<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 13, 1994
Scotsman Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-10182 36-3635892
(Commission File Number) (IRS Employer Identification No.)
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 215-4500
Exhibit Index is located on page 4.
<PAGE> 2
Item 5. Other Events
The information contained in the registrant's January 13, 1994
press release, announcing that the registrant and Onex Corporation have entered
into definitive agreements providing for the acquisition by the registrant of
The Delfield Company and Whitlenge Drink Equipment Ltd., a copy of which is
filed herewith as Exhibit 99, is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits:
Exhibit 2.1 Agreement and Plan of Merger dated as of January 11,
1994, among Scotsman Industries, Inc., Scotsman
Acquisition Corporation, DFC Holding Corporation, The
Delfield Company, Onex Corporation, Onex DHC LLC,
Pacific Mutual Life Insurance Co., PM Group Life
Insurance Co., EJJM, Matthew O. Diggs, Jr., Timothy C.
Collins, W. Joseph Manifold, Charles R. McCollom,
Anita J. Moffatt Trust, Anita J. Moffatt, Remo
Panella, Teddy F. Reed, Robert L. Schafer, Graham E.
Tillotson, John A. Tilmann Trust, John A. Tilmann,
Kevin E. McCrone, Michael P. McCrone, Ronald A.
Anderson and Continental Bank N.A.
Exhibit 2.2 Share Acquisition Agreement, dated as of January 11,
1994, among Scotsman Industries, Inc., Whitlenge
Acquisition Limited, Whitlenge Drink Equipment
Limited, Onex Corporation, Onex U.S. Investments Inc.,
EJJM, Matthew O. Diggs, Jr., Timothy C. Collins,
Graham F. Cook, Christopher R.L. Wheeler, Michael de
St. Paer and John Rushtow.
Exhibit 99 January 13, 1994 Press Release
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Scotsman Industries, Inc.
-------------------------
Registrant
Dated: January 18, 1994 By: /s/ DONALD D. HOLMES
-------------------------
Donald D. Holmes
Vice President-Finance
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<TABLE>
<CAPTION>
EXHIBIT INDEX
Number Description Page Number
- ------ ----------- -----------
<S> <C> <C>
Exhibit 2.1 Agreement and Plan of Merger dated as of January 11,
1994, among Scotsman Industries, Inc., Scotsman Acquisition
Corporation, DFC Holding Corporation, The Delfield Company, Onex
Corporation, Onex DHC LLC, Pacific Mutual Life Insurance Co., PM
Group Life Insurance Co., EJJM, Matthew O. Diggs, Jr., Timothy C.
Collins, W. Joseph Manifold, Charles R. McCollom, Anita J.
Moffatt Trust, Anita J. Moffatt, Remo Panella, Teddy F. Reed,
Robert L. Schafer, Graham E. Tillotson, John A. Tilmann Trust,
John A. Tilmann, Kevin E. McCrone, Michael P. McCrone, Ronald A.
Anderson and Continental Bank N.A.
Exhibit 2.2 Share Acquisition Agreement, dated as of January 11, 1994,
among Scotsman Industries, Inc., Whitlenge Acquisition Limited,
Whitlenge Drink Equipment Limited, Onex Corporation, Onex U.S.
Investments Inc., EJJM, Matthew O. Diggs, Jr., Timothy C.
Collins, Graham F. Cook, Christopher R.L. Wheeler, Michael de St.
Paer and John Rushtow.
Exhibit 99 January 13, 1994 Press Release
</TABLE>
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<PAGE> 1
EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
SCOTSMAN INDUSTRIES, INC.,
SCOTSMAN ACQUISITION CORPORATION,
DFC HOLDING CORPORATION,
THE DELFIELD COMPANY,
ONEX CORPORATION,
ONEX DHC LLC,
PACIFIC MUTUAL LIFE INSURANCE COMPANY,
PM GROUP LIFE INSURANCE CO.,
EJJM, MATTHEW O. DIGGS, JR., TIMOTHY C. COLLINS,
W. JOSEPH MANIFOLD, CHARLES R. MCCOLLOM,
ANITA J. MOFFATT TRUST, ANITA J. MOFFATT, REMO PANELLA,
TEDDY F. REED, ROBERT L. SCHAFER,
GRAHAM E. TILLOTSON, JOHN A. TILMANN TRUST, JOHN A. TILMANN,
KEVIN E. McCRONE, MICHAEL P. McCRONE,
RONALD A. ANDERSON
AND
CONTINENTAL BANK N.A.
-------------------------
DATED AS OF JANUARY 11, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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ARTICLE I
THE MERGER
<S> <C> <C>
Section 1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.2. Filing Certificate of Merger and
Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.3. Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.4. Certificate of Incorporation, By-Laws,
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.5. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
<CAPTION>
ARTICLE II
CONVERSION OF SHARES
<S> <C> <C>
Section 2.1. Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2. Issuance of Scotsman Contingent Common
Shares; Definition of EBITDA . . . . . . . . . . . . . . . . . . . . . 6
Section 2.3. Determination of EBITDA and Contingent
Common Shares to be Issued . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.4. Payment of Cash and Delivery of
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.5. Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.6. Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.7. Changes in Scotsman Common Stock . . . . . . . . . . . . . . . . . . . . 14
Section 2.8. Non-assignability; Succession; Delivery of
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<CAPTION>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
<S> <C> <C>
Section 3.1. Organization of Holding and TDC . . . . . . . . . . . . . . . . . . . . 15
Section 3.2. Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.3. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.4. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.5. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.6. Operations Since Balance Sheet Date . . . . . . . . . . . . . . . . . . 19
Section 3.7. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.9. Condition of Tangible Assets . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.10. Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.11. Availability and Ownership of Assets . . . . . . . . . . . . . . . . . . 25
Section 3.12. Personal Property Leases . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.13. Accounts Receivable; Inventories . . . . . . . . . . . . . . . . . . . . 25
Section 3.14. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 3.15. Owned Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.16. Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.17. Obligations; Litigation . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.18. Product Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.19. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.20. Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.21. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.22. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.23. Employees and Agents and Related
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.24. Employee Relations and Labor Matters . . . . . . . . . . . . . . . . . . 33
Section 3.25. Absence of Certain Business Practices . . . . . . . . . . . . . . . . . 34
Section 3.26. Territorial Restrictions . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.27. Transactions with Certain Persons . . . . . . . . . . . . . . . . . . . 34
Section 3.28. Safe Harbor or TRAC Leases . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.29. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.30. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.31. No Guaranties; Extensions of Credit . . . . . . . . . . . . . . . . . . 38
Section 3.32. Alco Standard Asset Acquisition Agreement . . . . . . . . . . . . . . . 38
Section 3.33. Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.34. Registration Statement and Proxy
Statement/Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.35. Liabilities and Operations of Holding . . . . . . . . . . . . . . . . . 39
Section 3.36. No Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.37. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
<CAPTION>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SCOTSMAN
<S> <C> <C>
Section 4.1. Organization of Scotsman . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.3. Shares of Scotsman Common Stock . . . . . . . . . . . . . . . . . . . . 41
Section 4.4. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.5. Operations Since January 3, 1993 . . . . . . . . . . . . . . . . . . . . 42
Section 4.6. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.7. SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.8. Intention to Sell, etc. . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.9. Obligations; Litigation . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.10. No Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.11. Rights Agreement; Benefits . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.12. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
<CAPTION>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUB
<S> <C> <C>
Section 5.1. Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.2. Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.3. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
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<TABLE>
<CAPTION>
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ARTICLE VI
ACTIONS PRIOR TO THE EFFECTIVE DATE
<S> <C> <C>
Section 6.1. Proxy Statement; Registration Statement . . . . . . . . . . . . . . . . 46
Section 6.2. Action by Stockholders of Holding . . . . . . . . . . . . . . . . . . . 47
Section 6.3. Action by Scotsman and Stockholders of
Scotsman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.4. Investigation of Holding, TDC and Scotsman . . . . . . . . . . . . . . . 47
Section 6.5. Lawsuits, Proceedings, Etc . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.6. Conduct of Business by Holding, TDC and
Scotsman Pending the Merger . . . . . . . . . . . . . . . . . . . . . 48
Section 6.7. Mutual Cooperation; Reasonable Best Efforts . . . . . . . . . . . . . . 52
Section 6.8. No Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 6.9. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 6.10. Listing Applications . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.11. Antitrust Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.12. Termination of Management and Stockholders'
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.13. Periodic Financial Statements . . . . . . . . . . . . . . . . . . . . . 54
Section 6.14. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
<CAPTION>
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
<S> <C> <C>
Section 7.1. Board Representation . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 7.2. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.3. Standstill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.5. Tax-Free Nature; Tax Consequences . . . . . . . . . . . . . . . . . . . 59
<CAPTION>
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SCOTSMAN AND SUB
<S> <C> <C>
Section 8.1. No Misrepresentation or Breach of Covenants
and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 8.2. No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . 60
Section 8.3. Opinion of Counsel for Holding, TDC and the
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 8.4. No Injunctions or Restraints . . . . . . . . . . . . . . . . . . . . . . 60
Section 8.5. Necessary Governmental Approvals . . . . . . . . . . . . . . . . . . . . 60
Section 8.6. Necessary Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.7. Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.8. Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . 61
Section 8.9. Stockholder Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.10. Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.11. Stock Exchange Listings . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
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<TABLE>
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<S> <C> <C>
Section 8.12. Registration Statement Effective . . . . . . . . . . . . . . . . . . . . 62
Section 8.13. Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.14. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.15. Comfort Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.16. Glenco Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.17. Whitlenge Share Acquisition Agreement . . . . . . . . . . . . . . . . . 62
Section 8.18. Average Scotsman Common Stock Closing
Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.19. Resignations of Directors . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.20. Termination of Management and Stockholders'
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
<CAPTION>
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS
OF HOLDING, TDC AND THE STOCKHOLDERS
<S> <C> <C>
Section 9.1. No Misrepresentation or Breach of Covenants
and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.2. No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.3. No Injunctions or Restraints . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.4. Opinions of Counsel for Scotsman and Sub . . . . . . . . . . . . . . . . 64
Section 9.5. Necessary Governmental Approvals . . . . . . . . . . . . . . . . . . . . 64
Section 9.6. Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . 64
Section 9.7. Stockholder Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.8. Stock Exchange Listings . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.9. Registration Statement Effective . . . . . . . . . . . . . . . . . . . . 65
Section 9.10. Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.11. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.12. Glenco Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.13. Whitlenge Share Acquisition Agreement . . . . . . . . . . . . . . . . . 65
Section 9.14. Average Scotsman Common Stock Closing
Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.15. Necessary Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.16. Comfort Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 9.17. Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . 66
<CAPTION>
ARTICLE X
INDEMNIFICATION; SURVIVAL
<S> <C> <C>
Section 10.1. Indemnification by the Stockholders . . . . . . . . . . . . . . . . . . 66
Section 10.2. Indemnification by Scotsman . . . . . . . . . . . . . . . . . . . . . . 67
Section 10.3. Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 10.4. Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 10.5. Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
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<TABLE>
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<S> <C> <C>
Section 10.6. Survival of Obligations . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 10.7. Update of the Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
<CAPTION>
ARTICLE XI
TERMINATION
<S> <C> <C>
Section 11.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
<CAPTION>
ARTICLE XII
OTHER PROVISIONS
<S> <C> <C>
Section 12.1. Confidential Nature of Information . . . . . . . . . . . . . . . . . . . 75
Section 12.2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 12.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 12.4. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 12.5. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 12.6. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 12.7. Execution in Counterpart . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 12.8. Titles and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 12.9. Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 12.10. Entire Agreement; Amendments and Waivers;
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 12.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 12.12. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . 86
</TABLE>
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<PAGE> 7
EXHIBITS TO MERGER AGREEMENT
<TABLE>
<S> <C>
Exhibit I Certificate of Designation for Scotsman Convertible Preferred Stock
Exhibit II Certificate of Designation for Scotsman Nonconvertible Preferred Stock
Exhibit III-A Form of Opinion of Debevoise & Plimpton
Exhibit III-B Form of Opinion of Counsel for Certain of the Stockholders
Exhibit IV Form of Noncompetition Agreement
Exhibit V Form of Registration Rights Agreement
Exhibit VI-A Form of Opinion of Sidley & Austin
Exhibit VI-B Form of Opinion of Schiff, Hardin & Waite
</TABLE>
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<PAGE> 8
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 11, 1994
(this "Agreement"), among Scotsman Industries, Inc., a Delaware corporation
("Scotsman"), Scotsman Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Scotsman ("Sub"), DFC Holding Corporation, a
Delaware corporation ("Holding"), (Sub and Holding being hereinafter referred
to as the "Constituent Corporations"), The Delfield Company, a Delaware
corporation ("TDC") and a wholly-owned subsidiary of Holding, Onex Corporation,
an Ontario corporation ("Onex"), Onex DHC LLC, a limited liability corporation
formed under the laws of the State of Wyoming and a wholly-owned, indirect,
subsidiary of Onex ("Onex DHC"), Pacific Mutual Life Insurance Company, a
California corporation ("Pacific"), PM Group Life Insurance Co., an Arizona
corporation ("PM"), EJJM, an Ohio limited partnership ("EJJM"), Matthew O.
Diggs, Jr. ("Diggs"), Timothy C. Collins ("Collins"), W. Joseph Manifold
("Manifold"), Charles R. McCollom ("McCollom"), Anita J. Moffatt Trust u/a
dated July 23, 1993 ("Moffatt Trust"), Anita J. Moffatt ("Moffatt"), Remo
Panella ("Panella"), Teddy F. Reed ("Reed"), Robert L. Schafer ("Schafer"),
Graham E. Tillotson ("Tillotson"), John A. Tilmann Trust dated July 23, 1993
("Tilmann Trust"), John A. Tilmann ("Tilmann"), Ronald A. Anderson
("Anderson"), Kevin E. McCrone (KE McCrone"), Michael P. McCrone ("MP McCrone")
(Onex DHC, Pacific, PM, EJJM, Collins, Manifold, McCollom, Moffatt Trust,
Panella, Reed, Schafer, Tillotson, Tilmann Trust, Anderson, KE McCrone and MP
McCrone are each referred to individually as a "Record Stockholder" and
collectively as the "Record Stockholders" and Onex, Diggs, Moffatt and Tilmann
and the Record Stockholders are each referred to individually as a
"Stockholder" and collectively as the "Stockholders") and Continental Bank N.A.
("Continental"). Unless otherwise indicated, (i) capitalized terms used herein
are used as defined in Section 12.4 hereof, (ii) all references in Article III
to a Schedule and all references to Schedules 10.1 and 12.4 shall be deemed to
refer to the Schedules to a disclosure letter dated the date hereof delivered
by the Stockholders to Scotsman and Sub and relating to this Agreement and
(iii) all references in Articles IV and V to a Schedule and all references to
Schedules 2.3(g) and 6.6(a) shall be deemed to refer to the Schedules to a
disclosure letter dated the date hereof delivered by Scotsman to Holding, TDC,
the Stockholders and Continental and relating to this Agreement.
W I T N E S S E T H :
WHEREAS, Scotsman is a Delaware corporation having an
authorized capital of (i) 50,000,000 shares of common stock, $.10 par value
(the "Scotsman Common Stock"), of which, on the date hereof, 7,008,254 shares
are issued and outstanding, and (ii) 10,000,000 shares of preferred stock,
$1.00 par value, none of which is issued and outstanding;
<PAGE> 9
WHEREAS, Sub is a Delaware corporation having an authorized
capital of 100 shares of common stock, $.01 par value, all of which are issued
and outstanding;
WHEREAS, Holding is a Delaware corporation having an
authorized capital of (i) 7,000,000 shares of Class A common stock, $.01 par
value (the "Holding Common Stock"), of which, on the date hereof, 6,445,000
shares are issued and outstanding, and (ii) 500,000 shares of preferred stock,
$.01 par value, none of which is issued and outstanding;
WHEREAS, TDC, the capital stock of which constitutes the sole
asset of Holding, designs, manufactures and sells commercial refrigerators and
freezers, custom and standard commercial kitchen systems, chef stations and
display cases, commercial ventilation systems and other foodservice equipment
(hereinafter generally referred to as the "Delfield Business");
WHEREAS, the respective Boards of Directors of the Constituent
Corporations have approved the merger (the "Merger") of Sub into Holding
pursuant to the terms and conditions of this Agreement and have directed that
this Agreement be submitted to their stockholders for adoption;
WHEREAS, the parties hereto intend the Merger to constitute a
reorganization described in section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code");
WHEREAS, pursuant to a separate Share Acquisition Agreement,
dated the date hereof (the "Whitlenge Share Acquisition Agreement"), Scotsman
or a wholly owned subsidiary of Scotsman will make an offer to purchase, for
cash and the contingent right to receive in the future certain additional
consideration, all of the issued and outstanding shares of Whitlenge
Acquisition Limited ("WAL"), a private company limited by shares registered in
England and an affiliate of Holding (the "Whitlenge Share Acquisition"); and
WHEREAS, Scotsman, Sub, Holding, TDC and the Stockholders
desire to make certain representations, warranties and agreements in connection
with the Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
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ARTICLE I
THE MERGER
Section 1.1. The Merger. Subject to the conditions contained
herein and in accordance with the provisions of this Agreement and the Delaware
General Corporation Law (the "DGCL"), at the Effective Time (as hereinafter
defined), Sub shall be merged with and into Holding, which, as the corporation
surviving in the Merger (the "Surviving Corporation"), shall continue
unaffected and unimpaired by the Merger to exist under and be governed by the
laws of the State of Delaware. Upon the effectiveness of the Merger, the
separate existence of Sub shall cease except to the extent provided by law in
the case of a corporation after its merger into another corporation.
Section 1.2. Filing Certificate of Merger and Effectiveness.
Upon the satisfaction or waiver of the conditions to the obligations of each of
the parties contained herein, a Certificate of Merger (which shall be in form
and substance reasonably satisfactory to the parties hereto), executed and
acknowledged in accordance with the laws of the State of Delaware, shall be
filed in the office of the Secretary of State of the State of Delaware. The
Merger shall become effective upon such filing as provided by the DGCL. The
date and the time on such date of effectiveness of the Merger are herein
called, respectively, the "Effective Date" and the "Effective Time."
Section 1.3. Effects of the Merger. The Merger shall have
the effects set forth in Sections 259 through 261 of the DGCL.
Section 1.4. Certificate of Incorporation, By-Laws, Directors
and Officers. The Restated Certificate of Incorporation and By-Laws of
Holding, as in effect immediately prior to the Effective Time, shall continue
in full force and effect as the Restated Certificate of Incorporation and
By-Laws of the Surviving Corporation. The initial Board of Directors of the
Surviving Corporation shall consist of not less than three directors to be
designated by Scotsman, who shall serve until their respective successors are
duly elected and qualified. The officers of Holding immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation until
their respective successors are duly elected and qualified.
Section 1.5. Further Assurances. From time to time after the
Effective Time, the officers and directors of the Surviving Corporation shall
be authorized to execute and deliver, in the name and on behalf of Holding or
otherwise, such deeds and other instruments and to take or cause to be taken
such further or other action as shall be necessary or desirable in order to
vest or perfect in or to confirm, of record or otherwise, in the Surviving
Corporation title to, and possession of, all of the property, rights,
privileges, powers, immunities and franchises
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of Holding and otherwise carry out the purposes of this Agreement.
ARTICLE II
CONVERSION OF SHARES
Section 2.1. Conversion of Securities. As of the Effective
Time, by virtue of the Merger and without any action on the part of any
stockholder of Holding or Sub or the holder of the Warrant (as defined in
Section 3.3):
(a) Each share of common stock of Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of Class A common stock,
$.01 par value, of the Surviving Corporation.
(b) All shares of Holding Common Stock that immediately prior
to the Effective Time are held in the treasury of Holding or by any
subsidiary of Holding shall be cancelled and no capital stock of
Scotsman or other consideration shall be delivered in exchange
therefor.
(c) Each share of Holding Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into a pro
rata portion (based upon the aggregate number of shares of Holding
Common Stock issued and outstanding immediately prior to the Effective
Time) of (i) 1,200,000 shares of Scotsman Common Stock together with
associated common stock purchase rights (the "Common Stock Purchase
Rights") issued pursuant to the Rights Agreement, dated as of April
14, 1989, as amended (the "Rights Agreement"), between Scotsman and
Harris Trust & Savings Bank (such shares of Scotsman Common Stock and
Common Stock Purchase Rights are collectively referred to herein as
"Scotsman Fixed Common Shares"), (ii) 2,000,000 shares of Series A
$0.62 Cumulative Convertible Preferred Stock of Scotsman, $1.00 par
value (the "Scotsman Convertible Preferred Stock"), having
substantially the terms set forth in the form of Certificate of
Designation set forth in Exhibit I hereto (such shares of Scotsman
Convertible Preferred Stock are collectively referred to herein as
"Scotsman Convertible Preferred Shares"), and (iii) the right to
receive in cash the sum of (A) U.S. $13,947,490.00, (B) U.S.
$113,566.65 for each consecutive three month period between September
30, 1993 and the Effective Date (each, a "Three Month Period") and (C)
the product obtained by multiplying U.S. $1,261.85 by the number of
calendar days in the period from the day following the end of the
latest Three Month Period to the Effective Date (inclusive), in each
case subject to reduction pursuant toSection 6.6(c) (such
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<PAGE> 12
amounts in cash are collectively referred to herein as the "Cash
Consideration").
(d) Each holder of Holding Common Stock immediately prior to
the Effective Time shall have the nontransferable contingent right to
receive its pro rata portion (based upon the percentage held by it at
such time of the then issued and outstanding Holding Common Stock) of
97.06552% of the Scotsman Contingent Common Shares (as hereinafter
defined).
(e) The Warrant shall be purchased by Scotsman or Sub for (i)
cash in an amount equal to the sum of (x) U.S. $630,510.00, (y) U.S.
$3,433.35 for each Three Month Period and (z) the product obtained by
multiplying U.S. $38.15 by the number of calendar days in the period
from the day following the end of the latest Three Month Period to the
Effective Date (inclusive) and (ii) the nontransferable contingent
right to receive (A) 2.93448% of the Scotsman Contingent Common Shares
or, if Continental and Scotsman so agree in writing on or prior to the
day on which such Scotsman Contingent Common Shares are to be issued,
(B) cash in an amount equal to the product obtained by multiplying the
Closing Price (as defined in Section 2.6(b)) of the Scotsman Common
Stock as of the business day immediately preceding the date on which
such Scotsman Contingent Common Shares are to be issued, by such
number of Scotsman Contingent Common Shares. The amounts described in
clauses (i) and (if applicable) (ii) (B) of the immediately preceding
sentence shall be paid by wire transfer of immediately available funds
to the account or accounts designated in a notice by Continental to
Scotsman. Upon such purchase, the Warrant shall be deemed cancelled
and its holder shall not be entitled to any rights thereunder except
as provided in the immediately preceding sentence.
Notwithstanding the foregoing, if the sum (the "Initial Cash Component") of the
Cash Consideration and the aggregate amount of cash to be paid in lieu of the
issuance of fractional shares pursuant to Section 2.6 exceeds the Maximum Cash
Component (as hereinafter defined), then in lieu of a pro rata portion of the
Cash Consideration, each share of Holding Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted, in part, into a pro
rata portion (based upon the aggregate number of shares of Holding Common Stock
issued and outstanding immediately prior to the Effective Time) of (i) the
right to receive an amount of cash equal to the Maximum Cash Component and (ii)
a number of shares (the "Substitution Number") of Series B Cumulative Preferred
Stock of Scotsman, $1.00 par value (the "Scotsman Nonconvertible Preferred
Stock"), having a liquidation preference equal to the excess of the Initial
Cash Component over the Maximum Cash Component. The Scotsman Nonconvertible
Preferred Stock shall have substantially the terms set forth in the form of
Certificate of Designation set forth in Exhibit II hereto (shares of Scotsman
Nonconvertible Preferred
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<PAGE> 13
Stock into which Holding Common Stock in part are so converted are referred to
herein as the "Scotsman Nonconvertible Preferred Shares"). The per annum
dividend rate per share for the Scotsman Nonconvertible Preferred Stock shall
be equal to the lesser of (x) such per annum rate as is agreed upon at or prior
to the Effective Time by representatives of Morgan Stanley & Co. Incorporated
and William Blair & Company as a rate which would cause shares of Scotsman
Nonconvertible Preferred Stock to trade publicly at the Effective Time (if such
shares were then traded publicly) at a price per share equal to 100% of the
liquidation preference per share for such shares and (y) a per annum rate
(rounded to the nearer cent or, if there is not a nearer cent, to the next
higher cent) per share equal to an amount determined by dividing (i) the sum of
(A) U.S. $200,000 divided by the total number of shares of Scotsman
Nonconvertible Preferred Stock to be issued at the Effective Time and (B) U.S.
$3.515625 by (ii) five.
As used herein, the "Maximum Cash Component" shall mean the
product (rounded to the nearer dollar, or if there is no nearer dollar, to the
next higher dollar) obtained by multiplying (i) .19 by (ii) the sum of (a) the
product obtained by multiplying 1,200,000 by the Adjusted Value (as hereinafter
defined) of Scotsman Common Stock on the Effective Date, (b) U.S. $22,500,000
and (c) the Initial Cash Component. As used herein, the "Adjusted Value" shall
mean the lesser of (i) the arithmetic mean of the high and low trading prices
on the New York Stock Exchange, Inc. (the "NYSE") of Scotsman Common Stock on
the Effective Date (as reported in the NYSE Composite Transactions) and (ii)
the Closing Price (as defined in Section 2.6(b)) of Scotsman Common Stock on
the Effective Date; provided, however, that if the lesser of such amounts is
more than 10% higher than the arithmetic mean of the high and low trading
prices on the NYSE of the Scotsman Common Stock (as reported in the NYSE
Composite Transactions) for the preceding 10 trading business days, the
Adjusted Value shall be such arithmetic mean. In determining the Substitution
Number of Scotsman Nonconvertible Preferred Shares, due account shall be taken
of cash issued in lieu of fractional Scotsman Nonconvertible Preferred Shares
pursuant to Section 2.6 hereof.
Section 2.2. Issuance of Scotsman Contingent Common Shares;
Definition of EBITDA. (a) As provided in Sections 2.1(d), (e) and 2.3,
Scotsman Contingent Common Shares may be issued in respect of the shares of
Holding Common Stock issued and outstanding immediately prior to the Effective
Time and the Warrant. As used herein, "Scotsman Contingent Common Shares"
means the shares of Scotsman Common Stock (together with the associated Common
Stock Purchase Rights) which may be issued pursuant to Sections 2.1(d), (e),
2.3 and 2.7.
(b) The term "EBITDA" shall mean the combined earnings before
interest, income taxes, depreciation and amortization of TDC and Whitlenge
Drink Equipment Limited ("Whitlenge Drink"), a
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wholly-owned subsidiary of WAL, for (x) with respect to TDC, the period
beginning January 1, 1994 and ending December 31, 1994 and (y) with respect to
Whitlenge Drink, the period beginning October 1, 1993 and ending September 30,
1994 (together, the "Measurement Period"). The following principles shall be
applied in determining EBITDA: (i) except as otherwise provided in this Section
2.2, EBITDA shall be determined in accordance with generally accepted
accounting principles applied on a basis consistent with the Statement of
Income, Balance Sheet, Unaudited Statement of Income and Unaudited Balance
Sheet (as such terms are defined in Section 3.5) and through all periods; (ii)
EBITDA shall be determined without regard to any adjustments to the accounting
books and records for financial reporting purposes which may be recorded by
Scotsman as a result of the transactions contemplated by this Agreement and the
Whitlenge Share Acquisition Agreement and without regard to any expenses
reflected in the books and records of TDC or Whitlenge Drink in respect of the
Merger or the Whitlenge Share Acquisition; (iii) EBITDA shall be determined
without regard to expenses charged to TDC or Whitlenge Drink for general
administrative, management or overhead expenses provided by or on behalf of
Scotsman or any of its affiliates (other than expenses charged and invoiced to
TDC or Whitlenge Drink for the provision of specific goods or services which
would otherwise have been provided by third parties) or any charges for the
cost of capital and without regard to any amounts charged under the Onex
Management Agreement and the Diggs Management Agreement (as such terms are
hereinafter defined); (iv) in determining EBITDA, all transactions between TDC,
Whitlenge Drink or their subsidiaries, on the one hand, and Scotsman or its
affiliates (other than TDC, Whitlenge Drink and their subsidiaries), on the
other hand, shall be accounted for on arms-length financial terms; (v) to the
extent that the generally accepted accounting principles required to be used in
the preparation of accounts change from those existing on the date hereof and
the required principles permit alternative accounting treatments of a matter,
Scotsman will apply such alternative treatment as will maximize EBITDA; (vi)
the amount of TDC's "purchase" reserve (other than the portion thereof relating
to pension liability) reflected in the December 31, 1994 financial statements
of TDC shall not be less than the amount thereof at December 31, 1993;
provided, however, that (x) a reduction of up to U.S. $100,000 shall be
permitted to the extent that warranty reserve requirements are otherwise
exceeded and (y) in the discretion of Scotsman, further reductions will be
permitted; (vii) no portion of such "purchase" reserve shall be deemed to
constitute or be applied against any other reserve or accrual for any other
matter except (A) as set forth in the immediately preceding clause (vi), (B)
that some or all of the portion of the "purchase" reserve not relating to
pension liability may be used to constitute a portion of the reserve for
warranty claims and (C) as Scotsman may otherwise determine in its discretion
(it being understood that Scotsman shall not be bound by past practice of TDC
in making any such determination); (viii) the portion of the "purchase" reserve
relating to pension liability at December 31, 1994 may be reduced
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<PAGE> 15
below the amount of such portion at December 31, 1993 (which is U.S. $747,000)
only to the extent that the required pension funding exceeds expensed amounts;
and (ix) reserves and accruals other than the "purchase" reserve, as reflected
in the December 31, 1994 financial statements of TDC and the September 30, 1994
financial statements of Whitlenge Drink, shall be determined consistent with
the Statement of Operating Principles referred to in Section 2.3(g) and in
accordance with generally accepted accounting principles consistently applied
(clauses (i) through (ix) above being referred to herein as the "Agreed
Accounting Principles"). Within 45 days after the end of each month following
the Effective Date through the end of the Measurement Period, Scotsman will
furnish, or caused to be furnished, to the Stockholder Representative (as
hereinafter defined) financial information relating to TDC and Whitlenge Drink
for such month in a form and in such detail as is consistent with the financial
report heretofore furnished to the directors of TDC on a monthly basis.
Section 2.3. Determination of EBITDA and Contingent Common
Shares to be Issued. (a) As soon as practicable (but in any event within 90
days) after the end of the fiscal year of Scotsman ending January 1, 1995,
based upon an audit of the financial statements with respect to TDC and
Whitlenge Drink for the Measurement Period, applying procedures consistent with
past practice, the amount of EBITDA shall be determined by Scotsman in good
faith and Scotsman shall deliver to the Stockholder Representative a notice
(the "Notice") specifying the amount so determined together with the principal
calculations made in such determination. At the request and expense of the
Stockholders, the accounting personnel of Arthur Andersen & Co. who have
heretofore audited the financial statements of Holding prior to the Effective
Time shall be permitted to observe the performance of the auditing procedures
performed by, and have access to the working papers of, the accounting
personnel of Arthur Andersen & Co. used by Scotsman to perform such audit.
"Stockholder Representative" means Onex, or if it is unable or
unwilling to act, then Diggs, or if he is unable or unwilling to act, then the
person appointed by a written instrument or instruments delivered to Scotsman
and signed by the persons who would be entitled to receive more than 50% of the
Scotsman Contingent Common Shares which may be issuable pursuant to this
Section 2.3 and the Scotsman Earnout Shares which may be issuable pursuant to
Section 1.2 of the Whitlenge Share Acquisition Agreement.
(b) Promptly following receipt of the Notice, the Stockholder
Representative may review the same and within 45 days after the date of such
receipt, may deliver to Scotsman a certificate setting forth its or his
objections to the calculation of EBITDA, together with detail of the reasons
therefor and calculations which, in its or his view, are necessary to eliminate
such objections. Scotsman shall allow the Stockholder Representative
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and its or his representatives to examine the books and records, including work
papers, relating to TDC and Whitlenge Drink, and to examine any other
materials, and have access to Arthur Andersen & Co. and any personnel of
Scotsman, the Surviving Corporation and TDC, reasonably requested by the
Stockholder Representative, in connection with such review. In the event the
Stockholder Representative does not so object within such 45-day period, the
amount of EBITDA set forth in the Notice shall be final and binding as the
amount of EBITDA for purposes of this Agreement, but shall not limit the
representations, warranties, covenants and agreements of the parties set forth
elsewhere in this Agreement.
(c) In the event the Stockholder Representative so objects
within such 45-day period, Scotsman and the Stockholder Representative
shall use their reasonable best efforts to resolve by written agreement any
differences as to the amount of EBITDA and the principal calculations to be
made in determining the same and, in the event Scotsman and the Stockholder
Representative so resolve any such differences (the "Agreed Adjustments"), the
amount of EBITDA set forth in the Notice as adjusted by the Agreed Adjustments
shall be final and binding as the amount of EBITDA for purposes of this
Agreement, but shall not limit the representations, warranties, covenants and
agreements of the parties set forth elsewhere in this Agreement.
(d) In the event any objections raised by the Stockholder
Representative are not resolved by Agreed Adjustments within the 30-day period
next following such 45-day period, then Scotsman and the Stockholder
Representative shall submit the objections that are then unresolved to the
Detroit, Michigan office of KPMG Peat Marwick (or to such other national
accounting firm acceptable to both the Stockholder Representative and Scotsman)
and such firm (the "Accounting Firm") shall be directed by Scotsman and the
Stockholder Representative solely to resolve the unresolved objections (based
solely on whether any disputed matter had been determined in a manner
consistent with the Agreed Accounting Principles and Sections 2.3(f) and (g)
and the Accounting Firm shall not conduct any customary audit procedures in
connection with the determination of EBITDA) as promptly as reasonably
practicable and to deliver written notice to each of Scotsman and the
Stockholder Representative setting forth in reasonable detail its resolution of
the disputed matters. The amount of EBITDA, after giving effect to any Agreed
Adjustments and to the resolution of disputed matters by the Accounting Firm,
shall be final and binding as the amount of EBITDA for purposes of this
Agreement, but shall not limit the representations, warranties, covenants and
agreements of the parties set forth elsewhere in this Agreement.
(e) The fees and expenses of the Accounting Firm hereunder
shall be paid 50% by Scotsman and 50% by the Stockholders; provided, however,
if EBITDA shall be finally determined pursuant to Section 2.3(d) to be
less than U.S. $17,000,000, the
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Stockholders shall pay all fees and expenses of the Accounting Firm; and
provided, further, that if EBITDA as finally determined pursuant to Section
2.3(d) results in a number of Scotsman Contingent Common Shares to be issued
which is more than 104,052 shares greater than the number asserted by Scotsman,
Scotsman shall pay all fees and expenses of the Accounting Firm.
(f) Promptly (but not later than 30 days) after the
determination of EBITDA pursuant to this Section 2.3 that is final and binding
as set forth herein, Scotsman shall, subject to Sections 2.6 and 2.7, issue and
deliver, in accordance with Sections 2.1(d) and (e), the number of Scotsman
Contingent Common Shares, if any, determined as follows:
(i) If EBITDA is less than U.S. $17,000,000, Scotsman will
neither deliver nor owe to the Stockholders (or any other person)
under Sections 2.1(d) and (e) any additional shares of Scotsman Common
Stock (or associated Common Stock Purchase Rights);
(ii) If EBITDA is equal to or greater than U.S. $17,000,000
and less than U.S. $17,500,000, Scotsman shall deliver to the persons
referred to in Sections 2.1(d) and (e) their respective portions of a
number of shares of Scotsman Common Stock (together with associated
Common Stock Purchase Rights) equal to the amount obtained by
multiplying (A) 520,260 by (B) the quotient obtained by dividing (1)
the excess of EBITDA over U.S. $17,000,000 by (2) U.S. $500,000; or
(iii) If EBITDA is equal to or greater than U.S. $17,500,000,
Scotsman shall deliver to the persons referred to in Sections 2.1(d)
and (e) their respective portions of 520,260 shares of Scotsman Common
Stock (together with associated Common Stock Purchase Rights).
Scotsman will reserve and keep available 520,260 shares of Scotsman Common
Stock (or such other number of shares resulting from adjustments pursuant to
Section 2.7), from the Effective Date through the date on which the Scotsman
Contingent Common Shares, if any, are issued or are finally determined not to
be issuable, solely for issuance and delivery of the Scotsman Contingent Common
Shares.
(g) After the Effective Date and during the Measurement
Period, Scotsman will cause the activities of TDC and Whitlenge Drink to be
conducted in a businesslike manner consistent with the Statement of Operating
Principles attached hereto as Schedule 2.3(g) (except for deviations therefrom
as may be approved by the Stockholder Representative) and in good faith with
due regard to the rights of the persons referred to in Sections 2.1(d) and (e)
with respect to the Scotsman Contingent Common Shares. Prior to the end of the
Measurement Period,
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without the consent of the Stockholder Representative, Scotsman will not permit
either TDC or Whitlenge Drink to acquire or dispose of any material assets
(other than inventory in the ordinary course of business and the making of
capital expenditures) or businesses. In the event that Scotsman desires to
take any action that, under this Section 2.3(g), requires the consent of the
Stockholder Representative, and Scotsman takes such action without obtaining
such consent, (i) at the election of the Stockholder Representative, EBITDA
shall be calculated as though such action were not taken (or, in the case of
the matters covered by the Statement of Operating Principles, as if such
action had been undertaken only to the extent permitted thereby) and (ii) in
any event the taking of such action shall not be deemed to be a breach of this
Agreement.
(h) The rights of the persons referred to in Sections 2.1(d)
and (e) to any payments of Scotsman Contingent Common Shares shall not be
subject to set-off or counterclaim to satisfy the Stockholders' indemnification
obligations under Section 10.1 or with respect to any other liability or
obligation (whether under this Agreement or otherwise) and shall not depend in
any way or otherwise be contingent upon the performance of any agreement or
continued employment or the provision of personal services.
Section 2.4. Payment of Cash and Delivery of Certificates.
At or after the Effective Time, each holder of a certificate or certificates
representing issued and outstanding shares of record of Holding Common Stock,
and the holder of the certificate representing the Warrant, in each case
immediately prior to the Effective Time, may surrender such certificate or
certificates to Scotsman, and, subject to the last two sentences of this
Section 2.4, Scotsman shall immediately deliver or cause to be delivered, in
exchange therefor, cash (including all amounts payable in lieu of fractional
shares or interests pursuant to Section 2.6), by wire transfer in immediately
available funds to the account or accounts designated by such holder in a
notice to Scotsman, and/or one or more certificates representing the aggregate
number of whole Scotsman Fixed Common Shares, Scotsman Convertible Preferred
Shares and Scotsman Nonconvertible Preferred Shares, as the case may be, into
which the Holding Common Stock represented by the certificate or certificates
so surrendered shall in part have been converted or for which the Warrant in
part was purchased, as the case may be, pursuant to Section 2.1. Until so
surrendered, each outstanding certificate representing issued and outstanding
shares of record of Holding Common Stock or the Warrant immediately prior to
the Effective Time shall not be transferable on the books of the Surviving
Corporation or Scotsman, but shall be deemed for all corporate purposes,
subject to Section 2.5, to evidence the right to receive such cash and/or
ownership of the number of whole Scotsman Fixed Common Shares, Scotsman
Convertible Preferred Shares and Scotsman Nonconvertible Preferred Shares and
the right to receive the Scotsman Contingent Common Shares, as the case may
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be, into which the shares of Holding Common Stock which immediately prior to
the Effective Time were represented thereby shall have been converted or for
which the Warrant was purchased, as the case may be, pursuant to Section 2.1.
At the close of business on the business day next preceding the Effective Date,
the stock transfer books of Holding shall be closed and no transfer of Holding
Common Stock or the Warrant shall thereafter be made or consummated. The
amount of cash payable on the Effective Date to the holders of Holding Common
Stock shall be limited to U.S. $8 million. Any additional cash due to a holder
of Holding Common Stock and all amounts of Scotsman Nonconvertible Preferred
Stock issuable to a holder of Holding Common Stock pursuant to the Merger shall
be paid or issued, as the case may be, on the second business day after the
Effective Date, after the Maximum Cash Component pursuant to Section 2.1 hereof
has been determined.
Section 2.5. Dividends and Distributions. Any dividend or
other distribution paid in respect of Scotsman Common Stock, Scotsman
Convertible Preferred Stock or Scotsman Nonconvertible Preferred Stock to
holders of record on or after the Effective Date and otherwise payable to the
holder of an outstanding certificate which, immediately prior to the Effective
Time, represented issued and outstanding shares of Holding Common Stock or the
Warrant shall, until the surrender of such certificate and the issuance of a
certificate or certificates for Scotsman Fixed Common Shares, Scotsman
Convertible Preferred Shares or Scotsman Nonconvertible Preferred Shares, as
the case may be, in respect thereof, be retained by Scotsman, and no such
dividend or other distribution payable in respect of Scotsman Common Stock,
Scotsman Convertible Preferred Stock or Scotsman Nonconvertible Preferred Stock
shall be paid to the holder of such certificate representing Holding Common
Stock or the Warrant until such certificate shall have been so surrendered to
Scotsman. Upon surrender of each such certificate and issuance in exchange
therefor of Scotsman Fixed Common Shares, Scotsman Convertible Preferred Shares
or Scotsman Nonconvertible Preferred Shares, as the case may be, there shall be
paid by Scotsman to or at the direction of the holder of the certificate for
such Scotsman Fixed Common Shares, Scotsman Convertible Preferred Shares or
Scotsman Nonconvertible Preferred Shares, as the case may be, the amount of all
dividends and distributions which became payable to holders of record on or
after the Effective Date in respect of the number of whole Scotsman Fixed
Common Shares, Scotsman Convertible Preferred Shares and Scotsman
Nonconvertible Preferred Shares represented by the certificate or certificates
so issued. In the event any dividend or other distribution is paid in respect
of Scotsman Common Stock to holders of record on or after the date of final
determination of EBITDA pursuant to Section 2.3 and prior to the date of
issuance of the Scotsman Contingent Common Shares, if any, pursuant to Section
2.3(f), Scotsman shall pay or cause to be paid on the date of such issuance of
Scotsman Contingent Common Shares to or at the direction of the person to whom
the certificate for such
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Scotsman Contingent Common Shares is mailed pursuant to Section 2.8(b) the
amount of such dividends or distributions in respect of the number of whole
Scotsman Contingent Common Shares represented by the certificate so issued. In
no event shall the holder of any certificate which, immediately prior to the
Effective Time, represented issued and outstanding shares of Holding Common
Stock or the Warrant be entitled to receive interest on any of the funds to be
received in the Merger.
Section 2.6. Fractional Shares. (a) No certificates for
fractions of shares of Scotsman Common Stock, Scotsman Convertible Preferred
Stock or Scotsman Nonconvertible Preferred Stock and no scrip or other
certificates evidencing fractional interests in such shares shall be issued
pursuant to Section 2.1, 2.2 or 2.3. If the conversion of a person's aggregate
holdings of Holding Common Stock or the number of Scotsman Contingent Common
Shares issuable to a person at any time results in a fractional share of
Scotsman Common Stock or interest therein, such person shall, in lieu thereof,
be paid cash in an amount equal to the value of such fractional share or
interest based on the Closing Price of Scotsman Common Stock on the last
business day prior to the Effective Date for cash to be paid in connection with
the issuance of Scotsman Fixed Common Shares and the last business day prior to
the issuance of the Scotsman Contingent Common Shares for cash to be paid in
connection with the issuance of Scotsman Contingent Common Shares. If the
conversion of a person's aggregate holdings of Holding Common Stock results in
a fractional share of Scotsman Convertible Preferred Stock or Scotsman
Nonconvertible Preferred Stock or interest therein, such person shall, in lieu
thereof, be paid cash in an amount equal to the value of such fractional share
or interest based on the liquidation preference of such preferred stock. Any
person otherwise entitled to a fractional share or interest shall not be
entitled by reason thereof to any voting, dividend or other rights as a
stockholder of Scotsman.
(b) The "Closing Price" of Scotsman Common Stock on any
business day shall for all purposes of this Agreement be: (i) the last sale
price, or the closing bid price if no sale occurred, of Scotsman Common Stock
on the principal securities exchange on which Scotsman Common Stock is listed,
if so listed, or (ii) if not listed, the mean between the closing high bid and
low asked quotations of Scotsman Common Stock on the National Association of
Securities Dealers, Inc. Automated Quotation System, or any similar system of
automated dissemination of quotations of securities prices then in common use,
if so quoted. If the closing price of Scotsman Common Stock is not available
through the systems set forth above, the Closing Price of Scotsman Common Stock
on any day or the average of such Closing Prices for any period shall be the
fair market value of Scotsman Common Stock as determined by a member firm of
the New York Stock Exchange, Inc. selected by Scotsman and reasonably
acceptable to the Stockholder Representative.
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Section 2.7. Changes in Scotsman Common Stock. In the event
that, between the date hereof and the Effective Time, there has occurred any
reclassification, stock split, stock dividend or similar change in respect of
the Scotsman Common Stock, then appropriate adjustment shall be made in the
number of shares of Scotsman Common Stock and/or kind of securities issued as
Scotsman Fixed Common Shares or to be issued as Scotsman Contingent Common
Shares in order to provide holders of Holding Common Stock or the Warrant with
the same number of shares of Scotsman Common Stock and/or such securities that
they would have received after such reclassification, stock split, stock
dividend or similar change if the Effective Time or the issuance of the
Scotsman Contingent Common Shares had occurred immediately prior to such
reclassification, stock split, stock dividend or similar change (and all
references herein to the "Scotsman Fixed Common Shares" and "Scotsman
Contingent Common Shares" shall refer to such adjusted number and/or kind of
securities). In the event that Scotsman Contingent Common Shares become
issuable pursuant to Sections 2.1(d), (e), 2.2 and 2.3 and, between the
Effective Time and such issuance, (i) there has occurred any conversion,
change, exchange or reclassification of the Scotsman Common Stock into another
security or form of property pursuant to any merger, consolidation, acquisition
of business and assets, reorganization or recapitalization or there has
occurred any reclassification under other circumstances or any stock split,
stock dividend or similar change in respect of the Scotsman Common Stock, or
(ii) Scotsman shall have distributed cash to all holders of Scotsman Common
Stock in such an amount and manner that the conversion rate applicable to the
Scotsman Convertible Preferred Stock is adjusted in respect thereof pursuant to
Section 6(f)(iv) of the Certificate of Designation applicable thereto, then
appropriate adjustment shall be made in the number of shares of Scotsman Common
Stock and/or kind of securities issued as Scotsman Contingent Common Shares in
order to provide holders of Holding Common Stock or the Warrant, as the case
may be, with, in the case of clause (i), the same number of shares of Scotsman
Common Stock and/or such securities that they would have received after such
conversion, change, exchange, reclassification, stock split, stock dividend or
similar change if the issuance of the Scotsman Contingent Common Shares had
occurred immediately prior to such conversion, change, exchange,
reclassification, stock split, stock dividend or similar change or, in the case
of clause (ii), a number of shares of Scotsman Common Stock reflecting the
adjustment factor specified in such Section 6(f)(iv) (and all references herein
to the "Scotsman Contingent Common Shares" shall refer to such adjusted number
and/or kind of securities). If, between the date hereof and the Effective
Time, any event shall take place which would require an adjustment to the
conversion rate of the Scotsman Convertible Preferred Stock pursuant to the
Certificate of Designation applicable thereto if such provisions were then in
effect, then at the time of each such event the conversion rate of the Scotsman
Convertible Preferred Stock shall be appropriately adjusted as if the
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provisions of such Certificate of Designation were then in effect.
Section 2.8. Non-assignability; Succession; Delivery of
Certificates. (a) The right to receive Scotsman Contingent Common Shares, if
any, shall not be assignable or transferable except by operation of law.
(b) A certificate for any Scotsman Contingent Common Shares
which becomes issuable shall be mailed, in accordance with the customary
practice of Scotsman or its transfer agent, to the Record Stockholder, the
holder of the Warrant, their respective successors by operation of law, or
the Permitted Transferee (as defined in Section 7.1), to whom the Scotsman
Contingent Common Shares represented thereby are being issued, to such person's
last known address as provided in the stockholder records of Scotsman or such
other address, or in the name of such successor or Permitted Transferee, as
shall be furnished in writing to Scotsman by the Record Stockholder, the holder
of the Warrant, their respective duly appointed personal representatives or
successors or such Permitted Transferee. Scotsman may require proper evidence
of succession or transfer and, in any event, shall be fully protected in
issuing, registering and mailing certificates for Scotsman Contingent Common
Shares to and registered in the name of such person to such address.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
As an inducement to Scotsman and Sub to enter into this
Agreement and to consummate the transactions contemplated hereby, the
Stockholders jointly and severally (except as otherwise provided below and
subject to Article X) represent and warrant to Scotsman and Sub and agree as
follows:
Section 3.1. Organization of Holding and TDC. Holding and TDC
are each corporations duly incorporated, validly existing and in good standing
under the laws of the State of Delaware. Holding and TDC are each duly
qualified to transact business as foreign corporations and are each in good
standing in each of the jurisdictions in which the ownership or leasing of the
properties used in its business or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not have a Material Adverse Effect on
Holding and TDC, taken as a whole. Holding and TDC have full corporate power
and authority to own or lease and operate their respective properties and to
carry on their respective businesses as now conducted. Holding and TDC have
delivered to Scotsman complete and correct copies of the certificates of
incorporation and by-laws of Holding and TDC, each as amended and in effect on
the date hereof.
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Section 3.2. Subsidiaries and Investments. (a) Holding's
sole asset is 100 shares of common stock of TDC, which constitutes all of the
issued and outstanding capital stock of TDC. Except for such common stock of
TDC and any securities or equity interest it may own indirectly through TDC,
Holding does not, directly or indirectly, (i) own, of record or beneficially,
any outstanding securities or other interest in any corporation, partnership,
joint venture or other entity or (ii) control any corporation, partnership,
joint venture or other entity.
(b) Except as set forth in Schedule 3.2, TDC does not,
directly or indirectly, (i) own, of record or beneficially, any outstanding
securities or other interest in any corporation, partnership, joint venture or
other entity (other than investments in publicly traded securities, cash
equivalents and short-term investment grade debt) or (ii) control any
corporation, partnership, joint venture or other entity.
Section 3.3. Capitalization. (a) The authorized capital of
Holding consists of (i) 7,000,000 shares of Class A common stock, $.01 par
value, of which 6,445,000 shares are issued and outstanding (before giving
effect to any redemption pursuant to Section 6.6(c)) and, except for 194,845
shares issuable upon exercise of the Warrant (as hereinafter defined), none of
which is reserved for any purpose and (ii) 500,000 shares of preferred stock,
$.01 par value, none of which is issued and outstanding or reserved for any
purpose. All of the outstanding shares of Holding Common Stock are duly
authorized, validly issued, fully paid and nonassessable. The record owners of
the Holding Common Stock as of the date hereof are listed in Schedule 3.3(a)
hereto and a list of the record owners of the Holding Common Stock as of the
Effective Date will be provided to Scotsman on the Effective Date. Continental
is the record owner of a warrant (the "Warrant") entitling it to purchase
194,845 shares of Holding Common Stock. Complete and correct copies of the
material agreements relating to the Warrant have been furnished to Scotsman.
Except for the Warrant or as permitted hereunder, there are no options,
warrants or other rights to acquire, or agreements or commitments to issue,
sell, purchase or redeem, shares of capital stock or other equity interest of
Holding, whether on conversion of other securities or otherwise. None of the
issued and outstanding shares of Holding Common Stock has been issued in
violation of, or is subject to, any preemptive or subscription rights. Except
as set forth in Schedule 3.3(a), there are no stockholder agreements, voting
trust agreements or any other similar contracts, agreements, arrangements,
commitments, plans or understandings restricting or otherwise relating to
voting, dividend, ownership or transfer rights with respect to any shares of
capital stock of Holding.
(b) Each Stockholder other than Onex severally represents
and warrants as to itself and Onex severally represents and warrants as to Onex
DHC that (i) it is the beneficial owner of the shares of Holding Common Stock
listed in
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Schedule 3.3(a) opposite its name or it has transferred such shares to a
Permitted Transferee or Permitted Transferees and (ii) all such shares are
owned free from all liens, claims, encumbrances or other restrictions of any
kind, other than liens, claims, encumbrances or other restrictions listed on
Schedule 3.3(b). Each Stockholder severally represents and warrants as to
itself that, except as a result of the consummation of the Merger or as set
forth in Schedule 3.3(b), neither it nor any of its affiliates or associates
owns, beneficially or of record, any shares of Scotsman Common Stock.
Continental severally represents and warrants as to itself that it is the
beneficial owner of the Warrant.
(c) The authorized capital of TDC consists of 1,000
shares of common stock, $.01 par value, of which 100 shares are issued and
outstanding and none of which is reserved for any purpose. All such
outstanding shares are duly authorized, validly issued, fully paid and
nonassessable. Holding is the record and beneficial owner of all of the issued
and outstanding shares of common stock of TDC. All such shares of common stock
of TDC are so owned free from all liens, claims, encumbrances or other
restrictions of any kind, other than liens, claims, encumbrances or other
restrictions listed on Schedule 3.3(c). There are no options, warrants or
other rights to acquire, or agreements or commitments to issue, sell, purchase
or redeem, shares of capital stock of TDC, whether on conversion of other
securities or otherwise. None of the issued and outstanding shares of common
stock of TDC has been issued in violation of, or is subject to, any preemptive
or subscription rights. There are no voting trust agreements or any other
similar contracts, agreements, arrangements, commitments, plans or
understandings restricting or otherwise relating to voting, dividend, ownership
or transfer rights with respect to any shares of common stock of TDC.
Section 3.4. Authority. (a) Holding and TDC have full
corporate power and authority to enter into this Agreement and, subject to
adoption of this Agreement by the stockholders of Holding, to consummate the
transactions contemplated hereby.
The execution, delivery and performance of this Agreement by
Holding and TDC and the consummation by Holding and TDC of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Holding and TDC subject to such adoption of this Agreement by
the stockholders of Holding. This Agreement is, and each other agreement or
instrument of Holding or TDC contemplated hereby when executed and delivered
will be, the legal, valid and binding agreement of Holding or TDC, as the case
may be, enforceable against Holding or TDC, as the case may be, in accordance
with its respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and
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by general equitable principles (whether enforcement is sought by proceedings
in equity or at law).
Neither the execution or delivery of this Agreement by
Holding, TDC or any Stockholder, nor consummation of the transactions
contemplated hereby or compliance with or fulfillment of the terms and
provisions hereof by Holding, TDC or any Stockholder, will (a) conflict with,
result in a breach of the terms, conditions or provisions of, or constitute a
default, an event of default or an event creating rights of acceleration,
termination or cancellation or a loss of rights, or result in the creation or
imposition of any encumbrance upon any of the material assets of Holding or
TDC, under the certificate of incorporation or the by-laws of Holding or TDC,
any instrument, agreement, mortgage, indenture, deed of trust, permit,
concession, grant, franchise, license, judgment, order, award, decree or other
restriction to which Holding or TDC is a party or any of their respective
material properties is subject or by which either of them is bound or any
material statute, other law or regulatory provision affecting any of them,
except for such conflicts, breaches, defaults, events, creations and
impositions that are set forth on Schedule 3.4(a) or (b) require the approval,
consent or authorization of, or the making of any declaration, filing or
registration with, any third party or any foreign, federal, state or local
court, governmental authority or regulatory body, by or on behalf of Holding or
TDC, except for the applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware, adoption of this
Agreement by the stockholders of Holding and as set forth in Schedule 3.4(a).
(b) Each Stockholder that is a corporate entity severally
represents and warrants as to itself that it has full corporate power and
authority, and each other Stockholder severally represents and warrants as to
itself that it has full power and authority, to enter into this Agreement.
Each Stockholder severally represents and warrants as to itself that neither
the execution or delivery of this Agreement by Holding, TDC or such
Stockholder, nor consummation of the transactions contemplated hereby or
compliance with or fulfillment of the terms and provisions hereof by Holding,
TDC or such Stockholder, will conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or a loss of
rights under, or result in the creation or imposition of any encumbrance upon
any of the material assets of Holding or TDC, under any instrument, agreement,
mortgage, indenture, deed of trust, permit, concession, grant, franchise,
license, judgment, order, award, decree or other restriction to which such
Stockholder is a party or by which such Stockholder is bound. Each of the
Stockholders severally represents and warrants as to itself that this Agreement
is, and each other agreement or instrument of such Stockholder contemplated
hereby when executed and delivered
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will be, the legal, valid and binding agreement of such Stockholder enforceable
against such Stockholder in accordance with its respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforceability of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
Section 3.5. Financial Statements. Holding and TDC have
previously provided Scotsman with: (i) the consolidated audited balance
sheet (the "Balance Sheet") of Holding as of December 31, 1992 (the "Balance
Sheet Date") and the related audited consolidated statements of income (the
"Statement of Income"), stockholders' equity and cash flows for the year then
ended, together with appropriate notes to such financial statements, certified
by Arthur Andersen & Co., independent public accountants, and (ii) the
consolidated unaudited balance sheet of Holding as of September 30, 1993 (the
"Unaudited Balance Sheet") and the related unaudited consolidated statement of
income (the "Unaudited Statement of Income") for the nine months then ended.
Except as disclosed in the notes thereto, such consolidated balance sheets and
statements of income, stockholders' equity and cash flows referred to in
clauses (i) and (ii) of the preceding sentence have been prepared in conformity
with generally accepted accounting principles consistently applied and fairly
present in all material respects the consolidated financial position of Holding
at the dates of such balance sheets and the consolidated results of its
operations and consolidated cash flows for the respective periods indicated,
except that the Unaudited Balance Sheet and the Unaudited Statement of Income
are subject to normal year-end audit adjustments. The Unaudited Statement of
Income does not contain any material items of special or nonrecurring income
except as expressly specified therein. The Statement of Income does not
contain any material items of special or nonrecurring income except as
expressly specified therein. Except as set forth on Schedule 3.5 or in the
Unaudited Statement of Income or the Unaudited Balance Sheet, the Unaudited
Balance Sheet and the Unaudited Statement of Income include all adjustments,
which consist only of normal recurring accruals, other than normal year-end
audit adjustments, necessary for such fair representation. All costs and
expenses incurred in generating the revenues reflected in the Statement of
Income or otherwise in connection with the Delfield Business during the period
covered thereby which are required by generally accepted accounting principles
to be reflected in the Statement of Income are so reflected.
Section 3.6. Operations Since Balance Sheet Date. (a) Except
as set forth in Schedule 3.6(a) or as disclosed in the Unaudited Balance Sheet
or the Unaudited Statement of Income, since the Balance Sheet Date, there has
been: (i) no material adverse change in the assets, liabilities, operations,
profits or business or condition, financial or otherwise, of Holding and TDC;
and (ii) no damage, destruction, loss or claim with respect
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to, whether or not covered by insurance, or condemnation or other taking of,
assets having a Material Adverse Effect on Holding and TDC taken as a whole.
(b) Except as set forth in Schedule 3.6(b), as contemplated
hereby or with the prior written consent of Scotsman after the date hereof,
since the Balance Sheet Date, TDC has conducted the Delfield Business only in
the ordinary course and in conformity with past practice. Without limiting the
generality of the foregoing, except as set forth in Schedule 3.6(b), as
contemplated hereby or with the prior written consent of Scotsman after the
date hereof, since the Balance Sheet Date, neither Holding nor TDC has: (i)
issued, delivered or agreed (actually or contingently) to issue or deliver any
of its capital stock, or granted any option, warrant or right to purchase any
of its capital stock or other equity interest, or security convertible into its
capital stock or other equity interest, or any of its bonds, notes or other
securities, or borrowed or agreed to borrow any funds, other than in the
ordinary course of business consistent with past practice; (ii) paid any
obligation or liability (absolute or contingent) other than current liabilities
reflected on the balance sheets referred to in Section 3.5 and current
liabilities incurred since the Balance Sheet Date in the ordinary course of
business consistent with past practice; (iii) declared or made, or agreed to
declare or make, any payment of dividends or distributions to stockholders or
purchased or redeemed, or agreed to purchase or redeem, any of its capital
stock or other equity interest, except in each case as permitted hereunder;
(iv) mortgaged, pledged or encumbered any assets other than in the ordinary
course of business consistent with past practice; (v) except for assets sold,
leased or transferred in the ordinary course of business consistent with past
practice, sold, leased or transferred or agreed to sell, lease or transfer any
material assets or rights; (vi) cancelled or agreed to cancel any material
debts or claims, waived or agreed to waive any rights of material value, or
allowed to lapse or failed to keep in force any material franchise, permit or
other material right; (vii) except in the ordinary course of business
consistent with past practice, made or permitted any material amendment or
termination of any material contract, agreement or license; (viii) undertaken
or committed to capital expenditures exceeding U.S. $100,000 for any single
project or related series of projects; (ix) made any increase in the
compensation paid or to become payable to any of Holding's or TDC's officers or
employees except for increases in the normal course of business consistent with
past practice and increases required to be made pursuant to the terms of any
employment or other agreement or employee benefit plan, policy, arrangement or
agreement entered into prior to the Balance Sheet Date; (x) amended its
certificate of incorporation or by-laws; (xi) undergone any material adverse
change in its relationship, taken as a whole, with suppliers, customers,
distributors and lessors; (xii) made charitable donations in excess of U.S.
$50,000 in the aggregate; (xiii) incurred any liability or obligation (whether
absolute, accrued, contingent or otherwise and
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whether direct or as guarantor or otherwise with respect to obligations of
others) material to the business or assets of Holding and TDC, taken as a
whole, except in the ordinary course of business consistent with past practice;
(xiv) instituted, settled or agreed to settle any litigation, action, or
proceeding before any court or governmental body relating to the business or
assets of Holding or TDC and involving an amount in excess of U.S. $50,000 or
otherwise materially affecting Holding or TDC; (xv) entered into, or amended in
any material respect, any employment, collective bargaining, deferred
compensation, retention, change of control, termination or other material
agreement or arrangement for the benefit of employees (whether or not legally
binding) or entered into, adopted or amended in any material respect any Plan
(as hereinafter defined); (xvi) suffered any strike or other employment related
problem which would have a Material Adverse Effect on Holding and TDC taken as
a whole; (xvii) suffered the loss of any key employees or had any material
change in its relations with its employees and agents; (xviii) received any
notice of termination of any material contract, lease or other material
agreement; (xix) transferred or expressly granted any rights under, or entered
into any settlement regarding the breach or infringement of, any material
United States or foreign license, patent, copyright, trademark, trade name,
invention or other material intellectual property or modified in any material
respect any existing rights with respect thereto; (xx) changed its accounting
reference period; or (xxi) entered into any transaction of the type described
in Section 3.30; (xxii) amended the terms of the Executive Salary and Bonus
Structure Recommendations for The Delfield Company, as updated to November 1993
(the "Bonus Plan"), a complete and correct copy of which has been furnished to
Scotsman; or (xxiii) entered into or become committed to enter into any other
material transaction except in the ordinary course of business consistent with
past practice.
Section 3.7. No Undisclosed Liabilities. Neither Holding nor
TDC is subject to any liability which is required in accordance with generally
accepted accounting principles to be shown on the Balance Sheet but which is
not so shown, and, to the knowledge of Holding, TDC or any Stockholder, neither
Holding nor TDC is subject to any material liability, absolute or contingent,
which is not shown on the Balance Sheet or which is in excess of amounts shown
or reserved for in the Balance Sheet or referred to in the notes thereto, other
than, in each case, (i) as disclosed in Schedule 3.7, (ii) as disclosed in the
Unaudited Balance Sheet and (iii) liabilities of a similar nature as those set
forth in the Balance Sheet and notes thereto and incurred after the Balance
Sheet Date in the ordinary course of its business consistent with past
practice.
