<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal year ended DECEMBER 31, 1998
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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2111 E. 37TH STREET NORTH, WICHITA, KANSAS 67219
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 316-832-2700
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
SAME CLASS THE PACIFIC STOCK EXCHANGE
(unlisted trading privileges)
SAME CLASS MIDWEST STOCK EXCHANGE
(unlisted trading privileges)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. X Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ X ]
The aggregate market value of the voting stock of the registrant held by
non-affiliates, based upon the closing sale price of the common stock on April
9, 1999 was approximately $84,524,784.
As of April 9, 1999, there were 55,827,490 shares of the registrant's
common stock outstanding, of which 44,067,520 shares were held by an indirect
wholly-owned subsidiary of Sunbeam Corporation.
Exhibit Index at pages 41 through 48.
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THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
1998 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
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PART I Page
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<S> <C> <C>
Item 1. Business............................................................................ 3
Item 2. Properties.......................................................................... 9
Item 3. Legal Proceedings................................................................... 10
Item 4. Submission of Matters to a Vote of Security Holders................................. 12
PART II
Item 5. Market for Registrant's Common Equity and Related Stock Matters..................... 13
Item 6. Selected Financial Data............................................................. 14
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................................... 15
Item 8. Financial Statements and Supplementary Data......................................... 27
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures.......................................... 28
PART III
Item 10. Directors and Executive officers of the Registrant.................................. 28
Item 11. Executive Compensation.............................................................. 31
Item 12. Security Ownership of Certain Beneficial Owners and Management...................... 37
Item 13. Certain Relationships and Related Transactions...................................... 38
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Report on Form 8-K..................... 41
Signatures.......................................................................... 49
</TABLE>
2
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PART I
ITEM 1. BUSINESS
GENERAL
The Coleman Company, Inc. ("Coleman" or the "Company") is a leading
manufacturer and marketer of consumer products for the worldwide outdoor
recreation market. The Company's products have been sold under the Coleman
brand name since the 1920s. The Company believes its strong market position
is attributable primarily to its well-recognized trademarks, particularly the
Coleman brand name, broad product line, product quality and innovation, and
marketing, distribution and manufacturing expertise.
Coleman is a subsidiary of Coleman Worldwide Corporation ("Coleman
Worldwide"). Coleman Worldwide is an indirect wholly-owned subsidiary of
Laser Acquisition Corp. ("Laser"), an indirect wholly-owned subsidiary of
Sunbeam Corporation ("Sunbeam"). Coleman Worldwide owns 44,067,520 shares of
the common stock of Coleman which represented approximately 79% of the
outstanding Coleman common stock as of December 31, 1998.
On February 27, 1998, CLN Holdings Inc. ("CLN Holdings"), the then
parent company of Coleman Worldwide, and Coleman (Parent) Holdings Inc.
("Parent Holdings"), the then parent company of CLN Holdings, entered into an
Agreement and Plan of Merger (as amended, the "Holdings Merger Agreement")
with Sunbeam and Laser. On March 30, 1998, pursuant to the Holdings Merger
Agreement, CLN Holdings was merged with and into Laser, with Laser continuing
as the surviving corporation and as a wholly-owned subsidiary of Sunbeam (the
"Holdings Merger"). In the Holdings Merger, Parent Holdings received
14,099,749 shares of Sunbeam common stock and $160.0 million in cash in
exchange for all of the outstanding shares of CLN Holdings. As a result of
the Holdings Merger, Sunbeam became the indirect owner of 44,067,520 shares
of Coleman common stock held by Coleman Worldwide (the "Sunbeam
Acquisition"). On August 12, 1998, Sunbeam announced it had entered into a
settlement agreement with Parent Holdings, a subsidiary of MacAndrews &
Forbes Holdings Inc. ("M&F"), in connection with the Holdings Merger (the
"Parent Holdings Settlement Agreement"). The Parent Holdings Settlement
Agreement, subject to the terms of such settlement: (i) released Sunbeam from
certain claims Parent Holdings and its affiliates, including M&F, may have
against Sunbeam arising out of the Sunbeam Acquisition; and (ii) enabled
Sunbeam and its subsidiaries to retain the services of executive personnel
affiliated with Parent Holdings who had previously been involved with
management of Coleman and who had been managing Sunbeam since mid-June of
1998. Pursuant to the Parent Holdings Settlement Agreement, Parent Holdings
received from Sunbeam a five-year warrant (the "Parent Holdings Warrant") to
purchase up to an additional 23 million shares of Sunbeam common stock at an
exercise price of $7.00 per share, subject to anti-dilution provisions.
Coincident with the execution of the Holdings Merger Agreement, the
Company, Sunbeam and Camper Acquisition Corp. ("CAC"), a wholly-owned
subsidiary of Sunbeam, entered into an Agreement and Plan of Merger (the
"Coleman Merger Agreement" and with the Holdings Merger Agreement,
collectively, the "Merger Agreements"), providing that among other things,
CAC will be merged with and into Coleman, with Coleman continuing as the
surviving corporation (the "Coleman Merger"). Pursuant to the Coleman Merger
Agreement, each share of the Company's common stock issued and outstanding
immediately prior to the effective time of the Coleman Merger (other than
shares held indirectly by Sunbeam and dissenting shares, if any) will be
converted into the right to receive (a) 0.5677 of a share of Sunbeam common
stock, with cash paid in lieu of fractional shares, and (b) $6.44 in cash,
without interest. In addition, outstanding stock options of Coleman
immediately vested upon consummation of the Holdings Merger Agreement and
unexercised stock options at the time of the Coleman Merger will be cashed
out by Sunbeam at a price per share equal to the difference between $27.50
per share and the exercise price of such options. In October 1998, Coleman
and Sunbeam entered into a memorandum of understanding to settle, subject to
court approval, certain class actions brought by minority shareholders of
Coleman against Coleman, Sunbeam and certain of their current and former
officers and directors challenging the proposed Coleman Merger. Under the
terms of the proposed settlement, if approved by the court, Sunbeam will
issue to the minority
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shareholders of Coleman five-year warrants to purchase up to 4.98 million
shares of Sunbeam common stock at $7.00 per share, subject to certain
anti-dilution provisions. These warrants will generally have the same terms
as the Parent Holdings Warrant and will be issued when the Coleman Merger is
consummated, which is now expected to occur during the second half of 1999.
There can be no assurance that the court will approve the settlement as
proposed, although such approval is not a condition to the consummation of
the Coleman Merger.
The consummation of the Coleman Merger is contingent upon several
conditions including, among other things, the filing of a registration
statement under the Securities Act of 1933 (the "Securities Act") for the
purpose of registering the shares of Sunbeam common stock to be issued in the
Coleman Merger (the "Registration Statement") and that the Registration
Statement shall have become effective in accordance with the provisions of
the Securities Act. Sunbeam has filed a preliminary Registration Statement
but is uncertain when the Registration Statement will become effective.
However, it is anticipated the Coleman Merger will be completed during the
second half of 1999. Upon consummation of the Coleman Merger, Coleman will
become an indirect wholly-owned subsidiary of Sunbeam. As a result of the
Sunbeam Acquisition, all previous arrangements with Parent Holdings and its
affiliates for the provision of services to Coleman were terminated. See also
"Certain Relationships and Related Transactions--Services Provided by M&F".
The Company has made several acquisitions in recent years designed
to expand its product lines. In 1996, the Company acquired the French company
Application des Gaz ("Camping Gaz") which is a leader in the European camping
equipment market and also acquired the assets of Seatt Corporation ("Seatt"),
a leading designer, manufacturer and distributor of safety and security
products including smoke alarms, thermostats and carbon monoxide detectors.
In 1998, the Company sold Coleman Safety & Security Products, Inc. ("CSS"),
the successor to the assets acquired from Seatt, to Ranco Incorporated of
Delaware ("Ranco"), a wholly-owned subsidiary of Siebe plc. As part of such
sale, the Company also licensed the "Coleman" name and trademark to Ranco for
manufacture and sale at retail by Ranco of certain smoke alarms, carbon
monoxide detectors and other similar products. In 1995, the Company acquired
Sierra Corporation of Fort Smith, Inc. ("Sierra"), a manufacturer of portable
outdoor and recreational folding furniture and accessories and substantially
all of the assets of Active Technologies, Inc. ("ATI"), a manufacturer of
technologically advanced lightweight generators and battery charging
equipment. In 1994, the Company acquired substantially all of the assets of
Eastpak, Inc. and all of the capital stock of M.G. Industries, Inc.
(together, "Eastpak"), a leading designer, manufacturer and distributor of
branded daypacks, sports bags and related products; and substantially all of
the assets of Sanborn Manufacturing Company ("Sanborn"), a manufacturer of a
broad line of portable and stationary air compressors.
The Company also restructured certain operations. In 1994, the
Company completed the restructuring of its German manufacturing operations
(the "German Restructuring"), including selling its plastic cooler business
located in Inheiden, Germany and Loucka, Czech Republic. In 1996, the Company
closed the Brazilian manufacturing operations it had acquired from Metal
Yanes, Ltda. in 1994. In 1997, the Company undertook further restructuring
including (i) exiting various low margin products, including pressure
washers, (ii) closing and relocating certain administrative and sales
offices, and (iii) closing several manufacturing facilities. During 1998, the
Company continued certain restructuring activities originally begun in 1997,
terminated approximately 117 employees in connection with the Sunbeam
Acquisition, closed certain domestic and European facilities and incurred
other costs directly associated with the Sunbeam Acquisition. During 1998,
the Company also sold its portable spa products business.
PRODUCTS AND OPERATIONS
The Company has two primary classes of products, outdoor recreation
and hardware. The Company's principal outdoor recreation products include a
comprehensive line of lanterns and stoves, fuel-related products such as
disposable fuel cartridges, a broad range of coolers and jugs, sleeping bags,
backpacks, daypacks, adventure travel gear, tents, outdoor folding furniture,
portable electric lights, camping accessories and other products. The
Company's principal hardware products include portable generators, and
portable and stationary air compressors. The Company's products are used
predominantly in outdoor
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recreation, but many products have applications in emergency preparedness and
some are also used in home improvement projects and are distributed
predominantly through mass merchandisers, home centers and other retail
outlets.
The Company's operations are managed through five groups: Outdoor
Recreation, Powermate, Eastpak, International and Corporate. The Company's
outdoor recreation products are sold domestically through the Outdoor
Recreation and Eastpak groups, and the hardware products are sold
domestically through Powermate, and both classes of products are sold
throughout the rest of the world through the International group. The
Company's Corporate group provides general and administrative services to all
operating groups and also includes the operation of the Company's retail
stores and the conduct of the Company's licensing activities.
OUTDOOR RECREATION
Coleman's principal Outdoor Recreation products include a
comprehensive line of lanterns and stoves for outdoor recreational use,
fuel-related products such as disposable fuel cartridges, a broad range of
coolers and jugs, sleeping bags, backpacks, tents, outdoor folding furniture,
portable electric lights, camping accessories and other products. These
products are used predominantly in outdoor recreation, but many products have
applications in emergency preparedness and some are also used in home
improvement projects and are distributed predominantly through mass
merchandisers, home centers and other retail outlets. The Company believes it
is the leading manufacturer of lanterns and stoves for outdoor recreational
use in the world. The Company's liquid fuel appliances include single and
dual fuel-powered lanterns and stoves and a broad range of propane- and
butane-fueled lanterns and stoves. These products are manufactured at the
Company's facilities located in the United States and are marketed under the
COLEMAN-Registered Trademark- and PEAK ONE-Registered Trademark- brand names.
The Outdoor Recreation group revenues accounted for approximately 38% of the
Company's total net revenues in 1998.
The Company manufactures and sells a wide variety of insulated
coolers and jugs and reusable ice substitutes, including personal coolers for
camping, picnics or lunch box use; large coolers; beverage coolers for use at
work sites and recreational and social events; and soft-sided coolers. The
Company's cooler products are manufactured predominantly at the Company's
facilities located in the United States and are marketed under the COLEMAN
brand name worldwide. The Company designs, manufactures or sources, and
markets textile products, including tents, sleeping bags, backpacks and
rucksacks. The Company's tents and sleeping bags are marketed under the
COLEMAN and PEAK ONE brand names. The Company manufactures and markets
aluminum- and steel-framed, portable, outdoor, folding furniture under the
COLEMAN and SIERRA TRAILS-Registered Trademark- brand names. These products
are manufactured predominantly at the Company's facilities located in the
United States. The Company designs and markets electric lighting products
that are manufactured by others and sold under the COLEMAN,
POWERMATE-Registered Trademark- and JOB-PRO-Registered Trademark- brand
names. These products include portable electric lights such as hand held
spotlights, flashlights and fluorescent lanterns and a line of rechargeable
lanterns and flashlights. The Company designs, sources and markets a variety
of small accessories for camping and outdoor use, such as cookware and
utensils. These products are manufactured by third-party vendors to Coleman's
specifications and are marketed under the COLEMAN brand name.
POWERMATE
The Company's principal Powermate products include portable
generators and portable and stationary air compressors. The Company is a
leading manufacturer and distributor of portable generators in the United
States. Generators are used for home improvement projects, small businesses,
emergency preparedness and outdoor recreation. These products are
manufactured by the Company at its United States facilities, using engines
manufactured by third parties, are marketed under the COLEMAN
POWERMATE-Registered Trademark- brand name and are distributed predominantly
through mass merchandisers and home center chains. The Company also produces
advanced, light-weight generators incorporating proprietary technology. The
Company's air compressors are manufactured at its facilities located in the
United States, are marketed under the COLEMAN POWERMATE brand name and are
distributed predominantly through mass merchandisers and home center
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chains. The Powermate group revenues accounted for approximately 20% of the
Company's total net revenues in 1998.
EASTPAK
The Company designs, manufactures and distributes book bags,
backpacks and related goods under the EASTPAK-Registered Trademark- and
TIMBERLAND-Registered Trademark- brand names. The Company manufactures the
majority of its products in its plants located in Puerto Rico. The Eastpak
group revenues accounted for approximately 4% of the Company's total net
revenues in 1998.
INTERNATIONAL
The Company's International group is managed through the following
regional subdivisions: (1) Europe (manufacture, sale and distribution of
CAMPINGAZ-Registered Trademark- products and sales and distribution of other
Company products in Europe, Africa and the Middle East); (2) Latin America
(sales and distribution through Latin America of substantially all the
Company's products); (3) Japan (sales and distribution of primarily outdoor
recreation products in Japan); (4) Canada (sales and distribution of
substantially all the Company's products in Canada); and (5) East Asia (sales
and distribution in all areas of East Asia other than Japan of substantially
all the Company's products).
The Company markets a variety of products outside the United States.
While the Company sells many of the same products domestically and
internationally, it also sells products designed specifically to appeal to
foreign markets. The Company, through its foreign subsidiaries, has
manufacturing facilities in France, Italy, and Indonesia, and has sales
administration offices and warehouse and distribution facilities in
Australia, Austria, Belgium, Brazil, Canada, the Czech Republic, France,
Germany, Holland, Hong Kong, Hungary, Indonesia, Italy, Japan, Korea, Mexico,
the Philippines, Portugal, Spain, Switzerland, the United Arab Emirates and
the United Kingdom. Each office is responsible for sales and distribution of
the Company's products in the territories assigned to that office. The
Company's direct export operations market its products directly to
international customers in certain other markets through Company sales
managers, independent distributors, and commissioned sales representatives.
In total, the Company sells its products in more than 100 countries. The
products sold by the international group are sourced from the Company's
manufacturing operations or from vendors primarily located in Asia.
