SPRECKELS INDUSTRIES INC, SC 14D9, 1996-08-01

SPRECKELS INDUSTRIES INC
SC 14D9, 1996-08-01
SUGAR & CONFECTIONERY PRODUCTS

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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14D-9

SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934

SPRECKELS INDUSTRIES, INC.
(Name of Subject Company)

SPRECKELS INDUSTRIES, INC.
(Name of Person(s) Filing Statement)

Class A Common Stock, Par Value $0.01 Per Share
(Including the Associated Rights)
Warrants to Purchase Shares of Class A Common Stock ($9.17 Exercise Price Per
Warrant)
Warrants to Purchase Shares of Class A Common Stock ($11.67 Exercise Price Per
Warrant)
Warrants to Purchase Shares of Class A Common Stock ($15.00 Exercise Price Per
Warrant)
Warrants to Purchase Shares of Class A Common Stock ($1.00 Exercise Price Per
Warrant)

(Title of Class of Securities)

849416201
(CUSIP Number of Class of Securities)

DONALD C. ROOF
SPRECKELS INDUSTRIES, INC.
D/B/A YALE INTERNATIONAL, INC.
ONE MORROCROFT CENTRE
6805 MORRISON BLVD., SUITE 450
CHARLOTTE, NORTH CAROLINA 28211
(704) 367-4220

(Name, address and telephone number of person
authorized to receive notice and communications on
behalf of the person(s) filing statement)

COPY TO:

PHILIP T. RUEGGER III, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3954
(212) 455-2000

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ITEM 1. SECURITY AND SUBJECT COMPANY.

The name of the subject company is Spreckels Industries, Inc. (doing
business as Yale International, Inc.), a Delaware corporation (the "Company"),
and the address of its principal executive offices is One Morrocroft Centre,
6805 Morrison Blvd., Suite 450, Charlotte, North Carolina 28211. The title of
each class of equity securities to which this Statement relates is (i) the Class
A Common Stock, par value $0.01 per share (the "Common Stock"), of the Company,
including the associated rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of November 11, 1995, between the Company and ChaseMellon
Shareholder Services L.L.C. (the "Rights Agent"), as amended by amendments
thereto dated as of January 8, 1996 and July 23, 1996, respectively (as so
amended, the "Rights Agreement"), and (ii) all outstanding warrants to purchase
Common Stock. References herein to the "Shares" means the outstanding shares of
the Common Stock and shall, unless the context requires otherwise, include the
associated Rights.

ITEM 2. TENDER OFFER OF THE BIDDER.

This Statement relates to the tender offer disclosed in a Tender Offer
Statement on Schedule 14D-1 dated July 19, 1996 (the "Schedule 14D-1"), by
American Enterprises Acquisition Corp., a Delaware corporation ("American
Enterprises Acquisition") and a wholly owned subsidiary of American Enterprises,
L.L.C., a Delaware limited liability company ("American Enterprises"), to
purchase (i) all outstanding shares of Common Stock, including the associated
Rights, at a price of $16.50 per share (and associated Right) and (ii) all
outstanding warrants to purchase shares of Common Stock issued by the Company
(the "Warrants") at the Spread (as defined in the Offer to Purchase (as defined
below)), in each case net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Offer to Purchase dated
July 19, 1996 (the "Offer to Purchase") and the related Letter of Transmittal
(which together constitute the "Offer").

According to the Schedule 14D-1, the principal executive offices of
American Enterprises and American Enterprises Acquisition are located at 701
East Franklin Street, Richmond, Virginia 23219.

ITEM 3. IDENTITY AND BACKGROUND.

(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.

(b) Except as set forth in this Item 3(b), to the knowledge of the Company
as of the date hereof, there are no material contracts, agreements, arrangements
or understandings and no actual or potential conflicts of interest between the
Company or its affiliates and (i) the Company, its executive officers, directors
or affiliates or (ii) American Enterprises or American Enterprises Acquisition
or their respective executive officers, directors or affiliates.

BACKGROUND. On November 14, 1995, Bart A. Brown, Chairman of the Board of
the Company, was informed by Philip W. Knisely, President of American
Enterprises, that American Enterprises had acquired shares of the Company and
would be filing a Schedule 13D. Mr. Brown suggested that Mr. Knisely meet with
Gary L. Tessitore, President and Chief Executive Officer of the Company. On
November 18, 1995, American Enterprises filed a Schedule 13D in which it
disclosed that it had acquired 1,201,260 shares of Common Stock in order to
obtain a substantial equity position in the Company, and that it was
considering, but had not decided whether or not to pursue, other courses of
action with respect to the Company.

On November 21, 1995, Mr. Tessitore and Mr. Knisely met and generally
discussed the Company and American Enterprises.

Subsequently, on December 4, 1995, Steven M. Rales and Mitchell P. Rales,
each of whom is a member of the Board of Managers of American Enterprises,
met with Mr. Tessitore. In that meeting, Messrs. Rales made a presentation to
Mr. Tessitore on the performance of Danaher Corporation, a company of which
Messrs. Rales beneficially owned approximately 43% of the outstanding common
stock as of March 21, 1996 (according to Danaher Corporation's proxy statement
for its 1996 Annual Meeting), and also discussed the growth opportunities that
they saw for the Company.

On December 19, 1995, the Board of Directors of the Company (the "Board")
received a letter from American Enterprises proposing a business combination
transaction for consideration of $11.00 per share of Common Stock and providing
for a distribution in cash of the net proceeds from the sale of the Spreckels
Sugar business.

At the Board meeting on January 8, 1996, the Board and its advisors
carefully reviewed and considered American Enterprises's proposal contained in
its December 19, 1995 letter and determined to reject the proposal. On January
5, 1996, the last full trading day before the Board meeting, the closing price
of the Common Stock on the Nasdaq National Market

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was $13.50 per share. A copy of the letter dated January 8, 1996 that the
Company sent to American Enterprises with regard to the Board's determination is
set forth below.

January 8, 1996

Mr. Philip W. Knisely
President
American Enterprises, L.L.C.
701 East Franklin Street
Richmond, Virginia 23219

Dear Phil:

The Board of Directors of Spreckels Industries, Inc. and its
advisors have carefully reviewed and considered American Enterprises,
L.L.C.'s proposal to acquire Spreckels for $11 per share plus an
unspecified cash distribution.

The Board has rejected your proposal and has concluded that
entering into merger discussions with you or providing confidential
information is not in the best interests of the Company's shareholders.
In reaching this conclusion, the Board has reiterated its view that the
Company is not for sale and that management should continue to implement
its long term strategy to enhance the value of the Company for all
shareholders. The Company will announce tomorrow that it has reached a
definitive agreement to sell its Spreckels Sugar subsidiary to Imperial-
Holly Corporation. A copy of the press release is attached.

Sincerely yours,

/s/ Gary L. Tessitore

Gary L. Tessitore

On April 1, 1996, at an industry conference, Mitchell P. Rales spoke with
Mr. Tessitore and said that American Enterprises was contemplating the
acquisition of a company in a business related to the Company's. Mr. Rales then
indicated, among other things, that American Enterprises might want to pursue
the possible acquisition by American Enterprises of an increased equity interest
in the Company. Mr. Tessitore responded that if American Enterprises were to
make a written proposal, the Board of Directors of the Company would give it due
consideration, but Mr. Rales should be advised that at that time the Company was
not for sale.

On May 16, 1996, the Company received a letter from Metropolitan Capital
Advisors, Inc. ("Metropolitan"), the general partner of Bedford Fall Investors,
LP, in which Metropolitan indicated its intention to seek control of the Board
at the next shareholders' meeting, with a slate of directors that Metropolitan
said would be committed to the near-term maximization of the value of the Common
Stock.

On May 16, 1996, Mr. Knisely called Mr. Tessitore and a meeting was
arranged for May 24 to discuss possible responses by the Company to the
Metropolitan letter. On May 24, 1996, Mr. Brown, Mr. Tessitore, Mr. Knisely and
Messrs. Mitchell and Steven Rales met. Messrs. Rales and Mr. Knisely of American
Enterprises indicated American Enterprises's interest in a potential transaction
pursuant to which the Company would amend its then effective Rights Agreement to
permit American Enterprises to acquire approximately 40% of the Company's Common
Stock through open market purchases and an issuance of additional shares. In
connection with such potential transaction, American Enterprises also requested
representation on the Board. Mr. Brown and Mr. Tessitore told the American
Enterprises representatives that they would consider this proposal as well as
other alternatives.

On June 7, 1996, after evaluation of a number of investment banking firms,
the Company notified Salomon Brothers Inc ("Salomon Brothers") that the Company
desired to engage Salomon Brothers to assist in the evaluation of the proposal
made by American Enterprises and other financial and strategic alternatives
available to the Company.

On July 17, 1996, the Board held a meeting at which Salomon Brothers made a
presentation to the Board with respect to various strategic alternatives
available to the Company. Following this presentation, the Board discussed and
considered, among other matters, American Enterprises's May 16, 1996 proposal.

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On July 19, 1996, Mr. Tessitore received a telephone call from Mr. Knisely
informing him that American Enterprises was commencing the Offer and offering to
arrange a meeting. Subsequent to the telephone conversation, American
Enterprises commenced the Offer and the Company received a letter from American
Enterprises to that effect. The Company also learned of the commencement of the
litigation referred to in Item 8 of this Statement.

On July 19, 1996, the Board held a meeting, in which its legal and
financial advisors participated, after which a press release was issued, which
stated in pertinent part:

CHARLOTTE, NC (July 19, 1996) -- The Board of Directors of Yale
International, Inc. (formerly Spreckels Industries, Inc.; Nasdaq: YALE)
today confirmed that it had received a letter from American Enterprises,
L.L.C. announcing its intention to proceed with an unsolicited cash
tender for the outstanding common shares and the outstanding warrants of
the company, and its further intention to pursue legal actions with
respect to this offer.

The Board is reviewing this offer with the help of its financial
advisor, Salomon Brothers Inc. When that review is complete, the Board
will advise its shareholders and respond appropriately. Until then, the
Board urges the shareholders of the company to take no action with
respect to the tender offer.

On July 23, 1996, the Board held a meeting, in which its legal and
financial advisors participated, to discuss the Offer and possible responses to
it. During the meeting, the Board considered, among other matters, the time it
would have to respond to the Offer and the provisions of its Rights Agreement,
as then in effect. After discussing the matter with its legal and financial
advisors, the Board determined to amend the Rights Agreement so that the Rights
will expire upon consummation of an all cash tender offer for the Common Stock
if, among other requirements which previously were in effect, the offer is
consummated no earlier than 90 days after it is commenced. At the July 23 Board
meeting, the Board also resolved to defer the distribution date of the Rights
until the earlier of (i) the date any person becomes an Acquiring Person (as
defined in the Rights Agreement) and (ii) such other time as shall be determined
by the Board. Because American Enterprises is a Grandfathered Person (as defined
in the Rights Agreement), it will become an Acquiring Person upon the
acquisition of beneficial ownership of any additional shares of Common Stock.

The Company issued a press release on July 24, 1996, which stated in
pertinent part:

CHARLOTTE, NC (July 24, 1996) -- Yale International, Inc. (Nasdaq: YALE)
today announced that its Board of Directors has amended its Stockholder
Rights Plan, effective immediately. The Plan, as amended, provides that
the rights under the Plan will expire upon consummation of an all cash
tender offer for the Company's stock if, among other requirements which
previously were in effect, the offer is consummated no earlier than 90
days after it is commenced.

"This amendment provides the Board of Directors adequate time to
review the proposal announced last week by American Enterprises and to
explore all options available to the Company," Gary L. Tessitore,
President and CEO of Yale, said. "It will assist us in our desire to act
in the best interests of our shareholders."

See Item 8 of this Statement for additional information with respect to
certain litigation.

SEVERANCE AND RELATED MATTERS. Certain contracts, agreements, arrangements
or understandings between the Company and certain of its executive officers,
directors and affiliates are described on pages 3-19 of the Company's Proxy
Statement dated October 3, 1995 for the 1995 Annual Meeting of Stockholders of
the Company (the "Proxy Statement"). Pertinent portions of such pages are filed
as Exhibit 1 hereto and incorporated herein by reference.

At a meeting of the Board held on July 17, 1996 (the "July 17 Meeting"),
prior to the commencement of the Offer, in order to ensure the continued
dedication and objectivity of certain key executives and managers of the
Company, the Board authorized the Company to enter into amended severance
compensation arrangements ("Amended Severance Agreements") with seven of such
executives and managers (such executives and managers, the "Executives"). The
Amended Severance Agreements modified the previously effective severance
agreement forms to (i) provide that an Executive will be entitled to Severance
(as defined below) based on the Annual Target Bonus (as defined below) rather
than the Executive's accrued bonus to the date of Termination (as defined
below), (ii) provide that an Executive will be entitled to Severance in the
event of an Executive's Termination of employment by the Company (or its
successor) within two years following a Change in Control (as defined below)
rather than one year for constructive Termination or six months from resignation
and (iii) modify the definitions of "Termination" and "Change in Control" as
described below.

Under the three-tiered severance structure adopted by the Board, each of
Mr. Tessitore and Donald C. Roof, Chief Financial Officer of the Company, are
parties to Tier 1 Amended Severance Agreements, one Executive is a party to a
Tier 2

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Amended Severance Agreement and four Executives are parties to Tier 3 Amended
Severance Agreements. Copies of the forms of the Tier 1, Tier 2 and Tier 3
Amended Severance Agreements are filed as Exhibits 2, 3 and 4 hereto,
respectively, and are incorporated herein by reference. The following
description of the Amended Severance Agreements is qualified in its entirety by
reference to such exhibits.

The Amended Severance Agreements provide for the payment of severance
benefits ("Severance") in the event of an Executive's termination of employment
by the Company (or its successor) within two years following a Change in
Control. Such Severance consists of (i) a lump sum payment equal to the sum of
(A) a multiplier (the "Severance Multiplier") times the Executive's base salary
immediately prior to the Change in Control and (B) the Severance Multiplier
times the Executive's target bonus as in effect for the year in which the
Termination occurs (or, if higher, the target bonus for the year in which the
Change in Control occurs) (the "Annual Target Bonus"); and (ii) continued
medical benefits until the second anniversary of the Executive's termination or
the first anniversary if the Executive has resigned. The Severance Multipliers
for the Tier 1, Tier 2 and Tier 3 Amended Severance Agreements are 2, 1.5 and 1,
respectively. In addition, the Executives are entitled to payment of one half
the amount otherwise due under their Amended Severance Agreements upon any
termination of employment by them within two years of a Change in Control.

The Amended Severance Agreements also provide for the Executive to become
fully vested in all awards granted to him under all incentive compensation,
deferred compensation, stock option, stock appreciation rights, restricted
stock, phantom stock or similar plans maintained by the Company, any contrary
provisions of such plans notwithstanding. Payments and benefits under the
Amended Severance Agreements are limited by the parachute limit imposed by
Section 280G of the Internal Revenue Code of 1986, as amended.

A "Change in Control" for the purposes of the Amended Severance Agreements
is deemed to have occurred if: (i) the six persons who were directors of the
Company on September 1, 1995 (the "Incumbent Directors") cease (for any reason
other than death) to constitute a majority of the Board of Directors. For this
purpose, any director who was not a director on September 1, 1995 shall be
deemed to be an Incumbent Director if such director was elected or appointed to
the Board after July 24, 1996 in substitution of an Incumbent Director by, or on
the recommendation of or with the approval of, at least a majority of the
directors who then qualified as Incumbent Directors (so long as such director
was not nominated by a person who has threatened to, or has entered into an
agreement to, effect a Change in Control); (ii) any person (as such term is used
in sections 13(d) and 14(d) of the Exchange Act) (excluding the Company or any
Company benefit plans) is or becomes the beneficial owner directly or indirectly
of securities of the Company representing more than 30% of the combined voting
power of the Company's then outstanding securities ordinarily (and apart from
rights accruing under special circumstances) having the right to vote at
elections of directors; (iii) the shareholders of the Company approve (A) a
merger or consolidation of the Company with any other corporation or (B) an
agreement for the sale of 50% or more of the assets of the Company; or (iv) any
other event occurs which is determined to be a Change in Control by a majority
of the Board.

Under the Amended Severance Agreements, "Cause" is defined as (i) a willful
failure by the Executive to substantially perform his duties, other than a
failure resulting from the Executive's complete or partial incapacity due to
physical or mental illness or impairment, (ii) a willful act by the Executive
which constitutes gross misconduct or fraud and which is materially injurious to
the Company, or (iii) a conviction of, or a plea of "guilty" or "no contest" to,
a felony, provided that no act or failure to act by the Executive shall be
considered "willful" unless committed without good faith and without a
reasonable belief that the act or omission was in the Company's best interest.

Under the Amended Severance Agreements, "Termination" or "Terminated" is
defined as any of the following: (i) the Executive has been terminated by the
Company for any reason other than Cause; (ii) elimination of the Executive's
position or job; (iii) a significant diminution of the Executive's duties,
responsibilities or authority without the Executive's consent; (iv) a reduction
in the Executive's Base Compensation after the Change in Control; (v) the
failure by the Company to provide substantially similar benefits as in effect on
the date hereof, including, without limitation, equity, incentive, bonus,
retirement, health, life insurance, vacation, change in control protection and
other fringe benefit arrangements; (vi) any breach of the agreement by the
Company; or (vii) a requirement that the Executive relocate his principal place
of work by a distance of 50 miles or more.

The Company also has indemnification agreements (the "Indemnification
Agreements") with each member of the Board and certain executive officers. The
Indemnification Agreements supplement the protections afforded to the Company's
directors and executive officers under the Company's By-laws. In general, the
Indemnification Agreements provide that upon the occurrence of a change in
control, the Company will obtain an irrevocable standby letter of credit in an
amount not less than $1,000,000 per individual naming such director or officer
as the sole beneficiary. Such director or officer can draw amounts under such
letter of credit upon the certification by such indemnified person that (i) such
indemnified person has made a written request to the Company for such amount and
the Company has failed or refused to provide him with such amount in

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full for 30 days and (ii) the indemnified party believes that he is entitled
under the terms of the Indemnification Agreement to the amount he is drawing
down. The Indemnification Agreements are binding on the Company and any
successor to the Company.

The foregoing description of the Indemnification Agreements is qualified in
its entirety by reference to the form of agreement, a copy of which is filed as
Exhibit 5 hereto and is incorporated herein by reference.