Section 3.8. Taxes. (a) Except as set forth on Schedule 3.8,
(i) each of Holding, TDC and each Company Group (as hereinafter defined) has
filed on or before the date hereof (or will timely file) all material Tax
Returns (as hereinafter
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defined) required to be filed on or before the Effective Date; (ii) all such
Tax Returns are complete and accurate in all material respects and disclose all
material Taxes (as hereinafter defined) required to be paid by Holding, TDC and
each Company Group for the periods covered thereby except for Taxes for which
adequate reserves have been established by Holding and TDC in accordance with
generally accepted accounting principles and all Taxes shown to be due on such
Tax Returns have been timely paid; (iii) none of Holding, TDC or any member of
any Company Group has waived or been requested to waive any statute of
limitations in respect of Taxes; (iv) the Tax Returns referred to in clause (i)
have been examined by the Internal Revenue Service or the appropriate state,
local or foreign taxing authority or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired; (v)
there is no action, suit, investigation, audit, claim or assessment pending or
proposed or threatened with respect to Taxes of Holding, TDC or any Company
Group and, to the knowledge of each Stockholder, Holding and TDC, no basis
exists therefor for which adequate reserves in accordance with generally
accepted accounting principles have not been established; (vi) all deficiencies
asserted or assessments made as a result of any examination of the Tax Returns
referred to in clause (i) have been paid in full; (vii) all Tax Sharing
Arrangements (as hereinafter defined) will terminate prior to the Effective
Date and Holding and TDC will not have any liability thereunder on or after the
Effective Date; (viii) there are no liens for Taxes upon the assets of Holding
or TDC except liens relating to current Taxes not yet due; (ix) all Taxes which
Holding, TDC or any Company Group are required by law to withhold or to collect
for payment have been duly withheld and collected, and have been paid or
accrued; (x) the accruals for deferred Taxes reflected in the Balance Sheet are
adequate to cover any deferred tax liability of Holding or TDC determined in
accordance with generally accepted accounting principles through the date
thereof; (xi) there are no Tax rulings, requests for rulings, request for a
change in method of accounting or closing agreements relating to Holding, TDC
or any Company Group which could affect Holding or TDC's liability for Taxes
for any period after the Effective Date; (xii) none of Holding, TDC or any
Company Group has filed a consent under Section 341(f) of the Code or any
comparable provision of state statutes; (xiii) none of the Stockholders,
Holding or TDC has any knowledge of any facts that, if known to any taxing
authority, would likely result in the issuance of a notice of proposed
deficiency or similar notice of intention to assess material Taxes against
Holding, TDC or any Company Group; (xiv) since January 1, 1993, none of
Holding, TDC or any Company Group has taken any action not in accordance with
past practice that would have the effect of deferring any Tax liability for
Holding or TDC from any taxable period ending on or before the Effective Date
to any taxable period ending after the Effective Date; (xv) none of the income
recognized, for federal, state, local or foreign income Tax purposes, by
Holding or TDC during the period beginning on the date hereof and ending on the
Effective Date will be derived other than in the ordinary course
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of business; (xvi) no income or gain of Holding or TDC has been deferred
pursuant to Treasury Regulation Section Section 1.1502-13 or -14, or Temporary
Treasury Regulation Section Section 1.1502-13T or -14T; (xvii) no power of
attorney has been granted with respect to any matter relating to Taxes of
Holding or TDC which is currently in force; (xviii) none of the property of
Holding or TDC is required to be treated as owned by another person pursuant to
Section 168(f)(8) of the Code (as in effect prior to its amendment by the Tax
Equity and Fiscal Responsibility Act of 1982) or is "tax exempt use property"
within the meaning of Section 168(h) of the Code; (xix) neither Holding nor TDC
have participated in or cooperated in an international boycott, within the
meaning of Section 999 of the Code, nor has any such corporation had operations
which are or may hereafter become reportable under Section 999 of the Code;
(xx) neither Holding nor TDC have disposed of property in a transaction being
accounted for under the installment method pursuant to Section 453 or 453A of
the Code; (xxi) neither Holding nor TDC have any corporate acquisition
indebtedness, as described in Section 279(b) of the Code; and (xxii) neither
Holding nor TDC assumed any Tax liabilities in connection with the transactions
carried out pursuant to the agreements referred to in Section 3.32 hereof and
prior to such transactions neither Holding nor TDC had any material Tax
liabilities.
(b) No disposition by Holding or any of the Stockholders
pursuant to this Agreement is subject to withholding under Section 1445 of the
Code and no stock transfer taxes, real estate transfer taxes, or other similar
taxes will be imposed in respect of the Merger.
(c) As a result of the Merger, none of Holding, TDC or
the Surviving Corporation will be obligated (limited, in the case of the
Surviving Corporation, to obligations to which the Surviving Corporation
becomes subject as a result of any agreement or arrangement entered into by
Holding or TDC prior to the Merger) to make a payment to an individual that
would be an "excess parachute payment" to a "disqualified individual" as those
terms are defined in Section 280G of the Code, without regard to whether such
payment is reasonable compensation for personal services performed or to be
performed in the future.
(d) For purposes of this Section 3.8, the following
definitions shall apply:
(i) "Company Group" shall mean any "affiliated group" (as
defined in Section 1504(a) of the Code without regard to the
limitations contained in Section 1504(b) of the Code) that, at any
time on or before the Effective Date, includes or has included
Holding, TDC or any predecessor of or successor to Holding or TDC (or
another such predecessor or successor), or any other group of
corporations which, at any time on or before the Effective Date, files
or has filed Tax Returns on a combined, consolidated or unitary basis
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with Holding or TDC or any predecessor of or successor to Holding or
TDC (or another such predecessor or successor).
(ii) "material" shall mean, with respect to Taxes or Tax
Returns, that the failure on a timely basis to pay all such Taxes, to
file all such Tax Returns or pay the Taxes due in respect of such Tax
Returns, as the case may be, would result in an aggregate Tax
liability of not less than U.S. $50,000.
(iii) "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") shall mean (i) any federal, state, local or foreign income,
gross receipts, windfall profits, severance, property, production,
sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, transfer,
excise, stamp, or environmental tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, addition to tax or
additional amount imposed by any governmental authority, and (ii)
liability of Holding or TDC for the payment of amounts with respect to
payments of a type described in clause (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group, or
as a result of any obligation of Holding or TDC under any Tax Sharing
Arrangement or Tax indemnity arrangement.
(iv) "Tax Return" shall mean any return, report or similar
statement required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information
return, claim for refund, amended return and declaration of estimated
Tax.
(v) "Tax Sharing Arrangement" shall mean any written or
unwritten agreement or arrangement for the allocation or payment of
Tax liabilities or payment for Tax benefits with respect to a
consolidated, combined or unitary Tax Return which Tax Return includes
Holding and TDC or any Subsidiary.
Section 3.9. Condition of Tangible Assets. Each tangible
asset owned or leased by TDC and having a book or fair market value in excess
of U.S. $50,000 is in good operating condition (subject to reasonable wear and
tear and immaterial impairments of value and damage) and generally suitable for
the uses for which intended.
Section 3.10. Title to Property. TDC has good and, with
respect to real property, marketable title to all of the material assets
reflected on the Balance Sheet as being owned by it and all of the material
assets thereafter acquired by it
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(except to the extent that such assets have thereafter been disposed of in the
ordinary course of business consistent with past practice), subject to no
liens, mortgages, pledges, security interests, encumbrances, claims or charges
of any kind (collectively, "Liens") except (i) as noted in Schedule 3.10, (ii)
for Liens for taxes not yet delinquent or the validity of which is being
contested in good faith, (iii) any Liens arising by operation of law securing
obligations not yet overdue and (iv) Liens that do not materially interfere
with the present use or value of the applicable asset.
Section 3.11. Availability and Ownership of Assets. The
assets shown on the Balance Sheet, taken as a whole, include all the material
properties and assets owned or used or held by Holding or TDC during the past
twelve months and required, in accordance with generally accepted accounting
principles, to be reflected on the Balance Sheet (except properties and assets
sold, cash disposed of, accounts receivable collected, prepaid expenses
realized, contracts fully performed, and properties or assets which had become
worn out, obsolete or surplus, in each case in the ordinary course of
business). There are no material assets or properties used in the Delfield
Business owned by any person other than TDC which are leased or licensed to TDC
pursuant to a lease or license that will terminate as a result of the
consummation of the Merger and the other transactions contemplated hereby.
Section 3.12. Personal Property Leases. Set forth in Schedule
3.12 is a brief description of each lease or other agreement or right, whether
written or oral (including in each case the annual rental, the expiration date
thereof and a brief description of the property covered), under which TDC is
lessee of, or holds or operates, any machinery, equipment, vehicle or other
tangible personal property owned by a third person having scheduled rental
payments in excess of U.S. $50,000 per year.
Section 3.13. Accounts Receivable; Inventories. To the
knowledge of Holding, TDC and the Stockholders, all outstanding accounts
receivable of TDC have arisen from bona fide transactions of TDC, except to the
extent that a reserve in respect thereof shall have been established on the
Balance Sheet, the Unaudited Balance Sheet or the audited consolidated balance
sheet of Holding referred to in Section 6.13. To the knowledge of Holding, TDC
and the Stockholders, (i) the accounts receivable reflected in the Balance
Sheet, taken as a whole, are good and collectible in all material respects in
the ordinary course of business at the aggregate recorded amounts thereof, net
of any applicable allowances for doubtful accounts or customer rebates
reflected therein; and (ii) the accounts receivable to be reflected in the
books and records of TDC as of the Effective Date, taken as a whole, will be
good and collectible in all material respects in the ordinary course of
business at the aggregate recorded amounts thereof, net of any applicable
allowances for doubtful accounts or customer rebates reflected
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thereon, which allowances will be determined on a basis consistent with the
basis used in determining the allowances for doubtful accounts or customer
rebates reflected in the Balance Sheet. To the knowledge of Holding, TDC and
the Stockholders, the inventories of TDC (including raw materials, supplies,
work-in-process, finished goods and other materials), taken as a whole, are in
merchantable condition in all material respects and are reflected in all
material respects in the books and records of Holding and TDC at the lower of
average cost or market value, except in each case for obsolete inventory
accounted for in accordance with the applicable policy set forth in the
attachment to Schedule 2.3(g).
Section 3.14. Intellectual Property. (a) Schedule 3.14
contains a list of:
(i) all material United States and foreign patents and patent
applications, all material United States, state and foreign
trademarks, service marks, trade names and copyrights for which
registrations have been issued or applied for, and all other material
United States, state and foreign trademarks, service marks, trade
names and copyrights, owned by Holding or TDC or in which Holding or
TDC holds any material right, license or interest, showing in each
case the product, device, process, service, business or publication
covered thereby, the registered or other owner, expiration date and,
in the case of any such right, license or interest, a brief
description thereof;
(ii) all material agreements, commitments, contracts,
understandings, licenses and assignments relating or pertaining to any
asset, property or right described in the preceding clause to which
Holding or TDC is a party, showing in each case the parties thereto
and, in the case of oral agreements, commitments, contracts,
understandings, licenses and assignments, the material terms thereof;
(iii) all material licenses or agreements pertaining to
mailing lists, know-how, trade secrets, inventions or uses of ideas to
which Holding or TDC is a party, showing in each case the parties
thereto and, in the case of oral licenses or agreements, a brief
description of the material terms thereof; and
(iv) all registered assumed or fictitious names under which
TDC is conducting the Delfield Business as of the date hereof.
(b) All patents listed in Schedule 3.14 as being owned by
Holding or TDC are valid and in full force, all patents listed in Schedule 3.14
as being used by Holding or TDC are, to the knowledge of Holding and TDC, valid
and in full force and all
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patent applications of Holding or TDC listed therein are in good standing, all
without material challenge of any kind except as otherwise disclosed in
Schedule 3.14, and, except as otherwise disclosed in Schedule 3.14, Holding or
TDC owns the entire right, title and interest in and to such patents and patent
applications so listed as being owned by Holding or TDC without limitation,
burden or encumbrance of any kind, except for such limitations, burdens and
encumbrances that would not have a Material Adverse Effect on Holding and TDC
taken as a whole. All of the registrations for trade names, trademarks,
service marks and copyrights listed in Schedule 3.14 as being owned by Holding
or TDC are valid and in full force, all of the registrations for trade names,
trademarks, service marks and copyrights listed in Schedule 3.14 as being used
by Holding or TDC are, to the knowledge of Holding and TDC, valid and in full
force and all applications by Holding or TDC for such registrations are pending
and in good standing, all without material challenge of any kind except as
otherwise disclosed in Schedule 3.14, and, except as otherwise disclosed in
Schedule 3.14, Holding or TDC owns the entire right, title and interest in and
to all such trade names, trademarks, service marks and copyrights so listed as
being owned by Holding or TDC as well as the registrations and applications for
registration therefor without qualification, limitation, burden or encumbrance
of any kind, except for such qualifications, limitations, burdens and
encumbrances that would not have a Material Adverse Effect on Holding and TDC
taken as a whole. Correct and complete copies of all the patents and patent
applications, registered trademarks, trade names, service marks and copyrights,
registrations or applications therefor and licenses listed in Schedule 3.14
have heretofore been delivered by Holding or TDC to Scotsman.
(c) Except as disclosed in Schedule 3.14, Holding or TDC owns
or has the perpetual right to use all material patents, trademarks, service
marks, copyrights, trade names, inventions, improvements, processes, formulae,
trade secrets, mailing lists, know-how and proprietary information used in
conducting the Delfield Business. No infringement of any patent, patent right,
trademark, service mark, trade name, or copyright or registration thereof has
occurred or results in any way from the operations or business of Holding or
TDC, except for such infringements that would not have a Material Adverse
Effect on Holding and TDC taken as whole. No claim or (to the knowledge of
Holding, TDC or any Stockholders) threat of any such infringement has been made
in respect of any of the foregoing, no claim of invalidity of any patent
described in Schedule 3.14 as being owned by Holding or TDC has been made, and
no proceedings are pending or, to the knowledge of Holding, TDC or any
Stockholder, threatened against Holding or TDC which challenge the validity or
ownership of any material patent, trademark, trade name, service mark or
copyright or the ownership of any other right or property described in Schedule
3.14, and none of Holding, TDC or the Stockholders knows of the infringing use
of any of the same by any other person, except for such claims, proceedings and
infringing uses that
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would not have a Material Adverse Effect on Holding and TDC taken as whole.
None of Holding, TDC or the Stockholders has had notice of, or knowledge of,
any claim against Holding or TDC that a material portion of the operations,
activities, products, equipment, machinery or processes of the Delfield
Business materially infringes the patents, trademarks, service marks, trade
names, copyrights or other similar property rights of any other person.
Section 3.15. Owned Real Property. Schedule 3.15 contains a
brief description of each parcel of real property owned by TDC (the "Owned Real
Property") and of each option held by TDC to acquire any real property.
Complete and correct copies of any title opinions, surveys and appraisals in
Holding's or TDC's possession or any policies of title insurance currently in
force and in the possession of Holding or TDC with respect to each such parcel
have heretofore been delivered by Holding or TDC to Scotsman.
Section 3.16. Leased Real Property. Schedule 3.16 sets forth
a list and brief description of each lease or similar agreement (showing the
parties thereto, annual rental, expiration date and the location of the real
property covered by such lease or other agreement) under which (i) TDC is
lessee of, or holds or operates any real property owned by any third person,
(ii) to the knowledge of Holding, TDC and the Stockholders, TDC has been lessee
of, or has held or operated, any real property owned by any third person and is
as of the date hereof, or will be as of the Expiration Date, subject to any
actual or contingent liability (other than any liability in respect of a matter
referred to in Section 3.29) in respect thereof (the real property described in
clauses (i) and (ii) above being collectively referred to herein as the "Leased
Real Property") or (iii) TDC is lessor of any of the Owned Real Property.
Except as set forth in Schedule 3.16, TDC has the right to quiet enjoyment of
all the Leased Real Property described in clause (i) of the immediately
preceding sentence for the full term of each such lease or similar agreement
(and any renewal option related thereto) relating thereto, and the leasehold or
other interest of Holding or TDC in such real property is not subject or
subordinate to any encumbrance, except for any failure to have such right or
the existence of any such encumbrance that would not have a Material Adverse
Effect on Holding and TDC taken as whole. Complete and correct copies of any
title opinions, surveys and appraisals in Holding's or TDC's possession or any
policies of title insurance currently in force and in the possession of Holding
or TDC with respect to each such parcel of leased property have heretofore been
delivered by Holding or TDC to Scotsman.
Section 3.17. Obligations; Litigation. Except as set forth in
Schedule 3.17, Holding and TDC have performed all obligations required to be
performed by them to date, and are not in default, under any agreement, lease
or other document to which
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either is a party, or under any law or order of any court or governmental
agency, except for such failures to perform or defaults that would not have a
Material Adverse Effect on Holding and TDC taken as whole. Except as set forth
in Schedule 3.17, there are no claims, actions, suits or proceedings to which
Holding or TDC is a party or any of their respective properties is subject or
by which either of them is bound, pending or, to the knowledge of Holding, TDC
or any Stockholder, threatened before or by any court or governmental agency,
which is reasonably expected to have a Material Adverse Effect on Holding and
TDC taken as a whole or prevent or hinder the consummation of the transactions
contemplated hereby.
Section 3.18. Product Warranties. Schedule 3.18 contains a
list and description of each express warranty given or offered by TDC prior to
the date hereof covering any class or group of products sold or distributed by
TDC and other express warranties covering any material product sold or
distributed by TDC, in each case which warranty is in effect on the date hereof
or will be in effect on the Effective Date. The reserve for liabilities with
respect to warranty claims contained in the Balance Sheet fairly reflects in
all material respects the amount required in accordance with generally accepted
accounting principles to be shown thereon as of the Balance Sheet Date and the
reserve for such liabilities to be contained in the books and records of TDC on
the Effective Date will fairly reflect in all material respects the amount
required in accordance with generally accepted accounting principles to be
shown thereon as of the Effective Date.
Section 3.19. Compliance with Laws. Holding and TDC are in
compliance with the provisions of all applicable laws and regulations of the
federal, state, local and foreign governments, including but not limited to all
Applicable Laws (as defined in Section 3.29(a)), except to the extent that the
failure to comply therewith would not have a Material Adverse Effect on Holding
and TDC taken as whole. To the knowledge of Holding, TDC and each Stockholder,
there are no proposed orders, judgments, decrees, governmental takings,
condemnations or other proceedings, in each case binding upon the business,
operations or properties of Holding or TDC and which would have a Material
Adverse Effect on Holding and TDC taken as a whole.
Section 3.20. Permits. Each of Holding and TDC possesses all
material governmental franchises, permits, licenses, certificates, variances,
approvals and other material authorizations necessary to own or lease and
operate its material properties and to conduct its business as now conducted
(hereinafter collectively called the "Permits"), including but not limited to
environmental Permits. All Permits are set forth in Schedule 3.20, except for
such Permits which would be readily obtainable by any qualified applicant
without undue burden in the event of any lapse, termination, cancellation or
forfeiture.
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Except as disclosed in Schedule 3.20, all Permits are in full
force and effect and no consent, approval or act of, or the making of any
filing with, any governmental body, regulatory commission or other party will
be required to be obtained or made by Holding or TDC in respect of any Permit
as a result of the consummation of the Merger and the other transactions
contemplated hereby. Neither Holding nor TDC is in default in any material
respect under the terms of any such Permit and has not received notice of any
material default thereunder.
Section 3.21. Insurance. Holding and TDC maintain policies
(or are covered by policies maintained by Onex and its affiliates on behalf of
Holding and TDC or their properties, assets, operations or business) of fire
and casualty, liability (general, product and other liability), workers'
compensation (except for TDC's Mt. Pleasant facility, which is self-insured
with respect to workers' compensation) and other forms of insurance and bonds
with those insurers listed on Schedule 3.21 in such amounts and against such
risks and losses as are usually insured against in the same general areas by
companies engaged in the same or a similar business. Schedule 3.21 contains a
list and brief description (including type of coverage, limits, deductibles,
carriers and effective and termination dates) of all policies of insurance
maintained by Holding or TDC (or maintained on behalf of Holding or TDC or
their properties, assets, operations or business) since April 27, 1991, up to
and including the Effective Date. Each of Holding and TDC is a named insured
or is otherwise covered under each such policy, and each such policy is in full
force and effect and (without limiting the obligations under Section 7.4) will
not in any way be affected by or terminate or lapse by reason of the
transactions contemplated by this Agreement.
Holding and TDC have made available to Scotsman complete and
correct copies of all policies listed on Schedule 3.21, together with all
riders and amendments thereto, and, to the knowledge of Holding, TDC and the
Stockholders, no insurer under such policies has a basis to void such policies
on grounds of non-disclosure on the part of the policyholder or the insured
thereunder.
Schedule 3.21 hereto includes a list of (i) each product
liability claim submitted under any such policy (whether or not relating to the
Delfield Business) since April 27, 1991 and (ii) with respect to each other
claim since April 27, 1991 under any such policy, a list of the aggregate
amounts of such claims by class of such claims. Except for such claims, the
full policy limits (subject to deductibles provided therein) are available and
unimpaired under each such policy. Each of Holding, TDC and their respective
affiliates has complied with each such policy in all material respects and has
not failed to give any notice or present any claim thereunder in a due and
timely manner.
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The liability and excess liability insurance policies listed
on Schedule 3.21 provide product liability coverage for Holding and TDC on an
occurrence basis, cover all claims for injuries which have occurred or may
occur on or prior to the Effective Date and will cover payment of any adverse
judgment rendered against the Surviving Corporation or TDC in any claim arising
out of a product liability occurrence occurring on or prior to the Effective
Date.
Except as set forth on Schedule 3.21, to the knowledge of
Holding, TDC and the Stockholders, no person has alleged that any product
manufactured or sold by the Delfield Business has caused a fire.
Section 3.22. Employee Benefit Plans. (a) Schedule 3.22 sets
forth a list of, and, except as set forth in Schedule 3.22, Holding or TDC has
delivered to Scotsman copies, of any pension, profit sharing, retirement,
disability, health, welfare or other material "employee benefit plan", as that
term is defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), bonus, stock option or other equity based,
incentive, severance, termination, retention or other material employee benefit
or compensation plan, policy, arrangement or agreement, whether written or
unwritten, (i) under which any employee or former employee of Holding or TDC or
the beneficiary or dependent of any such employee or former employee
(collectively, the "Participants") is eligible to participate or derive a
benefit and (ii) that is established or maintained by Holding or TDC or any
trade or business, whether or not incorporated, which would be treated as a
single employer together with Holding or TDC under Section 414 of the Code, as
of any date of determination (each, an "ERISA Affiliate") or to which Holding
or TDC or any ERISA Affiliate is obligated to contribute (collectively, the
"Plans"). Neither Holding nor, TDC, nor to the knowledge any Stockholder, any
such Plan nor any trust created thereunder has engaged in a transaction
prohibited by Section 406 of ERISA or Section 4975 of the Code that would
result in any material liability to Holding or TDC. Except as disclosed in
Schedule 3.22, determination letters have been received from the Internal
Revenue Service with respect to each Plan which is intended to qualify under
Section 401(a) of the Code to the effect that such Plan and the attendant trust
are qualified and tax-exempt within the meaning of Sections 401 and 501 of the
Code, respectively, and nothing has occurred since the date of such letters
that would result in disqualification of such Plans or the loss of such
tax-exempt status and a material liability to Holding or TDC as a result
thereof. Each of the Plans has been operated and administered in accordance
with ERISA, the Code and all other applicable laws, except where any such
noncompliance would not result in a material liability to Holding, TDC or
Scotsman. There are no material pending or, to the knowledge of Holding, TDC
or any Stockholder, threatened, claims by or on behalf of any Plan, by or on
behalf of any Participant or otherwise involving any Plan (other than routine
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claims for benefits). Each Plan which is subject to the minimum funding
standards of the Code or ERISA satisfies such standards, and no such Plan has
incurred an "accumulated funding deficiency," whether or not waived, within the
meaning of the Code or ERISA. All contributions required to have been made by
Holding or TDC and each ERISA Affiliate to each Plan under the terms of any
such Plan or pursuant to applicable law or any applicable collective bargaining
agreement have been made within the time prescribed by any such Plan, law or
agreement, as the case may be.
(b) Except as set forth in Schedule 3.22, neither Holding,
TDC nor any ERISA Affiliate would be liable for any material amount pursuant to
Title IV of ERISA if any employee pension benefit plan (within the meaning of
section 3(2) of ERISA) subject to such Title (a "Title IV Plan") were to
terminate. Except as disclosed on Schedule 3.22 hereto, as of the last day of
the 1992 fiscal year of each Plan which is a Title IV Plan, the "projected
benefit obligations" (within the meaning of the Financial Accounting Standards
Board Statement No. 87) under each such Plan did not exceed the fair market
value of the assets of each such Plan, determined on the basis of actuarial
assumptions each of which is reasonable, and the estimated excess of the
projected benefit obligation under each such Plan over the assets of each such
Plan as of December 31, 1993 did not exceed U.S. $1,200,000. Neither Holding,
TDC nor any ERISA Affiliate has engaged in a transaction which could cause
Holding, TDC or such ERISA Affiliate to be subject to liability under section
4069 or 4212 of ERISA. Neither Holding, TDC nor any ERISA Affiliate has
incurred any material liability under or pursuant to Title I or IV of ERISA or
the penalty, excise tax or joint and several liability provisions of the Code
or ERISA relating to employee benefit plans for failure to comply with such
provisions with respect to the Plans and no event or condition has occurred or
exists which could result in any material liability following the Effective
Date to Scotsman under or pursuant to Title I or IV of ERISA or such penalty,
excise tax or liability provisions of the Code or ERISA for failure to comply
with such provisions with respect to the Plans.
(c) No Plan is a "multiemployer plan" or a "multiple employer
plan" within the meaning of ERISA or the Code.
(d) No Plan is subject to the law of any jurisdiction outside
of the United States of America.
(e) No Participant is or may become entitled to
post-employment benefits of any kind by reason of employment with Holding or
TDC, including, without limitation, death or medical benefits (whether or not
insured), other than (A) coverage mandated by section 4980B of the Code, (B)
pension benefits payable under any Plan intended to qualify under Section
401(a) of the Code or (C) deferred compensation accrued as a liability in the
books and records of Holding and TDC. The consummation of the
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transactions contemplated by this Agreement will not result in an increase in
the amount of compensation or benefits or accelerate the vesting or timing of
payment of any compensation or benefits payable to or in respect of any
participant.
Section 3.23. Employees and Agents and Related Agreements.
(a) Except as set forth in Schedules 3.23(a) or 3.30, neither Holding nor TDC
is a party to or bound by any oral or written employment agreement, consulting
agreement (other than employment or consulting agreements under which Holding's
or TDC's obligations are terminable by Holding or TDC without premium or
penalty (other than statutory severance or termination benefits) on notice of
30 days or less), deferred compensation agreement, confidentiality agreement
(except for the Employee Invention and Secrecy Agreement entered into by all
employees prior to April 1991) or covenant not to compete with any officer,
director, stockholder, employee, agent or attorney-in-fact of Holding or TDC.
(b) Schedule 3.23(b) contains: (i) a list of all employees
or commission sales groups of Holding or TDC as of December 1, 1993 whose
compensation was in excess of U.S. $50,000 per annum on such date; (ii) the
then current annual compensation of, and a description of the material fringe
benefits (other than those generally available to eligible employees of Holding
or TDC) provided by Holding or TDC to any such employees or commission sales
groups; (iii) a list of all present or former employees or commission sales
groups of Holding or TDC paid in excess of U.S. $50,000 in calendar year 1992
who have terminated or given notice of their intention to terminate their
relationship with Holding or TDC since December 31, 1992; and (iv) a list of
any increase, effective after December 1, 1993, in the rate of compensation of
any employee or commission sales group whose compensation was in excess of U.S.
$50,000 per annum as of December 1, 1993 or would be in excess of U.S. $50,000
after taking into account any increase effective after December 1, 1993, if
such increase exceeds 6% of the previous annual salary of such employee or
commission sales group.
Section 3.24. Employee Relations and Labor Matters. (a)
Holding and TDC have complied in all material respects with all applicable
laws, rules and regulations which relate to wages, hours, discrimination in
employment and collective bargaining and are not liable for any material
arrears of wages or any material taxes or penalties for failure to comply with
any of the foregoing. Holding and TDC believe that their relations with their
employees are good.
(b) Except as set forth in Schedule 3.24(b) hereto, neither
Holding nor TDC is a party to any collective bargaining agreement and Holding
and TDC have complied in all material respects with all such collective
bargaining agreements. Neither Holding nor TDC is a party to or, to the
knowledge of Holding, TDC or any Stockholders, is threatened with, any dispute
or
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controversy with a union or with respect to unionization or collective
bargaining involving its employees. To the knowledge of Holding or TDC or any
Stockholder, neither Holding nor TDC is materially affected by any dispute or
controversy with a union or with respect to unionization or collective
bargaining involving any of its suppliers or customers. Schedule 3.24(b)
hereto sets forth a list of any union organizing or election activities
involving any non-union employees of Holding or TDC known to Holding or TDC
which have occurred since December 31, 1990 or, to the knowledge of Holding,
TDC or any Stockholder, are threatened as of the date hereof.
Section 3.25. Absence of Certain Business Practices. None of
Holding, TDC, any officer, employee or agent of Holding or TDC, or any other
person acting on its behalf, has, directly or indirectly, since April 27, 1991,
given or agreed to give any gift or similar benefit (other than with respect to
bona fide payments for which adequate consideration has been given) to any
customer, supplier, governmental employee or other person who is or may be in a
position to help or hinder the business of Holding or TDC (or assist Holding or
TDC in connection with any actual or proposed transaction) (a) which might
subject Holding or TDC to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (b) which, if not continued in the
future, would have an adverse affect on Holding's or TDC's assets, business,
operations or prospects or which would subject Holding or TDC to suit or
penalty in any private or governmental litigation or proceeding, (c) for any of
the purposes described in section 162(c) of the Code, or (d) for establishment
or maintenance of any concealed fund or concealed bank account.
Section 3.26. Territorial Restrictions. Except as set forth
on Schedule 3.26, neither Holding nor TDC is restricted in any material respect
by any written agreement or understanding with third parties from carrying on
its business anywhere in the world.
Section 3.27. Transactions with Certain Persons. Except as
set forth in Schedule 3.27 hereto, since April 27, 1991, neither Holding nor
TDC has, directly or indirectly, purchased, leased from others or otherwise
acquired any material property or obtained any material services from, or sold,
leased to others or otherwise disposed of any material property or furnished
any material services to (except with respect to remuneration for services
rendered as a director, officer or employee of Holding or TDC), in the ordinary
course of business or otherwise, (a) any Stockholder, (b) any affiliate of
Holding or TDC, (c) any person who is an officer or director of Holding or TDC
or (d) any associate of any person referred to in clause (a), (b) or (c) above.
Except as set forth in Schedule 3.27 hereto, neither Holding nor TDC owes any
amount in excess of U.S. $10,000 to, or has any contract with or commitment to,
any Stockholder, director, officer or employee of Holding or TDC (other than
for compensation for current services not yet due and payable,
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reimbursement of expenses arising in the ordinary course of business and the
Onex Management Agreement and the Diggs Management Agreement (as each such term
is defined in Section 6.6(a)), and none of such persons owes any amount in
excess of U.S. $10,000 to Holding or TDC.
Section 3.28. Safe Harbor or TRAC Leases. Holding and TDC
have identified and delivered to Scotsman complete and correct copies of (i)
all leases ("168(f)(8) Leases"), if any, under section 168(f)(8) of the Code,
as in effect prior to the date of enactment of the Tax Equity and Fiscal
Responsibility Act of 1982 and (ii) all leases ("TRAC Leases"), if any, under
section 7701(h) of the Code, or any predecessor provision, in each case to
which any of the assets of Holding or TDC is subject.
Section 3.29. Environmental Matters. (a) Holding and TDC
have each:
(i) complied with and are in compliance with, in all
material respects, all applicable environmental, health and safety
statutes, laws, rules, regulations, ordinances and codes ("Applicable
Laws"), except as disclosed in Schedule 3.29(a);
(ii) not been and are not the subject of any investigation,
judicial or administrative proceeding, or settlement concerning (A) a
Release (as hereinafter defined) or threatened Release of any
hazardous or toxic waste, substance or constituent or other substance,
including petroleum or its constituents ("Hazardous Substance") as
defined or regulated under any Applicable Laws or (B) the violation of
any Applicable Laws;
(iii) not been and are not under a duty to file any notice
under any Applicable Laws reporting the treatment, storage, disposal,
handling or managing of any Hazardous Substance, the violation of any
Applicable Laws or the Release or threatened Release of any Hazardous
Substance, except as disclosed in Schedule 3.29(a);
(iv) no material contingent liability in connection with any
Release or threatened Release of any Hazardous Substance nor have any
present Property or past Property listed or proposed for listing on
the National Priorities List ("NPL") pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act, 41 U.S.C.
Section 9601 et seq., any amendments thereto, any successor statutes,
and any regulations or guidance promulgated thereunder ("CERCLA") or
on the Comprehensive Environmental Response Compensation Liability
Information System List ("CERCLIS") or any similar state list of
sites requiring Remedial Action;
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(v) never generated, treated, stored, recycled, transported
or disposed of any Hazardous Substance, except as disclosed in Schedule
3.29(a);
(vi) never installed, had installed, utilized or been aware
of any underground storage tanks or surface impoundments on any of
their Owned Real Property or Leased Real Property, except as disclosed
in Schedule 3.29(a); and
(vii) no knowledge of any outstanding lien filed on their
assets in favor of any governmental agency in connection with any
Applicable Laws.
(b) The presence or condition of all material containing
more than one percent (1%) asbestos by weight ("Asbestos Containing Material")
which is on or part of any Property (excluding any raw materials used in the
manufacture of products or products themselves) does not violate any current
Applicable Laws.
(c) For purposes of this Section 3.29, the following
definitions shall apply:
(i) "material" means any fines, penalties, costs or expenses
arising under the Applicable Laws that would result in an aggregate
liability to Holding or TDC of not less than U.S. $100,000 per year;
(ii) "Property" means any real or personal property, plant,
building, facility, structure, underground storage tank, equipment or
unit, or other asset owned, leased or operated by Holding or TDC
(including any surface water thereon or adjacent thereto, and soil or
groundwater thereunder) whether now or previously or any time; and
(iii) "Release" means release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment or into or out of
any Property including the movement of Hazardous Substances through or
in the air, soil, surface water, groundwater or Property.
Section 3.30. Contracts. (a) Except as set forth in Schedule
3.30, neither Holding nor TDC is a party to or is bound by any oral or written
contract, agreement, commitment or instrument:
(i) for the purchase, sale or lease (except if the scheduled
lease payments are less than U.S. $50,000 per year) of real property;
(ii) for the purchase of raw materials (A) which involved the
payment of more than U.S. $250,000 in 1992, (B) which Holding or TDC
reasonably anticipates
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will involve the payment of more than U.S. $250,000 in 1993 or (C)
which extends beyond January 1, 1994 and which is anticipated to
require over the term of the contract (other than the period prior to
January 1, 1994) aggregate payments of more than U.S. $500,000;
(iii) for the sale of goods or services (A) which involved
the payment of more than U.S. $250,000 in 1992, (B) which Holding or
TDC reasonably anticipates will involve the payment of more than U.S.
$250,000 in 1993 or (C) which extends beyond January 1, 1994 and which
is anticipated to require over the term of the contract (other than
the period prior to January 1, 1994) aggregate payments of more than
U.S. $500,000;
(iv) which provides for, or relates to, any consignment,
distributor, dealer, manufacturers representative, sales agency,
advertising representative or advertising or public relations
arrangement (A) which involved the payment of more than U.S. $100,000
in 1992, (B) which Holding or TDC reasonably anticipates will involve
the payment of more than U.S. $100,000 in 1993 or (C) which extends
beyond January 1, 1994 and which is anticipated to require over the
term of the contract (other than the period prior to January 1, 1994)
aggregate payments of more than U.S. $250,000;
(v) which provides for, or relates to, the guarantee by
Holding or TDC of any obligation exceeding U.S. $10,000 of any
customers, suppliers, officers, directors, employees or affiliates of
Holding or TDC;
(vi) which provides for, or relates to, the incurrence by
Holding or TDC of debt for borrowed money in excess of U.S. $100,000;
(vii) which provides for, or relates to, any non-competition
or confidentiality arrangement with any person, including any current
or former officer or employee of Holding or TDC;
(viii) for capital expenditures in excess of U.S. $100,000
for any single project or related series of projects;
(ix) with any broker or finder;
(x) any partnership, joint venture or other similar
arrangements or agreements involving a sharing of profits or losses;
(xi) with any employee, director, officer, Stockholder or
affiliates of Holding or TDC (including royalty agree-
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ments), providing for payment or receipts by Holding or TDC in excess
of U.S. $25,000;
(xii) which (other than contracts, agreements, commitments
and instruments of the nature described in clauses (i) through (xi)
above) involve payments or receipts by Holding or TDC of more than
U.S. $100,000; and
(xiii) for any purpose (whether or not made in the ordinary
course of the Delfield Business or otherwise not required to be listed
or described in Schedule 3.30) which is material to the business of
Holding and TDC taken as a whole.
(b) Except as set forth in Schedule 3.30, Holding and TDC
have fulfilled and performed their obligations in all material respects under
each of the leases, contracts and other agreements listed in Schedule 3.30
(collectively, the "Holding-TDC Agreements") and are not, or, to the knowledge
of Holding and TDC, are not alleged to be, in breach or default in any material
respect under, nor, to the knowledge of Holding, TDC or any Stockholder, is
there or, to the knowledge of Holding and TDC, is there alleged to be any basis
for termination of, any of the Holding-TDC Agreements and no event has occurred
and no condition or state of facts exists which, with the passage of time or
the giving of notice or both, would constitute such a default or breach by
Holding or TDC. Copies of each of the Holding-TDC Agreements have heretofore
been delivered to Scotsman by Holding or TDC.
Section 3.31. No Guaranties; Extensions of Credit. Except as
set forth in Schedule 3.31, no material obligations or liabilities of Holding
or TDC are guaranteed by or subject to a similar contingent obligation of any
other person, nor has Holding or TDC guaranteed or become subject to a similar
contingent obligation in respect of the obligations or liabilities of, or
extended credit to any other person.
Section 3.32. Alco Standard Asset Acquisition Agreement. None
of Holding, TDC or any Stockholder has taken any action that would cause the
Purchase and Sale of Assets Agreement, dated as of March 20, 1991 (the "Alco
Agreement"), among Alco Standard Corporation, an Ohio corporation ("Alco
Standard"), The Delfield Company, a Delaware corporation, and TDC (formerly
known as DFC Acquisition Corporation), or any other material agreements
executed in connection with the Alco Agreement, not to be, and Alco Standard
has not asserted to Holding or TDC that the Alco Agreement or such other
material agreement does not constitute, a legal, valid and binding agreement.
Except as set forth on Schedule 3.32, neither Holding nor TDC is, or, to the
knowledge of Holding, TDC or any Stockholder, alleged to be, in breach or
default in any material respect under the Alco Agreement or such other material
agreement.
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Section 3.33. Customers and Suppliers. Set forth in Schedule
3.33 hereto is a list of names and addresses of the ten largest customers and
the ten largest suppliers (measured by dollar volume of purchases or sales in
each case) of TDC and the percentage of the Delfield Business which each such
customer or supplier represents or represented during each of the years ended
December 31, 1992 and 1993 and the period from January 1, 1993 through
September 30, 1993. Copies of the forms of purchase order for inventory and
other supplies and sales contracts for finished goods used by TDC have been
provided to Scotsman by Holding or TDC. There exists no actual or, to the
knowledge of any Stockholder, Holding or TDC, threatened termination,
cancellation or material adverse change in, the business relationship of TDC
with any customer or group of customers listed in Schedule 3.33, or whose
purchases individually or in the aggregate are material to the operations of
the Delfield Business, or with any supplier or group of suppliers listed in
Schedule 3.33, or whose sales individually or in the aggregate are material to
the operations of the Delfield Business.
Section 3.34. Registration Statement and Proxy
Statement/Prospectus. None of the written information supplied or to be
supplied by Holding, TDC, or any of the Stockholders or any affiliate of the
foregoing (including, without limitation, WAL) specifically for inclusion in
the Registration Statement or the Proxy Statement/Prospectus (as such terms are
defined in Section 6.1) will be the basis for any successful claim against
Scotsman, Holding, TDC or any of their officers or directors asserting that (i)
in the case of the Registration Statement, at the time it becomes effective and
at the Effective Time, such information contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading, or
(ii) in the case of the Proxy Statement/Prospectus, at the time of the mailing
of the Proxy Statement/Prospectus to Scotsman's stockholders and at the time of
the meeting of its stockholders referred to in Section 6.3, such information
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading.
Section 3.35. Liabilities and Operations of Holding. Except
as contemplated hereby or in connection with obligations relating to its equity
securities, the Warrant and the Guaranty, dated as of December 29, 1992, made
by Holding in favor of Continental (a complete and correct copy of which has
been delivered by Holding to Scotsman), Holding is not subject to any material
liability, absolute or contingent, other than those indirect liabilities that
relate to its ownership of the common stock of TDC. Holding conducts no
business other than the holding of the common stock of TDC.
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Section 3.36. No Finder. Neither Holding, TDC nor any party
acting on the behalf of either of them has paid or become obligated to pay any
fee or commission to any broker, finder or intermediary for or on account of
the transactions contemplated by this Agreement, other than to Lazard Freres &
Co. ("Lazard") and Morgan Stanley & Co. Incorporated ("Morgan"), whose fees and
expenses, to the extent payable, shall be paid by the Stockholders except as
provided in Section 12.2. Complete and correct copies of the engagement and
indemnification agreements entered into by Holding or TDC with Lazard and
Morgan have been furnished to Scotsman.
Section 3.37. Disclosure. The representations and warranties
contained herein, the information contained in the Schedules referred to in
Article III and the other information or documents referred to in this Article
III as having been furnished or to be furnished to Scotsman or any of its
representatives by Holding, TDC, the Stockholders or their representatives
pursuant to the terms of this Agreement, are, taken as a whole, true and
accurate in all material respects.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SCOTSMAN
As an inducement to Holding, TDC and the Stockholders to enter
into this Agreement and to consummate the transactions contemplated herein,
Scotsman hereby warrants and represents to Holding, TDC and the Stockholders
and agrees as follows:
Section 4.1. Organization of Scotsman. Scotsman is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Scotsman is duly qualified to transact business
as a foreign corporation and is in good standing in each of the jurisdictions
in which the ownership or leasing of the properties used in its business or the
conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing would
not have a Material Adverse Effect on Scotsman and its subsidiaries, taken as a
whole, and no other jurisdiction has demanded, requested or otherwise indicated
that Scotsman is required so to qualify. Scotsman has full corporate power and
authority to own or lease and operate its properties and to carry on its
business as now conducted.
Section 4.2. Authority. Scotsman has full corporate power and
authority to enter into this Agreement and, subject to approval of the issuance
of the shares contemplated by this Agreement by the stockholders of Scotsman,
to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by
Scotsman and the consummation by Scotsman of the transac-
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tions contemplated hereby have been duly authorized by all necessary corporate
action on the part of Scotsman subject to such approval by the stockholders of
Scotsman as required by the rules of the NYSE and the adoption of this
Agreement by Scotsman as the sole stockholder of Sub. This Agreement is, and
each other agreement or instrument of Scotsman contemplated hereby when
executed and delivered will be, the legal, valid and binding agreement of
Scotsman enforceable against Scotsman in accordance with its respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
Except as set forth in Schedule 4.2, neither the execution and
delivery of this Agreement by Scotsman nor consummation of the transactions
contemplated hereby or compliance with or fulfillment of the terms and
provisions hereof by Scotsman will (a) conflict with, result in a breach of the
terms, conditions or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration, termination or
cancellation or a loss of rights, or result in the creation or imposition of
any encumbrance upon any of the material assets of Scotsman or any of its
subsidiaries, under the certificate of incorporation or the by-laws of Scotsman
or any subsidiary of Scotsman, any instrument, agreement, mortgage, indenture,
deed of trust, permit, concession, grant, franchise, license, judgment, order,
award, decree or other restriction to which Scotsman or any of its subsidiaries
is a party or any of their respective material properties is subject or by
which any of them is bound or any material statute, other law or regulatory
provision affecting any of them, except for such impositions created under any
instruments or agreements entered into in connection with the financing of the
transactions contemplated hereby, or (b) require the approval, consent or
authorization of, or the making of any declaration, filing or registration
with, any third party or any foreign, federal, state or local court,
governmental authority or regulatory body, by or on behalf of, Scotsman or Sub,
except for the filing of appropriate documents with the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and for the applicable requirements of the HSR Act, the filing
of a Certificate of Merger with the Secretary of State of the State of
Delaware, and approval by the stockholders of Scotsman as required by the rules
of the NYSE.
Section 4.3. Shares of Scotsman Common Stock. The shares of
Scotsman Common Stock, Scotsman Convertible Preferred Stock and Scotsman
Nonconvertible Preferred Stock to be delivered to the stockholders of Holding
pursuant to this Agreement will, when issued and delivered in accordance with
the terms hereof, be validly issued, fully paid and nonassessable.
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Section 4.4. Capitalization. The authorized capital of
Scotsman consists of (i) 50,000,000 shares of common stock, $.10 par value, of
which 7,008,254 shares are issued and outstanding, 202,295 shares are held as
treasury stock and 976,326 shares are reserved for issuance under Scotsman's
long-term executive incentive compensation plan and 7,036,875 shares are
reserved in connection with the Common Stock Purchase Rights, (ii) 10,000,000
shares of preferred stock, $1.00 par value, none of which is issued and
outstanding or reserved for any purpose. All of the outstanding shares of
Scotsman Common Stock are duly authorized, validly issued, fully paid and
nonassessable. Except for options granted pursuant to Scotsman's long-term
executive incentive compensation plan and the Common Stock Purchase Rights,
there are no options, warrants or other rights to acquire from Scotsman or
agreements or commitments by Scotsman to issue or sell shares of its capital
stock, whether on conversion of other securities or otherwise. None of the
issued and outstanding shares of Scotsman Common Stock has been issued in
violation of, or is subject to, any preemptive or subscription rights. There
are no stockholder agreements, voting trust agreements or any other similar
contracts, agreements, arrangements, commitments, plans or understandings to
which Scotsman is a party restricting or otherwise relating to voting,
dividend, ownership or transfer rights with respect to any shares of capital
stock of Scotsman, other than the Rights Agreement and the Common Stock
Purchase Rights.
Section 4.5. Operations Since January 3, 1993. Except as set
forth in the Scotsman SEC Documents (as hereinafter defined), since January 3,
1993, there has been: (i) no material adverse change in the assets,
liabilities, operations, profits or business or in the condition, financial or
otherwise, of Scotsman and its subsidiaries; and (ii) no damage, destruction,
loss or claim with respect to, whether or not covered by insurance, or
condemnation or other taking of, assets having a Material Adverse Effect on
Scotsman and its subsidiaries taken as a whole.
Section 4.6. Compliance with Laws. Scotsman is in compliance
with the provisions of all applicable laws and regulations of the federal,
state, local and foreign governments, except to the extent that the failure to
comply therewith would not have a Material Adverse Effect on Scotsman and its
subsidiaries taken as a whole. Except as set forth in the Scotsman SEC
Documents, to the knowledge of Scotsman, there are no proposed orders,
judgments, decrees, governmental takings, condemnations or other proceedings,
in each case binding upon the business, operations or properties of Scotsman or
any subsidiary thereof, which would have a Material Adverse Effect on Scotsman
and its subsidiaries taken as a whole.
Section 4.7. SEC Documents. Scotsman has previously delivered
to Holding and TDC complete and correct copies of all reports, statements and
registration statements (including annual reports on Form 10-K, current reports
on Form 8-K, quarterly
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reports on Form 10-Q and proxy statements) filed by it with the SEC since
January 1, 1991. Scotsman has filed all required documents with the SEC since
January 1, 1991 (the "Scotsman SEC Documents"). As of their respective dates,
the Scotsman SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
none of the Scotsman SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Scotsman
included in the Scotsman SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) consistently
applied (except as may be indicated therein or in the notes thereto) and fairly
present in all material respects the consolidated financial position of
Scotsman and its consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and statements of cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Section 4.8. Intention to Sell, etc. (a) Scotsman has no
present plan or intention to sell or otherwise dispose of any of the Common
Stock of the Surviving Corporation to be acquired by it in the Merger, to
liquidate the Surviving Corporation, to merge the Surviving Corporation or TDC
with another corporation or to cause TDC or the Surviving Corporation to
dispose of any of its assets other than in the ordinary course of business.
(b) Scotsman currently intends that, after the consummation
of the Merger, each of the Surviving Corporation and TDC will continue
substantially all of its current business.
(c) Scotsman has no current plan or intention to redeem or
otherwise reacquire any of the Scotsman Common Stock, Scotsman Convertible
Preferred Stock or Scotsman Nonconvertible Preferred Stock to be issued to the
Stockholders in connection with the Merger.
(d) Scotsman has no current intention to make its funds
available to Holding or TDC for the repayment of any indebtedness for borrowed
money of Holding or TDC, as the case may be, outstanding as of the Effective
Time and incurred in order to finance any redemption or repurchase described in
Section 6.6(c), or to refinance or cause the refinancing of any such
indebtedness in a manner that shifts the primary obligation to repay such
indebtedness from the Surviving Corporation or TDC, as the case may be, to
Scotsman.
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Section 4.9. Obligations; Litigation. Except as set forth in
the Scotsman SEC Documents, Scotsman and its subsidiaries have performed all
obligations required to be performed by them to date, and are not in default,
under any agreement, lease or other document to which any of them is a party,
or under any law or order of any court or governmental agency, except for such
failures to perform or defaults that would not have a Material Adverse Effect
on Scotsman and its subsidiaries taken as whole. Except as set forth in the
Scotsman SEC Documents, there are no claims, actions, suits or proceedings to
which Scotsman or any of its subsidiaries is a party or any of their respective
properties is subject or by which any of them is bound pending or, to the
knowledge of Scotsman, threatened before or by any court or governmental
agency, which is reasonably expected to have a Material Adverse Effect on
Scotsman and its subsidiaries taken as a whole or prevent or hinder the
consummation of the transactions contemplated hereby.
Section 4.10. No Finder. Neither Scotsman nor any party
acting on its behalf has paid or become obligated to pay any fee or any
commission to any broker, finder or intermediary for or on account of the
transactions contemplated herein, other than to William Blair & Company, whose
fees and expenses, to the extent payable, shall be paid by Scotsman.
Section 4.11. Rights Agreement; Benefits. Scotsman has
amended the Rights Agreement in order to provide that the New Scotsman
Stockholders (as hereinafter defined), as a group, shall not constitute an
"Acquiring Person" under the Rights Agreement by reason of the acquisition by
such New Scotsman Stockholders of shares of capital stock of Scotsman pursuant
to this Agreement and the Whitlenge Share Acquisition Agreement. The
consummation of the transactions contemplated by this Agreement will not result
in an increase in the amount of compensation or benefits or accelerate the
vesting or timing of payment of any compensation or benefits payable to or in
respect of any employee of Scotsman or its subsidiaries.
Section 4.12. Disclosure. The representations and warranties
contained herein, the information contained in the Schedule referred to in this
Article IV and the other information or documents referred to in this Article
IV as having been furnished or to be furnished to Holding or any of its
representatives pursuant to the terms of this Agreement, taken as a whole, are
true and accurate in all material respects.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUB
As an inducement to Holding, TDC and the Stockholders to enter into this
Agreement and to consummate the transactions contemplated herein, Scotsman and
Sub hereby jointly and severally warrant and represent to Holding, TDC and the
Stockholders and agree as follows:
Section 5.1. Organization and Standing. Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Sub was organized solely for the purpose of engaging in the
transactions contemplated by this Agreement and has not engaged in any business
since it was incorporated which is not in connection with this Agreement.
Section 5.2. Capital Structure. The authorized capital stock of Sub
consists of 100 shares of common stock, $.01 par value, all of which are
validly issued and outstanding, fully paid and nonassessable and are owned by
Scotsman free and clear of all liens, claims and encumbrances.
Section 5.3. Authority. Sub has the requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement, the performance by Sub
of its obligations hereunder and the consummation of the transactions
contemplated hereby have been duly authorized by its Board of Directors, and,
except for the adoption of this Agreement by Scotsman as stockholder of Sub
(which adoption shall be effected promptly following the date hereof) and the
corporate filings required by state law, no other corporate proceedings on the
part of Sub are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Sub and this Agreement is, and each other agreement or instrument
of Sub contemplated hereby when executed and delivered will be, the legal,
valid and binding agreement of Sub enforceable against Sub in accordance with
its respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law).
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ARTICLE VI
ACTIONS PRIOR TO THE EFFECTIVE DATE
Scotsman, Sub, Holding and TDC (and the Stockholders with respect to
Sections 6.7, 6.8 and 6.9) covenant and agree to take the following respective
actions between the date hereof and the Effective Date:
Section 6.1. Proxy Statement; Registration Statement. Scotsman shall
prepare and file with the SEC as soon as practicable a registration statement
on Form S-4 (the "Registration Statement") containing a proxy
statement/prospectus covering the Scotsman Common Stock and the Scotsman
Convertible Preferred Stock to be issued pursuant to Article II (the form of
such proxy statement/prospectus, together with any amendments thereof or
supplements thereto, mailed to Scotsman's stockholders in connection with the
meeting referred to in Section 6.3 is herein referred to as the "Proxy
Statement/Prospectus") and shall use its best efforts to have the Registration
Statement declared effective by the SEC as soon as practicable. The
Registration Statement and the Proxy Statement/Prospectus will comply as to
form in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the respective rules and regulations
thereunder. The Registration Statement, when declared effective by the SEC,
and the Proxy Statement/Prospectus, at the time of its mailing or delivery to
the stockholders of Scotsman and at the time of the meeting referred to above,
will not include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing shall not apply
to the extent that any such untrue statement of a material fact or omission to
state a material fact was made by Scotsman in reliance upon and in conformity
with written information concerning Holding, TDC or their affiliates furnished
to Scotsman by Holding and TDC or their affiliates expressly for inclusion in
the Registration Statement. Scotsman shall also take any action required to be
taken under state blue sky or securities laws in connection with the issuance
of such Scotsman Common Stock and Scotsman Convertible Preferred Stock pursuant
to the Merger. The Registration Statement shall permit resales of Scotsman
Fixed Common Shares, Scotsman Convertible Preferred Shares and the shares of
Scotsman Common Stock issuable upon the conversion of the Scotsman Convertible
Preferred Shares, and shall be kept open for such purpose until the 45th day
following the Effective Date. Holding, TDC and the Stockholders shall, and
shall cause their affiliates to, furnish Scotsman all information concerning
themselves required for use in the Registration Statement, including, without
limitation, financial statements of Holding and TDC which are required to be
included in the Registration Statement or which are necessary to prepare pro
forma financial statements and information to be included in the Registration
Statement. If, at any time prior to the Effective Time, any event with respect
to
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Holding, TDC or any of their affiliates should occur which is required to be
described in an amendment of, or a supplement to, the Proxy
Statement/Prospectus or the Registration Statement, such event shall be so
described, and such amendment shall be promptly filed with the SEC and, as
required by law, disseminated to any stockholders of Scotsman and Holding.
Scotsman will advise Holding and TDC, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment thereto has been filed, of the issuance of any stop
order, of the suspension of the qualification for offering or sale in any
jurisdiction of the Scotsman Common Stock and Scotsman Convertible Preferred
Stock issuable in connection with the Merger or any request by the SEC for
amendment or supplement of the Registration Statement or for additional
information.
Section 6.2. Action by Stockholders of Holding. Holding shall, as soon as
practicable after the Registration Statement shall become effective, duly call,
give notice of, convene and hold a meeting of its stockholders for the purpose
of approving the Merger and adopting this Agreement. Holding will, through its
Board of Directors, recommend to its stockholders the adoption of this
Agreement. In lieu of such meeting, the stockholders of Holding may take the
actions described in the preceding sentence by unanimous written consent in
accordance with the DGCL.
Section 6.3. Action by Scotsman and Stockholders of Scotsman. Scotsman
shall, as soon as practicable after the Proxy Statement/Prospectus referred to
in Section 6.1 shall be cleared by the SEC, duly call, give notice of, convene
and hold a meeting of its stockholders for the purpose of approving the
issuance, in accordance with the terms and conditions of this Agreement, of the
Scotsman Fixed Common Shares, the Scotsman Contingent Common Shares and the
Scotsman Convertible Preferred Shares and the issuance, in accordance with the
terms and conditions of the Whitlenge Share Acquisition Agreement, of the
Scotsman Earnout Shares (as defined therein). Scotsman will, through its Board
of Directors, recommend to its stockholders approval of such issuance.
Scotsman, as the sole stockholder of Sub, shall take such actions as may be
necessary or desirable to approve the Merger and adopt this Agreement.
Section 6.4. Investigation of Holding, TDC and Scotsman. Holding, TDC and
Scotsman shall afford to the officers, employees and authorized representatives
of Scotsman, Holding or TDC, as the case may be (including, without limitation,
independent public accountants, attorneys, environmental consultants and
financial advisors thereof), reasonable access during normal business hours to
the offices, properties, employees and business and financial records
(including, without limitation, computer files, retrieval programs and similar
documentation) of Holding, TDC or Scotsman, as the case may be, to the extent
Scotsman, Holding or TDC, as
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the case may be, shall deem necessary or desirable, and shall furnish
to Scotsman, Holding or TDC, as the case may be, or such party's authorized
representatives such additional information concerning the operations,
properties and businesses of Holding, TDC or Scotsman, as the case may be, as
may be reasonably requested in writing, to enable Scotsman, Holding or TDC or
such party's authorized representatives to verify the accuracy of the
representations and warranties contained in this Agreement, to verify the
accuracy of the financial statements referred to in Section 3.5 and to
determine whether the conditions set forth in Articles VIII and IX have been
satisfied. Scotsman, Holding and TDC agree that such investigations shall be
conducted in such manner as not to interfere unreasonably with the operation of
the business of Holding, TDC or Scotsman, as the case may be. Without limiting
the foregoing, TDC shall permit Scotsman, or its representatives, to conduct an
environmental audit of any of the Owned Real Property or the Leased Real
Property, with respect to any environmental health and safety issues deemed
material by Scotsman. No investigation made by Scotsman, Holding or TDC or
such party's authorized representatives hereunder shall affect the
representations and warranties of the parties hereunder.
Section 6.5. Lawsuits, Proceedings, Etc. Holding, TDC or Scotsman shall
notify Scotsman or Holding and TDC, as the case may be, promptly of any
lawsuit, proceeding, claim or investigation that may be threatened, brought,
asserted or commenced against any party hereto (a) involving in any way the
transactions contemplated by this Agreement or (b) that would have been listed
in Schedule 3.17 or specified as an exception to Section 4.9 if such lawsuit,
proceeding, claim or investigation had arisen prior to the date hereof.
Section 6.6. Conduct of Business by Holding, TDC and Scotsman Pending the
Merger. (a) During the period from the date of this Agreement through the
Effective Time, except as expressly contemplated by this Agreement, Holding,
TDC and Scotsman shall carry on their businesses in, and not enter into any
material transaction other than in accordance with, the ordinary course
consistent with past practice and, to the extent consistent therewith, use
their reasonable efforts to preserve intact their current business
organizations, keep available the services of their current officers and
preserve their relationships with customers, suppliers and others having
business dealings with them (except, in each case, with respect to Holding and
TDC, with the prior written consent of Scotsman and except, in each case with
respect to Scotsman, with the prior written consent of Holding). Without
limiting the generality of the foregoing, and except as expressly contemplated
by this Agreement, neither Holding nor TDC shall, without the prior written
consent of Scotsman (not to be unreasonably withheld):
(i) (x) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make
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any payments to the Stockholders in their capacity as such (other than
(a) any such payments otherwise permitted to be made under this Agreement,
(b) the payment, when due, and not earlier, of management fees in accordance
with the terms, as in effect on the date hereof, of the Management Advisory
Agreement, dated May 1, 1991, between TDC and Onex U.S. Investments Inc. (the
"Onex Management Agreement"), and the Management Advisory Agreement, dated
May 1, 1991, between TDC and The Matthew Diggs Group, Inc. (the "Diggs
Management Agreement"), and (c) dividends and other distributions by TDC to
Holding to enable Holding to pay its liabilities), (y) split, combine or
reclassify any of its capital stock or issue, sell or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (z) purchase, redeem or otherwise acquire any
shares of capital stock of Holding or TDC or any other securities thereof or
any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock or other securities (including, without
limitation, any rights, warrants or options to acquire any securities);
(iii) amend its certificate of incorporation or by-laws;
(iv) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof;
(v) sell, lease or otherwise dispose of or agree to sell, lease or
otherwise dispose of, any of its assets, except sales of inventory in the
ordinary course of business and the sale, lease or other disposition of other
assets having a book or fair market value in the aggregate not exceeding U.S.
$50,000;
(vi) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others, or make any loans, advances or capital contributions
to, or investments in, any other person, except the incurrence and/or
guarantee of indebtedness to fund working capital and except in connection
with Section 6.6(c);
(vii) make or incur any new capital expenditure or expenditures which,
individually, is in excess of U.S. $50,000 or, in the aggregate, are in
excess of U.S. $250,000;
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(viii) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business;
(ix) alter through merger, liquidation, reorganization, restructuring or in
any other fashion its corporate structure;
(x) enter into or adopt, or amend any existing, bonus, incentive, deferred
compensation, insurance, medical, hospital, disability or severance plan,
agreement or arrangement or enter into or amend any Plan or employment,
consulting or management agreement (including, without limitation, the Onex
Management Agreement and the Diggs Management Agreement), other than any such
amendment to a Plan that is made to maintain the qualified status of such
Plan or its continued compliance with applicable law;
(xi) make any change in accounting practices or policies applied in the
preparation of the financial statements referred to in Section 3.5 except as
required by generally accepted accounting principles;
(xii) modify any of the agreements, understandings, obligations,
commitments, indebtedness or other obligations set forth in Schedule 6.6(a)
or enter into any agreement, understanding, obligation or commitment, or
incur any indebtedness or obligation, of the type that would have been
required to be listed on Schedule 3.30 if in existence on the date hereof; or
(xiii) pay or commit to pay any bonus to any officer or employee of Holding
or TDC other than in accordance with and when required by the terms of the
Bonus Plan as in effect on the date hereof;
(xiv) enter into any other transaction affecting the business of Holding or
TDC, other than in the ordinary course of business consistent with past
practice or as expressly contemplated by this Agreement.
(b) Without limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Agreement or the Whitlenge Share
Acquisition Agreement, Scotsman shall not, without the prior written consent of
Holding (not to be unreasonably withheld):
(A) issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock or other securities (including, without
limitation, any rights, warrants or options to acquire any securities), other
than (i) options granted pursuant to Scotsman's long-term
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executive incentive compensation plan as in existence on the date hereof, (ii)
the issuance of shares (and associated Common Stock Purchase Rights) pursuant
to such options, other employee benefit plans as in existence on the date
hereof or other rights, warrants or options outstanding as the date hereof
and (iii) the issuance of other shares of Scotsman Common Stock (and
associated Common Stock Purchase Rights) in an amount not to exceed 1% of the
issued and outstanding shares of Scotsman Common Stock on the date hereof;
(B) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof, in any such case having a
fair market value of U.S. $2,000,000 or more; or
(C) alter through merger, liquidation, reorganization or restructuring its
corporate structure, except that Scotsman may make changes in its corporate
structure required to be made or desirable in connection with the
consummation of the transactions contemplated by this Agreement and the
Whitlenge Share Acquisition Agreement or the financing related thereto.
(c) Notwithstanding any other provision of this Agreement, prior to the
Effective Time, Holding may make distributions and payments in respect of the
redemption or repurchase of Holding Common Stock in amounts not to exceed, in
the aggregate, U.S. $7,000,000 and TDC may make a distribution to Holding
sufficient to permit Holding to make the above distribution, redemption or
repurchase, and each of Holding and TDC may take any action necessary or
appropriate to effect such distribution or payment (including incurring
indebtedness for borrowed money), and any Stockholder or Stockholders or
Permitted Transferee (as hereinafter defined) thereof may sell their Holding
Common Stock to Holding; provided, however, that the Cash Consideration payable
to such persons in the case of a redemption or repurchase, and to all holders
of Holding Common Stock in the case of a distribution to all such holders, in
connection with the Merger pursuant to Section 2.1(c) shall be reduced by an
amount equal to such amounts paid to such persons in redemption or repurchase
by Holding pursuant to this Section 6.6(c) and all such amounts distributed by
Holding, respectively; and provided, further, that no amount shall be
distributable or payable pursuant to this Section 6.6(c) unless Holding shall
have determined, in its reasonable discretion, that such amount is available to
it for such distribution or payment without regard to the Merger or any other
transactions contemplated by this Agreement; and provided, further, that in the
case of any such distribution, redemption or repurchase that is not made on a
pro rata basis with respect to all holders of Holding Common Stock,
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Schedule 10.1 shall be appropriately revised to reflect a reallocation
of the amounts set forth therein.
(d) Holding, TDC or Scotsman shall promptly advise Scotsman or Holding and
TDC, as the case may be, orally and in writing of any change or event having a
Material Adverse Effect on Holding and TDC taken as a whole, or on Scotsman and
its subsidiaries taken as a whole, as the case may be.
Section 6.7. Mutual Cooperation; Reasonable Best Efforts. The parties
hereto shall cooperate with each other, and shall use their respective
reasonable best efforts to cause the fulfillment of the conditions to the
parties' obligations hereunder and to obtain as promptly as possible all
consents, authorizations, orders or approvals from each and every third party,
whether private or governmental, required in connection with the transactions
contemplated by this Agreement; provided, however, that the foregoing shall not
require Scotsman or TDC to make any divestiture or consent to any divestiture
by TDC in order to obtain any waiver, consent or approval.
Section 6.8. No Public Announcement. None of the parties hereto shall,
without the approval of Scotsman, Holding and TDC (which may not be
unreasonably withheld), make any press release or other public announcement
concerning the transactions contemplated by this Agreement, except as and to
the extent that such party shall be so obligated by law, in which case Scotsman
or Holding and TDC, as the case may be, shall be advised and Scotsman, Holding
and TDC shall use their reasonable best efforts to cause a mutually agreeable
release or announcement to be issued.
Section 6.9. No Solicitation. Holding, TDC and their affiliates shall not,
nor shall they authorize or permit any officer, director or employee of or any
investment banker, attorney or other adviser or representative of TDC, Holding
or any of their affiliates to, (i) solicit, initiate, or encourage the
submission of, any Acquisition Proposal (as hereinafter defined), (ii) enter
into any agreement with respect to any Acquisition Proposal or (iii) except to
the extent required by law as advised by counsel in writing, participate in any
discussions or negotiations regarding, or furnish to any person any information
for the purpose of facilitating the making of, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal. Without limiting
the foregoing, it is understood that any violation, of which Holding, TDC or
any of their affiliates had knowledge at the time of such violation, of the
restrictions set forth in the preceding sentence by any officer or director of
Holding or TDC or any of their affiliates or any investment banker, attorney or
other adviser or representative of Holding, TDC or any of their affiliates,
whether or not such person is purporting to act on behalf of Holding, TDC or
any of their affiliates or otherwise, shall be deemed to be a breach of
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this Section 6.9 by Holding, TDC and their affiliates. Holding and TDC
promptly shall advise Scotsman of any Acquisition Proposal and any inquiries
with respect to any Acquisition Proposal. For purposes of this Agreement,
"Acquisition Proposal" means any proposal for a merger or other business
combination involving Holding or TDC or any proposal or offer to acquire in any
manner, directly or indirectly, an equity interest in Holding or TDC, any
voting securities of Holding or TDC or a substantial portion of the assets of
TDC.
