<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended MARCH 31, 1996
--------------
or
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 1-988
-----
THE COLEMAN COMPANY, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3639257
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1526 COLE BLVD., SUITE 300, GOLDEN, COLORADO 80401
-------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
303-202-2400
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirement for the past 90 days. Yes X No
----- -----
The number of shares outstanding of the registrant's par value $.01 common stock
was 26,584,105 shares as of April 30, 1996 of which 22,033,760 shares were held
by an indirect wholly-owned subsidiary of Mafco Holdings Inc.
Exhibit Index on Page 12.
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Statements of Earnings
Three months ended March 31, 1996 and 1995 . . . . . 3
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995 . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1996 and 1995 . . . . . 5
Notes to Condensed Consolidated Financial Statements . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . 12
Signatures. . . . . . . . . . . . . . . . . . . . . . . 13
2
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Net revenues . . . . . . . . . . . . . . . . . . $273,560 $224,024
Cost of sales. . . . . . . . . . . . . . . . . . 192,594 155,528
-------- --------
Gross profit . . . . . . . . . . . . . . . . . . 80,966 68,496
Selling, general and administrative expenses . . 46,737 39,597
Interest expense . . . . . . . . . . . . . . . . 8,081 5,610
Amortization of goodwill and deferred charges. . 2,247 1,878
Other expense (income), net. . . . . . . . . . . 30 (94)
-------- --------
Earnings before income taxes . . . . . . . . . . 23,871 21,505
Provision for income taxes . . . . . . . . . . . 8,832 8,258
-------- --------
Net earnings . . . . . . . . . . . . . . . . . . $ 15,039 $ 13,247
-------- --------
-------- --------
Earnings per common share. . . . . . . . . . . . $ .57 $ .50
-------- --------
-------- --------
Weighted average common shares outstanding . . . 26,582 26,667
-------- --------
-------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . $ 6,816 $ 12,065
Accounts receivable, net. . . . . . . . . . . 262,656 165,309
Inventories . . . . . . . . . . . . . . . . . 257,886 216,236
Income tax refunds receivable - affiliate . . -- 2,400
Deferred tax assets . . . . . . . . . . . . . 21,485 20,481
Prepaid assets and other. . . . . . . . . . . 25,571 22,308
---------- --------
Total current assets . . . . . . . . . . . 574,414 438,799
Property, plant and equipment, net . . . . . . . 169,677 162,691
Intangible assets related to businesses
acquired, net. . . . . . . . . . . . . . . . . 255,282 217,289
Deferred tax assets and other. . . . . . . . . . 20,216 25,708
-------- --------
$1,019,589 $844,487
---------- --------
---------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and notes payable. . . . . . . . . . $133,274 $90,679
Other current liabilities . . . . . . . . . . 52,574 59,188
---------- --------
Total current liabilities . . . . . . . . . 185,848 149,867
Long-term debt . . . . . . . . . . . . . . . . . 479,395 354,206
Other liabilities. . . . . . . . . . . . . . . . 47,856 48,072
Contingencies. . . . . . . . . . . . . . . . . .
Stockholders' equity:
Common stock. . . . . . . . . . . . . . . . . 266 266
Additional paid-in capital. . . . . . . . . . 165,824 165,732
Retained earnings . . . . . . . . . . . . . . 139,764 126,179
Currency translation adjustment . . . . . . . 636 165
---------- --------
Total stockholders' equity. . . . . . . . . 306,490 292,342
---------- --------
$1,019,589 $844,487
---------- --------
---------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings . . . . . . . . . . . . . . . . . . $ 15,039 $ 13,247
--------- --------
Adjustments to reconcile net earnings to
net cash flows from operating activities:
Depreciation and amortization . . . . . . . 7,588 6,210
Change in assets and liabilities:
Increase in receivables . . . . . . . . . (84,659) (67,109)
Increase in inventories . . . . . . . . . (28,420) (28,165)
Increase in accounts payable. . . . . . . 8,741 10,582
Other, net. . . . . . . . . . . . . . . . (11,145) (6,524)
--------- --------
(107,895) (85,006)
--------- --------
Net cash used by operating activities. . . . . . (92,856) (71,759)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . (6,866) (5,619)
Purchases of businesses, net of cash acquired. . (60,132) --
Proceeds from sale of fixed assets . . . . . . . 186 273
--------- --------
Net cash used by investing activities. . . . . . (66,812) (5,346)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from revolving credit agreement
borrowings . . . . . . . . . . . . . . . . . . 125,713 54,900
Net change in short-term borrowings. . . . . . . 29,611 17,775
Repayment of long-term debt. . . . . . . . . . . (172) (1,403)
Purchases of Company common stock. . . . . . . . (2,329) --
Proceeds from stock options exercised. . . . . . 967 3,410
--------- --------
Net cash provided by financing activities. . . . 153,790 74,682
--------- --------
Effect of exchange rate changes on cash. . . . . 629 (2,471)
--------- --------
Net decrease in cash and cash equivalents. . . . (5,249) (4,894)
Cash and cash equivalents at beginning of
the period . . . . . . . . . . . . . . . . . . 12,065 8,319
--------- --------
Cash and cash equivalents at end of the period . $6,816 $3,425
--------- --------
--------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
The Coleman Company, Inc. ("Coleman" or "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1996. The balance sheet at December 31, 1995 has been derived from
the audited financial statements for that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1995.
2. INVENTORIES
The components of inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------- ---------
<S> <C> <C>
Raw material and supplies. . . . . . . . . $ 72,450 $ 57,653
Work-in-process. . . . . . . . . . . . . . 7,118 5,389
Finished goods . . . . . . . . . . . . . . 178,318 153,194
-------- --------
$257,886 $216,236
-------- --------
</TABLE>
3. ACQUISITIONS
On January 2, 1996, the Company purchased substantially all the assets
and assumed certain liabilities of Seatt Corporation ("Seatt"), a leading
designer, manufacturer and distributor of a broad range of safety related
electronic products for residential and commercial applications. The Seatt
acquisition, which was accounted for under the purchase method, was completed
for approximately $64,982 including fees and expenses and was financed through
borrowings under the Company Credit Agreement, and assumption of certain
liabilities in the amount of $7,157 by the Company. The results of operations
of Seatt have been included in the consolidated financial statements from the
date of acquisition. In connection with the preliminary purchase price
allocation of the Seatt acquisition, the Company recorded goodwill of
approximately $37,821. The Company is amortizing this amount over 40 years.
6
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
The following summarized, unaudited pro forma results of operations for
the three months ended March 31,1995 assumes the acquisition of Seatt occurred
as of the beginning of 1995. The pro forma results do not purport to be
indicative of what would have occurred had the Seatt acquisition been
consummated at the beginning of 1995. Moreover, the pro forma information is
not intended to be indicative of future results of operations.
<TABLE>
<CAPTION>
Three months ended
March 31,
1995
---------
<S> <C>
Net revenues . . . . . . . . . . . . . . . $238,185
Net earnings . . . . . . . . . . . . . . . 13,356
Earnings per common share. . . . . . . . . $0.50
</TABLE>
On February 28, 1996, the Company and Butagaz S.N.C. ("Butagaz"), a
subsidiary of Societe de Petroles Shell S.A., jointly announced they had entered
into an agreement in connection with the sale to Coleman of 60 percent of the
outstanding shares of Application des Gaz, S.A. ("ADG" or "Camping Gaz") at a
price of French Franc 404 per share (approximately $81 per share at the then
current exchange rate) or approximately $58,000 in the aggregate. Coleman has
the right to purchase the balance of Butagaz' 10 percent economic interest at a
later date at the same price per share of French Franc 404, with Butagaz
retaining a seat on the board of ADG. The transaction is subject to several
conditions and once these have been satisfied, the purchase of the remaining 30
percent of the outstanding shares of Camping Gaz held by ADG public shareholders
shall be proposed through a tender offer at the same price of French Franc 404
per share. The Company expects the conditions to the acquisition will be
satisfied and expects to complete the acquisition of Camping Gaz late in the
second quarter of 1996. Camping Gaz has a significant presence in the market
for camping equipment in Europe and has recently pursued its development
internationally. The Company's current intention is to finance the Camping Gaz
acquisition through a private placement issuance of approximately $160,000
aggregate principal amount senior notes due in 2008. The Company is currently
in the process of reviewing its integration alternatives with respect to the
combination of the business operations of Coleman and Camping Gaz. The
conclusions of the review could result in a charge against earnings in 1996.
4. SUBSEQUENT EVENTS
On April 30, 1996, the Company amended the Company Credit Agreement to
revise several of the terms and provisions of the Company Credit Agreement and
to allow for the issuance of additional long-term notes. The Company Credit
Agreement, as amended, provides for (a) an unsecured French Franc term loan in
the amount of French Franc 385,125 ($75,000 at the then current exchange rates)
and (b) an unsecured revolving credit facility of $275,000. The Company Credit
Agreement, as amended, is available to the Company until April 30, 2001.
The outstanding loans under the Company Credit Agreement bear interest at
either of the following rates, as selected by the Company from time to time:
(i) the higher of the agent's base lending rate or the federal funds rate plus
.50% or (ii) the London Inter-Bank Offered Rate ("LIBOR") plus a margin ranging
from .25% to 1.1% based on the Company's financial performance. If there is a
default, the interest rate otherwise in effect will be increased by 2% per annum
and the margin will be 1.0% in the case of U.S. Dollar denominated LIBOR loans
and 1.1% for foreign currency denominated LIBOR loans. The Company Credit
Agreement also bears an overall
7
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
facility fee ranging from .15% to .375% based on the Company's financial
performance.
The amended Company Credit Agreement contains various restrictive
covenants, including without limitation, requirements for the maintenance of
specified financial ratios and levels of consolidated net worth and certain
other provisions limiting the incurrence of additional debt, purchase or
redemption of Coleman Common Stock, issuance of Coleman Preferred Stock, and the
payment of dividends. Under the most restrictive of these covenants of the
amended Company Credit Agreement, approximately $69,860 would have been
available for payment by the Company of cash dividends at March 31, 1996.
In connection with the amending and restating of the Company's previous
credit agreement, the Company will recognize an extraordinary loss of
approximately $1,078 ($652 after taxes, or $0.03 per share) in the quarter ended
June 30, 1996, which represents a write-off of the related unamortized financing
costs associated with the Company's previous credit agreement.
8
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues in the 1996 and 1995 periods were $273.6 million and $224.0
million, respectively, an increase of $49.6 million, or 22.1%. All classes of
the Company's products contributed to this increase with recreation products
increasing by $15.2 million, hardware/home center products contributing $16.5
million, and the Company's new class of home safety and security products
recording revenues of $17.9 million. Net revenues in the United States and
Canada increased 24.7%, and net revenues from international markets increased
14.3%.
Recreation products revenues reflect strong growth in sleeping bags,
tents and camping accessories and along with sales of Sierra camp furniture
products, a business acquired in July 1995, helped offset a decline in revenues
from cooler and jugs which is primarily attributable to a large thermo-electric
cooler premium promotion in the 1995 period which was not repeated in 1996. The
increase in sales of the Company's hardware/home center products include strong
sales of generators as a result of the winter weather and continued growth in
pressure washer revenues as the overall pressure washer market continues to grow
and become more competitive. Total revenues in the 1996 period also include
revenues from home safety and security products associated with the Seatt
business, which was acquired in January 1996. Seatt revenues exceeded
expectations and were up when compared to Seatt's respective period in 1995.
International revenues were adversely affected by the unfavorable translation of
foreign revenues, primarily in Japan, due to the strengthening of the U.S.
dollar in the 1996 period as compared to the 1995 period.
Cost of sales was $192.6 million in 1996 compared with $155.5 million in
1995, an increase of 23.8%. Cost of sales as a percent of net revenues
increased to 70.4% in 1996 from 69.4% in 1995. The increase in cost of sales as
a percent of net revenues is primarily because of the effects of the mix of
products sold, as revenues from lower margin products, primarily electric
pressure washers, grew faster than other categories of products which carry
higher margins.
Selling, general and administrative ("SG&A") expenses were $46.7 million
in 1996 compared to $39.6 million in 1995, an increase of 18.0%. SG&A expenses
as a percent of net revenues improved to 17.1% in 1996 from 17.7% in 1995 as
revenues grew faster than the growth in SG&A expenses. The increase in SG&A
expenses primarily reflects SG&A expenses associated with recent business
acquisitions and to a lesser extent increased advertising, marketing and
administrative expenses.
Interest expense was $8.1 million in 1996 compared with $5.6 million in
1995, an increase of $2.5 million. This increase was primarily the result of
higher borrowings to fund business acquisitions and support the increase in
working capital.
The Company's effective income tax rate was 37.0% in 1996 compared with
38.4% in 1995. The decrease in the effective tax rate in 1996 as compared to
1995 is primarily due to tax benefits associated with the Company's
manufacturing operations in Puerto Rico.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows used in operations were $92.9 million and $71.8 million for
the three months ended March 31, 1996 and 1995, respectively. Cash used during
these periods reflects the Company's seasonal working capital requirements
associated with generally higher sales in the first quarter of the year as
compared to the fourth quarter of the year. Receivables increased by $84.7
million and $67.1 million for the three months ended March 31, 1996 and 1995,
respectively, as a result of the seasonality of the Company's sales and an
increase in the
9
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
overall level of the Company's sales. Inventories increased by $28.4 million in
the three months ended March 31, 1996 to support the growth of the Company,
especially in the camping accessory and lighting products. The Company's net
cash used for investing activities was $66.8 million and $5.3 million for the
three months ended March 31, 1996 and 1995, respectively. The Company's capital
expenditures were $6.9 million and $5.6 million in the three months ended March
31, 1996 and 1995, respectively. The Company used $60.1 million of cash for a
business acquisition during the three months ended March 31, 1996. The increase
in capital expenditures reflects the addition of equipment to expand the
Company's capacity to manufacture certain of its products lines. Net cash
provided by financing activities for the three months ended March 31, 1996
consisted primarily of increases in long-term and short-term borrowings to
finance the seasonal increase in working capital and the Company's investing
activities.
The Company's working capital requirements are currently funded by cash
flow from operations and domestic and foreign bank lines of credit. In April
1996, the Company amended its credit agreement to allow for the Camping Gaz
acquisition as well as to extend the maturity of the credit agreement (the
"Company Credit Agreement"). The Company Credit Agreement provides a term loan
of French Franc 385,125 ($75.0 million at the then current exchange rates) and a
revolving credit facility in an amount of $275.0 million. Availability under
the Company Credit Agreement is reduced by any commercial paper borrowings
outstanding. The Company Credit Agreement is available to the Company until
April 30, 2001. At March 31, 1996, $70.7 million would have been available for
borrowings under the Company Credit Agreement.
The outstanding loans under the Company Credit Agreement bear interest at
either of the following rates, as selected by the Company from time to time:
(i) the higher of the agent's base lending rate or the federal funds rate plus
.50% or (ii) the London Inter-Bank Offered Rate ("LIBOR") plus a margin ranging
from .25% to 1.1% based on the Company's financial performance. If there is a
default, the interest rate otherwise in effect will be increased by 2% per annum
and the margin will be 1.0% for in the case of U.S. Dollar denominated LIBOR
loans and 1.1% for foreign currency denominated LIBOR loans. The Company Credit
Agreement also bears an overall facility fee ranging from .15% to .375% based on
the Company's financial performance.
The Company Credit Agreement contains various restrictive covenants,
including without limitation, requirements for the maintenance of specified
financial ratios and levels of consolidated net worth and certain other
provisions limiting the incurrence of additional debt, purchase or redemption of
Coleman Common Stock, issuance of Coleman Preferred Stock, and the payment of
dividends. Under the most restrictive of these covenants of the Company Credit
Agreement, approximately $69.9 million would have been available for payment by
the Company of cash dividends at March 31, 1996.
In connection with the amending of the Company's credit agreement, the
Company will recognize an extraordinary loss of approximately $1.1 million
($0.7 million after taxes, or $0.03 per share) in the quarter ended June 30,
1996, which represents a write-off of the related unamortized financing costs
associated with the Company's credit agreement.
The Company's parent (Coleman Worldwide Corporation) and its parent
(Coleman Holdings Inc.) have entered into borrowing agreements which are
collateralized by the Company's common stock.
The Company expects that the combination of the cash flow generated by
its operations and borrowings under the Company Credit Agreement will be
sufficient to enable it to meet its current operating requirements, including
projected capital expenditures, tax sharing payments and other obligations.
On February 28, 1996, the Company and Butagaz S.N.C. ("Butagaz"),
a subsidiary of Societe de Petroles Shell S.A., jointly announced they had
entered into an agreement in connection with the sale to Coleman of 60 percent
of the outstanding shares of Application des Gaz, S.A. ("ADG" or "Camping Gaz")
at a price of
10
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
French Franc 404 per share (approximately $81 per share at the then current
exchange rate) or approximately $58.0 million in the aggregate. Coleman has the
right to purchase the balance of Butagaz' 10 percent economic interest at a
later date at the same price per share of French Franc 404, with Butagaz
retaining a seat on the board of ADG. The transaction is subject to several
conditions and once these have been satisfied, the purchase of the remaining 30
percent of the outstanding shares of Camping Gaz held by ADG public shareholders
shall be proposed through a tender offer at the same price of French Franc 404
per share. The Company expects the conditions to the acquisition will be
satisfied and expects to complete the acquisition of Camping Gaz late in the
second quarter of 1996. Camping Gaz has a significant presence in the market
for camping equipment in Europe and has recently pursued its development
internationally. The Company's current intention is to finance the Camping Gaz
acquisition through a private placement issuance of approximately $160.0 million
aggregate principal amount senior notes due in 2008. The Company is currently
in the process of reviewing its integration alternatives with respect to the
combination of the business operations of Coleman and Camping Gaz. The
conclusions of the review could result in a charge against earnings in 1996.
The Company uses a variety of derivative financial instruments to manage
its foreign currency and interest rate exposures. The Company does not
speculate on interest rates or foreign currency rates. Instead it uses
derivatives when implementing its risk management strategies to reduce the
possible effects of these exposures.
With respect to foreign currency exposures the Company principally uses
forward and option contracts to reduce risks arising from firm commitments,
anticipated intercompany sales transactions and intercompany receivable and
payable balances. The Company generally uses interest rate swaps and interest
rate caps to fix certain of its variable rate debt. The Company manages credit
risk related to these derivative contracts through credit approvals, exposure
limits and other monitoring procedures.
SEASONALITY
The Company's sales generally are highest in the second quarter of the
year and lowest in the fourth quarter. As a result of this seasonality, the
Company has generally incurred a loss in the fourth quarter. The Company's
sales may be affected by weather conditions, especially during the second and
third quarters of the year.
11
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Index Description
------------- -----------
4.1 Amendment No. 1 dated as of April 30, 1996 to the
Amended and Restated Company Credit Agreement
among the Company, the Lenders party thereto, the
Issuing Bank, the Agent, and the Co-Agents (the
"Company Credit Agreement").
4.2 Amendment No. 2 dated as of April 30, 1996 to the
Company Credit Agreement.
MANAGEMENT CONTRACTS AND COMPENSATORY PLANS
10.1 Employment Agreement dated as of January 1, 1996
between the Company and Patrick McEvoy.
10.2 Corrected and Restated Employment Agreement dated
as of January 1, 1996 between the Company and
Michael N. Hammes.
10.3 The Coleman Retirement Salaried Incentive Savings
Plan.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
A report on Form 8-K was filed on January 12, 1996 to disclose the
purchase of assets and assumption of certain liabilities of Seatt
Corporation ("Seatt") and to provide the financial statements and
information required by Item 7(a) in connection with the Seatt
acquisition.
A report on Form 8-K/A was filed on March 17, 1996 to provide the
information required by Item 7 (b) in connection with the Seatt
acquisition.
12
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE COLEMAN COMPANY, INC.
(Registrant)
Date: May 13, 1996 By: /s/ George Mileusnic
George Mileusnic
Executive Vice President and
Chief Financial Officer
13
<PAGE>
AMENDMENT NO. 1
THIS AMENDMENT NO. 1 (this "Amendment") to the Credit Agreement (as
defined below) is entered into as of April 30, 1996 by and among The Coleman
Company, Inc. (the "Company"), certain foreign subsidiaries of the Company party
thereto (each a "Foreign Borrower" and, collectively, together with the Company,
the "Borrowers"), the Lenders party thereto (the "Lenders") and Credit Suisse,
as agent for the Lenders (the "Agent").
WHEREAS, the Borrowers, the Lenders and the Agent are party to the
Amended and Restated Credit Agreement dated as of August 3, 1995 (as amended,
supplemented or otherwise modified from time to time, the "Agreement";
capitalized terms used but not defined herein shall have their respective
meanings specified in the Agreement); and
WHEREAS, the Borrowers have requested that the Lenders and the Agent
agree, and the Lenders and the Agent are willing, to amend the Agreement, on the
terms and conditions of this Amendment, in order to, among other things,
(i) provide for a term loan facility in French Francs for the use of the Company
in an aggregate principal Equivalent Alternative Currency Amount, with respect
to the date of borrowing thereof, of $75,000,000, (ii) reduce the Revolving
Credit Facility to an aggregate principal amount of $275,000,000, and
(iii) increase the Multicurrency Facility, a subfacility of the Revolving Credit
Facility, to an aggregate principal amount of $75,000,000.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. AMENDMENTS. Subject to the satisfaction of the
conditions to effectiveness specified in Section 5 hereof, the Agreement shall
be amended as follows:
(a) Section 1.01 (DEFINITIONS) shall be amended by:
(i) inserting the following definitions in their respective
appropriate alphabetic location:
"'ADG' means Application des Gaz SA, a company formed under the
laws of France."
"'ADG ACQUISITION' means the acquisition by the Company or any of
its Wholly-Owned Subsidiaries (without giving effect to the proviso in
the definition thereof) of more than 50% of the Voting Power of the
issued and outstanding capital stock, and 59.9% or more of the
interest in the capital or profits, of ADG."
"'ADG EXCESS' means, at any time after the ADG Acquisition, the
amount by which the Debt of ADG permitted
<PAGE>
pursuant to Section 5.02(b)(iii)(M) exceeds $40,000,000 at such time."
"'AGENT'S FRENCH FRANC ACCOUNT' means the account of the Agent
maintained by the Agent at the location specified in writing from time
to time by the Agent to the Company."
"'AMENDMENT NO. 1' means Amendment No. 1, dated as of April 30,
1996, to this Agreement."
"'AMENDMENT NO. 1 EFFECTIVE DATE' means the date that the
conditions precedent to the effectiveness of Amendment No. 1 set forth
therein shall have been satisfied."
"'BAFIGES' means Bafiges S.A., a company formed under the laws of
France and an indirect Wholly-Owned Subsidiary of the Company."
"'COMPANY'S FRENCH FRANC ACCOUNT' means the account of the
Company maintained by the Company with Credit Suisse at its office in
Paris, France."
"'FRENCH FRANCS' or 'FFR' means francs in lawful currency of the
Republic of France."
"'MATURITY DATE' means April 30, 2001 (or, if such date is not a
Business Day, the next succeeding Business Day), or such earlier date
pursuant to Section 6.01."
"'NOTICE OF TERM LOAN BORROWING' has the meaning specified in
Section 2.03(a)(ii)."
"'ORAS' means OBLIGATIONS REMBOURSABLE EN ACTIONS issued from
time to time by Bafiges denominated in French Francs in an aggregate
principal amount not to exceed FFr450,000,000 in connection with the
acquisition by Bafiges or any Wholly-Owned Subsidiary of Bafiges of
not less than a majority of the issued and outstanding capital stock
of ADG; PROVIDED that (i) any such ORA shall be purchased and held at
all times by the Company or any Wholly-Owned Subsidiary of the Company
(other than any Foreign Subsidiary), (ii) Bafiges shall, at all times
when any ORA has been issued and is outstanding, (x) be a Wholly-Owned
Subsidiary (without giving effect to the proviso in the definition
thereof) of the Company and (y) own no assets other than capital stock
of ADG or any Wholly-Owned Subsidiary of the Company and cash
necessary to fund activities necessary and incidental thereto and
(iii) substantially final drafts of the documentation governing any
such ORA shall have been furnished to the Agent and the Lenders at
least 5 Business Days prior to the issuance thereof."
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<PAGE>
"'SURPLUS PROCEEDS' means, as of any date, Net Cash Proceeds
related to the issuance on or prior to such date of Additional Long-
Term Notes in aggregate principal amount in excess of $160,000,000."
"'TERM LOAN BORROWING' means a borrowing consisting of Term Loans
of the same Type made by the Lenders on the same day."
"'TERM LOAN COMMITMENT' has the meaning specified in
Section 2.01."
(ii) amending the definition of "Additional Long-Term Notes"
by (A) inserting the words "from time to time" immediately prior to
the words "after September 1, 1995" (B) deleting the number
"$150,000,000" therein and substituting "$260,000,000" therefor,
(C) deleting in clause (c) thereof the words "the date that is one
year after the Termination Date" and substituting therefor "April 30,
2002, (D) inserting the words "(PROVIDED, HOWEVER, that Additional
Long-Term Notes may require mandatory prepayments to be made
(X) during the year immediately preceding April 30, 2001 in an
aggregate amount not to exceed $14,000,000 and (Y) during the year
immediately following April 30, 2001 in an aggregate amount not to
exceed $14,000,000)" immediately following the words "the Termination
Date" in clause (c) thereof and (E) deleting the words "the net
proceeds" immediately following the subsection reference "(iii)"
therein and substituting the words "the Surplus Proceeds" therefor;
(iii) amending the definition of "Affiliate" by inserting the
words "; PROVIDED, HOWEVER, that Butagaz S.A. shall not be deemed to
be an Affiliate of the Company or any of its Subsidiaries solely by
reason of the ownership by Butagaz S.A. of any shares of capital stock
of ADG owned by Butagaz S.A. prior to the ADG Acquisition or any other
shares of ADG that represent in the aggregate no more than 5% of the
Voting Power of the capital stock of ADG but do not represent an
interest in the capital or profits of ADG" immediately prior to the
final period in the final sentence thereof;
(iv) deleting the definition of "Alternative Currency" in its
entirety and substituting the following therefor:
"'ALTERNATIVE CURRENCY' means, in the case of a Revolving Credit
Loan, any General Alternative Currency or any Specified Alternative
Currency or, with respect to a Term Loan, French Francs."
(v) deleting the definition of "Applicable Currency" in its
entirety and substituting the following therefor:
"'APPLICABLE CURRENCY' means Dollars, any Alternative Currency
selected by a Borrower pursuant to Section 2.02(b) or, with respect to
Term Loans, French Francs."
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<PAGE>
(vi) amending the definition of "Applicable Margin" by
(A) deleting the first table thereof in its entirety and substituting
the following therefor:
TOTAL APPLICABLE
DEBT TO LIBOR
EBITDA RATIO LOAN MARGIN
------------ -----------
Below 2.00 0.25%
At or above 2.00, but
below 2.50 0.325%
At or above 2.50, but
below 2.75 0.425%
At or above 2.75, but
below 3.25 0.50%
At or above 3.25, but
below 3.50 0.575%
At or above 3.50, but
below 3.75 0.80%
At or above 3.75 0.925%
and (B) deleting the second table thereof in its entirety and
substituting the following therefor:
APPLICABLE
TOTAL LIBOR
DEBT TO LOAN MARGIN FOR
EBITDA RATIO LOCAL LOANS
------------ -----------
Below 2.00 0.35%
At or above 2.00, but
below 2.50 0.425%
At or above 2.50, but
below 2.75 0.525%
At or above 2.75, but
below 3.25 0.60%
At or above 3.25, but
below 3.50 0.675%
At or above 3.50, but
below 3.75 0.90%
At or above 3.75 1.025%
(vii) amending the definition of "Borrowing" by inserting the
words "a Term Loan Borrowing," immediately following the word "means";
4
<PAGE>
(viii) amending the definition of "Business Day" by
(x) inserting the words "or the Agent's French Franc Account"
immediately following the words "Agent's Multicurrency Account" and
(y) inserting the words "or a Term Loan" immediately following the
words "Multicurrency Loan";
(ix) amending the definition of "Debt" by (X) inserting the
words "and Section 5.01(k)" immediately following to the words "the
Facility Fee" in clause (x) of the proviso thereof, (Y) deleting
clause (y) in the proviso thereof in its entirety and (Z) relettering
clause (z) of the proviso thereof as clause (y);
(x) amending the definition of "Excess Multicurrency
Allotment" by deleting the number "110%" therefrom and substituting
the number "16/15" therefor;
(xi) deleting the definition of "Facility Share" in its
entirety and substituting the following therefor:
"'FACILITY SHARE' means, as at any date, as to any Lender, the
sum of the Equivalent Dollar Amount of the outstanding principal
amount of such Lender's Term Loan and its Revolving Credit Commitment
in effect from time to time (or, after termination of the Revolving
Credit Commitments, its outstanding principal amount of Revolving
Credit Loans), expressed as a percentage of the sum of the Equivalent
Dollar Amount of the aggregate principal amount of Term Loans then
outstanding and the then-effective Revolving Credit Facility (or,
after termination of the Revolving Credit Facility, the aggregate
principal amount of Revolving Credit Loans outstanding)."