ITEM 4. THE SOLICITATION OR RECOMMENDATION.

(a) At the Board's meeting on July 31, 1996 (the "July 31 Meeting"), the
Board carefully considered the Company's business, financial condition and
future prospects, the terms of the Offer and other matters, including
presentations by its legal and financial advisors. After taking into account
these matters, the Board determined, by unanimous vote of the directors present,
that the Offer is inadequate and not in the best interests of the Company and
its shareholders.

ACCORDINGLY, THE BOARD RECOMMENDS THAT ALL HOLDERS OF SHARES REJECT THE
OFFER AND NOT TENDER THEIR SHARES PURSUANT TO THE OFFER.

The Board is committed to the enhancement of shareholder value through the
exploration of all options available to the Company in response to the Offer. In
this regard, the Board has authorized management and Salomon Brothers, the
Company's financial advisor, to explore all strategic alternatives and to report
back to the Board at an early date.

A copy of the letter to the Company's shareholders communicating the
Board's recommendation and the press release relating thereto are filed as
Exhibits 6 and 7 to this Statement and are incorporated herein by reference.

(b) In reaching its determinations and recommendations described in Item
4(a) above, the Board considered a number of factors, including, without
limitation, the following:

(i) The Company's business, financial condition, results of operations
and future prospects, especially as such factors would affect the Company's
ability to enhance shareholder value.

(ii) A presentation by Salomon Brothers concerning, among other
matters, the financial aspects of the Offer and certain of the conditions
of the Offer as they relate to financial matters, the historical and
current financial position and results of operations of the Company and the
Company's future prospects, the historical and current market for the
Common Stock and for equity securities of selected other companies,
selected recent merger and acquisition transactions, the possible interest
of third parties with respect to an acquisition of all or any part of the
Company and previous actual and potential merger and acquisition
transactions involving affiliates of American Enterprises (based on
publicly available information).

(iii) The written opinion of Salomon Brothers to the effect that, as
of the date of such opinion, the consideration to be received by the
holders of Shares (other than American Enterprises and its affiliates)
pursuant to the Offer is inadequate, from a financial point of view, to
such holders. The full text of such opinion, dated July 31, 1996, which
sets forth the assumptions made and matters considered and limitations set
forth by Salomon Brothers, is included as Annex A hereto and should be read
in its entirety.

(iv) The price of the Common Stock on the Nasdaq National Market,
which, at the close of trading on the Nasdaq National Market on July 30,
1996, was $18.375 per share.

(v) The Board's belief, based in part on the factors referred to
above, that the $16.50 per share cash price pursuant to the Offer does not
reflect the current value of the Company.

(vi) The significant conditionality of the Offer. The Offer is
conditioned, among other things, on the following: (i) either (A) American
Enterprises being satisfied, in its sole discretion, that the Rights are
inapplicable to the Offer through the satisfaction of the Rights Expiration
Condition or (B)(I) there being validly tendered a number of Shares and
Warrants which when added to the Shares beneficially owned by American
Enterprises would represent at least a majority of the Shares outstanding
on a fully diluted basis on the date of purchase and (II) American
Enterprises being satisfied, in its sole discretion, that the Rights are
otherwise inapplicable to the Offer or that the Rights have been redeemed
or invalidated, (ii) there being no change in the business, properties,
assets, liabilities, capitalization, stockholders' equity, condition
(financial or otherwise), operations, licenses or franchises, results of
operations or prospects of the Company or any of its subsidiaries that, in
the sole judgment of American Enterprises, is or may be materially adverse
to the Company or any of its subsidiaries, (iii) American Enterprises not
becoming aware of any facts, that in its sole judgment, have or may have
material adverse significance with respect to either the value of the
Company or any of

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its subsidiaries or the value of the Shares or Warrants to American
Enterprises or any of its affiliates, (iv) there being no change in the
general political, market, economic or financial conditions in the United
States or abroad that could, in the sole judgment of American Enterprises,
have a material adverse effect on the business, properties, assets,
liabilities, capitalization, stockholders' equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of the Company or any of its subsidiaries, or the trading in, or
value of, the Shares and (v) further conditions which are also subject to
the sole judgment of American Enterprises. Although the Offer is not
subject to a financing condition, the cumulative effect of all of the
Offer's conditions, especially those conditions the satisfaction of which
is determinable by American Enterprises in its sole judgment or discretion,
is an offer which the Board viewed as highly conditional. In this regard,
the Board also considered that, under certain circumstances, certain
conditions might be determined by American Enterprises not to be satisfied
if financing were not available to meet the Company's obligations in the
event that holders of the Company's 11 1/2% Senior Secured Notes Due 2000
(the "Notes") were to exercise their rights to demand that the Company
repurchase their Notes upon a change in control. American Enterprises's
Offer did not identify a specific source of funds for these obligations if
they arose.

(vii) The Board's commitment to protecting the best interests of the
Company's shareholders and the enhancement of shareholder value.

The foregoing discussion of the information and factors considered and
given weight by the Board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation, the Board did
not find it practicable to and did not quantify or otherwise assign relative
weights to the specific factors considered in reaching its determinations and
recommendation. In addition, individual members of the Board may have given
different weight to different factors.

ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.

Pursuant to the terms of the engagement letter dated June 7, 1996, the
Company has retained Salomon Brothers to render financial advisory services to
the Company, and in accordance with such engagement, Salomon Brothers has
advised the Company with respect to the Offer and related matters.

The Company has paid Salomon Brothers an initial fee of $150,000 and will
pay a fee of $250,000 as a result of the public announcement of the Offer and an
additional fee of $250,000 as a result of the submission by Salomon Brothers of
the opinion described herein. The Company has also agreed to pay Salomon
Brothers additional fees, including fees equal to 1.1% of the aggregate
consideration in connection with any combination transaction (less any other
fees paid), such additional fees to be contingent upon the consummation of a
combination transaction and payable at the closing thereof. Salomon Brothers
would also be entitled to certain lesser fees if a change of control of the
Company has not occurred on or before June 7, 1997.

The Company has also agreed to reimburse Salomon Brothers for its
reasonable expenses, including travel and out-of-pocket expenses, and also
including the reasonable fees and disbursements of outside counsel, and to
indemnify Salomon Brothers and certain related persons against certain
liabilities in connection with their engagement, including certain liabilities
under the federal securities laws.

In the ordinary course of its business, Salomon Brothers may from time to
time effect transactions and hold positions in securities of the Company or
affiliates of American Enterprises.

The Company has retained Georgeson & Company, Inc. ("Georgeson") to
distribute information (including this Statement on Schedule 14D-9) on behalf of
the Company in connection with the Offer and related matters and to assist the
Company in any solicitation in opposition to any solicitation by American
Enterprises in connection with any stockholders' meeting or proposed
stockholders' meeting. Such firm will receive customary compensation for its
services in an amount to be agreed upon with the Company and will be reimbursed
for certain out-of-pocket expenses.

Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations or
recommendations to others with respect to the Offer.

ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.

(a) Except as set forth below, there have been no transactions in Shares
which were effected during the past 60 days by the Company, or to the best
knowledge of the Company, by any executive officer, director, affiliate or
subsidiary of the Company. On July 1, 1996, Larry Katsoulis, President of the
Company's Material Handling Division, exercised 5,166 options granted in 1994
and 1995 at prices ranging from $8.125 to $8.875 per option.

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(b) To the best knowledge of the Company, (i) none of its executive
officers, directors, affiliates or subsidiaries presently intends to tender
Shares to the Purchaser pursuant to the Offer and (ii) none of its executive
officers, directors, affiliates or subsidiaries presently intends to otherwise
sell any Shares which are owned beneficially or held of record by such persons,
except that one director has indicated to the Company that a person with which
he is affiliated has not yet decided whether or not it will tender Shares to the
Purchaser pursuant to the Offer. The foregoing does not include any Shares over
which, or with respect to which, any such executive officer, director or
affiliate or subsidiary acts in a fiduciary or representative capacity or is
subject to instructions from a third party with respect to such tender.

ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.

(a) As stated above in Item 4(b) above, the Board believes that the $16.50
per Share cash price pursuant to the Offer does not reflect the current value of
the Company. For this reason, and in light of the other factors referred to in
such Item, and the Board's commitment to the enhancement of shareholder value,
the Board has authorized management and the Company's advisors to explore all
strategic alternatives and to report back to the Board at an early date. These
alternatives could lead to and involve undertaking negotiations which may result
in: (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any subsidiary of the Company and another company; (ii)
a purchase, sale or transfer of a material amount of assets by the Company or
one or more subsidiaries of the Company; (iii) a tender offer for or other
acquisition of securities by or of the Company; or (iv) a material change in the
present capitalization or dividend policy of the Company. At the date hereof no
negotiations are underway, although certain parties have executed
confidentiality agreements in customary form with the Company.

The Board has determined that disclosure of the possible terms of any
transactions or proposals of the type referred to above in this Item 7 prior to
an agreement in principle with respect thereto would jeopardize the initiation
or continuation of negotiations with respect to such transactions and has,
accordingly, adopted a resolution directing management not to disclose such
possible terms, or the parties thereto, until such an agreement has been
reached.

(b) There are no transactions, Board resolutions, agreements in principle
or signed contracts in response to the Offer that relate to or would result in
one or more of the events referred to in Item 7(a) above.

ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.

RIGHTS AGREEMENT. On November 11, 1995, the Board declared a dividend
distribution of one-half Right for each outstanding Share to stockholders of
record at the close of business on November 24, 1995. Except as set forth below
each whole Right, when exercisable, entitles the registered holder to purchase
from the Company one share of Common Stock at a price of $45.00 per share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in the Rights Agreement.

The following is a general description only and is qualified in its
entirety by the Rights Agreement, a copy of which is filed as Exhibit 8 hereto
and is incorporated herein by reference. All undefined capitalized terms used in
the discussion below are used as defined in the Rights Agreement.

Initially, the Rights will be attached to all certificates representing
Shares then outstanding, and no separate Rights certificates will be
distributed. The Rights will separate from the Common Stock and a distribution
date (the "Distribution Date") will occur upon the earlier of (i) a public
announcement that a Person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of securities representing 15% or more of the voting power of all
outstanding voting securities of the Company (the "Stock Acquisition Date") or
(ii) 10 days (unless such date is extended by the Board) following the
commencement of (or a public announcement of an intent to make) a tender offer
or exchange offer which would result in any Person or group of affiliated or
associated Persons becoming an Acquiring Person. The Rights Agreement provides
that the term "Acquiring Person" shall not include any Person who as of the
close of business on the later of (i) November 13, 1995 or (ii) the date as of
which such Person can demonstrate to the Company it first received notice of the
authorization of the Rights, beneficially owned securities representing 15% (the
"Percentage Limitation") or more of the shares of Common Stock then outstanding,
provided such Person does not acquire after the Record Date beneficial ownership
of additional shares of Common Stock (other than as a result of stock splits,
stock dividends or other actions affecting the stock ownership of all of the
holders of the Common Stock as a group or as a result of grants of options or
purchases of Common Stock pursuant to the Company's employee benefit plans). At
its meeting on July 23, 1996, the Board resolved to defer the Distribution Date
until the earlier of (i) the date any person becomes an Acquiring Person and
(ii) such other time as shall be determined by the Board. Because American
Enterprises is a Grandfathered Person, it will become an Acquiring Person upon
the acquisition of beneficial ownership of any additional Shares.

<PAGE>
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates, with a Summary of the Rights, and will be transferred with
and only with the Common Stock certificates and (ii) new Common Stock
certificates issued after November 24, 1995 upon transfer or new issuance of
Common Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights) the surrender for transfer of any certificates for Common Stock
outstanding as of the Record Date will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificates. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Common Stock as of the close of business on the Distribution Date
and the separate Rights Certificates alone will evidence the Rights.

The Rights are not exercisable until the Distribution Date and will expire
or terminate at the earliest of (i) November 23, 2005, (ii) consummation of a
merger transaction with a Person or group who acquired shares of Common Stock
pursuant to a Permitted Offer (as defined below), and is offering in the merger
the same price per share and form of consideration paid in the Permitted Offer,
or (iii) redemption or exchange of the Rights by the Company as described below.

In the event that a Person or group of affiliated or associated Persons
becomes the beneficial owner of securities representing the Percentage
Limitation or more of the then outstanding shares of Common Stock (unless
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock at a price and on terms which are determined prior to the date of
the first acceptance of payment for any of such shares by at least a majority of
the members of the Board who are not officers of the Company and are not
Acquiring Persons or affiliates or associates thereof to be both adequate and
otherwise in the best interests of the Company and its shareholders (a
"Permitted Offer")), then proper provision shall be made so that each holder of
a whole Right will for a 60-day period (subject to extension under certain
circumstances) thereafter have the right to receive upon exercise one Share for
each whole Right then held, at the price of $1.00 per Share to the extent
available (such Right being called the "Subscription Right" and the price
referred to above to exercise the same being called the "Subscription Right
Price") and then (after all authorized and unreserved Shares have been issued) a
common stock equivalent (such as another equity security with at least the same
economic value as the Shares) with the Shares to the extent available being
issued first. In the event that following the first date of public announcement
by the Company or an Acquiring Person that an Acquiring Person has become such,
the Company is involved in a merger or consolidation (whether or not the Company
is the surviving corporation), or 50% or more of the Company's assets or earning
power are sold (in one transaction or a series of transactions), proper
provision shall be made so that each holder of a whole Right (other than such
Acquiring Person) shall thereafter have the right to receive, upon the exercise
thereof at the Subscription Right Price that number of shares of Common Stock of
either the Company, in the event that it is the surviving corporation of a
merger or consolidation, or the acquiring company (or, in the event there is
more than one acquiring company, the acquiring company receiving the greatest
portion of the assets or earning power transferred) which at the time of such
transaction would be equal to the result obtained by dividing (i) the product
determined by multiplying the Purchase Price per share of the Common Stock of
the Company by the numbers of shares of Common Stock into which a Right is then
exercisable by (ii) 50% of the current market price per share of the Company or
such other party (such right being called the "Merger Right"). The holder of a
Right will continue to have the Merger Right whether or not such holder
exercises the Subscription Right. Notwithstanding the foregoing, upon the
occurrence of any of the events giving rise to the exercisability of the Merger
Right or the Subscription Right, any Rights that are or were at any time after
the Distribution Date owned by an Acquiring Person shall immediately become null
and void.

The Purchase Price payable and the "Subscription Right Price" referred to
above, and the number of shares of Common Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on or a
subdivision, combination or reclassification of the Common Stock; (ii) upon the
grant to holders of the Common Stock of certain rights or warrants to subscribe
for Common Stock or convertible securities at less than the current market price
of the Common Stock; or (iii) upon the distribution to holders of the Common
Stock of evidences of indebtedness or assets (excluding regular quarterly cash
dividends out of earnings or retained earnings) or of subscription rights or
warrants (other than those referred to above).

With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued and in lieu thereof an
adjustment in cash will be made based on the market price of the Common Stock on
the last trading date prior to the date of exercise.

At any time prior to the earlier to occur of (i) a Stock Acquisition Date
or (ii) the expiration of the Rights, the Company may redeem the Rights in
whole, but not in part, at a price of $.001 per Right (the "Redemption Price"),
which redemption shall be effective upon the action of the Board of Directors.
Additionally, the Company may thereafter redeem the then

<PAGE>
outstanding Rights in whole, but not in part, at the Redemption Price (i) if
such redemption is incidental to a merger, consolidation or sale of 50% or more
of the Company's assets or earning power but not involving an Acquiring Person
or certain related Persons or (ii) following an event giving rise to, and the
expiration of the exercise period for, the Subscription Right if and for as long
as an Acquiring Person beneficially owns securities representing less than the
Percentage Limitation of the outstanding Common Stock. The redemption of Rights
described in the preceding sentence shall be effective only as of such time when
the Subscription Right is not exercisable, and in any event, only after ten
Business Days' prior notice. Upon the effective date of the redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.

Subject to applicable law, the Board of Directors, at its option, may at
any time after a Person becomes an Acquiring Person (but not after the
acquisition by such Person of 50% or more of the outstanding Common Stock),
exchange all or part of the then outstanding and exercisable Rights (except for
Rights which have become void) for shares of Common Stock in the ratio of one
share of Common Stock per Right or, alternatively, for substitute consideration
consisting of cash, securities of the Company or other assets (or any
combination thereof). All Rights shall expire upon the consummation of an all
cash tender offer for all of the outstanding shares as a result of which an
Acquiring Person becomes the beneficial owner of 85% or more of the Common
Stock; provided that the Person making such tender offer discloses a commitment
(i) to make a tender offer for the untendered shares or (ii) to cause a merger
of the Company with such Person, in each case, for at least the same cash
consideration as paid in the original tender offer; and, provided, further, that
such all cash tender offer shall not have been consummated earlier than the date
which is the 90th calendar day after the commencement thereof (the "Rights
Expiration Condition").

Fractional shares of Common Stock will not be issuable upon exercise of the
Rights. In lieu of fractional shares, an adjustment in cash will be made based
on the market price of the Common Stock on the last trading date prior to the
date of exercise.

Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be subject to federal taxation to shareholders or to the Company, shareholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration) of
the Company or for Common Stock of the acquiring company as set forth above.

The Board may supplement or amend the Rights Agreement without approval of
any holders of Rights or Rights Certificates in order (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained therein which may be
defective or inconsistent with any other provisions therein, (iii) prior to the
Distribution Date to change or supplement any provision thereunder in any manner
which the Company may deem necessary or desirable or (iv) on or following the
Distribution Date, to change or supplement any provision thereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.

CERTAIN LITIGATION. On July 19, 1996, a complaint (the "American
Enterprises Complaint") entitled AMERICAN ENTERPRISES, L.L.C. V. SPRECKELS
INDUSTRIES, INC., ET AL., C.A. No. 15109, was filed against the Company in the
Court of Chancery of the State of Delaware. A copy of the American Enterprises
Complaint is filed as Exhibit 9(a) and is incorporated herein by reference.
Among other things, the American Enterprises Complaint seeks injunctive relief
and declarations that the Offer shall satisfy the Rights Expiration Condition of
the Rights Agreement provided that American Enterprises beneficially owns, upon
the consummation of the Offer, 85% of the Shares and that the advance notice
provision in the Company's bylaws is invalid. The American Enterprises Complaint
also seeks, among other things, costs and attorneys' fees.

