
engage, the Company will notify Consultant promptly, in writing, of whether the
Company would consider such business, industry or other activity to violate
Section 5, and Consultant shall not be obliged to refrain from engaging in any
such business, industry or activity if Company fails to do so within 30 days.
9. Expenses. The Company shall promptly pay the Consultant for all
costs and expenses (including, without limitation, court costs and attorney's
fees) incurred by the Consultant as a result of any claim, action or proceeding
(including, without limitation, a claim, action or proceeding by the Consultant
against the Company to collect amounts due to the Consultant or to otherwise
enforce this Agreement) arising out of, or challenging the validity,
advisability or enforceability of, this Agreement or any provision hereof;
provided, however, that no such payment or reimbursement shall be made to the
Consultant if the Consultant is the plaintiff in such claim, action or
proceeding and a final nonappealable judgment is rendered against the Consultant
with respect to all his claims.
10. Indemnification. The Company shall defend, indemnify and hold
the Consultant harmless from and against all damages, costs and expenses
(including attorneys' fees) as a result of claims made by third parties arising
out of the Consultant's performance of services under this agreement; provided,
however, that the Company shall not indemnify and hold the Consultant harmless
for conduct found by a final nonappealable judgment of a court of competent
jurisdiction that the damage, cost or expense results from the Consultant's own
willful misconduct.
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<PAGE>
11. Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Consultant and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and its respective successors and assigns.
12. Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered, when delivered by courier or
overnight express service or five days after having been sent by certified or
registered mail, postage prepaid, addressed (a) if to the Consultant, to the
Consultant's address set forth in the records of the Company, or if to the
Company, to Scotsman Industries, Inc., 775 Corporate Woods Parkway, Vernon
Hills, Illinois 60061, Attention: Richard C. Osborne, with a copy to Sidley &
Austin, One First National Plaza, Chicago, Illinois 60603, Attention: Thomas A.
Cole, Esq. or (b) to such other address as either party may have furnished to
the other party in writing in accordance herewith, except that notices of change
of address shall be effective only upon receipt.
13. Governing Law; Validity; Jurisdiction and Venue. The
interpretation, construction and performance of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the State
of Michigan without regard to the applicable principles of conflicts of laws.
The parties agree and agree to stipulate that the United States District Court
for the Western District of Michigan (Southern Division) shall be the proper
jurisdiction and venue for litigation of any claim arising out of or relating to
this Agreement. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any of the other
provisions of this Agreement, which other provisions shall remain in full force
and effect.
14. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original and both of which
together shall constitute one and the same instrument.
15. Miscellaneous. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and executed
by the Consultant and by a duly authorized officer of the Company. No waiver by
a party hereto at any time of any breach by the other party hereto of, or
failure to comply with, any condition or provision of this Agreement to be
performed or complied with by such other party shall be deemed a waiver of any
similar or dissimilar conditions or provisions at the same or at any prior or
subsequent time. This Agreement does not affect any other agreement between the
Consultant and the Company or any of its affiliates. Failure by the Consultant
or the Company to insist upon strict compliance with any provision of this
Agreement or to assert any right which the Consultant or the Company may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Consultant has executed this
Agreement as of the day and year first above written.
SCOTSMAN INDUSTRIES INC.
By /s/ Richard Osborne
------------------------------------
Chairman and Chief Executive Officer
CONSULTANT:
/s/ Timothy Peterson
--------------------------------------
Timothy Peterson
<PAGE>
EXHIBIT (c)(9)
AMENDMENT NO. 2 TO RIGHTS AGREEMENT, dated as of February 2, 1997, between
KYSOR INDUSTRIAL CORPORATION, a Michigan corporation (the "Company"), and HARRIS
TRUST AND SAVINGS BANK (the "Rights Agent"), amending the Rights Agreement,
dated as of April 26, 1996, between the Company and the Rights Agent (the
"Rights Agreement").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Board of Directors of the Company has approved an Agreement
and Plan of Merger (the "Merger Agreement") by and among the Company, Scotsman
Industries, Inc., a Delaware corporation ("Scotsman"), and K Acquisition
Corporation, a Michigan corporation and a wholly-owned subsidiary of Scotsman
("K Acquisition"), providing for K Acquisition to commence an all-cash tender
offer for all outstanding shares of capital stock of the Company (the "Offer")
and for the subsequent merger of K Acquisition into the Company (the "Merger");
WHEREAS, the Board of Directors of the Company has determined that the
Offer and the Merger are fair to and in the best interests of the Company and
its shareholders;
WHEREAS, the willingness of Scotsman and K Acquisition to enter into the
Merger Agreement is conditioned on, among other things, the amendment of the
Rights Agreement on the terms set forth herein; and
WHEREAS, Section 26 of the Rights Agreement provides that, among other
things, prior to the Distribution Date and subject to the restrictions set forth
in the penultimate sentence of such Section, the Company may, and the Rights
Agent shall, if the Company so directs, supplement or amend any provisions of
the Rights Agreement without the approval of any holders of certificates
representing shares of Common Stock;
NOW, THEREFORE, in consideration of the premises and mutual agreements set
forth in the Rights Agreement and this Amendment, the parties hereby agree as
follows:
1. Section 1 of the Rights Agreement is hereby amended by adding the
following definitions thereto:
"K Acquisition" shall mean K Acquisition Corporation, a Michigan
corporation and a wholly-owned subsidiary of Scotsman.