(xii) amending the definition of "Interest Coverage Ratio" by
(x) deleting the words "LESS capital expenditures made by the Company
or any of its Subsidiaries for continuing operations made during such
period" and (y) deleting the proviso thereto;
(xiii) amending the definition of "Interest Period" by deleting
clause (a) thereof in its entirety and substituting the following
therefor:
"(a) the applicable Borrower may not select any Interest
Period that (i) with respect to any Revolving Credit Loan, ends after
the Termination Date or (ii) with respect to any Term Loan, ends after
the Maturity Date;"
(xiv) amending the definition of "LIBOR Reserve Percentage" by
(x) inserting the words "or any Term Loan" immediately after the words
"Multicurrency Loan" and (y) inserting the words "or any Lender,
respectively" immediately after the words "Multicurrency Lender";
5
<PAGE>
(xv) amending the definition of "Multicurrency Facility" by
deleting the number "$50,000,000" therein and substituting
"$75,000,000" therefor;
(xvi) amending the definition of "Net Cash Proceeds" by
inserting the words "or any issuance and sale by any Person of any
shares of capital stock, or options, warrants or any other rights to
subscribe for or otherwise to acquire capital stock, of such Person,
or any incurrence of Debt by any Person," immediately prior to the
words "the amount of cash received" in the second line thereof;
(xvii) amending the definition of "Notice of Borrowing" by
inserting the words ", a Notice of Term Loan Borrowing" immediately
prior to the words "a Notice of Swingline Borrowing";
(xviii) deleting the definition of "Required Lenders" in its
entirety and substituting the following therefor:
"'REQUIRED LENDERS' means, at any time, Lenders (other than
Affiliates of the Company) holding an Equivalent Dollar Amount of Term
Loans and having aggregate Revolving Credit Commitments (or, after
termination of the Revolving Credit Commitments, having an outstanding
principal amount of Revolving Credit Loans, after giving effect to
Section 2.14) in excess of 50% of the sum of (a) the Equivalent Dollar
Amount of the aggregate principal amount of Term Loans then
outstanding PLUS (b) the then-effective Revolving Credit Facility (or,
after termination of the Revolving Credit Facility, the aggregate
principal amount of Revolving Credit Loans outstanding, after giving
effect to Section 2.14) (in each case excluding Term Loans and
Revolving Credit Loans held by, and Revolving Credit Commitments of,
Lenders that are Affiliates of the Company)."
(xix) amending the definition of "Revolving Credit Facility" by
deleting the number "$300,000,000" therein and substituting
"$275,000,000" therefor;
(xx) amending the definition of "Subsidiary" by deleting the
words "directly or indirectly" therefrom;
(xxi) deleting the definition of "Term Loan" in its entirety
and substituting the following therefor:
"'TERM LOAN' means, with respect to each Lender that is signatory
hereto, the advance made by such Lender pursuant to Section 2.01, or,
if such Lender has entered into one or more Assignments and
Acceptances, and with respect to each other Lender, the amount set
forth for such Lender in the Register maintained by the Agent pursuant
to Section 8.07(c) as such Lender's "Term Loan", as the same may be
reduced pursuant to Section 2.09 hereof."
6
<PAGE>
(xxii) deleting the definition of "Termination Date" in its
entirety and substituting the following therefor:
"'TERMINATION DATE' means April 30, 2001 (or, if such date is not
a Business Day, the next succeeding Business Day) or the earlier date
of termination in whole of the Revolving Credit Commitments of all the
Lenders pursuant to Section 2.06 or 6.01."
(xxiii) deleting the definition of "Wholly-Owned Subsidiary" in
its entirety and substituting the following therefor:
"'WHOLLY-OWNED SUBSIDIARY' of any Person means a Subsidiary with
respect to which all of the shares of stock entitled, under ordinary
circumstances, to vote for the election of directors or other managers
of such Subsidiary (other than directors' qualifying shares) are owned
by such Person, by such Person and one or more of its Wholly-Owned
Subsidiaries, or by one or more of such Person's Wholly-Owned
Subsidiaries; PROVIDED, HOWEVER, that, at such time as 80% or more of
the interest in the capital or profits of ADG is owned by the Company
or any of its Wholly-Owned Subsidiaries, ADG and its Wholly-Owned
Subsidiaries shall be deemed to be Wholly-Owned Subsidiaries of the
Company."
(b) Section 2.01 (TERM LOANS) shall be amended by being deleted
in its entirety and by substituting the following therefor:
"SECTION 2.01. TERM LOANS. Each Lender severally agrees, upon
the terms and subject to the conditions hereinafter set forth, to make
a single advance in French Francs to the Company on the Amendment
No. 1 Effective Date, in an amount not to exceed the amount set forth
opposite such Lender's name on Schedule I hereto under the caption
"French Franc Term Loans" (such Lender's "Term Loan Commitment").
Amounts of Term Loans repaid or prepaid from time to time may not be
reborrowed."
(c) Section 2.02 (THE REVOLVING CREDIT FACILITY) shall be
amended by deleting from paragraph (c) thereof the number "$10,000,000" and
substituting "$15,000,000" therefor.
(d) Section 2.03 (MAKING OF THE WORKING CAPITAL LOANS,
MULTICURRENCY LOANS AND SWING LINE LOANS) shall be amended by:
(i) deleting the heading thereof and substituting the words
"SECTION 2.03. MAKING OF LOANS." therefor;
(ii) deleting paragraph (a) thereof in its entirety and by
substituting the following therefor:
"(a) NOTICE OF TERM LOAN BORROWING OR WORKING CAPITAL
BORROWING. (i) Except as otherwise provided in this
Section 2.03(a)(i) or in Section 2.03(c), each Term Loan Borrowing or
Working Capital Borrowing shall be made on notice, given not
7
<PAGE>
later than 12:00 noon (New York City time), (A) in the case of a
Borrowing comprised of Base Rate Loans, on the Business Day of the
proposed Borrowing, (B) in the case of a Borrowing (other than a Term
Loan Borrowing) comprised of LIBOR Loans, on the third Business Day
prior to the date of the proposed Borrowing, and (C) in the case of a
Term Loan Borrowing, on the fourth Business Day prior to the date of
the proposed Borrowing, in either case, by the Company to the Agent,
which shall give to each Lender prompt notice thereof by telex,
telecopier or cable.
(ii) Each notice of a Term Loan Borrowing (a "Notice of Term
Loan Borrowing") or Working Capital Borrowing (a "Notice of Working
Capital Borrowing") shall be by telefacsimile or delivered by hand, in
substantially the form of Exhibit A-2 hereto, specifying therein the
requested (A) date of such Borrowing, (B) Type of Loans comprising
such Borrowing, (C) aggregate amount of such Borrowing, and, (D) in
the case of a Borrowing comprised of LIBOR Loans, initial Interest
Period for such Borrowing. In the case of a proposed Borrowing
comprised of LIBOR Loans, the Agent shall promptly notify each Lender
of the applicable interest rate under Section 2.08(b). Each Lender
shall, before 1:00 p.m. (local time at the location of the Agent's
Dollar Account or the Agent's French Franc Account, as applicable) on
the date of such Borrowing, make available to the Agent at the Agent's
Dollar Account, in the case of a Working Capital Borrowing, or the
Agent's French Franc Account, in the case of a Term Loan Borrowing, in
same day funds, such Lender's ratable portion of such Borrowing.
After the Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Agent will make
such funds available to the Company by crediting the Company's Dollar
Account, in the case of a Working Capital Borrowing, or the Company's
French Franc Account, in the case of a Term Loan Borrowing; PROVIDED,
HOWEVER, that in the case of any Working Capital Borrowing, the Agent
shall first make a portion of such funds, in an amount equal to the
lesser of (x) the aggregate amount of the Swing Line Loans outstanding
on the date of such Working Capital Borrowing or (y) the amount of
such Working Capital Borrowing, available to the Swing Line Bank for
repayment of such Swing Line Loans."
(iii) deleting the number "12:00 noon" in the second line of
paragraph (c) thereof and substituting the number "2:00 p.m."
therefor.
(iv) deleting the words "Agent's Account" in the seventh line
of paragraph (c) thereof and substituting the words "Agent's Dollar
Account" therefor.
(e) Section 2.04 (ISSUANCE OF AND OTHER PROVISIONS IN REGARD
TO LETTERS OF CREDIT) shall be amended by deleting the words "Agent's
Account" from clause (ii) of paragraph (b) thereof and substituting the
words "Agent's Dollar Account" therefor.
8
<PAGE>
(f) Section 2.05 (FEES) of the Agreement shall be amended by
(i) inserting the words "and on each Lender's Term Loans from
the Amendment No. 1 Effective Date" immediately following the words
"from July 1, 1995" in paragraph (a) thereof;
(ii) inserting the words ", with respect to the Revolving
Credit Facility, and until the Maturity Date, with respect to the Term
Loans," immediately preceding the words "at the rate of 0.375%" in
paragraph (a) thereof;
(iii) inserting the words "and the Maturity Date" immediately
preceding the proviso in paragraph (a) thereof;
(iv) deleting the table in the proviso in paragraph (a)
thereof in its entirety and substituting the following therefor:
Total Debt to
EBITDA Ratio Applicable Rate
------------ ---------------
Below 2.00 0.15%
At or above 2.00, but
below 2.50 0.175%
At or above 2.50, but
below 2.75 0.20%
At or above 2.75, but
below 3.25 0.25%
At or above 3.25, but
below 3.50 0.30%
At or above 3.50 0.325%
; and
(v) deleting the words "Agent's Account" therefrom and
substituting the words "Agent's Dollar Account" therefor in
paragraph (c) thereof.
(g) Section 2.07 (REPAYMENT) shall be amended by deleting
paragraph (a) thereof in its entirety and by substituting the following
therefor:
"(a) TERM LOANS. The Company shall repay to the Agent, for
the account of the Lenders, the aggregate outstanding principal amount
of the Term Loans, together with all accrued and unpaid interest
thereon, on the Maturity Date."
(h) Sections 2.09 (PREPAYMENT) shall be amended by:
(i) deleting from paragraph (a) thereof the words "(or at
least one Business Day's notice for Base Rate Loans and same Business
Day's notice for Swing Line Loans)" and substituting the words "(or
same
9
<PAGE>
Business Day's notice by 12:00 p.m. for Base Rate Loans and same
Business Day's notice by 2:00 p.m. for Swing Line Loans)" therefor.
(ii) deleting paragraphs (b)(i) and (ii) in their entirety and
substituting the following therefor:
"(i) The Company shall on the date of receipt by the Company
or any of its Subsidiaries of the Net Cash Proceeds from the sale,
lease, transfer or other disposition of any assets of the Company or
any of its Subsidiaries (other than sales of assets expressly
permitted by Section 5.02(d)), prepay, or, with respect to
Multicurrency Loans to Foreign Borrowers, cause the prepayment of, an
aggregate principal amount (or the Equivalent Dollar Amount, in the
case of Term Loans and Multicurrency Loans) of the Term Loans and,
after the Term Loans have been repaid in full, of the Revolving Credit
Loans, in each case comprising part of the same Borrowing or
Borrowings, equal to 100% of the amount of such Net Cash Proceeds.
Each such prepayment applied to Revolving Credit Loans shall effect
concomitant reductions in the Revolving Credit Facility and the
Multicurrency Facility (but not in the Letter of Credit Facility or
the Swing Line Facility, PROVIDED that, at no time, shall the Letter
of Credit Facility or the Swing Line Facility exceed the Revolving
Credit Facility); PROVIDED, HOWEVER, that if the Term Loans shall have
been repaid in full and the aggregate commitments under the Revolving
Credit Facility are less than or equal to $125,000,000, such Net Cash
Proceeds shall be applied in accordance with Section 2.09(b)(iii);
PROVIDED further that no such prepayment shall be required from Net
Cash Proceeds resulting from transactions permitted by Section 5.02(d)
that are reinvested in property, plant or equipment of the Company or
any of its Subsidiaries within 270 days after such sale, lease,
transfer or other disposition.
(ii) The Company shall, on the date of receipt of Net Cash
Proceeds by the Company or any of its Subsidiaries from the issuance
and sale by the Company or any of its Subsidiaries of any shares of
capital stock, or options, warrants or any other rights to subscribe
for or otherwise acquire capital stock, of the Company or any of its
Subsidiaries (other than in respect of employee stock options) to any
Person (other than to the Company or any of its Subsidiaries), and, on
the date of receipt of Net Cash Proceeds from the incurrence of any
Debt of the Company or any of its Subsidiaries (other than Debt
permitted pursuant to Section 5.02(b)) and, on the date of receipt of
Surplus Proceeds from the issuance by the
10
<PAGE>
Company of any Additional Long-Term Notes, prepay, or, with respect to
Multicurrency Loans to Foreign Borrowers, cause the prepayment of, an
aggregate principal amount (or the Equivalent Dollar Amount, in the
case of Term Loans and Multicurrency Loans) of the Term Loans and,
after the Term Loans have been repaid in full, of the Revolving Credit
Loans, in each case comprising part of the same Borrowing or
Borrowings, equal to 100% of the amount of such Net Cash Proceeds or
Surplus Proceeds, as the case may be. Each such prepayment applied to
Revolving Credit Loans shall effect concomitant reductions in the
Revolving Credit Facility and the Multicurrency Facility (but not in
the Letter of Credit Facility or the Swing Line Facility, PROVIDED
that, at no time, shall the Letter of Credit Facility or the Swing
Line Facility exceed the Revolving Credit Facility); PROVIDED,
HOWEVER, that if the Term Loans shall have been repaid in full and the
aggregate commitments under the Revolving Credit Facility are less
than or equal to $125,000,000, such Net Cash Proceeds or Surplus
Proceeds, as the case may be, shall be applied in accordance with
Section 2.09(b)(iii). The Company shall not be obligated to apply any
proceeds (other than Surplus Proceeds) from the issuance of any
Additional Long-Term Note to the prepayment of any Loan; PROVIDED,
that any prepayment of any Revolving Credit Loan made from such
proceeds (other than Surplus Proceeds) of any Additional Long-Term
Note pursuant to Section 2.09(a) shall not effect any reduction in the
Revolving Credit Facility or the Multicurrency Facility. Each
Borrower of Local Loans in Italian Lire that is domiciled in the
Republic of Italy shall repay such Local Loan on the termination of
any Lire Borrowing Period that is not renewed in accordance with the
terms of this Agreement."
(iii) inserting in paragraph (b)(iii) thereof the words "the
Term Loans shall have been repaid in full and" immediately following
the words "At such time as";
(iv) deleting in clause (B)(I) of paragraph (b)(iv) thereof
the number "110%" therefrom and substituting the number "16/15"
therefor;
(v) deleting in paragraph (b)(v) thereof the number
"$45,000,000" therein and substituting "$55,000,000 minus the ADG
Excess" therefor.
(i) Section 2.10 (CONVERSION OF LOANS, EXCHANGE OF LOANS)
shall be amended by (i) inserting in paragraph (a) thereof the words "Term
Loans and" immediately preceding the words "Working Capital Loans" in each
instance where such words are used, (ii) inserting the words "the
Equivalent Dollar Amount of" immediately preceding the number "$5,000,000
in
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<PAGE>
clause (i) of paragraph (b) thereof, (iii) inserting the words "Term Loans
and" immediately preceding the words "Working Capital Loans" in the title
of such section and in clause (i) of paragraph (b) thereof, and
(iv) inserting the words "Term Loan or" immediately preceding the words
"Working Capital Loan" in each instance where such words are used in
clauses (ii) and (iii) of paragraph (b) thereof.
(j) Section 2.12 (PAYMENTS) shall be amended by deleting the
first sentence of paragraph (a)(i) thereof in its entirety and substituting
the following therefor "Each Borrower shall make each payment hereunder not
later than 1:00 p.m., or 2:00 p.m. with respect to Swing Line Loans (local
time at the location of the Agent's Dollar Account, Agent's Multicurrency
Account or the Agent's French Franc Account, as applicable) on the day when
due in Dollars to the Agent at the Agent's Dollar Account (or, with respect
to Multicurrency Loans, in the applicable Alternative Currency at the
Agent's Multicurrency Account for the Alternative Currency, or, with
respect to Term Loans, in French Francs at the Agent's French Franc
Account) in same day funds for the account of the Lenders (or, with respect
to Multicurrency Loans, the Multicurrency Lenders)."
(k) Section 2.16 (USE OF PROCEEDS) shall be amended by
deleting the words "Revolving Credit" in paragraph (a) thereof.
(l) Section 2.17 (LOAN ALLOCATION) shall be amended by
(i) inserting the words "(iv) the Term Loan Borrowing shall be requested
from the Lenders PRO RATA according to their Term Loan Commitments",
(ii) renumbering clauses (iv), (v) and (vi) as clauses (v), (vi) and (vii),
respectively, (iii) deleting the word "and" immediately preceding the
number "(vii)" and (iv) inserting the words "and (viii) each prepayment by
the Company of principal of any outstanding Term Loans shall be made for
the account of the Lenders PRO RATA according to their respective Facility
Shares of the Term Loans" immediately prior to the proviso thereof.
(m) Section 3.02 (CONDITIONS PRECEDENT TO EACH BORROWING AND
ISSUANCE) shall be amended by deleting from clause (iv)(A) of paragraph (a)
thereof the number "$45,000,000" therein and substituting "$55,000,000
minus the ADG Excess" therefor.
(n) Section 5.01 (AFFIRMATIVE COVENANTS) shall be amended by:
(i) inserting the words "(except as permitted under
Section 5.02(c) and 5.02(d))" immediately prior to the words "cause
each of its Subsidiaries to preserve and maintain" in paragraph (d)
thereof;
(ii) deleting paragraph (k) thereof in its entirety and
substituting the following therefor:
"(k) MAINTENANCE OF TOTAL DEBT TO EBITDA RATIO. Maintain a
Total Debt to EBITDA Ratio, determined as of the end of each fiscal
quarter of the Company, of not greater than the ratio
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<PAGE>
set forth below opposite the period in which the end of such fiscal
quarter occurs:
PERIOD RATIO
----------------------------------- --------------------
January 1, 1996 to and
including December 31, 1996 3.75
January 1, 1997 to and
including December 31, 1997 3.50
January 1, 1998 and thereafter 3.00
(iii) deleting the table in paragraph (l) thereof in its entirety
and by substituting the following therefor:
PERIOD RATIO
----------------------------------- --------------------
January 1, 1996 to and
including December 31, 1997 3.50
January 1, 1998 and thereafter 4.00
(o) Section 5.02 (NEGATIVE COVENANTS) shall be amended by:
(i) inserting in clause (iv) of paragraph (a) thereof (x) the
words "or any Additional Long-Term Notes" immediately following the
words "Long-Term Notes" in the second line thereof and (y) the words
"or such Additional Long-Term Notes, as the case may be," immediately
following the words "Long-Term Notes" in the fifth line thereof.
(ii) inserting in clause (ii) of paragraph (b) thereof the
words "Term Loans and" immediately preceding the words "the Revolving
Credit Facility".
(iii) (x) inserting in clause (iii)(C) of paragraph (b) thereof
the words ", or between Subsidiaries," immediately following the words
"between the Company and any Subsidiary" and (y) deleting from
clause (iii)(C) of paragraph (b) thereof the number "$30,000,000" and
substituting therefor the number "$50,000,000".
(iv) deleting from clause (iii)(D) of paragraph (b) thereof
the number "$30,000,000" therein and substituting "$40,000,000"
therefor and further amended by deleting the number "$20,000,000"
therein and substituting "$30,000,000" therefor.
(v) deleting from clause (iii)(F) of paragraph (b) thereof
(x) the words "(other than that permitted by Section
5.02(b)(iii)(C)(3))" and substituting therefor the words "(OTHER THAN
THAT PERMITTED BY SECTION 5.02(b)(iii)(C) or (M))", (y) the number
"$45,000,000" therein and substituting "$55,000,000 MINUS THE ADG
EXCESS" therefor and
13
<PAGE>
(z) the number "$20,000,000" therein and substituting "$30,000,000"
therefor.
(vi) (x) deleting the word "and" at the end of clause (iii)(K)
of paragraph (b) thereof, (y) deleting the period at the end of
clause (iii)(L) of paragraph (b) thereof and substituting a semicolon
therefor and (z) inserting the following new clause (iii)(M) in
paragraph (b):
"(M) Debt of ADG and any of its Subsidiaries outstanding on
the date of the ADG Acquisition that was not incurred in anticipation
of such acquisition and any refinancings thereof, PROVIDED that the
principal amount of any Debt issued in such refinancing does not
exceed the principal amount of Debt being refinanced thereby."
(vii) inserting in paragraph (c) thereof the words ", except to
the extent permitted by Section 5.02(d) or Section 5.02(e) and"
immediately following the words "or permit any of its Subsidiaries to
do so".
(viii) deleting the word "and" immediately prior to clause (iii)
of paragraph (d) thereof and inserting immediately following the
proviso to such clause (iii) the following words "and (iv) sales of
assets of the Company and its Subsidiaries for cash and for fair
market value in an aggregate amount not to exceed $5,000,000 in any
fiscal year of the Company (the "Base Amount"); PROVIDED that to the
extent that $5,000,000 PLUS any Excess Amount (as hereinafter defined)
exceeds the amount of sales made pursuant to this clause (iv) in any
fiscal year, sales may be made in the next succeeding fiscal year in
the amount of such excess (the "Excess Amount", which shall be zero
for the fiscal year ended immediately preceding the Amendment No. 1
Effective Date) PLUS the Base Amount".
(ix) inserting in clause (i)(A) of paragraph (e) thereof the
words "(PROVIDED, that, no other investments may be made in Loan
Parties that are Foreign Subsidiaries of the Company pursuant to this
clause (i)(A) other than investments in an aggregate amount not in
excess of $5,000,000)" immediately after the words "Subsidiary's
business" therein.
(x) deleting from clause (i)(B)(II) of paragraph (e) thereof
the number "$200,000,000" therein and substituting "$400,000,000"
therefor.
(xi) inserting immediately prior to the final period of
paragraph (e) thereof the words "or (iii) the Company or any Wholly-
Owned Subsidiary of the Company from contributing to Bafiges funds
required to purchase the capital stock of ADG, or (iv) the Company or
any Wholly-Owned Subsidiary of the Company from making contributions
to Bafiges in an aggregate amount not in excess of FFr36,000,000 in
any fiscal year or (v) any Subsidiary that is not a Loan Party from
making investments in the Company or any
14
<PAGE>
Subsidiary; PROVIDED that Bafiges may not make investments that would
otherwise be permitted hereunder in an aggregate amount in excess of
FFr3,000,000 per fiscal year ended after the Amendment No. 1 Effective
Date PLUS the amount of dividends or distributions made in cash to
Bafiges, as a stockholder, by ADG MINUS the amount of capital
contributions to or other investments in ADG previously made by
Bafiges under this clause (v)."
(xii) inserting in paragraph (g) thereof the words ", and
except that ADG may issue to Butagaz S.A. an aggregate number of
shares of ADG that represents no more than 5% of the Voting Power of
the capital stock of ADG but does not represent an interest in the
capital or profits of ADG" immediately preceding the final period
thereof.
(xiii) inserting the following as a new paragraph (p) thereof:
"(p) ISSUANCE OF ORAS. Issue, or permit any Subsidiary to
issue, any OBLIGATIONS REMBOURSABLE EN ACTIONS; PROVIDED that Bafiges
may issue ORAs in accordance with the definition thereof
notwithstanding Section 5.02(b), 5.02(e) and the immediately preceding
clause of this Section 5.02(p); PROVIDED, FURTHER, that any such
issuance shall not cause a reduction in the amount of any permitted
exception to restrictions contained in this Agreement (other than this
Section 5.02(p)).
(p) Section 8.07 (ASSIGNMENTS AND PARTICIPATIONS) shall be
amended by deleting paragraph (a) thereof in its entirety and substituting
the following therefor:
"(a) Each Lender may assign to one or more banks or other entities all
or, except with respect to any Multicurrency Loan or any Multicurrency
Commitment, a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Term Loan, Working
Capital Loans and Revolving Credit Commitment and all of its Multicurrency
Loans and Multicurrency Commitment), subject to the following:
(i) each such assignment shall be effected contemporaneously
with an assignment to the same bank or other entity of a constant and
not varying percentage of all of the assigning Lender's rights and
obligations under and in respect of all of Loans (except, with respect
to assignments by a Multicurrency Lender, Multicurrency Loans and
Working Capital Loans) and the Loan Documents (including without
limitation, the same percentage of the assigning Lender's Term Loans
and Revolving Credit Commitment and, with respect to assignments by a
Single Currency Lender, Working Capital Loans);
(ii) with respect to any assignment by a Multicurrency Lender,
such Multicurrency Lender may assign a varying percentage of Working
Capital Loans, Multicurrency Loans and its
15
<PAGE>
Multicurrency Commitment; PROVIDED, HOWEVER, that, in an assignment of
its Multicurrency Commitment and Multicurrency Loans, a Multicurrency
Lender may assign only all of its Multicurrency Loans and its entire
Multicurrency Share of the Excess Multicurrency Allotment; PROVIDED,
FURTHER, that, each Multicurrency Lender shall assign a constant and
non-varying percentage of the assigning Multicurrency Lender's Term
Loans and Revolving Credit Commitment; PROVIDED, FURTHER, that any
designation of any portion of any Multicurrency Lender's Multicurrency
Commitment as a Specified Currency Commitment with respect to any
Specified Alternative Currency shall be maintained as such after any
assignment);
(iii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender, the aggregate
amount of the Term Loan and Revolving Credit Commitment of the
assigning Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than the lesser
of (A) the entire Term Loan and Revolving Credit Commitment of such
Lender at such time or (B) $5,000,000 (PROVIDED, HOWEVER, that if the
amount of such assignment is less than the entire amount of the
Commitment of the assigning Lender, the amount retained by the
assigning Lender must be at least $5,000,000);
(iv) each such assignment shall be to an Eligible Assignee and
(v) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with a processing and
recordation fee of $3,500.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective
date shall be at least five Business Days after the delivery thereof to the
Agent or, if so specified in such Assignment and Acceptance, the date of
acceptance thereof by the Agent, (x) the assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and,
in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto, except that such
Lender shall continue to be an "Indemnified Party" under Section 8.04(b))."
16
<PAGE>
(q) Schedule I to the Agreement (DOMESTIC AND LIBOR OFFICES
OF LENDERS; TERM LOAN COMMITMENTS; REVOLVING CREDIT COMMITMENTS;
MULTICURRENCY COMMITMENTS) is hereby amended and restated in its entirety
in the form attached hereto as Attachment A.
(r) Schedule 1.01-A to the Agreement (GENERAL ALTERNATIVE
CURRENCIES AND SPECIFIED ALTERNATIVE CURRENCIES) is hereby amended and
restated in its entirety in the form attached hereto as Attachment B.
(s) Exhibit A-1 to the Agreement (FORM OF ASSIGNMENT AND
ACCEPTANCE) is hereby amended and restated in its entirety in the form
attached hereto as Attachment C.
(t) Exhibit A-2 to the Agreement (FORM OF NOTICE OF
BORROWING) is hereby amended and restated in its entirety in the form
attached hereto as Attachment D.
(u) Exhibit A-3 to the Agreement (FORM OF NOTICE OF
MULTICURRENCY BORROWING) is hereby amended by deleting from clause (D)
thereof the number "$45,000,000" and substituting "$55,000,000 minus the
ADG Excess" therefor.
SECTION 2. FACILITY FEE. Notwithstanding anything to the contrary
contained in the Agreement, the Company shall pay the amount of Facility Fee
accrued and unpaid to the Amendment Effective Date on the Amendment Effective
Date, if the Amendment Effective Date is not a date upon which such fees are
otherwise payable. After the Amendment Effective Date, the Company shall pay
the Facility Fee in accordance with the terms of the Agreement; PROVIDED that no
further Facility Fee shall be payable with respect to any period for which a
Facility Fee was paid in accordance with this Section 2.
SECTION 3. TRANSITION PROVISIONS. (a) On the Amendment Effective
Date the Borrowers shall repay the full principal amount of all Loans
outstanding under the Agreement on such date (exclusive of Loans made on such
date), together with all other amounts payable under the Agreement in connection
with such repayment, including, without limitation, interest accrued with
respect to such Loans repaid and costs of the Lenders set forth in Section 2.15
of the Agreement. The Agent shall apply the proceeds of such repayment in
accordance with the Agreement prior to giving effect to this Amendment. With
respect to any Loan that is requested to be made on the Amendment Effective
Date, the Agent shall request such Loans from the Lenders in accordance with the
terms of the Agreement (after giving effect to this Amendment). The Agent will
notify each Lender of the amount of any Loan such Lender shall be required to
make and of the amount of any such repayment that such Lender shall receive on
the Amendment Effective Date. On the Amendment Effective Date each Lender
making a Loan hereunder will transfer to the Agent the amount of its Loan in
accordance with the terms of the Agreement (after giving effect to this
Amendment). Each Letter of Credit outstanding under the Agreement on the
Amendment Effective Date shall remain outstanding as a Letter of Credit in
accordance with the terms thereof and the Agreement on and after the Amendment
Effective Date.
(b) Any delivery of any Notice of Borrowing prior to the Amendment
Effective Date in accordance with the terms of the Agreement (after giving
17
<PAGE>
effect to this Amendment) shall be effective upon the occurrence of the
Amendment Effective Date with respect to the obligations of the Lenders under
the Agreement (after giving effect to this Amendment) as if this Amendment were
effective on the date of delivery of such notice.
(c) With respect to any notice of any prepayment of Loans to be made
on the Amendment Effective Date, notwithstanding Section 2.09 of the Agreement
(but subject to such Borrower's other obligations under the Agreement,
including, without limitation, Sections 2.11, 2.13 and 2.15 of the Agreement),
any Borrower may give such irrevocable notice at or prior to 10:00 a.m. on the
Amendment Effective Date.
(d) The amendments herein to the definition of "Applicable Margin"
and to the table in Section 2.05 shall cause, effective upon the Amendment
Effective Date, the Applicable Margin and the Facility Fee to adjust such that
the Applicable Margin and the Facility Fee effective from the Amendment
Effective Date to the immediately following Adjustment Date shall be determined
with reference to the Total Debt to EBITDA Ratio calculated based on the
financial statements most recently delivered pursuant to Section 5.01(n)(iii) or
(iv) of the Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Borrower represents
and warrants as of the date hereof that: (a) this Amendment has been duly
executed and delivered by such Borrower and that this Amendment constitutes such
Borrower's legal, valid and binding obligation, enforceable against such
Borrower in accordance with its terms, (b) no Default has occurred and is
continuing and, (c) the representations and warranties made or deemed to have
been made by such Borrower in Article IV of the Agreement are true and correct
in all material respects on and as of the date hereof (or, if any such
representation or warranty is expressly stated to have been made as of a
specific earlier date, as of such date). It shall be an Event of Default for
all purposes of the Agreement if any of the representations and warranties made
herein shall be, or shall prove to have been, false or misleading as of the time
made in any material respect.