On July 24, 1996, counsel for American Enterprises and the Company
discussed various procedural aspects of such litigation. As part of this
discussion and subsequent contacts between such counsel, it was agreed that (i)
an offer to purchase all shares that is conditioned upon at least 85% of the
shares being tendered is an "any and all" offer within the meaning of the Rights
Agreement and (ii) the Company will provide American Enterprises with 70 days
written notice of any shareholders' meeting to facilitate American Enterprises's
compliance with Section 2.8 of the Company's By-laws (with respect to timely
submission of director nominations). These discussions were subsequently
confirmed in letters dated July 29, 1996 and July 31, 1996, copies of which are
filed as Exhibits 9(b) and 9(c) hereto, respectively, and incorporated by
reference herein.

The foregoing description of the American Enterprises Complaint and
subsequent letters dated July 29, 1996 and July 31, 1996 is qualified in its
entirety by reference to Exhibits 9(a), 9(b) and 9(c) hereto.

<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.

The following exhibits are filed herewith:

<TABLE>
<S> <C> <C>
Exhibit 1 -- Pages 3-19 of the Company's Proxy Statement dated October 3, 1995.
Exhibit 2 -- Form of Tier 1 Severance Compensation Agreement.
Exhibit 3 -- Form of Tier 2 Severance Compensation Agreement.
Exhibit 4 -- Form of Tier 3 Severance Compensation Agreement.
Exhibit 5 -- Form of Indemnification Agreement.*
Exhibit 6 -- Letter to Shareholders dated August 1, 1996.+
Exhibit 7 -- Press Release dated August 1, 1996.
Exhibit 8(a) -- Rights Agreement, dated as of November 11, 1995, between the Company and ChaseMellon Shareholder Services
L.L.C.**
Exhibit 8(b) -- Amendment to the Rights Agreement, dated as of January 8, 1996.***
Exhibit 8(c) -- Form of Amendment to the Rights Agreement, dated as of July 23, 1996.
Exhibit 9(a) -- Complaint in AMERICAN ENTERPRISES, L.L.C. V. SPRECKELS INDUSTRIES, INC., ET AL. (Delaware Chancery Court,
July 19, 1996).
Exhibit 9(b) -- Letter dated July 29, 1996 from counsel for American Enterprises to special Delaware counsel for the
Company.
Exhibit 9(c) -- Letter dated July 31, 1996 from special Delaware counsel for the Company to counsel for American
Enterprises.
Exhibit 10 -- Opinion of Salomon Brothers Inc dated July 31, 1996.****
</TABLE>

+ Included in copy mailed to stockholders.

* Incorporated by reference to Exhibit 10.16 to the Company's Registration
Statement on Form S-1 (File No. 33-18053) filed on November 16, 1987.

** Incorporated by reference to Exhibit 1 to the Company's Form 8-K dated
November 17, 1995.

*** Incorporated by reference to Exhibit 1 to the Company's Form 8-K dated
February 5, 1996.

**** Included as Annex A in copy mailed to shareholders.

<PAGE>
SIGNATURE

After reasonable 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.

SPRECKELS INDUSTRIES, INC.

By: /s/ GARY L. TESSITORE
GARY L. TESSITORE
PRESIDENT AND CHIEF EXECUTIVE OFFICER

Dated: August 1, 1996

<PAGE>
EXHIBIT INDEX

+ Included in copy mailed to stockholders.

* Incorporated by reference to Exhibit 10.16 to the Company's Registration
Statement on Form S-1 (File No. 33-18053) filed on November 16, 1987.

** Incorporated by reference to Exhibit 1 to the Company's Form 8-K dated
November 17, 1995.

*** Incorporated by reference to Exhibit 1 to the Company's Form 8-K dated
February 5, 1996.

**** Included as Annex A in copy mailed to shareholders.

ELECTION OF DIRECTORS

The Company's Certificate of Incorporation provides that the holders of
Class B Common Stock shall have the right to elect one of the Company's
directors for so long as Prudential and its affiliates hold at least ten percent
(10%) of the outstanding Common Stock, and that the holders of Class A Common
Stock shall have the right to elect all of the remaining directors. At the
Annual Meeting, seven Class A directors will be elected by the Class A
stockholders and one Class B director will be elected by the Class B
stockholders.

Unless you request on your proxy card that voting of your proxy be
withheld for any one or more of the following nominees for director, proxies of
Class A Common Stock will be voted for the election of the seven nominees for
Class A director named below and proxies of Class B Common Stock will be voted
for the election of the one nominee for Class B director named below, all to
serve until the next annual meeting of the stockholders and until their
successors are elected or chosen. In the event any nominee is unable or declines
to serve as a director at the time of the meeting, the proxy will be voted for
any nominee who shall be designated by the present Board to fill such vacancy.

Certain information relating to each of the nominees is set forth
below.

Class of Stock
Name of Nominee Age Representing Principal Occupation
<S> <C> <C> <C>

Bart A. Brown, Jr. 63 Class A Chairman of the Board of Directors and
Chief Executive Officer of Color Tile Inc.

Joshua S. Friedman 39 Class A Founding Director and Officer of Canyon
Partners Incorporated

Stewart M. Kasen 56 Class A President and Chief Executive Officer of
Best Products, Inc.

William J. Nightingale 66 Class A Senior Advisor of Nightingale & Associates,
Inc., Corporate Director

George A. Poole, Jr. 64 Class A Private Investor

S. Donley Ritchey 62 Class A Managing Partner of Alpine Partners

Gary L. Tessitore 50 Class A President and Chief Executive Officer of the
Company

John P. Mullman 35 Class B Senior Vice President - The Prudential
Insurance Company of America
</TABLE>

There is no family relationship between any director or executive
officer of the Company.

Nominees for Class A Directors

Bart A. Brown, Jr. has served as the Chairman of the Board of Directors
of the Company since July 14, 1994, its Chief Executive Officer from July 14,
1994 to May 15, 1995, and as director since September 1993. He is also currently
Chairman of the Board of Directors and Chief Executive Officer of Color Tile
Inc. which owns and operates flooring stores. From June 1990 to August 1995, he
was Chairman of Circle K Corporation, which owns and operates convenience
stores, and served as its Chief Executive Officer from June 1991 through July
1993. Prior to joining Circle K, he was an attorney practicing in the
Cincinnati, Ohio area for over 30 years. Mr. Brown serves on the Board of
Directors of Circle K Corporation, Barry's Jewelers, Inc. and Firstcity
Financial Corporation. He received his B.S. in Accounting and Bachelor of Law
degree from the

-3-
<PAGE>

University of Louisville along with a Masters of Law from Georgetown University.
Mr. Brown is admitted to practice law in both Kentucky and Ohio.

Joshua S. Friedman is a founding director and officer of Canyon
Partners Incorporated ("CPI"), a California corporation, positions he has held
since 1990, and holds similar positions or limited partnership interests in its
subsidiaries and affiliates. Mr. Friedman is in charge of CPI's merchant banking
and direct investment activities. Prior to the formation of CPI, Mr. Friedman
was an Executive Vice President and Co-Director of the Capital Markets Services
Group of Drexel Burnham Lambert. Prior to 1984, he worked in the Mergers &
Acquisitions Department of Goldman, Sachs & Company in New York. Mr. Friedman is
a graduate of Harvard College (B.A.), Oxford University (M.A.), Harvard Law
School (J.D.) and Harvard Business School (M.B.A.). Mr. Friedman currently holds
no position as either a director or officer of the Company. In 1995 Mr. Friedman
was elected to the board of directors of Showbiz Pizza Time, Inc.

Stewart M. Kasen became a director of the Company in September 1993,
and is currently President and Chief Executive Officer of Best Products, Inc.
which operates discount retail stores, where he also serves as Chairman of the
Board of Directors. In January 1991, Best Products, Inc. filed for protection
under Chapter 11 of the United States Bankruptcy Code and emerged from
bankruptcy on June 14, 1994. Mr. Kasen joined Best in October 1989 as President
and Chief Operating Officer and was prompted to his current position in June
1991. He previously served as President of Emporium Capwell (retail stores) and
President of Thalhimers (retail stores). He also serves on the Board of
Directors of Markel Corporation. Mr. Kasen received his B.S. degree from Seton
Hall University.

William J. Nightingale became a director of the Company in September
1993. He has been a Senior Advisor of Nightingale & Associates, Inc., a general
management consulting firm, since July 1995, after serving as the firm's
Chairman and President since July 1975. In this previous capacity, he has
provided executive management services for a number of companies. Prior to
founding Nightingale & Associates, he was President and Chief Executive Officer
of the Bali Company, Inc. Mr. Nightingale also serves as a director of
Glasstech, Inc. and Rings End Inc., as well as a trustee of the Narragansett Tax
Free Bond Fund (Rhode Island), Churchill Money Market Fund and Churchill Tax
Free Bond Fund (Kentucky). He received his B.A. degree in Economics from Bowdoin
College and an M.B.A. from Harvard Business School.

George A. Poole, Jr. became a director of the Company in September
1993, and has been a private investor for more than the past five years. He
currently serves as a director of U.S. Home Corporation, Bucyrus-Erie Company
and Rock Island Foods, Inc. Mr. Poole received his B.A. degree from Yale
University and his J.D. from Stanford University.

S. Donley Ritchey became a director of the Company in September 1993,
and currently serves on the Board of Directors of Pacific Telesis Group,
McClatchy Newspapers, Inc., De La Salle Institute and Hughes Markets, Inc. Since
May 1981, he has been the managing partner of Alpine Partners, an investment
partnership. Mr. Ritchey has also served as Council Member/Mayor of the Town of
Danville, California since December 1987. He is the former President, Chief
Executive Officer and Chairman of the Board of Lucky Stores, Inc. where he
worked for over 30 years prior to his retirement. He has previously served as a
director of Lucky Stores, Inc., York International Corp., Levolor Corporation
and Crocker National Bank. Mr. Ritchey received both his B.S. and M.S. degrees
from San
Diego State University.

Gary L. Tessitore became the President, Chief Executive Officer and a
director of the Company on May 15, 1995. Prior to joining the Company, Mr.
Tessitore was the President and Chief Operating Officer of Breed Technologies,
Inc., a manufacturer of automotive safety equipment, from March 1993 to January
1995, an Executive Vice President and General Manager of the agricultural
equipment and components group of J.I. Case Company from July 1990 to March
1993, and its Senior Vice President and Chief Financial Officer from 1988 to
1990. From 1968 to 1988, he held various positions with Ford Motor Company, an
automobile manufacturer, including Vice President and Controller of its Ford New
Holland Division. Mr. Tessitore received his B.S. degree from Villanova
University in 1966 and his M.B.A. degree from the University of Maryland in
1968.

-4-
<PAGE>

Nominee for Class B Director

John P. Mullman became a director of the Company in September 1993 and
previously served as a director from April 1992 to September 1992. He is a
Senior Vice President and Portfolio Manager in the Private Placement Group of
The Prudential Insurance Company of America (insurance and financial services).
Mr. Mullman joined Prudential in 1987 and worked in the Financial Restructuring
Group, Asset Sales and Syndications and the Corporate Finance Group prior to his
current position. Mr. Mullman is a Chartered Financial Analyst and received his
B.A. degree from the College of the Holy Cross and an M.P.P.M. from Yale
University.

The Board of Directors recommends a vote FOR each of the above nominees
to the Board.

Agreements with Respect to the Nominees

In September 1995, Canyon Capital Management, L.P. ("Capital
Management"), certain affiliates and related parties thereof and entities over
which Capital Management and such affiliates and parties exercise investment
control or discretion ("Canyon Partners"), collectively beneficial owners of
less than 5% of the Class A Common Stock, submitted the nominations of Mr.
Friedman and two other individuals for election to the Company's Board of
Directors. The Company believed that Canyon Partners was not entitled to pursue
the election of nominees at the Company's Annual Meeting. Canyon Partners
disputed the Company's position. The parties met to resolve these questions with
an interest in avoiding potentially costly and protracted litigation. As a
result of these negotiations, the parties entered into an agreement whereby
Canyon Partners agreed to withdraw their nominations and the Company agreed to
nominate Mr. Friedman as a Class A director for election at the Annual Meeting.
The agreement also provides that the Company's Board of Directors will commence
a search to identify an additional candidate to serve on its Board of Directors.
Such individual must be acceptable to a majority of the Board of Directors,
including Mr. Friedman. Once such individual is identified and agrees to serve,
the Board of Directors will be expanded to comprise nine directors. The Company
also agreed not to submit its stockholder rights plan, adopted in July 1995, to
the stockholders for approval at the Annual Meeting. As a result, all rights
thereunder will automatically terminate and the rights agreement will expire. In
addition, the agreement with Canyon Partners includes the reimbursement to
Canyon Partners by the Company for certain of its expenses, not to exceed
$30,000.

As described herein, the provisions of the Company's Certificate of
Incorporation currently entitle Prudential to elect the Class B director. Mr.
Mullman has been designated by Prudential to serve as the Class B nominee.

Certain Committees of the Board of Directors; Meetings

The Board of Directors has standing audit and compensation committees.

Members of the Compensation Committee are Messrs. Stewart M. Kasen,
William J. Nightingale and S. Donley Ritchey. The functions of this Committee
are to review annually and recommend to the Board of Directors the level of
total compensation of the Chairman of the Board; review annually the
recommendations of the Chairman of the Board concerning the salaries and
incentive awards of certain senior officers; administer the Company's stock
option plans; and review and make recommendations to the Board of Directors for
changes in the Company's compensation and benefit plans and practices. The
Compensation Committee held seven meetings during the fiscal year ended June 30,
1995.

Members of the Audit Committee are Messrs. Bart A. Brown, Jr., George
A. Poole, Jr. and S. Donley Ritchey. The functions of this Committee are to
receive from and review with the Company's independent auditors the annual
report of such auditors: review with the independent auditors the scope of the
succeeding annual examination; nominate the independent auditors to be selected
each year by the Company's Board of Directors; ascertain the existence of
adequate internal accounting and control systems; and review with management and
the auditors current and emerging accounting and financial reporting
requirements and practices affecting the Company. The Audit Committee held four
meetings during the fiscal year ended June 30, 1995.

-5-
<PAGE>

The Board of Directors held eleven meetings during the fiscal year
ended June 30, 1995. Each of the directors attended seventy-five percent (75%)
or more of the aggregate number of meetings of the Board of Directors and of the
committees on which such director served during the fiscal year ended June 30,
1995.

Directors' Compensation

Each director of the Company who is not also an employee of the Company
(other than the director designated by the holders of Class B Common Stock)
receives an annual fee of $10,000, plus $2,000 for each Board meeting attended,
$500 for each committee meeting attended that is held on the day immediately
preceding or following a Board meeting, $750 for each committee meeting attended
that is not held on the same day or day immediately preceding or following a
Board meeting and $500 for participation in each telephonic meeting. During the
1995 fiscal year, an aggregate amount of $128,250 in fees was paid to directors.
Directors are also reimbursed for reasonable out-of-pocket expenses incurred in
attending Board of Directors and committee meetings.

Under the 1993 Directors' Stock Option Plan (the "Directors' Plan"),
each director other than Mr. Mullman was granted an option to purchase 5,000
shares of Class A Common Stock at an exercise price of $10.00 per share plus an
option to purchase 5,000 shares of Class A Common Stock at an exercise price of
$11.67 per share. Of each such grant, 1,000 shares vested on September 2, 1994,
1,500 shares vested on September 2, 1995 and 2,500 will vest on September 2,
1996.

In addition, on August 29, 1994, options to purchase 5,000 shares of
Class A Common Stock were granted to each of the directors (other than Messrs.
Brown and Mullman) at an exercise price of $8.875 per share under the New
Management Stock Option Plan. The options vest in one-third increments on June
30, 1995, 1996 and 1997.
See "Stock Options" below.

-6-

<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth certain information as of September 12,
1995 as to shares of the Company's Common Stock beneficially owned by: (i) each
person who is known by the Company to own beneficially more than five percent
(5%) of any class of the Company's Common Stock, (ii) each of the Company's
directors, (iii) each of the Company's executive officers named in the Summary
Compensation Table and (iv) all directors and executive officers of the Company
as a group.

Shares Percentage
Beneficially Beneficially
Name of Beneficial Owner Owned(1) Owned(1)
<S> <C> <C>

The Prudential Insurance Company of America(2)....................... 2,161,160 31.1%
Robert Fleming, Inc. et al.(3)....................................... 531,163 8.9%
Federated Investors(4)............................................... 319,090 5.3%
Joshua S. Friedman(5)................................................ 256,500 4.3%
George A. Lamberth(6)................................................ 138,449 2.3%
James E. Boyd(6),(7),(8),(9)......................................... 58,065 *
Robert L. Schmalz(6),(7),(8),(9)..................................... 55,309 *
Bart A. Brown, Jr.(7)................................................ 31,500 *
Donald C. Roof(6),(7),(8),(9)........................................ 27,402 *
Gary L. Tessitore(7)................................................. 15,000 *
George A. Poole, Jr.(7).............................................. 9,167 *
Stewart M. Kasen(7).................................................. 7,667 *
William J. Nightingale(7)............................................ 7,667 *
S. Donley Ritchey(7)................................................. 7,667 *
Michael L. Sarina(7),(9)............................................. 1,501 *
John P. Mullman(10).................................................. ---
All directors and executive officers as a group (11 persons)(6),(7).. 221,945 3.6%
</TABLE>

- ----------
* Less than one percent (1%).

(1) The number of shares beneficially owned includes shares which could be
acquired upon exercise of warrants or options to acquire Class A Common
Stock exercisable on September 12, 1995 or within sixty (60) days
thereof. Except as set forth below, to the Company's knowledge, the
person listed has sole voting power and sole investment power with
respect to the shares beneficially owned.

