SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
March 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10182
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Scotsman Industries, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 36-3635892
- ------------------------- -----------------------------------
(State of Incorporation) (I.R.S. 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: (847) 215-4500
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes x No
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At May 8, 1997 there were 10,548,214 shares of registrant's common
----------- ----------
stock outstanding.
<PAGE> 2
SCOTSMAN INDUSTRIES, INC.
--------------------------
FORM 10-Q
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March 30, 1997
----------------
INDEX
------
PART I--FINANCIAL INFORMATION:
Item 1. FINANCIAL STATEMENTS-
HISTORICAL-
Condensed Statement of Income
Condensed Balance Sheet
Condensed Statement of Cash Flows
Notes to Condensed Financial Statements
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
PART II--OTHER INFORMATION:
Item 1. LEGAL PROCEEDINGS
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURE
<PAGE> 3
PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements
SCOTSMAN INDUSTRIES, INC.
CONDENSED STATEMENT OF INCOME
(Unaudited)
(In thousands, except per-share amount)
---------------------------------------
For the Three
Months Ended
---------------------------
Mar. 30, Mar. 31,
1997 1996
-------- --------
Net sales $98,077 $85,533
Cost of sales 72,446 62,130
-------- --------
Gross profit $25,631 $23,403
Selling and administrative expenses 16,124 15,023
-------- --------
Income from operations $ 9,507 $ 8,380
Interest expense, net 2,207 1,415
-------- --------
Income before income taxes $ 7,300 $ 6,965
Income taxes 3,435 3,346
-------- --------
Income before extraordinary
loss $ 3,865 $ 3,619
Extraordinary
loss (net of income
taxes of $422)(i) (633) -
-------- --------
Net income $ 3,232 $ 3,619
Preferred stock dividends - 310
-------- --------
Net income available
to common shareholders $ 3,232 $ 3,309
======== ========
Primary net income per common
share (ii):
Income before extraordinary loss $ 0.36 $ 0.36
Extraordinary loss (0.06) -
-------- --------
Net income per common share $ 0.30 $ 0.36
======== ========
Fully diluted net income per
common share (iii):
Income before extraordinary loss $ 0.36 $ 0.34
Extraordinary loss (0.06) -
-------- --------
Net income per common share $ 0.30 $ 0.34
======== ========
<PAGE> 4
PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements
-----------------------------
CONDENSED STATEMENT OF INCOME - continued
(i) The extraordinary loss resulted from one-time expenses incurred
relating to the early retirement of $20 million of 11.43%
privately placed debt of the Company prior to the acquisition
of Kysor Industrial Corporation in March of 1997.
(ii) PRIMARY: Primary earnings per common share are computed by
dividing net income available to common shareholders by the
weighted average number of common shares and common stock
equivalents outstanding during each period: 10,795,445 and
9,140,363, for the three months ended March 30, 1997, and March
31, 1996, respectively.
(iii) FULLY DILUTED: The calculation of fully-diluted net income per
share is based on net income before preferred stock dividends.
The number of shares assumes the conversion of the convertible
preferred stock from the date of issue. The total number of
shares used in the fully-diluted calculation for the three
months ended March 30, 1997, and March 31, 1996, were
10,806,254 and 10,669,965, respectively.
See notes to unaudited condensed financial statements.
<PAGE> 5
SCOTSMAN INDUSTRIES, INC.
CONDENSED BALANCE SHEET
(In thousands, except per-share data)
---------------------------------------
Mar. 30, Dec. 29,
A S S E T S 1997 1996
----------- --------- --------
(unaudited)
CURRENT ASSETS:
Cash and temporary cash investments $ 18,074 $ 16,501
Trade accounts receivable, net of
reserves of $4,627 and $2,778 102,419 58,734
Inventories 85,170 52,530
Deferred income taxes 14,491 4,708
Other current assets 7,345 5,101
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Total current assets $227,499 $137,574
PROPERTIES AND EQUIPMENT, net of
accumulated depreciation of $71,793
and $44,654 84,786 46,659
GOODWILL, net 285,552 94,975
DEFERRED INCOME TAXES 26,588 -
OTHER NONCURRENT ASSETS 40,100 4,056
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$664,525 $283,264
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-term debt and current maturities
of long-term debt and capitalized
lease obligations $ 22,850 $ 16,317
Trade accounts payable 47,401 22,344
Accrued income taxes 16,613 6,302
Accrued expenses 64,661 33,290
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Total current liabilities $151,525 $ 78,253
LONG-TERM DEBT AND CAPITALIZED LEASE
OBLIGATIONS 330,274 60,289
DEFERRED INCOME TAXES 7,360 3,710
OTHER NONCURRENT LIABILITIES 44,482 9,300
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Total liabilities $533,641 $151,552
======= =======
SHAREHOLDERS' EQUITY:
Common stock, $.10 par value $ 1,074 $ 1,073
Additional paid in capital 73,174 73,053
Retained earnings 65,004 62,036
Deferred compensation and
unrecognized pension cost (87) (117)
Foreign currency translation adjustments (6,825) (2,877)
<PAGE> 6
Less: Common stock held in treasury (1,456) (1,456)
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Total Shareholders' Equity $130,884 $131,712
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$664,525 $283,264
======= =======
See notes to unaudited condensed financial statements.
<PAGE> 7
SCOTSMAN INDUSTRIES, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(In Thousands)
--------------
For the Three
Months Ended
-----------------------
Mar. 30, Mar. 31,
1997 1996
--------- --------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 3,232 $ 3,619
Adjustments to reconcile net income
to net cash provided by operating
activities-
Depreciation and amortization 2,922 1,980
Change in assets and liabilities-
Trade accounts receivable (10,579) (8,654)
Inventories (3,290) (3,947)
Trade accounts payable and other
liabilities (1,940) 8,069
Other, net 734 (485)
--------- --------
Net cash (used in) provided by
operating activities $ (8,921) $ 582
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in properties and equipment $ (1,836) $ (1,451)
Acquisition of Kysor Industrial Corp., net (262,189) -
Proceeds from disposal of property,
plant and equipment 5 89
--------- --------
Net cash used in investing activities $(264,020) $ (1,362)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under long-term
debt and capitalized lease
obligations $ (56,816) $ (2,101)
Issuance of long-term debt 326,491 10,866
Dividends paid to shareholders (264) (534)
Short-term debt, net 6,236 (7,927)
--------- --------
Net cash provided by financing
activities $ 275,647 $ 304
--------- --------
Effect of exchange rate changes on
cash and temporary cash investments (1,133) (449)
NET INCREASE (DECREASE) IN CASH AND
TEMPORARY CASH INVESTMENTS $ 1,573 $ (925)
CASH AND TEMPORARY CASH INVESTMENTS,
beginning of period 16,501 15,808
CASH AND TEMPORARY CASH INVESTMENTS, --------- --------
end of period $ 18,074 $ 14,883
========= ========
<PAGE> 8
SCOTSMAN INDUSTRIES, INC.
CONDENSED STATEMENT OF CASH FLOWS - continued
(Unaudited)
(In Thousands)
--------------
For the Three
Months Ended
-----------------------
Mar. 30, Mar. 31,
1997 1996
--------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 2,779 $ 1,411
========= ========
Income taxes $ 329 $ 163
========= ========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Investment in properties and equipment
through issuance of capitalized
lease obligations $ (418) $ (42)
======== ========
Issuance of common stock for
acquisition $ -- $ -
========= ========
See notes to unaudited condensed financial statements.
<PAGE> 9
SCOTSMAN INDUSTRIES, INC.
--------------------------
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------
(1) BASIS OF PRESENTATION:
- -------------------------
The condensed consolidated financial statements include the accounts of
Scotsman Industries, Inc. and its consolidated subsidiaries (the
"Company").
All accounting policies used in the preparation of the quarterly
condensed financial statements are consistent with the accounting
policies described in the notes to consolidated financial statements for
the year ended December 29, 1996, appearing in the Company's 1996 Annual
Report to Shareholders (the "Annual Report"). In the opinion of
management, the interim financial statements reflect all adjustments
which are necessary for a fair presentation of the Company's financial
position, results of operations and cash flows for the interim periods
presented. The results for such interim periods are not necessarily
indicative of results for the full year. These financial statements
should be read in conjunction with the consolidated financial statements
and the accompanying notes to consolidated financial statements included
in the Annual Report.
(2) INVENTORIES:
- ---------------
Inventories consisted of the following (in thousands):
Mar. 30, Dec. 29,
1997 1996
------ ------
Finished goods $34,399 $23,207
Work-in-process 16,915 9,052
Raw materials 33,856 20,271
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Total inventories $85,170 $52,530
====== ======
<PAGE> 10
(3) ACQUISITION OF KYSOR:
- -------------------------
In March of 1997, the Company completed the acquisition of Kysor
Industrial Corporation ("Kysor"), a leading supplier of refrigerated
display cases and walk-in coolers and freezers to supermarkets and
convenience stores. Prior to the acquisition, Kysor also manufactured a
line of products for the transportation industry through its
transportation products group (the "Transportation Products Group"). The
Company purchased Kysor for an aggregate purchase price of $309 million
in cash and assumed $35 million in debt, net of cash, related to both
Kysor's Transportation Products Group and its Commercial Products Group,
through which Kysor sold its refrigerated display cases and walk-in
coolers and freezers. Concurrent with the acquisition, Kysor sold Kysor's
Transportation Products Group to a third party for an aggregate purchase
price of $86 million in pre-tax proceeds ($68 million of after-tax
proceeds) plus assumption of certain liabilities related to the
Transportation Products Group. Including transaction and severance
costs of $22.5 million, the net purchase price for the Commercial
Products Group was approximately $299 million.
The acquisition will be accounted for using the purchase method of
accounting. Accordingly, assets acquired and liabilities assumed will be
recorded at their estimated fair values which are subject to further
refinement, including final appraisals and other analyses, with
appropriate recognition given to the effect of current interest rates and
income taxes. Goodwill relating to the acquisition of Kysor of
approximately $192 million will be finalized within 12 months of the
acquisition date and is being amortized for book purposes over 40 years
using the straight-line method.
The acquisition of Kysor was financed through a $415 million loan
facility between the Company and The First National Bank of Chicago (the
"FNBC Facility"). The FNBC Facility consists of a $150 million seven-
year term loan and a $265 million seven-year revolving loan facility,
both with an initial interest rate of 1.375 percent above Eurocurrency
rates. The interest rates on both facilities adjust based on a certain
ratio tied to the strength of the Company's balance sheet.
The agreement governing the FNBC Facility includes various financial
covenants. One of those covenants has the effect of restricting the
amount of the Company's dividends to its shareholders by requiring the
Company to maintain consolidated stockholders' equity of at least $120
million (without giving effect to the cumulative effect of future changes
in accumulated translation adjustments), plus 60 percent of (i) the
cumulative net income of the Company from December 30, 1996, forward and
(ii) the net cash proceeds from any future issuance of equity securities
by the Company after the closing of the FNBC Facility. At December 29,
1996, consolidated stockholders' equity of the Company was $131.7
million. Under the FNBC Facility, the Company is also precluded from
paying dividends to its shareholders (other than dividends payable in its
own capital stock) if a default or an unmatured default under the
agreement has occurred and is continuing or would occur after giving
effect to the payment of such dividends.
<PAGE> 11
The FNBC Facility requires that a notional amount of $150 million be
hedged to reduce interest rate exposure for three years. Subsequent to
the acquisition of Kysor, the Company entered into interest rate swap
agreements to hedge its interest rate exposure on $150 million of the
aggregate borrowing under the FNBC Facility for a three-year period. One
of the interest rate swap agreements, covering a notional amount of $50
million, is extendable for an additional two years at the bank's option.
In addition to financing the Kysor acquisition, proceeds of the FNBC
Facility will be used to pay expenses associated with this acquisition
and were used to repay existing long-term debt, including the portion of
debt outstanding under the Company's former $90.0 million reducing credit
agreement and a $20.0 million private placement agreement.
Due to the significance of the Kysor acquisition to the Company, the
Company's operating results will be materially different from, and will
not be comparable to, prior periods. For fiscal year 1996, Kysor's sales
of commercial refrigeration products were $245.1 million, which when
combined with the comparable period for the Company, would have resulted
in pro forma combined sales of $601.4 million, a 69 percent increase over
the Company's reported 1996 sales.
The accompanying unaudited condensed pro forma income statement
information is presented to illustrate the effect of certain events on
the historical income statement information of the Company as if the
acquisition of Kysor had occurred as of the first day of each of the
periods presented.
The pro forma information includes assumptions and estimates and is not
necessarily indicative of the results of operations of the Company as
they may be in the future or as they might have been had the transaction
occurred as discussed above. The pro forma results of operations for the
period ended March 30, 1997 include certain adjustments made by Kysor prior
to acquisition anticipating the completion of the transaction. These
adjustments related to changes in the accounting estimates for the carrying
values of certain assets and liabilities and the combining of four of
Kysor's business units into two business units. These adjustments are not
reflected in the pro forma results for the period ended March 31, 1996.