SECTION 5. CONFIRMATION OF COMPANY GUARANTY. The Company hereby
(a) reaffirms and restates as of the date hereof the obligations of the Company
pursuant to the Company Guaranty, (b) confirms that the Guaranteed Obligations
(as defined in the Company Guaranty) shall include, without limitation, the
Obligations of each Foreign Borrower under the Credit Agreement and each other
Loan Document, as each may be amended hereby, (c) consents to the increase in
the Multicurrency Facility as provided herein and (d) agrees that each reference
to the Credit Agreement or words of similar import in each Loan Document shall
be a reference to the Credit Agreement as amended hereby.
SECTION 6. CONFIRMATION OF LENDER. Each party hereto hereby agrees
that, on the Amendment Effective Date, Banque Francaise du Commerce Exterieur
("BFCE") shall become a Lender under the Amended and Restated Credit Agreement
and agrees that each reference in the Amended and Restated Credit Agreement and
each other Loan Document to a Lender shall thereupon also mean and be a
reference to BFCE. BFCE shall have the rights and the obligations of a Lender
under the Agreement and shall be bound by the provisions thereof, including,
without limitation, Article VII of the Agreement, as if an original signatory
thereto, except as expressly provided herein. The Initial Date with respect to
BFCE shall be the
18
<PAGE>
Amendment Effective Date. BFCE hereby appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under the Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto.
SECTION 7. NO OTHER CONSENTS, WAIVERS OR AMENDMENTS. Except as
specifically provided in this Amendment, no other consents, waivers or
amendments are made or permitted hereby to the Agreement. All other terms and
conditions of the Agreement remain in full force and effect and apply fully to
this Amendment.
SECTION 8. EFFECTIVENESS. This Amendment shall become effective on
the date (the "Amendment Effective Date") that the following conditions
precedent shall have been satisfied:
(a) The Agent shall have received on or before the Amendment
Effective Date the following documents (each document to be received by the
Agent shall be in form and substance satisfactory to the Agent), each dated
such date (unless otherwise specified):
(i) a copy of this Amendment, duly executed by the Borrowers,
the Agent and the Lenders;
(ii) a copy of the Confirmation of Subsidiary Guaranty that
follows the signature pages hereof, duly executed by each of the
Subsidiaries party to the Subsidiary Guaranty;
(iii) a copy of such executed Assignment and Acceptances, if
any, as are necessary to effect this Amendment, duly executed by each
of the parties thereto;
(iv) a copy of the certificate of incorporation of the Company
and each amendment thereto, certified as of a recent date prior to the
Amendment Effective Date by the Secretary of State of the State of
Delaware as being a true and correct copy thereof;
(v) a copy of a certificate of the Secretary of State of the
State of Delaware, dated as of a recent date prior to the Amendment
Effective Date, listing the certificate of incorporation of the
Company and each amendment thereto on file in his or her office and
certifying that (A) such amendments are the only amendments to the
Company's certificate of incorporation on file in his or her office,
(B) the Company has paid all franchise taxes to the date of such
certificate and (C) the Company is duly incorporated and in good
standing under the laws of the State of Delaware;
(vi) a certificate of each Borrower, signed on behalf of such
Borrower by its President or any Vice President or equivalent officer
and the Secretary or any Assistant Secretary or equivalent officer,
dated the Amendment Effective Date, certifying as to (A) a true and
correct copy of the charter or other appropriate organizational
documents of such Borrower as in effect on the date thereof, (B) a
true and correct copy of the bylaws or other appropriate
organizational documents of such
19
<PAGE>
Borrower as in effect on the date thereof, (C) the due incorporation
and good standing of such Borrower as a corporation organized under
the laws of its state or other jurisdiction of incorporation, and the
absence of any proceeding for the dissolution or liquidation of such
Borrower, (D) the truth in all material respects of the
representations and warranties contained in the Loan Documents as
though made on and as of the Amendment Effective Date, (E) the absence
of any event occurring and continuing that constitutes a Default, and
(F) the filing by such Borrower of all Federal, foreign, state and
local tax returns required by law to be filed by such Borrower on or
prior to such date and the timely payment by such Borrower of all
taxes shown thereon to be due;
(vii) a certificate of each Loan Party (other than any
Borrower), signed on behalf of such Loan Party by its President or any
Vice President or equivalent officer and the Secretary or any
Assistant Secretary or equivalent officer, dated the Amendment
Effective Date, certifying as to (A) the absence of any amendment to
the charter or other appropriate organizational documents of such Loan
Party since the Original Closing Date, or, with respect to any Loan
Party that was not a Loan Party on the Original Closing Date, the date
such Loan Party became a Loan Party, (B) the absence of any amendment
to the bylaws or other appropriate organizational documents of such
Loan Party since the Original Closing Date, or, with respect to any
Loan Party that was not a Loan Party on the Original Closing Date, the
date such Loan Party became a Loan Party, (C) the due incorporation
and good standing of such Loan Party as a corporation organized under
the laws of its state or other jurisdiction of incorporation, and the
absence of any proceeding for the dissolution or liquidation of such
Loan Party, (D) the truth in all material respects of the
representations and warranties contained in the Loan Documents as
though made on and as of the Amendment Effective Date, (E) the absence
of any event occurring and continuing that constitutes a Default, and
(F) the filing by such Loan Party of all Federal, foreign, state and
local tax returns required by law to be filed by such Loan Party on or
prior to such date and the timely payment by such Loan Party of all
taxes shown thereon to be due;
(viii) a certificate of the Secretary or any Assistant Secretary
or equivalent officer of each Loan Party dated the Amendment Effective
Date certifying (A) as to the adoption of resolutions by the Board of
Directors of such Loan Party in form attached thereto, and that such
resolutions have not been rescinded, modified or amended and remain in
full force and effect, and (B) the names and true signatures of the
officers of such Loan Party authorized to sign each documents to be
delivered hereunder by such Loan Party;
(ix) favorable opinions of (i) Paul, Weiss, Rifkind, Wharton &
Garrison, counsel for the Company, and (ii) the Senior Vice
President - Legal Affairs of the Company, each as to such matters as
the Agent or any Lender may request;
(x) a Notice of Borrowing by the Company with respect to the
Term Loans in accordance with Section 2.03(a), as amended hereby;
20
<PAGE>
(xi) such other approvals, opinions or documents as Required
Lenders or the Agent may reasonably request;
(b) No event has occurred and is continuing that constitutes
a Default under the Agreement on the date hereof or on the Amendment
Effective Date, or after giving effect to the transactions contemplated
hereby, under this Amendment No. 1;
(c) The receipt by the Agent of all fees of the Agent and the
Lenders that are due to the extent such fees have been presented to a
Borrower for payment;
(d) The Company shall have repaid, or shall have caused the
repayment of, an aggregate principal amount of Revolving Credit Loans equal
to the amount, if any, by which the SUM of (A) the aggregate outstanding
principal amount of the Revolving Credit Loans, PLUS (B) any unpaid
Reimbursement Obligations, PLUS (C) the maximum amount then available to be
drawn under outstanding Letters of Credit (assuming compliance with all
conditions to drawing) and (D) the aggregate principal amount of Debt of
Foreign Subsidiaries described in Section 5.02(b)(iii)(F) in excess of
$55,000,000, exceeds the Available Revolving Credit Facility Amount after
giving effect to this Amendment; PROVIDED, that any such repayment may be
effected with the proceeds of the Term Loan Borrowing;
(e) The Amendment Effective Date shall have occurred on or
prior to May 14, 1996.
Upon such effectiveness, the Agent shall promptly notify the Company and each of
the Lenders of such effectiveness.
SECTION 9. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall be identical and all of which, when
taken together, shall constitute one and the same instrument, and any of the
parties hereto may execute this Amendment by signing any such counterpart.
SECTION 10. BINDING EFFECT. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 11. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first above written.
THE COLEMAN COMPANY, INC., as a Borrower
By: /s/ H. MacGregor Clarke
------------------------------------------
Name: H. MacGregor Clarke
Title: Vice President and Treasurer
COLEMAN JAPAN CO., LTD., as a Borrower
By: /s/ Larry E. Sanford
------------------------------------------
Name: Larry E. Sanford
Title: Director
COLEMAN (DEUTSCHLAND) GmbH, as a Borrower
By: /s/ Larry E. Sanford
------------------------------------------
Name: Larry E. Sanford
Title: Managing Director
CREDIT SUISSE, as Agent and a Lender
By: /s/ Juerg Jomner
------------------------------------------
Name: Juerg Jomner
Title: Associate
By: /s/ Michael C. Mast
------------------------------------------
Name: Michael C. Mast
Title: Member of Senior Management
22
<PAGE>
CHEMICAL BANK, as a Lender
By: /s/ Peter C. Eckstein
------------------------------------------
Name: Peter C. Eckstein
Title: Vice President
CITIBANK, N.A., as a Lender
By: /s/ Julie Eisner
------------------------------------------
Name: Julie Eisner, Managing Director
Title: Attorney-In-Fact
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as a Lender
By: /s/ Donald J. Chin
------------------------------------------
Name: Donald J. Chin
Title: Vice President
THE LONG TERM CREDIT BANK OF JAPAN, LTD., LOS
ANGELES AGENCY, as a Lender
By: /s/ Genichi Imai
------------------------------------------
Name: Genichi Imai
Title: Joint General Manager
NATIONSBANK (CAROLINAS), N.A., as a Lender
By: /s/ S. Lynn Callicott
------------------------------------------
Name: S. Lynn Callicott
Title: Vice President
23
<PAGE>
TORONTO DOMINION (TEXAS), INC., as a Lender
By: /s/ Lisa Allison
------------------------------------------
Name: Lisa Allison
Title: Vice President
BANK IV KANSAS, N.A., as a Lender
By: /s/ Michael E. Wegeng
------------------------------------------
Name: Michael E. Wegeng
Title: Senior Vice President
THE YASUDA TRUST & BANKING COMPANY, LIMITED,
CHICAGO BRANCH, as a Lender
By: /s/ Joseph C. Meek
------------------------------------------
Name: Joseph C. Meek
Title: First Vice President and Manager
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
By: /s/ Richard D. Hill, Jr.
------------------------------------------
Name: Richard D. Hill, Jr.
Title: Director
THE FUJI BANK LIMITED, as a Lender
By: /s/ Katsunori Nozawa
------------------------------------------
Name: Katsunori Nozawa
Title: Vice President and Manager
24
<PAGE>
ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A.,
as a Lender
By: /s/ William J. DeAngelo
------------------------------------------
Name: William J. DeAngelo
Title: First Vice President
By: /s/ Ettore Viazzo
------------------------------------------
Name: Ettore Viazzo
Title: Vice President
THE NIPPON CREDIT BANK, LTD., as a Lender
By: /s/ Yoshihide Watanabe
------------------------------------------
Name: Yoshihide Watanabe
Title: Vice President and Manager
THE BANK OF NEW YORK, as a Lender
By: /s/ Robert Louk
------------------------------------------
Name: Robert Louk
Title: Vice President
INDUSTRIAL BANK OF JAPAN, as a Lender
By: /s/ Junri Oda
------------------------------------------
Name: Junri Oda
Title: Senior Vice President
UNION BANK OF CALIFORNIA, N.A., as a Lender
By: /s/ Cary Moore
------------------------------------------
Name: Cary Moore
Title: Vice President
By: /s/ Patricia Samson
------------------------------------------
Name: Patricia Samson
Title: Credit Officer
BANQUE FRANCAISE DU COMMERCE EXTERIEUR,
as a Lender
By: /s/ Timothy Daileader
------------------------------------------
Name: Timothy Daileader
Title: Assistant Vice President
By: /s/ William Maier
------------------------------------------
Name: William Maier
Title: Vice President - Group Manager
25
<PAGE>
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH,
as a Lender
By: /s/ Yoshinori Kawamura
------------------------------------------
Name: Yoshinori Kawamura
Title: Joint General Manager
26
<PAGE>
CONFIRMATION OF SUBSIDIARY GUARANTY
Each of the undersigned (the "Guarantors") hereby (i) approves, ratifies,
confirms and acknowledges the attached Amendment (the "Amendment"; terms defined
therein being used herein as therein defined), (ii) reaffirms and restates as of
the date hereof the obligations of such Guarantor pursuant to the Subsidiary
Guaranty dated as of May 4, 1994 (as supplemented by Supplement No. 1 thereto
dated as of March 9, 1995, by Supplement No. 2 thereto dated as of July 14, 1995
and by Supplement No. 3 thereto dated as of December 21, 1995, the "Subsidiary
Guaranty") by the Guarantors in favor of the Agent and (iii) agrees that each
reference to the Credit Agreement or words of similar import in each Loan
Document to which such Guarantor is party shall be a reference to the Amended
and Restated Credit Agreement, as amended by the Amendment. Each of the
undersigned further represents and warrants to each Lender and the Agent that
(a) this acknowledgment has been duly executed and delivered by such Guarantor
and constitutes such Guarantor's legal, valid and binding obligation,
enforceable in accordance with its terms, and, (b) immediately after giving
effect to the Amended and Restated Credit Agreement, as amended by the
Amendment, (i) no Default has occurred and is continuing and (ii) the
representations and warranties made by such Guarantor in Section 5 of the
Subsidiary Guaranty are true, correct and complete in all material respects as
if made on and as of the date hereof, except that any such representation or
warranty stated to relate to a specific earlier date is true and correct as of
such earlier date. It shall be an Event of Default for all purposes of the
Subsidiary Guaranty and the other Loan Documents if any of the representations
and warranties made herein shall be, or shall prove to have been, false or
misleading as of the time made in any material respect.
Dated: April 30, 1996
GUARANTORS
----------
AUSTRALIAN COLEMAN, INC.
BEACON EXPORTS, INC.
COLEMAN COUNTRY, LTD.
COLEMAN POWERMATE, INC.
COLEMAN POWERMATE COMPRESSORS, INC.
COLEMAN SPAS, INC.
COLEMAN U.K., INC.
COLEMAN VENTURE CAPITAL, INC.
KANSAS ACQUISITION CORP.
NIPPON COLEMAN, INC.
SEATT CORPORATION
SIERRA CORPORATION OF FORT SMITH, INC.
GENERAL ARCHERY INDUSTRIES, INC.
PEARSON HOLDINGS INCORPORATED
WOODCRAFT EQUIPMENT COMPANY
RIVER VIEW CORPORATION OF BARLING, INC.
By: /s/ Larry E. Sanford
-------------------------------------
Name: Larry E. Sanford
Title: Vice President and Secretary
<PAGE>
EASTPAK CORPORATION
EASTPAK MANUFACTURING CORPORATION
By: /s/ Larry E. Sanford
-------------------------------------
Name: Larry E. Sanford
Title: Executive Vice President-Law,
Administration & Development
and Secretary
TAYMAR INC.
By: /s/ Larry E. Sanford
-------------------------------------
Name: Larry E. Sanford
Title: President
2
<PAGE>
EXECUTION COPY
AMENDMENT NO. 2
This AMENDMENT NO. 2 (this "Amendment") to the Credit Agreement (as
defined below) is entered into as of April 30, 1996 by and among The Coleman
Company, Inc. (the "Company"), certain foreign subsidiaries of the Company party
thereto (each a "Foreign Borrower" and, collectively, together with the Company,
the "Borrowers"), the Lenders (as defined below) party hereto and Credit Suisse,
as agent for the Lenders (the "Agent").
WHEREAS, the Borrowers, certain lenders (the "Lenders") and the Agent
are party to the Amended and Restated Credit Agreement dated as of August 3,
1995 (as amended, supplemented or otherwise modified from time to time, the
"Agreement"; capitalized terms used but not defined herein shall have their
respective meanings specified in the Agreement); and
WHEREAS, the Borrowers have requested that the Lenders and the Agent
agree, and Required Lenders party hereto and the Agent are willing, to amend the
Agreement, on the terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. AMENDMENT TO SECTION 8.07. Subject to the satisfaction
of the conditions to effectiveness specified in Section 5 hereof, Paragraph (e)
of Section 8.07 of the Agreement shall be amended (a) to delete clause (iii) of
the proviso thereto and (b) to renumber clauses (iv) and (v) of the proviso
thereto as clauses (iii) and (iv), respectively.
SECTION 2. REPRESENTATIONS AND WARRANTIES. Each Borrower
represents and warrants as of the date hereof that: (a) this Amendment has been
duly executed and delivered by such Borrower and that this Amendment constitutes
such Borrower's legal, valid and binding obligation, enforceable against such
Borrower in accordance with its terms, (b) no Default has occurred and is
continuing and, (c) the representations and warranties made or deemed to have
been made by such Borrower in Article IV of the Agreement are true and correct
in all material respects on and as of the date hereof (or, if any such
representation or warranty is expressly stated to have been made as of a
specific earlier date, as of such date). It shall be an Event of Default for
all purposes of the Agreement if any of the representations and warranties made
herein shall be, or shall prove to have been, false or misleading as of the time
made in any material respect.
SECTION 3. CONFIRMATION OF COMPANY GUARANTY. The Company hereby
(a) reaffirms and restates as of the date hereof the obligations of the Company
pursuant to the Company Guaranty, (b) confirms that the Guaranteed Obligations
(as defined in the Company Guaranty) shall include, without limitation, the
Obligations of each Foreign Borrower under the Credit Agreement and each other
Loan Document, as each may be amended hereby and (c) agrees that each reference
to the Credit Agreement or words of similar import in each Loan Document shall
be a reference to the Credit Agreement as amended hereby.
<PAGE>
SECTION 4. NO OTHER CONSENTS, WAIVERS OR AMENDMENTS. Except as
specifically provided in this Amendment, no other consents, waivers or
amendments are made or permitted hereby to the Agreement. All other terms and
conditions of the Agreement remain in full force and effect and apply fully to
this Amendment.
SECTION 5. EFFECTIVENESS. This Amendment shall become effective
on the date (the "Amendment Effective Date") that the following conditions
precedent shall have been satisfied:
(a) The Agent shall have received the following documents (each
document to be received by the Agent shall be in form and substance
satisfactory to the Agent):
(i) a copy of this Amendment, duly executed by the Borrowers,
the Agent and Required Lenders;
(ii) a copy of the Confirmation of Subsidiary Guaranty that
follows the signature pages hereof, duly executed by each of the
Subsidiaries party to the Subsidiary Guaranty;
(iii)such other approvals, opinions or documents as Required
Lenders or the Agent may reasonably request;
(b) No event has occurred and is continuing that constitutes a
Default under the Agreement on the date hereof or on the Amendment
Effective Date, or after giving effect to the transactions contemplated
hereby;
(c) Amendment No. 1 to the Agreement shall have become
effective.
Upon such effectiveness, the Agent shall promptly notify the Company and each of
the Lenders of such effectiveness.
SECTION 6. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall be identical and all of which, when
taken together, shall constitute one and the same instrument, and any of the
parties hereto may execute this Amendment by signing any such counterpart.
SECTION 7. BINDING EFFECT. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
SECTION 8. GOVERNING LAW. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first above written.
THE COLEMAN COMPANY, INC., as a Borrower
By: /s/ H. MacGregor Clarke
---------------------------------
Name: H. MacGregor Clarke
Title: Vice President and Treasurer
COLEMAN JAPAN CO., LTD., as a Borrower
By: /s/ Larry E. Sanford
---------------------------------
Name: Larry E. Sanford
Title: Director
COLEMAN (DEUTSCHLAND) GMbH, as a Borrower
By: /s/ Larry E. Sanford
---------------------------------
Name: Larry E. Sanford
Title: Managing Director
CREDIT SUISSE, as Agent and a Lender
By: /s/ Juerg Johner
---------------------------------
Name: Juerg Johner
Title: Associate
By: /s/ Michael C. Mast
---------------------------------
Name: Michael C. Mast
Title: Member of Senior Management
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CHEMICAL BANK, as a Lender
By: /s/ Peter C. Eckstein
--------------------------------
Name: Peter C. Eckstein
Title: Vice President
CITIBANK, N.A., as a Lender
By: /s/ Jolie Eisner
---------------------------------
Name: Jolie Eisner, Managing Director
Title: Attorney-In-Fact
BANK OF AMERICA ILLINOIS, as a Lender
By: /s/ Donald J. Chin
---------------------------------
Name: Donald J. Chin
Title: Vice President
THE LONG TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY,
as a Lender
By: /s/ Genichi Imai
---------------------------------
Name: Genichi Imai
Title: Joint General Manager
NATIONSBANK (CAROLINAS), N.A., as a Lender
By: /s/ S. Lynn Callicott
---------------------------------
Name: S. Lynn Callicott
Title: Vice President
23
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TORONTO DOMINION (TEXAS), INC.,
as a Lender
By: /s/ Lisa Allison
---------------------------------
Name: Lisa Allison
Title: Vice President
BANK IV KANSAS, N.A., as a Lender
By: /s/ Michael E. Wegeng
---------------------------------
Name: Michael E. Wegeng
Title: Senior Vice President
THE YASUDA TRUST & BANKING
COMPANY, LIMITED, CHICAGO
BRANCH, as a Lender
By: /s/ Joseph C. Meek
---------------------------------
Name: Joseph C. Meek
Title: First Vice President and Manager
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
By: /s/ Richard D. Hill, Jr.
---------------------------------
Name: Richard D. Hill, Jr.
Title: Director
THE FUJI BANK LIMITED, as a Lender
By: /s/ Katsunori Nozawa
---------------------------------
Name: Katsunori Nozawa
Title: Vice President & Manager
24
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ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A., as a Lender
By: /s/ William J. DeAngelo Ettore Viazzo
---------------------------------
Name: William J. DeAngelo Ettore Viazzo
Title: First V.P. V.P.
THE NIPPON CREDIT BANK, LTD., as a
Lender
By: /s/ Yoshihide Watanabe
---------------------------------
Name: Yoshihide Watanabe
Title: Vice President & Manager
THE BANK OF NEW YORK, as a Lender
By: /s/ Robert Louk
---------------------------------
Name: Robert Louk
Title: Vice President
INDUSTRIAL BANK OF JAPAN, as a Lender
By: /s/ Junri Oda
---------------------------------
Name: Junri Oda
Title: SENIOR VICE PRESIDENT
UNION BANK, as a Lender
By: /s/ Cary Moore Patricia Samson
---------------------------------
Name: Cary Moore Patricia Samson
Title: Vice President Credit Officer
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR, as a Lender
By: /s/ Timothy Daileader William Maier
---------------------------------
Name: Timothy Daileader/William Maier
Title: AVP VP - Grp Mngr
25
<PAGE>
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH, as a Lender
By: /s/ Yoshinori Kawamura
---------------------------------
Name: Yoshinori Kawamura
Title: Joint General Manager
26
<PAGE>
CONFIRMATION OF SUBSIDIARY GUARANTY
Each of the undersigned (the "Guarantors") hereby (i) approves,
ratifies, confirms and acknowledges the attached Amendment (the "Amendment";
terms defined therein being used herein as therein defined), (ii) reaffirms and
restates as of the date hereof the obligations of such Guarantor pursuant to the
Subsidiary Guaranty dated as of May 4, 1994 (as supplemented by Supplement No. 1
thereto dated as of March 9, 1995, by Supplement No. 2 thereto dated as of July
14, 1995 and by Supplement No. 3 thereto dated as of December 21, 1995, the
"Subsidiary Guaranty") by the Guarantors in favor of the Agent and (iii) agrees
that each reference to the Credit Agreement or words of similar import in each
Loan Document to which such Guarantor is party shall be a reference to the
Amended and Restated Credit Agreement, as amended by the Amendment. Each of the
undersigned further represents and warrants to each Lender and the Agent that
(a) this acknowledgment has been duly executed and delivered by such Guarantor
and constitutes such Guarantor's legal, valid and binding obligation,
enforceable in accordance with its terms, and, (b) immediately after giving
effect to the Amended and Restated Credit Agreement, as amended by the
Amendment, (i) no Default has occurred and is continuing and (ii) the
representations and warranties made by such Guarantor in Section 5 of the
Subsidiary Guaranty are true, correct and complete in all material respects as
if made on and as of the date hereof, except that any such representation or
warranty stated to relate to a specific earlier date is true and correct as of
such earlier date. It shall be an Event of Default for all purposes of the
Subsidiary Guaranty and the other Loan Documents if any of the representations
and warranties made herein shall be, or shall prove to have been, false or
misleading as of the time made in any material respect.
Dated: April 30, 1996
GUARANTORS
AUSTRALIAN COLEMAN, INC.
BEACON EXPORTS, INC.
COLEMAN COUNTRY, LTD.
COLEMAN POWERMATE, INC.
COLEMAN POWERMATE COMPRESSORS, INC.
COLEMAN SPAS, INC.
COLEMAN U.K., INC.
COLEMAN VENTURE CAPITAL, INC.
KANSAS ACQUISITION CORP.
NIPPON COLEMAN, INC.
SEATT CORPORATION
SIERRA CORPORATION OF FORT SMITH, INC.
GENERAL ARCHERY INDUSTRIES, INC.
PEARSON HOLDINGS INCORPORATED
WOODCRAFT EQUIPMENT COMPANY
RIVER VIEW CORPORATION OF BARLING, INC.
By: /s/ Larry E. Sanford
--------------------------------
Name: Larry E. Sanford
Title: Vice President and Secretary
<PAGE>
EASTPAK CORPORATION
EASTPAK MANUFACTURING CORPORATION
By: /s/ Larry E. Sanford
--------------------------------
Name: Larry E. Sanford
Title: Executive Vice President-Law,
Administration & Development and
Secretary
TAYMAR INC.
By: /s/ Larry E. Sanford
--------------------------------
Name: Larry E. Sanford
Title: President
2
<PAGE>
Agreement
Effective as of the first day of January, 1996
by and between
The Coleman Company, Inc.
a Delaware corporation
with its principal place of business at
1526 Cole Boulevard - Suite 300
Golden, Colorado
(the "Corporation")
and
Patrick McEvoy
(the "Executive")
WITNESSETH
Whereas, the Corporation and the Executive
mutually desire to enter into this Agreement
with respect to the Executive's employment
with the Corporation.
Now, therefore, in consideration of the mutual
covenants herein contained, the Corporation
and the Executive agree as follows:
1. EMPLOYMENT AND TERM. The Corporation agrees to employ the Executive
and the Executive agrees to serve the Corporation as a senior executive officer
for a term beginning on January 1, 1996 and ending on December 31, 1997, unless
sooner terminated in accordance with Section 5 hereof; PROVIDED, that commencing
on January 1, 1997 and each January 1 thereafter, the term of this Agreement
will automatically be extended for one additional year unless, not later than
June 30 of the preceding year, the Corporation or the Executive will have given
written notice to the other party not to extend this Agreement (such notice of
nonrenewal given by the Corporation to the Executive being hereinafter referred
to as a "Nonrenewal"); and FURTHER, PROVIDED, that if a Change in Control (as
defined in Section 8 hereof) occurs
<PAGE>
during the term of this Agreement (including any extensions thereto), this
Agreement will continue in effect for a period of not less than two (2) years
beyond the month in which such Change in Control occurs.
2. DUTIES. The Executive agrees to serve the Corporation faithfully and
to the best of his ability; to devote his entire time, energy and skill during
regular business hours to such employment; and to use his best efforts, skill
and ability to promote its interest.
3. RESPONSIBILITIES; PLACE OF PERFORMANCE.
(a) During the term of this Agreement, the Executive shall have such
title and perform such duties as from time to time may be assigned to him by
the Board of Directors of the Corporation (the "Board") or any superior officer
of the Corporation; PROVIDED, that the title and the duties assigned to the
Executive shall not be inconsistent with his status as a senior executive
officer of the Corporation. The Executive shall at all times have executive
powers and authority as shall reasonably be required to enable him to discharge
his duties in an efficient manner, together with such facilities and services as
are suitable or customary to his position.
(b) Except for occasional travel on the Corporation's business, the
Executive will be required to perform his duties under this Agreement in the
Chicago, Illinois metropolitan area or in such other geographic location (within
the contiguous United States of America) as the Corporation may determine, so
long as the Corporation provides the Executive with relocation benefits no less
favorable than the relocation benefits available under the Corporation's
executive relocation policy as in effect for the 1995 relocation of the
Corporation's executive offices to the Denver, Colorado metropolitan area.
4. COMPENSATION AND RELATED MATTERS.
(a) SALARY. During the term of the Executive's employment hereunder,
the Corporation will pay to the Executive a salary at the rate of $200,000 per
annum, in substantially equal installments in accordance with normal payroll
practices of the Corporation, but not less frequently than monthly. The base
salary may
2
<PAGE>
be increased by the Board from time to time, in its discretion, but in no event
shall such base salary be reduced from the rate previously in effect. The base
salary in effect from time to time hereunder is referred to as the "Base
Salary."
(b) EXPENSES. The Executive will be entitled to receive prompt
reimbursement from the Corporation of all reasonable expenses incurred by the
Executive in performing services hereunder during the term of the Executive's
employment hereunder, including all expenses of travel and living expenses while
away from home on business or at the request of the Corporation, consistent with
expense policies applicable to other senior executive officers. The Executive
will furnish the Corporation with evidence that such expenses were incurred as
the Corporation may from time to time reasonably request.
(c) INCENTIVE BONUS. With respect to each calendar year during the
Term, the Executive will be granted an annual target incentive bonus opportunity
(the "Target Bonus") equal to no less than 70% of Base Salary. Payments of the
Executive's annual incentive bonus shall be made in accordance with the terms
and conditions set forth in the then current incentive bonus plan or arrangement
maintained by the Corporation (the "Incentive Plan"). The Target Bonus may be
increased from time to time, but may not be decreased below the percentage of
Base Salary previously in effect unless an adjustment is made in the Executive's
Base Salary such that the aggregate dollar amount of the Executive's Base Salary
and Target Bonus (after giving effect to the foregoing adjustments) is no less
than the aggregate dollar amount of such Base Salary and Target Bonus
(immediately prior to such adjustments).
(d) EMPLOYEE BENEFITS. The Executive will be entitled to participate
in all of the other employee benefit plans, programs and arrangements which are
presently or may hereafter be provided by the Corporation to its senior
executive officers including, without limitation, all retirement, health
insurance and life insurance plans, programs and arrangements (the "Benefit
Plans"), on a basis no less favorable than that of other senior executive
officers of the Corporation. In addition, the Executive will be entitled to
participate in all nonqualified employee pension plans or arrangements of the
Corporation in which he is currently or subsequently designated as a participant
(the "Pen-
3
<PAGE>
sion Plans"). The Corporation agrees that it will not terminate Executive's
participation in any of the Pension Plans or amend any of the Pension Plans in
any manner adverse to the Executive without the Executive's prior written
consent.
