-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EwCt9q9QzkYCs63kqRyYEJVv27dKmXOC8NWbKdTWNXiltmXqSFSEcuMLciEsy1OM htXWcR8b5pIc/xE4fDztow== 0000950131-97-000668.txt : 19970211 0000950131-97-000668.hdr.sgml : 19970211 ACCESSION NUMBER: 0000950131-97-000668 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 23 FILED AS OF DATE: 19970207 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KYSOR INDUSTRIAL CORP /MI/ CENTRAL INDEX KEY: 0000202356 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 381909000 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-38262 FILM NUMBER: 97521068 BUSINESS ADDRESS: STREET 1: ONE MADISON AVE CITY: CADILLAC STATE: MI ZIP: 49601 BUSINESS PHONE: 6167792200 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SCOTSMAN INDUSTRIES INC CENTRAL INDEX KEY: 0000846660 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 363635892 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 775 CORPORATE WOODS PKWY CITY: VERNON HILLS STATE: IL ZIP: 60061 BUSINESS PHONE: 7082154500 SC 14D1 1 SCHEDULE 14D-1 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------------- KYSOR INDUSTRIAL CORPORATION (NAME OF SUBJECT COMPANY) K ACQUISITION CORP., AN INDIRECT WHOLLY OWNED SUBSIDIARY OF SCOTSMAN INDUSTRIES, INC. (BIDDERS) COMMON STOCK, $1.00 PAR VALUE, AND 501566103 NOT AVAILABLE SERIES A CONVERTIBLE VOTING (CUSIP Number of Class of PREFERRED STOCK, $24.375 STATED Securities) VALUE (Title of Class of Securities) SCOTSMAN INDUSTRIES, INC. 775 CORPORATE WOODS PARKWAY, VERNON HILLS, ILLINOIS 60061 (847) 215-4500 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS) Copy to SIDLEY & AUSTIN ONE FIRST NATIONAL PLAZA CHICAGO, ILLINOIS 60603 (312) 853-7000 ATTENTION: THOMAS A. COLE ---------------- CALCULATION OF FILING FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
TRANSACTION AMOUNT OF VALUATION* FILING FEE - ------------------------- $356,865,778 $71,374
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- * For the purpose of calculating the fee only, this amount assumes the purchase of (i) 7,512,335 shares of Common Stock, $1.00 par value, of the Subject Company, together with associated common share purchase rights, and (ii) 786,869.1221 shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share, at $43.00 per share. Such number of shares includes all outstanding shares as of January 31, 1997 and assumes the exercise of all stock options to purchase shares of Common Stock issued. [_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount Previously Paid:______________ Filing Party:_____________________ Form or Registration No.:____________ Date Filed:_______________________ - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- This Statement relates to a tender offer by K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation ("Parent"), to purchase all outstanding shares of (i) Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as of April 26, 1996, as amended (the "Rights Agreement"), between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively, the "Common Stock"), and (ii) Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Stock"; the shares of Common Stock and the shares of ESOP Preferred Stock being collectively referred to herein as the "Shares"), at a purchase price of $43.00 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated February 7, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2) hereof, respectively, and which are incorporated herein by reference. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Kysor Industrial Corporation. The address of the principal executive offices of the Company is set forth in Section 8 ("Certain Information Concerning the Company") of the Offer to Purchase and is incorporated herein by reference. (b) The exact titles of the classes of equity securities being sought in the Offer are the Common Stock, $1.00 par value, including the associated Rights, and the Series A Convertible Voting Preferred Stock, $24.375 stated value per share, of the Company. The information set forth in the Introduction to the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a) through (d), (g): The information set forth in the Introduction and Section 9 ("Certain Information Concerning Parent and the Offeror") of the Offer to Purchase, and in Annex I thereto, is incorporated herein by reference. (e) and (f): Neither the Offeror nor Parent nor, to the best of their knowledge, any of the persons listed in Annex I of the Offer to Purchase, has, during the last five years, (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) None. (b) The information set forth in the Introduction and Section 11 ("Background of the Offer; Past Contacts, Transactions or Negotiations with the Company") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) and (b): The information set forth in Section 10 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a) through (e): The information set forth in the Introduction, Section 11 ("Background of the Offer; Past Contacts, Transactions or Negotiations with the Company"), Section 12 ("Purpose of the Offer and the Merger; 2 Plans for the Company") and Section 13 ("The Merger Agreement; the Asset Purchase Agreement; and Certain Other Arrangements") of the Offer to Purchase is incorporated herein by reference. (f) and (g): The information set forth in Section 7 ("Certain Effects of the Transaction") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) and (b): None. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introduction, Section 11 ("Background of the Offer; Past Contacts, Transactions or Negotiations with the Company") and Section 13 ("The Merger Agreement; the Asset Purchase Agreement; and Certain Other Arrangements") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Introduction and in Section 18 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 9 ("Certain Information Concerning Parent and the Offeror") of the Offer to Purchase is incorporated herein by reference. The incorporation by reference herein of the above-mentioned financial information does not constitute an admission that such information is material to a decision by a security holder of the Company as whether to sell, tender or hold Shares being sought in the Offer. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth in Section 13 ("The Merger Agreement; the Asset Purchase Agreement; and Certain Other Arrangements") is incorporated herein by reference. (b) and (c) The information set forth in Section 17 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 7 ("Certain Effects of the Transaction") of the Offer to Purchase is incorporated herein by reference. (e) None. (f) The information set forth in the Offer to Purchase; the Letter of Transmittal; the Agreement and Plan of Merger, dated as of February 2, 1997, among Parent, the Offeror and the Company; the Asset Purchase Agreement, dated as of February 2, 1997, among the Company, certain subsidiaries of the Company named therein, Kuhlman Corporation ("Kuhlman") and Transpro Group, Inc.; the Joinder dated February 2, 1997, of Parent in respect of certain provisions of the Asset Purchase Agreement; and the Confidentiality and Standstill Agreement, dated June 18, 1996, between the Company and Parent; the Confidentiality and Standstill Agreement, dated December 26, 1996, between Kuhlman and the Company; the Consulting and Noncompetition Agreement, dated as of February 2, 1997, between Parent and George Kempton; the Consulting and Noncompetition Agreement, dated as of February 2, 1997, between Parent and Peter Gravelle; the Consulting and Noncompetition Agreement, dated as of February 2, 1997, between Parent and Timothy Peterson; and Amendment No. 2 to the Rights Agreement, dated as of February 1, 1997, between the Company and the successor Rights Agent, copies of which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1), (c)(2), (c)(3), (c)(4), (c)(5), (c)(6), (c)(7), (c)(8) and (c)(9), is incorporated herein by reference in its entirety. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase, dated February 7, 1997. (a)(2) Letter of Transmittal. 3 (a)(3) Letter from Morgan Stanley & Co. Incorporated, as Dealer Manager, to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees to Clients. (a)(5) Letter from Old Kent Bank to participants in the Company Employee Stock Ownership Plan.* (a)(6) Letter from Bankers Trust Company to participants in the Company Savings Plan and 401(k) Plan. (a)(7) Letter from Old Kent Bank to participants in the Company Employee Stock Purchase Plan. (a)(8) Letter from Harris Trust and Savings Bank to participants in the Company Dividend Reinvestment Plan. (a)(9) Notice of Guaranteed Delivery. (a)(10) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(11) Summary Advertisement, dated February 7, 1997. (a)(12) Press Release issued by Parent and the Company on February 3, 1997. (a)(13) Press Release issued by Parent on February 7, 1997. (b)(1) Commitment Letter, dated as of January 31, 1997, among The First National Bank of Chicago, as Administrative Agent, First Chicago Capital Markets, Inc., as Arranger, and Scotsman Group Inc. (c)(1) Agreement and Plan of Merger, dated as of February 2, 1997, among Parent, the Offeror and the Company. (c)(2) Asset Purchase Agreement, dated as of February 2, 1997, among the Company, certain subsidiaries of the Company named therein, Kuhlman Corporation and Transpro Group, Inc. (c)(3) Joinder, dated February 2, 1997, of Parent in respect of certain provisions of the Asset Purchase Agreement described in Exhibit (c)(2). (c)(4) Confidentiality and Standstill Agreement dated June 18, 1996 between the Company and Parent. (c)(5) Confidentiality and Standstill Agreement, dated December 26, 1996, between Kuhlman and the Company. (c)(6) Consulting and Noncompetition Agreement, dated as of February 2, 1997, between Parent and George Kempton. (c)(7) Consulting and Noncompetition Agreement, dated as of February 2, 1997, between Parent and Peter Gravelle. (c)(8) Consulting and Noncompetition Agreement, dated as of February 2, 1997, between Parent and Timothy Peterson. (c)(9) Amendment No. 2 to the Rights Agreement, dated as of February 1, 1997, between the Company and the successor Rights Agent. (d) None. (e) Not applicable. (f) None. - -------- *To be filed by amendment to this Schedule 14D-1. 4 SIGNATURE AFTER DUE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I CERTIFY THAT THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND CORRECT. Dated: February 7, 1997 SCOTSMAN INDUSTRIES, INC. /s/ Richard C. Osborne By: _________________________________ Name: Richard C. Osborne Title: Chairman, President and Chief Executive Officer K ACQUISITION CORP. /s/ Richard C. Osborne By: _________________________________ Name: Richard C. Osborne Title: President and Chief Executive Officer 5 EX-99.A1 2 OFFER TO PURCHASE Exhibit (a)(1) Offer to Purchase for Cash All Outstanding Shares of Common Stock and Series A Convertible Voting Preferred Stock of Kysor Industrial Corporation at $43.00 Net Per Share by K Acquisition Corp., an indirect wholly owned subsidiary of Scotsman Industries, Inc. --------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED. --------------- THIS OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER, DATED AS OF FEBRUARY 2, 1997 (THE "MERGER AGREEMENT"), AMONG SCOTSMAN INDUSTRIES, INC., K ACQUISITION CORP. AND KYSOR INDUSTRIAL CORPORATION (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER, THE MERGER, THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, HAS DETERMINED THAT THE OFFER, THE MERGER (AS DEFINED HEREIN) AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT ARE ADVISABLE AND THAT THE TERMS OF EACH OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS AND RECOMMENDS THAT HOLDERS OF THE SHARES (AS DEFINED HEREIN) ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. --------------- THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER SUCH NUMBER OF SHARES OF COMMON STOCK, $1.00 PAR VALUE, OF THE COMPANY, INCLUDING THE ASSOCIATED COMMON SHARE PURCHASE RIGHTS (COLLECTIVELY, THE "COMMON STOCK"), AND SHARES OF SERIES A CONVERTIBLE VOTING PREFERRED STOCK, $24.375 STATED VALUE PER SHARE (THE "ESOP PREFERRED STOCK"; AND, TOGETHER WITH THE COMMON STOCK, THE "COMPANY CAPITAL STOCK"; THE SHARES OF COMMON STOCK AND THE SHARES OF ESOP PREFERRED STOCK BEING COLLECTIVELY REFERRED TO HEREIN AS THE "SHARES"), THAT WOULD CONSTITUTE A MAJORITY OF THE OUTSTANDING SHARES OF THE COMPANY CAPITAL STOCK AT THE DATE OF EXPIRATION OF THE OFFER (ASSUMING THE EXERCISE OF ALL OPTIONS TO PURCHASE SHARES OF COMPANY CAPITAL STOCK OUTSTANDING AT THE EXPIRATION DATE OF THE OFFER), (II) THE WAITING PERIOD UNDER THE HSR ACT (AS DEFINED HEREIN) APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED, (III) THE COMPANY AND KUHLMAN (AS DEFINED HEREIN) HAVING CONSUMMATED THE TRANSACTIONS CONTEMPLATED BY THE ASSET PURCHASE AGREEMENT (AS DEFINED HEREIN), OR KUHLMAN HAVING WAIVED ANY CONDITIONS TO CONSUMMATE THE ASSET PURCHASE AGREEMENT, AGREEING TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED THEREBY CONTEMPORANEOUSLY WITH OR IMMEDIATELY FOLLOWING THE CONSUMMATION OF THE OFFER, AND (IV) SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 15. --------------- IMPORTANT Any shareholder desiring to tender Shares should either (i) complete and sign the Letter of Transmittal or a facsimile thereof in accordance with the instructions in the Letter of Transmittal and deliver the Letter of Transmittal with the Shares and all other required documents to the Depositary (as defined herein) or follow the procedure for book-entry transfer set forth in Section 3 or (ii) request such shareholder's broker, dealer, commercial bank, trust company or other nominee effect the transaction for the shareholder. Shareholders having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person if they desire to tender their Shares. Any shareholder who desires to tender Shares and whose certificates representing such Shares are not immediately available, or who cannot comply with the procedures for book-entry transfer on a timely basis, may tender such Shares pursuant to the guaranteed delivery procedure set forth in Section 3. Questions and requests for assistance or additional copies of this Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. --------------- The Dealer Manager for the Offer is: MORGAN STANLEY & CO. Incorporated February 7, 1997 TABLE OF CONTENTS
PAGE ---- Introduction.............................................................. 1 1. Terms of the Offer.................................................... 3 2. Acceptance for Payment and Payment for Shares......................... 4 3. Procedure for Tendering Shares........................................ 5 4. Withdrawal Rights..................................................... 8 5. Certain Federal Income Tax Consequences............................... 8 6. Price Range of Shares; Dividends...................................... 10 7. Certain Effects of the Transaction.................................... 10 8. Certain Information Concerning the Company............................ 11 9. Certain Information Concerning Parent and the Offeror................. 12 10. Source and Amount of Funds............................................ 14 11. Background of the Offer; Past Contacts, Transactions or Negotiations with the Company......................................................... 15 12. Purpose of the Offer and the Merger; Plans for the Company............ 18 13. The Merger Agreement; the Asset Purchase Agreement; and Certain Other Arrangements............................................................. 20 14. Dividends and Distributions........................................... 29 15. Certain Conditions to the Offeror's Obligations....................... 30 16. The Company Employee Stock Ownership Plan............................. 31 17. Certain Legal Matters................................................. 33 18. Fees and Expenses..................................................... 35 19. Miscellaneous......................................................... 36 Annex I. Certain Information Concerning the Directors and Executive Officers of Parent and the Offeror................................ A-1
TO THE HOLDERS OF COMMON STOCK, $1.00 PAR VALUE, OR SERIES A CONVERTIBLE VOTING PREFERRED STOCK, $24.375 STATED VALUE PER SHARE, OF KYSOR INDUSTRIAL CORPORATION: INTRODUCTION K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation ("Parent"), hereby offers to purchase all outstanding shares of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as of April 26, 1996, as amended (the "Rights Agreement"), between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively, the "Common Stock"), and all outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Stock"; and, together with the Common Stock, the "Company Capital Stock"; the shares of Common Stock and the shares of ESOP Preferred Stock being collectively referred to herein as the "Shares"), at a purchase price of $43.00 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). Tendering holders of Shares will not be obligated to pay brokerage fees or commissions or, except as set forth in the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Offeror pursuant to the Offer. The Offeror will pay all charges and expenses of Morgan Stanley & Co. Incorporated (the "Dealer Manager or "Morgan Stanley"), First Chicago Trust Company of New York (the "Depositary") and Morrow & Co., Inc. (the "Information Agent") in connection with the Offer. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER, THE MERGER (AS DEFINED HEREIN), THE MERGER AGREEMENT (AS DEFINED HEREIN) AND THE TRANSACTIONS CONTEMPLATED THEREBY, HAS DETERMINED THAT THE OFFER, THE MERGER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT ARE ADVISABLE AND THAT THE TERMS OF EACH OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS AND RECOMMENDS THAT THE HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. William Blair & Company, L.L.C. ("William Blair"), the Company's financial advisor, has delivered to the Company's Board of Directors its written opinion that the consideration to be received in the Offer and the Merger by the Company's shareholders is fair to such shareholders (other than Parent or any of its affiliates) from a financial point of view. A copy of such opinion is contained in the Company's Statement on Schedule 14D-9 which is being distributed to the Company's shareholders. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF SHARES THAT WOULD CONSTITUTE A MAJORITY OF THE OUTSTANDING SHARES OF THE COMPANY CAPITAL STOCK AT THE DATE OF THE EXPIRATION OF THE OFFER (ASSUMING THE EXERCISE OF ALL OPTIONS TO PURCHASE SHARES OF THE COMPANY CAPITAL STOCK OUTSTANDING AT THE EXPIRATION DATE OF THE OFFER) (THE "MINIMUM CONDITION"). THE OFFER IS ALSO CONDITIONED UPON THE WAITING PERIOD UNDER THE HART-SCOTT- RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED AND THE COMPANY AND KUHLMAN (AS DEFINED HEREIN) HAVING CONSUMMATED THE TRANSACTIONS CONTEMPLATED BY THE ASSET PURCHASE AGREEMENT (AS DEFINED HEREIN) OR KUHLMAN HAVING WAIVED ANY CONDITIONS TO CONSUMMATE THE ASSET PURCHASE AGREEMENT, AGREEING TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED THEREBY CONTEMPORANEOUSLY WITH OR IMMEDIATELY FOLLOWING THE CONSUMMATION OF THE OFFER. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTION 15. The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of February 2, 1997 (the "Merger Agreement"), among Parent, the Offeror and the Company. The Merger Agreement provides that, among other things, as soon as practicable after the purchase of Shares pursuant to the Offer and the satisfaction of the other conditions set forth in the Merger Agreement and in accordance with the relevant provisions of the Michigan Business Corporation Act, as amended (the "Michigan BCA"), the Offeror will be merged with and into the Company (the "Merger"). If the Offeror acquires at least 90% of the outstanding shares of each class of stock of the Company pursuant to the Offer, the Offeror would be able to effect the Merger pursuant to the "short-form" merger provisions of Section 450.1711 of the Michigan BCA, without prior notice to, or any action by, any shareholder of the Company. See Section 12. Following consummation of the Merger, the Company will continue as the surviving corporation (the "Surviving Corporation") and will be an indirect wholly owned subsidiary of Parent. At the effective time of the Merger (the "Effective Time"), each share of Company Capital Stock that is issued and outstanding (other than shares of Company Capital Stock owned by the Company, any subsidiary of the Company, Parent, the Offeror or any other subsidiary of Parent, which shares will be automatically canceled and retired) will be converted into the right to receive from the Surviving Corporation $43.00 (or any higher price that may be paid for each Share pursuant to the Offer) in cash, without interest thereon (the "Offer Price"). See Section 5 for a description of certain tax consequences of the Offer and the Merger. Concurrently with the execution of the Merger Agreement, the Company and certain of its domestic subsidiaries entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Kuhlman Corporation, a Delaware corporation, and Transpro Group Inc., a Delaware corporation (collectively, "Kuhlman"). Pursuant to the Asset Purchase Agreement, and subject to the terms and conditions thereof, the Company agreed to sell and Kuhlman agreed to acquire substantially all of the assets (the "TPG Assets") of the Company's transportation products group business ("TPG") for a purchase price of $86 million in cash and the assumption, with limited exceptions, of the liabilities related to such assets and business. See Section 13. The Merger Agreement provides that, promptly after the Offeror acquires Shares pursuant to the Offer, the Offeror will be entitled to designate at its option up to that number of directors of the Board of Directors of the Company as will make the percentage of the Company's directors designated by the Offeror equal to the aggregate voting power of the Shares held by Parent or any of its subsidiaries (assuming the exercise of all outstanding options to purchase shares of the Company Capital Stock). However, Parent shall cause the Board of Directors of the Company to have at least three directors who were directors on the date of the Merger Agreement (of whom at least two directors are not officers of the Company). The Company has agreed, at the option of Parent, either to increase the size of the Board of Directors of the Company and/or obtain the resignation of such number of directors as is necessary to enable the Offeror's designees to be elected or appointed to the Board. Notwithstanding the foregoing, the size of the Board of Directors of the Company shall not be larger than 10 persons (thereby limiting to seven the number of directors who may be designated by Parent pending the consummation of the Merger). The Company has advised the Offeror that as of January 31, 1997, there were (a) 5,961,665 shares of Common Stock issued and outstanding, (b) outstanding stock options and rights to purchase not in excess of 1,550,670 shares of Common Stock and (c) 786,869.1221 shares of ESOP Preferred Stock, which are convertible into 786,869.1221 shares of Common Stock. As of the date hereof, neither the Offeror nor Parent beneficially owns any Company Capital Stock. If the Offeror acquires at least 4,149,603 Shares in the Offer, it will control a majority of the outstanding shares of Company Capital Stock (assuming the exercise of all options to purchase shares of the Company Common Capital Stock outstanding at the expiration date of the Offer and the purchase, conversion into Common Stock or redemption of all outstanding shares of ESOP Preferred Stock). Accordingly, the Offeror would have sufficient voting power to approve the Merger without the affirmative vote of any other shareholder. It is a condition to the consummation of the Offer that there shall have been validly tendered and not withdrawn all outstanding shares of ESOP Preferred Stock, unless the Company shall have called all outstanding shares of ESOP Preferred Stock for redemption on a date that is not later than one business day after the consummation of the Offer. See Section 15. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 2 1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any extension or amendment), the Offeror will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not theretofore withdrawn in accordance with Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time, on Friday, March 7, 1997, unless the Offeror shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Offeror, shall expire. If the Offeror shall decide, in its sole discretion, to increase the consideration offered in the Offer to holders of Shares and if, at the time that notice of such increase is first published, sent or given to holders of Shares in the manner specified below, the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that such notice is first so published, sent or given, then the Offer will be extended until the expiration of such period of 10 business days. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or a federal holiday and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York City time. THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM CONDITION, THE WAITING PERIOD UNDER THE HSR ACT APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED AND THE COMPANY AND KUHLMAN HAVING CONSUMMATED THE TRANSACTIONS CONTEMPLATED BY THE ASSET PURCHASE AGREEMENT OR KUHLMAN HAVING WAIVED ANY CONDITIONS TO CONSUMMATE THE ASSET PURCHASE AGREEMENT, AGREEING TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED THEREBY CONTEMPORANEOUSLY WITH OR IMMEDIATELY FOLLOWING THE CONSUMMATION OF THE OFFER. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTION 15. THE MERGER AGREEMENT AND THE OFFER MAY BE TERMINATED BY THE OFFEROR AND PARENT IF CERTAIN EVENTS OCCUR. The Offeror reserves the right (but shall not be obligated), in accordance with applicable rules and regulations of the United States Securities and Exchange Commission (the "Commission"), subject to the limitations set forth in the Merger Agreement and described below, to waive or reduce the Minimum Condition or to waive any other condition to the Offer. If the Minimum Condition or any condition set forth in Section 15 has not been satisfied by 12:00 Midnight, New York City time, on Friday, March 7, 1997 (or any other time then set as the Expiration Date), the Offeror may, subject to the terms of the Merger Agreement as described below, elect to (1) extend the Offer and, subject to applicable withdrawal rights, retain all tendered Shares until the expiration of the Offer, as extended, (2) subject to complying with applicable rules and regulations of the Commission, accept for payment all Shares so tendered and not extend the Offer or (3) terminate the Offer and not accept for payment any Shares and return all tendered Shares to tendering shareholders. Under the terms of the Merger Agreement, the Offeror may not (except as described in the next sentence), without the consent of the Company, reduce the number of Shares subject to the Offer, reduce the Offer Price, modify or add to the conditions to the Offer other than the conditions set forth in Section 15 (other than to waive any such conditions to the extent permitted by the Merger Agreement), extend the Offer, change the form of consideration payable in the Offer or amend, waive or add any other term of the Offer in any manner adverse to the Company or the holders of Shares. Notwithstanding the foregoing, the Offeror may, without the consent of the Company, extend the Offer (i) if at the then-scheduled Expiration Date of the Offer, any of the conditions shall not have been satisfied or waived, until such time as such conditions are satisfied or waived, (ii) for any period required by any rule, regulation, interpretation or position of the Commission or the Commission staff applicable to the Offer, (iii) on one or more occasions for an aggregate period of not more than five business days beyond the then-scheduled Expiration Date if, as of such Expiration Date, sufficient Shares have not been tendered in order for the Merger to be effected pursuant to a "short- form" merger pursuant to Section 450.1711 of the Michigan BCA, without prior notice to, or any action by, any shareholders of the Company (which would require that the Offeror has acquired at least 90% of the outstanding shares of each class of stock of the Company and no shares of ESOP Preferred Stock remain outstanding) or (iv) for any reason on one or more occasions for an aggregate period of not more than five business days beyond the latest expiration date that would be permitted under clause (i), (ii) or (iii) of this sentence. The Offeror is also required to extend the Offer for up to seven 3 business days or approximately 22 days in the case of certain third party takeover proposals for the Company or cure periods related to breaches of the Merger Agreement by the Company, respectively. See Sections 13 and 15. Subject to the limitations set forth in this Offer and the Merger Agreement, the Offeror reserves the right (but will not be obligated), at any time or from time to time in its sole discretion, to extend the period during which the Offer is open by giving oral or written notice of such extension to the Depositary and by making a public announcement of such extension. There can be no assurance that the Offeror will exercise its right to extend the Offer. Subject to the applicable rules and regulations of the Commission and subject to the limitations set forth in the Merger Agreement, the Offeror expressly reserves the right, at any time and from time to time, in its sole discretion, (i) to delay payment for any Shares regardless of whether such Shares were theretofore accepted for payment, or to terminate the Offer and not to accept for payment or pay for any Shares not theretofore accepted for payment or paid for, upon the occurrence of any of the conditions set forth in Section 15, by giving oral or written notice of such delay or termination to the Depositary, and (ii) at any time or from time to time, to amend the Offer in any respect. The Offeror's right to delay payment for any Shares or not to pay for any Shares theretofore accepted for payment is subject to the applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), relating to the Offeror's obligation to pay for or return tendered Shares promptly after the termination or withdrawal of the Offer. Any extension of the period during which the Offer is open, delay in acceptance for payment or payment, termination or amendment of the Offer will be followed, as promptly as practicable, by public announcement thereof, such announcement in the case of an extension to be issued not later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date in accordance with the public announcement requirements of Rules 14d-4(c) and 14e-1(d) under the Exchange Act. Without limiting the obligation of the Offeror under such rule or the manner in which the Offeror may choose to make any public announcement, the Offeror currently intends to make announcements by issuing a press release to the Dow Jones News Service and making any appropriate filing with the Commission. If, subject to the terms of the Merger Agreement, the Offeror makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer (including, with the consent of the Company, a waiver of the Minimum Condition), the Offeror will disseminate additional tender offer materials and extend the Offer if and to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act or otherwise. The minimum period during which a tender offer must remain open following material changes in the terms of the offer or the information concerning the offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of the terms or information changes. With respect to a change in price or a change in percentage of securities sought, a minimum 10 business day period is generally required to allow for adequate dissemination to shareholders and investor response. The Company has provided the Offeror with the Company's list of shareholders and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares whose names appear on the Company's shareholder list and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Offeror will accept for payment and will pay for all Shares validly tendered prior to the Expiration Date and not theretofore withdrawn in accordance with Section 4 promptly after the later to occur of (a) the Expiration Date and (b) the satisfaction or waiver of the 4 conditions set forth in Section 15 related to regulatory matters. Subject to compliance with Rule 14e-1(c) under the Exchange Act, the Offeror expressly reserves the right to delay payment for Shares in order to comply in whole or in part with any applicable law. See Sections 1 and 17. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (collectively, the "Book- Entry Transfer Facilities"), pursuant to the procedures set forth in Section 3, (ii) a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) with all required signature guarantees or, in the case of a book-entry transfer, an Agent's Message (as defined below) and (iii) any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message transmitted by a Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Offeror may enforce such agreement against the participant. For purposes of the Offer, the Offeror will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not withdrawn as, if and when the Offeror gives oral or written notice to the Depositary of the Offeror's acceptance of such Shares for payment pursuant to the Offer. In all cases, payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payment from the Offeror and transmitting such payment to tendering shareholders. If, for any reason whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer is delayed, or the Offeror is unable to accept for payment Shares tendered pursuant to the Offer, then, without prejudice to the Offeror's rights under Section 1, the Depositary may, nevertheless, on behalf of the Offeror, retain tendered Shares, and such Shares may not be withdrawn, except to the extent that the tendering shareholders are entitled to withdrawal rights as described in Section 4 below and as otherwise required by Rule 14e- 1(c) under the Exchange Act. Under no circumstances will interest be paid by the Offeror because of any delay in making such payment. If any tendered Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason, or if certificates are submitted for more Shares than are tendered, certificates for such unpurchased or untendered Shares will be returned, without expense to the tendering shareholder (or, in the case of Shares delivered by book-entry transfer to a Book-Entry Transfer Facility, such Shares will be credited to an account maintained within such Book-Entry Transfer Facility), as promptly as practicable after the expiration, termination or withdrawal of the Offer. If, prior to the Expiration Date, the Offeror increases the price being paid for Shares accepted for payment pursuant to the Offer, such increased consideration will be paid to all shareholders whose Shares are purchased pursuant to the Offer, whether or not such Shares were tendered prior to such increase in consideration. The Offeror reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates, the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Offeror of its obligations under the Offer or prejudice the rights of tendering shareholders to receive payment for Shares validly tendered and accepted for payment. 3. PROCEDURE FOR TENDERING SHARES. Valid Tenders. For Shares to be validly tendered pursuant to the Offer, either a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other required documents, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date or the tendering shareholder must comply with the guaranteed delivery procedure set forth 5 below. In addition, either (i) certificates representing such Shares must be received by the Depositary along with the Letter of Transmittal or such Shares must be tendered pursuant to the procedure for book-entry transfer set forth below, and a Book-Entry Confirmation must be received by the Depositary, in each case prior to the Expiration Date, or (ii) the guaranteed delivery procedures set forth below must be complied with. No alternative, conditional or contingent tenders will be accepted. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. Book-Entry Transfer. The Depositary will make a request to establish an account with respect to the Shares at each Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in a Book-Entry Transfer Facility's system may make book-entry delivery of Shares by causing a Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at a Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for transfer. Although delivery of Shares may be effected through book-entry at a Book-Entry Transfer Facility prior to the Expiration Date, (i) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other required documents, must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase or (ii) the guaranteed delivery procedures described below must be complied with. Signature Guarantee. Signatures on the Letter of Transmittal must be guaranteed by a member in good standing of the Securities Transfer Agents Medallion Program, or by any other bank, broker, dealer, credit union, savings association or other entity which is an "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing being referred to as an "Eligible Institution" and, collectively, as "Eligible Institutions"), unless the Shares tendered thereby are tendered (i) by a registered holder of Shares who has not completed either the box labeled "Special Delivery Instructions" or the box labeled "Special Payment Instructions" on the Letter of Transmittal or (ii) for the account of any Eligible Institution. If the certificates evidencing Shares are registered in the name of a person or persons other than the signer of the Letter of Transmittal, or if payment is to be made, or delivered to, or certificates for unpurchased Shares are to be issued or returned to, a person other than the registered owner or owners, then the tendered certificates must be endorsed or accompanied by duly executed stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the certificates, with the signatures on the certificates or stock powers guaranteed by an Eligible Institution as provided in the Letter of Transmittal. See Instructions 1 and 5 to the Letter of Transmittal. Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to the Offer and such shareholder's certificates for Shares are not immediately available or time will not permit all required documents to reach the Depositary prior to the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, such Shares may nevertheless be tendered if all of the following guaranteed delivery procedures are duly complied with: (i) the tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Offeror, is received by the Depositary, as provided below, prior to the Expiration Date; and (iii) the certificates for all tendered Shares, in proper form for transfer (or a Book-Entry Confirmation), together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), and any required signature guarantees, or, in the case of a book- entry transfer, an Agent's Message, and any other documents required by the Letter of Transmittal are received by the Depositary within three trading days after the date of such Notice of Guaranteed Delivery. The term "trading day" is any day on which the New York Stock Exchange ("NYSE") is open for business. 6 The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery. THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (i) certificates for such Shares or a Book-Entry Confirmation, (ii) a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with all required signature guarantees or, in the case of a book-entry transfer, an Agent's Message, and (iii) any other documents required by the Letter of Transmittal. BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT "BACKUP" FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, EACH SHAREHOLDER MUST, SUBJECT TO CERTAIN EXCEPTIONS, PROVIDE THE DEPOSITARY WITH SUCH SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER ("TIN") AND CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. FOREIGN HOLDERS MUST GENERALLY SUBMIT A COMPLETED FORM W-8 TO AVOID BACKUP WITHHOLDING. THIS FORM MAY BE OBTAINED FROM THE DEPOSITARY. SEE INSTRUCTIONS 8 AND 9 SET FORTH IN THE LETTER OF TRANSMITTAL. Determination of Validity. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Offeror, in its sole discretion, and its determination will be final and binding on all parties. The Offeror reserves the absolute right to reject any or all tenders of any Shares that are determined by it not to be in proper form or the acceptance of or payment for which may, in the opinion of the Offeror, be unlawful. The Offeror also reserves the absolute right to waive any of the conditions of the Offer, subject to the limitations set forth in the Merger Agreement, or any defect or irregularity in the tender of any Shares. The Offeror's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the Instructions to the Letter of Transmittal) will be final and binding on all parties. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Offeror, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Other Requirements. By executing the Letter of Transmittal as set forth above (including through delivery of an Agent's Message), a tendering shareholder irrevocably appoints designees of the Offeror as such shareholder's attorneys-in-fact and proxies, each with full power of substitution, in the manner set forth in the Letter of Transmittal, to the full extent of such shareholder's right with respect to the Shares tendered by such shareholder and accepted for payment by the Offeror (and any and all other Shares or other securities issued or issuable in respect of such Shares). All such powers of attorney and proxies shall be considered coupled with an interest in the tendered Shares. This appointment is effective when, and only to the extent that, the Offeror accepts for payment the Shares deposited with the Depositary. Upon acceptance for payment, all prior powers of attorney and proxies given by the shareholder with respect to such Shares or other securities or rights will, without further action, be revoked and subsequent proxies may be given or written consent executed (and, if given or executed, will not be deemed effective). The designees of the Offeror will, with respect to the Shares and other securities or rights, be empowered to exercise all voting and other rights of such shareholder as they in their sole judgment deem proper in respect of any annual or special meeting of the Company's shareholders, or any adjournment or postponement thereof. The Offeror reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Offeror's payment for such Shares, the Offeror must be able to exercise full voting and other rights with respect to such Shares and the other securities or rights issued or issuable in respect of such Shares, including voting at any meeting of shareholders (whether annual or special or whether or not adjourned) in respect of such Shares. 7 A tender of Shares pursuant to any one of the procedures described above will constitute the tendering shareholder's acceptance of the terms and conditions of the Offer, as well as the tendering shareholder's representation and warranty that (i) such shareholder has the full power and authority to tender, sell, assign and transfer the tendered Shares (and any and all other Shares or other securities issued or issuable in respect of such Shares), and (ii) when the same are accepted for payment by the Offeror, the Offeror will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The Offeror's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering shareholder and the Offeror upon the terms and subject to the conditions of the Offer. 4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment pursuant to the Offer, may also be withdrawn at any time after Friday, March 7, 1997. If purchase of or payment for Shares is delayed for any reason or if the Offeror is unable to purchase or pay for Shares for any reason, then, without prejudice to the Offeror's rights under the Offer, tendered Shares may be retained by the Depositary on behalf of the Offeror and may not be withdrawn except to the extent that tendering shareholders are entitled to withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under the Exchange Act, which provides that no person who makes a tender offer shall fail to pay the consideration offered or return the securities deposited by or on behalf of security holders promptly after the termination or withdrawal of the Offer. For a withdrawal of Shares tendered pursuant to the Offer to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name in which the certificates representing such Shares are registered, if different from that of the person who tendered the Shares. If certificates for Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered by an Eligible Institution, the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer set forth in Section 3, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and must otherwise comply with such Book-Entry Transfer Facility's procedures. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Offeror, in its sole discretion, and its determination will be final and binding on all parties. None of the Offeror, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any Shares properly withdrawn will be deemed not validly tendered for purposes of the Offer, but may be retendered at any subsequent time prior to the Expiration Date by following any of the procedures described in Section 3. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following is a summary of certain United States federal income tax consequences of the Offer and the Merger to beneficial owners of Shares whose Shares are purchased pursuant to the Offer or whose Shares are converted to cash in the Merger. The discussion is for general information only and does not purport to consider all aspects of federal income taxation that may be relevant to beneficial owners of Shares. The discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), existing, proposed and temporary regulations promulgated thereunder and administrative and judicial interpretations thereof, all of which are subject to change. The discussion applies only to beneficial owners of Shares in whose hands Shares 8 are capital assets within the meaning of Section 1221 of the Code, and may not apply to Shares received pursuant to the exercise of employee stock options or otherwise as compensation, or to certain types of beneficial owners of Shares (such as insurance companies, tax-exempt organizations and broker-dealers) who may be subject to special rules. This discussion does not discuss the federal income tax consequences to a beneficial owner of Shares who, for United States federal income tax purposes, is a non-resident alien individual, a foreign corporation, a foreign partnership or a foreign estate or trust, nor does it consider the effect of any foreign, state or local tax laws. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH BENEFICIAL OWNER OF SHARES SHOULD CONSULT SUCH BENEFICIAL OWNER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH BENEFICIAL OWNER AND THE PARTICULAR TAX EFFECTS TO SUCH BENEFICIAL OWNER OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS. Common Stock. The receipt of cash for shares of Common Stock pursuant to the Offer or the Merger will be a taxable transaction for federal income tax purposes. In general, for federal income tax purposes, a beneficial owner of shares of Common Stock will recognize gain or loss equal to the difference between the beneficial owner's adjusted tax basis in the shares of Common Stock sold pursuant to the Offer or converted to cash in the Merger and the amount of cash received therefor. Gain or loss must be determined separately for each block of shares of Common Stock (i.e., shares of Common Stock acquired at the same cost in a single transaction) sold pursuant to the Offer or converted to cash in the Merger, although, under proposed legislation not yet effective, gain or loss would be determined based on the average tax basis of all Common Stock held by the beneficial owner. Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the beneficial owner held the shares of Common Stock for more than one year as of the date of sale (in the case of the Offer) or the Effective Time (in the case of the Merger). Long-term capital gain of individuals currently is taxed at a maximum rate of 28%. The Company has advised the Offeror that the Company's Employee Stock Ownership Plan and the Company's Employee Stock Ownership Trust (such plan and such trust are referred to as the "ESOP") are, respectively, a qualified plan described in section 401(a) of the Code and an exempt trust under section 501(a) of the Code. Accordingly, receipt by the ESOP of cash for shares of Common Stock pursuant to the Offer or the Merger should not result in the imposition of federal income tax on either the ESOP itself or the participants in the ESOP. For a general discussion concerning the taxation of participants in the ESOP upon receiving distributions therefrom, see Section 16, "The Company Employee Stock Ownership Plan." ESOP Preferred Stock. Assuming the ESOP is exempt from federal income tax as described above, the receipt by the ESOP of cash for shares of ESOP Preferred Stock pursuant to the Offer or the Merger should not result in the imposition of federal income tax on the ESOP itself or the participants in the ESOP. If the ESOP Trustee exercises its right to convert the ESOP Preferred Stock into Common Stock, such conversion will not be a taxable transaction, and the discussion above regarding Common Stock held by the ESOP will be applicable. For a general discussion concerning the taxation of participants in the ESOP upon receiving distributions therefrom, see Section 16, "The Company Employee Stock Ownership Plan." Backup Withholding. Payments in connection with the Offer or the Merger may be subject to "backup withholding" at a rate of 31%, unless a beneficial owner of Shares (a) is a corporation or comes within certain exempt categories and, when required, demonstrates this fact or (b) provides a correct TIN to the payor, certifies as to no loss of exemption from backup withholding and otherwise complies with applicable requirements of the backup withholding rules. A beneficial owner who does not provide a correct TIN may be subject to penalties imposed by the Internal Revenue Service. Any amount paid as backup withholding does not constitute an additional tax and will be creditable against the beneficial owner's federal income tax liability. Each beneficial owner of Shares should consult with his or her own tax advisor as to his or her qualification for exemption from backup withholding and the procedure for obtaining such exemption. Those tendering their Shares in the Offer may prevent backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. See Section 3. Similarly, those who convert their Shares into cash in the Merger may prevent backup withholding by completing a Substitute Form W-9 and submitting it to the paying agent for the Merger. 9 6. PRICE RANGE OF SHARES; DIVIDENDS. According to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the "1995 10-K"), the shares of Common Stock, together with the associated Rights, are traded on the NYSE. The shares of ESOP Preferred Stock are not publicly traded. The following table sets forth for the periods indicated the high and low sales prices per share of Common Stock on the NYSE as reported by the Company in the 1995 10-K with respect to the years ended December 31, 1994 and December 31, 1995, and as reported by published financial sources with respect to periods after December 31, 1995.
HIGH LOW DIVIDENDS ------- ------- --------- Year Ended December 31, 1994: First Quarter................................. $18 $15 1/2 $.12 Second Quarter................................ 18 15 .13 Third Quarter................................. 20 3/4 17 1/4 .13 Fourth Quarter................................ 22 3/8 20 .13 Year Ended December 31, 1995: First Quarter................................. $23 7/8 $20 $.15 Second Quarter................................ 21 3/4 20 .15 Third Quarter................................. 24 1/4 20 1/4 .15 Fourth Quarter................................ 25 1/4 20 7/8 .15 Year Ended December 31, 1996: First Quarter................................. $26 1/2 $21 7/8 $.15 Second Quarter................................ 26 5/8 23 1/2 $.165 Third Quarter................................. 27 1/4 23 1/8 $.165 Fourth Quarter................................ 32 7/8 26 1/4 $.165 Year Ending December 31, 1997: First Quarter (through February 6, 1997)...... $42 5/8 $32 5/8
On January 31, 1997, the last full day of trading prior to the public announcement of the execution of the Merger Agreement, the closing price per share of Common Stock as reported on the NYSE was $37.00. On February 6, 1997, the last full day of trading prior to the commencement of the Offer, the closing price per share of Common Stock as reported on the NYSE was $42.50. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES OF COMMON STOCK. 7. CERTAIN EFFECTS OF THE TRANSACTION. The purchase of the shares of Common Stock by the Offeror pursuant to the Offer will reduce the number of shares of Common Stock that might otherwise trade publicly and will reduce the number of holders of shares of Common Stock, which will adversely affect the liquidity and market value of the remaining shares of Common Stock held by shareholders other than the Offeror. The Company has advised the Offeror that, as of January 31, 1997, there were approximately 1,200 holders of record and approximately 6,800 beneficial owners of the shares of Common Stock. All of the outstanding shares of ESOP Preferred Stock are held of record by Old Kent Bank, as Trustee, under the ESOP. Market for Shares. Depending upon the number of shares of Common Stock purchased pursuant to the Offer, the shares of Common Stock may no longer meet the standards for continued inclusion on the NYSE. According to the NYSE's published guidelines, the NYSE would consider delisting such shares if, among other things, the number of record holders of at least 100 of such shares should fall below 1,200, the number of publicly held shares of Common Stock (exclusive of holdings of officers, directors, their immediate families and other concentrated holdings of 10% or more ("NYSE Excluded Holdings")) should fall below 600,000 or the aggregate market value of publicly held shares of Common Stock (exclusive of NYSE Excluded Holdings) should fall below $5,000,000. 10 In the event that the shares of Common Stock should no longer be listed or traded on the NYSE, it is possible that such shares would continue to trade in the over-the-counter market and that price quotations would be reported by other sources. The extent of the public market for such shares and the availability of such quotations would, however, depend upon the number of holders of such shares remaining at such time, the interest in maintaining a market in shares of Common Stock on the part of securities firms, the possible termination of registration of such shares under the Exchange Act, as described below, and other factors. Exchange Act Registration. The shares of Common Stock are currently registered under the Exchange Act. Such registration may be terminated upon application by the Company to the Commission if there are fewer than 300 record holders of such shares. It is the intention of the Offeror to seek to cause an application for such termination to be made as soon after consummation of the Offer as the requirements for termination of registration of such shares are met. If such registration were terminated, the Company would no longer legally be required to disclose publicly in proxy materials distributed to shareholders the information which it now must provide under the Exchange Act or to make public disclosure of financial and other information in annual, quarterly and other reports required to be filed with the Commission under the Exchange Act; and the officers, directors and 10% shareholders of the Company would no longer be subject to the "short-swing" insider trading reporting and profit recovery provisions of the Exchange Act. Furthermore, if such registration were terminated, persons holding "restricted securities" of the Company may be deprived of their ability to dispose of such securities under Rule 144 promulgated under the Securities Act of 1933, as amended (the "Securities Act"). Margin Regulations. The shares of Common Stock are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such shares. Depending upon factors similar to those described above regarding listing and market quotations, it is possible that, following the Offer, the shares of Common Stock would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and therefore could no longer be used as collateral for loans made by brokers. If registration of shares of Common Stock under the Exchange Act were terminated, such shares would no longer be "margin securities." 8. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set forth herein, the information concerning the Company contained in this Offer to Purchase, including financial information, has been furnished by the Company or has been taken from or based upon publicly available documents and records on file with the Commission and other public sources. Although neither the Offeror nor Parent has any knowledge that would indicate that statements contained herein based upon such documents are untrue, none of the Offeror, Parent and the Dealer Manager assume any responsibility for the accuracy or completeness of the information concerning the Company, furnished by the Company, or contained in such documents and records or for any failure by the Company to disclose events which may have occurred or may affect the significance or accuracy any such information but which are unknown to the Offeror, Parent or the Dealer Manager. The Company is a Michigan corporation with its principal executive offices located at One Madison Avenue, Cadillac, Michigan 49601-9785. The Company is a leading international manufacturer of refrigerated display cases, refrigerated building systems and commercial vehicle components. Set forth below is certain summary consolidated financial data with respect to the Company excerpted or derived from financial information contained in the Company's 1995 Form 10-K and the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996. More comprehensive financial information is included in such reports and other documents filed by the Company with the Commission, and the following summary is qualified in its entirety by reference to such reports and such other documents and all the financial information (including any related notes) contained therein. Such reports and other documents should be available for inspection and copies thereof should be obtainable in the manner set forth below. 11 KYSOR INDUSTRIAL CORPORATION SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR YEARS ENDED DECEMBER NINE MONTHS ENDED 31, SEPTEMBER 30, -------------------------- ----------------- 1995 1994 1993 1996 1995 -------- -------- -------- -------- -------- (UNAUDITED) Statement of Income Data Total sales and revenues..... $364,302 $314,379 $273,850 $291,815 $276,885 Income before income taxes and accounting change....... 19,544 21,325 18,008 21,958 21,861 Net income................... 17,429 13,275 2,470(1) 14,925 12,576 Fully diluted earnings per common share before accounting change........... 2.42 1.81 .03(1) 2.06 1.76
AS OF AS OF DECEMBER 31, SEPTEMBER 30, ------------------- ------------- 1995 1994 1996 --------- --------- ------------- (UNAUDITED) Balance Sheet Data Total current assets............... $ 108,436 $ 107,821 $123,657 Total assets....................... 186,973 177,511 232,588 Total current liabilities.......... 55,796 56,645 66,585 Total liabilities and deferred credits........................... 106,738 109,593 136,487 Total common shareholders' equity.. 75,242 63,642 90,158
- -------- (1) Includes a charge of $7,628 in respect of the cumulative effect of a change in accounting for postretirement benefits (net of income tax benefit of $4,435). The Company is subject to the informational requirements of the Exchange Act and in accordance therewith files periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. The Company is required to disclose in such proxy statements certain information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities and any material interests of such persons in transactions with the Company. Such reports, proxy statements and other information may be inspected at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also be obtained at prescribed rates from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a World Wide Web site on the internet at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the Commission. Such material may also be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005. 9. CERTAIN INFORMATION CONCERNING PARENT AND THE OFFEROR. The Offeror is a newly incorporated Michigan corporation. To date, the Offeror has not conducted any business other than that incident to its formation, the execution and delivery of the Merger Agreement and the commencement of the Offer. Accordingly, no meaningful financial information with respect to the Offeror is available. The Offeror is a wholly owned subsidiary of Scotsman Group Inc., a Delaware corporation, which is a wholly owned subsidiary of Parent. The principal executive office of each of the Offeror and Scotsman Group Inc. is located at 775 Corporate Woods Parkway, Vernon Hills, Illinois 60061. 12 Parent, a Delaware corporation, has its principal executive office at 775 Corporate Woods Parkway, Vernon Hills, Illinois 60061. Parent is a holding company with subsidiaries engaged in the manufacture and marketing of refrigeration products primarily for the foodservice industry, including ice machines, food preparation and storage equipment and drink dispensing equipment. Set forth below are certain summary consolidated financial data with respect to Parent excerpted or derived from financial information contained in Parent's Annual Report on Form 10-K for the year ended December 31, 1995, and Parent's Quarterly Report on Form 10-Q for the quarter ended September 29, 1996. More comprehensive financial information is included in such reports and other documents filed by Parent with the Commission, and the following summary is qualified in its entirety by reference to such reports and such other documents and all the financial information (including any related notes) contained therein. SCOTSMAN INDUSTRIES, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED FOR YEARS ENDED DECEMBER 31, SEPTEMBER 29, -------------------------------- ---------------------- 1995 1994 1993 1996 1995 ------------ ---------- -------- ------------- -------- (UNAUDITED) Statement of Income Data Net sales............. $324,291 $266,632 $163,952 $282,720 $253,512 Income from operations........... 34,454 28,214 17,606 35,398 29,890 Net income............ 15,408 12,785 7,411 16,467 13,469 Fully diluted net income per share..... 1.45 1.35 1.06 1.54 1.26 AS OF AS OF AS OF DECEMBER 31, JANUARY 1, SEPTEMBER 29, 1995 1995 1996 ------------ ---------- ------------- (UNAUDITED) Balance Sheet Data Total current assets.. $131,342 $116,382 $147,514 Total assets.......... 275,943 244,791 294,029 Total current liabilities.......... 76,514 61,817 74,671 Total liabilities..... 163,624 158,328 165,514 Total shareholders' equity............... 112,319 86,463 128,515
Parent is subject to the informational requirements of the Exchange Act and in accordance therewith files periodic reports and other information with the Commission relating to its business, financial condition and other matters. Such reports and other information are available for inspection and copying at the offices of the Commission in the same manner as set forth with respect to the Company in Section 8. Such material may also be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005. The name, citizenship, business address, present principal occupation and material positions held during the past five years of each of the directors and executive officers of Parent and the Offeror are set forth in Annex I to this Offer to Purchase. Except as described in this Offer to Purchase, none of the Offeror, Parent, or to the best knowledge of the Offeror or Parent, any of the persons listed in Annex I hereto, owns or has any right to acquire any Shares and none of them has effected any transaction in the Shares during the past 60 days. Except as set forth in this Offer to Purchase, none of the Offeror, Parent or, to the best knowledge of the Offeror or Parent, any of the persons listed in Annex I hereto, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss 13 or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, there have been no contacts, negotiations or transactions between the Offeror or Parent, or, to the best of their knowledge, any of the persons listed in Annex I hereto, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets. Except as described in this Offer to Purchase, none of the Offeror, Parent or, to the best knowledge of Parent or the Offeror, any of the persons listed in Annex I hereto, has had any transaction with the Company or any of its executive officers, directors or affiliates that would require disclosure under the rules and regulations of the Commission applicable to the Offer. 10. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the Offeror to consummate the Offer and the Merger is expected to be approximately $330 million (before factoring in the consideration to be received pursuant to the Asset Purchase Agreement), which amount excludes related fees and expenses. Scotsman Group Inc., a wholly owned subsidiary of Parent and the direct parent of the Offeror ("Scotsman Group"), has received a written financing commitment (the "Commitment Letter") from The First National Bank of Chicago ("First Chicago") in the aggregate principal amount of $500 million (the "Credit Facility"). The terms of the definitive agreement providing for the Credit Facility (the "Loan Agreement") have not yet been finalized. The following is a summary of the anticipated principal terms of the Credit Facility based upon the Commitment Letter. This summary is subject to finalizing of the Loan Agreement and is qualified in its entirety by reference to the Commitment Letter which is filed as an exhibit to the Schedule 14D-1 of which this Offer to Purchase is an exhibit (the "Schedule 14D-1"). The Credit Facility consists of three subfacilities: (a) a $265 million revolving loan facility (the "Revolving Facility") under which loans may be borrowed, repaid and reborrowed by Scotsman Group (and certain of its subsidiaries) from time to time for the purpose of providing funds to consummate the Offer and the Merger, to refinance certain indebtedness, to provide working capital and for other general corporate purposes; (b) a $150 million term loan facility (the "Term Facility") for the purpose of providing funds to consummate the Offer and the Merger, to refinance certain indebtedness and to pay certain expenses incurred in connection with the Offer and the Merger; and (c) an $85 million bridge loan facility (the "Bridge Facility") for the purpose of providing funds to consummate the Offer and the Merger, to refinance certain indebtedness and to pay certain expenses incurred in connection with the Offer and the Merger. The Revolving Facility will mature in seven years. The aggregate principal amount that may be borrowed thereunder will be reduced on December 31, 1998 by $10 million and by $15 million on each December 31 thereafter until maturity, at which time the remaining commitment amount under the Revolving Facility will be reduced to zero. The Term Facility will mature in seven years and will be amortized with semi-annual principal payments (in varying amounts) starting on December 31, 1997 and continuing thereafter until maturity. The Bridge Facility will mature in 45 days after the consummation of the Offer; provided, however, that if not paid in full after 45 days, the Bridge Facility will convert to a seven and one-half year term loan. It is anticipated that the Bridge Facility will be paid in full on or prior to maturity with proceeds of the sale of the TPG Assets. Borrowings under the Credit Facility will bear interest at a floating rate based upon, at the borrower's option, (i) the higher of First Chicago's corporate base rate or the Federal funds rate plus 1/2% per annum, or (ii) the rate offered by First Chicago for deposits in the relevant Eurocurrency, plus, in each case, an applicable margin. The applicable margin will vary depending upon the "Debt/Earnings Ratio" (as defined below). The Credit Facility will be guaranteed by Parent and certain of its subsidiaries. The Loan Agreement will contain conditions precedent, representations and warranties, covenants, events of default and other provisions customary for such financings. Covenants in the Loan Agreement will include the following financial covenants: (a) the net worth of Parent on a consolidated basis shall not be less than the sum of $120 million plus 60% of net income of Parent on a consolidated basis for all quarters ending after December 31, 1996 plus 60% of the proceeds of any equity issuances by Parent minus certain adjustment 14 amounts; (b) the ratio (the "Debt/Earnings Ratio") of total indebtedness to "EBITDA" (i.e., net income, plus income tax expense, minus equity in net income of affiliates, plus interest expense, plus depreciation expense, plus amortization expense, plus other non-cash charges, minus interest income), for Parent and its subsidiaries on a consolidated basis, shall not exceed specified amounts measured on a rolling four-quarter basis for each quarter end commencing with the quarter ending in June 1997 (such ratio for such quarter end not to exceed 4.25 to 1.00, calculated by multiplying one quarter of EBITDA at such time by four); and (c) the ratio of EBITDAR" (i.e., EBITDA plus rents) minus capital expenditures to "Fixed Charges" (i.e., interest expense, plus scheduled principal repayments, plus income tax expense, plus rents, plus dividends paid, plus mandatory Revolving Facility reductions minus dividends received), for Parent and its subsidiaries on a consolidated basis, shall not be less than 1.0 to 1.0 for all fiscal quarters ending in 1997 and 1.05 to 1.00 thereafter. First Chicago's commitment to provide the Credit Facility is conditioned on, among other things: initial funding under the Credit Facility occurring on or before May 31, 1997; evidence satisfactory to First Chicago that requisite legal and regulatory approvals for the Offer and the Merger have been obtained; the absence of a material adverse change in the business, condition (financial or otherwise), operations, properties or performance of (a) Parent and its subsidiaries on a consolidated basis or the Company and its subsidiaries on a consolidated basis (in each case from that reflected in the September 30, 1996 financials for each such entity), or (b) Parent and the Company and their respective subsidiaries taken as a whole, on a combined basis after giving effect to the Offer and the Merger, from that reflected in the consolidated pro forma financial statements to be delivered to First Chicago prior to consummation of the Offer; the absence of any matured or unmatured default under the Loan Agreement after giving effect to consummation of the Offer and the Merger; the representations and warranties in the Merger Agreement and the Asset Purchase Agreement being accurate as of the consummation of the Offer and the conditions thereon having been satisfied; the Minimum Condition being satisfied; and the concurrent repayment of Scotsman Group's existing $90 million credit facility and $20 million private placement indebtedness and all existing credit facilities of the Company and its subsidiaries. 11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE COMPANY. On June 4, 1996, George R. Kempton, Chairman of the Board and Chief Executive Officer of the Company, wrote to Richard C. Osborne, Chairman and Chief Executive Officer of Parent, suggesting that the parties meet to discuss a possible strategic alliance. On June 18, 1996, the chairmen of the respective companies met and, following the execution of a mutual Confidentiality and Standstill Agreement dated June 18, 1996, a copy of which is filed as an exhibit to the Schedule 14D-1, discussed potential synergistic advantages that might be obtainable through a combination of the companies' respective product and marketing capabilities. At the time of the meeting, the market price for the Common Stock was approximately $25 per share. On June 19, 1996, Mr. Kempton wrote Mr. Osborne outlining several reasons why an alliance of the Company and Parent may be mutually beneficial. The reasons outlined by Mr. Kempton included: (i) the Company's walk-in cooler and deli case product lines complemented Parent's product lines for the food service industry (restaurants, fast food chains and convenience stores); (ii) Parent's ice machines and food preparation work stations complemented the Company's display case product lines for the supermarket industry; (iii) there was little or no product overlap between the two companies; (iv) purchasing trends of customers in the food service and supermarket industries suggested a desire of those customers to reduce their numbers of individual suppliers and to enter into longer-term supply relationships with full-line suppliers that could provide acceptable quality, delivery and price; and (v) the companies' manufacturing operations geographically complemented each other on a global basis, particularly in light of Parent's strong presence and experience in the European markets and the Company's market position in Australia and its expansion in Southeast Asian markets. Additional correspondence was exchanged by the parties during the month following their initial meeting and another meeting between certain executive officers of the companies was held on July 24, 1996. At that meeting the parties continued to explore the potential advantages of combining the Company's commercial products business with the commercial products business of Parent. 15 At the Company's regularly scheduled Board of Directors' meeting held July 26, 1996, Mr. Kempton reported to the Board on the meetings that had been held with Parent and inquired whether the Board desired Mr. Kempton to explore further a possible business combination with Parent. The Board authorized the Company's management to continue dialogue with Parent to determine whether a proposal could be obtained which would provide a premium value to the Company's shareholders, although the Board emphasized that it was not making any decision to sell the Company. Following the July 26, 1996 Board meeting, Mr. Osborne contacted Mr. Kempton and indicated that Parent had a continuing interest in a possible acquisition of the Company's commercial products business. Mr. Osborne also informed Mr. Kempton that Parent would engage Morgan Stanley as its investment banking firm to assist in Parent's evaluation of the Company. On September 6, 1996, Mr. Kempton and other executive officers of the Company met with representatives of Parent and Morgan Stanley and continued discussions concerning the possible acquisition of the Company by Parent. In that meeting, Mr. Osborne stated that Parent had no interest in acquiring the Company's TPG and he inquired whether the Company might be willing to sell its commercial products group business separately. Due to the cyclical nature of the Company's TPG, Mr. Kempton indicated that he did not believe it would be beneficial to the Company's shareholders to retain the TPG, as it was currently constituted, as a stand-alone business entity, but he acknowledged that a sale of the TPG to a third party in connection with the acquisition of the Company by Parent might maximize value to the Company's shareholders. Also in September 1996, the Company engaged a regional investment banking firm to conduct an evaluation of each of the Company's nine operating divisions to assist the Company's management and Board of Directors in its long-range strategic planning. The investment banking firm reported to the Company's management on various potential strategic alternatives to enhance the value of the Company to its shareholders, including: (i) maintaining the status quo and carrying out current operating plan strategies; (ii) implementing an aggressive campaign to increase the investing community's awareness of the Company; (iii) issuing letter stock to reflect the value of one of the Company's two product groups; (iv) spinning off one of the Company's two products groups in the form of a dividend to existing shareholders; (v) partially divesting the TPG and retaining isolated product lines (such as the fan and fan clutch cooling product lines); (vi) divesting the TPG in its entirety; (vii) divesting the Company's commercial products business; and (viii) selling the entire Company. In late September 1996, Mr. Osborne contacted Mr. Kempton and reemphasized that Parent would not make any acquisition proposal for the Company unless the TPG could be sold to a third party in a prearranged transaction. Mr. Osborne requested and received permission to contact a third party that had acquired several transportation components companies to see if that party had an interest in acquiring the TPG. Mr. Osborne subsequently informed Mr. Kempton that the third party expressed an interest in the possible acquisition of the TPG assets in a transaction in which the Company would receive a cash payment of up to $85 million, although Mr. Osborne understood that the third party's proposal would not include the assumption of pre-closing liabilities associated with the TPG, other than perhaps current trade payables. The parties agreed that they would continue to investigate whether a more advantageous sales opportunity might be available for the TPG. At its regularly scheduled meeting held October 24, 1996, Mr. Kempton updated the Board on his discussions with Mr. Osborne. The Board also reviewed and discussed the report of the regional investment banking firm concerning possible alternatives to maximize value to the Company's shareholders and additional discussions on this topic were scheduled for the Board's January 1997 meeting. The Board also authorized Mr. Kempton to discuss with two executive managers of the TPG (the "MBO Proponents") whether they had an interest in investigating a possible management buy-out of the TPG. During late November and early December 1996, the MBO Proponents met with independent financial advisers to determine the feasibility of a management-led acquisition of the TPG. The MBO Proponents reported 16 to Mr. Kempton that they did have an interest in bidding for the TPG and that, based upon the meetings held with their financial advisers, they believed that a transaction could be structured providing a purchase price of approximately $90 million ($85 million in cash and $5 million in notes). The MBO Proponents indicated, however, that any offer they would make would be conditioned upon the Company retaining responsibility for pre-closing liabilities associated with the TPG, other than trade payables and certain other designated liabilities, and upon obtaining necessary financing. On December 17, 1996, the Company's executive management, including the MBO Proponents, met again with representatives of Parent and Morgan Stanley and continued discussions concerning the possible acquisition of the Company by Parent. The MBO Proponents were given an opportunity at that meeting to outline their interest in acquiring the TPG and the proposed structure of a transaction. In a subsequent conversation with Mr. Kempton, Mr. Osborne expressed concerns as to the financing uncertainties associated with the MBO Proponents' proposal and certain of the suggested terms of the proposal. A special meeting of the Company's Board of Directors was held on December 17, 1996 to review and discuss the status of discussions with Parent, the interest expressed by the MBO Proponents in the TPG and the response of Parent to the MBO Proponents' proposal. Mr. Kempton noted that, within the preceding month, Kuhlman had made an unsolicited inquiry as to whether the Company might wish to explore some strategic alliance involving the TPG. He also noted that several years earlier the Company had engaged in discussions with Schwitzer, Inc. ("Schwitzer") concerning a possible business combination, and that after the termination of those discussions Schwitzer had been acquired by Kuhlman. It was determined that Mr. Kempton would contact Kuhlman to investigate whether it might be interested in acquiring the TPG in a transaction that would facilitate an acceptable proposal by Parent for the entire Company. At its December 17, 1996 meeting, the Board also constituted a committee (the "Special Committee") comprised of the non-employee directors serving on the Board's Acquisition, Divestiture and Merger Committee (Messrs. Grant C. Gentry (Chair), Robert W. Navarre and Robert J. Ratliff), together with Mr. Kempton (ex-officio) and Paul K. Gaston, to assist the Board in evaluating any proposal that might be made for the Company or the TPG. The Special Committee held its first meeting on December 20, 1996. Discussions continued with Parent during the remainder of December 1996, and on December 26, 1996, Mr. Kempton and another executive officer of the Company met with Gary G. Dillon, the Chairman, President and Chief Executive Officer of Schwitzer, to discuss a possible acquisition of the TPG by Kuhlman. Based upon preliminary evaluation materials made available pursuant to a mutual Confidentiality and Standstill Agreement executed at that meeting, a copy of which is filed as an exhibit to the Schedule 14D-1, Mr. Dillon expressed a substantial interest in pursuing an acquisition transaction. On December 27, 1996, legal counsel for the Company and Parent met and discussed possible transaction structures, timing and due diligence. Mr. Dillon visited various of the TPG facilities during the first week of January 1997, and on January 6, 1997, contacted Mr. Kempton and confirmed Kuhlman's interest in acquiring the TPG. At the time, Kuhlman was not aware that the Company was discussing a possible sale transaction with Parent. Mr. Kempton and Mr. Osborne discussed the preliminary indications of value expressed by Mr. Dillon and they agreed that a three-way meeting should be held among the parties to determine whether an acceptable proposal for the TPG could be structured. Mr. Osborne indicated that Parent's valuation of the Company would be adversely affected by any continuing exposure of the Company to liabilities associated with the TPG. On January 13, 1997, the Special Committee met to review and discuss the status of discussions with Parent and Kuhlman. At that meeting, the Special Committee authorized the engagement of William Blair as its investment banking firm to evaluate the fairness from a financial point of view to the Company's shareholders of the consideration to be received by such shareholders in any offer that might be made by Parent, taking into consideration the possible sale of the TPG as part of such a proposal. The scope of William Blair's engagement was subsequently enlarged to include assisting the Company in its negotiations with Parent. 17 From January 20, 1997 through February 1, 1997, the Company engaged in extensive negotiations with Parent and Kuhlman concerning the terms of the definitive agreements under which Parent would acquire the Shares and Kuhlman would acquire the TPG. Between January 21 and January 23, 1997, representatives of each of the parties held extended meetings at the offices of the Company's legal counsel, including a meeting held January 23, 1997 among Mr. Kempton, Mr. Osborne and Mr. Dillon. The contractual terms negotiated with Parent during this period included, among others, the terms of the Offer, the representations and warranties to be made by the Company in the Merger Agreement, the conditions to the Offeror's obligations to consummate the Offer and the Merger, and the size of the termination fee and instances in which such fee would be payable in the event the transactions contemplated by the Merger Agreement were not consummated. The terms negotiated with Kuhlman concerning the Asset Purchase Agreement included, among others, the liabilities to be assumed by Kuhlman as part of the transaction, the representations and warranties to be made by the Company in the Asset Purchase Agreement and the obligations of the Company with respect to such representations and warranties following the closing and the conditions to Kuhlman's obligations to consummate the Asset Purchase Agreement. The terms of the respective definitive agreements and the ongoing negotiations with respect to such agreements were reviewed by the Special Committee in meetings held on January 30 and 31, 1997, and by the Company's Board of Directors in a meeting on January 31, 1997. At the January 31, 1997 meeting, the Board of Directors also received a preliminary report from William Blair. On January 31, 1997 and February 1, 1997, Parent also negotiated with certain of the Company's key executive officers mutually acceptable consulting and noncompetition agreements and modifications of existing agreements between such individuals and the Company, each of which was a condition to Parent entering into the Merger Agreement. All substantive terms of the Merger Agreement and the Asset Purchase Agreement were resolved on February 1, 1997, and the Company's Board of Directors convened to review the terms of the respective agreements. At that meeting, William Blair delivered its opinion to the Board of Directors, as described below, to the effect that the consideration to be received by the Company's shareholders in the Offer and the Merger is fair from a financial point of view and the Board unanimously approved both the Merger Agreement and the Asset Purchase Agreement, subject to the fulfillment of certain conditions which were subsequently satisfied. On February 2, 1997, the Merger Agreement and the Asset Purchase Agreement were executed by the respective parties, and press releases announcing the execution of such agreements and the transactions contemplated thereunder were issued on the morning of February 3, 1997 before the opening of the NYSE. 12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY. The purpose of the Offer, the Merger, the Merger Agreement and the other transactions contemplated thereby, is to enable Parent to acquire control of, and the entire equity interest in, the Company. Pursuant to the Michigan BCA and the Articles of Incorporation (the "Charter") of the Company, adoption by the Board of Directors of the Company and the affirmative vote of the holders of a majority of the outstanding shares of the Company entitled to vote thereon and, if a class or series is entitled to vote as a class, the affirmative vote of the holders of a majority of the outstanding shares of the class or series, is required to approve the Merger Agreement. The Board of Directors of the Company has unanimously approved the Offer, the Merger and the Merger Agreement and the transactions contemplated thereby, and the only remaining required corporate action of the Company is the approval of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock and the affirmative vote of a majority of the outstanding shares of ESOP Preferred Stock, each voting separately as a class. If the Minimum Condition is satisfied and no shares of ESOP Preferred Stock are then outstanding, the Offeror will have sufficient voting power to cause the approval of the Merger Agreement without the affirmative vote of any other shareholder. The foregoing assumes satisfaction of the condition to the Offer that there shall have been validly tendered and not withdrawn prior to 18 the expiration of the Offer all outstanding shares of ESOP Preferred Stock, unless the Company shall have called all outstanding shares of ESOP Preferred Stock for redemption on a date that is not later than one business day after the consummation of the Offer. In the Merger Agreement, the Company has agreed that if approval of the shareholders of the Company is required by law, to take all action necessary to convene a meeting of its shareholders as promptly as practicable after the consummation of the Offer for the purpose of considering and taking action on the Merger Agreement. Parent has agreed that, subject to applicable law, all Shares owned by the Offeror or any other subsidiary of Parent will be voted in favor of approval of the Merger Agreement. Pursuant to the Merger Agreement, the Company has agreed as soon as practicable following the expiration of the Offer, to duly call, give notice of, convene and hold a meeting of shareholders for the purpose of obtaining the shareholders' approval. The shareholders meeting shall be held as soon as practicable following the purchase of Shares pursuant to the Offer. If the Offeror owns a majority of the outstanding shares of Common Stock and the condition described above in respect of the ESOP Preferred Stock is satisfied, approval of the Merger Agreement can be obtained without the affirmative vote of any other shareholder of the Company. Under the Michigan BCA, if a corporation owns 90% or more of each outstanding class of stock of another corporation, it can effect a "short- form" merger with such corporation without prior notice to, or any action by, any other shareholder of such corporation. Accordingly, if the Offeror acquires at least 7,469,284 Shares in the Offer and the condition described above in respect of the ESOP Preferred Stock is satisfied, the Offeror would own more than 90% of the only class of stock of the Company then outstanding and would be able to effect the Merger pursuant to the "short-form" merger provisions of the Michigan BCA. Appraisal Rights. No appraisal rights under the Michigan BCA are available in connection with the Offer or the Merger because the holders of Shares will receive cash in the Merger. Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions and which may, under certain circumstances, be applicable to the Merger or another business combination in which the Offeror seeks to acquire the remaining Shares not held by it following the purchase of Shares pursuant to the Offer. The Offeror believes, however, that Rule 13e-3 will not be applicable to the Merger if the Merger is consummated within one year after the termination of the Offer at the Offer Price. If applicable, Rule 13e-3 requires, among other things, that certain financial information concerning the Company and certain information relating to the fairness of the proposed transaction and the consideration offered to minority shareholders in such transaction be filed with the Commission and disclosed to shareholders prior to consummation of the transaction. Plans for the Company. Parent will continue to evaluate the business and operations of the Company during the pendency of the Offer and after the consummation of the Offer and the Merger. Parent intends to seek additional information about the Company during this period. Thereafter, Parent intends to review such information as part of a comprehensive review of the Company's business, operations, capitalization and management with a view to optimizing use of the Company's potential in conjunction with Parent's business. Except as indicated in this Offer to Purchase, Parent does not have any current plans or proposals which relate to or would result in any of the following: an extraordinary corporate transaction, such as a merger, reorganization or liquidation involving the Company or any of its subsidiaries; a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; any change in the present Board of Directors or management of the Company; any material change in the Company's present capitalization or dividend policy; or any other material change in the Company's corporate structure or business. Notwithstanding the foregoing, following the acquisition of Shares pursuant to the Offer, the Offeror may designate up to that number of directors of the Board of Directors of the Company as will make the percentage of the Company's directors designated by the Offeror equal to the aggregate voting power of the Shares held by Parent and any of its subsidiaries (assuming the exercise of all outstanding options to purchase shares of the Company Capital Stock). 19 In addition, assuming the designation of directors as aforesaid and so long as there are holders of Shares other than Parent or any of its subsidiaries, Parent expects that the Board of Directors would not declare dividends on the shares of Common Stock. 13. THE MERGER AGREEMENT; THE ASSET PURCHASE AGREEMENT; AND CERTAIN OTHER ARRANGEMENTS. The following summary of certain provisions of the Merger Agreement, the Asset Purchase Agreement and certain consulting agreements between Parent and certain officers of the Company, copies of which are filed as exhibits to the Schedule 14D-1, is qualified in its entirety by reference to the text of the Merger Agreement, the Asset Purchase Agreement and such consulting agreements. The Merger Agreement The Offer. The Offeror commenced the Offer in accordance with the terms of the Merger Agreement. Pursuant to the terms and conditions of the Merger Agreement, each of the Company, Parent and the Offeror have agreed, subject to certain exceptions, to use its reasonable best efforts to cause the purchase of Shares pursuant to the Offer and the consummation of the Merger to occur as soon as practicable. Without limiting the foregoing, each of the Company, Parent and the Offeror have agreed to use its reasonable best efforts to take, or cause to be taken, all actions necessary to comply promptly with all legal requirements that may be imposed on itself with respect to the Offer and the Merger and shall promptly cooperate with and furnish information to each other in connection with any such requirements imposed upon any of them in connection with the Offer and the Merger. Notwithstanding the foregoing, the Company is not obligated to use its reasonable best efforts to take any action pursuant to the Merger Agreement if the Board of Directors of the Company concludes in good faith based on the advice of its outside counsel that failure to take such action is necessary in order to comply with its fiduciary duties under applicable law. In addition, neither Parent nor any of its subsidiaries is obligated in connection with obtaining any required HSR Act or other governmental approvals to divest or hold separate or to otherwise take or commit to take any action that limits its freedom of action with respect to, or its ability to retain, the Company or any of the businesses, product lines or assets of Parent or any of its subsidiaries or that would have a material adverse effect on Parent. The Merger. The Merger Agreement provides that, upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the Michigan BCA, the Offeror shall be merged with and into the Company at the Effective Time. Following the Merger, the separate corporate existence of the Offeror shall cease and the Company shall continue as the Surviving Corporation and shall succeed to and assume all the rights and obligations of the Offeror in accordance with the Michigan BCA. At the Effective Time, the Charter and By- Laws of the Offeror shall be the Charter and By-Laws of the Surviving Corporation. The directors of the Offeror shall become the directors of the Surviving Corporation and the officers of the Company shall become the officers of the Surviving Corporation. Conversion of Securities. As of the Effective Time, by virtue of the Merger and without any action on the part of the Offeror, the Company or the holders of any securities of the Offeror or the Company, each share of Company Capital Stock (other than shares of Company Capital Stock owned by the Company, any subsidiary of the Company, Parent, the Offeror, or any other subsidiary of Parent) shall be converted into the right to receive from the Surviving Corporation, in cash, without interest, the Offer Price. Each share of stock of the Offeror issued and outstanding immediately prior to the Effective Time shall, at the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of stock of the Offeror, be converted into and become one fully paid and nonassessable share of Common Stock, $1.00 par value, of the Surviving Corporation. Representations and Warranties. In the Merger Agreement, the Company has made customary representations and warranties to Parent and the Offeror. The representations and warranties of the Company relate, among other things, to its organization and qualification; subsidiaries; capital structure; authority to enter into the Merger Agreement and the Asset Purchase Agreement and to consummate the transactions contemplated 20 thereby; required consents and approvals; filings made by the Company with the Commission under the Securities Act or the Exchange Act (including financial statements included in the documents filed by the Company under these acts); absence of any material adverse change; the absence of certain violations and defaults; compliance with laws, licenses and permits; termination, severance and employment agreements; environmental matters; tax matters; litigation; the enforceability of certain contracts; employee benefits; liabilities; intellectual property; propriety of certain payments; the inapplicability of certain state takeover statutes and the execution of an amendment to the Rights Agreement; and the Asset Purchase Agreement and the transactions contemplated thereby. The Offeror and Parent have also made customary representations and warranties to the Company. Representations and warranties of the Offeror and Parent relate, among other things, to: their organization and authority to enter into the Merger Agreement and to consummate the transactions contemplated thereby; required consents and approvals; and financing. Covenants Relating to the Conduct of Business. During the period from the date of the Merger Agreement to such time as Parent's designees shall constitute a majority of the Board of Directors of the Company, the Company has agreed that it will, and will cause its subsidiaries to, in all material respects, carry on its business in, and not enter into any material transactions other than in accordance with, the ordinary course of its business as currently conducted and, to the extent consistent therewith, use reasonable best efforts to preserve intact its current business organizations, keep available the services of its current officers and key employees and preserve its relationships with customers, suppliers and others having business dealings with it to the end that its goodwill and ongoing business shall not be impaired. The Company has agreed that, except as otherwise expressly contemplated by the Merger Agreement, the Asset Purchase Agreement or required by law, during such period, the Company will not, and will not permit any of its subsidiaries to, without the prior written consent of Parent (which consent shall not be unreasonably withheld): (a) (x) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, or otherwise make any payments to its shareholders in their capacity as such (other than regular quarterly dividends of not more than $0.165 per share on the Common Stock and regular semi-annual dividends of not more than $0.975 per share on the Preferred Stock, in each case declared and paid on dates consistent with past practice), (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except the issuance of shares of Common Stock upon conversion of any share of ESOP Preferred Stock in accordance with the terms thereof, or (z) except as required under existing employee benefit plans, agreements, policies, awards or arrangements in effect on the date of the Merger Agreement, purchase, redeem or otherwise acquire any shares of its capital stock or those of any subsidiary or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (b) except as required under existing employee benefit plans, agreements, policies, awards or arrangements in effect on the date of the Merger Agreement, issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities, equity equivalent or convertible securities (other than pursuant to the Rights Agreement or the issuance of shares of Common Stock upon the exercise of stock options of the Company outstanding on the date of the Merger Agreement in accordance with their current terms and the issuance of shares of Common Stock upon the conversion of any shares of ESOP Preferred Stock into shares of Common Stock in accordance with the terms thereof); (c) amend its Charter or By-laws or other similar organizational documents; (d) acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets, other than (y) the purchase of raw materials and goods and services used in the manufacture of the 21 products of the businesses of the Company and its subsidiaries, in each case in the ordinary course of business consistent with past practice and (z) other transactions that are in the ordinary course of business consistent with past practice and which in the aggregate involve assets having a purchase price not in excess of $1,000,000. (e) sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets, other than the sale of products of the businesses of the Company and its subsidiaries, in each case in the ordinary course of business consistent with past practice and other transactions that are in the ordinary course of business consistent with past practice and which in the aggregate involve assets having a fair market value or book value not in excess of $500,000; (f) incur any new indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or guarantee any debt securities of others or make any loans, advances or capital contributions to, or other investments in, any other person, other than to or in the Company or any wholly owned subsidiary of the Company and other than customary travel and similar advances to employees in the ordinary course of business consistent with past practice; (g) alter (through merger, liquidation, reorganization, restructuring or in any other fashion) the corporate structure or ownership of the Company or any subsidiary of the Company; (h) enter into or adopt, or amend any existing severance plan, agreement or arrangement or enter into or amend any employee benefit plan or employment or consulting agreement, other than as required by law; (i) except as required under existing plans, agreements, policies, awards or arrangements in effect on the date of the Merger Agreement, or as otherwise disclosed to Parent, increase the compensation payable or to become payable to its officers or employees, except, in the case of employees who are not officers, for increases in the ordinary course of business consistent with past practice, pay or commit to pay any bonus, or grant any severance or termination pay to, or enter into any employment or severance agreement, or establish, adopt, enter into, or amend in any material respect or take action to enhance in any material respect or accelerate any rights or benefits under, any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, stock ownership, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, except, in each case, as may be required to comply with applicable law or regulation; (j) violate or fail to perform any material obligation or duty imposed upon it by any applicable federal, state or local law, rule, regulation, guideline or ordinance; (k) redeem the Rights or amend the Rights Agreement; (l) breach in any material respect any of its material representations, warranties, covenants or agreements contained in the Asset Purchase Agreement (regardless of any provisions regarding notice or lapse of time, or both) or waive any of its material rights under, amend or terminate the Asset Purchase Agreement, other than a waiver of the condition regarding the consummation of the Offer; (m) make any material change in its accounting methods, policies or procedures except as a result of any change in law or generally accepted accounting principles; (n) prepare or file any tax return inconsistent with past practice or, on any such tax return, take any position, make any election or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar tax returns in prior periods, or give certain approvals or consents under the Asset Purchase Agreement in respect of the allocation of the purchase price for the TPG Assets; or (o) authorize, recommend, propose or announce an intention to do any of the foregoing, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing. No Solicitation. The Company has agreed in the Merger Agreement that, from and after the date of the Merger Agreement, the Company will not, and will not permit any of its or its subsidiaries' officers, directors or 22 employees to, and the Company will use its reasonable best efforts to cause all of its and its subsidiaries' attorneys, financial advisors, agents and other representatives not to, directly or indirectly, solicit, initiate or knowingly encourage (including by way of furnishing information) any Takeover Proposal (as defined herein), or engage in or continue discussions or negotiations relating thereto. Notwithstanding the foregoing, the Company may engage in discussions or negotiations with, or furnish information concerning the Company and its business, properties or assets to, any third party with respect to a Takeover Proposal if the Board of Directors of the Company concludes in good faith, based on the advice of its outside counsel, that it is necessary to do so in order to comply with its fiduciary duties under applicable law. The Company will promptly notify Parent of any Takeover Proposal, including the material terms and conditions thereof and the identity of the person or group making such Takeover Proposal, and will promptly notify Parent of any determination by the Company's Board of Directors that a Superior Proposal (as defined herein) has been made. For purposes of the Merger Agreement, (i) "Takeover Proposal" means any proposal or offer, other than a proposal or offer by Parent or any of its subsidiaries, for a tender or exchange offer, a merger, consolidation or other business combination involving the Company or any of its subsidiaries or any proposal to acquire in any manner a substantial equity interest in, or a substantial portion of the assets of (other than pursuant to the Asset Purchase Agreement) the Company or any of its subsidiaries and (ii) "Superior Proposal" means a bona fide proposal or offer made by a third party to acquire the Company pursuant to a tender or exchange offer, a merger, consolidation or other business combination or a sale of all or substantially all of the assets of the Company and its subsidiaries (other than pursuant to the Asset Purchase Agreement) on terms which a majority of the members of the Board of Directors of the Company concludes in their good faith reasonable judgment to be more favorable to the Company's shareholders than the transactions contemplated by the Merger Agreement and for which any required financing is committed or which a majority of such members reasonably concludes is reasonably capable of being obtained by such third party. The foregoing does not prohibit the Company or its Board of Directors from taking or disclosing to its shareholders any position pursuant to Rules 14d-9 and 14e-2 under the Exchange Act or from making any disclosure to the Company's shareholders if the Company's Board of Directors concludes in good faith based on the advice of its outside counsel that it is necessary to do so in order to comply with its fiduciary duties under applicable law. Third Party Standstill Agreements. During the period from the date of the Merger Agreement through the Effective Time, the Company has agreed not to terminate, amend, modify or waive any provision of any confidentiality or standstill agreement to which the Company or any of its subsidiaries is a party (other than any involving Parent, but solely in respect of the Offer or any increase in the Offer Price), unless the Board of Directors of the Company concludes in good faith based on the advice of its outside counsel that it is necessary to do so in order to comply with its fiduciary duties under applicable law. During such period, the Company has agreed to enforce, to the fullest extent permitted under applicable law, the provisions of any such agreements, including, without limitation, obtaining injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof in any court of the United States of America or any state thereof having jurisdiction, unless the Board of Directors of the Company concludes in good faith based on the advice of its outside counsel that failure to take such action is necessary in order to comply with its fiduciary duties under applicable law. Options. Prior to the commencement of the Offer, the Company has agreed to adopt procedures pursuant to which each outstanding stock option of the Company, stock appreciation right, and other stock based award ("Option") which is exercisable immediately prior to the consummation of the Offer in accordance with the terms of the applicable plan may be exercised or settled by the holder thereof by the delivery to the Company of a notice of exercise or acceptance of cash settlement prior to the consummation of the Offer. Upon the consummation of the Offer, each Option so exercised or settled will be canceled and promptly thereafter, the Company will deliver to the holder thereof a cash payment in an amount equal to the product of (i) the number of shares of Common Stock subject or related to such Option and (ii) the excess of the Offer Price over the exercise or purchase price per share of Common Stock subject or related to such Option (such payment to be net of applicable withholding taxes). 23 Prior to the commencement of the Offer, the Company has agreed to take action in accordance with the Company's stock option plans to cause each Option which is outstanding immediately following the consummation of the Offer, whether or not then exercisable, to become fully exercisable. The Company also has agreed to adopt procedures pursuant to which each Option may be exercised or settled by the holder thereof by the delivery to the Company of a notice of exercise or acceptance of cash settlement prior to the Effective Time. At the Effective Time, each such Option so exercised or settled shall be canceled and promptly thereafter the Company shall deliver to the holder thereof cash in an amount equal to the product of (i) the number of shares of Common Stock subject or related to such Option and (ii) the excess of the Offer Price over the exercise or purchase price per share of Common Stock subject or related to such Option (such payment to be net of applicable withholding taxes). Parent has agreed to provide the Company sufficient funds for the Company to meet its payment obligations set forth in the preceding two paragraphs and, notwithstanding any provisions of the Merger Agreement to the contrary, the Company is permitted to borrow such funds to the extent they are not so provided by Parent. Following the Effective Time, each Option which has not theretofore been exercised or settled by the holder thereof will be canceled and promptly thereafter Parent will deliver to the holder thereof cash in an amount equal to the product of (i) the number of shares of Common Stock subject or related to such Option and (ii) the excess of the Offer Price over the exercise or purchase price per share of Common Stock subject or related to such Option (such payment to be net of applicable withholding taxes). Restricted Stock. Prior to the commencement of the Offer, the Company has agreed to cause the restrictions on restricted shares of Common Stock under the Company's compensation plans and arrangements to lapse effective upon the consummation of the Offer and to adopt procedures to enable all holders thereof to tender such shares of Common Stock pursuant to the terms of the Offer. Indemnification. From and after the consummation of the Offer, Parent has agreed to (and to cause the Company or the Surviving Corporation to) exculpate, indemnify and hold harmless all past and present officers, directors, employees and agents of the Company and its subsidiaries to the same extent such persons are currently exculpated and indemnified by the Company or any of its subsidiaries pursuant to the Company's or any such subsidiary's Charter or By- laws (or similar organizational documents), agreements in effect as of the date of the Merger Agreement or applicable law for acts or omissions, or alleged acts or omissions, occurring at or prior to the Effective Time, and Parent has agreed to (and to cause the Company or the Surviving Corporation to), honor all such obligations of the Company (including, if necessary, providing the Company or the Surviving Corporation sufficient funds), including, without limitation, obligations to advance expenses to such persons arising pursuant to the Company's or any such subsidiary's Charter or By-laws (or similar organizational documents), agreements in effect as of the date of the Merger Agreement or applicable laws. However, Parent is not obligated to exculpate, indemnify or hold harmless any person who becomes an employee of Kuhlman or any of its subsidiaries in connection with the Asset Purchase Agreement, or the transactions contemplated thereby, for any acts or omissions occurring at or prior to the Effective Time in respect of the business previously conducted by the Company using the TPG Assets (the "Excluded Matters"). Parent will cause the Surviving Corporation to provide, for an aggregate period of not less than six years from the Effective Time, the Company's current directors and officers an insurance and indemnification policy that provides coverage for events occurring prior to the Effective Time (the "D&O Insurance"), that is no less favorable than the Company's existing policy or, if substantially equivalent insurance coverage is unavailable, the best available coverage. Notwithstanding the foregoing, the Surviving Corporation shall not be required to pay an annual premium for the D&O Insurance in excess of 200% of the last annual premium paid prior to the date hereof, but in such case shall purchase as much coverage as possible for such amount. Employee Benefits. Parent has agreed that it will provide and cause the Surviving Corporation to provide benefits for the employees of the Company from and after the Effective Time either under the employee benefits plans of the Company and its subsidiaries ("Company Plans") or under other employee benefit plans established 24 by Parent or the Surviving Corporation. As soon as reasonably practicable after the Effective Time, employer contributions to the Company's Employee Stock Ownership Plan shall be discontinued and such plan will be merged into another qualified defined contribution plan maintained by Parent or its affiliates. Board Representation. The Merger Agreement provides that promptly after such time as the Offeror acquires Shares pursuant to the Offer, the Offeror shall be entitled to designate at its option up to that number of directors, rounded to the nearest whole number, of the Company's Board of Directors, subject to compliance with Section 14(f) of the Exchange Act, as will make the percentage of the Company's directors designated by the Offeror equal to the aggregate voting power of the Shares held by Parent or any of its subsidiaries (assuming the exercise of all options to purchase shares of the Company Capital Stock outstanding at the Expiration Date). However, in the event that the Offeror's designees are elected to the Board of Directors of the Company, until the Effective Time, such Board of Directors shall have at least three directors who are directors on the date of the Merger Agreement (of which at least two directors are not officers of the Company) (the "Independent Directors"). If the number of Independent Directors shall be reduced below three for any reason whatsoever, the remaining Independent Directors shall designate a person to fill such vacancy who shall be deemed to be an Independent Director for purposes of the Merger Agreement or, if no Independent Directors then remain, the other directors of the Company as of the date of the Merger Agreement shall designate three persons to fill such vacancies who shall not be officers or affiliates of the Company or any of its subsidiaries, or officers or affiliates of Parent or any of its subsidiaries, and such persons shall be deemed to be Independent Directors for purposes of the Merger Agreement. In connection with the foregoing, the Company will promptly, at the option of Parent, either increase the size of the Company's Board of Directors and/or obtain the resignation of such number of its current directors as is necessary to enable the Offeror's designees to be elected or appointed to the Company's Board of Directors as provided above. In no event, however, will the size of the Company's Board of Directors be larger than 10 persons (thereby limiting to seven the number of directors who may be designated by Parent pending the consummation of the Merger). Severance, Employment and Benefit Agreements. Parent has agreed to timely honor, and following the consummation of the Offer and the Merger, respectively, to cause the Company or the Surviving Corporation, as the case may be, to timely honor (including by providing sufficient funds therefor), in accordance with their terms, certain specified severance, employment and benefit agreements, plans and arrangements with the Company's directors, officers and employees that have previously been disclosed by the Company to Parent. Conditions Precedent. The respective obligations of each party to effect the Merger shall be subject to the fulfillment at or prior to the Effective Time of the following conditions: (a) if required by applicable law, the shareholders of the Company shall have approved the Merger Agreement (provided that Parent and the Offeror vote all of their shares of Company Capital Stock entitled to vote thereon in favor of the Merger); (b) no statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other governmental entity preventing the consummation of the Merger shall be in effect (provided that each of the parties shall have used its reasonable best efforts to prevent the entry of any such temporary restraining order, injunction or other order and to appeal as promptly as possible any injunction or other order that may be entered); (c) the Offeror shall have previously accepted for payment and paid for Shares pursuant to the Offer (this condition being deemed satisfied with respect to the obligations of Parent or the Offeror if the Offeror fails to accept for payment and pay for any Shares pursuant to the Offer in violation of the terms of the Merger Agreement); and (d) any waiting period (and any extension thereof) under the HSR Act applicable to the Merger shall have expired or been terminated. Termination. The Merger Agreement provides that it may be terminated at any time prior to the Effective Time, whether before or after the approval of the shareholders of the Company: (a) by mutual written consent of Parent and the Company; (b) by either Parent or the Company: (i) if (x) as a result of the failure of any of the conditions to the Offer as set forth in this Offer to Purchase (see Section 15), the Offer shall have terminated or expired in accordance with its terms without the Offeror having accepted for payment any Shares pursuant to the Offer or (y) all of the conditions to the Offer set forth in this Offer to Purchase have not been satisfied prior to 25 June 30, 1997 or such later date as the parties may agree to (provided that the right to terminate the Merger Agreement pursuant to this clause (b)(i) shall not be available to any party whose failure to perform any of its obligations under the Merger Agreement results in the failure of any such condition to the Offer or if the failure of such condition to the Offer results from facts or circumstances that constitute a breach of representation or warranty under the Merger Agreement by such party); or (ii) if any governmental entity shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by the Merger Agreement and such order, decree or ruling or other action shall have become final and nonappealable, provided that the party seeking to terminate the Merger Agreement shall have used its reasonable best efforts to lift or vacate such order, decree or ruling; (c) by Parent or the Offeror prior to the purchase of Shares pursuant to the Offer in the event of a breach by the Company of any representation, warranty, covenant or other agreement contained in the Merger Agreement which (i) would give rise to the failure of condition (d) or (e) described below in Section 15 and (ii) cannot be or has not been cured within 20 days after the giving of written notice to the Company; (d) by Parent or the Offeror if either Parent or the Offeror is entitled to terminate the Offer as a result of the occurrence of any event set forth in paragraph (c) described below in Section 15; (e) by the Company if the Board of Directors of the Company reasonably determines that a Takeover Proposal constitutes a Superior Proposal and the Board of Directors of the Company determines in good faith based on the advice of its outside counsel that termination of the Merger Agreement is necessary in order to comply with its fiduciary duties under applicable law; (f) by the Company, if (i) any of the representations or warranties of Parent or the Offeror set forth in the Merger Agreement that are qualified as to materiality shall not be true and correct in any respect or any such representations or warranties that are not so qualified shall not be true and correct in any material respect, or (ii) Parent or the Offeror shall have failed to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant of Parent or the Offeror to be performed or complied with by it under the Merger Agreement and, in the case of (i) or (ii), such untruth or incorrectness or failure cannot be or has not been cured within 20 days after the giving of written notice to Parent or the Offeror, as applicable; or (g) by the Company, if the Offer has not been timely commenced. Notwithstanding the foregoing, the Company may not terminate the Merger Agreement pursuant to clause (e) unless and until five business days have elapsed following delivery to Parent of a written notice (a "Section 9.1(e) Notice") of the conclusion by the Board of Directors of the Company described in clause (e) and, during such five business day period, the Company has cooperated fully with Parent, including, without limitation, informing Parent of the terms and conditions of the Takeover Proposal and the identity of the person making the Takeover Proposal, with the intent of enabling Parent to agree to a modification of the terms and conditions of the Merger Agreement so that the transactions contemplated thereby may be effected. Furthermore, the Company may not terminate the Merger Agreement pursuant to clause (e) unless at the end of such five business day period the Board of Directors of the Company continues reasonably to believe its prior conclusion that the Takeover Proposal constitutes a Superior Proposal and simultaneously with such termination the Company pays to Parent the expenses described below. In connection with the foregoing, the Offeror is required to extend the Offer (i) by the earlier of seven business days following a Section 9.1(e) Notice or the termination by the Company under clause (e) above and (ii) by up to two business days following the 20-day cure period described in clause (c) above. In the event of a termination of the Merger Agreement by either the Company or Parent, the Merger Agreement shall forthwith become void (except for certain specified provisions, including those pertaining to the payment of certain expenses and fees and except for certain confidentiality obligations of the parties) and the Offer and the Merger terminated and abandoned and there shall be no liability or obligation on the part of Parent, the Offeror or the Company or their respective officers, directors, employees or agents, other than for liability for any willful or bad faith breach. Fees and Expenses. Except as provided in the Merger Agreement, whether or not the Merger is consummated, all costs and expenses incurred by a party to the Merger Agreement in connection with the Merger Agreement and the transactions contemplated thereby, including, without limitation, the fees and disbursements of counsel, financial advisors and accountants, shall be paid by the party incurring such costs and expenses. The Company has agreed in the Merger Agreement that it will pay, or cause to be paid, to Parent, up to $1,750,000 of Expenses (as defined herein) if: (i) Parent or the Offeror terminates the Merger Agreement under 26 clause (d) set forth above under "Termination"; or (ii) the Company terminates the Merger Agreement pursuant to clause (e) set forth above under "Termination". "Expenses" means documented out-of-pocket fees and expenses reasonably incurred or paid by or on behalf of Parent or its subsidiaries in connection with the Offer, the Merger or the consummation of any of the transactions contemplated by the Merger Agreement, including all reasonable fees and expenses of law firms, commercial banks, investment banking firms, accountants, experts and consultants to Parent or any of its subsidiaries. If Expenses are payable, or have been paid, as described in the preceding paragraph and within 365 days after a termination described in such paragraph a Takeover Proposal with a third party is consummated (other than a Takeover Proposal relating to the sale of all or substantially all of the Company's transportation products group), the Company has agreed to pay to Parent, simultaneously with the consummation of such Takeover Proposal, by the additional sum of $9,000,000. Asset Purchase Agreement Sale and Purchase of Assets; Consideration. In the Asset Purchase Agreement, the Company and certain of its domestic subsidiaries (the "Sellers") have agreed to sell to Kuhlman, and Kuhlman has agreed to purchase from Sellers, on the terms and subject to the conditions set forth therein, all right, title and interest that Sellers possess and have the right to transfer in all of the properties, assets, rights, claims and goodwill relating exclusively to the business of the TPG (the "Business"), including all of the outstanding capital stock owned by the Company in certain foreign subsidiaries constituting part of the TPG (the "Foreign Subsidiaries") (collectively the "Purchased Assets"). As consideration for the transfer of the Purchased Assets and Sellers' other undertakings in the Asset Purchase Agreement, including certain restrictive covenants, Kuhlman has agreed to pay to Sellers at closing $86,000,000 in cash. As additional consideration for the transfer of the Purchased Assets and Sellers' other undertakings in the Asset Purchase Agreement, Kuhlman has agreed to assume and fully pay, satisfy and discharge when due (other than in the case of any good faith disputes) all of Sellers' respective liabilities and obligations to the extent relating to the Business other than specified liabilities expressly excluded in the Asset Purchase Agreement. Representations and Warranties. The Asset Purchase Agreement contains customary representations and warranties of Sellers with respect to the Business. The representations and warranties of Sellers relate to, among other things: Sellers' organization and qualification and authority to enter into the Asset Purchase Agreement and to consummate the transactions contemplated thereby; the absence of conflicts and required consents and approvals; filings made by the Company with the Commission under the Securities Act or the Exchange Act (including financial statements included in the documents filed by the Company under those acts); the absence of any material adverse change; litigation; compliance with laws; tax matters; termination, severance and employment agreements; employee benefit plans; environmental matters; labor matters; title to the Purchased Assets; real property; intellectual property; material contracts; and broker's fees. The Asset Purchase Agreement also contains customary representations and warranties of Kuhlman with respect to, among other things: Kuhlman's organization and authority to enter into the Asset Purchase Agreement and to consummate the transactions contemplated thereby; the absence of potential conflicts and required consents and approvals; broker's fees; acceptance of the Purchased Assets; and financing. Survival of Representations, Warranties and Covenants. None of the representations or warranties of Sellers and Kuhlman in the Asset Purchase Agreement will survive the closing, other than Sellers' representations and warranties with respect to broker's fees, title to the Purchased Assets and authority to enter into and consummate the transactions contemplated by the Asset Purchase Agreement, which will survive forever. The post-closing covenants and agreements of the parties, including the indemnification covenants described in "Indemnification" below, will survive the closing without limitation, except for those that, by their terms, contemplate a shorter survival period. Except for the covenants and agreements of Sellers described in "Interim Operations of Sellers" below, which will survive for two years after the closing, all pre-closing covenants and agreements of the parties will not survive the closing. 27 Interim Operations of Sellers. The Asset Purchase Agreement provides that, except as contemplated thereby or as expressly agreed to in writing by Kuhlman, during the period from the date of the Asset Purchase Agreement to the closing: (i) each Seller will conduct its operations relating to the Business in the ordinary course of business consistent with past practices; (ii) each Seller will exercise its reasonable best efforts to preserve intact the present business organizations and personnel relating to the Business, preserve the present goodwill of the Business with all persons having business dealings with it and comply with all laws applicable to the conduct of the Business; (iii) Sellers will not take, or agree in writing or otherwise to take, any action that would make any of the representations or warranties of Sellers contained in the Asset Purchase Agreement untrue or incorrect in any material respect as of the date when made; and (iv) the Foreign Subsidiaries will not transfer any cash or cash equivalents to the Company. Termination. The Asset Purchase Agreement may be terminated: (i) by either the Company or Kuhlman if a court or other governmental body has taken action to prohibit the transactions contemplated thereby or if the transactions contemplated by the Asset Purchase Agreement have not closed by June 30, 1997; (ii) by Kuhlman upon certain breaches of the Asset Purchase Agreement by Sellers, following notice to, and an opportunity to cure such breaches by, the Company; (iii) by the Company upon certain breaches of the Asset Purchase Agreement by Kuhlman, following notice to, and an opportunity to cure such breaches by, Kuhlman; and (iv) by the Company if the Merger Agreement is terminated for any reason. If the Company terminates the Asset Purchase Agreement pursuant to the immediately preceding clause (iv), it has agreed to pay Kuhlman the sum of $100,000 within three business days of termination, provided that Kuhlman is not in material breach of its representations, warranties or obligations under the Asset Purchase Agreement. Restrictive Covenants. Subject to certain exceptions, Sellers and their respective subsidiaries have agreed not to compete with the Business or solicit, divert or accept orders from certain customers of the Business for five years following the closing of the transactions contemplated by the Asset Purchase Agreement. In addition, Sellers and their respective subsidiaries have agreed not to solicit certain employees of the Business for three years following the closing. The foregoing covenants will not restrict the right of a Seller or any subsidiary to own up to 5% of the outstanding capital stock of certain publicly traded companies or to acquire a business any unit of which engages in any activity restricted by the foregoing covenants, provided that not more than 15% of the consolidated revenues of the acquired business is derived from the unit and the acquired business divests itself of the unit within one year after the purchase. The Parent has entered into a Joinder dated February 2, 1997 under which it agrees, effective as of the consummation of the Offer, to be responsible for Sellers' compliance with the restrictive covenants described above. A copy of the Joinder is filed as an exhibit to the Schedule 14D-1. Conditions to the Transaction. The obligations of the parties to consummate the transactions contemplated by the Asset Purchase Agreement are subject to the satisfaction or waiver of certain conditions, including that no statutes, rules, regulations or actions by governmental authorities must have been enacted or taken that make illegal or prohibit the consummation of such transactions or otherwise would materially adversely affect the Business. The obligations of Kuhlman to consummate the transactions contemplated by the Asset Purchase Agreement are subject to the satisfaction or waiver of certain additional conditions, including that Sellers are not in breach of their representations, warranties or covenants under the Asset Purchase Agreement (subject to certain materiality standards and cure periods) and the absence of certain developments with respect to the Business that have had or may reasonably be expected to have a material adverse effect on the Business. The obligation of Sellers to consummate the transactions contemplated by the Asset Purchase Agreement are subject to the satisfaction or waiver of certain additional conditions, including that Kuhlman is not in breach of its representations, warranties or covenants under the Asset Purchase Agreement (subject to certain materiality standards and cure periods) and that the Offer must have been consummated. Indemnification. Sellers have agreed to defend, indemnify and hold harmless Kuhlman and certain related parties against certain losses and expenses resulting from or relating to, among other things: (i) any breach of any representation, warranty, covenant or agreement made by Sellers in the Asset Purchase Agreement that 28 survives the closing or any breach or nonperformance of any agreement entered into by any Seller at closing; and (ii) any liabilities of Sellers not assumed by Kuhlman pursuant to the Asset Purchase Agreement. Kuhlman has agreed to defend, indemnify and hold harmless each Seller and certain related parties against certain losses and expenses resulting from or relating to, among other things: (i) any breach or nonperformance of any covenant or agreement made by Kuhlman in the Asset Purchase Agreement that survives the closing or any agreement entered into by Kuhlman at closing; (ii) liabilities assumed by Kuhlman in the Asset Purchase Agreement, and (iii) the conduct of the Business and the use of the Purchased Assets after closing. The Asset Purchase Agreement limits in certain respects the indemnification obligations of Sellers. In particular, except with respect to post-closing covenants and agreements of Sellers and other limited matters set forth in the Asset Purchase Agreement, Sellers will not be liable to Kuhlman for any indemnification claims until the aggregate amount of the claims exceeds $500,000 (the "Basket Amount"), and upon reaching the Basket Amount Sellers will be liable to Kuhlman for all indemnification claims in excess of the Basket Amount up to a maximum aggregate amount of $8,000,000. Parent has entered into a Joinder dated February 2, 1997 under which it agrees, effective as of the consummation of the Offer, to be responsible for Sellers' performance of their indemnification obligations under the Asset Purchase Agreement. Consulting Agreements Upon consummation of the Offer, Parent has agreed to engage Mr. Kempton, Peter W. Gravelle, President and Chief Operating Officer of the Company, and Timothy D. Peterson, Vice President, Marketing and International of the Company (the "Consultants"), to act as consultants to Parent with respect to Parent's operations and business development activities. In connection with their engagement by Parent, the Consultants have agreed to refrain from engaging in any activity in competition with Parent and to provide certain consulting services for Parent. Under such consulting and noncompetition agreements, Mr. Kempton will receive $49,400 per month for 36 months, Mr. Gravelle will receive $44,600 per month for 72 months and Mr. Peterson will receive $14,100 per month for 72 months. 14. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that neither the Company nor any of its subsidiaries will, among other things, from the date of the Merger Agreement until the time Parent's designees shall constitute a majority of the Board of Directors of the Company, (a) (x) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, or otherwise make any payments to its shareholders in their capacity as such (other than regular quarterly dividends of not more than $0.165 per share on the Common Stock and regular semiannual dividends of not more than $0.975 per share on the ESOP Preferred Stock, in each case declared and paid on dates consistent with past practice), (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except the issuance of shares of Common Stock upon conversion of any share of ESOP Preferred Stock in accordance with the terms thereof, or (z) except as required under existing employee benefit plans, agreements, policies, awards or arrangements in effect on the date of the Merger Agreement, purchase, redeem or otherwise acquire any shares of its capital stock or those of any subsidiary or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; or (b) except as required under existing employee benefit plans, agreements, policies, awards or arrangements in effect on the date of the Merger Agreement, issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities, equity equivalent or convertible securities (other than pursuant to the Rights Agreement or the issuance of shares of Common Stock upon the exercise of stock options of the Company outstanding on the date of the Merger Agreement in accordance with their current terms and the issuance of shares of Common Stock upon the conversion of shares of ESOP Preferred Stock in accordance with the terms thereof). 29 15. CERTAIN CONDITIONS TO THE OFFEROR'S OBLIGATIONS. Notwithstanding any other term of the Offer or the Merger Agreement, the Offeror shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-l(c) under the Exchange Act (relating to the Offeror's obligation to pay for or return tendered Shares after the termination or withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer unless (i) there shall have been validly tendered and not withdrawn prior to the expiration of the Offer such number of Shares that would constitute a majority of the outstanding shares of the Company Capital Stock at the Expiration Date (assuming the exercise of all options to purchase shares of the Company Capital Stock outstanding at the Expiration Date), (ii) any waiting period under the HSR Act applicable to the purchase of Shares pursuant to the Offer shall have expired or been terminated, (iii) the Company and Kuhlman shall have consummated the transactions contemplated by the Asset Purchase Agreement, or Kuhlman shall have waived any conditions to consummate the Asset Purchase Agreement, agreeing to consummate the transactions contemplated thereby contemporaneously with or immediately following the consummation of the Offer, and (iv) there shall have been validly tendered and not withdrawn prior to the expiration of the Offer all outstanding shares of ESOP Preferred Stock, unless the Company shall have called all outstanding shares of ESOP Preferred Stock for redemption on a date that is not later than one business day after the consummation of the Offer. Furthermore, notwithstanding any other term of the Offer or the Merger Agreement, the Offeror shall not be required to accept for payment or, subject as aforesaid, to pay for any Shares not theretofore accepted for payment or paid for, and may terminate the Offer if, at any time on or after the date of the Merger Agreement and before the acceptance of such Shares for payment or the payment therefor, any of the following conditions exists (other than as a result of any action or inaction of Parent or any of its subsidiaries that constitutes a breach of the Merger Agreement): (a) there shall be instituted by any governmental entity and pending as of the Expiration Date any suit, action or proceeding (i) seeking to prohibit or limit the acquisition by Parent or the Offeror of any Shares pursuant to the Offer, seeking to prohibit or limit the making or consummation of the Offer or the Merger or the performance of any of the other transactions contemplated by the Merger Agreement or the Asset Purchase Agreement, or seeking to obtain from the Company, Parent or the Offeror any damages that are material in relation to the Company and its subsidiaries taken as a whole, (ii) seeking to prohibit or limit the ownership or operation by the Company, Parent or any of their respective subsidiaries of any material portion of the business or assets of the Company and its subsidiaries, or Parent and its subsidiaries, or to compel the Company or Parent to dispose of or hold separate any material portion of the business or assets of the Company and its subsidiaries, or Parent and its subsidiaries, as a result of the Offer, the Merger or any of the other transactions contemplated by the Merger Agreement, (iii) seeking to impose limitations on the ability of Parent or the Offeror to acquire or hold, or exercise full rights of ownership of, any Shares to be accepted for payment pursuant to the Offer, including, without limitation, the right to vote such Shares on all matters properly presented to the shareholders of the Company, or (iv) prohibiting Parent or any of its subsidiaries from effectively controlling any material portion of the business or operations of the Company or its subsidiaries (provided, that, in the case of clauses (i) through (iv) above, Parent shall have used its reasonable best efforts to resolve or eliminate same); (b) there shall be enacted, entered, enforced, promulgated or deemed applicable to the Offer or the Merger by any governmental entity, any statute, rule, regulation, judgment, order or injunction, other than the application to the Offer, the Merger or the transactions contemplated by the Asset Purchase Agreement of applicable waiting periods under the HSR Act, that would reasonably be expected to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (iv) of paragraph (a) above; (c) the Board of Directors of the Company or any committee thereof shall have withdrawn or modified in a manner adverse to Parent or the Offeror its approval or recommendation of the Offer, the Merger or the Merger Agreement, or approved or recommended any Takeover Proposal; (d) any of the representations and warranties of the Company set forth in the Merger Agreement shall not be true and correct in any respect, in each case as if such representations and warranties were made as of such time, except for (i) failures to be true and correct that would not reasonably be expected to result in a material adverse effect on the Company and (ii) failures to comply that are capable of being and are cured 30 within 20 days after written notice from Parent to the Company of such failure (in which case Parent has agreed to and to cause the Offeror to, extend the Expiration Date to two business days following the end of such cure period or, if earlier, the date of cure, unless the Offer would otherwise not expire prior thereto); (e) the Company shall have failed to perform any obligation or to comply with any agreement or covenant of the Company to be performed or complied with by it under the Merger Agreement, except for (i) failures to so perform or comply that would not reasonably be expected to result in a material adverse effect on the Company and (ii) failures to perform or comply that are capable of being and are cured within 20 days after written notice from Parent to the Company of such failure (in which case Parent has agreed to, and to cause the Offeror to, extend the Expiration Date to two business days following the end of such cure period or, if earlier, the date of cure, unless the Offer would otherwise not expire prior thereto); (f) there shall have occurred and be continuing as of the Expiration Date (i) any general suspension of trading in, or limitation on prices for, securities on a national securities exchange in the United States (excluding any coordinated trading halt triggered solely as a result of a specified decrease in a market index), (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any limitation (whether or not mandatory) by any governmental entity on, or other event that materially adversely affects, the extension of credit by banks or other lending institutions, (iv) a commencement of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States which in any case is reasonably expected to have a material adverse effect on the Company or to materially adversely affect Parent's or the Offerer's ability to complete the Offer or the Merger, or (v) in case of any of the foregoing existing on the date of the Merger Agreement, material acceleration or worsening thereof which in any case is reasonably expected to have a material adverse effect on the Company or to materially adversely affect Parent's or the Offeror's ability to complete the Offer or the Merger; or (g) the Merger Agreement shall have been terminated in accordance with its terms. The foregoing conditions, other than the Minimum Condition, are for the sole benefit of Parent and the Offeror and may, subject to the terms of the Merger Agreement, be waived by Parent and the Offeror in whole or in part at any time and from time to time in their sole discretion. The failure by Parent or the Offeror at any time to exercise any of the foregoing rights will not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and circumstances will not be deemed a waiver with respect to any other facts and circumstances and each such right will be deemed an ongoing right that may be asserted at any time and from time to time. Should the Offer be terminated pursuant to the foregoing provisions, all tendered Shares not theretofore accepted for payment shall forthwith be returned by the Depositary to the tendering stockholders. 16. THE COMPANY EMPLOYEE STOCK OWNERSHIP PLAN. As the holder of record of the Shares owned by the ESOP and pursuant to the terms of the ESOP, the trustee of the ESOP (the "ESOP Trustee") has the power to tender to the Offeror the Shares owned by the ESOP and the power to exercise with respect to the Merger any voting rights with respect to any Shares owned by the ESOP that are not tendered. The terms of the ESOP also provide that each participant or beneficiary in the ESOP (a "Participant") can direct the ESOP Trustee (i) whether to tender to the Offeror the Shares owned by the ESOP that are allocated to that Participant's accounts under the ESOP, and (ii) as to the manner in which any voting rights with respect to the Merger are to be exercised with respect to any such Shares that are not tendered. The terms of the ESOP also provide that (i) the extent to which the ESOP Trustee tenders to the Offeror the Shares owned by the ESOP that are not allocated to Participants' accounts ("Unallocated ESOP Shares"), and (ii) the manner in which any voting rights with respect to the Merger are to be exercised with respect to such Shares that are not tendered and with respect to allocated ESOP Shares that are not tendered for which no voting directions are given by the Participants to whose accounts such Shares are allocated, are to be determined by directions provided to the ESOP Trustee by the Participants for those purposes, subject to certain conditions and 31 limitations. The terms of the ESOP provide that the ESOP Trustee will follow the directions of Participants described above regarding the tender and voting of Shares owned by the ESOP to the extent consistent with applicable law. The terms of the ESOP provide that if the ESOP Trustee determines that applicable law provides that the ESOP Trustee cannot follow the directions of Participants as to whether to tender to the Offeror any Shares owned by the ESOP, or as to the extent to which any voting rights with respect to the Merger are to be exercised with respect to any Shares owned by the ESOP that are not tendered, the ESOP Trustee shall decide whether such Shares shall be tendered and shall decide the extent to which such voting rights shall be exercised with respect to such Shares. The ESOP provides that the cash received by the ESOP pursuant to the Offer or the Merger with respect to Shares allocated to a Participant's accounts under the ESOP will be allocated to such accounts. The ESOP and the Exempt Loan Agreement dated February 24, 1989 between the ESOP Trustee and the Company also provide that cash received by the ESOP Trust pursuant to the Offer or the Merger with respect to the Unallocated ESOP Shares will first be used to repay the ESOP's outstanding indebtedness incurred during 1989 to purchase ESOP Preferred Stock. Under the terms of the ESOP, the remainder of such cash received with respect to Unallocated ESOP Shares, which Parent and the Offeror expect to be approximately $2 to $3 million (assuming the consummation of the Offer and the Merger), is considered investment earnings and gains of Participants' ESOP accounts and is allocable to Participants' accounts under the ESOP in proportion to the relative portions of such accounts attributable to the Shares purchased by the ESOP in 1989. The National Office of the Internal Revenue Service has on several recent occasions issued private letter rulings to other taxpayers stating that the limitations of Code section 415 apply to allocations to participant accounts of a portion of the proceeds from the sale of unallocated shares held by an employee stock ownership plan remaining after the repayment of an exempt loan to the plan. If determined to be applicable with respect to a portion of the remainder of the cash received by the ESOP with respect to Unallocated ESOP Shares (the "Restricted Amount"), Code section 415 would limit the portion of the Restricted Amount allocable to a Participant for any plan year to the lesser of (i) 25% of the Participant's taxable compensation for such year from the Company (and its affiliates) and (ii) $30,000, in either case reduced by any contributions made for such year by or for the Participant to the ESOP or any other qualified defined contribution plan maintained by the Company (or an affiliate of the Company). Thus, if the limitations of Code section 415 are determined to apply to allocations of the Restricted Amount, it may not be possible to allocate fully the Restricted Amount to Participants' accounts in any one year and, therefore, some of the Restricted Amount might have to be allocated to Participants' accounts in one or more subsequent years. If this were to occur, only Participants who remain employed by and receive taxable compensation from the Surviving Corporation (or an affiliate of the Surviving Corporation) during the plan years when such allocations are made will share in such allocations. It is also possible that the Internal Revenue Service may take the position that the Restricted Amount must be allocated among Participants' accounts on a basis different from that provided in the ESOP plan documents, such as in proportion to Participants' relative amounts of compensation. In order to resolve any issues relating to the allocation of the Restricted Amount, the Surviving Corporation may request a determination letter from the Internal Revenue Service that such allocations do not adversely affect the ESOP's status as a qualified plan under section 401(a) of the Code. In the event that such a determination is requested and the Internal Revenue Service does not issue a favorable determination letter relating to the allocation of the Restricted Amount, Kuhlman has the right under the Asset Purchase Agreement to request that the account balances of TPG Participants under the ESOP and the portion of the Restricted Amount attributable to such Participants be transferred to a separate plan the sponsorship of which will be assumed by Kuhlman for the benefit of the TPG Participants. Following the Merger, the ESOP will no longer own or invest in Shares and contributions to the ESOP will be discontinued. It is anticipated that, as soon as reasonably practicable after the Merger, the ESOP will be merged into another qualified defined contribution plan of the Surviving Corporation, Parent or an affiliate of Parent. None of the Offer, the Merger, discontinuance of contributions or merger of the ESOP into another plan will by themselves cause or accelerate the distribution of benefits from the ESOP to the Participants. Generally, a distribution from the ESOP or any successor plan will be subject to ordinary income tax and may be subject to an additional 10% tax if the Participant has not attained age 59 1/2. Such taxes do not apply if 32 the distribution is "rolled over," within 60 days of the date the distribution is made, to another qualified plan or to an individual retirement account (an "IRA"), but will apply upon any subsequent distribution from such other plan or IRA. Because Participants will no longer be entitled to distributions from the ESOP in the form of Shares, the special income tax rules relating to "net unrealized appreciation" in Shares distributed from the ESOP will no longer be available. 17. CERTAIN LEGAL MATTERS. Except as set forth in this Section, the Offeror is not aware of any approval or other action by any governmental or administrative agency which would be required for the acquisition or ownership of Shares by the Offeror as contemplated herein. Should any such approval or other action be required, it will be sought, but the Offeror has no current intention to delay the purchase of Shares tendered pursuant to the Offer pending the outcome of any such matter, subject, however, to the Offeror's right to decline to purchase Shares if any of the conditions specified in Section 15 shall have occurred. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions, or that adverse consequences might not result to the Company's business or that certain parts of the Company's business might not have to be disposed of if any such approvals were not obtained or other action taken. U. S. Antitrust. Under the provisions of the HSR Act applicable to the Offer, the acquisition of Shares under the Offer may be consummated following the expiration of a 15-day waiting period following the filing by the Parent of a Premerger Notification and Report Form with respect to the Offer, unless Parent receives a request for additional information or documentary material from the Department of Justice, Antitrust Division (the "Antitrust Division") or the Federal Trade Commission ("FTC") or unless early termination of the waiting period is granted. Parent made such a filing on February 4, 1997 and, accordingly, the initial waiting period will expire on February 19, 1997. If, within the initial 15-day waiting period, either the Antitrust Division or the FTC requests additional information or documentary material concerning the Offer, the waiting period will be extended through the tenth day after the date of substantial compliance by all parties receiving such requests. Complying with a request for additional information or documentary material can take a significant amount of time. Under the provisions of the HSR Act, the acquisition of the TPG Assets under the Asset Purchase Agreement may be consummated following the expiration of a 30-day waiting period following the filing by Kuhlman of a Premerger Notification and Report Form with respect to that transaction, unless Kuhlman receives a request for additional information or documentary material from the Antitrust Division or the FTC or unless early termination of the waiting period is granted. Kuhlman made such a filing on February 6, 1997 and, accordingly, the initial waiting period will expire on March 8, 1997. If, within the initial 30-day waiting period, either the Antitrust Division or the FTC requests additional information or documentary material concerning the sale of the TPG Assets, the waiting period will be extended through the tenth day after the date of substantial compliance by all parties receiving such requests. Complying with a request for additional information or documentary material can take a significant amount of time. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the Offeror's proposed acquisition of the Company. At any time before or after the Offeror's acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC could take such action under the antitrust laws as either deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or the consummation of the Merger, or seeking the divestiture of Shares acquired by the Offeror or the divestiture of substantial assets of the Company or its subsidiaries or Parent or its subsidiaries. Private parties may also bring legal action under the antitrust laws under certain circumstances. There can be no assurance that a challenge to the Offer, the consummation of the Merger or the sale of the TPG Assets pursuant to the Asset Purchase Agreement on antitrust grounds will not be made, or, if such a challenge is made, of the result thereof. 33 If any applicable waiting period under the HSR Act applicable to the Offer has not expired or been terminated prior to the Expiration Date, the Offeror will not be obligated to proceed with the Offer or the purchase of any Shares not theretofore purchased pursuant to the Offer. See Section 15. Michigan State Takeover Laws. Chapter 7A of the Michigan BCA (the "Michigan Business Combination Law") requires two supermajority votes for certain "business combinations" (including certain mergers, consolidations, share exchanges, sales or dispositions of assets, issuances of stock, liquidations and reclassifications) between a Michigan corporation and any interested shareholder (defined generally as any person who, directly or indirectly, beneficially owns 10 percent or more of the voting power of the outstanding voting shares of the corporation or an affiliate of the corporation that, at any time within the two-year period prior to the date in question, was the beneficial owner of ten percent or more of the voting power of the corporation's then outstanding voting shares). The requirement of two supermajority votes for approval of a business combination will lapse five years after the most recent date on which the interested shareholder became an interested shareholder if, among other conditions, the corporation's common shareholders receive a minimum price (as calculated pursuant to the Michigan BCA) for their shares in cash or in the same form as previously paid by the interested shareholder for its shares. These provisions of the Michigan BCA do not apply to a business combination with an interested shareholder that is approved or exempted from the supermajority vote requirements by the board of directors of the corporation prior to the date on which the interested shareholder became such. The Company's Board of Directors has approved the Offer, the Merger, the Merger Agreement and the Asset Purchase Agreement. Accordingly, the Michigan Business Combination Law is inapplicable to the Offer, the Merger or the transactions contemplated by the Merger Agreement or the Asset Purchase Agreement. Chapter 7B of the Michigan BCA (the "Michigan Control Share Act") generally prohibits an acquiring person from voting control shares (as defined herein) of a Michigan issuing public corporation acquired pursuant to a control share acquisition (as defined herein), unless voting rights for such shares shall have been approved by the shareholders of the corporation by the affirmative vote of a majority of all votes entitled to be cast (other than interested shares, as defined herein) or unless the shares are acquired pursuant to a merger agreement with the corporation or the corporation's charter or by-laws contain a provision, adopted prior to the acquisition, permitting the acquisition of such shares. "Control shares" generally mean shares of a corporation acquired by a person within any of the following ranges of voting power: (i) one-fifth or more, but less than one-third of all voting power; (ii) one-third or more, but less than a majority of all voting power; or (iii) a majority or more of all voting power. "Control share acquisition" generally means the acquisition of ownership of, or the power to direct the exercise of voting power with respect to, control shares, but does not include the acquisition of shares in a merger, consolidation or share exchange to which the corporation is a party. "Interested shares" generally mean shares of a corporation in respect of which an acquiring person, an officer of the corporation or an employee of the corporation who is also a director of the corporation, is entitled to exercise voting power in the election of directors. The Company's Board of Directors has adopted an amendment to the Company's By- laws that exempts from the Michigan Control Share Act any acquisition of shares of capital stock of the Company, including acquisitions by the Offeror in connection with the transactions contemplated by the Merger Agreement. Other State Takeover Laws. A number of other states have adopted laws and regulations applicable to attempts to acquire securities of corporations which are incorporated, or have substantial assets, stockholders, principal executive offices or principal places of business or whose business operations otherwise have substantial economic effects in such states. In Edgar v. MITE Corp., in 1982, the Supreme Court of the United States (the "U.S. Supreme Court") invalidated on constitutional grounds the Illinois Business Takeover statute, which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However in 1987, in CTS Corp. v. Dynamics Corp. of America, the U.S. Supreme Court held that the State of Indiana may, as a matter of corporate law and, in particular, with respect to those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquirer from voting on the affairs of a target corporation without the prior approval of the remaining stockholders. The state law before the U.S. Supreme Court was by its terms applicable only to corporations that had a substantial number of stockholders in the state and were incorporated there. 34 The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted takeover laws. The Offeror does not know whether any of these laws will, by their terms, apply to the Offer or the Merger and has not complied with any such laws. Should any person seek to apply any state takeover law, the Offeror will take such action as then appears desirable, which may include challenging the validity or applicability of any such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover laws is applicable to the Offer or the Merger, and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer, the Offeror might be required to file certain information with, or receive approvals from, the relevant state authorities. In addition, if enjoined, the Offeror might be unable to accept for payment any Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer and the Merger. In such event, the Offeror may not be obligated to accept for payment any Shares tendered. See Section 15. Certain Charter and By-law Provisions. The Company's Charter and By-laws contain certain provisions that may delay, defer or prevent a takeover of the Company, including Article X of the Charter, which requires a supermajority vote of the shareholders of the Company to approve certain business combination transactions, and Article XII of the Charter, which also requires a supermajority vote of the shareholders of the Company on certain business combination transactions unless the transaction satisfies certain "fair price" provisions. The Company's Board of Directors has approved the Offer, the Merger and the Merger Agreement. Accordingly, the provisions of Articles X and XII of the Charter, by their terms, are not applicable to the Offer, the Merger or the Merger Agreement. Rights Agreement. The Rights Agreement contains certain provisions that may delay, defer or prevent a takeover of the Company. In connection with the Merger Agreement, the Company's Board of Directors has amended the Rights Agreement to provide that such provisions will not apply to the Offer, the Merger, the Merger Agreement and the transactions contemplated thereby. 18. FEES AND EXPENSES. Neither the Offeror nor Parent, nor any officer, director, shareholder, agent or other representative of the Offeror or Parent will pay any fees or commissions to any broker, dealer or other person (other than the Dealer Manager, the Information Agent and the Depositary) for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies and other nominees will, upon request, be reimbursed by the Offeror for customary mailing and handling expenses incurred by them in forwarding materials to their customers. Morgan Stanley is acting as Dealer Manager in connection with the Offer and is providing certain financial advisory services to Parent and the Offeror in connection with the Offer. Parent has agreed to pay Morgan Stanley reasonable and customary compensation for such services. In addition, Parent has agreed to reimburse Morgan Stanley for its out-of-pocket expenses related to its engagement, including the reasonable fees and expenses of its counsel, and has agreed to indemnify Morgan Stanley against certain liabilities and expenses, including under the federal securities laws. In the ordinary course of its business, Morgan Stanley engages in securities trading, market-making and brokerage activities and may, at any time, hold long or short positions and may trade or otherwise effect transactions in securities of the Company. As of February 4, 1997, Morgan Stanley had a long position of 7,300 shares of Common Stock held for its own account and did not maintain a short position. The Offeror has retained Morrow & Co., Inc. as Information Agent and First Chicago Trust Company of New York as Depositary in connection with the Offer. The Information Agent and the Depositary will receive reasonable and customary compensation for their services hereunder and reimbursement for their reasonable out-of-pocket expenses. The Depositary will also be indemnified by the Offeror against certain liabilities in connection with the Offer. The Information Agent may contact holders of Shares by mail, telex, telegraph and personal interviews and may request brokers, dealers and other nominee shareholders to forward materials relating to the Offer to beneficial owners of Shares. 35 19. MISCELLANEOUS. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares residing in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Offeror by the Dealer Manager or one or more registered brokers or dealers licensed under the laws of such jurisdiction. No person has been authorized to give any information or make any representation on behalf of the Offeror other than as contained in this Offer to Purchase or in the Letter of Transmittal and, if any such information or representation is given or made, it should not be relied upon as having been authorized by the Offeror or Parent. The Offeror and Parent have filed with the Commission the Schedule 14D-1, pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3 promulgated thereunder, furnishing certain information with respect to the Offer. The Schedule 14D-1 and any amendments thereto, including exhibits, may be examined and copies may be obtained at the same places and in the same manner as set forth with respect to the Company in Section 8 (except that they will not be available at the regional offices of the Commission). K Acquisition Corp. February 7, 1997 36 ANNEX I CERTAIN INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT AND THE OFFEROR 1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth below are the name, current business address, citizenship, present principal occupation or employment and employment history (covering a period of not less than five years) of each director and executive officer of Parent. Years of service as a director or executive officer of Parent may include service prior to April 14, 1989, on which date Parent was spun-off from Household International, Inc. ("Household") through the issuance to Household shareholders of one share of Parent common stock for every five shares of Household common stock then outstanding. Unless otherwise indicated, each such person's business address is 775 Corporate Woods Parkway, Vernon Hills, Illinois 60061. All persons listed below are citizens of the United States of America, except for Messrs. Lanzani, Faenza and Palmieri, who are citizens of Italy, Mr. Klein, who is a citizen of Germany, and Michael de St. Paer, who is a citizen of the United Kingdom.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL NAME POSITIONS HELD DURING PAST FIVE YEARS - ---- ---------------------------------------------- Richard C. Osborne.......... Mr. Osborne is Chairman of the Board of Parent and has held that position since May 1991. He is also President, Chief Executive Officer and a director of Parent and has held those positions since April 1989. Paolo Faenza................ Mr. Faenza is General Manager, Castel MAC, and has Via del Lavoro, 9 held that position since 1986. 31033 Castelfranco Veneto, Italy Richard M. Holden........... Mr. Holden is Vice President--Human Resources of Parent and has held that position since January 1990. Donald D. Holmes............ Mr. Holmes is Vice President--Finance and Secretary of Parent and has held those positions since April 1989. Christopher D. Hughes....... Mr. Hughes is a Vice President of Parent and has 2007 Royal Lane held that position since June 1994. Mr. Hughes is Dallas, Texas 75229 also President of Booth, Inc., a wholly owned subsidiary of Parent, and has held that position since May 1994. From 1993 to May 1994, he was Vice President/General Manager of the Central and Western Transit Operations of Morrison Knudsen Corporation, a division engaged in the business of assembling new and overhauling used passenger rail cars. From 1991 to 1993, Mr. Hughes was Vice President of Operations of Scotsman Ice Systems and Parent's former Glenco-Star division. From 1989 to 1991, he was President of Parent's former Halsey Taylor/Consumer Products Division. Ludwig H. Klein............. Mr. Klein is a Vice President of Parent and has Otto-Hahn-Strabe 4 held that position since February 1996. Mr. Klein D-42477 Radevormward, is also Managing Director of Hartek Beverage Germany Handling GmbH and Hartek Awagem Vertriebsges m.b.H., each a wholly owned European
A-1
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL NAME POSITIONS HELD DURING PAST FIVE YEARS - ---- ---------------------------------------------- subsidiary of Parent (collectively, "Hartek") and has held that position since February 1995. From June 1994 until February 1995, he worked as an independent consultant and provided, during that period, consulting services to Hartek and in the capital goods industry. From July 1986 until June 1994, Mr. Klein held the position of General Manager of Haacon Hebetechnik GmbH, a manufacturer of industrial lifting equipment. Emanuele Lanzani........ Mr. Lanzani is an Executive Vice President of Vio Puccini 22 Parent and has held that position since April 20010 Bettollino di 1989. He is also the Managing Director, Frimont Pogliano S.p.A. ("Frimont") and Castel MAC S.p.A. ("Castel Milan, Italy MAC"), each a wholly owned Italian subsidiary of Parent. Mr. Lanzani has been Managing Director of Castel MAC since its acquisition by a wholly owned subsidiary of Household in October 1985 and has been Managing Director of Frimont since 1968. Gerardo Palmieri........ Mr. Palmieri is Director--Sales and Marketing, Via Puccini 22 Frimont, and has held that position since 1980. 20010 Bettolino di Pogliano Milan, Italy Randall C. Rossi........ Mr. Rossi is a Vice President of Parent and has held that position since January 1995. Mr. Rossi is also President of Scotsman Ice Systems and has held that position since January 1995. From January 1994 to January 1995, he was an Executive Vice President of Scotsman Ice Systems. From 1989 to January 1994, he was Vice President--Sales and Marketing of Scotsman Ice Systems. William J. Rotenberry... Mr. Rotenberry is Vice President--Business Development of Parent, has been employed by Parent since January 1996 and became a Vice President of Parent in February 1996. From 1990 until January 1996, he was Director of Corporate Development for Joslyn Corporation, a diversified manufacturer. Michael de St. Paer..... Mr. de St. Paer is a Vice President of Parent and Chancel Way has held that position since April 1994. Mr. de Halesowen Industrial St. Paer is also Managing Director of Whitlenge Park Drink Equipment Limited, a wholly owned European Halesowen, West Midlands subsidiary of Parent ("Whitlenge"), and has held United Kingdom B62 85E that position since April 1993. From June 1992 to April 1993 he was Assistant Managing Director of Whitlenge. From 1991 until June 1992, he was the Managing Director and a Group Technical Director of Hartek. Donald C. Clark......... Prior to his retirement in 1996, Mr. Clark was One South Wacker Drive Chairman of the Board of Household from 1984 to Suite 1495 1996 and was Chief Executive Officer of Household Chicago, Illinois 60606- from 1982 to September 1994. Mr. Clark is also a 4616 director of Ameritech Corporation and Warner- Lambert Co.