International group revenues accounted for approximately 33% of the Company's
total net revenues in 1998.
SALES AND MARKETING
The following table sets forth net revenues by class of products
for the years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
1998 1997 1996
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(in millions)
<S> <C> <C> <C>
Outdoor Recreation.................. $ 779.0 $ 859.7 $ 859.6
Hardware............................ 236.4 294.6 360.6
---------- ---------- ----------
Total........................... $ 1,015.4 $ 1,154.3 $ 1,220.2
---------- ---------- ----------
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</TABLE>
In the United States and Canada, the Company's outdoor recreation
products are sold by the Company's own sales force and, to a lesser extent,
by sales representatives that serve specialty markets and related
distribution channels. The Company's hardware products are sold by Company
and independent sales representatives that serve specialty markets and
related distribution channels.
The Company promotes its products through national and local
advertising campaigns, frequently coordinating with retailers' promotions to
maximize the benefits of its advertising efforts.
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Foreign sales represented 38%, 34% and 34% of net revenues for the
years ended December 31, 1998, 1997 and 1996, respectively. For 1998,
approximately 82% of the Company's foreign sales were in Europe, Japan and
Canada.
RETAIL AND LICENSING
RETAIL. The Company sells many of its products through its ten
retail outlet stores which are operated under the Camp Coleman-Registered
Trademark- name.
LICENSING. The Company licenses the Coleman name and logo under two
types of licensing arrangements: general merchandise licenses and licenses to
purchasers of businesses divested by the Company. The Company's general
merchandise licensing activities involve licensing the Coleman name and logo,
for a royalty fee, to certain companies that manufacture and sell products
that complement the Company's product lines. Revenues from licensing
activities in 1998 were $6.2 million.
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 unseasonable weather conditions.
RAW MATERIALS/SUPPLIERS
The raw materials used in the manufacture of the Company's products
are available from numerous suppliers in quantities sufficient to meet normal
requirements. The Company's primary raw materials include aluminum, steel,
plastic resin, copper, electrical components, various textiles or fabrics and
corrugated cardboard for cartons. The Company also purchases a number of
finished products. The Company is not dependent upon any single supplier for
a material amount of such sourced products.
COMPETITION
The markets in which the Company operates are generally highly
competitive, based primarily on product quality, product innovation, price
and customer service and support, although the degree and nature of such
competition vary by location and product line. The Company believes that no
other company produces and markets the breadth of outdoor recreation products
marketed by the Company.
Each of the Company's outdoor recreation products is competitive
with various products based upon the product line. Lanterns and stoves
compete with, among others, products offered by Century Primus, American
Camper and Dayton Hudson Corporation, while Desa & Schau and Mr. Heater are
the primary competitors for heaters. The primary competitors for the
Company's portable furniture are a variety of import companies. The Company's
insulated cooler and jug products compete with products offered by Rubbermaid
Incorporated, Igloo Products Corp. and The Thermos Company. The Company's
sleeping bags compete with, among others, American Recreation, Slumberjack,
Academy Broadway Corp. and MZH Inc., as well as certain private label
manufacturers. In the tent market, the Company competes with, among others,
Wenzel, Eureka and Mountain Safety Research, as well as certain private label
manufacturers. The Company's backpack products compete with, among others,
American Camper, JanSport, Nike, Outdoor Products, The North Face and Kelty,
as well as certain private label manufacturers. The Company's competition in
the electric light business includes, among others, Eveready and Rayovac
Corporation. The Company's camping accessories compete primarily with
Coughlan's.
Each of the Company's hardware product lines also competes with
various products. The Company's primary competitors in the generator business
are Generac Corporation, Honda Motor Co., Ltd., Kawasaki and Yamaha. Primary
competitors in the air compressor business include DeVilbiss and Campbell
Hausfeld.
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In addition, the Company competes with various other entities in
international markets.
CUSTOMERS
The Company markets its products through virtually every category of
retailer including mass merchandisers, catalog showrooms, warehouse clubs,
department stores, catalogues, Company-owned outlet stores, hardware stores,
home improvement centers, and drug and grocery stores, as well as independent
distributors and military post exchange outlets. In 1998, the Company sold
products to virtually all of the top 100 U.S. retailers, including
Wal-Mart/Sam's Club, Kmart, Price Costco, Target Stores and Home Depot. The
Company's largest customer, Wal-Mart Stores, Inc. accounted for approximately
16% of sales in 1998. Currently, the Company has the majority of its U.S.
customers' sales on electronic data interchange (EDI) systems.
BACKLOG
The amount of backlog orders at any point in time is not a
significant factor in the Company's business.
PATENTS AND TRADEMARKS
The Company's operations are not significantly dependent upon any
single or related group of patents. While the Company does not believe any
single trademark is material to its business other than the
"Coleman-Registered Trademark-", "Coleman Powermate-Registered Trademark-",
"Campingaz-Registered Trademark-" and "Eastpak-Registered Trademark-"
trademarks, and the "Coleman in parallelogram with lantern symbol" logo mark,
it believes its trademarks taken as a whole are material to its business. The
Company aggressively monitors and protects its interests in all such
trademarks.
The Company holds numerous design and utility patents covering a
wide variety of products, the loss of any one of which would not have a
material adverse effect on the Company's business taken as a whole.
RESEARCH AND DEVELOPMENT
The Company's research and development efforts are linked to the
process of marketing its products. New products and improvements to existing
products are developed based upon the perceived needs and demands of
consumers. The Company's research and development is performed primarily by
an in-house team of marketing managers, engineers, draftsmen and product
testers using tools such as computer-assisted design and a variety of
consumer research techniques. Research and development expenditures are
expensed as incurred. The amounts charged against operations for the years
ended December 31, 1998, 1997 and 1996 were $10.4 million, $11.9 million and
$11.1 million, respectively.
INDUSTRY SEGMENTS, FOREIGN AND DOMESTIC OPERATIONS
Certain information concerning the Company's business and geographic
segments is set forth in Note 18 of the Notes to Consolidated Financial
Statements contained elsewhere in this Form 10-K Annual Report. Coleman has
sales in countries where economic growth has slowed, primarily Japan and
Korea. The economies of other foreign countries important to the Company's
operations could also suffer instability in the future. The following are
among the factors that could negatively affect Coleman's operations in
foreign markets: (1) access to markets; (2) currency devaluation; (3) new
tariffs; (4) changes in monetary policies; (5) inflation; and (6)
governmental instability. See also "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Exposure to Market Risk."
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EMPLOYEES
As of December 31, 1998, the Company had approximately 4,700
full-time and part-time employees of which approximately 3,300 are employed
in the United States. None of the Company's United States employees are
represented by unions. The Company's Canadian warehouse employees are
represented by a union, as are all of the production employees in France and
Italy. The Company has had no material labor-related work stoppages and, in
the opinion of management, relations with its employees are generally good.
ITEM 2. PROPERTIES
The Company's principal properties as of December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
Building
Square Owned/
Location Principal Use Footage Leased
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<S> <C> <C> <C>
UNITED STATES
Kearney, NE Manufacture/assembly of portable generators;
office and warehouse..................................... 155,000 Leased(1)
Lake City, SC Manufacture of sleeping bags................................ 168,000 Owned
Maize, KS Manufacture of propane cylinders Owned/
and machined parts....................................... 232,760 Leased
New Braunfels, TX Manufacture of insulated coolers and other plastic
products................................................ 338,000 Owned
Pocola, OK Manufacture of outdoor folding furniture and warehouse...... 186,000 Owned
Springfield, MN Manufacture of air compressors.............................. 166,000 Owned
Wichita, KS Manufacture of lanterns and stoves and insulated coolers
and jugs; research and development and design
operations; office and warehouse......................... 1,197,000 Owned
Morovis and Orocovis, Manufacture of daypacks, sports bags, and related
Puerto Rico products; office and warehouse........................... 110,000 Leased
INTERNATIONAL
Centenaro di Lonata, Manufacture of butane lanterns, stoves, heaters and
Italy grills; office and warehouse............................. 77,000 Owned
St. Genis Laval, France Manufacture of lanterns and stoves, filling of gas
cylinders, and assembly of grills; office and
warehouse................................................ 2,070,000 Owned(2)
</TABLE>
- ------------
(1) The owned facilities at Kearney, Nebraska reside on land leased under
three leases that expire in 2007 with options to extend each for three
additional ten-year periods.
(2) The warehouse portion of St. Genis Laval, France is leased for terms that
expire in 2004; the remaining facility is owned.
The Company also maintains leased sales and administrative offices
in the United States, Japan, Australia, Belgium, Germany, Hong Kong, Austria,
the Czech Republic, Hungary, the Netherlands, the Philippines, Portugal,
Spain and the United Kingdom, among other sites. The Company leases various
warehouse facilities and/or accesses public warehouse facilities as needed on
a short-term lease basis. The Company also maintains gas filling plants in
Indonesia, the Philippines and the United Kingdom. The Company also leases a
total of 54,927 square feet for the operation of its retail outlet stores.
Company management considers the Company's facilities to be suitable for the
Company's operations, and believes that the Company's facilities provide
sufficient capacity for its production requirements and its operating plans.
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ITEM 3. LEGAL PROCEEDINGS
PRODUCT LIABILITY AND INSURANCE
The Company is party to various product liability lawsuits relating
to its products and incidental to its business. The Company believes that
many of the personal injury and damage claims brought against it arise from
the misuse or misapplication of the Company's products. In such cases, the
Company vigorously defends against such actions. Since the beginning of 1986,
in only one policy period did the Company have a product liability award that
exceeded the individual per occurrence self-insured retention amount and
product liability awards that exceeded the aggregate self-insured retention
amount. There can be no assurance, however, that the Company's future product
liability experience will be consistent with its past experience. The Company
believes that the ultimate conclusion of the various pending product
liability claims and lawsuits of the Company will not have a material adverse
effect on the financial position or results of operations of the Company.
The Company participates in product liability insurance programs
maintained by Sunbeam and reimburses Sunbeam for its allocable share of the
cost of such coverage. Such liability insurance is written on an "occurrence"
basis. An "occurrence" policy generally insures the Company for any claims
made arising from incidents or events which occurred while such insurance
coverage is in effect. Under Sunbeam's product liability insurance coverages,
the Company retains liability in the amount of $2.5 million per occurrence
and $18.0 million in the aggregate for the policy year. The Company believes
this type and level of coverage is adequate. For a discussion of the
Company's policy on accrual of reserves for the self-insured portions of the
risks covered by the insurance programs maintained by Sunbeam, see Notes 1
and 13 of the Consolidated Financial Statements of the Company, which are
included elsewhere in this Form 10-K Annual Report.
ENVIRONMENTAL MATTERS
The operations of Coleman involve the use and disposal of substances
regulated under environmental protection laws. The Company has an
environmental policy intended to ensure the Company operates in compliance
with applicable environmental regulations. The Company does not anticipate
charges to income for environmental liabilities will have a material effect
on the results of operations in a particular year.
The Company accrues environmental remediation costs when it is both
probable that a liability has been incurred and the amount can be reasonably
estimated. Estimated costs, which are based upon experience with similar
sites and technical evaluations, are judgmental in nature and are recorded at
undiscounted amounts without considering the impact of inflation, and are
adjusted periodically to reflect changes in applicable laws or regulations,
changes in available technologies and receipt by the Company of new
information. It is difficult to estimate the ultimate level of future
environmental expenditures due to a number of uncertainties surrounding
environmental liabilities. These uncertainties include the applicability of
laws and regulations, changes in environmental remediation requirements, the
enactment of additional regulations, uncertainties surrounding remediation
procedures including the development of new technologies, the identification
of new sites for which the Company could be a potentially responsible party
("PRP"), information relating to the exact nature and extent of the
contamination at each site and the extent of required clean up efforts, and
the varying costs of alternative remediation strategies.
The Company has recorded reserves for environmental matters which it
believes are adequate based upon facts known to the Company, applicable laws
and regulations, status of remediation efforts, ongoing investigations,
technical evaluations, and individual circumstances related to each site.
10
<PAGE>
GILBERT AND MOSLEY SITE
As a result of investigations undertaken in 1986, the Kansas
Department of Health and Environment ("KDHE") discovered that groundwater in
the Wichita area (the "Gilbert and Mosley Site") was contaminated with
volatile organic compounds ("VOCs"). Coleman occupied a facility within the
boundaries of the Gilbert and Mosley Site. Subsequent investigations in the
area, including investigations in November 1998 by Coleman, indicated the
groundwater beneath the Coleman property is contaminated with VOCs. Coleman
is in the process of remediating the contamination on its property.
The City of Wichita (the "City") has entered into a voluntary
agreement with KDHE in which the City agreed to investigate and then
remediate contamination at the Gilbert and Mosley Site. Coleman has entered
into an agreement with KDHE in which Coleman agreed to perform a similar
study for the Coleman property and to implement remedial activities at its
property. In addition, Coleman entered into an agreement with the City in
which Coleman agreed to fund its proportionate share of the City's study and
remediation of the Gilbert and Mosley Site.
In December 1996, the City completed a preliminary study of the
proportionate share of remediation costs which the City alleges should be the
responsibility of Coleman. The preliminary study proposed an allocation to
Coleman of $7.9 million of site response costs. Coleman disagrees with both
the City's methodology and assumptions as well as with the conclusion of the
City's preliminary study. Since completion of the preliminary study,
additional site investigation work has been performed by the City in an
attempt to design appropriate remedies. The City has submitted its final
remediation proposals to the KDHE in March 1999.
MAIZE SITE
Coleman has undertaken a soil and groundwater investigation at its
facility in Maize, Kansas (the "Maize Site"). Results indicate limited VOCs
contamination is present in the groundwater under and to the southeast of the
facility. The data has been reported to the KDHE, and Coleman has entered
into an agreement with KDHE to implement appropriate remedial actions. The
remediation system has been installed, and Coleman is in the process of
remediating the contaminated groundwater.
NORTHEAST SITE
In 1990, Coleman undertook a soil and groundwater investigation of
its facility in northeast Wichita (the "Northeast Site"). Results indicated
the presence of VOCs in the groundwater and soils. Although some of the
contamination may be a result of Coleman's operations at the facility, the
data also indicated contamination was migrating onto the Coleman property
from upgradient sources. Coleman reported the initial results of its study to
KDHE. Coleman has also provided copies of all data to the United States
Environmental Protection Agency (the "EPA"), at its request. The EPA has not
initiated any actions against the Company with respect to the Northeast Site.
An agreement has been entered into with KDHE to undertake additional
investigatory activities, and an interim remediation system has been
installed.
During 1998, KDHE approved the remedial investigation report
prepared by Coleman and requested Coleman to prepare and submit a remedial
system design to address off-site contamination. Coleman is in the process of
developing the feasibility study which will propose several potential
alternatives for remediating the on-site soil and groundwater contamination
sources and the off-site groundwater contamination resulting from the on-site
sources. In addition, Coleman has revised its estimate for remediation of
on-site soil contamination and off-site groundwater contamination based upon
the results of preliminary ongoing investigations and monitoring procedures.
The Northeast Site is located in an area of Wichita which the KDHE has
designated as the North Industrial Corridor Site ("NIC Site"). The City has
entered into a voluntary agreement with KDHE in which the City agreed to
investigate and then remediate contamination at the NIC Site. In June 1996,
Coleman entered into an agreement with the City in which Coleman agreed to fund
its proportionate share, if any, of the cost to remediate the NIC Site. The City
has not completed its remedial investigation on the NIC Site. In April 1999,
Coleman, along with several other parties, received a demand from the EPA to pay
the EPA's past investigative and oversight cost for a former EPA site which is
now part of the NIC Site. Coleman believes that it has both equitable and legal
defenses to the EPA's demand for payment of these costs and Coleman intends to
defend itself vigorously with respect to the EPA's demand.