Management does not expect these adjustments to occur in the future.
The unaudited condensed pro forma income statement information should be
read in conjunction with the historical condensed financial statements
and notes thereto of the Company appearing elsewhere herein.
(Amounts in thousands, except per-share data)
PRO FORMA (Unaudited)
Three Months Ended March 30, March 31,
1997 1996
--------- ---------
Net Sales $136,911 $132,490
Net income before
extraordinary item $ 1,839 $ 2,978
Net income per common share before
extraordinary item $ 0.17 $ 0.28
Average number of common shares
outstanding - fully diluted 10,806 10,670
<PAGE> 12
SCOTSMAN INDUSTRIES, INC.
-------------------------
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- -----------------------------------------------------------
Results of Operations
- ---------------------
The following discussion and analysis of the Company's financial
condition and results of operations contains forward looking statements
that involve risks and uncertainties. The Company's results could differ
significantly from those anticipated as a result of unforeseen factors.
For a discussion of certain factors that could cause actual results to
differ from those anticipated, see the Cautionary Statements included in
Exhibit 99 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 29, 1996.
Net sales for the first quarter of 1997 were $98.1 million, up $12.5
million or 15 percent from sales for the first quarter of 1996. First
quarter 1997 results included sales from March 10 through March 30 of
$14.5 million from the Commercial Products Group of Kysor Industrial
Corporation ("Kysor") subsequent to its acquisition by the Company in
March 1997.
Scotsman's worldwide ice machine sales, representing slightly less than
40 percent of the Company's sales for the first quarter of 1997,
decreased by 9 percent in U.S. dollars compared with the first quarter of
1996. The decline in ice machine sales resulted primarily from lower
sales from European operations due to weak market conditions and high
distributor inventory levels. Translation of European sales into U.S.
dollars was also negatively impacted by the strong U.S. dollar.
<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- -----------------------------------------------------------
Results of Operations - continued
- ---------------------
Sales of food preparation and storage equipment, representing slightly
more than one quarter of the Company's sales in the first quarter of
1997, increased 17 percent for the first quarter compared to the first
quarter of the prior year. Improved volume of sales at the Company's
Delfield business to Boston Market as a result of Delfield's designation
as Boston Market's sole supplier of serving line and certain related
products and strong sales of the Tecnomac bakery equipment product line
in Italy were primary contributors to this increase.
Sales of beverage dispensing equipment, representing slightly less than
one-fifth the Company's sales for the quarter, decreased approximately 4
percent compared to the same period of the prior year. Sales gains by
the Company's U.K.-based beverage dispensing business were more than
offset by weaker sales by the Company's dispensing business in Germany
and in the United States.
The Company's gross profit increased by $2.2 million compared with the
first quarter of 1996 due to the impact of the newly-acquired Kysor
business. However, the Company's gross profit margin decreased as a
percentage of sales to 26.1 percent in 1997 from 27.4 percent in the
first quarter of 1996. The reduction in gross profit margins was
primarily attributable to the lower margins at the Company's Delfield
business in the first quarter, reflecting lower productivity as Delfield
adopted new manufacturing processes to accommodate higher sales demand.
Selling and administrative expenses of $16.1 million increased by $1.1
million or 7 percent from the first quarter of 1996. The increase in
selling and administrative expenses was attributable to the inclusion of
Kysor results subsequent to its acquisition by the Company. As a
percentage of net sales, selling and administrative expenses decreased to
16.4 percent from 17.6 percent compared with the prior year period.
Income from operations of $9.5 million increased by $1.1 million or 13
percent from the first quarter of 1996 which reflects primarily the
contribution to profits by the newly-acquired Kysor business.
Interest expense, net of $2.2 million, increased by $0.8 million or 56
percent when compared to the prior year's first quarter, primarily as a
result of the increased domestic borrowings incurred by the Company to
fund the acquisition of Kysor.
The Company's overall tax rate for the first quarter of 1997 was 47.1
percent compared with 48.0 percent for the first quarter of 1996. This
lower income tax rate is primarily attributable to an increase in the
percentage of the Company's pre-tax income which was generated
domestically as a result of the inclusion of the results of operations
of Kysor and the lower relative tax rate applicable to the Company's
domestic income.
Net income for the first quarter of 1997, before a one-time after-tax
charge of $633,000 incurred for the early retirement of $20 million of
11.43% private placement debt, was up 7 percent to $3.9 million or $0.36
per share. Net income for the first quarter of 1997 including the one-
time charge declined 11 percent to $3.2 million or $0.30 per share.
<PAGE> 14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- -----------------------------------------------------------
Kysor sales have traditionally been strongest in the third and fourth
quarters of the year and Kysor's results are expected to be accretive to
Scotsman's fully-diluted earnings per share in the third and fourth
quarters of this year and for the full year. On a continuing basis,
Kysor's seasonal pattern is expected to shift Scotsman's historical
pattern of sales and earnings more to the second half of the year.
Kysor's seasonality, plus factors mentioned above regarding Delfield and
the European ice machine businesses, are expected to result in relatively
flat earnings per share in the second quarter and improved earnings per
share in the second half compared to the same periods of the prior year.
Liquidity and Capital Resources
- -------------------------------
Historically, the Company's liquidity requirements have arisen primarily
from the need to fund its working capital, capital expenditures,
acquisitions, and interest expense, including fixed obligations
associated with debt or lease obligations. The Company has met these
liquidity requirements through use of funds generated from operations,
along with financing from various sources.
The Company expects to continue to generate significant cash flow from
operations, which will be used to run the Company's businesses and fund
further growth. Increased levels of working capital, capital
expenditures and interest expense associated with the Kysor acquisition
are not expected to adversely impact the Company's liquidity and access
to capital.
The Company utilized cash flow from operations of $8.9 million for the
first quarter of 1997 compared to cash flow provided by operating
activities of $0.6 million for the first quarter of 1996.
<PAGE> 15
The following changes in the balance sheet categories from December 29,
1996, until March 30, 1997, exclude the impact of the acquisition of
Kysor in March of 1997 and the impact of changes in foreign exchange
rates on those categories:
Inventory increased by $3.3 million, which reflects normal seasonal
activity in anticipation of the Company's major selling season.
Accounts receivable were $10.6 million higher, primarily as a result
of the sales increase in the first quarter of 1997 compared to the
fourth quarter of 1996.
Trade accounts payable were $5.8 million higher, which also reflects
the increased inventory purchases.
Capital expenditures, including those funded through capital leases,
increased $0.8 million, or 51 percent to $2.3 million for the first
quarter of 1997 from $1.5 million for the first quarter of 1996. Capital
expenditures in 1997 were made primarily to fund productivity
improvements, new product tooling, and maintenance and replacement items.
All asset and liability accounts as of March 30, 1997, were significantly
impacted by the acquisition of Kysor in March of 1997. Goodwill
increased from December 29, 1996 due to the acquisition of Kysor, which
added approximately $192 million.
Cash and temporary cash investments of $18.1 million as of the end of the
first quarter of 1997 increased by $1.6 million from December 29, 1996,
reflecting primarily the increase in cash balances at the Company's
foreign subsidiaries.
Shareholders' equity decreased $0.8 million from December 29, 1996, which
reflects net income of $3.2 million for the first quarter of 1997, which
was more than offset by a reduction in shareholders' equity caused by
changes in accumulated foreign currency translation adjustments and the
impact of dividends.
Note 3 to the condensed financial statements contains a summary of the
changes in the Company's debt structure. Long-term debt outstanding
increased by approximately $270 million as of the end of the first
quarter of 1997 primarily due to the acquisition of Kysor in March of
1997, along with funding of working capital needs. Short-term debt
increased by $6.2 million from December 29, 1996 also primarily due
to funding of working capital needs of the business. Total debt,
including capital leases, was $353.1 million compared to $76.6 million as
of December 29, 1996. The debt to capital ratio was 73 percent at March
30, 1997, compared with 37 percent at December 29, 1996.
On February 13, 1997 the Company's Board of Directors declared a dividend
of 2 1/2 cents per share payable to common shareholders of record on
March 28, 1997.
Since its first quarter as a publicly-held company, the Company has paid
a quarterly dividend of 2 1/2 cents per share. The continuation, amount
and timing of this dividend will be determined by the Board of Directors
and may change as conditions warrant.
<PAGE> 16
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
Manitowoc Patent Litigation.
---------------------------
On September 17, 1996, The Manitowoc Company, Inc. ("Manitowoc")
filed a lawsuit against the Company in the United States District
Court for the Northern District of Illinois, entitled THE MANITOWOC
COMPANY, INC. V. SCOTSMAN INDUSTRIES, INC. In its Complaint and in
an Amended Complaint, filed on January 14, 1997, Manitowoc alleged
that the Company's CM{3} ice machine, a cuber machine introduced by
the Company during the first quarter of 1996, infringed three
patents owned by Manitowoc relating to a cleaning feature on an ice
machine.
The Company advised Manitowoc that it does not believe that the
cleaning feature on its CM{3} ice machine infringed any of
Manitowoc's patents. As previously reported in the Company's 1996
Annual Report on Form 10-K, in the interests of avoiding litigation,
the Company nonetheless implemented a design change to the cleaning
feature on its CM{3} ice machine and agreed, with Manitowoc, to
communicate with a particular ice machine customer and the Company's
field service force about the operation of the CM{3} ice machine's
cleaning feature. Following the Company's satisfaction of these
settlement conditions, Manitowoc filed a Notice of Dismissal,
dismissing the lawsuit without prejudice, on April 22, 1997.
<PAGE> 17
Litigation Relating to the Indianapolis Athletic Club Fire.
----------------------------------------------------------
Delfield, which was acquired by the Company on April 29, 1994, was
originally named as a defendant in two cases filed in Marion County
Superior Court, Indianapolis, Indiana, arising out of a fire at the
Indianapolis Athletic Club (the "IAC") on February 5, 1992,
including MUTZ V. THE DELFIELD COMPANY, ET AL., brought by the
estate of Thomas R. Mutz alleging damages for the alleged wrongful
death of Mr. Mutz in the fire. The plaintiffs alleged, in both
actions, that the fire was caused by a refrigerator manufactured by
Delfield. Delfield was dismissed as a defendant in both cases,
following an investigation of its claim that the refrigerator in the
IAC was manufactured, not by Delfield, but by the Delfield Division
of Alco Standard Corporation ("Alco") prior to the acquisition of
the Delfield Division by DFC Holding Corporation which was, in turn,
acquired by Scotsman. Such dismissals were, however, without
prejudice to the rights of the plaintiffs to reinstate their claims
against Delfield. The plaintiffs in both cases continued to pursue
their claims against the Delfield Division of Alco, and the Company
has continued to monitor such actions.
As previously reported in the Company's 1996 Annual Report on Form
10-K, Alco and the other defendants in MUTZ agreed to enter into a
settlement agreement with the estate of Mr. Mutz resolving all of
the claims of the estate against such defendants. Under the terms
of the settlement agreement, Alco and/or its insurer agreed to pay a
total of $200,000 as Alco's share of the settlement amount. The
settlement agreement has been finalized, and on April 1, 1997, the
court entered an order dismissing the MUTZ case, with prejudice.
Item 6. Exhibits and Reports
on Form 8-K
--------------------
(a) Exhibits
Exhibit 10.1 Domestic Guaranty, dated as of March 12, 1997,
entered into by Scotsman Industries, Inc., in favor
of The First National Bank of Chicago, as agent, and
the lenders named in the Credit Agreement, dated as
of March 12, 1997, among Scotsman Group Inc.,
Scotsman Industries, Inc. and certain of their
subsidiaries, as borrowers, The First National Bank
of Chicago, as agent, and the lenders named therein
(previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 29, 1996).
Exhibit 10.2 Domestic Guaranty, dated as of March 12, 1997, in the
form separately entered into by each of Scotsman
Group Inc., Booth, Inc., DFC Holding Corporation, The
Delfield Company, and Kysor Industrial Corporation,
in favor of The First National Bank of Chicago, as
agent, and the lenders named in the Credit Agreement,
dated as of March 12, 1997, among Scotsman Group
Inc., Scotsman Industries, Inc. and certain of their
subsidiaries, as borrowers, The First National Bank
of Chicago, as agent, and the lenders named therein
(previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 29, 1996).
<PAGE> 18
Exhibit 10.3 Foreign Guaranty, dated as of March 12, 1997, in the
form separately entered into by each of Whitlenge
Drink Equipment Limited, Scotsman Drink Limited,
Frimont S.p.A., and Castel MAC S.p.A., in favor of
The First National Bank of Chicago, as agent, and the
lenders named in the Credit Agreement, dated as of
March 12, 1997, among Scotsman Group Inc., Scotsman
Industries, Inc. and certain of their subsidiaries,
as borrowers, The First National Bank of Chicago, as
agent, and the lenders named therein (previously
filed as an exhibit to the Company's Annual Report on
Form
10-K for the fiscal year ended December 29, 1996).