A-2
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL NAME POSITIONS HELD DURING PAST FIVE YEARS - ---- ---------------------------------------------- Timothy C. Collins........... Mr. Collins is Chief Executive Officer and Senior 712 Fifth Avenue Managing Director of Ripplewood Holdings L.L.C., 49th Floor an investment management company, and has held New York, NY 10019 that position since October 1995. Mr. Collins was Senior Managing Director of Onex Investment Corp. (New York), a management company for the U.S. investments of Onex Corporation, an Ontario corporation from 1990 to October 1995. He also serves on the board of directors of the Metropolitan New York YMCA. He has been a director of Parent since April 1994.
Frank W. Considine........... Mr. Considine is Honorary Chairman of the Board, One First National Plaza Chairman of the Executive Committee and a director Suite 2530 of American National Can Company, a packaging Chicago, Illinois 60603 manufacturer. He was Chairman of the Board of American National Can Company from 1983 to 1990, President from 1969 to 1988 and Chief Executive Officer from 1973 to 1988. Mr. Considine is a director of IMC Global, Inc. and Pechiney International, S.A. Mr. Considine is also Chairman of the Board of Trustees of Loyola University, Chicago, and serves on the Board of Trustees of the Field Museum of Natural History, Chicago. Mr. Considine has been a director of Parent since April 1989. Matthew O. Diggs, Jr......... Mr. Diggs is the Chief Executive Officer of The 1630 Kettering Tower Diggs Group, a New York general partnership that Dayton, Ohio 45423 provides investment banking services, and has held that position since 1990. From 1987 to 1990, Mr. Diggs was Vice Chairman of Copeland Corporation, a refrigerator compressor manufacturer, having served as President and Chief Executive Officer of Copeland Corporation from 1975 to 1987. Mr. Diggs is a director of Bank One Dayton NA and Tower Automotive Inc. and serves as a trustee of Wright State University and the Miami Valley School. He has been a director of Parent since April 1994. George D. Kennedy............ Mr. Kennedy was Chairman and a director of the P.O. Box 559 Mallinckrodt Group Inc., a producer of medical Winnetka, Illinois 60093 products and chemicals, from 1991 until his retirement in October 1994. He was Chairman and Chief Executive Officer of Mallinckrodt Group Inc. from 1986 to 1991. Mr. Kennedy is also a director of Brunswick Corporation, Illinois Tool Works, Inc., American National Can Company, Kemper National Insurance Company and Stone Container Corporation. He has been a director of Parent since April 1989. James J. O'Connor............ Mr. O'Connor is Chairman, Chief Executive Officer One First National Plaza and a director of Commonwealth Edison Company, an P.O. Box 767 electric utility company, and has held those Chicago, Illinois 60690 positions since 1980. Mr. O'Connor has also been the Chairman, Chief Executive Officer and a director of Unicom Corporation, a holding company for Commonwealth Edison Company, since 1994. Mr. O'Connor is a director of Corning Incorporated, First Chicago NBD Corporation, The First National Bank of Chicago, Tribune
A-3 Company, UAL Inc. and American National Can Company. He has been a director of Parent since April 1989. Robert G. Rettig............. Mr. Rettig is a consultant to Illinois Tool Works, 3600 West Lake Avenue Inc., a manufacturer of industrial products and Glenview, Illinois 60025 components, and a consultant to, and a director of, The Tech Group, a custom molding company. He was an Executive Vice President of Illinois Tool Works, Inc. from 1983 to January 1990. Mr. Rettig is also a director of Lawson Products, Inc. and serves as a trustee of the Illinois Institute of Technology. He has been a director of Parent since April 1989.
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE OFFEROR. Unless otherwise indicated, for each person identified below all information concerning the current business address, present principal occupation or employment and five- year employment history for such person is the same as the information given above. All persons listed below are citizens of the United States of America. DIRECTORS
Richard C. Osborne Donald D. Holmes Richard M. Holden EXECUTIVE OFFICERS
Richard C. Osborne, President and Chief Executive Officer Donald D. Holmes, Vice President--Treasurer and Secretary William J. Rotenberry, Vice President--Assistant Secretary and Assistant Treasurer A-4 Facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates for Shares and any other required documents should be sent or delivered by each shareholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of the addresses set forth below: The Depositary for the Offer is: FIRST CHICAGO TRUST COMPANY OF NEW YORK By Mail: By Hand: By Overnight Courier: Tenders & Exchanges First Chicago Trust Company of New York Tenders & Exchanges P.O. Box 2569--Suite Tenders & Exchanges 14 Wall Street 4660-KYS c/o The Depository Trust 8th Floor--Suite 4680-KYS Jersey City, New Jersey Company New York, New York 07303-2569 55 Water Street, DTC TAD 10005 Vietnam Veterans Memorial Plaza New York, New York 10041 Facsimile for Eligible Institutions: (201) 222-4720 or (201) 222-4721 Confirm by Telephone: (201) 222-4707 Any questions or requests for assistance or additional copies of the Offer to Purchase and the Letter of Transmittal and Notice of Guaranteed Delivery may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and locations listed below. Shareholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: MORROW & CO., INC. 909 3rd Avenue 20th Floor New York, New York 10022 (212) 754-8000 Toll Free: (800) 566-9061 Banks and Brokerage Firms, please call: (800) 662-5200 The Dealer Manager for the Offer is: MORGAN STANLEY & CO. Incorporated One Financial Place 440 South LaSalle Street Chicago, Illinois 60605 (312) 706-4424 EX-99.A2 3 LETTER OF TRANSMITTAL EXHIBIT (a)(2) LETTER OF TRANSMITTAL To Tender Shares of Common Stock or Series A Convertible Voting Preferred Stock of Kysor Industrial Corporation Pursuant to the Offer to Purchase Dated February 7, 1997 by K Acquisition Corp., an indirect wholly owned subsidiary of Scotsman Industries, Inc. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED. The Depositary: FIRST CHICAGO TRUST COMPANY OF NEW YORK By Mail: By Hand: By Overnight Courier: Tenders & Exchanges First Chicago Trust Company Tenders & Exchanges P.O. Box 2569--Suite of New York 14 Wall Street 4660-KYS Tenders & Exchanges 8th Floor--Suite 4680-KYS Jersey City, New Jersey c/o The Depository Trust New York, New York 10005 07303-2569 Company 55 Water Street, DTC TAD Vietnam Veterans Memorial Plaza New York, New York 10041 Facsimile for Eligible Institutions only: (201) 222-4720 or (201) 222-4721 Confirm by Telephone: (201) 222-4707 --------------- DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by shareholders of Kysor Industrial Corporation if certificates are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery of Shares (as defined below) is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (hereinafter collectively referred to as the "Book- Entry Transfer Facilities") pursuant to the procedures set forth in Section 3 of the Offer to Purchase. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. Shareholders whose certificates for Shares are not immediately available or who cannot deliver their Shares and all other documents required hereby to the Depositary by the Expiration Date (as defined in the Offer to Purchase), or who cannot comply with the book-entry transfer procedures on a timely basis, may nevertheless tender their Shares pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2. [_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Name of Tendering Institution _______________________________________________ Account Number ___________________________________________________________ at Check Box of Applicable Book-Entry Transfer Facility: [_] The Depository Trust Company [_] Philadelphia Depository Trust Company Transaction Code Number _____________________________________________________ [_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Tendering Shareholder(s) _________________________________________ Date of Execution of Notice of Guaranteed Delivery __________________________ Window Ticket Number (if any) _______________________________________________ Name of Institution which Guaranteed Delivery _______________________________ If delivery is by book-entry transfer _______________________________________ Name of Tendering Institution _______________________________________________ Account Number ___________________________________________________________ at Check Box of Applicable Book-Entry Transfer Facility: [_] The Depository Trust Company [_] Philadelphia Depository Trust Company Transaction Code Number _____________________________________________________ DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED SHARES TENDERED HOLDER(S) (ATTACH ADDITIONAL LIST, IF NECESSARY) (PLEASE FILL IN, IF BLANK) - ------------------------------------------------------------------------------- NUMBER OF SHARE SHARES NUMBER OF CERTIFICATE REPRESENTED SHARES NUMBER(S)* BY TENDERED** CERTIFICATE(S)* - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Total Shares - ------------------------------------------------------------------------------- *Need not be completed by shareholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depositary are being tendered. See Instruction 4. [_] CHECK HERE IF THE SHARES DESCRIBED ABOVE ARE SHARES OF ESOP PREFERRED STOCK AND PLEASE SO INDICATE BY MARKING A "P" NEXT TO THE CERTIFICATE NUMBER. NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to K Acquisition Corp. (the "Offeror"), a Michigan corporation and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation ("Parent"), the above-described shares of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights issued pursuant to the Rights Agreement, dated as of April 26, 1996, as amended, between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively, the "Common Stock"), or Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Stock"; the shares of Common Stock and/or the shares of ESOP Preferred Stock may be referred to herein as the "Shares"), pursuant to the Offeror's offer to purchase all of the outstanding Shares at a purchase price of $43.00 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated February 7, 1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together with the Offer to Purchase constitute the "Offer"). The Offer is being made in connection with the Agreement and Plan of Merger, dated as of February 2, 1997 (the "Merger Agreement"), among Parent, the Offeror and the Company. Subject to, and effective upon, acceptance for payment of and payment for the Shares tendered herewith, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Offeror all right, title and interest in and to all the Shares that are being tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof) and appoints First Chicago Trust Company of New York (the "Depositary") the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and all such other Shares or securities), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates for such Shares (and all such other Shares or securities), or transfer ownership of such Shares (and all such other Shares or securities) on the account books maintained by any of the Book-Entry Transfer Facilities, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Offeror, (b) present such Shares (and all such other Shares or securities) for transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and all such other Shares or securities), all in accordance with the terms of the Offer. The undersigned hereby irrevocably appoints each designee of the Offerer as the attorney-in-fact and proxy of the undersigned, each with full power of substitution, to exercise all voting and other rights of the undersigned in such manner as each such attorney and proxy or his substitute shall in his sole judgment deem proper, with respect to all of the Shares tendered hereby which have been accepted for payment by the Offeror prior to the time of any vote or other action (and any and all other Shares or other securities or rights issued or issuable in respect of such Shares) at any meeting of shareholders of the Company (whether annual or special and whether or not an adjourned meeting) or otherwise. This proxy is irrevocable, shall be coupled with an interest, and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares by the Offeror in accordance with the terms of the Offer. Such acceptance for payment shall revoke any other proxy or written consent granted by the undersigned at any time with respect to such Shares (and all such other Shares or other securities or rights), and no subsequent proxies will be given or written consents will be executed by the undersigned (and if given or executed, will not be deemed effective). The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any and all other Shares or other securities or rights issued or issuable in respect of such Shares) and that when the same are accepted for payment by the Offeror, the Offeror will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary or the Offeror to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and all such other Shares or other securities or rights). All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute an agreement between the undersigned and the Offeror upon the terms and subject to the conditions of the Offer. Unless otherwise indicated under "Special Payment Instructions," please issue the check for the purchase price of any Shares purchased, and return any Shares not tendered or not purchased, in the name(s) of the undersigned. Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price of any Shares purchased and return any certificates for Shares not tendered or not purchased (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the purchase price of any Shares purchased and return any Shares not tendered or not purchased in the name(s) of, and mail such check and any certificates to, the person(s) so indicated. Unless otherwise indicated under "Special Payment Instructions," please credit any Shares tendered hereby and delivered by book-entry transfer, but which are not purchased by crediting the account at the Book-Entry Transfer Facility designated above. The undersigned recognizes that the Offeror has no obligation, pursuant to the "Special Payment Instructions," to transfer any Shares from the name of the registered holder(s) thereof if the Offeror does not accept for payment any of the Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if the check To be completed ONLY if the check for the purchase price of Shares for the purchase price of Shares purchased or certificates for purchased or certificates for Shares not tendered or not Shares not tendered or not purchased are to be issued in the purchased are to be mailed to name of someone other than the someone other than the undersigned undersigned, or if Shares tendered or to the undersigned at an address hereby and delivered by book-entry other than that shown below the transfer which are not accepted for undersigned's signature(s). payment are to be returned by credit to an account at one of the Book-Entry Transfer Facilities other than designated above. Mail check and/or certificate(s) to: Name _______________________________ Issue [_] check [_] certificate(s) (Please Print) to: ------------------------------------ Name _______________________________ Address ____________________________ (Please Print) ------------------------------------ ------------------------------------ (Zip Code) Address ____________________________ ------------------------------------ ------------------------------------ (Taxpayer Identification or Social Security Number) (Zip Code) (See Substitute Form W-9) ------------------------------------ (Taxpayer Identification No. or Social Security Number) (See Substitute Form W-9) [_Credit]Shares delivered by book- entry transfer and not purchased to the account set forth below. Check appropriate box [_]The Depository Trust Company [_]Philadelphia Depository Trust Company
SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Signature(s) of Owner(s) - -------------------------------------------------------------------------------- Name(s) ________________________________________________________________________ - -------------------------------------------------------------------------------- (Please Print) Capacity (full title) __________________________________________________________ Address ________________________________________________________________________ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Zip Code) - -------------------------------------------------------------------------------- Area Code and Telephone Number _________________________________________________ Taxpayer Identification Number or Social Security Number _______________________ (See Substitute Form W-9) Dated: __________________________________________________________________ , 199^ (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by the person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5). GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) FOR USE BY FINANCIAL INSTITUTIONS ONLY, PLACE MEDALLION GUARANTEE IN SPACE BELOW. Authorized signature(s) ________________________________________________________ Name ___________________________________________________________________________ (Please Print) Name of Firm ___________________________________________________________________ Address ________________________________________________________________________ - -------------------------------------------------------------------------------- (Zip Code) Area Code and Telephone Number _________________________________________________ Dated: __________________________________________________________________ , 199^ INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Guarantee of Signatures. Except as otherwise provided below, signatures on all Letters of Transmittal must be guaranteed by a member in good standing of the Securities Transfer Agents Medallion Program or by any other bank, broker, dealer, credit union, savings association or other entity which is an "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (each of the foregoing constituting an "Eligible Institution"), unless the Shares tendered thereby are tendered (i) by a registered holder of Shares who has not completed either the box labeled "Special Payment Instructions" or the box labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 5. If the certificates are registered in the name of a person or persons other than the signer of this Letter of Transmittal, or if payment is to be made or delivered to, or certificates evidencing unpurchased Shares are to be issued or returned to, a person other than the registered owner or owners, then the tendered certificates must be endorsed or accompanied by duly executed stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the certificates or stock powers, with the signatures on the certificates or stock powers guaranteed by an Eligible Institution as provided herein. See Instruction 5. 2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal is to be used either if certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if the delivery of Shares is to be made by book-entry transfer pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) and any other documents required by this Letter of Transmittal or an Agent's Message in the case of a book-entry delivery, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal by the Expiration Date. Shareholders who cannot deliver their Shares and all other required documents to the Depositary by the Expiration Date must tender their Shares pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such procedures: (a) such tender must be made by or through an Eligible Institution; (b) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Offeror, must be received by the Depositary prior to the Expiration Date; and (c) the certificates for all tendered Shares, in proper form for transfer (or a Book-Entry Confirmation), together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), and any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other documents required by this Letter of Transmittal must be received by the Depositary within three trading days after the date of such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase. The term "trading day" is any day on which the New York Stock Exchange is open for business. The method of delivery of Shares, the Letter of Transmittal and all other required documents, including delivery through a Book-Entry Transfer Facility, is at the option and risk of the tendering shareholder. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. No alternative, conditional or contingent tenders will be accepted, and no fractional Shares will be purchased. By executing this Letter of Transmittal (or a manually signed facsimile thereof), the tendering shareholder waives any right to receive any notice of the acceptance for payment of the Shares. 3. Inadequate Space. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. 4. Partial Tenders (not applicable to shareholders who tender by book-entry transfer). If fewer than all the Shares represented by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such case, a new certificate for the remainder of the Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal unless otherwise provided in the appropriate box on this Letter of Transmittal, as promptly as practicable following the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are held of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in different names on different certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless payment of the purchase price is to be made, or Shares not tendered or not purchased are to be returned, in the name of any person other than the registered holder(s), in which case, the certificate(s) for such Shares tendered hereby must be endorsed, or accompanied by, appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appears(s) on the certificate(s) for such Shares. Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, the certificate must be endorsed or accompanied by, appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Offeror of the authority of such person so to act must be submitted. 6. Stock Transfer Taxes. The Offeror will pay any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be returned in the name of, any person other than the registered holder(s), then the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the certificates listed in this Letter of Transmittal. 7. Special Payment and Delivery Instructions. If the check for the purchase price of any Shares purchased is to be issued, or any Shares not tendered or not purchased are to be returned, in the name of a person other than the person(s) signing this Letter of Transmittal or if the check or any certificates for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Shareholders tendering Shares by book-entry transfer may request that Shares not purchased be credited to such account at any of the Book-Entry Transfer Facilities as such shareholder may designate under "Special Payment Instructions." If no such instructions are given, any such Shares not purchased will be returned by crediting the account at the Book-Entry Transfer Facilities designated above. 8. Substitute Form W-9. The tendering shareholder is required to provide the Depositary with such shareholder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided below, unless an exemption applies. Failure to provide the information on the Substitute Form W-9 may subject the tendering shareholder to a $50 penalty and to 31% federal income tax backup withholding on the payment of the purchase price for the Shares. 9. Foreign Holders. Foreign holders must submit a completed IRS Form W-8 to avoid 31% backup withholding. IRS Form W-8 may be obtained by contacting the Depositary at one of the addresses on the face of this Letter of Transmittal. 10. Requests for Assistance or Additional Copies. Requests for assistance or additional copies of the Offer to Purchase and this Letter of Transmittal may be obtained from the Information Agent or the Dealer Manager at their respective addresses or telephone numbers set forth below. 11. Waiver of Conditions. The conditions of the Offer may be waived by the Offeror (subject to certain limitations in the Merger Agreement), in whole or in part, at any time or from time to time, in the Offeror's sole discretion. IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE COPY HEREOF (TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE). IMPORTANT TAX INFORMATION Under federal income tax law, a shareholder whose tendered Shares are accepted for payment is required to provide the Depositary with such shareholder's correct TIN on the Substitute Form W-9. If such shareholder is an individual, the TIN is such shareholder's social security number. If the Depositary is not provided with the correct TIN, the shareholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such shareholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding. Certain shareholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that shareholder must submit a statement, signed under penalties of perjury, attesting to that individual's exempt status. Such statements may be obtained from the Depositary. All exempt recipients (including foreign persons wishing to qualify as exempt recipients) should see the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the shareholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup federal income tax withholding on payments that are made to a shareholder with respect to Shares purchased pursuant to the Offer, the shareholder is required to notify the Depositary of such shareholder's correct TIN by completing the form certifying that the TIN provided on the Substitute Form W-9 is correct. WHAT NUMBER TO GIVE THE DEPOSITARY The shareholder is required to give the Depositary the social security number or employer identification number of the record owner of the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidelines on which number to report. PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK - ------------------------------------------------------------------------------- PART I--PLEASE PROVIDE TIN: _____________________ YOUR TIN IN THE BOX AT Social Security THE RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. SUBSTITUTE Number or Employer Identification Number --------------------------------------------------------- FORM W-9 PART II--For Payees exempt from backup withholding, see the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as instructed therein. --------------------------------------------------------- Certification--Under penalties of perjury, I certify that: DEPARTMENT OF THE TREASURY, INTERNAL REVENUE SERVICE (1) The number shown on this form is my correct TIN (or I am waiting for a number to be issued to me); and PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN") AND CERTIFICATION --------------------------------------------------------- (2) I am not subject to backup withholding because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. SIGNATURE: ________________________ DATE: _________ CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you were no longer subject to backup withholding, do not cross out item (2). (Also see the instructions in the enclosed Guidelines.) NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR TIN. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a TIN has not been issued to me, and either (1) I have mailed or delivered an application to receive a TIN to the appropriate IRS Center or Social Security Administration Officer or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a TIN by the time of payment, 31% of all payments pursuant to the Offer made to me thereafter will be withheld until I provide a number. Signature: ______________________________________________ Date: __________ The Information Agent for the Offer is: MORROW & CO., INC. 909 3rd Avenue 20th Floor New York, New York 10022 (212) 754-8000 Toll-Free: (800) 566-9061 Banks and Brokerage Firms, please call: (800) 662-5200 The Dealer Manager for the Offer is: MORGAN STANLEY & CO. Incorporated One Financial Place 440 South LaSalle Street Chicago, Illinois 60605 (312) 706-4424 EX-99.A3 4 BROKER DEALER LETTER EXHIBIT (A)(3) MORGAN STANLEY & CO. Incorporated One Financial Place 440 South LaSalle Street Chicago, Illinois 60605 Offer to Purchase for Cash All Outstanding Shares of Common Stock and Series A Convertible Voting Preferred Stock of Kysor Industrial Corporation at $43.00 Net Per Share by K Acquisition Corp., an indirect wholly owned subsidiary of Scotsman Industries, Inc. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED. To Brokers, Dealers, Commercial Banks, February 7, 1997 Trust Companies and Other Nominees: We have been appointed by K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation ("Parent"), to act as Dealer Manager in connection with the Offeror's offer to purchase all outstanding shares of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights issued pursuant to the Rights Agreement, dated as of April 26, 1996, as amended, between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively, the "Common Stock"), and all outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Stock"; and, together with the Common Stock, the "Company Capital Stock"; the shares of Common Stock and the shares of ESOP Preferred Stock being collectively referred to herein as "Shares"), at a purchase price of $43.00 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated February 7, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer") enclosed herewith. The Offer is being made in connection with the Agreement and Plan of Merger, dated as of February 2, 1997, among Parent, the Offeror and the Company (the "Merger Agreement"). Holders of Shares whose certificates for such Shares (the "Certificates") are not immediately available or who cannot deliver their Certificates and all other required documents to the Depositary or complete the procedures for book-entry transfer prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares in your name or in the name of your nominee. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. The Offer to Purchase, dated February 7, 1997. 2. The Letter of Transmittal to tender Shares for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal (with manual signatures) may be used to tender Shares. 3. A letter to shareholders of the Company from George R. Kempton, the Chairman of the Board and Chief Executive Officer of the Company, together with the Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by the Company and mailed to the shareholders of the Company. 4. The Notice of Guaranteed Delivery for Shares to be used to accept the Offer if neither of the two procedures for tendering Shares set forth in the Offer to Purchase can be completed on a timely basis. 5. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name, with space provided for obtaining such clients' instructions with regard to the Offer. 6. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. 7. A return envelope addressed to the Depositary. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED. Please note the following: 1. The tender price is $43.00 per Share, net to the seller in cash, without interest. 2. The Offer is being made for all of the outstanding Shares. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Friday, March 7, 1997, unless the Offer is extended. 4. The Offer is conditioned upon, among other things, there having been validly tendered and not withdrawn prior to the expiration of the Offer such number of Shares that would constitute a majority of the outstanding shares of the Company Capital Stock (assuming the exercise of all options to purchase shares of Company Capital Stock outstanding at the expiration date of the Offer). The Offer is also subject to the other terms and conditions contained in the Offer to Purchase. 5. Tendering shareholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Offeror pursuant to the Offer. In order to take advantage of the Offer, (i) a duly executed and properly completed Letter of Transmittal (or a manually signed facsimile thereof) and any required signature guarantees or, in the case of a book-entry transfer, an Agent's Message (as defined in the Offer to Purchase) or other required documents should be sent to the Depositary and (ii) Certificates representing the tendered Shares or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) should be delivered to the Depositary in accordance with the instructions set forth in the Offer. 2 If holders of Shares wish to tender, but it is impracticable for them to forward their Certificates or other required documents or complete the procedures for book-entry transfer prior to the Expiration Date, a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. Neither the Offeror nor Parent, nor any officer, director, shareholder, agent or other representative of the Offeror or Parent will pay any fees or commissions to any broker, dealer or other person (other than the Dealer Manager, the Depositary and the Information Agent as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. The Offeror will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. The Offeror will pay or cause to be paid any stock transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to Morrow & Co., Inc., the Information Agent for the Offer, at 909 3rd Avenue, 20th Floor, New York, New York 10022, (800) 662-5200 or Morgan Stanley & Co. Incorporated, the Dealer Manager for the Offer at One Financial Place, 440 South LaSalle Street, Chicago, Illinois 60605, (312) 706-4424. Requests for copies of the enclosed materials may be directed to the Information Agent at the above address and telephone number. Very truly yours, MORGAN STANLEY & CO. Incorporated NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF PARENT, THE OFFEROR, THE DEPOSITARY, THE INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. 3 EX-99.A4 5 LETTER FROM BROKER DEALERS EXHIBIT (A)(4) Offer to Purchase for Cash All Outstanding Shares of Common Stock and Series A Convertible Voting Preferred Stock of Kysor Industrial Corporation at $43.00 Net Per Share by K Acquisition Corp., an indirect wholly owned subsidiary of Scotsman Industries, Inc. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated February 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), relating to an offer by K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation ("Parent"), to purchase all outstanding shares of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights issued pursuant to the Rights Agreement, dated as of April 26, 1996, as amended, between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively, the "Common Stock"), and all outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Stock"; and, together with the Common Stock, the "Company Capital Stock"; the shares of Common Stock and the shares of ESOP Preferred Stock being collectively referred to herein as the "Shares"), at a purchase price of $43.00 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer. The Offer is being made in connection with the Agreement and Plan of Merger, dated as of February 2, 1997, among Parent, the Offeror and the Company (the "Merger Agreement"). This material is being forwarded to you as the beneficial owner of Shares carried by us in your account but not registered in your name. WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. Accordingly, we request instructions as to whether you wish to tender any or all of the Shares held by us for your account, upon the terms and conditions set forth in the Offer. Please note the following: 1. The tender price is $43.00 per Share, net to you in cash, without interest. 2. The Offer is being made for all of the outstanding Shares. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Friday, March 7, 1997, unless the Offer is extended. 4. The Board of Directors of the Company has unanimously approved the Offer, the Merger (as defined in the Offer to Purchase), the Merger Agreement and the transactions contemplated thereby, has determined that the Offer, the Merger and the transactions contemplated by the Merger Agreement are advisable and that the terms of each of the Offer and the Merger are fair to and in the best interests of the Company's shareholders and recommends that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer. 5. The Offer is conditioned upon, among other things, there having been validly tendered and not withdrawn prior to the expiration of the Offer such number of Shares that would constitute a majority of the outstanding shares of Company Capital Stock at the date of the expiration of the Offer (assuming the exercise of all options to purchase shares of the Company Capital Stock outstanding at the expiration date of the Offer). The Offer is also subject to the other terms and conditions contained in the Offer to Purchase. 6. Tendering shareholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Offeror pursuant to the Offer. If you wish to have us tender any or all of the Shares, please so instruct us by completing, executing, detaching and returning to us the instruction form contained in this letter. An envelope to return your instructions to us is enclosed. If you authorize tender of your Shares, all such Shares will be tendered unless otherwise indicated in such instruction form. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and any supplements or amendments thereto. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares residing in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Offeror by Morgan Stanley & Co. Incorporated or by one or more registered brokers or dealers licensed under the laws of such jurisdiction. 2 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK AND SERIES A CONVERTIBLE VOTING PREFERRED STOCK OF KYSOR INDUSTRIAL CORPORATION BY K ACQUISITION CORP. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated February 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer") in connection with the offer by K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation, to purchase all outstanding shares of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights issued pursuant to the Rights Agreement, dated as of April 26, 1996, as amended, between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively, the "Common Stock"), and all outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Stock"; the shares of Common Stock and the shares of ESOP Preferred Stock being collectively referred to herein as the "Shares"). This will instruct you to tender to the Offeror the number of Shares indicated below (or if no number is indicated below, all Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Shares to be Tendered:* SIGN HERE Account Number: _____________________ ------------------------------------- Date: _________________________, 199 ------------------------------------- (Signature(s)) ------------------------------------- ------------------------------------- (Print Name(s)) ------------------------------------- ------------------------------------- (Print Address(es)) ------------------------------------- (Area Code and Telephone Number(s)) ------------------------------------- (Taxpayer Identification or Social Security Number(s)) - -------- *Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. 3 EX-99.A6 6 LETTER FROM BANKERS TRUST EXHIBIT (a)(6) February 7, 1997 To: Participants in the Kysor Industrial Corporation Savings Plan and 401(k) Plan: As you are aware, K Acquisition Corp., a Michigan corporation and indirect wholly-owned subsidiary of Scotsman Industries, Inc., a Delaware corporation, has commenced a tender offer to purchase all outstanding shares of Common Stock, par value $1 per share, and the associated common share purchase rights, and Series A Convertible Voting Preferred Stock, $24.375 stated value per share, of Kysor Industrial Corporation (the "Company") at $43.00 per share net to the seller in cash (without interest). The tender offer commenced February 7, 1997 and will expire on March 7, 1997, unless extended. As a result of this tender offer for all of the Company's shares, no new investments or transfers into the Kysor Common Stock Fund will be permitted effective as of February 6, 1997. Participants in the Savings Plan and 401(k) Plan will not be permitted to increase their investments in the Kysor Common Stock Fund from February 6, 1997 through March 7, 1997, or a later date to coincide with the expiration of the tender offer. Throughout this suspension period, all contributions and loan repayments allocated to the Kysor Common Stock Fund will be redirected by The Principal Financial Group (the administrator of the Savings Plan and 401(k) Plan) into the Money Market Fund. You may contact The Principal Financial Group via TeleTouch to change your investment direction for all future contributions. The Company will notify all Savings Plan and 401(k) Plan participants at a later date if new investments and transfers into the Kysor Common Stock Fund are again permitted. If you hold shares of the Company's Common Stock in your Savings Plan or 401(k) Plan account, you will be receiving materials from Bankers Trust Company (the holder of record of the Common Stock in the Savings Plan and 401(k) Plan) regarding whether you wish to accept or reject the $43.00 offer. PLEASE REVIEW THESE MATERIALS CAREFULLY AND RETURN THE INSTRUCTION PAGE TO BANKERS TRUST COMPANY BY WEDNESDAY, MARCH 5, 1997. Sincerely, Terry M. Murphy Vice President, Chief Financial Officer Offer to Purchase for Cash All Outstanding Shares of Common Stock and Series A Convertible Voting Preferred Stock of Kysor Industrial Corporation at $43.00 Net Per Share by K Acquisition Corp., an indirect wholly owned subsidiary of Scotsman Industries, Inc. - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- February 7, 1997 To Participants in the Kysor Industrial Corporation Savings Plan and 401(k) Plan: Enclosed for your consideration are the Offer to Purchase, dated February 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), relating to an offer by K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation ("Parent"), to purchase all outstanding shares of common stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights, issued pursuant to the Rights Agreement dated as of April 26, 1996, as amended, between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively, the "Common Shares"), and all outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Shares" and together with the Common Shares, the "Shares"), at a purchase price of $43.00 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer. The Offer is being made in connection with the Agreement and Plan of Merger dated as of February 2, 1997, among Parent, the Offeror and the Company (the "Merger Agreement"). WE ARE THE HOLDER OF RECORD OF COMMON SHARES HELD FOR YOUR ACCOUNT AS A PARTICIPANT IN THE COMPANY'S SAVINGS PLAN OR 401(K) PLAN (THE "PLANS"). A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD IN ACCORDANCE WITH THE TERMS OF THE PLANS, TO THE EXTENT CONSISTENT WITH APPLICABLE LAWS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD IN YOUR PLAN ACCOUNT. Accordingly, we request information as to whether you wish to have us tender any or all of the Common Shares held in your Plan account, upon the terms and conditions set forth in the Offer. Please note the following: 1. The tender price is $43.00 per Share, net to the seller in cash, without interest. 2. The Offer is being made for all of the outstanding Shares. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on March 7, 1997, unless the Offer is extended. 4. The Offer is conditioned upon, among other things, there having been validly tendered and not withdrawn prior to the expiration of the Offer such number of Shares which would constitute a majority of the outstanding Shares at the date of the expiration of the Offer (assuming the exercise of all options to purchase Shares outstanding at the expiration date of the Offer). The Offer is also subject to the other terms and conditions in the enclosed Offer to Purchase. The Offeror reserves the right (but shall not be obligated), in accordance with applicable rules and regulations of the United States Securities and Exchange Commission and subject to the limitations set forth in the Merger Agreement, to waive any of the conditions to the Offer. 5. Common Shares in Plan accounts as to which we have not received instructions from Participants will not be tendered in the Offer. If you wish to have us tender any or all of the Common Shares held in your Plan account, please so instruct us by completing, executing, detaching and returning to us the instruction form contained in this letter. An envelope to return your instruction to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise indicated in such instruction form. PLEASE FORWARD YOUR INSTRUCTIONS TO US SO THAT THEY ARE RECEIVED BY US NO LATER THAN 5:00 P.M. NEW YORK TIME, ON MARCH 5, 1997, TO ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and any supplements or amendments thereto. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares residing in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction where the securities, blue sky, or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Offeror by Morgan Stanley & Co. Incorporated or one or more registered brokers or dealers licensed under the laws of such jurisdiction. Very truly yours, Bankers Trust Company INSTRUCTION WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK AND SERIES A CONVERTIBLE VOTING PREFERRED STOCK OF KYSOR INDUSTRIAL CORPORATION To Bankers Trust Company: The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase dated February 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), in connection with the offer by K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation, to purchase all outstanding shares of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights, issued pursuant to the Rights Agreement dated as of April 26, 1996, as amended, between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively the "Common Shares"), and all outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share. This will instruct you to tender to the Offeror the number of Common Shares indicated below (or if no number is indicated below, all Common Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. NOTE: Shares in Plan accounts as to which we have not received instructions will not be tendered in the Offer. Number of Shares to be Tendered:/1/ _____ SIGN HERE ____________________________________ ____________________________________ Signature(s) ____________________________________ ____________________________________ Print Name(s) ____________________________________ Area Code and Telephone Number(s) ____________________________________ Taxpayer Identification or Social Security Number(s) - ------------------- /1/Unless otherwise indicated, it will be assumed that all Common Shares held by us for your account are to be tendered. EX-99.A7 7 LETTER FROM OLD KENT BANK EXHIBIT (a)(7) February 7, 1997 To: Employee Stock Purchase Plan Participants: As you are aware, K Acquisition Corp., a Michigan corporation and indirect wholly-owned subsidiary of Scotsman Industries, Inc., a Delaware corporation, has commenced a tender offer to purchase all outstanding shares of Common Stock, par value $1 per share, and the associated common share purchase rights, and Series A Convertible Voting Preferred Stock, $24.375 stated value per share, of Kysor Industrial Corporation (the "Company") at $43.00 per share net to the seller in cash (without interest). The tender offer commenced February 7, 1997 and will expire on March 7, 1997, unless extended. As a result of this tender for all of the Company's shares, any amounts withheld under the Employee Stock Purchase Plan by employees for pay periods ending from February 7, 1997 through March 7, 1997, or a later date to coincide with the expiration of the tender offer, will be held by the Company, as Plan Trustee, in each employee's cash account. Upon expiration of the tender offer, the Plan Trustee will notify all Employee Stock Purchase Plan participants of the outcome of the tender offer and request instructions regarding the disposition of each participant's cash account. During this suspension period, participants are permitted to sell shares of the Company's Common Stock from their accounts as described in the Employee Stock Purchase Plan. If you held shares of the Company's Common Stock in your Employee Stock Purchase Plan account on February 6, 1997, you will find materials enclosed from Old Kent Bank (the Plan Administrator) regarding whether you wish to accept or reject the $43.00 offer. PLEASE REVIEW THESE MATERIALS CAREFULLY AND RETURN THE INSTRUCTION PAGE TO OLD KENT BANK BY WEDNESDAY, MARCH 5, 1997. Sincerely, Terry M. Murphy Vice President, Chief Financial Officer OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK AND SERIES A CONVERTIBLE VOTING PREFERRED STOCK OF KYSOR INDUSTRIAL CORPORATION AT $43.00 NET PER SHARE BY K ACQUISITION CORP., an indirect wholly owned subsidiary of SCOTSMAN INDUSTRIES, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED. February 7, 1997 To Participants in the Employee Stock Purchase Plan of Kysor Industrial Corporation: Enclosed for your consideration are the Offer to Purchase, dated February 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), relating to an offer by K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation ("Parent"), to purchase all outstanding shares of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights, issued pursuant to the Rights Agreement dated as of April 26, 1996, as amended, between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively, the "Common Shares"), and all outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Shares" and together with the Common Shares, the "Shares"), at a purchase price of $43.00 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer. The Offer is being made in connection with the Agreement and Plan of Merger dated as of February 2, 1997, among Parent, the Offeror and the Company (the "Merger Agreement"). WE ARE THE HOLDER OF RECORD OF COMMON SHARES HELD FOR YOUR ACCOUNT AS A PARTICIPANT IN THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN (THE "PLAN"). A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD IN ACCORDANCE WITH THE TERMS OF THE PLAN, TO THE EXTENT CONSISTENT WITH APPLICABLE LAWS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD IN YOUR PLAN ACCOUNT. Accordingly, we request information as to whether you wish to have us tender any or all of the Common Shares held in your Plan account, upon the terms and conditions set forth in the Offer. Please note the following: 1. The tender price is $43.00 per Share, net to the seller in cash, without interest. 2. The Offer is being made for all of the outstanding Shares. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on March 7, 1997, unless the Offer is extended. 4. The Offer is conditioned upon, among other things, there having been validly tendered and not withdrawn prior to the expiration of the Offer such number of Shares which would constitute a majority of the outstanding Shares at the date of the expiration of the Offer (assuming the exercise of all options to purchase Shares outstanding at the expiration date of the Offer). The Offer is also subject to the other terms and conditions in the enclosed Offer to Purchase. The Offeror reserves the right (but shall not be obligated), in accordance with applicable rules and regulations of the United States Securities and Exchange Commission and subject to the limitations set forth in the Merger Agreement, to waive any of the conditions to the Offer. 5. Common Shares in Plan accounts as to which we have not received instructions from Participants will not be tendered in the Offer. If you wish to have us tender any or all of the Common Shares held in your Plan account, please so instruct us by completing, executing, detaching and returning to us the instruction form contained in this letter. An envelope to return your instruction to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise indicated in such instruction form. PLEASE FORWARD YOUR INSTRUCTIONS TO US SO THAT THEY ARE RECEIVED BY US NO LATER THAN 5:00 P.M. NEW YORK TIME, ON MARCH 5, 1997, TO ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and any supplements or amendments thereto. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares residing in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction where the securities, blue sky, or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Offeror by Morgan Stanley & Co. Incorporated or one or more registered brokers or dealers licensed under the laws of such jurisdiction. Very truly yours, Old Kent Bank INSTRUCTION WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK AND SERIES A CONVERTIBLE VOTING PREFERRED STOCK OF KYSOR INDUSTRIAL CORPORATION To Old Kent Bank: The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase dated February 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), in connection with the offer by K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation, to purchase all outstanding shares of Common Stock, $1.00 par value per share, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated Common Share Purchase Rights, issued pursuant to the Rights Agreement dated as of April 26, 1996, as amended, between the Company and Harris Trust and Saving Bank, as successor Rights Agent (collectively the "Common Shares") and all outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share. This will instruct you to tender to the Offeror the number of Common Shares indicated below (or if no number is indicated below, all Common Shares) which are held by you for the account of the undersigned upon the terms and subject to the conditions set forth in the Offer. NOTE: Shares in Plan accounts as to which we have not received instructions will NOT be tendered in the Offer. Number of Shares to be Tendered: /1/ _____ SIGN HERE --------------------------------- --------------------------------- Signature(s) --------------------------------- --------------------------------- Print Name(s) --------------------------------- Area Code and Telephone Number(s) --------------------------------- Taxpayer Identification or Social Security Number(s) - ----------------------------- /1/ Unless otherwise indicate, it will be assumed that all Common Shares held by us for your account are to be tendered. EX-99.A8 8 LETTER FROM HARRIS TRUST EXHIBIT (a)(8) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK AND SERIES A CONVERTIBLE VOTING PREFERRED STOCK OF KYSOR INDUSTRIAL CORPORATION AT $43.00 NET PER SHARE BY K ACQUISITION CORP., an indirect wholly owned subsidiary of SCOTSMAN INDUSTRIES, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED. February 7, 1997 To Participants in the Kysor Industrial Corporation Dividend Reinvestment Plan: Enclosed for your consideration are the Offer to Purchase, dated February 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), relating to an offer by K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation ("Parent"), to purchase all outstanding shares of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights, issued pursuant to the Rights Agreement dated as of April 26, 1996, as amended, between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively, the "Common Shares"), and all outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Shares" and together with the Common Shares, the "Shares"), at a purchase price of $43.00 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer. The Offer is being made in connection with the Agreement and Plan of Merger dated as of February 2, 1997, among Parent, the Offeror and the Company (the "Merger Agreement"). WE ARE THE HOLDER OF RECORD OF COMMON SHARES HELD FOR YOUR ACCOUNT AS A PARTICIPANT IN THE COMPANY'S DIVIDEND REINVESTMENT PLAN (THE "PLAN"). A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD IN ACCORDANCE WITH THE TERMS OF THE PLAN, TO THE EXTENT CONSISTENT WITH APPLICABLE LAWS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD IN YOUR PLAN ACCOUNT. Accordingly, we request information as to whether you wish to have us tender any or all of the Common Shares held in your Plan account, upon the terms and conditions set forth in the Offer. Please note the following: 1. The tender price is $43.00 per Share, net to the seller in cash, without interest. 2. The Offer is being made for all of the outstanding Shares. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on March 7, 1997, unless the Offer is extended. 4. The Offer is conditioned upon, among other things, there having been validly tendered and not withdrawn prior to the expiration of the Offer such number of Shares which would constitute a majority of the outstanding Shares at the date of the expiration of the Offer (assuming the exercise of all options to purchase Shares outstanding at the expiration date of the Offer). The Offer is also subject to the other terms and conditions in the enclosed Offer to Purchase. The Offeror reserves the right (but shall not be obligated), in accordance with applicable rules and regulations of the United States Securities and Exchange Commission and subject to the limitations set forth in the Merger Agreement, to waive any of the conditions to the Offer. 5. Common Shares in Plan accounts as to which we have not received instructions from Participants will not be tendered in the Offer. If you wish to have us tender any or all of the Common Shares held in your Plan account, please so instruct us by completing, executing, detaching and returning to us the instruction form contained in this letter. An envelope to return your instruction to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise indicated in such instruction form. PLEASE FORWARD YOUR INSTRUCTIONS TO US SO THAT THEY ARE RECEIVED BY US NO LATER THAN 5:00 P.M. CHICAGO TIME, ON MARCH 5, 1997, TO ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and any supplements or amendments thereto. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares residing in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction where the securities, blue sky, or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Offeror by Morgan Stanley & Co. Incorporated or one or more registered brokers or dealers licensed under the laws of such jurisdiction. Very truly yours, Harris Trust and Savings Bank INSTRUCTION WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK AND SERIES A CONVERTIBLE VOTING PREFERRED STOCK OF KYSOR INDUSTRIAL CORPORATION To Harris Trust and Savings Bank: The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase dated February 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), in connection with the offer by K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly-owned subsidiary of Scotsman Industries, Inc., a Delaware corporation, to purchase all outstanding shares of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights, issued pursuant to the Rights Agreement dated as of April 26, 1996, as amended, between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively the "Common Shares"), and all outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share. This will instruct you to tender to the Offeror the number of Common Shares indicated below (or if no number is indicated below, all Common Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. NOTE: Shares in Plan accounts as to which we have not received instructions will not be tendered in the Offer. Number of Shares to be Tendered:/1/ _____ SIGN HERE ---------------------------------- ---------------------------------- Signature(s) ---------------------------------- ---------------------------------- Print Name(s) ---------------------------------- ---------------------------------- Area Code and Telephone Number(s) ---------------------------------- Taxpayer Identification or Social Security number(s) - ------------------ /1/Unless otherwise indicated, it will be assumed that all Common Shares held by us for your account are to be tendered. EX-99.A9 9 NOTICE OF GUARANTEED DELIVERY EXHIBIT (A)(9) NOTICE OF GUARANTEED DELIVERY for Tender of Shares of Common Stock and Series A Convertible Voting Preferred Stock of Kysor Industrial Corporation THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED. This form, or one substantially equivalent hereto, must be used to accept the Offer (as defined below) if certificates for shares of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights issued pursuant to the Rights Agreement, dated as of April 26, 1996, as amended, between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively, the "Common Stock"), or certificates for shares of the Company's Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Stock;" the shares of Common Stock and the shares of ESOP Preferred Stock being collectively referred to herein as the "Shares"), are not immediately available or if the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary (as defined below) on or prior to the Expiration Date (as defined in the Offer to Purchase). Such form may be delivered by hand, facsimile transmission or mail to the Depositary. See Section 3 of the Offer to Purchase, dated February 7, 1997 (the "Offer to Purchase"). The Depositary for the Offer is: FIRST CHICAGO TRUST COMPANY OF NEW YORK By Mail: By Hand: By Overnight Courier: Tenders & Exchanges First Chicago Trust Tenders & Exchanges P.O. Box 2569--Suite Company of 14 Wall Street 4660-KYS New York 8th Floor--Suite 4680-KYS Jersey City, New Jersey Tenders & Exchanges New York, New York 10005 07303-2569 c/o The Depository Trust Company 55 Water Street, DTC TAD Vietnam Veterans Memorial Plaza New York, New York 10041 Facsimile for Eligible Institutions only: (201) 222-4720 or (201) 222-4721 Confirm by Telephone: (201) 222-4707 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" (as defined in the Offer to Purchase) under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal or an Agent's Message and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED. Ladies and Gentlemen: The undersigned hereby tenders to K Acquisition Corp., a Michigan corporation, and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated February 7, 1997, and in the related Letter of Transmittal, receipt of which are hereby acknowledged, Shares of the Company, pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Number of Shares:____________________ Name(s) of Record Holder(s): Certificate Number(s) (if available): ------------------------------------- - ------------------------------------- ------------------------------------- (Please Print) - ------------------------------------- Address(es):__________________________ If Shares will be tendered by book-entry transfer: ------------------------------------- (Zip Code) Name of Tendering Institution: Area Code and Telephone Number(s): - ------------------------------------- ------------------------------------- Account Number:___________________ at Signature(s): ________________________ (CHECK ONE BOX IF SHARES WILL BE TENDERED BY BOOK-ENTRY TRANSFER) ------------------------------------- [_] The Depository Trust Company [_] Philadelphia Depository Trust Company------------------------------------- Dated: ______________________________ GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member in good standing of the Securities Transfer Agents Medallion Program or a bank, broker, dealer, credit union, savings association or other entity which is an "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, guarantees the delivery to the Depositary of the Shares tendered hereby, together with a properly completed and duly executed Letter of Transmittal (or manually signed facsimile(s) thereof) and any other required documents, or an Agent's Message (as defined in the Offer to Purchase) in the case of a book- entry delivery of Shares, all within three New York Stock Exchange trading days of the date hereof. Name of Firm: _______________________ Title: _______________________________ - ------------------------------------- Name: ________________________________ (Authorized Signature) (Please Print or Type) Address: ____________________________ Area Code and Telephone No.: _________ - ------------------------------------- Date: _________________________, 199 (Zip Code) DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM--CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL 2 EX-99.A10 10 GUIDELINES FOR FORM W-9 EXHIBIT (a)(10) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER--Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the Payer. - ---------------------------------------------------------------- GIVE THE FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY NUMBER OF-- - ---------------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner of the (joint account) account or, if combined funds, the first individual on the account(1) 3. Husband and wife (joint The actual owner of the account) account or, if joint funds, the first individual on the account(1) 4. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult, or if the minor is account) the only contributor, the minor(1) 6. Account in the name The ward, minor or of guardian or committee for incompetent person(3) a designated ward, minor or incompetent person 7. a. A revocable savings The grantor-trustee(1) trust account (in which grantor is also trustee) b. Any "trust" account The actual owner(4) that is not a legal or valid trust under State law - ---------------------------------------------------------------- GIVE THE EMPLOYER FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF-- - ---------------------------------------------------------------- 8. Sole proprietorship account The owner(4) 9. A valid trust, estate or The legal entity (Do not pension trust furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, charitable or The organization educational organization account 12. Partnership account held in The partnership the name of the business 13. Association, club or other The organization tax-exempt organization 14. A broker or registered The broker or nominee nominee 15. Account with the The public entity Department of Agriculture in the name of a public entity (such as a State or local governmental school district or prison) that receives agricultural program payments - ---------------------------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Card, or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), or Form W-7 for Individual Taxpayer Identification Number (for alien individuals required to file U.S. tax returns), at an office of the Social Security Administration or the Internal Revenue Service. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on all payments include the following: . A corporation. . A financial institution. . An organization exempt from tax under section 501(a), or an individual retirement plan, or a custodial account under Section 403(b)(7). . The United States or any agency or instrumentality thereof. . A State, the District of Columbia, a possession of the United States, or any political subdivision or instrumentality thereof. . A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. . An international organization or any agency or instrumentality thereof. . A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. . A real estate investment trust. . A common trust fund operated by a bank under section 584(a). . An entity registered at all times during the tax year under the Investment Company Act of 1940. . A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: . Payments to nonresident aliens subject to withholding under section 1441. . Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. . Payments of patronage dividends where the amount received is not paid in money. . Payments made by certain foreign organizations. . Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: . Payments of interest on obligations issued by individuals. NOTE: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. . Payments of tax-exempt interest (including exempt-interest dividends under section 852). . Payments described in section 6049(b)(5) to nonresident aliens. . Payments on tax-free covenant bonds under section 1451. . Payments made by certain foreign organizations. . Payments made to a nominee. Exempt payees described above should file a Substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.A11 11 SUMMARY ADVERTISEMENT EXHIBIT (A)(11) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made solely by the Offer to Purchase dated February 7, 1997 and the related Letter of Transmittal and is not being made to (nor will tenders be accepted from) holders of Shares in any jurisdiction in which the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In those jurisdictions where securities laws, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Offeror (as defined below) by Morgan Stanley & Co. Incorporated or one or more registered brokers or dealers licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Shares of Common Stock and Series A Convertible Voting Preferred Stock of Kysor Industrial Corporation at $43.00 Net Per Share by K Acquisition Corp., an indirect wholly owned subsidiary of Scotsman Industries, Inc. K Acquisition Corp., a Michigan corporation (the "Offeror") and an indirect wholly owned subsidiary of Scotsman Industries, Inc., a Delaware corporation (the "Parent"), is offering to purchase all outstanding shares of Common Stock, $1.00 par value, of Kysor Industrial Corporation, a Michigan corporation (the "Company"), including the associated common share purchase rights issued pursuant to the Rights Agreement, dated as of April 26, 1996, as amended, between the Company and Harris Trust and Savings Bank, as successor Rights Agent (collectively, the "Common Stock"), and all outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Stock"; and, together with the Common Stock, the "Company Capital Stock"; the shares of Common Stock and the shares of ESOP Preferred Stock being collectively referred to herein as the "Shares"), at a purchase price of $43.00 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated February 7, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"). Following the Offer, the Offeror intends to effect the Merger described below. - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MARCH 7, 1997, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- The Offer is conditioned upon, among other things, there having been validly tendered and not withdrawn prior to the expiration date of the Offer such number of Shares that would constitute a majority of the outstanding shares of the Company Capital Stock at the date of the expiration of the Offer (assuming the exercise of all options to purchase shares of the Company Capital Stock outstanding at the expiration date of the Offer) (the "Minimum Condition"). The Offer is also conditioned upon the waiting period under the HSR Act (as defined in the Offer to Purchase) applicable to the purchase of Shares pursuant to the Offer having expired or been terminated and the Company and Kuhlman (as defined in the Offer to Purchase) having consummated the transactions contemplated by the Asset Purchase Agreement (as defined in the Offer to Purchase) or Kuhlman having waived any conditions to consummate the Asset Purchase Agreement, agreeing to consummate the transactions contemplated thereby contemporaneously with or immediately following the consummation of the Offer. The Offer is also subject to other terms and conditions. The Offer is being made pursuant to an Agreement and Plan of Merger dated as of February 2, 1997 (the "Merger Agreement"), among Parent, the Offeror and the Company. The Merger Agreement provides that, among other things, as soon as practicable after the purchase of Shares pursuant to the Offer and the satisfaction of the other conditions set forth in the Merger Agreement and in accordance with the relevant provisions of the Michigan Business Corporation Act, as amended (the "Michigan BCA"), the Offeror will be merged with and into the Company (the "Merger"). If the Offeror acquires at least 90% of the outstanding shares of each class of stock of the Company pursuant to the Offer, the Offeror would be able to effect the Merger pursuant to the "short-form" merger provisions of Section 450.1711 of the Michigan BCA, without prior notice to, or any action by, any shareholder of the Company. Following consummation of the Merger, the Company will continue as the surviving corporation (the "Surviving Corporation") and will be an indirect wholly owned subsidiary of Parent. At the effective time of the Merger (the "Effective Time"), each share of Company Capital Stock that is issued and outstanding (other than shares of Company Capital Stock owned by the Company, any subsidiary of the Company, Parent, the Offeror or any other subsidiary of Parent, which shares will be automatically canceled and retired) will be converted into the right to receive from the Surviving Corporation $43.00 (or any higher price that may be paid for each Share pursuant to the Offer) in cash, without interest thereon. The Board of Directors of the Company has unanimously approved the Offer, the Merger, the Merger Agreement and the transactions contemplated thereby, has determined that the Offer, the Merger and the transactions contemplated by the Merger Agreement are advisable and that the terms of each of the Offer and the Merger are fair to and in the best interests of the Company's shareholders, and recommends that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer. For purposes of the Offer, the Offeror will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not withdrawn as, if and when the Offeror gives oral or written notice to First Chicago Trust Company of New York (the "Depositary") of the Offeror's acceptance of such Shares for payment pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payment from the Offeror and transmitting such payment to tendering shareholders. Under no circumstances will interest be paid by the Offeror because of any delay in making such payment. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (as defined in Section 2 of the Offer to Purchase) pursuant to the procedures set forth in the Offer to Purchase, (ii) a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with all required signature guarantees or, in the case of a book-entry transfer, an Agent's Message (as defined in Section 2 of the Offer to Purchase) and (iii) any other documents required by the Letter of Transmittal. If any of the conditions set forth in the Offer to Purchase that relate to the Offeror's obligation to purchase the Shares have not been satisfied by 12:00 Midnight, New York City time, on Friday, March 7, 1997 (or any other time then set as the expiration date of the Offer), the Offeror may, subject to the terms of the Merger Agreement, elect to (i) extend the Offer and, subject to applicable withdrawal rights, retain all tendered Shares until the expiration of the Offer, as extended, (ii) subject to complying with applicable rules and regulations of the Securities and Exchange Commission, accept for payment all Shares so tendered and not extend the Offer or (iii) terminate the Offer and not accept for payment any Shares and return all tendered Shares to tendering shareholders. The term "Expiration Date" means 12:00 Midnight, New York City time, on Friday, March 7, 1997, unless the Offeror shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Offeror, shall expire. Subject to the limitations set forth in the Offer and the Merger Agreement, the Offeror reserves the right (but will not be obligated), at any time or from time to time in its sole discretion, to extend the period during which the Offer is open by giving oral or written notice of such extension to the Depositary and by making a public announcement of such extension. There can be no assurance that the Offeror will exercise its right to extend the Offer. Any extension of the period during which the Offer is open will be followed, as promptly as practicable, by public announcement thereof, such announcement to be issued not later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date in accordance with the public announcement requirement of Rules 14d-4(c) and 14e-1(d) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of a tendering shareholder to withdraw such shareholder's Shares. Except as otherwise provided in Section 4 of the Offer to Purchase, tenders of Shares made pursuant to the Offer are irrevocable, except that such Shares may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment pursuant to the Offer, may also be withdrawn at any time after Friday, March 7, 1997. For a withdrawal of Shares tendered pursuant to the Offer to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name in which the certificates representing such Shares are registered, if different from that of the person who tendered the Shares. If certificates for Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered by an Eligible Institution (as defined in Section 3 of the Offer to Purchase), the signature on the notice of withdrawal must be guaranteed by an Eligible Institution. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Offeror, in its sole discretion, and its determination will be final and binding on all parties. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Exchange Act is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided the Offeror with the Company's list of shareholders and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares whose names appear on the Company's shareholder list and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. The Offer to Purchase and the related Letter of Transmittal contain important information which should be read before any decision is made with respect to the Offer. Any questions or requests for assistance or copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent or the Dealer Manager as set forth below, and copies will be furnished promptly at the Offeror's expense. Shareholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. No fees or commissions will be payable to brokers, dealers or other persons other than the Information Agent, the Dealer Manager and the Depositary for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: MORROW & CO., INC. 909 3rd Avenue 20th Floor New York, New York 10022 (212) 754-8000 Toll Free (800) 566-9061 Banks and Brokerage Firms please call: (800) 662-5200 The Dealer Manager for the Offer is: MORGAN STANLEY & CO. Incorporated One Financial Place 440 South LaSalle Street Chicago, Illinois 60605 (312) 706-4424 February 7, 1997 EX-99.A12 12 PRESS RELEASE EXHIBIT (a)(12) FOR IMMEDIATE RELEASE - --------------------- Contacts: Donald Holmes Terry Murphy Paul Verbinnen/Judy Brennan Scotsman Industries Kysor Industrial Sard Verbinnen & Co. 847-215-4600 616-779-2200 212-687-8080 SCOTSMAN INDUSTRIES AGREES TO ACQUIRE KYSOR INDUSTRIAL CORPORATION FOR $43.00 CASH PER SHARE ---------------- Strategic Transaction Will Increase Scotsman Revenues To Nearly $600 Million; Reinforces Leadership As "Cold" Equipment Supplier To Restaurants, Institutions, Supermarkets and Convenience Stores ---------------- Kysor Has Definitive Agreement For Simultaneous Sale Of Kysor's Transportation Products Group To Kuhlman Corporation ---------------- VERNON HILLS, IL, and CADILLAC, MI, February 3, 1997 -- Scotsman Industries, Inc. (NYSE: SCT), a leading international manufacturer of commercial refrigeration products and food preparation workstations, and Kysor Industrial Corporation (NYSE: KZ), a quality producer of commercial refrigeration systems, today jointly announced they have signed a definitive agreement under which Scotsman will acquire Kysor in a cash tender offer of $43.00 per Kysor common and preferred share. The agreement has been unanimously approved by the boards of directors of both companies. The transaction, which is expected to close in the first quarter and will also include the assumption of approximately $30 million in Kysor debt, is expected to be non-dilutive to modestly accretive in 1997 and meaningfully accretive in 1998 to Scotsman's earnings. In a related transaction, Kysor announced it has entered into a definitive agreement for the simultaneous sale of the assets of its Transportation Products Group to Kuhlman Corporation for $86 million in cash with the assumption of the liabilities associated with the unit. - more - -2- The acquisition of Kysor is subject to a majority of Kysor's shares being tendered and not withdrawn, the closing of the sale of the Transportation Products Group to Kuhlman, expiration of the Hart-Scott-Rodino Antitrust review period, and other customary conditions. Scotsman, which had 1995 net sales of $324 million, manufactures ice machines, beverage dispensing systems, food preparation and storage equipment and related foodservice products. The company markets primarily to commercial customers in the foodservice, hospitality, beverage and health care industries. Customers include leading restaurant chains such as McDonald's, Taco Bell, KFC, Hardee's and Boston Market, supermarket chains such as Wal*Mart, Kroger and Publix, convenience and specialty store chains such as 7-Eleven, and institutional food service operators and soft drink bottlers including Coca-Cola and Pepsi. Kysor had 1995 sales of approximately $364 million. The Company's Commercial Products Group had 1995 sales of $207 million and is a quality producer of refrigerated display cases, commercial refrigeration systems and insulated panels for supermarkets, convenience stores and the foodservice industry. Major customers include Wal*Mart, Food Lion and Winn Dixie. The Company's Transportation Products Group, which manufactures components for the medium- and heavy-duty commercial vehicle market, accounted for $157 million of Kysor's 1995 sales. Said Richard C. Osborne, Chairman, President and Chief Executive Officer of Scotsman: "This is an important strategic step which we believe puts Scotsman in a new league. The Kysor acquisition underscores our commitment to stay focused and grow strategically by acquiring companies that build on our strong position in foodservice equipment and strengthens our position in the supermarket industry. By acquiring the second largest commercial refrigeration equipment provider to supermarkets and a significant supplier to the convenience store market, we will expand the depth and breadth of both our product lines and customer base." Osborne continued: "This transaction makes strategic sense not only because of excellent cross selling opportunities, but also because of the annual cost savings we will achieve from reducing corporate overhead, leveraging material purchases, and instilling best practices at all operations." Said George R. Kempton, Chairman and Chief Executive Officer of Kysor: "In an era of consolidation in our industry, this transaction makes great strategic sense and results from our long-standing efforts to obtain maximum value for our stakeholders." - more - -3- Scotsman's and Kysor's commercial products groups together had combined pro forma 1996 annual revenue of approximately $600 million. Morgan Stanley & Co. Incorporated is acting as financial advisor to Scotsman and is acting as dealer manager for the tender offer. William Blair & Co., LLC represents Kysor in this transaction. Kysor Industrial Corporation is a quality producer of refrigerated display cases, commercial refrigeration systems and insulated panels for the supermarket and foodservice industry and a manufacturer of components for the medium- and heavy-duty commercial vehicle market. The Company has 14 manufacturing operations in 10 states as well as Great Britain and South Korea. Scotsman Industries, Inc. is a leading international manufacturer of refrigeration products -- ice machines, beverage dispensing systems, food preparation and storage equipment and related products. The Company markets primarily to commercial customers in the foodservice, hospitality, beverage and health care industries. Scotsman's products are sold in more than 100 countries through multiple distribution channels. *** The press release contains forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Forward looking statements are necessarily projections which are subject to change upon the occurrence of events that may affect business. The Company also points out that the acquisition involves a number of risks that can cause actual results to be materially different from expected results. ### EX-99.A13 13 PRESS RELEASE EXHIBIT (a)(13) Contact: Donald D. Holmes (847) 215-4600 SCOTSMAN INDUSTRIES COMMENCES TENDER OFFER FOR KYSOR INDUSTRIAL CORPORATION Vernon Hills, IL, February 7, 1997 -- Scotsman Industries, Inc. (NYSE: SCT) today announced that an indirect wholly owned subsidiary has commenced its previously announced tender offer for shares of Common Stock, $1.00 par value, and shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share, of Kysor Industrial Corporation, at $43.00 per share, net to the seller, in cash. The tender offer is being made pursuant to an Agreement and Plan of Merger dated as of February 2, 1997. The tender offer is scheduled to expire on Friday, March 7, 1997. First Chicago Trust Company of New York is the depositary for the tender offer. Morrow & Co., Inc. is the information agent. The dealer manager is Morgan Stanley & Co. Incorporated. -more- Scotsman Industries, Inc. is a leading manufacturer of refrigeration products -- ice machines, beverage dispensing systems, food preparation and storage equipment and related products. The company markets primarily to commercial customers in the foodservice, hospitality, beverage and health care industries. Scotsman's products are sold in more than 100 countries through multiple distribution channels. EX-99.B1 14 COMMITMENT LETTER EXHIBIT (b)(1) One First National Plaza Chicago, Illinois 60670 Telephone: (312) 732-4000 January 31, 1997 Scotsman Group Inc. 775 Corporate Woods Parkway Vernon Hills, Illinois 60061 Attn: Donald D. Holmes Vice President--Finance Re: Commitment Letter Gentlemen/Ladies: The Scotsman Group Inc. (the "Company") has requested credit facilities (the "Facilities") in the aggregate principal amount of $500,000,000 (the "Aggregate Commitment"). The Company has indicated that it intends to acquire a public company which you have identified to us with the code name "Caesar" (hereinafter, the "Target") pursuant to a two-step acquisition. The first step will consist of an all cash tender offer by means of an offer to purchase (as amended from time to time, the "Tender Offer") to be made by a newly formed subsidiary (the "Acquisition Sub") of the Company or one of its existing subsidiaries for all of the outstanding common stock and preferred stock of the Target (the "Stock"). Prior to the making of the Tender Offer, Acquisition Sub and the Target shall have entered into a definitive agreement and plan of merger (the "Merger Agreement") to merge Acquisition Sub and the Target, subject to shareholder approval by the shareholders of Acquisition Sub and the Target if required by applicable law (the "Merger") (the Tender Offer and the Merger, collectively, the "Acquisition"). The Tender Offer will be conditioned on the tender and purchase of at least the minimum number of shares, on a fully diluted basis, required under applicable state law and the Target's articles or certificate of incorporation and by-laws to vote for and effect a merger of the Target and Acquisition Sub. The second step of the acquisition will consist of the Merger. The borrowers and guarantors under the Facilities will be those entities described as such in the term sheet attached hereto ("Term Sheet"). The First National Bank of Chicago is pleased to provide you with its financing commitment for, and to agree to act as administrative agent bank (the "Agent") in connection with, the entire amount of the Facilities on the terms and conditions set forth in this commitment letter ("Commitment Letter") and the Term Sheet, and First Chicago Capital Markets, Inc. (the "Arranger"), an affiliate of the Agent, is pleased to provide the Company with its undertaking to syndicate all or a portion of the Facilities to the Lenders. While the Agent's agreement herein is to provide the entire amount of the Facilities on a fully underwritten basis, the Arranger reserves the right to syndicate all or a portion of the Facilities to additional Lenders with a corresponding reduction in the Agent's commitment. Agents, officers and employees of each of The First National Bank of Chicago and First Chicago Capital Markets, Inc. will have the right to share information received from the Company and its affiliates and their respective agents, officers, and employees. The Company agrees to (i) reimburse the Agent and the Arranger for all reasonable out-of-pocket expenses (including the reasonable fees of outside counsel and time charges for inside counsel) incurred in connection with this Commitment Letter, the Fee Letter (as hereinafter defined), the Term Sheet (the Commitment Letter, Fee Letter and Term Sheet collectively the "Commitment"), the transactions contemplated by the Commitment and the Agent's and the Arranger's on-going work in connection with such transactions, including without limitation travel expenses and costs incurred in connection with the preparation, negotiation, execution, administration, syndication, and enforcement of any document relating to this transaction and its role hereunder, 1 CONTINUING OUR LETTER OF JANUARY 31, 1997 (ii) indemnify and hold harmless the Agent, the Arranger, the Lenders and their respective officers, employees, agents and directors (collectively, the "Indemnified Persons") against any and all losses, claims, damages, or liabilities of every kind whatsoever to which the Indemnified Persons may become subject in connection in any way with the transaction which is the subject of this Commitment, including without limitation expenses incurred in connection with investigating or defending against any liability or action whether or not a party thereto, except to the extent any of the foregoing is found in a final judgment by a court of competent jurisdiction to have arisen solely from such Indemnified Person's gross negligence or wilful misconduct; and (iii) assert no claim against any Indemnified Persons seeking consequential damages on any theory of liability in connection in any way with the transaction which is the subject of this Commitment. The obligations described in this paragraph are independent of all other obligations of the Company hereunder and under the Loan Documents (as defined below), shall survive the expiration, revocation or termination of this Commitment, and shall be payable whether or not the financing transactions contemplated by this Commitment shall close. The Agent's and the Arranger's respective obligations under this Commitment are enforceable solely by the party signing this Commitment and may not be relied upon by any other person. For purposes of enforcing this indemnity, the Company irrevocably submits to the non- exclusive jurisdiction of any court in which a claim arising out of or relating to the services provided under this Commitment is properly brought against the Agent, the Arranger, or the Lenders and irrevocably waives any objection as to venue or inconvenient forum. IF THIS COMMITMENT, OR ANY ACT, OMISSION OR EVENT DESCRIBED IN THIS PARAGRAPH BECOMES THE SUBJECT OF A DISPUTE, THE PARTIES HERETO EACH HEREBY WAIVE TRIAL BY JURY. The Company agrees not to settle any claim, litigation or proceeding relating to this transaction (whether or not the Agent or the Arranger is a party thereto) unless such settlement releases all Indemnified Persons from any and all liability in respect of such transaction. This Agent's Commitment and the Arranger's undertaking are subject to (i) the preparation, execution, and delivery of a mutually acceptable credit agreement ("Credit Agreement") and other loan documents (collectively, the "Loan Documents") incorporating, without limitation, substantially the terms and the conditions outlined in the Commitment; and (ii) the Agent's and the Arranger's respective determination that there is an absence of a material adverse change in the business, condition (financial or otherwise), operations, performance or properties of either (a) the Parent and its subsidiaries on a consolidated basis or (b) the Target and its subsidiaries on a consolidated basis from that reflected in the September 30, 1996 financials for each such entity already provided to the Agent. The Arranger will, in consultation with the Company, manage all aspects of the syndication, including, without limitation, decisions as to the selection of institutions to be approached and when they will be approached, when their commitments will be accepted, which institutions will participate, the allocations of the commitments among the Lenders and the amount and distribution of the fees discussed herein among the Lenders. Upon the Arranger's acceptance of any such commitment from a Lender the identity of which is reasonably acceptable to the Company, the Agent shall be relieved of its commitment to fund such amount. To assist the Arranger in its syndication efforts, the Company shall (a) provide the Arranger upon request with all information deemed reasonably necessary by it to complete successfully the syndication, including, without limitation, all information and projections prepared by the Company or on the Company's behalf relating to the transactions contemplated hereby; (b) actively participate in both the preparation of an information package regarding the operations and prospects of the Company and the Target (including, without limitation, information with respect to environmental issues) and the presentation of the information to prospective Lenders; (c) not make any statement publicly about the Commitment or the Facilities which might reasonably be expected to negatively affect the Arranger's ability to syndicate the Facilities; and (d) assist, if the Arranger so requests, restructuring in a manner mutually acceptable to the Arranger and the Company, of the terms and conditions of the Facilities if, in the Arranger's judgment, any portion of the syndication shall have been unsuccessful. After the Company has publicly announced the transaction, the Company authorizes each of the Agent and the Arranger to communicate with and answer inquiries from financial services media with respect to specific terms of the Facilities. The foregoing authorization shall remain in effect unless the Company notifies the Agent in writing that such authorization is revoked. 2 CONTINUING OUR LETTER OF JANUARY 31, 1997 Please indicate your acceptance of this Commitment by the Agent and undertaking by the Arranger in the space indicated below and return a copy of this letter so executed to the Agent and the Arranger. This Commitment and undertaking will expire at 5 p.m., Chicago time, February 2, 1997, unless on or prior to such time the Agent and the Arranger shall have received a copy of this letter executed by the Company. Notwithstanding timely acceptance of the Commitment pursuant to the preceding sentence, the Commitment will automatically terminate unless definitive Loan Documents are executed on or before May 31, 1997. By its acceptance hereof, the Company agrees to pay the Agent and the Arranger the fees described in the fee letter ("Fee Letter") of even date herewith. By its acceptance hereof, the Company hereby authorizes each of the Agent and the Arranger, at their respective sole expense but without any prior approval by the Company, to publish such tombstones as each may from time to time determine in its sole discretion. By accepting delivery of this Commitment, the Company hereby agrees that, prior to executing this Commitment Letter, the Company will not disclose either expressly or impliedly, without the Agent's and the Arranger's consent, to any person any of the terms of this Commitment, except that the Company may disclose the foregoing to the Target and to any employee, financial advisor (but not to a financial advisor known by the Company to be a provider or potential provider of senior debt in this transaction) or attorney of the Company or the Target to whom, in each case, it is necessary to disclose such information so long as any such employee, advisor or attorney is directed to observe this confidentiality obligation. Following the Company's execution of this Commitment, the Company may make public disclosure of the existence and the amount of the Commitment and the terms of the Term Sheet; and the Company may file a copy of the Commitment Letter, or make such other disclosures if such disclosure is, in the opinion of the Company's counsel, required by law. If the Company does not accept this Commitment, the Company is to immediately return it and all copies of it to the Agent. This Commitment Letter and Term Sheet supersede any and all prior versions thereof. This Commitment Letter shall be governed by the internal laws of the State of Illinois, and may only be amended by a writing signed by both parties. Very truly yours, The First National Bank of Chicago, individually and as Agent By: /s/Julia A. Bristow --------------------------------- Title: Managing Director First Chicago Capital Markets, Inc., as Arranger By: /s/ Darric A. Brambora --------------------------------- Title: Managing Director Accepted and agreed: SCOTSMAN GROUP INC. By: Donald D. Holmes Title: Vice President Date: 2/2/97 3 SCOTSMAN GROUP INC. TERM SHEET JANUARY 31, 1997 This term sheet is delivered with a commitment letter of even date herewith (the "Commitment Letter"). Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Commitment Letter. BORROWERS: Scotsman Group Inc. (the "Company"), Castel MAC S.p.A., The Delfield Company, Frimont S.p.A., Scotsman Drink Limited, Whitlenge Drink Equipment Limited, and a public company identified by the Company and given the code name Caesar (hereinafter, the "Target") via a public tendering for shares (the "Acquisition"). Any proposal to change which entity or entities is a Borrower must be reasonably acceptable to the Agent. GUARANTORS: Each of the Borrowers, Booth, Inc., DFC Holding Corporation, Scotsman Industries, Inc. (the "Parent"), the Target, and any current or newly acquired or formed direct or indirect subsidiaries of any of the foregoing with assets greater than $15,000,000. To the extent that the assets at non- guarantor subsidiaries with assets less than $15,000,000 individually exceed $50,000,000 in the aggregate, all such non-guarantor subsidiaries will become guarantors and a new $50,000,000 "basket" will commence. Notwithstanding the foregoing, (i) foreign subsidiaries will only guarantee the obligations of foreign Borrowers and (ii) certain subsidiaries which would be restricted from entering into guarantees due to significant tax considerations will instead issue promissory notes to affiliates which will be pledged to the Agent on behalf of the Lenders. AMOUNT: Up to $500,000,000 (the "Aggregate Commitment") unsecured credit facility comprised of loans and letters of credit under the facilities described below (the "Facilities"). ADMINISTRATIVE AGENT: The First National Bank of Chicago (the "Agent"). ARRANGER: First Chicago Capital Markets, Inc. ("FCCM" or the "Arranger"). LENDERS: The Agent or a group of lenders selected by the Agent and reasonably satisfactory to the Company (collectively, together with the Agent in its capacity as lender, the "Lenders"). SYNDICATION MANAGEMENT: The Agent and Arranger will manage all aspects of the syndication including, without limitation, the timing of offers to potential Lenders, the amounts offered to potential Lenders, the acceptance of commitments and the allocation thereof, and the compensation provided. DOCUMENTATION: The Facilities will be evidenced by a Credit Agreement and other Loan Documents mutually satisfactory to the Company and the Lenders. FACILITY A: REDUCING REVOLVING CREDIT FACILITY AMOUNT: Up to $265,000,000 (the "Facility A Commitment"). 4 PURPOSE: To provide funds for the purchase of the Target pursuant to the Acquisition; to refinance certain indebtedness of the Company, the Target, and their respective subsidiaries; and for working capital, friendly acquisitions, and other general corporate purposes, with a sublimit to be determined for letters of credit. MATURITY: Seven years from the date of closing of the Facilities (the "Closing Date"). COMMITMENT REDUCTIONS: Annual reductions in availability as follows:
Reduction Date Facility A Commitment Reduced By -------------- -------------------------------- 12/31/98 $10,000,000 12/31/99 $15,000,000 12/31/00 $15,000,000 12/31/01 $15,000,000 12/31/02 $15,000,000 12/31/03 $15,000,000 Final maturity Remaining balance
CURRENCIES: U.S. Dollars and, to the extent freely transferable and convertible into U.S. Dollars, the lawful currencies of France, Germany, Italy, Japan, Switzerland, Canada and the United Kingdom and, subject to availability and to the terms and conditions of the Credit Agreement, such other freely transferable and convertible foreign currencies as requested by the Company and acceptable to the Agent and the Required Lenders, in their reasonable discretion. LETTERS OF CREDIT: A portion of Facility A (to be determined by the Company and the Agent) shall be available for the issuance of commercial and standby letters of credit (including, without limitation, standby letters of credit providing liquidity support for tax-exempt bonds). Letters of credit will be issued for the account of a Borrower by the Agent or another Lender selected by such Borrower (in such capacity, the "Issuer"). Lenders will hold pro rata risk participations in each letter of credit. FACILITY B: TERM LOAN FACILITY AMOUNT: Up to $150,000,000 (the "Facility B Commitment"). PURPOSE: To provide funds for the purchase of the Target pursuant to the Acquisition; to refinance certain indebtedness of the Company, the Target, and their respective subsidiaries; and for payment of expenses incurred in connection with the Acquisition. MATURITY: Seven years from the Closing Date. 5 AMORTIZATION: Semi-annual principal payments commencing on December 31, 1997 in the following amounts:
Date Amount ---- ----------- 12/31/97 $10,000,000 6/30/98 $ 7,500,000 12/31/98 $ 7,500,000 6/30/99 $ 7,500,000 12/31/99 $ 7,500,000 6/30/00 $12,500,000 12/31/00 $12,500,000 6/30/01 $12,500,000 12/31/01 $12,500,000 6/30/02 $15,000,000 12/31/02 $15,000,000 6/30/03 $15,000,000 Maturity Date $15,000,000
FACILITY C: BRIDGE FACILITY AMOUNT: Up to $85,000,000 available only in a single drawing (the "Facility C Commitment"). PURPOSE: To provide funds for the purchase of the Target pursuant to the Acquisition; to refinance certain indebtedness of the Company, the Target, and their respective subsidiaries; and for payment of expenses incurred in connection with the Acquisition. MATURITY: Forty-five days from the Closing Date. REFINANCING: It is contemplated that Facility C will be repaid with the proceeds of the asset sale referred to below in the Conditions Precedent section under the heading "Asset Sale Agreement." If Facility C is not repaid at maturity, it will convert to a 7 1/2 year term loan with amortization to be determined. FEES The Company will pay the following fees: COMMITMENT FEE: A commitment fee at the per annum rate set forth on the attached pricing grid attached as Exhibit A hereto (the "Pricing Grid") on the average daily unused portion of the Facility A Commitment payable quarterly in arrears to the Lenders (including the Agent) ratably from the Closing Date until termination of the Facility A Commitment. L/C FEES: COMMERCIAL: Customary fees. STANDBY: A letter of credit fee at a rate equal to the Applicable Margin for Eurocurrency Loans as set forth on the Pricing Grid on the undrawn stated amount of each letter of credit, payable quarterly in arrears to the Agent for the account of the Lenders. In addition, a letter of credit fronting fee equal to .15% of the face amount of each letter of credit payable to the Issuer thereof for its own account and, in connection with the issuance of or any draw under any letter of credit, customary processing and other fees. 6 AGENT AND OTHER FEES: Such additional fees payable to the Agent and the Arranger as are specified in the fee letter among the Agent, the Arranger, and the Company. INTEREST RATES At the Company's option: FACILITIES A AND B: ABR (in the case of U.S. Dollar loans), plus the Applicable Margin Eurocurrency Rate plus the Applicable Margin FACILITY C: Prior to conversion to a 7 1/2 year term loan: ABR plus 0.375% per annum Eurocurrency Rate plus 1.375% per annum After conversion to a 7 1/2 year term loan: ABR plus 1.0% per annum Eurocurrency Rate plus 2.0% per annum Applicable Margin is determined by the ratio of (a) total indebtedness to (b) earnings before interest, taxes, depreciation, and amortization ("EBITDA"), all as set forth on the pricing grid attached as Exhibit A hereto. The Applicable Margin shall be adjusted (upward or downward) effective 10 days after the Agent has received the Parent's quarterly financial statements required to be delivered under the Credit Agreement. "ABR" means the Alternate Base Rate and is the larger of CBR, and the federal funds rate plus 1/2% per annum. "CBR" means the corporate base rate of interest announced by the Agent from time to time, changing when and as said corporate base rate changes. "Eurocurrency Rate" means the rate offered by the Agent at 11:00 a.m. (London time) two business days prior to the borrowing date for deposits in the relevant Eurocurrency and in the approximate amount of, and for a maturity corresponding to, the Agent's portion of the relevant loan, as adjusted for maximum statutory reserves. Eurocurrency Rate interest periods shall (except as set forth below) be one, two, three, or six months. Interest on ABR loans shall be payable on the 15th day of each month, upon any prepayment (whether due to acceleration or otherwise), and at final maturity. Interest on Eurocurrency Rate loans shall be payable in arrears on the last day of each interest period and, in the case of an interest period longer than three months, quarterly, upon any prepayment (whether due to acceleration or otherwise), and at final maturity. Interest on all loans (other than ABR loans) and fees shall be calculated for actual days elapsed on the basis of a 360-day year; interest on ABR loans shall be calculated for actual days elapsed on the basis of a 365/6-day year. The Credit Agreement will include customary provisions relating to yield protection, availability, and capital adequacy. After default, the interest rate for each advance will be equal to the then-current rate for such advance plus 2% per annum. 7 Eurocurrency Rate interest periods will not, for the first 90 days following the initial funding of the loans, exceed 14 days in length, and the Company will pay any breakfunding costs incurred to accommodate the syndication. PREPAYMENTS MANDATORY--SALE OF Upon the sale, transfer, or other disposition of ASSETS: assets of the Parent or any subsidiary which (a) on a cumulative basis during the term of the Credit Agreement (i) exceed (measured by their book value) 20% of the consolidated assets of the Parent (and its subsidiaries) or (ii) are responsible for more than 20% of the Parent's (and its subsidiaries') consolidated net sales or net income (other than the sale of inventory in the ordinary course of business) or (b) during any fiscal year of the Parent (i) exceed (measured by the their book value) 10% of the consolidated assets of the Parent (and its subsidiaries) or (ii) are responsible for more than 10% of the Parent's (and its subsidiaries') consolidated net sales or net income (other than the sale of inventory in the ordinary course of business), the Company shall make a mandatory prepayment in an amount equal to 100% of the net proceeds realized from any such sale, transfer, or other disposition, such prepayment to be applied pro rata among the Facilities and any other senior debt of the Parent or any subsidiary permitted under the Credit Agreement the terms of which require such a prepayment, with that portion of such prepayment dedicated to the Facilities to be applied to Facility C until paid in full, then to Facility B until paid in full, and then to reduce outstandings under Facility A. This provision shall not apply to (x) sales of inventory in the ordinary course of business, (y) intercompany transfers or sales of assets (among wholly-owned subsidiaries of the Parent) or (z) to the extent that an amount equal to such net proceeds is spent within the period from 90 days prior to such disposition to 180 days after such disposition on the purchase of other like kind assets for use in the business of the Parent and its subsidiaries. MANDATORY--EXCESS CASH Upon delivery of the Parent's audited financial FLOW: statements in each year commencing with the fiscal year ending December 31, 1997, the Company shall, if such financial statements show a Leverage Ratio (as defined in Exhibit A) of 3.0 to 1.0 or greater, make a mandatory prepayment equal to 50% of Excess Cash Flow, if positive, for the most recently ended fiscal year, of Facility C until paid in full, then to Facility B until paid in full. "Excess Cash Flow" means, for any period of determination, for the Parent and its subsidiaries on a consolidated basis: (a) the sum of (i) net income plus (ii) amortization, depreciation, and other non-cash charges; minus (b) the sum of (i) capital expenditures, (ii) principal payments made on all indebtedness for borrowed money (inclusive of mandatory prepayments made for Excess Cash Flow during such period), (iii) any increase or decrease (as the case may be) as of the last day of a fiscal year from the last day of the previous fiscal year in the excess of current assets over current liabilities, and (iv) any cash dividends paid by the Parent in accordance with the terms of the Credit Agreement. For the purpose of this mandatory prepayment provision, "Excess Cash Flow" will exclude income from foreign operations up to $25,000,000 during the term of the Credit Agreement. 8 SALE OF DEBT OR EQUITY: Upon the issuance of any debt or common stock, preferred stock, warrant, or other equity, the Company shall make a mandatory prepayment in an amount equal to (i) 50% of the net proceeds of any equity issuance or (ii) 100% of the proceeds of any debt issuance (other than debt permitted to be issued after the Closing Date pursuant to the indebtedness covenant), to be applied pro rata among the Facilities and any other senior debt of the Parent or any subsidiary permitted under the Credit Agreement the terms of which require such a prepayment, with that portion of such prepayment dedicated to the Facilities to be applied to Facility C until paid in full, then to Facility B until paid in full, and then to reduce outstandings under Facility A. This provision shall not apply to certain permitted issuances of equity securities pursuant to employee stock option or other employee compensation plans, subject to limits to be negotiated. VOLUNTARY PREPAYMENTS: Facility B and Facility C may be prepaid in whole or in part without premium (but subject to breakfunding payments) on five days' notice provided that such payments will be in amounts of at least $2,000,000 and multiples of $1,000,000 in excess thereof; and the Facility A Commitment may be permanently reduced without premium on five days' notice in an amount of at least $5,000,000 and multiples of $1,000,000 in excess thereof. ALLOCATION OF Any mandatory prepayment required to be applied to PREPAYMENTS: either Facility B or Facility C as described above shall be applied to the remaining principal installments of such Facility in the inverse order of maturity. CONDITIONS OF LENDING The Loan Documents shall be in form and substance acceptable to the Agent. The Credit Agreement shall include terms consistent with this Term Sheet including, without limitation, conditions precedent, representations and warranties, covenants, events of default, indemnification, yield protection and capital adequacy, and other provisions customary for such financings. CONDITIONS PRECEDENT Usual and customary conditions to each loan (including absence of default or unmatured default and lack of material adverse change from, in the case of the Parent and its subsidiaries and the Target and its subsidiaries taken on a combined basis, their combined financial condition and operations as reflected in the Parent's and the Target's consolidated financial statements as of September 30, 1996, previously delivered to the Agent). Additional conditions precedent to the initial loan will include those set forth below. INITIAL FUNDING: Initial funding shall occur no later than May 31, 1997. APPROVAL: Evidence satisfactory to the Agent that the boards of directors (and, to the extent required by applicable law, the shareholders) of the Parent, the Company, and the Target shall have approved the Acquisition; and all regulatory and legal approvals for the Acquisition shall have been obtained including, without limitation, approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. 9 LITIGATION: Absence of injunction or temporary restraining order which, in the judgment of the Agent or the Required Lenders would prohibit the making of the loans or the consummation of the Acquisition; and absence of litigation which would reasonably be expected to result in a material adverse effect on (i) the Parent and its subsidiaries taken as a whole or (ii) the Target and its subsidiaries taken as a whole. DUE DILIGENCE: The Agent shall be satisfied that, with respect to pension, environmental and other contingent liabilities, the exposure of the Company and its subsidiaries (including, without limitation, the Target and its subsidiaries) is not sufficiently worse than has been represented by the Company (either orally or in written disclosures) to date so as to have a material adverse effect on the financial condition of the Company and its subsidiaries and the Target and its subsidiaries, taken as a whole. ACQUISITION AGREEMENT: The representations and warranties in the Agreement and Plan of Merger for the Acquisition (the "Acquisition Agreement") shall be accurate in all material respects as of the date of the Acquisition closing, the conditions to closing therein shall have been satisfied and there shall have been no amendments of any material terms therein (unless consented to by the Agent). TENDER OFFER: The Lenders' funding shall be conditioned upon the tendering of the minimum number of shares required to consummate a merger by any applicable corporate statute, anti-takeover statute, or provision in the Company's or the Target's articles of incorporation, by-laws, or other constitutive documents. ASSET PURCHASE The Company will have an executed Asset Purchase AGREEMENT: Agreement for the sale of certain assets and subsidiaries comprising the transportation products group of the Target (the "Asset Purchase Agreement"). The representations and warranties in the Asset Purchase Agreement shall be accurate in all material respects as of the date of the Asset Purchase Agreement closing, the conditions to closing therein shall have been satisfied and there shall have been no amendments of any material terms therein (unless consented to by the Agent). FINANCIAL STATEMENTS: The Agent and the Required Lenders shall have received (i) pro forma opening financial statements giving effect to the Acquisition which must not be materially less favorable, in the Agent's and the Required Lenders' reasonable judgment, than the projections previously provided to them and which must demonstrate, in their reasonable judgment, together with all other information then available to the Agent and the Required Lenders, that the Parent and its subsidiaries (including the Target and its subsidiaries) can repay their debts and satisfy their respective other obligations as and when due, and can comply with the financial covenants acceptable to the Agent and the Required Lenders; and (ii) such information as the Agent and the Required Lenders may reasonably request to confirm the tax, legal, and business assumptions made in such pro forma financial statements. 10 VALUATION: The Agent and the Required Lenders shall have received an officer's certificate as to value, solvency, and other appropriate factual information and advice in form and substance satisfactory to them from the Parent's Chief Financial Officer supporting conclusions that after giving effect to the Acquisition, the Parent and its subsidiaries (including the Target and its subsidiaries) are solvent and will be solvent subsequent to incurring the indebtedness in connection with the Acquisition, will be able to pay their debts and liabilities as they become due, and will not be left with unreasonably small capital with which to engage in their businesses. LEGAL: All legal (including tax implications) and regulatory matters shall be reasonably satisfactory to the Agent. REGULATIONS: Compliance with all applicable requirements of Regulations G, T, U, and X of the Board of Governors of the Federal Reserve System. NO DEFAULT; NO MAC: No default or unmatured default shall exist on the initial funding date; and there shall have occurred no material adverse change in the business, condition (financial or otherwise), operations, performance or properties of (i) the Parent and its subsidiaries, taken as a whole, from that reflected in the Parent's consolidated financial statements as of September 30, 1996; (ii) the Target and its subsidiaries, taken as a whole, from that reflected in the Target's consolidated financial statements as of September 30, 1996; or (iii) the Parent and the Target and their respective subsidiaries taken as a whole, on a combined basis after giving effect to the Acquisition, from that reflected in the consolidated pro forma financial statements to be delivered to the Agent prior to closing. EXISTING CREDIT Contemporaneously with the initial loan, all FACILITIES: obligations under (i) the Company's existing credit agreement, (ii) all existing credit facilities at the Target or any of its subsidiaries, and (iii) the private placement with CIGNA in the principal amount of $20,000,000 dated April 1989 shall be paid in full and (if applicable) the commitments of the lenders thereunder shall be terminated. CUSTOMARY DOCUMENTS: Receipt of other customary closing documentation including, without limitation, legal opinions of the Company's counsel, reasonably acceptable to the Agent. 11 COVENANTS The Credit Agreement will contain customary covenants including, without limitation, restrictions substantially similar (except as noted) to those set forth in the Company's existing credit agreement with the Agent on the following: --financial reporting --maintenance of property and insurance --payment of taxes --rate hedging (notional amount equal to $150,000,000 --for three years) sale of assets (certain asset securitizations will --be permitted) liens and encumbrances --restricted payments --guarantees --sale and leaseback transactions --consolidations and mergers --investments --loans and advances --indebtedness (with certain existing indebtedness --permitted) compliance with pension, environmental, and other --laws operating leases --transactions with affiliates --changes in line of business --permit inspection of records and assets The Credit Agreement will contain the following financial covenants: FINANCIAL COVENANTS: --Consolidated Minimum Net Worth shall not be less than the sum of $120,000,000 plus 60% of net income for all quarters ending after 12/31/96 plus 60% of the proceeds of any equity issuances, minus certain carve-outs substantially identical to those in the Company's current credit agreement with the Agent. --Total Indebtedness/EBITDA (as defined below) Ratio, measured on a rolling four-quarter basis*, shall not exceed:
Quarters Ending Ratio --------------- ----------- 6/97-12/97 4.25 to 1.0 3/98-12/98 4.00 to 1.0 3/99-12/99 3.75 to 1.0 3/00-9/00 3.50 to 1.0 12/00-9/01 3.25 to 1.0 12/01 and after 3.00 to 1.0
*6/97 test will multiply one quarter of EBITDA times 4, 9/97 test will multiply two quarters of EBITDA times 2, and 12/97 test will multiply three quarters of EBITDA times 4/3. --Fixed Charge Coverage Ratio (as defined below) shall not be less than 1.0 to 1.0 for all fiscal quarters ending in 1997 and 1.05 to 1.0 thereafter. "EBITDA" means the sum of net income, plus income tax expense, minus equity in net income of affiliates, plus interest expense, plus depreciation expense, plus amortization expense, plus other non-cash charges, minus interest income. 12 "EBITDAR" means the sum of EBITDA plus rents. "Fixed Charge Coverage Ratio" means the ratio of EBITDAR minus capital expenditures to Fixed Charges. "Fixed Charges" means the sum of interest expense, plus scheduled principal repayments, plus income tax expense, plus rents, plus dividends paid, plus mandatory revolver reductions above outstandings, minus dividends received. REPRESENTATIONS AND WARRANTIES Usual representations and warranties in connection with each loan shall be included in the Credit Agreement including, but not limited to, absence of material adverse change, absence of material litigation, absence of default or unmatured default, continued accuracy of representations, representations regarding environmental issues, compliance with all material requirements of law and contracts, and compliance with regulation G, T, U, and X. DEFAULTS Customary events of default including, without limitation, cross-default to occurrence of a default (whether or not resulting in acceleration) under any other agreement governing indebtedness for borrowed money (in excess of $10,000,000) of the Parent or any of its subsidiaries, and change of control. ASSIGNMENTS AND PARTICIPATIONS Each Lender may, in its sole discretion, sell participations and may, with the consent of the Agent and the Company (which consent shall not be unreasonably withheld), sell assignments in the loans and in its commitment and disclose information to prospective participants and share, at its option, any fees with such participants. Assignments shall be in principal amounts of at least $5,000,000. The assignee shall pay an assignment fee of $3,500 to the Agent upon any assignment by a Lender of its rights and obligations under the Facilities (including, but not limited to, an assignment by a Lender to another Lender). OTHER This Term Sheet is intended as an outline only and does not purport to summarize all the conditions, covenants, representations, warranties and other provisions which would be contained in definitive legal documentation for the financing contemplated hereby. The Loan Documents will be governed by the laws of the State of Illinois, giving effect to federal laws applicable to national banks. "Required Lenders" shall mean Lenders holding 66 2/3% or more of the Aggregate Commitment. 13 EXHIBIT A PRICING GRID INTEREST RATES AND FEES--APPLICABLE MARGIN The Applicable Margin is determined by the ratio of (a) total indebtedness to (b) EBITDA (the "Leverage Ratio") as per the following schedule: APPLICABLE MARGIN - --------------------------------------------------------------------------------
LEVERAGE ABR EUROCURRENCY COMMITMENT FEE - -------------------------------------------------------------------------------------------- Level 1 ^ 4.0 0.375% 1.375% 0.35% - -------------------------------------------------------------------------------------------- Level 2 ^ 3.5 < 4.0 0.250% 1.25% 0.35% - -------------------------------------------------------------------------------------------- Level 3 ^ 3.0 < 3.5 0.125% 1.125% 0.30% - -------------------------------------------------------------------------------------------- Level 4 ^ 2.5 < 3.0 0% 0.875% 0.25% - -------------------------------------------------------------------------------------------- Level 5 ^ 2.0 < 2.5 0% 0.750% 0.20% - -------------------------------------------------------------------------------------------- Level 6 < 2.0 0% 0.50% 0.175%
provided that, notwithstanding the then-current Leverage Ratio, Level 1 pricing shall be in effect for the first six months following the Closing Date. 14 EX-99.C1 15 AGREEMENT AND PLAN OF MERGER Exhibit (c)(1) AGREEMENT AND PLAN OF MERGER AMONG SCOTSMAN INDUSTRIES, INC., K ACQUISITION CORP. AND KYSOR INDUSTRIAL CORPORATION DATED AS OF FEBRUARY 2, 1997 TABLE OF CONTENTS -----------------
Page ---- ARTICLE I THE OFFER................................ 2 SECTION 1.1 The Offer..................................................... 2 SECTION 1.2 Company Actions............................................... 4 ARTICLE II THE MERGER................................ 6 SECTION 2.1 The Merger.................................................... 6 SECTION 2.2 Closing....................................................... 6 SECTION 2.3 Effective Time................................................ 6 SECTION 2.4 Effects of the Merger......................................... 7 SECTION 2.5 Articles of Incorporation and By-laws; Officers and Directors. 7 ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES........... 7 SECTION 3.1 Effect on Capital Stock....................................... 7 SECTION 3.2 Surrender of Certificates..................................... 8 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............. 10 SECTION 4.1 Organization.................................................. 10 SECTION 4.2 Subsidiaries.................................................. 11 SECTION 4.3 Capital Structure............................................. 11 SECTION 4.4 Authority..................................................... 12 SECTION 4.5 Consent and Approvals; No Violations.......................... 13 SECTION 4.6 SEC Documents and Other Reports............................... 14 SECTION 4.7 Absence of Certain Changes or Events.......................... 15 SECTION 4.8 Information Supplied.......................................... 15 SECTION 4.9 No Existing Violation, Default, Etc........................... 16 SECTION 4.10 Licenses and Permits.......................................... 17 SECTION 4.11 Termination, Severance and Employment Agreements.............. 18 SECTION 4.12 Environmental Matters......................................... 19 SECTION 4.13 Tax Matters................................................... 19 SECTION 4.14 Actions and Proceedings....................................... 20 SECTION 4.15 Contracts..................................................... 20 SECTION 4.16 ERISA......................................................... 21 SECTION 4.17 Liabilities................................................... 22 SECTION 4.18 Intellectual Properties....................................... 22 SECTION 4.19 Propriety of Past Payments.................................... 23 SECTION 4.20 Opinion of Financial Advisor.................................. 23
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Page ---- SECTION 4.21 State Takeover Statutes; Rights Agreement; Charter Provisions. 23 SECTION 4.22 Asset Purchase Agreement...................................... 24 SECTION 4.23 Brokers....................................................... 25 ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB............ 26 SECTION 5.1 Organization.................................................. 26 SECTION 5.2 Authority..................................................... 26 SECTION 5.3 Consents and Approvals; No Violations......................... 26 SECTION 5.4 Information Supplied.......................................... 27 SECTION 5.5 Interim Operations of Sub..................................... 28 SECTION 5.6 Brokers....................................................... 28 SECTION 5.7 Financing..................................................... 28 ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS................ 28 SECTION 6.1 Conduct of Business by the Company Pending the Merger......... 28 SECTION 6.2 No Solicitation............................................... 31 SECTION 6.3 Third Party Standstill Agreements............................. 32 SECTION 6.4 Other Actions................................................. 33 ARTICLE VII ADDITIONAL AGREEMENTS.......................... 33 SECTION 7.1 Shareholder Approval; Preparation of Proxy Statement.......... 33 SECTION 7.2 Access to Information......................................... 34 SECTION 7.3 Fees and Expenses............................................. 35 SECTION 7.4 Options....................................................... 36 SECTION 7.5 Public Announcements.......................................... 37 SECTION 7.6 Real Estate Transfer Tax...................................... 37 SECTION 7.7 State Takeover Laws........................................... 38 SECTION 7.8 Indemnification; Directors and Officers Insurance............. 38 SECTION 7.9 Notification of Certain Matters............................... 39 SECTION 7.10 Board of Directors............................................ 39 SECTION 7.11 Reasonable Best Efforts....................................... 40 SECTION 7.12 Certain Litigation............................................ 41 SECTION 7.13 Employee Benefits............................................. 42 SECTION 7.14 Employee Stock Ownership Plan and Trust....................... 42 SECTION 7.15 Severance..................................................... 42
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Page ---- ARTICLE VIII CONDITIONS PRECEDENT........................... 42 SECTION 8.1 Conditions to Each Party's Obligation to Effect the Merger.... 42 ARTICLE IX TERMINATION AND AMENDMENT......................... 43 SECTION 9.1 Termination................................................... 43 SECTION 9.2 Effect of Termination......................................... 45 SECTION 9.3 Amendment and Certain Other Actions........................... 45 SECTION 9.4 Extension; Waiver............................................. 46 ARTICLE X GENERAL PROVISIONS............................ 46 SECTION 10.1 Non-Survival of Representations and Warranties................ 46 SECTION 10.2 Notices....................................................... 47 SECTION 10.3 Interpretation................................................ 47 SECTION 10.4 Counterparts.................................................. 48 SECTION 10.5 Entire Agreement; No Third-Party Beneficiaries................ 48 SECTION 10.6 Governing Law................................................. 48 SECTION 10.7 Assignment.................................................... 49 SECTION 10.8 Severability.................................................. 49 SECTION 10.9 Enforcement of this Agreement................................. 49
iii AGREEMENT AND PLAN OF MERGER ---------------------------- AGREEMENT AND PLAN OF MERGER, dated as of February 2, 1997 (this "Agreement"), among SCOTSMAN INDUSTRIES, INC., a Delaware corporation ("Parent"), K ACQUISITION CORP., a Michigan corporation and a wholly owned subsidiary of Parent ("Sub"), and KYSOR INDUSTRIAL CORPORATION, a Michigan corporation (the "Company") (Sub and the Company being hereinafter collectively referred to as the "Constituent Corporations"). W I T N E S S E T H: -------------------- WHEREAS, the respective Boards of Directors of Parent, Sub and the Company have unanimously approved the acquisition of the Company by Parent pursuant to a tender offer (as it may be amended from time to time as permitted under this Agreement, the "Offer") by Sub for (i) all of the outstanding shares of Common Stock, $1.00 par value (the "Common Stock"), together with the related Rights (as defined in Section 4.3), and (ii) all of the outstanding shares of Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the "ESOP Preferred Stock"), of the Company, each at a price of $43.00 per share (the "Offer Price"), net to the seller in cash, without interest thereon, followed by a merger (the "Merger") of Sub with and into the Company upon the terms and subject to the conditions set forth herein (the shares of Common Stock, together with all associated Rights (except as the context otherwise requires), and ESOP Preferred Stock subject to the Offer are hereinafter referred to collectively as the "Shares"); WHEREAS, the Company has advised the Parent and Sub that, simultaneous with the execution and delivery of this Agreement, the Company and certain of its Subsidiaries are entering into an Asset Purchase Agreement dated as of the date hereof (the "Asset Purchase Agreement") with Kuhlman Corporation, a Delaware corporation ("Kuhlman"), and Transpro Group, Inc., a Delaware corporation (together with Kuhlman, the "Private Buyer"), pursuant to which the Company has agreed to sell to the Private Buyer, and the Private Buyer has agreed to purchase from the Company, on a going concern basis, substantially all of the assets and properties of the transportation products business conducted by the Company (the "TPG Assets"), all on the terms and subject to the conditions set forth in the Asset Purchase Agreement; WHEREAS, the Board of Directors of the Company has (i) determined that the consideration to be paid for each Share in the Offer and for the TPG Assets by the Private Buyer under the Asset Purchase Agreement are fair to and in the best interests of the shareholders of the Company, (ii) approved and adopted this Agreement and the Asset Purchase Agreement and the transactions contemplated hereby and thereby and (iii) adopted resolutions unanimously determining that, subject to the terms and provisions of this Agreement, the Offer, the Merger, this Agreement and the Asset Purchase Agreement, and the transactions contemplated thereby, are advisable, approving such transactions and recommending that the Company's shareholders accept the Offer and, if required by applicable law, approve this Agreement and the Merger; and WHEREAS, pursuant to the Merger, each issued and outstanding share of Company Capital Stock (as defined in Section 3.1) not owned directly or indirectly by Parent or the Company will be converted into the right to receive the consideration paid per Share pursuant to the Offer. NOW, THEREFORE, in consideration of the premises and the representations, warranties and agreements herein contained, the parties agree as follows: ARTICLE I THE OFFER --------- SECTION 1.1 The Offer. (a) Subject to the provisions of this Agreement, as promptly as practicable but in no event later than five business days after the date of the public announcement by Parent and the Company of this Agreement, Sub shall, and Parent shall cause Sub to, commence the Offer. The obligation of Sub to, and of Parent to cause Sub to, commence the Offer and accept for payment, and pay for, any Shares tendered pursuant to the Offer shall be subject only to the conditions set forth in Exhibit A (the "Offer Conditions") (any of which may be waived in whole or in part by Sub in its sole discretion, provided that, without the consent of the Company, Sub shall not waive the Minimum Condition (as defined in Exhibit A)). Sub expressly reserves the right to modify the terms of the Offer, except that, without the consent of the Company, Sub shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) modify or add to the Offer Conditions (other than to waive any Offer Conditions to the extent permitted by this Agreement), (iv) except as provided in the next sentence, extend the Offer, (v) change the form of consideration payable in 2 the Offer or (vi) amend, waive or add any other term of the Offer in any manner adverse to the Company or the holders of Shares. Notwithstanding the foregoing, Sub may, without the consent of the Company, (i) extend the Offer if at the scheduled or extended expiration date of the Offer any of the Offer Conditions shall not be satisfied or waived until such time as such conditions are satisfied or waived, (ii) extend the Offer for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the "SEC") or the staff thereof applicable to the Offer, (iii) extend the Offer on one or more occasions for an aggregate period of not more than five business days beyond the scheduled or extended expiration date if as of such expiration date sufficient Shares have not been tendered in order for the Merger to be effected without a vote of the Company's shareholders pursuant to Section 450.1711 of the MBCA and (iv) extend the Offer for any reason on one or more occasions for an aggregate period of not more than five business days beyond the latest expiration date that would otherwise be permitted under clause (i), (ii) or (iii) of this sentence. So long as this Agreement is in effect and the Offer Conditions have not been satisfied or waived, Sub shall, and Parent shall cause Sub to, cause the Offer not to expire. In the event that the Company delivers to Parent a Section 9.1(e) Notice (as defined in Section 9.1(e)), Sub shall extend the Offer to the earlier of (i) a date that is not earlier than seven business days following the date of such delivery, unless the Offer would otherwise not expire prior thereto, or (ii) the termination of this Agreement by the Company pursuant to Section 9.1(e). In the event that Parent delivers to the Company the notice contemplated in paragraph (d) or (e) of Exhibit A, Sub shall extend the Offer to a date not earlier than two business days following the end of the 20- day cure period contemplated in such paragraph (d) or (e) or, if earlier, the date on which the breach or failure to perform or comply, as the case may be, is cured, unless the Offer would otherwise not expire prior thereto. Subject to the terms and conditions of the Offer and this Agreement, Sub shall, and Parent shall cause Sub to, accept for and pay for, all Shares validly tendered and not withdrawn pursuant to the Offer that Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer as soon as practicable after the expiration of the Offer. (b) On the date of commencement of the Offer, Parent and Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D- 1") with respect to the Offer, which shall contain an offer to purchase and a related letter of transmittal and summary advertisement (such Schedule 14D-1 and the documents included therein pursuant to which the Offer will be made, together with any supplements or amendments thereto, the "Offer Documents"). Parent, Sub and the Company each agrees 3 promptly to correct any information provided by it for use in the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect, and Parent and Sub further agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer Documents as so corrected to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given reasonable opportunity to review and comment upon the Offer Documents prior to their filing with the SEC or dissemination to the shareholders of the Company. Parent and Sub agree to provide the Company and its counsel any comments Parent, Sub or their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments. (c) Prior to the expiration of the Offer, Parent shall provide or cause to be provided to Sub all funds necessary to accept for payment, and pay for, any Shares that Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer. SECTION 1.2 Company Actions. (a) The Company hereby approves of and consents to the Offer and represents that the Board of Directors of the Company, at a meeting duly called and held, at which all directors were present, has, subject to the terms and provisions of this Agreement, duly and unanimously adopted resolutions approving this Agreement, the Offer, the Merger and the Asset Purchase Agreement and the transactions contemplated hereby and thereby, determining that the Offer, the Merger and the transactions contemplated by this Agreement and the Asset Purchase Agreement are advisable and that the terms of the Offer, the Merger and the Asset Purchase Agreement are fair to, and in the best interests of, the Company's shareholders and recommending that holders of Shares accept the Offer and, if required by applicable law, that the Company's shareholders approve this Agreement and the Merger; provided, however, that such approval, determination, recommendation or other action may be withdrawn, modified or amended at any time or from time to time if the Board of Directors of the Company concludes in good faith based on the advice of its outside counsel that it is necessary to do so in order to comply with its fiduciary duties under applicable law. The Company represents that its Board of Directors has received the opinion of William Blair & Company, LLC (the "Financial Advisor") that the proposed consideration to be received by Company's common shareholders pursuant to the Offer and the Merger is fair to the Company's common shareholders (other than Parent or any of its affiliates) from a financial point of view. The Company has been authorized by Financial Advisor to permit, subject to prior review and consent by 4 Financial Advisor (such consent not to be unreasonably withheld), the inclusion of such fairness opinion (or a reference thereto) in the Offer Documents and in the Schedule 14D-9 referred to below. The Company hereby consents to the inclusion in the Offer Documents of the recommendation of the Company's Board of Directors described in this Section 1.2(a), subject to the immediately preceding proviso. The Company has been advised by each of its directors and executive officers that each such person intends, as of the date of this Agreement, to tender, or cause the tender of, all Shares owned by such person pursuant to the Offer, including any shares of ESOP Preferred Stock over which such person has the power to direct the tender, regardless of whether such shares are allocated to such person's account. (b) On the date the Offer Documents are filed with the SEC, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from time to time, the "Schedule 14D-9") containing the recommendation described in paragraph (a) above (subject to the proviso in Section 1.2(a)) and shall mail a copy of the Schedule 14D-9 to the shareholders of the Company. Each of the Company, Parent and Sub agrees promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect, and the Company further agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and disseminated to the Company's shareholders, in each case as and to the extent required by applicable federal securities laws. Parent and its counsel shall be given reasonable opportunity to review and comment upon the Schedule 14D-9 prior to its filing with the SEC or dissemination to shareholders of the Company. The Company agrees to provide Parent and its counsel any comments the Company or counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments. (c) In connection with the Offer and the Merger, the Company shall cause its transfer agent to furnish Sub promptly with mailing labels containing the names and addresses of the record holders of shares of Common Stock as of a recent date and of those persons becoming record holders subsequent to such date, together with copies of all lists of shareholders, security position listings and computer files and all other information in the Company's possession or control regarding the beneficial owners of Shares, and shall furnish to Sub such information and assistance (including updated lists of shareholders, security position listings and computer files) as Parent or Sub may reasonably request in communicating the Offer to the Company's 5 shareholders. Subject to the requirements of applicable law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Merger, Parent and Sub and their agents shall hold in confidence the information contained in any such labels, listings and files, will use such information only in connection with the Offer and the Merger and, if this Agreement shall be terminated, will, upon request, deliver, and will use their reasonable best efforts to cause their agents to deliver, to the Company all copies of such information then in their possession or control. (d) The Company shall use its reasonable best efforts to assist the trustee (the "ESOP Trustee") under the Employee Stock Ownership Trust between the Company and Old Kent Bank and Trust Company dated January 1, 1989, as amended (the "ESOP Trust"), in the solicitation of directions from the participants in the Company's Employee Stock Ownership Plan (the "Employee Stock Plan") with respect to the tender of the shares of the ESOP Preferred Stock held thereunder in accordance with the terms of the ESOP Trust and the Employee Stock Plan. ARTICLE II THE MERGER SECTION 2.1 The Merger. Upon the terms and subject to the conditions hereof, and in accordance with the Business Corporation Act of the State of Michigan (the "MBCA"), Sub shall be merged with and into the Company at the Effective Time (as defined in Section 2.3). Following the Merger, the separate corporate existence of Sub shall cease and the Company shall continue as the surviving corporation (the "Surviving Corporation") and shall succeed to and assume all the "rights and obligations of Sub in accordance with the MBCA." The name of the Surviving Corporation shall be "Kysor Industrial Corporation". SECTION 2.2 Closing. The closing of the Merger will take place at 10:00 a.m. on a date to be specified by Parent or Sub, which shall be no later than the second business day after satisfaction or waiver of the conditions set forth in Article VIII (the "Closing Date"), at the offices of Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, unless another date, time or place is agreed to in writing by the parties hereto. SECTION 2.3 Effective Time. The Merger shall become effective when a Certificate of Merger (the "Certificate of Merger"), executed in accordance with the relevant provisions of the MBCA, is accepted by the administrator (as defined in the 6 MBCA, the "Administrator"); provided, however, that, upon mutual consent of the Constituent Corporations, the Certificate of Merger may provide for a later date of effectiveness of the Merger not more than 10 days after the date the Certificate of Merger is delivered to the Administrator. When used in this Agreement, the term "Effective Time" shall mean the later of the date and time at which the Certificate of Merger is accepted by the Administrator or such later time established by the Certificate of Merger. The filing of the Certificate of Merger shall be made as soon as practicable after the satisfaction or waiver of the conditions to the Merger set forth herein. SECTION 2.4 Effects of the Merger. The Merger shall have the effects set forth in Section 450.1724 of the MBCA. SECTION 2.5 Articles of Incorporation and By-laws; Officers and Directors. (a) Subject to Section 2.1, the Articles of Incorporation of Sub, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law. (b) The By-Laws of the Sub, as in effect immediately prior to the Effective Time, shall be the By-laws of the Surviving Corporation until thereafter changed or amended as provided therein or by the Articles of Incorporation of the Surviving Corporation or by applicable law. (c) The directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, until the next annual meeting of shareholders (or the earlier of their death, resignation or removal) and until their respective successors are duly elected and qualified, as the case may be. (d) The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation, for a term of one year (or until the earlier of their death, resignation or removal) and until their respective successors are duly elected and qualified, as the case may be. ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES --------------------------------------------------- SECTION 3.1 Effect on Capital Stock. As of the Effective Time, by virtue of the Merger and without any action on 7 the part of Sub, the Company or the holders of any securities of the Constituent Corporations: (a) Capital Stock of Sub. Each issued and outstanding share of stock of Sub shall be converted into and become one fully paid and nonassessable shares of Common Stock, $1.00 par value, of the Surviving Corporation. (b) Cancellation of Treasury Stock and Parent Owned Stock. Each share of capital stock of the Company (including, without limitation, the Shares purchased pursuant to the Offer) owned by the Company or any Subsidiary of the Company, Parent, Sub or any other Subsidiary (as defined in Section 10.3) of Parent (other than the shares into which the outstanding shares of capital stock of Sub were converted pursuant to Section 3.1(a)) automatically shall be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor. (c) Conversion of Shares. Each share of (i) the Common Stock, together with the related Right, or (ii) the ESOP Preferred Stock (the Common Stock and the ESOP Preferred Stock are hereinafter collectively referred to as the "Company Capital Stock"), in each case, that is issued and outstanding (other than shares to be canceled in accordance with Section 3.1(b)), shall be converted into the right to receive from the Surviving Corporation in cash, without interest, the price paid per share of Common Stock in the Offer (the "Merger Consideration"). As of the Effective Time, all such Shares, when so converted, shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration, without interest. (e) Company Stock Options. Each Company Stock Option (as defined in Section 4.3) that is outstanding shall be canceled and converted into the right to receive the amount of cash specified in Section 7.4. SECTION 3.2 Surrender of Certificates. (a) Paying Agent. Prior to the Effective Time, Parent shall designate a bank or trust company reasonably acceptable to the Company to act as paying agent in the Merger (the "Paying Agent"), and prior to the Effective Time, Parent shall deposit in trust with, or cause the Surviving Corporation to deposit in trust with, the Paying Agent cash in amounts necessary for the payment of the Merger 8 Consideration upon surrender of certificates representing Shares as part of the Merger (it being understood that any and all interest earned on funds made available to the Paying Agent pursuant to this Agreement shall be turned over to Parent). If the amount of cash deposited with the Paying Agent pursuant to this Section 3.2 is insufficient to pay all of the amounts required to be paid pursuant to Section 3.1, Parent from time to time after the Effective Time shall take all steps necessary to enable or cause the Surviving Corporation to deposit with the Paying Agent additional cash in an amount sufficient to make all such payments. As soon as reasonably practicable after the Effective Time, the Paying Agent shall mail to each holder of record of a certificate or certificates that immediately prior to the Effective Time represented Shares (the "Certificates"), (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in a form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Paying Agent, the Paying Agent shall, and Parent shall cause the Paying Agent to, pay the holder of such Certificate in exchange therefor the amount of cash into which the Shares theretofore represented by such Certificate shall have been converted pursuant to Section 3.1, and the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of ownership of Shares that is not registered in the transfer records of the Company, payment may be made to a person other than the person in whose name the Certificate so surrendered is registered, if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of such Certificate or establish to the satisfaction of the Surviving Corporation that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 3.2, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the amount of cash, without interest, into which the shares of capital stock theretofore represented by such Certificate shall have been converted pursuant to Section 3.1. No interest will be paid or will accrue on the cash payable upon the surrender of any Certificate. 9 (c) No Further Ownership Rights in Shares. All cash paid upon the surrender of Certificates in accordance with the terms of this Article III shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of capital stock theretofore represented by such Certificates. At the Effective Time, the stock transfer books of the Company shall be closed, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of capital stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Paying Agent for any reason, they shall be canceled and exchanged as provided in this Article III. (d) No Liability. None of Parent, Sub, the Company or the Paying Agent shall be liable to any person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. Any funds deposited with the Paying Agent that remain unclaimed by the shareholders of the Company on the first anniversary of the Effective Time shall be repaid to the Surviving Corporation (including, without limitation, all interest and other income received by the Paying Agent in respect of all such funds), and thereafter shareholders of the Company shall look only to Parent or the Surviving Corporation (subject to the terms of this Agreement, abandoned property, escheat and other similar laws) as general creditors thereof with respect to any Merger Consideration that may be payable upon due surrender of the Certificates held by them. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- The Company represents and warrants to Parent and Sub as follows, except that the following representations and warranties (other than those contained in Section 4.22) do not pertain to, and the Company Letter (as defined in Section 4.2) need not include, matters included among the Purchased Assets or Assumed Liabilities (as defined in the Asset Purchase Agreement) (it being understood that the inclusion of such matters shall not be interpreted to mean that by implication such matters are not included among such Purchased Assets or Assumed Liabilities): SECTION 4.1 Organization. The Company and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now being conducted, except where the failure to be so organized, validly existing or in good standing would not have a Material Adverse Effect (as defined in Section 10 10.3) on the Company or prevent or materially delay the consummation of the Offer or the Merger. The Company and each of its Subsidiaries is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing would not have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer or the Merger. The Company has, or will prior to consummation of the Offer, deliver to Parent complete and correct copies of its Articles of Incorporation and By-laws and the Articles of Incorporation and By-laws (or similar organizational documents) of its Subsidiaries. SECTION 4.2 Subsidiaries. Item 4.2 of the letter from the Company to Parent dated the date hereof, which letter relates to this Agreement and is designated therein as the Company Disclosure Letter (the "Company Letter"), lists each Subsidiary of the Company existing as of the date hereof. Except as set forth in Section 4.2 of the Company Letter, all the outstanding shares of capital stock of each Subsidiary of the Company are owned by the Company, by another wholly owned Subsidiary of the Company or by the Company and another wholly owned Subsidiary of the Company, free and clear of all pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever (collectively, "Liens"), and are duly authorized, validly issued, fully paid and nonassessable. Except as set forth in Item 4.2 of the Company Letter and except for the capital stock of its Subsidiaries, the Company does not own, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, joint venture or other entity. SECTION 4.3 Capital Structure. The authorized capital stock of the Company consists of 30,000,000 shares of Common Stock and 5,000,000 shares of preferred stock (the "Preferred Stock"), of which 820,513 shares of Preferred Stock have been designated as the ESOP Preferred Stock. At the close of business on January 31, 1997, (i) 5,961,665 shares of Common Stock were issued and outstanding, all of which were validly issued, fully paid and nonassessable and free of preemptive rights, and (ii) 786,869.1221 shares of ESOP Preferred Stock were issued and outstanding, all of which were validly issued, fully paid and nonassessable and free of preemptive rights. As of the date of this Agreement, except for (i) the rights to purchase shares of Common Stock (the "Rights") issued pursuant to the Rights Agreement dated as of April 26, 1996 (the "Rights Agreement"), between the Company and State Street Bank, as Rights Agent; (ii) 11 the rights of holders of shares of ESOP Preferred Stock to convert such shares into shares of Common Stock; and (iii) stock options covering not in excess of 1,550,670 shares of Common Stock, including shares offered under the Company's 1980 Nonqualified Stock Option Plan, Stock Option and Stock Appreciation Rights Plan of 1980, 1983 Incentive Stock Option Plan, 1984 Stock Option Plan, 1987 Stock Option and Restricted Stock Plan and 1993 Long-Term Incentive Plan (collectively, the "Company Stock Options"), there are no options, warrants, calls, rights or agreements to which the Company or any of its Subsidiaries is a party or by which any of them is bound obligating the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of the Company or any Subsidiary or obligating the Company or any of its Subsidiaries to grant, extend or enter into any such option, warrant, call, right or agreement. Except as set forth in the Company Letter and except in respect of the ESOP Preferred Stock, as of the date of this Agreement, there are no outstanding contractual obligations of the Company or any of its Subsidiaries (i) to repurchase, redeem or otherwise acquire any shares of capital stock of the Company or (ii) to vote or to dispose of any shares of the capital stock of any of the Company's Subsidiaries. SECTION 4.4 Authority. The Board of Directors of the Company has approved and adopted this Agreement and the Asset Purchase Agreement and the transactions contemplated hereby and thereby and adopted resolutions unanimously determining that, subject to the terms and provisions of this Agreement, the Offer, the Merger, this Agreement and the Asset Purchase Agreement, and the transactions contemplated thereby, are advisable, approving such transactions and recommending that the Company's shareholders accept the Offer and, if required by applicable law, approve this Agreement and the Merger; and the Company has all requisite corporate power and authority to enter into this Agreement and the Asset Purchase Agreement and, subject to approval by the shareholders of the Company of this Agreement and the Merger (if required), to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Asset Purchase Agreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company, subject to approval by the shareholders of the Merger (if required). This Agreement and the Asset Purchase Agreement have been duly executed and delivered by the Company and (assuming the valid authorization, execution and delivery of this Agreement by Parent and Sub and of the Asset Purchase Agreement 12 by the Private Buyer) constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms. The only shareholder action required in order to effect the Merger is approval of the Merger by the holders of a majority of the shares of the Company Capital Stock outstanding as of the record date for the Shareholders Meeting (as defined in Section 7.1), all holders of each of the Common Stock and the ESOP Preferred Stock voting separately as a class to the extent any ESOP Preferred Stock is outstanding as of such record date; provided, however, that if Sub purchases an amount of Shares pursuant to the Offer sufficient to permit the Merger to be effected in accordance with Section 450.1711 of the MBCA (which would include all of the outstanding shares of ESOP Preferred Stock, unless the same were converted into Common Stock pursuant to the terms thereof or redeemed), no shareholder approval will be required. No action by the shareholders of the Company is required under the MBCA or the Company's Articles of Incorporation or By-laws in order to effect the transactions contemplated by the Asset Purchase Agreement. SECTION 4.5 Consent and Approvals; No Violations. Except as set forth in Item 4.5 of the Company Letter, the execution and delivery of this Agreement do not, and the consummation by the Company and its shareholders of the transactions contemplated hereby and compliance with the provisions hereof will not, result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or the loss of a benefit under, or result in the creation of any Lien upon any of the properties or assets of the Company or any of its Subsidiaries under, any provision of (i) the Articles of Incorporation or By-laws of the Company, (ii) any provision of the Articles of Incorporation, By- laws or other organizational documents of any of its Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to the Company or any of its Subsidiaries or (iv) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries or any of their respective properties or assets, other than, in the case of clauses (ii), (iii) or (iv), any such violations, defaults, rights, losses or Liens that, individually or in the aggregate, would not have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer or the Merger. No filing or registration with, or authorization, consent or approval of, any domestic (federal and state), foreign or supranational court, commission, governmental body, regulatory agency, authority or tribunal (a "Governmental Entity") is required by or with respect 13 to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement by the Company or is necessary for the consummation of the Offer, the Merger and the other transactions contemplated by this Agreement, except for (i) in connection, or in compliance, with the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the "Exchange Act"), (ii) the filing of a Certificate of Merger with the Administrator and appropriate documents with the relevant authorities of other states in which the Company or any of its Subsidiaries is qualified to do business, (iii) such filings and consents as may be required under any environmental, health or safety law or regulation pertaining to any notification, disclosure or required approval triggered by the Offer, the Merger or the other transactions contemplated by this Agreement, (iv) such filings, authorizations, orders and approvals as may be required by state takeover laws (the "State Takeover Approvals"), (v) such filings as may be required in connection with the taxes described in Section 7.6, (vi) filings with and approvals of the New York Stock Exchange, Inc. and the SEC with respect to the delisting and deregistration of the Common Stock, (vii) such other consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under the laws of any foreign country in which the Company or any of its Subsidiaries conducts any business or owns any property or assets and (viii) such other consents, orders, authorizations, registrations, declarations and filings the failure of which to be obtained or made would not, individually or in the aggregate, have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer or the Merger. SECTION 4.6 SEC Documents and Other Reports. The Company has filed all required documents with the SEC since January 1, 1993 (the "Company SEC Documents"). As of their respective dates, the Company SEC Documents complied in all material respects with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case may be, and as of their respective dates none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Company SEC Documents comply as of their respective dates as to form in all material respects with their applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of 14 the unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly present the consolidated financial position of the Company and its consolidated Subsidiaries as at the dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to the lack of footnotes thereto, to normal year-end audit adjustments and to any other adjustments described therein). The Company has not, since December 31, 1995, made any change in the accounting practices or policies applied in the preparation of its financial statements. SECTION 4.7 Absence of Certain Changes or Events. Except as disclosed in Item 4.7 of the Company Letter or in the Company SEC Documents filed and publicly available prior to the date of this Agreement (the "Company Filed SEC Documents") and except for the transactions contemplated by the Asset Purchase Agreement, since December 31, 1995, (A) the Company and its Subsidiaries have not incurred any material liability or obligation (indirect, direct or contingent), or entered into any material oral or written agreement or other material transaction, that is not in the ordinary course of business or that could reasonably be expected to result in a Material Adverse Effect on the Company; (B) the Company and its Subsidiaries have not sustained any loss or interference with their business or properties from fire, flood, windstorm, accident or other calamity (whether or not covered by insurance) that has had or that could reasonably be expected to have a Material Adverse Effect on the Company; (C) there has been no material change in the indebtedness of the Company and its Subsidiaries, no change in the capital stock of the Company, except for the issuance of shares of Common Stock pursuant to Company Stock Options or pursuant to conversion rights in existence at the date of this Agreement, and no dividend or distribution of any kind declared, paid or made by the Company on any class of its stock, except for regular semi-annual dividends of not more than $0.975 per share on the ESOP Preferred Stock, regular quarterly dividends of not more than $0.165 per share on the Common Stock and the distribution of the Rights; and (D) there has been no event causing a Material Adverse Effect on the Company, nor any development that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect on the Company. SECTION 4.8 Information Supplied. None of the information supplied or to be supplied by the Company specifically for inclusion or incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the information to be filed by the Company in connection with the 15 Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the "Information Statement") or (iv) the proxy statement (together with any amendments or supplements thereto, the "Proxy Statement") relating to the Shareholders Meeting will, in the case of the Offer Documents, the Schedule 14D- 9 and the Information Statement, at the respective times the Offer Documents, the Schedule 14D-9 and the Information Statement are filed with the SEC or first published, sent or given to the Company's shareholders, or, in the case of the Proxy Statement, at the time the Proxy Statement is first mailed to the Company's shareholders or at the time of the Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Schedule 14D-9, the Information Statement and the Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by Parent or Sub specifically for inclusion or incorporation by reference therein. SECTION 4.9 No Existing Violation, Default, Etc. Except as disclosed in Item 4.9 of the Company Letter or the Company Filed SEC Documents, neither the Company nor any of its Subsidiaries is in violation of (A) its Articles of Incorporation, By-Laws or other organizational documents, (B) any applicable law, ordinance, administrative or governmental rule or regulation or (C) any order, decree or judgment of any Governmental Entity having jurisdiction over the Company or any of its Subsidiaries, except, in each case, for any violations that, individually or in the aggregate, would not have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer or the Merger. Except as disclosed in Item 4.9 of the Company Letter or the Company Filed SEC Documents, the properties, assets and operations of the Company and its Subsidiaries are in compliance in all material respects with all applicable federal, state, local and foreign laws, rules and regulations, orders, decrees, judgments, permits and licenses relating to public and worker health and safety (collectively, "Worker Safety Laws") and the protection and clean-up of the environment and activities or conditions related thereto, including, without limitation, those relating to the generation, handling, disposal, transportation or release of hazardous materials (collectively, "Environmental Laws"), except for any violations that, individually or in the aggregate, would not have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer or the Merger. Except as disclosed in Item 4.9 of the Company Letter or the Company Filed 16 SEC Documents, with respect to such properties, assets and operations, including any previously owned, leased or operated properties, assets or operations, to the Company's knowledge, there are no past, present or reasonably anticipated future events, conditions, circumstances, activities, practices, incidents, actions or plans of the Company or any of its Subsidiaries that may interfere with or prevent compliance or continued compliance in all material respects with applicable Worker Safety Laws or Environmental Laws, other than any such interference or prevention as would not, individually or in the aggregate with any such other interference or prevention, have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer or the Merger. Except as set forth in the Company Letter or the Company Filed SEC Documents, no event of default or event that, but for the giving of notice or the lapse of time or both, would constitute an event of default exists or, upon the consummation by the Company of the transactions contemplated by this Agreement, will exist under (i) any indenture, mortgage, loan agreement, note or other agreement or instrument for borrowed money, or any guarantee of any agreement or instrument for borrowed money or (ii) any lease, permit, license or other agreement or instrument, in each case, to which the Company or any of its Subsidiaries is a party or by which the Company or any such Subsidiary is bound or to which any of the properties, assets or operations of the Company or any such Subsidiary is subject, other than, in the case of clause (ii), any events of default that, individually or in the aggregate, would not have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer or the Merger. SECTION 4.10 Licenses and Permits. Except as set forth in Item 4.10 of the Company Letter or the Company Filed SEC Documents, the Company and its Subsidiaries have such certificates, permits, licenses, franchises, consents, approvals, orders, authorizations and clearances from appropriate Governmental Entities (the "Company Licenses") as are necessary to own, lease or operate their properties and to conduct their businesses in the manner described in the Company SEC Documents and as currently owned or leased and conducted, and all such Company Licenses are valid and in full force and effect, except such licenses which the failure to have or to be in full force and effect, individually or in the aggregate, would not have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer or the Merger. Except as set forth in Item 4.10 of the Company Letter or the Company Filed SEC Documents, the Company and its Subsidiaries are in compliance in all material respects with their respective obligations under the Company Licenses, with such exceptions as, individually or in the 17 aggregate, would not have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer or the Merger, and, to the Company's knowledge, no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination of the Company Licenses, other than such revocations or terminations that, individually or in the aggregate, would not have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer and the Merger. SECTION 4.11 Termination, Severance and Employment Agreements. The Company has provided to Parent a complete and accurate list and a copy of each of the following as it relates to the businesses conducted by the Company and its Subsidiaries: (a) employment or severance agreement or arrangement (whether written or oral) with any director, executive officer or other key employee that is not terminable without material liability or obligation (either individually or collectively) on 60 days' or less notice; (b) agreement of employment with any director, executive officer or other key employee that provides any term of employment or other compensation guarantee or extending severance benefits or other benefits after termination of employment not comparable to benefits generally available to employees of the Company and its Subsidiaries; (c) agreement, plan or arrangement (whether written or oral) of employment with any director, executive officer or other key employee under which that person may receive payments that may be subject to tax imposed by (Section) 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or included in the determination of that person's "parachute payment" under (Section) 280G of the Code; and (d) agreement or arrangement (whether written or oral) or plan, including any stock option plan, stock appreciation rights plan, restricted stock plan or stock purchase plan, with or affecting any director, executive officer or other key employee any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the Asset Purchase Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement or the Asset Purchase Agreement. Except as set forth in Item 4.11 of the Company Letter or the Company Filed SEC Documents, since December 31, 1995, neither the Company or any of its Subsidiaries has entered into or amended in any material respect, any employment or severance agreement or arrangement (whether written or oral) with, or granted any severance or termination pay to, any director, executive officer or other key employee of the Company or any of its Subsidiaries. As used in this Agreement, "key employee" means an employee whose aggregate annual compensation in 1996 or 1997 exceeded, or is scheduled to exceed, $100,000. 18 SECTION 4.12 Environmental Matters. Except as set forth in the Company Filed SEC Documents or Item 4.12 of the Company Letter, and except, in each case, for matters that would not have a Material Adverse Effect on the Company, neither the Company nor any of its Subsidiaries is the subject of any federal, state, local or foreign investigation, and neither the Company nor any of its Subsidiaries has received any notice or claim (or is aware of any facts that would form a reasonable basis for any claim), or entered into any negotiations or agreements with any third party, and there are not facts or conditions associated with the properties or operations of the businesses of the Company and its Subsidiaries, giving rise or relating to any material liability or remedial action or potential material liability or remedial action under any Environmental Laws, nor are there any pending, reasonably anticipated or, to the knowledge of the Company, threatened actions, suits or proceedings against or affecting the Company, any of its Subsidiaries or any of their properties, assets or operations seeking any such liability or remedial action in connection with any Environmental Laws. SECTION 4.13 Tax Matters. Except as may be disclosed in Item 4.13 of the Company Letter or in the Company Filed SEC Documents and except for matters that individually or in the aggregate would not have a Material Adverse Effect on the Company, (i) the Company and each Subsidiary have filed all Tax Returns required to have been filed and have paid all Taxes shown to be due on such Tax Returns; (ii) all Tax Returns filed by the Company and each Subsidiary are complete and accurate and disclose all Taxes required to be paid by the Company and each Subsidiary for the periods covered thereby; (iii) neither the Company nor any Subsidiary has waived any statute of limitations in respect of Taxes of the Company or such Subsidiary; (iv) the Tax Returns referred to in clause (i) relating to federal income Taxes have been examined by the Internal Revenue Service or the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has expired; (v) no issues that have been raised by the relevant taxing authority in connection with the examination of the Tax Returns referred to in clause (i) are currently pending; (vi) no taxing authority has proposed any adjustments to tax against the Company or any Subsidiary; (vii) all deficiencies asserted or assessments made as a result of any examination of the Tax Returns referred to in clause (i) by a taxing authority have been paid in full; (viii) there are no Liens for Taxes upon the assets of the Company or any Subsidiary except Liens relating to current Taxes not yet due; and (ix) all Taxes which the Company or any Subsidiary are required by law to withhold or to collect for payment have been duly withheld and collected, and have been paid or accrued, reserved against and 19 entered on the books of the Company. For purposes of this Agreement (a) "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means, any federal, state, local or foreign income, gross receipts, property, sales, use, goods and services, license, excise, franchise, employment, payroll, withholding, alternative or added minimum, ad valorem, value added, transfer or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, imposed by any governmental authority, and (b) "Tax Return" means any return, report or similar statement required to be filed with respect to any Tax (including any attached schedules), including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax. SECTION 4.14 Actions and Proceedings. Except as set forth in the Company Filed SEC Documents or Item 4.14 of the Company Letter, there are no outstanding orders, judgments, injunctions, awards or decrees of any Governmental Entity against or involving the Company or any of its Subsidiaries, any of its or their present or former directors, officers, employees, consultants, agents or shareholders, as such, or any of its or their properties, assets or business or any Company Plan (as defined in Section 4.17) that, individually or in the aggregate, would have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer or the Merger. Except as set forth in the Company Filed SEC Documents or Item 4.14 of the Company Letter, as of the date of this Agreement, there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Company, threatened against or involving the Company or any of its Subsidiaries or any of its or their present or former directors, officers, employees, consultants, agents or shareholders, as such, or any of its or their properties, assets or business or any Company Plan that, individually or in the aggregate, would have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the Offer or the Merger. SECTION 4.15 Contracts. Except as disclosed in Item 4.15 of the Company Letter, all of the material contracts of the Company and its Subsidiaries that are required to be described in the Company SEC Documents or to be filed as exhibits thereto have been described in the Company SEC Documents or filed as exhibits thereto. Neither the Company or any of its Subsidiaries nor, to the knowledge of the Company, any other party is in breach of or default under any material contracts which are currently in effect, except for such breaches and defaults as in the aggregate have not had or would not have a Material Adverse Effect on the 20 Company or prevent or materially delay the consummation of the Offer or the Merger. SECTION 4.16 ERISA. Prior to the consummation of the Offer, the Company will deliver to Parent a complete and accurate list of each Company Plan and each Company Multiemployer Plan. Except as to matters which would not have a Material Adverse Effect on the Company, each Company Plan complies with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the Code and all other applicable statutes and governmental rules and regulations, and (i) no "reportable event" (within the meaning of Section 4043 of ERISA) has occurred with respect to any Company Plan, (ii) neither the Company nor any of its ERISA Affiliates has withdrawn, completely or partially, from any Company Multiemployer Plan (as hereinafter defined in this Section 4.16) or instituted, or is currently considering taking, any action to do so, and (iii) no action has been taken, or is currently being considered other than as contemplated by this Agreement, to terminate any Company Plan subject to Title IV of ERISA. Except as provided in the Company Filed SEC Documents, no Company Plan, nor any trust created thereunder, has incurred any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, which would have a Material Adverse Effect on the Company. There are no actions, suits or claims pending or, to the knowledge of the Company, threatened (other than routine claims for benefits) with respect to any Company Plan which would have a Material Adverse Effect on the Company. Neither the Company nor any of its ERISA Affiliates has incurred or reasonably expects to incur any liability under or pursuant to Title IV of ERISA which would have a Material Adverse Effect on the Company. No prohibited transactions described in Section 406 of ERISA or Section 4975 of the Code have occurred which would have a Material Adverse Effect on the Company. All Company Plans that are intended to be qualified under Section 401(a) of the Code have been determined by the Internal Revenue Service to be so qualified, and the Company is not aware of any reason why any Company Plan is not so qualified in operation. Neither the Company nor any of its ERISA Affiliates has been notified by any Company Multiemployer Plan that such Company Multiemployer Plan is currently in reorganization or insolvency under and within the meaning of Section 4241 or 4245 of ERISA or that such Company Multiemployer Plan intends to terminate or has been terminated under Section 4041A of ERISA. As used herein, (i) "Company Plan" means a "pension plan" (as defined in Section 3(2) of ERISA (other than a Company Multiemployer Plan)) or a "welfare plan" (as defined in Section 3(1) of ERISA) established or maintained by the Company or any of its ERISA Affiliates or as to which the Company or any of its ERISA Affiliates has contributed or otherwise may have any liability; (ii) "Company Multiemployer 21 Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) to which the Company or any of its ERISA Affiliates is or has been obligated to contribute or otherwise may have any liability; and (iii) "ERISA Affiliate" means (A) any corporation which at any time on or before the Effective Time is or was a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Company, (B) any partnership, trade or business (whether or not incorporated) which at any time on or before the Effective Time is or was under common control (within meaning of Section 414(c) of the Code) with the Company and (C) any entity which at any time on or before the Effective Time is or was a member of the same affiliated service group (within the meaning of Section 414(m) of the Code) as either the Company, any corporation described in clause (A) of this clause (iii) or any partnership, trade or business described in clause (B) of this clause (iii). Except as set forth in Item 4.16 of the Company Letter or the Company Filed SEC Documents, no Company Plan (i) provides health, life insurance, or other welfare benefits to former employees (or their dependents or beneficiaries) after retirement or termination of employment except as required by section 601 et seq. of ERISA, and (ii) no Company Plan provides additional benefits or contains other provisions that would become effective upon or as a result of the consummation of any of the transactions contemplated by this Agreement. SECTION 4.17 Liabilities. Except as fully reflected or reserved against in the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995, or disclosed in the footnotes thereto, the Company and its Subsidiaries had no liabilities (including, without limitation, tax liabilities) at the date of such financial statements, absolute or contingent, that are of a nature required under generally accepted accounting principles to be recorded or reflected on such financial statements that have had or would reasonably be expected to have a Material Adverse Effect on the Company. Except as so reflected, reserved or disclosed or as disclosed in Item 4.17 of the Company Letter or the Company Filed SEC Documents, the Company and its Subsidiaries have no commitments which have had or would reasonably be expected to have a Material Adverse Effect on the Company. SECTION 4.18 Intellectual Properties. Except as disclosed in Item 4.18 of the Company Letter and matters which would not have a Material Adverse Effect on the Company, the Company and its Subsidiaries own or have a valid license to use all inventions, patents, trademarks, service marks, trade names, copyrights, trade secrets, software, mailing lists and other intellectual property rights (collectively, the "Company Intellectual Property") necessary to carry on their respective 22 businesses as currently conducted; and, to the knowledge of the Company, neither the Company nor any such Subsidiary has received any notice of infringement of or conflict with, and there are no infringements of or conflicts with, the rights of others with respect to the use of any of the Company Intellectual Property that, in either such case, has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. SECTION 4.19 Propriety of Past Payments. Since January 1, 1991, (i) no funds or assets of the Company or any of its Subsidiaries have been used for illegal purposes, (ii) no unrecorded fund or assets of the Company or any of its Subsidiaries has been established for any purpose, (iii) no accumulation or use of the corporate funds of the Company or any of its Subsidiaries has been made without being properly accounted for in the respective books and records of the Company or such Subsidiary, (iv) all payments by or on behalf of the Company or any of its Subsidiaries have been duly and properly recorded and accounted for in the books and records of the Company and its Subsidiaries, (v) no false or artificial entry has been made in the books and records of the Company or any of its Subsidiaries for any reason, (vi) no payment has been made by or on behalf of the Company or any of its Subsidiaries with the understanding that any part of such payment is to be used for any purpose other than that described in the documents supporting such payment and (vii) neither the Company nor any of its Subsidiaries has made any illegal contributions to any political party or candidate, either domestic or foreign, except for such uses, payments, contributions or actions described in clauses (i) through (vii) which, or the cessation of which, would not have a Material Adverse Effect on the Company or result in material adverse publicity for the Company. SECTION 4.20 Opinion of Financial Advisor. The Company has received the opinion of Financial Advisor, dated the date hereof, to the effect that, as of the date hereof, the consideration to be received in the Offer and the Merger by the Company's common shareholders is fair to the Company's common shareholders (other than Parent or any of its affiliates) from a financial point of view, a copy of which opinion has been delivered to Parent. SECTION 4.21 State Takeover Statutes; Rights Agreement; Charter Provisions. The Company has taken all actions necessary to provide that the provisions of the Stacey, Bennett, and Randall Shareholder Equity Act, Sections 450.1790 et seq. of the MBCA, do not apply to the Company and the transactions contemplated by this Agreement and the Asset Purchase Agreement. Chapter 7A of the MBCA does not apply to this Agreement and the 23 transactions contemplated hereby by reason of the prior approval requirements of Section 450.1782(1)(b) of the MBCA. The Company has heretofore provided Parent with a complete and correct copy of the Rights Agreement, including all amendments and exhibits thereto. The Board of Directors of the Company has approved an amendment to the Rights Agreement (which amendment will be presented to the Rights Agent with directions to execute promptly following the execution of this Agreement) to provide that a Shares Acquisition Date, a Distribution Date, any of the events set forth in Section 11(a)(ii) of the Rights Agreement or a Section 13 Event (as such terms are defined in the Rights Agreement) shall not occur or be deemed to occur, the Rights shall not separate from the shares of the Common Stock, the Rights shall not be become exercisable, and neither Parent nor Sub shall become an Acquiring Person (as defined in the Rights Agreement) as a result of the execution, delivery or performance of this Agreement, the announcement, making or consummation of the Offer, the acquisition of shares of capital stock of the Company pursuant to the Offer or the Merger, the consummation of the Merger or any other transactions contemplated by this Agreement. The Board of Directors has taken all actions necessary to exempt this Agreement and the Asset Purchase Agreement, and the transactions contemplated hereby and thereby, from the provisions of Articles X and XII of the Company's Articles of Incorporation. SECTION 4.22 Asset Purchase Agreement. The Asset Purchase Agreement has been duly executed and delivered by the Company and (assuming the valid authorization, execution and delivery of the Asset Purchase Agreement by the Private Buyer) constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms. Except as set forth in Item 4.22 of the Company Letter, the execution and delivery by the Company of the Asset Purchase Agreement do not, and the consummation by the Company of the transactions contemplated thereby and compliance with the provisions thereof will not, result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or the loss of a benefit under, or result in the creation of any Lien upon any of the properties or assets of the Company or any of its Subsidiaries under, any provision of (i) the Articles of Incorporation or By-laws of the Company, (ii) any provision of the Articles of Incorporation, By-laws or other organizational documents of any of its Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to the Company or any of its Subsidiaries or (iv) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to 24 the Company or any of its Subsidiaries or any of their respective properties or assets, other than, in the case of clauses (ii), (iii) or (iv), any such violations, defaults, rights, losses or Liens that, individually or in the aggregate, would not have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the transactions contemplated by the Asset Purchase Agreement. No filing or registration with, or authorization, consent or approval of, any Governmental Entity is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of the Asset Purchase Agreement by the Company or is necessary for the consummation of the transactions contemplated thereby, except for (i) in connection, or in compliance, with the provisions of the HSR Act, (ii) such filings and consents as may be required under any environmental, health or safety law or regulation pertaining to any notification, disclosure or required approval triggered by the transactions contemplated by the Asset Purchase Agreement, (iii) such other consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under the laws of any foreign country in which the Company or any of its Subsidiaries conducts any business or owns any property or assets and (iv) such other consents, orders, authorizations, registrations, declarations and filings the failure of which to be obtained or made would not, individually or in the aggregate, have a Material Adverse Effect on the Company or prevent or materially delay the consummation of the transactions contemplated by the Asset Purchase Agreement. The representations and warranties of the Company set forth in the Asset Purchase Agreement are true and correct in all material respects, and, immediately prior to the consummation of the Offer, the Company will have complied in all material respects with all material agreements or covenants of the Company to be performed or complied with by it under the Asset Purchase Agreement by such time. The Company has delivered to Parent a complete and correct copy of the Asset Purchase Agreement. SECTION 4.23 Brokers. No broker, investment banker, financial advisor or other person, other than Financial Advisor, the fees and expenses of which will be paid by the Company (and are reflected in an agreement between Financial Advisor and the Company, a copy of which has been furnished to Parent), is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company. 25 ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB ----------------- Parent and Sub represent and warrant to the Company as follows: SECTION 5.1 Organization. Each of Parent and Sub is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now being conducted, except where the failure to be so organized, validly existing or in good standing would not have a Material Adverse Effect on Parent or Sub or prevent or materially delay the consummation of the Offer or the Merger. SECTION 5.2 Authority. Parent and Sub have all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Parent and Sub and the consummation by Parent and Sub of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent and Sub. This Agreement has been duly executed and delivered by Parent and Sub and (assuming the valid authorization, execution and delivery of this Agreement by the Company) constitutes a valid and binding obligation of each of Parent and Sub enforceable against each respectively in accordance with its terms. SECTION 5.3 Consents and Approvals; No Violations. The execution and delivery by Parent and Sub of this Agreement do not, and the consummation by Parent and Sub of the transactions contemplated hereby and compliance with the provisions hereof will not, result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or the loss of a benefit under, or result in the creation of any Lien upon any of the properties or assets of Parent or any of its Subsidiaries under, any provision of (i) the Certificate of Incorporation, By-laws or comparable organizational documents of Parent, Sub or any other Subsidiaries of Parent, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to Parent or any of its Subsidiaries (other than any agreement or note that will be paid or discharged in full at or prior to the consummation of the Offer) or (iii) any judgment, order, decree, statute, law, ordinance, rule or regulation 26 applicable to Parent or any of its Subsidiaries or any of their respective properties or assets, other than, in the case of clause (ii) or (iii), any such violations, defaults, rights, losses or Liens that, individually or in the aggregate, would not have a Material Adverse Effect on Parent or Sub or prevent or materially delay the consummation of the Offer or the Merger. No filing or registration with, or authorization, consent or approval of, any Governmental Entity is required by or with respect to Parent or any of its Subsidiaries in connection with the execution and delivery of this Agreement by Parent or Sub or is necessary for the consummation of the Offer, the Merger and the other transactions contemplated by this Agreement, except for (i) in connection, or in compliance, with the provisions of the HSR Act and the Exchange Act, (ii) the filing of Certificate of Merger with the Administrator and appropriate documents with the relevant authorities of other states in which Parent or any of its Subsidiaries is qualified to do business, (iii) such filings and consents as may be required under any environmental, health or safety law or regulation pertaining to any notification, disclosure or required approval triggered by the Offer, the Merger or the other transactions contemplated by this Agreement, (iv) such filings, authorizations, orders and approvals as may be required to obtain the State Takeover Approvals, (v) such filings as may be required in connection with the taxes described in Section 7.6, (vi) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under the laws of any foreign country in which Parent or any of its Subsidiaries conducts any business or owns any property or assets and (vii) such other consents, orders, authorizations, registrations, declarations and filings the failure of which to be obtained or made would not, individually or in the aggregate, have a Material Adverse Effect on Parent or Sub or prevent or materially delay the consummation of the Offer or the Merger. SECTION 5.4 Information Supplied. None of the information supplied or to be supplied by Parent or Sub specifically for inclusion or incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Information Statement or (iv) the Proxy Statement will, in the case of the Offer Documents, the Schedule 14D-9 and the Information Statement, at the respective times the Offer Documents, the Schedule 14D-9 and the Information Statement are filed with the SEC or first published, sent or given to the Company's shareholders, or, in the case of the Proxy Statement, at the time the Proxy Statement is first mailed to the Company's shareholders or at the time of the Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances 27 under which they are made, not misleading. The Offer Documents will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder, except that no representation or warranty is made by Parent or Sub with respect to statements made or incorporated by reference therein based on information supplied by the Company specifically for inclusion or incorporation by reference therein. SECTION 5.5 Interim Operations of Sub. Sub was formed solely for the purpose of engaging in the transactions contemplated hereby, has engaged in no other business activities and has conducted its operations only as contemplated hereby. SECTION 5.6 Brokers. No broker, investment banker, financial advisor or other person, other than Morgan Stanley & Co. Incorporated, the fees and expenses of which will be paid by Parent, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or Sub. SECTION 5.7 Financing. Scotsman Group Inc. has entered into, and furnished to the Company a copy of, the Financing Commitment Letter with First Chicago Capital Markets, Inc. (the "Lender"). Subject to the terms and condition specified therein, the Financing Commitment Letter will provide Sub funds sufficient in amount to consummate the Offer and Merger pursuant to this Agreement. The Financing Commitment Letter is in full force and effect as of the date of the Agreement. ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS ----------------------------------------- SECTION 6.1 Conduct of Business by the Company Pending the Merger. Except for actions reasonably necessary to effect the consummation of the transactions contemplated by, and in accordance with the terms of, the Asset Purchase Agreement, during the period from the date of this Agreement until such time as Parent's designees shall constitute a majority of the Board of Directors of the Company, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in, and not enter into any material transaction other than in accordance with, the ordinary course of its business as currently conducted and, to the extent consistent therewith, use reasonable best efforts to preserve intact its current business organizations, keep available the services of its current officers and key employees and preserve its relationships with customers, suppliers and others having business dealings with it 28 to the end that its goodwill and ongoing business shall not be impaired. Without limiting the generality of the foregoing, and except as referred to in Item 6.1 of the Company Letter or as otherwise expressly contemplated by this Agreement or the Asset Purchase Agreement or required by law, during such period, the Company shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Parent (which consent shall not be unreasonably withheld): (a) (w) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, or otherwise make any payments to its shareholders in their capacity as such (other than regular quarterly dividends of not more than $0.165 per share on the Common Stock and regular semi-annual dividends of not more than $0.975 per share on the ESOP Preferred Stock, in each case declared and paid on dates consistent with past practice), (x) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except the issuance of shares of Common Stock upon conversion of any share of ESOP Preferred Stock in accordance with the terms thereof, or (y) except as required under existing employee benefit plans, agreements, policies, awards or arrangements in effect on the date of this Agreement, purchase, redeem or otherwise acquire any shares of its capital stock or those of any Subsidiary or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (b) except as required under existing employee benefit plans, agreements, policies, awards or arrangements in effect on the date of this Agreement, issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire any such shares, voting securities, equity equivalent or convertible securities (other than pursuant to the Rights Agreement or the issuance of shares of Common Stock upon the exercise of Company Stock Options outstanding on the date of this Agreement in accordance with their current terms and the issuance of shares of Common Stock upon the conversion of any shares of ESOP Preferred Stock into shares of Common Stock in accordance with the terms thereof); (c) amend its Articles of Incorporation or By-laws or other similar organizational documents; (d) acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the 29 assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets, other than the purchase of raw materials and goods and services used in the manufacture of the products of the businesses of the Company and its Subsidiaries, in each case in the ordinary course of business consistent with past practice, and other transactions that are in the ordinary course of business consistent with past practice and which in the aggregate involve assets having a purchase price not in excess of $1,000,000; (e) sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets, other than the sale of products of the businesses of the Company and its Subsidiaries, in each case in the ordinary course of business consistent with past practice, and other transactions that are in the ordinary course of business consistent with past practice and which in the aggregate involve assets having a fair market value or book value not in excess of $500,000; (f) incur any new indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or guarantee any debt securities of others or make any loans, advances or capital contributions to, or other investments in, any other person, other than to or in the Company or any wholly owned Subsidiary of the Company and other than customary travel and similar advances to employees in the ordinary course of business consistent with past practices; (g) alter (through merger, liquidation, reorganization, restructuring or in any other fashion) the corporate structure or ownership of the Company or any Subsidiary; (h) enter into or adopt, or amend any existing, severance plan, agreement or arrangement or enter into or amend any Company Plan or employment or consulting agreement, other than as required by law; (i) except as required under existing plans, agreements, policies, awards or arrangements in effect on the date of this Agreement or as described in Item 6.1 of the Company Letter, increase the compensation payable or to become payable to its officers or employees, except, in the case of employees who are not officers, for increases in the ordinary course of business consistent with past practice, pay or commit to pay any bonus, or grant any severance or termination pay to, or enter into any employment or severance agreement, or establish, adopt, enter into, or amend in any material respect or take action to 30 enhance in any material respect or accelerate any rights or benefits under, any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, stock ownership, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, except, in each case, as may be required to comply with applicable law or regulation; (j) violate or fail to perform any material obligation or duty imposed upon it by any applicable federal, state or local law, rule, regulation, guideline or ordinance; (k) redeem the Rights or amend the Rights Agreement; (l) breach in any material respect any of its material representations, warranties, covenants or agreements contained in the Asset Purchase Agreement (regardless of any provisions regarding notice or lapse of time, or both) or waive any of its material rights under, amend or terminate the Asset Purchase Agreement, other than a waiver of the condition regarding the consummation of the Offer contained in Section 5.3(d) of the Asset Purchase Agreement; (m) make any material change in its accounting methods, policies or procedures, except as a result of any change in law or generally accepted accounting principles; (n) prepare or file any Tax Return inconsistent with past practice or, on any such Tax Return, take any position, make any election or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods, or give any approval or consent under Section 4.13, or agree to any allocation under Section 1.2(c), of the Asset Purchase Agreement without the prior written consent of Parent; or (o) authorize, recommend, propose or announce an intention to do any of the foregoing, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing. The Company shall promptly advise Parent orally and in writing of any change or event having, or which could reasonably be expected to have, a Material Adverse Effect on the Company or which could prevent or materially delay the consummation of the Offer or the Merger. SECTION 6.2 No Solicitation. From and after the date hereof, the Company shall not, and shall not permit any of its or its Subsidiaries' officers, directors or employees to, and the 31 Company shall use its reasonable best efforts to cause all of its and its Subsidiaries' attorneys, financial advisors, agents and other representatives not to, directly or indirectly, solicit, initiate or knowingly encourage (including by way of furnishing information) any Takeover Proposal (as hereinafter defined in this Section 6.2), or engage in or continue discussions or negotiations relating thereto; provided, however, that the Company may engage in discussions or negotiations with, or furnish information concerning the Company and its business, properties or assets to, any third party with respect to a Takeover Proposal if the Board of Directors of the Company concludes in good faith based on the advice of its outside counsel that it is necessary to do so in order to comply with its fiduciary duties under applicable law. The Company promptly will notify Parent of any Takeover Proposal, including the material terms and conditions thereof and the identity of the person or group making such Takeover Proposal, and will promptly notify Parent of any determination by the Company's Board of Directors that a Superior Proposal (as hereinafter defined in this Section 6.2) has been made. As used in this Agreement, (i) "Takeover Proposal" shall mean any proposal or offer, other than a proposal or offer by Parent or any of its Subsidiaries, for a tender or exchange offer, a merger, consolidation or other business combination involving the Company or any of its Subsidiaries or any proposal to acquire in any manner a substantial equity interest in, or a substantial portion of the assets of, the Company or any of its Subsidiaries and (ii) "Superior Proposal" shall mean a bona fide proposal or offer made by a third party to acquire the Company pursuant to a tender or exchange offer, a merger, consolidation or other business combination or a sale of all or substantially all of the assets of the Company and its Subsidiaries on terms which a majority of the members of the Board of Directors of the Company concludes in their good faith reasonable judgment to be more favorable to the Company's shareholders than the transactions contemplated hereby and for which any required financing is committed or which a majority of such members reasonably concludes is reasonably capable of being obtained by such third party. Notwithstanding anything else in this Agreement, including this Section 6.2, to the contrary, the Company and its Board of Directors shall not be prohibited from taking or disclosing to its shareholders any position pursuant to Rules 14d-9 and 14e-2 under the Exchange Act or from making any disclosure to the Company's shareholders if the Company's Board of Directors concludes in good faith based on the advice of its outside counsel that it is necessary to do so in order to comply with its fiduciary duties under applicable law. SECTION 6.3 Third Party Standstill Agreements. During the period from the date of this Agreement through the Effective Time, the Company shall not terminate, amend, modify or waive any 32 provision of any confidentiality or standstill agreement to which the Company or any of its Subsidiaries is a party (other than any involving Parent, including the standstill agreement included in the Confidentiality Agreement dated June 18, 1996, between Parent and the Company, which standstill agreement the parties hereto acknowledge the Company has waived only in respect of the Offer (including any Offer involving any increase in the Offer Price), the Merger and the other transactions contemplated hereby), unless the Board of Directors of the Company concludes in good faith based on the advice of its outside counsel that it is necessary to do so in order to comply with its fiduciary duties under applicable law. During such period, the Company agrees to enforce, to the fullest extent permitted under applicable law, the provisions of any such agreements, including, without limitation, obtaining injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof in any court of the United States of America or any state thereof having jurisdiction, unless the Board of Directors of the Company concludes in good faith based on the advice of its outside counsel that failure to take such action is necessary in order to comply with its fiduciary duties under applicable law. SECTION 6.4 Other Actions. Except as expressly contemplated or permitted by this Agreement or except as set forth in the Company Letter, the Company shall not, and shall not permit any of its Subsidiaries to, take any action that would, or that could reasonably be expected to, result in (i) any of the representations and warranties of the Company set forth in this Agreement that are qualified as to materiality becoming untrue, (ii) any of such representations and warranties that are not so qualified becoming untrue in any material respect, or (iii) any of the Offer Conditions not being satisfied (subject to the Company's right to take actions specifically permitted by Section 6.2). ARTICLE VII ADDITIONAL AGREEMENTS --------------------- SECTION 7.1 Shareholder Approval; Preparation of Proxy Statement. (a) If approval of this Agreement and the Merger by shareholders of the Company (the "Company Shareholder Approval") is required by law, the Company shall, as soon as practicable following the consummation of the Offer, duly call, give notice of, convene and hold a meeting of its shareholders (the "Shareholders Meeting") for the purpose of obtaining the Company Shareholder Approval. The Shareholders Meeting shall be held as soon as practicable following the purchase of Shares pursuant to the Offer. The Company shall, through its Board of Directors, 33 but subject to the fiduciary duties of its Board of Directors under applicable law as determined by the Board of Directors in good faith based on the advice of the Company's outside counsel, recommend to its shareholders that the Company Shareholder Approval be given. Notwithstanding the foregoing, if Sub or any other Subsidiary of Parent shall acquire ownership of not less than 90% of the outstanding shares of each class of the Company, the parties shall, at the request of Parent, take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the expiration of the Offer without a Shareholders Meeting in accordance with Section 450.1711 of the MBCA. (b) If the Company Shareholder Approval is required by law, the Company shall, as soon as practicable following the consummation of the Offer, prepare and file a preliminary Proxy Statement with the SEC and shall use its reasonable best efforts to respond to any comments of the SEC or its staff and to cause the Proxy Statement to be mailed to the Company's shareholders as promptly as practicable after responding to all such comments to the satisfaction of the staff. The Company shall notify Parent promptly of the receipt of any comments from the SEC or its staff and of any request by the SEC or its staff for amendments or supplements to the Proxy Statement or for additional information and will supply Parent with copies of all correspondence between the Company or any of its representatives, on the one hand, and the SEC or its staff, on the other hand, with respect to the Proxy Statement or the Merger. If at any time prior to the Shareholders Meeting there shall occur any event that should be set forth in an amendment or supplement to the Proxy Statement, the Company promptly shall prepare and mail to its shareholders such an amendment or supplement. Except as required by law, the Company shall not mail any Proxy Statement, or any amendment or supplement thereto, to which Parent reasonably objects without first attempting in good faith to resolve such objections. Parent shall cooperate with the Company in the preparation of the Proxy Statement or any amendment or supplement thereto. (c) Parent agrees to cause all shares of the Company Capital Stock purchased pursuant to the Offer entitled to vote on the Merger owned by Parent or any Subsidiary of Parent to be voted in favor of the Company Shareholder Approval. Parent also agrees that if the transactions contemplated by the Asset Purchase Agreement have not been consummated prior to consummation of the Offer, Parent shall take all actions as are reasonably required to consummate such transactions. SECTION 7.2 Access to Information. Subject to currently existing contractual and legal restrictions applicable to the Company, the Company shall, and shall cause each of its 34 Subsidiaries to, afford to Parent and to the officers, employees, accountants, counsel, actuaries, financial advisors and other representatives of Parent reasonable access to, and permit them to make such inspections as they may reasonably require of, during normal business hours during the period from the date of this Agreement through the Effective Time, all their respective properties, books, contracts, commitments and records (including, without limitation, the work papers of independent accountants and actuaries) and, during such period, the Company shall, and shall cause each of its Subsidiaries to, promptly furnish to Parent (i) a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of federal or state securities laws and (ii) all other information concerning its business, properties and personnel as Parent may reasonably request; provided, however, that no invasive soil or groundwater tests may be performed without the prior written consent of the Company, which shall not be unreasonably withheld. No investigation pursuant to this Section 7.2 shall affect any representation or warranty in this Agreement of any party hereto or any condition to the obligations of the parties hereto. All information obtained by Parent pursuant to this Section 7.2 shall be kept confidential in accordance with the Confidentiality Agreement dated June 18, 1996, between Parent and the Company. SECTION 7.3 Fees and Expenses. (a) Except as provided in this Section 7.3 and Section 7.6, regardless of whether the Merger is consummated, all costs and expenses incurred by a party hereto in connection with this Agreement and the transactions contemplated hereby, including, without limitation, the fees and disbursements of counsel, financial advisors and accountants, shall be paid by the party incurring such costs and expenses. (b) The Company shall pay, or cause to be paid, in same day funds by wire transfer to an account specified by Parent up to $1,750,000 of Expenses (as hereinafter defined in this Section 7.3) if: (i) Parent or Sub terminates this Agreement under Section 9.1(d) or (ii) the Company terminates this Agreement pursuant to Section 9.1(e). If Expenses are payable, or have been paid, under the preceding sentence and within 365 days after a termination described in such sentence a Takeover Proposal with a third party is consummated (other than a Takeover Proposal relating to the sale of all or substantially all of the Company's transportation products group), the Company shall pay to Parent, simultaneously with the consummation of such Takeover Proposal, by wire transfer of same day funds, the additional sum of $9,000,000. 35 "Expenses" shall mean documented out-of-pocket fees and expenses reasonably incurred or paid by or on behalf of Parent or its Subsidiaries in connection with the Offer, the Merger or the consummation of any of the transactions contemplated by this Agreement, including all reasonable fees and expenses of law firms, commercial banks, investment banking firms, accountants, experts and consultants to Parent or any of its Subsidiaries. SECTION 7.4 Options. (a) Prior to the commencement of the Offer, the Board of Directors of the Company or the Compensation Committee of the Board of Directors of the Company (the "Committee") shall adopt procedures pursuant to which each outstanding Company Stock Option, stock appreciation right and other stock based award (an "Option") which is exercisable immediately prior to the consummation of the Offer in accordance with the terms of the applicable plan (collectively, the "Stock Option Plans"), may be exercised or settled by the holder thereof by the delivery to the Company of a notice of exercise or acceptance of cash settlement prior to the consummation of the Offer. Upon the consummation of the Offer, each Option so exercised or settled shall be canceled and promptly thereafter the Company shall deliver to the holder thereof cash in an amount equal to (i) the product of (x) the number of shares of Common Stock subject or related to such Option and (y) the excess, if any, of the Merger Consideration over the exercise or purchase price per share of Common Stock subject or related to such Option, minus (ii) all applicable federal, state, local and other Taxes required to be withheld by the Company. (b) Prior to the commencement of the Offer, the Board of Directors of the Company or the Committee shall take action in accordance with the terms of the Stock Option Plans to cause each Option outstanding immediately following the consummation of the Offer, whether or not then exercisable, to become fully exercisable. The Board of Directors of the Company or the Committee shall also adopt procedures pursuant to which each such Option may be exercised or settled by the holder thereof by the delivery to the Company of a notice of exercise or acceptance of cash settlement prior to the Effective Time. At or prior to the Effective Time, each such Option so exercised or settled shall be canceled and promptly thereafter the Company shall deliver to the holder thereof cash in an amount equal to (i) the product of (x) the number of shares of Common Stock subject or related to such Option and (y) the excess, if any, of the Merger Consideration over the exercise or purchase price per share of Common Stock subject or related to such Option minus (ii) all applicable federal, state, local and other Taxes required to be withheld by the Company. 