11
<PAGE>
LAKE CITY SITE
In 1992, Coleman undertook a soil and groundwater investigation of
its facility in Lake City, South Carolina (the "Lake City Site"). Results
indicated limited VOC and fuel oil contamination in the soil and groundwater.
In both instances, the contamination appeared to relate to activities of a
previous occupant of the Lake City Site. The results of the investigation
were reported to the appropriate South Carolina environmental agency and the
prior owner agreed to take over further site investigations and remediation
actions and reimbursed Coleman for a significant part of Coleman's past costs
related to site investigation.
The Company has not been named as a PRP by the EPA nor does it have
joint and several liability with any other PRP for remediation at any of the
above sites.
J.C. PENNCO SITE
Coleman has been identified as a PRP for the presence of hazardous
substances at the J.C. Pennco Site in San Antonio, Texas. In January 1999,
Coleman agreed to settle its alleged liability with the EPA, and in March
1999, Coleman agreed to settle its alleged liability with the Texas Natural
Resource Conservation Commission.
LITIGATION
Beginning on June 25, 1998, several class action lawsuits were filed
in the Court of Chancery of the State of Delaware by minority stockholders of
Coleman against Coleman, Sunbeam and certain of their current and former
officers and directors. These actions were consolidated into a single class
action lawsuit. The actions allege, among other things, that the
consideration payable to the public stockholders of Coleman in the proposed
Coleman Merger is no longer fair to such stockholders as a result of the
decline in the market price of Sunbeam common stock. In October 1998, Coleman
and Sunbeam entered into a memorandum of understanding to settle, subject to
court approval, the consolidated class action lawsuit. Under the terms of the
proposed settlement, if approved by the court, Sunbeam will issue to the
minority stockholders of Coleman five-year warrants to purchase 4.98 million
shares of Sunbeam common stock at an exercise price of $7.00 per share,
subject to certain anti-dilution provisions. These warrants will generally
have the same terms as the Parent Holdings Warrant and will be issued when
the Coleman Merger is consummated, which is now expected to occur during the
second half of 1999. There can be no assurance that the court will approve
the settlement as proposed, although such approval is not a condition to the
consummation of the Coleman Merger.
OTHER MATTERS
The Company and its subsidiaries are also involved in various
lawsuits arising from time to time which the Company considers to be ordinary
routine litigation incidental to its business. In the opinion of the Company,
the resolution of these routine matters, and of certain matters relating to
prior operations, individually or in the aggregate, will not have a material
adverse effect upon the financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of 1998.
12
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is listed and traded on the New York
Stock Exchange ("NYSE") under the symbol "CLN" and has unlisted trading
privileges on the Midwest Stock Exchange and the Pacific Stock Exchange. The
following table sets forth the high and low sales prices of the Company's
common stock as reported on the New York Stock Exchange Composite Transaction
Tape.
<TABLE>
<CAPTION>
1998 High Low
---- ---- ---
<S> <C> <C>
First Quarter........................... $ 35 9/16 $ 12 1/16
Second Quarter.......................... 31 3/4 10 13/16
Third Quarter........................... 12 8 15/16
Fourth Quarter.......................... 10 3/16 7 7/16
1997
----
First Quarter........................... $ 16 1/8 $ 11 1/2
Second Quarter.......................... 19 1/8 12 7/8
Third Quarter........................... 18 15 3/16
Fourth Quarter.......................... 16 13/16 12 3/8
</TABLE>
As of the close of business on April 9, 1999, there were
approximately 575 holders of record of the Company's common stock.
By letter dated April 6, 1999, Coleman was advised by the NYSE that
Coleman did not meet the continuing listing standards of the NYSE because
Coleman did not have tangible net assets of at least $12.0 million and average
annual net income of at least $0.6 million for fiscal years 1995, 1996 and 1997.
Coleman intends to meet with NYSE officials to discuss presenting a submission
that would support the continued listing of the Company's common stock on the
NYSE.
The Company has not declared a cash dividend on its common stock and
does not anticipate any dividends will be declared on its common stock in the
foreseeable future.
The Company did not sell any unregistered securities during 1998.
13
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data for the years presented in the table
below has been derived from the Consolidated Financial Statements and
includes financial data related to businesses acquired from their respective
dates of acquisition. This information should be read in conjunction with the
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements and the related notes,
which are included elsewhere in this Annual Report on Form 10-K.
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net revenues............................. $ 1,015,373 $ 1,154,294 $ 1,220,216 $ 933,574 $ 751,580
Cost of sales (a)........................ 750,486 840,331 928,497 649,427 535,710
----------- ----------- ----------- ---------- ---------
Gross profit............................. 264,887 313,963 291,719 284,147 215,870
Selling, general and
administrative expenses (a)............ 270,772 266,283 291,669 174,688 128,466
Asset impairment charge (b).............. -- -- -- 12,289 --
Restructuring expense (c)................ -- -- -- -- 18,456
Interest expense, net.................... 33,213 40,852 38,727 24,545 13,374
Amortization of goodwill and
deferred charges....................... 19,584 11,338 10,473 7,745 6,209
Gain on sales of businesses.............. (32,411) -- -- -- --
Other expense, net....................... 170 1,867 1,151 334 1,138
----------- ----------- ----------- ---------- ---------
(Loss) earnings before income taxes,
minority interest and
extraordinary item .................... (26,441) (6,377) (50,301) 64,546 48,227
Income tax expense (benefit) (a)......... 13,846 (5,227) (10,927) 24,479 14,747
Minority interest........................ 276 1,386 1,872 -- --
----------- ----------- ----------- ---------- ---------
(Loss) earnings before
extraordinary item .................... (40,563) (2,536) (41,246) 40,067 33,480
Extraordinary loss on early
extinguishment of debt, net of
income taxes........................... (17,538) -- (647) (787) (677)
----------- ----------- ----------- ---------- ---------
Net (loss) earnings...................... $ (58,101) $ (2,536) $ (41,893) $ 39,280 $ 32,803
----------- ----------- ----------- ---------- ---------
----------- ----------- ----------- ---------- ---------
Basic (loss) earnings
per common share ...................... $ (1.05) $ (0.05) $ (0.79) $ 0.74 $ 0.61
----------- ----------- ----------- ---------- ---------
----------- ----------- ----------- ---------- ---------
Weighted average common
shares outstanding..................... 55,309 53,344 53,197 53,226 53,436
----------- ----------- ----------- ---------- ---------
----------- ----------- ----------- ---------- ---------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1998 1997 1996 1995 1994
------------ ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets............................ $ 933,257 $ 1,041,764 $ 1,160,086 $ 844,487 $ 712,265
Long-term debt
(including current portions).......... 365,535 477,799 583,613 355,257 291,175
Total stockholders' equity.............. 238,615 240,469 252,945 292,342 253,363
</TABLE>
- -------------------
(a) The Company recorded restructuring and other charges totaling $27,932,
$22,501 and $52,516, net of tax for the years ended December 31, 1998, 1997
and 1996, respectively. Cost of sales include pre-tax charges of $1,062,
$19,673 and $44,005; selling, general and administrative expenses include
pre-tax charges of $30,245, $16,746 and $30,195; and the provision for
income tax benefit includes $3,375, $13,918 and $21,684 of net tax benefits
in the years ended December 31, 1998, 1997 and 1996, each respectively,
resulting from these charges.
(b) The asset impairment charge is related to the Company's Brazilian
operations which had not performed to the Company's expectations since the
acquisition of this operation in 1994 and reflects the charge taken in
connection with the adoption of FAS 121.
(c) Restructuring expense reflects primarily the non-recurring charge taken in
connection with the German Restructuring which includes severance costs,
commitments to third parties and write-downs of leasehold improvements and
other assets to estimated realizable values.
14
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements and the related notes, which are included
elsewhere in this Annual Report on Form 10-K.
ACQUISITION OF THE COMPANY
On February 27, 1998, CLN Holdings, the then parent of Coleman
Worldwide, and Parent Holdings, the then parent company of CLN Holdings,
entered into the Holdings Merger Agreement with Sunbeam and Laser. On March
30, 1998, pursuant to the Holdings Merger Agreement, CLN Holdings was merged
with and into Laser, with Laser continuing as the surviving corporation and
as a wholly-owned subsidiary of Sunbeam. In the Holdings Merger, Parent
Holdings received 14,099,749 shares of Sunbeam common stock and $160.0
million in cash in exchange for all of the outstanding shares of CLN
Holdings. As a result of the Holdings Merger, Sunbeam became the indirect
owner of 44,067,520 shares of Coleman common stock held by Coleman Worldwide.
On August 12, 1998, Sunbeam announced that it had entered into a settlement
agreement with Parent Holdings, a subsidiary of M&F, in connection with the
Holdings Merger. The Parent Holdings Settlement Agreement, subject to the
terms of such settlement: (i) released Sunbeam from certain claims Parent
Holdings and its affiliates, including M&F, may have against Sunbeam arising
out of the Sunbeam Acquisition; and (ii) enabled Sunbeam and its subsidiaries
to retain the services of executive personnel affiliated with Parent Holdings
who had previously been involved with management of Coleman and who had been
managing Sunbeam since mid-June of 1998. Pursuant to the Parent Holdings
Settlement Agreement, Parent Holdings received from Sunbeam a five-year
warrant to purchase up to an additional 23 million shares of Sunbeam common
stock at an exercise price of $7.00 per share, subject to anti-dilution
provisions.
Coincident with the execution of the Holdings Merger Agreement, the
Company, Sunbeam and CAC entered into the Coleman Merger Agreement providing
that among other things, CAC will be merged with and into Coleman, with
Coleman continuing as the surviving corporation. Pursuant to the Coleman
Merger Agreement, each share of the Company's common stock issued and
outstanding immediately prior to the effective time of the Coleman Merger
(other than shares held indirectly by Sunbeam and dissenting shares, if any)
will be converted into the right to receive (a) 0.5677 of a share of Sunbeam
common stock, with cash paid in lieu of fractional shares, and (b) $6.44 in
cash, without interest. In addition, outstanding stock options of Coleman
immediately vested upon consummation of the Holdings Merger Agreement, and
unexercised stock options at the time of the Coleman Merger will be cashed
out by Sunbeam at a price per share equal to the difference between $27.50
per share and the exercise price of such options. In October 1998, Sunbeam
and Coleman entered into a memorandum of understanding to settle, subject to
court approval, certain class actions brought by minority shareholders of
Coleman against Coleman, Sunbeam and certain of their current and former
officers and directors challenging the proposed Coleman Merger. Under the
terms of the proposed settlement, if approved by the court, Sunbeam will
issue to the minority shareholders of Coleman five-year warrants to purchase
up to 4.98 million shares of Sunbeam common stock at $7.00 per share, subject
to certain anti-dilution provisions. These warrants will generally have the
same terms as the Parent Holdings Warrant and will be issued when the Coleman
Merger is consummated, which is now expected to be during the second half of
1999. There can be no assurance that the court will approve the settlement as
proposed, although such approval is not a condition to the consummation of
the Coleman Merger.
The consummation of the Coleman Merger is contingent upon several
conditions including, among other things, the filing of the Registration
Statement under the Securities Act, and that the Registration Statement shall
have become effective in accordance with the provisions of the Securities
Act. Sunbeam has filed a preliminary Registration Statement but is uncertain
when the Registration Statement will become effective. However, it is
anticipated the Coleman Merger will be completed during the second half of
1999. Upon consummation of the Coleman Merger, Coleman will become an
indirect wholly-owned subsidiary of Sunbeam.
15
<PAGE>
RESULTS OF OPERATIONS
RESTRUCTURING AND OTHER CHARGES
During 1996, 1997 and 1998, the Company recorded restructuring
charges totaling $66.2 million, $32.8 million and $17.6 million,
respectively. The charges generally relate to integration of operations
following business acquisitions (including costs associated with
consolidation of operations and severance), elimination of product lines,
consolidation and/or rationalization of facilities, severance and employee
termination costs and additional costs related to these activities. There
were no significant operations generated from facilities or assets included
in a restructuring charge since the date of the charge.
In addition to the restructuring charges, the Company recorded other
charges during 1996, 1997 and 1998 totaling $8.0 million, $3.6 million and
$13.7 million, respectively. These charges primarily relate to asset
write-offs and integration expense, but do not meet the criteria to qualify
as restructuring charges. These charges are combined with the restructuring
charges in the following table (dollars in millions).
<TABLE>
<CAPTION>
Idle
Impairment of Inventory Facilities
Fixed and Other Asset Termination and Other
Assets Impairments Costs Exit Costs Total
------- ----------- ------- ---------- -------
<S> <C> <C> <C> <C> <C>
1996 Charges................... $ 10.0 $ 38.3 $ 2.0 $ 23.9 $ 74.2
Activity....................... (1.8) (25.9) (1.6) (12.4) (41.7)
------- ------- ------- ------- -------
Balance at 12/31/96............ 8.2 12.4 0.4 11.5 32.5
1997 Charges................... 6.4 11.0 12.1 6.9 36.4
Activity....................... (6.5) (15.0) (9.7) (9.7) (40.9)
------- ------- ------- ------- -------
Balance at 12/31/97............ 8.1 8.4 2.8 8.7 28.0
1998 Charges................... 1.3 4.0 15.7 10.3 31.3
Activity....................... (1.3) (10.6) (9.8) (15.7) (37.4)
------- ------- ------- ------- -------
Balance at 12/31/98............ $ 8.1 $ 1.8 $ 8.7 $ 3.3 $ 21.9
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
During 1996, the Company recorded restructuring charges of $66.2
million and other charges of $8.0 million. The Company reflected $44.0
million of the charges in cost of sales and $30.2 million in selling, general
and administrative ("SG&A") expenses. The components of the charges are as
follows.
INTEGRATION OF CAMPING GAZ AND COLEMAN - Restructuring charges
totaling $29.1 million were recorded to integrate the Camping Gaz operations.
Actions related to the integration included consolidating facilities,
eliminating duplicate product lines including related inventory and
equipment, and termination of employees. The charges for these actions are
included in the table above as follows: Impairment of Fixed Assets, $9.0
million; Inventory and Other Asset Impairments, $6.5 million; Termination
Costs, $1.8 million; and Idle Facilities and Other Exit Costs, $11.8 million.
The severance and termination costs related to approximately 200 employees,
all of whom had left the Company by December 31, 1996. The severance and
termination costs and other exit costs were cash charges, while the fixed
asset and inventory and other asset impairments resulted in non-cash charges.
The integration actions were substantially complete by December 31, 1998,
with the disposal of an idle warehouse being the only significant remaining
action to be completed. The only significant adjustment recorded to the
original charge was to increase the allowance for the idle warehouse by $1.7
million to $7.9 million. The warehouse remains unsold at December 31, 1998.
EXIT LOW END ELECTRIC PRESSURE WASHER BUSINESS - The Company
recorded restructuring charges totaling $19.0 million to exit the Company's
low end electric pressure washer business. The exit costs included $13.2
million for disposing of inventory and other assets, and $5.8 for other exit
costs. The inventory disposal was substantially complete by December 31,
1997, and resulted in non-cash charges. The other exit costs were
substantially paid by December 31, 1997, and principally resulted in cash
charges. No significant adjustments were made to the original charge in
subsequent periods.