Exhibit 10.4 Confirmation of Interest Rate Swap Transactions,
dated March 17, 1997, in the notional amounts of $100
million and $50 million, respectively, pursuant to an
ISDA Master Agreement and Schedule, dated as of March
3, 1994, between The First National Bank of Chicago
and Scotsman Group Inc. (previously filed as an
exhibit to the Company's 10-K for the fiscal year
ended January 1, 1995).
Exhibit 27 Article 5 Financial Data Schedule for the Period
Ended March 30, 1997.
(b) The Registrant filed a report on Form 8-K dated March 8, 1997,
during the quarterly period ended March 30, 1997.
<PAGE> 19
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.
-------------------------
Date May 12, 1997 By: /s/ Donald D. Holmes
----------------- -------------------------
Donald D. Holmes
Vice President-Finance
and Secretary
<PAGE> 20
EXHIBIT INDEX
Exhibit Page Number
Number Description of Exhibit
- ------- ----------- -----------
Exhibit 10.1 Domestic Guaranty, dated as of March 12, 1997, 21
entered into by Scotsman Industries, Inc., in favor
of The First National Bank of Chicago, as agent, and
the lenders named in the Credit Agreement, dated as
of March 12, 1997, among Scotsman Group Inc.,
Scotsman Industries, Inc. and certain of their
subsidiaries, as borrowers, The First National Bank
of Chicago, as agent, and the lenders named therein
(previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 29, 1996).
Exhibit 10.2 Domestic Guaranty, dated as of March 12, 1997, in the 32
form separately entered into by each of Scotsman
Group Inc., Booth, Inc., DFC Holding Corporation, The
Delfield Company, and Kysor Industrial Corporation,
in favor of The First National Bank of Chicago, as
agent, and the lenders named in the Credit Agreement,
dated as of March 12, 1997, among Scotsman Group
Inc., Scotsman Industries, Inc. and certain of their
subsidiaries, as borrowers, The First National Bank
of Chicago, as agent, and the lenders named therein
(previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 29, 1996).
Exhibit 10.3 Foreign Guaranty, dated as of March 12, 1997, in the 43
form separately entered into by each of Whitlenge
Drink Equipment Limited, Scotsman Drink Limited,
Frimont S.p.A., and Castel MAC S.p.A., in favor of
The First National Bank of Chicago, as agent, and the
lenders named in the Credit Agreement, dated as of
March 12, 1997, among Scotsman Group Inc., Scotsman
Industries, Inc. and certain of their subsidiaries,
as borrowers, The First National Bank of Chicago, as
agent, and the lenders named therein (previously
filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended December 29,
1996).
Exhibit 10.4 Confirmation of Interest Rate Swap Transactions, 54
dated March 17, 1997, in the notional amounts of $100
million and $50 million, respectively, pursuant to an
ISDA Master Agreement and Schedule, dated as of March
3, 1994, between The First National Bank of Chicago
and Scotsman Group Inc. (previously filed as an
exhibit to the Company's 10-K for the fiscal year
ended January 1, 1995).
Exhibit 27 Article 5 Financial Data Schedule for the Period 61
Ended March 30, 1997.
<PAGE> 21
EXHIBIT 10.1
DOMESTIC GUARANTY
-----------------
This Guaranty (this "Guaranty") is made as of the 12TH day
of March, 1997 by Scotsman Industries, Inc., a Delaware corporation
(the "Guarantor"), in favor of the Agent and the Lenders (as
hereinafter defined).
R E C I T A L S:
----------------
A. Scotsman Group Inc. and the other parties named therein
(collectively, the "Borrowers"), Scotsman Industries, Inc., the
financial institutions named therein (the "Lenders") and The First
National Bank of Chicago, as Agent (the "Agent"), have entered into a
certain Credit Agreement dated as of the date hereof (as from time to
time amended, restated, modified or supplemented, the "Credit
Agreement"). Each term used but not otherwise defined herein shall
have the meaning ascribed to such term by the Credit Agreement.
B. The Guarantor will receive substantial and direct
benefits from the extensions of credit contemplated by the Credit
Agreement and is entering into this Guaranty to induce the Agent and
the Lenders to enter into the Credit Agreement and extend credit to
the Borrowers thereunder.
C. The execution and delivery of this Guaranty is a
condition precedent to the obligation of the Lenders to extend credit
to the Borrowers pursuant to the Credit Agreement.
NOW THEREFORE, in consideration of the foregoing and other
good and valuable consideration and as an inducement to the Lenders to
enter into the Credit Agreement and to extend credit to the Borrowers,
the Guarantor hereby agrees as follows:
1. The Guarantor hereby absolutely, irrevocably and
unconditionally guarantees prompt, full and complete payment when due,
whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of (a) the principal of and interest on the Loans
made by the Lenders to, and the Note(s) held by each Lender of, the
Borrowers and (b) all other amounts from time to time owing to the
Lenders or the Agent by the Borrowers under the Credit Agreement, the
Notes and the other Loan Documents, including without limitation any
Rate Hedging Obligations (the "Guaranteed Debt"), it being the intent
of the Guarantor that the guaranty set forth herein shall be a
guaranty of payment and not of collection.
<PAGE> 22
2. The Guarantor waives notice of the acceptance of this
Guaranty and of the extension or incurrence of the Guaranteed Debt or
any part thereof. The Guarantor further waives all setoffs and
counterclaims and presentment, protest, notice, filing of claims with
a court in the event of receivership, bankruptcy or reorganization of
any Borrower, demand or action on delinquency in respect of the
Guaranteed Debt or any part thereof, including any right to require
the Agent or the Lenders to sue any Borrower, any other guarantor or
any other person obligated with respect to the Guaranteed Debt or any
part thereof, or otherwise to enforce payment thereof against any
collateral securing the Guaranteed Debt or any part thereof.
3. The Guarantor hereby agrees that, to the fullest extent
permitted by law, its obligations hereunder shall be continuing,
absolute and unconditional under any and all circumstances and not
subject to any reduction, limitation, impairment, termination, defense
(other than indefeasible payment in full), setoff, counterclaim or
recoupment whatsoever (all of which are hereby expressly waived by it
to the fullest extent permitted by law), whether by reason of any
claim of any character whatsoever, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise. The
validity and enforceability of this Guaranty shall not be impaired or
affected by any of the following: (a) any extension, modification or
renewal of, or indulgence with respect to, or substitution for, the
Guaranteed Debt or any part thereof or any agreement relating thereto
at any time; (b) any failure or omission to perfect or maintain any
lien on, or preserve rights to, any security or collateral or to
enforce any right, power or remedy with respect to the Guaranteed Debt
or any part thereof or any agreement relating thereto, or any
collateral securing the Guaranteed Debt or any part thereof; (c) any
waiver of any right, power or remedy or of any default with respect to
the Guaranteed Debt or any part thereof or any agreement relating
thereto or with respect to any collateral securing the Guaranteed Debt
or any part thereof; (d) any release, surrender, compromise,
settlement, waiver, subordination or modification, with or without
consideration, of, any collateral securing the Guaranteed Debt or any
part thereof, any other guaranties with respect to the Guaranteed Debt
or any part thereof, or any other obligations of any person or entity
with respect to the Guaranteed Debt or any part thereof; (e) the
enforceability or validity of the Guaranteed Debt or any part thereof
or the genuineness, enforceability or validity of any agreement
relating thereto or with respect to any collateral securing the
Guaranteed Debt or any part thereof; (f) the application of payments
received from any source to the payment of indebtedness other than the
Guaranteed Debt, any part thereof or amounts which are not covered by
this Guaranty even though the Lenders might lawfully have elected to
apply such payments to any part or all of the Guaranteed Debt or to
amounts which are not covered by this Guaranty; (g) any change of
ownership of any Borrower or the insolvency, bankruptcy or any other
change in the legal status of any Borrower; (h) any change in, or the
imposition of, any law, decree, regulation or other governmental act<PAGE>
<PAGE> 23
which does or might impair, delay or in any way affect the validity,
enforceability or the payment when due of the Guaranteed Debt; (i) the
failure of any Borrower to maintain in full force, validity or effect
or to obtain or renew when required all governmental and other
approvals, licenses or consents required in connection with the
Guaranteed Debt or this Guaranty, or to take any other action required
in connection with the performance of all obligations pursuant to the
Guaranteed Debt or this Guaranty; (j) the existence of any claim,
setoff or other rights which the Guarantor may have at any time
against any Borrower or any other guarantor in connection herewith or
with any unrelated transaction; (k) the Lenders' election, in any case
or proceeding instituted under chapter 11 of the United States
Bankruptcy Code, of the application of section 1111(b)(2) of the
United States Bankruptcy Code; (l) any borrowing, use of cash
collateral, or grant of a security interest by any Borrower, as debtor
in possession, under section 363 or 364 of the United States
Bankruptcy Code; (m) the disallowance of all or any portion of any of
the Lenders' claims for repayment of the Guaranteed Debt under section
502 or 506 of the United States Bankruptcy Code; or (n) any other fact
or circumstance which might otherwise constitute grounds at law or
equity for the discharge or release of the Guarantor from its
obligations hereunder, all whether or not the Guarantor shall have had
notice or knowledge of any act or omission referred to in the
foregoing CLAUSES (a) THROUGH (n) of this paragraph. It is agreed that
the Guarantor's liability hereunder is independent of any other
guaranties or other obligations at any time in effect with respect to
the Guaranteed Debt or any part thereof and that the Guarantor's
liability hereunder may be enforced regardless of the existence,
validity, enforcement or nonenforcement of any such other guaranties
or other obligations or any provision of any applicable law or
regulation purporting to prohibit payment by any Borrower of the
Guaranteed Debt in the manner agreed upon among the Agent, the Lenders
and the Borrowers. Notwithstanding the provisions of Section 3(a),
(b), (c) and (e) above, the validity and enforceability of this
Guaranty shall be subject to the express terms of any written
amendment, supplement, modification or waiver of the terms or
provisions of this Guaranty signed and delivered by the Agent on
behalf of the Lenders.
4. Credit may be granted or continued from time to time by
the Lenders to the Borrowers without notice to or authorization from
the Guarantor regardless of any Borrower's financial or other
condition at the time of any such grant or continuation. Neither the
Agent nor any Lender shall have an obligation to disclose or discuss
with the Guarantor its assessment of the financial condition of any
Borrower.
5. The Guarantor shall have no right of subrogation with
respect to the Guaranteed Debt and hereby waives any right to enforce
any remedy which the Agent or the Lenders now have or may hereafter
have against any Borrower, any endorser or any other guarantor of all
<PAGE> 24
or any part of the Guaranteed Debt, and the Guarantor hereby waives
any benefit of, and any right to participate in, any security or
collateral given to the Agent or the Lenders to secure payment of the
Guaranteed Debt or any part thereof or any other liability of any
Borrower to the Agent or the Lenders. The Guarantor hereby releases
each Borrower from all, and agrees not to assert or enforce (whether
by or in a legal or equitable proceeding or otherwise) any, "claims"
(as defined in Section 101(4) of the United States Bankruptcy Code, as
amended), whether arising under any law, statute, governmental rule or
regulation or judicial determination or otherwise, to which the
Guarantor is or would at any time be entitled by virtue of its
obligations hereunder, any payment made pursuant thereto or the
exercise by the Agent or any Lender of its rights with respect to any
collateral for the Guaranteed Debt, including any such claims to which
the Guarantor may be entitled as a result of any right of subrogation,
exoneration or reimbursement.
6. The Guarantor authorizes the Lenders to take any action
or exercise any remedy with respect to any collateral from time to
time securing the Guaranteed Debt, which the Lenders in their sole
discretion shall determine, without notice to the Guarantor.
7. In the event the Lenders in their sole discretion elect
to give notice of any action with respect to any collateral securing
the Guaranteed Debt or any part thereof, ten (10) days' written notice
mailed to the Guarantor by ordinary mail at the address shown hereon
shall be deemed reasonable notice of any matters contained in such
notice. The Guarantor consents and agrees that neither the Agent nor
the Lenders shall be under any obligation to marshall any assets in
favor of the Guarantor or against or in payment of any or all of the
Guaranteed Debt.
8. In the event that acceleration of the time for payment
of any of the Guaranteed Debt is stayed upon the insolvency,
bankruptcy or reorganization of any Borrower, or otherwise, all such
amounts shall nonetheless be payable by the Guarantor forthwith upon
demand by the Agent or the Lenders. The Guarantor further agrees
that, to the extent that any Borrower makes a payment or payments to
any of the Lenders on the Guaranteed Debt, or the Agent or the Lenders
receive any proceeds of collateral securing the Guaranteed Debt, which
payment or receipt of proceeds or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or
required to be returned or repaid to such Borrower, its estate,
trustee, receiver, debtor in possession or any other party, including,
without limitation, the Guarantor, under any insolvency or bankruptcy
law, state or federal law, common law or equitable cause, then to the
extent of such payment, return or repayment, the obligation or part
thereof which has been paid, reduced or satisfied by such amount shall
be reinstated and continued in full force and effect as of the date
when such initial payment, reduction or satisfaction occurred.