Section 6.10. Listing Applications. Scotsman will promptly file an
application to list on the New York Stock Exchange, Inc. ("NYSE"), subject to
official notice of issuance, the Scotsman Fixed Common Shares to be issued
pursuant to Section 2.1, the Scotsman Contingent Common Shares which may be
issued pursuant to Sections 2.1 and 2.3 and the Scotsman Common Stock issuable
upon the conversion of the Scotsman Convertible Preferred Shares and will use
its best efforts to effect such listing on the NYSE on or prior to the
Effective Date and to maintain its listing on the NYSE of Scotsman Common Stock
thereafter.
Section 6.11. Antitrust Law Compliance. Scotsman shall file and Holding
shall cause the "ultimate parent entity" (within the meaning of the HSR Act and
rules and regulations thereunder) of Holding to file with the Federal Trade
Commission and the United States Department of Justice the notification and
other information required to be filed with respect to the transactions
contemplated herein under the HSR Act and the rules and regulations promulgated
thereunder. Scotsman warrants that all such filings by it shall be, and
Holding and TDC warrant that all such filings by such ultimate parent entity
shall be, accurate as of the date filed and in accordance with the requirements
of the HSR Act and all such rules and regulations. Scotsman and Holding agree
to make available, or cause to be made available, to the other parties such
information as may reasonably be requested relative to the businesses, assets
and property of Scotsman, Holding, TDC and the ultimate parent entity of
Holding, as the case may be, as may be required to file any additional
information requested by such agencies under the HSR Act and such rules and
regulations.
Section 6.12. Termination of Management and Stockholders' Agreements.
Holding and TDC shall cause the Onex Management Agreement and the Diggs
Management Agreement to be terminated effective at or prior to the Effective
Date pursuant to an instrument which is in form and substance reasonably
satisfactory to Scotsman. The Stockholders shall cause the Stockholders'
Agreement, dated as of May 1, 1991 and amended December 29, 1992, among 713389
Ontario Inc. (as the transferee of Onex U.S. Investments, Inc.), EJJM (as the
transferee of The Matthew Diggs Group, Inc.), Pacific, PM, Manifold, McCollom,
Moffatt, Panella, Reed, Schafer, Tillotson, Tilmann, KE McCrone, MP McCrone,
Anderson and Holding (the "Stockholders' Agreement") to be terminated effective
at or prior to the Effective Date.
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Section 6.13. Periodic Financial Statements. Holding shall furnish, or
cause to be furnished, to Scotsman by February 15, 1994, and Scotsman shall
furnish, or cause to be furnished, to Holding by March 31, 1994 (or earlier if
available), the audited consolidated balance sheet and statements of income of
Holding or Scotsman, as the case may be, for the period ended December 31, 1993
or January 2, 1994, as the case may be, which financial statements shall be
prepared in accordance with the books and records of Holding or Scotsman, as
the case may be, fairly present in all material respects the consolidated
financial position of Holding or Scotsman, as the case may be, as of the date
or for the period indicated and shall be prepared in conformity with generally
accepted accounting principles consistently applied. Holding or Scotsman, as
the case may be, shall provide, or shall cause to be promptly provided, to
Scotsman or Holding, as applicable, such other financial information relating
to Holding and TDC or Scotsman (including, without limitation, information on
payables and receivables) as Scotsman or Holding, as applicable, may reasonably
request.
Section 6.14. Financing. Scotsman shall use its reasonable best efforts to
obtain the financing commitments, amendments or other financing arrangements
referred to in Section 8.14, to enter into definitive agreements consistent
with the terms of such financing commitments, amendments or arrangements and to
do all such acts and things reasonably necessary to consummate the transactions
contemplated by such definitive agreements. Scotsman shall promptly notify
Holding and TDC of the receipt of such financing commitments, amendments or
arrangements and shall advise Holding and TDC from time to time of its progress
in negotiating such definitive agreements.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
Section 7.1. Board Representation. Effective on or prior to the Effective
Date, Scotsman shall increase the size of its Board of Directors by one, so
that such Board of Directors shall consist of a total of eight directors, with
such additional directorship to be in the class of directors whose term expires
at the 1996 annual meeting of stockholders (the "1996 Class"), and (ii) appoint
Collins to the currently existing vacancy in the class of directors whose term
expires at the 1995 annual meeting of stockholders (the "1995 Class") and Diggs
to the new directorship in the 1996 Class, in each case to hold office until
his successor shall have been duly elected and qualified. So long as the
Stockholders, their Permitted Transferees (the Stockholders and their Permitted
Transferees are collectively referred to herein as the "Merger Stockholders")
and the Acquisition Shareholders (the Merger Stockholders and the Acquisition
Shareholders are collectively referred to as the "New Scotsman Stockholders")
own (on a fully diluted basis) at least 1,688,578
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shares of Scotsman Common Stock (reduced by one-half of the amount (the
"Reduction Amount") equal to the excess, if any, of 651,733 over the sum of (i)
the number of Scotsman Contingent Common Shares, if any, finally determined to
be issuable pursuant to Sections 2.1(d), 2.2 and 2.3 and (ii) the number of
Scotsman Earnout Shares (as defined in the Whitlenge Share Acquisition
Agreement), if any, finally determined to be issuable pursuant to Sections 1.1
and 1.2 of the Whitlenge Share Acquisition Agreement and appropriately adjusted
for any recapitalization, stock dividend, split or other similar change in the
capital stock taking place after the date hereof), the New Scotsman
Stockholders will be entitled to designate the individuals who are nominated by
Scotsman's Board of Directors to fill the directorships initially held by
Collins and Diggs. If at any time the ownership of the New Scotsman
Stockholders (on a fully diluted basis) is between 1,114,462 (reduced by an
amount equal to 33% of the Reduction Amount and appropriately adjusted for any
recapitalization, stock dividend, split or other similar change in the capital
stock taking place after the date hereof) and 1,688,578 shares of the Scotsman
Common Stock (reduced by an amount equal to one-half of the Reduction Amount
and appropriately adjusted for any recapitalization, stock dividend, split or
other similar change in the capital stock taking place after the date hereof),
the New Scotsman Stockholders will be entitled to designate the individual
chosen pursuant to subsection 3(b) of the Stockholders' Agreement, dated as of
January 11, 1994, as amended from time to time, among certain of the
stockholders of Holding, the shareholders of WAL and certain other parties
thereto, and shall have no right under this Section 7.1 to designate any other
individuals for election to the Board. If at any time the New Scotsman
Stockholders own (on a fully diluted basis) less than 1,114,462 shares of the
Scotsman Common Stock (reduced by 33% of the Reduction Amount and appropriately
adjusted for any recapitalization, stock dividend, split or other similar
change in the capital stock taking place after the date hereof), the New
Scotsman Stockholders will no longer have any right under this Section 7.1 to
designate any nominees for election to the Board.
If the right of the New Scotsman Stockholders to designate an individual or
individuals for nomination shall cease (by reason of the foregoing or the
immediately following paragraph of this Section 7.1) at any time during which a
directorship or directorships is or are held by a designee or designees of the
New Scotsman Stockholders and any such designee or designees holding the
directorship or directorships as to which the New Scotsman Stockholders have no
such right is a New Scotsman Stockholder or are New Scotsman Stockholders, then
any such designee who is a New Scotsman Stockholder shall, at Scotsman's
request, promptly resign as director. If such designee or designees are not
New Scotsman Stockholders, the New Scotsman Stockholders shall, at Scotsman's
request, use their reasonable best efforts to cause such designee or designees
to promptly resign. So long as the New Scotsman Stockholders are entitled
under this Section
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7.1 to designate at least one nominee, Scotsman shall cause
the size of the Board not to exceed eight directors (unless the holders of
shares of any preferred stock, including, without limitation, the Scotsman
Convertible Preferred Stock, are entitled to elect directors pursuant to the
applicable Certificate of Designation, in which case the Board may consist of
up to such amount of directors as is equal to eight plus such additional
directors).
The rights of the New Scotsman Stockholders under this Section 7.1 shall
terminate at such time as the obligations of the Merger Stockholders pursuant
to Section 7.2 and of the Acquisition Shareholders pursuant to Section 5.1 of
the Whitlenge Share Acquisition Agreement (or in either case pursuant to any
agreement extending the obligations under Section 7.2 or such Section 5.1, as
the case may be) terminate.
As used herein, "Permitted Transferees" shall mean with respect to any
Stockholder (other than Onex or Onex DHC), (i) any other Stockholder, (ii) any
of its controlled affiliates, (iii) in the event of the dissolution,
liquidation or winding up of any Stockholder that is a corporation or a
partnership, the partners of a partnership that is such Stockholder, the
stockholders of a corporation that is such Stockholder or a successor
partnership all of the partners of which or a successor corporation all of the
stockholders of which are the persons who were the partners of such partnership
or the stockholders of such corporation immediately prior to the dissolution,
liquidation or winding up of such Stockholder, (iv) a transferee by
testamentary or intestate disposition, (v) the spouse, children and/or other
relatives of such Stockholder, (vi) a trust transferee by inter vivos transfer,
the beneficiaries of which are the transferring Stockholder, spouse, children
and/or other relatives of such Stockholder, or (vii) a successor nominee or
trustee for the beneficial owner of the shares of Holding Common Stock for
which such Stockholder acts as nominee or trustee, as the case may be, in each
case to whom a Stockholder may transfer shares of Holding Common Stock prior to
the Effective Time; provided, however, that (x) the aggregate number of shares
covered by transfers to persons described in clause (i) shall not exceed
1,500,000 and (y) any such Permitted Transferee who was not, prior to such
transfer, a stockholder of Holding shall furnish to Scotsman a written
instrument, reasonably satisfactory to Scotsman, whereby such Permitted
Transferee agrees to be bound by any obligations of Merger Stockholders
contained in this Agreement as though such Permitted Transferee were a party
hereto (it being understood that any such transfer shall in no way relieve any
Stockholder of any obligations under this Agreement unless such transfer shall
be made to another Stockholder, in which case Schedule 10.1 shall be
appropriately revised to reflect a reallocation of the percentages set forth
therein). As used in this Section 7.1, "on a fully diluted basis" shall
include any shares of Scotsman Common Stock into which shares of Scotsman
Convertible Preferred Stock owned by the New Scotsman Stockholders are
convertible and,
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until the final determination of the number of Scotsman Common
Contingent Shares, if any, issuable pursuant to Sections 2.1(d), 2.2 and 2.3
and the number of Scotsman Earnout Shares, if any, issuable pursuant to
Sections 1.1 and 1.2 of the Whitlenge Share Acquisition Agreement, the maximum
number of Scotsman Contingent Common Shares and Scotsman Earnout Shares that
may be issuable.
Section 7.2. Voting. So long as the New Scotsman Stockholders are entitled
under Section 7.1 to designate at least one nominee to Scotsman's Board of
Directors, the Merger Stockholders, together with any affiliates or associates
controlled by them, shall, and the Merger Stockholders shall use reasonable
best efforts to cause any other of their affiliates or associates to, vote all
shares of capital stock of Scotsman owned by them (other than the shares of
Scotsman Common Stock (the "PM Affiliate Shares") listed on Schedule 3.3(b) as
being beneficially owned by the affiliates of Pacific and PM listed on such
Schedule (the "PM Affiliates") or other shares acquired after the date hereof
by the PM Affiliates without violation of Section 7.3, as to which this Section
7.2 shall not apply) in favor of all of the director nominees to the Board of
Directors recommended by the Board of Directors of Scotsman (which shall
include any designate or designates referred to in Section 7.1). The
obligations of the Merger Stockholders under this Section 7.2 shall in any
event terminate on the tenth anniversary of the date hereof unless, by
agreement among Scotsman and the New Scotsman Stockholders who then own any
shares of Scotsman Common Stock or Scotsman Convertible Preferred Stock, such
obligations are extended after the eighth anniversary and prior to such tenth
anniversary.
Section 7.3. Standstill. Unless specifically requested in writing in
advance by Scotsman's Board of Directors, during the period from the date
hereof through and including the fifth anniversary hereof, the New Scotsman
Stockholders, together with their affiliates and associates, may not, directly
or indirectly, (i) acquire any voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any voting securities, of
Scotsman (other than pursuant to this Agreement or the Whitlenge Share
Acquisition Agreement, or upon the conversion, in accordance with their terms,
of the Scotsman Convertible Preferred Shares acquired pursuant to this
Agreement), (ii) make, induce or assist any other person to make, any proposal
regarding an acquisition of Scotsman by any person or group or any other
transaction that could result in a change in control of Scotsman, (iii) solicit
proxies or otherwise participate in any proxy contest with respect to Scotsman,
(iv) enter into any discussions, negotiations, arrangements or understandings
with any other person with respect to any matter described in clause (i), (ii)
or (iii), (v) request a waiver to permit any of the foregoing or (vi) take any
action with respect to any of the foregoing matters that requires public
disclosure. Notwithstanding clause (i) of the immediately preceding sentence,
in the event this Agreement is terminated pursuant to Section
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11.1, and only in such event, the New Scotsman Stockholders, together with
their affiliates, may acquire beneficial ownership of shares of Scotsman Common
Stock representing less than 5% of the outstanding shares. Neither the New
Scotsman Stockholders nor any of their successors may sell in any transaction,
or series of related transactions, more than 500,000 shares of Scotsman Common
Stock (on a fully diluted basis and appropriately adjusted for any
recapitalization, stock dividend, split or other change in the capital stock
taking place after the date hereof) to a single person or group (other than a
group of underwriters in connection with an underwritten public offering)
unless such person or group agrees to the provisions of this Section 7.3.
Nothing in this Section 7.3 shall in any way limit the obligations of the New
Scotsman Stockholders and their affiliates and associates under Section 7.2, it
being understood that, so long as the New Scotsman Stockholders are entitled
under Section 7.1 to designate one nominee to Scotsman's Board of Directors,
during any proxy contest conducted with respect to Scotsman by any third party,
the New Scotsman Stockholders, together with their affiliates and associates,
shall be required to vote (other than the voting of the PM Affiliate Shares or
other shares acquired after the date hereof by the PM Affiliates without
violation of this Section 7.3, as to which this sentence shall not apply) in
favor of the director nominees to the Board of Directors recommended by the
Board of Directors of Scotsman. Notwithstanding the provisions of this Section
7.3, (a) the PM Affiliates may sell or otherwise dispose of the PM Affiliate
Shares to any person in any manner, without regard to such provisions (provided
that this clause (a) shall not permit any New Scotsman Stockholder, or its
affiliates or associates, to acquire such PM Affiliate Shares) and (b) the PM
Affiliates shall no longer be bound by this Section 7.3 after the later of (i)
the date of final determination of EBITDA pursuant to Section 2.3 (or, if the
Scotsman Contingent Common Shares are issuable pursuant to Sections 2.1(d) and
2.3, the date of such issuance) and (ii) the date on which (x) Pacific, PM and
their affiliates (other than the PM Affiliates) no longer beneficially own any
shares of Scotsman Common Stock or Scotsman Convertible Preferred Stock
acquired pursuant to this Agreement or any shares of Scotsman Common Stock
acquired upon conversion of such Scotsman Convertible Preferred Stock and (y)
Pacific, PM and their affiliates (including the PM Affiliates) are no longer
part of a "group" (within the meaning of Rule 13d-5 under the Exchange Act)
with respect to securities of Scotsman which includes any New Scotsman
Stockholder or any affiliate of any New Scotsman Stockholder, it being
understood that if the PM Affiliates are no longer bound by this Section 7.3 as
described above, Pacific, PM and their affiliates (other than the PM
Affiliates) will continue to be bound by this Section 7.3.
Section 7.4. Insurance. Onex and the affiliates of Onex controlled by it
will take such action as is necessary to cause the insurance policies listed on
Schedule 3.21 to provide the coverage listed therein with respect to Holding
and TDC for
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periods ending on or prior to the Effective Date, and to continue
such coverage, on and after the Effective Date, for the benefit of the
Surviving Corporation and TDC and (to the extent permitted under such policies)
their respective successors and assigns with respect to periods ending on or
prior to the Effective Date, notwithstanding the transactions contemplated
hereby, except to the extent any insurer cancels any such policy or withdraws
from coverage (other than at the request of Holding, TDC or any affiliate
thereof or due to the failure to pay any premium on any such policy). Without
limiting the foregoing, neither Onex nor the affiliates of Onex controlled by
it shall take any action to remove Holding or TDC as a named insured under any
of such policies or cause Holding or TDC to be denied the benefit of any
insurance coverage currently available to them.
Section 7.5. Tax-Free Nature; Tax Consequences. The parties to this
Agreement intend the Merger to constitute a reorganization described in section
368(a) of the Code and shall use their reasonable best efforts to cooperate in
achieving such a tax-free reorganization. Notwithstanding the preceding
sentence, the parties to this Agreement will rely solely on their own advisors
in determining the tax consequences of the transactions contemplated by this
Agreement and each party is not relying, and will not rely, on any
representations or assurances of any other party regarding such consequences
other than the representations and covenants set forth in writing in this
Agreement or any other agreement or certificate delivered in connection
herewith. In the event that the transactions contemplated by this Agreement do
not qualify as such a tax-free reorganization, the validity of such
transactions shall nevertheless be binding and final upon the parties to this
Agreement. Scotsman will not take any tax reporting positions or make any tax
elections inconsistent with the characterization of the Merger as a
reorganization described in section 368(a)(2)(E) of the Code except as may be
required upon examination by any Tax authority.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SCOTSMAN AND SUB
The obligations of Scotsman and Sub under this Agreement to cause the Merger
to be consummated shall, at the option of Scotsman, be subject to the
satisfaction, on or prior to the Effective Date, of the following conditions:
Section 8.1. No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Holding, TDC or any Stockholder in
the performance of their respective covenants and agreements herein to be
performed at or prior to the Effective Time; subject to Section 10.7, none of
the representations and warranties of any Stockholder that is qualified as to
materiality shall be untrue or incorrect in any respect and on the Effective
Date such representations and
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warranties shall be true and correct as though made on the Effective
Date except for changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by Scotsman,
permitted by Section 6.6(a) or entered into in connection with the consummation
of the Merger and the other transactions contemplated hereby; subject to
Section 10.7, none of the representations or warranties that is not so
qualified shall be untrue or incorrect in any material respect and on the
Effective Date such representations and warranties shall be true and correct in
all material respects as though made on the Effective Date except for changes
therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by Scotsman, permitted by Section
6.6(a) or entered into in connection with the consummation of the Merger and
the other transactions contemplated hereby; and there shall have been delivered
to Scotsman and Sub a certificate or certificates to the foregoing effect,
dated the Effective Date, signed on behalf of Holding and TDC by their
respective Presidents and Chief Financial Officers and signed by each of the
Stockholders.
Section 8.2. No Material Adverse Effect. Between the date hereof and the
Effective Date, there shall have been no Material Adverse Effect on Holding and
TDC, taken as a whole; and there shall have been delivered to Scotsman and Sub
a certificate or certificates to such effect, dated the Effective Date, signed
on behalf of Holding and TDC by their respective Presidents and Chief Financial
Officers and signed by each Stockholder.
Section 8.3. Opinion of Counsel for Holding, TDC and the Stockholders.
Scotsman and Sub shall have received (a) from Debevoise & Plimpton, counsel for
Holding and TDC, an opinion, dated the Effective Date, in form and substance
reasonably satisfactory to Scotsman, substantially to the effect set forth in
Exhibit III-A, and (b) from counsel for Onex, Onex DHC, EJJM, Diggs and
Collins, opinions, dated the Effective Date, in form and substance reasonably
satisfactory to Scotsman, substantially to the effect set forth in Exhibit
III-B.
Section 8.4. No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
the parties shall have used its reasonable best efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered.
Section 8.5. Necessary Governmental Approvals. The parties shall have
received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Effective Date by applicable law or
regula-
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tion (including, without limitation, the expiration or early termination
of the applicable waiting period under the HSR Act, if any) or are necessary to
prevent a Material Adverse Effect on Holding and TDC taken as a whole.
Section 8.6. Necessary Consents. Holding and TDC shall have received
consents, in form and substance reasonably satisfactory to Scotsman, to the
transactions contemplated hereby from the other parties to all material
contracts, leases, agreements and permits to which Holding or TDC is a party or
by which they are affected and which require such consent prior to the Merger
and are necessary to prevent a Material Adverse Effect with respect to Holding
and TDC taken as a whole.
Section 8.7. Noncompetition Agreements. Each of Onex, Onex DHC, Diggs,
Collins, Manifold, McCollom, Moffatt, Panella, Reed, Schafer, Tillotson,
Tilmann, KE McCrone, MP McCrone and Anderson shall have entered into a
Noncompetition Agreement with Scotsman substantially in the form of Exhibit IV.
Section 8.8. Registration Rights Agreement. The Stockholders shall have
each entered into the Registration Rights Agreement substantially in the form
of Exhibit V.
Section 8.9. Stockholder Action. This Agreement shall have been unanimously
adopted by all holders of Holding Common Stock. The issuance of shares of
Scotsman Common Stock and Scotsman Convertible Preferred Stock pursuant to this
Agreement and the Whitlenge Share Acquisition Agreement shall have been
approved by a majority of votes cast by holders of Scotsman Common Stock,
provided that the total vote cast shall have represented over 50% of the issued
and outstanding shares of Scotsman Common Stock at the time of the vote.
Section 8.10. Dissenting Stockholders. No stockholder of Holding shall have
delivered a written demand for appraisal of its Holding Common Stock pursuant
to Section 262 of the DGCL; and there shall have been delivered to Scotsman and
Sub a certificate or certificates to such effect, dated the Effective Date,
signed on behalf of Holding and TDC by their respective Presidents and Chief
Financial Officers.
Section 8.11. Stock Exchange Listings. The NYSE shall have approved for
listing, upon official notice of issuance, the shares of Scotsman Fixed Common
Shares to be issued pursuant to Section 2.1, the Scotsman Contingent Common
Shares which may be issued pursuant to Sections 2.1 and 2.3 and the shares of
Scotsman Common Stock issuable upon conversion of the Scotsman Convertible
Preferred Shares.
Section 8.12. Registration Statement Effective. The Registration Statement
shall have been declared effective by the SEC and no stop order suspending the
effectiveness of the Registration Statement shall have been entered by the SEC.
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Section 8.13. Securities Laws. Scotsman shall have received all necessary
permits and otherwise complied with any state securities laws applicable to the
issuance of the Scotsman Common Stock, the Scotsman Convertible Preferred Stock
and the Scotsman Nonconvertible Preferred Stock pursuant to this Agreement.
Section 8.14. Financing. Scotsman shall have obtained, on or before
February 15, 1994, written financing commitments, amendments to its existing
financing arrangements or other financing arrangements in an amount sufficient
to (i) pay the cash consideration specified in this Agreement and the Whitlenge
Share Acquisition Agreement, (ii) refinance, to the extent required, the
outstanding debt of Scotsman and (iii) refinance the outstanding debt of
Holding, TDC and Whitlenge, in each case on terms satisfactory to Scotsman.
Section 8.15. Comfort Letters. Scotsman and Sub shall have received comfort
letters from Arthur Andersen & Co., Coopers & Lybrand and Ernst & Young, dated
the date of mailing the Proxy Statement/Prospectus and the Effective Date and
addressed to Scotsman, in each case in form and substance reasonably
satisfactory to Scotsman, covering such matters reasonably requested by it.
Section 8.16. Glenco Holdings. Scotsman shall have obtained a written
waiver by Glenco Holdings of the Scotsman Noncompetition Agreement, dated
September 23, 1992 (the "Scotsman Noncompetition Agreement").
Section 8.17. Whitlenge Share Acquisition Agreement. The Whitlenge Share
Acquisition Agreement shall be in full force and effect and all of the issued
WAL Ordinary Shares (as such term is defined in the Whitlenge Share Acquisition
Agreement) shall have been tendered, accompanied by a stock transfer form
executed in blank, and accepted for payment by Scotsman or the Tender
Subsidiary (as so defined) and the condition contained in Section 6.21 of the
Whitlenge Share Acquisition Agreement shall have been satisfied or waived.
Section 8.18. Average Scotsman Common Stock Closing Price. The average
Closing Price of the Scotsman Common Stock for the ten trading days prior to
the date of the meeting of the stockholders of Scotsman referred to in Section
6.3 shall not be more than U.S. $14.50.
Section 8.19. Resignations of Directors. Scotsman shall have received the
resignation of each of the directors of Holding and TDC, effective as of the
Effective Date.
Section 8.20. Termination of Management and Stockholders' Agreement. The
Onex Management Agreement, the Diggs Management Agreement and the Stockholders'
Agreement shall have been terminated, effective upon the Effective Date,
without payment by
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Holding, WAL or any of their subsidiaries of any amount in respect of
such termination other than accrued fees and expenses incurred before the
Effective Time.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS
OF HOLDING, TDC AND THE STOCKHOLDERS
The obligations of Holding, TDC and the Stockholders under this Agreement to
cause the Merger to be consummated shall, at the option of Holding, TDC and the
Stockholders, be subject to the satisfaction, on or prior to the Effective
Date, of the following conditions (other than the condition set forth in
Section 9.14), and the obligations of Holding, TDC and the Stockholders under
this Agreement to cause the Merger to be consummated shall, at the option of
Holding, be subject to the satisfaction, on or prior to the Effective Date, of
the condition set forth in Section 9.14:
Section 9.1. No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Scotsman or Sub in the performance
of any of their respective covenants and agreements herein to be performed at
or prior to the Effective Time; none of the representations and warranties of
Scotsman or Sub that is qualified as to materiality shall be untrue or
incorrect in any respect and on the Effective Date such representations and
warranties shall be true and correct as though made on the Effective Date
except for changes therein specifically permitted by this Agreement or
resulting from any transactions expressly consented to in writing by Holding,
permitted by Sections 6.6(a) and (b) or entered into in connection with the
consummation of the Merger and the other transactions contemplated hereby; none
of the representations or warranties that are not so qualified shall be untrue
or incorrect in any material respect and on the Effective Date such
representations and warranties shall be true and correct in all material
respects as though made on the Effective Date except for changes therein
specifically permitted by this Agreement or resulting from any transactions
expressly consented to in writing by Holding, permitted by Sections 6.6(a) and
(b) or entered into in connection with the consummation of the Merger and the
other transactions contemplated hereby; and there shall have been delivered to
Holding, TDC and the Stockholders a certificate or certificates to the
foregoing effect, dated the Effective Date, signed on behalf of Scotsman and
Sub by their Presidents and Chief Financial Officers.
Section 9.2. No Material Adverse Effect. Between the date hereof and the
Effective Date, there shall have been no Material Adverse Effect on Scotsman
and its subsidiaries taken as a whole; and there shall have been delivered to
Holding, TDC and the Stockholders a certificate or certificates to such effect,
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dated the Effective Date, signed on behalf of Scotsman by its President and
Chief Financial Officer.
Section 9.3. No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
the parties shall have used its reasonable best efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered.
Section 9.4. Opinions of Counsel for Scotsman and Sub. Holding, TDC and the
Stockholders shall have received (a) from Sidley & Austin, special counsel for
Scotsman and Sub, an opinion, dated the Effective Date, in form and substance
satisfactory to Holding, TDC and the Stockholders, substantially to the effect
set forth in Exhibit VI-A, and (b) from Schiff, Hardin & Waite, counsel for
Scotsman and Sub, an opinion, dated the Effective Date, in form and substance
satisfactory to Holding, TDC and the Stockholders, substantially to the effect
set forth in Exhibit VI-B.
Section 9.5. Necessary Governmental Approvals. The parties shall have
received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Effective Date by applicable law or
regulation (including, without limitation, the expiration or early termination
of the applicable waiting period under the HSR Act, if any) or are necessary to
prevent a Material Adverse Effect on Scotsman and its subsidiaries taken as a
whole.
Section 9.6. Registration Rights Agreement. Scotsman shall have executed
and delivered the Registration Rights Agreement substantially in the form of
Exhibit V.
Section 9.7. Stockholder Action. This Agreement shall have been unanimously
adopted by all holders of Holding Common Stock. The issuance of shares of
Scotsman Common Stock and Scotsman Convertible Preferred Stock pursuant to this
Agreement and the Whitlenge Share Acquisition Agreement shall have been
approved by a majority of votes cast by holders of Scotsman Common Stock,
provided that the total vote cast shall have represented over 50% of the issued
and outstanding shares of Scotsman Common Stock at the time of the vote.
Section 9.8. Stock Exchange Listings. The NYSE shall have approved for
listing, upon official notice of issuance, the Scotsman Fixed Common Shares to
be issued pursuant to Section 2.1, the Scotsman Contingent Common Shares which
may be issued pursuant to Sections 2.1 and 2.3 and the shares of Scotsman
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Common Stock issuable upon the conversion of the Scotsman Convertible Preferred
Shares.
Section 9.9. Registration Statement Effective. The Registration Statement
shall have been declared effective by the SEC and no stop order suspending the
effectiveness of the Registration Statement shall have been entered by the SEC.
Section 9.10. Securities Laws. Scotsman shall have received all necessary
permits and otherwise complied with any state securities laws applicable to the
issuance of the shares of the Scotsman Common Stock, the Scotsman Convertible
Preferred Stock and the Scotsman Nonconvertible Preferred Stock pursuant to
this Agreement.
Section 9.11. Financing. Scotsman shall have obtained, on or before
February 15, 1994, written financing commitments, amendments to its existing
financing arrangements or other financing arrangements in an amount sufficient
to (i) pay the cash consideration specified in this Agreement and the Whitlenge
Share Acquisition Agreement, (ii) refinance, to the extent required, the
outstanding debt of Scotsman and (iii) refinance the outstanding debt of
Holding, TDC and Whitlenge, in each case on terms reasonably satisfactory to
Holding and TDC.
Section 9.12. Glenco Holdings. Scotsman shall have obtained, on or before
January 31, 1994, a written waiver by Glenco Holdings of the Scotsman
Noncompetition Agreement.
Section 9.13. Whitlenge Share Acquisition Agreement. The Whitlenge Share
Acquisition Agreement shall be in full force and effect and all of the issued
WAL Ordinary Shares shall have been tendered, accompanied by a stock transfer
form executed in blank, and accepted for payment by Scotsman or the Tender
Subsidiary and the condition contained in Section 6.21 of the Whitlenge Share
Acquisition Agreement shall have been satisfied or waived.
Section 9.14. Average Scotsman Common Stock Closing Price. The average
Closing Price of the Scotsman Common Stock for the ten trading days prior to
the date of the meeting of the stockholders of Scotsman referred to in Section
6.3 shall not be less than U.S. $10.50.
Section 9.15. Necessary Consents. Holding and TDC shall have received
consents, in form and substance reasonably satisfactory to Holding and TDC, to
the transactions contemplated hereby from the other parties to all material
contracts, leases, agreements and permits to which Holding or TDC is a party or
by which they are affected and which require such consent prior to the Merger
and are necessary to prevent a Material Adverse Effect with respect to Holding
and TDC taken as whole.
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Section 9.16. Comfort Letters. Holding shall have received comfort letters
from Arthur Andersen & Co., Coopers & Lybrand and Ernst & Young, dated the date
of mailing the Proxy Statement/Prospectus and the Effective Date and addressed
to Holding, in each case in form and substance reasonably satisfactory to
Holding, covering such matters reasonably requested by it.
Section 9.17. Dissenting Stockholders. No stockholder of Holding shall have
delivered a written demand for appraisal of its Holding Common Stock pursuant
to Section 262 of the DGCL.
ARTICLE X
INDEMNIFICATION; SURVIVAL
Section 10.1. Indemnification by the Stockholders. From and after the
Effective Time, each of the Stockholders shall indemnify and hold harmless
Scotsman, TDC, the Surviving Corporation and their subsidiaries, affiliates and
successors from and against any and all (a) liabilities, losses, costs or
damages ("Loss") and (b) reasonable attorneys', consultants' and accountants'
fees and expenses, court costs and all other reasonable out-of-pocket expenses
("Expense") incurred by Scotsman, TDC, the Surviving Corporation and their
subsidiaries, affiliates and successors in connection with or arising from (x)
any breach or failure to perform by any Stockholder or Shareholder (as defined
in the Whitlenge Share Acquisition Agreement) of any of their respective
agreements, covenants or obligations in this Agreement or the Whitlenge Share
Acquisition Agreement or any agreement entered into in connection with the
transactions contemplated hereby or thereby, in each case to be performed or
complied with after the Effective Time or the Expiration Date (as defined in
the Whitlenge Share Acquisition Agreement), as the case may be, (y) any breach
of any warranty or the inaccuracy of any representation of Holding, TDC, WAL,
Whitlenge Drink or any Stockholder or Shareholder contained in this Agreement
or the Whitlenge Share Acquisition Agreement, as updated in accordance with
Section 10.7 hereof and Section 8.7 of the Whitlenge Share Acquisition
Agreement, or in any certificate delivered by or on behalf of Holding, TDC,
WAL, Whitlenge Drink or any Stockholder or Shareholder pursuant hereto or
thereto and (z)(A) the actions listed in item 1 of Schedule 3.17 or (B) any
other claim, suit, action, proceeding or other matter in connection with or
arising out of the fire that occurred on or about February 5, 1992 at the
Indianapolis Athletic Club (including, without limitation, any claim, suit,
action or proceeding brought by or on behalf of Holding or TDC to seek or
enforce indemnification from Alco Standard or any of its affiliates or
insurance coverage under any insurance policy maintained by or for the benefit
of Alco Standard, Holding, TDC, Onex or any of their affiliates); provided,
however, that the Stockholders shall be required to indemnify and hold harmless
under this Section 10.1 only to the
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extent that the aggregate amount of (without duplication) (i) Loss and
Expense referred to above in this Section 10.1 and (ii) Loss and Expense
referred to in Section 8.1 of the Whitlenge Share Acquisition Agreement exceeds
U.S. $250,000; and provided, further, (X) each Stockholder's obligation to
indemnify and hold harmless pursuant to this Section 10.1 shall be limited to
the payment by such Stockholder of cash (1) with respect to any individual Loss
or Expense (other than any Loss or Expense arising from a breach of a warranty,
or inaccuracy of a representation, of such Stockholder contained in Section
3.3(b) or 3.4(b), as to which this clause (1) shall be inapplicable), in an
amount that does not exceed the product obtained by multiplying such
Stockholder's Applicable Percentage (as set forth on Schedule 10.1) by the
amount of such Loss or Expense, and (2) in the aggregate in an amount equal to
the product obtained by multiplying such Stockholder's Applicable Percentage
(as set forth on Schedule 10.1) by U.S. $30,000,000 (without limiting the
foregoing, it being understood that, for purposes of clause (2) above, with
respect to the Indianapolis Athletic Club fire matters or otherwise, the
payment of any amount by, or with funds furnished by, an insurer or Alco
Standard, shall not be deemed to be the payment by any Stockholder and (Y) no
Stockholder shall indemnify and hold harmless any indemnified party with
respect to any Loss or Expense arising from any breach of a warranty, or
inaccuracy of a representation, of any other Stockholder or Continental
contained in Section 3.3(b) or 3.4(b) or of any Shareholder contained in
Section 2.3(b) or 2.4(b) of the Whitlenge Share Acquisition Agreement.
Notwithstanding any other provision of this Agreement, the Stockholders shall
have no obligation to indemnify and hold harmless Scotsman, TDC, the Surviving
Corporation, their subsidiaries, affiliates and successors, or any other person
from and against any Loss or Expense resulting from an election (whether deemed
or actual) under section 338 of the Code made with respect to the Merger.
Section 10.2. Indemnification by Scotsman and the Surviving Corporation.
From and after the Effective Time, Scotsman and the Surviving Corporation shall
jointly and severally indemnify and hold harmless the Stockholders and their
subsidiaries, affiliates and successors from and against any and all Loss and
Expense incurred by the Stockholders and their subsidiaries, affiliates and
successors in connection with or arising from (a) any breach or failure to
perform by Scotsman or the Surviving Corporation of any of their respective
agreements, covenants or obligations in this Agreement or the Whitlenge Share
Acquisition Agreement or any agreement entered into in connection with the
transactions contemplated hereby or thereby, in each case to be performed or
complied with after the Effective Time or the Expiration Time, as the case may
be, and (b) any breach of any warranty or the inaccuracy of any representation
of Scotsman or Sub contained in this Agreement or the Whitlenge Share
Acquisition Agreement or in any certificate delivered by or on behalf of
Scotsman or Sub pursuant hereto or thereto; provided, however, that Scotsman
and the Surviving Corporation shall be
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required to indemnify and hold harmless under this Section 10.2 only to
the extent that the aggregate amount of (without duplication) (i) Loss and
Expense referred to above in this Section 10.2 and (ii) Loss and Expense
referred to in Section 8.2 of the Whitlenge Share Acquisition Agreement exceeds
U.S. $250,000; and provided, further, Scotsman's and the Surviving
Corporation's obligation to indemnify and hold harmless pursuant to this
Section 10.2 shall be limited to the aggregate payment by Scotsman and/or the
Surviving Corporation of cash in an amount equal to the excess of (i) U.S.
$30,000,000 over (ii) any amount theretofore paid in indemnification by
Scotsman and/or any of its subsidiaries under Section 8.2 of the Whitlenge
Share Acquisition Agreement. Any payment pursuant to this Section 10.2 shall
be payable in cash; provided, however, that to the extent any payment of cash
pursuant to this Section 10.2 would cause the aggregate amount of cash paid
pursuant to this Section 10.2 to exceed 19% of the sum of (i) the aggregate
amount of cash paid pursuant to this Section 10.2, (ii) the Adjusted Value (as
defined below) of Scotsman Contingent Common Shares theretofore paid to the
former holders of Holding Common Stock pursuant to Section 2.3 and (iii) the
aggregate liquidation preference of the shares of Scotsman Nonconvertible
Preferred Stock issued pursuant to this Section 10.2, such excess shall be paid
in the form of shares of Scotsman Nonconvertible Preferred Stock, valued for
such purpose at 100% of their liquidation preference. For purposes of the
foregoing, the Adjusted Value of a Scotsman Contingent Common Share shall be
determined in the manner provided in the last paragraph of Section 2.1 except
that the business day immediately prior to the date such Scotsman Contingent
Common Share was issued shall be substituted for the Effective Date.
Section 10.3. Notice of Claims. If Scotsman (with respect to Section 10.1)
or the Stockholder Representative (with respect to Section 10.2) believes that
any of the persons entitled to indemnification under this Article X has
suffered or incurred any Loss or incurred any Expense, whether or not the
applicable dollar limitation specified by Section 10.1 or 10.2 has been
exceeded, Scotsman or the Stockholder Representative, as the case may be, shall
so notify the other promptly in writing describing such Loss or Expense, the
amount thereof, if known, and the method of computation of such Loss or
Expense, all with reasonable particularity and containing a reference to the
provisions of this Agreement or any certificate delivered pursuant hereto in
respect of which such Loss or Expense shall have occurred; provided, however,
that the omission by such indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its indemnification obligation
under this Article X except to the extent that such omission results in a
failure of actual notice to the indemnifying party and such indemnifying party
is materially damaged as a result of such failure to give notice. If any
action at law or suit in equity is instituted by or against a third party with
respect to which any of the persons entitled to indemnification under this
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Article X intends to claim any liability or expense as Loss or Expense under
this Article X, any such person shall promptly notify the indemnifying party of
such action or suit as specified in this Section 10.3 and Section 10.4. Any
party entitled to indemnification hereunder shall use reasonable efforts to
minimize any Loss or Expense for which indemnification is sought hereunder.
If Scotsman furnishes a notice referred to in the first sentence of the
immediately preceding paragraph and the Stockholder Representative, within 10
business days of receipt thereof, furnishes Scotsman with a notice (an "Alco
Notice") stating that the Loss and Expense referred to in Scotsman's notice, or
some portion thereof, are subject to indemnification by Alco Standard pursuant
to any of the agreements referred to in Section 3.32 or in Section 2.32 of the
Whitlenge Share Acquisition Agreement (such notice to include specific
reference to the provisions of the agreements containing the indemnification
obligations), then (i) Scotsman shall use its best efforts to enforce such
indemnification obligations and the Stockholders and the Stockholder
Representative shall cooperate fully with Scotsman in seeking to enforce such
indemnification obligations and (ii) the indemnifying parties shall not be
required to indemnify with respect to the portion of such Loss and Expense
subject to indemnification until, and to the extent that, a court of competent
jurisdiction determines, or the Stockholder Representative acknowledges, that
Alco Standard is not required to so indemnify (it being understood that for
purposes of the second proviso to the first sentence of Section 10.6, Scotsman
shall be deemed to have asserted its claim for indemnification by the
indemnifying parties at the time of its notice and that the Loss and Expense
referred to in such notice shall be deemed to include, although not referred to
therein, any Loss and Expense thereafter incurred by any of the indemnified
parties in seeking to enforce, whether or not successful, any purported
indemnification obligation of Alco Standard identified by the Stockholder
Representative). In the event that the Stockholder Representative fails to
give an Alco Notice within the 10 business day period specified above, but
furnishes an Alco Notice at a later date, then (x) Scotsman, the Stockholder
Representative and the Stockholders shall take the actions specified in clause
(i) above, (y) should Scotsman or another person entitled to indemnification
under Section 10.1 thereafter successfully enforce any such purported
indemnification obligation of Alco Standard, any Loss and Expense that is
recovered in such enforcement action and was theretofore covered by an
indemnification payment by the indemnifying parties hereunder shall be paid
over to the Stockholder Representative on behalf of the Stockholders and (z)
the obligation of the indemnifying parties with respect to any Loss and Expense
identified in such subsequent Alco Notice as covered by such purported
indemnification obligation and for which, at the time of such subsequent Alco
Notice, indemnification has not been made by the indemnifying parties
hereunder, shall be as specified in clause (ii) above.
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Without limiting the indemnifying parties' obligation under clause (ii)
above to make an indemnification payment following a judicial determination of
the type referred to in such clause (ii), Scotsman, if requested in writing by
the Stockholder Representative on a timely basis, shall, at the expense of the
Stockholders (which shall be promptly paid as incurred), use its best efforts
to pursue a judicial appeal of such determination. If any such appeal results
in the recovery by Scotsman or another person entitled to indemnification under
Section 10.1 of any Loss or Expense which theretofore was covered by an
indemnification payment by the indemnifying parties hereunder, such recovery
shall be paid over to the Stockholder Representative on behalf of the
Stockholders. The Stockholders and the Shareholders shall be subrogated to any
and all rights of Scotsman or the other persons entitled to indemnification
pursuant to Section 10.1 under any indemnification obligations of Alco Standard
pursuant to any of the agreements referred to in Section 3.32 or in Section
2.32 of the Whitlenge Share Acquisition Agreement in respect of any Loss or
Expense with respect to which the Stockholder Representative has not furnished
an Alco Notice and for which the Stockholders or the Shareholders have
theretofore indemnified Scotsman or such other persons.
With respect to any claim that Scotsman or the other persons entitled to
indemnification under Section 10.1 may pursue against Alco Standard with
respect to the enforcement of a purported indemnification obligation pursuant
to any of the agreements referred to in Section 3.32 or in Section 2.32 of the
Whitlenge Share Acquisition Agreement, neither Scotsman nor such other persons
shall consent to entry of any judgment or enter into any settlement in respect
thereof unless (1) the Stockholder Representative consents to such judgment or
settlement or (2) Scotsman (on behalf of itself and such other indemnified
persons) releases the Stockholders and the Shareholders from any and all
liability with respect to the Loss and Expense that was the subject of such
claim and such judgment or settlement does not adversely affect any Stockholder
or Shareholder or any of their subsidiaries, affiliates or successors or any
other claim for indemnification by Alco Standard pursuant to any of the
agreements referred to in Section 3.32 or in Section 2.32 of the Whitlenge
Share Acquisition Agreement. With respect to any judicial or other proceeding
or appeal pursued by Scotsman or the other persons entitled to indemnification
under Section 10.1 and seeking the enforcement of a purported indemnification
obligation of Alco Standard pursuant to any of such agreements, the
Stockholders (i) if they have theretofore fully indemnified (subject to any
applicable deductible) Scotsman and the other persons entitled to
indemnification under Section 10.1, shall be entitled, at their own expense and
through counsel of their choice, to control the pursuit of the indemnification
claim against Alco Standard in such judicial or other proceeding or appeal (it
being understood that the Stockholders shall not consent to entry of any
judgment or enter into any settlement with respect thereto that adversely
affects Scotsman or any of
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the other persons entitled to indemnification under Section 10.1,
unless Scotsman or such persons, as the case may be, shall have consented
thereto), and (ii) if they have not so fully indemnified (subject to any
applicable deductible) Scotsman or the other persons entitled to
indemnification under Section 10.1, shall be entitled, at their own expense, to
participate with counsel of their choice but without any right of control
thereof.
Section 10.4. Third Party Claims. (a) In the event of any claim for
indemnification hereunder (other then pursuant to clause (z)(A) of Section
10.1) resulting from or in connection with any claim or legal proceeding by a
third party, the indemnified persons shall give such notice thereof to the
indemnifying party not later than twenty business days prior to the time any
response to the asserted claim is required, if possible, and in any event
within fifteen days following the date such indemnified person has actual
knowledge thereof; provided, however, that the omission by such indemnified
party to give notice as provided herein shall not relieve the indemnifying
party of its indemnification obligation under this Article X except to the
extent that such omission results in a failure of actual notice to the
indemnifying party and such indemnifying party is materially damaged as a
result of such failure to give notice. In the event of any such claim for
indemnification resulting from or in connection with a claim or legal
proceeding by a third party, the indemnifying party may, at its sole cost and
expense, assume the defense thereof; provided, however, that counsel for the
indemnifying party, who shall conduct the defense of such claim or legal
proceeding, shall be reasonably satisfactory to the indemnified party; and
provided, further, that if the defendants in any such actions include both the
indemnified persons and the indemnifying party and the indemnified persons
shall have reasonably concluded that there may be legal defenses or rights
available to them which have not been waived and are in actual or potential
conflict with those available to the indemnifying party, the indemnified
persons shall have the right to select one law firm reasonably acceptable to
the indemnifying party to act as separate counsel, on behalf of such
indemnified persons, at the expense of the indemnifying party. Subject to the
second proviso of the immediately preceding sentence, if an indemnifying party
assumes the defense of any such claim or legal proceeding, such indemnifying
party shall not consent to entry of any judgment, or enter into any settlement,
that (a) is not subject to full indemnification hereunder (except for the
deductible referred to in clause (ii) of the first proviso to the first
sentence of Section 10.1 or the deductible referred to in clause (ii) of the
first proviso to the first sentence of Section 10.2, in either case to the
extent applicable), (b) provides for injunctive or other non-monetary relief
affecting the indemnified persons or (c) does not include as an unconditional
term thereof the giving by each claimant or plaintiff to such indemnified
persons of a release from all liability with respect to such claim or legal
proceeding, without the prior written consent of the indemnified persons (which
consent, in the case of clauses (b) and (c), shall
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not be unreasonably withheld); and provided, further, that subject to
the second proviso of the immediately preceding sentence, the indemnified
persons may, at their own expense, participate in any such proceeding with the
counsel of their choice without any right of control thereof. So long as the
indemnifying party is in good faith defending such claim or proceeding, the
indemnified persons shall not compromise or settle such claim or proceeding
without the prior written consent of the indemnifying party, which consent
shall not be unreasonably withheld. If the indemnifying party does not assume
the defense of any such claim or litigation in accordance with the terms
hereof, the indemnified persons may defend against such claim or litigation in
such manner as they may deem appropriate, including, without limitation,
settling such claim or litigation (after giving prior written notice of the
same to the indemnifying party and obtaining the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld) on such
terms as the indemnified persons may deem appropriate, and the indemnifying
party will promptly indemnify the indemnified persons in accordance with the
provisions of this Section 10.4.
(b) With respect to the matters referred to in clause (z) of Section 10.1,
until the indemnification obligations of the Stockholders terminate by reason
of clause (2) of the second proviso to the first sentence of Section 10.1, the
Stockholders and the Shareholders shall, at their sole cost and expense, assume
the defense or prosecution of such matters, as the case may be; provided,
however, that Scotsman may, at its own expense, participate in any such defense
or prosecution with counsel of its choice without any rights of control
thereof; and provided, further, that the Stockholders shall not consent to
entry of any judgment, or enter into any settlement, that (a) is not subject to
full indemnification hereunder (except for the deductible referred to in clause
(ii) of the first proviso to the first sentence of Section 10.1), (b) provides
for injunctive or other non-monetary relief affecting the indemnified persons
or (c) does not include as an unconditional term thereof the giving by each
claimant or plaintiff to such indemnified persons of a release from all
liability with respect to such claim or legal proceeding, without the prior
written consent of the indemnified persons (which consent, in the case of
clauses (b) and (c), shall not be unreasonably withheld).
Section 10.5. Exclusive Remedy. In the event the Merger is consummated, any
claim against any party hereto for any breach of this Agreement or in
connection with any of the transactions contemplated hereby (other than a claim
for breach of Section 7.1, 7.2 or 7.3, the representation and warranty
contained in the last sentence of Section 3.3(b), the Noncompetition Agreements
entered into pursuant to Section 8.7 or the Registration Rights Agreement
entered into pursuant to Sections 8.8 and 9.6), shall, to the extent permitted
by law, be made solely pursuant to this Article X. Prior to the consummation
of the Merger or the termination of this Agreement
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pursuant to Article XI, no claim may be made against any party hereto
for any inaccuracy of any representation or breach of any warranty contained in
this Agreement, the Whitlenge Share Acquisition Agreement or any certificate,
instrument or other agreement delivered pursuant hereto or thereto.
Section 10.6. Survival of Obligations. All representations, warranties,
covenants and obligations contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement; provided,
however, that the representations and warranties in Sections 3.7, 3.10, 3.11,
3.15, 3.17, 3.18, 3.21, 3.26, 3.32, 3.35 and 4.9 shall terminate on the fourth
anniversary of the Effective Date, the representations and warranties contained
in Sections 3.8 and 4.8 shall terminate at the time the relevant statute of
limitations expires, and the representations and warranties contained in
Sections 3.1, 3.3, 3.4, 4.1, 4.2 and 4.4 shall survive without termination, and
all other representations and warranties contained herein shall terminate on
the third anniversary of the Effective Date; and provided, further, if any
claim under this Article X for Loss or Expense in respect of any
representations and warranties is asserted in writing prior to the expiration
of the applicable period set forth above, the obligations of the indemnifying
party with respect to such claim shall not be affected by the expiration of
such period.
Section 10.7. Update of the Representations and Warranties. Not later than
ten days prior to the Effective Date, Holding, TDC and any Stockholder may
deliver a written notice to Scotsman setting forth any and all facts,
conditions, occurrences, changes and other matters, in each case, occurring
after the date hereof, that has caused or may cause the representations and
warranties of the Stockholders contained herein (including the Schedules
hereto) not to be true and correct in all respects. In the event that any of
such facts, conditions, occurrences, changes and other matters shall have
caused or will cause, on or prior to the Effective Date, any such
representation or warranty not to be true and correct in all respects (in the
case of any representation or warranty containing any materiality
qualification) or in all material respects (in the case of any representation
and warranty without any materiality qualification) on the Effective Date with
the same effect as though made on the Effective Date, Scotsman may elect to
terminate this Agreement pursuant to Section 11.1(d) based on such facts,
conditions, occurrences, changes or other matters. If Scotsman shall
nevertheless proceed to consummate the Merger, such facts, conditions,
occurrences, changes and other matters so disclosed as to each such
representation or warranty of the Stockholders contained herein (including the
Schedules) shall be deemed to constitute an exception to such representation or
warranty reflecting the facts, conditions, occurrences, changes and other
matters so disclosed with the same effect as if such exception had been made in
such representation
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or warranty as of the date hereof in this Agreement to the
extent, but only to the extent, of such disclosure.
ARTICLE XI
TERMINATION
Section 11.1. Termination. Anything contained in this Agreement to the
contrary notwithstanding, (i) this Agreement shall terminate upon any
termination of the Whitlenge Share Acquisition Agreement and (ii) this
Agreement may be terminated at any time prior to the Effective Date:
(a) by the mutual consent of Scotsman and Holding;
(b) by Scotsman upon any material breach by Holding, TDC or any Stockholder
of any of the covenants contained in Article VI or VII or Section 12.1;
(c) by Holding upon any material breach by Scotsman or Sub of any of the
covenants contained in Article VI or VII or Section 12.1;
(d) by Scotsman if any of the conditions specified in Article VIII has not
been met or waived by Scotsman at such time as such condition can no longer
be satisfied;
(e) by Holding if any of the conditions specified in Article IX has not
been met or waived by Holding, TDC and the Stockholders, as applicable, at
such time as such condition can no longer be satisfied; or
(f) by Scotsman or Holding if the Merger shall not have been consummated on
or before May 1, 1994.
In the event that this Agreement shall be terminated pursuant to this Section
11.1, all further obligations of the parties under this Agreement (other than
Sections 7.3, 12.1, 12.2 and 12.10) shall terminate without further liability
of any party to the others; provided, however, that nothing herein shall
relieve any party from liability for its willful breach of this Agreement; and
provided, further, that in the case of any such termination, (i) no Stockholder
shall bear any liability for any breach of this Agreement (other than a breach
of Section 7.3) and (ii) Holding and TDC shall, jointly and severally, be
liable for any Stockholder's willful breach of this Agreement as though Holding
and TDC had made all representations and warranties of such Stockholder.
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ARTICLE XII
OTHER PROVISIONS
Section 12.1. Confidential Nature of Information. Each party agrees that
it will treat in strict confidence all documents, materials and other
information which it obtains regarding the other parties during the course of
the negotiations leading to the consummation of the transactions provided for
herein and the preparation of this Agreement; and if for any reason whatsoever
the transactions contemplated by this Agreement shall not be consummated, each
party shall return to the other party all copies of non-public documents and
materials which have been furnished or acquired in connection therewith and
shall not use or disseminate such documents, materials or other information for
any purpose whatsoever.
Section 12.2. Fees and Expenses. (a) Except as otherwise provided in this
Section 12.2, each of the parties hereto shall bear its own costs and expenses
(including, without limitation, fees and disbursements of its counsel,
accountants and other financial, legal, accounting or other advisors, any
expenses incurred by Holding and Whitlenge Drink in connection with any efforts
to effect an initial public offering and any fees, disbursements and expenses
incurred by or on behalf of Scotsman in connection with the Registration
Statement and the Proxy Statement/Prospectus, it being understood that the
costs and expenses of the audits and preparation of the historical financial
statements of Holding, TDC and WAL included in the Proxy Statement/Prospectus
and the costs and expenses of adjusting, for purposes of pro forma financial
statements, the historical financial statements of Whitlenge Drink so that they
are presented in United States dollars and in accordance with generally
accepted accounting principles in the United States shall be deemed to be costs
and expenses of the Stockholders and the Shareholders) incurred by it or its
affiliates in connection with the preparation, negotiation, execution, delivery
and performance of this Agreement, each of the other documents and instruments
executed in connection with or contemplated by this Agreement and the arranging
or providing for the financing contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby (collectively "Acquisition
Expenses"); provided, however, that, except for up to U.S. $390,000 of
Acquisition Expenses of the Stockholders, Holding and TDC relating to the
transactions contemplated by this Agreement, which U.S. $390,000 of Acquisition
Expenses are attributable to and shall be borne by Holding and TDC, the
Acquisition Expenses of the Stockholders, Holding and TDC shall be borne
entirely by the Stockholders and on the Effective Date the Stockholders shall
reimburse Holding and TDC for any Acquisition Expenses paid by Holding or TDC
prior to the Effective Time in connection with the foregoing. The
Stockholders, Holding and TDC shall furnish Scotsman with documentation on the
Effective Date demonstrating any reimbursement required by the preceding
sentence.
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(b) Holding and TDC shall pay to Scotsman or Sub, upon demand in same day
funds, all of Scotsman's and Sub's Acquisition Expenses, in the event that (i)
this Agreement is terminated pursuant to clause (d) of Section 11.1 as a result
of the failure of the condition set forth in the first sentence of Section 8.9
or pursuant to clause (e) of Section 11.1 as a result of the failure of the
condition set forth in Section 9.17 or (ii) the Whitlenge Share Acquisition
Agreement is terminated pursuant to clause (d) of Section 9.1 thereof as a
result of the failure of the condition set forth in the first sentence of
Section 6.10 thereof (each of the terminations described in clauses (i) and
(ii) being referred to as a "Qualifying Termination"); provided, however, that
Holding and TDC shall not be obligated to make payments pursuant to this
Section 12.2(b) in an aggregate amount exceeding the sum of (x) U.S. $780,000
and (y) the excess of U.S. $220,000 over the aggregate amount of payments made
pursuant to Section 10.2(b) of the Whitlenge Share Acquisition Agreement.
(c) In addition to payments pursuant to Section 12.2(b) and payments made
pursuant to Sections 10.2(b) and 10.2(c) of the Whitlenge Share Acquisition
Agreement, Holding and TDC shall pay to Scotsman or Sub, upon demand in same
day funds, a fee of U.S. $2,340,000, if (i) there is a Qualifying Termination
and (ii) within one year following the Qualifying Termination (x) any of TDC,
Whitlenge Drink, Holding or WAL or any combination thereof, directly or through
another entity, effects an initial public offering of its shares or (y) any
person or persons acquire, directly or indirectly, in one transaction or a
series of related transactions, a substantial portion of the assets of TDC and
Whitlenge Drink or more than 50% of the shares of common stock of Holding, TDC,
Whitlenge Drink or WAL, in any such case described in clause (x) or (y), for a
per share consideration (or the equivalent thereof) representing a valuation of
Holding, TDC, Whitlenge Drink or WAL greater than that represented by this
Agreement or the Whitlenge Share Acquisition Agreement, as the case may be.
Section 12.3. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or by overnight mail, or four days after being mailed (by registered
mail, return receipt requested) to a party at the following address (or to such
other address as such party may have specified by notice given to the other
parties pursuant to this provision):
If to Scotsman to:
Scotsman Industries, Inc.
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Attention: President
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with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Frederick C. Lowinger
If to Sub to:
Scotsman Acquisition Corporation
c/o Scotsman Industries, Inc.
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Attention: President
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Frederick C. Lowinger
If to Holding to:
DFC Holding Corporation
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
Attention: Kevin E. McCrone
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to TDC to:
The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
Attention: Kevin E. McCrone
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
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If to Onex to:
Onex Corporation
161 Bay Street, 25th Floor
Toronto, Ontario
Attention: President
with copies to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
and
Onex Investment Corp.
712 Fifth Avenue
40th Floor
New York, New York 10019
Attention: Timothy C. Collins
If to Onex DHC to:
Onex DHC LLC
c/o Onex Investment Corp.
421 Leader Street
Marion, Ohio 43302
with copies to:
Onex Corporation
161 Bay Street, 25th Floor
Toronto, Ontario
Attention: President
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
and
Onex Investment Corp.
712 Fifth Avenue
40th Floor
New York, New York 10019
Attention: Timothy C. Collins
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<PAGE> 86
If to Pacific to:
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Attention: Schuyler Lance
with a copy to:
Brobeck, Phleger & Harrison
550 South Hope Street, Suite 2100
Los Angeles, California 90071
Attention: Kenneth R. Bender
If to PM to:
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Attention: Schuyler Lance
with a copy to:
Brobeck, Phleger & Harrison
550 South Hope Street, Suite 2100
Los Angeles, California 90071
Attention: Kenneth R. Bender
If to EJJM to:
EJJM
c/o The Diggs Group
1630 Kettering Tower
Dayton, Ohio 45423
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Diggs to:
Matthew O. Diggs, Jr.
c/o The Diggs Group
1630 Kettering Tower
Dayton, Ohio 45423
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<PAGE> 87
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Collins to:
Timothy C. Collins
c/o Onex Investment Corp.
712 Fifth Avenue
40th Floor
New York, New York 10019
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Manifold to:
W. Joseph Manifold
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to McCollom to:
Charles L. McCollom
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Moffatt Trust to:
Anita J. Moffatt Trust
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
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If to Moffatt to:
Anita J. Moffatt
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Panella to:
Remo Panella
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
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If to Reed to:
Teddy F. Reed
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Schafer to:
Robert L. Schafer
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Tillotson to:
Graham E. Tillotson
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Tilmann Trust to:
John A. Tilmann Trust
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
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<PAGE> 90
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
If to Tilmann to:
John A. Tilmann
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to KE McCrone to:
Kevin E. McCrone
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to MP McCrone to:
Michael P. McCrone
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
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If to Anderson to:
Ronald A. Anderson
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Continental to:
Continental Bank N.A.
231 South LaSalle Street, 12th Floor
Chicago, Illinois
Attention: David Pattie
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: David Schuette
Section 12.4. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) an "associate" of any person means (i) a corporation or
organization of which such person is an officer or partner or is, directly
or indirectly, the beneficial owner of 10 percent or more of a class of
equity securities, (ii) any trust or other estate in which such person has
substantial beneficial interest or as to which such person serves as trustee
or in the similar capacity and (iii) any relative or spouse of such person,
or any relative of such spouse, who has the same home as such person or who
is a director or officer of the person or any of its parents or subsidiaries.
(c) the "knowledge of Holding or TDC" means the knowledge of the
persons listed in Schedule 12.4, which Schedule includes all directors of
Holding and TDC, the chief executive officers of each of Holding and TDC and
all employees
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of Holding and TDC who report directly to such chief executive officer
(except for KE McCrone's personal secretary).
(d) "Material Adverse Effect" means any change or effect (or any
development that, insofar as can reasonably be foreseen, would result in any
change or effect) that is materially adverse to the business, properties,
assets, condition (financial or otherwise) or results of operations of the
applicable person or persons; and
(e) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization or other entity.
Section 12.5. Partial Invalidity. In case any one or more of the
provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein unless the deletion of
such provision or provisions would result in such a material change as to cause
completion of the transactions contemplated hereby to be unreasonable.
Section 12.6. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
successors or assigns.
Section 12.7. Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
counterpart, and shall become a binding agreement when Scotsman, Sub, Holding,
TDC, the Stockholders and Continental shall have each executed one counterpart.
Section 12.8. Titles and Headings. Titles and headings to Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 12.9. Schedules and Exhibits. The Schedules and Exhibits referred
to in this Agreement shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Section 12.10. Entire Agreement; Amendments and Waivers; Assignment. This
Agreement, including the Schedules and Exhibits, contains the entire
understanding of the parties hereto with regard to the subject matter contained
herein except that the confidentiality agreement, dated October 29, 1993 (the
"October Confidentiality Agreement"), between Onex and Scotsman and the
confidentiality agreement, dated June 25, 1993 (the "June Confidentiality
Agreement"), between Onex Investment Corp. and Scotsman shall remain in full
force in effect pursuant to the
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<PAGE> 93
terms thereto after the execution of this Agreement; provided, however,
that the October Confidentiality Agreement shall terminate on the fifth
anniversary of the date hereof and the June Confidentiality Agreement shall
terminate on the earlier of the Effective Time or the fifth anniversary of the
date hereof. The parties hereto, by mutual agreement in writing, may amend,
modify and supplement this Agreement. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to
be a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of such party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach. Except as
expressly provided herein, the rights and obligations of the parties under this
Agreement may not be assigned or transferred by any party hereto without the
prior written consent of the other parties hereto.
Section 12.11. Governing Law. Except to the extent that Delaware law is
mandatorily applicable to the Merger and the rights and obligations of the
stockholders of Holding and Scotsman, this Agreement, and the application or
interpretation thereof, shall be governed by its terms and by the internal laws
of the State of New York, without regard to principles of conflicts of laws as
applied in the State of New York or any other jurisdiction which, if applied,
would result in the application of any laws other than the internal laws of the
State of New York. Each of the parties hereto irrevocably submits and consents
to the exclusive jurisdiction of the Supreme Court of the State of New York in
the County of New York, or the United States District Court for the Southern
District of New York, in connection with any action or proceeding arising out
of or relating to this Agreement, and irrevocably waives any immunity from
jurisdiction thereof and any claim of improper venue, forum non conveniens or
any similar basis to which it might otherwise be entitled in any such action or
proceeding. Each of the Merger Stockholders hereby appoints as its or his
authorized agent the Stockholder Representative (such agent hereinafter
referred to as the "Authorized Agent") upon which process may be served in any
action to enforce any claim arising out of or relating to this Agreement which
may be instituted in any court described above; such appointment shall be
irrevocable until the appointment, similarly irrevocable, of a successor
Authorized Agent reasonably acceptable to Scotsman and such successor's
acceptance of such appointment. Service of such process upon the Authorized
Agent shall be deemed in every respect effective service of process upon each
of the Merger Stockholders.
Section 12.12. No Third-Party Beneficiaries. Except for Sections 2.3, 7.1,
7.2 and 7.3 (with respect to Acquisition Shareholders) and Article X, nothing
in this Agreement, expressed or implied, is intended or shall be construed to
confer upon any person other than the parties hereto and successors and assigns
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<PAGE> 94
permitted by Section 12.6 any right, remedy or claim under or by reason of this
Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto or by their duly authorized officers, all as of the date
first above written.
SCOTSMAN INDUSTRIES, INC.
By __________________________
Name:
Title:
SCOTSMAN ACQUISITION CORPORATION
By __________________________
Name:
Title:
DFC HOLDING CORPORATION
By __________________________
Name:
Title:
THE DELFIELD COMPANY
By __________________________
Name:
Title:
ONEX CORPORATION
By __________________________
Name:
Title:
ONEX DHC LLC
By __________________________
Name:
Title:
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<PAGE> 95
PACIFIC MUTUAL LIFE INSURANCE COMPANY
By __________________________
Name:
Title:
PM GROUP LIFE INSURANCE CO.
By ___________________________
Name:
Title:
EJJM
By __________________________
Name:
Title:
MATTHEW O. DIGGS, JR.