"Merger" shall mean the merger of K Acquisition into the Company as
countemplated by the Merger Agreement.
"Merger Agreement" shall mean the Agreement and Plan of Merger, dated as of
February 2, 1997, by and among Scotsman, K Acquisition and the Company, as the
same may be amended in accordance with the terms thereof.
"Offer" shall have the meaning set forth in the Merger Agreement.
"Scotsman" shall mean Scotsman Industries, Inc. a Delaware corporation.
<PAGE>
2. Section 1(a) of the Rights Agreement is hereby amended by adding to
the end thereof the following:
"Notwithstanding anything to the contrary contained herein, neither
Scotsman nor K Acquisition shall be or become an "Acquiring Person" (and no
Shares Acquisition Date shall occur) as a result of (i) the announcement,
commencement or consummation of the Offer, or (ii) the execution of the Merger
Agreement (or any amendment thereto in accordance with the terms thereof) or the
consummation of the transactions comtemplated thereby (including, without
limitation, the Offer and the Merger)."
3. Section 3(a) of the Rights Agreement is hereby amended by adding to the
end thereof the following:
"Notwithstanding anything to the contrary contained herein, no Distribution
Date shall occur as a result of (i) the announcement, commencement or
consummation of the Offer, or (ii) the execution of the Merger Agreement (or any
amendment thereto in accordance with the terms thereof) or the consummation of
the transactions contemplated thereby (including, without limitation, the
Offer and the Merger), and no Distribution Date will, in any event, occur
prior to the effective time of the Merger or the earlier termination of the
Merger Agreement."
4. Section 7(a) of the Rights Agreement is hereby amended by replacing the
word "earlier" in its first occurrence with the word "earliest", by deleting the
word "or" immediately prior to the symbol "(ii)", and by replacing the words
"(the earlier of (i) and (ii), being herein referred to as the "Expiration
Date")" with the following:
"and (iii) immediately prior to the effective time of the Merger (the
earliest of (i), (ii) and (iii) being herein referred to as the "Expiration
Date")."
5. Section 11 of the Rights Agreement is hereby amended by adding to the
end thereof the following:
"(n) Notwithstanding anything to the contrary contained herein, the
provisions of this Section 11 will not apply to or be triggered by (i) the
announcement, commencement or consummation of the Offer, or (ii) the execution
of the Merger Agreement (or any amendment thereto in accordance with the terms
thereof) or the consummation of the transactions contemplated thereby
(including, without limitation, the Offer and the Merger)."
6. Section 13 of the Rights Agreement is hereby amended by adding to the
end thereof the following:
"(d) Notwithstanding anything to the contrary contained herein, the
provisions of this Section 13 will not apply to or be triggered by the execution
of the Merger Agreement or any amendment thereto or the consummation of the
transactions comtemplated thereby (including, without limitation, the Merger)."
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<PAGE>
7. The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Amendment.
8. The term "Agreement" as used in the Rights Agreement shall be deemed to
refer to the Rights Agreement as amended by this Amendment No. 2.
9. Except as set forth herein, the Rights Agreement shall remain in full
force and effect and shall be otherwise unaffected hereby.
10. This Amendment No. 2 may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
2 to be duly executed, all as of the day and year first above written.
KYSOR INDUSTRIAL CORPORATION
By /s/ Peter W. Gravelle
------------------------------------------
Its President and Chief Operating Officer
-------------------------------------
HARRIS TRUST AND SAVINGS BANK,
as Rights Agent
By /s/ Keith A. Bradley
------------------------------------------
Its Assistant Vice President
-------------------------------------
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