<PAGE> 25
9. No delay on the part of the Agent or the Lenders in the
exercise of any right, power or remedy shall operate as a waiver
thereof, and no single or partial exercise by the Agent or the Lenders
of any right, power or remedy shall preclude any further exercise
thereof; nor shall any amendment, supplement, modification or waiver
of any of the terms or provisions of this Guaranty be binding upon the
Agent or the Lenders, except as expressly set forth in a writing duly
signed and delivered on the Lenders' behalf by the Agent. The failure
by the Agent or the Lenders at any time or times hereafter to require
strict performance by any Borrower or the Guarantor of any of the
provisions, warranties, terms and conditions contained in any
promissory note, security agreement, agreement, guaranty, instrument
or document now or at any time or times hereafter executed pursuant to
the terms of, or in connection with, the Credit Agreement by any
Borrower or the Guarantor and delivered to the Agent or the Lenders
shall not waive, affect or diminish any right of the Agent or the
Lenders at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been waived by any
act or knowledge of the Agent or the Lenders, their agents, officers
writing duly signed and delivered on the Lenders' behalf by the Agent.
No waiver by the Agent or the Lenders of any default shall operate as
a waiver of any other default or the same default on a future
occasion, and no action by the Agent or the Lenders permitted
hereunder shall in any way affect or impair the Agent's or the
Lenders' rights or powers, or the obligations of the Guarantor under
this Guaranty. Any determination by a court of competent jurisdiction
of the amount of any Guaranteed Debt owing by the Borrowers to the
Lenders shall be conclusive and binding on the Guarantor irrespective
of whether the Guarantor was a party to the suit or action in which
such determination was made.
10. Subject to the provisions of SECTION 8, this Guaranty
shall continue in effect until the Credit Agreement has terminated,
the Guaranteed Debt has been paid in full and the other conditions of
this Guaranty have been satisfied.
11. In addition to and without limitation of any rights,
powers or remedies of the Agent or the Lenders under applicable law,
any time after maturity of the Guaranteed Debt, whether by
acceleration or otherwise, the Agent or the Lenders may, in their sole
discretion, with notice after the fact to the Guarantor and regardless
of the acceptance of any security or collateral for the payment
hereof, appropriate and apply toward the payment of the Guaranteed
Debt (a) any indebtedness due or to become due from any of the Lenders
to the Guarantor, and (b) any moneys, credits or other property
belonging to the Guarantor (including all account balances, whether
provisional or final and whether or not collected or available) at any
time held by or coming into the possession of any of the Agent or any
Lender whether for deposit or otherwise.
<PAGE> 26
12. The Guarantor agrees to pay all costs, fees and
expenses (including reasonable attorneys' fees and time charges, which
attorneys may be employees of the Agent or a Lender) incurred by the
Agent or any Lender in collecting or enforcing the obligations of the
Guarantor under this Guaranty.
13. This Guaranty shall bind the Guarantor and its
successors and assigns and shall inure to the benefit of the Agent,
the Lenders and their successors and assigns. All references herein to
the Lenders shall for all purposes also include all Purchasers and
Participants (as such terms are defined in the Credit Agreement). All
references herein to the Borrowers shall be deemed to include its
successors and assigns including, without limitation, a receiver,
trustee or debtor in possession of or for the Borrowers.
14. THIS GUARANTY SHALL BE DEEMED TO HAVE BEEN MADE AT
CHICAGO, ILLINOIS, AND SHALL BE CONSTRUED AND THE RIGHTS AND
LIABILITIES OF THE AGENT, THE LENDERS AND THE GUARANTOR DETERMINED, IN
ACCORDANCE WITH THE INTERNATIONAL LAWS, WITHOUT REGARD TO CONFLICT OF
LAWS PROVISIONS, OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. THE GUARANTOR CONSENTS TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK
COUNTY, ILLINOIS, WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MESSENGER
OR BY REGISTERED MAIL DIRECTED TO THE GUARANTOR AT THE ADDRESS
INDICATED BELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED AS AFORESAID. THE
GUARANTOR WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER. NOTHING
CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF THE AGENT OR THE LENDERS TO BRING ANY ACTION OR PROCEEDING
AGAINST THE GUARANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
15. EACH OF THE GUARANTOR AND, BY THEIR ACCEPTANCE HEREOF,
THE AGENT AND EACH LENDER, WAIVES TRIAL BY JURY WITH RESPECT TO
DISPUTES ARISING HEREUNDER.
16. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
17. Except as otherwise expressly provided herein, any
notice required or desired to be served, given or delivered to any
party hereto under this Guaranty shall be in writing by telex,
facsimile, United States mail or overnight courier and addressed or<PAGE>
<PAGE> 27
delivered to such party (a) if to the Agent or the Lenders, at their
respective addresses set forth in the Credit Agreement, or (b) if to
the Guarantor, at its address indicated on EXHIBIT A hereto, or to
such other address as the Agent or the Lenders or the Guarantor
designates to the Agent in writing. All notices by United States mail
shall be sent certified mail, return receipt requested. All notices
hereunder shall be effective upon delivery or refusal of receipt;
PROVIDED, that any notice transmitted by telex or facsimile shall be
deemed given when transmitted (answerback confirmed in the case of
telexes).
18. All payments hereunder shall be made by the Guarantor
in the currency in which the Guaranteed Debt was borrowed (the
"Specified Currency") and in the manner and at the address (the
"Specified Place") specified in Section 2.14(a) of the Credit
Agreement for the payment of such Guaranteed Debt. Payment of the
Guaranteed Debt shall not be discharged by an amount paid in another
currency or in another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on conversion to the
Specified Currency and transferred to the Specified Place under normal
banking procedures does not yield the amount of the Specified Currency
at the Specified Place due hereunder. If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum due
hereunder in the Specified Currency into another currency (the
"Judgment Currency"), the rate of exchange which shall be applied
shall be that at which in accordance with normal banking procedures
the Agent could purchase the Judgment Currency with that amount of the
Specified Currency on the Business Day next preceding that on which
such judgment is rendered. The obligation of the Guarantor in respect
of any such sum due from it to the Agent or any Lender hereunder (an
"Entitled Person") shall, notwithstanding the rate of exchange
actually applied in rendering such judgment, be discharged only to the
extent that on the Business Day following receipt by such Entitled
Person of any sum adjudged to be due hereunder in the Judgment
Currency, such Entitled Person may in accordance with normal banking
procedures purchase and transfer to the Specified Place the Specified
Currency with the amount of the Judgment Currency so adjudged to be
due; and the Guarantor, as a separate Obligation and notwithstanding
any such judgment, agrees to indemnify such Entitled Person against,
and to pay such Entitled Person on demand, in the Specified Currency,
any difference between the sum originally due to such Entitled Person
in the Specified Currency and the amount of the Specified Currency so
purchased and transferred.
19. (a) Except as otherwise required by applicable law,
all sums payable by the Guarantor whether in respect of principal,
interest, fees or otherwise shall be paid without deduction for any
present and future taxes, levies, assessments, imposts, deductions,
charges or withholdings imposed by any country, any Governmental
Agency thereof or therein, any jurisdiction from which any or all such
payments are made and any political subdivision or taxing authority
<PAGE> 28
thereof or therein, EXCLUDING income and franchise taxes (and
deductions and withholdings therefor) imposed on the Agent or any
Lender (i) by the jurisdiction under the laws of which the Agent or
such Lender is organized or any Governmental Agency or taxing
authority thereof or therein, or (ii) by any jurisdiction in which the
Agent's or such Lender's Lending Installations are located or any
Governmental Agency or taxing authority thereof or therein (such
excluded taxes, deductions and withholdings, collectively, "Excluded
Taxes," and all such taxes, levies, imposts, deductions, charges and
withholdings (including Excluded Taxes), collectively, "Taxes"), which
amounts shall be paid by such Borrower as provided in SECTION 19(b).
(b) If (i) the Guarantor or any other Person is required by
law to make any deduction or withholding on account of any Tax (other
than Excluded Taxes) or other amount from any sum paid or expressed to
be payable by the Guarantor to any Lender under this Guaranty; or (ii)
any party to this Guaranty (or any Person on its behalf) or the Credit
Agreement other than the Guarantor is required by law to make any
deduction or withholding from, or (other than on account of any
Excluded Tax) any payment on or calculated by reference to the amount
of, any such sum received or receivable by any Lender under this
Guaranty, then:
(w) the Guarantor shall notify the Agent of any such requirement
or any change in any such requirement as soon as the
Guarantor becomes aware of it;
(x) the Guarantor shall pay any such Tax or other amount before
the date on which penalties attached thereto become due and
payable, such payment to be made (if the liability to pay is
imposed on the Guarantor) for its own account or (if that
liability is imposed on the Agent or any Lender) on behalf
of and in the name of that party;
(y) the sum payable by the Guarantor in respect of which the
relevant deduction, withholding or payment is required shall
(except, in the case of any such payment, to the extent that
the amount thereof is not ascertainable when that sum is
paid) be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment,
that party receives on the due date and retains (free from
any liability in respect of any such deduction, withholding
or payment) a sum equal to that which it would have received
and so retained had no such deduction, withholding or
payment been required or made; and
(z) within thirty (30) days after payment of any sum from which
the Guarantor is required by law to make any deduction or
withholding, and within thirty (30) days after the due date
of payment of any Tax or other amount which it is required
by clause (x) above to pay, it shall deliver to the Agent
<PAGE> 29
all such certified documents and other evidence as to the
making of such deduction, withholding or payment as (i) are
reasonably satisfactory to other affected parties as proof
of such deduction, withholding or payment and of the
remittance thereof to the relevant taxing or other authority
and (ii) are reasonably required by any such party to enable
it to claim a tax credit with respect to such deduction,
withholding or payment.
[signature page to follow]
<PAGE> 30
IN WITNESS WHEREOF, the Guarantor has entered into this
Domestic Guaranty as of the date first written above.
SCOTSMAN INDUSTRIES, INC.
By: /s/ R. Osborne
----------------------------------------
Its: President
----------------------------------------
<PAGE> 31
EXHIBIT A TO DOMESTIC GUARANTY
------------------------------
ADDRESS OF GUARANTOR:
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Attention:Donald D. Holmes
Telephone:847-215-4447
Facsimile:847-634-8823<PAGE>
EXHIBIT 10.2
DOMESTIC GUARANTY
-----------------
This Guaranty (this "Guaranty") is made as of the 12TH day
of March, 1997 by ___________________, a ________ corporation (the
"Guarantor"), in favor of the Agent and the Lenders (as hereinafter
defined).
R E C I T A L S:
----------------
A. Scotsman Group Inc. and the other parties named therein
(collectively, the "Borrowers"), Scotsman Industries, Inc., the
financial institutions named therein (the "Lenders") and The First
National Bank of Chicago, as Agent (the "Agent"), have entered into a
certain Credit Agreement dated as of the date hereof (as from time to
time amended, restated, modified or supplemented, the "Credit
Agreement"). Each term used but not otherwise defined herein shall
have the meaning ascribed to such term by the Credit Agreement.
B. The Guarantor will receive substantial and direct
benefits from the extensions of credit contemplated by the Credit
Agreement and is entering into this Guaranty to induce the Agent and
the Lenders to enter into the Credit Agreement and extend credit to
the Borrowers thereunder.
C. The execution and delivery of this Guaranty is a
condition precedent to the obligation of the Lenders to extend credit
to the Borrowers pursuant to the Credit Agreement.
NOW THEREFORE, in consideration of the foregoing and other
good and valuable consideration and as an inducement to the Lenders to
enter into the Credit Agreement and to extend credit to the Borrowers,
the Guarantor hereby agrees as follows:
1. The Guarantor hereby absolutely, irrevocably and
unconditionally guarantees prompt, full and complete payment when due,
whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of (a) the principal of and interest on the Loans
made by the Lenders to, and the Note(s) held by each Lender of, the
Borrowers and (b) all other amounts from time to time owing to the
Lenders or the Agent by the Borrowers under the Credit Agreement, the
Notes and the other Loan Documents, including without limitation any
Rate Hedging Obligations (the "Guaranteed Debt"), it being the intent
of the Guarantor that the guaranty set forth herein shall be a
guaranty of payment and not of collection.
<PAGE> 33
2. The Guarantor waives notice of the acceptance of this
Guaranty and of the extension or incurrence of the Guaranteed Debt or
any part thereof. The Guarantor further waives all setoffs and
counterclaims and presentment, protest, notice, filing of claims with
a court in the event of receivership, bankruptcy or reorganization of
any Borrower, demand or action on delinquency in respect of the
Guaranteed Debt or any part thereof, including any right to require
the Agent or the Lenders to sue any Borrower, any other guarantor or
any other person obligated with respect to the Guaranteed Debt or any
part thereof, or otherwise to enforce payment thereof against any
collateral securing the Guaranteed Debt or any part thereof.