(e) VACATIONS. The Executive will be entitled to four (4) weeks of
vacation each calendar year, in accordance with the Corporation's vacation
policy as in effect from time to time. Vacation time which has not been used by
the end of each calendar year will be forfeited.
(f) CORPORATION AUTOMOBILE. The Corporation will provide the
Executive with an automobile during the term of this Agreement. The Corporation
will pay all reasonable expenses associated with the operation of such
automobile in the same manner as is in effect from time to time with respect to
other senior executive officers of the Corporation, including, without
limitation, all reasonable maintenance and insurance expenses. The automobile
furnished by the Corporation will be a late model top-of-the-line Oldsmobile or
like vehicle to be selected by the Executive. At the expiration of the term of
this Agreement, the Executive will promptly return the automobile to the
Corporation.
(g) OTHER. The Corporation will pay or promptly reimburse the
Executive for reasonable costs incurred by him in connection with his engagement
of professional estate planning and income tax assistance; PROVIDED, that such
amounts will not exceed $3,000 with respect to any calendar year.
5. TERMINATION.
(a) DEATH. The Executive's employment hereunder will terminate upon
his death.
(b) DISABILITY. The Executive's employment hereunder will terminate
upon his Disability. For purposes of this Agreement, the Executive will be
considered "Disabled" when eligible for benefits under the Corporation's long-
term disability plan as in effect from time to time (the "Disability Plan").
(c) CAUSE. The Executive's employment hereunder may be terminated for
Cause, as provided below. "Cause" means (i) the willful and continued failure
by the Executive to substantially
4
<PAGE>
perform the Executive's duties with the Corporation (other than any such failure
resulting from the Executive's incapacity due to physical or mental illness) or
(ii) the willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Corporation, monetarily or otherwise. For purposes
of the preceding sentence, no act, or failure to act, on the Executive's part
will be deemed "willful" unless done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that the Executive's act, or
failure to act, was in the best interest of the Corporation. Upon the
Corporation's determination that Cause for the Executive's termination exists,
the Corporation may elect to terminate this Agreement upon sixty (60) days'
prior written notice to the Executive.
(d) GOOD REASON. The Executive may voluntarily terminate his
employment with the Corporation for Good Reason. Good Reason will exist upon
(i) the occurrence of any material breach of this Agreement on the part of the
Corporation (including, but not limited to, any breach of Section 3 or 4
hereof), (ii) the delivery to the Executive of a notice of Nonrenewal by the
Corporation; PROVIDED, that the Executive delivers a Notice of Termination
within sixty (60) days of the delivery of such notice of Nonrenewal, or (iii)
after the occurrence of a Change in Control, (1) a substantial adverse
alteration in the Executive's title or in the nature or status of the
Executive's responsibilities from those in effect immediately prior to such
Change in Control or (2) any change to the manner in which the Incentive Plan is
administered (including, but not limited to, the process utilized in setting
performance goals and the relative difficulty of achieving such goals), compared
to the manner in which the Incentive Plan was administered immediately prior to
the Change in Control, which change results in a significantly greater
likelihood that the Executive will be unable to earn the Target Bonus.
The Executive's right to terminate the Executive's employment for
Good Reason will not be affected by the Executive's incapacity due to physical
or mental illness. Except as provided above, the Executive's continued
employment will not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason hereunder.
(e) RESIGNATION. The Executive may voluntarily terminate his
employment hereunder at any time.
5
<PAGE>
(f) TERMINATION BY THE CORPORATION WITHOUT CAUSE. The Corporation
may terminate the Executive's employment hereunder without Cause at any time.
(g) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Corporation or by the Executive (other than termination
pursuant to Section 5(a) hereof) must be communicated by written Notice of
Termination to other party hereto. For purposes of this Agreement, a "Notice of
Termination" will mean a notice that indicates the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(h) DATE OF TERMINATION. "Date of Termination" will mean (i) if the
Executive's employment is terminated by his death, the date of his death, (ii)
if the Executive delivers a Notice of Termination within sixty (60) days of
delivery to the Executive of a notice of Nonrenewal from the Corporation, the
date of delivery of such Notice of Termination, and (iii) if the Executive's
employment is terminated for any other reason, the date specified in the Notice
of Termination.
6. COMPENSATION UPON TERMINATION
(a) FOR CAUSE; OTHER THAN FOR GOOD REASON. In the event that the
Executive's employment is terminated by the Corporation for Cause or by the
Executive other than for Good Reason, the Corporation will pay the Executive his
Base Salary through the Date of Termination. In addition, the Executive will be
entitled to receive all accrued benefits to which the Executive is entitled
under the Benefit Plans, in accordance with the terms of such Benefit Plans.
The Executive will not be entitled to any portion of the incentive bonus in
respect of the calendar year in which occurs the Date of Termination; PROVIDED,
that if the Date of Termination occurs after the end of a calendar year and
prior to the determination of whether the Executive is entitled to an incentive
bonus for such year, such incentive bonus will be paid, if and to the extent so
determined.
(b) DEATH; DISABILITY. In the event that the Executive's employment
is terminated by reason of the Executive's death
6
<PAGE>
or Disability, the Corporation will pay the Executive (or his estate or
beneficiary if applicable) his Base Salary through the Date of Termination. The
Executive (or his estate or beneficiary, if applicable) will be entitled to
receive all accrued benefits to which the Executive is entitled under the
Benefit Plans, in accordance with the terms of such Benefit Plans. The
Executive (or his estate or beneficiary, if applicable) will be entitled to
receive (i) in a lump sum as soon as practicable after the Date of Termination,
any incentive bonus accrued but not yet paid to the Executive, including for
this purpose any accumulated but unpaid excess amounts under the Incentive Plan
in respect of all calendar years ending prior to the Date of Termination, plus
(ii) a pro rata portion of the incentive bonus for the year in which occurs the
Date of Termination, such incentive bonus (A) to be calculated in accordance
with the terms of the Incentive Plan based on the actual results of the
Corporation for such year and then multiplied by a fraction the numerator of
which is the number of full and partial months worked by the Executive in such
calendar year and the denominator of which is twelve (12) and (B) to be payable
at the same time as incentive bonuses are paid to other participants in the
Incentive Plan for such year. If the Date of Termination occurs after the end
of a calendar year and prior to the determination of whether the Executive is
entitled to an incentive bonus for such year, such incentive bonus will be paid,
if and to the extent so determined, at the same time as incentive bonuses are
paid to other participants in the Incentive Plan for such year. If such
termination of employment is for reason of Disability, the Executive will also
be entitled to receive disability benefits, whether or not then covered by the
Disability Plan, comprised of monthly salary continuation payments, in an amount
calculated at two-thirds of Base Salary, for a period of time ending no sooner
than the earlier of the Executive's attaining age 65 or his death; PROVIDED,
that any such payments will be offset by (i) any payments made to the Executive
under the Disability Plan and (ii) any disability benefits payable under Social
Security.
(c) WITHOUT CAUSE OR DISABILITY; GOOD REASON. In the event that the
Executive's employment is terminated by the Corporation for any reason other
than for Cause or for Disability, or is terminated by the Executive for Good
Reason, then:
7
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(1) The Corporation will pay to the Executive, in a lump sum on
the fifth day following the Date of Termination (i) any Base
Salary due the Executive through the Date of Termination, plus
(ii) any incentive bonus accrued but not yet paid to the
Executive under the Incentive Plan for all calendar years ending
prior to the Date of Termination, including for this purpose any
accumulated but unpaid excess amounts under the Incentive Plan;
PROVIDED, that if the Date of Termination occurs prior to the
determination of whether the Executive is entitled to an
incentive bonus for any such year, such incentive bonus will be
paid, if and to the extent so determined, at the same time as
incentive bonuses are paid to other participants in the Incentive
Plan for such year.
(2) The Corporation will pay to the Executive an amount equal to
a pro rata portion of the incentive bonus for the year in which
occurs the Date of Termination, such incentive bonus (A) to be
calculated in accordance with the terms of the Incentive Plan
based on the actual results of the Corporation and then
multiplied by a fraction the numerator of which is the number of
full and partial months worked by the Executive in such calendar
year and the denominator of which is twelve (12) and (B) to be
payable at the same time as incentive bonuses are paid to other
participants in the Incentive Plan for such year.
(3) The Corporation will pay to the Executive compensation
continuation payments, payable on a monthly basis for a period of
two years immediately following the Date of Termination, equal to
one-twelfth (1/12) of the sum of the Executive's Base Salary and
Target Bonus (each as in effect immediately prior to the Date of
Termination, without regard to any reductions thereto giving rise
to Good Reason); PROVIDED, that during the second year of such
compensation continuation, payments will be offset by any and all
salary and bonus amounts paid to or accrued in respect of the
Executive for ser-
8
<PAGE>
vices rendered to any other employer. The Executive will
promptly notify the Corporation of the receipt or accrual of any
such salary or bonus. The Corporation and the Executive agree
that the Executive is expected to seek employment in order to
attempt to offset payments provided under this Section 6(c)(3)
during the second year of compensation continuation but that the
Executive will not be required to accept any particular position
of employment.
(4) The Corporation will allow the Executive to continue to
participate, for two (2) years beginning as of the Date of
Termination, in any and all of the welfare benefit plans
maintained by the Corporation in which the Executive was entitled
to participate immediately prior to such Date of Termination, to
the same extent and upon the same terms as the Executive
participated in such plans prior to the Date of Termination;
PROVIDED, that the Executive's continued participation is
permissible or otherwise practicable under the general terms and
provisions of such plans. To the extent that continued
participation is neither permissible nor practicable, the
Corporation shall take such action as may be necessary to provide
the Executive with substantially comparable benefits (without
additional cost to the Executive) outside the scope of such plan.
If the Executive engages in regular employment after his
termination of employment (whether as an executive or as a
self-employed person), any employee welfare benefits received by
the Executive in consideration of such employment which are
similar in nature to the employee welfare benefits provided by the
Corporation will relieve the Corporation of its obligation under
this Section 6(c)(4) to provide comparable benefits to the extent
of the benefits so received. The Executive will promptly notify
the Corporation of his receipt of any such benefits.
(5) The Corporation will pay or promptly reimburse the Executive
for all reasonable expenses incurred
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<PAGE>
by him for professional outplacement services for a period of one
year (the "Outplacement Payment"); PROVIDED, that the
Outplacement Payment does not exceed in the aggregate $25,000,
and will pay an additional amount to reimburse the Executive for
any federal, state and local income taxes imposed on the
Executive by virtue of the Outplacement Payment and the
additional payment hereunder, such that the net amount retained
by the Executive, after deduction of any such taxes on the
Outplacement Payment and any such taxes on any additional payment
provided by this Section 6(c)(5), shall be equal to the
Outplacement Payment.
(6) Any and all stock options granted to the Executive under the
stock option plans of the Corporation (the "Option Plans") will
be treated as follows: (i) each stock option originally granted
with a term of five and one-half years or less under any Option
Plan will become immediately and fully vested as of the Date of
Termination, and (ii) each stock option originally granted with a
term of more than five and one-half years under any Option Plan
will become vested as of the Date of Termination on the basis of
the following vesting schedule, if more favorable than the
vesting schedule otherwise applicable to such stock option: the
number of shares of Corporation common stock subject to each such
stock option multiplied by the percentage obtained by multiplying
1.67% by the number of full and partial months of the Executive's
service during the term of such stock option through and
including the Date of Termination. The vested portion of stock
options under this Section 6(c)(6) shall remain exercisable for a
period of ninety (90) days after the Date of Termination (but not
beyond its normal expiration date). Any portion of any stock
option which does not vest under this Section 6(c)(6) (or under
the vesting schedule otherwise applicable to such stock option)
shall be forfeited as of the Date of Termination.
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(7) All accrued benefits of the Executive under the Pension
Plans will immediately vest as of the Date of Termination.
7. EXCISE TAX.
(a) In the event that any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Corporation, any
person whose actions result in a Change in Control or any person affiliated with
the Corporation or such person) (all such payments and benefits being
hereinafter called "Total Payments") will be subject (in whole or part) to the
excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), then, subject to the provisions of
Section (7)(b) hereof, the Corporation will pay to the Executive an additional
amount (the "Gross-Up Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income tax and Excise Tax upon the payment provided for
by this Section 7, will be equal to the Total Payments. For purposes of
determining the amount of the Gross-Up Payment, the Executive will be deemed to
pay federal income taxes at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on such date, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state and
local taxes.
(b) In the event that, after giving effect to any redeterminations
described in Section 7(d) hereof, a reduction in the Total Payments to the
largest amount that would result in no portion of the Total Payments being
subject to the Excise Tax (after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in such other plan,
arrangement or agreement) would produce a net amount (after deduction of the net
amount of federal, state and local income tax on such reduced Total Payments)
that would be greater than the net amount of unreduced Total Payments (after
deduction of the net amount of federal, state and local income tax and the
amount of
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<PAGE>
Excise Tax to which the Executive would be subject in respect of such Total
Payments), then Section 7(a) hereof will not apply and the Total Payments will
be so reduced.
(c) For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of
the Total Payments will be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, unless in the opinion of tax counsel selected by
the Corporation's independent auditors and reasonably acceptable to the
Executive ("Tax Counsel"), such other payments or benefits (in whole or in part)
do not constitute parachute payments, including by reason of Section
280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the
meaning of Section 280G(b)(l) of the Code will be treated as subject to the
Excise Tax, unless in the opinion of Tax Counsel such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of
the base amount (as defined in Section 280G(b)(3) of the Code) allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax, and
(iii) the value of any noncash benefits or any deferred payment or benefit will
be determined by the Corporation's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. The Corporation will
provide the Executive with its calculation of the amounts referred to in this
Section 7 and such supporting materials as are reasonably necessary for the
Executive to evaluate the Corporation's calculations. If the Executive disputes
the Corporation's calculations (in whole or in part), the reasonable opinion of
Tax Counsel with respect to the matter in dispute will prevail.
(d) In the event that (i) the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder at the time of payment
of the Total Payments and (ii) after giving effect to such redetermination, the
Total Payments are reduced pursuant to Section 7(b) hereof, the Executive will
repay to the Corporation, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income tax imposed
on the Gross-Up Payment being repaid by the Executive to the extent that such
repayment
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results in a reduction in the Excise Tax and/or a federal, state or local income
tax deduction) plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. In the event that (x) the Excise
Tax is determined to exceed the amount taken into account hereunder at the time
of the termination of the Executive's employment (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment) and (y) after giving effect to such redetermination, the Total
Payments are not reduced pursuant to Section 7(b) hereof, the Corporation will
make an additional Gross-Up Payment in respect of such excess and in respect of
any portion of the Excise Tax with respect to which the Corporation had not
previously made a Gross-Up Payment (plus any interest, penalties or additions
payable by the Executive with respect to such excess and such portion) at the
time that the amount of such excess is finally determined.
8. CHANGE IN CONTROL. (a) For purposes of this Agreement, a Change
in Control will be deemed to have taken place upon the occurrence of any of the
following events:
(i) any "person" (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as
modified in Sections 13(d) and 14(d) of the Exchange Act) other than (A)
the Corporation or any of its subsidiaries, (B) any employee benefit plan
of the Corporation or one of its subsidiaries, (C) MacAndrews & Forbes
Holdings Inc. or any affiliate thereof (collectively, "MAFCO"), (D) a
corporation owned, directly or indirectly, by stockholders of the
Corporation in substantially the same proportions as their ownership of the
Corporation, or (E) an underwriter temporarily holding securities pursuant
to an offering of such securities (a "Person"), becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Corporation representing 20% or more of
the shares of common stock of the Corporation then outstanding, and such
Person's beneficial ownership level then exceeds the percentage of the
Corporation's outstanding shares beneficially owned by MAFCO;
(ii) the consummation of any merger or consolidation of the
Corporation or one of its subsidiaries with or into any other corporation,
other than a merger or consolida-
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tion which would result in the holders of the voting securities of the
Corporation outstanding immediately prior thereto holding securities which
represent immediately after such merger or consolidation more than 80% of
the combined voting power of the voting securities of the Corporation or
the surviving corporation or the parent of such surviving corporation;
(iii) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets; or
(iv) a majority of the Board votes in favor of a decision that a
Change in Control has occurred.
(b) Notwithstanding anything in Section 8(a) hereof to the contrary,
any event or transaction which would otherwise constitute a Change in Control (a
"Transaction") shall not constitute a Change in Control for purposes of this
Agreement if, in connection with the Transaction, the Executive participates as
an equity investor in the acquiring entity or any of its affiliates (the
"Acquiror"). For purposes of the preceding sentence, the Executive shall not be
deemed to have participated as an equity investor in the Acquiror by virtue of
(i) obtaining beneficial ownership of any equity interest in Acquiror as a
result of the grant to the Executive of incentive compensation awards under one
or more incentive plans of Acquiror, on terms and conditions substantially
equivalent to those applicable to other executives of the Corporation
immediately prior to the Transaction, after taking into account normal
differences attributable to job responsibilities, title and the like, or (ii)
obtaining beneficial ownership of any equity interest in Acquiror on terms and
conditions substantially equivalent to those obtained in the Transaction by all
other stockholders of the Corporation.
(c) Upon the occurrence of a Change in Control during the term of
this Agreement, whether or not the Executive's employment within the Corporation
is terminated in connection with such event, any and all stock options granted
to the Executive under the Option Plans will become immediately vested.
9. INVENTIONS; CONFIDENTIAL INFORMATION; COMPETITORS.
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(a) All inventions, whether or not patentable, conceived or developed
by Executive, alone or with others, during his employment by the Corporation
will be the property of the Corporation and will be promptly and fully disclosed
by Executive to the Corporation. Executive will perform all necessary acts to
vest title fully to any such invention in the Corporation and to enable the
Corporation, at its expense, to secure and maintain domestic and/or foreign
patents or any other rights for such inventions.
(b) Without the express prior written consent of the Corporation,
Executive will not disclose or make available to anyone outside the Corporation,
its subsidiaries, or affiliated corporations or entities any confidential or
proprietary information of, or concerning, the Corporation, including, without
limitation, trade secrets, know how, customer lists, inventions or other
information not generally known to any competitor of the Corporation, its
subsidiaries or affiliated corporations or entities. Upon termination of his
employment, Executive will promptly deliver to the Corporation all documents
containing any such confidential or proprietary information without retaining
any copies or extracts thereof.
(c) During the time he is employed by the Corporation or serves the
Corporation as a consultant, Executive will not serve as officer, director or
employee or be associated in any other capacity with any corporation,
partnership or other entity or person which is a competitor of the Corporation,
its subsidiaries, or affiliated corporations or entities. During such period
Executive will have no financial interest in any corporation, partnership or
other entity which is a competitor of the Corporation, its subsidiaries, or
affiliated corporations or entities, except participation solely as a
stockholder owning not more than 5% of the outstanding shares of a publicly
owned business.
(d) Executive acknowledges that his services are special, unique,
unusual and extraordinary, giving them peculiar value, the loss of which cannot
be reasonably or adequately compensated for by damages and, in the event of
Executive's breach of this Section 9, the Corporation will be entitled to
equitable relief by way of injunction or otherwise.
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10. TERMINATION OF PRIOR AGREEMENTS. This Agreement expressly supersedes
all agreements and understandings between the parties with respect to
Executive's employment and any such agreement is hereby terminated as of the
date first above written.
11. BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of the parties hereto, their respective legal representatives and to any
successor of the Corporation, which successor will be deemed substituted for the
Corporation under the terms of this Agreement. As used in this Agreement, the
term "successor" will include any person, firm, corporation, or other business
entity which at any time, whether by merger, purchase or otherwise, acquires all
or substantially all of the assets or business of the Corporation.
12. WAIVER OF BREACH. The waiver by the Corporation of a breach of any
provision of this Agreement by the Executive will not operate or be construed as
a waiver of any subsequent breach.
13. NOTICES. Any notice required or permitted to be given will be
sufficient, if in writing, and if sent by registered or certified mail to the
Executive at his residence or to the Corporation at its principal place of
business.
14. ENTIRE AGREEMENT. This document contains the entire agreement of the
parties and may not be changed except in a written modification signed by both
parties.
15. INDEMNIFICATION. The Corporation will indemnify the Executive, to the
maximum extent permitted by applicable law, against all costs, charges and
expenses incurred or sustained by the Executive in connection with any action,
suit or proceeding to which the Executive may be made a party by reason of the
Executive being an officer, director or employee of the Corporation or of any
subsidiary or affiliate of the Corporation.
16. LEGAL FEES. The Corporation will pay or promptly reimburse the
Executive for the reasonable legal fees and expenses incurred by the Executive,
in good faith, in connection with enforcing or defending any right of the
Executive pursuant to this Agreement.
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17. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Colorado, as applied to contracts
executed and performed wholly within the State of Colorado.
18. SURVIVORSHIP. Any rights and obligations of the parties set forth in
Sections 4(d), 6, 7 and 9 of this Agreement will survive any termination of this
Agreement.
19. ARBITRATION. All disputes or controversies arising under or in
connection with this Agreement, including for this purpose any claims by the
Executive relating to any Pension Plan, will be settled exclusively by
arbitration, in Denver, Colorado in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; PROVIDED, that the
Executive will be entitled to seek specific performance of the Executive's right
to be paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
below.
THE COLEMAN COMPANY, INC.
By:/s/D K Stearns
---------------------------
Date: 4/15/96
-------------------------
/s/ Patrick McEvoy
------------------------------
EXECUTIVE
Date: 4/15/96
-------------------------
<PAGE>
Agreement
Effective as of the first day of January, 1996
by and between
The Coleman Company, Inc.
a Delaware corporation
with its principal place of business at
250 North St. Francis Street
Wichita, Kansas 67201
(the "Corporation")
and
Michael N. Hammes
(the "Executive")
WITNESSETH
Whereas, the Corporation and the Executive
mutually desire to enter into this Agreement
with respect to the Executive's employment
with the Corporation.
Now, therefore, in consideration of the mutual
covenants herein contained, the Corporation
and the Executive agree as follows:
1. EMPLOYMENT AND TERM. The Corporation agrees to employ the Executive
and the Executive agrees to serve the Corporation as Chairman and Chief
Executive Officer for a term beginning on January 1, 1996 and ending on December
31, 1997, unless sooner terminated in accordance with Section 5 hereof;
PROVIDED, that commencing on January 1, 1997 and each January 1 thereafter, the
term of this Agreement will automatically be extended for one additional year
unless, not later than June 30 of the preceding year, the Corporation or the
Executive will have given written notice to the other party not to extend this
Agreement (such
<PAGE>
notice of nonrenewal given by the Corporation to the Executive being hereinafter
referred to as a "Nonrenewal"); and FURTHER, PROVIDED, that if a Change in
Control (as defined in Section 8 hereof) occurs during the term of this
Agreement (including any extensions thereto), this Agreement will continue in
effect for a period of not less than two (2) years beyond the month in which
such Change in Control occurs.
2. DUTIES. The Executive agrees to serve the Corporation faithfully and
to the best of his ability; to devote his entire time, energy and skill during
regular business hours to such employment; and to use his best efforts, skill
and ability to promote its interest.
3. RESPONSIBILITIES; PLACE OF PERFORMANCE.
(a) During the term of this Agreement, the Executive shall have such
title and perform such duties as from time to time may be assigned to him by the
Board of Directors of the Corporation (the "Board"); PROVIDED, that the title
and the duties assigned to the Executive shall not be inconsistent with his
status as Chairman and Chief Executive Officer. The Executive shall at all
times have executive powers and authority as shall reasonably be required to
enable him to discharge his duties in an efficient manner, together with such
facilities and services as are suitable or customary to his position.
(b) Except for occasional travel on the Corporation's business, the
Executive will be required to perform his duties under this Agreement in the
Denver, Colorado metropolitan area or in such other geographic location (within
the contiguous United States of America) as the Corporation may determine, so
long as the Corporation provides the Executive with relocation benefits no less
favorable than the relocation benefits available under the Corporation's
executive relocation policy as in effect for the 1995 relocation of the
Corporation's executive offices to the Denver, Colorado metropolitan area.
4. COMPENSATION AND RELATED MATTERS.
(a) SALARY. During the term of the Executive's employment hereunder,
the Corporation will pay to the Executive a salary at the rate of $600,000 per
annum, in substantially equal install-
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ments in accordance with normal payroll practices of the Corporation, but not
less frequently than monthly. The base salary may be increased by the Board
from time to time, in its discretion, but in no event shall such base salary be
reduced from the rate previously in effect. The base salary in effect from time
to time hereunder is referred to as the "Base Salary."
(b) EXPENSES. The Executive will be entitled to receive prompt
reimbursement from the Corporation of all reasonable expenses incurred by the
Executive in performing services hereunder during the term of the Executive's
employment hereunder, including all expenses of travel and living expenses while
away from home on business or at the request of the Corporation, consistent with
expense policies applicable to other senior executive officers. The Executive
will furnish the Corporation with evidence that such expenses were incurred as
the Corporation may from time to time reasonably request.
(c) INCENTIVE BONUS. With respect to each calendar year during the
Term, the Executive will be granted an annual target incentive bonus opportunity
(the "Target Bonus") equal to no less than 100% of Base Salary. Payments of the
Executive's annual incentive bonus shall be made in accordance with the terms
and conditions set forth in the then current incentive bonus plan or arrangement
maintained by the Corporation (the "Incentive Plan"). The Target Bonus may be
increased from time to time, but may not be decreased below the percentage of
Base Salary previously in effect unless an adjustment is made in the Executive's
Base Salary such that the aggregate dollar amount of the Executive's Base Salary
and Target Bonus (after giving effect to the foregoing adjustments) is no less
than the aggregate dollar amount of such Base Salary and Target Bonus
(immediately prior to such adjustments).
(d) EMPLOYEE BENEFITS. The Executive will be entitled to participate
in all of the other employee benefit plans, programs and arrangements which are
presently or may hereafter be provided by the Corporation to its senior
executive officers including, without limitation, all retirement, health
insurance and life insurance plans, programs and arrangements (the "Benefit
Plans"), on a basis no less favorable than that of other senior executive
officers of the Corporation. In addition, the Executive will be entitled to
participate in all nonqualified employee
3
<PAGE>
pension plans or arrangements of the Corporation in which he is currently or
subsequently designated as a participant (the "Pension Plans"). The Corporation
agrees that it will not terminate Executive's participation in any of the
Pension Plans or amend any of the Pension Plans in any manner adverse to the
Executive without the Executive's prior written consent.
(e) VACATIONS. The Executive will be entitled to four (4) weeks of
vacation each calendar year, in accordance with the Corporation's vacation
policy as in effect from time to time. Vacation time which has not been used by
the end of each calendar year will be forfeited.
(f) CORPORATION AUTOMOBILE. The Corporation will provide the
Executive with an automobile during the term of this Agreement. The Corporation
will pay all reasonable expenses associated with the operation of such
automobile in the same manner as is in effect from time to time with respect to
other senior executive officers of the Corporation, including, without
limitation, all reasonable maintenance and insurance expenses. The automobile
furnished by the Corporation will be a late model luxury automobile of his
choice. At the expiration of the term of this Agreement, the Executive will
promptly return the automobile to the Corporation.
(g) OTHER. The Corporation will pay or promptly reimburse the
Executive for reasonable costs incurred by him in connection with his engagement
of professional estate planning and income tax assistance; PROVIDED, that such
amounts will not exceed $10,000 with respect to any calendar year.
5. TERMINATION.
(a) DEATH. The Executive's employment hereunder will terminate upon
his death.
(b) DISABILITY. The Executive's employment hereunder will terminate
upon his Disability. For purposes of this Agreement, the Executive will be
considered "Disabled" when eligible for benefits under the Corporation's long-
term disability plan as in effect from time to time (the "Disability Plan").
4
<PAGE>
(c) CAUSE. The Executive's employment hereunder may be terminated
for Cause, as provided below. "Cause" means (i) the willful and continued
failure by the Executive to substantially perform the Executive's duties with
the Corporation (other than any such failure resulting from the Executive's
incapacity due to physical or mental illness) or (ii) the willful engaging by
the Executive in conduct which is demonstrably and materially injurious to the
Corporation, monetarily or otherwise. For purposes of the preceding sentence,
no act, or failure to act, on the Executive's part will be deemed "willful"
unless done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that the Executive's act, or failure to act, was in
the best interest of the Corporation. Notwithstanding the foregoing, Cause will
not exist unless and until the Corporation has delivered to the Executive a
resolution duly adopted by the affirmative vote of three-quarters or more of the
Board then in office at a meeting of the Board called and held for such purpose
(after reasonable notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board), finding that in the
good faith opinion of the Board, the Executive was guilty of the conduct set
forth in this Section 5(c) and specifying the particulars thereof in detail.
(d) GOOD REASON. The Executive may voluntarily terminate his
employment with the Corporation for Good Reason. Good Reason will exist upon
(i) the occurrence of any material breach of this Agreement on the part of the
Corporation (including, but not limited to, any breach of Section 3 or 4
hereof), (ii) the delivery to the Executive of a notice of Nonrenewal by the
Corporation; PROVIDED, that the Executive delivers a Notice of Termination
within sixty (60) days of the delivery of such notice of Nonrenewal, or (iii)
after the occurrence of a Change in Control, (1) a substantial adverse
alteration in the Executive's title or in the nature or status of the
Executive's responsibilities from those in effect immediately prior to such
Change in Control or (2) any change to the manner in which the Incentive Plan is
administered (including, but not limited to, the process utilized in setting
performance goals and the relative difficulty of achieving such goals), compared
to the manner in which the Incentive Plan was administered immediately prior to
the Change in Control, which change results in a significantly greater
likelihood that the Executive will be unable to earn the Target Bonus.
5
<PAGE>
The Executive's right to terminate the Executive's employment for
Good Reason will not be affected by the Executive's incapacity due to physical
or mental illness. Except as provided above, the Executive's continued
employment will not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason hereunder.
(e) RESIGNATION. The Executive may voluntarily terminate his
employment hereunder at any time. If such voluntary termination is made with
the consent of the Board of Directors, then the Executive shall be entitled to
receive the minimum retirement benefit as specified in the Consolidated
Supplemental Retirement Plan of not less than 40% of annual cash compensation.