(2) Includes shares held by Prudential Securities, including warrants to
purchase an aggregate of 960,000 shares of Class A Common Stock. Also
includes 100 shares of Class B Common Stock which are convertible into
an equal number of shares of Class A Common Stock. Prudential holds all
of the issued and outstanding Class B Common Stock. The holders of
Class B Common Stock are entitled to elect one of the Company's

-7-

<PAGE>

directors for so long as Prudential and its affiliates own at least ten
percent (10%) of the outstanding Common Stock. Pursuant to an agreement
with the Company, Prudential has agreed (i) to convert any shares of
Class B Common Stock into Class A Common Stock prior to any sale or
other transfer thereof to a party which is not an affiliate of
Prudential, (ii) to convert all of its shares of Class B Common Stock
into Class A Common Stock at such time as Prudential's ownership of
Class A Common Stock declines below ten percent (10%) of all of the
issued and outstanding Class A Common Stock, and (iii) that, for so
long as Prudential holds any shares of Class B Common Stock, the number
of votes it will be entitled to cast for the election of directors as a
holder of Class A Common Stock shall be reduced by a number of votes
equal to (A) ten percent (10%) of the total number of outstanding
shares of Class A and Class B Common Stock minus (B) the number of
shares of Class B Common Stock then held by Prudential. The address for
Prudential is 100 Mulberry Street, Four Gateway Center, 9th Floor,
Newark, New Jersey 07102- 4069.

(3) Pursuant to a Schedule 13D filed with the Securities and Exchange
Commission on January 12, 1995, Robert Fleming, Inc. ("RFI"), Philip S.
Schaeffer, Michael E. Rowe, Sara H. Schaeffer, Louis P. Schaeffer,
Marilyn J. Schaeffer, Frank E. Rowe, Jr., and Portfolio Press have
identified themselves as a "group" formed for the purposes of
acquiring, holding or disposing of securities of the Company. According
to such Schedule 13D (as supplemented by letter dated September 27,
1995), RFI is the beneficial owner of 107,722 of such shares and has
sole voting and investment power with respect thereto and Philip
Schaeffer is the beneficial owner of 22,615 of such shares and has sole
voting and investment power with respect thereto. The remaining 400,826
of such shares represent shares beneficially owned by advisory clients
of RFI and as to which RFI has the voting power and investment power
with respect thereto, which power is exercised by Philip Schaeffer on
behalf of RFI. Mr. Schaeffer and RFI disclaim ownership of such 380,826
shares. The other persons listed in the Schedule 13D disclosed no share
ownership as of the filing date. The address for Philip S. Schaeffer
and Robert Fleming, Inc. is 320 Park Avenue, New York, New York 10022,
attention Philip Schaeffer.

(4) The number of shares indicated represents shares beneficially owned by
mutual funds advised by subsidiaries of Federated Investors which have
the power to direct investments and vote the securities. For purposes
of the reporting requirements under the Securities Exchange Act of
1934, as amended (the "1934 Act"), Federated Investors, its principal
stockholders and its investment adviser subsidiaries may be deemed to
be beneficial owners of such securities; however, in accordance with
Rule 13d-4 under the 1934 Act, Federated Investors, its principal
stockholders and its investment adviser subsidiaries declare that the
filing of the Schedule 13G disclosing beneficial ownership of the
securities should not be construed as an admission that they are
beneficial owners of such securities, and Federated Investors, its
principal stockholders and its investment subsidiaries expressly
disclaim that they are in fact the beneficial owners of such
securities. The address for Federated Investors is Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779.

(5) Of such shares, 205,875 represent shares beneficially owned by entities
advised by Capital Management, which exercises both voting and
dispositive power with respect to such shares and 50,625 represent
shares owned by CPI Securities, L.P. ("CPIS") which exercises both
voting and dispositive power with respect to such shares. Since Capital
Management and CPIS are each indirectly equally controlled by Mr.
Friedman and two other individuals, Mr. Friedman and such other persons
exercise both voting and dispositive power with respect to such shares.
Mr. Friedman disclaims beneficial ownership of such shares.

(6) Includes 130,970; 43,426; 43,190; 20,123; and 106,739 shares subject to
warrants to purchase Class A Common Stock held by Messrs. Lamberth,
Boyd, Schmalz, Roof and all directors and executive officers as a
group, respectively.

(7) Includes 2,167; 1,833; 30,000; 2,333; 15,000; 6,667; 6,667; 6,667;
6,667; 1,500 and 79,501 shares subject to options to purchase Class A
Common Stock held by Messrs. Boyd, Schmalz, Brown, Roof, Tessitore,
Poole, Kasen, Nightingale, Ritchey, Sarina and all directors and
executive officers as a group, respectively, which are exercisable on
September 12, 1995 or within sixty (60) days thereof.

-8-

<PAGE>

(8) Includes 6,318; 4,165; and 1,956 shares of Class A Common Stock held by
the Company's Incentive Savings Plan allocated to Messrs. Boyd, Schmalz
and Roof, respectively.

(9) Includes 1,175; 1,243; 1,001; and 1 shares of Class A Common Stock held
by the Company's Employee Stock Ownership Plan allocated to Messrs.
Boyd, Schmaltz, Roof and Sarina, respectively.

(10) Does not include 2,161,060 shares of Class A Common Stock (including
shares subject to warrants) or 100 shares of Class B Common Stock held
by Prudential and its affiliates. Mr. Mullman is a Senior Vice
President in the Private Placement Group of Prudential.

-9-

<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth a summary of annual and long-term
compensation for the fiscal years ended June 30, 1995, 1994 and 1993 awarded to,
earned by or paid to each Chief Executive Officer of the Company during the
fiscal year ended June 30, 1995 and each of the four most highly compensated
executive officers of the Company (other than the Chief Executive Officers)
whose total annual salary and bonus for the fiscal year ended June 30, 1995 were
in excess of $100,000:

Summary Compensation Table

<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
Securities
Underlying
Name and Principal Salary Bonuses Other Annual Options/ All Other
Position Year ($)(1) ($)(2) Compensation($) SARs(#) Compensation($)(3)
---------- ---- ------ ------ --------------- --------- ------------------
<S> <C> <C> <C> <C> <C> <C>

Bart A. Brown, Jr., 1995 0 0 327,202(4) 60,000(5) 18,500(5)
Chairman and Chief 1994 0 0 0 10,000 0
Executive Officer 1993 0 0 0 0 0
George A. Lamberth, 1995 11,953 0 2,428(6) 0 723,353(6)
Chairman and Chief 1994 310,600 0 0 24,594(7) 6,907
Executive Officer 1993 305,111 145,399 0 0 4,224
Gary L. Tessitore, 1995 47,115 0 0 60,000 0
President and Chief 1994 0 0 0 0 0
Executive Officer 1993 0 0 0 0 0
Donald C. Roof, 1995 164,323 25,000 0 22,000 0
Senior Vice President-Chief 1994 156,655 24,000 0 16,500(7) 1,615
Financial Officer 1993 151,611 49,983 0 20,000(8) 0
James E. Boyd, 1995 166,440 79,342 0 21,500 3,000
President 1994 146,630 25,820 0 19,500(7) 3,000
Duff-Norton Company, Inc. 1993 141,749 49,529 0 0 0
Robert L. Schmalz, 1995 151,664 0 0 5,500 0
Vice President and General 1994 139,420 11,275 0 13,500(7) 3,000
Counsel 1993 134,935 44,485 0 0 0
Michael L. Sarina, 1995 110,000 0 0 9,000 0
Controller, Chief 1994 8,462 0 0 0 0
Accounting Officer and 1993 0 0 0 0 0
Secretary

</TABLE>

-10-
<PAGE>

- ----------

(1) Amounts shown include the dollar value of base salary (cash and
noncash) earned by the executive officers named above, and any salary
deferred under a Company-sponsored 401(k) or other deferred
compensation plan.

(2) Amounts shown include the dollar value of bonuses (cash and noncash)
earned by the executive officers named above, as well as accrued
interest on certain bonuses not yet paid, and any bonus deferred under
a Company-sponsored 401(k) or other deferred compensation plan.

(3) Except as otherwise indicated, the amounts shown consist of
contributions made by the Company to the Company-sponsored 401(k).

(4) Consists of consulting payments of $267,500, office reimbursements in
the amount of $52,500 and payments made by the Company amounting to
$7,202 for an automobile.

(5) Mr. Brown was granted options to purchase 60,000 shares of Class A
Common Stock during fiscal year 1995; options covering 35,000 of such
shares were canceled on June 30, 1995 in exchange for a payment of
$17,500, which amount is included under "All Other Compensation." See
"Compensation Committee Report on Executive Compensation" below. The
remaining $1,000 of such compensation consists of director's fees.

(6) Mr. Lamberth resigned from the Company effective July 14, 1994 and
received severance payments of $652,680 and vacation payments of
$70,673. Mr. Lamberth's "Other Annual Compensation" of $2,428 consists
of payments made by the Company for an automobile. As described under
"Severance Agreement," the Company also paid attorney's fees incurred
by Mr. Lamberth and continues to provide him with certain benefits.

(7) Of the options granted during the fiscal year ended June 30, 1994,
one-third were forfeited as of each June 30, 1994 and June 30, 1995.
See "Stock Options" below.

(8) The options to purchase 20,000 shares of common stock held by Mr. Roof
were canceled in exchange for warrants to purchase Class A Common Stock
as part of the Company's Third Amended Plan of Reorganization, which
plan became effective September 2, 1993.

-11-

<PAGE>

Stock Options

The following tables summarize option grants to each of the Company's
officers named in the Summary Compensation Table during the last fiscal year.

Option Grants in Fiscal Year 1995(1)
<TABLE>
<CAPTION>

Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Terms(2)

Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Granted (#) Fiscal Year(3) Price ($/sh) Date 5%($) 10%($)

<S> <C> <C> <C> <C> <C> <C>
Bart A. Brown, Jr. 60,000 (3) 13.2 7,875 7/14/2004 297,153 753,043
George A. Lamberth 0 -- -- -- -- --
Gary L. Tessitore 60,000 (4) 13.2 8.125 6/30/2005 306,586 776,949
Donald C. Roof 7,000 (5) 1.5 8.875 8/29/2004 39,070 99,011
15,000 (6) 3.3 8.125 6/30/2005 76,646 194,237
James E. Boyd 6,500 (5) 1.4 8.875 8/29/2004 36,279 91,940
15,000 (6) 3.3 8.125 6/30/2005 76,646 194,237
Robert L. Schmalz 5,500 (5) 1.2 8.875 8/29/2004 30,698 77,794
Michael L. Sarina 4,500 (5) 1.0 8.875 8/29/2004 25,116 63,650
4,500 (6) 1.0 8.125 6/30/2005 22,994 58,271
</TABLE>

- ----------

(1) There were no SAR grants during the fiscal year ended June 30, 1995.

(2) The five percent (5%) and ten percent (10%) assumed rates of
appreciation are mandated by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
the future Class A Common Stock price.

(3) Mr. Brown was granted immediately exercisable options to purchase
60,000 shares of Class A Common Stock on July 14, 1994; options
covering 35,000 of such shares were canceled on June 30, 1995. After
giving effect to such cancellation, the % of Total Options Granted to
Employees in Fiscal Year would have been 6.0% and the Potential
Realizable Value at 5% and 10% would have been $123,814 and $313,768,
respectively.

(4) Such options vest in one-fourth increments on June 30, 1995, 1996, 1997
and 1998.

(5) Such options vest in one-third increments on June 30, 1995, 1996 and
1997.

(6) Such options vest in one-third increments on June 30, 1996, 1997 and
1998.

-12-

<PAGE>

Aggregated Option Exercises in Last Fiscal Year
and 1995 Fiscal Year-End Option Values(1)
<TABLE>
<CAPTION>

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Year End(#) Year End($)(2)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>

Bart A. Brown, Jr. 0 0 30,000/5,000 6,250/0
George A. Lamberth 0 0 0 0/0
Gary L. Tessitore 0 0 15,000/45,000 0/0
Donald C. Roof 0 0 2,333/25,667 0/0
James E. Boyd 0 0 2,167/25,833 0/0
Robert L. Schmalz 0 0 1,833/8,167 0/0
Michael L. Sarina 0 0 1,500/7,500 0/0
</TABLE>

- ----------

(1) There were no SAR exercises during the fiscal year ended June 30, 1995.

(2) Calculated on the basis of the fair market value of the underlying
securities at June 30, 1995 ($8.125 per share) minus the exercise
price.

The Company has adopted the New Management Stock Option Plan (the
"Option Plan") which authorizes the granting of options covering up to 564,894
shares of Class A Common Stock of the Company to key employees and directors. In
August 1993, options to purchase 376,494 shares were issued at an exercise price
of $0.01 per share. Such options vest in one-third increments at the close of
the fiscal years ending June 30, 1994, 1995 and 1996 if the Company's EBITDA
(earnings before interest, taxes, depreciation and amortization) for the
relevant year is at least equal to the targets set forth in the Option Plan. The
company's EBITDA for the fiscal years ended June 30, 1994 and June 30, 1995 were
less than the respective targets for those years set forth in the Option Plan,
so options representing 250,956 shares of Class A Common Stock have been
forfeited.

Options to purchase 188,298 shares along with any forfeited shares may
be granted under the Option Plan at exercise prices and upon such other terms as
determined by the Company's Board of Directors. Options to purchase 60,000
shares of Class A Common Stock at an exercise price of $7.875 were granted to
Bart A. Brown, Jr., upon becoming Chairman and Chief Executive Officer on July
14, 1994. All of these options were vested at the time of grant. Options
covering 35,000 of such shares were canceled on June 30, 1995. On August 29,
1994, options to purchase an additional 200,000 shares of Class A Common Stock
at an exercise price of $8.875 per share were granted to certain officers and
directors of the Company, including Messrs. Kasen, Nightingale, Poole, Ratchey,
Boyd, Roof, Schmalz and Sarina. These options vest in one-third increments on
June 30, 1995, 1996 and 1997. On June 30, 1995, options to purchase an
additional 193,150 shares of Class A Common Stock at an exercise price of $8.125
per share were granted to certain officers of the Corporation, including Messrs.
Tessitore, Boyd, Roof and Sarina. These options vest in one-third increments on
June 30, 1996, 1997 and 1998, except for 60,000 shares issued to Mr. Tessitore
which vest in one-fourth increments on June 30, 1995, 1996, 1997 and 1998.

-13-
<PAGE>

Pension Plans

The following two tables show estimated pension benefits for certain
employees of the Company. The first table shows the estimated annual pension
payable under the Spreckels Sugar Company, Inc. Salaried Pension Plan (the
"Spreckels Plan") in conjunction with any benefit that is payable under the
Company's Excess Benefit Plan (the "Excess Plan"). The calculations relate to
employees at various earnings classifications retiring on June 30, 1995 at age
65, with representative years of service, assuming that the employees had
elected a single life annuity form of payment.

The second table shows the estimated annual pension payable under the
Retirement Plan for Salaried Employees of Duff-Norton Company, Inc. (the
"Duff-Norton Plan") in conjunction with any benefit payable under the Excess
Plan. The calculations relate to employees at various earnings classifications
retiring on June 30, 1995 at age 65, with representative years of service,
assuming that the employees had elected a single life annuity form of payment.
Prior to June 30, 1979, employees were required to contribute to the Duff-Norton
Plan in order to accrue any benefit, and the calculations assume that the
employees made contributions to that plan prior to June 30, 1979 and had begun
participation at the earliest possible date.

While the Spreckels Plan and the Duff-Norton Plan are funded, qualified
pension plans, the Excess Plan is an unfunded, nonqualified plan. The Excess
Plan pays those benefits that exceed the limitations of the Internal Revenue
Service Code of 1986 (the "Code") applicable to qualified pension plans such as
the Spreckels Plan and the Duff-Norton Plan. For example, for the 1995 fiscal
year neither qualified plan may base a benefit on compensation in excess of
$150,000, and since 1994 the annual compensation that may be taken into account
under the plans has been subject to a $150,000 indexed limit. In addition, no
qualified plan may pay out an annual age 65 benefit in excess of $120,000 in
1995. Thus, any benefit accrued in excess of these limits would be payable from
the Excess Plan.

PENSION PLAN TABLES

Spreckels Plan and Excess Plan
<TABLE>
<CAPTION>

Years of Service
Remuneration 15 20 25 30 35
------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>

$125,000 $ 27,000 $ 36,000 $ 45,000 $ 54,000 $ 62,000
150,000 32,000 43,000 54,000 65,000 76,000
175,000 38,000 51,000 63,000 76,000 89,000
200,000 44,000 58,000 73,000 87,000 102,000
225,000 49,000 66,000 82,000 99,000 115,000
250,000 55,000 73,000 91,000 110,000 128,000
300,000 66,000 88,000 110,000 132,000 154,000
400,000 89,000 118,000 148,000 177,000 207,000
450,000 100,000 133,000 166,000 200,000 233,000
500,000 111,000 148,000 185,000 222,000 259,000
</TABLE>

Messrs. Lamberth, Roof, Schmalz, Tessitore and Sarina participate in
the Spreckels Plan. The remuneration on which benefits are based is the
employee's "average annual compensation." Under the Spreckels Plan, average
annual compensation is the average of the employee's total annual compensation
paid during the three-plan-year period in which compensation is the highest out
of the final ten years of employment. At the close of fiscal year

-14-
<PAGE>

1995, Messrs. Lamberth, Roof, Schmalz, Tessitore and Sarina were credited with
19, 10.25, 23.5, .17 and 1.08 years of service, respectively, under the
Spreckels Plan. Although benefits under the Spreckels Plan are determined under
an integrated formula, benefits under the Excess Plan are not subject to offset.

Duff-Norton Plan and Excess Plan
<TABLE>
<CAPTION>

Years of Service
Remuneration 15 20 25 30 35
------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>

$125,000 $ 27,800 $ 37,000 $46,300 $ 55,500 $ 64,800
150,000 33,400 44,500 55,600 66,800 77,900
175,000 39,000 52,000 65,000 78,000 91,000
200,000 48,600 59,500 74,400 89,300 104,100
225,000 50,300 67,000 83,800 100,500 117,300
250,000 55,900 78,500 93,100 111,800 130,400
300,000 67,100 89,500 111,900 134,300 156,600
400,000 89,600 119,500 149,400 179,300 209,100
450,000 100,900 134,500 168,100 201,800 235,400
500,000 112,100 149,500 186,900 224,300 261,600
</TABLE>

Mr. Boyd participates in the Duff-Norton Plan. The
remuneration on which benefits are based is the employee's "average annual
compensation." Under the Duff-Norton Plan average annual compensation is the
average of the employee's total annual compensation paid during the
three-year-plan period in which compensation is the highest out of the final ten
years of employment. Total annual compensation is the amount of salary and bonus
from the Summary Compensation Table. At the close of fiscal year 1995, Mr. Boyd
was credited with 20.6 years of service under the Duff-Norton Plan. Although
plan benefits are determined under an integrated formula, benefits accrued under
the Excess Plan are not subject to offset.