______________________________
TIMOTHY C. COLLINS
______________________________
W. JOSEPH MANIFOLD
______________________________
CHARLES R. McCOLLOM
______________________________
ANITA J. MOFFATT TRUST
By __________________________
Name:
Title:
<PAGE> 96
ANITA J. MOFFATT
______________________________
REMO PANELLA
______________________________
TEDDY F. REED
______________________________
ROBERT L. SCHAFER
______________________________
GRAHAM E. TILLOTSON
______________________________
JOHN A. TILMANN TRUST
By __________________________
Name:
Title:
JOHN A. TILMANN
______________________________
KEVIN E. McCRONE
______________________________
MICHAEL P. McCRONE
______________________________
<PAGE> 97
RONALD A. ANDERSON
______________________________
CONTINENTAL BANK N.A.
By __________________________
Name:
Title:
<PAGE> 98
EXHIBIT I
CERTIFICATE OF DESIGNATION
OF
SERIES A $0.62 CUMULATIVE CONVERTIBLE
PREFERRED STOCK
OF
SCOTSMAN INDUSTRIES, INC.
(PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE)
Scotsman Industries, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies that the following resolution was adopted by the Board of Directors
of the Corporation:
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Corporation (the "Board of Directors") by the
provisions of the Restated Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), there hereby is created, out of the 10,000,000
shares of Preferred Stock, par value $1.00 per share, of the Corporation
authorized in Article Fourth of the Certificate of Incorporation (the
"Preferred Stock"), a series of the Preferred Stock consisting of 2,000,000
shares, which series shall have the following powers, designations, preferences
and relative, participating, optional or other rights, and the following
qualifications, limitations and restrictions (in addition to the powers,
designations, preferences and relative, participating, optional or other
rights, and the qualifications, limitations and restrictions, set forth in the
Certificate of Incorporation which are applicable to the Preferred Stock):
Section 1. Designation of Amount. The shares of such series shall be
designated as "Series A $0.62 Cumulative Convertible Preferred Stock" (the
"Series A Preferred Stock") and the authorized number of shares constituting
such series shall be 2,000,000. Shares of the Series A Preferred Stock shall
have a stated value of $11.25 per share.
Section 2. Dividends.
(a) The holders of shares of the Series A Preferred Stock will be entitled
to receive, when, as and if declared by the Board of Directors out of funds of
the Corporation legally
<PAGE> 99
available therefor, cumulative cash dividends on the shares of the
Series A Preferred Stock at the rate of $0.62 per annum per share, and no more,
payable in equal quarterly installments on January 15, April 15, July 15 and
October 15 in each year, commencing [July 15, 1994]; provided that accumulated
and unpaid dividends for any prior quarterly period may be paid at any time;
and provided further that if any such date is a Saturday, Sunday or legal
holiday then such dividend shall be payable on the first immediately succeeding
calendar day which is not a Saturday, Sunday or legal holiday. For purposes
hereof, the term legal holiday shall mean any day on which banking institutions
are authorized to close in New York, New York. Such dividends shall be
cumulative from the date of original issue of each share of the Series A
Preferred Stock, whether or not there shall be funds legally available for the
payment of dividends on any quarterly payment date. Each such dividend shall be
paid to the holders of record of the shares of the Series A Preferred Stock as
they appear on the share register of the Corporation on such record date, not
more than 30 days nor less than 10 days preceding the dividend payment date
thereof, as shall be fixed by the Board of Directors or a duly authorized
committee thereof. If a holder converts a share or shares of the Series A
Preferred Stock after the close of business on the record date for a dividend
and before the opening of business on the payment date for such dividend, then,
pursuant to Section 6 hereof, the holder will be required to pay to the
Corporation at the time of such conversion the amount of such dividend (unless
such share or shares have been called for redemption and the date fixed for
redemption is after such record date and on or prior to such payment dates, in
which case the holder shall not be required to make such payment).
(b) If dividends are not paid in full, or declared in full and sums set
apart for the payment thereof, upon the shares of the Series A Preferred Stock
and shares of any other preferred stock ranking on a parity as to dividends
with the Series A Preferred Stock, all dividends declared upon shares of the
Series A Preferred Stock and of any other preferred stock ranking on a parity
as to dividends shall be paid or declared pro rata so that in all cases the
amount of dividends paid or declared per share on the Series A Preferred Stock
and such other shares of preferred stock shall bear to each other the same
ratio that unpaid accumulated dividends per share, including dividends accrued
or in arrears, if any, on the shares of the Series A Preferred Stock and such
other shares of preferred stock bear to each other. Unless and until full
cumulative dividends on the shares of the Series A Preferred Stock in respect
of all past quarterly dividend periods have been paid, and the full amount of
dividends on the shares of the Series A Preferred Stock in respect of the then
current quarterly dividend period shall have been declared in full and sums set
aside for the payment thereof,
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no dividends (other than dividends in shares of the Common Stock (as
hereinafter defined) or in shares of any other capital stock of the Corporation
ranking junior to the Series A Preferred Stock as to dividends) shall be paid
or declared and set aside for payment or other distribution made upon the
Corporation's Common Stock, par value $.10 per share (the "Common Stock"), or
any other capital stock of the Corporation ranking junior to or on a parity
with the Series A Preferred Stock as to dividends, nor shall any shares of the
Common Stock or shares of any other capital stock of the Corporation ranking
junior to or on a parity with the Series A Preferred Stock as to dividends be
redeemed, retired, purchased or otherwise acquired for any consideration (or
any payment made to or available for a sinking fund for the redemption of any
such shares) by the Corporation or any subsidiary of the Corporation (except by
conversion into or exchange for shares of capital stock of the Corporation
ranking junior to the Series A Preferred Stock as to dividends). Holders of
shares of the Series A Preferred Stock shall not be entitled to any dividends,
whether payable in cash, property or shares of capital stock, in excess of full
accrued and cumulative dividends as herein provided. No interest or sum of
money in lieu of interest shall be payable in respect of any dividend payment
or payments on the shares of the Series A Preferred Stock that may be in
arrears.
The terms "accrued dividends," "dividends accrued" and "dividends in
arrears," whenever used herein with reference to shares of preferred stock
shall be deemed to mean an amount which shall be equal to dividends thereon at
the annual dividend rates per share for the respective series from the date or
dates on which such dividends commence to accrue to the end of the then current
quarterly dividend period for such preferred stock (or, in the case of
redemption, to the date of redemption), whether or not earned or declared and
whether or not assets for the Corporation are legally available therefor, less
the amount of all such dividends paid, or declared in full and sums set aside
for the payment thereof, upon such shares of preferred stock.
(c) Dividends payable on the shares of the Series A Preferred Stock for any
period less than a full quarterly dividend period shall be computed on the
basis of a 360-day year of twelve 30-day months and the actual number of days
elapsed in the period for which payable.
Section 3. Optional Redemption.
(a) Subject to Section 3(e), the shares of the Series A Preferred Stock
will be redeemable at the option of the Corporation by resolution of its Board
of Directors, in whole or from time to time in part, subject to the limitations
set forth below, at the following redemption prices per share plus, in each
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case, all dividends accrued and unpaid on the shares of the Series A Preferred
Stock up to the date fixed for redemption, (each such price, plus such
dividends accrued and unpaid, being called the "Redemption Price") upon giving
notice as provided hereinbelow:
If redeemed during
the twelve-month
period beginning
[May 1,] Price
------------------
1994 $ 11.87
1995 11.81
1996 11.76
1997 11.70
1998 11.64
1999 11.59
2000 11.53
2001 11.48
2002 11.42
2003 11.36
2004 and thereafter 11.25
The Series A Preferred Stock will not be redeemable prior to [May 1,] 1999
unless, on the date of such resolution, the closing price for the shares of the
Common Stock shall have theretofore equalled or exceeded 140% of the conversion
price then in effect (determined as provided in Section 6) for any period of at
least ten consecutive trading days. The closing price for shares of the Common
Stock for each day shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the New York Stock
Exchange, or if the Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, the closing sale price of the Common
Stock, or in case no reported sale takes place, the average of the closing bid
and asked prices, on NASDAQ or any comparable system or if the Common Stock is
not quoted on NASDAQ or any comparable system, the closing sale price or, in
case no reported sale takes place, the average of the closing bid and ask
prices, as furnished by any two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Corporation for that
purpose.
(b) If less than all of the outstanding shares of the Series
A Preferred Stock are to be redeemed, the number of shares to be redeemed shall
be determined by the Board of Directors and
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<PAGE> 102
the shares to be redeemed shall be determined pro rata or by lot or in
such other manner and subject to such regulations as the Board of Directors in
its sole discretion shall prescribe.
(c) At least 30 days but not more than 60 days prior to the
date fixed for the redemption of shares of the Series A Preferred Stock, a
written notice shall be mailed to each holder of record of shares of
the Series A Preferred Stock to be redeemed in a postage prepaid envelope
addressed to such holder at such holder's post office address as shown on the
records of the Corporation, notifying such holder of the election of the
Corporation to redeem such shares, stating the date fixed for redemption
thereof (the "Redemption Date"), specifying the Redemption Price, specifying
the then effective conversion price pursuant to Section 6, and calling upon
such holder to surrender to the Corporation on the Redemption Date at the place
designated in such notice (which shall be in the Borough of Manhattan, The City
of New York, State of New York, or the City of Chicago, Illinois) his
certificate or certificates representing the number of shares specified in such
notice of redemption. On or after the Redemption Date each holder of shares of
the Series A Preferred Stock to be redeemed shall present and surrender his
certificate or certificates for such shares to the Corporation at the place
designated in such notice and against such surrender the Redemption Price of
such shares shall be paid to or on the order of the person whose name appears
on such certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. If a notice of redemption has been given
pursuant to this Section 4 and any holder of shares of the Series A Preferred
Stock shall, prior to the close of business on the last business day preceding
the Redemption Date, give written notice to the Corporation pursuant to Section
6 below of the conversion of any or all of the shares to be redeemed held by
such holder (accompanied by a certificate or certificates for such shares, a
duly executed notice of election to convert and instruments of transfer and
such taxes, stamps, funds or other evidence of payment, as required by Section
6 below), then such redemption shall not become effective as to such shares to
be converted, such conversion shall become effective as provided in Section 6
below and any moneys deposited or set aside by the Corporation for the
redemption of such shares of converted Series A Preferred Stock shall revert to
the general funds of the Corporation. In case less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares. From and after the Redemption Date
(unless default shall be made by the Corporation in payment in full of the
Redemption Price), all dividends on the shares of the Series A Preferred Stock
designated for redemption in such notice shall cease to accrue, and all rights
of the holders thereof as stockholders of the Corporation, except the right to
receive the Redemption Price of
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such shares (including all accrued and unpaid dividends up to the
Redemption Date) upon the surrender of certificates representing the same,
shall cease and terminate and such shares shall not thereafter be transferred
(except with the consent of the Corporation) on the books of the Corporation,
and such shares shall not be deemed to be outstanding for any purpose
whatsoever. At its election, the Corporation prior to the Redemption Date may
deposit the Redemption Price (including all accrued and unpaid dividends up to
the Redemption Date) of shares of the Series A Preferred Stock so called for
redemption in trust for the holders thereof with a bank or trust company
(having a capital surplus and undivided profits aggregating not less than
$50,000,000) in the Borough of Manhattan, City and State of New York, the City
of Chicago, State of Illinois, or in any other city in which the Corporation at
the time shall maintain a transfer agency with respect to such shares, with
irrevocable instructions and authority to redeem such shares upon surrender of
certificates therefor, in which case the aforesaid notice to holders of shares
of the Series A Preferred Stock to be redeemed shall state the date of such
deposit, shall specify the office of such bank or trust company as the place of
payment of the Redemption Price, and shall call upon such holders to surrender
the certificates representing such shares at such place on or after the date
fixed in such redemption notice (which shall not be later than the Redemption
Date) against payment of the Redemption Price (including all accrued and unpaid
dividends up to the Redemption Date). Any interest accrued on such funds shall
be paid to the Corporation from time to time. Any moneys so deposited which
shall remain unclaimed by the holders of such shares of the Series A Preferred
Stock at the end of two years after the Redemption Date shall be returned by
such bank or trust company to the Corporation; thereafter, the holders of
shares of the Series A Preferred Stock redeemed on such Redemption Date shall
look only to the Corporation for payment of the Redemption Price therefor.
(d) Shares of the Series A Preferred Stock redeemed,
repurchased or retired pursuant to the provisions of this Section 3 or
surrendered to the Corporation upon conversion shall thereupon be retired and
may not be reissued as shares of the Series A Preferred Stock but shall
thereafter have the status of authorized but unissued shares of the Preferred
Stock, without designation as to series until such shares are once more
designated as part of a particular series of the Preferred Stock.
(e) Notwithstanding the provisions of Section 3(a), in the
event that the Corporation shall have failed to declare and pay or set apart
for payment in full the dividends accumulated on the outstanding shares of the
Series A Preferred Stock for any eight quarterly dividend payment periods,
whether or not consecutive, whether or not earned or declared or whether or not
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<PAGE> 104
any assets of the Corporation are legally available therefor, the Series A
Preferred Stock shall not thereafter be redeemable.
Section 4. Voting Rights.
(a) Except as otherwise provided herein or as required by
law, the holders of shares of the Series A Preferred Stock shall be entitled to
vote on any matter on which the holders of Common Stock are entitled to vote.
Each share of the Series A Preferred Stock held of record on the record date
for the determination of stockholders entitled to vote on such matter (or, if
no such record date is established, on the date such vote is taken) shall
entitle the holder thereof to cast a number of votes equal to (i) in the case
of any Designated Transaction (as defined below), the number of shares of
Common Stock into which such share of the Series A Preferred Stock is then
convertible pursuant to the provisions hereof or (ii) in the case of
any other matter on which the holders of Common Stock are entitled to vote,
one-tenth (1/10) of one vote. For purposes of this Section 4(a), a "Designated
Transaction" shall mean any consolidation or merger to which the Corporation is
a party, other than a consolidation or merger in which the Corporation is the
surviving or resulting corporation, or any sale or conveyance of all or
substantially all of the property or business of the Corporation as an
entirety, in each case, if the holders of Common Stock are entitled to vote
thereon. Except as otherwise expressly provided herein or as required by law,
the holders of shares of the Series A Preferred Stock and Common Stock shall
vote together (together with any other class or series of preferred stock of
the Corporation then entitled to vote on any matter on which the holders of
Common Stock are entitled to vote) and not as separate classes.
(b) In the event that the Corporation shall have failed
to declare and pay or set apart for payment in full the dividends accumulated
on the outstanding shares of the Series A Preferred Stock for any six quarterly
dividend payment periods, whether or not consecutive, whether or not earned or
declared or whether or not any assets of the Corporation are legally available
therefor (a "Preferential Dividend Non-Payment"), the number of directors of
the Corporation shall be increased by two and the holders of outstanding shares
of the Series A Preferred Stock, shall be entitled to elect such additional
directors until the full dividends accumulated on all outstanding shares of the
Series A Preferred Stock have been declared and paid or set apart for payment.
In any such election the holders of outstanding shares of Series A Preferred
Stock shall be entitled to cast one vote per share of Series A Preferred Stock
held of record on the record date for the determination of stockholders
entitled to vote on such election (or, if no such record date is established,
on the date such vote is taken). Upon the occurrence of a
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<PAGE> 105
Preferential Dividend Non-Payment, the Board of Directors shall within
a reasonable period call a special meeting of the holders of shares of the
Series A Preferred Stock for the purpose of electing the additional directors
provided by the foregoing provisions. If and when all accumulated dividends on
the shares of the Series A Preferred Stock have been declared and paid or set
aside for payment in full, the holders of shares of the Series A Preferred
Stock shall be divested of the special voting rights provided by this Section
4(b), subject to revesting in the event of each and every subsequent
Preferential Dividend Non-Payment. Upon termination of such special voting
rights attributable to all holders of shares of the Series A Preferred Stock,
the term of office of each director elected by the holders of shares of the
Series A Preferred Stock (a "Preferred Stock Director") pursuant to such
special voting rights shall forthwith terminate and the number of directors
constituting the entire Board of Directors shall be reduced by the number of
Preferred Stock Directors. Any Preferred Stock Director may be removed by, and
shall not be removed otherwise than by, the vote of the holders of record of a
majority of the outstanding shares of the Series A Preferred Stock
voting as a separate class, at a meeting called for such purpose. So long as a
Preferential Dividend Non-Payment shall continue, any vacancy in the office of
a Preferred Stock Director may be filled by written consent of the Preferred
Stock Director remaining in office or, if none remains in office, by vote of
the holders of record of a majority of the outstanding shares of the Series A
Preferred Stock. As long as the Preferential Dividend Non-Payment shall
continue, except as provided in Section 4(a), holders of shares of the Series A
Preferred Stock shall not, as such stockholders, be entitled to vote on the
election or removal of directors other than Preferred Stock Directors, but
shall not be divested of any other voting rights provided to such stockholders
by law with respect to any other matter to be acted upon by the stockholders of
the Corporation. Notwithstanding anything to the contrary in this Section
4(b), the holders of outstanding shares of Series A Preferred Stock shall not
be entitled to elect more than two Preferred Stock Directors pursuant to this
Section 4(b).
Section 5. Liquidation Rights.
(a) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or otherwise,
the holders of shares of the Series A Preferred Stock shall be entitled to
receive, out of the assets of the Corporation available for distribution to its
shareholders, in cash, the amount of $11.25 for each share of the Series A
Preferred Stock, plus an amount equal to all dividends accrued and unpaid on
each such share up to the date fixed for distribution, before any distribution
shall be made to the holders of shares of the Common Stock or any other capital
stock
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<PAGE> 106
of the Corporation ranking (as to any such distribution) junior to the
Series A Preferred Stock. If upon any liquidation, dissolution or winding up
of the Corporation, the assets distributable among the holders of shares of the
Series A Preferred Stock and all other classes and series of preferred stock
ranking (as to any such distribution) on a parity with the Series A Preferred
Stock are insufficient to permit the payment in full to the holders of all such
shares of all preferential amounts payable to all such holders, then the entire
assets of the Corporation thus distributable shall be distributed ratably among
the holders of the shares of the Series A Preferred Stock and such other
classes and series of preferred stock ranking (as to any such distribution) on
a parity with the Series A Preferred Stock in proportion to the respective
amounts that would be payable per share if such assets were sufficient to
permit payment in full.
(b) For purposes of this Section 5, a distribution of
assets in any dissolution, winding up or liquidation shall not include (i) any
consolidation or merger of the Corporation with or into any other corporation,
or (ii) a sale or other disposition of all or substantially all of the
Corporation's assets to another corporation; provided, however, that, in each
case, effective provision is made in the certificate or incorporation
of the resulting and surviving corporation or otherwise for the protection of
the rights of the holders of shares of the Series A Preferred Stock.
(c) After the payment of the full preferential amounts
provided for herein to the holders of shares of the Series A Preferred Stock,
such holders shall be entitled to no other or further participation in the
distribution of the assets of the Corporation.
Section 6. Conversion.
(a) Holders of shares of the Series A Preferred Stock shall
have the right, exercisable at any time and from time to time to convert all or
any such shares of the Series A Preferred Stock into shares of the Common Stock
(calculated as to each conversion to the nearest 1/100th of a share) at an
initial conversion price of $14.75 per share of the Common Stock (equivalent to
an initial conversion rate of 0.7627 shares of the Common Stock for each share
of the Series A Preferred Stock so converted), subject to adjustment as
described below. Notwithstanding the foregoing, in the case of shares of the
Series A Preferred Stock called for redemption, conversion rights will expire
at the close of business on the last business day preceding the Redemption
Date. Upon conversion, no adjustment or payment will be made for dividends or
interest, but if any holder surrenders a share of the Series A Preferred Stock
for conversion
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<PAGE> 107
after the close of business on the record date for the payment of a
dividend and prior to the opening of business on the dividend payment date for
such dividend, then, notwithstanding such conversion, the dividend payable on
such dividend payment date will be paid to the registered holder of such share
on such record date. In such event, such share, when surrendered for
conversion, must be accompanied by payment of an amount equal to the dividend
payable on such dividend payment date on the share so converted (unless such
share has been called for redemption and the date fixed for redemption is after
such record date and on or prior to such payment date, in which case such
payment need not accompany such share). For purposes of this Section 6, the
"conversion price" applicable to a share of the Series A Preferred Stock shall
be determined by dividing the then existing conversion ratio into $11.25.
(b) Any holder of a share or shares of the Series A Preferred
Stock electing to convert such share or shares thereof shall deliver the
certificate or certificates therefor to the principal office of any transfer
agent for the Common Stock, with the form of notice of election to convert as
the Corporation shall prescribe fully completed and duly executed and (if so
required by the Corporation or any conversion agent) accompanied by instruments
of transfer in form satisfactory to the Corporation and to any conversion
agent, duly executed by the registered holder or his duly authorized attorney,
and transfer taxes, stamps or funds therefor or evidence of payment thereof if
required pursuant to Section 6(a) or 6(d) hereof. The Corporation shall, as
soon as practicable after such delivery and compliance with any other
conditions herein contained, deliver at such office of such transfer agent to
the person for whose account such shares of Series A Preferred Stock were so
surrendered or to the nominee or nominees of such person, certificates
evidencing the number of full shares of Common Stock to which such person shall
be entitled as aforesaid, together with a cash adjustment in respect of any
fraction of a share of Common Stock as hereinafter provided. The conversion
right with respect to any such shares shall be deemed to have been exercised at
the date upon which the certificates therefor accompanied by such duly executed
notice of election and instruments of transfer and such taxes, stamps, funds,
or evidence of payment shall have been so delivered, and the person or persons
entitled to receive the shares of the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of the Common Stock upon said date.
(c) No fractional shares of the Common Stock or scrip
representing fractional shares shall be issued upon conversion of shares of the
Series A Preferred Stock. If more than one share of the Series A Preferred
Stock shall be surrendered for conversion at one time by the same holder, the
number of full
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shares of the Common Stock which shall be issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of the
Series A Preferred Stock so surrendered. Instead of any fractional shares of
the Common Stock which would otherwise be issuable upon conversion of any
shares of the Series A Preferred Stock, the Corporation shall pay a cash
adjustment in respect of such fraction in an amount equal to the same fraction
of the closing price for the Common Stock on the last business day preceding
the date of conversion. The closing price for shares of the Common Stock for
such day shall be the last reported sales price regular way or, in case no such
reported sale takes place on such date, the average of the reported closing bid
and asked prices regular way, in either case on the New York Stock Exchange, or
if the Common Stock is not listed or admitted to trading on such Exchange, on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading or, if not listed or admitted to trading on any national
securities exchange, the closing sale price of the Common Stock or in case no
reported sale takes place, the average of the closing bid and asked prices, on
NASDAQ or any comparable system. If the Common Stock is not quoted on NASDAQ
or any comparable system, the Board of Directors shall in good faith determine
the current market price on the basis of such quotation as it considers
appropriate.
(d) If a holder converts a share or shares of the Series A
Preferred Stock, the Corporation shall pay any documentary, stamp or similar
issue or transfer tax due on the issue of Common Stock upon the
conversion. The holder, however, shall pay to the Corporation the amount of any
tax which is due (or shall establish to the satisfaction of the Corporation
payment thereof) if the shares are to be issued in a name other than the name
of such holder and shall pay to the Corporation any amount required by the last
sentence of Section 6(a) hereof.
(e) The Corporation shall reserve and shall at all times have
reserved out of its authorized but unissued shares of the Common Stock, solely
for the purpose of effecting the conversion of the Series A Preferred Stock,
enough shares of the Common Stock to permit the conversion of the then
outstanding shares of the Series A Preferred Stock. All shares of the Common
Stock which may be issued upon conversion of shares of the Series A Preferred
Stock shall be validly issued, fully paid and nonassessable. The Corporation
shall from time to time, in accordance with the laws of the State of Delaware,
increase the authorized number of shares of the Common Stock if any time the
number of shares of the Common Stock authorized but not outstanding shall not
be sufficient to permit conversion of all then-outstanding shares of the Series
A Preferred Stock. In order that the Corporation may issue shares of the
Common Stock upon conversion of shares of the Series A Preferred Stock, the
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Corporation will as expeditiously as possible endeavor to comply with all
applicable Federal and State securities laws (including registration with or
approval of any governmental authority) and will list on and keep listed such
shares of the Common Stock to be issued upon conversion on each securities
exchange on which the Common Stock is listed.
(f) The conversion rate in effect at any time shall be
subject to adjustment from time to time as follows:
(i) In case the Corporation shall (1) pay a
dividend in shares of the Common Stock to holders of the
Common Stock, (2) make a distribution in shares of the Common
Stock to holders of the Common Stock, (3) exchange outstanding
Rights (as defined on Section 6(f)(iii)) for shares of Common
Stock, (4) subdivide the outstanding shares of the Common
Stock into a greater number of shares of the Common Stock or
(5) combine the outstanding shares of the Common Stock into a
smaller number of shares of the Common Stock, the conversion
rate immediately prior to such action shall be adjusted so
that the holder of any shares of the Series A Preferred Stock
thereafter surrendered for conversion shall be entitled to
receive the number of shares of the Common Stock which he
would have owned immediately following such action had such
shares of the Series A Preferred Stock been converted
immediately prior thereto. Adjustments made pursuant to this
Section 6(f)(i) be made successively whenever any event listed
above shall occur and shall become effective retroactively to
immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination.
(ii) In case the Corporation shall issue rights or
warrants to all or substantially all holders of the Common
Stock entitling them (for a period commencing no earlier than
the record date for the determination of holders of the Common
Stock entitled to receive such rights or warrants and expiring
not more than 45 days after such record date) to subscribe for
or purchase shares of the Common Stock (or securities
convertible into shares of the Common Stock) at a price per
share less than the current market price (as determined
pursuant to Section 6(f)(v)) of the Common Stock on such
record date, the number of shares of the Common Stock into
which each share of the Series A Preferred Stock shall be
convertible shall be adjusted so that the same shall be equal
to the number determined by multiplying the number of shares
of the Common Stock
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into which such share of the Series A Preferred Stock
was convertible immediately prior to such record date by a
fraction of which the numerator shall be the number of shares
of the Common Stock outstanding on such record date plus the
number of additional shares of the Common Stock offered (or
into which the convertible securities so offered are
convertible), and of which the denominator shall be the number
of shares of the Common Stock outstanding on such record date,
plus the number of shares of the Common Stock which the
aggregate offering price of the offered shares of the Common
Stock (or the aggregate conversion price of the convertible
securities so offered) would purchase at such current market
price. Such adjustments shall be made successively whenever
such rights or warrants are issued and shall become effective
retroactively to immediately after such record date.
(iii) In case the Corporation shall distribute to
all holders of the Common Stock shares of any class of capital
stock other than the Common Stock, evidences of indebtedness,
cash or other assets (other than dividends paid exclusively in
cash), or shall distribute to substantially all holders of the
Common Stock rights or warrants to subscribe for securities
(other than those referred to in Section 6(f)(ii)), then in
each such case the number of shares of the Common Stock into
which each share of the Series A Preferred Stock shall be
convertible shall be adjusted so that the same shall equal the
number determined by multiplying the number of shares of the
Common Stock into which such share of the Series A Preferred
Stock was convertible immediately prior to the date of such
distribution by a fraction of which the numerator shall be the
current market price (determined as provided in
Section 6(f)(v)) of the Common Stock on the record date
mentioned below, and of which the denominator shall be such
current market price of the Common Stock, less the then fair
market value (as determined by the Board of Directors, whose
determination shall be conclusive evidence of such fair market
value) of the portion of the assets so distributed or of such
subscription rights or warrants applicable to one share of the
Common Stock. Such adjustment shall be made successively
wherever any such distribution is made and shall become
effective retroactively to immediately after the record date
for the determination of the holders of the Common Stock
entitled to receive such distribution. Notwithstanding the
foregoing, in the event that the Corporation shall distribute
rights or warrants (other than those referred to in
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Section 6(f)(ii)) ("Rights") pro rata to holders of the
Common Stock which are not separable from the Common Stock
except upon the occurrence of a contingency (including,
without limitation, the Rights referred to in Section 6(1)
hereof), the Corporation may, in lieu of making any adjustment
pursuant to this Section 6(f)(iii), make proper provision so
that each holder of a share of Series A Preferred Stock who
converts such share after the record date for such
distribution and prior to the expiration or redemption of the
Rights shall be entitled to receive upon such conversion, in
addition to the shares of the Common Stock issuable upon such
conversion (the "Conversion Shares"), a number of Rights to be
determined as follows: (i) if such conversion occurs on or
prior to the date for the distribution to the holders of
Rights of separate certificates evidencing such Rights (the
"Distribution Date"), the same number of Rights to which a
holder of a number of shares of the Common Stock equal to the
number of Conversion Shares is entitled at the time of such
conversion in accordance with the terms and provisions of and
applicable to the Rights; and (ii) if such conversion occurs
after the Distribution Date, the same number of Rights to
which a holder of the number of the Common Stock into which a
share of the Series A Preferred Stock so converted was
convertible immediately prior to the Distribution Date would
have been entitled on the Distribution Date in accordance with
the terms and provisions of and applicable to the Rights.
(iv) Subject to the last sentence of this Section
6(f)(iv), in case the Company shall, by dividend or
otherwise, at any time distribute to all holders of its Common
Stock cash (excluding (1) any cash that is distributed as part
of a distribution referred to in Section 6(f)(iii) and (2) any
cash that is distributed upon a reclassification, change,
consolidation, merger, sale or conveyance to which Section
6(k) applies) in an aggregate amount that, combined together
with the aggregate amount of all other distributions to all
holders of its Common Stock made exclusively in cash
(excluding distributions to the extent provided in the
preceding parenthetical) within the 12 months preceding the
date of payment of such distribution and in respect of which
no adjustment pursuant to this Section 6(f)(iv) has been made,
exceeds 15% of the product obtained by multiplying the current
market price per share (determined as provided in Section
6(f)(v)) of the Common Stock on the date for the determination
of holders of shares of Common Stock entitled to receive
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such distribution by the number of shares of Common
Stock outstanding on such date, then, and in each such case,
immediately after the close of business on such date for
determination, the conversion rate shall be increased so that
the same shall equal the rate determined by dividing the
conversion rate in effect immediately prior to the close of
business on the date fixed for determination of the
stockholders entitled to receive such distribution by a
fraction (i) the numerator of which shall be equal to the
current market price per share (determined as provided in
Section 6(f)(v)) of the Common Stock on the date fixed for
such determination less an amount equal to the quotient
obtained by dividing (x) the excess of such combined amount
over such 15% of such product by (y) the number of shares of
Common Stock outstanding on such date for determination and
(ii) the denominator of which shall be equal to the current
market price per share (determined as provided in Section
6(f)(v)) of the Common Stock on such date for determination.
(v) The current market price per share of the
Common Stock on any date shall be deemed to be the average of
the daily closing prices for twenty consecutive trading days
commencing thirty trading days before the day in question.
The closing price for each day shall be the last reported
sales price regular way or, in case no such reported sale
takes place on such date, the average of the reported closing
bid and asked prices regular way, in either case on the New
York Stock Exchange, or if the Common Stock is not listed or
admitted to trading on such Exchange, on the principal
national securities exchange on which the Common Stock is
listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, the closing sale
price of the Common Stock, or in case no reported sale takes
place, the average of the closing bid and asked prices, on
NASDAQ or any comparable system, or if the Common Stock is not
quoted on NASDAQ or any comparable system, the closing sale
price or, in case no reported sale takes place, the
average of the closing bid and asked prices, as furnished by
any two members of the National Association of Securities
Dealers, Inc. selected from time to time by the Corporation
for that purpose.
(vi) In any case in which this Section 6 shall
require that an adjustment be made immediately following a
record date, the Corporation may elect to defer (but only
until five business days following the mailing of the notice
described in Section 6(j))
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issuing to the holder of any share of the Series A
Preferred Stock converted after such record date the shares of
the Common Stock and other capital stock of the Corporation
issuable upon such conversion over and above the shares of the
Common Stock and other capital stock of the Corporation
issuable upon such conversion only on the basis of the
conversion rate prior to adjustment; and, in lieu of the
shares the issuance of which is so deferred, the Corporation
shall issue or cause its transfer agents to issue due bills or
other appropriate evidence of the right to receive such
shares.
(g) No adjustment in the conversion rate shall be
required until cumulative adjustments result in a concomitant change of 1% or
more of the conversion rate as existed prior to the last adjustment of the
conversion rate; provided, however, that any adjustments which by reason of
this Section 6(g) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 6 shall be made to the nearest cent or to the nearest one-hundredth of
a share, as the case may be. Except to the extent provided in Section
6(f)(iv), no adjustment to the conversion rate shall be made for cash
dividends.
(h) In the event that, as a result of an adjustment made
pursuant to Section 6(f), the holder of any share of the Series A Preferred
Stock thereafter surrendered for conversion shall become entitled to receive
any shares of capital stock of the Corporation other than shares of the Common
Stock, thereafter the number of such other shares so receivable upon conversion
of any shares of the Series A Preferred Stock shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Stock contained in this Section 6.
(i) The Corporation may make such increases in the
conversion rate, in addition to those required by Sections 6(f)(i), (ii), (iii)
and (iv), as it considers to be advisable in order that any event treated for
Federal income tax purposes as a dividend of stock or stock rights shall not be
taxable to the recipients thereof.
(j) Whenever the conversion rate is adjusted as herein
provided:
(1) the Corporation shall compute the adjusted conversion
rate and shall prepare a certificate signed by the Treasurer of the
Corporation setting forth the adjusted conversion rate and showing in
reasonable detail the acts upon which such adjustment is based, and
such certificate
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shall forthwith be filed with the transfer agent for the Series
A Preferred Stock; and
(2) a notice stating that the conversion rate has been
adjusted and setting forth the adjusted conversion rate shall
forthwith be prepared, and as soon as practicable after it is
prepared, such notice shall be mailed by the Corporation to all record
holders of shares of the Series A Preferred Stock at their last
addresses as they shall appear upon the stock transfer books of the
Corporation.
(k) If any of the following shall occur, namely: (i) any
reclassification or change of outstanding shares of the Common Stock issuable
upon conversion of shares of the Series A Preferred Stock (other than a change
in par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), (ii) any consolidation
or merger to which the Corporation is a party other than a merger in which the
Corporation is the continuing corporation and which does not result in any
reclassification of, or change (other than a change in name, or par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination) in, outstanding shares of the Common
Stock or (iii) any sale or conveyance of all or substantially all of the
property or business of the Corporation as an entirety (including, in the case
of any of the foregoing events, any statutory exchange of securities with
another corporation), the holder of each share of Series A Preferred Stock then
outstanding shall have the right thereafter to convert such share into the kind
and amount of shares of stock and other securities, cash and other property
receivable upon such consolidation, merger, sale, transfer, reclassification,
change or statutory exchange by a holder of the number of shares of the Common
Stock into which such share of the Series A Preferred Stock was convertible
immediately prior to such consolidation, merger, sale, transfer,
reclassification, change or statutory exchange. In any such event, effective
provision shall be made (and it shall be a condition precedent to any such
consolidation, merger, sale, transfer, reclassification, change or statutory
exchange that effective provision be made), in the articles or certificate of
incorporation of the resulting or surviving corporation or other corporation
issuing or delivering such shares of stock, other securities, cash or other
property or otherwise, so that the provisions set forth herein for the
protection of the conversion rights of the Series A Preferred Stock shall
thereafter be applicable, as nearly as reasonably may be, to any such other
shares of stock and other securities, cash or other property deliverable upon
conversion of the Series A Preferred Stock remaining outstanding or other
convertible stock or securities received by the holders of the Series A
Preferred Stock in place thereof; and any such resulting or surviving
corporation or other
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corporation issuing or delivering such shares of stock, other
securities, cash or other property shall expressly assume the obligation to
deliver, upon the exercise of the conversion privilege, such shares of stock,
other securities, cash or other property as the holders of shares of the Series
A Preferred Stock remaining outstanding, or other convertible stock or
securities received by the holders of shares of the Series A Preferred Stock in
place thereof, shall be entitled to receive, pursuant to the provisions hereof,
and to make provision for the protection of the conversion right as above
provided. In case shares of stock, other securities, cash or other property
are deliverable upon conversion as aforesaid, then all references to shares of
Common Stock in this Section 6 shall be deemed to apply, so far as provided and
as nearly as is reasonable, to any such shares, other securities, cash or other
property. The provisions of this Section 6(k) shall similarly apply to
successive consolidations, mergers, sales, transfers, reclassifications,
changes or statutory exchanges. The foregoing, however, shall not in any way
affect the right a holder of a share of the Series A Preferred Stock may
otherwise have, pursuant to clause (ii) of the last sentence of Section
6(f)(iii), to receive Rights upon conversion of a share of the Series A
Preferred Stock.
(1) So long as Rights of the kind authorized and declared on
April 14, 1989 as a dividend by the Corporation to holders of record of shares
of the Common Stock on April 14, 1989 pursuant to the Rights Agreement between
the Corporation and Harris Trust & Savings Bank, as Rights Agent, as the same
may have been and may hereafter be amended, are attached to the outstanding
shares of the Common Stock, each share of Common Stock issued upon conversion
of the shares of the Series A Preferred Stock prior to the earliest of any
Distribution Date (as defined in such Rights Agreement), any Redemption Date
(as so defined), or the Expiration Date (as so defined) shall be issued with
such Rights in an amount equal to the amount of such Rights then attached to
each such outstanding share of such Common Stock.
(m) Prior Notice of Certain Events. In case:
(i) the Corporation shall (1) authorize and declare
any dividend (or any other distribution) on the Common Stock,
other than (A) a dividend payable in shares of the Common
Stock or (B) a dividend payable in cash, other than any
special or nonrecurring or other extraordinary dividend or (2)
declare or authorize a redemption or repurchase of in excess
of 10% of the then outstanding shares of the Common Stock; or
(ii) the Corporation shall authorize the granting to
all holders of the Common Stock of rights or
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warrants to subscribe for or purchase any share of
stock of any class or of any other rights or warrants; or
(iii) of any reclassification of the Common Stock
(other than a subdivision or combination of the outstanding
Common Stock, or a change in par value, or form par value to
no par value, or from no par value to par value), or of any
consolidation or merger to which the Corporation is a party
and for which approval of any stockholders of the Corporation
shall be required, or of the sale or transfer of all or
substantially all of the assets of the Corporation as an
entirety or of any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or other
property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Series A Preferred Stock, and shall cause to be mailed to the holders of record
of the Series A Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least fifteen days prior
to the applicable record date hereinafter specified, a notice stating, as the
case may be, (x) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, redemption, repurchase or granting of
rights or warrants or, if a record is not be taken, the date as of which the
holders of the Common Stock of record to be entitled to such dividend,
distribution, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of the Common
Stock of record shall be entitled to exchange their shares of the Common Stock
for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).
Section 7. Limitations. In addition to any other rights
provided by applicable law, so long as any shares of the Series A Preferred
Stock are outstanding, the Corporation shall not, without the affirmative vote,
or the written consent as provided by law, of the holders of at least
two-thirds of the outstanding shares of the Series A Preferred Stock, voting
separately,
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(a) create, authorize or issue any class or series of
preferred stock ranking either as to payment of dividends or
distribution of assets upon liquidation prior to the Series A
Preferred Stock; or
(b) change the preferences, rights or powers with
respect to the Series A Preferred Stock so as to affect the
Series A Preferred Stock adversely;
but (except as otherwise required by applicable law) nothing herein contained
shall require such a vote or consent (i) in connection with any increase in the
total number of authorized shares of the Common Stock, or (ii) in connection
with the authorization or increase of any class or series of shares ranking, as
to dividends and in liquidation, junior to or on a parity with the Series A
Preferred Stock; provided, however, that no such vote or written consent of the
holders of the shares of the Series A Preferred Stock shall be required if, at
or prior to the time when the issuance of any such shares ranking prior to the
Series A Preferred Stock is to be made or any such change is to take effect, as
the case may be, provision is made for the redemption of all the then
outstanding shares of the Series A Preferred Stock.
Section 8. No Preemptive Rights. No holder of shares
of the Series A Preferred Stock will possess any preemptive rights to subscribe
for or acquire any unissued shares of capital stock of the Corporation (whether
now or hereafter authorized) or securities of the Corporation convertible into
or carrying a right to subscribe to or acquire shares of capital stock of the
Corporation.
Section 9. Dividend Received Deduction. For federal income
tax purposes, the Corporation shall report distributions on the Series A
Preferred Stock as dividends, to the extent of the Corporation's current and
accumulated earnings and profits (as determined for federal income tax
purposes). In addition, the Corporation covenants not to take any action
voluntarily which could reasonably be expected to cause dividends on the Series
A Preferred Stock to fail to be eligible for the dividend received deduction
pursuant to Section 244 of the Internal Revenue Code of 1986, as amended from
time to time.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation to be signed by ____________________, its
____________________, and attested by ____________________, its
____________________ this _____ day of __________, 1994.
SCOTSMAN INDUSTRIES, INC.
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By:_________________________
Attested:
By:_________________________
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EXHIBIT II
CERTIFICATE OF DESIGNATION
OF
SERIES B [$____] CUMULATIVE
PREFERRED STOCK
OF
SCOTSMAN INDUSTRIES, INC.
(PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE)
Scotsman Industries, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation:
RESOLVED, that pursuant to the authority expressly granted to
and vested in the Board of Directors of the Corporation (the "Board of
Directors") by the provisions of the Restated Certificate of Incorporation of
the Corporation (the "Certificate of Incorporation"), there hereby is created,
out of the 10,000,000 shares of Preferred Stock, par value $1.00 per share, of
the Corporation authorized in Article Fourth of the Certificate of
Incorporation (the "Preferred Stock"), a series of the Preferred Stock
consisting of _______ shares, which series shall have the following powers,
designations, preferences and relative, participating, optional or other
rights, and the following qualifications, limitations and restrictions (in
addition to the powers, designations, preferences and relative, participating,
optional or other rights, and the qualifications, limitations and restrictions,
set forth in the Certificate of Incorporation which are applicable to the
Preferred Stock):
Section 1. Designation of Amount. The shares of such
series shall be designated as "Series B [$____] Cumulative Preferred Stock"
(the "Series B Preferred Stock") and the authorized number of shares
constituting such series shall be ___________. Shares of the Series B
Preferred Stock shall have a stated value of $11.25 per share.
Section 2. Dividends.
(a) The holders of shares of the Series B Preferred Stock
will be entitled to receive, when, as and if declared by the Board of Directors
out of funds of the Corporation legally
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available therefor, cumulative cash dividends on the shares of the Series B
Preferred Stock at the rate of [$___] per annum per share, and no more, payable
in equal quarterly installments on January 15, April 15, July 15 and October
15 in each year, commencing [July 15, 1994]; provided that accumulated and
unpaid dividends for any prior quarterly period may be paid at any time; and
provided further that if any such date is a Saturday, Sunday or legal holiday
then such dividend shall be payable on the first immediately succeeding
calendar day which is not a Saturday, Sunday or legal holiday. For purposes
hereof, the term legal holiday shall mean any day on which banking institutions
are authorized to close in New York, New York. Such dividends shall be
cumulative from the date of original issue of each share of the Series B
Preferred Stock, whether or not there shall be funds legally available for the
payment of dividends on any quarterly payment date. Each such dividend shall
be paid to the holders of record of the shares of the Series B Preferred Stock
as they appear on the share register of the Corporation on such record date,
not more than 30 days nor less than 10 days preceding the dividend payment date
thereof, as shall be fixed by the Board of Directors or a duly authorized
committee thereof.
(b) If dividends are not paid in full, or declared in full and sums
set apart for the payment thereof, upon the shares of the Series B Preferred
Stock and shares of any other preferred stock ranking on a parity as to
dividends with the Series B Preferred Stock, all dividends declared upon shares
of the Series B Preferred Stock and of any other preferred stock ranking on a
parity as to dividends shall be paid or declared pro rata so that in all cases
the amount of dividends paid or declared per share on the Series B Preferred
Stock and such other shares of preferred stock shall bear to each other the
same ratio that unpaid accumulated dividends per share, including dividends
accrued or in arrears, if any, on the shares of the Series B Preferred Stock
and such other shares of preferred stock bear to each other. Unless and until
full cumulative dividends on the shares of the Series B Preferred Stock in
respect of all past quarterly dividend periods have been paid, and the full
amount of dividends on the shares of the Series B Preferred Stock in respect of
the then current quarterly dividend period shall have been declared in full and
sums set aside for the payment thereof, no dividends (other than dividends in
shares of any other capital stock of the Corporation ranking junior to the
Series B Preferred Stock as to dividends) shall be paid or declared and set
aside for payment or other distribution made upon the Corporation's Common
Stock, par value $.10 per share (the "Common Stock"), or any other capital
stock of the Corporation ranking junior to or on a parity with the Series B
Preferred Stock as to dividends, nor shall any shares of the Common Stock or
shares of any other capital stock of the Corporation ranking junior to or on a
parity
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with the Series B Preferred Stock as to dividends be redeemed, retired,
purchased or otherwise acquired for any consideration (or any payment made to
or available for a sinking fund for the redemption of any such shares) by the
Corporation or any subsidiary of the Corporation (except by conversion into or
exchange for shares of capital stock of the Corporation ranking junior to the
Series B Preferred Stock as to dividends). Holders of shares of the Series B
Preferred Stock shall not be entitled to any dividends, whether payable in
cash, property or shares of capital stock, in excess of full accrued and
cumulative dividends as herein provided. No interest or sum of money in lieu of
interest shall be payable in respect of any dividend payment or payments on the
shares of the Series B Preferred Stock that may be in arrears.
The terms "accrued dividends," "dividends accrued" and "dividends in
arrears," whenever used herein with reference to shares of preferred stock
shall be deemed to mean an amount which shall be equal to dividends thereon at
the annual dividend rates per share for the respective series from the date or
dates on which such dividends commence to accrue to the end of the then current
quarterly dividend period for such preferred stock (or, in the case of
redemption, to the date of redemption), whether or not earned or declared and
whether or not assets for the Corporation are legally available therefor, less
the amount of all such dividends paid, or declared in full and sums set aside
for the payment thereof, upon such shares of preferred stock.
(c) Dividends payable on the shares of the Series B Preferred Stock for
any period less than a full quarterly dividend period shall be computed on the
basis of a 360-day year of twelve 30-day months and the actual number of days
elapsed in the period for which payable.
Section 3. Optional Redemption by Corporation.
(a) Subject to Section 3(e), the shares of the Series B Preferred Stock
will be redeemable at the option of the Corporation by resolution of its Board
of Directors, in whole or from time to time in part, on and after [May 1],
1999, at a redemption price of $11.25 per share plus all dividends accrued and
unpaid on the shares of the Series B Preferred Stock up to the date fixed for
redemption (the "Redemption Price"), upon giving notice as provided
hereinbelow.
(b) If less than all of the outstanding shares of the Series B Preferred
Stock are to be redeemed, the number of shares to be redeemed shall be
determined by the Board of Directors and the shares to be redeemed shall be
determined pro rata or by lot or in such other manner and subject to such
regulations as the Board of Directors in its sole discretion shall prescribe.
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(c) At least 30 days but not more than 60 days prior to
the date fixed for the redemption of shares of the Series B Preferred Stock, a
written notice shall be mailed to each holder of record of shares of the Series
B Preferred Stock to be redeemed in a postage prepaid envelope addressed to
such holder at such holder's post office address as shown on the records of the
Corporation, notifying such holder of the election of the Corporation to redeem
such shares, stating the date fixed for redemption thereof (the "Redemption
Date"), specifying the Redemption Price, and calling upon such holder to
surrender to the Corporation on the Redemption Date at the place designated in
such notice (which shall be in the Borough of Manhattan, The city of New York,
State of New York, or the City of Chicago, Illinois) his certificate or
certificates representing the number of shares specified in such notice of
redemption. On or after the Redemption Date each holder of shares of the
Series B Preferred Stock to be redeemed shall present and surrender his
certificate or certificates for such shares to the Corporation at the place
designated in such notice and against such surrender the Redemption Price of
such shares shall be paid to or on the order of the person whose name appears
on such certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. In case less than all the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. From and after the Redemption Date (unless
default shall be made by the Corporation in payment in full of the Redemption
Price), all dividends on the shares of the Series B Preferred Stock designated
for redemption in such notice shall cease to accrue, and all rights of the
holders thereof as stockholders of the Corporation, except the right to receive
the Redemption Price of such shares (including all accrued and unpaid dividends
up to the Redemption Date) upon the surrender of certificates representing the
same, shall cease and terminate and such shares shall not thereafter be
transferred (except with the consent of the Corporation) on the books of the
Corporation, and such shares shall not be deemed to be outstanding for any
purpose whatsoever. At its election, the Corporation prior to the Redemption
Date may deposit the Redemption Price (including all accrued and unpaid
dividends up to the Redemption Date) of shares of the Series B Preferred Stock
so called for redemption in trust for the holders thereof with a bank or trust
company (having a capital surplus and undivided profits aggregating not less
than $50,000,000) in the Borough of Manhattan, City and State of New York, the
City of Chicago, State of Illinois, or in any other city in which the
Corporation at the time shall maintain a transfer agency with respect to such
shares, with irrevocable instructions and authority to redeem such shares upon
surrender of certificates therefor, in which case the aforesaid notice to
holders of shares of the Series B Preferred Stock to be redeemed shall state
the date of such deposit, shall specify the office of such bank or
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<PAGE> 123
trust company as the place of payment of the Redemption Price, and
shall call upon such holders to surrender the certificates representing such
shares at such place on or after the date fixed in such redemption notice
(which shall not be later than the Redemption Date) against payment of the
Redemption Price (including all accrued and unpaid dividends up to the
Redemption Date). Any interest accrued on such funds shall be paid to the
Corporation from time to time. Any moneys so deposited which shall remain
unclaimed by the holders of such shares of the Series B Preferred Stock at the
end of two years after the Redemption Date shall be returned by such bank or
trust company to the Corporation; thereafter, the holders of shares of the
Series B Preferred Stock redeemed on such Redemption Date shall look only to
the Corporation for payment of the Redemption Price therefor.
(d) Shares of the Series B Preferred Stock redeemed,
repurchased or retired pursuant to the provisions of this Section 3 shall
thereupon be retired and may not be reissued as shares of the Series B
Preferred Stock but shall thereafter have the status of authorized but unissued
shares of the Preferred Stock, without designation as to series until such
shares are once more designated as part of a particular series of the Preferred
Stock.
(e) Notwithstanding the provisions of Section 3(a), in the
event that the Corporation shall have failed to declare and pay or set apart
for payment in full the dividends accumulated on the outstanding shares of the
Series B Preferred Stock for any eight quarterly dividend payment periods,
whether or not consecutive, whether or not earned or declared or whether or not
any assets of the Corporation are legally available therefor, the Series B
Preferred Stock shall not thereafter be redeemable.
Section 4. Optional Redemption by Holders.
(a) Each holder of record of shares of the Series B Preferred
Stock shall have the right, at the option of such holder, at any time on or
after [May 1], 1999, to require the Corporation, to the extent the Corporation
has legally available funds therefor, to redeem all (but not less than all) of
the shares of the Series B Preferred Shares held by such holder at the
Redemption Price therefor.
(b) The right to require redemption pursuant to Section 4(a)
shall be exercised by such a holder by giving written notice of such exercise
by first class mail, postage prepaid, and by surrendering therewith the
certificate or certificates representing such shares to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the shares of
the Series B Preferred Stock), and thereupon the
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<PAGE> 124
Redemption Price of such shares shall be paid to or on the order of the
person whose name appears on such certificate or certificates as the owner
thereof.
(c) After receipt of the notice and certificates as specified
above, the Corporation shall redeem such shares of the Series B Preferred Stock
on the date (the "Elected Redemption Date") of the dividend payment date for
the shares of the Series B Preferred Stock next following the date of the
Corporation's receipt of such notice; provided that if the Corporation receives
such notice less than 30 days prior to such next following dividend payment
date, then the Elected Redemption Date for the shares to be redeemed pursuant
to such notice shall be the next succeeding dividend payment date.
From and after each Elected Redemption Date (unless default shall be made by
the Corporation in payment of the Redemption Price), all dividends on the
shares of the Series B Preferred Stock designated for redemption on such
Elected Redemption Date shall cease to accrue, and all rights of the holders
thereof as stockholders of the Corporation, except the right to receive the
Redemption Price of such shares (including all accrued and unpaid dividends up
to the Elected Redemption Date), shall cease and terminate and such shares
shall not thereafter be transferred (except with the consent of the
Corporation) on the books of the Corporation, and such shares shall not be
deemed to be outstanding for any purpose whatsoever.
(d) If the funds of the Corporation legally available for
redemption of shares of the Series B Preferred Stock are insufficient
to redeem the total number of shares of the Series B Preferred Stock to be
redeemed on an Elected Redemption Date pursuant to this Section 4, any funds
legally available therefor shall be distributed ratably among the holders of
such shares in proportion to the respective amounts that would be payable if
such funds were sufficient to redeem such shares in full. The shares of the
Series B Preferred Stock not redeemed pursuant to this Section 4(d) shall
remain outstanding and entitled to all rights provided herein and a new
certificate shall be issued representing the unredeemed shares.
(e) Shares of the Series B Preferred Stock redeemed,
repurchased or retired pursuant to the provisions of this Section 4 shall
thereupon be retired and may not be reissued as shares of the Series B
Preferred Stock but shall thereafter have the status of authorized but unissued
shares of the Preferred Stock, without designation as to series until such
shares are once more designated as part of a particular series of the Preferred
Stock.
Section 5. Voting Rights. Except as otherwise provided
herein or as required by law, the holders of shares of the Series B Preferred
Stock shall be entitled to vote on any matter on which the holders of Common
Stock are entitled to vote.
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<PAGE> 125
Each share of the Series B Preferred Stock held of record on the record
date for the determination of stockholders entitled to vote on such matter (or,
if no such record date is established, on the date such vote is taken) shall
entitle the holder thereof to cast a number of votes equal to one-tenth (1/10)
of one vote. Except as otherwise expressly provided herein or as required by
law, the holders of shares of the Series B Preferred Stock and Common Stock
shall vote together (together with any other class or series of preferred stock
of the Corporation then entitled to vote on any matter on which the holders of
Common Stock are entitled to vote) and not as separate classes.
Section 6. Liquidation Rights.
(a) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or otherwise,
the holders of shares of the Series B Preferred Stock shall be entitled
to receive, out of the assets of the Corporation available for distribution to
its shareholders, in cash, the amount of $11.25 for each share of the Series B
Preferred Stock, plus an amount equal to all dividends accrued and unpaid on
each such share up to the date fixed for distribution, before any distribution
shall be made to the holders of shares of the Common Stock or any other capital
stock of the Corporation ranking (as to any such distribution) junior to the
Series B Preferred Stock. If upon any liquidation, dissolution or winding up
of the Corporation, the assets distributable among the holders of shares of the
Series B Preferred Stock and all other classes and series of preferred stock
ranking (as to any such distribution) on a parity with the Series B Preferred
Stock are insufficient to permit the payment in full to the holders of all such
shares of all preferential amounts payable to all such holders, then the entire
assets of the Corporation thus distributable shall be distributed ratably among
the holders of the shares of the Series B Preferred Stock and such other
classes and series of preferred stock ranking (as to any such distribution) on
a parity with the Series B Preferred Stock in proportion to the respective
amounts that would be payable per share if such assets were sufficient to
permit payment in full.
(b) For purposes of this Section 6, a distribution of
assets in any dissolution, winding up or liquidation shall not include (i) any
consolidation or merger of the Corporation with or into any other corporation,
(ii) any dissolution, liquidation, winding up or reorganization of the
Corporation immediately followed by reincorporation of another corporation or
(iii) a sale or other disposition of all or substantially all of the
Corporation's assets to another corporation; provided, however, that, in each
case, effective provision is made in the certificate or incorporation of the
resulting and surviving
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<PAGE> 126
corporation or otherwise for the protection of the rights of the
holders of shares of the Series B Preferred Stock.
(c) After the payment of the full preferential amounts
provided for herein to the holders of shares of the Series B Preferred Stock
such holders shall be entitled to no other or further participation in the
distribution of the assets of the Corporation.
Section 7. Limitations. In addition to any other rights
provided by applicable law, so long as any shares of the Series B Preferred
Stock are outstanding, the Corporation shall not, without the affirmative vote,
or the written consent as provided by law, of the holders of at least
two-thirds of the outstanding shares of the Series B Preferred Stock, voting
separately,
(a) create, authorize or issue any class or series of
preferred stock ranking either as to payment of dividends or
distribution of assets upon liquidation prior to the Series B
Preferred Stock; or
(b) change the preferences, rights or powers with
respect to the Series B Preferred Stock so as to affect the
Series B Preferred Stock adversely;
but (except as otherwise required by applicable law) nothing herein contained
shall require such a vote or consent (i) in connection with any increase in the
total number of authorized shares of the Common Stock, or (ii) in connection
with the authorization or increase of any class or series of shares ranking, as
to dividends and in liquidation, junior to or on a parity with the Series B
Preferred Stock; provided, however, that no such vote or written consent of the
holders of the shares of the Series B Preferred Stock shall be required if, at
or prior to the time when the issuance of any such shares ranking prior to the
Series B Preferred Stock is to be made or any such change is to take effect, as
the case may be, provision is made for the redemption of all the then
outstanding shares of the Series B Preferred Stock.
Section 8. No Preemptive Rights. No holder of shares
of the Series B Preferred Stock will possess any preemptive rights to subscribe
for or acquire any unissued shares of capital stock of the Corporation (whether
now or hereafter authorized) or securities of the Corporation convertible into
or carrying a right to subscribe to or acquire shares of capital stock of the
Corporation.
Section 9. Dividend Received Deduction. For federal income
tax purposes, the Corporation shall report distributions
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<PAGE> 127
on the Series B Preferred Stock as dividends, to the extent of the
Corporation's current and accumulated earnings and profits (as determined for
federal income tax purposes). In addition, the Corporation covenants not to
take any action voluntarily which could reasonably be expected to cause
dividends on the Series B Preferred Stock to fail to be eligible for the
dividend received deduction pursuant to Section 244 of the Internal Revenue
Code of 1986, as amended from time to time.
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<PAGE> 128
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation to be signed by ____________________, its
____________________, and attested by ____________________, its
____________________ this _____ day of __________, 1994.
SCOTSMAN INDUSTRIES, INC.
By:_________________________
Attested:
By:_________________________
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<PAGE> 129
EXHIBIT III-A
[Form of Opinion of Debevoise & Plimpton]
____________, 1994
Scotsman Industries, Inc.
Scotsman Acquisition Corporation
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Agreement and Plan of Merger
Ladies and Gentlemen:
We have acted as special counsel to DFC Holding Corporation, a
Delaware corporation ("Holding"), and The Delfield Company, a Delaware
corporation ("TDC"), in connection with the Agreement and Plan of Merger, dated
as of January 11, 1994 (the "Merger Agreement"), among each of you, Holding,
TDC, the stockholders of Holding named in the Merger Agreement, certain other
parties named therein and Continental Bank N.A., providing for the merger of
Scotsman Acquisition Corporation into Holding, which will thereupon become a
wholly-owned subsidiary of Scotsman Industries, Inc. We are delivering this
opinion to each of you pursuant to Section 8.3 of the Merger Agreement. All
capitalized terms used herein without definition have the respective meanings
given to them in the Merger Agreement.
In so acting, we have participated in the preparation of the
Merger Agreement and the Registration Rights Agreement and have examined and
relied upon the
<PAGE> 130
Scotsman Industries, Inc. -2- ____________, 1994
Scotsman Acquisition
Corporation
representations and warranties as to factual matters contained in or
made pursuant to the Merger Agreement and the Registration Rights Agreement and
upon the originals, or copies certified or otherwise identified to our
satisfaction, of such agreements, records, documents, certificates and other
instruments, and have made such investigations of law, as in our judgment are
necessary or appropriate to enable us to render the opinion expressed below.
We have assumed the authenticity of all documents submitted to us as originals,
the genuineness of signatures, the legal capacity of all natural persons, the
absence of undue influence and the conformity with the original documents of
any copies thereof submitted to us as certified, conformed or photostatic
copies.
Based on the foregoing, and subject to the qualifications
expressed below, we are of the following opinion:
1. Holding and TDC are each duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and each
has corporate power and authority to own, lease and operate its respective
properties and to conduct its business as now conducted, as described in the
Registration Statement and the Proxy Statement/Prospectus, to execute and
deliver the Merger Agreement, to consummate the transactions contemplated
thereby, and to perform its respective obligations under the Merger Agreement.
2. The Merger Agreement has been duly authorized, executed
and delivered by Holding and TDC and (assuming the due authorization, execution
and delivery thereof by each of you) constitutes the legal, valid and binding
obligation of Holding and TDC, respectively, enforceable against Holding and
TDC, respectively, in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or affecting
the enforcement of creditors' rights generally or by general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law) and except that we express no opinion as to the
enforceability of any provisions of the Merger Agreement (i) requiring
arbitration, (ii) regarding rights to indemnification under federal or
state securities laws or regulations or related public policy or (iii) relating
to any waiver of inconvenient forum or the subject matter jurisdiction of the
United States District Court for the Southern District of New York to
adjudicate any controversy.
<PAGE> 131
Scotsman Industries, Inc. -3- ____________, 1994
Scotsman Acquisition
Corporation
3. Each of the Merger Agreement and the Registration Rights
Agreement (assuming the power and authority to enter into and perform
and the due authorization, execution and delivery of the Merger Agreement and
the Registration Rights Agreement by each of the parties, including the
Stockholders, thereto other than Holding and TDC) constitutes the legal, valid
and binding obligation of each Stockholder, enforceable against such
Stockholder in accordance with its respective terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or affecting
the enforcement of creditors' rights generally or by general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law) and except that we express no opinion as to the
enforceability of (i) any provisions of the Merger Agreement (a) requiring
arbitration, (b) regarding rights to indemnification under federal or state
securities laws or regulations or related public policy or (c) relating to any
waiver of inconvenient forum or the subject matter jurisdiction of the United
States District Court for the Southern District of New York to adjudicate any
controversy or (ii) the indemnification and contribution provisions of the
Registration Rights Agreement.
4. The execution, delivery and performance by Holding and TDC
of the Merger Agreement do not and will not conflict with, result in any breach
of the terms, conditions or provisions of, constitute a default, an event of
default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under, or result in the creation of any
encumbrance in respect of any property of Holding or any subsidiary thereof
(including TDC) under, the certificate of incorporation or the by-laws of
Holding or TDC, respectively, or of any written agreement or instrument listed
in Schedule A hereto.
5. No consent, approval or authorization of, registration,
filing or declaration with, any Federal, New York or Delaware (under the
General Corporation Law of Delaware) governmental or regulatory
authority is required to be obtained or made by or on behalf of Holding or TDC
for the valid execution and delivery by Holding and TDC of the Merger
Agreement, the consummation by Holding and TDC of the transactions contemplated
thereby and compliance by Holding and TDC with the terms and provisions
thereof, except for such as have been filed, obtained or made.
<PAGE> 132
Scotsman Industries, Inc. -4- ____________, 1994
Scotsman Acquisition
Corporation
In giving the opinion expressed in paragraph 5 above, we have
relied exclusively upon telephone confirmation of _______________ with respect
to the filing with the Secretary of State of the State of Delaware of the
Certificate of Merger relating to the merger of Sub into Holding and upon [a
letter, dated ________, 1994, from the Federal Trade Commission confirming the
grant of early termination of the thirty-day waiting period generally provided
for under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended].
We express no opinion as to the effect of any Federal or State
laws regarding fraudulent transfers or conveyances, or of provisions of
Delaware or New York law restricting dividends, loans or other distributions by
a corporation or for the benefit of its stockholders, including without
limitation as to the effect thereof on the validity, binding effect or
enforceability of the Merger Agreement or the Registration Rights Agreement.
We express no opinion herein as to any local or environmental,
land use or zoning laws or the laws of any jurisdiction other than the law of
the State of New York, the General Corporation Law of the State of Delaware and
the Federal law of the United States of America.
This opinion is being delivered solely to the persons to whom
it is addressed and, accordingly, it may not be relied upon by any other person
or quoted, filed with any governmental or regulatory authority or otherwise
circulated or utilized for any other purpose without our prior written consent.
Very truly yours,
<PAGE> 133
EXHIBIT III-B
[Form of Opinions of Counsel for Certain Stockholders*]
_______________, 1994
Scotsman Industries, Inc.
Scotsman Acquisition Corporation
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Agreement and Plan of Merger
Ladies and Gentlemen:
We have acted as counsel to [Onex Corporation; Onex DHC LLC;
EJJM and Diggs; and Collins] in connection with the Agreement and Plan of
Merger, dated as of January 11, 1994 (the "Merger Agreement"), among each of
you, DFC Holding Corporation, a Delaware corporation ("Holding"), The Delfield
Company, a Delaware corporation ("TDC"), [Onex Corporation; Onex DHC
LLC; EJJM and Diggs; Collins,] the [other] stockholders of Holding named in the
Merger Agreement, certain other parties named therein and Continental Bank
N.A., providing for the merger of Scotsman Acquisition Corporation into
Holding, which will thereupon become a wholly-owned subsidiary of Scotsman
Industries, Inc. We are delivering this opinion pursuant to Section 8.3 of the
Merger Agreement. All capitalized terms used herein without definition have
the respective meanings given to them in the Merger Agreement.
- -------------------------------
* Separate opinions to be rendered with respect to Onex; Onex DHC LLC;
EJJM and Matthew O. Diggs, Jr.; and Timothy C. Collins; with changes
as indicated herein.
<PAGE> 134
In so acting, we have reviewed the Merger Agreement and the
Registration Rights Agreement and have examined and relied upon the
representations and warranties as to factual matters contained in or made
pursuant to the Merger Agreement and the Registration Rights Agreement and upon
the originals, or copies certified or otherwise identified to our satisfaction,
of such agreements, records, documents, certificates and other instruments, and
have made such investigations of law, as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. We have
assumed the authenticity of all documents submitted to us as originals, the
genuineness of signatures, the legal capacity of all natural persons, the
absence of undue influence and the conformity with the original documents of
any copies thereof submitted to us as certified, conformed or photostatic
copies.