16
<PAGE>
EXIT A PORTION OF BATTERY POWERED LIGHT BUSINESS - Restructuring
charges totaling $18.1 million were recorded to exit a portion of the
Company's battery powered light business during the year as part of a
settlement with another battery powered light manufacturer. The charges
included $12.6 million for inventory and other asset impairments and $5.5
million for other exit costs. Other exit costs include $4.0 million cash
charges to settle litigation with the other battery powered light
manufacturer. The inventory was destroyed and the exit costs were fully paid
by December 31, 1997. No significant adjustments were made to the original
charge in subsequent periods.
OTHER CHARGES - The Company recorded other charges totaling $8.0
million which principally consist of costs to exit portions of certain
products and recognition of quality issues related to these and other
products. The costs do not qualify as restructuring charges, but are included
in the table above since the amounts involved are larger than similar
charges in prior years. These costs are included in the table above as
follows: Impairment of Fixed Assets, $1.0 million; Inventory and Other Asset
Impairments, $6.0 million; Termination Costs, $0.2 million; and Idle
Facilities and Other Exit Costs, $0.8 million.
During 1997, the Company recorded restructuring charges of $32.8
million and other charges of $3.6 million. The Company reflected $19.7
million of the charges in cost of sales and $16.7 million in SG&A expenses.
Significant components of the charges are as follows.
EXIT LOW-MARGIN PRODUCT LINES - The Company recorded restructuring
charges of $15.7 million to eliminate several low-margin product lines
including the remaining pressure washer business and numerous stock keeping
units in the outdoor products business. The majority of these charges relate
to inventory disposals and related actions and are included in the table
above as follows: Impairment of Fixed Assets, $2.1 million; Inventory and
Other Asset Impairments, $10.3 million; Termination Costs, $1.5 million; and
Idle Facilities and Other Exit Costs, $1.8 million. The termination costs and
other exit costs were generally cash charges, while the charges for the
inventory and other assets were generally non-cash charges. The actions to
exit the low-margin product lines were substantially complete by December 31,
1998. The termination costs related to approximately 25 employees, all of
whom had left the Company by December 31, 1997. No significant adjustments
were made to the original charge in subsequent periods.
CLOSE AND RELOCATE CERTAIN ADMINISTRATIVE AND SALES OFFICES - The
Company recorded restructuring and other charges totaling $14.9 million to
close and relocate certain administrative and sales offices during the year.
The locations included corporate, domestic and international facilities and
the majority of the charges related to employee termination benefits. The
charges are included in the table above as follows: Impairment of Fixed
Assets, $1.6 million; Termination Costs, $9.4 million; and Idle Facilities
and Other Exit Costs, $3.9 million. This plan was fully implemented in 1997,
and substantially all of the termination and other exit costs were cash
charges. The termination costs related to approximately 85 employees, all of
whom left the Company by December 31, 1997. The fixed asset impairments
resulted in non-cash charges. An additional charge of approximately $5.3
million was included in the 1998 restructuring charges to add to the employee
termination benefits due to the outcome of related arbitration. The remaining
amount of unpaid termination costs at December 31, 1998 of $4.3 million is
expected to be paid by December 31, 2000.
CLOSE SEVERAL MANUFACTURING FACILITIES - Restructuring charges
totaling $5.8 million were recorded to close two domestic and one
international manufacturing facility in 1997 in order to further consolidate
operations and reduce costs. Costs associated with the closures are included
in the table above as follows: Impairment of Fixed Assets, $2.7 million;
Inventory and Other Asset Impairments, $0.7 million; Termination Costs $1.2
million; and Idle Facilities and Other Exit Costs, $1.2 million. The actions
associated with the facilities closure were substantially complete as of
December 31, 1997, and consisted of cash charges for termination costs and
other exit costs and primarily non-cash charges for asset impairments. The
termination costs related to approximately 415 employees, all of whom left
the Company by December 31, 1997. No significant adjustments were made to the
original charge in subsequent periods.
17
<PAGE>
During 1998, the Company recorded $17.6 million of restructuring
charges and other charges of $13.7 million. The Company reflected $1.1
million of the charges in cost of sales and $30.2 million in SG&A expenses.
Significant components of the charges are as follows.
CLOSE FACILITIES - The Company recorded restructuring charges of
$3.5 million to further consolidate operations and improve efficiency. The
related actions included closing several operations in Europe and one
domestic manufacturing facility during the year. The charges associated with
the closures are included in the table above as follows: Inventory and Other
Asset Impairments, $0.1 million; Termination Costs, $2.6 million; and Idle
Facilities and Other Exit Costs, $0.8 million. The termination costs included
severance benefits for approximately 150 employees, which had been fully paid
to the former domestic employees by December 31, 1998, and will be fully paid
to the European employees by December 31, 2000. The asset impairment charges
are principally non-cash charges and the related actions were generally
completed by December 31, 1998. The other exit costs are primarily non-cash
charges and have generally been paid by December 31, 1998. No additional
charges are anticipated in future periods from the foregoing actions.
EMPLOYEE TERMINATION AND SEVERANCE - The Company recorded
restructuring and other charges totaling $7.9 million following the Sunbeam
acquisition for the termination of 117 employees. The charges, all included
in Termination Costs in the above table, are cash charges which will be fully
paid by December 31, 2000. No additional charges are anticipated in future
periods related to this issue.
REVISE PRIOR YEAR ESTIMATES - The Company recorded restructuring and
other charges totaling $6.2 million as adjustments to charges previously
recorded in 1996 and 1997, due to changes in facts and circumstances related
to the prior years' restructuring issues, including a change in the carrying
value of the idle warehouse identified as part of the integration of Camping
Gaz and Coleman and a change in the termination benefits related to the
closure and relocation of certain administrative and sales offices described
above. The charges are included in the table above as follows: Impairment of
Fixed Assets, $1.1 million; Inventory and Other Asset Impairments, ($0.4)
million; Termination Costs, $5.2 million; and Idle Facilities and Other Exit
Costs, $0.3 million. As indicated above, the idle warehouse remains held for
sale at December 31, 1998, and the additional termination costs are expected
be paid by December 31, 2000.
ACQUISITION OF COLEMAN BY SUNBEAM - The Company recorded other
charges totaling $13.7 million resulting from expenses associated with the
acquisition of the Company by Sunbeam including advisory fees, abandoning a
company-wide enterprise resource computer software system, and terminating a
licensing services agreement with an affiliate of Parent Holdings. These
charges do not qualify as restructuring charges, but are included in the
table above because of the unusual nature of the costs. These charges are
included in the table above as follows: Impairment of Fixed Assets, $0.2
million; Inventory and Other Asset Impairments, $4.3 million; and Idle
Facilities and Other Exit Costs, $9.2 million. No additional charges are
anticipated in future periods related to this issue.
YEAR ENDED DECEMBER 31, 1998 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1997
Net revenues of $1,015.4 million in the year ended December 31, 1998
were $138.9 million or 12.0% less than in the year ended December 31, 1997
with outdoor recreation products revenues decreasing $80.7 million or 9.4%.
The sales decrease occurred in nearly all product categories, primarily
reflecting the effects of the 1997 stock keeping unit ("SKU") reduction
program, softness in demand resulting from the domestic retail channel's
efforts to lower inventory levels, and adverse economic conditions in Japan
and Southeast Asia. The hardware products revenues decrease of $58.2 million
reflects the loss of pressure washer revenues due to exiting this business in
1997 and the loss of CSS revenues in 1998 due to the sale of this business in
March 1998. Excluding the revenues of each of these operations, the hardware
products revenues would show an increase of $33.3 million, or 17.8%, over
comparable 1997 revenues reflecting an increase in generator revenues as a
result of increased storm activity in 1998 which were partially offset by a
decline in compressor revenues. Geographically, United States revenues
decreased $130.4 million, or 17.1%, and foreign revenues decreased $8.5
million, or 2.1%. The United States revenues decrease reflects the loss of
the CSS and pressure washer revenues discussed above. Excluding these
revenues, United States revenues
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would show a decrease of $38.9 million or 6.0%
Gross profit, excluding the impact of restructuring and other
charges of $1.1 million in 1998 and $19.7 million in 1997, which are more
fully described above (see "Restructuring and Other Charges"), decreased as a
percent of sales by 2.7 percentage points to 26.2% in 1998 from 28.9% in
1997. This adjusted gross profit for 1998 reflects the impact of $4.5 million
of charges (in addition to those described above under "Restructuring and
Other Charges") related to writedowns of returned goods inventory and certain
fixed assets related to discontinued SKUs and also a $7.6 million charge
resulting from an increase in the Company's reserves for estimated costs of
environmental remediation efforts resulting from ongoing investigations,
feasibility studies, technical evaluations, and monitoring procedures. Gross
profit in 1998 was also negatively impacted by the effects of product mix
including the loss of the CSS business and lower sales of backpacks and
related products which tend to have higher gross profit percentages than the
Company's average and higher sales of hardware products which tend to have
lower gross profit percentages than the Company's average.
SG&A expenses, excluding the impact of restructuring and other
charges of $30.2 million in 1998 and $16.7 million in 1997, which are more
fully described above, were $240.5 million in 1998 compared to $249.5 million
in 1997, a decrease of $9.0 million which is primarily due to the reduction
in expenses as a result of the sale of CSS in March 1998 offset by increases
in litigation expenses resulting from additional litigation, and costs
incurred to remediate Year 2000 issues.
On March 24, 1998, the Company sold CSS to Ranco for approximately
$95.8 million, net of fees and expenses. In connection with the sale of CSS,
the Company recorded a pre-tax gain of $25.1 million. On October 13, 1998,
the Company sold its portable spa products business ("Spas") to MAAX
Holdings, Inc. for approximately $17.0 million, net of fees and expenses. In
connection with the sale of Spas, the Company recorded a pre-tax gain of $7.3
million.
Interest expense was $33.2 million in 1998 compared with $40.9
million in 1997, a decrease of $7.7 million. The decrease in interest expense
reflects the favorable effects of lower borrowings as the proceeds from the
sales of CSS and Spas were primarily used to reduce outstanding debt and from
improvements in managing working capital.
Amortization of goodwill and deferred charges increased $8.2
million, or 72.7%, primarily as a result of a writeoff of $8.8 million in
goodwill (in addition to the charges described above under "Restructuring and
Other Charges") associated with a review of the Company's European operations
and changes in certain operating strategies following the Sunbeam Acquisition.
The Company recorded a provision for income tax expense of $13.8
million in 1998 compared to a provision for income tax benefit of $5.2
million in 1997. Excluding the tax benefits associated with the restructuring
and other charges of $3.3 million in 1998 and $13.9 million in 1997, the
provision for income tax expense in 1998 was negatively impacted by
nondeductible merger costs and deconsolidation charges whereas the provision
for income tax benefit in 1997 was favorably impacted by foreign operations
and tax rate changes.
Minority interest represents the interest of minority shareholders
in the Company's subsidiary operations in the Philippines, Indonesia, and
Canada.
In March 1998, in connection with the Sunbeam Acquisition, the
Company repaid all outstanding indebtedness under the Company's credit
agreement, primarily with funds borrowed from Sunbeam, and the credit
agreement was terminated. In connection with the termination of this
agreement, the Company recorded an extraordinary loss of $2.0 million which
represents a write-off of the related unamortized financing costs associated
with the credit agreement. In April 1998, as a result of the Sunbeam
Acquisition, the Company repaid the $360.0 million outstanding indebtedness
under the Company's various senior notes, primarily with funds borrowed from
Sunbeam. The $23.4 million of redemption costs in excess of carrying
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value along with the write-off of related unamortized financing costs of $2.7
million and unamortized deferred interest rate swap losses of $0.9 million
are reflected as extraordinary loss on early extinguishment of debt. The
total $29.0 million of charges were reduced by $11.5 million of tax benefits
for a net after-tax charge of $17.5 million or $0.32 per share.
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1996
Net revenues of $1,154.3 million in 1997 were $65.9 million or 5.4%
less than in 1996 with outdoor recreation products unchanged at $859.7
million and hardware products decreasing $66.0 million or 18.3%. The outdoor
recreation products revenues were adversely affected by (i) a restructuring
program which eliminated certain low margin SKUs, (ii) lower sales in Japan
and Korea due to weak market conditions, and (iii) a program to reduce
wholesaler inventories in Japan; however, growth in the core products outside
of Japan and Korea offset these declines. Hardware products revenues
decreased due to the Company's decision to exit the pressure washer business
and lower generator sales resulting from fewer storms on the East Coast of
the United States in the second half of 1997. Geographically, United States
revenues decreased $44.2 million, or 5.5%, due to lower hardware product
sales while foreign revenues decreased $21.7 million, or 5.2%, primarily
related to lower sales in Japan and Korea. Results in the 1996 period include
the Camping Gaz operations from the date of acquisition.
The gross profit percentage of 28.9%, excluding the impact of
restructuring and other charges which are more fully described above (see
"Restructuring and Other Charges"), increased from 27.5% in 1996. The
improvement was driven by increased demand for higher margin products and the
elimination of certain low margin SKUs.
SG&A expenses, excluding the impact of restructuring and other
charges which are more fully described above, were $249.5 million in 1997
compared to $261.5 million in 1996, a decrease of 4.5%. The inclusion of a
full twelve months of Camping Gaz SG&A costs in the 1997 period increased
SG&A expenses; however, these increases were more than offset by benefits
resulting from the integration of Camping Gaz operations and the
restructuring initiatives.
Interest expense was $40.9 million in 1997 compared with $38.7
million in 1996, an increase of $2.2 million. This increase was a result of
the effects of higher interest rates on the Company's variable rate debt
partially offset by the favorable effects of lower borrowings in 1997
resulting from the Company's working capital management programs.
The Company recorded income tax benefits of $5.2 million in 1997 and
$10.9 million in 1996, which includes the net tax benefits of $13.9 million
in 1997 and $21.7 million in 1996 associated with restructuring and other
charges discussed above. Excluding the net tax benefits from the
restructuring and other charges, the provision for income tax expense would
have been $8.7 million or 28.9% of pre-tax earnings in 1997 as compared to a
provision for income tax expense of $10.8 million or 45.0% of pre-tax
earnings in 1996. This decrease is primarily due to the impact of increased
foreign tax rates on deferred tax assets and increased foreign earnings at
lower tax rates.
Minority interest in the 1997 period reflects the minority interests
in certain subsidiary operations acquired with the Camping Gaz business. On
March 1, 1996, the Company acquired control of approximately 70% of Camping
Gaz and in early July 1996 obtained control of the remaining 30% of Camping
Gaz and, accordingly, in the 1996 period, minority interest reflects the
minority shareholders' approximate 30% proportionate share of the results of
operations of Camping Gaz for the period March through June of 1996 and also
includes interests of other minority shareholders in certain subsidiary
operations acquired with the Camping Gaz business.
In 1996, in connection with the renegotiation of its credit
agreement, the Company recorded an extraordinary loss of $1.1 million ($0.6
million net of tax) which represented a write-off of the related unamortized
financing costs associated with its then existing credit agreement.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities provided $27.6 million and $91.2
million of cash during the years ended December 31, 1998 and 1997,
respectively. The decrease in cash provided by operating activities in 1998
as compared to 1997 is primarily attributable to the increase in the
Company's net loss in 1998 as compared to 1997. The Company's capital
expenditures were $23.7 million and $27.0 million during the years ended
December 31, 1998 and 1997, respectively. For 1999, the Company expects
capital expenditures to be within the range of $25.0 million to $30.0 million.