3. The Guarantor hereby agrees that, to the fullest extent
permitted by law, its obligations hereunder shall be continuing,
absolute and unconditional under any and all circumstances and not
subject to any reduction, limitation, impairment, termination, defense
(other than indefeasible payment in full), setoff, counterclaim or
recoupment whatsoever (all of which are hereby expressly waived by it
to the fullest extent permitted by law), whether by reason of any
claim of any character whatsoever, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise. The
validity and enforceability of this Guaranty shall not be impaired or
affected by any of the following: (a) any extension, modification or
renewal of, or indulgence with respect to, or substitution for, the
Guaranteed Debt or any part thereof or any agreement relating thereto
at any time; (b) any failure or omission to perfect or maintain any
lien on, or preserve rights to, any security or collateral or to
enforce any right, power or remedy with respect to the Guaranteed Debt
or any part thereof or any agreement relating thereto, or any
collateral securing the Guaranteed Debt or any part thereof; (c) any
waiver of any right, power or remedy or of any default with respect to
the Guaranteed Debt or any part thereof or any agreement relating
thereto or with respect to any collateral securing the Guaranteed Debt
or any part thereof; (d) any release, surrender, compromise,
settlement, waiver, subordination or modification, with or without
consideration, of, any collateral securing the Guaranteed Debt or any
part thereof, any other guaranties with respect to the Guaranteed Debt
or any part thereof, or any other obligations of any person or entity
with respect to the Guaranteed Debt or any part thereof; (e) the
enforceability or validity of the Guaranteed Debt or any part thereof
or the genuineness, enforceability or validity of any agreement
relating thereto or with respect to any collateral securing the
Guaranteed Debt or any part thereof; (f) the application of payments
received from any source to the payment of indebtedness other than the
Guaranteed Debt, any part thereof or amounts which are not covered by
this Guaranty even though the Lenders might lawfully have elected to
apply such payments to any part or all of the Guaranteed Debt or to
amounts which are not covered by this Guaranty; (g) any change of
ownership of any Borrower or the insolvency, bankruptcy or any other
change in the legal status of any Borrower; (h) any change in, or the
imposition of, any law, decree, regulation or other governmental act
<PAGE> 34
which does or might impair, delay or in any way affect the validity,
enforceability or the payment when due of the Guaranteed Debt; (i) the
failure of any Borrower to maintain in full force, validity or effect
or to obtain or renew when required all governmental and other
approvals, licenses or consents required in connection with the
Guaranteed Debt or this Guaranty, or to take any other action required
in connection with the performance of all obligations pursuant to the
Guaranteed Debt or this Guaranty; (j) the existence of any claim,
setoff or other rights which the Guarantor may have at any time
against any Borrower or any other guarantor in connection herewith or
with any unrelated transaction; (k) the Lenders' election, in any case
or proceeding instituted under chapter 11 of the United States
Bankruptcy Code, of the application of section 1111(b)(2) of the
United States Bankruptcy Code; (l) any borrowing, use of cash
collateral, or grant of a security interest by any Borrower, as debtor
in possession, under section 363 or 364 of the United States
Bankruptcy Code; (m) the disallowance of all or any portion of any of
the Lenders' claims for repayment of the Guaranteed Debt under section
502 or 506 of the United States Bankruptcy Code; or (n) any other fact
or circumstance which might otherwise constitute grounds at law or
equity for the discharge or release of the Guarantor from its
obligations hereunder, all whether or not the Guarantor shall have had
notice or knowledge of any act or omission referred to in the
foregoing CLAUSES (a) THROUGH (n) of this paragraph. It is agreed that
the Guarantor's liability hereunder is independent of any other
guaranties or other obligations at any time in effect with respect to
the Guaranteed Debt or any part thereof and that the Guarantor's
liability hereunder may be enforced regardless of the existence,
validity, enforcement or nonenforcement of any such other guaranties
or other obligations or any provision of any applicable law or
regulation purporting to prohibit payment by any Borrower of the
Guaranteed Debt in the manner agreed upon among the Agent, the Lenders
and the Borrowers. Notwithstanding the provisions of Section 3(a),
(b), (c) and (e) above, the validity and enforceability of this
Guaranty shall be subject to the express terms of any written
amendment, supplement, modification or waiver of the terms or
provisions of this Guaranty signed and delivered by the Agent on
behalf of the Lenders.
4. Credit may be granted or continued from time to time by
the Lenders to the Borrowers without notice to or authorization from
the Guarantor regardless of any Borrower's financial or other
condition at the time of any such grant or continuation. Neither the
Agent nor any Lender shall have an obligation to disclose or discuss
with the Guarantor its assessment of the financial condition of any
Borrower.
5. The Guarantor shall have no right of subrogation with
respect to the Guaranteed Debt and hereby waives any right to enforce
any remedy which the Agent or the Lenders now have or may hereafter
have against any Borrower, any endorser or any other guarantor of all
<PAGE> 35
or any part of the Guaranteed Debt, and the Guarantor hereby waives
any benefit of, and any right to participate in, any security or
collateral given to the Agent or the Lenders to secure payment of the
Guaranteed Debt or any part thereof or any other liability of any
Borrower to the Agent or the Lenders. The Guarantor hereby releases
each Borrower from all, and agrees not to assert or enforce (whether
by or in a legal or equitable proceeding or otherwise) any, "claims"
(as defined in Section 101(4) of the United States Bankruptcy Code, as
amended), whether arising under any law, statute, governmental rule or
regulation or judicial determination or otherwise, to which the
Guarantor is or would at any time be entitled by virtue of its
obligations hereunder, any payment made pursuant thereto or the
exercise by the Agent or any Lender of its rights with respect to any
collateral for the Guaranteed Debt, including any such claims to which
the Guarantor may be entitled as a result of any right of subrogation,
exoneration or reimbursement.
6. The Guarantor authorizes the Lenders to take any action
or exercise any remedy with respect to any collateral from time to
time securing the Guaranteed Debt, which the Lenders in their sole
discretion shall determine, without notice to the Guarantor.
7. In the event the Lenders in their sole discretion elect
to give notice of any action with respect to any collateral securing
the Guaranteed Debt or any part thereof, ten (10) days' written notice
mailed to the Guarantor by ordinary mail at the address shown hereon
shall be deemed reasonable notice of any matters contained in such
notice. The Guarantor consents and agrees that neither the Agent nor
the Lenders shall be under any obligation to marshall any assets in
favor of the Guarantor or against or in payment of any or all of the
Guaranteed Debt.
8. In the event that acceleration of the time for payment
of any of the Guaranteed Debt is stayed upon the insolvency,
bankruptcy or reorganization of any Borrower, or otherwise, all such
amounts shall nonetheless be payable by the Guarantor forthwith upon
demand by the Agent or the Lenders. The Guarantor further agrees
that, to the extent that any Borrower makes a payment or payments to
any of the Lenders on the Guaranteed Debt, or the Agent or the Lenders
receive any proceeds of collateral securing the Guaranteed Debt, which
payment or receipt of proceeds or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or
required to be returned or repaid to such Borrower, its estate,
trustee, receiver, debtor in possession or any other party, including,
without limitation, the Guarantor, under any insolvency or bankruptcy
law, state or federal law, common law or equitable cause, then to the
extent of such payment, return or repayment, the obligation or part
thereof which has been paid, reduced or satisfied by such amount shall
be reinstated and continued in full force and effect as of the date
when such initial payment, reduction or satisfaction occurred.
<PAGE> 36
9. No delay on the part of the Agent or the Lenders in the
exercise of any right, power or remedy shall operate as a waiver
thereof, and no single or partial exercise by the Agent or the Lenders
of any right, power or remedy shall preclude any further exercise
thereof; nor shall any amendment, supplement, modification or waiver
of any of the terms or provisions of this Guaranty be binding upon the
Agent or the Lenders, except as expressly set forth in a writing duly
signed and delivered on the Lenders' behalf by the Agent. The failure
by the Agent or the Lenders at any time or times hereafter to require
strict performance by any Borrower or the Guarantor of any of the
provisions, warranties, terms and conditions contained in any
promissory note, security agreement, agreement, guaranty, instrument
or document now or at any time or times hereafter executed pursuant to
the terms of, or in connection with, the Credit Agreement by any
Borrower or the Guarantor and delivered to the Agent or the Lenders
shall not waive, affect or diminish any right of the Agent or the
Lenders at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been waived by any
act or knowledge of the Agent or the Lenders, their agents, officers
or employees, unless such waiver is contained in an instrument in
writing duly signed and delivered on the Lenders' behalf by the Agent.
No waiver by the Agent or the Lenders of any default shall operate as
a waiver of any other default or the same default on a future
occasion, and no action by the Agent or the Lenders permitted
hereunder shall in any way affect or impair the Agent's or the
Lenders' rights or powers, or the obligations of the Guarantor under
this Guaranty. Any determination by a court of competent jurisdiction
of the amount of any Guaranteed Debt owing by the Borrowers to the
Lenders shall be conclusive and binding on the Guarantor irrespective
of whether the Guarantor was a party to the suit or action in which
such determination was made.
10. Subject to the provisions of SECTION 8, this
Guaranty shall continue in effect until the Credit Agreement has
terminated, the Guaranteed Debt has been paid in full and the other
conditions of this Guaranty have been satisfied.
11. In addition to and without limitation of any rights,
powers or remedies of the Agent or the Lenders under applicable law,
any time after maturity of the Guaranteed Debt, whether by
acceleration or otherwise, the Agent or the Lenders may, in their sole
discretion, with notice after the fact to the Guarantor and regardless
of the acceptance of any security or collateral for the payment
hereof, appropriate and apply toward the payment of the Guaranteed
Debt (a) any indebtedness due or to become due from any of the Lenders
to the Guarantor, and (b) any moneys, credits or other property
belonging to the Guarantor (including all account balances, whether
provisional or final and whether or not collected or available) at any
time held by or coming into the possession of any of the Agent or any
Lender whether for deposit or otherwise.
<PAGE> 37
12. The Guarantor agrees to pay all costs, fees and
expenses (including reasonable attorneys' fees and time charges, which
attorneys may be employees of the Agent or a Lender) incurred by the
Agent or any Lender in collecting or enforcing the obligations of the
Guarantor under this Guaranty.
13. This Guaranty shall bind the Guarantor and its
successors and assigns and shall inure to the benefit of the Agent,
the Lenders and their successors and assigns. All references herein
to the Lenders shall for all purposes also include all Purchasers and
Participants (as such terms are defined in the Credit Agreement). All
references herein to the Borrowers shall be deemed to include its
successors and assigns including, without limitation, a receiver,
trustee or debtor in possession of or for the Borrowers.
14. THIS GUARANTY SHALL BE DEEMED TO HAVE BEEN MADE AT
CHICAGO, ILLINOIS, AND SHALL BE CONSTRUED AND THE RIGHTS AND
LIABILITIES OF THE AGENT, THE LENDERS AND THE GUARANTOR DETERMINED, IN
ACCORDANCE WITH THE INTERNATIONAL LAWS, WITHOUT REGARD TO CONFLICT OF
LAWS PROVISIONS, OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. THE GUARANTOR CONSENTS TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK
COUNTY, ILLINOIS, WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MESSENGER
OR BY REGISTERED MAIL DIRECTED TO THE GUARANTOR AT THE ADDRESS
INDICATED BELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED AS AFORESAID.
THE GUARANTOR WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND
ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER. NOTHING
CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF THE AGENT OR THE LENDERS TO BRING ANY ACTION OR PROCEEDING
AGAINST THE GUARANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
15. EACH OF THE GUARANTOR AND, BY THEIR ACCEPTANCE HEREOF,
THE AGENT AND EACH LENDER, WAIVES TRIAL BY JURY WITH RESPECT TO
DISPUTES ARISING HEREUNDER.
16. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
17. Except as otherwise expressly provided herein, any
notice required or desired to be served, given or delivered to any
party hereto under this Guaranty shall be in writing by telex,
facsimile, United States mail or overnight courier and addressed or
<PAGE> 38
delivered to such party (a) if to the Agent or the Lenders, at their
respective addresses set forth in the Credit Agreement, or (b) if to
the Guarantor, at its address indicated on EXHIBIT A hereto, or to
such other address as the Agent or the Lenders or the Guarantor
designates to the Agent in writing. All notices by United States mail
shall be sent certified mail, return receipt requested. All notices
hereunder shall be effective upon delivery or refusal of receipt;
PROVIDED, that any notice transmitted by telex or facsimile shall be
deemed given when transmitted (answerback confirmed in the case of
telexes).