Based on the foregoing, and subject to the qualifications
expressed below, we are of the following opinion:
1. [[Onex] [Onex DHC LLC] is duly incorporated, validly
existing and in good standing under the laws of [insert jurisdiction of
incorporation] and has corporate power and authority to own, lease and operate
its properties and to conduct its business as now conducted, to execute and
deliver the Merger Agreement and the Registration Rights Agreement, to
consummate the transactions contemplated thereby, and to perform its
obligations under the Merger Agreement and the Registration Rights Agreement.]
[EJJM is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Ohio and has power and authority under
its partnership agreement and the laws of the State of Ohio to own, lease and
operate its properties and to conduct its business as now conducted, to execute
and deliver the Merger Agreement and the Registration Rights Agreement, to
consummate the transactions contemplated thereby and to perform its obligations
under the Merger Agreement and the Registration Rights Agreement.]
2. The Merger Agreement and the Registration Rights Agreement
have each been duly authorized, executed and delivered by [Onex; Onex DHC LLC;
EJJM and Diggs; Collins].
3. The execution, delivery and performance by [Onex; Onex DHC
LLC; EJJM] of the Merger Agreement and the
2
<PAGE> 135
Registration Rights Agreement do not and will not conflict with, result
in any breach of the terms, conditions or provisions of, constitute a default,
an event of default or any event creating rights of acceleration, termination
or cancellation or a loss of rights under, or result in the creation of any
encumbrance in respect of any property of [Onex; Onex DHC LLC; EJJM] under, the
[certificate of incorporation or the by-laws] [partnership agreement] of [Onex;
Onex DHC LLC; EJJM] [or any order, arbitration award, judgment, decree,
statute, law, ordinance, rule or regulation known to us, which is applicable to
[Onex; Onex DHC LLC; EJJM; Diggs; Collins] or to which [Onex; Onex DHC LLC;
EJJM; Diggs; Collins] is a party or by which [it] [he] is bound].
4. No consent, approval or authorization of,
registration, filing or declaration with, any Federal or
[jurisdiction of incorporation or formation or residence, as
applicable] governmental or regulatory authority is required
to be obtained or made by or on behalf of [Onex; Onex DHC LLC;
EJJM; Diggs; Collins] for the valid execution and delivery by
[Onex; Onex DHC LLC; EJJM; Diggs; Collins] of the Merger
Agreement or the Registration Rights Agreement, the
consummation by [Onex; Onex DHC LLC; EJJM; Diggs; Collins] of
the transactions contemplated thereby and compliance by [Onex;
Onex DHC LLC; EJJM; Diggs; Collins] with the terms and
provisions thereof, except for such as have been filed,
obtained or made.
This opinion is limited to the laws of the State of
[insert applicable jurisdiction].
This opinion is being delivered solely to the persons to whom
it is addressed and, accordingly, it may not be relied upon by any other person
or quoted, filed with any governmental or regulatory authority or otherwise
circulated or utilized for any other purpose without our prior written consent.
Very truly yours,
3
<PAGE> 136
EXHIBIT IV
NONCOMPETITION AGREEMENT
NONCOMPETITION AGREEMENT, dated as of , 1994
(this "Agreement"), among Scotsman Industries, Inc., a Delaware corporation
("Scotsman"), DFC Holding Corporation, a Delaware corporation ("Holding"), The
Delfield Company, a Delaware corporation ("TDC"), and
(the "Covenanting Stockholder"). Unless otherwise indicated, capitalized terms
used herein are used as defined in the Agreement and Plan of Merger, dated as
of January , 1994 (the "Merger Agreement"), relating to Holding.
W I T N E S S E T H:
WHEREAS, the Merger Agreement provides for the acquisition by
Scotsman of Holding through a merger (the "Merger") of Scotsman Acquisition
Corporation, a Delaware corporation ("Sub"), into Holding, pursuant to which
the outstanding shares of Class A Common Stock of Holding owned by the
Covenanting Stockholder and other stockholders of Holding shall be converted
into a combination of cash and equity securities of Scotsman; and
WHEREAS, in order to induce Scotsman and Sub to complete the
Merger, and as contemplated by the Merger Agreement, the Covenanting
Stockholder is entering into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
agreements herein contained, the parties hereto agree for the benefit of
Scotsman, Holding and TDC as follows:
Section 1. Noncompetition. (a) From and after the
Effective Date and continuing for a period of three years following the
Effective Date (the "Covenant Term"), the Covenanting Stockholder will not,
directly or indirectly, as an owner, individual proprietor, principal,
director, partner, stockholder, officer, employee, consultant, agent,
representative, investor, lender or in any other capacity whatsoever, alone, or
in association with any person, partnership, firm, corporation or other
business organization, carry on, be engaged in or take part in or render
services to, or own, share in the earnings of or invest in the stock, bonds or
other securities of any entity (other than Scotsman) that competes with TDC or
the Delfield Business within North America or Latin America with respect to any
business conducted by TDC on the date of this Agreement, including, without
limitation, the design, manufacture and sale to the type of markets now served
of the products currently offered in TDC's product catalogues or manufactured
by TDC; provided, however, that (a) the Covenanting Stockholder may own,
directly or indirectly, solely as an investment, securities of a
<PAGE> 137
publicly-traded entity engaged in the business described above if the
Covenanting Stockholder is not a controlling person of, or member of a group
that controls, such entity and the Covenanting Stockholder, together with any
group of which the Covenanting Stockholder is a member, does not beneficially
own in the aggregate five percent or more of any class of securities of such
entity and (b) the Covenanting Stockholder may acquire an entity no more than
five percent of the consolidated revenues of which for each of the three fiscal
years of such entity ended prior to the acquisition thereof by the Covenanting
Stockholder would fall within the scope of the prohibition contained in this
Section 1(a).
(b) During the Covenant Term, the Covenanting
Stockholder will not, directly or indirectly, as an owner, individual
proprietor, principal, director, partner, stockholder, officer, employee,
consultant, agent, representative, investor, lender or in any other capacity
whatsoever, alone, or in association with any person, partnership, firm,
corporation or other business organization, carry on, be engaged in or take
part in or render services to, or own, share in the earnings of or invest in
the stock, bonds or other securities of any entity (other than Scotsman) that
competes with Scotsman or its subsidiaries within North America or Latin
America with respect to any business conducted by Scotsman or its subsidiaries
in such geographical area on the date of this Agreement, including, without
limitation, the design, manufacture and sale to the type of markets now served
of ice machines and beverage dispensing units; provided, however, that (a) the
Covenanting Stockholder may own, directly or indirectly, solely as an
investment, securities of a publicly-traded entity engaged in the business
described above if the Covenanting Stockholder is not a controlling person of,
or member of a group that controls, such entity and the Covenanting
Stockholder, together with any group of which the Covenanting Stockholder is a
member, does not beneficially own in the aggregate five percent or more of any
class of securities of such entity and (b) a Covenanting Stockholder may
acquire an entity no more than five percent of the consolidated revenues of
which for each of the three fiscal years of such entity ended prior to the
acquisition thereof by the Covenanting Stockholder would fall within the scope
of the prohibition contained in this Section 1(b).
[(c) Notwithstanding the foregoing, the
restrictions contained in Section 1(a) and 1(b) shall not become
effective if the Covenanting Stockholder is not employed by TDC at the
Effective Time and such restrictions shall thereafter terminate if and at such
time as the employment of the Covenanting Stockholder is terminated (i) by TDC
without Cause (as hereinafter defined) or (ii) by the Covenanting Stockholder
on account of the significant diminution by TDC in the responsibilities
currently assigned to the Covenanting Stockholder as an employee of TDC [or the
reduction in the base compensation paid to the Covenanting Stockholder as an
employee
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of TDC].1 As used herein, "Cause" shall mean (1) a material breach by
the Covenanting Stockholder of Section 2 or 3 of this Agreement, (2) the
substantial failure of the Covenanting Stockholder to perform the reasonable
responsibilities assigned to the Covenanting Stockholder as an employee of TDC,
(2) the Covenanting Stockholder's engaging in serious misconduct or neglect in
the discharge of his duties (including, without limitation, violation of any
statutory or common law duty to TDC), or (3) the Covenanting Stockholder's
being convicted of any felony, or being guilty of dishonesty or any substantial
misconduct which reflects adversely on TDC. Nothing in this Agreement shall be
deemed to constitute a commitment or obligation on the part of Scotsman, TDC or
any of their affiliates to employ the Covenanting Stockholder.]2
Section 2. Non-Disclosure of Confidential Information.
Except as Scotsman may otherwise permit or direct in writing or as required by
law or judicial order, the Covenanting Stockholder will not, following the
Effective Date, directly or indirectly, disclose or make use of any mailing
lists, customer lists, subscription lists, processes, trade secrets, software,
research, techniques, designs or other technical data, know-how or other
proprietary or confidential information used at any time in the past or during
the Covenant Term in connection with the Delfield Business; provided, however,
that the foregoing shall not be applicable to any such item to the extent it
was, prior to such disclosure or use, generally available to the public other
than as a result of an unauthorized disclosure, directly or indirectly, by the
Covenanting Stockholder, any other Stockholder or any affiliate thereof. All
records, documents and other writings which are or have been prepared or
created on behalf of TDC or the Delfield Business by the Covenanting
Stockholder, Holding or TDC or which may have come into possession of the
Covenanting Stockholder, Holding or TDC shall be the property of Holding or
TDC, as the case may be, and shall be delivered to or, as the case may be,
shall remain in the possession of such corporation.
Section 3. Non-Solicitation. During the Covenant Term,
the Covenanting Stockholder shall not, whether for its own account or for the
account of any other individual, partnership, firm, corporation or other
business organization, solicit, request or endeavor to entice away from the
Surviving Corporation or any of its subsidiaries, any individual, partnership,
firm, corporation or other business organization which is, at the time
of such solicitation, request or endeavor, employed by or otherwise engaged to
perform services for the Surviving
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1 Not to be included in agreements of Kevin E. McGrone and
W. Joseph Manifold.
2 To be included in agreements entered into by members of
management.
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Corporation or any of its subsidiaries (including, but not limited to,
any independent sales representatives or organizations) or any individual,
partnership, firm, corporation or other business organization who is, at the
time of such solicitation, request or endeavor, a customer or client of TDC.
Section 4. Acknowledgment of Reasonableness. The
Covenanting Stockholder acknowledges that the restrictions contained in
Sections 1, 2 and 3 of this Agreement, which provide substantial inducement for
Scotsman's acquisition of Holding pursuant to the Merger Agreement, are
reasonable and justified.
Section 5. Injunctive Relief; Severability. The
Covenanting Stockholder agrees that a violation of any of the covenants in this
Agreement would cause irreparable and continuing damage to Scotsman, the
Surviving Corporation and TDC, that Scotsman, the Surviving Corporation and TDC
shall be entitled to injunctive or other equitable relief from any court of
competent jurisdiction restraining any further violation of such covenants and
that such injunctive relief shall be cumulative and in addition to any other
rights or remedies to which Scotsman, the Surviving Corporation and TDC may be
entitled to prevent such breach. It is the intention of the parties hereto
that if, in any action before any court empowered to enforce such covenants,
any term, restriction, covenant or promise is found to be invalid, illegal or
unenforceable, then (i) such term, restriction, covenant or promise shall be
deemed modified to the extent necessary to make it valid, legal or enforceable
and (ii) such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement.
Section 6. Scotsman's Right to Change Business. This
Agreement and any rights or privileges granted to the Covenanting Stockholder
hereunder shall not in any way prevent Scotsman, the Surviving Corporation, TDC
or any of their affiliates from exercising their powers to modify, restructure,
enlarge, discontinue or otherwise affect the business operations or activities
of such entities.
Section 7. Assignment. None of the parties hereto may
assign, transfer or convey this Agreement or any of its rights and obligations
hereunder without the prior written consent of the other parties hereto.
Section 8. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by the
respective successors and permitted assigns of the parties hereto, whether so
expressed or not, and, in particular, shall inure to the benefits of and be
enforceable by Scotsman, the Surviving Corporation and TDC or any successor to
the business and assets of Scotsman, the Surviving Corporation and TDC,
respectively, by merger or otherwise.
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Section 9. Execution in Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be considered
an original counterpart.
Section 10. Headings. Section headings herein are inserted for
convenience or reference only and are not intended to be a part of or affect
the meaning or interpretation of this Agreement.
Section 11. Governing Law. This Agreement shall be governed in
all respects, including validity, interpretation and effect, by the laws of New
York without regard to conflict of law principles.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto or by their duly authorized officers, all as of
the date first above written.
SCOTSMAN INDUSTRIES, INC.
By: ----------------------------
Name:
Title:
DFC HOLDING CORPORATION
By: ----------------------------
Name:
Title:
THE DELFIELD COMPANY
By: ----------------------------
Name:
Title:
--------------------------------
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EXHIBIT V
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
as of __________, 1994, among Scotsman Industries, Inc., a Delaware corporation
(the "Company") and the persons and entities listed on Schedule A hereto (such
persons and entities being hereinafter referred to as the "Investors").
1. Background. Pursuant to an Agreement and Plan of Merger
dated as of January 11, 1994 among the Company, Scotsman Acquisition
Corporation, a Delaware corporation, DFC Holding Corporation, a Delaware
corporation, The Delfield Company, a Delaware corporation, and certain of the
Investors (the "Merger Agreement"), the Investors are acquiring 2,000,000
shares (the "Preferred Shares") of the Company's Series A $0.62 Cumulative
Convertible Preferred Stock, par value $1.00 per share (the "Preferred Stock"),
1,200,000 shares of the Company's Common Stock, par value $.10 per share (the
"Common Stock"), together with associated common stock purchase rights (the
"Common Stock Purchase Rights") issued pursuant to the Rights Agreement, dated
as of April 1, 1989, as amended, between the Company and Harris Trust & Savings
Bank, as rights agent (such shares of Common Stock and associated Common Stock
Purchase Rights being referred to as the "Scotsman Fixed Shares"). Pursuant to
the Merger Agreement and the Whitlenge Share Acquisition Agreement dated as of
January 11, 1994 among the Company, Whitlenge Acquisition Limited, Whitlenge
Drink Equipment Limited and certain of the Investors, the Investors may acquire
up to an additional 651,733 shares of Common Stock, together with associated
Common Stock Purchase Rights (such additional shares of Common Stock and
associated Common Stock Purchase Rights being referred to as the "Scotsman
Contingent Shares"). The Preferred Shares are convertible into shares of
Common Stock (the "Conversion Shares") in accordance with the Certificate of
Designation of the Preferred Stock.
2. Registration Under Securities Act, etc.
2.1 Registration on Request. (a) Request. Subject to
Section 2.9 hereof, upon the written request of one or more holders (the
"Initiating Holders") of Registrable Securities representing not less than
250,000 shares of the Registrable Securities that the Company effect the
registration under the Securities Act of all or part of such Initiating
Holders' Registrable Securities, the Company will promptly give written notice
of such requested registration to all registered holders
<PAGE> 142
of Registrable Securities, and thereupon the Company will file with the
Commission a registration statement under the Securities Act in
accordance with Section 2.3 covering, and will use its best efforts to effect
the registration under the Securities Act as expeditiously as practicable of,
(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders, and
(ii) all other Registrable Securities which the Company has
been requested to register by the holders thereof (such holders
together with the Initiating Holders are hereinafter referred to as
the "Selling Holders") by written request given to the Company within
30 days after the giving of such written notice by the Company,
all to the extent requisite to permit the disposition of the Registrable
Securities so to be registered in the manner requested by the Selling Holders
as specified herein.
(b) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 2.1 in connection with an
offering and sale of Registrable Securities by one or more Selling Holders of
Registrable Securities (i) any Person other than a Selling Holder who holds
registration rights with respect to securities of the Company (each, a
"Registration Rights Holder"), shall have the right to include, to the extent
provided in the relevant agreement between the Company and the Registration
Rights Holder, in the registration made pursuant to this Section 2.1 the
securities held by the Registration Rights Holders to which such registration
rights relate, and (ii) the Company shall have the right to include in the
registration made pursuant to this Section 2.1 securities to be issued by the
Company (the securities for which Registration Rights Holders and the Company
can so require registration are herein referred to as "Additional Securities"),
unless in the case of an underwritten offering, the managing underwriter or
underwriters of such offering shall have advised the Selling Holders and the
Company in writing that the inclusion of such Additional Securities would
adversely affect such offering, in which case the number of Additional
Securities included in such registration shall be limited to the number that
will not, in the judgment of the managing underwriter or underwriters,
adversely affect the offering (such limited number to be allocated between the
Company and the affected Registration Rights Holders as they determine).
(c) Registration Statement Form. Registrations under this
Section 2.1 shall be on an appropriate registration form of the Commission, as
reasonably determined by the Company
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consistent with the manner of sale intended by the Selling Holders.
(d) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been
effected (i) unless a registration statement with respect thereto has become
effective and the Minimum Period has been completed without the
occurrence of any interference described in clause (ii) below, (ii) if after it
has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other
governmental agency or court for any reason not attributable to the Selling
Holders and such stop order, injunction, order or requirement has not been
lifted, and the effectiveness of such registration statement has not thereafter
been maintained for the number of days of the Minimum Period that remained at
the time such registration statement was first interfered with, or (iii) if the
conditions to closing specified in the underwriting agreement, if any, entered
into in connection with such registration are not satisfied, other than by
reason of some act or omission on the part of the Selling Holders, or waived.
(e) Selection of Underwriters. The underwriter or
underwriters of each underwritten offering of the Registrable Securities so to
be registered shall be selected by the Selling Holders of more than 50% of the
Registrable Securities so to be registered, subject to approval (not to be
unreasonably withheld) by the Company.
(f) Revocation of Request. Any Initiating Holder requesting
registration pursuant to Section 2.1(a) may revoke such request prior to the
effective date of the registration statement relating to such request, without
incurring any liability to the Company or any other holder of Registrable
Securities or other Person requesting registration of securities of the
Company, by providing a written notice to the Company revoking such request not
less than three business days prior to the proposed date of effectiveness of
such registration statement; provided, that if such registration statement does
not become effective solely because of such revocation, such Initiating Holder
shall reimburse the Company for all Registration Expenses incurred in
connection with such registration prior to or in connection with such
revocation and, provided further, that after any such revocation, such
Initiating Holder shall not, within six months after such revocation, again be
entitled to revoke a request for registration pursuant to this Section 2.1(f).
(g) Limitations on Registration on Request. Notwithstanding
anything in this Agreement to the contrary, in no
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event will the Company be required to (i) effect, in the aggregate,
more than three registrations pursuant to this Section 2.1, or (ii) effect a
registration in which the aggregate number of shares of Registrable Securities
is less than 250,000, or (iii) file a registration statement pursuant to a
request made under Section 2.1 within 120 days of the end of the Minimum Period
relating to a previous registration requested under Section 2.1.
2.2 Incidental Registration. (a) Right to Include
Registrable Securities. If the Company at any time proposes to register any of
its securities under the Securities Act by registration on Forms S-1, S-2 or
S-3 or any successor or similar form(s) (except registrations on such Forms or
similar form(s) solely for registration of securities in connection with an
employee benefit plan (on Form S-8 or any successor form) or dividend
reinvestment plan or in connection with a merger or consolidation or an
exchange offer), whether or not for sale for its own account, it will, subject
to Section 2.9 hereof, each such time give prompt written notice to all
registered holders of Registrable Securities of its intention to do so (and, if
such registration is an underwritten offering, the proposed managing
underwriter or underwriters of such offering). Upon the written request of any
such holder (a "Requesting Holder") made as promptly as practicable and in any
event within 30 days after the receipt of any such notice (7 days after
telephonic notice if the Company gives telephonic notice to all registered
holders of Registrable Securities, with written confirmation to follow promptly
thereafter, stating that (i) such registration will be on Form S-3 and (ii)
such shorter period of time is required because of a planned filing date),
which request shall specify the Registrable Securities intended to be disposed
of by such Requesting Holder, the Company will, subject to Section 2.9 hereof,
use its best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the Requesting Holders thereof, provided that if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities the Company may, at its election, give
written notice of such determination to each Requesting Holder of Registrable
Securities and (i) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not its obligation to pay Registration Expenses
incurred in connection with such registration) and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering such
securities. No registration
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effected under this Section 2.2 shall relieve the Company of its
obligation to effect any registration upon request under Section 2.1.
(b) Priority in Incidental Registrations. If a registration
pursuant to this Section 2.2 involves an underwritten offering and the senior
managing underwriter of such underwritten offering shall advise the Company in
writing (with a copy to each holder of Registrable Securities requesting
registration) that, in its opinion, the number or type of Registrable
Securities requested to be included in such registration is a number or type
which would adversely affect such offering, then the Company shall
include in such registration, to the extent of the number and type which the
Company is so advised can be sold in (or during the time of) such offering,
first, all securities proposed by the Company to be sold for its own account,
second, such Registrable Securities and other securities of the Company with
respect to which the holders thereof have the right to require the Company to
register such securities in connection with any registration of securities to
be offered by the Company ("Other Securities") requested to be included in such
registration, such Registrable Securities and Other Securities to be included
in such registration pro rata on the basis of the estimated gross proceeds from
the sale thereof, and third, any other securities of the Company requested to
be included in such registration. There shall be no limit on the number or
registrations that may be requested pursuant to this Section 2.2.
(c) Limitations on Incidental Registrations.
Notwithstanding anything in this Section 2.2 to the contrary, in no event will
the Company be required to (i) grant a request to include Registrable
Securities in any "shelf" registration filed pursuant to Rule 415 under the
Securities Act, or any successor rule, relating solely to the offering of debt
securities by the Company, or (ii) grant a request to include Registrable
Securities in any registration unless the number of shares of all Registrable
Securities which the Company has been so requested to register by the
Requesting Holders thereof (without giving effect to the application of the
foregoing subsection (b)) is at least 100,000.
2.3 Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1 and 2.2, the
Company will as expeditiously as possible:
(i) prepare and file with the Commission, as promptly as
practicable, but in any event no later than 120 days after receipt of
a request for registration with respect to
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Registrable Securities (60 days in the event of a registration
pursuant to Section 2.1 that is not a registration statement on Form
S-1 or any successor or similar form), the requisite registration
statement to effect such registration and thereafter use its best
efforts to cause such registration statement to become and remain
effective for the Minimum Period (defined in clause (ii) below),
provided, however, that the Company may discontinue any registration
of its securities which are not Registrable Securities (and, under the
circumstances specified in the proviso to the second sentence of
Section 2.2(a), its securities which are Registrable Securities) at
any time prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the Commission such amendments,
including post-effective amendments, and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act and the rules and
regulations thereunder with respect to the disposition of all
Registrable Securities covered by such registration statement for such
period as shall be required for the disposition of all of such
Registrable Securities, provided that such period need not exceed 90
days (such period being referred to in this Agreement as the "Minimum
Period"); furnish, prior to filing with the Commission, to each seller
of Registrable Securities covered by a registration statement in
connection with a registration pursuant to Section 2.1 a copy of any
amendment, post-effective amendment or supplement to such registration
statement or the prospectus used in connection therewith and shall
not, unless required by law as advised by counsel in writing, file any
such amendment or supplement to which the holders of at least 50% of
the Registrable Securities covered by such registration statement
shall have reasonably objected within two days after receipt of such
document; notify each seller of Registrable Securities covered by a
registration statement pursuant to Section 2.1 or 2.2 of any stop
order issued or threatened by the Commission and take all reasonable
actions required to prevent the entry of such stop order or to remove
it if entered; and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement during the Minimum Period in accordance with
the intended methods of disposition by the sellers thereof set forth
in such registration statement;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement such number of
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conformed copies of such registration statement and the
prospectus included therein (including each preliminary prospectus)
and of each such amendment, including post-effective amendments, and
supplement thereto (in each case including all exhibits), such number
of copies of the prospectus contained in such registration statement
(including each preliminary prospectus) and any other prospectus filed
under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, such documents, if any,
incorporated by reference in such registration statement or
prospectus, and such other documents, as such seller may reasonably
request;
(iv) use its best efforts (x) to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such States and territories of the United States of America where an
exemption is not available and as the sellers of Registrable
Securities covered by such registration statement shall reasonably
request in writing, (y) to keep such registration or qualification in
effect for so long as such registration statement remains in effect,
and (z) to take any other action which may be reasonably necessary or
advisable to enable such sellers to consummate the disposition in such
jurisdictions of the securities to be sold by such sellers, except
that the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this subdivision (iv)
be obligated to be so qualified or to consent to general service of
process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other Federal or state governmental agencies or
authorities as may be necessary to enable the seller or sellers
thereof to consummate the disposition of such Registrable Securities;
(vi) furnish to each seller of such Registrable Securities a
signed counterpart, addressed to each such seller, of (i) an opinion
of counsel for the Company (who may be in-house counsel for the
Company), and (ii) a "comfort" letter signed by the independent
public accountants who have certified the Company's financial
statements included in such registration statement, covering
substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of
such comfort letter, with respect to events subsequent to the date of
such financial statements,
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as are customarily covered in opinions of issuer's counsel and
in comfort letters delivered to underwriters in underwritten public
offerings of such securities (and dated the dates such opinions and
comfort letters are customarily dated) and, in the case of the comfort
letter, such other financial matters as the holders of more than 50%
of the Registrable Securities covered by such registration statement
may reasonably request;
(vii) notify, as soon as reasonably practicable, each seller
of Registrable Securities covered by such registration statement, (A)
when or if the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to the
registration statement or any post-effective amendment, when the same
has become effective, (B) of any request by the Commission for
amendments or supplements to the registration statement or the
prospectus or for additional information, (C) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such
purpose and (D) at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, in the light of the circumstances
under which they were made, and at the request of any such seller
promptly prepare and furnish (subject to the proviso below) to it a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made; provided, however, that the prompt delivery of such a
supplement to or amendment of such prospectus may be delayed by the
Company pursuant to Section 2.6(b) below.
(viii) use its best efforts to list the Registrable
Securities which are shares of Common Stock and which are covered by
such registration statement with any securities exchange or automated
quotation system on which the Common Stock of the Company is then
listed;
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(ix) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other
actions as the holders of at least 50% of the Registrable Securities
being sold or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities,
including customary indemnification;
(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least 12 months beginning
with the first full month after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act (it being understood
that the Company may rely upon Rule 158 of the Securities Act in its
compliance with this subclause (x)).
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company
may from time to time reasonably request in writing and as shall be required by
law or by the Commission in connection therewith.
Each seller of Registrable Securities agrees, by requesting
registration thereof, that upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (vii)(D) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition
of Registrable Securities pursuant to the registration statement relating to
such Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii)(D) of this
Section 2.3 or until it is advised in writing by the Company that the use of
the prospectus may be resumed (the "Advice") and, if so directed by the
Company, will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies, then in such holder's possession of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice. In the event that the Company shall give any notice of
the happening of any event of the kind described in subdivision (vii)(D) of
this Section 2.3, the Minimum Period with respect to such registration
statement shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date of
the Advice or the date when the Company furnishes to each seller of Registrable
Securities covered by such registration statement copies of the amended or
supplemented prospectus contemplated by subdivision (vii)(D) of this Section
2.3.
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2.4 Underwritten Offerings. (a) Requested Underwritten
Offerings. If requested by the underwriters for any underwritten offering by
holders of Registrable Securities pursuant to a registration requested under
Section 2.1, the Company will use its best efforts to enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the Company, each such
holder and the underwriters and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in agreements
of that type, including, without limitation, indemnities and the furnishing of
an opinion of counsel and "comfort" letters from the Company's independent
public accountants. The holders of the Registrable Securities proposed to be
distributed by such underwriters will cooperate with the Company in the
negotiation of the underwriting agreement. The holders of Registrable
Securities to be distributed by such underwriters shall, at the request of such
underwriters, be parties to the underwriting agreement between the Company and
such underwriters, and such holders may, at their option, require that the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and the conditions
precedent to the obligations of the underwriters shall be conditions precedent
to the obligations of such holders. Such holders of Registrable Securities
shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters other than reasonable
representations, warranties and agreements regarding such holder, such holder's
Registrable Securities, such holder's intended method of disposition and any
other representations or warranties required by law.
(b) Incidental Underwritten Offerings. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, subject to Section 2.9
hereof, if requested by any Requesting Holder of Registrable Securities, use
its best efforts to arrange for such underwriters to include all the
Registrable Securities to be offered and sold by such Requesting Holder among
the securities of the Company to be distributed by such underwriters. The
holders of Registrable Securities to be distributed by such underwriters shall,
at the request of such underwriters, be parties to the underwriting agreement
between the Company and such underwriters and such holders may, at their
option, require that the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and the conditions precedent to the obligations of the
underwriters shall
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be conditions precedent to the obligations of such holders. Such holders
of Registrable Securities shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
reasonable representations, warranties and agreements regarding such holder,
such holder's Registrable Securities, such holder's intended method of
disposition and any other representations or warranties required by law.
Notwithstanding the foregoing provisions of this Section 2.4(b), the Company
need not include any Registrable Securities of any such Requesting Holder in an
underwritten offering of the Company's securities under the circumstances
contemplated by Section 2.2(b) above.
2.5 Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the holders of
Registrable Securities registered under such registration statement, their
underwriters, if any, and their respective counsel the opportunity to
participate in the preparation of such registration statement, and, to the
extent practicable, each amendment thereof or supplement thereto, and give each
of them such access to the books, records and properties of the Company and its
subsidiaries (to the extent customarily given to the underwriters of the
Company's securities), such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements, and to have such officers and accountants
supply such information, as shall be reasonably requested by any such person in
connection with a reasonable investigation within the meaning of the Securities
Act.
2.6 Limitations, Conditions and Qualifications to Obligations
under Registration Covenants. The obligations of the Company to use its best
efforts to cause the Registrable Securities to be registered under the
Securities Act are subject to each of the following limitations, conditions and
qualifications:
(a) The Company shall not be obligated to file any
registration statement pursuant to Section 2.1 hereof at any time if the
Company would be required to include financial statements audited as of any
date other than the end of its fiscal year.
(b) The Company shall be entitled to postpone for a
reasonable period of time (but not exceeding 90 days) the filing,
effectiveness, supplementing or amending of any registration statement
otherwise required to be prepared and filed by it pursuant to Section 2.1 if
the Company in its good faith judgment determines that such registration and
offering would interfere with any material financing, acquisition, disposition,
corporate
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reorganization or other material transaction involving the Company or
any of its subsidiaries or Affiliates then planned, pending or in progress or
would require public disclosure thereof (unless public disclosure thereof has
previously been made) and gives the holders of Registrable Securities
requesting registration thereof pursuant to Section 2.1 prompt written notice
of such determination and an approximation of the anticipated delay; provided,
however, that after any exercise of its right to postpone the filing,
effectiveness, supplementing or amending of a registration statement under this
Section 2.6(b), the Company shall not, within six months of the expiration of
any such postponement, exercise again its right of postponement under this
Section 2.6(b). If the Company shall so postpone the filing of a registration
statement, such holders of Registrable Securities requesting registration
thereof pursuant to Section 2.1 shall have the right to withdraw the request
for registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal,
such request shall not be counted for purposes of the requests for registration
to which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof. The Investors hereby acknowledge that any notice given by the Company
pursuant to this Section 2.6(b) shall constitute material non-public
information and that the United States securities laws prohibit any Person who
has material non-public information about a company from purchasing or selling
securities of such company or from communicating such information to any other
Person under circumstances in which it is reasonably foreseeable that such
Person is likely to purchase or sell such securities.
(c) The Company shall not be obligated to file any
registration statement pursuant to Section 2.1 hereof if, within 15 days after
the Company's receipt of the written request of the Initiating Holders, the
Company notifies such Initiating Holders that, prior to the Company's receipt
of such request, it had, and it currently has, a plan or intention
promptly to register its equity securities under the Securities Act. Holders
of Registrable Securities shall have any rights to participate in any such
registration on the terms provided in Section 2.2 hereof.
2.7 Indemnification and Contribution. (a) In the event of a
registration of any Registrable Securities under the Securities Act pursuant to
Section 2, the Company will indemnify and hold harmless, to the full extent
permitted by law, each seller of Registrable Securities thereunder, its
directors, officers, partners and Affiliates, each underwriter of such
Registrable Securities thereunder and each other Person, if any, who controls
such seller of Registrable Securities or underwriter within the meaning of the
Securities Act or the Exchange Act, against any and all losses, claims,
damages, liabilities and
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expenses (including reasonable costs of investigation and reasonable attorneys'
fees), joint or several, to which such seller of Registrable Securities, its
directors, officers, partners or Affiliates, underwriters or controlling
persons may become subject under the Securities Act, common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such Registrable Securities were registered under the
Securities Act pursuant to Section 2, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or (ii)
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and will pay or reimburse each such seller of Registrable Securities, its
directors, officers, partners and Affiliates, each such underwriter and each
such controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case if and to the extent that any such loss, claim, damage
or liability (or action in respect thereof) arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in reliance upon and in conformity with information furnished in writing
by any such seller of Registrable Securities, its directors, officers, partners
or Affiliates, any such underwriter or any such controlling person, as the case
may be, specifically for use in such registration statement, prospectus,
amendment or supplement, and provided further that the Company shall not be
liable to any Person who participates as an underwriter in the offering or sale
of Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action in respect
thereof) or expense arises out of such Person's failure, at or prior to the
written confirmation of the sale of Registrable Securities to the Person
asserting an untrue statement or alleged untrue statement or omission or
alleged omission in a preliminary prospectus, to send or give a copy of the
final prospectus, as the same may be then supplemented or amended, to such
Person if such statement or omission was corrected in such final prospectus and
copies thereof were previously furnished to such underwriter. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of such seller or underwriter or any such director, officer,
controlling person, partner or Affiliate and shall survive the transfer of such
securities by such seller.
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(b) In the event of a registration of any Registrable
Securities under the Securities Act pursuant to Section 2, each seller of
Registrable Securities thereunder, severally and not jointly, will indemnify
and hold harmless the Company, each Person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company, each
director of the Company, each underwriter and each Person who controls any
underwriter within the meaning of the Securities Act or Exchange Act, against
all losses, claims, damages or liabilities, joint or several, to which the
Company or such officer, director, underwriter or controlling person may become
subject under the Securities Act, common law or otherwise, but only insofar as
such losses, claims, damages or liabilities (or actions in respect thereof),
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, made in reliance upon and in conformity with information
furnished in writing to the Company by such seller of Registrable Securities
specifically for use in such registration statement under which such
Registrable Securities were registered under the Securities Act pursuant to
Section 2, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, and will pay or reimburse the Company and
each such officer, director, underwriter and controlling person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided
further that such seller of Registrable Securities shall not be liable to any
Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action in respect
thereof) or expense arises out of such Person's failure, at or prior to the
written confirmation of the sale of Registrable Securities to the Person
asserting an untrue statement or alleged untrue statement or omission or
alleged omission in a preliminary prospectus, to send or give a copy of the
final prospectus, as the same may be then supplemented or amended, to such
Person if such statement or omission was corrected in such final prospectus and
copies thereof were previously furnished to such underwriter.
(c) Promptly after receipt by an indemnified party
hereunder of written notice of any claim or the commencement of any action or
proceeding, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnifying party hereunder, notify the indemnifying party
in writing thereof, but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to such indemnified party
other than under this Section 2.7 and shall
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only relieve it from any liability which it may have to such indemnified
party under this Section 2.7 if and to the extent the indemnifying
party is materially prejudiced by such omission. In case any such action shall
be brought against any indemnified party and the indemnified party shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, to the extent it shall wish, to assume
and undertake the defense thereof with counsel selected by the indemnifying
party and reasonably satisfactory to the indemnified party, and, after notice
from the indemnifying party to such indemnified party of its election so to
assume and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 2.7 for legal and other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof; provided, however, that if the indemnified party shall have
reasonably concluded that there are or may be legal defenses or rights
available to the indemnified party (which have not been waived) in any such
action which are or may be in actual or potential conflict with those available
to the indemnifying party, the indemnified party shall have the right to select
one law firm to act as separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the reasonable
fees and expenses of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred. The
parties agree to cooperate in any such defense and to give each other full
access to all information relevant thereto. The indemnifying party shall not
be obligated to indemnify any party hereunder for any settlement entered into
without the indemnifying party's prior written consent (not to be unreasonably
withheld). No indemnifying party, in the defense of any such claim or
litigation against an indemnified party, shall consent to entry of any judgment
or enter into any settlement which provides for injunctive relief or other
non-monetary relief affecting the indemnified party or that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation, unless in each such case such indemnified party shall otherwise
consent in writing (not to be unreasonably withheld).
(d) In order to provide for just and equitable
contribution in any case in which either (i) any seller of Registrable
Securities exercising registration rights under Section 2, its directors,
officers, partners or Affiliates, or any controlling person of any such
seller of Registrable Securities, makes a claim for indemnification pursuant to
this Section 2.7, but such indemnification is unavailable for any reason,
notwithstanding the fact that this Section 2.7 provides for indemnification in
such case, or (ii) contribution under the
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Securities Act may be required on the part of any such seller of
Registrable Securities, its directors, officers, partners or Affiliates, or any
such controlling person in circumstances for which indemnification is provided
under this Section 2.7; then, and in each such case, the Company and such
seller of Registrable Securities shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion as is appropriate to reflect both the relative
benefit received by the Company and such seller of Registrable Securities, its
directors, officers, partners or Affiliates or any such controlling person and
the relative fault of the Company and such seller of Registrable Securities,
its directors, officers, partners or Affiliates or a such controlling person;
provided, however, that, in any such case, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. For purposes of the preceding sentence, the relative
benefit received by a Person shall be deemed to be in the same proportion as
the public offering price of its Registrable Securities offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement; and the relative fault of the Company
and seller of Registrable Securities, its directors, officers, partners or
Affiliates or any such controlling person shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or omission of a material fact relates to information supplied by
the Company or by the seller of Registrable Securities, its directors,
officers, partners or Affiliates or any such controlling person and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
2.8 Restriction on Public Sale by Holders of Registrable
Securities. Each holder of Registrable Securities agrees, if so requested by
the managing underwriter or underwriters in connection with any registration
statement filed by the Company pursuant to Section 2.2 in an underwritten
public offering, not to effect any public sale or distribution of equity
securities of the Company, or any securities convertible into or exchangeable
or exercisable for such equity securities, during the three days prior to, and
during the 90 day period beginning on, the effective date of such registration
statement (except as a part of such registration).
2.9 Conditions and Limitations on Registrations of Registrable
Securities. The Company shall not be required to effect any registration of
Registrable Securities pursuant to Section 2.2 hereof if it shall deliver to
the holder or holders requesting such registration an opinion of counsel
reasonably
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satisfactory to such holders to the effect that the Registrable
Securities requested to be registered may be sold by such holder without
restriction or limitation and without registration under the Securities Act.
2.10 Expenses. All Registration Expenses, but not Selling
Expenses, shall be borne by the Company.
2.11 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
times permit the sale of the Registrable Securities to the public without
registration, the Company agrees that it will:
(a) make and keep public information available, as
contemplated by Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Registrable Securities
forthwith upon its request a written statement by the Company as to its
compliance with the reporting requirements of such Rule 144.
3. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Additional Securities" has the meaning specified in Section
2.1.
"Advice" has the meaning specified in Section 2.3.
"Affiliate" of a Person means any other Person that directly
or indirectly, through one or more intermediaries, is controlled by, controls,
or is under common control with, such Person.
"Associate" of a Person means (i) a corporation or
organization of which such Person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of a class of equity
securities, (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar capacity and (iii) any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person or who is a
director or officer of the Person or any of its parents or subsidiaries.
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"Commission" means the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act.
"Common Stock" has the meaning specified in Section 1.
"Common Stock Purchase Rights" has the meaning specified in
Section 1.
"Conversion Shares" has the meaning specified in Section 1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Initiating Holder" has the meaning specified in Section 2.1.
"Merger Agreement" has the meaning specified in Section 1.
"Minimum Period" has the meaning specified in Section 2.3(ii).
"Other Securities" has the meaning specified in Section 2.2.
"Person" means a corporation, an association, a partnership,
an organization, a business, an individual, a governmental or political
subdivision thereof or a governmental agency.
"Preferred Shares" has the meaning specified in Section 1.
"Preferred Stock" has the meaning specified in Section 1.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 2, including, without
limitation, all SEC, stock exchange and NASD registration, filing and other
fees, all fees and expenses of complying with securities or blue sky laws
(including, without limitation, reasonable fees and disbursements of counsel
for the underwriters in connection with "blue sky" qualifications of the
Registrable Securities), all word processing, duplicating and printing
expenses, messenger and delivery expenses, all fees and expenses incurred in
connection with the listing of the Registrable Securities which are Common
Stock to be registered on
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each securities exchange or national market system on which such securities are
to be listed, all fees and disbursements of underwriters customarily
paid by issuers or sellers of securities, the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of "cold comfort" letters required by or incident to such performance
and compliance, and fees of transfer agents.
"Registrable Securities" means (i) the Preferred Shares, (ii)
when issued, any Conversion Shares, (iii) the Scotsman Fixed Shares and (iv)
when issued, any Scotsman Contingent Shares. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities have been sold, (b) such securities shall have been sold as
permitted by Rule 144 (or any successor provision) under the Securities Act,
(c) such securities shall have been otherwise transferred to a Person other
than an Investor, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent public
distribution of such securities shall not require registration of them under
the Securities Act, or (d) such securities shall have ceased to be outstanding.
"Registration Rights Holder" has the meaning specified in
Section 2.1.
"Requesting Holder" has the meaning specified in Section 2.2.
"Scotsman Contingent Shares" has the meaning specified in
Section 1.
"Scotsman Fixed Shares" has the meaning specified Section 1.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" means all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and expenses of counsel to Selling Holders.
"Selling Holder" has the meaning specified in Section 2.1.
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4. Amendments and Waivers. This Agreement may be amended
with the consent of the Company and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company shall have obtained the written consent to such amendment,
action or omission to act, of the holder or holders of at least a majority of
the shares of the Registrable Securities; provided, however, that if a
proposed amendment, action or omission to act will affect only Preferred
Shares, only Conversion Shares, only Scotsman Fixed Shares, or only Scotsman
Contingent Shares, then such amendment, action or omission to act may be
approved by the holder or holders of a majority or more of the affected
Preferred Shares, Conversion Shares, Scotsman Fixed Shares, or Scotsman
Contingent Shares, as the case may be. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 4, whether or not such Registrable Securities shall
have been marked to indicate such consent.
5. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee or trustee for the beneficial
owner thereof, the beneficial owner thereof may, at its election in writing
delivered to the Company, be treated as the holder of such Registrable
Securities for purposes of any request or other action by any holder or holders
of Registrable Securities pursuant to this Agreement or any determination of
any number or percentage of Registrable Securities held by any holder or
holders of Registrable Securities contemplated by this Agreement. If the
beneficial owner of any Registrable Securities so elects, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities.
6. Notices. All communication provided for hereunder shall
be sent by postage-prepaid first-class mail, shall be deemed to be received
three days after being sent, or, if earlier, the date of actual receipt, and
shall be addressed as follows:
(a) if to an Investor, addressed in the manner set
forth in the Merger Agreement, or at such other address as such Investor shall
have furnished to the Company in writing;
(b) if to any other holder of Registrable
Securities, at the address that such holder shall have furnished to the Company
in writing, or, until any such other holder so furnishes to the Company an
address, then to and at the address of the last holder of such Registrable
Securities who has furnished an address to the Company; or
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(c) if to the Company, addressed to it in the manner
set forth in the Merger Agreement, or at such other address as the Company
shall have furnished to each holder of Registrable Securities at the time
outstanding.
7. Exercise of Registration Rights; Calculation of
Interests. (a) Any holder of Registrable Securities may exercise the rights
described in Section 2.1, subject to the terms and conditions of this
Agreement, provided that such holder is an Investor or an Affiliate or an
Associate of an Investor.
(b) For purposes of this Agreement (i) all references to a
number or percentage of the Registrable Securities which includes Preferred
Shares shall include, in respect of such Preferred Shares, a number of shares
equal to the number of shares of Common Stock into which the Preferred Shares
then outstanding are then convertible, and (ii) all references to a percentage
of the Registrable Securities shall be calculated based upon the number of
shares of Registrable Securities outstanding at the time such calculation is
made.
8. Successors and Assigns; Amendments. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by transferees
of the Registrable Securities (except as otherwise provided in Section 7 and as
otherwise provided herein), the parties hereto and their respective successors
and assigns. The parties hereto may amend this Agreement as provided in
Section 4 without the consent of any other Person.
9. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
10. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement, except to the extent that such
prohibition or invalidity would constitute a material change in the terms of
this Agreement taken as a whole.
11. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
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12. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed
by, the laws of the State of New York.
13. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
SCOTSMAN INDUSTRIES, INC.
By:_____________________________
Name:
Title:
[Add signature pages for Investors]
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EXHIBIT VI-A
[Form of Opinion of Sidley & Austin]
DFC Holding Corporation
The Delfield Company
The stockholders listed on
Exhibit A attached hereto
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
Gentlemen:
We refer to the Agreement and Plan of Merger dated as of
January 11, 1994 (the "Merger Agreement") among DFC Holding Corporation, a
Delaware corporation ("Holding"), The Delfield Company, a Delaware corporation
("TDC"), the stockholders of Holding listed therein (the "Stockholders"),
Scotsman Industries, Inc., a Delaware corporation ("Scotsman"), and Scotsman
Acquisition Corporation, a Delaware corporation ("Sub"), providing for (i) the
merger (the "Merger") of Sub into Holding, which will thereupon become a
wholly-owned subsidiary of Scotsman, and (ii) the conversion of the outstanding
shares of Class A Common Stock, $.01 par value per share, of Holding into (a)
1,200,000 shares (the "Scotsman Fixed Common Shares") of Common Stock, $.10 par
value per share (the "Common Stock"), of Scotsman, (b) 2,000,000 shares (the
"Scotsman Convertible Preferred Shares") of Series A $0.62 Cumulative
Convertible Preferred Stock, par value $1.00 per share, of Scotsman, (c)
__________ shares (the "Scotsman Nonconvertible Preferred Shares") of Series B
[$____] Cumulative Preferred Stock, par value $1.00 per share, of Scotsman, (d)
the contingent right to receive up to 520,260 shares of Common Stock (the
"Scotsman Contingent Common Shares") and (e) cash. All capitalized terms used
in this opinion without definition have the respective meanings given to them
in the Merger Agreement.
<PAGE> 164
Pursuant to the requirement of Section 9.4 of the Merger
Agreement, this will advise you that in the opinion of the undersigned, as
special counsel for Scotsman and Sub:
1. Scotsman and Sub are each duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and each
has corporate power and authority to own, lease and operate its respective
properties and to conduct its respective business as now conducted as described
in the Registration Statement and the Proxy Statement/Prospectus, to execute
and deliver the Merger Agreement, to consummate the transactions contemplated
thereby, and to perform its respective obligations under the Merger Agreement.
Scotsman has the corporate power and authority to execute and deliver the
Registration Rights Agreement, to consummate the transactions contemplated
thereby, and to perform its obligations under the Registration Rights
Agreement.
2. The Merger Agreement has been duly authorized, executed
and delivered by Scotsman and Sub and (assuming the due authorization,
execution and delivery thereof by Holding, TDC and each of the Stockholders)
constitutes the legal, valid and binding obligation of Scotsman and Sub,
respectively, enforceable against Scotsman and Sub, respectively, in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws of general applicability relating to or affecting the
enforcement of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law); however we express no opinion as to the enforceability of
any provisions of the Merger Agreement requiring arbitration. The Registration
Rights Agreement has been duly authorized, executed and delivered by Scotsman
and (assuming the due authorization, execution and delivery thereof by each
other party thereto) constitutes the legal, valid and binding obligation of
Scotsman enforceable against Scotsman in accordance with its terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of
general applicability relating to or affecting the enforcement of creditors'
rights and by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law); however we
express no opinion as to the enforceability of the indemnification and
contribution provisions of the Registration Rights Agreement.
3. The Scotsman Fixed Common Shares have been duly authorized
and, when certificates therefor have been duly executed, countersigned and
registered and delivered in accordance with the terms of the Merger Agreement,
will
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constitute shares of Common Stock which have been duly authorized and
validly issued and are fully paid and nonassessable.
4. The Scotsman Convertible Preferred Shares and the Scotsman
Nonconvertible Preferred Shares issuable upon consummation of the Merger have
been duly authorized and, when certificates therefor have been duly executed,
countersigned and registered and delivered in accordance with the terms
of the Merger Agreement, will constitute shares of Preferred Stock of Scotsman
which have been duly authorized and validly issued and are fully paid and
nonassessable.
5. The shares of Common Stock initially issuable upon the
conversion of the Scotsman Convertible Preferred Shares have been duly
authorized and reserved for issuance upon such conversion and, if and when
issued upon conversion of the Scotsman Convertible Preferred Shares, and when
certificates therefor have been duly executed, countersigned and registered and
delivered in accordance with the Certificate of Designation for the Convertible
Preferred Shares, will constitute shares of Common Stock which have been duly
authorized and validly issued and are fully paid and nonassessable.
6. The Scotsman Contingent Common Shares have been duly
authorized and reserved for issuance pursuant to the terms of the Merger
Agreement and, if and when issued pursuant to the terms of the Merger
Agreement, and when certificates therefor have been duly executed,
countersigned and registered and delivered in accordance with the terms of the
Merger Agreement, will constitute shares of Common Stock which have been duly
authorized and validly issued and are fully paid and nonassessable.
7. No consent, approval or authorization of, or registration,
filing or declaration with, any federal or state governmental authority or
other regulatory agency is required for the valid execution and delivery by
Scotsman and Sub of the Merger Agreement or the valid execution and delivery by
Scotsman of the Registration Rights Agreement, the consummation by Scotsman or
Sub, as the case may be, of the transactions contemplated thereby and
compliance by Scotsman or Sub, as the case may be, of the terms and provisions
thereof, except for such as have been filed, obtained or made.
8. The Scotsman Fixed Common Shares, the Scotsman Contingent
Common Shares and the shares of Common Stock initially issuable upon conversion
of the Scotsman Convertible Preferred Shares have been listed on the NYSE,
subject to official notice of issuance.
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<PAGE> 166
For the purpose of rendering the foregoing opinions, we have
relied, as to various questions of fact material to such opinions, upon the
representations made in the Merger Agreement and upon certificates of officers
of Scotsman and Sub. We also have examined originals, or copies of originals
certified to our satisfaction, of such agreements, documents, certificates and
other statements of government officials and other instruments, have examined
such questions of law and have satisfied ourselves as to such matters of fact
as we have considered relevant and necessary as a basis for this opinion. We
have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of all natural persons and
the conformity with the original documents of any copies thereof submitted to
us for our examination.
This opinion is limited to the General Corporation Law of the
State of Delaware and the laws of the United States of America and the State of
New York.
This opinion is being delivered solely for the benefit of the
persons to whom it is addressed; accordingly, it may not be quoted, filed with
any governmental authority or other regulatory agency or otherwise circulated
or utilized for any other purpose without our prior written consent.
Very truly yours,
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<PAGE> 167
EXHIBIT VI-B
[Form of Opinion of Schiff, Hardin & Waite]
DFC Holding Corporation
The Delfield Company
The stockholders listed on
Exhibit A attached hereto
c/o The Delfield Company
980 South Pleasant Road
Mt. Pleasant, Michigan 48858
Gentlemen:
We refer to the Agreement and Plan of Merger dated as of
January 11, 1994 (the "Merger Agreement") among DFC Holding Corporation, a
Delaware corporation, The Delfield Company, a Delaware corporation, the
stockholders of Holding listed therein, Scotsman Industries, Inc., a Delaware
corporation ("Scotsman"), and Scotsman Acquisition Corporation, a Delaware
corporation (the "Sub"), providing for (i) the merger of Sub into Holding,
which will thereupon become a wholly-owned subsidiary of Scotsman, and (ii) the
conversion of the outstanding shares of Class A Common Stock, $.01 par value
per share, of Holding into (a) 1,200,000 shares of Common Stock, $.10 par value
per share, of Scotsman, (b) 2,000,000 shares of Series A $0.62 Cumulative
Convertible Preferred Stock, par value $1.00 per share, of Scotsman, (c)
__________ shares of Series B [$____] Cumulative Preferred Stock, par value
$1.00 per share, of Scotsman, (d) the contingent right to receive up to 520,260
shares of Common Stock and (e) cash, as provided in the Merger Agreement. All
capitalized terms used in this opinion without definition have the respective
meanings given to them in the Merger Agreement.
Pursuant to the requirement of Section 9.4 of the Merger
Agreement, this will advise you that in the opinion of the undersigned, as
counsel for Scotsman and Sub, the execution, delivery and performance by
Scotsman and Sub of the Merger Agreement and the execution, delivery and
performance by Scotsman of the Registration Rights Agreement do not and will
not conflict with, result in any breach of the terms, conditions or provisions
of, constitute a default, an event of default or an event
<PAGE> 168
creating rights of acceleration, termination or cancellation or a loss
of rights, or result in the creation of any encumbrance (other than any
encumbrance created under any instruments entered into in connection with the
financing of the transactions contemplated by the Merger Agreement and the
Share Acquisition Agreement) in respect of any property of Scotsman or any
subsidiary thereof (including Sub) under, the certificate of incorporation or
the by-laws of Scotsman or Sub, respectively, any agreement or instrument
listed in Exhibit B hereto [list of all material agreements and instruments
from 10-K exhibit list] or any order, arbitration award, judgment, decree,
statute, law, ordinance, rule or regulation known to us, which is applicable to
Scotsman or Sub or to which either Scotsman or Sub is a party or by which
Scotsman or Sub is bound.
For the purpose of rendering the foregoing opinions, we have
relied, as to various questions of fact material to such opinions, upon the
representations made in the Merger Agreement and upon certificates of officers
of Scotsman and Sub. We also have examined originals, or copies of originals
certified to our satisfaction, of such agreements, documents, certificates and
other statements of government officials and other instruments, have examined
such questions of law and have satisfied ourselves as to such matters of fact
as we have considered relevant and necessary as a basis for this opinion. We
have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of all natural persons
and the conformity with the original documents of any copies thereof submitted
to us for our examination.
This opinion is limited to the General Corporation Law of the
State of Delaware and the laws of the United States of America and the State of
Illinois. Our opinion does not address any antitrust or unfair competition
statutes, laws, rules or regulations, the disclosure requirements of any
securities laws, rules or regulations, or compliance with fiduciary duty
requirements.
This opinion is being delivered solely for the benefit of the
persons to whom it is addressed; accordingly, it may not be quoted, filed with
any governmental authority or other regulatory agency or otherwise circulated
or utilized for any other purpose without our prior written consent.
Very truly yours,
-2-
<PAGE> 1
EXHIBIT 2.2
EXECUTION COPY
SHARE ACQUISITION AGREEMENT
AMONG
SCOTSMAN INDUSTRIES, INC.,
WHITLENGE ACQUISITION LIMITED,
WHITLENGE DRINK EQUIPMENT LIMITED,
ONEX CORPORATION,
ONEX U.S. INVESTMENTS, INC.,
EJJM,
MATTHEW O. DIGGS, JR.
TIMOTHY C. COLLINS,
GRAHAM F. COOK,
CHRISTOPHER R.L. WHEELER,
MICHAEL DE ST. PAER
AND
JOHN RUSHTON
-------------------------
DATED AS OF JANUARY 11, 1994
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER; ISSUANCE OF SCOTSMAN
CONTINGENT COMMON SHARES
Section 1.1. The Offer . . . . . . . . . . . . . . . . . . 2
Section 1.2. Issuance of Scotsman Earnout Shares . . . . . 4
Section 1.3. Dividends and Distributions . . . . . . . . . 5
Section 1.4. Fractional Shares . . . . . . . . . . . . . . 5
Section 1.5. Changes in Scotsman Common Stock . . . . . . 5
Section 1.6. Non-assignability; Succession; Delivery
of Certificates . . . . . . . . . . . . 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Section 2.1. Corporate Status . . . . . . . . . . . . . . 7
Section 2.2. Subsidiaries and Investments . . . . . . . . 7
Section 2.3. Capital . . . . . . . . . . . . . . . . . . . 8
Section 2.4. Authority . . . . . . . . . . . . . . . . . . 10
Section 2.5. Financial Statements . . . . . . . . . . . . 11
Section 2.6. Operations Since Balance Sheet Date . . . . . 12
Section 2.7. No Undisclosed Liabilities . . . . . . . . . 13
Section 2.8. Taxes . . . . . . . . . . . . . . . . . . . . 14
Section 2.9. Condition of Plant, Machinery and
Equipment . . . . . . . . . . . . . . . . 16
Section 2.10. Title to Property . . . . . . . . . . . . . . 16
Section 2.11. Availability and Ownership of Assets . . . . 16
Section 2.12. Personal Property Leases . . . . . . . . . . 17
Section 2.13. Accounts Receivable; Inventories . . . . . . 17
Section 2.14. Intellectual Property . . . . . . . . . . . . 17
Section 2.15. Owned Real Property . . . . . . . . . . . . . 19
Section 2.16. Leased Real Property . . . . . . . . . . . . 20
Section 2.17. Obligations; Litigation . . . . . . . . . . . 20
Section 2.18. Product Warranties . . . . . . . . . . . . . 20
Section 2.19. Compliance with Laws . . . . . . . . . . . . 21
Section 2.20. Permits . . . . . . . . . . . . . . . . . . . 21
Section 2.21. Insurance . . . . . . . . . . . . . . . . . . 21
Section 2.22. The Plans . . . . . . . . . . . . . . . . . . 22
Section 2.23. Employees and Agents and Related
Agreements . . . . . . . . . . . . . . . . 26
Section 2.24. Employee Relations and Labor Matters . . . . 26
Section 2.25. Absence of Certain Business Practices . . . . 27
Section 2.26. Territorial Restrictions . . . . . . . . . . 27
Section 2.27. Transactions with Certain Persons . . . . . . 28
Section 2.28. Insolvency . . . . . . . . . . . . . . . . . 28
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<PAGE> 3
Page
Section 2.29. Environmental Matters . . . . . . . . .. . . 28
Section 2.30. Contracts . . . . . . . . . . . . . . .. . . 30
Section 2.31. No Guarantees; Extensions of Credit . .. . . 32
Section 2.32. Whitlenge Purchase Agreement . . . . .. . . 32
Section 2.33. Customers and Suppliers . . . . . . . .. . . 32
Section 2.34. Competition . . . . . . . . . . . . . .. . . 32
Section 2.35. Registration Statement and Proxy
Statement/Prospectus . . . . . . . . . . . 33
Section 2.36. Liabilities and Operations of WAL . . .. . . 33
Section 2.37. Redemption of Preferred Stock . . . . .. . . 34
Section 2.38. No Finder . . . . . . . . . . . . . . .. . . 34
Section 2.39. Disclosure . . . . . . . . . . . . . .. . . 34
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SCOTSMAN
Section 3.1. Organization of Scotsman . . . . . . . . . 34
Section 3.2. Authority . . . . . . . . . . . . . . . . . 34
Section 3.3. Shares of Scotsman Common Stock . . . . . . 35
Section 3.4. Capitalization . . . . . . . . . . . . . . 36
Section 3.5. Operations Since January 3, 1993 . . . . . 36
Section 3.6. Compliance with Laws . . . . . . . . . . . 36
Section 3.7. SEC Documents . . . . . . . . . . . . . . . 37
Section 3.8. Obligations; Litigation . . . . . . . . . . 37
Section 3.9. No Finder . . . . . . . . . . . . . . . . . 37
Section 3.10. Rights Agreement; Benefits . . . . . . . . 38
Section 3.11. Disclosure . . . . . . . . . . . . . . . . 38
ARTICLE IV
ACTIONS PRIOR TO THE EXPIRATION DATE
Section 4.1. Proxy Statement; Registration Statement . . 38
Section 4.2. Action by Scotsman and Stockholders of
Scotsman . . . . . . . . . . . . . . . 39
Section 4.3. Investigation of WAL, Whitlenge, WB
and Scotsman. . . . . . . . . . . . . . 39
Section 4.4. Lawsuits, Proceedings, Etc. . . . . . . . . 40
Section 4.5. Conduct of Business by WAL, Whitlenge, WB
and Scotsman Prior to
the Expiration Date . . . . . . . . . . 40
Section 4.6. Mutual Cooperation; Reasonable Best
Efforts . . . . . . . . . . . . . . . . 43
Section 4.7. No Public Announcement . . . . . . . . . . . 44
Section 4.8. No Solicitation . . . . . . . . . . . . . . . 44
Section 4.9. Listing Applications . . . . . . . . . . . . 44
-ii-
<PAGE> 4
Page
Section 4.10. Termination of Management and
Shareholders' Agreements . . . . . . . . . 45
Section 4.11. Periodic Financial Statements . . . . . . . . . . 45
Section 4.12. Financing . . . . . . . . . . . . . . . . . . . . 45
Section 4.13. Amendment of Agreement for Tender
Subsidiary . . . . . . . . . . . . . . . . . . 45
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.1. Voting . . . . . . . . . . . . . . . . . . . . . 46
Section 5.2. Standstill . . . . . . . . . . . . . . . . . . . 47
Section 5.3. Insurance . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATION
TO ACCEPT AND PAY FOR SHARES
Section 6.1. No Misrepresentation or Breach of
Covenants and Warranties . . . . . . . . . . . 48
Section 6.2. No Material Adverse Effect . . . . . . . . . . . 48
Section 6.3. Opinion of Counsel for WAL, Whitlenge
and the Shareholders . . . . . . . . . . . . . 48
Section 6.4. No Injunctions or Restraints . . . . . . . . . . 49
Section 6.5. Necessary Governmental Approvals . . . . . . . . 49
Section 6.6. Necessary Consents . . . . . . . . . . . . . . . 49
Section 6.7. Extension of Service Contracts . . . . . . . . . 49
Section 6.8. Noncompetition Agreements . . . . . . . . . . . . 49
Section 6.9. Registration Rights Agreement . . . . . . . . . . 49
Section 6.10. Shareholder Action . . . . . . . . . . . . . . . 49
Section 6.11. Stock Exchange Listings . . . . . . . . . . . . . 50
Section 6.12. Registration Statement Effective . . . . . . . . 50
Section 6.13. Securities Laws . . . . . . . . . . . . . . . . . 50
Section 6.14. Financing . . . . . . . . . . . . . . . . . . . . 50
Section 6.15. Comfort Letters . . . . . . . . . . . . . . . . . 50
Section 6.16. Glenco Holdings . . . . . . . . . . . . . . . . . 50
Section 6.17. Merger Agreement . . . . . . . . . . . . . . . . 50
Section 6.18. Average Scotsman Common Stock Closing
Price . . . . . . . . . . . . . . . . . . . . 50
Section 6.19. Resignations of Directors . . . . . . . . . . . . 51
Section 6.20. Termination of Management and
Shareholders' Agreement . . . . . . . . . . . 51
Section 6.21. WAL Preferred Shares . . . . . . . . . . . . . . 51
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<PAGE> 5
Page
ARTICLE VII
CONDITIONS PRECEDENT TO RIGHT TO ACCEPT
AND PAY FOR SHARES
Section 7.1. No Misrepresentation or Breach of
Covenants and Warranties . . . . . . . . . . . 52
Section 7.2. No Material Adverse Effect . . . . . . . . . . . 52
Section 7.3. No Injunctions or Restraints . . . . . . . . . . 52
Section 7.4. Opinions of Counsel for Scotsman . . . . . . . . 52
Section 7.5. Necessary Governmental Approvals . . . . . . . . 53
Section 7.6. Registration Rights Agreement . . . . . . . . . . 53
Section 7.7. Shareholder Action . . . . . . . . . . . . . . . 53
Section 7.8. Stock Exchange Listing . . . . . . . . . . . . . 53
Section 7.9. Registration Statement Effective . . . . . . . . 53
Section 7.10. Securities Laws . . . . . . . . . . . . . . . . . 53
Section 7.11. Financing . . . . . . . . . . . . . . . . . . . . 53
Section 7.12. Glenco Holdings . . . . . . . . . . . . . . . . . 54
Section 7.13. Merger Agreement . . . . . . . . . . . . . . . . 54
Section 7.14. Average Scotsman Common Stock Closing
Price . . . . . . . . . . . . . . . . . . . . 54
Section 7.15. Necessary Consents . . . . . . . . . . . . . . . 54
Section 7.16. Comfort Letters . . . . . . . . . . . . . . . . . 54
ARTICLE VIII
INDEMNIFICATION; SURVIVAL
Section 8.1. Indemnification by the Shareholders . . . . . . . 54
Section 8.2. Indemnification by Scotsman . . . . . . . . . . . 55
Section 8.3. Notice of Claims . . . . . . . . . . . . . . . . 56
Section 8.4. Third Party Claims . . . . . . . . . . . . . . . 59
Section 8.5. Exclusive Remedy . . . . . . . . . . . . . . . . 60
Section 8.6. Survival of Obligations . . . . . . . . . . . . . 60
Section 8.7. Update of the Representations and
Warranties . . . . . . . . . . . . . . . . . . 61
ARTICLE IX
TERMINATION
Section 9.1. Termination . . . . . . . . . . . . . . . . . . . 61
ARTICLE X
OTHER PROVISIONS
Section 10.1. Confidential Nature of Information . . . . . . . 62
Section 10.2. Fees and Expenses . . . . . . . . . . . . . . . . 62
-iv-
<PAGE> 6
Page
Section 10.3. Notices . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.4. Definitions . . . . . . . . . . . . . . . . . . . . . 68
Section 10.5. Partial Invalidity . . . . . . . . . . . . . . . . . 69
Section 10.6. Successors and Assigns . . . . . . . . . . . . . . . 69
Section 10.7. Execution in Counterparts . . . . . . . . . . . . . . 69
Section 10.8. Titles and Headings . . . . . . . . . . . . . . . . . 69
Section 10.9. Schedules and Exhibits . . . . . . . . . . . . . . . 69
Section 10.10. Entire Agreement; Amendments and Waivers;
Assignment . . . . . . . . . . . . . . . . . . . . 69
Section 10.11. Governing Law . . . . . . . . . . . . . . . . . . . . 70
Section 10.12. No Third-Party Beneficiaries . . . . . . . . . . . . 71
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<PAGE> 7
EXHIBITS TO SHARE ACQUISITION AGREEMENT
Exhibit I-A Form of Opinion of Wragge and Co.