(f) TERMINATION BY THE CORPORATION WITHOUT CAUSE. The Corporation
may terminate the Executive's employment hereunder without Cause at any time.
(g) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Corporation or by the Executive (other than termination
pursuant to Section 5(a) hereof) must be communicated by written Notice of
Termination to other party hereto. For purposes of this Agreement, a "Notice of
Termination" will mean a notice that indicates the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(h) DATE OF TERMINATION. "Date of Termination" will mean (i) if the
Executive's employment is terminated by his death, the date of his death, (ii)
if the Executive delivers a Notice of Termination within sixty (60) days of
delivery to the Executive of a notice of Nonrenewal from the Corporation, the
date of delivery of such Notice of Termination, and (iii) if the Executive's
employment is terminated for any other reason, the date specified in the Notice
of Termination.
6. COMPENSATION UPON TERMINATION
(a) FOR CAUSE; OTHER THAN FOR GOOD REASON. In the event that the
Executive's employment is terminated by the Corporation for Cause or by the
Executive other than for Good Reason,
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<PAGE>
the Corporation will pay the Executive his Base Salary through the Date of
Termination. In addition, the Executive will be entitled to receive all accrued
benefits to which the Executive is entitled under the Benefit Plans, in
accordance with the terms of such Benefit Plans. The Executive will not be
entitled to any portion of the incentive bonus in respect of the calendar year
in which occurs the Date of Termination; PROVIDED, that if the Date of
Termination occurs after the end of a calendar year and prior to the
determination of whether the Executive is entitled to an incentive bonus for
such year, such incentive bonus will be paid, if and to the extent so
determined. In addition, if the Executive's employment is terminated for Cause
prior to the occurrence of a Change in Control, then notwithstanding anything to
the contrary contained in The Coleman Company, Inc. Consolidated Supplemental
Retirement Plan, as in effect from time to time (the "CSRP"), the Executive's
benefit under the first sentence of Section 4(a) of the CSRP will be determined
without regard to clause (ii) thereof.
(b) DEATH; DISABILITY. In the event that the Executive's employment
is terminated by reason of the Executive's death or Disability, the Corporation
will pay the Executive (or his estate or beneficiary if applicable) his Base
Salary through the Date of Termination. The Executive (or his estate or
beneficiary, if applicable) will be entitled to receive all accrued benefits to
which the Executive is entitled under the Benefit Plans, in accordance with the
terms of such Benefit Plans. The Executive (or his estate or beneficiary, if
applicable) will be entitled to receive (i) in a lump sum as soon as practicable
after the Date of Termination, any incentive bonus accrued but not yet paid to
the Executive, including for this purpose any accumulated but unpaid excess
amounts under the Incentive Plan in respect of all calendar years ending prior
to the Date of Termination, plus (ii) a pro rata portion of the incentive bonus
for the year in which occurs the Date of Termination, such incentive bonus (A)
to be calculated in accordance with the terms of the Incentive Plan based on the
actual results of the Corporation for such year and then multiplied by a
fraction the numerator of which is the number of full and partial months worked
by the Executive in such calendar year and the denominator of which is twelve
(12) and (B) to be payable at the same time as incentive bonuses are paid to
other participants in the Incentive Plan for such year. If the Date of
Termination occurs after the end of a calendar year and prior to the
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<PAGE>
determination of whether the Executive is entitled to an incentive bonus for
such year, such incentive bonus will be paid, if and to the extent so
determined, at the same time as incentive bonuses are paid to other participants
in the Incentive Plan for such year. If such termination of employment is for
reason of Disability, the Executive will also be entitled to receive disability
benefits, whether or not then covered by the Disability Plan, comprised of
monthly salary continuation payments, in an amount calculated at two-thirds of
Base Salary, for a period of time ending no sooner than the earlier of the
Executive's attaining age 65 or his death; PROVIDED, that any such payments will
be offset by (i) any payments made to the Executive under the Disability Plan
and (ii) any disability benefits payable under Social Security.
(c) WITHOUT CAUSE OR DISABILITY; GOOD REASON. In the event that the
Executive's employment is terminated by the Corporation for any reason other
than for Cause or for Disability, or is terminated by the Executive for Good
Reason, then:
(1) The Corporation will pay to the Executive, in a lump sum on
the fifth day following the Date of Termination (i) any Base
Salary due the Executive through the Date of Termination, plus
(ii) any incentive bonus accrued but not yet paid to the
Executive under the Incentive Plan for all calendar years ending
prior to the Date of Termination, including for this purpose any
accumulated but unpaid excess amounts under the Incentive Plan;
PROVIDED, that if the Date of Termination occurs prior to the
determination of whether the Executive is entitled to an
incentive bonus for any such year, such incentive bonus will be
paid, if and to the extent so determined, at the same time as
incentive bonuses are paid to other participants in the Incentive
Plan for such year.
(2) The Corporation will pay to the Executive an amount equal to
a pro rata portion of the incentive bonus for the year in which
occurs the Date of Termination, such incentive bonus (A) to be
calculated in accordance with the terms of the Incentive Plan
based on the actual results of the Corporation and
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<PAGE>
then multiplied by a fraction the numerator of which is the
number of full and partial months worked by the Executive in such
calendar year and the denominator of which is twelve (12) and (B)
to be payable at the same time as incentive bonuses are paid to
other participants in the Incentive Plan for such year.
(3) The Corporation will pay to the Executive compensation
continuation payments, payable on a monthly basis for a period of
two years immediately following the Date of Termination, equal to
one-twelfth (1/12) of the sum of the Executive's Base Salary and
Target Bonus (each as in effect immediately prior to the Date of
Termination, without regard to any reductions thereto giving rise
to Good Reason); PROVIDED, that during the second year of such
compensation continuation, payments will be offset by any and all
salary and bonus amounts paid to or accrued in respect of the
Executive for services rendered to any other employer. The
Executive will promptly notify the Corporation of the receipt or
accrual of any such salary or bonus. The Corporation and the
Executive agree that the Executive is expected to seek employment
in order to attempt to offset payments provided under this
Section 6(c)(3) during the second year of compensation
continuation but that the Executive will not be required to
accept any particular position of employment.
(4) The Corporation will allow the Executive to continue to
participate, for two (2) years beginning as of the Date of
Termination, in any and all of the welfare benefit plans
maintained by the Corporation in which the Executive was entitled
to participate immediately prior to such Date of Termination, to
the same extent and upon the same terms as the Executive
participated in such plans prior to the Date of Termination;
PROVIDED, that the Executive's continued participation is
permissible or otherwise practicable under the general terms and
provisions of such plans. To the extent
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<PAGE>
that continued participation is neither permissible nor
practicable, the Corporation shall take such action as may be
necessary to provide the Executive with substantially comparable
benefits (without additional cost to the Executive) outside the
scope of such plan. If the Executive engages in regular
employment after his termination of employment (whether as an
executive or as a self-employed person), any employee welfare
benefits received by the Executive in consideration of such
employment which are similar in nature to the employee welfare
benefits provided by the Corporation will relieve the Corporation
of its obligation under this Section 6(c)(4) to provide
comparable benefits to the extent of the benefits so received.
The Executive will promptly notify the Corporation of his receipt
of any such benefits.
(5) The Corporation will pay or promptly reimburse the Executive
for all reasonable expenses incurred by him for professional
outplacement services for a period of one year (the "Outplacement
Payment"); PROVIDED, that the Outplacement Payment does not
exceed in the aggregate $25,000, and will pay an additional
amount to reimburse the Executive for any federal, state and
local income taxes imposed on the Executive by virtue of the
Outplacement Payment and the additional payment hereunder, such
that the net amount retained by the Executive, after deduction of
any such taxes on the Outplacement Payment and any such taxes on
any additional payment provided by this Section 6(c)(5), shall be
equal to the Outplacement Payment.
(6) Any and all stock options granted to the Executive under the
stock option plans of the Corporation (the "Option Plans") will
be treated as follows: (i) each stock option originally granted
with a term of five and one-half years or less under any Option
Plan will become immediately and fully vested as of the Date of
Termination, and (ii) each stock option originally granted with a
term of more
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<PAGE>
than five and one-half years under any Option Plan will become
vested as of the Date of Termination on the basis of the
following vesting schedule, if more favorable than the vesting
schedule otherwise applicable to such stock option: the number of
shares of Corporation common stock subject to each such stock
option multiplied by the percentage obtained by multiplying 1.67%
by the number of full and partial months of the Executive's
service during the term of such stock option through and
including the Date of Termination. The vested portion of stock
options under this Section 6(c)(6) shall remain exercisable for a
period of ninety (90) days after the Date of Termination (but not
beyond its normal expiration date). Any portion of any stock
option which does not vest under this Section 6(c)(6) (or under
the vesting schedule otherwise applicable to such stock option)
shall be forfeited as of the Date of Termination.
(7) All accrued benefits of the Executive under the Pension
Plans will immediately vest as of the Date of Termination;
PROVIDED, that, regardless of the Executive's age on the Date of
Termination, the Executive will be entitled to receive benefits
determined under Section 4 of the CSRP which benefits will be
calculated without regard to any actuarial reduction to such
benefit to reflect commencement of such benefit prior to the
Executive's Normal Retirement Date (as such term is defined in
the CSRP).
7. EXCISE TAX.
(a) In the event that any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Corporation, any
person whose actions result in a Change in Control or any person affiliated with
the Corporation or such person) (all such payments and benefits being
hereinafter called "Total Payments") will be subject (in whole or part) to the
excise tax (the "Excise Tax") imposed under
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<PAGE>
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
then, subject to the provisions of Section (7)(b) hereof, the Corporation will
pay to the Executive an additional amount (the "Gross-Up Payment") such that the
net amount retained by the Executive, after deduction of any Excise Tax on the
Total Payments and any federal, state and local income tax and Excise Tax upon
the payment provided for by this Section 7, will be equal to the Total Payments.
For purposes of determining the amount of the Gross-Up Payment, the Executive
will be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive's residence on such date,
net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes.
(b) In the event that, after giving effect to any redeterminations
described in Section 7(d) hereof, a reduction in the Total Payments to the
largest amount that would result in no portion of the Total Payments being
subject to the Excise Tax (after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in such other plan,
arrangement or agreement) would produce a net amount (after deduction of the net
amount of federal, state and local income tax on such reduced Total Payments)
that would be greater than the net amount of unreduced Total Payments (after
deduction of the net amount of federal, state and local income tax and the
amount of Excise Tax to which the Executive would be subject in respect of such
Total Payments), then Section 7(a) hereof will not apply and the Total Payments
will be so reduced.
(c) For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of
the Total Payments will be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, unless in the opinion of tax counsel selected by
the Corporation's independent auditors and reasonably acceptable to the
Executive ("Tax Counsel"), such other payments or benefits (in whole or in part)
do not constitute parachute payments, including by reason of Section
280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the
meaning of Section 280G(b)(l) of the Code will be treated as subject to the
Excise Tax, unless in
12
<PAGE>
the opinion of Tax Counsel such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered, within the
meaning of Section 280G(b)(4)(B) of the Code, in excess of the base amount (as
defined in Section 280G(b)(3) of the Code) allocable to such reasonable
compensation, or are otherwise not subject to the Excise Tax, and (iii) the
value of any noncash benefits or any deferred payment or benefit will be
determined by the Corporation's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. The Corporation will
provide the Executive with its calculation of the amounts referred to in this
Section 7 and such supporting materials as are reasonably necessary for the
Executive to evaluate the Corporation's calculations. If the Executive disputes
the Corporation's calculations (in whole or in part), the reasonable opinion of
Tax Counsel with respect to the matter in dispute will prevail.
(d) In the event that (i) the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder at the time of payment
of the Total Payments and (ii) after giving effect to such redetermination, the
Total Payments are reduced pursuant to Section 7(b) hereof, the Executive will
repay to the Corporation, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income tax imposed
on the Gross-Up Payment being repaid by the Executive to the extent that such
repayment results in a reduction in the Excise Tax and/or a federal, state or
local income tax deduction) plus interest on the amount of such repayment at the
rate provided in Section 1274(b)(2)(B) of the Code. In the event that (x) the
Excise Tax is determined to exceed the amount taken into account hereunder at
the time of the termination of the Executive's employment (including by reason
of any payment the existence or amount of which cannot be determined at the time
of the Gross-Up Payment) and (y) after giving effect to such redetermination,
the Total Payments are not reduced pursuant to Section 7(b) hereof, the
Corporation will make an additional Gross-Up Payment in respect of such excess
and in respect of any portion of the Excise Tax with respect to which the
Corporation had not previously made a Gross-Up Payment (plus any interest,
penalties or additions payable by the Executive with respect
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<PAGE>
to such excess and such portion) at the time that the amount of such excess is
finally determined.
8. CHANGE IN CONTROL. (a) For purposes of this Agreement, a Change
in Control will be deemed to have taken place upon the occurrence of any of the
following events:
(i) any "person" (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as
modified in Sections 13(d) and 14(d) of the Exchange Act) other than (A)
the Corporation or any of its subsidiaries, (B) any employee benefit plan
of the Corporation or one of its subsidiaries, (C) MacAndrews & Forbes
Holdings Inc. or any affiliate thereof (collectively, "MAFCO"), (D) a
corporation owned, directly or indirectly, by stockholders of the
Corporation in substantially the same proportions as their ownership of the
Corporation, or (E) an underwriter temporarily holding securities pursuant
to an offering of such securities (a "Person"), becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Corporation representing 20% or more of
the shares of common stock of the Corporation then outstanding, and such
Person's beneficial ownership level then exceeds the percentage of the
Corporation's outstanding shares beneficially owned by MAFCO;
(ii) the consummation of any merger or consolidation of the
Corporation or one of its subsidiaries with or into any other corporation,
other than a merger or consolidation which would result in the holders of
the voting securities of the Corporation outstanding immediately prior
thereto holding securities which represent immediately after such merger or
consolidation more than 80% of the combined voting power of the voting
securities of the Corporation or the surviving corporation or the parent of
such surviving corporation;
(iii) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets; or
14
<PAGE>
(iv) a majority of the Board votes in favor of a decision that a
Change in Control has occurred.
(b) Notwithstanding anything in Section 8(a) hereof to the contrary,
any event or transaction which would otherwise constitute a Change in Control (a
"Transaction") shall not constitute a Change in Control for purposes of this
Agreement if, in connection with the Transaction, the Executive participates as
an equity investor in the acquiring entity or any of its affiliates (the
"Acquiror"). For purposes of the preceding sentence, the Executive shall not be
deemed to have participated as an equity investor in the Acquiror by virtue of
(i) obtaining beneficial ownership of any equity interest in Acquiror as a
result of the grant to the Executive of incentive compensation awards under one
or more incentive plans of Acquiror, on terms and conditions substantially
equivalent to those applicable to other executives of the Corporation
immediately prior to the Transaction, after taking into account normal
differences attributable to job responsibilities, title and the like, or (ii)
obtaining beneficial ownership of any equity interest in Acquiror on terms and
conditions substantially equivalent to those obtained in the Transaction by all
other stockholders of the Corporation.
(c) Upon the occurrence of a Change in Control during the term of
this Agreement, whether or not the Executive's employment within the Corporation
is terminated in connection with such event, (i) any and all stock options
granted to the Executive under the Option Plans will become immediately vested
and (ii) the Executive's benefit under the CSRP will become immediately vested.
9. INVENTIONS; CONFIDENTIAL INFORMATION; COMPETITORS.
(a) All inventions, whether or not patentable, conceived or developed
by Executive, alone or with others, during his employment by the Corporation
will be the property of the Corporation and will be promptly and fully disclosed
by Executive to the Corporation. Executive will perform all necessary acts to
vest title fully to any such invention in the Corporation and to enable the
Corporation, at its expense, to secure and maintain domestic and/or foreign
patents or any other rights for such inventions.
15
<PAGE>
(b) Without the express prior written consent of the Corporation,
Executive will not disclose or make available to anyone outside the Corporation,
its subsidiaries, or affiliated corporations or entities any confidential or
proprietary information of, or concerning, the Corporation, including, without
limitation, trade secrets, know how, customer lists, inventions or other
information not generally known to any competitor of the Corporation, its
subsidiaries or affiliated corporations or entities. Upon termination of his
employment, Executive will promptly deliver to the Corporation all documents
containing any such confidential or proprietary information without retaining
any copies or extracts thereof.
(c) During the time he is employed by the Corporation or serves the
Corporation as a consultant, Executive will not serve as officer, director or
employee or be associated in any other capacity with any corporation,
partnership or other entity or person which is a competitor of the Corporation,
its subsidiaries, or affiliated corporations or entities. During such period
Executive will have no financial interest in any corporation, partnership or
other entity which is a competitor of the Corporation, its subsidiaries, or
affiliated corporations or entities, except participation solely as a
stockholder owning not more than 5% of the outstanding shares of a publicly
owned business.
(d) Executive acknowledges that his services are special, unique,
unusual and extraordinary, giving them peculiar value, the loss of which cannot
be reasonably or adequately compensated for by damages and, in the event of
Executive's breach of this Section 9, the Corporation will be entitled to
equitable relief by way of injunction or otherwise.
10. TERMINATION OF PRIOR AGREEMENTS. This Agreement expressly supersedes
all agreements and understandings between the parties with respect to
Executive's employment and any such agreement is hereby terminated as of the
date first above written.
11. BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of the parties hereto, their respective legal representatives and to any
successor of the Corporation, which successor will be deemed substituted for the
Corporation under the terms of this Agreement. As used in this Agreement, the
term "successor" will include any person, firm, corporation, or other
16
<PAGE>
business entity which at any time, whether by merger, purchase or otherwise,
acquires all or substantially all of the assets or business of the Corporation.
12. WAIVER OF BREACH. The waiver by the Corporation of a breach of any
provision of this Agreement by the Executive will not operate or be construed as
a waiver of any subsequent breach.
13. NOTICES. Any notice required or permitted to be given will be
sufficient, if in writing, and if sent by registered or certified mail to the
Executive at his residence or to the Corporation at its principal place of
business.
14. ENTIRE AGREEMENT. This document contains the entire agreement of the
parties and may not be changed except in a written modification signed by both
parties.
15. INDEMNIFICATION. The Corporation will indemnify the Executive, to the
maximum extent permitted by applicable law, against all costs, charges and
expenses incurred or sustained by the Executive in connection with any action,
suit or proceeding to which the Executive may be made a party by reason of the
Executive being an officer, director or employee of the Corporation or of any
subsidiary or affiliate of the Corporation.
16. LEGAL FEES. The Corporation will pay or promptly reimburse the
Executive for the reasonable legal fees and expenses incurred by the Executive,
in good faith, in connection with enforcing or defending any right of the
Executive pursuant to this Agreement.
17. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Colorado, as applied to contracts
executed and performed wholly within the State of Colorado.
18. SURVIVORSHIP. Any rights and obligations of the parties set forth in
Sections 4(d), 6, 7 and 9 of this Agreement will survive any termination of this
Agreement.
19. ARBITRATION. All disputes or controversies arising under or in
connection with this Agreement, including for this purpose any claims by the
Executive relating to any Pension Plan,
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will be settled exclusively by arbitration, in Wichita, Kansas, in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having jurisdiction;
PROVIDED, that the Executive will be entitled to seek specific performance of
the Executive's right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
below, correcting and restating a prior agreement between the parties with same
effective date.
THE COLEMAN COMPANY, INC.
By: /s/ Larry E. Sanford
---------------------------
Date: 4/29/96
-------------------------
/s/ Michael N. Hammes
------------------------------
MICHAEL N. HAMMES
Date: 4/29/96
-------------------------
18
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COLEMAN MONTHLY SALARIED
RETIREMENT INCENTIVE SAVINGS PLAN
(Effective as of January 1, 1996)
<PAGE>
COLEMAN MONTHLY SALARIED
RETIREMENT INCENTIVE SAVINGS PLAN
CONTENTS
- - --------------------------------------------------------------------------------
SECTION PAGE
ARTICLE I. THE PLAN
1.1 Establishment of the Plan 1
1.2 Applicability of the Plan 1
ARTICLE II. DEFINITIONS
2.1 Definitions 2
2.2 Gender and Number 10
ARTICLE III. PARTICIPATION AND SERVICE
3.1 Participation 11
3.2 Duration of Participation 11
3.3 Eligibility Service 11
3.4 Hours of Service 13
3.5 Vesting Service 13
3.6 Severance from Service 14
3.7 One-Year Period of Severance 14
3.8 Leased Employees 15
3.9 Special Provisions for Participants Who Enter the
Armed Forces 16
3.10 Transferred Employees 16
3.11 Family & Medical Leave Act 16
ARTICLE IV. CONTRIBUTIONS
4.1 Before-Tax and Matching Contributions 17
4.2 Application of Forfeitures 18
4.3 Limitations on Contributions 18
4.4 Contributions Not Contingent on Profits 24
4.5 Limitations on Annual Account Additions 24
4.6 Rollover Contributions 26
ARTICLE V. VESTING IN ACCOUNTS
5.1 Before-Tax and Rollover Contributions Accounts 28
5.2 Matching Contributions Accounts 28
i
<PAGE>
COLEMAN MONTHLY SALARIED
RETIREMENT INCENTIVE SAVINGS PLAN
CONTENTS
- - --------------------------------------------------------------------------------
SECTION PAGE
ARTICLE VI. DISTRIBUTIONS AND WITHDRAWALS
6.1 Distribution Upon Retirement, Death, or Disability 29
6.2 Distribution Upon Severance from Service for
Reasons Other Than Retirement, Death, or Disability 29
6.3 Forfeitures 30
6.4 Commencement of Distributions 31
6.5 Method of Distribution 33
6.6 In-Service Withdrawals 33
6.7 Required Distributions 34
6.8 Withholding Taxes 35
6.9 Restrictions on Distribution of Before-Tax
Contributions Account 35
6.10 Loans and Withdrawals to Members 36
6.11 Direct Rollovers of Eligible Distributions 38
ARTICLE VII. INVESTMENT ELECTIONS
7.1 General 40
ARTICLE VIII. ACCOUNTS AND RECORDS OF THE PLAN
8.1 Accounts and Records 42
8.2 Trust Fund 42
8.3 Valuation and Allocation of Expenses 42
8.4 Allocation of Earnings and Losses 42
ARTICLE IX. FINANCING
9.1 Financing 43
9.2 Contributions 43
9.3 Nonreversion 43
9.4 Rights in the Trust Fund 43
ii
<PAGE>
COLEMAN MONTHLY SALARIED
RETIREMENT INCENTIVE SAVINGS PLAN
CONTENTS
- - --------------------------------------------------------------------------------
SECTION PAGE
ARTICLE X. ADMINISTRATION
10.1 Plan Administrator and Fiduciary 44
10.2 Compensation and Expenses 44
10.3 Manner of Action 44
10.4 Chairman, Secretary, and Employment of
Specialists 44
10.5 Assistance 45
10.6 Records 45
10.7 Rules 45
10.8 Administration 45
10.9 No Enlargement of Employee Rights 46
10.10 Appeals from Denial of Claims 46
10.11 Notice of Address and Missing Persons 47
10.12 Data and Information for Benefits 47
10.13 Indemnity for Liability 48
10.14 Effect of a Mistake 48
10.15 Self Interest 48
ARTICLE XI. AMENDMENT AND TERMINATION
11.1 Amendment and Termination 49
11.2 Limitations on Amendments 49
11.3 Effect of Bankruptcy and Other Contingencies
Affecting an Employer 50
ARTICLE XII. TOP-HEAVY PROVISIONS
12.1 Application of Top-Heavy Provisions 51
12.2 Definitions 51
12.3 Minimum Contribution 53
12.4 Limit on Annual Additions: Combined Plan Limit 54
12.5 Collective Bargaining Agreements 54
iii
<PAGE>
COLEMAN MONTHLY SALARIED
RETIREMENT INCENTIVE SAVINGS PLAN
CONTENTS
- - --------------------------------------------------------------------------------
SECTION PAGE
ARTICLE XIII. PARTICIPATION IN AND
WITHDRAWAL FROM THE PLAN BY AN
EMPLOYER
13.1 Participation in the Plan 55
13.2 Withdrawal from the Plan 56
ARTICLE XIV. MISCELLANEOUS
14.1 Beneficiary Designation 57
14.2 Incompetency 57
14.3 Nonalienation 58
14.4 Applicable Law 59
14.5 Severability 59
14.6 No Guarantee 59
14.7 Merger, Consolidation, or Transfer 59
14.8 Internal Revenue Service Approval 59
iv
<PAGE>
ARTICLE I. THE PLAN
1.1 ESTABLISHMENT OF THE PLAN
Effective January 1, 1996, the New Coleman Holdings Inc. hereby establishes a
savings plan for the benefit of its Eligible Employees and Eligible Employees of
participating Affiliates and shall be known as the "Coleman Monthly Salaried
Retirement Incentive Savings Plan" (referred to in this document as the "Plan").
The Plan is intended to be qualified as a profit sharing plan under Code section
401(a).
1.2 APPLICABILITY OF THE PLAN
The provisions set forth in this document are applicable only to Employees in
the employ of an Employer on or after the Effective Date.
1
<PAGE>
ARTICLE II. DEFINITIONS
2.1 DEFINITIONS
Whenever used in the Plan, the following terms shall have the respective
meanings set forth below unless otherwise expressly provided herein, and when
the defined meaning is intended the term is capitalized.
(a) "ACCOUNT" means the separate account maintained for each Member which
represents the Member's total proportionate interest in the Trust Fund as
of any Valuation Date and which consists of the sum of the following
subaccounts:
(1) "BEFORE-TAX CONTRIBUTIONS ACCOUNT" means that portion of the Member's
Account which evidences the value of the Before-Tax Contributions made
on the Member's behalf by an Employer pursuant to section 4.1(a),
including any gains and losses of the Trust Fund attributable thereto;
and
(2) "MATCHING CONTRIBUTIONS ACCOUNT" means that portion of the Member's
Account which evidences the value of the Matching Contributions made
on the Member's behalf by an Employer pursuant to section 4.1(b),
including any gains and losses of the Trust Fund attributable thereto.
(3) "ROLLOVER CONTRIBUTIONS ACCOUNT" means that portion of the Member's
Account which evidences the value of a Member's Rollover Contributions
made by the Member pursuant to section 4.6, including any gains and
losses of the Trust Fund attributable thereto.
(b) "AFFILIATE" means--
(1) any corporation other than the Company, i.e., either a subsidiary
corporation or an affiliated or associated corporation of the Company,
which together with the Company is a member of a "controlled group" of
corporations (as defined in section 414(b) of the Code);
(2) any organization which together with the Company is under "common
control" (as defined in section 414-C- of the Code);
(3) any organization which together with the Company is an "affiliated
service group" (as defined in section 414(m) of the Code); or
(4) any other entity required to be aggregated with the Company pursuant
to regulations under section 414(o) of the Code.
- - -C- "BEFORE-TAX CONTRIBUTIONS" means the contributions made by an Employer on
behalf of a Participant pursuant to the Participant's election to reduce
Compensation as described in section 4.1(a).
2
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(d) "BENEFICIARY" means a Beneficiary as described in section 14.1.
(e) "BOARD" means the Board of Directors of the Company.
(f) "CODE" means the Internal Revenue Code of 1986, as amended.
(g) "COMPANY" means New Coleman Holdings Inc.
(h) "COMPENSATION" means a Participant's pay, determined as follows:
(1) For all purposes of the Plan, except as otherwise specified,
Compensation means an Employee's--
(A) base pay,
(B) bonuses,
(C) overtime,
(D) commissions,
(E) shift differentials,
(F) standard hourly incentive system payments,
(G) salary reductions pursuant to a Company-sponsored cafeteria plan
(under Code section 125) or a Company-sponsored cash-or-deferred
arrangement (under Code section 401(k)),
(H) amounts excluded from income pursuant to a dependent care
assistance program (under Code section 129),
(I) income from stock options exercised by the Employee,
(J) paid time off, and
(K) vacation pay.
(2) For all purposes of the Plan, except as otherwise specified,
Compensation does not mean an Employee's--
(A) special assignment premium pay,
(B) per diem payments,
(C) location allowances,
(D) relocation allowances,
(E) separation pay,
(F) consulting fees,
(G) educational assistance payments, and
(H) incentive compensation awards.
(3) For purposes of satisfying the limits on contributions described in
section 4.3(b) and -C- (ADP and ACP tests) and applying the limits of
section 415 of the Code as described in section 4.5, Compensation
includes all of the items listed below as includible (to the extent
applicable) and excludes all of the items listed below as excludable
(to the extent applicable) in a Plan Year basis:
(A) INCLUDIBLE.
(I) The Employee's wages, salaries, fees, for professional
services, and other amounts received (without regard
3
<PAGE>
to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with
the Employer and any Affiliates to the extent that the
amounts are includible in gross income (including, but not
being limited to, commissions paid salesmen, compensation
for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe
benefits, and reimbursements or other expense allowances
under a nonaccountable plan (as described in Treasury
regulation section 1.62-2(c));
(ii) Amounts described in Code sections 104(a)(3), 105(a), and
105(h), but only to the extent that these amounts are
includible in the Employee's gross income;
(iii) Amounts paid or reimbursed by the Employer or any Affiliate
for moving expenses incurred by the Employee, but only to
the extent that at the time of the payment it is reasonable
to believe that these amounts are not deductible by the
Employee under Code section 217;
(iv) The value of a nonqualified stock option granted to an
Employee by the Employer or any Affiliate, but only to the
extent that the value of the option is includible in the
Employee's gross income for the taxable year in which it is
granted; and
(v) The amount includible in an Employee's gross income upon
making the election described in Code section 83(b).
Compensation under clause (I) includes foreign earned income as
defined in Code section 911(b), whether or not excludable from
gross income under Code section 911.
Compensation under clause (I) is to be determined without regard
to the exclusions from gross income in Code sections 931 and 933.
(B) EXCLUDABLE.