18. All payments hereunder shall be made by the Guarantor
in the currency in which the Guaranteed Debt was borrowed (the
"Specified Currency") and in the manner and at the address (the
"Specified Place") specified in Section 2.14(a) of the Credit
Agreement for the payment of such Guaranteed Debt. Payment of the
Guaranteed Debt shall not be discharged by an amount paid in another
currency or in another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on conversion to the
Specified Currency and transferred to the Specified Place under normal
banking procedures does not yield the amount of the Specified Currency
at the Specified Place due hereunder. If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum due
hereunder in the Specified Currency into another currency (the
"Judgment Currency"), the rate of exchange which shall be applied
shall be that at which in accordance with normal banking procedures
the Agent could purchase the Judgment Currency with that amount of the
Specified Currency on the Business Day next preceding that on which
such judgment is rendered. The obligation of the Guarantor in respect
of any such sum due from it to the Agent or any Lender hereunder (an
"Entitled Person") shall, notwithstanding the rate of exchange
actually applied in rendering such judgment, be discharged only to the
extent that on the Business Day following receipt by such Entitled
Person of any sum adjudged to be due hereunder in the Judgment
Currency, such Entitled Person may in accordance with normal banking
procedures purchase and transfer to the Specified Place the Specified
Currency with the amount of the Judgment Currency so adjudged to be
due; and the Guarantor, as a separate Obligation and notwithstanding
any such judgment, agrees to indemnify such Entitled Person against,
and to pay such Entitled Person on demand, in the Specified Currency,
any difference between the sum originally due to such Entitled Person
in the Specified Currency and the amount of the Specified Currency so
purchased and transferred.
19. (a) Except as otherwise required by applicable law, all
sums payable by the Guarantor whether in respect of principal,
interest, fees or otherwise shall be paid without deduction for any
present and future taxes, levies, assessments, imposts, deductions,
charges or withholdings imposed by any country, any Governmental
Agency thereof or therein, any jurisdiction from which any or all such
payments are made and any political subdivision or taxing authority
<PAGE> 39
thereof or therein, EXCLUDING income and franchise taxes (and
deductions and withholdings therefor) imposed on the Agent or any
Lender (i) by the jurisdiction under the laws of which the Agent or
such Lender is organized or any Governmental Agency or taxing
authority thereof or therein, or (ii) by any jurisdiction in which the
Agent's or such Lender's Lending Installations are located or any
Governmental Agency or taxing authority thereof or therein (such
excluded taxes, deductions and withholdings, collectively, "Excluded
Taxes," and all such taxes, levies, imposts, deductions, charges and
withholdings (including Excluded Taxes), collectively, "Taxes"), which
amounts shall be paid by such Borrower as provided in SECTION 19(b).
(b) If (i) the Guarantor or any other Person is required by
law to make any deduction or withholding on account of any Tax (other
than Excluded Taxes) or other amount from any sum paid or expressed to
be payable by the Guarantor to any Lender under this Guaranty; or (ii)
any party to this Guaranty (or any Person on its behalf) or the Credit
Agreement other than the Guarantor is required by law to make any
deduction or withholding from, or (other than on account of any
Excluded Tax) any payment on or calculated by reference to the amount
of, any such sum received or receivable by any Lender under this
Guaranty, then:
(w) the Guarantor shall notify the Agent of any such requirement
or any change in any such requirement as soon as the
Guarantor becomes aware of it;
(x) the Guarantor shall pay any such Tax or other amount before
the date on which penalties attached thereto become due and
payable, such payment to be made (if the liability to pay is
imposed on the Guarantor) for its own account or (if that
liability is imposed on the Agent or any Lender) on behalf
of and in the name of that party;
(y) the sum payable by the Guarantor in respect of which the
relevant deduction, withholding or payment is required shall
(except, in the case of any such payment, to the extent that
the amount thereof is not ascertainable when that sum is
paid) be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment,
that party receives on the due date and retains (free from
any liability in respect of any such deduction, withholding
or payment) a sum equal to that which it would have received
and so retained had no such deduction, withholding or
payment been required or made; and
(z) within thirty (30) days after payment of any sum from which
the Guarantor is required by law to make any deduction or
withholding, and within thirty (30) days after the due date
of payment of any Tax or other amount which it is required
by clause (x) above to pay, it shall deliver to the Agent
<PAGE> 40
all such certified documents and other evidence as to the
making of such deduction, withholding or payment as (i) are
reasonably satisfactory to other affected parties as proof
of such deduction, withholding or payment and of the
remittance thereof to the relevant taxing or other authority
and (ii) are reasonably required by any such party to enable
it to claim a tax credit with respect to such deduction,
withholding or payment.
20. It is understood that while the amount of the
Guaranteed Debt guaranteed hereby is not limited, if in any action or
proceeding involving any state, federal or foreign bankruptcy,
insolvency or other law affecting the rights of creditors generally,
this Guaranty would be held or determined to be void, invalid or
unenforceable on account of the amount of the aggregate liability
under this Guaranty, then, notwithstanding any other provision of this
Guaranty to the contrary, the aggregate amount of such liability
shall, without any further action of the Agent, the Lenders or any
other Person, be automatically limited and reduced to the highest
amount which is valid and enforceable as determined in such action or
proceeding.
[signature page to follow]
<PAGE> 41
IN WITNESS WHEREOF, the Guarantor has entered into this
Guaranty as of the date first written above.
_______________
By:
-----------------------------------------
Its:
-----------------------------------------
<PAGE> 42
EXHIBIT A TO DOMESTIC GUARANTY
ADDRESS OF GUARANTOR:
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Attention: Donald D. Holmes
Telephone: 847-215-4447
Facsimile: 847/634-8823
EXHIBIT 10.3
FOREIGN GUARANTY
----------------
This Guaranty (this "Guaranty") is made as of the 12th day
of March, 1997 by ______________________, a __________________________
(the "Guarantor"), in favor of the Agent and the Lenders (as
hereinafter defined).
R E C I T A L S:
----------------
A. Scotsman Group Inc. and the other parties named therein
(collectively, the "Borrowers"), Scotsman Industries, Inc., the
financial institutions named therein (the "Lenders") and The First
National Bank of Chicago, as Agent (the "Agent"), have entered into a
certain Credit Agreement dated as of the date hereof (as from time to
time amended, restated, modified or supplemented, the "Credit
Agreement"). Each term used but not otherwise defined herein shall
have the meaning ascribed to such term by the Credit Agreement.
B. The Guarantor will receive substantial and direct
benefits from the extensions of credit contemplated by the Credit
Agreement and is entering into this Guaranty to induce the Agent and
the Lenders to enter into the Credit Agreement and to extend credit to
the Borrowers thereunder.
C. The execution and delivery of this Guaranty is a
condition precedent to the obligation of the Lenders to extend credit
to the Borrowers pursuant to the Credit Agreement.
NOW THEREFORE, in consideration of the foregoing and other
good and valuable consideration and as an inducement to the Lenders to
enter into the Credit Agreement and extend credit to the Borrowers,
the Guarantor hereby agrees as follows:
1. The Guarantor hereby absolutely, irrevocably and
unconditionally guarantees prompt, full and complete payment when due,
whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of (a) the principal of and interest on the Loans
made by the Lenders to, and the Note(s) held by each Lender of, the
Borrowers which constitute Foreign Subsidiaries (the "Foreign
Borrowers") and (b) all other amounts from time to time owing to the
Lenders or the Agent by the Foreign Borrowers under the Credit
Agreement, the Notes and the other Loan Documents, including without
limitation any Rate Hedging Obligations (the "Guaranteed Debt"), it
being the intent of the Guarantor that the guaranty set forth herein
shall be a guaranty of payment and not of collection.
<PAGE> 44
2. The Guarantor waives notice of the acceptance of this
Guaranty and of the extension or incurrence of the Guaranteed Debt or
any part thereof. The Guarantor further waives all setoffs and
counterclaims and presentment, protest, notice, filing of claims with
a court in the event of receivership, bankruptcy or reorganization of
any Borrower, demand or action on delinquency in respect of the
Guaranteed Debt or any part thereof, including any right to require
the Agent or the Lenders to sue any Borrower, any other guarantor or
any other person obligated with respect to the Guaranteed Debt or any
part thereof, or otherwise to enforce payment thereof against any
collateral securing the Guaranteed Debt or any part thereof.
3. The Guarantor hereby agrees that, to the fullest extent
permitted by law, its obligations hereunder shall be continuing,
absolute and unconditional under any and all circumstances and not
subject to any reduction, limitation, impairment, termination, defense
(other than indefeasible payment in full), setoff, counterclaim or
recoupment whatsoever (all of which are hereby expressly waived by it
to the fullest extent permitted by law), whether by reason of any
claim of any character whatsoever, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise. The
validity and enforceability of this Guaranty shall not be impaired or
affected by any of the following: (a) any extension, modification or
renewal of, or indulgence with respect to, or substitution for, the
Guaranteed Debt or any part thereof or any agreement relating thereto
at any time; (b) any failure or omission to perfect or maintain any
lien on, or preserve rights to, any security or collateral or to
enforce any right, power or remedy with respect to the Guaranteed Debt
or any part thereof or any agreement relating thereto, or any
collateral securing the Guaranteed Debt or any part thereof; (c) any
waiver of any right, power or remedy or of any default with respect to
the Guaranteed Debt or any part thereof or any agreement relating
thereto or with respect to any collateral securing the Guaranteed Debt
or any part thereof; (d) any release, surrender, compromise,
settlement, waiver, subordination or modification, with or without
consideration, of, any collateral securing the Guaranteed Debt or any
part thereof, any other guaranties with respect to the Guaranteed Debt
or any part thereof, or any other obligations of any person or entity
with respect to the Guaranteed Debt or any part thereof; (e) the
enforceability or validity of the Guaranteed Debt or any part thereof
or the genuineness, enforceability or validity of any agreement
relating thereto or with respect to any collateral securing the
Guaranteed Debt or any part thereof; (f) the application of payments
received from any source to the payment of indebtedness other than the
Guaranteed Debt, any part thereof or amounts which are not covered by
this Guaranty even though the Lenders might lawfully have elected to
apply such payments to any part or all of the Guaranteed Debt or to
amounts which are not covered by this Guaranty; (g) any change of
ownership of any Borrower or the insolvency, bankruptcy or any other
change in the legal status of any Borrower; (h) any change in, or the
imposition of, any law, decree, regulation or other governmental act
which does or might impair, delay or in any way affect the validity,
<PAGE> 45
enforceability or the payment when due of the Guaranteed Debt; (i) the
failure of any Borrower to maintain in full force, validity or effect
or to obtain or renew when required all governmental and other
approvals, licenses or consents required in connection with the
Guaranteed Debt or this Guaranty, or to take any other action required
in connection with the performance of all obligations pursuant to the
Guaranteed Debt or this Guaranty; (j) the existence of any claim,
setoff or other rights which the Guarantor may have at any time
against any Borrower or any other guarantor in connection herewith or
with any unrelated transaction; (k) the Lenders' election, in any case
or proceeding instituted under chapter 11 of the United States
Bankruptcy Code, of the application of section 1111(b)(2) of the
United States Bankruptcy Code; (1) any borrowing, use of cash
collateral, or grant of a security interest by any Borrower, as debtor
in possession, under section 363 or 364 of the United States
Bankruptcy Code; (m) the disallowance of all or any portion of any of
the Lenders' claims for repayment of the Guaranteed Debt under section
502 or 506 of the United States Bankruptcy Code; or (n) any other fact
or circumstance which might otherwise constitute grounds at law or
equity for the discharge or release of the Guarantor from its
obligations hereunder, all whether or not the Guarantor shall have had
notice or knowledge of any act or omission referred to in the
foregoing CLAUSES (a) THROUGH (n) of this paragraph. It is agreed that
the Guarantor's liability hereunder is independent of any other
guaranties or other obligations at any time in effect with respect to
the Guaranteed Debt or any part thereof and that the Guarantor's
liability hereunder may be enforced regardless of the existence,
validity, enforcement or nonenforcement of any such other guaranties
or other obligations or any provision of any applicable law or
regulation purporting to prohibit payment by any Borrower of the
Guaranteed Debt in the manner agreed upon among the Agent, the Lenders
and the Borrowers. Notwithstanding the provisions of Section 3(a),
(b), (c) and (e) above, the validity and enforceability of this
Guaranty shall be subject to the express terms of any written
amendment, supplement, modification or waiver of the terms or
provisions of this Guaranty signed and delivered by the Agent on
behalf of the Lenders.
4. Credit may be granted or continued from time to time by
the Lenders to the Foreign Borrowers without notice to or
authorization from the Guarantor regardless of any Borrower's
financial or other condition at the time of any such grant or
continuation. Neither the Agent nor any Lender shall have an
obligation to disclose or discuss with the Guarantor its assessment of
the financial condition of any Borrower.
5. The Guarantor shall have no right of subrogation with
respect to the Guaranteed Debt and hereby waives any right to enforce
any remedy which the Agent or the Lenders now have or may hereafter
have against any Borrower, any endorser or any other guarantor of all
or any part of the Guaranteed Debt, and the Guarantor hereby waives
any benefit of, and any right to participate in, any security or
<PAGE> 46
collateral given to the Agent or the Lenders to secure payment of the
Guaranteed Debt or any part thereof or any other liability of any
Borrower to the Agent or the Lenders. The Guarantor hereby releases
each Borrower from all, and agrees not to assert or enforce (whether
by or in a legal or equitable proceeding or otherwise) any, "CLAIMS"
(as defined in Section 101(4) of the United States Bankruptcy Code, as
amended), whether arising under any law, statute, governmental rule or
regulation or judicial determination or otherwise, to which the
Guarantor is or would at any time be entitled by virtue of its
obligations hereunder, any payment made pursuant thereto or the
exercise by the Agent or any Lender of its rights with respect to any
collateral for the Guaranteed Debt, including any such claims to which
the Guarantor may be entitled as a result of any right of subrogation,
exoneration or reimbursement.