36 (c) Following the Effective Time, each outstanding Option which has not theretofore been exercised or settled by the holder thereof shall be canceled (whether or not such holder has delivered the acknowledgment referred to in the proviso to this sentence), and promptly thereafter Parent shall deliver to the holder thereof cash in an amount equal to (i) the product of (x) the number of shares of Common Stock subject or related to such Option and (y) the excess, if any, of the Merger Consideration over the exercise or purchase price per share of Common Stock subject or related to such Option, minus (ii) all applicable federal, state, local and other Taxes required to be withheld by the Company; provided, however, that any such payment to a holder of an Option so canceled shall be conditioned upon the delivery to Parent by such holder of a receipt in writing acknowledging the receipt by such holder of such payment in exchange for the cancellation of all Options held by such holder. No further options shall be granted under any Stock Option Plan after the date of this Agreement. The Company shall take such actions as may be reasonably requested by Parent in connection with the cancellation of the Options pursuant to the Merger and this Agreement. (d) Prior to the commencement of the Offer, the Board of Directors of the Company or the Committee shall take action in accordance with the terms of the Stock Option Plans and pursuant to all other plans and agreements providing for the award of restricted Common Stock to cause the restrictions on the shares of restricted Common Stock granted under such plans and agreements to lapse effective upon the consummation of the Offer and to adopt procedures to enable all holders thereof to tender such shares of Common Stock pursuant to the terms of the Offer. (e) Parent shall provide the Company sufficient funds for the Company to meet its payment obligations set forth in Sections 7.4(a) and 7.4(b) and, notwithstanding any provisions of this Agreement to the contrary, the Company may borrow such funds to the extent they are not provided by Parent pursuant to this Section 7.4(e). SECTION 7.5 Public Announcements. Parent and the Company will consult with each other before issuing any press release or otherwise making any public statements with respect to the transactions contemplated by this Agreement and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law or by obligations pursuant to any listing agreement with any national securities exchange. SECTION 7.6 Real Estate Transfer Tax. Parent and the Company agree that the Company (or, following the Merger, the 37 Surviving Corporation) shall pay any state or local tax which is attributable to the transfer of the beneficial ownership of the Company's or its Subsidiaries' real property, if any (collectively, the "Transfer Taxes"), to Parent and any penalties or interest with respect to the Transfer Taxes, payable in connection with the consummation of the Offer and the Merger. The Company agrees to cooperate with Parent in the filing of any returns with respect to the Transfer Taxes, including supplying in a timely manner a complete list of all real property interests held by the Company and its Subsidiaries and any information with respect to such property that is reasonably necessary to complete such returns. The portion of the consideration allocable to the real property of the Company and its Subsidiaries shall be determined by Parent in its reasonable discretion. The shareholders of the Company shall be deemed to have agreed to be bound by the allocation established pursuant to this Section 7.6 in the preparation of any return with respect to the Transfer Taxes. SECTION 7.7 State Takeover Laws. If any "fair price" or "control share acquisition" statute or other similar statute or regulation shall become applicable to the transactions contemplated hereby, Parent and the Company and their respective Boards of Directors shall use their reasonable best efforts to grant such approvals and take such actions as are necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to minimize the effects of any such statute or regulation on the transactions contemplated hereby. SECTION 7.8 Indemnification; Directors and Officers Insurance. From and after the consummation of the Offer, Parent shall, and agrees to cause the Company or the Surviving Corporation to, exculpate, indemnify and hold harmless all past and present officers, directors, employees and agents of the Company and its Subsidiaries (the "Indemnified Parties") to the same extent such persons are currently exculpated and indemnified by the Company or any of its Subsidiaries pursuant to the Company's or any such Subsidiary's Articles of Incorporation or By-Laws (or similar organizational documents), agreements in effect as of the date hereof or applicable law for acts or omissions, or alleged acts or omissions, occurring at or prior to the Effective Time, and Parent shall, and shall cause the Company or the Surviving Corporation to, honor all such obligations of the Company (including, if necessary, providing the Company or the Surviving Corporation sufficient funds), including, without limitation, obligations to advance expenses to such Indemnified Parties arising pursuant to the Company's or any such Subsidiary's Articles of Incorporation or By-laws (or similar organizational documents), agreements in effect as of the date 38 hereof or applicable law; provided, however, that Parent shall not be obligated to exculpate, indemnify or hold harmless any Indemnified Party who shall become an employee of the Private Buyer or any of its Subsidiaries in connection with the Asset Purchase Agreement, or the transactions contemplated thereby, for any acts or omissions occurring at or prior to the Effective Time in respect of the business previously conducted by the Company using the TPG Assets (the "Excluded Matters"); and, provided, further, that this Section 7.8 shall not be deemed to limit, modify or affect any rights of indemnification, including the advancement of expenses, under any provisions of the Company's or any of its Subsidiaries' Articles of Incorporation or By-laws (or similar organizational documents), any agreements in effect on the date hereof or applicable law with respect to the Excluded Matters. Parent shall cause the Surviving Corporation to provide, for an aggregate period of not less than six years from the Effective Time, the Company's current directors and officers an insurance and indemnification policy that provides coverage for events occurring prior to the Effective Time (the "D&O Insurance"), that is no less favorable than the Company's existing policy or, if substantially equivalent insurance coverage is unavailable, the best available coverage; provided, however, that the Surviving Corporation shall not be required to pay an annual premium for the D&O Insurance in excess of 200 percent of the last annual premium paid prior to the date hereof, but in such case shall purchase as much coverage as possible for such amount. SECTION 7.9 Notification of Certain Matters. Parent shall give prompt notice to the Company, and the Company shall give prompt notice to Parent, of: (i) the occurrence, or non-occurrence, of any event the occurrence, or non- occurrence, of which would be likely to cause (x) any material representation or warranty contained in this Agreement that is not qualified as to materiality to be untrue or inaccurate in any material respect, (y) any material representation or warranty contained in this Agreement that is qualified as to materiality to be untrue or inaccurate in any respect or (z) any material covenant, condition or agreement contained in this Agreement not to be complied with or satisfied; and (ii) any failure of Parent, Sub or the Company, as the case may be, to comply with or satisfy any material covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 7.9 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. SECTION 7.10 Board of Directors. Promptly after such time as Sub acquires Shares pursuant to the Offer, Sub shall be entitled to designate at its option up to that number of 39 directors, rounded to the nearest whole number, of the Company's Board of Directors, subject to compliance with Section 14(f) of the Exchange Act, as shall make the percentage of the Company's directors designated by Sub equal to the aggregate voting power of the Shares held by Parent or any of its Subsidiaries (assuming the exercise of all outstanding options to purchase, and the conversion or exchange of all securities convertible or exchangeable into shares of the Company Capital Stock); provided, however, that the size of the Company's Board of Directors shall not be larger than 10 persons; provided, further, that in the event that Sub's designees are elected to the Board of Directors of the Company, until the Effective Time, such Board of Directors shall have, and Parent shall cause the Board to have, at least three directors who are directors on the date of this Agreement (of which at least two directors are not officers of the Company) (collectively, the "Independent Directors"); and provided, further that, in such event, if the number of Independent Directors shall be reduced below three for any reason whatsoever, the remaining Independent Directors shall designate a person to fill such vacancy who shall be deemed to be an Independent Director for purposes of this Agreement or, if no Independent Directors then remain, the other directors of the Company as of the date of this Agreement shall designate three persons to fill such vacancies who shall not be officers or affiliates of the Company or any of its Subsidiaries, or officers or affiliates of Parent or any of its Subsidiaries, and such persons shall be deemed to be Independent Directors for purposes of this Agreement. Subject to applicable law, the Company shall take all action requested by Parent that is reasonably necessary to effect any such election, including mailing to its shareholders the Information Statement containing the information required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing with the mailing of the Schedule 14D-9 (provided that Sub shall have provided to the Company on a timely basis all information required to be included in the Information Statement with respect to Sub's designees). In connection with the foregoing, the Company promptly shall, at the option of Parent, either increase the size of the Company's Board of Directors and/or obtain the resignation of such number of its current directors as is necessary to enable Sub's designees to be elected or appointed to the Company's Board of Directors as provided above. SECTION 7.11 Reasonable Best Efforts. Subject to the terms and provisions of this Agreement and applicable law, each of the Company, Parent and Sub agrees to use its reasonable best efforts to cause the purchase of Shares pursuant to the Offer and the consummation of the Merger to occur as soon as practicable. Without limiting the foregoing, (a) each of the Company, Parent and Sub agree to use its reasonable best efforts to take, or 40 cause to be taken, all actions necessary to comply promptly with all legal requirements that may be imposed on itself with respect to the Offer, the Merger and the transactions contemplated by the Asset Purchase Agreement (which actions shall include furnishing all information required under the HSR Act and in connection with approvals of or filings with any other Governmental Entity) and shall promptly cooperate with and furnish information to each other in connection with any such requirements imposed upon any of them or any of their Subsidiaries in connection with the Offer, the Merger and the transactions contemplated by the Asset Purchase Agreement and (b) each of the Company, Parent and Sub shall, and shall cause its Subsidiaries to, use its reasonable best efforts to obtain (and shall cooperate with each other in obtaining) any consent, authorization, order or approval of, or any exemption by, any Governmental Entity or other public or private third party required to be obtained or made by Parent, Sub, the Company or any of their Subsidiaries in connection with the Offer, the Merger and the transactions contemplated by the Asset Purchase Agreement or the taking of any action contemplated thereby or by this Agreement. Notwithstanding anything to the contrary contained in this Agreement, (i) the Company shall not be obligated to use its reasonable best efforts or to take any action pursuant to this Section 7.11 if the Board of Directors of the Company shall conclude in good faith based on the advice of its outside counsel that such action is necessary in order to comply with its fiduciary duties under applicable law, and (ii) in connection with any filing or submission required or action to be taken by Parent, the Company or any of their respective Subsidiaries to consummate the Offer, the Merger or the other transactions contemplated in this Agreement or the Asset Purchase Agreement, the Company shall not, without Parent's prior written consent, commit to any divestiture transaction and neither Parent nor any of its Subsidiaries shall be required to divest or hold separate or otherwise take or commit to take any action that limits its freedom of action with respect to, or its ability to retain, the Company or any of the businesses, product lines or assets of Parent or any of its Subsidiaries or that would have a Material Adverse Effect on Parent. SECTION 7.12 Certain Litigation. The Company agrees that it shall not settle any litigation commenced after the date hereof against the Company or any of its directors by any shareholder of the Company relating to the Offer, the Merger, this Agreement or the Asset Purchase Agreement without the prior written consent of Parent, which shall not be unreasonably withheld. 41 SECTION 7.13 Employee Benefits. Parent shall provide or shall cause the Surviving Corporation to provide benefits for the employees of the Company from and after the Effective Time either under the Company Plans or under other employee benefit plans established by Parent or the Surviving Corporation; provided, however, that this Section 7.13 shall not be deemed to affect in any way any rights of the employees of the Company under the Company Plans that are vested as of the Effective Time. SECTION 7.14 Employee Stock Ownership Plan and Trust. As soon as reasonably practicable after the Effective Time, employer contirbutions to the Employee Stock Plan shall be discontinued and the Employee Stock Plan shall be merged into another qualified defined contribution plan maintained by Parent or the Surviving Corporation. SECTION 7.15 Severance, Employment and Benefit Agreements. Parent shall timely honor, and following the consummation of the Offer and the Merger (respectively) shall cause the Company or the Surviving Corporation, as the case may be, to timely honor (including by providing sufficient funds therefor), in accordance with their terms, all severance, employment and benefit agreements, plans and arrangements, including, without limitation, those arrangements referred to in Item 7.15 of the Company Letter (other than any Company Plans or other employee benefit plans, which are addressed in Section 7.13), with the Company's directors, officers and employees that are disclosed in the Company Letter or the Company Filed SEC Documents. ARTICLE VIII CONDITIONS PRECEDENT -------------------- SECTION 8.1 Conditions to Each Party's Obligation to Effect the Merger. The respective obligations of each party to effect the Merger shall be subject to the fulfillment at or prior to the Effective Time of the following conditions: (a) Company Shareholder Approval. If required by applicable law, the Company Shareholder Approval shall have been obtained; provided, however, that Parent and Sub shall vote all of their shares of capital stock of the Company entitled to vote thereon in favor of the Merger. (b) No Injunction or Restraint. No statute, rule, regulation, executive order, decree, temporary 42 restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other Governmental Entity preventing the consummation of the Merger shall be in effect; provided, however, that each of the parties shall have used its reasonable best efforts to prevent the entry of any such temporary restraining order, injunction or other order and to appeal as promptly as possible any injunction or other order that may be entered. (c) Purchase of Shares. Sub shall have previously accepted for payment and paid for Shares pursuant to the Offer; provided, however, that this condition will be deemed satisfied with respect to the obligations of Parent or Sub if Sub fails to accept for payment and pay for any Shares pursuant to the Offer in violation of the terms of this Agreement. (d) HSR Act. Any waiting period (and any extension thereof) under the HSR Act applicable to the Merger shall have expired or been terminated. ARTICLE IX TERMINATION AND AMENDMENT ------------------------- SECTION 9.1 Termination. This Agreement may be terminated at any time prior to the Effective Time, whether before or after the Company Shareholder Approval (if required by applicable law): (a) by mutual written consent of Parent and the Company; (b) by either Parent or the Company: (i) if (x) as a result of the failure of any of the Offer Conditions set forth in Exhibit A the Offer shall have terminated or expired in accordance with its terms without Sub having accepted for payment any Shares pursuant to the Offer or (y) all of the Offer Conditions have not been satisfied prior to June 30, 1997 or such later date as the parties may agree to; provided, however, that the right to terminate this Agreement pursuant to this Section 9.1(b)(i) shall not be available to any party whose failure to perform any of its obligations under this Agreement results in the failure of any such Offer 43 Condition or if the failure of such Offer Condition results from facts or circumstances that constitute a breach of representation or warranty under this Agreement by such party; or (ii) if any Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree or ruling or other action shall have become final and nonappealable, provided that the party seeking to terminate this Agreement shall have used its reasonable best efforts, subject to Section 7.11, to lift or vacate such order, decree or ruling; (c) by Parent or Sub prior to the purchase of Shares pursuant to the Offer in the event of a breach by the Company of any representation, warranty, covenant or other agreement contained in this Agreement which (i) would give rise to the failure of a condition set forth in paragraph (d) or (e) of Exhibit A and (ii) cannot be or has not been cured within 20 days after the giving of written notice to the Company; (d) by Parent or Sub if either Parent or Sub is entitled to terminate the Offer as a result of the occurrence of any event set forth in paragraph (c) of Exhibit A to this Agreement; (e) by the Company if the Board of Directors of the Company reasonably determines that a Takeover Proposal constitutes a Superior Proposal and the Board of Directors of the Company concludes in good faith based on the advice of its outside counsel that termination of this Agreement is necessary in order to comply with its fiduciary duties under applicable law; provided, however, that the Company may not terminate this Agreement pursuant to this Section 9.1(e) unless and until five business days have elapsed following delivery to Parent of a written notice (a "Section 9.1(e) Notice") of such conclusion by the Board of Directors of the Company and during such five business day period the Company has cooperated fully with Parent, including, without limitation, informing Parent of the terms and conditions of the Takeover Proposal and the identity of the Person making the Takeover Proposal, with the intent of enabling Parent to agree to a modification of the terms and conditions of this 44 Agreement so that the transactions contemplated hereby may be effected; and provided, further, that the Company may not terminate this Agreement pursuant to this Section 9.1(e) unless at the end of such five business day period the Board of Directors of the Company continues reasonably to believe its prior conclusion that the Takeover Proposal constitutes a Superior Proposal and simultaneously with such termination the Company pays to Parent the Expenses specified under Section 7.3(b); (f) by the Company, if (i) any of the representations or warranties of Parent or Sub set forth in this Agreement that are qualified as to materiality shall not be true and correct in any respect or any such representations or warranties that are not so qualified shall not be true and correct in any material respect, or (ii) Parent or Sub shall have failed to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant of Parent or Sub to be performed or complied with by it under this Agreement and, in the case of (i) or (ii), such untruth or incorrectness or failure cannot be or has not been cured within 20 days after the giving of written notice to Parent or Sub, as applicable; or (g) by the Company, if the Offer has not been timely commenced in accordance with Section 1.1. SECTION 9.2 Effect of Termination. In the event of a termination of this Agreement by either the Company or Parent as provided in Section 9.1, this Agreement shall forthwith become void and the Offer and the Merger terminated and abandoned and there shall be no liability or obligation on the part of Parent, Sub or the Company or their respective officers, directors, employees or agents, except with respect to the last sentence of Section 1.2(c), Section 4.23, Section 5.6, the last sentence of Section 7.2, Section 7.3, this Section 9.2 and Section 10.7 (which designated Section or sentence shall survive any termination), and each of the parties hereto hereby releases and waives any claim that may otherwise exist upon such termination; provided, however, that nothing herein shall relieve any party for liability for any willful or bad faith breach hereof. SECTION 9.3 Amendment and Certain Other Actions. Subject to applicable law, this Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors at any time before or after obtaining the Company Shareholder Approval (if required by law), but, after the 45 purchase of Shares pursuant to the Offer no amendment shall be made which decreases the Merger Consideration and after the Company Shareholder Approval no amendment shall be made which by law requires further approval by the shareholders of the Company without obtaining such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. Following the election or appointment of the Sub's designees pursuant to Section 7.10 and prior to the Effective Time, the affirmative vote of a majority of the Independent Directors then in office shall be required by the Company to (i) amend or terminate this Agreement by the Company, (ii) exercise or waive any of the Company's rights or remedies under this Agreement, (iii) extend the time for performance of Parent and Sub's respective obligations under this Agreement or (iv) give or authorize any consent, approval, authorization or recommendation of the Company or its Board of Directors required hereunder. SECTION 9.4 Extension; Waiver. At any time prior to the Effective Time, the parties hereto, by action taken or authorized by their respective Board of Directors, may, to the extent legally allowed, (i) subject to the provisions of Section 9.3, extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) subject to the provisions of Section 9.3, waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto or (iii) subject to the provisions of Section 9.3, waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. ARTICLE X GENERAL PROVISIONS ------------------ SECTION 10.1 Non-Survival of Representations and Warranties. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time, or, in the case of the Company, shall survive the consummation of the Offer. The covenants and agreements of the parties hereto and the Surviving Corporation shall survive the Effective Time without limitation (except for those that, by their terms, contemplate a shorter survival period). 46 SECTION 10.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given when delivered personally, one day after being delivered to an overnight courier or when telecopied (with a confirmatory copy sent by overnight courier) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Parent or Sub, to Scotsman Industries, Inc. 775 Corporate Woods Parkway Vernon Hills, Illinois 60061 Telecopy: (847) 634-8823 Attention: Richard C. Osborne, Chairman, President and Chief Executive Officer with a copy to: Sidley & Austin One First National Plaza Chicago, Illinois 60603 Telecopy: (312) 853-7036 Attn: Thomas A. Cole, Esq. and Frederick C. Lowinger, Esq. (b) if to the Company, to Kysor Industrial Corporation One Madison Avenue Cadillac, Michigan 49601 Telecopy: (616) 775-2661 Attention: George R. Kempton, Chairman and Chief Executive Officer with a copy to: Warner Norcross & Judd LLP 900 Old Kent Building 111 Lyon Street, N.W. Grand Rapids, Michigan 49503 Telecopy: (616) 752-2500 Attention: Tracy T. Larsen, Esq. and R. Paul Guerre, Esq. SECTION 10.3 Interpretation. When a reference is made in this Agreement to a Section or Exhibit, such reference shall be to a Section or Exhibit of this Agreement unless otherwise 47 indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." As used in this Agreement, the term "subsidiary" or "Subsidiary" of any person means another person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first person. As used in this Agreement, "Material Adverse Change" or "Material Adverse Effect" means, when used in connection with the Company or Parent, as the case may be, any change or effect (or any development that, insofar as can reasonably be foreseen, is likely to result in any change or effect) that is materially adverse to the business, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole or Parent and its Subsidiaries taken as a whole, as the case may be. As used in this Agreement, "consummation of the Offer" means the purchase of Shares pursuant to the Offer. As used in this Agreement, "to the Company's knowledge" (or words of similar import) and references to the Company's awareness of certain facts mean or refer to the actual knowledge of a director or executive officer of the Company. SECTION 10.4 Counterparts. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. SECTION 10.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement, and the Confidentiality Agreement referred to in the last sentence of Section 7.2, constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and thereof. This Agreement, except for the provisions of Sections 7.8 and 7.15 (which shall be for the benefit of, and shall be enforceable by, the described beneficiaries thereto and their heirs, legal representations, successors and assigns), is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. SECTION 10.6 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the 48 State of Michigan, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. SECTION 10.7 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned Subsidiary of Parent, but no such assignment shall relieve Sub of any of its obligations hereunder. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. SECTION 10.8 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement may be consummated as originally contemplated to the fullest extent possible. SECTION 10.9 Enforcement of this Agreement. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, such remedy being in addition to any other remedy to which any party is entitled at law or in equity. 49 IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized all as of the date first written above. SCOTSMAN INDUSTRIES, INC. By: /s/ Richard C. Osborne ------------------------- Name: Richard C. Osborne Title: Chairman, President and Chief Executive Officer Attest: /s/ Donald D. Holmes - -------------------------- Name: Donald D. Holmes Title: Vice President-Finance and Secretary K ACQUISITION CORP. By: /s/ Richard C. Osborne ------------------------- Name: Richard C. Osborne Title: Chairman, President and Chief Executive Officer Attest: /s/ Donald D. Holmes - ------------------------------------- Name: Donald D. Holmes Title: Vice President-Finance and Secretary KYSOR INDUSTRIAL CORPORATION By: /s/ George R. Kempton ------------------------ Name: George R. Kempton Title: Chairman and Chief Executive Officer Attest: /s/ David W. Crooks - ------------------------- Name: David W. Crooks Title: Vice President, General Counsel and Secretary 50 EXHIBIT A --------- CONDITIONS OF THE OFFER ----------------------- Notwithstanding any other term of the Offer or this Agreement, Sub shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating to Sub's obligation to pay for or return tendered Shares after the termination or withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer unless (i) there shall have been validly tendered and not withdrawn prior to the expiration of the Offer such number of Shares that would constitute a majority of the outstanding shares of Company Capital Stock at the date of the expiration of the Offer (assuming the exercise of all options to purchase, and the conversion or exchange of all securities convertible or exchangeable into, shares of the Company Capital Stock outstanding at the expiration date of the Offer) (the "Minimum Condition"), (ii) any waiting period under the HSR Act applicable to the purchase of Shares pursuant to the Offer shall have expired or been terminated, (iii) the Company and the Private Buyer shall have consummated the transactions contemplated by the Asset Purchase Agreement or the Private Buyer shall have waived any conditions to consummate the Asset Purchase Agreement, agreeing to consummate the transactions contemplated thereby contemporaneously with or immediately following the consummation of the Offer and (iv) there shall have been validly tendered and not withdrawn prior to the expiration of the Offer all outstanding shares of ESOP Preferred Stock, unless the Company shall have called all outstanding shares of ESOP Preferred Stock for redemption on a date that is not later than one business day after the consummation of the Offer. Furthermore, notwithstanding any other term of the Offer or this Agreement, Sub shall not be required to accept for payment or, subject as aforesaid, to pay for any Shares not theretofore accepted for payment or paid for, and may terminate the Offer if, at any time on or after the date of this Agreement and before the acceptance of such Shares for payment or the payment therefor, any of the following conditions exists (other than as a result of any action or inaction of Parent or any of its Subsidiaries that constitutes a breach of this Agreement): (a) there shall be instituted by any Governmental Entity and pending as of the expiration date of the Offer any suit, action or proceeding (i) seeking to prohibit or limit the acquisition by Parent or Sub of any Shares pursuant to the Offer, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or the performance of any of the other transactions contemplated by this Agreement or the Asset Purchase Agreement, or seeking to obtain from the Company, Parent or Sub any damages that are material in relation to the Company and its Subsidiaries taken as a whole, (ii) seeking to prohibit or limit the ownership or operation by the Company, Parent or any of their respective Subsidiaries of any material portion of the business or assets of the Company and its Subsidiaries, or Parent and its Subsidiaries, or to compel the Company or Parent to dispose of or hold separate any material portion of the business or assets of the Company and its Subsidiaries or Parent and its Subsidiaries, as a result of the Offer, the Merger or any of the other transactions contemplated by this Agreement, (iii) seeking to impose limitations on the ability of Parent or Sub to acquire or hold, or exercise full rights of ownership of, any Shares to be accepted for payment pursuant to the Offer, including, without limitation, the right to vote such Shares on all matters properly presented to the shareholders of the Company, or (iv) prohibiting Parent or any of its Subsidiaries from effectively controlling any material portion of the business or operations of the Company or its Subsidiaries provided, however, that, in the case of clauses (i) through (iv) above, Parent shall have used its reasonable best efforts, subject to Section 7.11, to resolve or eliminate the same; (b) as of the expiration date of the Offer, there shall be enacted, entered, enforced, promulgated or deemed applicable to the Offer or the Merger by any Governmental Entity any statute, rule, regulation, judgment, order or injunction, other than the application to the Offer, the Merger or the transactions contemplated by the Asset Purchase Agreement of applicable waiting periods under the HSR Act, that would reasonably be expected to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (iv) of paragraph (a) above; (c) the Board of Directors of the Company or any committee thereof shall have withdrawn or modified in a manner adverse to Parent or Sub its approval or recommendation of the Offer, the Merger or this A-2 Agreement, or approved or recommended any Takeover Proposal; (d) any of the representations and warranties of the Company set forth in this Agreement shall not be true and correct in any respect, in each case as if such representations and warranties were made as of such time, except for (i) failures to be true and correct that would not reasonably be expected to result in a Material Adverse Effect on the Company and (ii) failures to comply that are capable of being and are cured within 20 days after written notice from Parent to the Company of such failure (in which case Parent shall, and shall cause Sub to, extend the expiration date of the Offer to two business days following the end of such cure period or, if earlier, the date of cure, unless the Offer would otherwise not expire prior thereto); (e) the Company shall have failed to perform any obligation or to comply with any agreement or covenant of the Company to be performed or complied with by it under this Agreement, except for (i) failures to so perform or comply that would not reasonably be expected to result in a Material Adverse Effect on the Company and (ii) failures to perform or comply that are capable of being and are cured within 20 days after written notice from Parent to the Company of such failure (in which case Parent shall, and shall cause Sub to, extend the expiration date of the Offer to two business days following the end of such cure period or, if earlier, the date of cure, unless the Offer would otherwise not expire prior thereto); (f) there shall have occurred and be continuing as of the expiration date of the offer (i) any general suspension of trading in, or limitation on prices for, securities on a national securities exchange in the United States of America (excluding any coordinated trading halt triggered solely as a result of a specified decrease in a market index), (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States of America, (iii) any limitation (whether or not mandatory) by any Governmental Entity on, or other event that materially adversely affects, the extension of credit by banks or other lending institutions, (iv) a commencement of a war or armed hostilities or other national or international calamity directly or A-3 indirectly involving the United States of America which in any case is reasonably expected to have a Material Adverse Effect on the Company or to materially adversely affect Parent's or Sub's ability to complete the Offer or the Merger or (v) in case of any of the foregoing existing on the date of this Agreement, material acceleration or worsening thereof which in any case is reasonably expected to have a Material Adverse Effect on the Company or to materially adversely affect Parent's or Sub's ability to complete the Offer or the Merger; or (g) this Agreement shall have been terminated in accordance with its terms. The foregoing conditions, other than the Minimum Conditions, are for the sole benefit of Parent and Sub and may, subject to the terms of this Agreement, be waived by Parent and Sub in whole or in part at any time and from time to time in their sole discretion. The failure by Parent or Sub at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts and circumstances and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. A-4 EX-99.C2 16 ASSET PURCHASE AGREEMNT Exhibit (c)(2) ASSET PURCHASE AGREEMENT among KUHLMAN CORPORATION, TRANSPRO GROUP, INC., KYSOR INDUSTRIAL CORPORATION, and certain subsidiaries of KYSOR INDUSTRIAL CORPORATION dated as of February 2, 1997 TABLE OF CONTENTS ----- -- --------
ARTICLE I THE BASIC TRANSACTION................................................... 1 Section 1.1. Agreement to Purchase and Sell Assets..................... 1 Section 1.2. Purchase Price; Allocation................................ 3 Section 1.3. Closing................................................... 4 Section 1.4. Deliveries at Closing..................................... 4 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS............................... 5 Section 2.1. Organization.............................................. 5 Section 2.2. Authority................................................. 5 Section 2.3. No Violations; Consents and Approvals..................... 6 Section 2.4. Financial Statements...................................... 6 Section 2.5. SEC Documents............................................. 7 Section 2.6. Absence of Certain Changes................................ 7 Section 2.7. Litigation................................................ 7 Section 2.8. Compliance with Applicable Law............................ 7 Section 2.9. Taxes..................................................... 8 Section 2.10. Termination, Severance and Employment Agreements.......... 8 Section 2.11. Employee Benefit Plans; ERISA............................. 9 Section 2.12. Environmental Matters..................................... 10 Section 2.13. Labor Matters............................................. 10 Section 2.14. Title to and Condition of the Purchased Assets............ 11 Section 2.15. Real Property............................................. 11 Section 2.16. Intellectual Property..................................... 11 Section 2.17. Contracts................................................. 11 Section 2.18. Broker's Fees............................................. 12 ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER.............. 12 Section 3.1. Organization.............................................. 12 Section 3.2. Authority................................................. 12 Section 3.3. No Violations; Consents and Approvals..................... 12 Section 3.4. Broker's Fees............................................. 13 Section 3.5. Acceptance of Purchased Assets............................ 13 Section 3.6. Financing................................................. 13 ARTICLE IV COVENANTS............................................................... 13
Section 4.1. Conduct of Business....................................... 13 Section 4.2. Names..................................................... 14 Section 4.3. Access to Information..................................... 14 Section 4.4. Reasonable Best Efforts................................... 14 Section 4.5. Public Announcements...................................... 14 Section 4.6. Notification of Certain Matters........................... 15 Section 4.7. Expenses.................................................. 15 Section 4.8. HSR Filing................................................ 15 Section 4.9. Employees................................................. 15 Section 4.10. Preparation of Financial Statements....................... 15 Section 4.11. Post-Closing Access to Records............................ 15 Section 4.12. Bulk Transfer Laws........................................ 16 Section 4.13. Section 338 Election; Tax Returns......................... 16 Section 4.14. Consents.................................................. 16 Section 4.15. Litigation Matters........................................ 16 Section 4.16. Insurance Matters......................................... 17 Section 4.17. Collectively Bargained Qualified Plans.................... 18 Section 4.18. Other Qualified Plans..................................... 19 Section 4.19. Welfare Plans............................................. 20 Section 4.20. Further Assurances........................................ 21 Section 4.21. Restrictive Covenants..................................... 22 ARTICLE V CONDITIONS TO THE OBLIGATIONS OF THE PARTIES............................ 22 Section 5.1. Conditions to Obligations of the Parties.................. 22 Section 5.2. Additional Conditions to Obligations of Parent and the Purchaser......................................... 22 Section 5.3. Additional Conditions to Obligations of Sellers........... 23 ARTICLE VI TERMINATION............................................................. 24 Section 6.1. Termination............................................... 24 Section 6.2. Termination by Parent..................................... 24 Section 6.3. Termination by Kysor...................................... 24 Section 6.4. Notice of Termination..................................... 25 Section 6.5. Effect of Termination..................................... 25 Section 6.6. Termination Fee........................................... 25 ARTICLE VII INDEMNIFICATION AND RELATED MATTERS..................................... 25 Section 7.1. Survival of Representations, Warranties and Covenants..... 25 Section 7.2. Indemnity by Sellers...................................... 26 Section 7.3. Indemnity by Parent and the Purchaser..................... 26 Section 7.4. Limits on Indemnification................................. 26
Section 7.5. Third Party Claims.........................................27 ARTICLE VIII MISCELLANEOUS............................................................28 Section 8.1. Modification and Waiver....................................28 Section 8.2. Notices....................................................28 Section 8.3. Assignment.................................................29 Section 8.4. Governing Law..............................................29 Section 8.5. Counterparts...............................................30 Section 8.6. Interpretation.............................................30 Section 8.7. Entire Agreement...........................................30 Section 8.8. Severability...............................................30
ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of February 2, 1997 by and among KUHLMAN CORPORATION, a Delaware corporation ("Parent"), TRANSPRO GROUP, INC., a Delaware corporation and wholly owned subsidiary of Parent (the "Purchaser"), KYSOR INDUSTRIAL CORPORATION, a Michigan corporation ("Kysor"), and the corporations listed on Annex A, each a direct or indirect wholly owned domestic subsidiary of Kysor (each individually a "Subsidiary" and collectively the "Subsidiaries"). Kysor and the Subsidiaries are sometimes collectively referred to as "Sellers" and individually as a "Seller." Sellers, Parent and the Purchaser are sometimes collectively referred to as the "Parties" and individually as a "Party." Kysor, through the Subsidiaries, certain direct or indirect wholly owned foreign subsidiaries listed on Annex B (the "Foreign Subsidiaries"), and certain divisions of its own ("Divisions") (collectively, "TPG"), designs, manufactures and markets engine-performance systems, engine-protection systems and components and accessories for heavy-duty trucks, other commercial vehicles and marine equipment (the "Business"). This Agreement sets forth the terms and conditions under which Sellers are willing to sell to the Purchaser, and the Purchaser is willing to purchase from Sellers, with respect to the Divisions and Subsidiaries located in the United States, substantially all of the Divisions' and Subsidiaries' respective assets relating to the Business, including all of the capital stock of the Foreign Subsidiaries. ACCORDINGLY, the Parties agree as follows: ARTICLE I THE BASIC TRANSACTION Section 1.1. Agreement to Purchase and Sell Assets. On the terms and subject to the conditions of this Agreement, at the Closing (defined below) the Purchaser will purchase from Sellers, and Sellers will sell and transfer to the Purchaser, all of the right, title and interest that Sellers possess and have the right to transfer in all of the properties, assets, rights, claims and goodwill relating exclusively to the Business (collectively, the "Purchased Assets"), including without limitation the following: (a) Current Assets. All accounts and notes receivable, prepaid expenses, deposits, rights or claims to refunds or rebates of any kind and all other current assets; (b) Inventory. All inventories of raw materials, work-in-process, finished goods (including all inventories consigned to dealers, sales representatives and others) and supplies, wherever located; (c) Equipment. All machinery, equipment, tooling, dies, molds, tools, fixtures, furniture, office equipment, computer equipment and software, showroom models and displays, automobiles, trucks, trailers, other vehicles, fuel, spare parts and leasehold improvements, together with all express and implied warranties by the manufacturers or sellers of those items, and all maintenance records, brochures, catalogues and other documents relating to those items or to the installation or functioning of those items; (d) Real Property. The real property owned by Sellers described on attached Exhibit 1.1(d) (the "Real Property"), together with all related land rights, easements, rights of way and other appurtenances to the property, and all blueprints, building drawings, architectural specifications and other documents relating to the property; (e) Real Property Leases. The real property leases listed on attached Exhibit 1.1(e), and any leasehold improvements and security or similar deposits relating to those leases; (f) Contracts. All customer and supplier purchase orders, personal property leases and other contracts, agreements and commitments, and any security or similar deposits relating to those contracts, agreements and commitments; (g) Intellectual Property. All registered and unregistered domestic and foreign patents, patent applications, inventions upon which patent applications have not yet been filed, service marks, trade names, trademarks, trademark registrations and applications, logos, copyrighted works, copyright registrations and applications, trade secrets, formulae, technology, designs, processes, inventions, know-how and other intellectual property rights (collectively, the "Intellectual Property Assets"); (h) Records. All records, customer and supplier lists, payroll and personnel records, product information, product drawings, production documentation, material specifications, equipment lists, formulae, specifications, drawings, plans, reports, data, notes, correspondence, contracts, labels, catalogues, brochures, art work, photographs, advertising materials, marketing and production literature, files and other records and documents, including books of account, ledgers, and other financial records; (i) Permits and Licenses. All permits, licenses, orders, franchises, and approvals to the extent transferable; (j) Intangible Property Rights. All suits, claims, actions, proceedings or investigations and other intangible property rights; -2- (k) Insurance Policies. The life insurance policies upon the life of Timothy Campbell, William Cobb and William Venema and all insurance policies solely relating to the Business or the Purchased Assets to the extent assignable; and (l) Foreign Subsidiaries. All of the issued and outstanding capital stock of the Foreign Subsidiaries. Notwithstanding the foregoing, the Purchased Assets do not include those assets set forth on attached Exhibit 1.1(m) (the "Excluded Assets"). The Purchased Assets will be transferred to the Purchaser free and clear of all claims, liens, mortgages, security interests, encumbrances, charges, obligations, rights of third parties and other restrictions ("Liens"), except for those Liens described on attached Exhibit 1.1(n) (the "Permitted Liens"). Section 1.2 Purchase Price; Allocation. (a) In consideration of the transfer of the Purchased Assets to the Purchaser and Sellers' other undertakings set forth in this Agreement, the Purchaser will, and Parent will cause the Purchaser to (including providing sufficient funds), pay to Sellers an aggregate of Eighty-Six Million Dollars ($86,000,000) (collectively, the "Purchase Payment"), payable at Closing by wire transfer of immediately available funds to an account or accounts designated by Sellers. (b) As additional consideration for the transfer of the Purchased Assets to the Purchaser and Sellers' other undertakings set forth in this Agreement, at Closing the Purchaser will, and Parent will cause the Purchaser to (including providing sufficient funds), assume and fully pay, satisfy and discharge when due (other than in the case of any good faith disputes) all of Sellers' respective liabilities and obligations to the extent relating to the Business (whether due or to become due, known or unknown, absolute or contingent, or liquidated or unliquidated), including without limitation all liabilities for taxes (other than income taxes imposed on any Seller relating to the Business and other than income taxes imposed on any Foreign Subsidiary with respect to taxable periods ending prior to the Closing and, with respect to any taxable periods beginning before and ending after the Closing, the portion of such taxable periods ending on and including the Closing, determined on the basis of a "closing of the books" as of the time of Closing but with items determined on an annual basis (such as depreciation) allocated pro rata on a daily basis and with any net operating loss carryforwards allocated first to reduce income allocable to the period prior to the Closing), all liabilities and obligations in respect of any Litigation Claim (as defined below) constituting an Assumed Liability, all employee benefit and welfare obligations and other employment-related liabilities, including any severance obligations to employees of the Divisions and the Subsidiaries not hired -3- by the Purchaser and obligations to Timothy Campbell, William Cobb and William Venema under their respective Supplemental Executive Retirement Plans with Kysor, as amended, all employee benefit-related obligations to the extent provided in Sections 4.17, 4.18 and 4.19 below, all liabilities and obligations arising under the contracts, agreements and other commitments included in the Purchased Assets, obligations under that certain Indemnity Agreement between Kysor and Timothy Campbell with respect to acts or omissions occurring at or prior to the Closing with respect to the Business, and all environmental liabilities and all other liabilities associated with the Business, in each case regardless of whether disclosed to Parent or the Purchaser and regardless of whether consistent with the representations and warranties of Sellers in this Agreement (collectively, the "Assumed Liabilities"). Notwithstanding the foregoing, (i) the Assumed Liabilities will not include those liabilities described in attached Exhibit 1.2(b), and (ii) Kysor, on the one hand, will be liable for one- half of all sales, use, excise, transfer, documentary, recording and other taxes and fees associated with the transfer of the Purchased Assets to the Purchaser (the "Transfer Taxes") and Parent and the Purchaser, on the other hand, will be liable for one-half of all Transfer Taxes, and the Parties will reimburse each other as appropriate to effect the foregoing allocation of responsibility. The Parties acknowledge and agree that the Assumed Liabilities include any environmental liabilities to the extent they relate to properties owned, operated or utilized, or to which any materials or substances were sent or disposed of, by or with respect to the Business, in each case before or after Closing. The Purchase Payment and the Assumed Liabilities are collectively referred to in this Agreement as the "Purchase Price." (c) The Purchase Price will be allocated among the Purchased Assets as mutually determined by the Parties not later than the Closing in accordance with Section 1060 of the Code (as defined below) and the regulations thereunder, which allocation will be binding on the Parties for tax purposes. Section 1.3. Closing. The closing of the transactions contemplated by this Agreement (the "Closing") will take place in the office of Rudnick & Wolfe, 203 North LaSalle Street, Chicago, Illinois 60601 at 10 a.m. local time on the second business day after the satisfaction of the conditions set forth in Article V below. The Closing will be effective as of the close of business on the actual day of Closing, and possession of the Purchased Assets shall be delivered to Purchaser immediately after the Closing on the Closing Date. Section 1.4. Deliveries at Closing. At the Closing: (a) Sellers will (i) deliver to Parent and the Purchaser the various certificates, instruments and documents referred to in Section 5.2 below, (ii) execute, acknowledge (if appropriate) and deliver to the Purchaser instruments of sale, transfer, conveyance and assignment (in form and substance acceptable to the Purchaser) sufficient to transfer the Purchased Assets to the Purchaser, provided that no such instrument shall expand in any manner the representations and warranties made by Sellers in this Agreement, (iii) deliver to the Purchaser resignations of members of the respective Boards of -4- Directors of each Foreign Subsidiary as requested by the Purchaser before Closing, and (iv) deliver to Parent and the Purchaser any other documents required under this Agreement or reasonably requested by Parent or the Purchaser so long as they do not expand in any manner the representations and warranties made by Sellers in this Agreement; and (b) Parent and/or the Purchaser, as applicable, will (i) deliver to Sellers the Purchase Payment, (ii) execute, acknowledge (if appropriate) and deliver to Sellers an instrument or instruments (in form and substance acceptable to Sellers) effecting the assumption of the Assumed Liabilities, provided, that no such instrument will expand in any manner the assumption of obligations of Parent and Purchaser in this Agreement, (iii) deliver to Sellers the various certificates, instruments and other documents referred to in Section 5.3 below, and (iv) deliver to Sellers any other documents required under this Agreement or reasonably requested by any Seller. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS Sellers (which for purposes of this Article II are deemed to include the Foreign Subsidiaries) represent and warrant to Parent and the Purchaser, jointly and severally, as follows, except as previously disclosed by Sellers in an SEC Document (defined in Section 2.5 below) or in a disclosure letter dated of the date of this Agreement and delivered to Parent and the Purchaser on the date hereof, including the materials referenced in that letter (the "Disclosure Letter"): Section 2.1. Organization. Each Seller is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation. Each Seller has all requisite corporate power and authority to own, lease and operate its properties relating to the Business and to conduct its operations relating to the Business as now being conducted. Each Seller is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it with respect to the Business or the nature of its operations relating to the Business makes such qualification necessary, except in those jurisdictions where the failure to be duly qualified or licensed and in good standing would not, individually or in the aggregate, have a material adverse effect on the business, operations, assets or condition of Sellers taken as a whole with respect to the Business (a "Seller Material Adverse Effect"). Complete copies of each Seller's charter and bylaws, including all amendments, will be delivered to the Purchaser before the Closing. Kysor owns directly or indirectly all of the outstanding capital stock of each Subsidiary. Section 2.2. Authority. Each Seller has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly and validly authorized and approved by the Board of Directors of each Seller and the shareholder of each Subsidiary and no other corporate proceedings are necessary to authorize this Agreement or the consummation of the transactions -5- contemplated by this Agreement. This Agreement has been duly and validly executed and delivered by each Seller and, assuming this Agreement constitutes a legal, valid and binding agreement of Parent and the Purchaser, it constitutes a legal, valid and binding agreement of each Seller, enforceable against it in accordance with its terms. Section 2.3. No Violations; Consents and Approvals. (a) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement nor compliance by any Seller with any of the provisions of this Agreement will (i) violate any provision of any Seller's charter or bylaws, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default under, any of the terms, conditions or provisions of any license, franchise, permit or agreement, or (iii) violate any statute, rule, regulation, order or decree of any public body or authority by which any Seller or any of the Purchased Assets are bound, excluding from the foregoing clauses (ii) and (iii) any violations, breaches, defaults or rights that either would not have a Seller Material Adverse Effect or materially impair any Seller's ability to consummate the transactions contemplated by this Agreement or for which any Seller has received, or on or before Closing will have received, appropriate consents or waivers. (b) No filing or registration with, notification to, or authorization, consent or approval of, any governmental entity is required in connection with the execution and delivery of this Agreement by Sellers, or the consummation by Sellers of the transactions contemplated by this Agreement, except (i) expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) any filings and consents that may be required under any environmental law pertaining to any notification, disclosure or required approval triggered by the transactions contemplated by this Agreement, (iii) any filings, consents or approvals as may be required under the laws of any foreign country in which Sellers, or any of them, conduct business or own any property or assets and (iv) any other consents, approvals, orders, authorizations, notifications, registrations, declarations and filings not obtained or made before the Closing the failure of which to be obtained or made would not have a Seller Material Adverse Effect. Section 2.4. Financial Statements. Copies of unaudited consolidated financial statements of Sellers with respect to the Business for the fiscal years ending December 31, 1996 and 1995 (collectively, the "Financial Statements") have been provided to Parent and the Purchaser. The Financial Statements, including all notes and schedules to the Financial Statements, if any, are in accordance with Sellers' books and records relating to the Business, accurately and fairly reflect Sellers' transactions, assets and liabilities relating to the Business, and present fairly Sellers' financial position with respect to the Business as of the respective dates indicated and the results of Sellers' operations and changes in cash flows with respect to -6- the Business for the respective periods then ended, in conformity with generally accepted accounting principles (except as may be indicated in the notes accompanying the Financial Statements). Section 2.5. SEC Documents. Kysor has made available to Parent and the Purchaser accurate and complete copies of each registration statement, report, proxy statement, information statement or schedule, together with all amendments, that were required to be filed with the Securities and Exchange Commission ("SEC") by Kysor since January 1, 1994 (the "SEC Documents"), each of which was timely filed with the SEC. As of their respective dates, the SEC Documents complied, or will comply, in all material respects with the applicable requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, as the case may be, and none of the SEC Documents contained, or will contain, any untrue statement of a material fact or omitted, or will omit, to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were or are made, not misleading. Section 2.6. Absence of Certain Changes. Since December 31, 1996, no Seller has (a) incurred any liabilities or obligations of any nature, whether accrued, contingent or otherwise, or suffered any event or occurrence that would have a Seller Material Adverse Effect, or (b) made any changes in accounting methods, principles or practices with respect to the Business. Since December 31, 1996, each Seller has operated the Business according to its ordinary course of business consistent with past practice. Section 2.7. Litigation. There is no suit, claim, action, proceeding or investigation pending or, to the knowledge of Sellers, threatened against any Seller, with respect to the Business, before any court or governmental entity that would have a Seller Material Adverse Effect or prevent or delay the consummation of the transactions contemplated by this Agreement. No Seller is subject to any outstanding order, writ, injunction or decree that, to the extent reasonably foreseen, in the future would have a Seller Material Adverse Effect or would prevent or delay the consummation of the transactions contemplated by this Agreement. Section 2.8. Compliance with Applicable Law. With respect to the Business: (a) Sellers hold all permits, licenses, variances, exemptions, orders and approvals of all governmental entities necessary for the lawful conduct of the Business (the "Permits"), except for failures to hold any Permits that would not have a Seller Material Adverse Effect; (b) Each Seller is in compliance with the Permits applicable to it, except where the failure to comply would not have a Seller Material Adverse Effect; (c) The operations of the Business have not been and are not being conducted in violation of any law, ordinance, rule or regulation of any governmental entity, -7- except for violations or possible violations that do not and, insofar as reasonably can be foreseen, in the future will not have a Seller Material Adverse Effect; and (d) No investigation or review by any governmental entity with respect to any Seller is pending or, to the knowledge of Sellers, threatened nor, to the knowledge of Sellers, has any governmental entity indicated an intention to conduct the same, other than, in each case, those that would not have a Seller Material Adverse Effect. Section 2.9. Taxes. Each Seller, with respect to the Business, has filed or caused to be filed all federal, state, local and foreign income and other material tax returns required to be filed by them, and has paid or withheld or caused to be paid or withheld all taxes of any nature whatsoever, with any related penalties, interest and liabilities (any of the foregoing being referred to in this Agreement as a "Tax") that are shown on those tax returns as due and payable or otherwise required to be paid, other than Taxes being contested in good faith and for which adequate reserves have been established, except where the failure to file, pay or withhold would not have a Seller Material Adverse Effect. There are no material claims, assessments or audits pending or, to Sellers' knowledge, threatened against any Seller with respect to the Business for any alleged deficiency in any Tax that, if upheld, would have a Seller Material Adverse Effect, and no Seller knows of any threatened Tax claims or assessments against any Seller that if upheld would have a Seller Material Adverse Effect. There are no waivers or extensions of any applicable statute of limitations to assess any Taxes relating to the Business. All returns filed with respect to Taxes relating to the Business are true and correct, except where any failure to be true and correct would not have a Seller Material Adverse Effect. There are no outstanding requests for any extension of time within which to file any return or within which to pay any Taxes shown to be due on any return. There are no Liens for any Taxes upon the assets of the Business (other than statutory Liens for Taxes not yet due and payable and Liens for real estate taxes being contested in good faith) which would have a Seller Material Adverse Effect. Section 2.10. Termination, Severance and Employment Agreements. Sellers have provided to Parent or the Purchaser a complete and accurate list of each of the following as it relates to the Business: (a) employment or severance agreement with any director, officer or other key employee that is not terminable without material liability or obligation (either individually or collectively) on 60 days' or less notice; (b) agreement with any director, officer or other key employee that provides any term of employment or other compensation guarantee or extending severance benefits or other benefits after termination not comparable to benefits generally available to employees of the Business; (c) agreement, plan or arrangement with any director, officer or other key employee under which that person may receive payments that may be subject to tax imposed by (Section) 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or included in the determination of that person's "parachute payment" under (Section) 280G of the Code; and (d) agreement, plan or arrangement with or affecting any director, officer or other key employee any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of -8- the transactions contemplated by this Agreement. Since December 31, 1996, no Seller has entered into or amended, in any material respect, any employment or severance agreement with, or granted any severance or termination pay to, any director, officer or other key employee of the Business. For purposes of this Agreement, "key employee" means an employee whose aggregate annual compensation in 1996 or 1997 exceeded, or is expected to exceed, $100,000. Section 2.11. Employee Benefit Plans; ERISA. (a) With respect to the Business: (i) each "employee benefit plan" (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and all other employee benefit, bonus, incentive, stock option (or other equity-based), severance, change in control, welfare (including post-retirement medical and life insurance) and fringe benefit plans (whether or not subject to ERISA) maintained or sponsored by any Seller or any trade or business, whether or not incorporated, that would be deemed a "single employer" within the meaning of Section 4001 of ERISA (an "ERISA Affiliate"), for the benefit of any employee or former employee of a Division or Subsidiary or any of Sellers' ERISA Affiliates (the "Plans") has been operated in accordance with its terms and is in compliance (including the making of governmental filings) with all applicable laws, including ERISA and the applicable provisions of the Code, except for failures that would not have a Seller Material Adverse Effect, (ii) each of the Plans intended to be "qualified" within the meaning of Section 401(a) of the Code (the "Qualified Plans") has been determined by the Internal Revenue Service to be so qualified, and, since the date of such determination, no event has occurred that would adversely effect a Plan's qualified status, (iii) no "reportable event," as that term is defined in Section 4043(c) of ERISA (for which the 30-day notice requirement to the Pension Benefit Guaranty Corporation ("PBGC") has not been waived), has occurred with respect to any Plan that is subject to Title IV of ERISA that presents a risk of liability to any governmental entity or other person that would have a Seller Material Adverse Effect, and (iv) there are no pending or, to Sellers' knowledge, threatened claims (other than routine claims for benefits) audits, investigations or litigation by, on behalf of, against or relating to, any of the Plans or any trusts related thereto that would have a Seller Material Adverse Effect. No Plan is a "multiemployer plan" (within the meaning of Sections 3(37) or 4001(a)(3) of ERISA) nor has any Seller or any ERISA Affiliate ever contributed or been required to contribute to any multiemployer plan. (b) (i) No Plan relating to the Business has incurred an "accumulated fund deficiency" (as defined in Section 302 of ERISA or Section 412 of the Code), whether or not waived and (ii) neither any Seller nor any ERISA Affiliate has incurred any liability under Title IV of ERISA except for required premium payments to the PBGC, which payments have been made when due, and no events have occurred that are reasonably likely to give rise to any liability of any -9- Seller or an ERISA Affiliate under Title IV of ERISA or that could reasonably be anticipated to result in any claims being made against the Purchaser by the PBGC that present a risk of liability that would have a Seller Material Adverse Effect. (c) With respect to each Plan relating to the Business that is subject to Title IV of ERISA, (i) Sellers have provided to Parent or the Purchaser copies of the most recent actuarial valuation report prepared for the Plan before the date of this Agreement, (ii) the assets and liabilities in respect of the accrued benefits as set forth in the most recent actuarial valuation report prepared by the Plan's actuary fairly presented the funded status of the Plan in all material respects, and (iii) since the date of the valuation report there has been no adverse change in the funded status of any of those Plans that would have a Seller Material Adverse Effect. (d) Neither any Seller nor any ERISA Affiliate has failed to make any contribution or payment to any Plan relating to the Business that has resulted or could result in the imposition of a lien or the posting of a bond or other security under ERISA or the Code that would have a Seller Material Adverse Effect. Section 2.12. Environmental Matters. Each Seller, with respect to the Business, has obtained and is in compliance with the terms and conditions of all required permits, licenses, registrations and other authorizations required under Environmental Laws (as defined below), except for failures that would not have a Seller Material Adverse Effect. Each Seller, with respect to the Business, is in compliance with all Environmental Laws, except for failures to comply that would not have a Seller Material Adverse Effect. No Seller, with respect to the Business, has received notice of any past or present events, conditions, circumstances, activities, practices, incidents, actions or plans that have resulted in or threaten to result in any liability, or otherwise form the basis of any claim, action, suit, proceeding, hearing or investigation under, any Environmental Laws that would have a Seller Material Adverse Effect. For purposes of this Section 2.12, (a) "Environmental Laws" mean applicable federal, state, local and foreign laws, regulations and codes relating in any respect to human health and safety, pollution or protection or the environment and (b) "Hazardous Substances" means any toxic, caustic or otherwise dangerous substance (whether or not regulated under federal, state or local environmental statutes, rules, ordinances, or orders), including (i) "hazardous substance" as defined in 42 U.S.C. (Section) 9601, and (ii) petroleum products, derivatives, byproducts and other hydrocarbons. Section 2.13. Labor Matters. Since January 1, 1995, no Seller, with respect to the Business, (a) has been subject to, or to Sellers' knowledge threatened with, any strike, lockout or other labor dispute or engaged in any unfair labor practice, the result of which had or constituted, or could reasonably be expected to have or constitute, a Seller Material Adverse Effect, or (b) has received notice of any pending petition for certification before the National Labor Relations Board with respect to any material group of employees of any Subsidiary or -10- Division who are not currently organized. Sellers have provided to Parent or the Purchaser true, correct and complete copies of each collective bargaining agreement to which employees of any Subsidiary or Division are subject. Section 2.14. Title to and Condition of the Purchased Assets. Each Seller has or will have by Closing good, valid and marketable title to the Purchased Assets (including the outstanding capital stock of the Foreign Subsidiaries) purported to be owned by that Seller, free and clear of all Liens other than the Permitted Liens. All of the capital stock of the Foreign Subsidiaries is owned directly or indirectly by Kysor, and there are no outstanding options, warrants, rights or agreements respecting the issuance, disposition or acquisition of any such capital stock. With respect to the condition of the Purchased Assets, all of the Purchased Assets will be transferred to the Purchaser on an "AS IS, WHERE IS" basis, and SELLERS MAKE NO AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE PURCHASED ASSETS, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Section 2.15. Real Property. No building or improvement on the Real Property encroaches on any easement or property owned by another and no building or improvement owned by another encroaches on the Real Property, other than any encroachment that would not have a Seller Material Adverse Effect. The Real Property, and the applicable Seller's use of the Real Property, comply in all respects with all laws, regulations, rules, orders, zoning ordinances and requirements applicable to the Real Property, other than any failure to comply that would not have a Seller Material Adverse Effect. There are no pending or, to Sellers' knowledge, threatened condemnation proceedings against any portion of the Real Property which if adversely determined would have a Seller Material Adverse Effect. Section 2.16. Intellectual Property. To Sellers' knowledge, there is no infringement or unlawful use by any person or entity of any of the Intellectual Property Assets, other than any infringement or use that would not have a Seller Material Adverse Effect. No Seller, with respect to the Business, has manufactured or sold products that conflict with or infringe upon any proprietary rights of others, except where the conflict or infringement would not have a Seller Material Adverse Effect. Section 2.17. Contracts. All material contracts, leases and other agreements included in the Purchased Assets (the "Assigned Contracts") are valid, binding and enforceable in all material respects in accordance with their terms. Each Seller that is a party to an Assigned Contract and, to Sellers' knowledge, each other party to that Assigned Contract, has complied and is complying in all material respects with the terms of that Assigned Contract, and to Sellers' knowledge no event has occurred or circumstances exist that (with or without notice or lapse of time) may contravene, conflict with or result in a violation or breach of, or give any Seller or any other person or entity the right to declare a default under, any Assigned Contract that would have a Seller Material Adverse Effect. -11- Section 2.18. Broker's Fees. Neither Sellers nor anyone acting on any Seller's behalf have incurred any liability for any broker's fees, commissions or financial advisory or finder's fees in connection with any of the transactions contemplated by this Agreement for which Parent or the Purchaser would become liable. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER Parent and the Purchaser represent and warrant, jointly and severally, to each Seller as follows: Section 3.1. Organization. Each of Parent and the Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of its state of incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Section 3.2. Authority. Each of Parent and the Purchaser has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly and validly authorized and approved by the respective Boards of Directors of Parent and the Purchaser and no other corporate proceedings are necessary to authorize this Agreement or the consummation of the transactions contemplated by this Agreement. This Agreement has been duly and validly executed and delivered by Parent and the Purchaser and, assuming this Agreement constitutes a legal, valid and binding agreement of Sellers, it constitutes a legal, valid and binding agreement of Parent and the Purchaser, enforceable against each of them in accordance with its terms. Section 3.3. No Violations; Consents and Approvals. (a) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement nor compliance by Parent and the Purchaser with any of the provisions of this Agreement will (i) violate any provision of its charter or bylaws, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default under, any of the terms, conditions or provisions of any license, franchise, permit or agreement to which Parent or the Purchaser is a party or by which Parent or the Purchaser or any of its properties is bound, or (iii) violate any statute, rule, regulation, order or decree of any public body or authority by which Parent or the Purchaser or any of its properties is bound, excluding from the foregoing clauses (ii) and (iii) violations, breaches, defaults or rights that, either individually or in the aggregate, would not have a material adverse effect on -12- Parent's or the Purchaser's ability to perform its obligations pursuant to this Agreement or consummate the transactions contemplated by this Agreement (a "Parent Material Adverse Effect") or for which Parent or the Purchaser has received or on or before Closing will have received appropriate consents or waivers. (b) No filing or registration with, notification to, or authorization, consent or approval of, any governmental entity is required by Parent or the Purchaser in connection with the execution and delivery of this Agreement, or the consummation by Parent or the Purchaser of the transactions contemplated by this Agreement, except (i) expiration of the waiting period under the HSR Act and (ii) any other consents, orders, authorizations, registrations, declarations and filings not obtained or made before Closing the failure of which to be obtained or made would not have a Parent Material Adverse Effect. Section 3.4. Broker's Fees. Neither Parent, the Purchaser nor anyone acting on their behalf has incurred any liability for any broker's fees, commissions or financial advisory or finder's fees in connection with any of the transactions contemplated by this Agreement for which any Seller could become liable. Section 3.5. Acceptance of Purchased Assets. Parent and the Purchaser accept the Purchased Assets in their present condition on an "AS IS, WHERE IS" basis. Section 3.6. Financing. The Purchaser has available to it committed funds sufficient to allow it to timely consummate the transactions contemplated by this Agreement. ARTICLE IV COVENANTS Section 4.1. Conduct of Business. Except as contemplated by this Agreement or as expressly agreed to in writing by Parent, during the period from the date of this Agreement to the Closing: (a) each Seller will conduct its operations relating to the Business in the ordinary course of business consistent with past practices; (b) each Seller will exercise its reasonable best efforts to maintain and preserve its assets included in the Purchased Assets, keep its insurance with respect to the Business in full force and effect, preserve intact the present business organizations and personnel relating to the Business, preserve the present goodwill of the Business with all persons having business dealings with it and comply with all laws applicable to the conduct of the Business; (c) Sellers will not take, or agree in writing or otherwise to take, any action that would make any of the representations or warranties of Sellers contained in this Agreement untrue or incorrect in any material respect as of the date when made; and (d) the Foreign Subsidiaries will not transfer any cash or cash equivalents to Kysor. -13- Section 4.2. Names. Effective as of the Closing, Kysor hereby grants to Parent and the Purchaser a royalty-free perpetual license to use in connection with the Business the name "Kysor" (and any derivatives of that name) in the form currently used by Sellers in connection with the Business. As soon as practicable after the Closing, Kysor International Distribution Company will amend its articles of incorporation to change its corporate name to a name that does not include "Kysor." Section 4.3. Access to Information. From the date of this Agreement to the Closing, Sellers will give Parent, the Purchaser and their authorized representatives (including legal counsel, environmental and other consultants, financial advisors, accountants, banks, financial institutions and auditors) full access during normal business hours to all facilities, personnel and books and records of the Divisions and the Subsidiaries, will permit Parent and the Purchaser to make any inspections that Parent and the Purchaser reasonably require and will cause their respective officers to furnish Parent and the Purchaser with any financial and operating data and other information (of which Parent and the Purchaser will have the right to make copies at their own expense) with respect to the Business that Parent and the Purchaser may from time to time reasonably request; provided, however, that no invasive soil or groundwater tests may be performed without the prior written consent of Kysor, which consent will not be unreasonably withheld. All of the foregoing information will be held in confidence in accordance with the terms of the Confidentiality Agreement (the "Confidentiality Agreement") between Parent and Kysor dated December 26, 1996, the terms of which are incorporated by reference in this Agreement and which will survive the termination of this Agreement. Section 4.4. Reasonable Best Efforts. Subject to the terms and conditions in this Agreement and applicable law, each Party will use its reasonable best efforts promptly to take, or cause to be taken, all actions and do, or cause to be done, all things necessary, proper or appropriate under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including using reasonable best efforts to (i) obtain necessary consents, approvals or waivers under its material contracts relating to the Business, (ii) cooperate in making available information and personnel to the lenders to the Purchaser with respect to any financing for the transactions contemplated by this Agreement and (iii) lift any legal bar to the transactions contemplated by this Agreement. Section 4.5. Public Announcements. Before issuing any press release or otherwise making any public statements with respect to this Agreement, the Parties will consult with each other as to its form and substance and will not issue the press release or make the public statement before such consultation, except in either case as may be required by law or any obligations pursuant to any listing agreement with any national securities exchange. Section 4.6. Notification of Certain Matters. Prior to Closing, Kysor and Parent will give prompt notice to the other of (a) the occurrence, or non- occurrence, of any event the occurrence, or non-occurrence, of which would be likely to cause either (i) any representation or warranty of any Party contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date of this Agreement to the Closing, or (ii) any condition set forth -14- in Article V to be unsatisfied at any time from the date of this Agreement to the Closing, (b) any material failure of any Party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement, and (c) any capital expenditure made by any Seller with respect to the Business in excess of $500,000. The delivery of any notice pursuant to this Section 4.6 will not limit or otherwise affect the remedies available prior to Closing under this Agreement to the Party receiving the notice. Section 4.7. Expenses. Except as expressly provided in this Agreement, each Party will each bear its own expenses incurred in connection with the preparation, execution and performance of this Agreement and the transactions contemplated by this Agreement. Section 4.8. HSR Filing. Each Party will use its reasonable best efforts to file as promptly as practicable after the date of this Agreement its pre- merger notification under the HSR Act and to respond as promptly as practicable to all inquiries and requests resulting from the filing. Each Party will furnish to the other a copy of its filing and will cooperate with each other and keep each other informed concerning the status of its filing and communications with any governmental authorities with respect to its filing. Section 4.9. Employees. Effective as of the date of Closing, the Purchaser will hire and continue the employment of such numbers of employees of the Divisions and the Subsidiaries and on such terms, and will take all other steps, that may be necessary to eliminate any obligation of Sellers under the Worker Adjustment and Retraining Notification Act of 1988, including any obligation to give notice of the transfer of operations or any loss of employment or loss of pay or termination benefits. The Parties agree that the provisions of this Section 4.9 are solely between and for the benefit of the Parties and do not inure to the benefit of or confer rights upon any third party, including any employees of the Parties. Section 4.10. Preparation of Financial Statements. After Closing Sellers will use their reasonable best efforts to cooperate with Parent and the Purchaser to cause the preparation and delivery to the Purchaser of audited consolidated financial statements of Sellers with respect to the Business for the fiscal years ending December 31, 1996 and 1995 within 45 days after Closing. The expenses associated with such preparation will be shared equally between Kysor and the Parent, except that Parent's responsibility will not exceed $75,000. Section 4.11. Post-Closing Access to Records. The Parties will preserve until December 31, 2002 all business records relating to the Purchased Assets, the Assumed Liabilities and the transactions contemplated by this Agreement. Each Party will afford the other Parties and their representatives and agents, during normal business hours and upon reasonable advance notice, reasonable access to (and the right to copy at the other's expense) those records for any legitimate purpose, including a tax audit, governmental inquiry or litigation. Section 4.12. Bulk Transfer Laws. Parent and the Purchaser waive compliance with any bulk sale and transfer laws applicable to the transactions contemplated by this Agreement. -15- Section 4.13. Section 338 Election; Tax Returns. Without the prior written consent of Kysor, neither Parent, the Purchaser nor any affiliate thereof will make any election under Section 338 of the Code, or any similar provision of state, local or foreign law, in connection with the transactions contemplated by this Agreement. Parent and the Purchaser agree that no income tax return of any Foreign Subsidiary with respect to any taxable period (or portion thereof) prior to the Closing shall be filed or amended after the Closing without the prior review and written approval of Kysor. Section 4.14. Consents. The Parties will use their reasonable best efforts to cooperate with each other to obtain any consents to assignment or transfer of the Purchased Assets to the Purchaser. If consent to assignment is not obtained or if such assignment is not permitted irrespective of consent, Sellers will use their reasonable best efforts to cooperate with the Purchaser in any reasonable arrangement designed to provide for the Purchaser all benefits under such Purchased Assets, including enforcement for the benefit of the Purchaser of any and all rights of the applicable Seller against any other person with respect to the Purchased Assets; provided, however, that the Purchaser will bear all costs and expenses relating to such enforcement. Section 4.15. Litigation Matters. Following the Closing, the Purchaser will assume the defense of or settle, to the extent permitted under applicable Policies (as defined below) covering the Insured Claim (as defined below), each Litigation Claim included among the Assumed Liabilities (the "Defendant Claims") and will use its reasonable best efforts to cause Kysor and its affiliates (other than the Foreign Subsidiaries) to be removed as named parties therefrom, provided such removal would not prejudice any rights or any potential remedies or recoveries. Following the Closing, the Purchaser shall, in its sole discretion, prosecute, settle, compromise or cause to be dismissed each Litigation Claim included among the Purchased Assets (the "Plaintiff Claims") and will use its reasonable best efforts to cause Kysor and its affiliates (other than the Foreign Subsidiaries) to be removed as named parties therefrom, provided such removal would not prejudice any rights or any potential remedies or recoveries. Whether or not Parent effects the removal of Kysor and its affiliates (other than the Foreign Subsidiaries) from any such Defendant Claim or Plaintiff Claim, and in furtherance and not limitation of the provisions of Article VII, Parent and the Purchaser will defend, indemnify and hold harmless each Seller and its directors, officers, employees, shareholders, representatives and agents pursuant to Section 7.3 against any Indemnified Loss (as defined below) in respect of any Defendant Claim or Plaintiff Claim. Section 4.16. Insurance Matters. (a) Kysor will use its reasonable best efforts, consistent with past practice, to maintain in full force and effect after the Closing Date its liability insurance policies, including without limitation product liability, general liability, workers' compensation and environmental liability policies (collectively, the "Policies" and, individually, a "Policy") that relate to the Business in respect of acts, events or conditions that occurred or existed prior to the Closing (the -16- "Insured Claims") and will not, without the prior written consent of Parent, waive any rights of Parent or Purchaser as insureds (or, if Parent or the Purchaser is not permitted to be an insured under a Policy, any rights or benefits that the Parent or the Purchaser would have under that Policy if it were so permitted (an "Intended Insured Party")) under the Policies. At Parent's or the Purchaser's request in its discretion, Kysor will use its reasonable best efforts to cause Parent and the Purchaser to be named as additional insureds under the Policies in respect of the Insured Claims; provided, however, that Parent and the Purchaser will be liable for any additional premiums or other charges and will be responsible for any other obligations to the extent related to naming Parent and the Purchaser as additional insureds. Parent and the Purchaser may elect to discontinue coverage as an insured under any Policy upon written notice to that effect to Kysor. (b) To the extent that as of the Closing the aggregate deductible, retention, reimbursement or similar liability (collectively, the "Aggregate Retention") for any Policy described in the first sentence of Section 4.16(a) above with respect to any Policy year or other applicable period has not been fully met, the remaining portion (the "Remaining Portion") of such Aggregate Retention shall, to the extent of claims made thereafter in respect of such Policy year or period, be borne one-half by Sellers, on the one hand, and one-half by Parent and the Purchaser (as insured party or Intended Insured Party), on the other hand (it being understood that in no event shall Sellers, on the one hand, or Parent and the Purchaser (as insured parties or Intended Insured Parties), on the other hand, bear a portion of the Aggregate Retention in excess of its or their, as the case may be, claims). Subject to the foregoing, each insured party (or Intended Insured Party) will bear all individual per-claim deductibles, retentions, reimbursement and similar liabilities in respect of each claim by such insured party or Intended Insured Party in accordance with the terms of the Policy. If by reason of the timing of claims made after the Closing with respect to such Policy, the Remaining Portion of any Aggregate Retention is borne other than in accordance with the principles reflected in the first sentence of this Section 4.16(b), then the appropriate party will make such arrangements to compensate the other party or parties that have borne the disproportionate amount of such Remaining Portion as is reasonably acceptable to such latter party or parties (it being understood that such latter party or parties shall be placed in the same economic position as intended by the first sentence of this Section 4.16(b)). (c) The aggregate amount of insurance coverage available as of the Closing under a Policy with respect to any year or other applicable period thereunder shall be shared one-half by Sellers, on the one hand, and one- half by Parent and the Purchaser (as insured party or Intended Insured Party ), on the other hand. Any allocable portion of insurance coverage available as of the Closing under any Policy with respect to any year or other applicable period -17- thereunder that is not used by Sellers, on the one hand, or Parent and the Purchaser (as insured party or Intended Insured Party ), on the other hand, may be used by the other party. If with respect to any year or other applicable period under a Policy the aggregate amount of insurance coverage available thereunder as of the Closing shall have been exhausted and Sellers or Parent and the Purchaser, as the case may be, shall have exhausted a portion of the aggregate amount of such insurance coverage greater than its allocable share as determined in accordance with the second preceding sentence, Sellers or Parent and the Purchaser, as the case may be, shall promptly make such arrangements to compensate such party for its loss of insurance coverage as are reasonably acceptable to such party (it being understood that such party shall be put in the same economic position as if the sharing of aggregate insurance coverage provided in this Section 4.16(c) had initially occurred). Notwithstanding the foregoing, the Parent and the Purchaser shall share in the aggregate insurance coverage described above solely in respect of claims relating to the Business. (d) Each Party agrees that it shall comply with the terms of each Policy in respect of any Insured Claim, including the claims administration procedures thereof. (e) After Closing Sellers, on the one hand, and Parent and the Purchaser, on the other hand, shall provide information reasonably requested by the other regarding the status of claims, utilization of coverage, exhaustion of all deductibles, retentions, reimbursement and similar liabilities, and other matters regarding the Policies. Section 4.17. Collectively Bargained Qualified Plans. This Section 4.17 applies to all Qualified Plans sponsored or maintained by a Seller solely relating to employees in a collective bargaining agreement covering TPG. Sellers have disclosed all such Qualified Plans covered by this Section 4.17 to Purchaser and will furnish a list of such Qualified Plans prior to the Closing Date. With respect to all such plans, effective as of the Closing Date: (a) each Seller sponsoring such a plan shall take any and all action necessary under the plan and applicable law to transfer the sponsorship of the plan to the Purchaser; (b) all records relating to the operation and administration of such a plan shall be delivered to the Purchaser; (c) Sellers shall secure the resignation or removal of all trustees or fiduciaries of such a plan, unless Purchaser specifically informs Sellers in writing that it desires to continue the appointment of a trustee or other fiduciary; and (d) Sellers shall, or shall cause any other applicable named fiduciary under such a plan to, direct the trustee of the plan to transfer all assets to a successor trustee designated by the Purchaser. Section 4.18. Other Qualified Plans. This Section 4.18 applies to all Qualified Plans sponsored or maintained by a Seller relating to TPG employees which also cover employees of that Seller who are not related to TPG. The Sellers have disclosed to Purchaser all such -18- Qualified Plans covered by this Section 4.18 and will furnish a list of such Qualified Plans prior to the Closing Date. (a) Defined Benefit Pension Plans. With respect to all such defined benefit pension plans, effective as of the Closing Date: (i) each Seller sponsoring such a plan shall take necessary action to prepare a successor plan document in contemplation of a spin-off of assets and liabilities for current and former employees relating to TPG into a separate and successor plan with terms that are substantially similar to the original plan; (ii) a list of such current and former employees shall be furnished to Purchaser prior to the Closing Date; (iii) each Seller shall take all other necessary action to transfer assets and liabilities to each successor plan (including the Applicable Percentage of any Excess Assets (both as defined in Code section 414(1)(2)), and the calculation of the present value of the liabilities transferred to a successor plan shall be based on the mortality tables used by the original plans as of January 1, 1997 and the interest rates used by the PBGC for terminations of defined benefit pension plans as of the first day of the month that the transfer takes place; (iv) each Seller sponsoring a successor plan shall take all action necessary under the successor plan and applicable law to transfer the sponsorship of the plan to the Purchaser; (v) all records corresponding to the original plans relating to the operation and administration of the successor plans shall be delivered to the Purchaser; (vi) Sellers shall secure the resignation or removal of all trustees or fiduciaries of the successor plans, unless the Purchaser specifically informs Sellers in writing that it desires to continue the appointment of a trustee or other fiduciary; and (vii) Sellers shall, or shall cause any other applicable named fiduciary under the plan to, direct the trustee of a successor plan to transfer all assets to a successor trustee designated by the Purchaser. (b) Defined Contribution Plans. For each Qualified Plan covered by this Section 4.18 that is a defined contribution plan, except an employee stock ownership plan, effective as of the Closing Date: (i) each Seller sponsoring such a plan shall take necessary action to prepare a successor plan document in contemplation of a spin-off of assets and liabilities for current and former employees relating to TPG into a separate and successor plan with terms that are substantially similar to the original plan; (ii) a list of such current and former employees shall be furnished to the Purchaser prior to the Closing Date; (iii) each Seller shall take all other necessary action to transfer assets and liabilities to each successor plan attributable to current and former employees relating to TPG; (iv) each Seller sponsoring a successor plan shall take all action necessary under the successor plan and applicable law to transfer sponsorship of the plan to the Purchaser; (v) all records corresponding to the original plans relating to the operation and administration of the successor plans shall be delivered to the Purchaser; (vi) Sellers shall secure the resignation or removal of all trustees or fiduciaries of the successor plans, unless the Purchaser specifically informs -19- Sellers in writing that it desires to continue the appointment of a trustee or other fiduciary; and (vii) Sellers shall, or shall cause any other applicable named fiduciary under the plan to, direct the trustee of a successor plan to transfer all assets to a successor trustee designated by the Purchaser. (c) Employee Stock Ownership Plan. Effective as of the Closing Date, the Sellers shall: (i) take all action necessary to permanently discontinue employer contributions to the employee stock ownership plan ("ESOP") sponsored by a Seller and to fully vest the accounts of all participants; (ii) take all action necessary to make final allocations of all unallocated amounts, in accordance with terms of the ESOP document (which allocations shall include all participants who are active TPG employees at the Closing Date); (iii) submit the ESOP to the Internal Revenue Service for a determination that the allocation of ESOP unallocated assets on the basis of account balances does not adversely affect the ESOP's qualification under Sections 401(a) and 4975(e)(7) of the Code; and (iv) after receipt of the favorable determination letter, provide for the distribution of benefits from the ESOP to the participants as soon as reasonable feasible. Provided, however, if the Internal Revenue Service does not issue a favorable determination letter with respect to allocation of ESOP unallocated assets on the basis of account balances, or if all of the ESOP unallocated assets cannot be allocated during 1997, if requested by Purchaser, Sellers shall prepare a successor plan document for TPG participants and take necessary action to transfer assets and liabilities attributable to the TPG participants (including a percentage of the unallocated assets that would be allocable to TPG participants under Section 5.6(a) of the ESOP as in effect January 1, 1997) to the successor plan, in accordance with clauses (i)-(vii) of Section 4.18(b), and such successor plan shall be assumed by Purchaser. Section 4.19. Welfare Plans. (a) Medical Benefits Provided to Active Employees by the Purchaser. Effective immediately after the Closing Date, the Purchaser shall make available group medical plan coverage to all TPG active employees (and their dependents and beneficiaries who had such coverage under a group medical plan sponsored by Sellers on the Closing Date. The group medical plan coverage provided by the Purchaser under this Section 4.19(a) shall, to the extent permissible under applicable law, be based on such terms and conditions as the Purchaser deems appropriate, in its sole discretion; provided, however, that any such plan shall not preclude an employee from receiving coverage for a preexisting illness or other medical condition to the extent that the employee had coverage for that particular medical condition under a group health plan maintained by a Seller on the Closing Date. -20- (b) Medical Benefits Provided to Retired Employees by the Purchaser. Effective immediately after the Closing Date, the Purchaser shall assume the obligation of Sellers to provide medical coverage to those TPG employees (and their dependents and beneficiaries) who retired prior to the Closing Date and as of the Closing Date were provided with retiree medical benefits (other than COBRA coverage) by a Seller. A list of such employees will be furnished to the Purchaser prior to the Closing Date. (c) Benefits Provided by Sellers. Except with respect to a plan described in Section 4.19(e) below, any claim incurred by a TPG employee under any Welfare Plan (as defined below) sponsored or maintained by a Seller on or prior to the Closing Date shall remain the sole liability and responsibility of the Sellers and/or its particular Welfare Plan. A TPG employee covered by a Welfare Plan maintained by a Seller on or before the Closing Date shall have 180 days (or such longer or, in the case of a plan not self-funded by such Seller, shorter period of time that applies under the Seller's Welfare Plan) to submit a claim for benefits under the Seller's Welfare Plan. "Welfare Plan" means an "employee welfare benefit plan" as defined in Section 3(1) of ERISA maintained by a Seller for the benefit of any TPG employee. (d) COBRA Requirements. After the Closing Date: (i) Sellers shall be responsible for providing the COBRA Coverage for all TPG employees (and their dependents and beneficiaries) who incur a COBRA qualifying event on or prior to the Closing Date; and (ii) the Purchaser shall be responsible for providing COBRA Coverage for all TPG employees (and their dependents and beneficiaries) who incur a COBRA qualifying event after the Closing Date. (e) Section 125 Plan. The provisions of this Section 4.19(e) shall apply to any Plan maintained by a Seller under Code section 125 covering TPG employees. Effective as of the Closing Date, Sellers shall take all action necessary to: (i) spin-off that portion of such a plan covering TPG employees into a separate plan with substantially similar terms and conditions that are contained in the original plan; (ii) transfer an appropriate amount of assets consisting of all unreimbursed salary reduction contributions to the successor plan; and (iii) transfer sponsorship of the successor plan to the Purchaser. Section 4.20. Further Assurances. After Closing each Party will use its reasonable best efforts to cooperate with each other to further effect the transfer of the Purchased Assets to, and the assumption of the Assumed Liabilities by, the Purchaser and the other transactions contemplated by this Agreement, including (a) remitting to the Purchaser (i) payments received by Sellers with respect to accounts receivables included in the Purchased Assets and (ii) invoices and other bills received by Sellers with respect to liabilities included in the Assumed Liabilities, and (b) providing each other notice of any claim, obligation or liability for which the Party to be notified is responsible under this Agreement. Within three business days after Closing, -21- Parent will cause the Foreign Subsidiaries to pay and satisfy all inter-company accounts or liabilities to Kysor and any other Seller. Section 4.21. Restrictive Covenants. After Closing the Parties agree to abide by the provisions set forth in Exhibit 4.21. ARTICLE V CONDITIONS TO THE OBLIGATIONS OF THE PARTIES Section 5.1. Conditions to Obligations of the Parties. The obligations of each Party to consummate the transactions contemplated by this Agreement will be subject to the satisfaction at or before Closing of each of the following conditions unless waived in writing by that Party: (a) No statute, rule or regulation will have been promulgated, enacted, entered or enforced, and no other legally binding, final and nonappealable action will have been taken, by any domestic, foreign or supranational government or governmental, administrative or regulatory authority or agency of competent jurisdiction or by any court or tribunal of competent jurisdiction, domestic, foreign or supranational, that in any of the foregoing cases has the effect of (i) making illegal or directly or indirectly prohibiting or significantly restricting the consummation of the transactions contemplated by this Agreement, or (ii) that otherwise would materially adversely affect Sellers or the Business taken as a whole; provided, however, that Parent, the Purchaser and each Seller must have complied with Section 4.4 of this Agreement; (b) Any waiting period applicable to the transactions contemplated by this Agreement under the HSR Act must have terminated or expired and all other material consents and approvals of, and filings with any other governmental entities or other third parties must have been received or made, as applicable; and (c) This Agreement must not have been terminated by any Party in accordance with its terms. Section 5.2. Additional Conditions to Obligations of Parent and the Purchaser. The obligations of Parent and the Purchaser to consummate the transactions contemplated by this Agreement will be subject to the satisfaction at or before Closing of each of the following additional conditions unless otherwise waived in writing by the Purchaser: (a) the representations or warranties of Sellers contained in this Agreement that are qualified by materiality must be true and correct in all respects, and those that are not so qualified must be true and correct in all material respects, when made and at the Closing as if made again at that time, -22- except in each case for failures to comply that are capable of being and are cured (other than by mere disclosure of the breach) within 10 days after written notice from Parent to Kysor of the failure but in any event before Closing; (b) Sellers must have complied in all material respects with their obligations under this Agreement, except for failures to comply that are capable of being and are cured within 10 days after written notice from Parent to Kysor of the failure but in any event before Closing; (c) there must not have occurred on or after the date of this Agreement any development or developments with respect to the Business that have had or may reasonably be expected to have a Seller Material Adverse Effect; and (d) Kysor must have delivered to Parent and the Purchaser an officer's certificate certifying that as of the Closing all the conditions set forth in Sections 5.1 and Sections 5.2(a), (b) and (c) have been complied with. Section 5.3. Additional Conditions to Obligations of Sellers. The obligations of each Seller to consummate the transactions contemplated by this Agreement will be subject to the satisfaction at or before the Closing of each of the additional following conditions unless otherwise waived in writing by Sellers: (a) the representations or warranties of Parent and the Purchaser contained in this Agreement that are qualified by materiality must be true and correct in all respects, and those that are not so qualified must be true and correct in all material respects, when made and at the Closing as if made again at that time, except in each case for failures to comply that are capable of being and are cured (other than by mere disclosure of the breach) within 10 days after written notice from Kysor to Parent of the failure but in any event before Closing; (b) Parent and the Purchaser must have complied with their obligations under this Agreement, except for failures to comply that are capable of being and are cured within 10 days after written notice from Kysor to Parent but in any event before Closing; (c) Parent and the Purchaser must have delivered to each Seller an officer's certificate certifying that as of the Closing all the conditions set forth in Section 5.1 and Section 5.3(a) and (b) have been complied with; and (d) The cash tender offer for all of the outstanding capital stock of Kysor by Scotsman Industries, Inc. ("Scotsman") or a subsidiary thereof must have been consummated. -23- ARTICLE VI TERMINATION Section 6.1. Termination. This Agreement may be terminated at any time before the Closing: (a) by mutual written consent of Kysor and Parent; (b) by either Kysor or Parent if any court of competent jurisdiction in the United States or other governmental body in the United States has issued an order (other than a temporary restraining order), decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and the order, decree, ruling or other action has become final and nonappealable; provided that the party seeking to terminate this Agreement will have used its reasonable best efforts to remove or lift the order, decree or ruling; or (c) by either Kysor or Parent if the Closing has not occurred by June 30, 1997. Section 6.2. Termination by Parent. This Agreement may be terminated by Parent at any time before Closing if (a) the representations or warranties of Sellers contained in this Agreement are not true and correct as if made at and as of that time, except for (i) failures to be true and correct that could not reasonably be expected to result in a Seller Material Adverse Effect and (ii) failures to comply that are capable of being and are cured (other than by mere disclosure of the breach) within 10 days after written notice from Parent to Kysor of the failure; or (b) Sellers have failed to comply with their obligations under this Agreement, except for (i) failures to comply that could not reasonably be expected to result in a Seller Material Adverse Effect and (ii) failures to comply that are capable of being and are cured within 10 days after written notice from Parent to Kysor of the failure. Section 6.3. Termination by Kysor. This Agreement may be terminated by Kysor (a) if the Agreement and Plan of Merger dated as of February 2, 1997 among Kysor, Scotsman and K Acquisition Corp. is terminated for any reason; or (b) at any time before the Closing if (i) the representations and warranties of Parent and the Purchaser contained in this Agreement are not true and correct as if made at and as of that time, except for (A) failures to be true and correct that could not reasonably be expected to result in a Parent Material Adverse Effect and (B) failures to comply that are capable of being and are cured (other than by mere disclosure of the breach) within 10 days after written notice from Kysor to Parent of the failure; or (ii) Parent or the Purchaser has failed to comply with its obligations under this Agreement, except for (A) failures to comply that could not reasonably be expected to result in a Parent Material Adverse Effect and (B) failures to comply that are capable of being and are cured within 10 days after written notice from Kysor to Parent of the failure. -24- Section 6.4. Notice of Termination. If Parent or Kysor terminates this Agreement pursuant to this Article VI, that Party will promptly give written notice to that effect to the other Party. Section 6.5. Effect of Termination. In the event of termination of this Agreement pursuant to this Article VI, this Agreement will become void, except as provided in the last sentence of Section 4.3 and in Sections 4.7 and 6.6 (which provisions will survive any termination of this Agreement), without liability on the part of any Party or its affiliates, directors, officers, employees, stockholders, representatives or agents; provided, however, that the foregoing will not release a party for liability for any willful or bad faith breach of any obligation or undertaking under this Agreement. Each of the Parties by this Agreement waives and releases any other claim that may otherwise exist upon the termination. Section 6.6. Termination Fee. If this Agreement is terminated by Kysor (a) due to the failure of the condition set forth in Section 5.3(d) or (b) under Section 6.3(a), Kysor will promptly pay to Parent (but in any event within three business days after termination) the sum of $100,000, provided that the fee will not be payable if Parent or the Purchaser is in material breach of any of its material representations, warranties or obligations under this Agreement as of the date of termination. ARTICLE VII INDEMNIFICATION AND RELATED MATTERS Section 7.1. Survival of Representations, Warranties and Covenants. The representations and warranties contained in this Agreement and any agreement, document, instrument or certificate delivered under this Agreement will terminate and expire at the Closing, except for the representations and warranties set forth in Section 2.2, Section 2.14 and Section 2.18, all of which will survive the Closing forever. The post-Closing covenants and agreements of the Parties, including the indemnification covenants set forth in this Article VII, will survive the Closing without limitation (except for those that, by their terms, contemplate a shorter survival period). Except for the covenants and agreements of Sellers in Section 4.1, which will survive for two years after the Closing, all pre-Closing covenants and agreements of the Parties will not survive the Closing. This Article VII constitutes the sole and exclusive remedy of the Parties with respect to any subject matters addressed in this Agreement, and each Party hereby waives and releases the other Parties from any and all claims and other causes of action, including claims for contribution, relating to those subject matters, other than claims for intentional fraud and for injunctive relief. The making of a claim for indemnification under this Article VII (a "Claim") will toll the running of the limitation period with respect to that Claim. For purposes of the preceding sentence, a Claim will be deemed made upon the commencement of an independent judicial proceeding with respect to a matter or receipt by the indemnifying Party of a written notice of a Claim setting forth in detail the factual and contractual bases for the Claim. -25- Section 7.2. Indemnity by Sellers. Sellers, jointly and severally, will defend, indemnify and hold harmless Parent, the Purchaser and their respective directors, officers, employees, shareholders, representatives and agents against any loss, cost, damage, liability, obligation, claim or expense (including reasonable attorney fees and court costs but excluding any consequential, incidental, exemplary or similar damages) (collectively the "Indemnified Losses") resulting from or relating to (a) any breach of any representation, warranty, covenant or agreement made by Sellers in this Agreement that under Section 7.1 survives the Closing or any breach or nonperformance of any agreement entered into by any Seller at Closing, (b) any liabilities of Sellers not assumed by the Purchaser pursuant to this Agreement, and (c) the successful enforcement of Sellers' indemnification obligations under the Agreement. Section 7.3. Indemnity by Parent and the Purchaser. Parent and the Purchaser, jointly and severally, will defend, indemnify and hold harmless each Seller and its directors, officers, employees, shareholders, representatives and agents against any Indemnified Losses resulting from or relating to (a) any breach or nonperformance of any covenant or agreement made by Parent or the Purchaser in this Agreement that under Section 7.1 survives the Closing or any agreement entered into by Parent or the Purchaser at Closing, (b) the Assumed Liabilities, (c) the conduct of the Business and the use of the Purchased Assets after Closing, and (d) the successful enforcement of Parent's and the Purchaser's indemnification obligations under this Agreement. Section 7.4. Limits on Indemnification. The indemnification obligations of the Parties will be limited as follows: (a) Sellers will not be liable to Parent or Purchaser for Claims until the aggregate amount of Claims exceeds Five Hundred Thousand Dollars ($500,000) (the "Basket Amount"). Upon reaching the Basket Amount Sellers will be liable to Parent and the Purchaser for all Claims in excess of the Basket Amount up to an aggregate amount of Eight Million Dollars ($8,000,000) (the "Maximum Amount"). Under no circumstances will the aggregate amount of Sellers' indemnification obligations exceed the Maximum Amount. Notwithstanding the foregoing, nothing in this Section 7.4(a) will limit Seller's obligations under Section 4.1(d) or with respect to any post-Closing covenants and agreements of Sellers, including the indemnification covenants set forth in this Article VII, or with respect to any claims for intentional fraud. (b) Any amounts recoverable by an Indemnitee will be net of any tax benefits, insurance proceeds or other recoveries or reimbursements obtained by the Indemnitee. To the extent the tax benefits, insurance proceeds or other recoveries or reimbursements are incurred or received after any recovery pursuant to this Article VII, there will be a corresponding adjustment among the Parties without regard to the time limitations imposed under this Article VII. The Parties agree that all indemnification payments will be treated for tax purposes as an adjustment to the Purchase Price. -26- Section 7.5. Third Party Claims. If any action, suit, investigation or proceeding (including negotiations with federal, state, local or foreign tax authorities) (the "Action") is threatened or commenced by a third party in respect of which a Party or other person described in Section 7.2 and Section 7.3 (an "Indemnitee") may make a Claim under this Agreement, the Indemnitee will notify the Party obligated to indemnify that Party (the "Indemnitor") to that effect with reasonable promptness (so as to not prejudice the Indemnitor's rights) after the commencement or threatened commencement of the Action, and the Indemnitor will have the opportunity to defend against the Action (or, if the Action involves to a significant extent matters beyond the scope of the indemnity agreement contained in this Article VII, those claims that are covered hereby) subject to the limitations set forth below. If the Indemnitor elects to defend against any Action (or, as described in the preceding parenthetical, one or more claims relating thereto), the Indemnitor will notify the Indemnitee to that effect with reasonable promptness. In that case, the Indemnitee will have the right to employ its own counsel and participate in the defense of the Action, but the fees and expenses of such counsel will be at the expense of the Indemnitee unless the employment of such counsel at the expense of the Indemnitor is authorized in writing by the Indemnitor. Any Party granted the right to direct the defense of a threatened or actual Action under this Section 7.5 will: (a) keep the other Parties fully informed of material developments in the Action at all stages of the Action; (b) promptly submit to the other Parties copies of all pleadings, responsive pleadings, motions and other similar legal documents and papers received in connection with the Action; (c) permit the other Parties and their counsel, to the extent practicable, to confer on the conduct of the defense of the Action; and (d) to the extent practicable, permit the other Parties and their counsel an opportunity to review all legal papers to be submitted prior to their submission. The Parties will make available to each other and each other's counsel and accountants all of their books and records relating to the Action, and each Party will render to the other Parties any assistance that may be reasonably required in order to insure the proper and adequate defense of the Action. The Parties will use their respective good faith efforts to avoid the waiver of any privilege of any Party. The assumption of the defense of any matter by an Indemnitor will not constitute an admission of responsibility to indemnify or in any manner impair or restrict that party's rights to later seek to be reimbursed its costs and expenses if indemnification with respect to the matter was not required. An Indemnitor may elect to assume the defense of a matter at any time during the pendency of the matter, even if initially the Party did not elect to assume the defense, so long as the assumption at the later time would not prejudice the rights of the Indemnitee. No settlement of a matter by the Indemnitee will be binding on an Indemnitor for purposes of the Indemnitor's indemnification obligations. No settlement of a matter by the Indemnitor will be binding on an Indemnitee without the prior written consent of the Indemnitee (which consent will not be unreasonably withheld) unless the settlement involves only the payment of money that Indemnitor pays simultaneously with such settlement. Notwithstanding the foregoing, with respect to any Action for which a claim has been or may be made under any insurance policy, the Parties will comply with any procedures in such policy for filing, maintaining or prosecuting such claim, and to the extent the procedures in such policy are inconsistent with this Section 7.5, the procedures in such policy will control. -27- ARTICLE VIII MISCELLANEOUS Section 8.1. Modification and Waiver. At any time before the Closing, subject to applicable law, this Agreement may be amended, modified or supplemented only by the written agreement (referring specifically to this Agreement) of the Parties. At any time before the Closing, Parent and the Purchaser, on the one hand, and Sellers, on the other hand, may (a) extend the time for the performance of any of the obligations or other acts of the other, (b) waive any inaccuracies in the representations and warranties of the other contained in this Agreement or in any documents delivered pursuant to this Agreement and (c) waive compliance by the other with any of the agreements or conditions contained in this Agreement that may legally be waived. Any extension or waiver will be valid only if set forth in an instrument in writing specifically referring to this Agreement and signed on behalf of the extending or waiving Party. Section 8.2. Notices. All notices and other communications under this Agreement will be in writing and will be delivered personally or by next-day courier or telecopied with confirmation of receipt, to the Parties at the addresses specified below (or at any other address for a Party that will be specified by like notice; provided that any notice of a change of address will be effective only upon actual receipt of the notice). Any notice will be effective upon receipt, if personally delivered or telecopied, or one day after delivery to a courier for next day delivery. (a) if to any Seller: Kysor Industrial Corporation One Madison Avenue Cadillac, Michigan 49601-9785 Fax: (616) 775-2661 Attention: General Counsel with a copy to: Tracy T. Larsen, Esq. Warner, Norcross & Judd LLP 900 Old Kent Building 111 Lyon Street, NW Grand Rapids, Michigan 49503 Fax: (616) 752-2500 (b) if to Parent or the Purchaser: -28- Kuhlman Corporation Three Skidaway Village Square Savannah, Georgia 31411 Fax: (912) 598-0737 Attention: Richard A. Walker, Esq. with a copy to: Stephen A. Landsman, Esq. Rudnick & Wolfe 203 North LaSalle Street Chicago, Illinois 60601 (312) 236-7516 Section 8.3. Assignment. This Agreement and all of the provisions of this Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. In addition, this Agreement will inure to the benefit of and be enforceable by any person or entity acquiring beneficial ownership of 50% or more of Kysor's outstanding capital stock, whether by tender offer, merger or otherwise, and such person's or entity's successors or assigns; provided that such person or entity assumes and agrees to perform the obligations of Kysor under Article VII. Neither this Agreement nor any of the rights, interests or obligations under this Agreement will be assigned by any of the Parties without the prior written consent of the other Parties. No assignment will relieve any Party of its obligations under this Agreement. Except for the individuals identified in Article VII as entitled to indemnification under the terms of that Article, this Agreement is not intended to confer any rights or remedies upon any other person or entity except the Parties. Section 8.4. Governing Law. This Agreement will be governed by the laws of the State of Michigan as to all matters, including matters of validity, construction, effect, performance and remedies, without regard to conflict of law principles. Section 8.5. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Section 8.6. Interpretation. The Article and Section headings contained in this Agreement are solely for convenience of reference, are not part of the agreement of the Parties and will not in any way affect the meaning or interpretation of this Agreement. As used in this Agreement, the term"including" and words of similar import will mean "including, without limitation," unless the context otherwise requires or unless otherwise specified, the term "to the knowledge of Sellers" (or words of similar import) will mean to the knowledge of any executive officer of any Seller, and the term "Litigation Claim" means any pending or threatened suit, action, proceeding or investigation, whether as a plaintiff or as a defendant, and whether existing on or after the date of this Agreement. -29- Section 8.7. Entire Agreement. This Agreement, the Disclosure Letter and the Confidentiality Agreement (collectively, the "Transaction Documents") embody the entire agreement and understanding of the Parties in respect of the subject matter contained in the Transaction Documents and supersede all prior agreements and understandings among the Parties with respect to that subject matter. There are no representations, promises, warranties, covenants or undertakings in respect of that subject matter, other than those expressly set forth or referred to in the Transaction Documents. Section 8.8. Severability. The invalidity or unenforceability of any particular provision of this Agreement will be construed in all respects as if the invalid or unenforceable provision were omitted. All provisions of this Agreement will be enforced to the fullest extent permitted by law. * * * * * * * -30- The Parties have caused this Agreement to be signed by their respective duly authorized officers as of the date first written above. KUHLMAN CORPORATION By: /s/ Robert S. Jepson, Jr. ----------------------------------- Name: Robert S. Jepson, Jr. Title: Chairman and Chief Executive Officer "Parent" TRANSPRO GROUP, INC. By: /s/ Robert S. Jepson, Jr. ----------------------------------- Name: Robert S. Jepson, Jr. Title: Chairman and Chief Executive Officer "Purchaser" KYSOR INDUSTRIAL CORPORATION By: /s/ George R. Kempton ----------------------------------- Name: George R. Kempton Title: Chairman & CEO "Kysor" KYSOR INTERNATIONAL DISTRIBUTION COMPANY By: /s/ George R. Kempton ----------------------------------- Name: George R. Kempton Title: President "Subsidiary" AUSTIN TRAILER EQUIPMENT COMPANY By: /s/ George R. Kempton ----------------------------------- Name: George R. Kempton Title: President "Subsidiary" WESTRAN CORPORATION By: /s/ George R. Kempton ----------------------------------- Name: George R. Kempton Title: President "Subsidiary" -31- ANNEX A SUBSIDIARIES ------------ Kysor International Distribution Company, a Michigan corporation Austin Trailer Equipment Company, a Michigan corporation Westran Corporation, a Michigan corporation -32- ANNEX B FOREIGN SUBSIDIARIES ------- ------------ Kysor Europe Ltd., a United Kingdom corporation Kysor/Asia Ltd., a Korean corporation Dynair, Ltd., a United Kingdom corporation Kysor Industries, S.A., a Belgium corporation Kysor Do Brasil LTDA, a Brazilian corporation -33- EXHIBIT 1.1(d) OWNED REAL PROPERTY ----- ---- -------- 1. Plant, warehouse and office located in Byron, Illinois 2. Plant and office located in Scottsburg, Indiana 3. The following Michigan properties: (a) Cadillac: Plant, warehouse and office (b) Spring Lake: Plant and office (c) Rothbury: Plant, warehouse and office (d) Walker: Plant and office (e) White Pigeon: Plant and office 4. Plant and office in Charlotte, North Carolina -34- EXHIBIT 1.1(e) REAL PROPERTY LEASES ---- -------- ------ Leases respecting the following facilities: (a) Plant and office located in Hengoed, South Wales (b) Plant and office located in Nailsworth, England (c) Plant and office located in Changwon, South Korea -35- EXHIBIT 1.1(m) EXCLUDED ASSETS -------- ------ The Purchased Assets do not include the following assets of Sellers: (a) except for that which exists within the Foreign Subsidiaries, any cash, investments and other cash equivalents, (b) inter-company accounts (except with respect to the Foreign Subsidiaries, which will be settled within three business days after Closing), (c) the corporate charter, corporate records, seals, stock transfer books, blank stock certificates, minute books and other documents relating to the organization, maintenance and existence of each Seller as a corporation, (d) all qualifications to transact business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, (e) any assets of Sellers relating to their respective operations exclusive of the Business, (f) the equity interest of any Seller in the cogeneration facility located in Cadillac, Michigan, or any proceeds from the sale thereof, (g) the name "Kysor" and any derivatives of that name, and (h) the following amounts received or to be received in connection with the settlement of insurance claims with respect to environmental matters: (i) approximately $500,000 received from Wausau in 1996 (global settlement), (ii) approximately $1,350,000 received from Royal Globe Insurance in January, 1997 (global settlement), and (iii) amounts to be received from Firemen's Fund (global settlement except with respect to Cadillac, MI superfund site (settlement for past costs only)). -36- EXHIBIT 1.1(n) PERMITTED LIENS --------- ----- "Permitted Liens" means (a) Liens for water, sewage and similar charges and current taxes and assessments not yet due and payable or being contested in good faith, (b) mechanics', carriers', workers', repairers', materialmen's, warehousemen's and other similar Liens arising or incurred in the ordinary course of business, (c) Liens arising or resulting from any action taken by Parent or the Purchaser, (d) easements, rights of way, restrictions and other similar Liens that do not materially interfere with the ordinary conduct of the operations of any Division or any Subsidiary, (e) any Liens set forth in any leases, agreements or other documents included in the Purchased Assets that evidence the applicable Seller's rights in or to title to a particular Purchased Asset, (f) any Liens associated with the Assumed Liabilities, (g) minor imperfections or defects in title which do not effect the value or use of the Purchased Assets and (h) any other Liens to which Parent or the Purchaser consents in writing. -37- EXHIBIT 1.2(b) EXCLUDED LIABILITIES -------- ----------- The following liabilities are Excluded Liabilities: (a) except as provided in Section 1.2(b), any severance or benefit obligations respecting central staff (headquarters) employees of Kysor, (b) liabilities arising under the Termination Agreement between Kysor and Timothy Campbell, (c) liabilities associated with Kysor's equity interest in the cogeneration facility located in Cadillac, Michigan, (d) Sellers' expenses associated with the transactions contemplated by this Agreement to the extent not specifically allocated to Parent or the Purchaser, (e) Sellers' post-Closing contractual obligations under this Agreement, and (f) inter-company accounts (except with respect to the Foreign Subsidiaries, which will be settled within three business days after Closing). -38- EXHIBIT 4.21 ------------ RESTRICTIVE COVENANTS --------------------- Section 1. From and after the Closing, each Seller and each of their respective subsidiaries (each, a "Restricted Party" and, collectively, the "Restricted Parties") shall not, except on behalf of the Purchaser, either directly or indirectly, on its own account, or as an independent contractor, consultant, agent, partner, joint venture or owner of any other person, firm, partnership, corporation or other entity, or in any other capacity, in any way: (a) Throughout the period of five (5) years from and after the date of this Agreement (the "Term") within the United States of America, including its possessions and territories, or within any foreign country or foreign jurisdiction in which TPG operates or sells any of its products, conduct, engage in or aid or assist anyone in the conduct of a business (or any portion thereof) which is substantially similar or directly competitive with the Business (or any portion thereof), as currently conducted or as currently planned to be conducted during the Term; or (b) Throughout the Term solicit, divert, take away or accept orders from, or attempt to solicit, divert, take away or accept orders from, any person, firm, partnership, corporation or other entity, wherever located, for whom any member of TPG performed any services or to whom any member of TPG sold any product within the eighteen (18) month period immediately preceding the date of this Agreement with respect to any product or service which is the same or substantially similar (in either function or use) to the products or services sold or provided during said eighteen (18) month period by any member of TPG in respect of the Business; or (c) Throughout the three (3) year period after the date of this Agreement, solicit for employment any person who was employed by or engaged by any Restricted Party with respect to the Business within the twelve (12) month period immediately preceding the date of this Agreement (other than in the course of a general hiring solicitation program which is not specifically targeted, in whole or in part, to employees of the Business or Purchaser); or (d) Use for itself or for any other person, firm, corporation, partnership, association or other entity, or divulge or disclose in any manner to any person, firm, corporation, partnership, association or other entity, the methods of operation, financial data, sources of supply, know- how, pricing information, records, books, agreements, techniques, procedures, systems or other trade secrets or confidential or proprietary information included with the Purchased Assets (hereinafter referred to as the "Confidential Information"). Notwithstanding anything to the contrary contained in this Exhibit 4.21, the restrictions on disclosure and use of the Confidential Information shall not apply to (i) information or techniques which are or become available to the public other than through disclosure (whether deliberate or inadvertent) by any Restricted Party -39- in violation of this Section 1 (d); (ii) disclosure of Confidential Information in judicial or administrative proceedings or other requirements of the law to the extent any Restricted Party is legally compelled to disclose such information in the opinion of such Restricted Party's counsel, provided that such Restricted Party shall have used its reasonable efforts to obtain an appropriate protective order or other assurance of confidential treatment for the information required to be so disclosed; (iii) such Confidential Information becomes available to a Restricted Party from a third party who is under no confidential or fiduciary obligation to Purchaser with respect to such Confidential Information or (iv) the disclosure of Confidential information in connection with submitting proof or evidence in any legal or administrative proceeding to enforce any rights or remedies of Sellers under this Agreement or any of the documents contemplated hereby. Notwithstanding the foregoing, nothing set forth in this Exhibit 4.21 shall prohibit a Restricted Party from: (i) owning for investment purposes not in excess of 5% in the aggregate of any class of capital stock of any corporation if such capital stock is publicly traded and listed on any national or regional stock exchange or quoted on the Nasdaq National Market; and (ii) purchasing, and following such purchase, actively engaging in, any business that has a subsidiary, division, group, franchise or segment that is engaged in any activity that, without taking into account this sentence, cannot be engaged in by a Restricted Party under this Exhibit 4.21, so long as (x) on the date of such purchase not more than 15% of the consolidated revenues of such business are derived from such activity and (y) such business divests itself of such subsidiary, division, group, franchise or segment as soon as practicable after the date of such purchase (but in any event within one year after the date of such purchase). Section 2. Each Restricted Party hereby agrees that the periods of time, geographical scope and other limitations provided for in Section 1 above are the minimum such terms necessary to protect the Purchaser and each of its affiliates, successors and assigns in the use and employment of the goodwill respecting the Business. Each Restricted Party further agrees that damages cannot adequately compensate Purchaser in the event of its breach of any of the covenants contained in Section 1 above. Accordingly, each Restricted Party agrees that in the event of a breach of any of such covenants, Purchaser shall be entitled to obtain injunctive relief against such Restricted Party, without bond but upon due notice, in addition to such other relief as may appertain at law or in equity. Obtainment of any such injunction by Purchaser shall not be deemed an election of remedies or a waiver of any right to assert any other remedies Purchaser may have at law or in equity. The existence of any claim or cause of action of any Restricted Party against Purchaser, of whatever nature, shall not constitute a defense of Purchaser's enforcement of the covenants contained in Section 1 above. To the extent any of the covenants contained in Section 1 above are deemed unenforceable by virtue of their scope, in terms of geographical area or length of time or otherwise, but may be made enforceable by limitations thereon, each Restricted Party agrees that the same shall be enforceable to the fullest extent permissable under the laws and public policies of the jurisdiction in which enforcement is sought. The parties hereto hereby authorize any court of competent jurisdiction to modify or reduce the scope of the covenants contained in Section 1 above to the extent necessary to make such covenants enforceable. -40- EX-99.C3 17 JOINDER, DATED FEBRUARY 2, 1997 EXHIBIT (c)(3) JOINDER ------- Effective at the consummation of the tender offer contemplated by the Agreement and Plan of Merger dated as of February 2, 1997 among Scotsman Industries, Inc., a Delaware corporation ("Scotsman"), K Acquisition Corp., a Michigan corporation, and Kysor Industrial Corporation, a Michigan corporation ("Kysor"), and in order to induce Kuhlman Corporation, a Delaware corporation ("Kuhlman"), and Transpro Group, Inc., a Delaware corporation ("Kuhlman Sub"), to enter into the Asset Purchase Agreement dated as of February 2, 1997 (the "Asset Purchase Agreement") among Kuhlman, Kuhlman Sub, Kysor and certain subsidiaries of Kysor named therein, Scotsman hereby agrees to be bound by the provisions of Section 4.21 and Exhibit 4.21 of the Asset Purchase Agreement as a Restricted Party (as such term is defined therein) and by the provisions of Article VII of the Asset Purchase Agreement. Date: February 2, 1997 SCOTSMAN INDUSTRIES, INC. By: /s/ Richard C. Osborne ----------------------------------- Name: Richard C. Osborne Title: Chairman, President and Chief Executive Officer EX-99.C4 18 CONFIDENTIALITY AGREEMENT DATED 6/18/96 Exhibit (c)(4) [LETTERHEAD OF KYSOR INDUSTRIAL CORPORATION] June 18, 1996 CONFIDENTIAL Scotsman Industries, Inc. c/o Mr. Richard C. Osborne 775 Corporate Woods Parkway Vernon Hills, Illinois 60061 Gentlemen: We have entered into preliminary discussions concerning a possible negotiated business transaction between Kysor Industrial Corporation ("Kysor") and Scotsman Industries, Inc. ("Scotsman"). In connection therewith, each party has been, or may in the future be, furnished certain information concerning the business, financial condition, operations, assets and liabilities of the other from officers, directors, employees, representatives, advisors and/or agents of such other party. In consideration of the foregoing, we each hereby agree to the following (it being understood that we are also each agreeing to cause our respective affiliates, including persons who may become our affiliate or a successor to us or to a substantial portion of our business or assets after the date hereof, to comply with all of the provisions hereof): (I) Use of Evaluation Material. The Evaluation Material (as defined below) will be used solely for the purpose of evaluating a possible negotiated business transaction between Kysor and Scotsman. Unless and until we have completed such a transaction pursuant to a definitive agreement (a "Definitive Agreement"), all the Evaluation Material will be kept confidential by us and our Representatives (as defined below); provided, however, that we may disclose the Evaluation Material or portions thereof to those of our directors, officers, employees, agents or advisors (the persons to whom such disclosure is permissible being collectively called "Representatives") who need to know such information for the sole purpose of evaluating a possible negotiated business transaction between us and who, prior to the receipt of Evaluation Material, agree to keep such information confidential. We each agree to be responsible for compliance with this agreement by any of our respective Representatives, and we each agree, at our sole expense, to take all reasonable measures (including but not limited to court proceedings) to restrain our Representatives from prohibited or unauthorized disclosure or use of the other's Evaluation Material. (2) Legally Required Disclosures. In the event that either of us or any of our respective Representatives are requested or required (by deposition, interrogatory, requests for information or documents in legal proceedings, subpoena, civil investigative demand or similar process) to disclose any of the Evaluation Material of the other, the party requested or required to make such disclosure shall provide the other with prompt prior written notice of any such request or requirements so that such other party may seek a protective order or other appropriate remedy or, if appropriate, waive compliance with the terms of this agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver, either of us or any of our respective Respresentatives are nonetheless, in the written opinion of counsel, legally compelled to disclose Evaluation Material of the other or else stand liable for contempt or suffer other censure or penalty, such party or its Representatives may, without liability hereunder, disclose that portion of the Evaluation Material of the other which such counsel advises is legally required to be disclosed, provided that the disclosing party shall exercise its best efforts to preserve the confidentiality of the Evaluation Material, including, without limitation, by cooperating with the other party to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Evaluation Material by such tribunal, regulatory authority or other entity to which such Evaluation Material is required to be disclosed. (3) Definition of Evaluation Material. The term "Evaluation Material" as used in this agreement shall mean, with respect to a particular party, all information and documents concerning such party (whether prepared by such party, its advisors or otherwise and irrespective of the form of communication) which such party has furnished or disclosed now or in the future furnishes or other- wise discloses to the other or any of its Representatives, together with all notes, analyses, compilations, studies, interpretations or other documents, records or data prepared by the receiving party or any of its Representatives which contain, reflect or are otherwise based upon, in whole or in part, such information and documents. The term "Evaluation Material" does not include any information which: i) at the time of disclosure or thereafter is generally available to and known by the public or trade (other than as a result of a disclosure by a receiving party or any of its Representatives), ii) was within a receiving party's possession prior to its being furnished to such party pursuant hereto, provided that the source of such information was not known by the receiving party, after reasonable inquiry, to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the disclosing party or any other party with respect to such information, iii) after disclosure hereunder becomes available to the receiving party on a nonconfidential basis from a source other than the disclosing party, provided that such source is not bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the disclosing party or any other party with respect to such information, or 2 iv) has been independently acquired or developed by the receiving party without violation of law or any obligation under this agreement. (4) Return or Destruction of Material. If either of us decides that we do not wish to proceed with a business transaction, we will promptly inform the other of that decision. In such case, or otherwise upon written request (a "Return Notice"), we each agree to return to the other, within five business days, all Evaluation Material (and all copies thereof) then in our possession or in the possession of any of our respective Representatives; provided, however, with respect to any Evaluation Material prepared by either of us or any of our respective Representatives (including any analyses, compilations, studies or other documents, records or data, and any material contained on any computer tapes, computer disks or any other form of electronic or magnetic media) we each agree to destroy within five business days, in lieu of returning to the other, all such Evaluation Material, and we each agree to certify to the other in a letter delivered within ten business days of receipt of a Return Notice that the return required hereunder and/or such destruction have been accomplished. Notwithstanding the return or destruction of the Evaluation Material, we each agree to continue to be bound by our obligations of confidentiality and other obligations hereunder, and we will not use any Evaluation Material for any purpose or disclose any Evaluation Material to another person. (5) Nondisclosure of Possible Transaction. Without the prior written consent of the other, we will not, and will direct and cause our respective Representatives not to, now or at any time in the future, disclose to any person other than our respective Representatives, the fact that the Evaluation Material has been made available, that any investigations, discussions or any of the terms, conditions, status of discussions or other facts with respect to any such possible transaction, provided that we may make such disclosure if we are advised in the written opinion of our counsel that such disclosure must be made in order that we not commit a violation of law, but only after notifying the other of such opinion and advising the other of the substance of the contemplated disclosure. (6) Contacts with the Company and Personnel. Until the earliest of (i) the execution by us of a Definitive Agreement; or (ii) three years from the date of this agreement, we each agree not to initiate or maintain contact (except for those contacts made in the ordinary course of business) with the other, or any of the other's affiliates or advisors, regarding its business, assets, operations, prospects, finances, or Evaluation Material, except with the express permission of the Chief Executive Officers of our respective companies. It is understood that all (i) communications regarding a possible transaction between us and (ii) requests for additional information will be submitted or directed to each other or our designated advisors on a confidential bases. We each further agree that, for a period of three years from the date hereof, we will not solicit for employment any of the officers, directors or key employees of the other. (7) No Representation or Warranty. We each understand and acknowledge that neither the other nor any of its Representatives has made or makes any representations or warranty, express or implied, as to the accuracy or completeness of the Evaluation Material. We further each 3 agree that neither the other nor its Representatives shall have any liability relating to or resulting from the use of the Evaluation Material or any errors therein or omissions therefrom. Only those representations or warranties that are made in a Definitive Agreement when, as, and if one is executed, and subject to such limitations and restrictions as may be specified in such Definitive Agreement, will have any legal effect. (8) Definitive Agreement. We each understand and agree that no contract or agreement providing for any transaction involving Kysor and Scotsman shall be deemed to exist between us unless and until a Definitive Agreement has been executed and delivered, and we, except for breach of this agreement, hereby waive, in advance, any claims, (including, without limitation, claims of breach of contract) in connection with any transaction involving Kysor and Scotsman unless and until we have entered into a Definitive Agreement. We also each agree that unless and until a Definitive Agreement regarding a transaction between us has been executed and delivered, neither of us will be under any legal obligation of any kind whatsoever with respect to such a transaction by virtue of this agreement, except for the matters specifically agreed to herein. We each further acknowledge and agree that we each reserve the right to terminate discussions and negotiations with the other at any time. Neither this paragraph nor any other provision in this agreement can be waived or amended except by written consent of both parties, which consent shall specifically refer to this paragraph (or such other provision) and explicitly make such waiver or amendment. (9) Standstill Agreement. For a period of three years from the date of this agreement, we each agree that we and our respective controlled affiliates will not, directly or indirectly, except pursuant to a Definitive Agreement: (i)acquire or agree, offer, seek or propose to acquir e, or cause to be acquired, ownership of any of the other party's assets or businesses or any voting securities issued by the other party, or any other rights or options to acquire such ownership (including from a third party), (ii) seek or propose to influence or control the other party's management or policies, or (iii) enter into any discussions, negotiations, arrangements or understandings with any third party with respect to any of the foregoing. The restrictions contained in this paragraph, shall not be applicable to purchases solely for investment purposes aggregating less than 5% of the other's outstanding voting securities. (10) Remedies. We each agree that money damages would not be a sufficient remedy for any breach of this agreement and that we each shall be entitled to equitable relief, including injunction and specific performance, in the event of any breach or threatened breach of the provisions of this agreement by the other, in addition to all other remedies available at law or in equity. 