(I) Contributions made by the Employer or any Affiliate to a
plan of deferred compensation to the extent that, before
the application of the Code section 415 limitations to that
plan, the contributions are not includible in the
Employee's gross income for the taxable year in which they
are contributed;
4
<PAGE>
(ii) Contributions made by the Employer or any Affiliate on an
Employee's behalf to a simplified employee pension
described in Code section 408(k) (such contributions are
not considered as compensation for the taxable year in
which contributed);
(iii) Distributions from a plan of deferred compensation,
regardless of whether such amounts are includible in the
Employee's gross income when distributed, except that
amounts received by an Employee pursuant to an unfunded,
nonqualified plan are permitted to be considered as
Compensation for Code section 415 purposes in the year in
which the amounts are includible in the Employee's gross
income;
(iv) Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by an
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture within the
meaning of Code section 83 and regulations thereunder;
(v) Amounts realized from the sale, exchange, or other
disposition of stock acquired under a qualified stock
option; and
(vi) Other amounts which receive special tax benefits, such as
premiums for group-term life insurance (but only to the
extent that the premiums are not includible in the
Employee's gross income).
(4) For purposes of determining whether an individual is a Highly
Compensated Employee, Compensation means an Employee's Compensation as
defined in paragraph (2) of this section 2.1(h) but without regard to
Code sections 125, 402(a)(8), and 402(h)(1)(B) (i.e., with the
addition of elective deferrals pursuant to a cafeteria plan, a cash-
or-deferred arrangement, or a simplified employee pension).
The Compensation of each Employee that may be taken into account under this
subsection for a Plan Year (except in applying the limits of section 415 of
the Code as described in section 4.5) shall not exceed $150,000 subject to
adjustment under Code section 401(a)(17). In determining the Compensation
of an Employee for purposes of this limitation, the rules of Code section
414(q)(6) shall apply, except
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that in applying such rules, the term "family" shall include only the
Employee's spouse and any lineal descendants of the Employee who have not
attained age 19 before the close of the Plan Year.
(I) "DISABILITY" means a Participant's total and presumably permanent inability
to engage in any occupation or employment for wage or profit as a result of
bodily injury or disease, either occupational or nonoccupational in cause.
To constitute a Disability, such condition must have existed for a period
of six consecutive months (unless this requirement is waived by the Plan
Administrator on a basis that does not discriminate in favor of Highly
Compensated Employees), and the condition must not have been contracted,
suffered, or incurred while the Participant was engaged in a felonious
criminal enterprise, or as a result of the Participant's chronic alcoholism
or addiction to narcotics, or an intentionally self-inflicted injury.
Determination of whether a Disability has been incurred shall be made by
the Plan Administrator on the basis of qualified medical evidence
satisfactory to the Plan Administrator.
(j) "EFFECTIVE DATE" means January 1, 1996.
(k) "ELIGIBILITY SERVICE" means a period or periods of employment of an
Employee by an Employer or a nonparticipating Affiliate as described in
section 3.3.
(l) "ELIGIBLE EMPLOYEE" means an Employee of an Employer, excluding any
Employee who is--
(1) not on the Employer's United States payroll;
(2) included in a unit of employees covered by an agreement which the
Secretary of Labor finds to be a collective bargaining agreement
between employee representatives and any Employer, if there is
evidence that retirement benefits were the subject of good faith
bargaining between such employee representative and such Employer
unless, pursuant to such bargaining, the Employee is required to be an
Eligible Employee; or
(3) a leased employee within the meaning of Code section 414(n).
(4) included in a group listed in Appendix A attached to the Plan
document;
(5) any person employed by the Company on a weekly or hourly basis in the
continental United States.
(m) "EMPLOYEE" means a person who is employed by the Company or an Affiliate.
(n) "EMPLOYER" means the Company and any other Affiliate which elects to become
a party to the Plan, with the approval of the Company, by adopting the Plan
for the benefit of its Eligible Employees in the manner described in
section 13.1.
(o) "EMPLOYMENT COMMENCEMENT DATE" means the day on which an Employee first
performs an Hour of Service for an Employer or nonparticipating Affiliate
or, if applicable, the first day following a
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One-Year Period of Severance on which an Employee performs an Hour of
Service for an Employer or nonparticipating Affiliate.
(p) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(q) "HIGHLY COMPENSATED EMPLOYEE" means, with respect to any Plan Year, any
Employee who at any time during the preceding Plan Year (or such other
period as the Company may elect pursuant to Treasury regulations)--
(1) received compensation (as defined in section 2.1(h)(3) of the Plan)
from the Employer and all Affiliates in excess of $99,000,
(2) received compensation (as defined in section 2.1(h)(3) of the Plan)
from the Employer and all Affiliates in excess of $66,000 and was in
the top-paid 20 percent of Employees,
(3) was an officer who received compensation (as defined in section
2.1(h)(3) of the Plan) from the Employer and all Affiliates in excess
of 50 percent of the amount in effect under Code section 415(b)(1)(A)
for the preceding Plan Year, or
(4) was a 5-percent owner.
Unless the Company makes the "calendar year calculation election" under
Treasury regulations, Highly Compensated Employee also means, with respect
to any Plan Year, any Employee who, at any time during that Plan Year, met
the descriptions contained in paragraph (1), (2), or (3) and was among the
top-paid 100 Employees or any Employee who was a 5-percent owner. A family
member of a Highly Compensated Employee and a former employee shall be
treated as a Highly Compensated Employee to the extent required by sections
414(q)(6) and (9) of the Code and the regulations thereunder. The dollar
limits described in paragraphs (1), (2), and (3) will be adjusted to
reflect increases in the cost of living, in the manner and at the times
prescribed by the Secretary of the Treasury.
In determining who is a Highly Compensated Employee, the following rules
shall apply:
(A) For purposes of determining the number of employees in the top-paid 20
percent, the following employees are excluded:
(I) employees who have not completed six months of service;
(ii) employees who normally work less than 17-1/2 hours per week;
(iii) employees who normally work during not more than six months
during any Plan Year;
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(iv) employees who have not attained age 21; and
(v) to the extent allowable under Treasury regulation section
1.414(q)-1T, employees covered by a collective bargaining
agreement between employee representatives and the Company or an
Affiliate.
(B) The number of officers is limited to 50 (or, if lesser, the greater of
three employees or 10 percent of employees), excluding those employees
described in (A)(I), (ii), (iii), (iv), and (v) above.
-C- When no officer has compensation in excess of the dollar limit
described in (3) above (as adjusted for increases in the cost of
living as prescribed by the Secretary of the Treasury), the highest
paid officer is treated as highly compensated.
(D) A Highly Compensated Employee shall include a former employee who
separated from service prior to the Plan Year and who was an active
Highly Compensated Employee for either (I) the year the employee
separated from service, or (ii) any Plan Year ending on or after the
employee's fifty-fifth birthday.
(r) "HOUR OF SERVICE" means a period of employment, as defined in section 3.4.
(s) "INVESTMENT FUND" means any investment fund established by the Plan
Administrator as an investment medium for the Trust Fund. The Plan
Administrator shall have the discretion to establish and terminate such
funds as it deems appropriate.
(t) "MATCHING CONTRIBUTIONS" means the contributions made by an Employer on
behalf of a Participant, conditioned on the making of Before-Tax
Contributions, as described in section 4.1(b).
(u) "MEMBER" means a Participant, or a former Participant who still has an
Account balance in the Plan.
(v) "ONE-YEAR PERIOD OF SEVERANCE" means a period of absence from employment,
as described in section 3.7.
(w) "PARTICIPANT" means any Employee of an Employer who has met and continues
to meet the eligibility requirements of the Plan as set forth in section
3.1(a).
(x) "PLAN" means Coleman Monthly Salaried Retirement Incentive Savings Plan, as
provided herein and as subsequently amended from time to time.
(y) "PLAN ADMINISTRATOR" means the entity which has been designated as the
"plan administrator" as provided in section 10.1.
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(z) "PLAN YEAR" means (1) the period beginning on the Effective Date and ending
on December 31, 1994 and (2) each 12-consecutive-month period thereafter
ending each December 31.
(aa) "ROLLOVER CONTRIBUTION" means those contributions made by an Employee
Participant as described in section 4.6.
(bb) "SEVERANCE FROM SERVICE" means an absence from employment, as described in
section 3.6.
(cc) "TRUST AGREEMENT" means any agreement establishing a trust, which forms
part of the Plan, to receive, hold, invest, and dispose of the Trust Fund.
(dd) "TRUSTEE" means the corporation, or individual or individuals, or
combination thereof, acting as trustee under the Trust Agreement at any
time of reference.
(ee) "TRUST FUND" means the assets of every kind and description held under the
Trust Agreement.
(ff) "VALUATION DATE" means
(1) each business day of the Plan Year
(2) such other dates as determined by the Company pursuant to a
nondiscriminatory policy.
(gg) "VESTING SERVICE" means a period or periods of employment of an Employee by
an Employer or a nonparticipating Affiliate as described in section 3.5.
2.2 GENDER AND NUMBER
Unless the context clearly requires otherwise, the masculine pronoun whenever
used shall include the feminine and neuter pronoun, and the singular shall
include the plural.
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ARTICLE III. PARTICIPATION AND SERVICE
3.1 PARTICIPATION
(a) ELIGIBILITY REQUIREMENTS-for each Eligible Employee hired on or after
January 1, 1996, and effective January 1, 1997 for any eligible employee
unless they had previously satisfied the requirements for participation in
the Plan, who is or who becomes an Eligible Employee on or after the
Effective Date shall be eligible to participate in the Plan on the later
of--
(1) the Effective Date, or
(2) the first day of the January, April, July, or October coinciding with
or next following the completion of one year of Eligibility Service
and the attainment of age 21.
(b) COMMENCEMENT OF PARTICIPATION. Each Eligible Employee who is eligible to
participate according to subsection (a) shall become a Participant by
making the election to have Before-Tax Contributions made on his behalf in
accordance with section 4.1(a). Such election must be made upon first
becoming eligible to participate, otherwise it can only be made as the
first day of any subsequent payroll period.
- - -C- ROLLOVER CONTRIBUTIONS. An Eligible Employee shall be eligible to make a
Rollover Contribution before becoming eligible to participate, provided
that the Employee shall be deemed a Participant only to the extent of the
Employee's Rollover Contribution and not for any other purpose until the
Employee otherwise is eligible to be and becomes a Participant for all
purposes hereunder.
3.2 DURATION OF PARTICIPATION
A Participant shall continue to be a Participant until the Participant
terminates employment with all Employers and Affiliates; thereafter, the
Participant shall be a Member for as long as the Participant has an Account
balance in the Plan.
3.3 ELIGIBILITY SERVICE
For purposes of determining eligibility to participate in the Plan, an Employee
shall be credited with one year of Eligibility Service at the end of the 12-
consecutive-month period beginning on the Employee's Employment Commencement
Date and ending on the first anniversary thereof, if the Employee completes
1,000 or more Hours of Service during such period. If an Employee fails to
complete 1,000 or more Hours of Service during such period, the Employee shall
be credited with one year of Eligibility Service, for purposes of eligibility to
participate, upon the Employee's completion of
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<PAGE>
1,000 Hours of Service in any Plan Year, beginning with the Plan Year that
contains the first anniversary of the Employee's Employment Commencement Date.
An Employee who is employed by the Company or an Affiliate on the Effective Date
shall be credited with the years of "Eligibility Service" credited to him under
The Coleman Retirement Incentive Savings Plan as of the Effective Date, and as
otherwise required under the service crediting rules of the Code.
3.4 HOURS OF SERVICE
An Employee shall receive credit for Hours of Service for purposes of the Plan,
as follows:
(a) One hour for each hour for which the Employee is paid, or entitled to
payment, by an Employer or nonparticipating Affiliate for the performance
of duties during the applicable computation period for which the Employee's
Hours of Service are being determined under the Plan.
(b) One hour for each hour, in addition to the hours in subsection (a) above,
for which the Employee is directly or indirectly paid, or entitled to
payment, by an Employer or nonparticipating Affiliate, on account of a
period of time during which no duties are performed due to vacation,
holiday, illness, disability, layoff, jury duty, military duty, or leave of
absence. Not more than 501 hours shall be credited under this subsection
(b) on account of any single continuous period during which the Employee
performs no duties.
- - -C- One hour for each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer or nonparticipating
Affiliate, with no duplication of credit for hours.
(d) Hours of Service shall be credited in accordance with the rules of
Department of Labor regulation 2530.200(b)-2(b) and (c), which are
incorporated herein by reference.
3.5 VESTING SERVICE
An Employee shall be credited with Vesting Service for his period of employment
with an Employer and each nonparticipating Affiliate, determined as follows:
(a) Vesting Service shall be determined in completed years and days, with each
365 days constituting one year.
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(b) An Employee who is employed by the Company or an Affiliate on the Effective
Date shall be credited with the years of "Vesting Service" credited to him
under The Coleman Retirement Incentive Savings Plan as of the Effective
Date.
- - -C- On or after the Effective Date, an Employee shall receive credit for
Vesting Service from the later of the Employee's Employment Commencement
Date or the Effective Date until the Employee's Severance from Service,
except as otherwise required under the service crediting rules of Section
411 of the Code.
(d) If an Employee who has had a Severance from Service is subsequently
reemployed as an Employee--
(1) If the Employee is reemployed before a One-Year Period of Severance
occurs, the Vesting Service the Employee had at such Severance shall
be reinstated upon the Employee's reemployment and, if such Severance
from Service resulted from quit, discharge, or retirement, the
Employee shall receive credit for Vesting Service for the period
between the Employee's Severance from Service and the Employee's
reemployment.
(2) If the Employee is reemployed after a One-Year Period of Severance
occurs, the Vesting Service the Employee had at such Severance from
Service shall be reinstated upon the Employee's reemployment but the
Employee shall not receive credit for Vesting Service for the period
between the Employee's Severance from Service and the Employee's
reemployment.
3.6 SEVERANCE FROM SERVICE
Severance from Service means the earlier of (a) or (b) below:
(a) the date the Employee quits, retires, is discharged, or dies, or
(b) the first anniversary of the first day of an Employee's absence from
employment with an Employer or nonparticipating Affiliate (with or without
pay) for any reason other than in (a) above, such as vacation, sickness,
leave of absence, layoff, or military service (except as otherwise provided
in section 3.9). An Employee who fails to return to employment at the
expiration of an absence shall be deemed to have had a Severance from
Service on the first to occur of the expiration of the Employee's absence
or the first anniversary of the first day of the Employee's absence.
3.7 ONE-YEAR PERIOD OF SEVERANCE
(a) A One-Year Period of Severance means each 12-consecutive-month period
beginning on the date an Employee incurs a Severance from
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<PAGE>
Service and ending on each anniversary of such date, provided that the
Employee does not perform an Hour of Service for an Employer or any
nonparticipating Affiliate during such period.
(b) Solely for purposes of determining whether a One-Year Period of Severance
has occurred, if an Employee is absent from work beyond the first
anniversary of the first date of an absence and the absence is for
maternity or paternity reasons, the date the Employee incurs a Severance
from Service shall be the second anniversary of his absence from
employment. The Employee will not obtain Vesting Service for the period
between the first and second anniversary of the first date of his absence.
For purposes of this subsection, an absence from work for maternity or
paternity reasons means an absence (1) by reason of pregnancy of the
individual, (2) by reason of the birth of a child of the individual, (3) by
reason of the placement of a child with the individual in connection with
the adoption of such child by such individual, or (4) for purposes of
caring for such child for a period beginning immediately following such
birth or placement.
3.8 LEASED EMPLOYEES
A person who is not an Employee of an Employer or nonparticipating Affiliate and
who performs services for an Employer or a nonparticipating Affiliate pursuant
to an agreement between the Employer or nonparticipating Affiliate and a leasing
organization shall be considered a "leased employee" if such person performed
the services on a substantially full-time basis for a year and the services are
of a type historically performed by employees. A person who is considered a
"leased employee" of an Employer or nonparticipating Affiliate shall not be
considered an Employee for purposes of participating in this Plan or receiving
any contribution or benefit under this Plan. A leased employee shall be excluded
from this Plan regardless of whether the leased employee participates in any
plan maintained by the leasing organization. However, if a leased employee
participates in the Plan as a result of subsequent employment with an Employer
or nonparticipating Affiliate, such leased employee shall receive Eligibility
Service and Vesting Service for such employment as a leased employee.
Notwithstanding the preceding provisions of this section, a leased employee
shall be treated as an Employee for purposes of applying the requirements
described in section 414(n)(3) of the Code and for purposes of determining the
number and identity of Highly Compensated Employees.
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<PAGE>
3.9 SPECIAL PROVISIONS FOR PARTICIPANTS WHO ENTER THE ARMED FORCES
If a Participant is absent from employment for voluntary or involuntary military
service with the armed forces of the United States and returns to employment
within the period required under the law pertaining to veterans' reemployment
rights, the Participant shall receive Eligibility Service and Vesting Service
for the period of the Participant's absence from employment.
3.10 TRANSFERRED EMPLOYEES
(a) An Employee who is transferred from a nonparticipating Affiliate into
employment where he becomes a Participant hereunder shall be credited with
Eligibility Service and Vesting Service for all of his employment with the
Employer and any nonparticipating Affiliate, before and after such
transfer. Such service shall be credited in accordance with sections 3.3
and 3.5, respectively.
(b) A Participant who is transferred to a nonparticipating Affiliate shall
continue to be credited with Eligibility Service and Vesting Service during
the period he is employed by a nonparticipating Affiliate. Such service
shall be credited in accordance with sections 3.3 and 3.5, respectively.
3.11 Family and Medical Leave Act
An Employee taking a leave of absence pursuant to the Family and Medical
Leave Act of 1993 ("FMLA") will be treated as continuing service while on a
FMLA leave for purposes of determining whether such Employee has incurred a
break in service.
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ARTICLE IV. CONTRIBUTIONS
4.1 BEFORE-TAX AND MATCHING CONTRIBUTIONS
For each pay period, each Employer shall contribute to the Plan on behalf of
that Employer's Participants an amount equal to the sum of (a) Before-Tax
Contributions and (b) Matching Contributions, determined as follows:
(a) BEFORE-TAX CONTRIBUTIONS. Each Participant may elect, on a form provided by
the Plan Administrator, to reduce the Participant's annual Compensation by
1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%, or 10%, and to have the amount by which
the Participant's Compensation is reduced contributed on the Participant's
behalf by the Employer as a Before-Tax Contribution to the Plan. The Plan
Administrator shall have the right to amend the Plan to increase the
permissible amount of Before-Tax Contributions on a uniform basis, provided
that the Compensation reduction shall not exceed 16 percent.
(1) INITIAL ELECTION. A Participant's initial election must be made
effective as of the Effective Date or the first day of the January,
April, July, or October immediately after becoming eligible to
participate, otherwise such election can only be made effective as of
the first day of any subsequent payroll period upon such prior notice
to the Plan Administrator as the Plan Administrator may reasonably
require. If an Employee was eligible to participate in The Coleman
Retirement Incentive Savings Plan on the day before the Effective Date
of this Plan such employee's initial election (both contribution
percentage and investment election) under this Plan shall be deemed to
be identical to the election the Employee had in place under The
Coleman Retirement Incentive Savings Plan on such date.
(2) ELECTION CHANGES. The Participant may elect on a form provided by the
Plan Administrator to increase or decrease the Participant's
Compensation reductions upon such prior notice to the Plan
Administrator as the Plan Administrator may reasonably require (within
the percentage limits stated above) as of the first day of any payroll
period. A Participant may elect on a form provided by the Plan
Administrator to cease future Compensation reductions as of any pay
period with such prior notice to the Plan Administrator as the Plan
Administrator may reasonably require. Upon ceasing future Compensation
reductions, an election to again reduce Compensation may only be made
as of the first day of any subsequent payroll period.
(3) IMPLEMENTATION. The Plan Administrator may adopt rules concerning the
administration of this subsection. The Before-Tax Contributions made
on behalf of each Participant shall be paid by each Employer to the
Trustee as soon as practical after the end of every pay period and
allocated to such Participant's Before-Tax Contributions Account as of
the end of the pay period.
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<PAGE>
(b) MATCHING CONTRIBUTIONS. For each pay period, each Employer shall make a
Matching Contribution, on behalf of each Participant who is actively
employed by the Employer as of the end of such pay period, equal to 33 1/3
percent of the Before-Tax Contributions made on the Participant's behalf
during the pay period; provided, however, the percentage of Before-Tax
contributions selected for the Matching Contributions by the Employer shall
be the same for each Participant employed by the Employer and the Matching
Contributions shall not exceed 33 1/3 percent of the first 6 percent of any
Participant's Compensation for any Plan Year.
Upon notice to Employees, the Plan Administrator shall have the right to
vary, suspend, or modify the Matching Contribution to be made on behalf of
Each Employer at any time and from time to time, provided that employees
shall, following receipt of notice, be given the opportunity to modify
their Before-Tax Contributions.
At the election of the Employer, the Matching Contributions may be made
with a contribution of shares of common stock of The Coleman Company, Inc.,
with the amount of contribution per share to be equal to the New York Stock
Exchange closing price for such stock on the last day of trading prior to
the date of the Matching Contribution to this Plan.
4.2 APPLICATION OF FORFEITURES
Forfeitures occurring during any Plan Year in the Account of a Member shall, to
the extent necessary under section 6.3-C- or (d), be applied to restore
forfeitures of reemployed Members. Thereafter, any remaining forfeitures shall
be treated as an additional Matching Contribution and allocated to the Accounts
of all Participants of that Employer who are active Eligible Employees entitled
to receive an allocation of a Matching Contribution as of the end of such Plan
Year. The forfeitures shall be allocated to the Accounts of such Participants in
the same manner as the Employer's Matching Contributions for that Plan Year.
4.3 LIMITATIONS ON CONTRIBUTIONS
(a) DOLLAR LIMIT ON BEFORE-TAX CONTRIBUTIONS. In no event shall any Employer
make Before-Tax Contributions for any calendar year, with respect to any
Participant, in excess of the limit prescribed under Code section 402(g)
(as adjusted by the Secretary of the Treasury to reflect increases in the
cost of living). This limit shall be applied by aggregating all plans and
arrangements maintained by the Company and all Affiliates that provide for
elective deferrals (as defined in section 402(g) of the Code).
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<PAGE>
If this limit would be exceeded by contributions to this Plan, the Plan
Administrator shall distribute the amount of such excess (plus earnings
thereon) to the Member. Excess elective deferrals means elective deferrals
(under section 402(a)(8) of the Code) in excess of the annual limit on such
deferrals in section 402(g) of the Code. Excess elective deferrals, plus
any income and minus any loss attributable thereto, shall be distributed no
later than April 15 to any Participant to
17
<PAGE>
whose account such excess elective deferrals were assigned for the
preceding year and who claims excess elective deferrals for such taxable
year.
(b) ACTUAL DEFERRAL PERCENTAGE ("ADP") TEST. In no event shall any Employer
make Before-Tax Contributions for any Plan Year that would result in the
actual deferral percentage of the group of Highly Compensated Employees
eligible to participate in the Plan to exceed the greater of--
(1) one and one-quarter times the actual deferral percentage of the group
of all other Eligible Employees; or
(2) the lesser of (A) two times the actual deferral percentage of the
group of all other Eligible Employees or (B) the actual deferral
percentage of the group of all other Eligible Employees plus two
percentage points.
The actual deferral percentage of each group of Eligible Employees for any
Plan Year shall be the average of the ratios (calculated separately for
each Eligible Employee in each group) of (I) the Before-Tax Contributions
made on behalf of each Eligible Employee for such Plan Year to (ii) such
Eligible Employee's Compensation, earned while such Employee was an
eligible employee within the meaning of Treasury regulation section
1.401(k)-1(g)(4)(I) for such Plan Year. To the extent necessary to conform
to such limitation, the Plan Administrator shall reduce Before-Tax
Contributions made on behalf of the Highly Compensated Employees. Such
reduction shall be effected by reducing contributions made on behalf of
Highly Compensated Employees (in the order of their actual deferral
percentages) beginning with the Highly Compensated Employees who elected
the highest percentage of such contributions.
Any such reduction in the Before-Tax Contributions made on
behalf of any Participant shall be refunded to the Participant as soon as
administratively possible, together with any income allocable to such
excess contributions for the Plan Year for which the excess contributions
were made, as provided in the rules adopted by the Plan Administrator at
the time. In no event, however, shall such excess contributions or such
income allocable thereto be left undistributed any later than the last day
of the Plan Year following the Plan Year in which such excess contributions
were made.
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For purposes of the ADP test described in this subsection--
(A) A Before-Tax Contribution will be taken into account for a Plan Year
only if it relates to Compensation that either would have been
received by the Eligible Employee in the Plan Year (but for the
deferral election) or is attributable to services performed by the
Eligible Employee in the Plan Year and would have been received by the
Eligible Employee within 2-1/2 months after the close of the Plan
Year (but for the deferral election); and
(B) A Before-Tax Contribution will be taken into account for a Plan Year
only if it is allocated to the Eligible Employee as of a date within
that Plan Year. For this purpose, a Before-Tax Contribution is
considered allocated as of a date within a Plan Year if the allocation
is not contingent on participation or performance of services after
such date and the Before-Tax Contribution is actually paid to the
Trust Fund no later than 12 months after the Plan Year to which the
contribution relates.
- - -C- ACTUAL CONTRIBUTION PERCENTAGE ("ACP") TEST. In no event shall Matching
Contributions for any Plan Year be made which would result in the
contribution percentage of the group of Highly Compensated Employees
eligible to participate in the Plan to exceed the greater of--
(1) one and one-quarter times the contribution percentage of the group of
all other Eligible Employees; or
(2) the lesser of (A) two times the contribution percentage of the group
of all other Eligible Employees or (B) the contribution percentage of
the group of all other Eligible Employees plus two percentage points.
The contribution percentage of each group of Eligible
Employees for any Plan Year shall be the average of the ratios (calculated
separately for each Eligible Employee in each group) of (I) the Matching
Contributions made on behalf of each Eligible Employee for such Plan Year
to (ii) such Eligible Employee's Compensation earned while such Employee
was an eligible employee within the meaning of Treasury regulation section
1.401(m)-1(f)(4)(I) for such Plan Year. To the extent necessary to conform
to such limitation, the Plan Administrator shall reduce Matching
Contributions made on behalf of the Highly Compensated Employees in a
manner similar to the method used in subsection (b). Any such reduction in
the Matching Contributions made on behalf of any Participant shall be paid
to the Participant (if vested), or treated as a forfeiture under section
4.2 (if forfeitable). Such payment or forfeiture shall include any income
allocable to such excess contributions for the Plan Year for which the
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excess contributions were made. In no event shall such excess contributions
or such income allocable thereto be paid to the Participant any later than
the last day of the Plan Year following the Plan Year in which such excess
contributions were made.
For purposes of the ACP test described in this subsection, a Matching
Contribution will be taken into account for a Plan Year only if it is (I)
made on account of the Eligible Employee's Before-Tax Contributions for the
Plan Year, (II) allocated to the Eligible Employee's matching Contributions
Account as of a date within that Plan Year, and (III) paid to the Trust
Fund by the end of the twelfth month following the close of that Plan Year.
(d) SPECIAL RULES. For purposes of determining whether the Plan satisfies the
average deferral percentage test of subsection (b) and the average
compensation percentage test of subsection (c), the following rules shall
apply:
(1) All elective contributions that are made under two or more plans that
are aggregated for purposes of section 401(a)(4) or 410(b) (other than
section 410(b)(2)(A)(ii)) are to be treated as made under a single
plan. All matching contributions made under two or more plans that are
similarly aggregated are to be treated as made under a single plan. If
two or more plans are permissively aggregated for purposes of section
401(k) or 401(m), the aggregated plans must also satisfy sections
401(a)(4) and 410(b) as though they were a single 401(k) plan or
401(m) plan (as applicable).
(2) In calculating the actual deferral percentage or the actual
contribution percentage, the actual deferral ratio or the actual
contribution ratio (as applicable) of a Highly Compensated Employee
will be determined by treating all cash-or-deferred arrangements or
all plans subject to section 401(m) (as applicable) under which the
Highly Compensated Employee is eligible (other than those that may not
be permissively aggregated) as a single arrangement. If a Highly
Compensated Employee participates in two or more cash-or-deferred
arrangements, or in two or more plans subject to section 401(m), that
have different plan years, all cash-or-deferred arrangements or
arrangements subject to section 401(m) (as applicable) ending with or
within the same calendar year shall be treated as a single
arrangement.
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Notwithstanding the foregoing, plans shall be treated as separate if
mandatorily disaggregated under regulations under Code section 401(k)
or 401(m).
(3) In the case of a Highly Compensated Employee who is either a 5-percent
owner or one of the ten most Highly Compensated Employees and is
thereby subject to the family aggregation rules of section 414(q)(6)--
(A) the actual deferral ratio (ADR) for the family group (which is
treated as one Highly Compensated Employee) is the ADR determined
by combining the elective contributions, compensation, and
amounts treated as elective contributions of all eligible family
members, and
(B) the actual contribution rate (ACR) for the family group (which is
treated as one Highly Compensated Employee) is the greater of (I)
the ACR determined by combining the contributions and
compensation of all eligible family members who are Highly
Compensated Employees without regard to family aggregation, and
(ii) the ACR determined by combining the contribution and
compensation of all family members.
Except to the extent taken into account in the preceding sentence, the
elective contributions, compensation, and amounts treated as elective
contributions, and the contributions and compensation of all family
members are disregarded in determining the actual deferral percentages
and actual contribution percentages for the groups of Highly
Compensated Employees and nonhighly compensated employees.
(4) In the case of a Highly Compensated Employee whose actual deferral
ratio (ADR) or actual compensation ratio (ACR) is determined under the
family aggregation rules, the determination of the amount of excess
contributions shall be made as follows, in accordance with the
"leveling" method described in section 1.401(k)-1(f)(2) or
1.401(m)-1(e)(2) (as applicable) of the regulations:
(A) First, the ADR or ACR (as applicable) of the Highly Compensated
Employee with the highest ADR or ACR is reduced to the extent
necessary to satisfy the actual deferral percentage (ADP) test or
the actual contribution percentage (ACP) test (as applicable) or
cause such ratio to equal the ADR or ACR (as applicable) of the
Highly Compensated Employee with the next highest ratio.
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<PAGE>
(B) Second, this process is repeated until the ADP or ACP test (as
applicable) is satisfied.