6. The Guarantor authorizes the Lenders to take any action
or exercise any remedy with respect to any collateral from time to
time securing the Guaranteed Debt, which the Lenders in their sole
discretion shall determine, without notice to the Guarantor.
7. In the event the Lenders in their sole discretion elect
to give notice of any action with respect to any collateral securing
the Guaranteed Debt or any part thereof, ten (10) days' written notice
mailed to the Guarantor by ordinary mail at the address shown hereon
shall be deemed reasonable notice of any matters contained in such
notice. The Guarantor consents and agrees that neither the Agent nor
the Lenders shall be under any obligation to marshall any assets in
favor of the Guarantor or against or in payment of any or all of the
Guaranteed Debt.
8. In the event that acceleration of the time for payment
of any of the Guaranteed Debt is stayed upon the insolvency,
bankruptcy or reorganization of any Borrower, or otherwise, all such
amounts shall nonetheless be payable by the Guarantor forthwith upon
demand by the Agent or the Lenders. The Guarantor further agrees
that, to the extent that any Borrower makes a payment or payments to
any of the Lenders on the Guaranteed Debt, or the Agent or the Lenders
receive any proceeds of collateral securing the Guaranteed Debt, which
payment or receipt of proceeds or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or
required to be returned or repaid to such Borrower, its estate,
trustee, receiver, debtor in possession or any other party, including,
without limitation, the Guarantor, under any insolvency or bankruptcy
law, state or federal law, common law or equitable cause, then to the
extent of such payment, return or repayment, the obligation or part
thereof which has been paid, reduced or satisfied by such amount shall
be reinstated and continued in full force and effect as of the date
when such initial payment, reduction or satisfaction occurred.
9. No delay on the part of the Agent or the Lenders in the
exercise of any right, power or remedy shall operate as a waiver
thereof, and no single or partial exercise by the Agent or the Lenders
<PAGE> 47
of any right, power or remedy shall preclude any further exercise
thereof; nor shall any amendment, supplement, modification or waiver
of any of the terms or provisions of this Guaranty be binding upon the
Agent or the Lenders, except as expressly set forth in a writing duly
signed and delivered on the Lenders' behall by the Agent. The failure
by the Agent or the Lenders at any time or times hereafter to require
strict performance by any Borrower or the Guarantor of any of the
provisions, warranties, terms and conditions contained in any
promissory note, security agreement, agreement, guaranty, instrument
or document now or at any time or times hereafter executed pursuant to
the terms of, or in connection with, the Credit Agreement by any
Borrower or the Guarantor and delivered to the Agent or the Lenders
shall not waive, affect or diminish any right of the Agent or the
Lenders at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been waived by any
act or knowledge of the Agent or the Lenders, their agents, officers
or employees, unless such waiver is contained in an instrument in
writing duly signed and delivered on the Lenders' behalf by the Agent.
No waiver by the Agent or the Lenders of any default shall operate as
a waiver of any other default or the same default on a future
occasion, and no action by the Agent or the Lenders permitted
hereunder shall in any way affect or impair the Agent's or the
Lenders' rights or powers, or the obligations of the Guarantor under
this Guaranty. Any determination by a court of competent jurisdiction
of the amount of any Guaranteed Debt owing by the Foreign Borrowers to
the Lenders shall be conclusive and binding on the Guarantor
irrespective of whether the Guarantor was a party to the suit or
action in which such determination was made.
10. Subject to the provisions of SECTION 8, this Guaranty
shall continue in effect until the Credit Agreement has terminated,
the Guaranteed Debt has been paid in full and the other conditions of
this Guaranty have been satisfied.
11. In addition to and without limitation of any rights,
powers or remedies of the Agent or the Lenders under applicable law,
any time after maturity of the Guaranteed Debt, whether by
acceleration or otherwise, the Agent or the Lenders may, in their sole
discretion, with notice after the fact to the Guarantor and regardless
of the acceptance of any security or collateral for the payment
hereof, appropriate and apply toward the payment of the Guaranteed
Debt (a) any indebtedness due or to become due from any of the Lenders
to the Guarantor, and (b) any moneys, credits or other property
belonging to the Guarantor (including all account balances, whether
provisional or final and whether or not collected or available) at any
time held by or coming into the possession of any of the Agent or any
Lender whether for deposit or otherwise.
12. The Guarantor agrees to pay all costs, fees and
expenses (including reasonable attorneys' fees and time charges, which
attorneys may be employees of the Agent or a Lender) incurred by the
<PAGE> 48
Agent or any Lender in collecting or enforcing the obligations of the
Guarantor under this Guaranty.
13. This Guaranty shall bind the Guarantor and its
successors and assigns and shall inure to the benefit of the Agent,
the Lenders and their successors and assigns. All references herein to
the Lenders shall for all purposes also include all Purchasers and
Participants (as such terms are defined in the Credit Agreement). All
references herein to the Borrowers shall be deemed to include its
successors and assigns including, without limitation, a receiver,
trustee or debtor in possession of or for the Borrowers.
14. THIS GUARANTY SHALL BE DEEMED TO HAVE BEEN MADE AT
CHICAGO, ILLINOIS, AND SHALL BE CONSTRUED AND THE RIGHTS AND
LIABILITIES OF THE AGENT, THE LENDERS AND THE GUARANTOR DETERMINED, IN
ACCORDANCE WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS
PROVISIONS, OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS. THE GUARANTOR CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK COUNTY,
ILLINOIS, WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MESSENGER OR BY
REGISTERED MAIL DIRECTED TO THE GUARANTOR AT THE ADDRESS INDICATED
BELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED THREE (3)
DAYS AETER THE SAME SHALL HAVE BEEN POSTED AS AFORESAID. THE GUARANTOR
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION
TO VENUE OF ANY ACTION INSTITUTED HEREUNDER. NOTHING CONTAINED HEREIN
SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
THE AGENT OR THE LENDERS TO BRING ANY ACTION OR PROCEEDING AGAINST THE
GUARANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
15. EACH OF THE GUANANTOR AND, BY THEIR ACCEPTANCE HEREOF,
THE AGENT AND EACH LENDER, WAIVES TRIAL BY JURY WITH RESPECT TO
DISPUTES ARISING HEREUNDER.
16. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
17. Except as otherwise expressly provided herein, any
notice required or desired to be served, given or delivered to any
party hereto under this Guaranty shall be in writing by telex,
facsimile, United States mail or overnight courier and addressed or
delivered to such party (a) if to the Agent or the Lenders, at their
respective addresses set forth in the Credit Agreement, or (b) if to
the Guarantor, at its address indicated on EXHIBIT A hereto, or to
such other address as the Agent or the Lenders or the Guarantor
designates to the Agent in writing. All notices by United States mail
<PAGE> 49
shall be sent certified mail, return receipt requested. All notices
hereunder shall be effective upon delivery or refusal of receipt;
PROVIDED, that any notice transmitted by telex or facsimile shall be
deemed given when transmitted (answerback confirmed in the case of
telexes).
18. All payments hereunder shall be made by the Guarantor
in the currency in which the Guaranteed Debt was borrowed (the
"Specified Currency") and in the manner and at the address (the
"Specified Place") specified in Section 2.14(a) of the Credit
Agreement for the payment of such Guaranteed Debt. Payment of the
Guaranteed Debt shall not be discharged by an amount paid in another
currency or in another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on conversion to the
Specified Currency and transferred to the Specified Place under normal
banking procedures does not yield the amount of the Specified Currency
at the Specified Place due hereunder. If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum due
hereunder in the Specified Currency into another currency (the
"Judgment Currency"), the rate of exchange which shall be applied
shall be that at which in accordance with normal banking procedures
the Agent could purchase the Judgment Currency with that amount of the
Specified Currency on the Business Day next preceding that on which
such judgment is rendered. The obligation of the Guarantor in respect
of any such sum due from it to the Agent or any Lender hereunder (an
"Entitled Person") shall, notwithstanding the rate of exchange
actually applied in rendering such judgment, be discharged only to the
extent that on the Business Day following receipt by such Entitled
Person of any sum adjudged to be due hereunder in the Judgment
Currency, such Entitled Person may in accordance with normal banking
procedures purchase and transfer to the Specified Place the Specified
Currency with the amount of the Judgment Currency so adjudged to be
due; and the Guarantor, as a separate Obligation and notwithstanding
any such judgment, agrees to indemnify such Entitled Person against,
and to pay such Entitled Person on demand, in the Specified Currency,
any difference between the sum originally due to such Entitled Person
in the Specified Currency and the amount of the Specified Currency so
purchased and transferred.
19. (a) Except as otherwise required by applicable law,
all sums payable by the Guarantor whether in respect of principal,
interest, fees or otherwise shall be paid without deduction for any
present and future taxes, levies, assessments, imposts, deductions,
charges or withholdings imposed by any country, any Governmental
Agency thereof or therein, any jurisdiction from which any or all such
payments are made and any political subdivision or taxing authority
thereof or therein, EXCLUDING income and franchise taxes (and
deductions and withholdings therefor) imposed on the Agent or any
Lender (i) by the jurisdiction under the laws of which the Agent or
such Lender is organized or any Governmental Agency or taxing
authority thereof or therein, or (ii) by any jurisdiction in which the
Agent's or such Lender's Lending Installations are located or any
<PAGE> 50
Governmental Agency or taxing authority thereof or therein (such
excluded taxes, deductions and withholdings, collectively, "Excluded
Taxes," and all such taxes, levies, imposts, deductions, charges and
withholdings (including Excluded Taxes), collectively, "Taxes"), which
amounts shall be paid by such Borrower as provided in SECTION 19(b).
(b) If (i) the Guarantor or any other Person is
required by law to make any deduction or withholding on account of any
Tax (other than Excluded Taxes) or other amount from any sum paid or
expressed to be payable by the Guarantor to any Lender under this
Guaranty; or (ii) any party to this Guaranty (or any Person on its
behalf) or the Credit Agreement other than the Guarantor is required
by law to make any deduction or withholding from, or (other than on
account of any Excluded Tax) any payment on or calculated by reference
to the amount of, any such sum received or receivable by any Lender
under this Guaranty, then:
(w) the Guarantor shall notify the Agent of any such requirement
or any change in any such requirement as soon as the
Guarantor becomes aware of it;
(x) the Guarantor shall pay any such Tax or other amount before
the date on which penalties attached thereto become due and
payable, such payment to be made (if the liability to pay is
imposed on the Guarantor) for its own account or (if that
liability is imposed on the Agent or any Lender) on behalf
of and in the name of that party;
(y) the sum payable by the Guarantor in respect of which the
relevant deduction, withholding or payment is required shall
(except, in the case of any such payment, to the extent that
the amount thereof is not ascertainable when that sum is
paid) be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment,
that party receives on the due date and retains (free from
any liability in respect of any such deduction, withholding
or payment) a sum equal to that which it would have received
and so retained had no such deduction, withholding or
payment been required or made; and
(z) within thirty (30) days after payment of any sum from which
the Guarantor is required by law to make any deduction or
withholding, and within thirty (30) days after the due date
of payment of any Tax or other amount which it is required
by clause (x) above to pay, it shall deliver to the Agent
all such certified documents and other evidence as to the
making of such deduction, withholding or payment as (i) are
reasonably satisfactory to other affected parties as proof
of such deduction, withholding or payment and of the
remittance thereof to the relevant taxing or other authority
and (ii) are reasonably required by any such party to enable
<PAGE> 51
it to claim a tax credit with respect to such deduction,
withholding or payment.
20. It is understood that while the amount of the
Guaranteed Debt guaranteed hereby is not limited, if in any action or
proceeding involving any state, federal or foreign bankruptcy,
insolvency or other law affecting the rights of creditors generally,
this Guaranty would be held or determined to be void, invalid or
unenforceable on account of the amount of the aggregate liability
under this Guaranty, then, notwithstanding any other provision of this
Guaranty to the contrary, the aggregate amount of such liability
shall, without any further action of the Agent, the Lenders or any
other Person, be automatically limited and reduced to the highest
amount which is valid and enforceable as determined in such action or
proceeding.
[signature page to follow]
<PAGE> 52
IN WITNESS WHEREOF, the Guarantor has entered into this
Guaranty as of the date first written above.
_________________
By:
-----------------------------------
Its:
-----------------------------------
<PAGE> 53
EXHIBIT A TO GUARANTY
---------------------
ADDRESS OF GUARANTOR:
775 Corporate Woods Parkway
Vernon Hilis, Illinois 60061
Attention: Donald D. Holmes
Telephone: 847/215-4447
Facsimile: 847/634-8823
EXHIBIT 10.4
TO: SCOTSMAN GROUP, INC.