During 1998, the $49.7 million of proceeds from stock option
exercises along with $365.1 million of borrowings from Sunbeam and the
proceeds from the sales of CSS and Spas and sales of fixed assets of $117.8
million of cash were used to, among other things, (i) repay $116.0 million
outstanding indebtedness under the Company's credit agreement, (ii) redeem
the Company's various senior notes at a cost of $383.4 million, and (iii)
fund the Company's operating activities and capital expenditures.
The Company's uses of cash for 1999 are expected to be primarily for
working capital and capital expenditure requirements. The Company's ability to
meet its current cash operating requirements, including projected capital
expenditures and other obligations, is dependent upon a combination of cash
flows from operations and advances or loans to the Company from Sunbeam or its
affiliates. Sunbeam has informed the Company that it has the positive intent and
ability to fund the Company's cash requirements through April 10, 2000. Amounts
loaned by Sunbeam are represented by a promissory note (the "Intercompany Note")
which totaled $365.1 million at December 31, 1998 and, until the amendment and
restatement of the Intercompany Note described below, were due on demand. For
1998, the Intercompany Note bore interest at a floating rate equal to the
weighted average interest rate incurred by Sunbeam on its outstanding
convertible debt and borrowings under its bank credit facility which during the
year ended December 31, 1998 was 7.1%. Coleman is a borrower under Sunbeam's
credit facility (the "Sunbeam Credit Facility") for purposes of letters of
credit borrowings.
On April 15, 1999, Coleman, Sunbeam and, as to certain agreements, the
lenders under the Sunbeam Credit Facility entered into an amended and restated
Intercompany Note (the "Amended Intercompany Note"), intercompany security and
pledge agreements, an amendment to the Sunbeam Credit Facility and certain other
agreements (collectively, the "Agreements"). The Amended Intercompany Note is
due April 15, 2000. The Amended Intercompany Note bears interest at an annual
rate equal to (x) 4% if the six month London Interbank Offering Rate ("LIBOR")
quoted on the Telerate system is less than 6%, or (y) 5% if the six month LIBOR
quoted on the Telerate system is 6% or higher, subject to increases during an
event of default, and interest will be payable by adding the amount of such
interest to the principal balance of the Amended Intercompany Note. In addition,
the Amended Intercompany Note provides that an event of default under the
Sunbeam Credit Facility will constitute an event of default under the Amended
Intercompany Note and that in certain circumstances the payment on the Amended
Intercompany Note will be subordinate to Coleman's obligations under the Sunbeam
Credit Facility. Pursuant to the Agreements, Coleman has pledged to Sunbeam all
of its domestic assets, other than its real property, including 66% of the stock
of its domestic holding companies for its foreign subsidiaries and all of the
stock of its other domestic subsidiaries (but Coleman's subsidiaries have not
pledged their assets or stock of their subsidiaries), as security for the
Amended Intercompany Note. Sunbeam has pledged the Amended Intercompany Note as
security for the Sunbeam Credit Facility and assigned to such lenders the
security pledged by Coleman for the Amended Intercompany Note.
The Sunbeam Credit Facility provides for a revolving credit facility in
an aggregate principal amount of up to $400.0 million (subject to certain
reductions) maturing March 31, 2005. In addition, pursuant to the Sunbeam Credit
Facility, Sunbeam has borrowed approximately $1,262.5 million in two tranches of
term loans with scheduled repayments through maturity on March 31, 2005. As a
result of Sunbeam's operating losses during 1998, Sunbeam was not in compliance
with the financial covenants contained in the Sunbeam Credit Facility. In April
1999, Sunbeam and its lenders entered into an amendment to the Sunbeam Credit
Facility which amended and added certain financial covenants and waived
compliance with certain other financial covenants through April 10, 2000. At the
end of November 1998, approximately $277.0 million was available to the Company
under the Sunbeam Credit Facility either through letters of credit borrowings or
loans from Sunbeam. In addition, at the same time, Sunbeam's cash balance
available for debt repayment was approximately $22.0 million.
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<PAGE>
Borrowings under the Sunbeam Credit Facility are secured by a pledge
of the stock of certain of Sunbeam's subsidiaries and by a security interest
in substantially all of the assets of Sunbeam and its material subsidiaries
(other than as described below, Coleman and its subsidiaries), including the
Amended Intercompany Note. Sunbeam has pledged its shares of Coleman common
stock and its shares of Sunbeam Corporation (Canada) Limited ("Sunbeam
Canada") common stock (see "Certain Relationships and Related
Transactions--Business Acquisitions") owned by it as security under the
Sunbeam Credit Facility. In addition, borrowings under the Sunbeam Credit
Facility are guaranteed by certain of Sunbeam's wholly owned material United
States subsidiaries (but not Coleman) and such subsidiary guarantees are
secured as described above. Coleman has pledged its inventory (but not that
of its subsidiaries) and the proceeds from the sale of such inventory as
collateral for its letter of credit borrowings under the Sunbeam Credit
Facility.
The Sunbeam Credit Facility contains covenants customary for credit
facilities of a similar nature, and events of default customary for
transactions of this type. The Sunbeam Credit Facility requires that the
registration statement for the shares of Sunbeam common stock to be issued in
the Coleman Merger be declared effective by October 30, 1999, and that the
Coleman Merger be consummated no more than 25 business days after such
registration statement is declared effective. Sunbeam is also required to
maximize its subsidiaries' utilization of available foreign credit facilities
and Sunbeam's accounts receivable facility and to comply with specified
financial covenants and ratios. If an event of default occurs under the
Sunbeam Credit Facility or Sunbeam is unable to obtain a waiver or amendment
of certain financial covenants after April 10, 2000, the Company may be
required to reduce, delay or cancel capital or other expenditures and/or seek
loans or capital contributions from, or sell assets or capital stock to,
lending institutions and/or other third parties or affiliates. There can be
no assurance that any of such transactions could be consummated or if
consummated, would be on favorable terms or in amounts sufficient to permit
the Company to meets its cash requirements, or that any of such transactions
would be permitted under Sunbeam's debt instruments then in effect. See Note
13 to the Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-K.
The Company also maintains short-term bank lines of credit
aggregating approximately $76.4 million of which approximately $45.8 million
was outstanding at December 31, 1998. The weighted average interest rate for
amounts borrowed under these short-term lines was approximately 2.8% at
December 31, 1998. The Company also utilizes letters of credit which
aggregated approximately $40.6 million at December 31, 1998.
EXPOSURE TO MARKET RISK
QUALITATIVE INFORMATION
Coleman uses a variety of derivative financial instruments to manage
its foreign currency and interest rate exposures. Coleman 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. See also Note 11 to the Consolidated Financial
Statements, which are included elsewhere in this Form 10-K Annual Report.
22
<PAGE>
The Company's international operations are located primarily in
Europe, Japan and Canada, which are not considered to be highly inflationary
environments. 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. Coleman is most vulnerable to
changes in United States dollar/Japanese yen (JPY), United States
dollar/Canadian dollar, United States dollar/German Deutschemark (DM), and
United States dollar/British Pound (GBP) exchange rates.
The Company's interest income and expense are most sensitive to
changes in the general level of U.S. interest rates. In this regard, changes
in U.S. interest rates affect the interest earned on the Company's cash
equivalents and short-term investments as well as interest paid on its debt.
To mitigate the impact of fluctuations in U.S. interest rates, the Company
maintains a portion of its debt as fixed rate in nature by entering into
interest rate swap transactions.
Coleman manages credit risk related to its derivative instruments
through credit approvals, exposure limits, threshold amounts and other
monitoring procedures.
QUANTITATIVE INFORMATION
Set forth below are tabular presentations of certain information
related to Coleman's investments in market risk sensitive instruments. All of
the instruments set forth in the following tables have been entered into by
Coleman for purposes other than trading.
INTEREST RATE SENSITIVITY. The table below provides information
about Coleman's derivative financial instruments and other financial
instruments that are sensitive to changes in interest rates, including
interest rate swaps and debt obligations.
For debt obligations, the table presents principal cash flows by
expected maturity date and related December 31, 1998 weighted average
interest rates. For interest rate swaps, the table presents notional amounts
and weighted average interest rates for the contracts at December 31, 1998.
Notional amounts are used to calculate the contractual payments to be
exchanged under the contracts.
<TABLE>
<CAPTION>
EXPECTED MATURITY DATE
BALANCE -----------------------------------------------------------
AT THERE- FAIR
12/31/98 1999 2000 2001 2002 2003 AFTER TOTAL VALUE
-------- ------ ----- ----- ---- ---- ------- ------ -----
(US$ EQUIVALENT IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LONG-TERM DEBT
Fixed Rate................. $ 0.5 $ 0.1 $ 0.2 $ 0.1 $ 0.1 $ -- $ -- $ 0.5 $ 0.5
Average Interest Rate...... 2.91%
INTEREST RATE DERIVATIVES
Interest Rate Swaps:
Variable to Fixed (US$).. $ 25.0 $ -- $ -- $ -- $ -- $25.0 $ -- $ 25.0 $(0.9)
Average Pay Rate......... 6.12%
Average Receive Rate..... 5.08%
</TABLE>
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<PAGE>
EXCHANGE RATE SENSITIVITY. The table below provides information
about Coleman's foreign currency derivative financial instruments and other
financial instruments, including forward exchange agreements, by functional
currency and presents such information in U.S. dollar equivalents. The table
summarizes information on instruments and transactions that are sensitive to
foreign currency exchange rates, including foreign currency variable rate
credit lines, foreign currency forward exchange agreements and foreign
currency purchased put option contracts. For debt obligations, the table
represents principal cash flows and related weighted average interest rates
by expected maturity dates. For foreign currency forward exchange agreements
and foreign currency put option contracts, the table presents the notional
amounts and weighted average exchange rates by expected (contractual)
maturity dates. These notional amounts generally are used to calculate the
contractual payments to be exchanged under the contract.
<TABLE>
<CAPTION>
BALANCE
AT FAIR
12/31/98 (1) VALUE
------------- ----------
(US$ EQUIVALENT IN MILLIONS)
<S> <C> <C>
FOREIGN CURRENCY SHORT-TERM DEBT
Variable Rate Credit Lines (Europe, Japan and Asia)........................... $ 45.8 $ 45.8
Weighted Average Interest Rate................................................ 2.8%
FORWARD EXCHANGE AGREEMENTS
(Receive US$/Pay DM)
Contract Amount............................................................. $ 12.0 $12.2
Average Contractual Exchange Rate........................................... 1.62
(Receive US$/Pay JPY)
Contract Amount............................................................. $ 15.1 $14.5
Average Contractual Exchange Rate........................................... 116.11
(Receive US$/Pay GBP)
Contract Amount............................................................. $ 4.0 $4.1
Average Contractual Exchange Rate........................................... .60
PURCHASED PUT OPTION AGREEMENTS
(Receive US$/Pay DM)
Contract Amount............................................................. $ 18.4 $0.1
Average Strike Price........................................................ 1.80
(Receive US$/Pay JPY)
Contract Amount............................................................. $ 12.4 $0.2
Average Strike Price........................................................ 125.0
(Receive US$/Pay GBP)
Contract Amount............................................................. $ 1.5 $0.0
Average Strike Price........................................................ .62
</TABLE>
- -----------
(1) None of the instruments listed in the table have maturity dates beyond 1999.
SEASONALITY
The Company's sales generally are the strongest in the second
quarter of the year and weakest 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 unseasonable weather conditions. For
the years ended December 31, 1998, 1997 and 1996, second quarter sales
comprised approximately 32%, 33% and 37% of annual sales, respectively.
YEAR 2000 READINESS DISCLOSURE
The Company is continuing the process of assessing the impact of the
Year 2000 on its operations. The Company is being assisted in its review and
remediation work by Sunbeam's Year 2000 Program Management Office and
consulting firms employed by Sunbeam. The Company has completed an inventory
of its hardware and software systems, manufacturing equipment, electronic
data interchange telecommunications and other technical assets potentially
subject to Year 2000 problems, such as security and telephone systems and
controls for lighting, heating, ventilation and facility access.
Additionally, the
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<PAGE>
Company is assessing the effects of noncompliance by its vendors, service
providers, customers and financial institutions.
The Company relies on its information technology functions to
perform many tasks that are critical to its operations. Significant
transactions that could be impacted by Year 2000 noncompliance include, among
others, purchases of materials, production management, order entry and
fulfillment, and payroll processing. Systems and applications that have been
identified by the Company to date as not currently Year 2000 compliant that
are critical to the Company's operations include certain of its financial
software systems, which process the order entry, purchasing, production
management, general ledger, accounts receivable, and accounts payable
functions, and critical applications in the Company's manufacturing and
distribution facilities.
The Company's corrective work to achieve Year 2000 compliance has
included the following: (i) installation of Year 2000 compliant JD Edwards
software which has recently been completed in one location and is scheduled
to be completed in another location in September of 1999; (ii) the
installation of current Year 2000 compliant JBA software in one location
which is scheduled to be completed by July 1999; and (iii) remediation of
software codes for existing programs in another location which is scheduled
to be completed by July of 1999. The Company has identified one of these
locations as possessing significant Year 2000 issues. Coleman's failure to
complete a timely conversion of this location to a Year 2000 compliant system
could have a material impact on the Company's operations. Management believes
that, although there are significant systems that are being or will be
modified or replaced, Coleman's information systems environment will be made
Year 2000 compliant prior to January 1, 2000.
As of December 31, 1998, the Company had expended approximately $3.5
million related to remediation of Year 2000 issues, of which approximately
$2.8 million was recorded as SG&A expenses and the remainder as capital
expenditures. The Company's preliminary assessment of the total costs to
address and remedy Year 2000 issues is approximately $12.0 million. This
estimate includes the costs of software and hardware modifications and
replacements, and fees to third party consultants, but excludes the costs
associated with Company employees. The Company expects these expenditures to
be financed through operating cash flows or borrowings, as applicable. There
can be no assurance that these preliminary estimates will not change as the
Company completes its assessment of the Year 2000 issues.
With the exception of certain aspects of the Company's Year 2000
readiness program, the Company did not engage an independent third party to
verify the program's overall approach or total cost. However, the Company
believes that through its use of various external consulting firms which
perform significant roles within the program, the Company's exposure in this
regard is mitigated. In addition, through the use of external third party
diagnostic tools which helped to identify potential Year 2000 issues in the
software code which the Company is remediating, the Company believes that it
has also mitigated its risk by validating and verifying key program
components.
The Company has contacted its major vendors and suppliers of
products and services to determine their Year 2000 readiness, and is
continuing to monitor their status with respect to such plans. This review
includes third party providers to whom the Company has outsourced the
processing of its cash receipt and cash disbursement transactions and its
payroll. The Company is currently assessing the vendor responses and will
conduct additional reviews, including on-site meetings, if deemed necessary,
with any major suppliers who have not indicated their readiness for the Year
2000. The failure of certain of these third party suppliers to become Year
2000 compliant could have a material adverse impact on the Company. The
Company will also contact its customers to determine if they are prepared for
Year 2000 issues. Their failure to evaluate and prepare for Year 2000 issues
could have a material adverse effect on Coleman's operations.