Exhibit I-B Form of Opinion of Debevoise & Plimpton
Exhibit I-C Form of Opinions of Counsel for Certain Shareholders
Exhibit II Form of Noncompetition Agreement
Exhibit III-A Form of Opinion of Sidley & Austin
Exhibit III-B Form of Opinion of Schiff, Hardin & Waite
Exhibit III-C Form of Opinion of Ashurst Morris Crisp
-vi-
<PAGE> 8
SHARE ACQUISITION AGREEMENT
SHARE ACQUISITION AGREEMENT, dated as of January 11, 1994
(this "Agreement"), among Scotsman Industries, Inc., a Delaware corporation
("Scotsman"), Whitlenge Acquisition Limited, a private company limited by
shares registered in England ("WAL"), Whitlenge Drink Equipment Limited, a
private company limited by shares registered in England and a wholly-owned
subsidiary of WAL ("Whitlenge"), Onex Corporation, an Ontario corporation
("Onex"), Onex U.S. Investments, Inc., an Ontario corporation and a
wholly-owned, indirect, subsidiary of Onex ("Onex Investments"), EJJM, an Ohio
limited partnership ("EJJM"), Matthew O. Diggs, Jr. ("Diggs"), Timothy C.
Collins ("Collins"), Graham F. Cook ("Cook"), Christopher R.L. Wheeler
("Wheeler"), Michael de St. Paer ("de St. Paer") and John Rushton ("Rushton")
(Onex Investments, EJJM, Collins, Cook, Wheeler, de St. Paer and Rushton are
each referred to individually as a "Record Shareholder" and collectively as the
"Record Shareholders" and Onex, Diggs and the Record Shareholders are each
referred to individually as a "Shareholder" and collectively as the
"Shareholders"). Unless otherwise indicated, (i) capitalized terms used herein
are used as defined in Section 10.4 hereof, (ii) all references in Article II
to a Schedule and all references to Schedules 8.1 and 10.4 shall be deemed to
refer to the Schedules to a disclosure letter dated the date hereof delivered
by the Shareholders to Scotsman and relating to this Agreement, and (iii) all
references in Article III to a Schedule and all references to Schedule 4.5
shall be deemed to refer to the Schedules to a disclosure letter dated the date
hereof delivered by Scotsman to WAL, Whitlenge and the Shareholders and
relating to this Agreement.
W I T N E S S E T H :
WHEREAS, Whitlenge, the capital stock of which constitutes the
primary asset of WAL, designs, manufactures and sells beverage dispensing
equipment and other food service equipment (hereinafter generally referred to as
the "Whitlenge Business");
WHEREAS, the Record Shareholders, together with John S.
Nicholls ("Nicholls") and Richard J. Breed ("Breed"), are the owners of all the
issued ordinary shares of capital stock of WAL and will receive substantial
benefit from the transactions contemplated hereby;
WHEREAS, the Board of Directors of Scotsman has approved the
acquisition of all of the issued shares of capital stock of WAL by Scotsman or
a wholly-owned subsidiary of Scotsman pursuant to a tender offer by Scotsman or
such subsidiary on the terms set forth herein;
<PAGE> 9
WHEREAS, pursuant to a separate Agreement and Plan of Merger,
dated the date hereof (the "Merger Agreement"), Scotsman Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Scotsman
("Sub"), will merge (the "Merger") into DFC Holding Corporation, a Delaware
corporation and an affiliate of WAL ("Holding"); and
WHEREAS, Scotsman, WAL, Whitlenge and the Shareholders desire
to make certain representations, warranties and agreements in connection with
such tender offer and also to prescribe various conditions thereto;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
THE OFFER; ISSUANCE OF SCOTSMAN
CONTINGENT COMMON SHARES
Section 1.1. The Offer. Subject to the provisions of this
Agreement, as promptly as practicable following the effectiveness of the
Registration Statement (as defined in Section 4.1), Scotsman shall, or shall
cause one of its wholly-owned subsidiaries (the "Tender Subsidiary") to, make
a tender offer (the "Offer") to purchase all the issued WAL Ordinary Shares (as
defined in Section 2.3(a)) at a cash price (in U.S. dollars) per share equal to
the respective Pro Rata Share (as hereinafter defined) of the respective Cash
Amount (as hereinafter defined), upon the terms and subject to the conditions
of this Agreement. In addition, as provided in Section 1.2, each seller may be
entitled to receive in the future shares of Scotsman Earnout Shares (as
hereinafter defined) in respect of the WAL Ordinary Shares so purchased. At
the request of the Stockholder Representative on or prior to the fifth business
day prior to the commencement of the Offer, Scotsman or the Tender Subsidiary,
as the case may be, will also make a tender offer to purchase all the issued
WAL Preferred Shares (as defined in Section 2.3(a)) at the respective Cash
Amount (as hereinafter defined), upon the terms and subject to the conditions
of this Agreement. If so requested, the tender offer for the WAL Preferred
Shares shall constitute part of the "Offer." The Offer shall expire at 9:00
a.m. (New York time) on the Effective Date (as defined in the Merger Agreement)
or such other time and/or date as may be agreed upon between Scotsman and WAL
(such time and date of expiration being referred to herein as the "Expiration
Time" and "Expiration Date", respectively). The obligation of Scotsman or the
Tender Subsidiary, as the case may be, to accept for payment, and pay for, any
WAL Ordinary Shares (and, if so requested, any WAL Preferred Shares) tendered
pursuant to the Offer shall be subject only to the satisfaction or waiver of
the conditions set forth in Article VI. The right
-2-
<PAGE> 10
of Scotsman or the Tender Subsidiary, as the case may be, to accept for
payment the tendered WAL Ordinary Shares (and, if so requested, any WAL
Preferred Shares) shall be subject only to the satisfaction or waiver of the
conditions set forth in Article VII. Subject only to such conditions, at the
Expiration Time, Scotsman shall, or shall cause the Tender Subsidiary to, pay
the cash consideration specified above for all WAL Ordinary Shares (and, if so
requested, any WAL Preferred Shares) validly tendered and not withdrawn
pursuant to the Offer that Scotsman or the Tender Subsidiary, as the case may
be, becomes obligated to purchase pursuant to the Offer. As used herein, the
"Cash Amount" shall mean, with respect to each WAL Preferred Share, U.S. $149
per share plus accrued dividends to the Expiration Date; with respect to the
WAL "A" Ordinary Shares of (British pound) 1 each, the sum of (i) U.S.
$1,866,300, (ii) U.S. $4,950 for each consecutive three month period between
September 30, 1993 and the Expiration Date (each, a "Three Month Period") and
(iii) the product obtained by multiplying U.S. $55.00 by the number of calendar
days in the period from the day following the end of the latest Three Month
Period to the Expiration Date (inclusive) (such calendar days being referred to
herein as the "Stub Days"); with respect to the WAL "B" Ordinary Shares of
(British pound) 1 each, the sum of (i) U.S. $7,983,585, (ii) U.S. $20,460 for
each Three Month Period and (iii) the product obtained by multiplying U.S.
$227.34 by the number of Stub Days; and, with respect to the WAL "C" Ordinary
Shares of (British pound) 1 each, the sum of (i) U.S. $2,592,115, (ii) U.S.
$7,590 for each Three Month Period and (iii) the product obtained by
multiplying U.S. $84.33 by the number of Stub Days; provided, however, that if
the Stockholder Representative shall not have requested Scotsman or the Tender
Subsidiary, as the case may be, to make a tender offer to purchase all the
issued WAL Preferred Shares in accordance with this Section 1.1 or if the WAL
Preferred Shares shall have been purchased as described in clause (ii) of
Section 6.21, the Cash Amounts with respect to the WAL "A" Ordinary Shares, the
WAL "B" Ordinary Shares and the WAL "C" Ordinary Shares shall be adjusted by
(i) increasing such Cash Amounts by U.S. $447,000, $1,847,600 and $685,400,
respectively, and (ii) reducing such Cash Amounts by an aggregate amount (the
"Reduction Amount") equal to the U.S. dollar equivalent (calculated based upon
the applicable exchange rate set forth in The Wall Street Journal for the
business day immediately prior to the Expiration Date) of (British pound)
2,000,000 or, in the event of any purchase as described in clause (ii) of
Section 6.21, equal to the price paid by Scotsman or the Tender Subsidiary, as
the case may be, for the WAL Preferred Shares (less any accrued dividends paid
in respect thereof as part of such price). 15%, 62% and 23% of the Reduction
Amount shall be applied to reduce the Cash Amounts with respect to the WAL "A"
Ordinary Shares, the WAL "B" Ordinary Shares and the WAL "C" Ordinary Shares,
respectively, and such reduction shall be allocated among the sellers of the
WAL Ordinary Shares in accordance with their respective Pro Rata Share. For
purposes of the foregoing and Section 1.2, any amount paid with respect to a
class of WAL Ordinary Shares shall be allocated among the sellers
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of such class of shares pro rata in accordance with the respective amounts of
shares of such class held by such sellers immediately prior to the Expiration
Time (their "Pro Rata Share"). The respective Cash Amounts shall be paid at
the Expiration Time by wire transfer of immediately available funds in U.S.
dollars to the account or accounts designated in a notice to Scotsman or the
Tender Subsidiary, as the case may be, by each seller of WAL Ordinary Shares
and/or WAL Preferred Shares tendered under this Section 1.1.
Section 1.2. Issuance of Scotsman Earnout Shares. (a) As
provided in Section 1.1 and this Section 1.2, Scotsman Earnout Shares may be
issued in respect of the WAL Ordinary Shares purchased by Scotsman or the
Tender Subsidiary, as the case may be, pursuant to the Offer.
(b) Promptly (but not later than 30 days) after the
determination of EBITDA (as defined in the Merger Agreement) pursuant to
Section 2.3 of the Merger Agreement that is final and binding as set forth
therein, subject to Sections 1.4 and 1.5, Scotsman shall, or shall cause the
Tender Subsidiary to, issue and deliver, in respect of the WAL Ordinary Shares
purchased pursuant to the Offer, the number of shares of common stock, $.10 par
value, of Scotsman ("Scotsman Common Stock"), together with associated common
stock purchase rights (the "Common Stock Purchase Rights") issued pursuant to
the Rights Agreement, dated as of April 14, 1989, as amended (the "Rights
Agreement"), between Scotsman and Harris Trust & Savings Bank, if any,
determined as follows (such shares being referred to herein as the "Scotsman
Earnout Shares"):
(i) If EBITDA is less than U.S. $17,000,000, neither
Scotsman nor the Tender Subsidiary will deliver or will owe to the
sellers of such WAL Ordinary Shares (or any other person) under
Section 1.1 any shares of Scotsman Common Stock (or associated Common
Stock Purchase Rights);
(ii) If EBITDA is equal to or greater than U.S. $17,000,000
and less than U.S. $17,500,000, Scotsman shall, or shall cause the
Tender Subsidiary to, deliver to the sellers of WAL Ordinary Shares
pursuant to Section 1.1 their respective portions, as described below,
of a number of shares of Scotsman Common Stock (together with
associated Common Stock Purchase Rights) equal to the amount obtained
by multiplying (A) 146,740 by (B) the quotient obtained by dividing
(1) the excess of EBITDA over U.S. $17,000,000 by (2) U.S. $500,000;
or
(iii) If EBITDA is equal to or greater than U.S. $17,500,000,
Scotsman shall, or shall cause the Tender Subsidiary to, deliver to
the sellers of WAL Ordinary Shares pursuant to Section 1.1 their
respective portions, as described below, of 146,740 shares of Scotsman
Common Stock (together with associated Common Stock Purchase Rights).
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The sellers of WAL "A" Ordinary Shares, WAL "B" Ordinary Shares and WAL "C"
Ordinary Shares shall be entitled to receive an aggregate of 15%, 62% and 23%,
respectively, of the Scotsman Earnout Shares, in each case to be allocated
among the sellers of each such class of shares in accordance with their
respective Pro Rata Shares. Scotsman will reserve and keep available 146,740
shares of Scotsman Common Stock (or such other number of shares resulting from
adjustments pursuant to Section 1.5), from the Expiration Date through the date
on which the Scotsman Earnout Shares, if any, are issued or are finally
determined not to be issuable, solely for issuance and delivery of the Scotsman
Earnout Shares.
(c) The rights of the sellers of WAL Ordinary Shares referred
to in Section 1.1 to any payments of Scotsman Earnout Shares shall not be
subject to set-off or counterclaim to satisfy the Shareholders' indemnification
obligations under Section 8.1 or with respect to any other liability or
obligation (whether under this Agreement or otherwise) and shall not depend in
any way or otherwise be contingent upon the performance of any agreement or
continued employment or the provision of personal services.
Section 1.3. Dividends and Distributions. In the event any
dividend or other distribution is paid in respect of Scotsman Common Stock to
holders of record on or after the date of final determination of EBITDA
pursuant to Section 2.3 of the Merger Agreement and prior to the date of
issuance of the Scotsman Earnout Shares, if any, pursuant to Section 1.2(b),
Scotsman shall pay or cause to be paid on the date of such issuance to or at
the direction of the person to whom the certificate for such Scotsman Earnout
Shares is mailed pursuant to Section 1.6(b) the amount of such dividends or
distributions in respect of the number of whole Scotsman Earnout Shares
represented by the certificate so issued.
Section 1.4. Fractional Shares. No certificates for
fractions of shares of Scotsman Common Stock and no scrip or other certificates
evidencing fractional interests in such shares shall be issued pursuant to
Section 1.1 or Section 1.2. If the number of Scotsman Earnout Shares issuable
to a person at any time results in a fractional share of Scotsman Common Stock
or interest therein, such person shall, in lieu thereof, be paid cash (in U.S.
dollars) in an amount equal to the value of such fractional share or interest
based on the Closing Price (as defined in the Merger Agreement) of Scotsman
Common Stock on the last business day prior to the issuance of the Scotsman
Earnout Shares. Any person otherwise entitled to a fractional share or
interest shall not be entitled by reason thereof to any voting, dividend or
other rights as a stockholder of Scotsman.
Section 1.5. Changes in Scotsman Common Stock. In the event
that Scotsman Earnout Shares become issuable pursuant to Sections 1.1 and 1.2
and, between the date hereof and such
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issuance, (i) there has occurred any conversion, change, exchange or
reclassification of the Scotsman Common Stock into another security or form of
property pursuant to any merger, consolidation, acquisition of business and
assets, reorganization or recapitalization or there has occurred any
reclassification under other circumstances or any stock split, stock dividend
or similar change in respect of the Scotsman Common Stock, or (ii) Scotsman
shall have distributed cash to all holders of Scotsman Common Stock in such an
amount and manner that the conversion rate applicable to the Scotsman
Convertible Preferred Stock (as defined in the Merger Agreement) is adjusted in
respect thereof pursuant to Section 6(f)(iv) of the Certificate of Designation
applicable thereto, then appropriate adjustment shall be made in the number of
shares of Scotsman Common Stock and/or kind of securities issued as Scotsman
Earnout Shares in order to provide holders of WAL Ordinary Shares with, in the
case of clause (i), the same number of shares of Scotsman Common Stock and/or
such securities that they would have received after such conversion, change,
exchange, reclassification, stock split, stock dividend or similar change if
the issuance of the Scotsman Earnout Shares had occurred immediately prior to
such conversion, change, exchange, reclassification, stock split, stock
dividend or similar change or, in the case of clause (ii), a number of shares
of Scotsman Common Stock reflecting the adjustment factor specified in such
Section 6(f)(iv) (and all references herein to the "Scotsman Earnout Shares"
shall refer to such adjusted number and/or kind of securities).
Section 1.6. Non-assignability; Succession; Delivery of
Certificates. (a) The right to receive Scotsman Earnout Shares, if any, shall
not be assignable or transferable except by operation of law.
(b) A certificate for any Scotsman Earnout Shares which
becomes issuable shall be mailed, in accordance with the customary practice of
Scotsman or its transfer agent, to the Record Shareholder, their respective
successors by operation of law, or the Permitted Transferee (as defined in
Section 5.1), to whom the Scotsman Earnout Shares represented thereby are being
issued, to such person's address specified or determined in accordance with
Section 10.3, or in the name of such successor or Permitted Transferee, as
shall be furnished in writing to Scotsman by the Record Shareholder, their
respective duly appointed personal representatives or successors or such
Permitted Transferee. Scotsman may require proper evidence of succession or
transfer and, in any event, shall be fully protected in issuing, registering
and mailing certificates for Scotsman Earnout Shares to and registered in the
name of such person to such address.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
As an inducement to Scotsman to enter into this Agreement and
to consummate the transactions contemplated hereby, the Shareholders jointly
and severally (except as otherwise provided below and subject to Article VIII)
represent and warrant to Scotsman and agree as follows:
Section 2.1. Corporate Status. Each of WAL and Whitlenge is a
private company limited by shares duly organized, validly existing and duly
registered under the laws of England (Numbers 2669979 and 1271570,
respectively), with full power and authority under its memorandum and articles
of association, as amended and in effect on the date hereof, to carry on its
business as now conducted by it and to own or lease and to operate the assets
used therein as and in the places where its business is now conducted and such
assets are now owned, leased or operated. Whitlenge Drink Equipment, N.V.
("WB") is a corporation duly incorporated and validly existing under the laws
of Belgium, with full power and authority under its constitutive documents, as
amended and in effect on the date hereof, to carry on its businesses as now
conducted and to own or lease and to operate the assets used therein as and in
the places where the business of WB is now conducted and such assets are now
owned, leased or operated. WAL, Whitlenge and WB have delivered to Scotsman
complete and correct copies of the memorandum and articles of association of
each of WAL and Whitlenge and the constitutive documents of WB, each as amended
and in effect on the date hereof.
Section 2.2. Subsidiaries and Investments. (a) Except as set
forth in Schedule 2.2, WAL's sole asset is 406,500,000 Whitlenge Ordinary
Shares (as hereinafter defined) and 500,000 Whitlenge Deferred Shares (as
hereinafter defined), which constitute all of the issued and outstanding shares
of Whitlenge. Except for such shares of Whitlenge and any securities or equity
interest it may own indirectly through Whitlenge, WAL does not, directly or
indirectly, (i) own, of record or beneficially, any outstanding securities or
other interest in any corporation, partnership, joint venture or other entity
or (ii) control any corporation, partnership, joint venture or other entity.
(b) Except for shares of WB, Whitlenge does not, directly
or indirectly, (i) own, of record or beneficially, any outstanding securities
or other interest in any corporation, partnership, joint venture or other
entity (other than investments in publicly traded securities, cash equivalents
and short-term investment grade debt) or (ii) control any corporation,
partnership, joint venture or other entity.
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(c) WB does not, directly or indirectly, (i) own, of
record or beneficially, any outstanding securities or other interest in any
corporation, partnership, joint venture or other entity (other than investments
in publicly traded securities, cash equivalents and short-term investment grade
debt) or (ii) control any corporation, partnership, joint venture or other
entity.
Section 2.3. Capital. (a) The authorized share capital of
WAL consists of (i) 150,000 "A" Ordinary Shares of (British pound) 1 each, all
of which are issued, (ii) 775,000 "B" Ordinary Shares of (British pound) 1 each,
all of which are issued, (iii) 75,000 "C" Ordinary Shares of (British pound) 1
each, all of which are issued, and (iv) 20,000 6% Redeemable Cumulative
Preferred Shares of (British pound) 100 each, all of which are issued. All
such issued shares are duly authorized, validly issued and fully paid. The
record owners of such issued shares as of the date hereof are listed in
Schedule 2.3(a) hereto and a list of the record owners of such issued shares as
of the Expiration Date will be provided to Scotsman on the Expiration Date.
Such issued "A" Ordinary Shares, "B" Ordinary Shares and "C" Ordinary Shares
are collectively referred to herein as the "WAL Ordinary Shares" and such
issued 6% Redeemable Cumulative Preferred Shares are referred to herein as the
"WAL Preferred Shares." Except as permitted hereunder or disclosed on Schedule
2.3(a), there are no options, warrants or other rights to acquire, or
agreements or commitments to issue, sell, purchase or redeem, shares of WAL or
other equity interests in WAL, whether on conversion of other securities or
otherwise. Except as set forth in Schedule 2.3(a), no loan capital in WAL has
been created, allotted, issued, acquired, repaid or redeemed or agreed to be
created, allotted, issued, acquired, repaid or redeemed by WAL. None of the
issued shares of WAL has been issued in violation of, or is subject to, any
preemptive or subscription rights. Except as set forth in Schedule 2.3(a),
there are no shareholder agreements, voting trust agreements or any other
similar contracts, agreements, arrangements, commitments, plans or
understandings restricting or otherwise relating to voting, dividend, ownership
or transfer rights with respect to any shares of WAL.
(b) Each Shareholder severally represents and warrants as
to itself that (i) it (or, in the case of Onex Investments, Onex DHC LLC) is
the beneficial owner of the WAL Ordinary Shares listed in Schedule 2.3(b)
opposite its name or that it has transferred such shares to a Permitted
Transferee or Permitted Transferees and (ii) all such shares are owned free
from all liens, claims, encumbrances or other restrictions of any kind, other
than liens, claims, encumbrances or other restrictions listed on Schedule
2.3(b). Each Shareholder severally represents and warrants as to itself that,
except as a result of the consummation of this Agreement and the transactions
contemplated hereby or as set forth in Schedule 2.3(b), neither it nor any of
its affiliates or associates owns, beneficially or of record, any shares of
Scotsman Common Stock.
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(c) The authorized share capital of Whitlenge consists of
406,500,000 ordinary shares of 1p each (the "Whitlenge Ordinary
Shares") and 500,000 deferred shares of (British pound) 1 each (the "Whitlenge
Deferred Shares"), all of which 406,500,000 Whitlenge Ordinary Shares and
500,000 Whitlenge Deferred Shares are issued. All such shares are duly
authorized, validly issued and fully paid. WAL is the record and beneficial
owner of all of the issued Whitlenge Ordinary Shares and Whitlenge Deferred
Shares, other than one Whitlenge Ordinary Share held by Collins as a nominee
for WAL, and there exist no other equity interests in Whitlenge. All such
Whitlenge Ordinary Shares and Whitlenge Deferred Shares are so owned free from
all liens, claims, encumbrances or other restrictions of any kind, other than
liens, claims, encumbrances or other restrictions listed on Schedule 2.3(c).
There are no options, warrants or other rights to acquire, or agreements or
commitments to issue, sell, purchase or redeem, shares of Whitlenge or other
equity interests in Whitlenge, whether on conversion of other securities or
otherwise. No loan capital in WAL has been created, allotted, issued,
acquired, repaid or redeemed or agreed to be created, allotted, issued,
acquired or redeemed by Whitlenge. None of the issued shares of Whitlenge has
been issued in violation of, or is subject to, any preemptive or subscription
rights. There are no shareholder agreements, voting trust agreements or any
other similar contracts, agreements, arrangements, commitments, plans or
understandings restricting or otherwise relating to voting, dividend, ownership
or transfer rights with respect to any shares of Whitlenge.
(d) The authorized share capital, no nominal value, of WB
consists of 1,250 shares (the "WB Shares"), all of which are issued and
outstanding. All such outstanding shares are duly authorized, validly issued,
fully paid and nonassessable. Whitlenge is the record and beneficial owner of
all of the issued and outstanding WB Shares, other than one WB Share held by
Nicholls as a nominee for Whitlenge, and there exist no other equity interests
in WB. All such outstanding WB Shares are so owned free from all liens,
claims, encumbrances or other restrictions of any kind, other than liens,
claims, encumbrances or other restrictions listed on Schedule 2.3(d). There
are no options, warrants, or other rights to acquire, or agreements or
commitments to issue, sell, purchase or redeem, shares of WB or other equity
interests in WB, whether on conversion of other securities or otherwise. No
loan capital in WB has been created, allotted, issued, acquired, repaid or
redeemed or agreed to be created, allotted, issued, acquired or redeemed by WB.
None of the issued and outstanding shares of WB has been issued in violation
of, or is subject to, any preemptive or subscription rights. There are no
shareholder agreements, voting trust agreements or any other similar contracts,
agreements, arrangements, commitments, plans or understandings restricting or
otherwise relating to voting, dividend, ownership or transfer rights with
respect to any shares of WB.
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Section 2.4. Authority. (a) WAL and Whitlenge have full
corporate power and authority to execute and deliver this Agreement and to
perform their obligations hereunder.
The execution, delivery and performance of this Agreement by
WAL and Whitlenge and the performance by WAL and Whitlenge of their obligations
hereunder have been duly authorized by all necessary action on the part of WAL
and Whitlenge. This Agreement is, and each other agreement or instrument of
WAL or Whitlenge contemplated hereby when executed and delivered will be, the
legal, valid and binding agreement of WAL or Whitlenge, as the case may be,
enforceable against WAL or Whitlenge, as the case may be, in accordance with
its respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law).
Neither the execution or delivery of this Agreement by
Whitlenge, WAL or any Shareholder, nor consummation of the transactions
contemplated hereby or compliance with or fulfillment of the terms and
provisions hereof by WAL, Whitlenge or any Shareholder, will (a) conflict with,
result in a breach of the terms, conditions or provisions of, or constitute a
default, an event of default or an event creating rights of acceleration,
termination or cancellation or a loss of rights, or result in the creation or
imposition of any encumbrance upon any of the material assets of WAL, Whitlenge
or WB, under the memorandum or articles of association of WAL or Whitlenge or
the constitutive documents of WB, any instrument, agreement, mortgage,
indenture, deed of trust, permit, concession, grant, franchise, license,
judgment, order, award, decree or other restriction to which WAL, Whitlenge or
WB is a party or any of their respective material properties is subject or by
which any of them is bound or any material statute, other law or regulatory
provision affecting any of them, except for such conflicts, breaches, defaults,
events, creations and impositions that are set forth in Schedule 2.4(a) or (b)
require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any governmental
authority or regulatory body, by or on behalf of WAL, Whitlenge or WB, except
as set forth in Schedule 2.4(a); provided, however, that no representation and
warranty is made as to any consent or filing required to be obtained or made in
respect of the United Kingdom Office of Fair Trading, Monopolies and Mergers
Commission and/or the Commission of the European Community in connection with
the transactions contemplated by this Agreement.
(b) Each Shareholder that is a corporate entity severally
represents and warrants as to itself that it has full corporate power and
authority, and each other Shareholder severally represents and warrants as to
itself that it has full power and authority, to enter into this Agreement.
Each
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Shareholder severally represents and warrants as to itself that neither the
execution or delivery of this Agreement by WAL, Whitlenge or such Shareholder,
nor consummation of the transactions contemplated hereby or compliance with or
fulfillment of the terms and provisions hereof by WAL, Whitlenge or such
Shareholder, will conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under, or result in the creation or imposition of any encumbrance upon
any of the material assets of WAL, Whitlenge or WB, under any instrument,
agreement, mortgage, indenture, deed of trust, permit, concession, grant,
franchise, license, judgment, order, award, decree or other restriction to
which such Shareholder is a party or by which such Shareholder is bound. Each
of the Shareholders severally represents and warrants as to itself that this
Agreement is, and each other agreement or instrument of such Shareholder
contemplated hereby when executed and delivered will be, the legal, valid and
binding agreement of such Shareholder enforceable against such Shareholder in
accordance with its respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforceability of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
Section 2.5. Financial Statements. WAL and Whitlenge have
previously provided Scotsman with the consolidated audited balance sheet (the
"Balance Sheet") of WAL as of September 30, 1993 (the "Balance Sheet Date") and
the related audited consolidated profit and loss account (the "Income
Statement") and consolidated cash flow statement for the financial year then
ended, together with appropriate notes to such financial statements, certified
by Coopers & Lybrand, chartered accountants and registered auditors. Except as
disclosed in the notes thereto, the Balance Sheet and Income Statement have
been prepared in accordance with the requirements of all relevant statutes and
with generally accepted accounting principles and practices in the United
Kingdom consistently applied and fairly present in all material respects the
consolidated financial position of WAL at the date of such balance sheet and
the consolidated results of its operations and changes in its financial
position for the periods indicated. Except as set forth in Schedule 2.5, the
Income Statement does not contain any material items of special or nonrecurring
income except as expressly specified therein. The Balance Sheet and the Income
Statement include all adjustments, which consist only of normal recurring
accruals, necessary for such fair representation. All costs and expenses
incurred in generating the revenues reflected in the Income Statement or
otherwise in connection with the Whitlenge Business during the period covered
thereby which are required by generally accepted accounting principles in the
United Kingdom to be reflected in the Income Statement are so reflected.
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After the date of incorporation of WAL, each of WAL and
Whitlenge has notified the Registrar of Companies that the 30th of September is
its accounting reference date pursuant to the Companies Act of 1985 and it has
not subsequently notified the Registrar of Companies of any other date.
Section 2.6. Operations Since Balance Sheet Date. (a) Except
as set forth in Schedule 2.6(a), since the Balance Sheet Date, there has been:
(i) no material adverse change in the assets, liabilities, operations, profits
or business or condition, financial or otherwise, of WAL, Whitlenge and WB; and
(ii) no damage, destruction, loss or claim with respect to, whether or not
covered by insurance, or condemnation or other taking of, assets having a
Material Adverse Effect on WAL, Whitlenge and WB taken as a whole.
(b) Except as set forth in Schedule 2.6(b), as contemplated
hereby or with the prior written consent of Scotsman after the date hereof,
since the Balance Sheet Date, Whitlenge and WB have conducted the Whitlenge
Business only in the ordinary course and in conformity with past practice.
Without limiting the generality of the foregoing, except as set forth in
Schedule 2.6(b), as contemplated hereby or with the prior written consent of
Scotsman after the date hereof, since the Balance Sheet Date, none of WAL,
Whitlenge and WB has: (i) issued, delivered or agreed (actually or
contingently) to issue or deliver any of its shares, or granted any option,
warrant or right to purchase any of its shares or other equity interest, or
security convertible into its shares or other equity interest, or any of its
bonds, notes or other securities, or borrowed or agreed to borrow any funds,
other than in the ordinary course of business consistent with past practice;
(ii) paid any obligation or liability (absolute or contingent) other than
current liabilities reflected on the Balance Sheet and current liabilities
incurred since the Balance Sheet Date in the ordinary course of business
consistent with past practice; (iii) declared or made, or agreed to declare or
make, any payment of dividends or distributions to shareholders or purchased or
redeemed, or agreed to purchase or redeem, any of its shares or other equity
interest, except in each case as permitted hereunder; (iv) mortgaged, pledged
or encumbered any assets other than in the ordinary course of business
consistent with past practice; (v) except for assets sold, leased or
transferred in the ordinary course of business consistent with past practice,
sold, leased or transferred or agreed to sell, lease or transfer any material
assets or rights; (vi) cancelled or agreed to cancel any material debts or
claims, waived or agreed to waive any rights of material value, or allowed to
lapse or failed to keep in force any material franchise, permit or other
material right; (vii) except in the ordinary course of business consistent with
past practice, made or permitted any material amendment or termination of any
material contract, agreement or license; (viii) undertaken or committed to
capital expenditures exceeding (British pound) 65,000 for any single project
or related series of projects; (ix) made any
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increase in the compensation paid or to become payable to any of WAL's,
Whitlenge's or WB's officers or employees except for increases in the normal
course of business consistent with past practice and increases required to be
made pursuant to the terms of any employment or other agreement or employee
benefit plan, policy, arrangement or agreement entered into prior to the
Balance Sheet Date; (x) passed any resolution in a general meeting (other than
any resolution constituting ordinary business conducted at an annual general
meeting); (xi) undergone any material adverse change in its relationship, taken
as a whole, with suppliers, customers, distributors and lessors; (xii) made
charitable donations in excess of (British pounds) 30,000 in the aggregate;
(xiii) incurred any liability or obligation (whether absolute, accrued,
contingent or otherwise and whether direct or as guarantor or otherwise with
respect to obligations of others) material to the business or assets of WAL,
Whitlenge and WB, taken as a whole, except in the ordinary course of business
consistent with past practice; (xiv) instituted, settled or agreed to settle
any litigation, action, or proceeding before any court or governmental body
relating to the business or assets of WAL, Whitlenge or WB and involving an
amount in excess of (British pounds) 30,000 or otherwise materially affecting
WAL, Whitlenge or WB; (xv) entered into, or amended in any material respect,
any employment, collective bargaining, deferred compensation, retention, change
of control, termination or other material agreement or arrangement for the
benefit of employees (whether or not legally binding) or entered into, adopted
or amended in any material respect any Plan (as hereinafter defined); (xvi)
suffered any strike or other employment related problem which would have a
Material Adverse Effect on WAL, Whitlenge and WB taken as a whole; (xvii)
suffered the loss of any key employees or had any material change in its
relations with its employees and agents; (xviii) received any notice of
termination of any material contract, lease or other material agreement; (xix)
transferred or expressly granted any rights under, or entered into any
settlement regarding the breach or infringement of, any material United Kingdom
or foreign license, patent, copyright, trademark, trade name, invention or
other material intellectual property or modified in any material respect any
existing rights with respect thereto; (xx) entered into any transaction of the
type described in Section 2.30; (xxi) amended the terms of the Rules of the
Whitlenge Drink Equipment Limited Annual Bonus Plan or the Whitlenge Drink
Equipment Limited Annual Bonus Plan, as updated (together, the "Bonus Plans")
(complete and correct copies of which have been furnished to Scotsman); or
(xxii) entered into or become committed to enter into any other material
transaction except in the ordinary course of business consistent with past
practice.
Section 2.7. No Undisclosed Liabilities. Neither WAL,
Whitlenge nor WB is subject to any liability which is required in accordance
with generally accepted accounting principles in the United Kingdom (in the
case of WAL and Whitlenge) and in Belgium (in the case of WB) to be shown on
the Balance Sheet but which is
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not so shown, and to the knowledge of WAL, Whitlenge, WB or any Shareholder,
none of WAL, Whitlenge or WB is subject to any material liability, absolute or
contingent, which is not shown on the Balance Sheet or which is in excess of
amounts shown or reserved for in the Balance Sheet or referred to in the notes
thereto, other than, in each case, as disclosed in Schedule 2.7 or liabilities
of a similar nature as those set forth in the Balance Sheet and notes thereto
and incurred after the Balance Sheet Date in the ordinary course of its
business consistent with past practice.
Section 2.8. Taxes. (a) All Tax (as hereinafter defined)
returns, reports and declarations which are required to be filed prior to the
date hereof related to WAL, Whitlenge or WB have been duly filed. All Taxes
which are shown thereon to be due and all other Taxes, assessments and other
governmental charges imposed by law upon WAL, Whitlenge or WB which have become
due and payable as shown therein have been paid, other than those not yet
delinquent. The Balance Sheet provides for, and the books and records which
show the position at the Expiration Date will provide for, as appropriate, make
proper disclosure or note of all liabilities, whether actual, deferred,
contingent or disputed, of WAL, Whitlenge and WB, for Taxation at and for the
periods described therein. All Taxation for which WAL, Whitlenge or WB is
liable as a result of any act, omission or event has, if and insofar as such
Taxation or other sums ought to be paid, been so paid. Neither WAL nor
Whitlenge nor WB is in dispute with the Inland Revenue, Customs and Excise or
any other fiscal authority and neither WAL, Whitlenge, WB nor the Shareholders
are aware of any circumstances which may give rise to such a dispute. Neither
WAL, Whitlenge nor WB at any time made any repayment to which Section 210
and/or 211 of the Income and Corporation Taxes Act 1988 (bonus issue following
or preceding repayment of share capital) applies or issued any share capital as
paid up otherwise than by the receipt of new consideration within the meaning
of Part VI Income and Corporation Taxes Act 1988 (company distributions, tax
credits etc. where appropriate). Since the Balance Sheet Date, neither WAL,
Whitlenge nor WB has (i) declared, paid or made any dividend, bonus or other
distribution, or (ii) made or received any surrender relating to group relief
or the benefit of advance corporation tax. Since the Balance Sheet Date, no
payment has been made by WAL, Whitlenge or WB which will not be deductible for
corporation tax purposes either in computing the profits of WAL, Whitlenge or
WB or in computing the corporation tax chargeable on WAL, Whitlenge or WB. In
the Income Statement and Balance Sheet and the books and records which show the
position at the Expiration Date, the value attributed to each asset of WAL,
Whitlenge and WB as at the date thereof is such, or will be such, that on any
disposal thereof for a consideration equal to such value (and disregarding any
statutory right to claim any allowance of relief) (i) no liability to
corporation tax in respect of any chargeable gain will arise; and (ii) no
balancing charge will be made on WAL, Whitlenge or WB. Full particulars of
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each claim under S.152 or 153 Taxation of Chargeable Gains Act 1992 ("TCGA")
(replacement of business assets) made prior to the date hereof to which S. 154
TCGA (new assets which were depreciating assets) applies and which affects any
asset which was owned by WAL, Whitlenge or WB on or after March 31, 1992
(except where the held over gain is treated as having accrued prior to
September 30, 1993) are set forth in Schedule 2.8. Full details of all assets
currently owned by WAL or Whitlenge in relation to which charges to Tax might
at any time in the next six years arise under S.179 TCGA (company ceasing to be
member of a group) are set forth in Schedule 2.8.
(b) All documents which are required to be stamped and which
are in the possession of WAL or Whitlenge, or by virtue of which WAL or
Whitlenge has any right, have been duly stamped. Since September 30, 1993,
neither WAL nor Whitlenge has incurred any liability to stamp duty reserve tax.
(c) None of WAL, Whitlenge or WB has ever had any income
effectively connected with the conduct of a trade or business within the United
States (within the meaning of section 882 of the United States Internal Revenue
Code of 1986, as amended (the "Code") or, to the knowledge of the Shareholders,
any income from sources within the United States (within the meaning of section
881 of the Code).
(d) Each of WAL, Whitlenge or WB has not in the six years
preceding the date of this Agreement been a party to any transaction in respect
of which WAL, Whitlenge or WB, its officers, directors or advisers considered
that there was a risk that they could be liable to Taxation under provisions of
Part XVII of Income and Corporation Taxes Act 1988 (Anti-Avoidance) or as a
result of the principles enunciated by the House of Lords in the United Kingdom
in Furniss v. Dawson 55 TC 324 and concluded that such risk was too remote to
make provision therefore in the relevant accounts of WAL, Whitlenge or WB.
(e) WAL and Whitlenge are members of a "group of companies"
for the purpose of Section 29 Value Added Tax Act 1983. Schedule 2.8 sets out
full details of all assets currently owned by each of WAL and Whitlenge
(collectively the "Group Companies" and each a "Group Company") in relation to
which charges to Tax might at any time in the six years from the date of this
Agreement arise under S.179 TCGA. Schedule 2.8 sets out full details of the
group income election between WAL or Whitlenge under Section 247 Income and
Corporation Taxes Act 1988 which remain in force. Except as set forth in
Schedule 2.8, WAL and Whitlenge are a group for purposes of S.170 TCGA and
Section 402 Taxes Act 1988, and, together with WB, are associated for purposes
of Section 42 Finance Act 1930. Schedule 2.8 sets out full details of all
claims by each Group Company for group relief under Chapter IV of Part X Taxes
Act 1988 and for the surrender of advance corporation tax under Section 240
Income and Corporation Taxes Act 1988 for the six years ended September 30,
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1992. No event has occurred in consequence of which WAL, Whitlenge or WB may
be liable for tax for which some other company or person was primarily liable.
(f) Neither WAL, Whitlenge nor WB has, since September 30,
1993, incurred any liability for Taxation other than Taxation arising in the
ordinary course of its business.
(g) The utilization of any relief shall not be treated as
reducing or extinguishing a tax liability in respect of which, were it not for
the utilization of such relief, a breach would have occurred of the
representations and warranties hereby given.
(h) For purposes of this Section 2.8, the following
definitions shall apply:
(i) "Tax" and "Taxation" mean any form of taxation, levy,
duty, charge, contribution or impost of whatever nature (including any
fine, penalty, surcharge or interest in relation thereto) imposed by a
Taxation Authority and whether or not a primary or secondary
liability; and
(ii) "Taxation Authority" means the Inland Revenue, H.M.
Customs and Excise (both in the United Kingdom) and any other local,
municipal, governmental, state, federal or other fiscal authority,
body or official anywhere in the world.
Section 2.9. Condition of Plant, Machinery and Equipment.
Each item of plant, machinery and equipment owned or leased by Whitlenge and WB
and having a book or fair market value in excess of (British pounds) 30,000 is
in good operating condition (subject to reasonable wear and tear and immaterial
impairments of value and damage) and generally suitable for the uses for which
intended.
Section 2.10. Title to Property. Except as set forth in
Schedule 2.10, each of Whitlenge and WB has good and, with respect to real
property, marketable title to all of the material assets reflected on the
Balance Sheet as being owned by it and all of the material assets thereafter
acquired by it (except to the extent that such assets have thereafter been
disposed of in the ordinary course of business consistent with past practice),
subject to no liens, mortgages, pledges, security interests, encumbrances,
claims or charges of any kind (collectively, "Liens") except (i) any Liens
arising by law securing obligations not yet overdue and (ii) Liens that do not
materially interfere with the present use or value of the applicable asset.
Section 2.11. Availability and Ownership of Assets. The
assets shown on the Balance Sheet, taken as a whole, include all the material
properties and assets owned or used or held by WAL, Whitlenge or WB during the
past twelve months and required, in accordance with generally accepted
accounting principles, to be reflected on the Balance Sheet (except properties
and assets
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<PAGE> 24
sold, cash disposed of, accounts receivable collected, prepaid expenses
realized, contracts fully performed, and properties or assets which had become
worn out, obsolete or surplus in each case in the ordinary course of business).
There are no material assets or properties used in the Whitlenge Business owned
by any person other than Whitlenge or WB which are leased or licensed to
Whitlenge or WB pursuant to a lease or license that will terminate as a result
of the consummation of the Offer and the other transactions contemplated
hereby.
Section 2.12. Personal Property Leases. Set forth in Schedule
2.12 is a brief description of each lease or other agreement or right, whether
written or oral (including in each case the annual rental, the expiration date
thereof and a brief description of the property covered), under which Whitlenge
or WB is lessee of, or holds or operates, any machinery, equipment, vehicle or
other tangible personal property owned by a third person having scheduled
rental payments in excess of (British pounds) 10,000 per year.
Section 2.13. Accounts Receivable; Inventories. To the
knowledge of WAL, Whitlenge, WB and the Shareholders, all outstanding accounts
receivable of Whitlenge and WB have arisen from bona fide transactions, except
to the extent that a reserve in respect thereof shall have been established on
the Balance Sheet. Except as set forth in Schedule 2.13, to the knowledge of
WAL, Whitlenge, WB and the Shareholders, all (i) the accounts receivable
reflected in the Balance Sheet, taken as a whole, are good and collectible in
all material respects in the ordinary course of business at the aggregate
recorded amounts thereof, net of any applicable allowances for doubtful
accounts reflected therein; and (ii) the accounts receivable to be reflected in
the books and records of Whitlenge and WB as of the Expiration Date, taken as a
whole, will be good and collectible in all material respects in the ordinary
course of business at the aggregate recorded amounts thereof, net of any
applicable allowances for doubtful accounts reflected thereon, which allowances
will be determined on a basis consistent with the basis used in determining the
allowances for doubtful accounts reflected in the Balance Sheet. To the
knowledge of WAL, Whitlenge, WB and the Shareholders, the inventories of
Whitlenge and WB (including raw materials, supplies, work-in-process, finished
goods and other materials), taken as a whole, are in merchantable condition in
all material respects and are reflected in all material respects in the books
and records of WAL, Whitlenge and WB in accordance with generally accepted
accounting principles and at the lower of average cost or market value, except
in each case for obsolete inventory accounted for in accordance with the
applicable policy set forth in the attachment to Schedule 2.3(g) to the Merger
Agreement.
Section 2.14. Intellectual Property. (a) Schedule 2.14
contains a list of:
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<PAGE> 25
(i) all material United Kingdom and foreign patents and
patent applications and all material United Kingdom and foreign
trademarks, trade names and service marks for which registrations have
been issued or applied for, and all other material United Kingdom and
foreign trademarks, trade names and service marks owned by WAL,
Whitlenge or WB or in which WAL, Whitlenge or WB holds any right,
license or interest, showing in each case the product, device,
process, service, business or publication covered thereby, the
registered or other owner, application date and, in the case of such
right, license or interest, a brief description thereof;
(ii) all material agreements, commitments, contracts,
understandings, licenses and assignments relating or pertaining to any
asset, property or right described in the preceding clause to which
WAL, Whitlenge or WB is a party, showing in each case the parties
thereto and, in the case of oral agreements, commitments, contracts,
understandings, licenses and assignments, the material terms thereof;
(iii) all material licenses or agreements pertaining to
know-how, trade secrets, inventions, disclosures or uses of ideas to
which WAL, Whitlenge or WB is a party, showing in each case the
parties thereto and, in the case of oral licenses or agreements, a
brief description of the material terms thereof; and
(iv) all registered assumed or fictitious names under which
Whitlenge or WB is conducting the Whitlenge Business as of the date
hereof.
(b) All patents listed in Schedule 2.14 as being owned by
WAL, Whitlenge or WB are valid and in full force, all patents listed in
Schedule 2.14 as being used by WAL, Whitlenge or WB are, to the knowledge of
WAL, Whitlenge, WB and the Shareholders, valid and in full force and all patent
applications of WAL, Whitlenge or WB listed therein are in good standing, all
without material challenge of any kind except as otherwise disclosed in
Schedule 2.14, and, except as otherwise disclosed in Schedule 2.14, WAL,
Whitlenge or WB owns the entire right, title and interest in and to such
patents and patent applications so listed as being owned by WAL, Whitlenge or
WB without qualification, limitation, burden or encumbrance of any kind, except
for such qualifications, limitations, burdens and encumbrances that would not
have a Material Adverse Effect on WAL, Whitlenge and WB taken as a whole. All
of the registrations for trade names, trademarks and service marks listed in
Schedule 2.14 as being owned by WAL, Whitlenge or WB are valid and in full
force, all of the registrations for trade names, trademarks and service marks
listed in Schedule 2.14 as being used by WAL, Whitlenge or WB are, to the
knowledge of WAL, Whitlenge and WB, valid and in full
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<PAGE> 26
force and all applications by WAL, Whitlenge or WB for such registrations are
pending and in good standing, all without material challenge of any kind except
as otherwise disclosed in Schedule 2.14, and, except as otherwise disclosed in
Schedule 2.14, WAL, Whitlenge or WB owns the entire right, title and interest
in and to all such trade names, trademarks and service marks so listed as being
owned by WAL, Whitlenge or WB as well as the registrations and applications for
registration therefor without qualification, limitation, burden or encumbrance
of any kind, except for such qualifications, limitations, burdens and
encumbrances that would not have a Material Adverse Effect on WAL, Whitlenge
and WB taken as a whole. Correct and complete copies of all the patents and
published patent applications, registered trademarks, published trade names and
service marks and registrations or applications therefor and licenses listed in
Schedule 2.14 have heretofore been delivered by WAL, Whitlenge or WB to
Scotsman.
(c) Except as disclosed in Schedule 2.14, WAL, Whitlenge or
WB owns or has the right to use during the protected life thereof (including
any extension) all material patents, trademarks, service marks, published trade
names and other material intellectual property used in conducting the Whitlenge
Business. No infringement of any patent, patent right, trademark, service
mark, trade name, or copyright or registration thereof has occurred or results
in any way from the operations or business of WAL, Whitlenge or WB, except for
such infringements that would not have a Material Adverse Effect on WAL,
Whitlenge and WB taken as a whole. No claim or (to the knowledge of WAL,
Whitlenge, WB or any Shareholder) threat of any such infringement has been made
in respect of any of the foregoing, no claim of invalidity of any patent
described in Schedule 2.14 has been made, and no proceedings are pending or, to
the knowledge of WAL, Whitlenge and WB or any Shareholder, threatened against
WAL, Whitlenge or WB which challenge the validity or ownership of any material
patent, published trademark, trade name or service mark or the ownership of any
other right or property described in Schedule 2.14, or any copyright of WAL,
Whitlenge or WB, and, except as set forth in Schedule 2.14, none of WAL,
Whitlenge, WB or the Shareholders knows of the infringing use of any of the
same by any other person, except for such claims, proceedings and infringing
uses that would not have a Material Adverse Effect on WAL, Whitlenge and WB
taken as whole. None of WAL, Whitlenge, WB or the Shareholders has had notice
of, or knowledge of, any claim against WAL, Whitlenge or WB that a material
portion of the operations, activities, products, equipment, machinery or
processes of the Whitlenge Business materially infringes the patents,
trademarks, service marks, published trade names or other intellectual property
rights of any other person.
Section 2.15. Owned Real Property. None of WAL, Whitlenge or
WB owns any real property and is not bound by any contract or agreement for the
purchase or sale of any real property.
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<PAGE> 27
Section 2.16. Leased Real Property. Schedule 2.16 sets forth
a list and brief description of each lease or similar agreement together with
associated documentation (showing, without prejudice to the generality of the
foregoing, the parties thereto, annual rental, expiration date, and the
location of the real property covered by such lease or other agreement) under
which (i) Whitlenge or WB is lessee of, or holds or operates any real property
owned by a third person or (ii) to the knowledge of WAL, Whitlenge, WB and the
Shareholders, Whitlenge or WB has been lessee of, or has held or operated, any
real property owned by any third person and is as of the date hereof, or will
be as of the Expiration Date, subject to any actual or contingent liability
(other than any liability in respect of a matter referred to in Section 2.29)
in respect thereof (the real property described in clauses (i) and (ii) above
being collectively referred to herein as the "Leased Real Property"). Except
as set forth in Schedule 2.16, Whitlenge or WB has the right to quiet enjoyment
of all the Leased Real Property described in clause (i) of the immediately
preceding sentence for the full term of each such lease or similar agreement
(and any renewal option related thereto) relating thereto, and the leasehold or
other interest of WAL, Whitlenge or WB in such Leased Real Property is not
subject or subordinate to any encumbrance that has or will have a Material
Adverse Effect on WAL, Whitlenge and WB taken as a whole. Complete and correct
copies of any title opinions, surveys and appraisals in WAL's, Whitlenge's or
WB's possession or any policies of title insurance currently in force and in
the possession of WAL, Whitlenge or WB with respect to the Leased Real Property
heretofore been delivered by WAL, Whitlenge or WB to Scotsman.
Section 2.17. Obligations; Litigation. Except as set forth in
Schedule 2.17, WAL, Whitlenge and WB have performed all obligations required to
be performed by them to date, and are not in default, under any agreement,
lease or other document to which any of them is a party, or under any law or
order of any court or governmental agency, except for such failures to perform
or defaults that would not have a Material Adverse Effect on WAL, Whitlenge and
WB taken as whole. Except as set forth in Schedule 2.17, there are no claims,
actions, suits or proceedings to which WAL, Whitlenge or WB is a party or any
of their respective properties is subject or by which any of them is bound,
pending or, to the knowledge of WAL, Whitlenge, WB or any Shareholder,
threatened before or by any court or governmental agency, which is reasonably
expected to have a Material Adverse Effect on WAL, Whitlenge and WB taken as a
whole or prevent or hinder the consummation of the transactions contemplated
hereby.
Section 2.18. Product Warranties. Schedule 2.18 contains a
list and description of each express warranty given or offered by Whitlenge or
WB prior to the date hereof covering any class or group of products sold or
distributed by Whitlenge or WB and other express warranties covering any
material product sold or distributed by Whitlenge or WB, in each case which
warranty is
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<PAGE> 28
in effect on the date hereof or will be in effect on the Expiration Date. No
reserve for liabilities with respect to warranty claims is contained in the
Balance Sheet and generally accepted accounting principles in the United
Kingdom do not require that a reserve for such liabilities be contained in the
Balance Sheet of Whitlenge or WB.
Section 2.19. Compliance with Laws. WAL, Whitlenge and WB are
in compliance with the provisions of all applicable government laws and
regulations (domestic and foreign), including but not limited to all Applicable
Laws (as defined in Section 2.29(a)), except to the extent that the failure to
comply therewith would not have a Material Adverse Effect on WAL, Whitlenge and
WB taken as a whole. To the knowledge of WAL, Whitlenge, WB and each
Shareholder, there are no proposed orders, judgments, decrees, governmental
takings, condemnations or other proceedings, in each case binding upon the
business, operations or properties of WAL, Whitlenge or WB and which would have
a Material Adverse Effect on WAL, Whitlenge and WB taken as a whole.
Section 2.20. Permits. Each of WAL, Whitlenge and WB
possesses all material governmental franchises, permits, licenses,
certificates, variances, approvals and other material authorizations necessary
to own or lease and operate its material properties and to conduct its business
as now conducted (hereinafter collectively called the "Permits"), including but
not limited to environmental Permits. All Permits are set forth in Schedule
2.20, except for such Permits which would be readily obtainable by any
qualified applicant without undue burden in the event of any lapse,
termination, cancellation or forfeiture.
Except as disclosed in Schedule 2.20, all Permits are in full
force and effect and no consent, approval or act of, or the making of any
filing with, any governmental body, regulatory commission or other party will
be required to be obtained or made by WAL, Whitlenge or WB in respect of any
Permit as a result of the consummation of the transactions contemplated by this
Agreement. None of WAL, Whitlenge or WB is in default in any material respect
under the terms of any such Permit and has not received notice of any material
default thereunder.
Section 2.21. Insurance. WAL, Whitlenge and WB maintain
policies (or are covered by policies maintained by Onex and its affiliates on
behalf of WAL, Whitlenge and WB or their properties, assets, operations or
business) of fire and casualty, liability (general, product and other
liability), workers' compensation and other forms of insurance and bonds with
those insurers listed on Schedule 2.21 in such amounts and against such risks
and losses as are usually insured against in the same general areas by
companies engaged in the same or similar business. Schedule 2.21 contains a
list and brief description (including type of coverage, limits, deductibles,
carriers and effective and termination dates) of all policies of insurance
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<PAGE> 29
maintained by WAL, Whitlenge or WB (or maintained on behalf of WAL, Whitlenge
or WB or their properties, assets, operations or business) since April 1, 1992,
up to and including the Expiration Date. Each of WAL, Whitlenge and WB is a
named insured or is otherwise covered under each such policy, and each such
policy is in full force and effect and (without limiting the obligations under
Section 5.3) will not in any way be affected by or terminate or lapse by reason
of the transactions contemplated by this Agreement.
WAL, Whitlenge and WB have made available to Scotsman complete
and correct copies of all policies listed on Schedule 2.21, together with all
riders and amendments thereto, and, to the knowledge of WAL, Whitlenge, WB and
the Shareholders, no insurer under such policies has a basis to void such
policies on grounds of non-disclosure on the part of the policyholder or the
insured thereunder.
Schedule 2.21 hereto includes a list of (i) each product
liability claim submitted under any such policy (whether or not relating to the
Whitlenge Business) since April 1, 1992 and (ii) with respect to each other
claim since April 1, 1992 under such policy, a list of the aggregate amounts of
such claims by class of such claims. Except for such claims, the full policy
limits (subject to deductibles provided therein) are available and unimpaired
under each such policy. Each of WAL, Whitlenge, and their respective
affiliates has complied with each such policy in all material respects and has
not failed to give any notice or present any claim thereunder in a due and
timely manner.
The liability and excess liability insurance policies listed
on Schedule 2.21 provide product liability coverage for WAL, Whitlenge and WB
on an occurrence basis, cover all claims for injuries which have occurred or
may occur on or prior to the Expiration Date and will cover payment of any
adverse judgment rendered against WAL, Whitlenge or WB in any claim arising out
of a product liability occurrence occurring on or prior to the Expiration Date.
Except as set forth on Schedule 2.21, to the knowledge of WAL,
Whitlenge, WB and the Shareholders, no person has alleged that any product
manufactured in or sold by the Whitlenge Business has caused a fire.
Section 2.22. The Plans. (a) Schedule 2.22 sets forth a list
of each Plan (as hereinafter defined) and WAL, Whitlenge or WB has delivered to
Scotsman complete and correct copies of all Plans or a written description of
any Plan which is not in writing. Except for the Whitlenge Drink Equipment
Limited Retirement Benefit Scheme (the "Scheme") and except as set forth in
Schedule 2.22, there is not in operation and no proposal has been announced to
establish, any agreement, arrangement, custom or practice (whether legally
enforceable or not and whether or
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<PAGE> 30
not approved) for the payment of or contribution towards any pensions,
allowances, lump sums or other like benefits on retirement, death, termination
of employment (whether voluntary or not) or during periods of sickness or
disablement, for the benefit of any employee. Except as set forth in Schedule
2.22, each of WAL, Whitlenge and WB has performed all obligations required to
be performed by it under the Plans and each Plan has been maintained, operated
and administered in all material respects in accordance with applicable law.
There are no material pending or, to the knowledge of WAL, Whitlenge, WB and
each Shareholder, threatened claims by or on behalf of any employee involving
any such Plan (other than routine claims for benefits). No employee is or may
become entitled to post-employment benefits of any kind by reason of employment
in WAL, Whitlenge, WB or in connection with the operation of the business of
WAL, Whitlenge or WB, including, without limitation, death or medical benefits
(whether or not insured), other than deferred compensation but only to the
extent such deferred compensation remains the sole liability and obligation of
the Shareholders from and after the Expiration Date or the liability with
respect to such deferred compensation is adequately reflected on the books and
records of WAL, Whitlenge and WB. Except as set forth in Schedule 2.22, the
consummation of the transactions contemplated by this Agreement will not result
in an increase in the amount of compensation or benefits or accelerate the
vesting or timing of payment of any compensation or benefits payable to or in
respect of any employee. The books and records of WAL, Whitlenge and WB will
properly and adequately reflect any and all liabilities and obligations of WAL,
Whitlenge and WB relating to any period ending on or prior to January 31, 1993
to or in respect of the employees or the Plans for (i) unpaid compensation,
salaries, wages, accrued vacation and sick pay and other payroll items
(including, without limitation, bonus, incentive and deferred compensation) and
(ii) unpaid contributions, costs, pension premiums and expenses to or in
respect of any Plan. For purposes of this Section 2.22, "Approved" means
approved by the Board of Inland Revenue for the purposes of Chapter I of Part
XIV of the Taxes Act 1988 and references to "Approval" shall be construed
accordingly.
(b) WAL, Whitlenge, WB and the Shareholders have provided
Scotsman with (i) copies of all agreements, deeds and rules governing or
relating to the Scheme; (ii) copies of the explanatory literature issued to
employees who are or may become members of the Scheme; (iii) copies of any
announcement issued to any employees who are members of the Scheme in respect
of benefit improvements or other amendments not yet incorporated into the
documentation of the Scheme; (iv) a copy of the report of the most recent
actuarial valuation or funding review of the Scheme which has been received (in
final form) before the date of this Agreement, together with copies of any
written supplementary actuarial advice relating to the funding of the Scheme;
(v) copies of all policies effected with and agreements with any insurance
company for the purposes of the Scheme; (vi) if the
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<PAGE> 31
trustees or managers of the Scheme are required by the Occupational Pension
Schemes (Disclosure of Information) Regulations 1986 to obtain audited
accounts, a copy of the latest available audited accounts of the Scheme; (vii)
particulars of the assets of the Scheme by reference to the categories listed
in Schedule 3 to the Occupational Pension Schemes (Disclosure of Information)
Regulations 1986 including particulars of any self investment (as defined in
those Regulations) and of any investment in which more than five percent of the
total value of the net assets of the Scheme is invested; and (viii) a list of
the Scheme's active members, pensioners and deferred pensioners with all
particulars of them relevant to their membership of the Scheme and necessary to
establish their entitlement to benefits.
(c) Except as disclosed in Schedule 2.22, no discretion or
power has been exercised under the Scheme in respect of any individual to
augment benefits; to admit to membership any individual who would not otherwise
have been eligible for admission to membership; to provide a benefit which
would not otherwise be provided; to pay a contribution which would not
otherwise have been paid; or in the three years ending on the date of this
Agreement, to pay a transfer value or make a transfer of assets to another
scheme the amount or value of which was greater than the cash equivalent to
which such individual acquired a right under Part II of Schedule 1A to the
Social Security Pensions Act 1975. All benefits (other than refunds of
contributions) payable under the Scheme on the death of a member of the Scheme
or during periods of sickness or disability of the member are at the date of
this Agreement fully insured under a policy effected with an insurance company
of good repute and each member has been covered for such insurance by such
insurance company at its normal rates and on its normal terms for persons in
good health and all insurance premiums payable have been paid. No payment or
repayment of any of the assets of the Scheme has been made to WAL, Whitlenge,
WB or to any other employer participating in the Scheme since the date of the
most recent actuarial valuation or funding review disclosed to Scotsman. There
are no liens over any of the assets of the Scheme. The Scheme is wholly
invested in insurance policies or contracts issued by Standard Life Assurance
Company, and no loans have been made out of the assets of the Scheme which are,
at the date of this Agreement, outstanding to WAL, Whitlenge, WB any
Shareholder or any of their affiliates. There has been no breach of the trusts
of the Scheme and there are no actions, suits or claims (other than routine
claims for benefits) outstanding, pending or threatened against the trustees or
administrator of the Scheme or against WAL, Whitlenge, WB, any Shareholder or
any of their affiliates. All information supplied for the purpose of the most
recent actuarial valuation or funding review of the Scheme was true, complete
and accurate in all material respects.
(d) There is not at the date of this Agreement any
contribution to the Scheme which has fallen due but is unpaid. Since the date
of the most recent actuarial valuation or funding
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<PAGE> 32
review disclosed to Scotsman, contributions made to the Scheme have been at a
rate or rates not lower than that or those recommended in the report of the
said actuarial valuation or funding review.
(e) The Scheme is Approved and none of the WAL, Whitlenge, WB
or the Shareholders has knowledge of any circumstances which might give the
Board of Inland Revenue in the United Kingdom reason to withdraw Approval of
the Scheme. The Scheme is a contracted-out scheme for the purposes of the
Social Security Pensions Act 1975 and has been administered in accordance with
the contracting-out requirements of Part III of that Act. WAL, Whitlenge or WB
holds or is named in a current contracting-out certificate issued in relation
to the Scheme. Except as set forth in Schedule 2.22, the Scheme has been
designed to comply with and has been administered in accordance with all
applicable laws including, without limitation, all relevant statutes and
subordinate legislation of the Parliament of the United Kingdom and all
relevant provisions of the law of the European Communities, and subject to all
applicable laws in accordance with the trusts, powers and provisions of the
Scheme.
(f) None of WAL, Whitlenge or WB has in existence nor is
proposing to introduce any share incentive plan, share option plan or profit
sharing, bonus or other incentive plan for all or any of its Employees.
(g) For purposes of the Section 2.22, the following
definitions shall apply:
(i) "Employee" means each individual who is, was or has
formerly been employed by or served as director to WAL, Whitlenge, WB
or any of their respective predecessors, and the beneficiaries and
dependents of each such individual; and
(ii) "Plan" means each pension, retirement, profit sharing,
stock bonus, deferred or incentive compensation, medical,
hospitalization, dental, vision or other health, life insurance,
disability, accident insurance, severance, termination plan, policy,
agreement or arrangement, each bonus, incentive, employment, change of
control, retention, stock option, restricted stock or other
equity-based compensation or benefit plan, policy, agreement or
arrangement and each material payroll practice, in any case whether
written or unwritten, that provides or may provide benefits or
compensation in respect of any Employee or under which any Employee is
or may become eligible to participate and that is or has been entered
into, maintained or established by Onex, WAL, Whitlenge, WB or any of
their affiliates or to which Onex, WAL, Whitlenge, WB or any of their
affiliates or to which Onex, WAL, Whitlenge,
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WB or any of their affiliates contributes or is or has been obligated
to contribute.
Section 2.23. Employees and Agents and Related Agreements.
(a) Except as set forth in Schedules 2.23(a) or 2.30, none of WAL, Whitlenge
or WB is a party to or bound by any oral or written contract of service,
consulting agreement (other than contracts of service or consulting agreements
under which WAL's, Whitlenge's, or WB's obligations are terminable by WAL,
Whitlenge or WB without premium or penalty on notice of three months or less
other than a statutory redundancy payment or statutory compensation for unfair
dismissal), deferred compensation agreement, confidentiality agreement or
covenant not to compete with any officer, director, shareholder, employee or
agent of WAL, Whitlenge or WB.
(b) Schedule 2.23(b) contains: (i) a list of all employees
or sales executives payable on commission of WAL, Whitlenge or WB as of
December 1, 1993 whose salary or commission was in excess of (British pounds)
25,000 per annum on such date; (ii) the then current annual salary or
commission of, and a description of the material fringe benefits (other than
those generally available to eligible employees of WAL, Whitlenge or WB)
provided by WAL, Whitlenge or WB to any such employees or sales executives
payable on commission; (iii) a list of all present or former employees or sales
executives payable on commission of WAL, Whitlenge or WB paid in excess of
L25,000 in the financial year ended September 30, 1993 who have terminated or
given notice of their intention to terminate their relationship with WAL,
Whitlenge or WB since September 30, 1993; and (iv) a list of any increase,
effective after December 1, 1993, in the rate of salary or commission of any
employee or sales executives payable on commission if such increase exceeds 6%
of the previous annual salary or commission or other compensation of such
employee or sales executive payable on commission.
Section 2.24. Employee Relations and Labor Matters. (a)
Except as set forth in Schedule 2.24, WAL, Whitlenge and WB have complied in
all material respects with all applicable laws, rules and regulations which
relate to wages, hours, discrimination in employment and collective bargaining
and are not liable for any material arrears of wages or any material taxes or
penalties for failure to comply with any of the foregoing. WAL, Whitlenge and
WB believe that their relations with their employees are good.