(5) The amount of excess contributions and income allocable thereto to be
refunded shall be reduced by excess deferrals under subsection (a)
previously distributed for the taxable year ending in the same Plan
Year, and excess deferrals under subsection (a) to be distributed for
a taxable year will be reduced by excess contributions and income
allocable thereto previously distributed or recharacterized for the
Plan Year beginning in such taxable year.
(e) ADDITIONAL ACTION. The Plan Administrator may take such additional action
as it shall consider appropriate to ensure compliance with the requirements
of this section. Such action may include, but is not limited to, reducing
the maximum amount of Before-Tax Contributions under section 4.1(a) that
can be contributed on behalf of any group of Highly Compensated Employees.
(f) MULTIPLE-USE LIMITATION. To the extent required by rules issued under
section 401(m)(9) of the Code, the limits of this section shall be applied
in a manner that reflects any restrictions on the multiple use of the
alternative limitation contained in paragraph (2) of subsections (b) and
-C- of this section. Any such restriction on the multiple use of the
alternative limitation shall be implemented pursuant to uniform rules to
be adopted by the Plan Administrator.
(g) OTHER REQUIREMENTS. The determination of actual deferral percentage and
actual contribution percentage amounts of any Participant shall satisfy
such other requirements as may be permitted by the Secretary of the
Treasury.
4.4 CONTRIBUTIONS NOT CONTINGENT ON PROFITS
This Plan is designated as a profit sharing plan under section 401(a) of the
Code. However, payment by an Employer of contributions to the Plan shall not be
contingent upon the existence of current or accumulated profits of the Employer.
4.5 LIMITATIONS ON ANNUAL ACCOUNT ADDITIONS
(a) ANNUAL ACCOUNT ADDITION. "Annual Account Additions" (within the meaning of
Code section 415(c)(2) and applicable Treasury regulations) means for any
Participant for any Plan Year, which shall also be the limitation year, the
sum of--
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(1) Employer contributions made for the Participant under any defined
contribution plan for such Plan Year, including excess deferrals
within the meaning of Treasury regulation section 1.402(g)-1(e)(3)
unless such excess amounts are distributed no later than April 15
following the close of the Participant's taxable year;
(2) such Participant's contributions to any defined contribution plan for
such Plan Year;
(3) forfeitures allocated to the Participant under any defined
contribution plan for such Plan Year; and
(4) contributions allocated on the Participant's behalf to any individual
medical account within the meaning of Code section 415(l)(2) or
attributable to medical benefits allocated to an account established
under Code section 419A(d).
"Any defined contribution plan" means all defined contribution plans of the
Company and Affiliates considered as one plan. For purposes of this
section, "Affiliate" shall have the meaning prescribed in section 2.1(b),
except that the phrase "more than 50%" shall be substituted for the phrase
"at least 80%" each place it appears in Code section 1563(a)(1).
A restored forfeiture pursuant to section 10.11 or a Rollover Contribution
pursuant to section 4.6 shall not be included as part of any Participant's
Annual Account Addition.
(b) LIMITATION. A Participant's Annual Account Addition for any Plan Year shall
not exceed the lesser of--
(1) the greater of $30,000, or one-fourth of the defined benefit dollar
limitation set forth in Code section 415(b) in effect for such
limitation year; or
(2) 25 percent of such Participant's Compensation for such Plan Year.
- - -C- ADDITIONAL LIMITATION. If in any Plan Year a Participant is covered both
under any defined contribution plan and under any defined benefit plan, the
sum of the defined benefit plan fraction (as defined in Code section
415(e)(2)) and the defined contribution plan fraction (as defined in Code
section 415(e)(3)) for such Plan Year shall not exceed one. It is intended
to reduce the benefits payable under any defined benefit plan to the extent
necessary to prevent the sum of such fractions for any Plan Year from
exceeding one before reducing contributions to any defined contribution
plan. "Any defined benefit plan" means all defined benefit plans of the
Company and Affiliates considered as one plan.
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(d) REDUCTION IN ANNUAL ACCOUNT ADDITIONS. If in any Plan Year a Participant's
Annual Account Addition exceeds the limitation determined under subsection
(b) above, such excess shall not be allocated to the Participant's accounts
in any defined contribution plan but shall be handled in the following
manner and order until such excess is eliminated:
(1) the Participant's portion of the allocation of Before-Tax
Contributions or any part thereof (plus net income or appreciation
attributable thereto) shall be refunded to the Participant; and
(2) the Participant's portion of the allocation of Matching Contributions
or any part thereof shall be placed in a suspense account.
The amount held in such suspense account that is attributable to
contributions of an Employer shall be used to reduce contributions by that
Employer for the next following Plan Year.
Such suspense account shall share in the gains and losses of the Trust Fund
on the same basis as other Accounts.
The above reductions shall be applied to this Plan first, and thereafter to
any other defined contribution plan.
4.6 ROLLOVER CONTRIBUTIONS
An Employee of an Employer may, in accordance with procedures approved by the
Plan Administrator, contribute the following amounts to the Plan:
(a) part or all of a distribution or proceeds from a sale of distributed
property which qualifies as an "eligible rollover distribution" within the
meaning of section 6.1(b)(1) below from a trust described in section 401(a)
and exempt from tax under section 501(a); or
(b) a distribution from an individual retirement account or annuity, provided
the entire amount of the distribution is from a source described in (a)
above; or
- - -C- a trust-to-trust transfer from a prior employer's plan, provided that--
(1) the Employee can establish to the satisfaction of the Plan
Administrator that such prior employer's plan meets the qualification
requirements under Code section 401(a), and
(2) a trust-to-trust transfer shall not be permitted unless the amount
transferred is free of all defined benefit characteristics and does
not make the Plan a transferee plan under Code section
401(a)(11)(B)(iii)(III).
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Such a contribution must be paid over to the Trustee (or transferred
directly from a prior plan) on or before the sixtieth day after receipt by
the Employee of the distribution and shall be held in the trust under this
Plan as a separate account in the name of the Employee whose interest is
being held. Such account shall be fully vested and nonforfeitable.
An account established to hold any Rollover Contributions shall be
distributable to the Employee at the same time and in the same manner, and
shall otherwise be subject to the same rules under the Plan, as a Before-
Tax Contributions Account maintained under the Plan.
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ARTICLE V. VESTING IN ACCOUNTS
5.1 BEFORE-TAX AND ROLLOVER CONTRIBUTIONS ACCOUNTS
A Member shall at all times be fully vested and have a nonforfeitable interest
in such Member's Before-Tax Contributions Account and Rollover Contributions
Account.
5.2 MATCHING CONTRIBUTIONS ACCOUNTS
(a) GENERAL. A Member shall have a vested and nonforfeitable interest in that
portion of such Member's Matching Contributions Account in accordance with
the following schedule:
- - ------------------------------------------
- - ------------------------------------------
COMPLETED YEARS
OF VESTING SERVICE VESTED PERCENTAGE
- - ------------------------------------------
less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
- - ------------------------------------------
(b) ACCELERATED VESTING. Notwithstanding subsection (a) above, a Member shall
be fully vested and have a nonforfeitable interest in his entire Matching
Contributions Account if--
(1) the Member attains age 65 while still an Employee;
(2) the Member dies or suffers a Disability while an Employee; or
(3) contributions to the Plan are completely discontinued or the Plan is
terminated, or the Plan is partially terminated and such Member is
affected by such partial termination.
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ARTICLE VI. DISTRIBUTIONS AND WITHDRAWALS
6.1 DISTRIBUTION UPON RETIREMENT, DEATH, OR DISABILITY
Normal retirement age under the Plan shall be age 65. Early retirement age shall
be age 55. Upon a Member's Severance from Service because of the Member's
retirement at or after age 55, or because of the Member's Disability or death,
there shall be distributed to the Member, or to the Member's Beneficiary in case
of the Member's death, the Member's Account, determined as of the Valuation Date
coincident with or next following the date of such Severance from Service, plus
any amounts credited to the Member's Account subsequent to such Valuation Date.
Unless the Member otherwise elects, such distribution shall be made as soon as
practicable following the later of Severance from Service and his sixty-fifth
birthday, subject to the requirements of section 6.4(b). The Member shall be
entitled to elect--
(a) an early distribution, to be made as soon as practicable following his
Severance from Service; or
(b) a deferred distribution, to be made no later than April 1 of the year
following the year the Member attains age 70 1/2.
The amount of any distribution shall be based on the value of the Member's
Account as of the date of distribution.
6.2 DISTRIBUTION UPON SEVERANCE FROM SERVICE FOR REASONS OTHER THAN RETIREMENT,
DEATH, OR DISABILITY
Upon a Member's Severance from Service for any reason other than his retirement,
death, or Disability, there shall be distributed to the Member the full amount
of his Before-Tax Contributions Account and Rollover Contributions Account and
the vested portion of his Matching Contributions Account, determined as of the
Valuation Date coincident with or next following the date of such Severance from
Service, plus any amounts credited to his Account subsequent to such Valuation
Date. If the nonforfeitable portion of a Member's Account exceeds $3,500 (or
such higher amount as may be permitted under applicable law or regulation),
then, unless the Member otherwise elects, such distribution shall be made on the
first day of the month coincident with or next following the Member's sixty-
fifth birthday. The Member shall be entitled to elect--
(a) an early distribution of such nonforfeitable portion, to be made as soon as
practicable following his Severance from Service; or
(b) a deferred distribution of such nonforfeitable portion, to be made no later
than April 1 of the year following the year the Member attains age 70 1/2.
The amount of any distribution shall be based on the value of the Member's
Account as of the date of distribution.
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<PAGE>
6.3 FORFEITURES
(a) If a Member's Severance from Service occurs before the Member's fifty-fifth
birthday and the nonforfeitable portion of his Account is not greater than
$3,500, the Member will receive a distribution of the value of the
nonforfeitable portion of his Account and the nonvested portion shall be
treated as a forfeiture on the day on which the distribution occurred.
(b) If either (1) a Member's Severance from Service occurs on or after his
fifty-fifth birthday or (2) the Member's Severance from Service occurs
before his fifty-fifth birthday and the nonforfeitable portion of his
Account is greater than $3,500, the Member may elect to receive a
distribution of the value of the nonforfeitable portion of his Account, in
which event the forfeitable portion of such Account will be treated as a
forfeiture on the day on which the distribution occurred.
- - -C- If a Member receives a distribution pursuant to subsection (a) or (b) which
is less than the value of his Account and he is reemployed by any Employer
or nonparticipating Affiliate prior to incurring five consecutive One-Year
Periods of Severance, the portion of such Account forfeited pursuant to
subsection (a) or (b) will be restored if the Member repays to the Plan the
full amount of the distribution. Such repayment must be made prior to the
fifth anniversary of the first date on which the Member is subsequently
reemployed by the Employer or any Affiliate.
The source for restoring forfeitures shall be first, Trust earnings or
gains, second, current forfeitures, and if insufficient, an additional
contribution by the Member's Employer.
Repaid distributions and restored forfeitures shall be invested in
Investment Funds designated by the Member.
(d) If a Member fails to elect to receive a distribution of the nonforfeitable
portion of his Account pursuant to subsection (b), the Member's Account
shall continue to be maintained and adjusted under sections 8.3 and 8.4
until the vested portion is distributed under the applicable provisions of
the Plan. The portion of the Member's Account which is not vested shall be
treated as a forfeiture on the day on which the Member has incurred five
consecutive One-Year Periods of Severance.
(e) If a Member incurs five consecutive One-Year Periods of Severance, or if
subsection -C- is applicable to the Member but the Member fails to make the
repayment described in such subsection, the Member shall
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<PAGE>
permanently forfeit the portion of the Member's Account that was not vested
pursuant to section 5.2 at the time of the Member's prior distribution or
at the time of completion of such five consecutive One-Year Periods of
Severance, as applicable.
(f) Forfeitures pursuant to subsections (a) and (b) shall be treated as though
they are Matching Contributions of the Employer whose Employees created the
forfeitures and shall be applied as described in section 4.2.
(g) If a Member has a Severance from Service when he is zero percent vested in
his Matching Contributions Account, he shall be deemed to have received a
distribution of his vested interest in his Account on the day on which such
Severance from Service occurred, and the nonvested portion of the Account
shall be treated as a forfeiture on such day.
If an individual is deemed to receive a distribution pursuant to this
subsection (g) and is reemployed by any Employer or nonparticipating
Affiliate prior to incurring five consecutive One-Year Periods of
Severance, the portion of the Member's Account forfeited pursuant to the
preceding provisions of this subsection shall be deemed repaid and shall,
accordingly, be restored upon such reemployment.
6.4 COMMENCEMENT OF DISTRIBUTIONS
(a) Subject to the provisions of sections 6.1 and 6.2, distributions pursuant
to sections 6.1 and 6.2 shall be made or commence to the Member as soon as
practicable following the Member's Severance from Service.
The amount of any distribution shall be based on the value of the Member's
Account as of the date of distribution.
(b) Distribution of a Member's Account will begin not later than the sixtieth
day after the later to close of the Plan Year in which--
(1) the Member attains his sixty-fifth birthday; or
(2) the Member's Severance from Service occurs.
- - -C- If a Member dies after the Member's Severance from Service but prior to
receiving the full distribution of the Member's Account to which the Member
is entitled under this Article VI, any unpaid balance thereof at the time
of the Member's death shall be distributed to the Member's Beneficiary in a
lump sum, to be distributed as soon as practicable and permissible under
the Code after the Member's death.
(d) Amounts payable hereunder shall continue to be maintained and adjusted
under sections 8.3 and 8.4 pending such payment.
The amount of any distribution shall be based on the value of the Member's
Account as of the date of distribution.
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<PAGE>
6.5 METHOD OF DISTRIBUTION
All distributions shall be in a lump sum and shall be in cash. Amounts payable
hereunder shall continue to be maintained and adjusted under sections 8.3 and
8.4 pending such payment.
6.6 IN-SERVICE WITHDRAWALS
(a) No in-service withdrawals shall be made from any Participant's Matching
Contributions Account. Subject to the requirements of this section, a
Participant may make a withdrawal from the Participant's Rollover
Contributions Account and (if that account is depleted) Before-Tax
Contributions Account either on account of hardship or after the
Participant has attained age 59 1/2. A hardship withdrawal shall be made
only if the withdrawal both is made on account of an immediate and heavy
financial need and is necessary to satisfy the financial need.
(b) A hardship withdrawal must be for--
(1) expenses for medical care described in Code section 213(d) previously
incurred by the Participant, the Participant's spouse, or any
dependents of the Participant (as defined in Code section 152) or
necessary for these persons to obtain medical care described in Code
section 213(d);
(2) costs directly related to the purchase of a principal residence for
the Participant (excluding mortgage payments);
(3) payments necessary to prevent the eviction of the Participant from the
Participant's principal residence or foreclosure on the mortgage on
that residence;
(4) payment of tuition and related educational fees for the next 12 months
of post-secondary education for the Participant, or the Participant's
spouse, children, or dependents (as defined in Code section 152); or
(5) such other "safe harbor" payments as the Internal Revenue Commissioner
permits in revenue rulings, notices, and other documents of general
applicability.
- - -C- A Participant's request for a hardship withdrawal must be accompanied or
supplemented by such evidence that the distribution is necessary to satisfy
the hardship as the Plan Administrator may reasonably require. A
distribution shall be deemed necessary to satisfy an immediate and heavy
financial need if--
(1) the distribution is not in excess of the amount of the Participant's
immediate and heavy financial need. The amount of such need
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<PAGE>
may include any amounts necessary to pay any federal, state, or local
income taxes or penalties reasonably anticipated to result from the
distribution;
(2) the Participant has obtained all distributions, other than hardship
distributions, and all nontaxable (at the time of the loan) loans
currently available under all plans maintained by the Company and
Affiliates;
(3) the Plan and all other plans maintained by the Company and Affiliates
limit (and the Plan does hereby so limit) the Participant's Before-Tax
Contributions for the next taxable year to the applicable limit under
Code section 402(g) for that year minus the Participant's Before-Tax
Contributions for the year of the hardship distribution;
(4) the Participant is prohibited (and the Participant is hereby
prohibited), for 12 months after receipt of the hardship distribution,
from making Before-Tax Contributions and employee contributions to the
Plan and all other plans maintained by the Company and Affiliates. For
purposes of the preceding sentences of this paragraph (4), "all other
plans" means all qualified and nonqualified plans of deferred
compensation maintained by the Company and Affiliates. The phrase
includes a stock option, stock purchase, or similar plan, or a cash-
or-deferred arrangement that is part of a cafeteria plan within the
meaning of Code section 125; and
(5) the distribution satisfies any other "safe harbor" requirements
prescribed by the Internal Revenue Commissioner in revenue rulings,
notices, or other documents of general applicability.
A Participant will be limited to one hardship or post-age 59 1/2 withdrawal
under this section in a Plan Year, except that a second withdrawal will be
allowed if it is a hardship withdrawal for payment of tuition described in
(b)(4) above.
A hardship distribution from a Participant's Before-Tax Contributions Account
may be made only from Before-Tax Contributions made to that Account, and may not
include any earnings thereon.
6.7 REQUIRED DISTRIBUTIONS
Notwithstanding anything to the contrary contained in this Article VI--
(a) In no event may the distribution of a Member's benefits be made later than
April 1 of the calendar year following the year in which the Member attains
age 70 1/2.
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<PAGE>
(b) All distributions under this Plan shall be made in accordance with section
401(a)(9) of the Code and the regulations thereunder. Provisions of the
Plan regarding payment of distributions shall be interpreted and applied in
accordance with section 401(a)(9) of the Code and the regulations
thereunder.
6.8 WITHHOLDING TAXES
An Employer may withhold from a Member's compensation and the Trustee may
withhold from any payment under this Plan any taxes required to be withheld with
respect to contributions or benefits under this Plan and such sum as the
Employer or Trustee may reasonably estimate as necessary to cover any taxes for
which they may be liable and which may be assessed with respect to contributions
or benefits under this Plan.
6.9 RESTRICTIONS ON DISTRIBUTION OF BEFORE-TAX CONTRIBUTIONS ACCOUNT
Amounts attributable to a Member's Before-Tax Contributions shall not be
distributed earlier than upon one of the following events:
(a) The Member's retirement, death, Disability, or Separation from service;
(b) The termination of the Plan without establishment or maintenance of another
defined contribution plan (other than an employee stock ownership plan or a
simplified employee pension);
(c) The Member's attainment of age 59-1/2 or the Member's hardship as
described in section 6.6;
(d) The sale or other disposition by the Employer to an unrelated corporation
of substantially all of the assets used by the Employer in a trade or
business, but only with respect to Employees who continue employment with
the acquiring corporation, and provided (1) the acquiring corporation does
not maintain the Plan after the disposition; (2) the Employer continues to
maintain the Plan after the disposition; and (3) the distribution is in the
form of a lump sum; or
(e) The sale or other disposition by the Employer of its interest in a
subsidiary to an unrelated entity but only with respect to Employees who
continue employment with the subsidiary, and provided (1) the acquiring
entity does not maintain the Plan after the disposition, (2) the Employer
continues to maintain the Plan after the disposition; and (3) the
distribution is in the form of a lump sum.
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<PAGE>
6.10 LOANS AND WITHDRAWALS TO MEMBERS
(a) AVAILABILITY OF LOANS. A Member who is a "party in interest," as defined
under section 3(14) of ERISA, may make application to the Plan
Administrator to borrow from the vested portion of his Account upon the
terms and conditions hereinafter specified.
(b) TERMS OF LOANS. In the event a Member receives a loan from his Account in
accordance with subsection (a), such loan shall be made upon the following
terms and conditions:
(1) AMOUNT. The amount of such loan shall not be less than $1,000 and
(when added to the balance of other outstanding loans from any defined
contribution plan of the Employer or a nonparticipating Affiliate)
shall not exceed the lesser of--
(A) $50,000 reduced by the excess (if any) of--
(I) the highest outstanding principal balance of all loans from
the Plan during the 12-month period ending on the day that
the loan is made, over
(ii) the outstanding balance of loans from the Plan on the day
the loan is made, or
(B) 50 percent of the nonforfeitable value of the Member's Account.
If a Member is also covered under another qualified plan maintained by
the Employer or a nonparticipating Affiliate, the limitation
prescribed in subparagraph (A) shall be applied as though all such
qualified plans are one plan.
(2) TERM. The term of such loan must be made on the basis of full years
and shall not exceed the earlier of--
(A) 5 years (10 years in the case of a loan for the acquisition of a
primary residence of the Member); or
(B) such Member's Severance from Service.
Any such loan shall not be renewable, except that if the term of a
loan was originally for a period of less than 5 years (10 years in the
case of a loan for the acquisition of a primary residence of the
Member), the Plan Administrator may, in its discretion, renew such
loan for a period of time equal to the difference between 5 years (10
years in the case of a loan for the acquisition of a primary residence
of the Member) and the duration of the original loan.
(3) APPROVAL, INTEREST, AND ORIGINATION FEE. The Plan Administrator shall
review loan applications and, within a reasonable period, as
determined by the Plan Administrator, shall grant or deny the
applications. The Plan Administrator shall make loans upon the receipt
of promissory notes which the Plan Administrator deems
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<PAGE>
satisfactory and which shall bear interest at a rate commensurate with
the prevailing interest rate charged on similar commercial loans made
by persons in the business of lending money under similar
circumstances, as determined by the Plan Administrator, then in
effect. The Plan Administrator may require each Member to pay a loan
origination fee, in an amount to be determined by the Plan
Administrator, which shall be included in the principal amount of the
loan. The account balances in each of the Investment Funds in which
the Member's Account is invested shall be reduced proportionately to
reflect the principal amount of the loan. The promissory notes shall
specify the time and manner of repayment, as determined by the Plan
Administrator.
(4) REPAYMENT. Payments of principal and interest shall be made in
approximately equal payments, at least monthly, on a basis that would
permit such loan to be amortized over its term. Prepayments of
principal and interest may only be made in whole at any time without
penalty. Loans to Members who are active Participants shall be repaid
only by payroll deductions.
(5) DEFAULT. In the event the note is not paid to the extent due and
payable on or before maturity, the Plan Administrator shall give
written notice to the Member by sending such notice to his last known
address, and if the due payment is not made within 30 days from the
date of such notice, the amount allocated to each Investment Fund in
which the Member's Account is invested shall be subject to a
proportionate reduction by the amount of unpaid principal and interest
to be paid on the unpaid balance at the time of a distribution under
Article VI.
(6) SATISFACTION FROM ACCOUNT. In the event of a distribution as provided
in Article VI before the loan is repaid in full, the unpaid principal
and interest on the unpaid balance of the loan shall become due and
payable, and the Plan shall satisfy the indebtedness from the Member's
Account in the following manner:
(A) first, from the Member's Rollover Account, if any;
(B) second, from the Member's Before-Tax Contributions Account, if
any; and
-C- third, from the Member's vested Matching Contributions Account,
if any,
before making any payments to the Member or to his Beneficiary.
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<PAGE>
(7) PAYMENT TO MEMBER. The Trustee shall be directed by the Plan
Administrator with regard to any approved loans, and upon such
direction the Trustee shall issue a check from the Trust Fund to the
Member for the amount of the approved loan.
- - -C- ADDITIONAL LOAN REQUIREMENTS.
(1) NONDISCRIMINATION. In making loans pursuant to this section, the Plan
Administrator shall treat all eligible Members under similar
circumstances alike, and loans shall not be made in any manner to
discriminate in favor of Employees who are Highly Compensated
Employees.
(2) NO MORE THAN ONE LOAN OUTSTANDING. An eligible Member may not have
more than one loan under this section outstanding at any time.
(3) TWELVE MONTHS BETWEEN LOANS. A Member shall not be eligible for a loan
under this section until at least 12 months have elapsed after the
repayment in full of any prior loan under this section.
6.11 DIRECT ROLLOVERS OF ELIGIBLE DISTRIBUTIONS
(a) GENERAL. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this section, a
distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution
paid directly to an eligible retirement plan specified by the distributee
in a direct rollover.
(b) DEFINITIONS.
(1) ELIGIBLE ROLLOVER DISTRIBUTION. An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit of
the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint lives
(or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution is required
under Code section 401(a)(9); and the portion of any distribution that
is not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities).
(2) ELIGIBLE RETIREMENT PLAN. An eligible retirement plan is an individual
retirement account described in Code section 408(a), an individual
retirement annuity described in Code section
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<PAGE>
408(b), an annuity plan described in Code section 403(a), or a
qualified trust described in Code section 401(a), that accepts the
distributee's eligible rollover distribution. However, in the case of
an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity.
(3) DISTRIBUTEE. A distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in Code section 414(p), are distributees with regard to the interest
of the spouse or former spouse.
(4) DIRECT ROLLOVER. A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
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ARTICLE VII. INVESTMENT ELECTIONS
SECTION 7.1
The Plan Administrator may, at any time, and from time to time, establish
or designate investment funds (hereinafter "Fund" or "Funds") for the investment
of contributions under this Plan and Trust. The Plan Administrator shall
formulate detailed written objectives and procedures for such Funds and the
administration of individually directed accounts. The Plan Administrator may
also supplement the rules of this Article by adopting written procedures
concerning the maintenance of individually directed accounts (sometimes
hereinafter referred to as "IDAs") for Participants. Each Participant shall
invest his or her Accounts among the Fund or Funds so established. In the event
any Participants fails or refuses to make a designation among the Fund or Funds
so established, such Participant's Account shall be credited to the most secure
Fund then existing (i.e., and Income Fund). All such Funds shall be established
and maintained in accordance with the following subsections:
(a) General. Each Participant shall have the exclusive right to direct the
Trustee (or designee) from time to time with respect to the investment
directions of the Participant, as long as these directions are clearly stated
(in writing or otherwise, with an opportunity for written confirmation of such
instructions), would not (I) generate unrelated business income or debt financed
income to the Plan that would be taxable under the code, (ii) cause the Plan to
engage in a prohibited transaction, (iii) be inconsistent with the Plan terms or
ERISA, or (iv) jeopardize the Plan's qualified status. The Trustee may require
the Participant's instructions to be provided in a manner acceptable to the
Trustee. Other than for compliance with the restrictions in (b) below, no
person shall have either the right nor the duty to inquire into the propriety of
any Participant's investment director or its effect upon the Participant's Fund
or Account. Any Participant investment direction shall be notwithstanding the
occurrence of any event or other development of which the Trustee has, or should
have, knowledge. Employer, its officers, directors, stockholders, or partners,
the Plan Administrator, Trustee, and any fiduciary hereunder shall not be liable
or responsible for any loss resulting from the individually directed investment
or to any present or future Beneficiary thereof, by reason of: (1) any sale or
investment made or other action taken pursuant to and in accordance with the
directions of any Participant under this Section, or (2) the acquisition or
retention of any asset including cash, which has been acquired pursuant to the
Participant's direction hereunder.
(b) Collectibles. No investment under this Section shall be made in any
"collectible." The term "collectible" means any work of art, rug, antique,
metal,
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gem, stamp, coin, alcoholic beverage, or any other tangible personal property
specified by the Secretary for purposes of Section 408(m) of the Code.
(c) Costs. All reasonable costs and expenses of carrying out a Participant's
directions may be charged to the Participant Account under procedures
established by the Plan Administrator.
(d) Valuation of IDAs. IDAs shall be separately valued and adjusted to reflect
increases or decreases in the fair market value of the separate assets of each
IDA, accrued income and prepaid expenses, liabilities, etc., in accordance with
the customary valuation practices of the Trustee. IDAs shall be values as of
the annual Valuation Date and as of such other dates as may be necessary or
desirable for purpose of administration of those IDAs. For purposes of
determining the amount of a Participant's benefits or for purposes of making any
benefit distributions hereunder in the case of a terminated Participant, the
aggregate value of the Participant's IDA may be determined as of any appropriate
date selected by the Trustee.
Administrator has caused the necessary entries to be made in the Participants'
Accounts in the Investment Funds and has reconciled offsetting transfer
elections, in accordance with uniform rules therefor established by the Plan
Administrator.
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ARTICLE VIII. ACCOUNTS AND RECORDS OF THE PLAN
8.1 ACCOUNTS AND RECORDS
The Accounts and records of the Plan shall be maintained by the Plan
Administrator and shall accurately disclose the status of the Accounts of each
Member or each Member's Beneficiary in the Plan.
Each Member shall be advised from time to time, at least once during each Plan
Year, as to the status of the Member's Account.
8.2 TRUST FUND
Each Member shall have an undivided proportionate interest in the Trust Fund
which shall be measured by the proportion that the market value of the Member's
Account bears to the total market value of all Accounts as of the date that such
interest is being determined.
8.3 VALUATION AND ALLOCATION OF EXPENSES
As of each Valuation Date, the Trustee shall determine the fair market value of
the Trust Fund after first deducting any expenses which have not been paid by
the Employers. Unless paid by the Employers and subject to such limitations as
may be imposed by ERISA or other applicable law, all costs and expenses incurred
in connection with the general administration of the Plan and the Trust shall be
chargeable to the Trust Fund.
All transactions shall be based upon the fair market value of the investment.
8.4 ALLOCATION OF EARNINGS AND LOSSES
As of each Valuation Date, the Plan Administrator, with the assistance of the
Trustee, shall allocate the net earnings and gains or losses of each Investment
Fund of the Trust Fund since the preceding Valuation Date to each Member's
Account in the same proportion that the market value of the Member's Account in
such Investment Fund bears to the total market value of all Members' Accounts in
such Investment Fund; and, for this purpose, the Plan Administrator shall adopt
uniform rules which conform to applicable law and generally accepted accounting
practices.
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ARTICLE IX. FINANCING
9.1 FINANCING
The Company shall enter into a Trust Agreement in order to implement the
provisions of the Plan and to finance the benefits under the Plan. All rights
which may accrue to any person under the Plan shall be subject to all the terms
and provisions of such Trust Agreement. The Company may modify the Trust
Agreement in accordance with the terms of that Agreement from time to time to
accomplish the purposes of the Plan.
9.2 CONTRIBUTIONS
The Employers shall make such contributions to the Trust Fund as are required by
the provisions of the Plan, subject to the right of the Company to amend,
modify, or terminate the Plan.