Severance Agreement

In connection with his resignation from the Company, effective
July 14, 1994, George A. Lamberth received a severance payment in the amount of
$652,680 pursuant to his severance agreement with the Company. Pursuant to this
agreement, the Company paid Mr. Lamberth's attorney's fees in connection with
negotiating the agreement, and Mr. Lamberth will also receive certain benefits,
including health insurance, life insurance and disability coverage, until two
years from the date of his termination of employment. It is the Company's policy
generally to pay the other named executive officers one-year's base salary upon
involuntary termination.

Compensation Committee Interlocks and Insider Participation

The Company established a Compensation Committee in September
1993, the current members of which are Messrs. Stewart M. Kasen, William J.
Nightingale and S. Donley Ritchey, none of whom are or have been officers or
employees of the Company or any of its subsidiaries.

-15-

<PAGE>

Compensation Committee Report on Executive Compensation

The Compensation Committee of the Board of Directors was
established in September 1993 and is comprised entirely of independent outside
directors. The Committee approves compensation objectives for all management
employees, reviews and approves compensation for the Company's executive
officers and certain of the Company's compensation plans.

Policies and Objectives

The Compensation Committee believes that the overall objective
of its executive compensation policies is to provide programs that motivate key
executives to advance both the short-term and long-term interests of the
Company's stockholders. The Committee's goals are to:

o provide compensation incentives that are linked to the
overall performance of the Company, its business segments
and units, and individual employees;
o align the interests of the Company's executive employees
with those of its stockholders through stock ownership; and
o provide competitive compensation and benefits at
levels which enable the Company to attract and retain
high quality employees.

Compensation Programs

The Company's executive compensation program includes base
salary, annual incentive bonuses and stock options, each of which is tied to
performance and objectives. In addition, during fiscal 1995 the Compensation
Committee engaged a leading compensation consulting firm to review the structure
and levels of the Company's executive compensation program and to recommend
changes necessary to remain competitive and properly encourage performance.

Executive officer base salary levels consider salary survey
information for similar companies, as determined by the Committee's compensation
consultant and reviewed by the Committee. The Committee approves the base salary
of each executive officer based on the recommendations of the Chief Executive
Officer and review by the Committee of the individual performance of each
executive, taking into consideration the overall performance of the Company and,
where applicable, the performance of the business units or segment for which the
executive had management responsibility. The Chief Executive Officer's base
salary is determined by the Committee's evaluation of individual and Company
performance.

Annual incentive bonus awards are determined with reference to
internal performance targets and objectives set at the beginning of each fiscal
year. The performance targets for fiscal 1995 for executives with business unit
responsibility were specific operating earnings and working capital targets for
such business units. Executives with overall corporate responsibilities had
performance targets based on the net income results of the Company for the year.
In addition, the individual performance of each executive officer is reviewed by
the Committee in considering incentive bonus payments.

Individual executive stock options awards are based on the
level of position, individual contribution and the Company's stock ownership
objectives for executives. The purpose of option grants is to closely align the
financial interests of executive officers with those of stockholders,
particularly over the long term. Compensation from stock options is ultimately
determined by the Company's long-term performance, since stock option value is
entirely dependent on the long-term growth of the Company's stock price.

Compensation of the Chief Executive Officer

Mr. Brown became the Chief Executive Officer of the Company on
July 14, 1994 and received a monthly fee of $25,000 plus $5,000 for office
expenses under the terms of a consulting contract with the Company. Mr. Brown
was granted options to purchase 60,000 shares of Class A Common Stock of the
Company at $7.875

-16-

<PAGE>

per share on July 14, 1994. No incentive bonus payments were made to Mr. Brown
for fiscal 1995. Mr. Brown remains Chairman of the Board of the Company, but
resigned as Chief Executive Officer on May 15, 1995. On June 30, 1995, options
held by Mr. Brown covering 35,000 shares were canceled and Mr. Brown received a
payment of $17,500, representing the difference between the exercise price for
the options and $8.125, the market value of the stock on June 30, 1995.

Mr. Tessitore became Chief Executive Officer of the Company on
May 15, 1995 at a base salary of $350,000 which was determined in accordance
with the base salary guidelines set forth in this report. Mr. Tessitore did not
receive an incentive bonus for fiscal 1995. Mr. Tessitore was granted options to
purchase 60,000 shares of Class A Common Stock of the Company at an exercise
price of $8.125 per share on June 30, 1995. The options vest in 15,000 share
increments on June 30 of each of the years 1995-98.

Compensation Committee of the Board of Directors

S. Donley Ritchey, Chairman
Stewart M. Kasen
William J. Nightingale

-17-

<PAGE>

STOCK PRICE PERFORMANCE GRAPH

The following graph compares the cumulative total stockholder
return (changes in stock price plus reinvested dividends) of the Company's Class
A Common Stock with the Nasdaq Non-Financial Index (U.S.) and the Standard &
Poor's 500 Stock Index. Although such a graph would normally be for a five-year
period, the Company's Class A Common Stock has been traded only since January 6,
1994 and, as a result, the following graph commences as of such date. The
comparisons in the graph are required by the Securities and Exchange Commission
and are not intended to forecast or be indicative of possible future performance
of the Company's Class A Common Stock.

Comparison of Cumulative Total Return Among Spreckels
Industries, Inc., the Standard & Poor's 500 Stock Index and
the Nasdaq Non-Financial Index (U.S.)

[Comparison chart appears here. Plot points are below]

Stock Price Performance

1/6/94 6/30/94 6/30/95
Spreckels Industries, Inc. $100 $86 $82
S & P 500 $100 $96 $121
Nasdaq Non-Financial $100 $89 $120

-18-

<PAGE>

CERTAIN TRANSACTIONS

Under the indenture governing the Company's 11 1/2% Senior
Secured Notes and under its secured revolving credit facility, the Company is
generally precluded from entering into any transaction with any affiliate of the
Company (including officers and directors) or any five percent (5%) stockholder
unless the Board of Directors determines in good faith that the transaction is
as favorable to the Company as terms that could be obtained at the time for
comparable transactions in arm's-length dealings with unaffiliated parties.

The Company in the normal course of its operations purchases
insurance from The Prudential Insurance Company of America, which is a more than
five percent (5%) stockholder of the Company. During fiscal 1995, the dollar
value of such purchases was $1, 477,929. The Company believes that the cost and
terms of such insurance are substantially similar to, or more favorable to, the
Company than those it could obtain from parties not affiliated with the Company.
For information concerning the Company's agreement with Prudential relating to
its ownership of Class A and Class B Common Stock, see "Security Ownership of
Certain Beneficial Owners and Management."

STOCKHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING

Proposals of stockholders of the Company that are intended to
be presented by such stockholders at the Company's 1996 Annual Meeting must be
received by the Secretary of the Company no later than June 5, 1996 in order
that they may be included in the Company's proxy statement and form of proxy
relating to that meeting.

COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

Pursuant to SEC regulations, the Company is required to
identify the names of persons who failed to file or filed late a report required
under Section 16(a) of the Securities Exchange Act of 1934. Generally, the
reporting regulations under Section 16(a) require directors, executive officers
and greater than 10% stockholders to report changes in ownership of Company
securities. To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, for the fiscal year ended June 30, 1995, the Company
believes that all of its directors, officers and greater than 10% beneficial
owners complied with all filing requirements applicable to them.

OTHER MATTERS

The Company knows of no other business that will be presented
at the Annual Meeting. If any other business is properly brought before the
Annual Meeting, it is intended that proxies in the enclosed form will be voted
in accordance with the judgment of the persons voting the proxies.

-19-

<PAGE>

Whether you intend to be present at the Annual Meeting or not,
we urge you to return your signed proxy promptly.

By Order of the Board of Directors

Michael L. Sarina
Corporate Controller, Chief
Accounting Officer and Secretary

Charlotte, North Carolina
October 3, 1995

Upon written request of any person receiving this Proxy
Statement, the Company will provide, without charge, a copy of its 1995 annual
report on Form 10-K, including financial statements and financial statement
schedules, as filed with the Securities and Exchange Commission. Any such
request should be addressed to the Company at One Morrecroft Centre, 6805
Morrison Blvd., Ste. 450, Charlotte, North Carolina 28211, attention Michael L.
Sarina. The request must include a representation that as of September 15, 1995,
the person making the request was a beneficial owner of securities entitled to
vote at the Annual Meeting.

-20-

<PAGE>

Form of Tier 1 Severance Agreement

CHANGE IN CONTROL PAYMENTS AGREEMENTS

THIS AGREEMENT is entered into as of July __, 1996, by and
between ____________ (the "Employee") and Spreckels Industries, Inc., a Delaware
corporation d/b/a Yale International, Inc. (the "Company").

1. Change in Control Payments. If (a) a Change in Control
occurs, (b) the Employee is thereafter "Terminated" (as defined herein) or
voluntarily elects to resign within the time periods herein specified, and (c)
the Employee releases the Company, its subsidiaries and its directors, officers
and employees from all claims (including but not limited to those regarding
discrimination because of age, sex, race, national origin or physical or mental
impairments), then the Employee shall be entitled to receive a Change in Control
payment (a "CICP") and other benefits as provided herein. If the Employee
becomes entitled to a CICP and other benefits as provided herein, such
entitlement will be in lieu of any payments or other benefits under the
Company's Supplemental Executive Severance Policy and any other severance or
separation policy which otherwise would be applicable excluding any amounts
payable under the Company's Management Incentive Plan. Any CICP payment due the
Employee shall be made in a lump sum not more than five business days following
the date the Employee becomes entitled to receive such payment.

2. Termination. Subject to the terms of Section 1, in the
event the Employee is Terminated within two years following a Change in Control,
the Employee shall be entitled to receive a CICP in an amount equal to (a) two
times the Employee's annual rate of Base Compensation, plus (b) two times the
Employee's annual target bonus as in effect for the year in which Termination
occurs (or, if higher, the target bonus for the year in which the Change in
Control occurs (the "Annual Target Bonus")).

3. Resignation. Subject to the terms of Section 1, in the
event the Employee voluntarily resigns within two years following a Change in
Control, the Employee shall be entitled to receive a CICP in an amount equal to
(a) one times the Employee's annual rate of Base Compensation, plus (b) one
times the Employee's Annual Target Bonus.

4. Full Vesting. If the conditions specified in clauses (a),
(b) and (c) of the first sentence of Section 1 are satisfied, then the Employee
shall become fully vested in all awards heretofore or hereafter granted to him
under all incentive compensation, deferred compensation, stock option, stock
appreciation rights, restricted stock, phantom stock or similar plans maintained
by the Company, any contrary provisions of such

<PAGE>

plans notwithstanding. Any such plans shall be deemed amended to
the extent necessary carry out this section.

5. Health and Medical Benefits. If the conditions specified in
clauses (a), (b) and (c) of the first sentence of Section 1 are satisfied, then
the Employee (and, if applicable, his dependents) shall be entitled to continue
in all Company group insurance benefits as if the Employee was still employed by
the Company including, but not limited to, participation in the health and
medical benefit plans maintained by the Company, Employee life insurance, and
disability insurance to the same extent, and with the same benefits, as
immediately prior to his termination of employment (or, if greater as in effect
immediately prior to the Change in Control). This participation will continue
for a period of 24 months following Termination or a period of 12 months
following a voluntary resignation, and the Employee will be required to make the
same periodic contributions toward the cost of these benefits as was made
immediately prior to any such termination of his employment. To the extent that
the Company finds it impossible to cover the Employee under its group plans, the
Company shall provide the Employee with a comparable level of coverage under
individual policies, at the same cost to the Employee.

6. No Mitigation. The Employee shall not be required
to mitigate the amount of any CICP under this Agreement (whether
by seeking new employment or in any other manner), nor shall any
such payment be reduced by any earnings that the Employee may
receive from any other source.

7. Presumption and Additional Payment. (a) Subject
to the provisions of Section 10 hereof, the Company shall make
the CICP upon receiving a written demand from the Employee
describing the CICP, referring to the provision of this Agreement
under which the CICP is claimed and certifying that all
conditions with respect to such entitlement, as set forth in this
Agreement, have been satisfied and any such certification shall
be presumed correct. Notwithstanding any payment made under this
section, the Company may seek a refund thereof under the
provisions of Section 11(g) of this Agreement.

(b) In the event the Company fails to make the CICP, for any
reason, within ten business days of delivery of the written demand required
under Section 7(a) hereof, the Company shall make to the Employee an additional
lump sum payment in an amount equal to 50 percent of the CICP. The Company shall
make such additional payment immediately after it receives written notice from
the Employee that such additional payment is due.

8. Definitions.

(a) Change in Control. Under this Agreement, the
term "Change in Control" means the occurrence of any of the following events
after the date of this Agreement:

<PAGE>

(i) The six persons who were directors of the Company on
September 1, 1995 (the "Incumbent Directors") shall cease (for any
reason other than death) to constitute a majority of the Board of
Directors of the Company. For this purpose, any director who was not a
director on September 1, 1995 shall be deemed to be an Incumbent
Director if such director was elected or appointed to the Board after
the date hereof in substitution of an Incumbent Director by, or on the
recommendation of or with approval of, at least a majority of the
directors who then qualified as Incumbent Directors (so long as such
director was not nominated by a person who has threatened to, or has
entered into an agreement to, effect a Change in Control);

(ii) Any "person" (as such term is used in sections 13(d) and
14(d) of the Exchange Act), other than the Company or an employee
benefit plan of the Company, through the acquisition or aggregation of
securities is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing more than 30% of the combined
voting power of the Company's then outstanding securities ordinarily
(and apart from rights accruing under special circumstances) having the
right to vote at elections of directors;

(iii) The shareholders of the Company approve (i) a merger or
consolidation of the Company with any other corporation, provided that,
if immediately following such merger the Shareholders of the Company
own more than 75 percent of the combined voting power of the Company's
then outstanding securities ordinarily (and apart from rights accruing
under special circumstances) having the right to vote at elections of
directors of the resulting company and no "person" or "group" (as such
terms are used in sections 13(d) and 14(d) of the Exchange Act), other
than the Company or an employee benefit plan of the Company, owns more
than 25 percent of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing under
special circumstances) having the right to vote at elections of
directors, then no Change in Control shall be deemed to have taken
place or (ii) an agreement for the sale of 50 percent or more of the
assets of the Company; or

(iv) Any other event determined to be a Change in
Control by a majority of the Board.

(b) Termination. Under this Agreement, the term
"Termination" or "Terminated" shall mean any of the following:

(i) the Employee has been terminated by the Company
for any reason other than Cause;

(ii) elimination of the Employee's position or job;

<PAGE>

(iii) a significant diminution of the Employee's
duties, responsibilities or authority without the Employee's
consent;

(iv) a reduction in the Employee's Base Compensation
after the Change in Control;

(v) the failure by the Company to provide substantially
similar benefits as in effect on the date hereof, including, without
limitation, equity, incentive, bonus, retirement, health, life
insurance, vacation, change in control protection and other fringe
benefit arrangements;

(vi) any breach of this Agreement by the Company; or

(vii) a requirement that the Employee relocate his principal
place of work by a distance of 50 miles or more.

(i) A willful failure by the Employee to substantially perform
his duties, other than a failure resulting from the Employee's complete
or partial incapacity due to physical or mental illness or impairment,

(ii) A willful act by the Employee which constitutes
gross misconduct or fraud and which is materially injurious
to the Company, or

(iii) A conviction of, or a plea of "guilty" or "no
contest" to, a felony.

No act or failure to act by the Employee shall be considered "willful" unless
committed without good faith and without a reasonable belief that the act or
omission was in the Company's best interest.

(d) Base Compensation. Under this Agreement, the term
"Base Compensation" means base salary paid to the Employee at the
annual rate of $____________ or at such higher rate as the
Company amy determine from time to time.

9. Successors.

(a) Company's Successors. The Company shall require any
successor or successors (whether direct or indirect and whether by purchase,
lease, merger, consolidation, liquidation or otherwise) to all or substantially
all of the Company's business and/or assets, by an agreement in substance and
form satisfactory to the Employee, to assume this Agreement and to agree
expressly to perform this Agreement in the same manner and to the same extent as
the Company would be required to perform it in the

<PAGE>

absence of a succession. The Company's failure to obtain such agreement prior to
the effectiveness of a succession shall be a breach of this Agreement and shall
entitle the Employee to all of the compensation and benefits to which he would
have been entitled hereunder if the Company had involuntarily terminated his
employment without Cause immediately after such succession become effective. For
all purposes under this Agreement, the term "Company" shall include any
successor or successors to the Company's business and/or assets which executes
and delivers the assumption agreement described in this Subsection (a) or which
becomes bound by this Agreement by operation of law.

(b) Employee's Successors. This Agreement and all
rights of the Employee hereunder shall inure to the benefit of,
and be enforceable by, the Employee's personal or legal
representatives, executors, administrators, successors, heirs,
distributee, devisees and legatees.

10. Limitation on Payments.

(a) Basic Rule. Any other provision of this Agreement
notwithstanding, the Company shall not be required to make any payment or
transfer any property to, or for the benefit of, the Employee (under this
Agreement or otherwise) that would be nondeductible by the Company by reason of
section 280G of the Internal Revenue Code of 1986, as amended (the "Code") or
that would subject the Employee to the excise tax described in section 4999 of
the Code. All calculations required by this Section 10 shall be performed by
Arthur Anderson (the "Auditors"), based on information supplied by the Company
and the Employee, and shall be binding on the Company and the Employee. All fees
and expenses of the Auditors shall be paid by the Company.

(b) Reductions. If the amount of the aggregate payments or
property transfers to the Employee must be reduced under this Section 10, then
the Employee shall direct in which order the payments or transfers are to be
reduced, but no change in the timing of any payment or transfer shall be made
without the Company's consent. As a result of uncertainty in the application of
sections 280G and 4999 of the Code at the time of an initial determination by
the Auditors hereunder, it is possible that a payment will have been made by the
Company that should not have been made (an "Overpayment") or that an additional
payment that will not have been made by the Company could have been made (an
"Underpayment"). In the event that the Auditors, based upon the assertion of a
deficiency by the Internal Revenue Service against the Company or the Employee
that the Auditors believe has a high probability of success, determine that an
Overpayment has been made, such Overpayment shall be treated for all purposes as
a loan to the Employee that he shall repay to the Company, together with
interest at the applicable federal rate specified in section 7872(f)(2) of the
Code; provided, however, that no amount shall be payable by the Employee to the
Company if and to the extent that such payment

<PAGE>

would not reduce the amount that is nondeductible under section 280G of the Code
or is subject to an excise tax under section 4999 of the Code. In the event that
the Auditors determine that an Underpayment has occurred, such Underpayment
shall promptly be paid or transferred by the Company to, or for the benefit of,
the Employee, together with interest at the applicable federal rate specified in
section 7872(f)(2) of the Code.