4 (11) No Waiver. No failure or delay in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. (12) Person. The term "person" as used in this agreement will be interpreted broadly to include, without limitation, the media and any corporation, company, group, partnership or other entity or individual. (13) Governing Law. This agreement is for the benefit of Kysor and Scotsman and our respective directors, officers, stockholders, owners, affiliates and agents, and will be governed by and construed in accordance with the laws of the State of Michigan, without giving effect to the choice of law rules thereof. If any provision of this agreement is found to be contrary to Michigan law or otherwise unenforceable, this agreement shall be construed as if such unenforceable provision were absent from the agreement, but the remainder of this agreement shall remain in full force and effect. Very truly yours, KYSOR INDUSTRIAL CORPORATION By /s/ George R. Kempton ----------------------------------- George R. Kempton Its Chairman and CEO -------------------------------- AGREED AND ACCEPTED: SCOTSMAN INDUSTRIES, INC. By /s/ Richard C. Osborne ---------------------- Richard C. Osborne Its Chairman of the Board, President and Chief Executive Officer Dated June 18, 1996 EX-99.C5 19 CONFIDENTIALITY AGREEMENT DATED 12/26/96 Exhibit (c)(5) [LETTERHEAD OF KYSOR INDUSTRIAL CORPORATION] December 26, 1996 CONFIDENTIAL Kuhlman Corporation c/o Mr. Gary G. Dillon Three Skidway Village Square Savannah, Georgia 31411 Gentlemen: We have entered into preliminary discussions concerning a possible negotiated business transaction between Kysor Industrial Corporation ("Kysor") and Kuhlman Corporation ("Kuhlman"). In connection therewith, each party has been, or may in the future be, furnished certain information concerning the business, financial condition, operations, assets and liabilities of the other from officers, directors, employees, representatives, advisors and/or agents of such other party. In consideration of the foregoing, we each hereby agree to the following (it being understood that we are also each agreeing to cause our respective affiliates, including persons who may become our affiliate or a successor to us or to a substantial portion of our business or assets after the date hereof, to comply with all of the provisions hereof): (I) Use of Evaluation Material. The Evaluation Material (as defined below) will be used solely for the purpose of evaluating a possible negotiated business transaction between Kysor and Kuhlman. Unless and until we have completed such a transaction pursuant to a definitive agreement (a "Definitive Agreement"), all the Evaluation Material will be kept confidential by us and our Representatives (as defined below); provided, however, that we may disclose the Evaluation Material or portions thereof to those of our directors, officers, employees, agents or advisors (the persons to whom such disclosure is permissible being collectively called "Representatives") who need to know such information for the sole purpose of evaluating a possible negotiated business transaction between us and who, prior to the receipt of Evaluation Material, agree to keep such information confidential. we each agree to be responsible for compliance with this agreement by any of our respective Representatives, and we each agree, at our sole expense, to take all reasonable measures (including but not limited to court proceedings) to restrain our Representatives from prohibited or unauthorized disclosure or use of the other's Evaluation Material. (2) Legally Required Disclosures. In the event that either of us or any of our respective Representatives are requested or required (by deposition, interrogatory, requests for information or documents in legal proceedings, subpoena, civil investigative demand or similar process) to disclose any of the Evaluation Material of the other, the party requested or required to make such disclosure shall provide the other with prompt prior written notice of any such request or requirement so that such other party may seek a protective order or other appropriate remedy or, if appropriate, waive compliance with the terms of this agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver, either of us or any of our respective Representatives are nonetheless, in the written opinion of counsel, legally compelled to disclose Evaluation Material of the other or else stand liable for contempt or suffer other censure or penalty, such party or its Representatives may, without liability hereunder, disclose that portion of the Evaluation Material of the other which such counsel advises is legally required to be disclosed, provided that the disclosing party shall exercise its best efforts to preserve the confidentiality of the Evaluation Material, including, without limitation, by cooperating with the other party to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Evaluation Material by such tribunal, regulatory authority or other entity to which such Evaluation Material is required to be disclosed. (3) Definition of Evaluation Material. The term "Evaluation Material" as used in this agreement shall mean, with respect to a particular party, all information and documents concerning such party (whether prepared by such party, its advisors or otherwise and irrespective of the form of communication) which such party has furnished or disclosed now or in the future furnishes or otherwise discloses to the other or any of its Representatives, together with all notes, analyses, compilations, studies, interpretations or other documents, records or data prepared by the receiving party or any of its Representatives which contain, reflect or are otherwise based upon, in whole or in part, such information and documents. The term "Evaluation Material" does not include any information which: i) at the time disclosure or thereafter is generally available to and known by the public or trade (other than as a result of a disclosure by a receiving party or any of its Representatives), ii) was within a receiving party's possession prior to its being furnished to such party pursuant hereto, provided that the source of such information was not known by the receiving party, after reasonable inquiry, to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the disclosing party or any other party with respect to such information, iii) after disclosure hereunder becomes available to the receiving party on a nonconfidential basis from a source other than the disclosing party, provided that such source is not bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the disclosing party or any other party with respect to such information, or 2 iv) has been independently acquired or developed by the receiving party without violation of law or any obligation under this agreement. (4) Return or Destruction of Material. If either of us decides that we do not wish to proceed with a business transaction, we will promptly inform the other of that decision. In such case, or otherwise upon written request (a "Return Notice"), we each agree to return to the other, within five business days, all Evaluation Material (and all copies thereof) then in our possession or in the possession of any of our respective Representatives; provided however, with respect to any Evaluation Material prepared by either of us or any of our respective representatives (including any analyses, compilations, studies or other documents, records or data, and any material contained on any computer tapes, computer disks or any other form of electronic or magnetic media) we each agree to destroy within five business days, in lieu of returning to the other, all such Evaluation Material, and we each agree to certify to the other in a letter delivered within ten business days of receipt of a Return Notice that the return [required hereunder and/or such destruction have been accomplished. Notwithstanding the return] or destruction of the Evaluation Material, we each agree to continue to be bound by our obligations of confidentiality and other obligations hereunder, and we will not use any Evaluation Material for any purpose or disclose any Evaluation Material to another person. (5) Nondisclosure of Possible Transaction. Without the prior written consent of the other, we will not, and will direct and cause our respective Representatives not to, now or at any time in the future, disclose to any person other than our respective Representatives, the fact that the Evaluation Material has been made available, that any investigations, discussions or any of the terms, conditions, status of discussions or other facts with respect to any such possible transaction, provided that we may make such disclosure if we are advised in the written opinion of our counsel that such disclosure must be made in order that we not commit a violation of law, but only after notifying the other of such opinion and advising the other of the substance of the contemplated disclosure. (6) Contacts with the Company and Personnel. Until the earliest of (i) the execution by us of a Definitive Agreement; or (ii) three years from the date of this agreement, we each agree not to initiate or maintain contact (except for those contacts made in the ordinary course of business) with the other, or any of the other's affiliates or advisors, regarding its business, assets, operations, prospects, finances, or Evaluation Material, except with the express permission of the Chief Executive Officers of our respective companies. It is understood that all (i) communications regarding a possible transaction between us and (ii) requests for additional information will be submitted or directed to each other or our designated advisors on a confidential basis. We each further agree that, for a period of three years from the date hereof, we will not solicit for employment any of the officers, directors or key employees of the other. (7) No Representation or Warranty. We each understand and acknowledge that neither the other nor any of its Representatives has made or makes any representations or warranty, express or implied, as to the accuracy or completeness of the Evaluation Material. We further each 3 agree that neither the other nor its Representatives shall have any liability relating to or resulting from the use of the Evaluation Material or any errors therein or omissions therefrom. Only those representations or warranties that are made in a Definitive Agreement when, as, and if one is executed, and subject to such limitations and restrictions as may be specified in such Definitive Agreement, will have any legal effect. (8) Definitive Agreement. We each understand and agree that no contract or agreement providing for any transaction involving Kysor and Kuhlman shall be deemed to exist between us unless and until a Definitive Agreement has been executed and delivered, and we hereby waive, in advance, any claims, (including, without limitation, claims of breach of contract) in connection with any transaction involving Kysor and Kuhlman unless and until we have entered into a Definitive Agreement. We also each agree that unless and until a Definitive Agreement regarding a transaction between us has been executed and delivered, neither of us will be under any legal obligation of any kind whatsoever with respect to such a transaction by virtue of this agreement, except for the matters specifically agreed to herein. We each further acknowledge and agree that we each reserve the right to terminate discussions and negotiations with the other at any time. Neither this paragraph nor any other provision in this agreement can be waived or amended except by written consent of both parties, which consent shall specifically refer to this paragraph (or such other provision) and explicitly make such waiver or amendment. (9) Standstill Agreement. For a period of three years from the date of this agreement, we each agree that we and our respective affiliates will not, directly or indirectly, except pursuant to a Definitive Agreement: (i) acquire or agree, offer, seek or propose to acquire, or cause to be acquired, ownership of any of the other party's assets or businesses or any voting securities issued by the other party, or any other rights or options to acquire such ownership (including from a third party), (ii) seek or propose to influence or control the other party's management or policies, or (iii) enter into any discussions, negotiations, arrangements or understandings with any third party with respect to any of the foregoing. The restrictions contained in this paragraph, shall not be applicable to purchases solely for investment purposes aggregating less than 5% of the other's outstanding voting securities. (10) Remedies. We each agree that money damages would not be a sufficient remedy for any breach of this agreement and that we each shall be entitled to equitable relief, including injunction and specific performance, in the event of any breach or threatened breach of the provisions of this agreement by the other, in addition to all other remedies available at law or in equity. 4 (11) No Waiver. No failure or delay in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. (12) Person the term "person" as used in this agreement will be interpreted broadly to include, without limitation, the media and any corporation, company, group, partnership or other entity or individual. (13) Governing Law. This agreement is for the benefit of Kysor and Kuhlman and our respective directors, officers, stockholders, owners, affiliates and agents, and will be governed by and construed in accordance with the laws of the State of Michigan, without giving effect to the choice of law rules thereof. If any provision of this agreement is found to be contrary to Michigan law or otherwise unenforceable, this agreement shall be construed as if such unenforceable provision were absent from the agreement, but the remainder of this agreement shall remain in full force and effect. Very truly yours, KYSOR INDUSTRIAL CORPORATION BY /s/ David W. Crooks --------------------------- David W. Crooks Its Vice President-General Counsel and Secretary ----------------------------- AGREED AND ACCEPTED: KUHLMAN CORPORATION By /s/ Gary G. Dillon ------------------------- Gary G. Dillon Its Chairman, President and C.E.O., Schwitzer, Inc. ---------------------------- Dated: 12-26, 1996 EX-99.C6 20 CONSULTING AGREEMENT DATED 2/2/97 EXHIBIT (c)(6) CONSULTING AND NONCOMPETITION AGREEMENT --------------------------------------- This Consulting and Noncompetition Agreement (this "Agreement") is entered into as of February 2, 1997 between SCOTSMAN INDUSTRIES INC., a Delaware corporation (the "Company"), and GEORGE KEMPTON (the "Consultant"). WHEREAS, the Consultant has acquired extensive knowledge of and experience in the business conducted by the Company; WHEREAS, the Company desires to obtain the benefit of the Consultant's knowledge and experience by retaining the Consultant, and the Consultant desires to accept such position, for the term and upon the other conditions hereinafter set forth; WHEREAS, concurrently herewith, the Company, K Acquisition Corp. and Kysor Industrial Corporation are entering into an Agreement and Plan of Merger dated as of the date hereof (the "Merger Agreement"), pursuant to which K Acquisition Corp. is acquiring Kysor Industrial Corporation and Kysor Industrial Corporation is becoming a wholly-owned subsidiary of the Company; WHEREAS, the Consultant will cease to be Chairman of Kysor Industrial Corporation's Board of Directors and Chief Executive Officer of Kysor Industrial Corporation effective as of the consummation of the tender offer contemplated by the Merger Agreement (the "Tender Offer"); and WHEREAS, the Company has required as a condition to its entering into the Merger Agreement that the Consultant (i) agree to certain modifications to his existing employment agreement with Kysor Industrial Corporation (the "Employment Agreement") and (ii) enter into this Agreement. NOW THEREFORE, in consideration of the mutual promises and agreements contained herein, the adequacy and sufficiency of which are hereby acknowledged, the Company and the Consultant hereby agree as follows: 1. Consulting Services; Expenses. The Company hereby engages the Consultant as a consultant, subject to the terms and conditions hereof, for the period commencing at the consummation of the Tender Offer and ending on the date which is the third anniversary of such consummation (the "Consulting Period"), subject to earlier termination pursuant to Section 4 hereof; provided, however, that this Agreement shall terminate and shall be of no further force or effect if the Merger Agreement shall be terminated and the Tender Offer shall not be consummated pursuant to the terms thereof. During the Consulting Period, the Consultant shall make himself available to perform consulting services with respect to the businesses conducted, or in development, by the Company, upon reasonable advance notice. Such consulting services shall be related to such matters as the Chief Executive Officer of the Company may designate from time to time and as are commensurate with the Consultant's years of experience and level of skill, and shall include consulting services to the Board of Directors of the Company (the "Board") with respect to the businesses conducted by the Company. The Consultant shall accommodate reasonable requests for the Consultant's consulting services, and shall devote reasonable time and his reasonable best efforts, skill and attention to the performance of such consulting services, including travel reasonably required in the performance of such consulting services. The parties will arrange consulting and travel dates and times so as not to interrupt any pre-planned business or personal activities, or employment obligations, of the Consultant. The Company shall reimburse the Consultant for all necessary travel and other expenses incurred by the Consultant in providing such consulting services. Notwithstanding the foregoing, the Consultant shall not be required to be available more than three (3) days per month nor to travel on more than three (3) occasions per year. 2. Independent Contractor. The Consultant shall perform the consulting services described in Section 1 hereof as an independent contractor without the power to bind or represent the Company for any purpose whatsoever. The Consultant shall not, by virtue of being a consultant hereunder, be eligible to receive any benefits for which officers or other employees of the Company are eligible at any time, such as insurance, participation in the Company's pension plans or other employee benefits. Consultant acknowledges that Company will not make provision for federal or state withholding taxes or FICA. 3. Compensation. As compensation for the Consultant's agreement to make himself reasonably available for consulting as provided in Section 1, and for his covenants contained in Section 5 of this Agreement, the Company shall pay to the Consultant on a monthly basis at the end of each month for each of the thirty-six (36) months during the Consulting Period an amount equal to $49,400 per month (the "Compensation"). Except in the event of termination of this Agreement as provided in Section 4, such payments shall not be reduced, withheld, discontinued, or subjected to setoff, for any reason whatsoever. If the Company fails to make Compensation payments required by this Agreement, and such failure continues for ten (10) days after Consultant notifies the Company in writing of such breach, Consultant's obligations under this Agreement shall continue, but Company shall be obligated to immediately pay to Consultant, in one lump sum, all of the remaining unpaid Compensation that would have been payable through the end of the Consulting Period; discounted, however, to the then present value, using a discount rate of 7.5 percent. Notwithstanding any failure by the Company to utilize the consulting services, or any disability of the Consultant resulting in his inability to perform consulting services hereunder, the remaining unpaid installments of the Compensation payable pursuant to this Agreement shall be paid by the Company to the Consultant or to his legal representative on the dates such payments otherwise would have been paid hereunder. In the event of the death of the Consultant during the Consulting Period, the then present value, using a discount rate of 7.5 percent, of the remaining unpaid Compensation payable through the remainder of the Consulting Period shall be paid by the Company as a death benefit to the beneficiary or beneficiaries designated in writing by the Consultant, or if no beneficiary is so designated, to the executor of the Consultant's estate. 4. Termination of Agreement. (a) The obligation of the Consultant set forth in Section 1 of this Agreement may be terminated at any time by the Consultant on thirty (30) days prior written notice to the Company. In the event of such termination by the Consultant, the obligations of the Company to pay the Consultant pursuant to Section 3 hereof shall cease, effective on the date of such termination. (b) The obligations of the Company set forth in Section 3 of this Agreement may be terminated at any time by the Company upon written notice to the Consultant in the event that the Consultant shall willfully be in material breach of any covenant contained in Section 1 or 5 hereof and the Consultant shall fail to cure such material breach within 30 days following such notice (in the event -2- of an alleged breach of Section 5, Consultant may cure any such breach by ceasing the activities in question). (c) This Agreement may be terminated by the Consultant upon ten (10) days prior written notice to the Company in the event that the Company shall breach any of its obligations under Section 3, 9 or 10 hereof; provided, however, that the Consultant shall not be entitled to terminate this Agreement pursuant to this Section 4(c) in the event that the Company shall cure any such breach within such ten (10) day period. In the event of such termination by the Consultant, the Company shall pay to the Consultant all remaining payments which would have become due under this Agreement had it continued in effect until its expiration date, within five (5) business days of such termination. 5. Noncompetition. During the Consulting Period, except with the prior written consent of the Board, the Consultant shall not directly or indirectly: (a) engage in any activities, whether as employer, proprietor, partner, stockholder (other than the holder of less than 5% of the stock of any corporation the securities of which are traded on a national or regional securities exchange or on the NASDAQ (National Market System) or over the counter), director, officer, employee, consultant or otherwise, in competition with the businesses conducted, or in development, by the Company at any time during the Consulting Period, which covenant not to compete shall be on a worldwide basis and shall include all industries in which the Company competes at any time during the Consulting Period; or (b) solicit, in competition with the Company, any person who is a customer or prospective customer of the businesses conducted, or in development, by the Company at any time during the Consulting Period. 6. Confidentiality. The Consultant shall not, at any time during the Consulting Period or thereafter, make use of or disclose directly or indirectly, any trade secret or other confidential or secret information of the Company or Kysor Industrial Corporation or other technical, business, proprietary or financial information of the Company or Kysor Industrial Corporation not available to the public or to the competitors of the Company ("Confidential Information"), except to the extent that such Confidential Information (a) becomes a matter of public record or is published in a newspaper, magazine or other periodical available to the general public, (b) is required to be disclosed by any law, regulation or order of any court or regulatory commission, department or agency, or (c) as the Board may so authorize in writing. 7. Nonsolicitation. During the Consulting Period except with the prior written consent of the Board, the Consultant shall not directly or indirectly induce or attempt to persuade any employee of the Company to terminate his or her employment relationship with the Company. 8. Scope of Covenants: Remedies. The following provisions shall apply to the covenants of the Consultant contained in Sections 5 and 6: -3- (a) the covenants contained in Section 5 shall apply on a worldwide basis, which is the basis on which the Company is actively engaged in conduct of its businesses and in which customers are being solicited; (b) without limiting the right of the Company to pursue all other legal and equitable remedies available for violation by the Consultant of the covenants contained in Section 5, 6 and 7, it is expressly agreed by the Consultant and the Company that such other remedies cannot fully compensate the Company for any such violation and that the Company shall be entitled to injunctive relief to prevent any such violation or any continuing violation thereof; (c) the Company and the Consultant each intends and agrees that the covenants contained in Sections 5, 6 and 7 are reasonably designed to protect the legitimate business interests of the Company without unnecessarily or unreasonably restricting the Consultant's business opportunities during or after the termination of the consulting Period, but that if in any action before any court or agency legally empowered to enforce the covenants contained in Sections 5, 6 and 7 any term, restriction, covenant or promise contained therein is found to be unreasonable and accordingly unenforceable, then such term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable by such court or agency; and (d) the Company shall advise the Consultant in writing of all businesses, industries and activities the Company believes are covered by the prohibitions in Section 5, not so identified; provided, that neither the Company's listing of a business, industry or activity as covered by Section 5 nor the Consultant's failure to specifically object to such listing shall be conclusive as to such coverage. If Consultant notifies the Company in writing of a specific business, industry or activity in which the Consultant proposes to engage, the Company will notify Consultant promptly, in writing, of whether the Company would consider such business, industry or other activity to violate Section 5 and Consultant shall not be obliged to refrain from engaging in any such business, industry or activity if Company fails to do so within 30 days. Company agrees that Consultant may continue to serve as a director of Simpson Industries, Inc. and JLG Industries, Inc. notwithstanding any other provision of this Agreement. 9. Expenses. The Company shall promptly pay the Consultant for all costs and expenses (including, without limitation, court costs and attorney's fees) incurred by the Consultant as a result of any claim, action or proceeding (including, without limitation, a claim, action or proceeding by the Consultant against the Company to collect amounts due to the Consultant or to otherwise enforce this Agreement) arising out of, or challenging the validity, advisability or enforceability of, this Agreement or any provision hereof; provided, however, that no such payment or reimbursement shall be made to the Consultant if the Consultant is the plaintiff in such claim, action or proceeding and a final nonappealable judgment is rendered against the Consultant with respect to all his claims. 10. Indemnification. The Company shall defend, indemnify and hold the Consultant harmless from and against all damages, costs and expenses (including attorney's fees) as a result of claims made by third parties arising out of the Consultant's performance of services under this agreement; provided, however, that the Company shall not indemnify and hold the Consultant harmless for conduct -4- found by a final nonappealable judgment of a court of competent jurisdiction that the damage, cost or expense results from the Consultant's own willful misconduct. 11. Successors; Binding Agreement. This Agreement shall inure to the benefit of and be enforceable by the Consultant and by his personal or legal representatives, executors, administrators, heirs, distributees, devisees and legatees and by the Company and its respective successors and assigns. 12. Notices. All notices and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered, when delivered by courier or overnight express service or five days after having been sent by certified or registered mail, postage prepaid, addressed (a) if to the Consultant, to the Consultant's address set forth in the records of the Company, or if to the Company, to Scotsman Industries, Inc., 775 Corporate Woods Parkway, Vernon Hills, Illinois 60061, Attention: Richard C. Osborne, with a copy to Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, Attention: Thomas A. Cole, Esq., or (b) to such other address as either party may have furnished to the other party in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 13. Governing Law; Validity; Jurisdiction and Venue. The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Michigan without regard to the applicable principles of conflicts of laws. The parties agree and agree to stipulate that the United States District Court for the Western District of Michigan (Southern Division) shall be the proper jurisdiction and venue for litigation of any claim arising out of or relating to this Agreement. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any of the other provisions of this Agreement, which other provisions shall remain in full force and effect. 14. Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed to be an original and both of which together shall constitute one and the same instrument. 15. Miscellaneous. No provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and executed by the Consultant and by a duly authorized officer of the Company. No waiver by a party hereto at any time of any breach by the other party hereto of, or failure to comply with, any condition or provision of this Agreement to be performed or complied with by such other party shall be deemed a waiver of any similar or dissimilar conditions or provisions at the same or at any prior or subsequent time. This Agreement does not affect any other agreement between the Consultant and the Company or any of its affiliates. Failure by the Consultant or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right which the Consultant or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision of or right under this Agreement. -5- IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Consultant has executed this Agreement as of the day and year first above written. SCOTSMAN INDUSTRIES INC. By /s/ Richard Osborne ------------------------------------ Chairman and Chief Executive Officer CONSULTANT: /s/ George Kempton -------------------------------------- George Kempton EX-99.C7 21 CONSULTING AGREEMENT DATED 2/2/97 EXHIBIT (c)(7) CONSULTING AND NONCOMPETITION AGREEMENT --------------------------------------- This Consulting and Noncompetition Agreement (this "Agreement") is entered into as of February 2, 1997 between SCOTSMAN INDUSTRIES, INC., a Delaware corporation (the "Company"), and PETER GRAVELLE (the "Consultant"). WHEREAS, the Consultant has acquired extensive knowledge of and experience in the business conducted by the Company. WHEREAS, the Company desires to obtain the benefit of the Consultant's knowledge and experience by retaining the Consultant, and the Consultant desires to accept such position, for the term and upon the other conditions hereinafter set forth; WHEREAS, concurrently herewith, the Company, K Acquisition Corp. and Kysor Industrial Corporation are entering into an Agreement and Plan of Merger dated as of the date hereof (the "Merger Agreement"), pursuant to which K Acquisition Corp. is acquiring Kysor Industrial Corporation and Kysor Industrial Corporation is becoming a wholly-owned subsidiary of the Company; WHEREAS, the Consultant will cease to be the President and C.E.O. and a Director of Kysor Industrial Corporation effective as of the consummation of the tender offer contemplated by the Merger Agreement (the "Tender Offer"); and WHEREAS, the Company has required as a condition to its entering into the Merger Agreement that the Consultant (i) agree to certain modifications to his existing employment agreement with Kysor Industrial Corporation (the "Employment Agreement") and (ii) enter into this Agreement. NOW THEREFORE, in consideration of the mutual promises and agreements contained herein, the adequacy and sufficiency of which are hereby acknowledged, the Company and the Consultant hereby agree as follows: 1. Consulting Services; Expenses. The Company hereby engages the Consultant as a consultant, subject to the terms and conditions hereof, for the period commencing at the consummation of the Tender Offer and ending on the date which is the sixth anniversary of such consummation (the "Consulting Period"), subject to earlier termination pursuant to Section 4 hereof; provided, however, that this Agreement shall terminate and shall be of no further force or effect if the Merger Agreement shall be terminated and the Tender Offer shall not be consummated pursuant to the terms thereof. During the Consulting Period, the Consultant shall make himself available to perform consulting services with respect to the businesses conducted, or in development, by the Company, upon reasonable advance notice. Such consulting services shall be related to such matters as the Chief Executive Officer of the Company may designate from time to time and as are commensurate with the Consultant's years of experience and level of skill, and shall include consulting services to the Board of Directors of the Company (the "Board") with respect to the businesses conducted by the Company. The Consultant shall accommodate reasonable requests for the Consultant's consulting services, and shall devote reasonable time and his reasonable best efforts, skill and attention to the performance of such consulting services, including travel reasonably required in the performance of such consulting services. The parties will arrange consulting and travel dates and times so as not to interrupt any pre-planned business or personal activities, or employment obligations, of the Consultant. The Company shall reimburse the Consultant for all necessary travel and other expenses incurred by the Consultant in providing such consulting services. Notwithstanding the foregoing, the Consultant shall not be required to be available more than three (3) days per month nor to travel on more than three (3) occasions per year. 2. Independent Contractor. The Consultant shall perform the consulting services described in Section 1 hereof as an independent contractor without the power to bind or represent the Company for any purpose whatsoever. The Consultant shall not, by virtue of being a consultant hereunder, be eligible to receive any benefits for which officers or other employees of the Company are eligible at any time, such as insurance, participation in the Company's pension plans or other employee benefits. Consultant acknowledges that Company will not make provision for federal or state withholding taxes or FICA. 3. Compensation. As compensation for the Consultant's agreement to make himself reasonably available for consulting as provided in Section 1, and for his covenants contained in Section 5 of this Agreement, the Company shall pay to the Consultant on a monthly basis at the end of each month for each of the seventy-two (72) months during the Consulting Period an amount equal to $44,600 per month (the "Compensation"). Except in the event of termination of the Agreement as provided in Section 4, such payments shall not be reduced, withheld, discontinued, or subjected to setoff, for any reason whatsoever. If the Company fails to make Compensation payments required by this Agreement, and such failure continues for ten (10) days after Consultant notifies the Company in writing of such breach, Consultant's obligations under this Agreement shall continue, but Company shall be obligated to immediately pay to Consultant, in one lump sum, all of the remaining unpaid Compensation that would have been payable through the end of the Consulting Period; discounted, however, to the then present value, using a discount rate of 7.5 percent. Notwithstanding any failure by the Company to utilize the consulting services, or any disability of the Consultant resulting in his inability to perform consulting services hereunder, the remaining unpaid installments of the Compensation payable pursuant to this Agreement shall be paid by the Company to the Consultant or to his legal representative on the dates such payments otherwise would have been paid hereunder. In the event of the death of the Consultant during the Consulting Period, the then present value, using a discount rate of 7.5 percent, of the remaining unpaid Compensation payable through the remainder of the Consulting Period shall be paid by the Company as a death benefit to the beneficiary or beneficiaries designated in writing by the Consultant, or if no beneficiary is so designated, to the executor of the Consultant's estate. 4. Termination of Agreement. (a) The obligation of the Consultant set forth in Section 1 of this Agreement may be terminated at any time by the Consultant on thirty (30) days prior written notice to the Company. In the event of such termination by the Consultant, the obligations of the Company to pay the Consultant pursuant to Section 3 hereof shall cease, effective on the date of such termination. (b) The obligations of the Company set forth in Section 3 of this Agreement may be terminated at any time by the Company upon written notice to the Consultant in the event that the Consultant shall willfully be in material breach of any covenant contained in Section 1 or 5 hereof and the Consultant shall fail to cure such material breach within 30 days following such notice (in the event) -2- of an alleged breach of Section 5, Consultant may cure any such breach by ceasing the activities in question). (c) This Agreement may be terminated by the Consultant upon ten (10) days prior written notice to the Company in the event that the Company shall breach any of its obligations under Section 3, 9 or 10 hereof; provided, however, that the Consultant shall not be entitled to terminate this Agreement pursuant to this Section 4(c) in the event that the Company shall cure any such breach within such ten (10) day period. In the event of such termination by the Consultant, the Company shall pay to the Consultant all remaining payments which would have become due under this Agreement had it continued in effect until its expiration date, within five (5) business days of such termination. 5. Noncompetition. During the Consulting Period, except with the prior written consent of the Board, the Consultant shall not directly or indirectly: (a) engage in any activities, whether as employer, proprietor, partner, stockholder (other than the holder of less than 5% of the stock of any corporation the securities of which are traded on a national or regional securities exchange or on the NASDAQ (National Market System) or over the counter), director, officer, employee, consultant or otherwise, in competition with the businesses conducted, or in development, by the Company at any time during the Consulting Period, which covenant not to compete shall be on a worldwide basis and shall include all industries in which the Company competes at any time during the Consulting Period; or (b) solicit, in competition with the Company, any person who is a customer or prospective customer of the businesses conducted, or in development, by the Company at any time during the Consulting Period. (6) Confidentiality. The Consultant shall not, at any time during the Consulting Period or thereafter, make use of or disclose directly or indirectly, any trade secret or other confidential or secret information of the Company or Kysor Industrial Corporation or other technical, business, proprietary or financial information of the Company or Kysor Industrial Corporation not available to the public or to the competitors of the Company ("Confidential Information"), except to the extent that such Confidential Information (a) becomes a matter of public record or is published in a newspaper, magazine or other periodical available to the general public, (b) is required to be disclosed by any law, regulation or order of any court or regulatory commission, department or agency, or (c) as the Board may so authorize in writing. 7. Nonsolicitation. During the Consulting Period except with the prior written consent of the Board, the Consultant shall not directly or indirectly induce or attempt to persuade any employee of the Company to terminate his or her employment relationship with the Company. 8. Scope of Covenants; Remedies. The following provisions shall apply to the covenants of the Consultant contained in Sections 5 and 6: -3- (a) the covenants contained in Section 5 shall apply on a worldwide basis, which is the basis on which the Company is actively engaged in conduct of its businesses and in which customers are being solicited; (b) without limiting the right of the Company to pursue all other legal and equitable remedies available for violation by the Consultant of the covenants contained in Section 5, 6 and 7, it is expressly agreed by the Consultant and the Company that such other remedies cannot fully compensate the Company for any such violation and that the Company shall be entitled to injunctive relief to prevent any such violation or any continuing violation thereof; (c) the Company and the Consultant each intends and agrees that the covenants contained in Sections 5, 6 and 7 are reasonably designed to protect the legitimate business interests of the Company without unnecessarily or unreasonably restricting the Consultant's business opportunities during or after the termination of the consulting Period, but that if in any action before any court or agency legally empowered to enforce the covenants contained in Sections 5, 6 and 7 any term restriction, covenant or promise contained therein is found to be unreasonable and accordingly unenforceable, than such term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable by such court or agency; and (d) the Company shall advise the Consultant in writing of all businesses, industries and activities the Company believes are covered by the prohibitions in Section 5, not so identified; provided, that neither the Company's listing of a business, industry or activity as covered by Section 5 not the Consultant's failure to specifically object to such listing shall be conclusive as to such coverage. If Consultant notifies the Company in writing of a specific business, industry or activity in which the Consultant proposes to engage, the Company will notify Consultant promptly, in writing, of whether the Company would consider such business, industry or other activity to violate Section 5, and Consultant shall not be obliged to refrain from engaging in any such business, industry or activity if Company fails to do so within 30 days. 9. Expenses. The Company shall promptly pay the Consultant for all costs and expenses (including, without limitation, court costs and attorney's fees) incurred by the Consultant as a result of any claim, action or proceeding (including, without limitation, a claim, action or proceeding by the Consultant against the Company to collect amounts due to the Consultant or to otherwise enforce this Agreement) arising out of, or challenging the validity, advisability or enforceability of, this Agreement or any provision hereof; provided, however, that no such payment or reimbursement shall be made to the Consultant if the Consultant is the plaintiff in such claim, action or proceeding and a final nonappealable judgment is rendered against the Consultant with respect to all his claims. 10. Indemnification. The Company shall defend, indemnify and hold the Consultant harmless from and against all damages, cost and expenses (including attorneys' fees) as a result of claims made by third parties arising out of the Consultant's performance of services under this agreement; provided, however, that the Company shall not indemnify and hold the Consultant harmless for conduct found by a final nonappealable judgment of a court of competent jurisdiction that the damage, cost or expense results from the Consultant's own willful misconduct. -4- 11. Successor. Binding Agreement. This Agreement shall insure to the benefit of and be enforceable by the Consultant and by his personal or legal representatives, executors, administrators, heirs, distributees, devises and legatees and by the Company and its respective successors and assigns. 12. Notices. All notices and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered, when delivered by courier or overnight express service or five days after having been sent by certified or registered mail, postage prepaid, addressed (a) if to the Consultant, to the Consultant's address set forth in the records of the Company, or if to the Company, to Scotsman Industries, Inc., 775 Corporate Woods Parkway, Vernon Hills, Illinois 60061, Attention: Richard C. Osborne, with a copy to Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, Attention: Thomas A. Cole, Esq., or (b) to such other address as either party may have furnished to the other party in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 13. Governing Law: Validity: Jurisdiction and Venue. The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Michigan without regard to the applicable principles of conflicts of laws. The parties agree and agree to stipulate that the United States District Court for the Western District of Michigan (Southern Division) shall be the proper jurisdiction and venue for litigation of any claim arising out of or relating to this Agreement. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any of the other provisions of this Agreement, which other provisions shall remain in full force and effect. 14. Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed to be an original and both of which together shall constitute one and the same instrument. 15. Miscellaneous. No provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and executed by the Consultant and by a duly authorized officer of the Company. No waiver by a party hereto at any time of any breach by the other party hereto of, or failure to comply with, any condition or provision of this Agreement to be performed or complied with by such other party shall be deemed a waiver of any similar or dissimilar conditions or provisions at the same or at any prior or subsequent time. This Agreement does not affect any other agreement between the Consultant and the Company or any of its affiliates. Failure by the Consultant or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right which the Consultant or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision of or right under this Agreement. -5- IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Consultant has executed this Agreement as of the day and year first above written. SCOTSMAN INDUSTRIES INC. /s/ Richard Osborne By ____________________________________ Chairman and Chief Executive Officer CONSULTANT: /s/ Peter Gravelle _______________________________________ Peter Gravelle -6- EX-99.C8 22 CONSULTING AGREEMENT DATED 2/2/97 Exhibit (c)(8) CONSULTING AND NONCOMPETITION AGREEMENT This Consulting and Noncompetition Agreement (this "Agreement") is entered into as of February 2, 1997 between SCOTSMAN INDUSTRIES INC., a Delaware corporation (the "Company"), and TIMOTHY PETERSON (the "Consultant"). WHEREAS, the Consultant has acquired extensive knowledge of and experience in the business conducted by the Company; WHEREAS, the Company desires to obtain the benefit of the Consultant's knowledge and experience by retaining the Consultant, and the Consultant desires to accept such position, for the term and upon the other conditions hereinafter set forth; WHEREAS, concurrently herewith, the Company, K Acquisition Corp. and Kysor Industrial Corporation are entering into an Agreement and Plan of Merger dated as of the date hereof (the "Merger Agreement"), pursuant to which K Acquisition Corp. is acquiring Kysor Industrial Corporation and Kysor Industrial Corporation is becoming a wholly-owned subsidiary of the Company; WHEREAS, the Consultant will cease to be a Vice President of Kysor Industrial Corporation effective as of the consummation of the tender offer contemplated by the Merger Agreement (the "Tender Offer"); and WHEREAS, the Company has required as a condition to its entering into the Merger Agreement that the Consultant (i) agree to certain modifications to his existing employment agreement with Kysor Industrial Corporation (the "Employment Agreement") and (ii) enter into this Agreement. NOW THEREFORE, in consideration of the mutual promises and agreements contained herein, the adequacy and sufficiency of which are hereby acknowledged, the Company and the Consultant hereby agree as follows: 1. Consulting Services; Expenses. The Company hereby engages the Consultant as a consultant, subject to the terms and conditions hereof, for the period commencing at the consummation of the Tender Offer and ending on the date which is the sixth anniversary of such consummation (the "Consulting Period"), subject to earlier termination pursuant to Section 4 hereof; provided, however, that this Agreement shall terminate and shall be of no further force or effect if the Merger Agreement shall be terminated and the Tender Offer shall not be consummated pursuant to the terms thereof. During the Consulting Period, the Consultant shall make himself available to perform consulting services with respect to the businesses conducted, or in development, by the Company, upon reasonable advance notice. Such consulting services shall be related to such matters as the Chief Executive Officer of the Company may designate from time to time and as are commensurate with the Consultant's years of experience and level of skill, and shall include consulting services to the Board of Directors of the Company (the "Board") with respect to the businesses conducted by the Company. The Consultant shall accommodate reasonable requests for the Consultant's consulting services, and shall devote reasonable time and his reasonable best efforts, skill and attention to the performance of such consulting services, including travel reasonably required in the performance of such consulting services. The parties will arrange consulting and travel dates and times so as not to interrupt any pre-planned business or personal activities, or employment obligations, of the Consultant. The Company shall reimburse the Consultant for all necessary travel and other expenses incurred by the Consultant in providing such consulting services. Notwithstanding the foregoing, the Consultant shall not be required to be available more than three (3) days per month nor to travel on more than three (3) occasions per year. 2. Independent Contractor. The Consultant shall perform the consulting services described in Section 1 hereof as an independent contractor without the power to bind or represent the Company for any purpose whatsoever. The Consultant shall not, by virtue of being a consultant hereunder, be eligible to receive any benefits for which officers or other employees of the Company are eligible at any time, such as insurance, participation in the Company's pension plans or other employee benefits. Consultant acknowledges that Company will not make provision for federal or state withholding taxes or FICA. 3. Compensation. As compensation for the Consultant's agreement to make himself reasonably available for consulting as provided in Section 1, and for his covenants contained in Section 5 of this Agreement, the Company shall pay to the Consultant on a monthly basis at the end of each month for each of the seventy-two (72) months during the Consulting Period an amount equal to $14,100 per month (the "Compensation"). Except in the event of termination of this Agreement as provided in Section 4, such payments shall not be reduced, withheld, discontinued, or subjected to setoff, for any reason whatsoever. If the Company fails to make Compensation payments required by this Agreement and such failure continues for ten (10) days after Consultant notifies the Company in writing of such breach, Consultant's obligations under this Agreement shall continue, but Company shall be obligated to immediately pay to Consultant, in one lump sum, all of the remaining unpaid Compensation that would have been payable through the end of the Consulting Period; discounted, however, to the then present value, using a discount rate of 7.5 percent. Notwithstanding any failure by the Company to utilize the consulting services, or any disability of the Consultant resulting in his inability to perform consulting services hereunder, the remaining unpaid installments of the Compensation payable pursuant to this Agreement shall be paid by the Company to the Consultant or to his legal representative on the dates such payments otherwise would have paid hereunder. In the event of the death of the Consultant during the Consulting Period, the then present value, using a discount rate of 7.5 percent, of the remaining unpaid Compensation payable through the remainder of the Consulting Period shall be paid by the Company as a death benefit to the beneficiary or beneficiaries designated in writing by the Consultant, or if no beneficiary is so designated, to the executor of the Consultant's estate. 4. Termination of Agreement. (a) The obligation of the Consultant set forth in Section 1 of this Agreement may be terminated at any time by the Consultant on thirty (30) days prior written notice to the Company. In the event of such termination by the Consultant, the obligations of the Company to pay the Consultant pursuant to Section 3 hereof shall cease, effective on the date of such termination. (b) The obligations of the Company set forth in Section 3 of this Agreement may be terminated at any time by the Company upon written notice to the Consultant in the event that the Consultant shall willfully be in material breach of any covenant contained in Section 1 or 5 hereof and the Consultant shall fail to cure such material breach within 30 days following such notice (in the event -2- of an alleged breach of Section 5, Consultant may cure any such breach by ceasing the activities in question). (c) This Agreement may be terminated by the Consultant upon ten (10) days prior written notice to the Company in the event that the Company shall breach any of its obligations under Section 3, 9 or 10 hereof; provided, however, that the Consultant shall not be entitled to terminate this Agreement pursuant to this Section 4(c) in the event that the Company shall cure any such breach within such ten (10) day period. In the event of such termination by the Consultant, the Company shall pay to the Consultant all remaining payments which would have become due under this Agreement had it continued in effect until its expiration date, within five (5) business days of such termination. 5. Noncompetition. During the Consulting Period, except with the prior written consent of the Board, the Consultant shall not directly or indirectly: (a) engage in any activities, whether as employer, proprietor, partner, stockholder (other than the holder of less than 5% of the stock of any corporation the securities of which are traded on a national or regional securities exchange or on the NASDAQ (National Market System) or over the counter), director, officer, employee, consultant or otherwise, in competition with the businesses conducted, or in development, by the Company at any time during the Consulting Period, which covenant not to compete shall be on a worldwide basis and shall include all industries in which the Company competes at any time during the Consulting Period; or (b) solicit, in competition with the Company, any person who is a customer or prospective customer of the businesses conducted, or in development, by the Company at any time during the Consulting Period. 6. Confidentiality. The Consultant shall not, at any time during the Consulting Period or thereafter, make use of or disclose directly or indirectly, any trade secret or other confidential or secret information of the Company or Kysor Industrial Corporation or other technical, business, proprietary or financial information of the Company or Kysor Industrial Corporation not available to the public or to the competitors of the Company ("Confidential Information"), except to the extent that such Confidential Information (a) becomes a matter of public record or is published in a newspaper, magazine or other periodical available to the general public, (b) is required to be disclosed by any law, regulation or order of any court or regulatory commission, department or agency, or (c) as the Board may so authorize in writing. 7. Nonsolicitation. During the Consulting Period except with the prior written consent of the Board, the Consultant shall not directly or indirectly induce or attempt to persuade any employee of the Company to terminate his or her employment relationship with the Company. 8. Scope of Covenants; Remedies. The following provisions shall apply to the covenants of the Consultant contained in Sections 5 and 6; -3- (a) the covenants contained in Section 5 shall apply on a worldwide basis, which is the basis on which the Company is actively engaged in conduct of its businesses and in which customers are being solicited; (b) without limiting the right of the Company to pursue all other legal and equitable remedies available for violation by the Consultant of the covenants contained in Section 5, 6 and 7, it is expressly agreed by the Consultant and the Company that such other remedies cannot fully compensate the Company for any such violation and that the Company shall be entitled to injunctive relief to prevent any such violation or any continuing violation thereof; (c) the Company and the Consultant each intends and agrees that the covenants contained in Sections 5, 6 and 7 are reasonably designed to protect the legitimate business interests of the Company without unnecessarily or unreasonably restricting the Consultant's business opportunities during or after the termination of the consulting Period, but that if in any action before any court or agency legally empowered to enforce the covenants contained in Sections 5, 6 and 7 any term, restriction, covenant or promise contained therein is found to be unreasonable and accordingly unenforceable, then such term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable by such court or agency; and (d) the Company shall advise the Consultant in writing of all businesses, industries and activities the Company believes are covered by the prohibitions in Section 5, not so identified; provided, that neither the Company's listing of a business, industry or activity as covered by Section 5 nor the Consultant's failure to specifically object to such listing shall be conclusive as to such coverage. If Consultant notifies the Company in writing of a specific business, industry or activity in which the Consultant proposes to engage, the Company will notify Consultant promptly, in writing, of whether the Company would consider such business, industry or other activity to violate Section 5, and Consultant shall not be obliged to refrain from engaging in any such business, industry or activity if Company fails to do so within 30 days. 9. Expenses. The Company shall promptly pay the Consultant for all costs and expenses (including, without limitation, court costs and attorney's fees) incurred by the Consultant as a result of any claim, action or proceeding (including, without limitation, a claim, action or proceeding by the Consultant against the Company to collect amounts due to the Consultant or to otherwise enforce this Agreement) arising out of, or challenging the validity, advisability or enforceability of, this Agreement or any provision hereof; provided, however, that no such payment or reimbursement shall be made to the Consultant if the Consultant is the plaintiff in such claim, action or proceeding and a final nonappealable judgment is rendered against the Consultant with respect to all his claims. 10. Indemnification. The Company shall defend, indemnify and hold the Consultant harmless from and against all damages, costs and expenses (including attorneys' fees) as a result of claims made by third parties arising out of the Consultant's performance of services under this agreement; provided, however, that the Company shall not indemnify and hold the Consultant harmless for conduct found by a final nonappealable judgment of a court of competent jurisdiction that the damage, cost or expense results from the Consultant's own willful misconduct. -4- 11. Successors; Binding Agreement. This Agreement shall inure to the benefit of and be enforceable by the Consultant and by his personal or legal representatives, executors, administrators, heirs, distributees, devisees and legatees and by the Company and its respective successors and assigns. 12. Notices. All notices and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered, when delivered by courier or overnight express service or five days after having been sent by certified or registered mail, postage prepaid, addressed (a) if to the Consultant, to the Consultant's address set forth in the records of the Company, or if to the Company, to Scotsman Industries, Inc., 775 Corporate Woods Parkway, Vernon Hills, Illinois 60061, Attention: Richard C. Osborne, with a copy to Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, Attention: Thomas A. Cole, Esq. or (b) to such other address as either party may have furnished to the other party in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 13. Governing Law; Validity; Jurisdiction and Venue. The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Michigan without regard to the applicable principles of conflicts of laws. The parties agree and agree to stipulate that the United States District Court for the Western District of Michigan (Southern Division) shall be the proper jurisdiction and venue for litigation of any claim arising out of or relating to this Agreement. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any of the other provisions of this Agreement, which other provisions shall remain in full force and effect. 14. Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed to be an original and both of which together shall constitute one and the same instrument. 15. Miscellaneous. No provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and executed by the Consultant and by a duly authorized officer of the Company. No waiver by a party hereto at any time of any breach by the other party hereto of, or failure to comply with, any condition or provision of this Agreement to be performed or complied with by such other party shall be deemed a waiver of any similar or dissimilar conditions or provisions at the same or at any prior or subsequent time. This Agreement does not affect any other agreement between the Consultant and the Company or any of its affiliates. Failure by the Consultant or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right which the Consultant or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision of or right under this Agreement. -5- IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Consultant has executed this Agreement as of the day and year first above written. SCOTSMAN INDUSTRIES INC. By /s/ Richard Osborne ------------------------------------ Chairman and Chief Executive Officer CONSULTANT: /s/ Timothy Peterson -------------------------------------- Timothy Peterson EX-99.C9 23 AMENDMENT NO. 2 TO RIGHTS AGREEMENT EXHIBIT (c)(9) AMENDMENT NO. 2 TO RIGHTS AGREEMENT, dated as of February 2, 1997, between KYSOR INDUSTRIAL CORPORATION, a Michigan corporation (the "Company"), and HARRIS TRUST AND SAVINGS BANK (the "Rights Agent"), amending the Rights Agreement, dated as of April 26, 1996, between the Company and the Rights Agent (the "Rights Agreement"). W I T N E S S E T H - - - - - - - - - - WHEREAS, the Board of Directors of the Company has approved an Agreement and Plan of Merger (the "Merger Agreement") by and among the Company, Scotsman Industries, Inc., a Delaware corporation ("Scotsman"), and K Acquisition Corporation, a Michigan corporation and a wholly-owned subsidiary of Scotsman ("K Acquisition"), providing for K Acquisition to commence an all-cash tender offer for all outstanding shares of capital stock of the Company (the "Offer") and for the subsequent merger of K Acquisition into the Company (the "Merger"); WHEREAS, the Board of Directors of the Company has determined that the Offer and the Merger are fair to and in the best interests of the Company and its shareholders; WHEREAS, the willingness of Scotsman and K Acquisition to enter into the Merger Agreement is conditioned on, among other things, the amendment of the Rights Agreement on the terms set forth herein; and WHEREAS, Section 26 of the Rights Agreement provides that, among other things, prior to the Distribution Date and subject to the restrictions set forth in the penultimate sentence of such Section, the Company may, and the Rights Agent shall, if the Company so directs, supplement or amend any provisions of the Rights Agreement without the approval of any holders of certificates representing shares of Common Stock; NOW, THEREFORE, in consideration of the premises and mutual agreements set forth in the Rights Agreement and this Amendment, the parties hereby agree as follows: 1. Section 1 of the Rights Agreement is hereby amended by adding the following definitions thereto: "K Acquisition" shall mean K Acquisition Corporation, a Michigan corporation and a wholly-owned subsidiary of Scotsman. "Merger" shall mean the merger of K Acquisition into the Company as countemplated by the Merger Agreement. "Merger Agreement" shall mean the Agreement and Plan of Merger, dated as of February 2, 1997, by and among Scotsman, K Acquisition and the Company, as the same may be amended in accordance with the terms thereof. "Offer" shall have the meaning set forth in the Merger Agreement. "Scotsman" shall mean Scotsman Industries, Inc. a Delaware corporation. 2. Section 1(a) of the Rights Agreement is hereby amended by adding to the end thereof the following: "Notwithstanding anything to the contrary contained herein, neither Scotsman nor K Acquisition shall be or become an "Acquiring Person" (and no Shares Acquisition Date shall occur) as a result of (i) the announcement, commencement or consummation of the Offer, or (ii) the execution of the Merger Agreement (or any amendment thereto in accordance with the terms thereof) or the consummation of the transactions comtemplated thereby (including, without limitation, the Offer and the Merger)." 3. Section 3(a) of the Rights Agreement is hereby amended by adding to the end thereof the following: "Notwithstanding anything to the contrary contained herein, no Distribution Date shall occur as a result of (i) the announcement, commencement or consummation of the Offer, or (ii) the execution of the Merger Agreement (or any amendment thereto in accordance with the terms thereof) or the consummation of the transactions contemplated thereby (including, without limitation, the Offer and the Merger), and no Distribution Date will, in any event, occur prior to the effective time of the Merger or the earlier termination of the Merger Agreement." 4. Section 7(a) of the Rights Agreement is hereby amended by replacing the word "earlier" in its first occurrence with the word "earliest", by deleting the word "or" immediately prior to the symbol "(ii)", and by replacing the words "(the earlier of (i) and (ii), being herein referred to as the "Expiration Date")" with the following: "and (iii) immediately prior to the effective time of the Merger (the earliest of (i), (ii) and (iii) being herein referred to as the "Expiration Date")." 5. Section 11 of the Rights Agreement is hereby amended by adding to the end thereof the following: "(n) Notwithstanding anything to the contrary contained herein, the provisions of this Section 11 will not apply to or be triggered by (i) the announcement, commencement or consummation of the Offer, or (ii) the execution of the Merger Agreement (or any amendment thereto in accordance with the terms thereof) or the consummation of the transactions contemplated thereby (including, without limitation, the Offer and the Merger)." 6. Section 13 of the Rights Agreement is hereby amended by adding to the end thereof the following: "(d) Notwithstanding anything to the contrary contained herein, the provisions of this Section 13 will not apply to or be triggered by the execution of the Merger Agreement or any amendment thereto or the consummation of the transactions comtemplated thereby (including, without limitation, the Merger)." -2- 7. The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Amendment. 8. The term "Agreement" as used in the Rights Agreement shall be deemed to refer to the Rights Agreement as amended by this Amendment No. 2. 9. Except as set forth herein, the Rights Agreement shall remain in full force and effect and shall be otherwise unaffected hereby. 10. This Amendment No. 2 may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be duly executed, all as of the day and year first above written. KYSOR INDUSTRIAL CORPORATION By /s/ Peter W. Gravelle ------------------------------------------ Its President and Chief Operating Officer ------------------------------------- HARRIS TRUST AND SAVINGS BANK, as Rights Agent By /s/ Keith A. Bradley ------------------------------------------ Its Assistant Vice President ------------------------------------- -3- -----END PRIVACY-ENHANCED MESSAGE-----