ATTN: JUDY PELTEKIAN
PHONE: (847) 215-4547
FAX NO. (847) 913-9844
FROM: THE FIRST NATIONAL BANK OF CHICAGO, CHICAGO
DATE: 17MAR97
RE: OUR REP: 8969.A TRN ID: 1055720
----------------------------------------------------------------------
WE ARE PLEASED TO CONFIRM THE TERMS OF THE TRANSACTION
DESCRIBED BELOW BETWEEN THE FIRST NATIONAL BANK OF
CHICAGO, CHICAGO ("FIRST CHICAGO")
(THE FLOATING RATE PAYER), AND SCOTSMAN GROUP, INC.
("SCOTGRPINC") (THE FIXED RATE PAYER).
TYPE OF TRANSACTION: INTEREST RATE SWAP
NOTIONAL AMOUNT: USD 100,000,000.00
TERM:
------
TRADE DATE: 17MAR97
EFFECTIVE DATE: 26MAR97
TERMINATION DATE: 27MAR00, SUBJECT TO ADJUSTMENT IN
ACCORDANCE WITH THE MODIFIED FOLLOWING
BUSINESS DAY CONVENTION
FIXED AMOUNTS:
--------------
FIXED RATE PAYER: SCOTGRPINC
PAYMENT DATES: EACH MARCH 26, JUNE 26, SEPTEMBER 26,
AND DECEMBER 26, COMMENCING JUNE 26,
1997 AND ENDING MARCH 27, 2000.
BUSINESS DAY
CONVENTION: MODIFIED FOLLOWING
FIXED RATE: 6.4565 PCT
<PAGE> 55
FIXED RATE DAY COUNT
FRACTION: ACTUAL/360
FLOATING AMOUNTS:
-----------------
FLOATING RATE PAYER: FIRST CHICAGO
PAYMENT DATES: EACH MARCH 26, JUNE 26, SEPTEMBER 26,
AND DECEMBER 26, COMMENCING JUNE 26,
1997 AND ENDING MARCH 27, 2000.
BUSINESS DAY
CONVENTION: MODIFIED FOLLOWING
FLOATING RATE OPTION: USD-LIBOR-BBA
DESIGNATED MATURITY: 3 MONTHS
FLOATING RATE DAY
COUNT FRACTION: ACTUAL/360
RESET DATES: THE FIRST DAY OF EACH CALCULATION PERIOD
SPREAD PCT: NONE
INITIAL FLOATING RATE:
(INCLUDING SPREAD) TO BE SET
COMPOUNDING: INAPPLICABLE
AVERAGING: INAPPLICABLE
METHOD OF AVERAGING:
ROUNDING CONVENTION: 5 DECIMAL PLACES AS PER ISDA
BUSINESS DAYS: NEW YORK AND LONDON
DOCUMENTATION:
THIS CONFIRMATION SUPPLEMENTS, FORMS PART OF, AND IS SUBJECT TO, THE
ISDA MASTER AGREEMENT DATED AS OF 03MAR94 BETWEEN THE PARTIES, AS
AMENDED AND SUPPLEMENTED FROM TIME TO TIME (THE "AGREEMENT"). TERMS
USED AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THEIR MEANINGS
AS DEFINED IN THE 1991 ISDA DEFINITIONS.
DEALING WITH CONFIRMATIONS ON OUR BEHALF:
DIANNE SCHUYLER 312-732-2148
DEALING WITH SETTLEMENTS ON OUR BEHALF:
EDWARD LAZOWSKI 312-732-2623
<PAGE> 56
FIRST CHICAGO PAYMENT INSTRUCTIONS:
THE FIRST NATIONAL BANK OF CHICAGO, CHICAGO
ABA 071000013
ACCT NUMBER 48115380
ATTN: INTEREST RATE SWAPS
SCOTSMAN GROUP, INC. PAYMENT INSTRUCTIONS:
PLEASE ADVISE
PLEASE CONFIRM THE FOREGOING CORRECTLY SETS FORTH THE TERMS OF
OUR AGREEMENT BY EXECUTING THIS LETTER AND RETURNING IT VIA
FACSIMILE TO:
DERIVATIVES PRODUCT SUPPORT - CONFIRMATIONS
THE FIRST NATIONAL BANK OF CHICAGO, CHICAGO
(312) 336-4403 (FAX)
IT HAS BEEN A PLEASURE WORKING WITH YOU ON THIS INTEREST RATE
SWAP TRANSACTION AND WE LOOK FORWARD TO COMPLETING SIMILAR
TRANSACTIONS WITH YOU IN THE NEAR FUTURE.
REGARDS,
THE FIRST NATIONAL BANK OF CHICAGO,
CHICAGO
BY: /s/ Howard Costley
-----------------------------------
NAME: Howard Costley
TITLE: 1st VP
BY: /s/ R. Coats
-----------------------------------
NAME: R. Coats
TITLE: 1st VP 8333
ACCEPTED AND CONFIRMED AS OF THE DATE HERETO:
SCOTSMAN GROUP, INC.
BY: /s/ D. Holmes
---------------------------------
NAME: Donald D. Holmes
TITLE: V.P.
<PAGE> 57
TO: SCOTSMAN GROUP, INC.
ATTN: JUDY PELTEKIAN
PHONE: (847) 215-4547
FAX NO. (847) 913-9844
FROM: THE FIRST NATIONAL BANK OF CHICAGO, CHICAGO
DATE: 17MAR97
RE: OUR REF: 8970.A TRN ID: 1055740
----------------------------------------------------------------------
WE ARE PLEASED TO CONFIRM THE TERMS OF THE TRANSACTION
DESCRIBED BELOW BETWEEN THE FIRST NATIONAL BANK OF
CHICAGO, CHICAGO ("FIRST CHICAGO")
(THE FLOATING RATE PAYER), AND SCOTSMAN GROUP, INC.
("SCOTGRPINC") (THE FIXED RATE PAYER).
TYPE OF TRANSACTION: INTEREST RATE SWAP
NOTIONAL AMOUNT: USD 50,000,000.00
TERM:
------
TRADE DATE: 17MAR97
EFFECTIVE DATE: 26MAR97
TERMINATION DATE: 27MAR00, SUBJECT TO ADJUSTMENT IN
ACCORDANCE WITH THE MODIFIED FOLLOWING
BUSINESS DAY CONVENTION
FIXED AMOUNTS:
-------------
FIXED RATE PAYER: SCOTGRPINC
PAYMENT DATES: EACH MARCH 26, JUNE 26, SEPTEMBER 26,
AND DECEMBER 26, COMMENCING JUNE 26,
1997 AND ENDING MARCH 27, 2000.
BUSINESS DAY
CONVENTION: MODIFIED FOLLOWING
FIXED RATE: 6.245 PCT
<PAGE> 58
FIXED RATE DAY COUNT
FRACTION: ACTUAL/360
FLOATING AMOUNTS:
----------------
FLOATING RATE PAYER: FIRST CHICAGO
PAYMENT DATES: EACH MARCH 26, JUNE 26, SEPTEMBER 26,
AND DECEMBER 26, COMMENCING JUNE 26,
1997 AND ENDING MARCH 27, 2000.
BUSINESS DAY
CONVENTION: MODIFIED FOLLOWING
FLOATING RATE OPTION: USD-LIBOR-BBA
DESIGNATED MATURITY: 3 MONTHS
FLOATING RATE DAY
COUNT FRACTION: ACTUAL/360
RESET DATES: THE FIRST DAY OF EACH CALCULATION PERIOD
SPREAD PCT: NONE
INITIAL FLOATING RATE:
(INCLUDING SPREAD) TO BE SET
COMPOUNDING: INAPPLICABLE
AVERAGING: INAPPLICABLE
METHOD OF AVERAGING:
ROUNDING CONVENTION: 5 DECIMAL PLACES AS PER ISDA
BUSINESS DAYS: NEW YORK AND LONDON
OPTION TERMS
SCOTSMAN GROUP, INC. HEREBY GRANTS TO FIRST CHICAGO THE RIGHT,
EXERCISABLE ONLY ONCE, TO CHANGE THE TERMINATION DATE OF THE INTEREST
RATE SWAP TRANSACTION TO MARCH 26, 2002 BY PROVIDING NOTICE (WHICH MAY
BE TELEPHONIC) TO SCOTSMAN GROUP, INC. BY 11:00 A.M. (CENTRAL TIME) ON
MARCH 23, 2000. ANY TELEPHONIC NOTICE SO PROVIDED SHALL BE FOLLOWED
UP WITH WRITTEN NOTICE OF THE SAME (WHICH MAY BE BY FACSIMILE) WITHIN
2 BUSINESS DAYS FOLLOWING SUCH TELEPHONIC NOTICE; PROVIDED, HOWEVER,
THAT THE EFFECTIVENESS OF ANY TELEPHONIC NOTICE ACTUALLY RECEIVED BY
AN AUTHORIZED EMPLOYEE OF SCOTSMAN GROUP, INC. SHALL NOT BE CONTINGENT
UPON SUCH FOLLOW-UP NOTICE. IN THE EVENT FIRST CHICAGO EXERCISES SUCH
OPTION IN ACCORDANCE WITH THIS CONFIRMATION, MARCH 26, 2002 SHALL
BECOME THE TERMINATION DATE OF THIS INTEREST RATE SWAP TRANSACTION
EFFECTIVE AS OF THE DATE OF SUCH NOTICE.
<PAGE> 59
DOCUMENTATION:
THIS CONFIRMATION SUPPLEMENTS, FORMS PART OF, AND IS SUBJECT TO, THE
ISDA MASTER AGREEMENT DATED AS OF 03MAR94 BETWEEN THE PARTIES, AS
AMENDED AND SUPPLEMENTED FROM TIME TO TIME (THE "AGREEMENT"). TERMS
USED AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THEIR MEANINGS
AS DEFINED IN THE 1991 ISDA DEFINITIONS.
DEALING WITH CONFIRMATIONS ON OUR BEHALF:
DIANNE SCHUYLER 312-732-2148
DEALING WITH SETTLEMENTS ON OUR BEHALF:
EDWARD LAZOWSKI 312-732-2623
FIRST CHICAGO PAYMENT INSTRUCTIONS:
THE FIRST NATIONAL BANK OF CHICAGO, CHICAGO
ABA 071000013
ACCT NUMBER 48115380
ATTN: INTEREST RATE SWAPS
SCOTSMAN GROUP, INC. PAYMENT INSTRUCTIONS:
PLEASE ADVISE
PLEASE CONFIRM THE FOREGOING CORRECTLY SETS FORTH THE TERMS OF
OUR AGREEMENT BY EXECUTING THIS LETTER AND RETURNING IT VIA
FACSIMILE TO:
DERIVATIVES PRODUCT SUPPORT - CONFIRMATIONS
THE FIRST NATIONAL BANK OF CHICAGO, CHICAGO
(312) 336-4403 (FAX)
<PAGE> 60
IT HAS BEEN A PLEASURE WORKING WITH YOU ON THIS INTEREST RATE
SWAP TRANSACTION AND WE LOOK FORWARD TO COMPLETING SIMILAR
TRANSACTIONS WITH YOU IN THE NEAR FUTURE.
REGARDS,
THE FIRST NATIONAL BANK OF CHICAGO,
CHICAGO
BY: /s/ Howard Costley
-----------------------------------
NAME: Howard Costley
TITLE: 1st V.P.
BY: /s/ R. Coats
------------------------------------
NAME: R. Coats
TITLE: 1st VP 8333
ACCEPTED AND CONFIRMED AS OF THE DATE HERETO:
SCOTSMAN GROUP, INC.
BY: /s/ D. Holmes
------------------------------------
NAME: Donald D. Holmes
TITLE: V.P.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from Scotsman
Industries, Inc. Condensed Balance Sheet
(Unaudited) as of March 30, 1997 and
Scotsman Industries, Inc. Condensed
Statement of Income (Unaudited) for the
Three Months Ended March 30, 1997 and is
qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> MAR-30-1997
<PERIOD-TYPE> 3-MOS
<CASH> 18,074
<SECURITIES> 0
<RECEIVABLES> 102,419
<ALLOWANCES> 4,627
<INVENTORY> 85,170
<CURRENT-ASSETS> 227,499
<PP&E> 84,786
<DEPRECIATION> 71,793
<TOTAL-ASSETS> 664,525
<CURRENT-LIABILITIES> 151,525
<BONDS> 330,274
<COMMON> 1,074
0
0
<OTHER-SE> 129,810
<TOTAL-LIABILITY-AND-EQUITY> 664,525
<SALES> 98,077
<TOTAL-REVENUES> 98,077
<CGS> 72,446
<TOTAL-COSTS> 72,446
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,207
<INCOME-PRETAX> 7,300
<INCOME-TAX> 3,435
<INCOME-CONTINUING> 3,865
<DISCONTINUED> 0
<EXTRAORDINARY> (633)
<CHANGES> 0
<NET-INCOME> 3,232
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.30
</TABLE>