11. Miscellaneous Provisions.

(a) Notice. Notices and all other communications contemplated
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by U.S. registered mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.

(b) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Employee and by an authorized officer of the
Company (other than the Employee). No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the
same condition or provision at another time.

(c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof; provided, however, that
nothing in this Agreement shall affect the Employee's rights (subject to the
applicable terms thereof) to receive benefits under the Company's Supplemental
Executive Severance Policy or any successor policy (any of which may or may not
be applicable to the Employee under circumstances whether Employee is not
entitled to receive a CICP hereunder), or any other benefits applicable under
the circumstances of the Employee's termination which are not severance or
separation pay, continuation of group insurance benefits or benefits relating to
incentive compensation (including changes in terms and conditions relating
thereto).

(d) No Setoff; Withholding Taxes. There shall be no right of
setoff or counterclaim, with respect to any claim, debt or obligation, against
payments to the Employee under this Agreement. All payments made under this
Agreement shall be subject to reduction for individual income and withholding
taxes required to be withheld by law.

<PAGE>

(e) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
North Carolina.

(f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

(g) Arbitration. Except as otherwise provided in Section 10,
any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in Charlotte, North Carolina in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. All fees and expenses of the
arbitrator and such association shall be paid as determined by the arbitrator.
Punitive damages shall not be awarded. The arbitrators shall focus on the
factual situation and the equity of the situation rather than a technical
reading of the Agreement. Any ambiguity shall be construed in favor of the
Employee. Notwithstanding the foregoing, a dispute or controversy over whether
"Cause" exists or whether a "Termination" has occurred within two years after a
Change in Control shall be arbitrated by a three-member panel composed of the
Compensation Committee of the Board of Directors of the Company as it existed
prior to September 1, 1995 (the "Compensation Committee Members"), provided
that, if any Compensation Committee Member is unable to serve on such panel, the
remaining Compensation Committee Members shall appoint an additional panel
member, selecting first from among the outside directors serving on the Board of
Directors of the Company as it existed prior to September 1, 1995, in
substitution of such Compensation Committee Member. In the event three such
individual are unwilling to serve as arbitrators, the preceding three sentences
shall be inapplicable and all disputes and controversies shall be resolved in
the accordance with the provisions of the first sentence of this Section 11(g).

(h) No Assignment. The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or assignment,
either by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor's
process, and any action in violation of this Subsection (i) shall be void.

<PAGE>

IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year first above written.

-----------------------------
Employee

YALE INTERNATIONAL, INC.

By:__________________________
Bart A. Brown
Chairman of the
Board of Directors

<PAGE>

Form of Tier 2 Severance Agreement

CHANGE IN CONTROL PAYMENTS AGREEMENTS

THIS AGREEMENT is entered into as of July __, 1996, by and
between _____________ (the "Employee") and Spreckels Industries, Inc., a
Delaware corporation d/b/a Yale
International, Inc. (the "Company").

2. Termination. Subject to the terms of Section 1, in the
event the Employee is Terminated within two years following a Change in Control,
the Employee shall be entitled to receive a CICP in an amount equal to (a) one
and one half times the Employee's annual rate of Base Compensation, plus (b) one
and one half times the Employee's annual target bonus as in effect for the year
in which Termination occurs (or, if higher, the target bonus for the year in
which the Change in Control occurs (the "Annual Target Bonus")).

3. Resignation. Subject to the terms of Section 1, in the
event the Employee voluntarily resigns within two years following a Change in
Control, the Employee shall be entitled to receive a CICP in an amount equal to
(a) three quarters of the Employee's annual rate of Base Compensation, plus (b)
three quarters of the Employee's Annual Target Bonus.

<PAGE>

plans notwithstanding. Any such plans shall be deemed amended to
the extent necessary carry out this section.

6. No Mitigation. The Employee shall not be required to
mitigate the amount of any CICP under this Agreement (whether by seeking new
employment or in any other manner), nor shall any such payment be reduced by any
earnings that the Employee may receive from any other source.

7. Presumption and Additional Payment. (a) Subject to the
provisions of Section 10 hereof, the Company shall make the CICP upon receiving
a written demand from the Employee describing the CICP, referring to the
provision of this Agreement under which the CICP is claimed and certifying that
all conditions with respect to such entitlement, as set forth in this Agreement,
have been satisfied and any such certification shall be presumed correct.
Notwithstanding any payment made under this section, the Company may seek a
refund thereof under the provisions of Section 11(g) of this Agreement.

8. Definitions.

(a) Change in Control. Under this Agreement, the
term "Change in Control" means the occurrence of any of the following events
after the date of this Agreement:

<PAGE>

(iv) Any other event determined to be a Change in
Control by a majority of the Board.

(b) Termination. Under this Agreement, the term
"Termination" or "Terminated" shall mean any of the following:

(i) the Employee has been terminated by the Company
for any reason other than Cause;

(ii) elimination of the Employee's position or job;

<PAGE>

(iii) a significant diminution of the Employee's
duties, responsibilities or authority without the Employee's
consent;

(iv) a reduction in the Employee's Base Compensation
after the Change in Control;

(vi) any breach of this Agreement by the Company; or

(vii) a requirement that the Employee relocate his principal
place of work by a distance of 50 miles or more.

(ii) A willful act by the Employee which constitutes
gross misconduct or fraud and which is materially injurious
to the Company, or

(iii) A conviction of, or a plea of "guilty" or "no
contest" to, a felony.

No act or failure to act by the Employee shall be considered "willful" unless
committed without good faith and without a reasonable belief that the act or
omission was in the Company's best interest.

(d) Base Compensation. Under this Agreement, the term "Base
Compensation" means base salary paid to the Employee at the annual rate of
$____________ or at such higher rate as the Company amy determine from time to
time.

9. Successors.

<PAGE>

(b) Employee's Successors. This Agreement and all rights of
the Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributee, devisees and legatees.

10. Limitation on Payments.

<PAGE>

11. Miscellaneous Provisions.

<PAGE>

(e) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
North Carolina.

<PAGE>

IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year first above written.

-----------------------------
Employee

YALE INTERNATIONAL, INC.

By:__________________________
Bart A. Brown
Chairman of the
Board of Directors

<PAGE>

Form of Tier 3 Severance Agreement

CHANGE IN CONTROL PAYMENTS AGREEMENTS

2. Termination. Subject to the terms of Section 1, in the
event the Employee is Terminated within two years following a Change in Control,
the Employee shall be entitled to receive a CICP in an amount equal to (a) the
Employee's annual rate of Base Compensation, plus (b) the Employee's annual
target bonus as in effect for the year in which Termination occurs (or, if
higher, the target bonus for the year in which the Change in Control occurs (the
"Annual Target Bonus")).

3. Resignation. Subject to the terms of Section 1, in the
event the Employee voluntarily resigns within two years following a Change in
Control, the Employee shall be entitled to receive a CICP in an amount equal to
(a) one half the Employee's annual rate of Base Compensation, plus (b) one half
the Employee's Annual Target Bonus.

<PAGE>

7. Presumption and Additional Payment. (a) Subject
to the provisions of Section 10 hereof, the Company shall make the CICP upon
receiving a written demand from the Employee describing the CICP, referring to
the provision of this Agreement under which the CICP is claimed and certifying
that all conditions with respect to such entitlement, as set forth in this
Agreement, have been satisfied and any such certification shall be presumed
correct. Notwithstanding any payment made under this section, the Company may
seek a refund thereof under the provisions of Section 11(g) of this Agreement.

8. Definitions.

(a) Change in Control. Under this Agreement, the
term "Change in Control" means the occurrence of any of the following events
after the date of this Agreement:

(i) The six persons who were directors of the Company
on September 1, 1995 (the "Incumbent Directors") shall cease

<PAGE>

(for any reason other than death) to constitute a majority of the Board
of Directors of the Company. For this purpose, any director who was not
a director on September 1, 1995 shall be deemed to be an Incumbent
Director if such director was elected or appointed to the Board after
the date hereof in substitution of an Incumbent Director by, or on the
recommendation of or with approval of, at least a majority of the
directors who then qualified as Incumbent Directors (so long as such
director was not nominated by a person who has threatened to, or has
entered into an agreement to, effect a Change in Control);

(iv) Any other event determined to be a Change in
Control by a majority of the Board.

(b) Termination. Under this Agreement, the term
"Termination" or "Terminated" shall mean any of the following:

(i) the Employee has been terminated by the Company
for any reason other than Cause;

(ii) elimination of the Employee's position or job;

<PAGE>

(iii) a significant diminution of the Employee's
duties, responsibilities or authority without the Employee's
consent;

(iv) a reduction in the Employee's Base Compensation
after the Change in Control;

(vi) any breach of this Agreement by the Company; or

(vii) a requirement that the Employee relocate his principal
place of work by a distance of 50 miles or more.

(ii) A willful act by the Employee which constitutes
gross misconduct or fraud and which is materially injurious
to the Company, or

(iii) A conviction of, or a plea of "guilty" or "no
contest" to, a felony.

No act or failure to act by the Employee shall be considered "willful" unless
committed without good faith and without a reasonable belief that the act or
omission was in the Company's best interest.

(d) Base Compensation. Under this Agreement, the term "Base
Compensation" means base salary paid to the Employee at the annual rate of
$___________ or at such higher rate as the Company amy determine from time to
time.

9. Successors.

<PAGE>

10. Limitation on Payments.

<PAGE>

11. Miscellaneous Provisions.

<PAGE>

(e) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
North Carolina.

<PAGE>

IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year first above written.

-----------------------------
Employee

YALE INTERNATIONAL, INC.

By:__________________________
Bart A. Brown
Chairman of the
Board of Directors

<PAGE>

Yale YALE INTERNATIONAL, INC.

ONE MORROCROFT CENTRE, 6805 MORRISON BLVD., STE. 450, CHARLOTTE, NC 28211
(704) 367-4220 FAX: (704) 367-0076

August 1, 1996

Dear Shareholders:

On July 19, 1996, American Enterprises, L.L.C. ("American Enterprises") and
its wholly owned subsidiary, American Enterprises Acquisition Corp. ("American
Enterprises Acquisition") announced a tender offer (the "Offer") for: (i) all of
the outstanding common stock (together with the associated rights) of Yale
International, Inc. (the "Company" or "Yale") at a price of $16.50 per share in
cash and (ii) all outstanding warrants to purchase shares of common stock issued
by the Company (the "Warrants") at a price equal to the difference between the
offer price for the shares of common stock and the respective exercise prices
for each of the Warrants (to the extent such Warrants are then exercisable in
accordance with their terms).

YOUR BOARD OF DIRECTORS HAS DETERMINED, BY UNANIMOUS VOTE OF THE DIRECTORS
PRESENT, THAT THE OFFER IS INADEQUATE AND NOT IN THE BEST INTERESTS OF THE
COMPANY AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU REJECT THE OFFER AND NOT TENDER YOUR SHARES TO AMERICAN ENTERPRISES.

In reaching the determination that the Offer is inadequate and not in the
best interests of Yale or its shareholders, your Board gave careful
consideration to the Company's business, financial condition, results of
operations and future prospects, especially as such factors would affect the
Company's ability to enhance shareholder value, the terms of the Offer, the
opinion of the Company's financial advisor, Salomon Brothers Inc, that the Offer
is inadequate from a financial point of view, the Board's belief that the $16.50
per share cash price pursuant to the Offer does not reflect the current value of
the Company and the other factors described in the attached Schedule 14D-9. We
urge you to read carefully the attached document in its entirety, including the
opinion of Salomon Brothers Inc included as Annex A thereto, so that you will be
fully informed as to the Board's recommendation.

Your Board of Directors continues to be committed to the enhancement of
shareholder value. In this regard, the Board has authorized management and the
Company's financial advisor to explore all strategic alternatives and to report
back to the Board at an early date.

If you have questions or need additional materials, please call Georgeson &
Company, Inc., which is assisting us in this process, toll-free at (800)
223-2064.

We thank you for your continued support.

(Signature of Gary L. Tessitore
appears here)

Gary L. Tessitore
President and Chief Executive Officer

FOR: YALE INTERNATIONAL, INC.
CONTACT: Donald C. Roof
Senior Vice President and
Chief Financial Officer
(704) 367-4220

For Immediate Release
- ---------------------

YALE BOARD REJECTS AMERICAN ENTERPRISES OFFER

CHARLOTTE, NC (August 1, 1996) -- Yale International, Inc. (Nasdaq: YALE)
announced today that its Board of Directors has voted to reject the $16.50
per share unsolicited tender offer announced July 19, 1996 by American
Enterprises, L.L.C. as inadequate and not in the best interests of the
Company and its shareholders. Accordingly, the Board recommends that its
shareholders reject the pending offer and not tender their shares to
American Enterprises. The Board stated that they continue to be committed
to the enhancement of shareholder value. In this regard, the Board has
authorized management and the Company's financial advisor, Salomon Brothers,
to explore all strategic alternatives and to report back to the Board at an
early date.

Yale International, Inc. (formally Spreckels Industries, Inc.) manufactures
and distributes a diversified line of material handling and industrial
component products, including chain and wire rope hoists, actuators, scissor-
lifts and rotating unions. Principal brand names are Yale, Duff-Norton,
Coffing, Little Mule and American Lifts. The Company operates under the
name Yale International, although its legal identity will remain Spreckels
Industries, Inc. until shareholder approval is received at the next annual
shareholders' meeting.

#######

AMENDMENT TO RIGHTS AGREEMENT

THIS AMENDMENT TO RIGHTS AGREEMENT (this "Amendment") is
entered into as of July 23, 1996 by and between SPRECKELS INDUSTRIES, INC.
(doing business as YALE INTERNATIONAL, INC.), a Delaware corporation (the
"Company"), and CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C. (the "Rights
Agent"), amending the Rights Agreement dated as of November 11, 1995, as
amended, between the Company and the Rights Agent (the "Rights Agreement").

Recitals of the Company:

The Company has duly authorized the execution and delivery of
this Amendment, and all things necessary to make this Amendment a valid
agreement of the Company have been done. This Amendment is entered into pursuant
to Section 27(iii) of the Rights Agreement permitting the Company and the Rights
Agent, prior to the Distribution Date (as defined in the Rights Agreement) to
change or supplement any provision thereunder in any manner which the Company
may deem necessary or desirable.

NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:

1. Defined Terms. Terms defined in the Rights Agreement and
used herein shall have the meanings given to them in the Rights Agreement.

2. Amendment to Section 24(d) of Rights Agreement. Unless
Section 24(d) shall be amended in its entirety and restated to read in full as
follows:

"Notwithstanding anything in this Agreement to the contrary,
all Rights hereunder shall expire upon the consummation of an all cash
tender offer for any and all shares of Common Stock (an "All Cash
Offer") pursuant to which a Person, together with its Affiliates and
Associates, becomes the Beneficial Owner of 85% or more of the Common
Stock; provided that the Board of Directors determines that the tender
offer documents relating to the All Cash Offer disclose a commitment by
such Person to (i) immediately following announcement of its acceptance
for payment of Common Stock in the All Cash Offer, commence a cash
tender offer for any and all shares of Common Stock not tendered in the
All Cash Offer for at least the same cash consideration per share paid
in the All Cash Offer or (ii) cause a merger of the Company with such
Person (or its Affiliate) as promptly as practicable following
completion of the All Cash Offer, pursuant to which each then
outstanding share of Common Stock will be converted into the right to
receive at least the same cash consideration per share paid in the All
Cash Offer; and, provided, further, that such All Cash Offer

<PAGE>

shall not have been consummated earlier than the date which
is the 90th calendar day after the commencement thereof."

3. Amendment to Exhibit B. The last sentence of the first full
paragraph on page B-4 of Exhibit B shall be amended to read as follows:

"All Rights shall expire upon the consummation of an all cash
tender offer for all of the outstanding shares; provided that
the Person making such tender offer discloses a commitment (i)
to make a tender offer for the untendered shares or (ii) to
cause a merger of the Company with such Person, in each case,
for at least the same cash consideration as paid in the
original tender offer; and, provided, further, that such all
cash tender offer shall not have been consummated earlier than
the date which is the 90th calendar day after the commencement
thereof."

4. No Other Amendment. Except as amended hereby, the
Rights Agreement shall remain in full force and effect.

5. Counterparts. This Amendment may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.

6. Governing Law. This Amendment shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such state
applicable to contracts to be made and to be performed entirely within such
state.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.

Attest: SPRECKELS INDUSTRIES, INC.

[Seal]

____________________________ By:___________________________
Title: Title:

Attest: CHEMICAL MELLON SHAREHOLDERS
SERVICES, L.L.C.
[Seal]

_____________________________ By:___________________________
Title: Title:

<PAGE>

SKADDEN, ARPS, SLATE, MEAGHER & FLOM

ONE RODNEY SQUARE
BOX 636
WILMINGTON, DELAWARE 19899-0636

(302) 651-3000

July 19, 1996

HAND DELIVERED

The Honorable Richard C. Kiger
Master in Chancery
Court of Chancery
Daniel L. Herrmann Courthouse
1020 King Street
Wilmington, DE 19801

Re: American Enterprises, L.L.C.,et al. v. Spreckels
Industries, Inc., et al.,
(Del. Ch.)

Dear Master Kiger:

We represent Plaintiffs American Enterprises, L.L,C. and
American Enterprises Acquisition Corp. ("Plaintiffs") in the above-captioned
action filed today. Plaintiffs are seeking expedited declaratory and injunctive
relief in order (1) to permit the shareholders of Spreckels Industries, Inc.
("Spreckels") to accept Plaintiffs' all cash tender offer for Spreckels stock
that was announced today and (2) to allow American Enterprises, L.L.C. to
conduct a proxy contest to replace the current directors with its own nominees.