(b) Within the period of one year ending on the date of this
Agreement, none of WAL, Whitlenge or WB (i) has given notice of any
redundancies to the relevant Secretary of State in the United Kingdom or
started consultations with any independent trade union under the provisions of
Part IV of the Employment Protection Act 1975, (ii) failed to comply with any
of its obligations under Part IV of such Act, (iii) been a party to any
relevant transfer as defined in the Transfer of Undertakings
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(Protection of Employment) Regulations 1981 or (iv) failed to comply with any
duty to inform and consult any independent trade union under such Regulations.
(c) None of WAL, Whitlenge or WB has any agreement or other
arrangement (binding or otherwise) with any trade union or other body
representing its employees or any of them and none of WAL, Whitlenge or WB
recognizes any trade union or other body representing its employees or any of
them for negotiating purposes. Except as set forth in Schedule 2.24, there has
not been since January 2, 1987, with respect to WAL, Whitlenge or WB, any (a)
unfair labor or trade practice complaint against WAL, Whitlenge or WB before
any applicable governmental agency; (b) labor strike, dispute, or work stoppage
actually pending or threatened against WAL, Whitlenge or WB; or (c) arbitration
proceeding arising out of or under collective bargaining agreements pending
against WAL, Whitlenge or WB.
(d) Except to the extent (if any) to which provision or
allowance has been made in the Balance Sheet or as set forth on Schedule 2.24,
no liability has been incurred by WAL, Whitlenge or WB for breach of any
contract of service, for redundancy payments, protective awards, provision of
benefits or for compensation for wrongful or unfair dismissal.
Section 2.25. Absence of Certain Business Practices. Except
as set forth on Schedule 2.25, none of WAL, Whitlenge, WB, any officer,
employee or agent of WAL, Whitlenge or WB, or any other person acting on its
behalf, has, directly or indirectly, since April 1, 1992, given or agreed to
give any gift or similar benefit (other than with respect to bona fide payments
for which adequate consideration has been given and gifts of a nominal value
the giving of which is customary in the industry) to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the business of WAL, Whitlenge or WB (or assist WAL, Whitlenge or WB in
connection with any actual or proposed transaction) (a) which might subject
WAL, Whitlenge or WB to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (b) which, if not continued in the
future, would have an adverse affect on WAL's, Whitlenge's or WB assets,
business, operations or prospects or would subject WAL, Whitlenge or WB to suit
or penalty in any private or governmental litigation or proceeding, (c) for any
of the purposes described in section 162(c) of the Code, or (d) for
establishment or maintenance of any concealed fund or concealed bank account.
Section 2.26. Territorial Restrictions. None of WAL,
Whitlenge or WB is restricted in any material respect by any written agreement
or understanding with third parties from carrying on its business anywhere in
the world.
Section 2.27. Transactions with Certain Persons. Except as
set forth in Schedule 2.27 hereto, since April 1, 1992,
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none of WAL, Whitlenge or WB has, directly or indirectly, purchased,
leased from others or otherwise acquired any material property or obtained any
material services from, or sold, leased to others or otherwise disposed of any
material property or furnished any material services to (except with respect to
remuneration for services rendered as a director, officer or employee of WAL,
Whitlenge or WB), in the ordinary course of business or otherwise, (a) any
Shareholder, (b) any affiliate of WAL, Whitlenge or WB, (c) any person who is
an officer or director of WAL, Whitlenge or WB, or (d) any associate of any
person referred to in clause (a), (b) or (c) above. Except as set forth in
Schedule 2.27 hereto, none of WAL, Whitlenge or WB owes any amount in excess of
(British pounds) 5,000 to, or has any contract with or commitment to, any
Shareholder, director, officer or employee of WAL, Whitlenge or WB (other than
for compensation for current services not yet due and payable, reimbursement of
expenses arising in the ordinary course of business and the Onex Management
Agreement and the Diggs Management Agreement (as each such term is defined in
Section 4.5(a)), and none of such persons owes any amount in excess of (British
pounds) 5,000 to WAL, Whitlenge or WB.
Section 2.28. Insolvency. No order has been made or petition
presented or resolution passed for the winding up of WAL, Whitlenge or WB or
for the appointment of a provisional liquidator to WAL, Whitlenge or WB or for
an administration order in respect of WAL, Whitlenge or WB. No receiver or
receiver and manager has been appointed by any person of the whole or any part
of the business or assets of WAL, Whitlenge or WB. No voluntary arrangement
has been proposed under Section 1 of the Insolvency Act 1986 in respect of WAL,
Whitlenge or WB and no compromise or arrangement has been proposed, agreed to
or sanctioned under Section 425 of the Companies Act 1985 in respect of WAL,
Whitlenge or WB. None of WAL, Whitlenge or WB is insolvent or unable to pay
its debts within the meaning of Section 123 of the Insolvency Act 1986. None
of WAL, Whitlenge nor WB has stopped paying its debts as they fall due. No
distress, execution or other process has been levied on any of the assets of
WAL, Whitlenge or WB. There is no unfulfilled or unsatisfied judgment or court
order outstanding against WAL, Whitlenge or WB.
Section 2.29. Environmental Matters. (a) WAL, Whitlenge and
WB have each:
(i) complied with and are in compliance with, in all material
respects, all applicable environmental, health and safety statutes,
laws, rules, regulations, ordinances, common law and codes
("Applicable Laws"), except as disclosed in Schedule 2.29;
(ii) not been and are not the subject of any investigation,
judicial or administrative proceeding or settlement concerning (A) a
Release (as hereinafter defined) or threatened Release of any
hazardous or toxic waste, substance or constituent or other substance,
including
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petroleum or its constituents ("Hazardous Substance"), or the storage,
injection, deposit, disposal or dumping on or into the Property of any
nonhazardous waste ("Waste"), as defined or regulated under any
Applicable Laws or (B) the violation of any Applicable Laws;
(iii) not been and are not under a duty to file any notice
under any Applicable Laws reporting the treatment, storage, disposal,
handling or managing of any Hazardous Substance or Waste, the
violation of any Applicable Laws or the Release or threatened Release
of any Hazardous Substance or Waste, except as disclosed in Schedule
2.29;
(iv) no material contingent liability in connection with any
Release or threatened Release of any Hazardous Substance or Waste and
have each no reason to believe that the Property contains or
constitutes something which may have a deleterious effect on
Environmental Matters;
(v) never generated, treated, stored, recycled, transported
or disposed of any Hazardous Substance or stored or disposed of on the
Property any Waste, except as disclosed inSchedule 2.29;
(vi) never installed, had installed, utilized or been aware
of any underground storage tanks or surface impoundments on any of
their Leased Real Property, except as disclosed in Schedule 2.29; and
(vii) no knowledge of any outstanding lien filed on their
assets in favor of any governmental agency, including but not limited
to any city council, in connection with any Applicable Laws.
(b) The presence or condition of all material containing more
than one percent (1%) asbestos by weight ("Asbestos Containing Material") which
is on or part of any Property (excluding any raw materials used in the
manufacture of products or products themselves) does not violate any current
Applicable Laws.
(c) For purposes of this Section 2.29, the following
definitions shall apply:
(i) "Environmental Matters" means anything which affects or
relates to the environment or human health or is otherwise connected
with the subject matter of this Section 2.29;
(ii) "material" means any fines, penalties, costs or expenses
arising under the Applicable Laws that would result in an aggregate
liability to WAL, Whitlenge or WB of not less than (British pounds)
65,000 per year;
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(iii) "Property" means any real or personal property, plant,
building, facility, structure, underground storage tank, equipment or
unit, or other asset owned, leased or operated by WAL, Whitlenge nor
WB (including any surface water thereon or adjacent thereto, and soil
or groundwater thereunder) whether now or previously or any time; and
(iv) "Release" means release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment or into or out of
any Property, including the movement of Hazardous Substances or Waste
through or in the air, soil, surface water, groundwater or Property.
Section 2.30. Contracts. (a) Except as set forth in Schedule
2.30, none of WAL, Whitlenge or WB is a party to or is bound by any oral or
written contract, agreement, commitment or instrument:
(i) for the purchase, sale or lease (except if the scheduled
lease payments are less than (British pounds) 35,000 per year) of real
property;
(ii) for the purchase of raw materials which extends beyond
January 1, 1994 and which is anticipated to require over the term of
the contract (other than the period prior to the date hereof)
aggregate expenditure of more than (British pounds) 100,000;
(iii) for the sale of goods or services which extends beyond
January 1, 1994 and which is anticipated to require over the term of
the contract (other than the period prior to the date hereof)
aggregate expenditure of more than (British pounds) 100,000;
(iv) which provides for, or relates to, any consignment,
distributor, dealer, manufacturers representative, sales agency,
advertising representative or advertising or public relations
arrangement which extends beyond January 1, 1994 and which is
anticipated to require over the term of the contract (other than the
period prior to the date hereof) aggregate payments of more than
(British pounds) 50,000;
(v) which provides for, or relates to, the guarantee by WAL,
Whitlenge or WB of any obligation exceeding (British pounds) 4,000 of
any customer, supplier, officer, director, employee or affiliate of
WAL, Whitlenge or WB;
(vi) which provides for, or relates to, the incurrence by
WAL, Whitlenge or WB of debt for borrowed money in excess of (British
pounds) 25,000;
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(vii) which provides for, or relates to, any non-competition
or confidentiality arrangement with any person, including any current
or former officer or employee of WAL, Whitlenge or WB;
(viii) for capital expenditures in excess of (British pounds)
25,000 for any single project or related series of projects;
(ix) with any broker or finder;
(x) any partnership, joint venture or other similar
arrangements or agreements involving a sharing of profits or losses;
(xi) any contracts or commitments, including royalty
agreements, with any employee, director, officer, Shareholder or
affiliates of WAL, Whitlenge or WB, providing for payment or receipts
by WAL, Whitlenge or WB in excess of (British pounds) 10,000;
(xii) which (other than contracts, agreements, commitments
and instruments of the nature described in clauses (i) through (xi)
above) involve payments or receipts by WAL, Whitlenge or WB of more
than (British pounds) 25,000; and
(xiii) for any purpose (other than specifically referred to
in this Section 2.30(a)) (whether or not made in the ordinary course
of the Whitlenge Business or otherwise not required to be listed or
described in Schedule 2.30) which is material to the business of WAL,
Whitlenge and WB taken as a whole.
(b) Except as set forth in Schedule 2.30, WAL, Whitlenge and
WB have fulfilled their obligations in all material respects under each of the
leases, contracts and other agreements listed in Schedule 2.30 (collectively,
the "Whitlenge Agreements") and are not, or, to the knowledge of WAL, Whitlenge
or WB not alleged to be, in breach or default in any material respect under,
nor, to the knowledge of WAL, Whitlenge, WB or any Shareholder, is there or, to
the knowledge of WAL, Whitlenge or WB is there alleged to be any basis for
termination of, any of the Whitlenge Agreements and no event has occurred and
no condition or state of facts exists which, with the passage of time or the
giving of notice or both, would constitute such a default or breach by WAL,
Whitlenge or WB. Copies of each of the Whitlenge Agreements have heretofore
been delivered to Scotsman by WAL, Whitlenge or WB.
Section 2.31. No Guarantees; Extensions of Credit. Except as
set forth in Schedule 2.31, no material obligations or liabilities of WAL,
Whitlenge or WB are guaranteed by or subject to a similar contingent obligation
of any other person, nor has
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WAL, Whitlenge or WB guaranteed or become subject to a similar contingent
obligation in respect of the obligations or liabilities of, or extended credit
to, any other person.
Section 2.32. Whitlenge Purchase Agreement. Except as set
forth in Schedule 2.32, none of WAL, Whitlenge, WB or any Shareholder has taken
any action that would cause the Share Purchase Agreement, dated as of March 31,
1992 (the "Alco Agreement"), among Alco Standard U.K. Ltd, a private company
limited by shares registered in England, Alco Standard Corporation, an Ohio
corporation ("Alco Standard"), and WAL, or any other material agreements
executed in connection with the Alco Agreement, not to be, and Alco Standard
has not asserted to WAL, Whitlenge or WB that the Alco Agreement or such other
material agreement does not constitute, a legal, valid and binding agreement.
None of WAL, Whitlenge or WB is, or, to the knowledge of WAL, Whitlenge, WB or
any Shareholder, alleged to be, in breach or default in any material respect
under the Alco Agreement or such other material agreement.
Section 2.33. Customers and Suppliers. Set forth in Schedule
2.33 hereto is a list of names and addresses of the ten largest customers and
the ten largest suppliers (measured by cash value volume of purchases or sales
in each case) of Whitlenge and WB and the percentage of the Whitlenge Business
which each such customer or supplier represents or represented during each of
the years ended September 30, 1992 and 1993. Copies of the forms of purchase
order for inventory and other supplies and sales contracts for finished goods
used by Whitlenge and WB have been provided to Scotsman by WAL, Whitlenge or
WB. Except as set forth in Schedule 2.33, there exists no actual or, to the
knowledge of WAL, Whitlenge, WB or any Shareholder, threatened termination,
cancellation or material adverse change in, the business relationship of
Whitlenge or WB with any customer or group of customers listed in Schedule
2.33, or whose purchases individually or in the aggregate are material to the
operations of the Whitlenge Business, or with any supplier or group of
suppliers listed in Schedule 2.33, or whose sales individually or in the
aggregate are material to the operations of the Whitlenge Business.
Section 2.34. Competition. Except as set forth in Schedule
2.34, to the knowledge of WAL, Whitlenge, WB and the Shareholders, none of WAL,
Whitlenge or WB is or has been party to any agreement or arrangement or is
conducting or has conducted itself (whether by omission or otherwise) in a
manner which (i) is, or is required to be, registered under the Restrictive
Trade Practices Act 1976 and 1977; (ii) contravenes the provisions of the
Resale Prices Act 1976; (iii) contravenes Article 85(1) or Article 86 of the
Treaty of Rome or which has been notified to the Commission of the European
Communities for an exemption or in respect of which application has been made
to the Commission for a negative clearance; (iv) has or would reasonably be
expected to have the effect of restricting, distorting or preventing
competi-
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tion in connection with the production, supply or acquisition of goods
in the United Kingdom or any part of it or the supply or procuring of services
in the United Kingdom or any part of it; or (v) is registrable, unenforceable
or void or renders WAL, Whitlenge or WB liable to civil, criminal or
administrative proceedings by virtue of any antitrust or similar legislation in
any jurisdiction in which WAL, Whitlenge or WB has assets or carries on
business or where its activities would have an effect. To the knowledge of
WAL, Whitlenge, WB and the Shareholders, none of WAL, Whitlenge or WB has given
any undertaking or written assurance (whether legally binding or not) to any
governmental authority or any authority of the European Communities under the
Fair Trading Act 1973, the Competition Act 1980, the Restrictive Trade
Practices Acts 1976 and 1977, the Resale Prices Act 1976, the Treaty of Rome or
any other statute or legal instrument and none of WAL, Whitlenge or WB is
affected, directly or indirectly, by any order or regulations made by the
Secretary of State under the Fair Trading Act 1973 or the Competition Act 1980.
Section 2.35. Registration Statement and Proxy
Statement/Prospectus. None of the written information supplied or to be
supplied by WAL, Whitlenge, WB or any of the Shareholders or any affiliate of
the foregoing (including, without limitation, Holding) specifically for
inclusion in the Registration Statement or the Proxy Statement/Prospectus (as
such terms are defined in Section 4.1) will be the basis for any successful
claim against Scotsman, the Tender Subsidiary, WAL, Whitlenge, WB or any of
their officers or directors asserting that (i) in the case of the Registration
Statement, at the time it becomes effective, at the time of commencement of the
Offer and at the Expiration Time, such information contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, or (ii) in the case of the Proxy Statement/Prospectus, at the time
of the mailing of the Proxy Statement/Prospectus to Scotsman's stockholders and
at the time of the meeting of its stockholders referred to in Section 4.2, such
information contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
Section 2.36. Liabilities and Operations of WAL. Except as
contemplated hereby or in connection with the obligations relating to its
equity securities (and any loan guarantees of Whitlenge or WB guarantees by
WAL), WAL is not subject to any material liability, absolute or contingent,
other than those indirect liabilities that relate to its ownership of the
shares of Whitlenge. WAL conducts no business other than the holding of the
shares of Whitlenge.
Section 2.37. Redemption of Preferred Stock. The Articles of
Association of WAL provide that WAL may redeem the
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WAL Preferred Shares by payment of the (British pounds) 100 per share redemption
price therefor, plus accrued dividends to the date of redemption.
Section 2.38. No Finder. None of WAL, Whitlenge, WB nor any
party acting on the behalf of any of the foregoing has paid or become obligated
to pay any fee or commission to any broker, finder or intermediary for or on
account of the transactions contemplated by this Agreement, other than to
Lazard Freres & Co. ("Lazard") and Morgan Stanley & Co. Incorporated
("Morgan"), whose fees and expenses, to the extent payable, shall be paid by
the Shareholders except as provided in Section 10.2. Complete and correct
copies of the engagement and indemnification agreements entered into by the
Shareholders with Lazard and Morgan have been furnished to Scotsman.
Section 2.39. Disclosure. The representations and warranties
contained herein, the information contained in the Schedules referred to in
Article II and the other information or documents referred to in this Article
II as having been furnished or to be furnished to Scotsman or any of its
representatives by WAL, Whitlenge, WB, the Shareholders or their
representatives pursuant to the terms of this Agreement, are, taken as a whole,
true and accurate in all material respects.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SCOTSMAN
As an inducement to WAL, Whitlenge and the Shareholders to
enter into this Agreement and to consummate the transactions contemplated
herein, Scotsman hereby warrants and represents to WAL, Whitlenge and the
Shareholders and agrees as follows:
Section 3.1. Organization of Scotsman. Scotsman is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Scotsman is duly qualified to transact business
as a foreign corporation and is in good standing in each of the jurisdictions
in which the ownership or leasing of the properties used in its business or the
conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing would
not have a Material Adverse Effect on Scotsman and its subsidiaries, taken as a
whole. Scotsman has full corporate power and authority to own or lease and
operate its properties and to carry on its business as now conducted.
Section 3.2. Authority. Scotsman has full corporate power and
authority to enter into this Agreement and, subject to approval of the issuance
of the Scotsman Earnout Shares contemplated by this Agreement by the
stockholders of Scotsman, to consummate the transactions contemplated hereby.
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The execution, delivery and performance of this Agreement by
Scotsman and the consummation by Scotsman of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Scotsman subject to such approval by the stockholders of Scotsman as
required by the rules of the NYSE. This Agreement is, and each other agreement
or instrument of Scotsman contemplated hereby when executed and delivered will
be, the legal, valid and binding agreement of Scotsman enforceable against
Scotsman in accordance with its respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
Except as set forth in Schedule 3.2, neither the execution and
delivery of this Agreement by Scotsman nor consummation of the transactions
contemplated hereby or compliance with or fulfillment of the terms and
provisions hereof by Scotsman will (a) conflict with, result in a breach of the
terms, conditions or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration, termination or
cancellation or a loss of rights, or result in the creation or imposition of
any encumbrance upon any of the material assets of Scotsman or any of its
subsidiaries, under the certificate of incorporation or the by-laws of Scotsman
or any subsidiary of Scotsman, any instrument, agreement, mortgage, indenture,
deed of trust, permit, concession, grant, franchise, license, judgment, order,
award, decree or other material restriction to which Scotsman or any of its
subsidiaries is a party or any of their respective material properties is
subject or by which any of them is bound or any material statute, other law or
regulatory provision affecting any of them, except for such impositions created
under any instruments or agreements entered into in connection with the
financing of the transactions contemplated hereby or by the Merger Agreement,
or (b) require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body in
respect of, by or on behalf of, Scotsman, except for the filing of appropriate
documents with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"), and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and for the approval by
the stockholders of Scotsman as required by the rules of the NYSE.
Section 3.3. Shares of Scotsman Common Stock. The shares of
Scotsman Common Stock to be delivered to the Shareholders pursuant to this
Agreement will, when issued and delivered in accordance with the terms hereof,
be validly issued, fully paid and nonassessable.
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Section 3.4. Capitalization. The authorized capital of
Scotsman consists of (i) 50,000,000 shares of common stock, $.10 par value, of
which 7,008,254 shares are issued and outstanding, 202,295 shares are held as
treasury stock and 976,326 shares are reserved for issuance under Scotsman's
long-term executive incentive compensation plan and 7,036,875 shares are
reserved in connection with the Common Stock Purchase Rights, and (ii)
10,000,000 shares of preferred stock, $1.00 par value, none of which is issued
and outstanding or reserved for any purpose. All of the outstanding shares of
Scotsman Common Stock are duly authorized, validly issued, fully paid and
nonassessable. Except for options granted pursuant to Scotsman's long-term
executive incentive compensation plan and the Common Stock Purchase Rights,
there are no options, warrants or other rights to acquire from Scotsman or
agreements or commitments by Scotsman to issue or sell shares of its capital
stock, whether on conversion of other securities or otherwise. None of the
issued and outstanding shares of Scotsman Common Stock has been issued in
violation of, or is subject to, any preemptive or subscription rights. There
are no stockholder agreements, voting trust agreements or any other similar
contracts, agreements, arrangements, commitments, plans or understandings to
which Scotsman is a party restricting or otherwise relating to voting,
dividend, ownership or transfer rights with respect to any shares of capital
stock of Scotsman, other than the Rights Agreement and the Common Stock
Purchase Rights.
Section 3.5. Operations Since January 3, 1993. Except as set
forth in the Scotsman SEC Documents (as hereinafter defined), since January 3,
1993, there has been: (i) no material adverse change in the assets,
liabilities, operations, profits or business or in the condition, financial or
otherwise, of Scotsman and its subsidiaries; and (ii) no damage, destruction,
loss or claim with respect to, whether or not covered by insurance, or
condemnation or other taking of, assets having a Material Adverse Effect on
Scotsman and its subsidiaries taken as a whole.
Section 3.6. Compliance with Laws. Scotsman is in compliance
with the provisions of all applicable laws and regulations of the federal,
state, local and foreign governments, except to the extent that the failure to
comply therewith would not have a Material Adverse Effect on Scotsman and its
subsidiaries taken as a whole. Except as set forth in the Scotsman SEC
Documents, to the knowledge of Scotsman, there are no proposed orders,
judgments, decrees, governmental takings, condemnations or other proceedings,
in each case binding upon the business, operations or properties of Scotsman or
any subsidiary thereof, which would have a Material Adverse Effect on Scotsman
and its subsidiaries taken as a whole.
Section 3.7. SEC Documents. Scotsman has previously delivered
to WAL and Whitlenge complete and correct copies of all reports, statements and
registration statements (including annual reports on Form 10-K, current reports
on Form 8-K, quarterly
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reports on Form 10-Q and proxy statements) filed by it with the SEC since
January 1, 1991. Scotsman has filed all required documents with the SEC since
January 1, 1991 (the "Scotsman SEC Documents"). As of their respective dates,
the Scotsman SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
none of the Scotsman SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Scotsman
included in the Scotsman SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) consistently
applied (except as may be indicated therein or in the notes thereto) and fairly
present in all material respects the consolidated financial position of
Scotsman and its consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and statements of cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Section 3.8. Obligations; Litigation. Except as set forth in
the Scotsman SEC Documents, Scotsman and its subsidiaries have performed all
obligations required to be performed by them to date, and are not in default,
under any agreement, lease or other document to which any of them is a party,
or under any law or order of any court or governmental agency, except for such
failures to perform or defaults that would not have a Material Adverse Effect
on Scotsman and its subsidiaries taken as whole. Except as set forth in the
Scotsman SEC Documents, there are no claims, actions, suits or proceedings to
which Scotsman or any of its subsidiaries is a party or any of their respective
properties is subject or by which any of them is bound pending or, to the
knowledge of Scotsman, threatened before or by any court or governmental
agency, which is reasonably expected to have a Material Adverse Effect on
Scotsman and its subsidiaries taken as a whole or prevent or hinder the
consummation of the transactions contemplated hereby.
Section 3.9. No Finder. Neither Scotsman nor any party acting
on its behalf has paid or become obligated to pay any fee or any commission to
any broker, finder or intermediary for or on account of the transactions
contemplated herein, other than to William Blair & Company, whose fees and
expenses, to the extent payable, shall be paid by Scotsman.
Section 3.10. Rights Agreement; Benefits. Scotsman has
amended the Rights Agreement in order to provide that the New Scotsman
Stockholders (as defined in the Merger Agreement), as a
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group, shall not constitute an "Acquiring Person" under the Rights Agreement by
reason of the acquisition by such New Scotsman Stockholders of shares of
capital stock of Scotsman pursuant to this Agreement and the Merger Agreement.
The consummation of the transactions contemplated by this Agreement will not
result in an increase in the amount of compensation or benefits or accelerate
the vesting or timing of payment of any compensation or benefits payable to or
in respect of any employee of Scotsman or its subsidiaries.
Section 3.11. Disclosure. The representations and warranties
contained herein, the information contained in the Schedule referred to in this
Article III and the other information or documents referred to in this Article
III as having been furnished or to be furnished to WAL or any of its
representatives pursuant to the terms of this Agreement are, taken as a whole,
true and accurate in all material respects.
ARTICLE IV
ACTIONS PRIOR TO THE EXPIRATION DATE
Scotsman, WAL and Whitlenge (and the Shareholders with respect
to Sections 4.6, 4.7, 4.8 and 4.10) covenant and agree to take the following
respective actions between the date hereof and the Expiration Date:
Section 4.1. Proxy Statement; Registration Statement.
Scotsman shall prepare and file with the SEC as soon as practicable a
registration statement on Form S-4 (the "Registration Statement") containing a
proxy statement/prospectus covering the Scotsman Earnout Shares to be issued
pursuant to Article I (the form of such proxy statement/prospectus, together
with any amendments thereof or supplements thereto, mailed to Scotsman's
stockholders in connection with the meeting referred to in Section 4.2 is
herein referred to as the "Proxy Statement/Prospectus") and shall use its best
efforts to have the Registration Statement declared effective by the SEC as
soon as practicable. The Registration Statement and the Proxy
Statement/Prospectus will comply as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the
respective rules and regulations thereunder. The Registration Statement, when
declared effective by the SEC, and the Proxy Statement/Prospectus, at the time
of its mailing or delivery to the stockholders of Scotsman and at the time of
the meeting referred to above, will not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by Scotsman in
reliance upon and in conformity with written information concerning WAL,
Whitlenge, WB or their
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affiliates furnished to Scotsman by WAL, Whitlenge and WB or their affiliates
expressly for inclusion in the Registration Statement. Scotsman shall also
take any action required to be taken under U.S. state blue sky or U.S.
securities laws in connection with the issuance of the Scotsman Earnout Shares.
WAL, Whitlenge and the Shareholders shall, and shall cause their affiliates to,
furnish Scotsman all information concerning themselves required for use in the
Registration Statement, including, without limitation, financial statements of
WAL, Whitlenge and WB which are required to be included in the Registration
Statement or which are necessary to prepare pro forma financial statements and
information to be included in the Registration Statement. If, at any time
prior to the Expiration Time, any event with respect to WAL, Whitlenge or any
of their affiliates should occur which is required to be described in an
amendment of, or a supplement to, the Proxy Statement/Prospectus or the
Registration Statement, such event shall be so described, and such amendment
shall be promptly filed with the SEC and, as required by law, disseminated to
any stockholders of Scotsman and WAL. Scotsman will advise WAL and Whitlenge,
promptly after it receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment thereto has been
filed, of the issuance of any stop order, of the suspension of the
qualification for offering or sale in any jurisdiction of the Scotsman Common
Stock issuable in connection with this Agreement or any request by the SEC for
amendment or supplement of the Registration Statement or for additional
information.
Section 4.2. Action by Scotsman and Stockholders of Scotsman.
Scotsman shall, as soon as practicable after the Proxy Statement/Prospectus
referred to in Section 4.1 shall be cleared by the SEC, duly call, give notice
of, convene and hold a meeting of its stockholders for the purpose of approving
the issuance, in accordance with the terms and conditions of this Agreement and
the Merger Agreement, of shares of Scotsman Common Stock (including the
Scotsman Earnout Shares and the Scotsman Contingent Common Shares (as defined
in the Merger Agreement)) and the issuance, in accordance with the terms and
conditions of the Merger Agreement, of Scotsman Convertible Preferred Shares
(as defined in the Merger Agreement). Scotsman will, through its Board of
Directors, recommend to its stockholders approval of such issuance.
Section 4.3. Investigation of WAL, Whitlenge, WB and Scotsman.
WAL, Whitlenge and Scotsman shall afford to the officers, employees and
authorized representatives of Scotsman, WAL, Whitlenge, WB or the Shareholders,
as the case may be (including, without limitation, independent public
accountants, attorneys, environmental consultants and financial advisors
thereof), reasonable access during normal business hours to the offices,
properties, employees and business and financial records (including, without
limitation, computer files, retrieval programs and similar documentation) of
WAL, Whitlenge and WB or
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Scotsman, as the case may be, to the extent Scotsman, WAL, Whitlenge or the
Shareholders, as the case may be, shall deem necessary or desirable, and shall
furnish to Scotsman, WAL, Whitlenge or the Shareholders, as the case may be, or
such party's authorized representatives such additional information concerning
the operations, properties and businesses of WAL, Whitlenge, WB or Scotsman, as
the case may be, as may be reasonably requested in writing, to enable Scotsman,
WAL, Whitlenge or the Shareholders or such party's authorized representatives
to verify the accuracy of the representations and warranties contained in this
Agreement, to verify the accuracy of the financial statements referred to in
Section 2.5 and to determine whether the conditions set forth in Articles VI
and VII have been satisfied. Scotsman, WAL, Whitlenge and the Shareholders
agree that such investigations shall be conducted in such manner as not to
interfere unreasonably with the operation of the business of WAL, Whitlenge, WB
or Scotsman, as the case may be. Without limiting the foregoing, Whitlenge and
WB shall permit Scotsman, or its representatives, to conduct an environmental
audit of any of the Leased Real Property, with respect to any environmental
health and safety issues deemed material by Scotsman. No investigation made by
Scotsman, WAL, Whitlenge or any Shareholder or such party's authorized
representatives hereunder shall affect the representations and warranties of
the parties hereunder.
Section 4.4. Lawsuits, Proceedings, Etc. WAL, Whitlenge or
Scotsman shall notify Scotsman or WAL and Whitlenge, as the case may be,
promptly of any lawsuit, proceeding, claim or investigation that may be
threatened, brought, asserted or commenced against any party hereto (a)
involving in any way the transactions contemplated by this Agreement or (b)
that would have been listed in Schedule 2.17 or specified as an exception to
Section 3.8 if such lawsuit, proceeding, claim or investigation had arisen
prior to the date hereof.
Section 4.5. Conduct of Business by WAL, Whitlenge, WB and
Scotsman Prior to the Expiration Date. (a) During the period from the date of
this Agreement through the Expiration Time, except as expressly contemplated by
this Agreement, WAL, Whitlenge and Scotsman shall (and WAL and Whitlenge shall
cause WB to) carry on their businesses in, and not enter into any material
transaction other than in accordance with, the ordinary course consistent with
past practice and, to the extent consistent therewith, use their reasonable
efforts to preserve intact their current business organizations, keep available
the services of their current officers and preserve their relationships with
customers, suppliers and others having business dealings with them (except, in
each case, with respect to WAL and Whitlenge (and any action WAL and Whitlenge
shall cause WB to take), with the prior written consent of Scotsman and except,
in each case with respect to Scotsman, with the prior written consent of WAL).
Without limiting the generality of the foregoing, and except as expressly
contemplated by this Agreement, neither
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WAL nor Whitlenge shall (and WAL and Whitlenge shall cause WB not to), without
the prior written consent of Scotsman (not to be unreasonably withheld):
(i) (x) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect of,
any of its capital stock, or otherwise make any payments to the
Shareholders in their capacity as such (other than (a) any such
payments otherwise permitted to be made under this Agreement, (b) the
payment, when due, and not earlier, of management fees in accordance
with the terms, as in effect on the date hereof, of the Management
Advisory Agreement, dated April 1, 1992, among WAL, Whitlenge and Onex
Investments (the "Onex Management Agreement"), and the Management
Advisory Agreement, dated April 1, 1992, among WAL, Whitlenge and The
Matthew Diggs Group, Inc. (the "Diggs Management Agreement"), (c)
dividends and other distributions by Whitlenge to WAL to enable WAL to
pay its liabilities and (d) the payment of scheduled dividends on the
WAL Preferred Shares), (y) split, combine or reclassify any of its
capital stock or issue, sell or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock, or (z) purchase, redeem or otherwise acquire any
shares of capital stock of WAL, Whitlenge or WB or any other
securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock or other securities
(including, without limitation, any rights, warrants or options to
acquire any securities);
(iii) amend its memorandum and articles of association or
other constitutive documents;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or
equity in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof;
(v) sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any of its assets, except sales of
inventory in the ordinary course of business and the sale, lease or
other disposition of other assets having a book or fair market value
in the aggregate not exceeding (British pounds) 20,000;
(vi) incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others, or make any loans, advances
or capital contributions to, or
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investments in, any other person, except for the incurrence and/or
guarantee of indebtedness to fund working capital;
(vii) make or incur any new capital expenditure or
expenditures which, individually, is in excess of (British pounds)
20,000 or, in the aggregate, are in excess of (British pounds) 50,000;
(viii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business;
(ix) alter through merger, liquidation, reorganization,
restructuring or in any other fashion its corporate structure;
(x) enter into or adopt, or amend any existing bonus,
incentive, deferred compensation, insurance, medical, hospital,
disability or severance plan, agreement or arrangement or enter into
or amend any Plan or employment, consulting or management agreement
(including, without limitation, the Onex Management Agreement and the
Diggs Management Agreement), other than any such amendment to a Plan
that is made to maintain the qualified status of such Plan or its
continued compliance with applicable law;
(xi) make any change in accounting practices or policies
applied in the preparation of the financial statements referred to in
Section 2.5 except as required by generally accepted accounting
principles in the United Kingdom or Belgium, as the case may be;
(xii) modify any of the agreements, understandings,
obligations, commitments, indebtedness or other obligations set forth
in Schedule 4.5 or enter into any agreement, understanding, obligation
or commitment, or incur any indebtedness or obligation, of the type
that would have been required to be listed on Schedule 2.30 if in
existence on the date hereof; or
(xiii) pay or commit to pay any bonus to any officer or
employee of WAL, Whitlenge or WB other than in accordance with and
when required by the terms of the Bonus Plans, as in effect on the
date hereof;
(xiv) enter into any other transaction affecting the business
of WAL, Whitlenge or WB, other than in the ordinary course of business
consistent with past practices or as expressly contemplated by this
Agreement.
(b) Without limiting the generality of the foregoing, and
except as otherwise expressly contemplated by this Agreement
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or the Merger Agreement, Scotsman shall not, without the prior written consent
of WAL (not to be unreasonably withheld):
(A) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock or other securities
(including, without limitation, any rights, warrants or options to
acquire any securities), other than (i) options granted pursuant to
Scotsman's long-term executive incentive compensation plan as in
existence on the date hereof, (ii) the issuance of shares (and
associated Common Stock Purchase Rights) pursuant to such options,
other employee benefit plans as in existence on the date hereof or
other rights, warrants or options outstanding as the date hereof and
(iii) the issuance of other shares of Scotsman Common Stock (and
associated Common Stock Purchase Rights) in an amount not to exceed 1%
of the issued and outstanding shares of Scotsman Common Stock on the
date hereof;
(B) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the
assets of or equity in, or by any other manner, any business or any
corporation, partnership, association or other business organization
or division thereof, in any such case having a fair market value of
U.S. $2,000,000 or more; or
(C) alter through merger, liquidation, reorganization or
restructuring its corporate structure, except that Scotsman may make
changes in its corporate structure required to be made or desirable in
connection with the consummation of the transactions contemplated by
this Agreement and the Merger Agreement or the financing related
thereto.
(c) Advice of Changes. WAL, the Stockholder Representative
(as defined in the Merger Agreement) or Scotsman shall promptly advise Scotsman
or WAL and Whitlenge, as the case may be, orally and in writing of any change
or event having a Material Adverse Effect on WAL, Whitlenge and WB taken as a
whole, or on Scotsman and its subsidiaries taken as a whole, as the case may
be.
Section 4.6. Mutual Cooperation; Reasonable Best Efforts. The
parties hereto shall cooperate with each other, and shall use their respective
reasonable best efforts to cause the fulfillment of the conditions to the
parties' obligations hereunder and to obtain as promptly as possible all
consents, authorizations, orders or approvals from each and every third party,
whether private or governmental, required in connection with the transactions
contemplated by this Agreement; provided, however, that the foregoing shall not
require Scotsman or Whitlenge to make any divestiture or consent to any
divestiture
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by WAL, Whitlenge or WB in order to obtain any waiver, consent or approval.
Section 4.7. No Public Announcement. None of the parties
hereto shall, without the approval of Scotsman, WAL and Whitlenge (which may
not be unreasonably withheld), make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that such party shall be so obligated by law, in which
case Scotsman or WAL and Whitlenge, as the case may be, shall be advised and
Scotsman, WAL and Whitlenge shall use their reasonable best efforts to cause a
mutually agreeable release or announcement to be issued.
Section 4.8. No Solicitation. WAL, Whitlenge and their
affiliates shall not, nor shall they authorize or permit any officer, director
or employee of or any investment banker, attorney or other adviser or
representative of WAL, Whitlenge, WB or any of their affiliates to, (i)
solicit, initiate, or encourage the submission of, any Acquisition Proposal (as
hereinafter defined), (ii) enter into any agreement with respect to any
Acquisition Proposal or (iii) except to the extent required by law as advised
by counsel in writing, participate in any discussions or negotiations
regarding, or furnish to any person any information for the purpose of
facilitating the making of, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal. Without limiting the foregoing,
it is understood that any violation, of which WAL, Whitlenge or any of their
affiliates had knowledge at the time of such violation, of the restrictions set
forth in the preceding sentence by any officer or director of WAL, Whitlenge,
WB or any of their affiliates or any investment banker, attorney or other
adviser or representative of WAL, Whitlenge, WB or any of their affiliates,
whether or not such person is purporting to act on behalf of WAL, Whitlenge, WB
or any of their affiliates or otherwise, shall be deemed to be a breach of this
Section 4.8 by WAL, Whitlenge and their affiliates. WAL and Whitlenge promptly
shall advise Scotsman of any Acquisition Proposal and any inquiries with
respect to any Acquisition Proposal. For purposes of this Agreement,
"Acquisition Proposal" means any proposal for a merger or other business
combination involving WAL, Whitlenge or WB or any proposal or offer to acquire
in any manner, directly or indirectly, an equity interest in WAL, Whitlenge or
WB, any voting securities of WAL, Whitlenge or WB or a substantial portion of
the assets of Whitlenge or WB.
Section 4.9. Listing Applications. Scotsman will promptly
file an application to list on the New York Stock Exchange, Inc. ("NYSE"),
subject to official notice of issuance, the Scotsman Earnout Shares which may
be issued pursuant to Article I and will use its best efforts to effect such
listing on the NYSE on or prior to the Expiration Date and to maintain its
listing on the NYSE of Scotsman Common Stock thereafter.
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Section 4.10. Termination of Management and Shareholders' Agreements. The
Shareholders will procure the termination of the Onex Management Agreement and
the Diggs Management Agreement, effective at or prior to the Expiration Date
pursuant to an instrument which is in form and substance reasonably
satisfactory to Scotsman. The Shareholders shall cause the Shareholders
Agreement, dated April 1, 1992, among Whitlenge, Onex Investments, Nicholls and
others (the "Shareholders' Agreement") to be terminated effective at the
Expiration Date.
Section 4.11. Periodic Financial Statements. Scotsman shall furnish, or
cause to be furnished, to WAL by March 31, 1994 (or earlier if available), the
audited consolidated balance sheet and statements of income of Scotsman for the
period ended January 2, 1994, which financial statements shall be prepared in
accordance with the books and records of Scotsman, fairly present in all
material respects the consolidated financial position of Scotsman as of the
date or for the period indicated and shall be prepared in conformity with
generally accepted accounting principles consistently applied. WAL, or
Scotsman, as the case may be, shall provide, or shall cause to be promptly
provided, to Scotsman or WAL, as applicable, such other financial information
relating to WAL, Whitlenge, WB or Scotsman (including, without limitation,
information on payables and receivables) as Scotsman or WAL, as applicable, may
reasonably request.
Section 4.12. Financing. Scotsman shall use its reasonable best efforts to
obtain the financing commitments, amendments or other financing arrangements
referred to in Section 6.14, to enter into definitive agreements consistent
with the terms of such financing commitments, amendments or arrangements and to
do all such acts and things reasonably necessary to consummate the transactions
contemplated by such definitive agreements. Scotsman shall promptly notify WAL
and Whitlenge of the receipt of such financing commitments, amendments or
arrangements and shall advise WAL and Whitlenge from time to time of its
progress in negotiating such definitive agreements.
Section 4.13. Amendment of Agreement for Tender Subsidiary. If Scotsman
shall cause the Tender Subsidiary to make the Offer, the Shareholders may
request that Scotsman and the Tender Subsidiary enter into an amendment to this
Agreement in form and substance reasonably satisfactory to the Shareholders,
and Scotsman shall, and shall cause the Tender Subsidiary to, enter into such
amendment, pursuant to which the Tender Subsidiary will make appropriate
representations, warranties, covenants and indemnities.
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ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.1. Voting. (a) So long as the Shareholders and the Permitted
Transferees (as hereinafter defined) (the Shareholders and the Permitted
Transferees are collectively referred to as the "Acquisition Shareholders") and
the Merger Stockholders (as defined in the Merger Agreement and, together with
the Acquisition Shareholders, the "New Scotsman Stockholders") are entitled
under Section 7.1 of the Merger Agreement to designate at least one nominee to
Scotsman's Board of Directors, the Acquisition Shareholders, together with any
affiliates or associates controlled by them, shall, and the Acquisition
Shareholders shall use reasonable best efforts to cause any other of their
affiliates or associates to, vote all shares of capital stock of Scotsman owned
by them in favor of all of the director nominees to the Board of Directors
recommended by the Board of Directors of Scotsman (which shall include any
designate or designates referred to in Section 7.1 of the Merger Agreement).
Scotsman shall afford to the Acquisition Shareholders the rights set forth in
Section 7.1 of the Merger Agreement as though the Acquisition Shareholders were
parties to the Merger Agreement. The obligations of the Acquisition
Shareholders referred to in such Section 7.1 shall be binding on the
Acquisition Shareholders as though they were parties to the Merger Agreement.
The obligations of the Acquisition Shareholders under this Section 5.1 shall in
any event terminate on the tenth anniversary of the date hereof unless, by
agreement among Scotsman and the New Scotsman Stockholders who then own any
shares of Scotsman Common Stock or Scotsman Convertible Preferred Stock, such
obligations are extended after the eighth anniversary and prior to such tenth
anniversary.
(b) As used herein, "Permitted Transferees" shall mean with respect to any
Shareholder (other than Onex or Onex Investments), (i) any other Shareholder,
(ii) any of its controlled affiliates, (iii) in the event of the dissolution,
liquidation or winding up of any Shareholder that is a corporation or a
partnership, the partners of a partnership that is such Shareholder, the
shareholders of a corporation that is such Shareholder or a successor
partnership all of the partners of which or a successor corporation all of the
shareholders of which are the persons who were the partners of such partnership
or the shareholders of such corporation immediately prior to the dissolution,
liquidation or winding up of such Shareholder, (iv) a transferee by
testamentary or intestate disposition, (v) the spouse, children and/or other
relatives of such Shareholder, (vi) a trust transferee by inter vivos transfer,
the beneficiaries of which are the transferring Shareholder, spouse, children
and/or other relatives of such Shareholder, or (vii) a successor nominee or
trustee for the beneficial owner of the shares of WAL Ordinary Shares for which
such Acquisition Shareholder acts as nominee or trustee, as the case may be, in
each case to whom a Shareholder may transfer
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shares of WAL Ordinary Shares prior to the Expiration Time; provided,
however, that (x) the aggregate number of shares covered by transfers to
persons described in clause (i) shall not exceed 300,000 and (y) any such
Permitted Transferee who was not, prior to such transfer, a shareholder of WAL
who is a party hereto shall furnish to Scotsman a written instrument,
reasonably satisfactory to Scotsman, whereby such Permitted Transferee agrees
to be bound by any obligations of Acquisition Shareholders contained in this
Agreement (other than, with respect to Permitted Transferees which are (A) the
spouse or children of a Shareholder or (B) a trust transferee, the
beneficiaries of which are the spouse or children of a Shareholder; provided,
however, the transfer to such persons listed in clauses (A) and (B) shall not
in the aggregate exceed 75,000 WAL "A" Ordinary Shares) as though such
Permitted Transferee were a party hereto (it being understood that any such
transfer shall in no way relieve any Shareholder of any obligations under this
Agreement unless such transfer shall be made to another Shareholder, in which
case Schedule 8.1 shall be appropriately revised to reflect a reallocation of
the percentages set forth therein).
Section 5.2. Standstill. The obligations of the Acquisition Shareholders
referred to in Section 7.3 of the Merger Agreement shall be binding on the
Acquisition Shareholders as though they were parties to the Merger Agreement.
Section 5.3. Insurance. Onex and the affiliates of Onex controlled by it
will take such action as is necessary to cause the insurance policies listed on
Schedule 2.21 to provide the coverage listed therein with respect to WAL,
Whitlenge and WB for periods ending on or prior to the Expiration Date, and to
continue such coverage, on and after the Expiration Date, for the benefit of
WAL, Whitlenge and WB and (to the extent permitted under such policies) their
respective successors and assigns with respect to periods ending on or prior to
the Expiration Date, notwithstanding the transactions contemplated hereby,
except to the extent any insurer cancels any such policy or withdraws from
coverage (other than at the request of WAL, Whitlenge, WB or any affiliate
thereof or due to the failure to pay any premium on any such policy). Without
limiting the foregoing, neither Onex nor the affiliates of Onex controlled by
it shall take any action to remove WAL, Whitlenge or WB as a named insured
under any of such policies or cause WAL, Whitlenge or WB to be denied the
benefit of any insurance coverage currently available to them.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATION
TO ACCEPT AND PAY FOR SHARES
Notwithstanding any other term of the Offer or this Agreement, Scotsman (or,
in the event that Tender Subsidiary makes the Offer, Tender Subsidiary) shall
not be required to
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accept for payment, or pay for, any WAL Ordinary Shares or WAL Preferred Shares
tendered pursuant to the Offer unless and until the following conditions shall
have been satisfied:
Section 6.1. No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by WAL, Whitlenge, WB or any
Shareholder in the performance of their respective covenants and agreements
herein to be performed at or prior to the Expiration Date; subject to Section
8.7, none of the representations and warranties of any Shareholder that is
qualified as to materiality shall be untrue or incorrect in any respect and on
the Expiration Date such representations and warranties shall be true and
correct as though made on the Expiration Date except for changes therein
specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by Scotsman, permitted by Section 4.5(a) or
entered into in connection with the consummation of the Offer or the Merger and
the other transactions contemplated hereby; subject to Section 8.7, none of the
representations or warranties that are not so qualified shall be untrue or
incorrect in any material respect and on the Expiration Date such
representations and warranties shall be true and correct in all material
respects as though made on the Expiration Date except for changes therein
specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by Scotsman, permitted by Section 4.5(a) or
entered into in connection with the consummation of the Offer or the Merger and
the other transactions contemplated hereby; and there shall have been delivered
to Scotsman a certificate or certificates to the foregoing effect, dated the
Expiration Date, signed on behalf of WAL and Whitlenge by their respective
Chairmen or Managing Directors and Finance Directors and signed by each
Shareholder.
Section 6.2. No Material Adverse Effect. Between the date hereof and the
Expiration Date, there shall have been no Material Adverse Effect on WAL,
Whitlenge and WB, taken as a whole; and there shall have been delivered to
Scotsman a certificate or certificates to such effect, dated the Expiration
Date, signed on behalf of WAL and Whitlenge by their respective Chairmen or
Managing Directors and Finance Directors and signed by each Shareholder.
Section 6.3. Opinion of Counsel for WAL, Whitlenge and the Shareholders.
Scotsman shall have received (a) from Wragge and Co., counsel for WAL and
Whitlenge, an opinion, dated the Expiration Date, in form and substance
reasonably satisfactory to Scotsman, substantially to the effect set forth in
Exhibit I-A, (b) from Debevoise & Plimpton, United States counsel for WAL and
Whitlenge, an opinion, dated the Expiration Date, in form and substance
reasonably satisfactory to Scotsman, substantially to the effect set forth in
Exhibit I-B, and (c) from counsel for Onex, Onex Investments, EJJM, Diggs and
Collins, opinions, dated the Expiration Date, in form and substance reasonably
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satisfactory to Scotsman, substantially to the effect set forth in Exhibit I-C.
Section 6.4. No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Offer or the transactions contemplated hereby shall be in
effect; provided, however, that each of the parties shall have used its
reasonable best efforts to prevent the entry of any such injunction or other
order and to appeal as promptly as possible any injunction or other order that
may be entered.
Section 6.5. Necessary Governmental Approvals. The parties shall have
received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Expiration Date by applicable law or
regulation or are necessary to prevent a Material Adverse Effect on WAL,
Whitlenge and WB taken as a whole.
Section 6.6. Necessary Consents. WAL and Whitlenge shall have received
consents, in form and substance reasonably satisfactory to Scotsman, to the
transactions contemplated hereby from the other parties to all contracts,
leases, agreements and permits to which WAL, Whitlenge or WB is a party or by
which they are affected and which require such consent prior to the purchase of
WAL Ordinary Shares pursuant to the Offer and are necessary to prevent a
Material Adverse Effect with respect to WAL, Whitlenge and WB taken as a whole.
Section 6.7. Extension of Service Contracts. Whitlenge and each of de St.
Paer, Wheeler, Cook, John Turner, Gary D. Wyatt and Peter Barber shall have
entered into an amendment to the Service Contract between such individual and
Whitlenge whereby the term of such Service Contract is extended until April 1,
1995, and each such Service Contract, as so amended, shall be in full force and
effect.
Section 6.8. Noncompetition Agreements. Each of Onex, Onex Investments,
Diggs, Collins, Cook, Wheeler, de St. Paer and Rushton shall have entered into
a Noncompetition Agreement with Scotsman substantially in the form of Exhibit
II.
Section 6.9. Registration Rights Agreement. The Shareholders shall have
each entered into the Registration Rights Agreement substantially in the form
of Exhibit V to the Merger Agreement.
Section 6.10. Shareholder Action. The Offer shall have been unanimously
accepted by all holders of WAL Ordinary Shares and all WAL Ordinary Shares
shall have been tendered, accompanied by a share transfer form endorsed in
blank, and not withdrawn. The issuance of shares of Scotsman Common Stock and
Scotsman
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Convertible Preferred Stock pursuant to this Agreement and the Merger Agreement
shall have been approved by a majority of votes cast by holders of Scotsman
Common Stock, provided that the total vote cast shall have represented over 50%
of the issued and outstanding shares of Scotsman Common Stock at the time of
the vote.
Section 6.11. Stock Exchange Listings. The NYSE shall have approved for
listing, upon official notice of issuance, the Scotsman Earnout Shares which
may be issued pursuant to Article I.
Section 6.12. Registration Statement Effective. The Registration Statement
shall have been declared effective by the SEC and no stop order suspending the
effectiveness of the Registration Statement shall have been entered by the SEC.
Section 6.13. Securities Laws. Scotsman shall have received all necessary
permits and otherwise complied with any securities laws applicable to the
issuance of the Scotsman Earnout Shares pursuant to this Agreement.
Section 6.14. Financing. Scotsman shall have obtained, on or before
February 15, 1994, written financing commitments, amendments to its existing
financing arrangements or other financing arrangements in an amount sufficient
to (i) pay the cash consideration specified in this Agreement and the Merger
Agreement, (ii) refinance, to the extent required, the outstanding debt of
Scotsman and (iii) refinance the outstanding debt of Holding, TDC and
Whitlenge, in each case on terms satisfactory to Scotsman.
Section 6.15. Comfort Letters. Scotsman shall have received comfort letters
from each of Arthur Andersen & Co., Coopers & Lybrand and Ernst & Young, dated
the date of mailing the Proxy Statement/Prospectus and the Expiration Date and
addressed to Scotsman, in each case in form and substance reasonably
satisfactory to Scotsman, covering such matters reasonably requested by it.
Section 6.16. Glenco Holdings. Scotsman shall have obtained a written
waiver by Glenco Holdings of the Scotsman Noncompetition Agreement, dated
September 23, 1992 (the "Scotsman Noncompetition Agreement").
Section 6.17. Merger Agreement. The Merger Agreement shall be in full force
and effect and the Merger shall have been consummated simultaneously with the
consummation of the Offer.
Section 6.18. Average Scotsman Common Stock Closing Price. The average
Closing Price (as defined in the Merger Agreement) of the Scotsman Common Stock
for the ten trading days prior to the date of the meeting of the stockholders
of Scotsman referred to in Section 4.2 shall not be more than U.S. $14.50.
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Section 6.19. Resignations of Directors. Scotsman shall have received the
resignations of each director of WAL, Whitlenge or WB, effective upon the
Expiration Date, that it shall have requested to resign.
Section 6.20. Termination of Management and Shareholders' Agreement. The
Onex Management Agreement, the Diggs Management Agreement and the Shareholders'
Agreement shall have been terminated, effective upon the Expiration Date,
without payment by Holding, WAL or any of their subsidiaries of any amount in
respect of such termination other than accrued fees and expenses incurred
before the Expiration Time.
Section 6.21. WAL Preferred Shares. Either (i) all of the issued WAL
Preferred Shares shall have been duly tendered pursuant to Section 1.1,
accompanied by a stock transfer form executed in blank, and not withdrawn, (ii)
all of the issued WAL Preferred Shares shall otherwise have been purchased by
Scotsman or the Tender Subsidiary for an aggregate price not exceeding
L2,000,000 plus accrued dividends, or (iii) Scotsman shall be satisfied in its
reasonable judgment that, after giving effect to a contribution of L2,000,000
plus accrued dividends to WAL's ordinary share capital or a subscription for
additional WAL Ordinary Shares for a purchase price equal to such amount, WAL
would be able to redeem all of the issued WAL Preferred Shares, on such date on
or after the Expiration Date as may be determined by Scotsman (and which
permits 30 days' prior notice) (A) without adverse tax consequences to, or the
violation of the charter, by-laws or other constituent documents of, Scotsman,
the Tender Subsidiary, WAL or Whitlenge, or violation of any law, rule,
regulation, order, contract, agreement or understanding to which Scotsman, the
Tender Subsidiary, WAL or Whitlenge is a party or by which any of them is
bound, and (B) at no cost to Scotsman, the Tender Subsidiary, WAL or Whitlenge
other than the "redemption moneys" specified in WAL's Articles of Association,
which shall consist solely of L2,000,000 plus accrued dividends.
ARTICLE VII
CONDITIONS PRECEDENT TO RIGHT TO ACCEPT
AND PAY FOR SHARES
The right of Scotsman or the Tender Subsidiary to accept for payment the WAL
Ordinary Shares and WAL Preferred Shares pursuant to the Offer shall, at the
option of the Shareholders, be subject to the satisfaction, on or prior to the
Expiration Date, of the following conditions (other than the condition set
forth in Section 7.14), and the right of Scotsman or the Tender Subsidiary to
accept for payment the WAL Ordinary Shares and WAL Preferred Shares pursuant to
the Offer shall, at the option of Onex, be subject to the satisfaction, on or
prior
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to the Expiration Date, of the condition set forth in Section 7.14:
Section 7.1. No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Scotsman in the performance of any
of its covenants and agreements herein to be performed at or prior to the
Expiration Date; none of the representations and warranties of Scotsman that is
qualified as to materiality shall be untrue or incorrect in any respect and on
the Expiration Date such representations and warranties shall be true and
correct as though made on the Expiration Date except for changes therein
specifically permitted by this Agreement or resulting from any transactions
expressly consented to in writing by WAL, permitted by Sections 4.5(a) and (b)
or entered into in connection with the consummation of the Offer or the Merger
and the other transactions contemplated hereby; none of the representations or
warranties that are not so qualified shall be untrue or incorrect in any
material respect and on the Expiration Date such representations and warranties
shall be true and correct in all material respects as though made on the
Expiration Date except for changes therein specifically permitted by this
Agreement or resulting from any transactions expressly consented to in writing
by WAL, permitted by Sections 4.5(a) and (b) or entered into in connection with
the consummation of the Offer or the Merger and the other transactions
contemplated hereby; and there shall have been delivered to WAL, Whitlenge and
the Shareholders a certificate or certificates to the foregoing effect, dated
the Expiration Date, signed on behalf of Scotsman by its President and Chief
Financial Officer.
Section 7.2. No Material Adverse Effect. Between the date hereof and the
Expiration Date, there shall have been no Material Adverse Effect on Scotsman
and its subsidiaries taken as a whole; and there shall have been delivered to
WAL, Whitlenge and the Shareholders a certificate or certificates to such
effect, dated the Expiration Date, signed on behalf of Scotsman by its
President and Chief Financial Officer.
Section 7.3. No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Offer or the transactions contemplated hereby shall be in
effect; provided, however, that each of the parties shall have used its
reasonable best efforts to prevent the entry of any such injunction or other
order and to appeal as promptly as possible any injunction or other order that
may be entered.
Section 7.4. Opinions of Counsel for Scotsman. Holding, TDC and the
Shareholders shall have received (a) from Sidley & Austin, special counsel for
Scotsman, an opinion, dated the Expiration Date, in form and substance
satisfactory to WAL, Whitlenge and the Shareholders, substantially to the
effect set
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forth in Exhibit III-A, (b) from Schiff, Hardin & Waite, counsel for Scotsman,
an opinion, dated the Expiration Date, in form and substance satisfactory to
WAL, Whitlenge and the Shareholders, substantially to the effect set forth in
Exhibit III-B, and (c) from Ashurst Morris Crisp, special counsel for Scotsman,
an opinion, dated the Expiration Date in form and substance satisfactory to
WAL, Whitlenge and the Shareholders, substantially to the effect set forth in
Exhibit III-C.
Section 7.5. Necessary Governmental Approvals. The parties shall have
received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Expiration Date by applicable law or
regulation or are necessary to prevent a Material Adverse Effect on Scotsman
and its subsidiaries taken as a whole.
Section 7.6. Registration Rights Agreement. Scotsman shall have executed
and delivered the Registration Rights Agreement substantially in the form of
Exhibit V to the Merger Agreement.
Section 7.7. Shareholder Action. The Offer shall have been unanimously
accepted by all holders of WAL Ordinary Shares and all WAL Ordinary Shares
shall have been tendered, accompanied by a share transfer form endorsed in
blank, and not withdrawn. The issuance of shares of Scotsman Common Stock and
Scotsman Convertible Preferred Stock pursuant to this Agreement and the Merger
Agreement shall have been approved by a majority of votes cast by holders of
Scotsman Common Stock, provided that the total vote cast shall have represented
over 50% of the issued and outstanding shares of Scotsman Common Stock at the
time of the vote.
Section 7.8. Stock Exchange Listing. The NYSE shall have approved for
listing, upon official notice of issuance, the Scotsman Earnout Shares which
may be issued pursuant to Article I.
Section 7.9. Registration Statement Effective. The Registration Statement
shall have been declared effective by the SEC and no stop order suspending the
effectiveness of the Registration Statement shall have been entered by the SEC.
Section 7.10. Securities Laws. Scotsman shall have received all necessary
permits and otherwise complied with any securities laws applicable to the
issuance of the Scotsman Earnout Shares pursuant to this Agreement.
Section 7.11. Financing. Scotsman shall have obtained, on or before
February 15, 1994, written financing commitments, amendments to its existing
financing arrangements or other financing arrangements in an amount sufficient
to (i) pay the cash consideration specified in this Agreement and the Merger
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Agreement, (ii) refinance, to the extent required, the outstanding debt of
Scotsman and (iii) refinance the outstanding debt of Holding, TDC and
Whitlenge, in each case on terms reasonably satisfactory to WAL and Whitlenge.
Section 7.12. Glenco Holdings. Scotsman shall have obtained, on or before
January 31, 1994, a written waiver by Glenco Holdings of the Scotsman
Noncompetition Agreement.
Section 7.13. Merger Agreement. The Merger Agreement shall be in full force
and effect and the Merger shall have been consummated simultaneously with the
consummation of the Offer.
Section 7.14. Average Scotsman Common Stock Closing Price. The average
Closing Price of the Scotsman Common Stock for the ten trading days prior to
the date of the meeting of the stockholders of Scotsman referred to in Section
4.2 shall not be less than U.S. $10.50.
Section 7.15. Necessary Consents. WAL and Whitlenge shall have received
consents, in form and substance reasonably satisfactory to WAL and Whitlenge,
to the transactions contemplated hereby from the other parties to all material
contracts, leases, agreements and permits to which WAL, Whitlenge or WB is a
party or by which they are affected and which require such consent prior to the
consummation of the transactions contemplated by this Agreement and are
necessary to prevent a Material Adverse Effect with respect to WAL, Whitlenge
and WB taken as a whole.
Section 7.16. Comfort Letters. WAL shall have received comfort letters from
Arthur Andersen & Co., Coopers & Lybrand and Ernst & Young, dated the date of
mailing the Proxy Statement/Prospectus and the Expiration Date and addressed to
WAL, in each case in form and substance reasonably satisfactory to WAL,
covering such matters reasonably requested by it.
ARTICLE VIII
INDEMNIFICATION; SURVIVAL
Section 8.1. Indemnification by the Shareholders. From and after the
Expiration Time, each of the Shareholders shall indemnify and hold harmless
Scotsman, WAL, Whitlenge, WB and their subsidiaries, affiliates and successors
from and against any and all (a) liabilities, losses, costs or damages ("Loss")
and (b) reasonable attorneys', consultants' and accountants' fees and expenses,
court costs and all other reasonable out-of-pocket expenses ("Expense")
incurred by Scotsman, WAL, Whitlenge, WB and their subsidiaries, affiliates and
successors in connection with or arising from (x) any breach or failure to
perform by any Shareholder or Stockholder (as defined in the Merger Agreement)
of any of their respective agreements, covenants or obligations
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in this Agreement or the Merger Agreement or any agreement entered into in
connection with the transactions contemplated hereby or thereby, in each case
to be performed or complied with after the Expiration Time or Effective Time
(as defined in the Merger Agreement), as the case may be, (y) any breach of any
warranty or the inaccuracy of any representation of Holding, TDC, WAL,
Whitlenge or any Shareholder or Stockholder contained in this Agreement or the
Merger Agreement, as updated in accordance with Section 8.7 hereof and Section
10.7 of the Merger Agreement, or in any certificate delivered by or on behalf
of Holding, TDC, WAL, Whitlenge or any Stockholder or Shareholder pursuant
hereto or thereto or (z) the matters referred to in clause (z) of Section 10.1
of the Merger Agreement; provided, however, that the Shareholders shall be
required to indemnify and hold harmless under this Section 8.1 only to the
extent that the aggregate amount of (without duplication) (i) Loss and Expense
referred to above in this Section 8.1 and (ii) Loss and Expense referred to in
Section 10.1 of the Merger Agreement exceeds U.S. $250,000; and provided,
further, (X) each Shareholder's obligation to indemnify and hold harmless
pursuant to this Section 8.1 shall be limited to the payment by such
Shareholder of cash (1) with respect to any individual Loss or Expense (other
than any Loss or Expense arising from a breach of a warranty, or inaccuracy of
a representation, of such Shareholder contained in Section 2.3(b) or 2.4(b), as
to which this clause (1) shall be inapplicable), in an amount that does not
exceed the product obtained by multiplying such Shareholder's Applicable
Percentage (as set forth on Schedule 8.1) by the amount of such Loss or
Expense, and (2) in the aggregate in an amount equal to the product obtained by
multiplying such Shareholder's Applicable Percentage (as set forth on Schedule
8.1) by U.S. $30,000,000 (without limiting the foregoing, it being understood
that, for purposes of clause (2) above, with respect to the matters described
in clause (z) of Section 10.1 of the Merger Agreement or otherwise, the payment
of any amount by, or with funds furnished by, an insurer or Alco Standard shall
not be deemed to be the payment by any Shareholder) and (Y) no Shareholder
shall indemnify and hold harmless any indemnified party with respect to any
Loss or Expense arising from any breach of a warranty, or inaccuracy of a
representation, of any other Shareholder contained in Section 2.3(b) or 2.4(b)
or of any Stockholder or Continental Bank N.A. contained in Section 3.3(b) or
3.4(b) of the Merger Agreement. Each payment made by any Shareholder to any
indemnified party pursuant to this Section 8.1 shall constitute a repayment of
and a reduction in the consideration paid to the Shareholders under Section
1.1.
Section 8.2. Indemnification by Scotsman. From and after the Expiration
Time, Scotsman shall indemnify and hold harmless the Shareholders and their
subsidiaries, affiliates and successors from and against any and all Loss and
Expense incurred by the Shareholders and their subsidiaries, affiliates and
successors in connection with or arising from (a) any breach or failure to
perform by Scotsman or the Surviving Corporation (as
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defined in the Merger Agreement) of any of their respective agreements,
covenants or obligations in this Agreement or the Merger Agreement or any
agreement entered into in connection with the transactions contemplated hereby
or thereby, in each case to be performed or complied with after the Expiration
Time or the Effective Time, as the case may be, and (b) any breach of any
warranty or the inaccuracy of any representation of Scotsman or Sub (as defined
in the Merger Agreement) contained in this Agreement or the Merger Agreement or
in any certificate delivered by or on behalf of Scotsman or Sub pursuant hereto
or thereto; provided, however, that Scotsman shall be required to indemnify and
hold harmless under this Section 8.2 only to the extent that the aggregate
amount of (without duplication) (i) Loss and Expense referred to above in this
Section 8.2 and (ii) Loss and Expense referred to in Section 10.2 of the Merger
Agreement exceeds U.S. $250,000; and provided, further, Scotsman's obligation
to indemnify and hold harmless pursuant to this Section 8.2 shall be limited to
the aggregate payment by Scotsman of cash in an amount equal to the excess of
(i) U.S. $30,000,000 over (ii) any amount theretofore paid in indemnification
by Scotsman and/or any of its subsidiaries under Section 10.2 of the Merger
Agreement.