The Company plans to establish a contingency plan for addressing any
effects of the Year 2000 on its operations, whether due to noncompliance of
the Company's systems or those of third parties. The Company expects to
complete such contingency plan by September 30, 1999 and expects that such
contingency plan will include an analysis of the Company's worst case
scenario and will address alternative
25
<PAGE>
processes, such as manual procedures to replace those processed by
noncompliant systems, potential alternative service providers, and plans to
address compliance issues as they arise. At this time, the Company believes
that the most likely "worst-case" scenario relating to Year 2000 issues
generally involves potential disruptions in areas in which the Company's
operations must rely on vendors, suppliers and customers whose systems may
not work properly after January 1, 2000. While such failures could either
directly or indirectly affect important operations of the Company and its
subsidiaries in a significant manner, the Company cannot at present estimate
either the likelihood or the potential cost of such failures. However,
subject to the nature of the systems and applications of the Company or third
parties which are not made Year 2000 compliant, the impact of such
non-compliance on the Company's operations could be material if appropriate
contingency plans cannot be developed prior to January 1, 2000.
Because Year 2000 readiness is critical to the business, the Company
has redeployed some resources from non-critical system enhancements to
address Year 2000 issues. In addition, due to the importance of information
systems to the Company's business, management has deferred
non-mission-critical systems enhancements as much as possible. The Company
does not expect these redeployments and deferrals to have a material impact
on the Company's financial condition or results of operations.
EURO CONVERSION
On January 1, 1999, certain member countries of the European Union
established fixed conversion rates between their existing currencies and the
European Union's common currency (the "Euro"). The transition period for the
introduction of the Euro is between January 1, 1999 and January 1, 2002. The
Company has been preparing for the introduction of the Euro and continues to
evaluate and address the many issues involved, including the conversion of
information technology systems, recalculating currency risk, strategies
concerning continuity of contracts, and impacts on the processes for
preparing taxation and accounting records. Based on the work to date, the
Company believes the Euro conversion will not have a material impact on its
results of operations.
INFLATION
In general, manufacturing costs are affected by inflation and the
effects of inflation may be experienced by the Company in future periods.
Management believes, however, that such effects have not been material to the
Company during the past three years.
CAUTIONARY STATEMENTS
Certain statements in this Annual Report on Form 10-K may constitute
"forward looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995, as the same may be amended from time to time
(the "Act") and in releases made by the Securities and Exchange Commission
("SEC") from time to time. Such forward looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward looking statements. Statements that are not
historical facts, including statements about the Company's beliefs and
expectations, are forward looking statements. Forward looking statements can
be identified by, among other things, the use of forward looking language,
such as "believe," "expects," "estimates", "projects", "may," "will,"
"should," "seeks," "plans," "scheduled to," "anticipates" or "intends" or the
negative of those terms, or other variations of those terms or comparable
language, or by discussions of strategy or intentions. Forward looking
statements speak only as of the date they are made, and the Company
undertakes no obligation to update them. These forward looking statements
were based on various factors and were derived utilizing numerous important
assumptions and other important factors that could cause actual results to
differ materially from those in the forward looking statements. These
cautionary statements are being made pursuant to the Act, with the intention
of obtaining the benefits of the "Safe Harbor" provisions of the Act. The
Company cautions investors that any forward looking statements made by the
Company are not guarantees of future performance. Important assumptions and
other important factors that could cause actual
26
<PAGE>
results to differ materially from those contained in the forward looking
statements with respect to the Company include, but are not limited to risks
associated with:
- high leverage,
- Sunbeam having sufficient borrowing capacity or other funds to lend
to the Company to satisfy the
Company's cash needs,
- unavailability of sufficient cash flows from operations and
borrowings from Sunbeam, and the inability of the Company to secure
loans or capital contributions from, or sell assets or capital
stock to, lending institutions and/or other third parties or
affiliates,
- Sunbeam's ability to comply with the terms of the Sunbeam Credit
Facility, and to continue to have access to its revolving credit
facility,
- Coleman's ability to maintain and increase market shares for its
products at acceptable margins,
- Coleman's ability to successfully introduce new products and to
provide on-time delivery and a satisfactory level of customer
service,
- changes in domestic and/or foreign laws and regulations, including
changes in tax laws, accounting standards, environmental laws,
occupational, health and safety laws,
- access to foreign markets together with foreign economic and
political conditions, including currency fluctuations, and trade,
monetary, fiscal and/or tax policies,
- uncertainty as to the effect of competition in existing and
potential future lines of business,
- fluctuations in the cost and/or availability of raw materials and/or
products,
- changes in the availability and/or costs of labor,
- effectiveness of advertising and marketing programs,
- product quality, including excess warranty costs, product liability
expenses and costs of product recalls,
- weather conditions which are adverse to the specific businesses of
Coleman,
- the possibility of a recession in the United States or other
countries resulting in a decrease in consumer demands for Coleman's
products,
- ability of third party service providers that have been engaged to
provide services such as factory maintenance and certain back
office administrative services to timely and accurately provide
their services to the Company,
- changes in consumer preferences or a decrease in the public's
interest in camping and related activities,
- combinations or other actions by retail customers that adversely
affect sales or profitability,
- actions by competitors including business combinations, new product
offerings and marketing and promotional activities,
- failure of Coleman and/or its customers and suppliers of goods or
services to timely complete the remediation of computer systems to
effectively process Year 2000 information, and
- any material error in evaluating levels of retail inventories and
the related impact on operations of changes therein.
Other factors and assumptions not included in the foregoing may
cause the Company's actual results to materially differ from those projected.
The Company assumes no obligation to update any forward looking statements or
these cautionary statements to reflect actual results or changes in other
factors affecting such forward looking statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the consolidated financial statements listed in the accompanying
List of Financial Statements and Schedules on Page F-1 herein. Information
required by schedules called for under Regulation S-X is either not
applicable or is included in the consolidated financial statements or notes
thereto.
27
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
The name, age, present principal occupation or employment, five-year
employment history, selected biographical information, and period of service
as a director of the Company of each of the current directors of the Company
are set forth below.
Jerry W. Levin, age 54, was appointed Chief Executive Officer and a
Director of the Company in June 1998, and as Chairman of the Board on August
31, 1998. Mr. Levin was elected Chairman of the Board of Directors of Sunbeam
in March 1999, and has been Chief Executive Officer, President and a Director
of Sunbeam since June 1998. Mr. Levin previously held the position of
Chairman and Chief Executive Officer of Coleman from February 1997 until its
sale in March 1998. Mr. Levin was also the Chairman of Coleman from 1989 to
1991. Mr. Levin was Chairman of the Board of Revlon, Inc. from November 1995
until June 1998, Chief Executive Officer of Revlon, Inc. from 1992 until 1997
and President of Revlon, Inc. from 1992 until November 1995. Mr. Levin has
been Executive Vice President of M&F since March 1989. For 15 years prior to
joining M&F, Mr. Levin held various senior executive positions with the
Pillsbury Company. Mr. Levin is also a member of the Boards of Directors of
Ecolab, Inc., U.S. Bancorp, Meridian Sports Incorporated and Revlon, Inc. For
a description of certain arrangements entered into by Sunbeam and M&F
relating to the appointment of Mr. Levin as an officer of Sunbeam, see
"Certain Relationships and Related Transactions--Services Provided by M&F".
M&F owns approximately 14% of the outstanding common stock of Sunbeam.
Paul E. Shapiro, age 57, was appointed Executive Vice President,
Chief Administrative Officer and a Director of the Company in June 1998. Mr.
Shapiro also joined Sunbeam as Executive Vice President and Chief
Administrative Officer in June of 1998. He previously held the position of
Executive Vice President and General Counsel of Coleman from July 1997 until
its sale in March 1998. Before joining Coleman, he was Executive Vice
President, General Counsel and Chief Administrative Officer of Marvel
Entertainment Group, Inc. ("Marvel"). Marvel and several of its subsidiaries
filed voluntary petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code ("Chapter 11") in 1996. Mr. Shapiro served as an
executive officer of Marvel at the time of such filing. He had previously
spent over 25 years in private law practice and as a business executive, most
recently as a shareholder in the law firm of Greenberg Traurig. Mr. Shapiro
is also a member of the Board of Directors of Toll Brothers, Inc. For a
description of certain arrangements entered into by Sunbeam and M&F relating
to the appointment of Mr. Shapiro as an officer of Sunbeam, see "Certain
Relationships and Related Transactions--Services Provided by M&F".
A. Whitman Marchand, age 62, is currently retired. Prior to his
retirement, Mr. Marchand was Managing Director and Group Head for the Special
Loan Group of Bankers Trust Company ("Bankers Trust") from 1982 to 1998.
Prior to 1982, Mr. Marchand held various positions within the national
banking department at Bankers Trust, including head of the Real Estate
Investment Trust Group. Mr. Marchand is a member of the Board of Directors of
RainTree Healthcare Corporation.
COMPENSATION OF DIRECTORS
Messrs. Levin and Shapiro receive no compensation for service as a
director of the Company. Directors who are not currently receiving
compensation as employees of the Company or any of its affiliates are paid an
annual $25,000 retainer fee and are reimbursed for reasonable out-of-pocket
expenses incurred
28
<PAGE>
in connection with Company business. In addition, such directors receive a
fee of $1,000 for each meeting of the Board of Directors or any committee
meeting they attend. Mr. Marchand also served as the sole member of a special
committee of the Board of Directors which approved and authorized Coleman
entering into the Agreements. Mr. Marchand was paid a fee of $25,000 for
serving on such special committee.
EXECUTIVE OFFICERS
The following table sets forth certain information as of April 9,
1999, concerning the executive officers of the Company. All executive
officers serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jerry W. Levin........................... 54 Chairman of the Board and Chief Executive Officer
Paul E. Shapiro.......................... 57 Executive Vice President and
Chief Administrative Officer
Bobby G. Jenkins......................... 37 Executive Vice President
Karen K. Clark........................... 38 Vice President - Finance
Gwen C. Wisler........................... 39 Executive Vice President and
Chief Financial Officer
Janet G. Kelley.......................... 45 Vice President, General Counsel, and Secretary
William L. Phillips...................... 46 Vice President and General Manager
</TABLE>
The following sets forth the position with the Company and selected
biographical information for the executive officers of the Company who are
not directors.
Bobby G. Jenkins was appointed Executive Vice President in August
1998. Mr. Jenkins joined Sunbeam as Executive Vice President and Chief
Financial Officer in June 1998. Mr. Jenkins previously held the position of
Chief Financial Officer of Coleman's Outdoor Recreation division from
September 1997 to May 1998. Mr. Jenkins was Executive Vice President and
Chief Financial Officer of Marvel from December 1993 through June 1997. Mr.
Jenkins served as an executive officer of Marvel at the time of the 1996
Chapter 11 filings of Marvel and several of its subsidiaries. Mr. Jenkins was
Assistant Vice President of Finance at Turner Broadcasting System from August
1992 to November 1993. Prior to that, Mr. Jenkins was with Price Waterhouse
LLP, last serving as Senior Audit Manager. For a description of certain
arrangements entered into by Sunbeam and M&F relating to the appointment of
Mr. Jenkins as an officer of Sunbeam, see "Certain Relationships and Related
Transactions--Services Provided by M&F".
Karen K. Clark was appointed Vice President - Finance in June 1997.
She joined Sunbeam in April of 1998 as Vice President, Operations Finance and
has served as Vice President, Finance of Sunbeam since June 1998. She was
Corporate Controller for Precision Castparts Corp. from 1994 to 1997 and
prior to that held various positions in public accounting and industry.
Gwen C. Wisler was appointed Executive Vice President and Chief
Financial Officer in March 1999, and was Senior Vice President and Chief
Financial Officer from July 1998. Ms. Wisler was appointed Senior Vice
President and Chief Financial Officer - Outdoor Leisure Group and
International for Sunbeam in March 1999, and was Senior Vice President and
Chief Financial Officer - Outdoor Leisure Group for Sunbeam from July 1998 to
March 1999. Ms. Wisler joined Coleman in January 1997 as Vice President and
Chief Financial Officer -International. Prior to that, Ms. Wisler was Vice
President and Chief Accounting Officer for New World Communications Group
Incorporated from February 1994 to January 1997, and Chief Financial Officer
for Cobb Partners from May 1993 to February 1994.
29
<PAGE>
Janet G. Kelley was appointed Vice President, General Counsel and
Secretary in August 1998, and from March 1998 until August 1998, Ms. Kelley
was Vice President, Associate General Counsel and Assistant Secretary. She
joined Sunbeam in March 1994 and was named General Counsel in April of 1998.
From 1994 to 1998, Ms. Kelley served as Group Counsel and Associate General
Counsel. Prior to joining Sunbeam, she was a partner in the law firm of
Wyatt, Tarrant & Combs in Louisville, Kentucky.
William L. Phillips was appointed Vice President and General Manager
in August 1998. Mr. Phillips serves as the President of the Company's Outdoor
Recreation division, and was Vice President and General Manager for the hard
goods business of Coleman's Outdoor Recreation division until August 1998.
From 1985 to 1998, Mr. Phillips held various positions in the sales and
marketing area of Coleman, and has been with the Company since 1978.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's Directors, executive officers and persons who own more
than 10% of a registered class of the Company's equity securities to file
certain reports regarding ownership of the Company's common stock with the
SEC and the New York Stock Exchange. These insiders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge all Section 16(a) filing requirements
applicable to the Company's current officers, Directors and beneficial owners
of more than 10% of the outstanding shares of common stock were filed on a
timely basis. The Company is unable to determine whether the former chief
executive officer has complied with the Section 16(a) filing requirements.
30
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation for services
rendered to the Company for the years ended December 31, 1998, December 31,
1997, and December 31, 1996, in all capacities of those persons who, during
1998, (i) served as Chief Executive Officer ("CEO") of the Company, (ii) were
the four most highly compensated executive officers of the Company, other
than the CEO, as of year-end, and (iii) were executive officers during 1998
who would have been among the four most highly compensated executive officers
but were not serving as executive officers of the Company as of year-end.
Messrs. Levin and Shapiro served as executive officers of the Company through
March 1998, and rejoined the Company as executive officers of Coleman in June
1998. Ms. Clark has served as an executive officer of the Company since June
1997. Ms. Wisler served as Chief Financial Officer of the International
division of the Company until July 1998 and became an executive officer of
Coleman in July 1998. Mr. Dunlap served as the Company's Chairman of the
Board with chief executive responsibilities from March 1998 to June 1998. Mr.
Goldman served as an executive officer of the Company until March 1998.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------ ---------- --------------------------
OTHER SECURITIES
ANNUAL UNDERLYING RESTRICTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS STOCK COMPENSATION
--------------------------- ---- ------ ----- ------------ ------- ----- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT OFFICERS:
Jerry W. Levin ................ 1998 $ 333,333 (1) $ 1,583,333 (2) $ 22,285 0 0 $ 4,026 (3)
Chairman and Chief Executive 1997 300,000 300,000 2,567 500,000 0 0
Officer
Paul E. Shapiro................ 1998 157,693 (4) 37,125 0 0 0 256 (5)
Executive Vice President and 1997 145,832 0 0 77,500 0 525 (5)
Chief Administrative Officer
Karen K. Clark................. 1998 160,501 (6) 43,561 3,100 0 0 3,400 (7)
Vice President Finance 1997 88,173 81,761 3,150 25,000 0 0
William L. Phillips............ 1998 205,816 50,000 8,585 0 0 3,791 (8)
Vice President and 1997 155,438 53,804 6,916 20,000 0 2,736 (8)
General Manager 1996 137,955 0 7,604 5,000 0 3,714 (8)
Gwen C. Wisler................. 1998 226,484 (9) 64,848 12,450 0 0 443 (5)
Executive Vice President and 1997 95,073 25,000 3,000 25,000 0 305 (5)
Chief Financial Officer
FORMER OFFICERS:
Albert J. Dunlap (10).......... 1998 0 0 0 0 0 0
Former Chief Executive Officer
Mark Goldman................... 1998 300,000 0 8,700 0 0 3,970 (11)
Former Executive Vice President 1997 250,000 0 6,300 40,000 0 4,230 (11)
1996 250,000 0 0 0 0 4,270 (11)
</TABLE>
31
<PAGE>
- ------------------
(1) Mr. Levin is also an executive officer of Sunbeam. Mr. Levin was
compensated directly by Coleman from January 1998 through March 1998. Mr.