We want to schedule a meeting with the Court on Wednesday, if
that is convenient to the Court, to discuss preliminary matters, including
scheduling.

Prior to meeting with the Court, we will attempt to speak with
counsel for Spreckels, if we can determine who represents Spreckels in this
matter. If We are able to consult with Spreckels' counsel in advance of the
meeting, we will be in a better position to know to what extent we need the
Court's assistance in resolving preliminary matters. We expect that Spreckels
will not take defensive actions to compromise further our ability to consummate
the offer before we have had the opportunity to meet with the Court.

<PAGE>

The Honorable Richard C. Kiger
Page Two
July 19, 1996

Please let us know if the proposed date for a meeting is
convenient or an alternative date that better suits the Court's schedule. I can
be reached at 651-3120 if the Court wishes to discuss any aspect of the case.

Respectfully,

/s/ Marc B. Tucker

Marc B. Tucker

Enclosure

cc: Register in Chancery (by hand)

<PAGE>

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

- - - - - - - - - - - - - - - - - - x

AMERICAN ENTERPRISES, L.L.C., a :
Delaware limited liability corpo-
ration, and AMERICAN ENTERPRISES, :
ACQUISITION CORP.,
: C.A. No. 15169
Plaintiffs,
:
v.
:
SPRECKELS INDUSTRIES, INC., a
Delaware corporation, BART A. :
BROWN, JR., JOSHUA S. FRIEDMAN,
STEWART M. KASEN, F. KENNETH :
IVERSON, WILLIAM J. NIGHTINGALE,
GEORGE A. POOLE, JR., S. DONLEY :
RITCHEY, GARY L. TESSITORE and
STEVEN VAN DYKE, :

Defendants. :
- - - - - - - - - - - - - - - - - - x

COMPLAINT
As and for their complaint herein, Plaintiffs American
Enterprises, L.L.C. and American Enterprises Acquisition Corp,. ("Plaintiffs"),
by their attorneys, allege, upon knowledge as to themselves and their acts, and
Upon information and belief as to all other matters, as follows:
PRELIMINARY STATEMENT
1. Plaintiffs have made a noncoercive, nondiscriminatory,
all-cash, all-shares tender offer for the stock of Sprockets Industries, Inc.
("Spreckels" or the "Company") and have committed to acquire all remaining
shares not tendered into the offer for at least the same cash consideration as
in the tender offer (the "Offer"). A provision in Spreckels, rights plan exempts
all-cash,

<PAGE>

all-shares tender offers in which the acquiror becomes the beneficial owner of
85% or more of Spreckels' common stock so long as the offer contains a
commitment to purchase the remaining stock in a back-end transaction for at
least the same cash consideration as paid on the front end (the "Expiration
Provision"). The Offer satisfies the requirements of the Expiration Provision.
2. Past conduct of the defendants, however, suggests that they
may invoke a literal, but unworkable and unreasonable, interpretation of the
Expiration Provision or take other improper action to frustrate consummation of
the offer. Expedited declaratory and injunctive relief is warranted to prevent
any such improper action.
3. Last year the defendants had a rights plan in effect that
had to be approved by the shareholders of Spreckels at the annual meeting
scheduled for November 2, 1995. The defendants also faced the threat of a proxy
contest by an investor group who opposed the rights plan to elect three
directors to the Board. In September 1995, because the defendants knew
shareholder opposition would defeat the rights plan and in order to avert a
proxy contest, the defendants agreed, among other things, that they would not
submit the rights plan to the shareholders for their approval, which caused the
rights plan to expire. The defendants announced the agreement in their October
4, 1995 proxy statement. The defendants, thus, promised to forgo a rights plan,
and plaintiffs relied on that promise in purchasing a substantial portion of its
shares of Spreckels.

<PAGE>

4. Nevertheless, on November 11, 1995, just days after that
purchase, the defendants implemented a new and more onerous rights plan that did
not require shareholder approval. Because defendants were bound not to reinstate
a rights plan, because defendants breached their fiduciary duties by
circumventing the requirement to submit the rights plan to a shareholder vote
and because the defendants failed to exercise due care in adopting the rights
plan currently in effect, the rights plan should be declared invalid.
5. Alternatively, the defendants should not be permitted to
invoke an unintended and unreasonable interpretation of the rights plan to
frustrate Plaintiffs' ability to satisfy the requirements of the Expiration
Provision. The defendants also should not be permitted to amend the rights plan
currently in effect. it was amended just months ago in response to a previous
offer by American Enterprises, L.L.C. to merge with Spreckels, and, thus, fully
addressed, in the defendants judgment, any supposed "threat" posed by that
offer. Inasmuch as the current offer is superior to the previous offer in every
respect, any effort further to amend the rights plan to frustrate Plaintiffs,
ability to consummate the offer would constitute a disproportionate response and
violate the defendants' fiduciary duties.
6. PlaintiffS also have announced their intention to wage a
proxy contest to replace the current directors with their own nominees.
Spreckels' by-laws, however, make it impossible for a shareholder who wishes to
nominate candidates for the Board to be certain that it has satisfied the 60-day
advance notice provision for nominating candidates. The defendants have

<PAGE>

previously used these by-laws to frustrate the ability of shareholders to wage
proxy contests. Such use of these by-laws is contrary to Delaware law and should
not be permitted.
THE PARTIES
7. Plaintiff American Enterprises, L.L.C. ("American
Enterprises") is a Delaware limited liability corporation with its principal
executive offices at 701 East Franklin Street, Suite 1300, Richmond, Virginia
23219. American Enterprises is the beneficial owner of 1,201,260 shares of
Spreckels common stock, representing approximately 20.0% of all Spreckels shares
outstanding. Plaintiff American Enterprises Acquisition Corp. is a Delaware
corporation and a wholly-owned subsidiary of American Enterprises and is the
proposed purchaser in connection with the offer.
8. Defendant Spreckels is a Delaware corporation with its
principal executive offices at 6605 Morrison Boulevard, Suite 450, Charlotte,
North Carolina 28211. Spreckels manufactures and distributes material handling
and industrial component products, including chain and wire rope hoists,
actuators, scissor-lifts and rotating unions. As of May 17, 1996 Spreckels had
6,006,362 Class A common shares outstanding, which are listed and traded on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ").
9. Defendants Bart A. Brown, Jr., Joshua S. Friedman, Stewart
M. Kasen, F. Kenneth Iverson, William J. Nightingale, George A, Poole, Jr., S.
Donley Ritchey, Gary L. Tessitore and Steven Van Dyke are members of the Board
of Directors of Spreckels (the "Board"). As such, they owe the highest fiduciary
duties of care and loyalty to the Spreckels shareholders.

<PAGE>

10. Defendant Brown is also Chairman of the Board and served
as its Chief Executive Officer from July 14, 1994 to May 15, 1995.
11. Defendant Tessitore is also the President and
Chief Executive Officer of Spreckels.
12. Approximately 85% of Spreckels' shares (based on 6,006,362
shares outstanding), or 65% of Spreckels' shares, on a fully diluted basis, were
held by highly sophisticated investors, including large institutional investors
and wealthy private investors.
FACTUAL BACKGROUND
A. Spreckels Agrees To Let The Old Rights Plan Expire Rather
Than Submit It For Shareholder Approval.
13. On July 7, 1995, the Board adopted a shareholder rights
plan that had to be approved by Spreckels' shareholders at the 1995 Annual
Meeting of Spreckels shareholders (the "Old Rights Plan.")
14. The Old Rights Plan contained "flip-in" and "flip-over"
provisions and a 24 percent "trigger." The rights terminated, however, if one of
the following events Occurred! (i) redemption of the rights by Spreckels; (ii)
the consummation of an offer for all outstanding shares for the same
consideration per share; or (iii) the consummation of a merger approved by the
Board.
15. As the Annual Meeting approached, the defendants realized
that shareholder opposition would defeat the old Rights Plan.
16. The defendants also faced another problem. In September,
1995 Canyon Capital Management, L.P. and certain related parties ("Canyon
Partners"), collectively beneficial

<PAGE>

owners of approximately 4.46% of the common stock, one of the many shareholders
that opposed the Old Rights Plan, announced its intention to wage a proxy fight
and nominate Joshua S. Friedman and two other individuals for election to the
Company's Board. The Company claimed that Canyon Partners did not satisfy the
requirements of the advance notice by-law and was not entitled to pursue the
election of nominees at the Company's Annual Meeting.
Canyon Partners disagreed.
17. In order to resolve this dispute and because the Old
Rights Plan was expected to be rejected by the shareholders, the parties entered
into an agreement, which was intended to benefit all of the Company's
shareholders, whereby (a) Canyon Partners agreed to withdraw their director
nominations, (b) the Company agreed to nominate Mr. Friedman as a director for
election at the 1995 Annual Meeting, (c) the Board would search for an
additional candidate to serve on the Board, who would be acceptable to a
majority of the Board, including Mr. Friedman (the Board would then be expanded
to include nine directors), and (d) the Company agreed to let the old Rights
Plan to the shareholders for a vote (the "Agreement").
18. On October 4, 1995, the Company filed its proxy statement
for the upcoming annual meeting, describing the Agreement and stating as
follows:
The Company also agreed not to submit its stockholder rights
plan, adopted in July 1995, to the stockholders for approval
at the annual meeting. As a result, all rights thereunder will
automatically terminate and the rights agreement will expire.

19. The Old Rights Plan, thus, expired, and a proxy contest
that threatened the defendants' control was averted. The

<PAGE>

defendants, thus, promised shareholders not to reinstate a rights
plan for some reasonable period of time.
B. American Enterprises' Purchases Stock
In Reliance On the Defendants' Decision
To Forego A Rights Plan.

20. In the tall of 1995, Prudential Investment ("Prudential"),
then the largest shareholder of Spreckels,
decided to sell its interest in Spreckels.
21. Plaintiff American Enterprises initially purchased a block
of 81,460 shares from Prudential on October 10, 1995.
22. John P. Mullman, then a director of Spreckels who was
Prudential's representative on the Board, resigned his post as a director on
October 18, 1995, thus advising the Board that Prudential intended to sell its
remaining block of shares.
23. On November 7, 1995, based on the Company's decision to
let the Old Rights Plan expire and promise to forego reinstatement of a rights
plan, American Enterprises purchased all of the remaining Prudential shares,
making American Enterprises the owner of approximately 20% of the issued and
outstanding shares of Spreckels.
C. Spreckels Adopts The New Rights Plan.
24. On November 11, 1995, only nine days after the old Rights
Plan expired, the Board adopted a new but more onerous shareholder rights plan
(the "New Rights Plan"). The New Rights Plan differed from the Old Rights Plan
in two material respects: the New Rights Plan has a 15% instead of a 24% trigger
and does not require shareholder approval.
25. On November 13, 1995, the Company announced the adoption
of the New Rights Plan but did not explain the reasons

<PAGE>

for their about-face and breach of promise with respect to implementing a rights
plan. Inasmuch as the defendants were not even aware yet of American Enterprises
purchases of Company stock, the "threat" to which the Company was responding
must have been the threat associated with Prudential's decision to sell its
substantial holdings, which could be purchased by an acquisitive company. That
"threat," however, already existed when the defendants caused the Old Rights
Plan to expire on November 2, 1995.
26. The Board's adoption of the New Rights Plan was not only a
breach of promise and inequitable manipulation of the corporate machinery but
also amounted to a breach of the duty of care. The defendants acted
precipitously, and they failed to consider the following, among other things, in
adopting the New Rights Plan: (a) the effect the New Rights Plan would have on
shareholders' ability to wage proxy contests; (b) whether the adoption of the
New Rights Plan violated the Agreement and the rights of the Company's
shareholders; and (c) the implications of the Board's failure to announce its
intention to adopt the New Rights Plan when it caused the Old Rights Plan to
expire.
D. Events Leading Up To The Offer.
27. On November 14, Philip Knisely, a member of the Board of
Managers of American Enterprises, called Mr. Brown, Chairman of the Board of the
Company, and informed him that American Enterprises had acquired 1,201,260
shares and would be filing a Schedule 13D. Mr. Brown suggested that Mr. Knisely
meet with Mr. Tessitore, President and Chief Executive Officer of the Company.

<PAGE>

28. On November 18, 1995, American Enterprises filed a
Schedule 13D in which it disclosed that it had acquired 1,201,260 shares of
Spreckels and was considering, but had not decided whether to pursue, various
courses of action, including proposing a merger between the Company and American
Enterprises or seeking control of the Company's Board of Directors.
29. On December 4, 1995, members of American Enterprises met
with Mr. Tessitore. In that meeting, Mr. Tessitore suggested that
representatives of American Enterprises visit the Company's plants, and Mr.
Tessitore was asked to have representatives of the Company visit plants of
companies they control. A few days later Mr. Tessitore cancelled the plant
visits.
30. On December 19, 1995, American Enterprises sent a letter
to the defendants proposing a combination of American Enterprises and Spreckels,
31. On January 8, 1996, the Company sent American Enterprises
a letter rejecting the proposal and stating that it was not for sale.
E. The Amendment To The New Rights Agreement.
32. On January 8, 1996 -- the same day that the Company
rejected Plaintiffs' merger proposal -- the Board amended the New Rights Plan
(the "New Rights Plan as Amended"). Pursuant to the amendment, the new share
purchase rights expire if (a) an entity acquires 85% of the Company's stock and
(b) the Board determines that the acquiring entity has committed to acquiring
all the shares not tendered into the first tender offer in a second tender offer
or a business combination of at least the same cash consideration (the
"Expiration Provision").

<PAGE>

33. Specifically, the Expiration Provision states that
all rights thereunder:

shall expire upon the consummation of an all cash tender offer
for any and all shares of Common Stock (an "All Cash Offer")
pursuant to which a Person, together with its Affiliates and
Associates, becomes the Beneficial Owner of 85% or more of the
Common Stock; provided that the Board of Directors determines
that the tender offer documents relating to the All Cash Offer
disclose a commitment by such Person to (i) immediately
following announcement of its acceptance for payment of Common
Stock in the All Cash Offer, commence a cash tender offer for
any and all shares of Common Stock not tendered in the All
Cash Offer for at least the same cash consideration per share
paid in the All Cash Offer or (ii) cause a merger of the
Company with such Person (or its Affiliate) as promptly as
practicable following completion of the All Cash Offer,
pursuant to which each then outstanding share of Common Stock
will be converted into the right to receive at least the same
cash consideration per share paid in the All Cash Offer.

34. The New Rights Plan as Amended constituted the Board's
response to the supposed "threat" posed by Plaintiffs' merger proposal of
December 19, 1995.
F. Plaintiffs' Current Offer.
35. On July 19, 1996, Mr. Knisely telephoned Mr. Tessitore to
inform him that American Enterprises was commencing the Offer and to request a
meeting with him. The same day, American Enterprises sent a letter to the
Company that stated that it was commencing a cash tender offer to purchase all
outstanding common shares of the Company at a price of $16.50 per share and
would acquire all nontendered shares, if the Offer succeeded, by a second tender
offer or by merger for at least the same cash consideration as paid in the
front-end tender offer, thus satisfying the Expiration Provision of the New
Rights Plan (the "Offer").
36. The letter also informed the Company about the
filing of this lawsuit.

<PAGE>

37. The Offer will require, among other things, the
defendants' redemption of the New Rights Plan as Amended or a declaration that
the New Rights Plan as Amended be deemed to be invalid or inapplicable to the
Offer.
38. In order to satisfy the Expiration Provision, Plaintiffs
have committed either to make a tender offer for the untendered shares or to
effect a merger for at least the same cash consideration as paid in the original
tender offer:
(i) immediately following announcement of its acceptance for
payment of Shares in the Offer, commence a cash tender offer
for any and all Shares not tendered in the Offer for at least
the same cash consideration per share paid in the Offer or
(ii) cause a merger of the Company with the Purchaser as
promptly as practicable following completion of the Offer,
pursuant to which each then outstanding Share will be
converted into the right to receive at least the same cash
consideration per Share paid in the Offer (the transaction
described in clause (ii), the "Proposed Merger" and the
aforesaid commitment, the "Follow-up Transaction Commitment").
39. The Offer satisfies the requirements of the
Expiration Provision.
G. The By-laws Impede The Nomination Process
40. Plaintiffs also have announced their intention to wage a
proxy contest to replace the current members of the Board with their own
nominees.
41. The Company's by-laws filed with its Form 10-Q for the
period ended March 31, 1996 (the "By-laws"), however, make it impossible for a
shareholder who wishes to nominate candidates for the Board as shareholders to
be certain that it has satisfied the 60-day advance notice provision.
42. Section 2.4 of the By-laws requires that written notice of
shareholders' meetings shall be given to each shareholder not less than ten (10)
nor more than sixty (60) days

<PAGE>

prior to the meeting. But, section 2.8 (the "Advance Notice By-law") requires
that shareholders submit director nominations not less than sixty (60) days
prior to the shareholders meeting.
43. Thus, as a practical matter, the Board is required to
provide notice of a shareholders' meeting after the deadline for director
nominations has passed and, thus, impairs the right of shareholders to nominate
candidates for the Board of Directors. A reasonable notification period that
gives stockholders notice of an annual meeting sufficiently in advance of the
60-day advance notice deadline for submitting nominations is required for
persons to be able to submit nominations.
44. The defendants previously have used the "Catch 22" feature
of the Advance Notice By-law to prevent shareholders from nominating directors.
In September 1995, Canyon Partners submitted the nominations of three persons to
the Board. The Company claimed that Canyon Partners was not entitled to pursue
the election of the nominees at the Company's Annual Meeting because it did not
satisfy the provisions of the Advance Notice By-law for director nominations.
45. Other shareholders are also concerned about the
defendants' use of the By-laws to frustrate their ability to propose candidates
for the Board. On May 16, 1996, Bedford Falls Investors, L.P. ("Bedford Falls"),
a shareholder of the Company, advised the Company of its intention to submit a
list of nominees for election as the majority of the Company's Board of
Directors at the next shareholders meeting. In that letter, Bedford Falls wrote,
"As evidenced by disagreements between the Company and another shareholder in
1995, there is some uncertainty regarding the requirements and deadlines of the
Company's Certificate of

<PAGE>

Incorporation and By-laws as respecting the submission of director nominations."
Noting the burdensome aspects of the By-laws, Bedford Falls requested
clarification of the procedures for director nominations.
46. Plaintiffs are not aware of any response by the defendants
to Bedford Falls' request for clarification.
47. On July 12, 1996, Bedford Falls proposed a slate of
nominees for election to the Board.
Count I
(Declaratory Judgment Regarding Satisfaction
of the Expiration Provision)

48. Plaintiffs repeat and realleges each allegation set forth
in paragraph 1 through 50 hereof.
49. A literal but unworkable interpretation of the Expiration
Provision could frustrate consummation of the Offer. Such an interpretation
would suggest that the 85% minimum requirement in the Expiration Provision is
inconsistent with an "any and all offer" that also is a requirement of the
Expiration Provision and, thus, the Offer cannot satisfy both requirements. Past
conduct of the defendants suggests that they may invoke just such a "Catch-22"
interpretation of the Expiration Provision in order to frustrate consummation of
the Offer.
50. Plaintiffs are entitled to a declaration that the Offer
satisfies the Expiration Provision.
Count II
(Injunction Preventing Defendants
From Amending The New Rights Plan As
Amended To Frustrate The Offer)
51. Plaintiffs repeat and reallege each allegation set forth
in paragraphs 1 through 50 hereof.