Section 8.3. Notice of Claims. If Scotsman (with respect to Section 8.1) or
the Stockholder Representative (as defined in the Merger Agreement) (with
respect to Section 8.2) believes that any of the persons entitled to
indemnification under this Article VIII has suffered or incurred any Loss or
incurred any Expense, whether or not the applicable dollar limitation specified
by Section 8.1 or 8.2 has been exceeded, Scotsman or the Stockholder
Representative, as the case may be, shall so notify the other promptly in
writing describing such Loss or Expense, the amount thereof, if known, and the
method of computation of such Loss or Expense, all with reasonable
particularity and containing a reference to the provisions of this Agreement or
any certificate delivered pursuant hereto in respect of which such Loss or
Expense shall have occurred; provided, however, that the omission by such
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its indemnification obligation under this Article VIII
except to the extent that such omission results in a failure of actual notice
to the indemnifying party and such indemnifying party is materially damaged as
a result of such failure to give notice. If any action at law or suit in
equity is instituted by or against a third party with respect to which any of
the persons entitled to indemnification under this Article VIII intends to
claim any liability or expense as Loss or Expense under this Article VIII, any
such person shall promptly notify the indemnifying party of such action or suit
as specified in this Section 8.3 and Section 8.4. Any party entitled to
indemnification hereunder shall use reasonable efforts to minimize any Loss or
Expense for which indemnification is sought hereunder.
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If Scotsman furnishes a notice referred to in the first sentence of the
immediately preceding paragraph and the Stockholder Representative, within 10
business days of receipt thereof, furnishes Scotsman with a notice (an "Alco
Notice") stating that the Loss and Expense referred to in Scotsman's notice, or
some portion thereof, are subject to indemnification by Alco Standard pursuant
to any of the agreements referred to in Section 2.32 or in Section 3.32 of the
Merger Agreement (such notice to include specific reference to the provisions
of the agreements containing the indemnification obligations), then (i)
Scotsman shall use its best efforts to enforce such indemnification obligations
and the Shareholders and the Stockholder Representative shall cooperate fully
with Scotsman in seeking to enforce such indemnification obligations and (ii)
the indemnifying parties shall not be required to indemnify with respect to the
portion of such Loss and Expense subject to indemnification until, and to the
extent that, a court of competent jurisdiction determines, or the Stockholder
Representative acknowledges, that Alco Standard is not required to so indemnify
(it being understood that for purposes of the second proviso to the first
sentence of Section 8.6, Scotsman shall be deemed to have asserted its claim
for indemnification by the indemnifying parties at the time of its notice and
that the Loss and Expense referred to in such notice shall be deemed to
include, although not referred to therein, any Loss and Expense thereafter
incurred by any of the indemnified parties in seeking to enforce, whether or
not successful, any purported indemnification obligation of Alco Standard
identified by the Stockholder Representative). In the event that the
Stockholder Representative fails to give an Alco Notice within the 10 business
day period specified above, but furnishes an Alco Notice at a later date, then
(x) Scotsman, the Stockholder Representative and the Shareholders shall take
the actions specified in clause (i) above, (y) should Scotsman or another
person entitled to indemnification under Section 8.1 thereafter successfully
enforce any such purported indemnification obligation of Alco Standard, any
Loss and Expense that is recovered in such enforcement action and was
theretofore covered by an indemnification payment by the indemnifying parties
hereunder shall be paid over to the Stockholder Representative on behalf of the
Shareholders and (z) the obligation of the indemnifying parties with respect to
any Expense and Loss identified in such subsequent Alco Notice as covered by
such purported indemnification obligation and for which, at the time of such
subsequent Alco Notice, indemnification has not been made by the indemnifying
parties hereunder, shall be as specified in clause (ii) above. Without
limiting the indemnifying parties' obligation under clause (ii) above to make
an indemnification payment following a judicial determination of the type
referred to in such clause (ii), Scotsman, if requested in writing by the
Stockholder Representative on a timely basis, shall, at the expense of the
Shareholders (which shall be promptly paid as incurred), use its best efforts
to pursue a judicial appeal of such determination. If any such appeal results
in the recovery by Scotsman or another person entitled to indemnification under
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Section 8.1 of any Loss or Expense which theretofore was covered by an
indemnification payment by the indemnifying parties hereunder, such recovery
shall be paid over to the Stockholder Representative on behalf of the
Shareholders. The Shareholders and the Stockholders shall be subrogated to any
and all rights of Scotsman or any other persons entitled to indemnification
pursuant to Section 8.1 under any indemnification obligations of Alco Standard
pursuant to any of the agreements referred to in Section 2.32 or in Section
3.32 of the Merger Agreement in respect of any Loss or Expense with respect to
which the Stockholder Representative has not furnished an Alco Notice and for
which the Shareholders or the Stockholders have theretofore indemnified
Scotsman or such other persons.
With respect to any claim that Scotsman or the other persons entitled to
indemnification under Section 8.1 may pursue against Alco Standard with respect
to the enforcement of a purported indemnification obligation pursuant to any of
the agreements referred to in Section 2.32 or in Section 3.32 of the Merger
Agreement, neither Scotsman nor such other persons shall consent to entry of
any judgment or enter into any settlement in respect thereof unless (1) the
Stockholder Representative consents to such judgment or settlement or (2)
Scotsman (on behalf of itself and such other indemnified persons) releases the
Shareholders and the Stockholders from any and all liability with respect to
the Loss and Expense that was the subject of such claim and such judgment or
settlement does not adversely affect any Shareholder or Stockholder or any of
their subsidiaries, affiliates or successors or any other claim for
indemnification by Alco Standard pursuant to any of the agreements referred to
in Section 2.32 or in Section 3.32 of the Merger Agreement. With respect to
any judicial or other proceeding or appeal pursued by Scotsman or the other
persons entitled to indemnification under Section 8.1 and seeking the
enforcement of a purported indemnification obligation of Alco Standard pursuant
to any of such agreements, the Shareholders (i) if they have theretofore fully
indemnified (subject to any applicable deductible) Scotsman and the other
persons entitled to indemnification under Section 8.1, shall be entitled, at
their own expense and through counsel of their choice, to control the pursuit
of the indemnification claim against Alco Standard in such judicial or other
proceeding or appeal (it being understood that the Shareholders shall not
consent to entry of any judgment or enter into any settlement with respect
thereto that adversely affects Scotsman or any of the other persons entitled to
indemnification under Section 8.1 unless Scotsman or such person, as the case
may be, shall have consented thereto) and (ii) if they have not so fully
indemnified (subject to any applicable deductible) Scotsman or the other
persons entitled to indemnification under Section 8.1, shall be entitled, at
their own expense, to participate with counsel of their choice but without any
right of control thereof.
Section 8.4. Third Party Claims. In the event of any claim for
indemnification hereunder (other than pursuant to
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clause (z)(A) of Section 10.1 of the Merger Agreement) resulting from or in
connection with any claim or legal proceeding by a third party, the indemnified
persons shall give such notice thereof to the indemnifying party not later than
twenty business days prior to the time any response to the asserted claim is
required, if possible, and in any event within fifteen days following the date
such indemnified person has actual knowledge thereof; provided, however, that
the omission by such indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its indemnification obligation under this
Article VIII except to the extent that such omission results in a failure of
actual notice to the indemnifying party and such indemnifying party is
materially damaged as a result of such failure to give notice. In the event of
any such claim for indemnification resulting from or in connection with a claim
or legal proceeding by a third party, the indemnifying party may, at its sole
cost and expense, assume the defense thereof; provided, however, that counsel
for the indemnifying party, who shall conduct the defense of such claim or
legal proceeding, shall be reasonably satisfactory to the indemnified party;
and provided, further, that if the defendants in any such actions include both
the indemnified persons and the indemnifying party and the indemnified persons
shall have reasonably concluded that there may be legal defenses or rights
available to them which have not been waived and are in actual or potential
conflict with those available to the indemnifying party, the indemnified
persons shall have the right to select one law firm reasonably acceptable to
the indemnifying party to act as separate counsel, on behalf of such
indemnified persons, at the expense of the indemnifying party. Subject to the
second proviso of the immediately preceding sentence, if an indemnifying party
assumes the defense of any such claim or legal proceeding, such indemnifying
party shall not consent to entry of any judgment, or enter into any settlement,
that (a) is not subject to full indemnification hereunder (except for the
deductible referred to in clause (ii) of the first proviso to the first
sentence of Section 8.1 or the deductible referred to in clause (ii) of the
first proviso to the first sentence of Section 8.2, in either case to the
extent applicable), (b) provides for injunctive or other non-monetary relief
affecting the indemnified persons or (c) does not include as an unconditional
term thereof the giving by each claimant or plaintiff to such indemnified
persons of a release from all liability with respect to such claim or legal
proceeding, without the prior written consent of the indemnified persons (which
consent, in the case of clauses (b) and (c), shall not be unreasonably
withheld); and provided, further, that subject to the second proviso of the
immediately preceding sentence, the indemnified persons may, at their own
expense, participate in any such proceeding with the counsel of their choice
without any right of control thereof. So long as the indemnifying party is in
good faith defending such claim or proceeding, the indemnified persons shall
not compromise or settle such claim or proceeding without the prior written
consent of the indemnifying party, which consent shall not be unreasonably
withheld. If the
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indemnifying party does not assume the defense of any such claim or litigation
in accordance with the terms hereof, the indemnified persons may defend against
such claim or litigation in such manner as they may deem appropriate,
including, without limitation, settling such claim or litigation (after giving
prior written notice of the same to the indemnifying party and obtaining the
prior written consent of the indemnifying party, which consent shall not be
unreasonably withheld) on such terms as the indemnified persons may deem
appropriate, and the indemnifying party will promptly indemnify the indemnified
persons in accordance with the provisions of this Section 8.4. The rights and
obligations of the Shareholders referred to in Section 10.4(b) of the Merger
Agreement shall be afforded to and binding upon the Shareholders as though they
were parties to the Merger Agreement.
Section 8.5. Exclusive Remedy. In the event the Offer is consummated, any
claim against any party hereto for any breach of this Agreement or in
connection with any of the transactions contemplated hereby (other than a claim
for breach of Section 5.1 or 5.2, the representation and warranty contained in
the last sentence of Section 3.3(b) of the Merger Agreement or the
Noncompetition Agreements entered into pursuant to Section 6.8 or the
Registration Rights Agreement entered into pursuant to Sections 6.9 and 7.6),
shall, to the extent permitted by law, be made solely pursuant to this Article
VIII. Prior to the consummation of the Offer or the termination of this
Agreement pursuant to Article IX, no claim may be made against any party hereto
for any inaccuracy of any representation or breach of any warranty contained in
this Agreement, the Merger Agreement or any certificate, instrument or other
agreement delivered pursuant hereto or thereto.
Section 8.6. Survival of Obligations. All representations, warranties,
covenants and obligations contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement; provided,
however, that the representations and warranties in Sections 2.7, 2.10, 2.11,
2.15, 2.17, 2.18, 2.21, 2.26, 2.32, 2.36 and 3.8 shall terminate on the fourth
anniversary of the Expiration Date, the representations and warranties
contained in Section 2.8 shall terminate at the time the relevant statute of
limitations expires, and the representations and warranties contained in
Sections 2.1, 2.3, 2.4, 3.1, 3.2 and 3.4 shall survive without termination and
all other representations and warranties contained herein shall terminate on
the third anniversary of the Expiration Date; and provided, further, if any
claim under this Article VIII for Loss or Expense in respect of any
representations and warranties is asserted in writing prior to the expiration
of the applicable period set forth above, the obligations of the indemnifying
party with respect to such claim shall not be affected by the expiration of
such period.
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Section 8.7. Update of the Representations and Warranties. Not later than
ten days prior to the Expiration Date, WAL, Whitlenge and any Shareholder may
deliver a written notice to Scotsman setting forth any and all facts,
conditions, occurrences, changes and other matters, in each case, occurring
after the date hereof, that has caused or may cause the representations and
warranties of the Shareholders contained herein (including the Schedules
hereto) not to be true and correct in all respects. In the event that any of
such facts, conditions, occurrences, changes and other matters shall have
caused or will cause, on or prior to the Expiration Date, any such
representation or warranty not to be true and correct in all respects (in the
case of any representation or warranty containing any materiality
qualification) or in all material respects (in the case of any representation
and warranty without any materiality qualification) on the Expiration Date with
the same effect as though made on the Expiration Date, Scotsman may elect to
terminate this Agreement pursuant to Section 9.1(d) based on such facts,
conditions, occurrences, changes or other matters. If Scotsman shall
nevertheless proceed to consummate the transactions contemplated by this
Agreement, such facts, conditions, occurrences, changes and other matters so
disclosed as to each such representation or warranty of the Shareholders
contained herein (including the Schedules) shall be deemed to constitute an
exception to such representation or warranty reflecting the facts, conditions,
occurrences, changes and other matters so disclosed with the same effect as if
such exception had been made in such representation or warranty as of the date
hereof in this Agreement to the extent but only to the extent, of such
disclosure.
ARTICLE IX
TERMINATION
Section 9.1. Termination. Anything contained in this Agreement to the
contrary notwithstanding, (i) this Agreement shall terminate upon any
termination of the Merger Agreement and (ii) this Agreement may be terminated
at any time prior to the Expiration Date:
(a) by the mutual consent of Scotsman and WAL;
(b) by Scotsman upon any material breach by WAL, Whitlenge or any
Shareholder of any of the covenants contained in Article IV or V or Section
10.1;
(c) by WAL upon any material breach by Scotsman of any of the covenants
contained in Article IV or V or Section 10.1;
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(d) by Scotsman if any of the conditions specified in Article VI has not
been met or waived by Scotsman at such time as such condition can no longer
be satisfied;
(e) by WAL if any of the conditions specified in Article VII has not been
met or waived by WAL, Whitlenge and the Shareholders, as applicable, at such
time as such condition can no longer be satisfied; or
(f) by Scotsman or WAL if the consummation of the Offer shall not have been
consummated on or before May 1, 1994.
In the event that this Agreement shall be terminated pursuant to this Section
9.1, all further obligations of the parties under this Agreement (other than
Sections 5.2, 10.1, 10.2 and 10.10) shall terminate without further liability
of any party to the others; provided, however, that nothing herein shall
relieve any party from liability for its willful breach of this Agreement.
ARTICLE X
OTHER PROVISIONS
Section 10.1. Confidential Nature of Information. Each party agrees that
it will treat in strict confidence all documents, materials and other
information which it obtains regarding the other parties during the course of
the negotiations leading to the consummation of the transactions provided for
herein and the preparation of this Agreement; and if for any reason whatsoever
the transactions contemplated by this Agreement shall not be consummated, each
party shall return to the other party all copies of non-public documents and
materials which have been furnished or acquired in connection therewith and
shall not use or disseminate such documents, materials or other information for
any purpose whatsoever.
Section 10.2. Fees and Expenses. (a) Except as otherwise provided in this
Section 10.2, each of the parties hereto shall bear its own costs and expenses
(including, without limitation, fees and disbursements of its counsel,
accountants and other financial, legal, accounting or other advisors and any
expenses incurred by Holding and Whitlenge in connection with any efforts to
effect an initial public offering and any fees, disbursements and expenses
incurred by or on behalf of Scotsman in connection with the Registration
Statement and the Proxy Statement/Prospectus, it being understood that the
costs and expenses of the audits and preparation of the historical financial
statements of Holding, TDC and WAL included in the Proxy Statement/Prospectus
and the costs and expenses of adjusting, for purposes of pro forma financial
statements, the historical financial statements of Whitlenge so that they are
presented in United States dollars and in accordance with
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generally accepted accounting principles in the United States shall be deemed
to be costs and expenses of the Shareholders and the Stockholders) incurred by
it or its affiliates in connection with the preparation, negotiation,
execution, delivery and performance of this Agreement, each of the other
documents and instruments executed in connection with or contemplated by this
Agreement and the arranging or providing for the financing contemplated hereby,
and the consummation of the transactions contemplated hereby and thereby
(collectively "Acquisition Expenses"); provided, however, that, in the event
the transactions contemplated hereby are consummated, up to U.S. $110,000 of
Acquisition Expenses of WAL and Whitlenge relating to the transactions
contemplated by this Agreement shall be borne by Scotsman, and the other
Acquisition Expenses of the Shareholders, WAL and Whitlenge shall be borne
entirely by the Shareholders and on the Expiration Date the Shareholders shall
reimburse WAL and Whitlenge for any Acquisition Expenses paid by WAL and
Whitlenge prior to the Expiration Date and required by the foregoing to be paid
by the Shareholders. The Shareholders, WAL and Whitlenge shall furnish
Scotsman with documentation on the Expiration Date demonstrating any
reimbursement required by the preceding sentence.
(b) The Shareholders shall pay to Scotsman, upon demand in same day funds,
all of Scotsman's Acquisition Expenses, in the event that (i) this Agreement is
terminated pursuant to clause (d) of Section 9.1 as a result of the failure of
the condition set forth in the first sentence of Section 6.10, or (ii) the
Merger Agreement is terminated pursuant to clause (d) of Section 11.1 thereof
as a result of the failure of the condition set forth in the first sentence of
Section 8.9 thereof or pursuant to clause (e) of Section 11.1 thereof as a
result of the failure of the condition set forth in Section 9.17 thereof (each
of the terminations described in clauses (i) and (ii) being referred to as a
"Qualifying Termination"); provided, however, that the Shareholders shall not
be obligated to make payments pursuant to this Section 10.2(b) in an aggregate
amount exceeding the sum of (x) U.S. $220,000 and (y) the excess of U.S.
$780,000 over the aggregate amount of payments made pursuant to Section 12.2(b)
of the Merger Agreement.
(c) In addition to payments pursuant to Section 10.2(b) and payments
pursuant to Sections 12.2(b) and 12.2(c) of the Merger Agreement, the
Shareholders shall pay to Scotsman, upon demand in same day funds, a fee of
U.S. $660,000 if (i) there is a Qualifying Termination and (ii) within one year
following the Qualifying Termination (x) any of TDC, Whitlenge, Holding or WAL
or any combination thereof, directly or through another entity, effects an
initial public offering of its shares or (y) any person or persons acquire,
directly or indirectly, in one transaction or a series of related transactions,
a substantial portion of the assets of TDC and Whitlenge or more than 50% of
the shares of common stock of Holding, TDC, Whitlenge or WAL, in any such case
described in clause (x) or (y), for a
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per share consideration (or the equivalent thereof) representing a valuation of
Holding, TDC, Whitlenge or WAL greater than that represented by this Agreement
or the Merger Agreement, as the case may be.
Section 10.3. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or by overnight mail, or four days after being mailed (by registered
mail, return receipt requested) to a party at the following address (or to such
other address as such party may have specified by notice given to the other
parties pursuant to this provision):
If to Scotsman to:
Scotsman Industries, Inc.
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Attention: President
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Frederick C. Lowinger
If to WAL to:
Whitlenge Acquisition Limited
c/o Whitlenge Drink Equipment Ltd.
Chancel Way
Halesowen Industrial Park
Halesowen, West Midlands
U.K. B62 8SE
Attention: Michael de St. Paer
with copies to:
Wragge & Co.
55 Colmore Row
Birmingham B3 2AS
United Kingdom
(REF: CWH/ATS)
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
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<PAGE> 72
If to Whitlenge to:
Whitlenge Drink Equipment Ltd.
Chancel Way
Halesowen Industrial Park
Halesowen, West Midlands
U.K. B62 8SE
Attention: Michael de St. Paer
with copies to:
Wragge & Co.
55 Colmore Row
Birmingham B3 2AS
United Kingdom
(REF: CWH/ATS)
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Onex to:
Onex Corporation
161 Bay Street, 25th Floor
Toronto, Ontario
Attention: President
with copies to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
and
Onex Investment Corp.
712 Fifth Avenue
40th Floor
New York, New York 10019
Attention: Timothy C. Collins
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<PAGE> 73
If to Onex Investments to:
Onex Investment Corp.
c/o Onex DHC LLC
421 Leader Street
Marion, Ohio 43302
with copies to:
Onex Corporation
161 Bay Street, 25th Floor
Toronto, Ontario
Attention: President
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
and
Onex Investment Corp.
712 Fifth Avenue
40th Floor
New York, New York 10019
Attention: Timothy C. Collins
If to EJJM to:
EJJM
c/o The Diggs Group
1630 Kettering Tower
Dayton, Ohio 45423
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Diggs to:
Matthew O. Diggs, Jr.
c/o The Diggs Group
1630 Kettering Tower
Dayton, Ohio 45423
with a\ copy to:
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<PAGE> 74
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Collins to:
Timothy C. Collins
c/o Onex Investment Corp.
712 Fifth Avenue
40th Floor
New York, New York 10019
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Robert F. Quaintance, Jr.
If to Cook to:
Graham F. Cook
c/o Whitlenge Drink Equipment Ltd.
Chancel Way
Halesowen Industrial Park
Halesowen, West Midlands
U.K. B62 8SE
with a copy to:
Wragge & Co.
55 Colmore Row
Birmingham B3 2AS
United Kingdom
(REF: CWH/ATS)
If to Wheeler to:
Christopher R.L. Wheeler
c/o Whitlenge Drink Equipment Ltd.
Chancel Way
Halesowen Industrial Park
Halesowen, West Midlands
U.K. B62 8SE
with a copy to:
Wragge & Co.
55 Colmore Row
Birmingham B3 2AS
United Kingdom
(REF: CWH/ATS)
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<PAGE> 75
If to de St. Paer to:
Michael de St. Paer
c/o Whitlenge Drink Equipment Ltd.
Chancel Way
Halesowen Industrial Park
Halesowen, West Midlands
U.K. B62 8SE
with a copy to:
Wragge & Co.
55 Colmore Row
Birmingham B3 2AS
United Kingdom
(REF: CWH/ATS)
If to Rushton to:
John Rushton
c/o Whitlenge Drink Equipment Ltd.
Chancel Way
Halesowen Industrial Park
Halesowen, West Midlands
U.K. B62 8SE
with a copy to:
Wragge & Co.
55 Colmore Row
Birmingham B3 2AS
United Kingdom
(REF: CWH/ATS)
Section 10.4. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) an "associate" of any person means (i) a corporation or organization of
which such person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of a class of equity securities, (ii)
any trust or other estate in which such person has substantial beneficial
interest or as to which such person serves as trustee or in the similar
capacity and (iii) any relative or spouse of such person, or any relative of
such spouse, who has the same home as such person or who is a director or
officer of the person or any of its parents or subsidiaries.
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(c) the "knowledge of WAL, Whitlenge or WB" means the knowledge of the
persons listed in Schedule 10.4, which Schedule includes all directors of
WAL, Whitlenge and WB, the chief executive officers of each of WAL, Whitlenge
and WB and all employees of WAL, Whitlenge and WB who report directly to such
chief executive officer (other than, in each such case, Nicholls and Breed
and de St. Paer's personal secretary).
(d) "Material Adverse Effect" means any change or effect (or any
development that, insofar as can reasonably be foreseen, would result in any
change or effect) that is materially adverse to the business, properties,
assets, condition (financial or otherwise) or results of the applicable
person or persons; and
(e) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization or other entity.
Section 10.5. Partial Invalidity. In case any one or more of the
provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein unless the deletion of
such provision or provisions would result in such a material change as to cause
completion of the transactions contemplated hereby to be unreasonable.
Section 10.6. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
successors or assigns.
Section 10.7. Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
counterpart, and shall become a binding agreement when Scotsman, WAL, Whitlenge
and the Shareholders shall have each executed one counterpart.
Section 10.8. Titles and Headings. Titles and headings to Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 10.9. Schedules and Exhibits. The Schedules and Exhibits referred
to in this Agreement shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Section 10.10. Entire Agreement; Amendments and Waivers; Assignment. This
Agreement, including the Schedules and Exhibits, contains the entire
understanding of the parties hereto
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<PAGE> 77
with regard to the subject matter contained herein except that the
confidentiality agreement, dated October 29, 1993 (the "October Confidentiality
Agreement"), between Onex and Scotsman and the confidentiality agreement, dated
June 25, 1993 (the "June Confidentiality Agreement"), between Onex Investment
Corp. and Scotsman shall remain in full force in effect pursuant to the terms
thereto after the execution of this Agreement; provided, however, that the
October Confidentiality Agreement shall terminate on the fifth anniversary of
the date hereof and the June Confidentiality Agreement shall terminate on the
earlier of the Expiration Time or on the fifth anniversary of the date hereof.
The parties hereto, by mutual agreement in writing, may amend, modify and
supplement this Agreement. The failure of any party hereto to enforce at any
time any provision of this Agreement shall not be construed to be a waiver of
such provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of such party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach. Except as expressly
provided herein, the rights and obligations of the parties under this Agreement
may not be assigned or transferred by any party hereto without the prior
written consent of the other parties hereto.
Section 10.11. Governing Law. Except to the extent that Delaware law is
mandatorily applicable to the rights and obligations of the stockholders of
Scotsman or to the extent that the laws of England are mandatorily applicable
to WAL, Whitlenge or their shareholders, this Agreement, and the application or
interpretation thereof, shall be governed exclusively by its terms and by the
internal laws of the State of New York, without regard to principles of
conflicts of laws as applied in the State of New York or any other jurisdiction
which, if applied, would result in the application of any laws other than the
internal laws of the State of New York. Each of the parties hereto irrevocably
submits and consents to the exclusive jurisdiction of the Supreme Court of the
State of New York in the County of New York, or the United States District
Court for the Southern District of New York in connection with any action or
proceeding arising out of or relating to this Agreement, and irrevocably waives
any immunity from jurisdiction thereof and any claim of improper venue, forum
non conveniens or any similar basis to which it might otherwise be entitled in
any such action or proceeding. Each of the Acquisition Shareholders hereby
appoints as its or his authorized agent the Stockholder Representative (such
agent hereinafter referred to as the "Authorized Agent") upon which process may
be served in any action to enforce any claim arising out of or relating to this
Agreement which may be instituted in any court described above; such
appointment shall be irrevocable until the appointment, similarly irrevocable,
of a successor Authorized Agent reasonably acceptable to Scotsman and such
successor's acceptance of such appointment. Service of such process upon the
Authorized Agent shall be deemed in every
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respect effective service of process upon each of the Acquisition Shareholders.
Section 10.12. No Third-Party Beneficiaries. Except for Article VIII,
nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any person other than the parties hereto and
successors and assigns permitted by Section 10.6 any right, remedy or claim
under or by reason of this Agreement.
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<PAGE> 79
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto or by their duly authorized officers, all as of the date
first above written.
SCOTSMAN INDUSTRIES, INC.
By __________________________
Name:
Title:
WHITLENGE ACQUISITION LIMITED
By __________________________
Name:
Title:
WHITLENGE DRINK EQUIPMENT LIMITED
By __________________________
Name:
Title:
ONEX CORPORATION
By __________________________
Name:
Title:
ONEX U.S. INVESTMENTS, INC.
By __________________________
Name:
Title:
<PAGE> 80
EJJM
By __________________________
Name:
Title:
MATTHEW O. DIGGS, JR.
______________________________
TIMOTHY C. COLLINS
______________________________
GRAHAM F. COOK
______________________________
CHRISTOPHER R.L. WHEELER
______________________________
MICHAEL DE ST. PAER
_____________________________
JOHN RUSHTON
_____________________________
M2G93C93.SEC (1/15/94 4:05am)
<PAGE> 81
EXHIBIT I-A AGREED FORM
10312/2/CWH/DFM/ATS
, 1994
Scotsman Industries Inc.,
Scotsman Acquisition Corporation,
775 Corporate Woods Parkway,
Vernon Hills,
Illinois,
60661.
Dear Gentlemen,
We refer to the Share Acquisition Agreement dated as of January ,
1994 ("the Share Acquisition Agreement") among Scotsman Industries Inc.
("Scotsman"), Whitlenge Acquisition Limited ("WAL"), Whitlenge Drink Equipment
Limited ("Whitlenge"), Onex Corporation, Onex US Investments, Inc., EJJM,
Matthew O. Diggs, Jr., Timothy C. Collins, Graham F. Cook, Christopher R.L.
Wheeler, Michael J. de St.Paer and John Rushton which provides, inter-alia, for
the purchase by Scotsman of all the issued WAL Ordinary shares upon the terms
and subject to the conditions of the Share Acquisition Agreement. All
capitalised terms used in this opinion without definition have the respective
meanings given to them in the Share Acquisition Agreement.
Pursuant to a requirement of Section 6.3 of the Share Acquisition
Agreement, this letter is to advise you that, in the opinion of the undersigned
as UK counsel for Whitlenge and WAL, under the laws of England & Wales:
1. and based on the searches of the UK Companies Registry on ,
1994, Whitlenge and WAL are each duly incorporated, validly existing and
duly registered and each has corporate power and authority to own, lease and
operate its respective properties and to conduct its business as now
conducted, to execute and deliver the Share Acquisition Agreement, to
consummate the transactions contemplated thereby and to perform its
respective obligations under the Share Acquisition Agreement;
<PAGE> 82
2. and assuming that the Share Acquisition Agreement is valid and
binding under its applicable law (where such is other than the laws of
England and Wales), the Share Acquisition Agreement has been duly
authorised, executed and delivered by WAL and Whitlenge (assuming the due
authorisation, execution and delivery thereof by the other parties
thereto), constitutes the legal, valid and binding obligation of WAL and
Whitlenge respectively and is enforceable against WAL and Whitlenge
respectively in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, maintenance of capital,
insolvency, reorganisation, moratorium, fraudulent transfer or other similar
laws of general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law); we express no opinion as to the enforceability of any of
the provisions of the Share Acquisition Agreement (i) requiring arbitration,
(ii) limiting liability or (iii) to the extent it is governed by the laws of
any jurisdiction other than England and Wales;
3. subject to the matters contained and/or disclosed within Schedule 2.4(a) to
the Share Acquisition Agreement, the execution, delivery and performance by
WAL and Whitlenge of the Share Acquisition Agreement do not and will not
conflict with, result in any breach of the terms, conditions or provisions
of, constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights, or result in
the creation of any incumbrance in respect of any property of WAL or
Whitlenge under the memorandum and articles of association of WAL or
Whitlenge respectively, any agreement or instrument or any order,
arbitration award, judgment, decree, statute, law, ordinance, rule or
regulation known to us which is applicable to WAL or Whitlenge or to which
WAL or Whitlenge is a party or by which WAL or Whitlenge is bound; and
4. no consent, approval or authorisation of, registration or filing with, any
governmental or regulatory authority of England or Wales is required to be
obtained or made by or on behalf of WAL or Whitlenge for the valid execution
and delivery by WAL or Whitlenge of the Share Acquisition Agreement, the
consummation by WAL or Whitlenge of the transactions contemplated thereby
and compliance by WAL or Whitlenge with the terms and provisions thereof,
except for such as have been filed, obtained or made; we express no opinion
as to any consent or filing required to be obtained or made in respect of
the United Kingdom Restrictive Trade Practices Acts 1976 and 1977, Office of
Fair Trading, Monopolies and Mergers Commission and/or the Commission of the
European Community in connection with the transactions contemplated by the
Share Acquisition Agreement.
For the purpose of rendering the foregoing opinions, we have relied, as to
the various questions of fact material to such opinions, upon the
representations made in the Share Acquisition Agreement and upon certificates
of and/or statements made by officers of WAL and Whitlenge. We have also
examined originals, or copies of originals,
<PAGE> 83
of such agreements, documents, certificates and other statements of
government officials and other instruments and have examined such questions of
law and have satisfied ourselves as to such matters of fact as we have
considered relevant and necessary as a basis for this opinion. We have assumed
the authenticity of all documents submitted to us as originals, the genuineness
of all signatures, the legal capacity of all natural persons and the conformity
with the original documents of any copies thereof submitted to us for our
examination.
This opinion is governed by the laws of England and Wales.
This opinion is being delivered solely for the benefit of the persons to whom
it is addressed; accordingly, it may not be quoted, filed with any governmental
authority or other regulatory agency or otherwise circulated or utilised for
any other purpose without our prior written consent.
Yours faithfully,
<PAGE> 84
EXHIBIT I-B
[Form of Opinion of Debevoise & Plimpton]
____________, 1994
Scotsman Industries, Inc.
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Share Acquisition Agreement
Ladies and Gentlemen:
We have acted as special United States counsel to Whitlenge Acquisition
Limited, a private company limited by shares registered in England ("WAL"),
Whitlenge Drink Equipment Limited, a private company limited by shares
registered in England ("Whitlenge"), and the shareholders of WAL, in connection
with the Share Acquisition Agreement, dated as of January 11, 1994 (the "Share
Acquisition Agreement"), among you, WAL, Whitlenge, the shareholders of WAL
named in the Share Acquisition Agreement and certain other parties named
therein, providing for a tender offer by you or your wholly-owned subsidiary to
purchase all of the issued ordinary shares of WAL [and all of the issued
preferred shares of WAL]. We are delivering this opinion to each of you
pursuant to Section 6.3 of the Share Acquisition Agreement. All capitalized
terms used herein without definition have the respective meanings given to them
in the Share Acquisition Agreement.
In so acting, we have participated in the preparation of the Share
Acquisition Agreement and the Registration Rights Agreement and have examined
and relied upon the representations and warranties as to factual
<PAGE> 85
Scotsman Industries, Inc. -2- _____________, 1994
matters contained in or made pursuant to the Share Acquisition
Agreement and the Registration Rights Agreement and upon the originals, or
copies certified or otherwise identified to our satisfaction, of such
agreements, records, documents, certificates and other instruments, and have
made such investigations of law, as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. We have
assumed the authenticity of all documents submitted to us as originals, the
genuineness of signatures, the legal capacity of all natural persons, the
absence of undue influence and the conformity with the original documents of
any copies thereof submitted to us as certified, conformed or photostatic
copies.
Based on the foregoing, and subject to the qualifications expressed below,
we are of the following opinion:
1. Each of the Share Acquisition Agreement and the Registration Rights
Agreement (assuming the power and authority to enter into and perform and the
due authorization, execution and delivery of the Share Acquisition Agreement
and the Registration Rights Agreement by each of the parties thereto, including
WAL, Whitlenge and the Shareholders) constitutes the legal, valid and binding
obligation of WAL, Whitlenge and each Shareholder, enforceable against WAL,
Whitlenge and each Shareholder in accordance with its respective terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating
to or affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and except that we express no opinion as to the
enforceability of (i) any provisions of the Share Acquisition Agreement (a)
requiring arbitration, (b) regarding rights to indemnification under federal or
state securities laws or regulations or related public policy or (c) relating
to any waiver of inconvenient forum or the subject matter jurisdiction of the
United States District Court for the Southern District of New York to
adjudicate any controversy or (ii) the indemnification and contribution
provisions of the Registration Rights Agreement.
2. No consent, approval or authorization of, registration, filing or
declaration with, any Federal, New York or Delaware (under the General
Corporation Law of Delaware) governmental or regulatory authority is required
to be obtained or made by or on behalf of WAL or Whitlenge
<PAGE> 86
Scotsman Industries, Inc. -3- _____________, 1994
for the valid execution and delivery by WAL and Whitlenge of the Share
Acquisition Agreement, the consummation by WAL and Whitlenge of the
transactions contemplated thereby and compliance by WAL and Whitlenge with the
terms and provisions thereof, except such as have been obtained or made.
We express no opinion as to the effect of any Federal or State laws
regarding fraudulent transfers or conveyances, or of provisions of Delaware or
New York law restricting dividends, loans or other distributions by a
corporation or for the benefit of its shareholders, including without
limitation as to the effect thereof on the validity, binding effect or
enforceability of the Share Acquisition Agreement or the Registration Rights
Agreement.
We express no opinion herein as to any local or environmental, land use or
zoning laws or the laws of any jurisdiction other than the law of the State of
New York, the General Corporation Law of the State of Delaware and the Federal
law of the United States of America.
This opinion is being delivered solely to the persons to whom it is
addressed and, accordingly, it may not be relied upon by any other person or
quoted, filed with any governmental or regulatory authority or otherwise
circulated or utilized for any other purpose without our prior written consent.
Very truly yours,
<PAGE> 87
EXHIBIT I-C
[Form of Opinions of Counsel for Certain Shareholders]
_______________, 1994
Scotsman Industries, Inc.
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Share Acquisition Agreement
Ladies and Gentlemen:
We have acted as counsel to [Onex Corporation; Onex Investments; EJJM and
Diggs; and Collins] in connection with the Share Acquisition Agreement, dated
as of January 11, 1994 (the "Share Acquisition Agreement"), among you,
Whitlenge Acquisition Limited ("WAL"), Whitlenge Drink Equipment Limited, [Onex
Corporation; Onex DHC LLC; EJJM and Diggs; Collins,] the [other] shareholders
of WAL named in the Share Acquisition Agreement and certain other parties named
therein, providing for a tender offer by you or your wholly-owned subsidiary to
purchase all of the issued ordinary shares of WAL [and all of the issued
preferred shares of WAL]. We are delivering this opinion pursuant to Section
6.3 of the Share Acquisition Agreement. All capitalized terms used herein
without definition have the respective meanings given to them in the Share
Acquisition Agreement.
In so acting, we have reviewed the Share Acquisition Agreement and the
Registration Rights Agreement and have examined and relied upon the
representations and warranties as to factual matters contained in or made
pursuant to the Share Acquisition Agreement and the Registration Rights
Agreement and upon the originals, or copies certified or otherwise identified
to our
<PAGE> 88
satisfaction, of such agreements, records, documents, certificates and
other instruments, and have made such investigations of law, as in our judgment
are necessary or appropriate to enable us to render the opinion expressed
below. We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of signatures, the legal capacity of all natural
persons, the absence of undue influence and the conformity with the original
documents of any copies thereof submitted to us as certified, conformed or
photostatic copies.
Based on the foregoing, and subject to the qualifications expressed below,
we are of the following opinion:
1. [[Onex] [Onex DHC LLC] is duly incorporated, validly existing and in
good standing under the laws of [insert jurisdiction of incorporation] and has
corporate power and authority to own, lease and operate its properties and to
conduct its business as now conducted, to execute and deliver the Share
Acquisition Agreement and the Registration Rights Agreement, to consummate the
transactions contemplated thereby, and to perform its obligations under the
Share Acquisition Agreement and the Registration Rights Agreement.] [EJJM is a
limited partnership duly formed, validly existing and in good standing under
the laws of the State of Ohio and has power and authority under its partnership
agreement and the laws of the State of Ohio to own, lease and operate its
properties and to conduct its business as now conducted, to execute and deliver
the Share Acquisition Agreement and the Registration Rights Agreement, to
consummate the transactions contemplated thereby and to perform its obligations
under the Share Acquisition Agreement and the Registration Rights Agreement.]
2. The Share Acquisition Agreement and the Registration Rights Agreement
have each been duly authorized, executed and delivered by [Onex; Onex DHC LLC;
EJJM and Diggs; Collins].
3. The execution, delivery and performance by [Onex; Onex DHC LLC; EJJM] of
the Share Acquisition Agreement and the Registration Rights Agreement do not
and will not conflict with, result in any breach of the terms, conditions or
provisions of, constitute a default, an event of default or any event creating
rights of acceleration, termination or cancellation or a loss of rights under,
or result in the creation of any encumbrance in respect of any property of
[Onex; Onex DHC LLC; EJJM] under, the [certificate of incorporation or the
by-laws] [partnership agreement] of [Onex; Onex DHC LLC; EJJM] [or any order,
2
<PAGE> 89
arbitration award, judgment, decree, statute, law, ordinance, rule or
regulation known to us, which is applicable to [Onex; Onex DHC LLC; EJJM;
Diggs; Collins] or to which [Onex; Onex DHC LLC; EJJM; Diggs; Collins] is a
party or by which [it] [he] is bound].
4. No consent, approval or authorization of, registration, filing or
declaration with, any Federal or [jurisdiction of incorporation or formation or
residence, as applicable] governmental or regulatory authority is required to
be obtained or made by or on behalf of [Onex; Onex DHC LLC; EJJM; Diggs;
Collins] for the valid execution and delivery by [Onex; Onex DHC LLC; EJJM;
Diggs; Collins] of the Share Acquisition Agreement or the Registration Rights
Agreement, the consummation by [Onex; Onex DHC LLC; EJJM; Diggs; Collins] of
the transactions contemplated thereby and compliance by [Onex; Onex DHC LLC;
EJJM; Diggs; Collins] with the terms and provisions thereof, except for such as
have been filed, obtained or made.
This opinion is limited to the laws of the State of [insert applicable
jurisdiction].
This opinion is being delivered solely to the persons to whom it is
addressed and, accordingly, it may not be relied upon by any other person or
quoted, filed with any governmental or regulatory authority or otherwise
circulated or utilized for any other purpose without our prior written consent.
Very truly yours,
3
<PAGE> 90
EXHIBIT II
NONCOMPETITION AGREEMENT
NONCOMPETITION AGREEMENT, dated as of , 1994 (this
"Agreement"), among Scotsman Industries, Inc., a Delaware corporation
("Scotsman"), , a corporation and a wholly-owned
subsidiary of Scotsman (the "Tender Subsidiary"), Whitlenge Acquisition
Limited, a private company limited by shares registered in England ("WAL"),
Whitlenge Drink Equipment Limited, a private company limited by shares
registered in England and a wholly-owned subsidiary of WAL ("Whitlenge"), and
(the "Covenanting Shareholder"). Unless otherwise indicated,
capitalized terms used herein are used as defined in the Whitlenge Share
Acquisition Agreement, dated as of January , 1994 (the "Acquisition
Agreement"), relating to WAL.
W I T N E S S E T H:
WHEREAS, the Acquisition Agreement provides for the acquisition by Scotsman
[through the Tender Subsidiary] of WAL pursuant to a tender offer (the "Offer")
for the issued WAL Ordinary Shares and WAL Preferred Shares;
WHEREAS, the Covenanting Shareholder has, pursuant to the Offer, tendered
the WAL Ordinary Shares and WAL Preferred Shares owned by him [it]; and
WHEREAS, in order to induce the purchase of the tendered WAL Ordinary Shares
and WAL Preferred Shares, and as contemplated by the Acquisition Agreement, the
Covenanting Shareholder is entering into this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements herein
contained, the parties hereto agree for the benefit of Scotsman, the Tender
Subsidiary, WAL and Whitlenge as follows:
Section 1. Noncompetition. (a) From and after the Expiration Date and
continuing for a period of three years following the Expiration Date (the
"Covenant Term"), the Covenanting Shareholder will not, directly or indirectly,
as an owner, individual proprietor, principal, director, partner, stockholder,
officer, employee, consultant, agent, representative, investor, lender or in
any other capacity whatsoever, alone, or in association with any person,
partnership, firm, corporation or other business organization, carry on, be
engaged in or take part in or render services to, or own, share in the earnings
of or invest in the stock, bonds or other securities of any entity (other than
Scotsman) that competes with Whitlenge or its subsidiaries or the Whitlenge
Business within
<PAGE> 91
the United Kingdom or the continent of Europe with respect to any business
conducted by Whitlenge or its subsidiaries on the date of this Agreement,
including, without limitation, the design, manufacture and sale to the type
of markets now served of the products currently offered in the product
catalogues of Whitlenge or WB or manufactured by Whitlenge or WB; provided,
however, that (a) the Covenanting Shareholder may own, directly or indirectly,
solely as an investment, securities of a publicly-traded entity engaged in the
business described above if the Covenanting Shareholder is not a controlling
person of, or member of a group that controls, such entity and the Covenanting
Shareholder, together with any group of which the Covenanting Shareholder is a
member, does not beneficially own in the aggregate five percent or more of any
class of securities of such entity and (b) the Covenanting Shareholder may
acquire an entity no more than five percent of the consolidated revenues of
which for each of the three fiscal years of such entity ended prior to the
acquisition thereof by the Covenanting Shareholder would fall within the scope
of the prohibition contained in this Section 1(a).
(b) During the Covenant Term, the Covenanting Shareholder will not,
directly or indirectly, as an owner, individual proprietor, principal,
director, partner, stockholder, officer, employee, consultant, agent,
representative, investor, lender or in any other capacity whatsoever, alone, or
in association with any person, partnership, firm, corporation or other
business organization, carry on, be engaged in or take part in or render
services to, or own, share in the earnings of or invest in the stock, bonds or
other securities of any entity (other than Scotsman) that competes with
Whitlenge, Scotsman, their subsidiaries or the Whitlenge Business within the
United Kingdom or the continent of Europe with respect to any business
conducted by The Delfield Company, a Delaware corporation and an affiliate of
Whitlenge ("TDC"), on the date of this Agreement, including, without
limitation, the design, manufacture and sale to the type of markets now served
of the products currently offered in the product catalogues of TDC or
manufactured by TDC; provided, however, that (a) the Covenanting Shareholder
may own, directly or indirectly, solely as an investment, securities of a
publicly-traded entity engaged in the business described above if the
Covenanting Shareholder is not a controlling person of, or member of a group
that controls, such entity and the Covenanting Shareholder, together with any
group of which the Covenanting Shareholder is a member, does not beneficially
own in the aggregate five percent or more of any class of securities of such
entity and (b) the Covenanting Shareholder may acquire an entity no more than
five percent of the consolidated revenues of which for each of the three fiscal
years of such entity ended prior to the acquisition thereof by the Covenanting
Shareholder would fall within the scope of the prohibition contained in this
Section 1(b).
(c) During the Covenant Term, the Covenanting Shareholder will not,
directly or indirectly, as an owner,
-2-
<PAGE> 92
individual proprietor, principal, director, partner, stockholder,
officer, employee, consultant, agent, representative, investor, lender or in
any other capacity whatsoever, alone, or in association with any person,
partnership, firm, corporation or other business organization, carry on, be
engaged in or take part in or render services to, or own, share in the earnings
of or invest in the stock, bonds or other securities of any entity (other than
Scotsman) that competes with Scotsman or its subsidiaries within the United
Kingdom or the continent of Europe with respect to any business conducted by
Scotsman or its subsidiaries in such geographical area on the date of this
Agreement, including, without limitation, the design, manufacture and sale to
the type of markets now served of ice machines, commercial upright
refrigeration equipment and bakery equipment; provided, however, that (a) the
Covenanting Shareholder may own, directly or indirectly, solely as an
investment, securities of a publicly-traded entity engaged in the business
described above if the Covenanting Shareholder is not a controlling person of,
or member of a group that controls, such entity and the Covenanting
Shareholder, together with any group of which the Covenanting Shareholder is a
member, does not beneficially own in the aggregate five percent or more of any
class of securities of such entity and (b) the Covenanting Shareholder may
acquire an entity no more than five percent of the consolidated revenues of
which for each of the three fiscal years of such entity ended prior to the
acquisition thereof by the Covenanting Shareholder would fall within the scope
of the prohibition contained in this Section 1(c).
Section 2. Non-Disclosure of Confidential Information. Except as Scotsman
may otherwise permit or direct in writing or as required by law or judicial
order, the Covenanting Shareholder will not, following the Expiration Date,
directly or indirectly, disclose or make use of any mailing lists, customer
lists, subscription lists, processes, trade secrets, software, research,
techniques, designs or other technical data, know-how or other proprietary or
confidential information used at any time in the past or during the Covenant
Term in connection with the Whitlenge Business; provided, however, that the
foregoing shall not be applicable to any such item to the extent it was, prior
to such disclosure or use, generally available to the public other than as a
result of an unauthorized disclosure, directly or indirectly, by the
Covenanting Shareholder, any other Shareholder, Nichols, Breed or any affiliate
thereof. All records, documents and other writings which are or have been
prepared or created on behalf of WAL, Whitlenge, any of their subsidiaries or
the Whitlenge Business by the Covenanting Shareholder, WAL, Whitlenge or any of
their subsidiaries or which may have come into possession of the Covenanting
Shareholder, WAL, Whitlenge, or any of their subsidiaries shall be the property
of WAL, Whitlenge, or such subsidiary, as the case may be, and shall be
delivered to or, as the case may be, shall remain in the possession of such
corporation.
-3-
<PAGE> 93
Section 3. Non-Solicitation. During the Covenant Term, the Covenanting
Shareholder shall not, whether for its own account or for the account of any
other individual, partnership, firm, corporation or other business
organization, solicit, request or endeavor to entice away from WAL, Whitlenge
or any of their subsidiaries, any individual, partnership, firm, corporation or
other business organization which is, at the time of such solicitation, request
or endeavor, employed by or otherwise engaged to perform services for WAL,
Whitlenge or any of their subsidiaries (including, but not limited to, any
independent sales representatives or organizations) or any individual,
partnership, firm, corporation or other business organization who is, at the
time of such solicitation, request or endeavor, a customer or client of WAL,
Whitlenge or any of their subsidiaries.
Section 4. Acknowledgment of Reasonableness. The Covenanting Shareholder
acknowledges that the restrictions contained in Sections 1, 2 and 3 of this
Agreement, which provide substantial inducement for Scotsman's acquisition of
WAL pursuant to the Acquisition Agreement, are reasonable and justified.
Section 5. Injunctive Relief; Severability. The Covenanting Shareholder
agrees that a violation of any of the covenants in this Agreement would cause
irreparable and continuing damage to Scotsman, the Tender Subsidiary, WAL and
Whitlenge, that Scotsman, the Tender Subsidiary, WAL and Whitlenge shall be
entitled to injunctive or other equitable relief from any court of competent
jurisdiction restraining any further violation of such covenants and that such
injunctive relief shall be cumulative and in addition to any other rights or
remedies to which Scotsman, the Tender Subsidiary, WAL and Whitlenge may be
entitled to prevent such breach. It is the intention of the parties hereto
that if, in any action before any court empowered to enforce such covenants,
any term, restriction, covenant or promise is found to be invalid, illegal or
unenforceable, then (i) such term, restriction, covenant or promise shall be
deemed modified to the extent necessary to make it valid, legal or enforceable
and (ii) such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement.
Section 6. Scotsman's Right to Change Business. This Agreement and any
rights or privileges granted to the Covenanting Shareholder hereunder shall not
in any way prevent Scotsman, the Tender Subsidiary, WAL, Whitlenge or any of
their affiliates from exercising their powers to modify, restructure, enlarge,
discontinue or otherwise affect the business operations or activities of such
entities.
Section 7. Assignment. None of the parties hereto may assign, transfer or
convey this Agreement or any of its rights and obligations hereunder without
the prior written consent of the other parties hereto.
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<PAGE> 94
Section 8. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
permitted assigns of the parties hereto, whether so expressed or not, and, in
particular, shall inure to the benefits of and be enforceable by Scotsman, the
Tender Subsidiary, WAL and Whitlenge or any successor to the business and
assets of Scotsman, the Tender Subsidiary, WAL and Whitlenge, respectively, by
merger or otherwise.
Section 9. Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
counterpart.
Section 10. Headings. Section headings herein are inserted for convenience
or reference only and are not intended to be a part of or affect the meaning
or interpretation of this Agreement.
Section 11. Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of England
without regard to conflict of law principles.
[Section 12. Restrictive Trade Practices Act. If this Agreement or any
provision hereof is subject to registration under the Restrictive Trade
Practices Act of 1976, then, notwithstanding anything to the contrary contained
in this Agreement, this Agreement shall not become effective until the day
after particulars of this Agreement have been furnished to the Director General
of Fair Trading pursuant to Section 24 of such Act.]*
____________________
* To be included if Agreement is believed by Scotsman to be subject to
Restrictive Trade Practices Act.
-5-
<PAGE> 95
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto or by their duly authorized officers, all as of the date
first above written.
SCOTSMAN INDUSTRIES, INC.
By:_____________________________
Name:
Title:
[Tender Subsidiary]
By:_____________________________
Name:
Title:
WHITLENGE ACQUISITION LIMITED
By:_____________________________
Name:
Title:
WHITLENGE DRINK EQUIPMENT LIMITED
By:_____________________________
Name:
Title:
________________________________
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<PAGE> 96
EXHIBIT III-A
[Form of Opinion of Sidley & Austin]
Whitlenge Acquisition Limited
Whitlenge Drink Equipment Limited
The shareholders listed on
Exhibit A attached hereto
c/o Whitlenge Drink Equipment Ltd.
Chancel Way
Halesowen Industrial Park
Halesowen, West Midlands
U.K. B62 8SE
Gentlemen:
We refer to the Share Acquisition Agreement dated as of January 11, 1994
(the "Share Acquisition Agreement") among Whitlenge Acquisition Limited, a
private company limited by shares registered in England ("WAL"), Whitlenge
Drink Equipment Limited, a private company limited by shares registered in
England ("Whitlenge"), the shareholders of WAL listed therein (the
"Shareholders") and Scotsman Industries, Inc., a Delaware corporation
("Scotsman"), providing for the offer (the "Offer") by Scotsman or one of its
wholly-owned subsidiaries to purchase all of the issued WAL Ordinary Shares for
cash and the contingent right to receive up to 146,740 shares (the "Scotsman
Earnout Shares") of Common Stock, $.10 par value per share (the "Common
Stock"), of Scotsman. All capitalized terms used in this opinion without
definition have the respective meanings given to them in the Share Acquisition
Agreement.
Pursuant to the requirement of Section 7.4 of the Share Acquisition
Agreement, this will advise you that in the opinion of the undersigned, as
special counsel for Scotsman:
1. Scotsman is duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and has corporate power and authority
to own, lease and operate its properties and to conduct its business as now
conducted as
<PAGE> 97
described in the Registration Statement and the Proxy Statement/Prospectus, to
execute and deliver the Share Acquisition Agreement and the Registration Rights
Agreement, to consummate the transactions contemplated thereby, and to perform
its obligations under the Share Acquisition Agreement and the Registration
Rights Agreement.
2. The Share Acquisition Agreement has been duly authorized, executed and
delivered by Scotsman and (assuming the due authorization, execution and
delivery thereof by WAL, Whitlenge and each of the Shareholders) constitutes
the legal, valid and binding obligation of Scotsman enforceable against
Scotsman in accordance with its terms, except to the extent enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights and by the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law); however we express no opinion as to the
enforceability of any provisions of the Share Acquisition Agreement requiring
arbitration. The Registration Rights Agreement has been duly authorized,
executed and delivered by Scotsman and (assuming the due authorization,
execution and delivery thereof by each other party thereto) constitutes the
legal, valid and binding obligation of Scotsman enforceable against Scotsman in
accordance with its terms, except to the extent enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws of general applicability relating to or affecting the
enforcement of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law); however we express no opinion as to the enforceability of
the indemnification and contribution provisions of the Registration Rights
Agreement.
3. The Scotsman Earnout Shares have been duly authorized and reserved for
issuance pursuant to the terms of the Share Acquisition Agreement and, if and
when issued pursuant to the terms of the Share Acquisition Agreement, and when
certificates therefor have been duly executed, countersigned and registered and
delivered in accordance with the terms of the Share Acquisition Agreement, will
constitute shares of Common Stock which have been duly authorized and validly
issued and are fully paid and nonassessable. The Scotsman Earnout Shares have
been listed on the NYSE, subject to official notice of issuance.
4. No consent, approval or authorization of, or registration, filing or
declaration with, any federal or state governmental authority or other
regulatory agency is required for the valid execution and delivery by Scotsman
of the Share
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<PAGE> 98
Acquisition Agreement or the Registration Rights Agreement, the
consummation by Scotsman of the transactions contemplated thereby and
compliance by Scotsman of the terms and provisions thereof, except for such as
have been filed, obtained or made.
For the purpose of rendering the foregoing opinions, we have relied, as to
various questions of fact material to such opinions, upon the representations
made in the Share Acquisition Agreement and upon certificates of officers of
Scotsman. We also have examined originals, or copies of originals certified to
our satisfaction, of such agreements, documents, certificates and other
statements of government officials and other instruments, have examined such
questions of law and have satisfied ourselves as to such matters of fact as we
have considered relevant and necessary as a basis for this opinion. We have
assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures, the legal capacity of all natural persons and
the conformity with the original documents of any copies thereof submitted to
us for our examination.
This opinion is limited to the General Corporation Law of the State of
Delaware and the laws of the United States of America and the State of New
York.
This opinion is being delivered solely for the benefit of the persons to
whom it is addressed; accordingly, it may not be quoted, filed with any
governmental authority or other regulatory agency or otherwise circulated or
utilized for any other purpose without our prior written consent.
Very truly yours,
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<PAGE> 99
EXHIBIT III-B
[Form of Opinion of Schiff, Hardin & Waite]
Whitlenge Acquisition Limited
Whitlenge Drink Equipment Limited
The shareholders listed on
Exhibit A attached hereto
c/o Whitlenge Drink Equipment Ltd.
Chancel Way
Halesowen Industrial Park
Halesowen, West Midlands
U.K. B62 8SE
Gentlemen:
We refer to the Share Acquisition Agreement dated as of January 11, 1994
(the "Share Acquisition Agreement") among Whitlenge Acquisition Limited, a
private company limited by shares registered in England ("WAL"), Whitlenge
Drink Equipment Limited, a private company limited by shares registered in
England ("Whitlenge"), the shareholders of WAL listed therein and Scotsman
Industries, Inc., a Delaware corporation ("Scotsman"), providing for the offer
by Scotsman or one of its wholly-owned subsidiaries to purchase all of the
issued WAL Ordinary Shares and WAL Preferred Shares for cash and the contingent
right to receive up to 146,740 shares (the "Scotsman Earnout Shares") of Common
Stock, $.10 par value per share (the "Common Stock"), of Scotsman. All
capitalized terms used in this opinion without definition have the respective
meanings given to them in the Share Acquisition Agreement.
Pursuant to the requirement of Section 7.4 of the Share Acquisition
Agreement, this will advise you that in the opinion of the undersigned, as
counsel for Scotsman, the execution, delivery and performance by Scotsman of
the Share Acquisition Agreement and the Registration Rights Agreement do not
and will not conflict with, result in any breach of the terms, conditions or
provisions of, constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights, or
result in the creation of any encumbrance (other than any encumbrance created
under any
<PAGE> 100
instruments entered into in connection with the financing of the
transactions contemplated by the Merger Agreement and the Share Acquisition
Agreement) in respect of any property of Scotsman or any subsidiary thereof
under, the certificate of incorporation or the by-laws of Scotsman, any
agreement or instrument listed in Exhibit B hereto [list of all material
agreements and instruments from 10-K exhibit list] or any order, arbitration
award, judgment, decree, statute, law, ordinance, rule or regulation known to
us, which is applicable to Scotsman or to which Scotsman is a party or by which
Scotsman is bound.
For the purpose of rendering the foregoing opinions, we have relied, as to
various questions of fact material to such opinions, upon the representations
made in the Share Acquisition Agreement and upon certificates of officers of
Scotsman. We also have examined originals, or copies of originals certified to
our satisfaction, of such agreements, documents, certificates and other
statements of government officials and other instruments, have examined such
questions of law and have satisfied ourselves as to such matters of fact as we
have considered relevant and necessary as a basis for this opinion. We have
assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures, the legal capacity of all natural persons and
the conformity with the original documents of any copies thereof submitted to
us for our examination.
This opinion is limited to the General Corporation Law of the State of
Delaware and the laws of the United States of America and the State of
Illinois. Our opinion does not address any antitrust or unfair competition
statutes, laws, rules or regulations, the disclosure requirements of any
securities laws, rules or regulations, or compliance with fiduciary duty
requirements.
This opinion is being delivered solely for the benefit of the persons to
whom it is addressed; accordingly, it may not be quoted, filed with any
governmental authority or other regulatory agency or otherwise circulated or
utilized for any other purpose without our prior written consent.
Very truly yours,
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<PAGE> 101
EXHIBIT III-C
[Form of Opinion of Ashurst Morris Crisp]
Whitlenge Acquisition Limited
Whitlenge Drink Equipment Limited
The shareholders listed on
Exhibit A attached hereto
c/o Whitlenge Drink Equipment Ltd.
Chancel Way
Halesowen Industrial Park
Halesowen, West Midlands
U.K. B62 8SE
Gentlemen:
We refer to the Share Acquisition Agreement dated as of January 11, 1994
(the "Share Acquisition Agreement") among Whitlenge Acquisition Limited, a
private company limited by shares registered in England ("WAL"), Whitlenge
Drink Equipment Limited, a private company limited by shares registered in
England, the shareholders of WAL listed therein and Scotsman Industries, Inc.,
a Delaware corporation ("Scotsman").
Pursuant to the requirement of Section 7.4 of the Share Acquisition
Agreement, this will advise you that in the opinion of the undersigned, as
special counsel for Scotsman, no consent, approval or authorization of,
registration or filing with, any governmental or regulatory authority of
England or Wales is required to be obtained or made by or on behalf of Scotsman
for the valid execution and delivery by Scotsman of the Share Acquisition
Agreement, the consummation by Scotsman of the transactions contemplated
thereby and compliance by Scotsman with the terms and provisions thereof,
except for such as have been filed, obtained or made; however, we express no
opinion as to any consent or filing required to be obtained or made in respect
of the United Kingdom Restrictive Trade Practices Acts 1976 and 1977, Office of
Fair Trading, Monopolies and Merger Commission and/or the Commission of the
European Community in connection
<PAGE> 102
with the transactions contemplated by the Share Acquisition Agreement.
This opinion is limited to the laws of England and Wales.
This opinion is being delivered solely for the benefit of the persons to
whom it is addressed; accordingly, it may not be quoted, filed with any
governmental authority or other regulatory agency or otherwise circulated or
utilized for any other purpose without our prior written consent.
Very truly yours,
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EXHIBIT 99
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061-9112
(708) 215-4500
SCOTSMAN Fax (708) 913-9844
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INDUSTRIES
Scotsman Industries
Contact: Donald D. Holmes
708-215-4600/4347
Onex Corporation
Timothy C. Collins
212-582-2211
SCOTSMAN INDUSTRIES AND ONEX ANNOUNCE DEFINITIVE AGREEMENTS
REGARDING SCOTSMAN'S ACQUISITION OF
THE DELFIELD COMPANY AND WHITLENGE DRINK EQUIPMENT LTD.
January 13, 1994 -- Scotsman Industries, Inc. (NYSE: SCT) and Onex Corporation
(TSE: OCX) announced that they entered into definitive agreements providing
for the acquisition by Scotsman of The Delfield Company ("Delfield") and
Whitlenge Drink Equipment, Ltd. ("Whitlenge"). As previously announced, the
parties had entered into a letter of intent on December 2, 1993 regarding the
acquisition.
Delfield, headquartered in Mt. Pleasant, Michigan,
manufactures and sells refrigerated foodservice equipment primarily in the
United States. Whitlenge, located near Birmingham, England, manufactures and
sells drink dispensing equipment, primarily in Western Europe. The two have
combined annual revenues in excess of $100 million. Delfield and Whitlenge are
controlled by Onex, a
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publicly traded Canadian corporation, and Matthew O. Diggs, Jr.
Richard C. Osborne, chairman, president and chief executive
officer of Scotsman Industries, said "This acquisition, as previously noted,
will increase Scotsman's annual sales to more than $275 million and is expected
to make a positive contribution to earnings per share in its first year. This
combination of premier brands in the foodservice industry is a major step in
Scotsman's strategies to grow the company and enhance shareholder value."
Delfield manufactures and markets a wide range of commercial
refrigerated foodservice equipment and is the largest domestic producer of
custom food preparation workstations. Their customers include the country's
largest chains, many of which are also served by Scotsman's current businesses.
Whitlenge is a major supplier of soft drink and beer dispensing equipment for
the European marketplace, complementing Scotsman's U.S. soft drink dispensing
business.
"The combined businesses have complementary products and
similar technologies which will offer many potential benefits and provide
increased opportunities for growth in the worldwide foodservice equipment
industry," said Mr. Osborne.
Timothy Collins, Managing Director of Onex, said "We continue
to believe in the long term potential of this industry and with this
acquisition Scotsman becomes the leader in its field. We expect our ongoing
interest in Scotsman to be an attractive way to
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invest in this industry." Matthew Diggs added, "With this combination,
Scotsman becomes the force to be reckoned with in the industry world-wide."
Pursuant to the definitive agreements, the aggregate
consideration to be paid by Scotsman for Delfield and Whitlenge would include
approximately $30.3 million in a combination of cash and non-convertible
preferred stock of Scotsman, 1.2 million shares of Scotsman common stock and
$22.5 million of 5 1/2% perpetual convertible preferred stock of Scotsman.
Through the acquisition of the companies, Scotsman would also assume their debt
of approximately $37 million. In addition, the current stockholders of
Delfield and Whitlenge would be entitled to receive up to an additional 667,000
shares of Scotsman common stock if Delfield and Whitlenge meet a specified
level of financial performance for their 1994 fiscal year. Based on Scotsman's
currently outstanding shares, the current stockholders of Delfield and
Whitlenge would hold up to approximately 33 percent of the then outstanding
shares of common stock, assuming conversion of the preferred stock and
attainment of the 1994 earn-out.
Following the closing of the transaction, the current
stockholders of Delfield and Whitlenge will be entitled to designate two
directors of Scotsman. They have also agreed to limitations on their future
acquisition of voting securities of, and certain other matters regarding,
Scotsman.
Completion of the proposed acquisition is subject to,
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among other things, regulatory approvals, approval by the parties' stockholders
and Scotsman's receipt of financing. Scotsman has received a commitment letter
from The First National Bank of Chicago under which, subject to certain
conditions, The First National Bank of Chicago has committed to provide a
portion of the requisite financing and to use its best efforts to obtain
commitments for the balance of the financing. It is anticipated that the
acquisition of the two companies will be completed early in the second quarter
of 1994.
Scotsman Industries, Inc. is a leading manufacturer of
refrigeration products, primarily servicing the foodservice, hospitality,
beverage, bakery and healthcare industries, with a secondary focus on luxury
appliances for the consumer market. Sales in fiscal year 1992 were $168.7
million, with net income of $6.4 million.
Onex Corporation is a diversified company with 24,000
employees and fiscal year 1993 consolidated annual revenues of Canadian $4.0
billion.
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