Levin was compensated directly by Coleman from June 1998 to October 1998
and Sunbeam reimbursed the Company $319,167 during 1998, representing the
compensation Mr. Levin earned for services rendered to Sunbeam since June
1998. Mr. Levin was compensated directly by Sunbeam from October 1998
through December 1998 and the Company reimbursed Sunbeam $151,250 during
1998, representing the compensation Mr. Levin earned for services rendered
to Coleman from October 1998. See "Certain Relationships and Related
Transactions--Services Provided to and by Sunbeam".
(2) Includes a one-time bonus of $1,500,000 paid to Mr. Levin pursuant to a
prior employment agreement with Coleman resulting from the sale of a
subsidiary.
(3) Includes the Company's 401(k) matching contribution in the amount of
$3,400 and $626 for premiums paid by the Company for term life insurance.
(4) Mr. Shapiro is also an executive officer of Sunbeam. Mr. Shapiro was
compensated directly by Coleman from January 1998 through March 1998. Mr.
Shapiro was compensated directly by Sunbeam from June 1998 through
December 1998 and the Company reimbursed Sunbeam $86,625 during 1998,
representing the compensation Mr. Shapiro earned for services rendered to
Coleman since June 1998. See "Certain Relationships and Related
Transactions--Services Provided to and by Sunbeam".
(5) Represents premiums paid by the Company for term life insurance.
(6) Ms. Clark is also an executive officer of Sunbeam. Ms. Clark was
compensated directly by Coleman from January 1998 through December 1998
and Sunbeam reimbursed the Company $37,388 during 1998, representing the
compensation Ms. Clark earned for services rendered to Sunbeam since June
1998. See "Certain Relationships and Related Transactions--Services
Provided to and by Sunbeam".
(7) Represents the Company's 401(k) matching contribution.
(8) Includes the Company's 401(k) matching contributions and premiums paid for
term life insurance, respective, as follows: $3,400 and $391 for 1998;
$2,114 and $622 for 1997; and $3,162 and $552 for 1996.
(9) Ms. Wisler is also an executive officer of Sunbeam. Ms. Wisler was
compensated directly by Coleman from January 1998 through December 1998
and Sunbeam reimbursed the Company $9,193 during 1998, representing the
compensation Ms. Wisler earned for services rendered to Sunbeam since July
1998. See "Certain Relationships and Related Transactions--Services
Provided to and by Sunbeam".
(10) Mr. Dunlap was Chairman of Coleman with Chief Executive officer
responsibilities from March 1998 to June 1998 and Mr. Dunlap was also
Chairman and Chief Executive Officer of Sunbeam during 1998 until June
1998. Mr. Dunlap was not compensated by Coleman. Mr. Dunlap had an
employment agreement with Sunbeam and was paid by Sunbeam for 1998 until
June 1998 in the amount of $885,256 for salary (including $51,923 for
vacation pay accrued during 1998 and paid to Mr. Dunlap as a result of the
termination of his employment), $11,887,500 for the value of a 300,000
share stock grant, $0 in bonus, $13,917,409 in Other Annual Compensation
(including $13,698,561 for taxes paid by Sunbeam Corporation on the value
of the vesting of Restricted Stock and $218,848 in Other Sunbeam benefits
and gross-ups thereon).
(11) Includes the Company's 401(k) matching contributions and premiums paid for
term life insurance, respectively, as follows: $3,400 and $570 for 1998;
$3,230 and $1,000 for 1997; and $3,230 and $1,040 for 1996.
OPTION GRANTS IN LAST FISCAL YEAR
The Company did not award any option grants to the Chief Executive
Officer and the other named executive officers during the year ended December
31, 1998.
32
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
The following table sets forth information with respect to option
exercises occurring during 1998 and the number of options held by the current
and previous Chief Executive Officers and the other named executive officers
at the Company's fiscal year-end.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired December 31, 1998 December 31, 1998 (1)
on Value ------------------------------- -----------------------------
Name Exercise Realized Exercisable (2) Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerry W. Levin............. 500,000 $9,936,763 0 0 $ 0 $ 0
Paul E. Shapiro............ 0 0 77,500 0 0 0
Karen K. Clark............. 0 0 25,000 0 0 0
William L. Phillips........ 59,000 890,738 0 0 0 0
Gwen C. Wisler............. 25,000 392,015 0 0 0 0
Albert J. Dunlap (3)....... 0 0 0 0 0 0
Mark Goldman............... 60,000 830,482 0 0 0 0
</TABLE>
(1) Market closing price of $9.125 per share on December 31, 1998 was used in
computing year-end values.
(2) Pursuant to the Coleman Merger Agreement, upon the consummation of the
Coleman Merger, the unexercised options under Coleman's stock option plans
will be cashed out at a price per share equal to the difference between
$27.50 per share and the exercise price of such options. Mr. Shapiro and
Ms. Clark hold 77,500 and 25,000 unexercised options, respectively, for
which they will receive payments before deductions for withholding taxes
of $823,000 and $275,005, respectively.
(3) There were no options to purchase shares of stock of Coleman granted to
Mr. Dunlap.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
EMPLOYMENT AGREEMENT WITH MR. LEVIN.
On August 12, 1998, Sunbeam entered into an employment agreement
with Mr. Levin (the "Levin Agreement") pursuant to which Sunbeam has agreed
to employ Mr. Levin as Chief Executive Officer of Sunbeam, and Mr. Levin has
agreed to serve in such capacity, for an initial period of approximately
three years ending June 14, 2001.
Under the Levin Agreement, Mr. Levin will be paid a base salary at
an annual rate of not less than $1,000,000. Effective April 1, 1999, Mr.
Levin's base salary was increased to $1,150,000. Additionally, Mr. Levin was
paid a guaranteed bonus for 1998 of $541,667 and, thereafter, is eligible to
receive a performance-based annual bonus of up to 100% of his base salary
although under the terms of Sunbeam's incentive plan it is possible for an
eligible participant to earn up to twice such participant's target bonus in a
particular year if Sunbeam's results significantly exceed the targets for
such year. Mr. Levin is eligible to participate immediately in the other
benefit plans available generally to employees or other senior executives of
Sunbeam. Sunbeam also reimburses Mr. Levin for the cost of membership in a
country club. Mr. Levin is compensated directly by Sunbeam and the Company
reimburses Sunbeam for a portion of the compensation paid by Sunbeam to Mr.
Levin representing the compensation Mr. Levin earned for services rendered to
Coleman during such period. See "Certain Relationships and Related
Transactions--Services Provided to and by Sunbeam". In addition, for a
description of certain arrangements entered into by Sunbeam and M&F relating
to the appointment of Mr. Levin as an officer of Sunbeam, see "Certain
Relationships and Related Transactions--Services Provided by M&F".
Sunbeam may terminate Mr. Levin's employment under the Levin
Agreement due to his disability, or for Cause. As defined in the Levin
Agreement, "Cause" means (1) gross neglect of his duties, (2) his conviction
for a felony or any lesser crime or offense involving the property of
Sunbeam, (3) willful misconduct in connection with the performance of any
material portion of his duties, (4) willful breach of any material provision
of the agreement by Levin, or (5) any conduct on Levin's part which would
make his
33
<PAGE>
continued employment materially prejudicial to the best interests of Sunbeam.
In addition, he may terminate his employment following a Company Breach upon
60 days written notice to Sunbeam. As defined in the Levin Agreement,
"Company Breach" means (1) any material breach of the agreement by Sunbeam,
or (2) a Change in Control of Sunbeam (as defined in the Levin Agreement).
The Levin Agreement provides that, if Sunbeam terminates Mr. Levin's
employment for Cause or if he voluntarily terminates his employment, all
obligations (other than accrued obligations) of Sunbeam will cease and all
unvested Levin Options shall be immediately forfeited. If a Company Breach
occurs, and Mr. Levin terminates the agreement, Sunbeam is obligated to
continue to pay Mr. Levin's base salary and target bonus for the balance of
the term and continue his benefits until his reemployment. In addition, all
of the Levin Options vest and are exercisable for three years.
The Levin Agreement provides that, if Mr. Levin's employment is
terminated due to his death, his legal representatives or designated
beneficiary will receive continued payments in an amount equal to 60% of base
salary until the longer of 12 months or the end of the term in effect at the
time of his death. The Levin Options will become vested and exercisable upon
stockholder approval, and shall remain exercisable for three years thereafter.
EMPLOYMENT AGREEMENTS WITH EXECUTIVES SHAPIRO, PHILLIPS, CLARK, AND WISLER.
Sunbeam entered into employment agreements with Messrs. Shapiro and
Phillips, and Ms. Clark and Ms. Wisler in August 1998. Messrs. Shapiro and
Phillips, and Ms. Clark and Ms. Wisler are referred to as the "Executives".
The agreement with Mr. Shapiro is for an initial period of approximately
three years ending on June 14, 2001; the agreement with Mr. Phillips has no
definitive term; and the agreements with Ms. Clark and Ms. Wisler have terms
ending on June 14, 2000. The Executives' agreements are referred to
individually as an "Executive Agreement" and collectively as the "Executive
Agreements."
Under the Executive Agreements, Messrs. Shapiro and Phillips, and
Ms. Clark, and Ms. Wisler will be paid a base salary at annual rates not less
than $600,000, $250,000, $270,000, and $285,000, respectively. Effective
April 1, 1999, Mr. Shapiro's base salary was increased to $750,000.
Additionally, Mr. Shapiro, Ms. Clark and Ms. Wisler were paid a guaranteed
bonus for 1998 equal to $243,750, $73,125, and $65,313, respectively, and,
thereafter, are eligible to receive a performance-based annual bonus equal to
75%, 50%, and 50% of their respective annual salary. Mr. Phillips is eligible
to receive a performance-based annual bonus equal to 50% of his annual salary
although under the terms of Sunbeam's incentive plan it is possible for an
eligible participant to earn up to twice such participant's target bonus in a
particular year if Sunbeam's results significantly exceed the targets for
such year. They are also eligible to participate in the other benefit plans
available generally to employees or other senior executives of Sunbeam. Mr.
Shapiro is compensated directly by Sunbeam and the Company reimburses Sunbeam
for a portion of the compensation paid by Sunbeam to Mr. Shapiro representing
the salary Mr. Shapiro earned for services rendered to Coleman during such
period. Ms. Clark and Ms. Wisler are compensated directly by Coleman and
Sunbeam reimburses Coleman for a portion of the compensation paid by Coleman
to such persons representing the salary such persons earned for services
rendered to Sunbeam during such period. Mr. Phillips is compensated directly
by Coleman. See "Certain Relationships and Related Transactions--Services
Provided to and by Sunbeam." In addition, for a description of certain
arrangements entered into by Sunbeam and M&F relating to the appointment of
Mr. Shapiro as an officer of Sunbeam, see "Certain Relationships and Related
Transactions--Services Provided by M&F"
Sunbeam may terminate an Executive's employment under his or her
Executive Agreement due to disability, or for Cause. As defined in the
Executive Agreements, "Cause" means (1) gross neglect of duties, (2)
conviction for a felony or any lesser crime or offense involving the property
of Sunbeam, (3) willful misconduct in connection with the performance of any
material portion of duties, (4) willful breach of any material provision of
the agreement by the Executive, or (5) any conduct on the Executive's part
which would make continued employment materially prejudicial to the best
interests of Sunbeam. The Executive may terminate his or her employment under
the Executive Agreement at any time. In addition, he or she may
34
<PAGE>
terminate his or her employment for Company Breach upon 60 days' written
notice to Sunbeam. As defined in the Executive Agreements, "Company Breach"
means (1) any material breach of the agreement by Sunbeam, or (2) a Change in
Control of Sunbeam (as defined in the Executive Agreements).
The Executive Agreements provide that, if Sunbeam terminates an
Executive's employment for Cause or if the Executive voluntarily terminates
his or her employment, all obligations (other than accrued obligations) of
Sunbeam will cease and all unvested Executive Options shall be immediately
forfeited. If a Company Breach occurs, and an Executive terminates the
agreement, Sunbeam is obligated to continue to pay the Executive's base
salary and target bonus for the balance of the term and continue the
Executive's benefits until the Executive's reemployment. In addition, all of
the Executive Options vest and are exercisable for three years.
The Executive Agreements provide that, if an Executive's employment
is terminated due to death, his or her legal representatives or designated
beneficiary will receive continued payments in an amount equal to 60% of base
salary until the longer of 12 months or the end of the term in effect at the
time of death. The Executive Options will become vested upon such death and
shall remain exercisable for three years thereafter.
EMPLOYMENT AGREEMENT WITH MR. GOLDMAN
The Company has entered into a letter agreement with Mark Goldman
dated January 1, 1999 (the "Goldman Agreement") whereby Mr. Goldman would be
chairman of Eastpak Corporation. The Goldman Agreement has no definite term
and is cancelable by either party on three months notice. Under the Goldman
Agreement, Mr. Goldman will be paid a base salary at an annual rate of
$300,000. Additionally, Mr. Goldman is eligible to receive a
performance-based annual bonus equal to 70% of his annual salary. Mr. Goldman
is also eligible to participate in the other benefit plans available
generally to employees of Coleman. Pursuant to the Goldman Agreement, Mr.
Goldman is entitled to receive a grant of options to purchase 30,000 shares
of Sunbeam common stock with 50% of such grant becoming exercisable on July
1, 1999, and 50% of such grant becoming exercisable on December 31, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not have a compensation committee of the Board of
Directors. The Company's executive officers are compensated pursuant to
employment agreements with Sunbeam, and the Company reimburses Sunbeam for a
portion of the compensation paid by Sunbeam for the Company's executive
officers, except in the case of Mr. Phillips who is compensated directly by
Coleman in accordance with the terms of his employment agreement with Sunbeam
(see "-Employment Contracts and Termination of Employment and Change in Control
Arrangements"). Messrs. Levin, Shapiro and Jenkins and Ms. Wisler participated
in the deliberations regarding the portion of compensation paid by Sunbeam to
Coleman's executive officers to be reimbursed by Coleman to Sunbeam.
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
ALTERNATIVE PENSION PLAN DISCLOSURE
Executive officers and other employees of the Company participate in
a noncontributory qualified defined benefit retirement plan: the New Coleman
Company, Inc. Retirement Plan for Salaried Employees (the "Salaried Pension
Plan"). This plan was amended effective January 1, 1999 to convert the plan
to a cash balance plan.
35
<PAGE>
Benefits to participants vest after five years of vesting service as
defined in the Salaried Pension Plan and are based on eligible pay.
Eligibility pay is composed of regular base pay and contributions to
qualified deferred compensation plans and does not include amounts paid
pursuant to the Company's annual cash incentive compensation plans. Under a
new benefit accrual formula that applies in determining benefits under the
Salaried Pension Plan on or after January 1, 1999, a participant meeting the
Rule of 45 (age plus vesting service equal to 45; minimum of 5 years of
vesting service) or who has ten years of vesting service, receives a pay
credit at the end of each year in which the participant remains eligible and
receives eligible pay for services. The annual pay credit is equal to a
percentage of the participant's annual eligible pay. The percentage depends
on age and completed years of vesting service at the beginning of the year,
as shown below.