<PAGE>

52. The Offer poses no threat to Spreckels' corporate policy
and effectiveness that is not addressed fully by the New Rights Plan as Amended.
Indeed, the current offer is superior to the one in response to which the New
Rights Plan was amended.
53. Plaintiffs are entitled to an injunction prohibiting the
Board from modifying the New Rights Plan as Amended to frustrate further
consummation of the offer.
54. Plaintiffs have no adequate remedy at law.
Count III
(Declaratory Judgment And Injunction
Preventing Misuse Of By-law Provisions)

55. Plaintiffs repeat and reallege each allegation set forth
in paragraphs 1 through 54 hereof.
56. Sections 2.4 and 2.8 of the By-laws together are
unworkable and impair Plaintiffs' ability to nominate directors. Moreover, the
defendants already have demonstrated that they will use these By-laws to
frustrate shareholders' ability to wage a proxy contest.
57. Plaintiffs are entitled to a declaration that such use of
the By-laws is invalid under Delaware law and an injunction preventing such
misuse.
Count IV
(Breach of the Duty of Care in
Adopting the New Rights Plan)

58. Plaintiffs repeat and reallege each allegation set forth
in paragraphs 1 through 57 hereof.
59. The director defendants, as fiduciaries, owe Plaintiffs
the highest duty of care.
60. Defendants breached their duty of care in precipitously
adopting the New Rights Plan without adequately

<PAGE>

considering, among other things, the implications of the Agreement, the
detrimental reliance by the investing public on the defendants representation
that they would forego a rights plan and the effect of the New Rights Plan as
Amended on shareholders' ability to exercise their voting franchise.
61. Plaintiffs are entitled to a declaration that the New
Rights Plan as Amended is invalid.
Count VI
(Estoppel)
62. Plaintiffs repeat and reallege each allegation set forth
in paragraphs 1 through 61 hereof.
63. On October 4 and November 2, 1995, defendants represented
to the shareholders of Spreckels, including Plaintiffs, that they would forego a
rights plan.
64. Based on that representation, Plaintiffs purchased a
substantial portion of shares.
65. On November 13, 1995, defendants reinstated a rights plan.
66. Plaintiffs are entitled to a declaration that defendants
are estopped from applying the New Rights Plan as Amended to the Offer.
Count V
(Breach of Contract)
67. Plaintiffs repeat and reallege each allegation set forth
in paragraphs 1 through 66 hereof.
68. The Agreement precluded the defendants from reinstating a
rights plan. Plaintiffs and all other Spreckels shareholders are intended third
party beneficiaries of the Agreement. Plaintiffs, thus, have the right to
enforce the

<PAGE>

Agreement.
69. By adopting the New Rights Plan as Amended, the Board
violated the Agreement.
70. Plaintiffs are entitled to a declaratory judgment that the
New Rights Plan as Amended is invalid as applied to the Offer.
Count VII
(Inequitable Manipulation of Corporate Machinery)
71. Plaintiffs repeat and reallege each allegation set forth
in paragraphs 1 through 70 hereof.
72. Defendants caused the Old Rights Plan to terminate nstead
of submitting it to the shareholders for their approval.
73. Eleven days later, the defendants adopted a more onerous
rights plan that did not require shareholder approval.
74. Defendants circumvention of a shareholder vote constituted
an inequitable manipulation of corporate machinery and a breach of fiduciary
duty.
75. Plaintiffs, therefore, are entitled to a declaration that
the New Rights Plan as Amended is invalid.
WHEREFORE, Plaintiffs respectfully request this Court to enter
an Order:
(a) declaring that the Offer satisfies the Expiration
Provision in the New Rights Plan as Amended;
(b) preliminarily and permanently enjoining defendants, their
employees, agents and all persons acting on their behalf or in concert
with them from amending the New Rights Plan as Amended in a manner that
makes consummation of the Offer more difficult;
(c) declaring that use of By-law Sections 2.4 and

<PAGE>

2.8 to frustrate Plaintiffs' ability to nominate candidates
for the Board is invalid and enjoining such use; and
(d) declaring that the New Rights Plan as amended is
invalid;
(e) awarding Plaintiffs their costs and disbursements
in this action, including reasonable attorney's fees; and
(f) granting Plaintiffs such other and further relief
as the Court deems just and proper.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM

By:/s/ Marc S. Tucker
Marc S. Tucker
Karen L. Valihura
Curtis S. Alva
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
(302) 651-3000
Attorneys for Plaintiff

OF COUNSEL

Robert E. Zimet
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 Third Avenue
New York, New York 10022

DATED: July 19, 1996

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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

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AMERICAN ENTERPRISES, L.L.C., a :
Delaware Limited Liability
Corporation, and AMERICAN :
ENTERPRISES, ACQUISITION CORP.,
a Delaware Corporation, : C.A. No.

Plaintiffs, :

v. :

SPRECKELS INDUSTRIES, INC., a :
Delaware corporation, BART A.
BROWN, JR., JOSHUA S. FRIEDMAN, :
F. KENNETH IVERSON, STEWART M.
KASEN, WILLIAM J. NIGHTINGALE, :
GEORGE A. POOLE, JR., S. DONLEY
RITCHEY, GARY L. TESSITORE and :
STEVEN VAN DYKE,
:
Defendants.
:
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STATEMENT PURSUANT TO CHANCERY COURT RULE
4(dc) Plaintiffs state, pursuant to Rule 4(dc) of the Rules
of this Court, that:
1. The name of the corporate defendant upon whose governing
body the individual nonresident defendants serve, as it appears on the most
recent annual franchise tax report filed with the Secretary of State of Delaware
is Spreckels Industries, Inc.
2. The principal business address of the corporate defendant
upon whose governing body the individual nonresident defendants serve, as it
appears on the most recent annual franchise tax report filed with the Secretary
of State of Delaware is not the current address of the corporate defendant.

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The plaintiffs have obtained more recent information which shows that the
principal business address of the corporate defendant is as follows:
Spreckels Industries, Inc.
6805 Morrison Boulevard, Suite 450
Charlotte, North Carolina 28211

3. The name and address, including county, of
Spreckels Industries, Inc.'s registered agent in Delaware are as
follows:
The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801

4. The following addresses represent the most recent
addresses known to plaintiff of each nonresident defendant as to
whom service of process in sought.1
Bart A, Brown, Jr.
c/o Spreckels Industries, Inc.
6805 Morrison Boulevard, Suite 450
Charlotte, North Carolina 28211

Stewart M. Kasen
c/o Spreckels Industries, Inc.
6805 Morrison Boulevard, Suite 450
Charlotte, North Carolina 28211

William J. Nightingale
c/o Spreckels Industries, Inc.
6805 Morrison Boulevard, Suite 450
Charlotte, North Carolina 28211

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1 The Residential addresses for these directors were not available from
the annual franchise tax report. Accordingly, Plaintiffs have listed
the address where they believe the nonresident defendants may be
served.

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Donley Ritchey
c/o Spreckels Industries, Inc.
6805 Morrison Boulevard, Suite 450
Charlotte, North Carolina 28211

Joshua S. Friedman
c/o Spreckels Industries, Inc.
6805 Morrison Boulevard, Suite 450
Charlotte, North Carolina 28211

George A. Poole, Jr.
c/o Spreckels Industries, Inc.
6805 Morrison Boulevard, Suite 450
Charlotte, North Carolina 28211

Gary Q. Tessitore
c/o Spreckels Industries, Inc.
6805 Morrison Boulevard, Suite 450
Charlotte, North Carolina 28211

F. Kenneth Iverson
c/o Spreckels Industries, Inc.
6805 Morrison Boulevard, Suite 450
Charlotte, North Carolina 28211

Steven Van Dyke
c/o Spreckels Industries, Inc.
6805 Morrison Boulevard, Suite 450
Charlotte, North Carolina 28211

/s/ Marc B. Tucker
Marc B. Tucker
Karen L. Valihura
Curtis S. Alva
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
(302) 651-3000
Attorneys for Plaintiffs

DATED: July 19, 1996

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SKADDEN, ARPS, SLATE, MEAGHER & FLOM

ONE RODNEY SQUARE

BOX 636

WILMINGTON, DELAWARE 19899-0636

----------
(302) 651-3000

July 29, 1996

Alan J. Stone, Esquire
Morris Nichols Arsht & Tunnell
1201 North Market Street
P.O. Box 1347
Wilmington, DE 19899

Re: American Enterprises, L.L.C. et al.
v. Spreckels Indus., Inc., et al.,
Del. Ch., C.A. No. 15109

Dear Alan:

As we advised you, we do not want to litigate unnecessarily.
Based on our discussions, we seem to be in agreement about certain significant
issues, and, thus, expedited proceedings to resolve any issues relating to them
appear to be unnecessary at this time. In order to avoid any misunderstanding
and at your suggestion, I wanted to confirm the essence of our discussions.

First, you have advised us that we have the same understanding
of the Expiration Provision of the Rights Plan. Specifically, our complaint
suggested that if the Expiration Provision were to be interpreted to mean that
an 85% minimum requirement is inconsistent with the "any and all offer"
requirement, it would make compliance with that provision all but impossible.
You, on behalf of Spreckels, agree, however, that an offer for all shares with
what amounts to an 85% minimum tender condition is an "any and all" offer within
the meaning of the Expiration Provision and that our offer, if left open for 90
days and the 85% minimum tender condition were to be satisfied, meets the
requirements of the Expiration Provision.

Second, we discussed with you the practical problems
associated with Sections 2.4 and 2.8 of the By-Laws. Section 2.4 requires that
written notice of

<PAGE>

Alan J. Stone, Esquire
July 29, 1996
Page 2

shareholders' meetings be given to each shareholder not less than ten (10) nor
more than sixty (60) days prior to the meeting. But Section 2.8 (the "Advance
Notice By-Law") requires that shareholders submit director nominations not less
than sixty days prior to the shareholders' meeting. Thus, as a practical matter,
the Board is required to provide notice of a shareholders' meeting after the
deadline for director nominations has passed. In order to address this practical
problem, we have asked for, and you, on behalf of Spreckels, have agreed to
provide, advance notice of any shareholders' meeting to allow us to submit
nominations in a timely manner (a "Pre-notice Notice"). You asked that we
propose a Pre- notice Notice period. We ask that your client provide us with
Pre-notice Notice at least 70 days before any shareholders' meeting.

Finally, we advised you that, at this time, we do not intend
to seek injunctive relief with respect to the recent amendment to the Rights
Plan requiring that, in order to satisfy the Expiration Provision, an offer
remain open for 90 days, although we do so without prejudice to our claim that
such amendment was unlawful. We insist that your client use the 90 days in an
appropriate manner. If your client were to engage in a dilutive transaction or
otherwise compromise our ability to satisfy the Expiration Provision or
otherwise act in a manner we believe to be inappropriate, we would seek relief
from the Court. We expressly reserve the right to seek the Court's assistance
should your client take any action that unfairly interferes with the
consummation of our offer.

Please confirm to me in writing that we are in agreement on
the interpretation of the Expiration Provision and that you will give us 70 days
notice of any shareholders' meeting. Thank you for your help.

Very truly yours,

/s/ Marc B. Tucker

Marc B. Tucker

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July 31, 1996

BY HAND

Marc B. Tucker, Esquire
Skadden, Arps, Slate, Meagher & Flom
One Rodney Square
P.O. Box 636
Wilmington, DE 19899

Re: American Enterprises, et al. v.
Spreckels Industries, Inc., et al.
Del. Ch., C.A. No. 15109

Dear Marc:

With regard to your letter of July 29, 1996, I have been
authorized by my client to make the following representations to you:

1. Under the Spreckels Industries, Inc. Shareholder Rights
Plan, an offer to purchase all shares that is conditioned upon at least 85% of
the shares being tendered is an "any and all" offer.

2. Spreckels Industries, Inc. will give you seventy (70) days
written notice of any shareholders' meeting to facilitate your clients'
compliance with Section 2.8 of the Company's bylaws.

Sincerely,

Alan J. Stone

<PAGE>

ANNEX A

SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048

Telephone: (212) 783-7000

July 31, 1996

Board of Directors
Yale International, Inc.
6805 Morrison Boulevard, Suite 450
One Morrocroft Centre
Charlotte, North Carolina 28211 (Salomon Brothers Logo appears here)

Ladies and Gentlemen:

American Enterprises Acquisition Corp., a wholly owned subsidiary of
American Enterprises, L.L.C. (collectively, "American Enterprises"), has
commenced a tender offer (the "American Enterprises Offer") to purchase (i) all
outstanding shares of Class A Common Stock, par value $0.01 per share (the
"Shares"), of Yale International, Inc. ("Yale" or the "Company") not owned by
American Enterprises, including the common stock purchase rights (the "Rights")
associated therewith and issued pursuant to the Rights Agreement dated as of
November 11, 1995, between the Company and Chemical Mellon Shareholder Services,
L.L.C., as Rights Agent, as amended as of January 8, 1996, at a price of $16.50
per Share (and associated Right) and (ii) all outstanding warrants to purchase
Shares issued by the Company (the "Warrants") at the Spread (as defined in the
Schedule 14D-1, dated July 19, 1996, as amended, the "Schedule 14D-1"). The
terms of the American Enterprises Offer are more fully set forth in the Schedule
14D-1 filed by American Enterprises with the Securities and Exchange Commission.
You have asked for our opinion as investment bankers as to the adequacy of the
American Enterprises Offer, from a financial point of view, to the holders of
Shares other than American Enterprises (the "Non-American Enterprises Holders").

As you are aware, we have acted as financial advisor to the Board of
Directors of the Company in connection with its review of the American
Enterprises Offer and will receive a fee for our services, including a fee in
the event certain transactions are consummated. In addition, in the ordinary
course of our business, we may actively trade the debt and equity securities of
the Company for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.

In connection with rendering our opinion, we have reviewed and analyzed
material bearing upon the financial and operating condition and prospects of the
Company including, among other things, the following: (i) the Schedule 14D-1;
(ii) certain publicly available information concerning Yale, including the
Annual Reports on Form 10-K of the Company for the years ended June 30, 1994 and
June 30, 1995, the Quarterly Reports on Form 10-Q of the Company for the
quarters ended September 30, 1995, December 31, 1995 and March 31, 1996 and the
Current Report on Form 8-K of the Company filed on April 19, 1996; (iii) certain
internal information of the Company, primarily financial in nature (including
projections, forecasts and analyses prepared by or on behalf of the Company's
management), concerning the business, assets, liabilities, operations and
prospects of the Company furnished to us by the Company for purposes of our
analysis; (iv) certain publicly available information concerning the trading of,
and the trading market for, the Shares; (v) certain publicly available
information with respect to certain publicly traded companies that we believe to
be comparable to the Company and the trading markets for certain of such other
companies' securities; (vi) certain publicly available information concerning
the nature and terms of certain other acquisition transactions that we consider
relevant to our inquiry; (vii) certain publicly available information about
American Enterprises, its principals and Danaher Corporation, an affiliate of
American Enterprises, and certain transactions in which they have been involved;
and (viii) the financial terms of the American Enterprises Offer. We have also
met with certain officers and employees of the Company to discuss matters we
believe relevant to our inquiry including the past and current business
operations, financial condition and prospects of the Company.

In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided to us or publicly available and have neither attempted
independently to verify nor assumed any responsibility for verifying any of such
information. With respect to

Salomon
Brothers Inc
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<PAGE>
SALOMON BROTHERS INC

(Salomon Brothers Logo appears here)

financial projections and forecasts, we have assumed that they were reasonably
prepared and reflect the best currently available estimates and judgment of the
Company's management as to the future financial performance of the Company and
we express no view with respect to such projections or forecasts or the
assumptions on which they were based. We have not made or obtained or assumed
any responsibility for making or obtaining any independent evaluations or
appraisals of any of the Company's assets, properties or facilities, nor have we
been furnished with any such evaluations or appraisals.

In conducting our analysis and arriving at our opinion as expressed herein,
we have considered such financial and other factors as we have deemed
appropriate under the circumstances including, among others, the following: (i)
the historical and current financial position and results of operations of the
Company; (ii) the business prospects of the Company; (iii) the historical and
current market for the Shares and for the equity securities of certain other
companies that we believe to be comparable to the Company; (iv) the nature and
terms of certain other acquisition transactions that we believe to be relevant;
and (v) the nature and terms of certain transactions involving principals of
American Enterprises or Danaher Corporation. We have also taken into account our
assessment of general economic, market and financial conditions as well as our
experience in connection with similar transactions and securities valuation
generally. Our opinion necessarily is based upon conditions as they exist and
can be evaluated on the date hereof and we assume no responsibility to update or
revise our opinion based upon circumstances or events occurring after the date
hereof. Our opinion is for the sole benefit of the Board of Directors in its
consideration of the American Enterprises Offer and is, in any event, limited to
the adequacy, from a financial point of view, of the American Enterprises Offer
to the Non-American Enterprises Holders and does not constitute a recommendation
to any Non-American Enterprises Holder as to whether such holder should tender
Shares or Warrants in the American Enterprises Offer.

Based upon and subject to the foregoing, it is our opinion as investment
bankers that as of the date hereof, the American Enterprises Offer is
inadequate, from a financial point of view, to the Non-American Enterprises
Holders.

Very truly yours,

/s/ Salomon Brothers Inc