9.3 NONREVERSION
No Employer shall have any right, title, or interest in the contributions made
to the Trust Fund, and no part of the Trust Fund shall revert to any Employer,
except that--
(a) If a contribution is made to the Trust Fund by an Employer by a mistake of
fact, then such contribution may be returned to such Employer within one
year after the payment of the contribution; and if any part or all of a
contribution is disallowed as a deduction under Code section 404, then to
the extent such contribution is disallowed as a deduction it may be
returned to such Employer within one year after the disallowance. All
contributions by an Employer are conditioned on their deductibility under
Code section 404.
(b) If the Internal Revenue Service initially determines that the Plan does not
meet the requirements of Code section 401, the Plan shall be null and void
from the Effective Date, and any contributions shall be returned to all
contributors within one year following the determination that the Plan does
not meet such requirements, unless the Company elects to make the changes
to the Plan necessary to receive a determination from the Internal Revenue
Service that the requirements of Code section 401 are met.
9.4 RIGHTS IN THE TRUST FUND
Persons eligible for benefits under the Plan are entitled to look only to the
Trust Fund for the payment of such benefits and have no claim against any
Employer, the Plan Administrator, or any other person. No person has any right
or interest in the Trust Fund except as expressly provided in the Plan.
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ARTICLE X. ADMINISTRATION
10.1 PLAN ADMINISTRATOR AND FIDUCIARY
The Plan shall be administered by a committee appointed by the Board. The
committee shall be composed of as many members as the Board may appoint from
time to time and shall hold office at the pleasure of the Board. Any member of
the committee may resign by delivering a written resignation to the Board.
Vacancies in the committee arising by resignation, death, removal, or otherwise
shall be filled by the Board. The committee shall be the administrator of the
Plan within the meaning of section 3(16)(A) of ERISA, a fiduciary with respect
to the Plan within the meaning of section 3(21)(A)(I) and (iii) of ERISA, and
the named fiduciary under section 402 of ERISA. It shall also be the Plan
Administrator for purposes of the Plan.
10.2 COMPENSATION AND EXPENSES
A member of the committee shall serve without compensation for services as such
if the Member is receiving full-time pay as an Employee. Any other member of the
committee may receive compensation for services as a member, to be paid from the
Trust Fund to the extent not paid by the Employers. All expenses incurred in the
administration of the Plan shall be paid for by the Trust Fund to the extent not
paid by the Employers, and any member of the committee may receive reimbursement
by the Trust Fund of expenses properly and actually incurred to the extent not
paid by the Employers. Such expenses shall include any expenses incident to the
administration of the Plan, including, but not limited to, fees of accountants,
counsel, and other specialists.
10.3 MANNER OF ACTION
A majority of the members of the committee at the time in office shall
constitute a quorum for the transaction of business. All resolutions adopted and
other actions taken by the committee at any meeting shall be by a majority vote
of those present at any such meeting. Upon the unanimous concurrence in writing
of the members at the time in office, action of the committee may be taken
otherwise than at a meeting.
10.4 CHAIRMAN, SECRETARY, AND EMPLOYMENT OF SPECIALISTS
The members of the committee may elect one of their number as chairman and may
elect a secretary who may, but need not, be a member of the committee. They may
authorize one or more of their number or any agent
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to execute or deliver any instrument or instruments on their behalf, and may
employ such counsel, auditors, and other specialists, and such clerical,
medical, actuarial, and other services as they may require in carrying out the
provisions of the Plan. Such expenses shall be paid by the Retirement Fund to
the extent not paid by the Employers.
10.5 ASSISTANCE
The committee may appoint one or more individuals and delegate such of its power
and duties as it deems desirable to any such individual, in which case every
reference herein made to the committee shall be deemed to mean or include the
individuals as to matters within their jurisdiction. Such individuals shall be
such officers or other employees of the Employers and such other persons as the
committee may appoint.
10.6 RECORDS
All resolutions, proceedings, acts, and determinations of the committee shall be
recorded by the secretary thereof or under such secretary's supervision, and all
such records, together with such documents and instruments as may be necessary
for the administration of the Plan, shall be preserved in the custody of the
secretary.
10.7 RULES
Subject to the limitations contained in the Plan, the committee shall be
empowered from time to time in its discretion to adopt bylaws and establish
rules for the conduct of its affairs and the exercise of the duties imposed upon
it under the Plan.
10.8 ADMINISTRATION
The committee shall be responsible for the administration of the Plan. The
committee shall have all such powers as may be necessary to carry out the
provisions hereof and may, from time to time, establish rules for the
administration of the Plan and the transaction of the Plan's business. In making
any such determination or rule, the committee shall pursue uniform policies as
from time to time established by the committee and shall not discriminate in
favor of or against any Member. The committee shall have the exclusive right to
make any finding of fact necessary or appropriate for any purpose under the Plan
including, but not limited to, the determination of the eligibility for and the
amount of any benefit payable under the Plan. The committee shall have the
exclusive right to interpret the provisions of the Plan and to determine any and
all questions
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arising under the Plan or in connection with the administration thereof,
including, without limitation, the right to remedy or resolve possible
ambiguities, inconsistencies, or omissions, by general rule or particular
decision. The committee shall make, or cause to be made, all reports or other
filings necessary to meet both the reporting and disclosure requirements and
other filing requirements of ERISA which are the responsibility of "plan
administrators" under ERISA. To the extent permitted by law, all findings of
fact, determinations, interpretations, and decisions of the committee shall be
conclusive and binding upon all persons having or claiming to have any interest
or right under the Plan.
10.9 NO ENLARGEMENT OF EMPLOYEE RIGHTS
Nothing contained in the Plan shall be deemed to give any Employee the right to
be retained in the service of an Employer or to interfere with the right of an
Employer to discipline, discharge, or retire any Employee at any time.
10.10 APPEALS FROM DENIAL OF CLAIMS
If any claim for benefits under the Plan is wholly or partially denied, the
claimant shall be given notice in writing within a reasonable period of time
after receipt of the claim by the Plan (not to exceed 90 days after receipt of
the claim or, if special circumstances require an extension of time, written
notice of the extension shall be furnished to the claimant and an additional 90
days will be considered reasonable) by registered or certified mail of such
denial, written in a manner calculated to be understood by the claimant, setting
forth the following information:
(a) the specific reasons for such denial;
(b) specific reference to pertinent Plan provisions on which the denial is
based;
- - -C- a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary; and
(d) an explanation of the Plan's claim review procedure.
The claimant also shall be advised that the claimant or the claimant's duly
authorized representative may request a review by the Plan Administrator of the
decision denying the claim by filing with the Plan Administrator, within 60 days
after such notice has been received by the claimant, a written request for such
review, and that the claimant may review pertinent documents, and submit issues
and comments in writing within
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the same 60-day period. If such request is so filed, such review shall be made
by the Plan Administrator within 60 days after receipt of such request, unless
special circumstances require an extension of time for processing, in which case
the claimant shall be so notified and a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for review.
The claimant shall be given written notice of the decision resulting from such
review, which notice shall include specific reasons for the decision, written in
a manner calculated to be understood by the claimant, and specific references to
the pertinent Plan provisions on which the decision is based.
10.11 NOTICE OF ADDRESS AND MISSING PERSONS
Each person entitled to benefits under the Plan must file with the Plan
Administrator, in writing, such person's post office address and each change of
post office address. Any communication, statement, or notice addressed to such a
person at the latest reported post office address will be binding upon such
person for all purposes of the Plan and neither the Plan Administrator nor the
Employers, Trustee, or insurance company shall be obliged to search for or
ascertain such person's whereabouts. In the event that such person cannot be
located, the Plan Administrator may direct that such benefit and all further
benefits with respect to such person shall be discontinued, all liability for
the payment thereof shall terminate and the balance in such Member's Account
shall be deemed a forfeiture; provided, however, that in the event of the
subsequent reappearance of the Member or Beneficiary prior to termination of the
Plan, the benefits which were due and payable and which such person missed shall
be paid in a single sum and the future benefits due such person shall be
reinstated in full.
10.12 DATA AND INFORMATION FOR BENEFITS
All persons claiming benefits under the Plan must furnish to the Plan
Administrator or its designated agent such documents, evidence, or information
as the Plan Administrator or its designated agent consider necessary or
desirable for the purpose of administering the Plan; and such person must
furnish such information promptly and sign such documents as the Plan
Administrator or its designated agent may require before any benefits become
payable under the Plan.
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10.13 INDEMNITY FOR LIABILITY
The Company shall indemnify each member of the committee serving as Plan
Administrator against any and all claims, losses, damages, and expenses,
including counsel fees, incurred by the committee and any liability, including
any amounts paid in settlement with the committee's approval, arising from the
member's or committee's action or failure to act, except when the same is
judicially determined to be attributable to the gross negligence or willful
misconduct of such member. The Company shall pay the premiums on any bond
secured under this section and shall be entitled to reimbursement by the other
Employers for their proportionate share.
10.14 EFFECT OF A MISTAKE
In the event of a mistake or misstatement as to the eligibility, participation,
or service of any Member, or the amount of payments made or to be made to the
Trustee or to a Member or Beneficiary, the Plan Administrator shall, if
possible, cause to be withheld or accelerated or otherwise make adjustment of
such amounts of payments as will in its sole judgment result in the Trustee,
Member, or Beneficiary receiving the proper amount of payments under this Plan.
10.15 SELF INTEREST
A member of the committee who is also a Member shall not vote on any question
relating specifically to such person.
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ARTICLE XI. AMENDMENT AND TERMINATION
11.1 AMENDMENT AND TERMINATION
(a) The Company hereby reserves the sole and exclusive right at any time by
action of the Board to amend, modify, or terminate the Plan. The Company's
right of amendment, modification, or termination as aforesaid shall not
require the assent, concurrence, or any other action by any Employer
notwithstanding that such action by the Company may relate in whole or in
part to persons in the employ of an Employer.
(b) While each Employer contemplates carrying out the provisions of the Plan
indefinitely with respect to its Employees, no Employer shall be under any
obligation or liability whatsoever to maintain the Plan for any minimum or
other period of time.
- - -C- Upon any termination of the Plan in its entirety, or with respect to any
Employer, the Company shall give written notice thereof to the Plan
Administrator, the Trustee, and any Employer involved.
(d) Except as provided by law, upon any termination of the Plan, no Employer
with respect to whom the Plan is terminated (including the Company) shall
thereafter have any obligation, liability, or responsibility whatsoever to
make any contribution or payment to the Trust Fund, the Plan, any Member,
any Beneficiary, or any other person, trust, or fund whatsoever, for any
purpose whatsoever under or in connection with the Plan.
(e) The disposition of Before-Tax Contributions Accounts pursuant to
termination of the Plan shall be subject to the provisions of section
6.9(b).
(f) Notwithstanding anything to the contrary, the provisions relating to the
matching contribution or the allocation of forfeitures shall not be amended
more often than once every six months other than to comport with changes in
the Code, ERISA, or the rules promulgated thereunder.
11.2 LIMITATIONS ON AMENDMENTS
The provisions of this Article are subject to and limited by the following
restrictions:
(a) No amendment shall operate either directly or indirectly to give any
Employer any interest whatsoever in any funds or property held by the
Trustee under the terms hereof, or to permit the corpus or income of the
Trust to be used for or diverted to purposes other than the exclusive
benefit of Members or their Beneficiaries.
(b) No such amendment shall operate either directly or indirectly to deprive
any Member of his vested and nonforfeitable interest as of the time of such
amendment.
- - -C- No amendment shall modify the vesting schedule set forth in section 5.2
unless the conditions of section 411(a)(10) of the Code are met.
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11.3 EFFECT OF BANKRUPTCY AND OTHER CONTINGENCIES AFFECTING AN EMPLOYER
In the event an Employer terminates its connection with the Plan, or in the
event an Employer is dissolved, liquidated, or shall by appropriate legal
proceedings be adjudged a bankrupt, or in the event judicial proceedings of any
kind result in the involuntary dissolution of an Employer, the Plan shall be
terminated with respect to such Employer. The merger, consolidation, or
reorganization of an Employer, or the sale by it of all or substantially all of
its assets, shall not terminate the Plan if there is delivery to such Employer
by the Employer's successor or by the purchaser of all or substantially all of
the Employer's assets, of a written instrument requesting that the successor or
purchaser be substituted for the Employer and agreeing to perform all the
provisions hereof which such Employer is required to perform. Upon the receipt
of said instrument, with the approval of the Company, the successor, or the
purchaser shall be substituted for such Employer herein, and such Employer shall
be relieved and released from any obligations of any kind, character, or
description herein or in any trust agreement imposed upon it.
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ARTICLE XII. TOP-HEAVY PROVISIONS
12.1 APPLICATION OF TOP-HEAVY PROVISIONS
(A) SINGLE PLAN DETERMINATION. Except as provided in subsection (b)(2), if as
of a Determination Date, the sum of the amount of the Section 416 Accounts
of Key Employees and the Beneficiaries of deceased Key Employees exceeds 60
percent of the amount of the Section 416 Accounts of all Employees and
Beneficiaries (excluding former Key Employees), the Plan is top-heavy and
the provisions of this Article shall become applicable.
(b) AGGREGATION GROUP DETERMINATION.
(1) If as of a Determination Date this Plan is part of an Aggregation
Group which is top-heavy, the provisions of this Article shall become
applicable. Top-heaviness for the purpose of this subsection shall be
determined with respect to the Aggregation Group in the same manner as
described in subsection (a) above.
(2) If this Plan is top-heavy under subsection (a), but the Aggregation
Group is not top-heavy, the Plan shall not be top-heavy and this
Article shall not be applicable.
- - -C- CALCULATIONS. The Plan Administrator shall have responsibility to make all
calculations to determine whether this Plan is top-heavy.
12.2 DEFINITIONS
(a) "AGGREGATION GROUP" means this Plan and all other plans maintained by the
Employers and nonparticipating Affiliates which cover a Key Employee and
any other plan which enables a plan covering a Key Employee to meet the
requirements of Code section 401(a)(4) or section 410, which shall
constitute a "required aggregation group" within the meaning of Code
section 416(g)(2)(A)(I). In addition, at the election of the Plan
Administrator, the Aggregation Group may be expanded to include any other
qualified plan maintained by an Employer or nonparticipating Affiliate if
such expanded Aggregation Group meets the requirements of Code sections
401(a)(4) and 410. Such expanded aggregation group shall constitute a
"permissive aggregations group" within the meaning of Code section
416(g)(2)(A)(ii).
(b) "COMPENSATION" means the Member's compensation, salaries, and other amounts
received for personal services rendered in the course of employment with
Employers and nonparticipating Affiliates, including those items described
in Treasury regulation section 1.415-2(d)(1).
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- - -C- "DETERMINATION DATE" means the last day of the Plan Year immediately
preceding the Plan Year for which top-heaviness is to be determined or, in
the case of the first Plan Year of a new plan, the last day of such Plan
Year.
(d) "KEY EMPLOYEE" means an Employee, a former Employee or any Beneficiary
thereof if such Employee or former Employee, for the Plan Year containing
the Determination Date or any of the four preceding Plan Years, was--
(1) an officer of an Employer or nonparticipating Affiliate who has annual
Compensation greater than 50 percent of the amount in effect under
Code section 415(b)(1)(A) for such Plan Year; provided, however, that
no more than the lesser of--
(A) 50 Employees, or
(B) the greater of (I) three Employees or (ii) 10 percent of all
Employees,
shall be treated as officers, and such officers shall be those with
the highest annual Compensation in the five-year period;
(2) one of the ten Employees having annual Compensation from all Employers
and nonparticipating Affiliates for such Plan Year greater than the
dollar limit specified in Code section 415(c)(1)(A) and owning both
more than a one-half of 1 percent interest and the largest interests
in an Employer or nonparticipating Affiliate;
(3) a 5-percent owner of an Employer or nonparticipating Affiliate; or
(4) a 1-percent owner of an Employer or nonparticipating Affiliate having
annual Compensation of more than $150,000.
Ownership shall be determined in accordance with Code section
416(I)(1)(B) and (C). For purposes of paragraph (2), if two Employees
have the same ownership interest in an Employer or nonparticipating
Affiliate, the Employee having the greater annual Compensation from
the Employers and nonparticipating Affiliates shall be treated as
having a larger interest. Any Employee who is not a Key Employee shall
be a "non-Key employee" for purposes of applying this Article XII.
(e) "SECTION 416 ACCOUNT" means--
(1) the amount credited as of a Determination Date to a Member's or
Beneficiary's account, under the Plan and under any other qualified
defined contribution plan which is part of an Aggregation Group
(including amounts to be credited as of the Determination Date but
which have not yet been contributed);
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(2) the present value of the accrued benefit credited to a Member or
Beneficiary under a qualified defined benefit plan which is part of an
Aggregation Group; and
(3) the amount of distributions to the Member or Beneficiary during the
five-year period ending on the Determination Date other than a
distribution which is a tax-free Rollover Contribution (or similar
transfer) that is not initiated by the Member or that is contributed
to a plan which is maintained by an Employer or nonparticipating
Affiliate;
reduced by--
(4) the amount of Rollover Contributions (or similar transfers) and
earnings thereon credited as of a Determination Date under the Plan or
a plan forming part of an Aggregation Group which is attributable to a
Rollover Contribution (or similar transfer) accepted after
December 31, 1983, initiated by the Member and derived from a plan not
maintained by an Employer or nonparticipating Affiliate.
The Account of a Member who was a Key Employee and who subsequently meets
none of the conditions of subsection -C- for the Plan Year containing the
Determination Date is not a Section 416 Account and shall be excluded from
all computations under this Article. Furthermore, if a Member has not
performed any services for an Employer or nonparticipating Affiliate during
the five-year period ending on the Determination Date, any account of such
Member (and any accrued benefit for such Member) shall not be taken into
account in computing top-heaviness under this Article.
12.3 MINIMUM CONTRIBUTION
(a) GENERAL. If this Plan is determined to be top-heavy under the provisions of
section 12.1 with respect to a Plan Year, the sum of Employer contributions
(excluding contributions under a salary reduction agreement only for non-
Key Employees) and forfeitures under all qualified defined contribution
plans allocated to the accounts of each Member in the Aggregation Group who
is not a Key Employee and is an Employee on the last day of the Plan Year
shall not be less than 3 percent of such Member's Compensation.
(b) EXCEPTION. The contribution rate specified in subsection (a) shall not
exceed the percentage at which Employer contributions and forfeitures are
allocated under the plans of the Aggregation Group to the account of the
Key Employee for whom such percentage is the highest for the
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Plan Year. For the purpose of this subsection (b), the percentage for each
Key Employee shall be determined by dividing the Employer contributions and
forfeitures for the Key Employee by the amount of the Key Employee's
Compensation for the year.
- - -C- MULTIPLE PLANS. If this Plan is determined to be top-heavy under the
provisions of section 12.1 with respect to a Plan Year, any Member who is a
non-Key Employee covered under this Plan and under a defined benefit plan
maintained by the Employers and nonparticipating Affiliates shall receive a
minimum contribution determined by substituting 5 percent for 3 percent in
applying the provisions of subsection (a). However, no minimum contribution
under this section shall be allocable to any non-Key Employee who
participates in a defined benefit plan maintained by an Employer or
nonparticipating Affiliate and who receives the minimum benefit described
in Code section 416(c)(1) under such defined benefit plan.
12.4 LIMIT ON ANNUAL ADDITIONS: COMBINED PLAN LIMIT
(a) GENERAL. If this Plan is determined to be top-heavy under section 12.1,
section 4.5 of this Plan shall be applied by substituting 1.0 for 1.25 in
applying the provisions of Code section 415(e)(2) and (e)(3).
(b) EXCEPTION. Subsection (a) shall not be applicable if--
(1) section 12.4 is applied by substituting "4 percent" for "3 percent,"
and
(2) this Plan would not be top-heavy if "90 percent" is substituted for
"60 percent" in section 12.1.
- - -C- TRANSITIONAL RULE. If, but for this subsection (c), subsection (a) would
begin to apply with respect to the Plan, the application of subsection (a)
shall be suspended with respect to a Member so long as there are--
(1) no Employer contributions, forfeitures, or voluntary nondeductible
contributions allocated to such Member, and
(2) no accruals under a qualified defined benefit plan for such Member.
12.5 COLLECTIVE BARGAINING AGREEMENTS
The requirements of section 12.3 shall not apply with respect to any Employee
included in a unit of Employees covered by a collective bargaining agreement
between Employee representatives and an Employer or nonparticipating Affiliate
if retirement benefits were the subject of good faith bargaining between such
Employee representatives and such Employer or nonparticipating Affiliate.
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ARTICLE XIII. PARTICIPATION IN AND WITHDRAWAL FROM THE PLAN BY AN EMPLOYER
13.1 PARTICIPATION IN THE PLAN
Any Affiliate which desires to become an Employer hereunder may elect, with the
consent of the Board, to become a party to the Plan and Trust Agreement by
adopting the Plan for the benefit of its Eligible Employees, effective as of the
date specified in such adoption--
(a) by filing with the Company a certified copy of a resolution of its board of
directors to that effect, and such other instruments as the Company may
require; and
(b) by the Company's filing with the then Trustee or insurance company a copy
of such resolution, together with a certified copy of resolutions of the
Board approving such adoption.
The adoption resolution may contain such specific changes and variations in Plan
or Trust Agreement terms and provisions applicable to such adopting Employer and
its Employees as may be acceptable to the Company and the Trustee. However, the
sole, exclusive right of any other amendment of whatever kind or extent to the
Plan or Trust Agreement is reserved by the Company. The Company may not make
specific changes and variations in the Plan or Trust Agreement terms and
provisions as adopted by the Employer in its adoption resolution without the
consent of such Employer. The adoption resolution shall become, as to such
adopting organization and its employees, a part of this Plan as then amended or
thereafter amended and the related Trust Agreement. It shall not be necessary
for the adopting organization to sign or execute the original or then amended
Plan and Trust Agreement documents. The coverage date of the Plan for any such
adopting organization shall be that stated in the resolution or decision of
adoption, and from and after such effective date, such adopting organization
shall assume all the rights, obligations, and liabilities of an individual
employer entity hereunder and under the Trust Agreement. The administrative
powers and control of the Company, as provided in the Plan and Trust Agreement,
including the sole right to amendment, and of appointment and removal of the
Plan Administrator, the Trustee, and their successors, shall not be diminished
by reason of the participation of any such adopting organization in the Plan and
Trust Agreement.
52
<PAGE>
13.2 WITHDRAWAL FROM THE PLAN
Any Employer, by action of its board of directors or other governing authority,
may withdraw from the Plan and Trust Agreement after giving 90 days' notice to
the Board, provided the Board consents to such withdrawal. Distribution may be
implemented through continuation of the Trust Fund, or transfer to another trust
fund exempt from tax under Code section 501, or to a group annuity contract
qualified under Code section 401, or distribution may be made as an immediate
cash payment in accordance with the directions of the Plan Administrator;
provided, however, that no such action shall divert any part of such fund to any
purpose other than the exclusive benefit of the Employees of such Employer.
53
<PAGE>
ARTICLE XIV. MISCELLANEOUS
14.1 BENEFICIARY DESIGNATION
(a) Each unmarried Member may designate, on a form provided for that purpose by
the Plan Administrator, a Beneficiary or Beneficiaries to receive such
Member's interest in the Plan in the event of such Member's death, but such
designation shall not be effective for any purpose until it has been filed
by the Member during the Member's lifetime with the Plan Administrator. The
Member may, from time to time during the Member's lifetime, on a form
approved by and filed with the Plan Administrator, change the Member's
Beneficiary or Beneficiaries.
(b) The Beneficiary of each Member who is married shall be the surviving spouse
of such Member, unless such spouse consents in writing to the designation
of another Beneficiary or Beneficiaries. Each married Member may, from time
to time, change such Member's designation of Beneficiaries; provided,
however, that the Member may not change the Member's Beneficiary without
the written consent of such Member's spouse, unless such spouse's prior
consent expressly permits designations by the Member without any
requirement of further consent by the spouse.
- - -C- In the event that a Member fails to designate a Beneficiary, or if for any
reason such designation shall be legally ineffective, or if all designated
Beneficiaries predecease the Member or die simultaneously with the Member,
distribution shall be made to the Member's spouse; or if none, to the
Member's children in equal shares; or if none, to the Member's parents in
equal shares; or if none, to the Member's estate. If any such Beneficiary
shall die prior to receiving the distribution that would have been made to
such Beneficiary had such Beneficiary's death not occurred, then, for the
purposes of the Plan, the distribution that would have been received by
such Beneficiary shall be made to such Beneficiary's estate.
(d) The written consent described in subsection (b) shall acknowledge the
effect of such election and shall be witnessed by a Plan representative
designated by the Plan Administrator or a notary public.
14.2 INCOMPETENCY
Every person receiving or claiming benefits under the Plan shall be conclusively
presumed to be mentally competent and of age until the Plan Administrator
receives written notice, in a form and manner acceptable to it, that such person
is incompetent or a minor, and that a guardian,
54
<PAGE>
conservator, or other person legally vested with the care of such person's
estate has been appointed. In the event that the Plan Administrator finds that
any person to whom a benefit is payable under the Plan is unable to properly
care for such person's affairs, or is a minor, then any payment due (unless a
prior claim therefor shall have been made by a duly appointed legal
representative) may be paid to the spouse, a child, a parent, a brother, or a
sister, or to any person deemed by the Plan Administrator to have incurred
expense for such person otherwise entitled to payment.
In the event a guardian or conservator of the estate of any person receiving or
claiming benefits under the Plan shall be appointed by a court of competent
jurisdiction, payments shall be made to such guardian or conservator, provided
that proper proof of appointment is furnished in a form and manner suitable to
the Plan Administrator.
To the extent permitted by law, any payment made under the provisions of this
section 14.2 shall be a complete discharge of liability under the Plan.
14.3 NONALIENATION
Except as provided in Code section 401(a)(13) with respect to qualified domestic
relations orders, neither benefits payable at any time under the Plan nor the
corpus or income of the Trust Fund shall be subject in any manner to alienation,
sale, transfer, assignment, pledge, attachment, garnishment, or encumbrance of
any kind. Any attempt to alienate, sell, transfer, assign, pledge, or otherwise
encumber any such benefit, whether presently or thereafter payable, shall be
void. No benefit nor the Trust Fund shall in any manner be liable for or subject
to the debts or liabilities of any Member or of any other person entitled to any
benefit. The Plan Administrator shall establish procedures to determine whether
domestic relations orders are "qualified domestic relations orders" and to
administer distributions under such qualified domestic relations orders.
In no event shall a domestic relations order be treated as a qualified domestic
relations order if it requires the Plan to make payments prior to the date that
a Participant attains earliest retirement age, as defined in Code section
414(p). Notwithstanding the foregoing, the Plan may make a distribution to an
alternate payee prior to the date the Participant attains earliest retirement
age if the qualified domestic relations order provides that the Plan and the
alternate payee may agree in writing to an earlier distribution, and the
distribution is made pursuant to such a written agreement.
55
<PAGE>
14.4 APPLICABLE LAW
The Plan and all rights hereunder shall be governed by and construed in
accordance with the laws of the State of Kansas to the extent such laws have not
been preempted by applicable federal law.
14.5 SEVERABILITY
If a provision of this Plan shall be held illegal or invalid, the illegality or
invalidity shall not affect the remaining parts of the Plan and the Plan shall
be construed and enforced as if the illegal or invalid provision had not been
included in this Plan.
14.6 NO GUARANTEE
Neither the Plan Administrator, the Company, the Employers, nor the Trustee in
any way guarantees the Trust Fund from loss or depreciation nor the payment of
any money which may be or become due to any person from the Trust Fund. Nothing
herein contained shall be deemed to give any Participant, Member, or Beneficiary
an interest in any specific part of the Trust Fund or any other interest except
the right to receive benefits out of the Trust Fund in accordance with the
provisions of the Plan and the Trust.
14.7 MERGER, CONSOLIDATION, OR TRANSFER
In the case of any merger or consolidation of the Plan with, or in the case of
any transfer of assets or liabilities of the Plan to or from, any other plan,
each Member shall receive a benefit immediately after the merger, consolidation,
or transfer (if the Plan had then terminated) which is equal to or greater than
the benefit the Member would have been entitled to receive immediately before
the merger, consolidation, or transfer (if the Plan had then terminated).
14.8 INTERNAL REVENUE SERVICE APPROVAL
It is the intention of the Company to obtain a ruling or rulings by the District
Director of Internal Revenue that--
(a) the Plan, as in effect from time to time, with respect to all Employers,
meets the requirements of Code section 401(a); and
(b) any and all contributions made by the Employers under the Plan are
deductible for income tax purposes under section 404(a) or any other
applicable provisions of the Code.
* * * * * * * * * *
56
<PAGE>
IN WITNESS WHEREOF, New Coleman Holdings Inc. has caused this instrument to be
executed by its duly authorized officers on this 31 day of December, 1995.
NEW COLEMAN HOLDINGS INC.
ATTEST:
By /s/ Kyle Wendt
-----------------------------------
Its Director - Employee Benefits &
Corporate Services
-------------------------------
By /s/ Elizabeth A. Heinemann
-----------------------------
Its Corporate H.R. Assistant
-------------------------
57
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND CONDENSED CONSOLIDATED BALANCE
SHEETS FOUND ON PAGES THREE AND FOUR OF THE COMPANY'S FORM 10-Q FOR THE
YEAR-TO-DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 6,816
<SECURITIES> 0
<RECEIVABLES> 266,203
<ALLOWANCES> 3,863
<INVENTORY> 257,886
<CURRENT-ASSETS> 574,414
<PP&E> 242,468
<DEPRECIATION> 72,791
<TOTAL-ASSETS> 1,019,589
<CURRENT-LIABILITIES> 185,848
<BONDS> 479,395
0
0
<COMMON> 266
<OTHER-SE> 306,224
<TOTAL-LIABILITY-AND-EQUITY> 1,019,589
<SALES> 272,745
<TOTAL-REVENUES> 273,560
<CGS> 192,594
<TOTAL-COSTS> 192,594
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 840
<INTEREST-EXPENSE> 8,081
<INCOME-PRETAX> 23,871
<INCOME-TAX> 8,832
<INCOME-CONTINUING> 15,039
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,039
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
</TABLE>