<TABLE>
<CAPTION>
Age Plus Vesting Service Pay Credits
------------------------ -------------
<S> <C>
Under 55.................................. 3.00%
55-59..................................... 4.00%
60-64..................................... 5.00%
65-69..................................... 6.00%
70-74..................................... 7.00%
75-79..................................... 8.00%
80-84..................................... 9.00%
85 and over............................... 10.00%
</TABLE>
Prior to application of the new benefit accrual formula, benefits
for participants under the Salaried Pension Plan were determined under
another formula. To transition from the prior formula to the new formula, a
participant's accrued benefit earned under the prior formula is preserved as
a minimum.
Participants who have been employed by a company that is in the same
"controlled group" of companies as Coleman may be entitled to benefits under
the qualified defined benefit retirement plan of that company. The annual
pension from the Salaried Pension Plan will be reduced by any pension amounts
payable by those other plans.
Assuming that each of the individuals listed on the Summary
Compensation Table continues in their present positions at their present
salaries until retirement at age 65, their estimated annual pensions in a
single life annuity form would be:
<TABLE>
<S> <C>
Mr. Levin................................. $41,800
Mr. Shapiro............................... $22,300
Ms. Clark................................. $ 5,600
Mr. Phillips.............................. $76,600
Ms. Wisler................................ $63,400
Mr. Dunlap................................ Not an eligible plan participant
Mr. Goldman............................... $42,000
</TABLE>
Such estimates are calculated assuming interest credits of 5% per
year.
36
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 9, 1999 with
respect to beneficial ownership of the Company's common stock by all persons
known by the Company to be the record or beneficial owner of more than 5% of
the outstanding shares of the Company's common stock. Except as otherwise
noted, all beneficial owners listed below have sole voting and investment
power with respect to the shares owned by them.
<TABLE>
<CAPTION>
Amount and Nature of Percentage of
Name of Beneficial Owner Beneficial Ownership Common Stock
------------------------ -------------------- ------------
<S> <C> <C>
Sunbeam Corporation.............................. 44,067,520 (1) 78.9%
2381 Executive Center Drive
Boca Raton, Florida 33431
</TABLE>
- -------------
1) Pursuant to the Holdings Merger Agreement, Sunbeam, through its
indirect wholly-owned subsidiary Coleman Worldwide, became the
indirect beneficial owner of the shares acquired from Parent
Holdings. Sunbeam has pledged its shares of Coleman common stock and
its shares of Sunbeam Canada common stock (see "Certain
Relationships and Related Transactions--Business Acquisitions")
owned by it as security under the Sunbeam Credit Facility. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources".
The following table sets forth the beneficial ownership, reported to
the Company as of April 9, 1999, of the Company's common stock, including
shares as to which a right to acquire ownership exists, of: (1) each Director
of the Company; (2) each of the Named Executives and (3) the Directors and
current executive officers of the Company as a group. In addition, the
following table sets forth, as of April 9, 1999, the beneficial ownership of
two former Named Executives, based on information filed with the Commission
and made available to the public.
<TABLE>
<CAPTION>
Amount and Nature of Percentage of
Name of Beneficial Owner Beneficial Ownership Common Stock
------------------------ -------------------- ------------
<S> <C> <C>
Directors:
Jerry W. Levin................................ -- *
A. Whitman Marchand........................... -- *
Paul E. Shapiro............................... 77,500 (1) *
Named Executive Officers:
Karen K. Clark................................ 25,000 (1) *
William L. Phillips........................... -- *
Gwen C. Wisler................................ -- *
Albert J. Dunlap.............................. -- *
Mark Goldman.................................. -- *
All Directors and Current Executive Officers
as a Group (8 persons)........................ 102,500 (1) *
</TABLE>
- --------------
* Less than 1%
1) Represents shares of common stock which Directors, Named Executives and
current executive officers have the right to acquire pursuant to stock
options that are currently exercisable and may be exercised within the
next 60 days.
37
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH SUNBEAM
Coleman is an indirect 79% owned subsidiary of Sunbeam. Sunbeam is a
leading manufacturer and marketer of branded consumer products sold under the
SUNBEAM-Registered Trademark-, OSTER-Registered Trademark- and other brand
names. Sunbeam markets its products through virtually every category of
retailer including mass merchandisers, catalog showrooms, warehouse clubs,
department stores, catalogs, television shopping channels, Sunbeam-owned
outlet stores, hardware stores, home centers, drug and grocery stores, pet
supply retailers, as well as independent distributors and the military.
Sunbeam also sells its products to commercial end users such as hotels and
other institutions.
RELATIONSHIP WITH M&F
Until the consummation of the Sunbeam Acquisition, Ronald O.
Perelman, through M&F, beneficially owned approximately 82% of Coleman's
common stock and was a director of the Company. M&F is a diversified holding
company with interests in several industries. The principal executive offices
of M&F are located at 35 East 62nd Street, New York, New York 10021.
CROSS-INDEMNIFICATION AGREEMENT
Coleman and an affiliate of M&F ("Holdings") are parties to a
cross-indemnification agreement pursuant to which Coleman has agreed to
indemnify Holdings, its officers, directors, employees, control persons,
agents and representatives against all past, present and future liabilities,
including product liability and environmental matters, related to the initial
assets of Coleman, which Coleman acquired from such affiliate in December
1991. In addition, pursuant to this cross-indemnification agreement, Holdings
agreed to indemnify Coleman and its officers, directors, employees, agents
and representatives against all other liabilities of Holdings or any of its
subsidiaries, including liabilities relating to the assets it did not
transfer to Coleman in December 1991. This cross-indemnification agreement
survived the Sunbeam Acquisition and will survive the Coleman Merger.
TAX SHARING AGREEMENT
For all taxable periods ended on or prior to March 30, 1998, the
Company was included in the consolidated tax group of which M&F was the
common parent and Coleman's tax liability was included in the consolidated
Federal income tax liability of M&F. Coleman was also included in certain
state and local tax returns of M&F or its affiliates. Coleman participated in
a Tax Sharing Agreement (the "Tax Sharing Agreement") pursuant to which it
paid to Coleman Worldwide amounts equal to the taxes that Coleman would
otherwise have had to pay if it were to file separate Federal, state or local
income tax returns (including any amounts determined to be due as a result of
a redetermination of the tax liability of M&F arising from an audit or
otherwise). Under Federal law, Coleman is subject to liability for the
consolidated Federal income tax liabilities of the consolidated group of
which M&F is the common parent, for any taxable period during which Coleman
or a subsidiary was a member of that consolidated group. M&F has agreed,
however, to indemnify Coleman for any such Federal income tax liability (and
certain state and local tax liabilities) of M&F or any of its subsidiaries
that Coleman is actually required to pay. As a result of the consummation of
the Holdings Merger, Coleman is no longer included in the M&F consolidated
tax group. Pursuant to the Holdings Merger Agreement the Tax Sharing
Agreement terminated with respect to M&F and its affiliates, but not with
respect to Coleman Worldwide. The Holdings Merger Agreement provides for
certain tax indemnities and tax sharing payments with respect to M&F, Coleman
and their respective affiliates.
INSURANCE PROGRAMS
Since the consummation of the Sunbeam Acquisition, Coleman has been
insured under policies maintained by Sunbeam or its affiliates, including
workers compensation and liability insurance. Until the
38
<PAGE>
consummation of the Sunbeam Acquisition, Coleman was insured under policies
maintained by M&F or its affiliates, including workers compensation, and
liability insurance. For 1998, the Company's insurance expense including its
allocable share of premium costs from Sunbeam and M&F for such insurance, was
approximately $6.3 million. Management believes that the terms for such
insurance were at least as favorable as terms that could be obtained by the
Company were it separately insured.
BENEFIT PLANS
Until the consummation of the Sunbeam Acquisition, Holdings
maintained pension and other retirement plans in various forms covering
employees of Coleman who met eligibility requirements. Until the consummation
of the Sunbeam Acquisition, Holdings also had an unfunded excess benefit plan
covering certain of Coleman's U.S. employees whose benefits under the plans
described above are limited by provisions of the Code. Coleman paid to
Holdings its allocable costs of maintaining such plans for Coleman's
employees. As part of the consummation of the Holdings Merger, such pension
and other benefit plans associated with Coleman's employees were assigned and
assumed directly by Coleman.
SERVICES PROVIDED TO AND BY SUNBEAM
Since the consummation of the Sunbeam Acquisition, Coleman has
provided certain management services to Sunbeam and its affiliates and also
received certain management services from Sunbeam and its affiliates. These
services included, among other things, (i) executive, general administrative,
legal and financial services, (ii) factory management and inventory control
services, and (iii) sales and marketing services. For the year ended December
31, 1998, the cost of the services provided by Coleman and charged to Sunbeam
and its affiliates was $2.3 million, and the charges to Coleman for services
received by Coleman from Sunbeam and its affiliates for such period was $3.0
million. The cost of the services is assessed based on actual usage or other
allocation methods which management believes are reasonable.
BORROWINGS FROM SUNBEAM
The Company has borrowed funds from Sunbeam, which along with funds
generated from the Company's operations, has been used to fund the Company's
current cash requirements, including projected capital expenditures and other
obligations. Amounts loaned by Sunbeam totaled $365.1 million at December 31,
1998 and, until the amendment and restatement of the Intercompany Note described
below, were due on demand. For 1998, the Intercompany Note bore interest at a
floating rate equal to the weighted average interest rate incurred by Sunbeam on
its outstanding convertible debt and borrowings under its bank credit facility
which during the year ended December 31, 1998 was 7.1%.
On April 15, 1999, Coleman, Sunbeam and, as to certain agreements,
the lenders under the Sunbeam Credit Facility entered into the Agreements,
including the Amended Intercompany Note. The Amended Intercompany Note is due
April 15, 2000. The Amended Intercompany Note bears interest at an annual
rate equal to (x) 4% if the six month London Interbank Offering Rate
("LIBOR") quoted on the Telerate system is less than 6%, or (y) 5% if the six
month LIBOR quoted on the Telerate system is 6% or higher, subject to
increases during an event of default, and interest will be payable by adding
the amount of such interest to the principal balance of the Amended
Intercompany Note. In addition, the Amended Intercompany Note provides that
an event of default under the Sunbeam Credit Facility will constitute an
event of default under the Amended Intercompany Note and that in certain
circumstances the payment on the Amended Intercompany Note will be
subordinate to Coleman's obligations under the Sunbeam Credit Facility.
Pursuant to the Agreements, Coleman has pledged to Sunbeam all of its
domestic assets, other than its real property, including 66% of the stock of
its domestic holding companies for its foreign subsidiaries and all of the
stock of its other domestic subsidiaries (but Coleman's subsidiaries have not
pledged their assets or stock of their subsidiaries), as security for the
Amended Intercompany Note. Sunbeam has pledged the Amended Intercompany Note
as security for the Sunbeam Credit Facility and assigned to such lenders the
security pledged by Coleman for the Amended Intercompany Note. In addition,
39
<PAGE>
Sunbeam has pledged its shares of Coleman common stock and its shares of
Sunbeam Canada common stock (see "--Business Acquisitions") owned by it as
security under the Sunbeam Credit Facility. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity and
Capital Resources" and Note 13 to the Company's Consolidated Financial
Statement included elsewhere in this Annual Report on Form 10-K.
SERVICES PROVIDED BY M&F
Until the Sunbeam Acquisition, from time to time, Coleman purchased
from M&F or its affiliates, at negotiated rates, specialized accounting and
other services. Coleman also provided, at negotiated rates, specialized
accounting services and other services to M&F and its affiliates. The net
expense for such services was approximately $0.5 million during 1998. Coleman
believes that the terms of such arrangements were at least as favorable to
Coleman as those it could have negotiated with nonaffiliated parties. In
addition, until the Sunbeam Acquisition, certain employees of the Company
have been paid by M&F or its affiliates, and the Company reimbursed such
affiliates for the compensation expense for such employees.
Pursuant to the Parent Holdings Settlement Agreement, M&F agreed to
provide certain management assistance to Sunbeam and its subsidiaries with
respect to financings, dealings with financing sources and capital markets,
investor and public relations, acquisitions, divestitures and other
extraordinary transactions, executive benefits and compensation and other
personnel matters, and compliance, litigation, insurance, regulatory and
other legal matters. Sunbeam and its subsidiaries, including Coleman, do not
reimburse M&F for such services or for expenses incurred in providing such
services to Sunbeam and its subsidiaries, other than reimbursement of
out-of-pocket expenses paid to third parties. Execution of the Parent
Holdings Settlement Agreement was a condition to Sunbeam's continued
employment of Messrs. Levin, Shapiro and Jenkins as officers of Sunbeam and
its subsidiaries.
OFFICE LEASE
Coleman subleased office space in New York City from an affiliate of
M&F pursuant to a month to month occupancy memorandum. The rent paid by
Coleman represents the allocable portion, based on the space leased, of the
rent paid by the affiliate to its third party landlord. The sublease was
terminated in April 1998. The expense for such rent during 1998 was
approximately $0.1 million. Coleman believes that the terms of the sublease
were at least as favorable to Coleman as those it could have negotiated with
nonaffiliated parties.
LICENSING SERVICES
The Company had engaged an affiliate of M&F to provide licensing
services. In connection with the Sunbeam Acquisition, the Company terminated
the licensing services agreement and recorded $2.0 million of expense related
to payments to be made under the terms of the termination agreement and $.2
million of expense related to certain receivables from an affiliate of Parent
Holdings which were forgiven as part of the same termination agreement.
BUSINESS ACQUISITIONS
On December 31, 1998, Canadian Coleman Company LTD ("Canadian
Coleman"), a subsidiary of Coleman, acquired a subsidiary from Sunbeam
("Canadian Sunbeam") in exchange for newly issued common stock of Canadian
Coleman. The issuance of additional common stock to Sunbeam reduced Coleman's
ownership in Canadian Coleman from 100% to approximately 57%. The Company has
accounted for this transaction in a manner similar to a pooling-of-interests
due to Sunbeam's common control over each of the parties involved in the
transaction. The $0.2 million of excess book value of Coleman's 43% interest
given up in the net assets of Canadian Coleman prior to the transaction over
Coleman's 57% interest received in the net assets of Canadian Sunbeam have
been charged to retained earnings. Subsequent to December 31, 1998, Canadian
Coleman and Canadian Sunbeam amalgamated to form Sunbeam Corporation (Canada)
Limited.
40
<PAGE>
OTHER ARRANGEMENTS
During 1998, Coleman purchased products for resale from Sunbeam for
approximately $17.5 million.
Prior to the Sunbeam Acquisition, Coleman paid approximately $0.2
million for air transportation services to a corporation, one of whose
shareholders was a director of Coleman until the consummation of the Sunbeam
Acquisition.
During 1998, a subsidiary of Coleman paid approximately $0.2 million
for warehouse space leased from a real estate partnership in which Mr.
Goldman, who was an Executive Vice President of Coleman until March 31, 1998,
and three other immediate family members of Mr. Goldman's are partners. A
manufacturing business owned by Mr. Goldman's father contracted with
Coleman's subsidiary for the manufacture of goods sold to the subsidiary, for
which the subsidiary paid approximately $1.4 million during 1998.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) Financial Statements and Schedule.
See List of Financial Statements and Schedules which appears
on page F-1 herein.
(3) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- ------------
<S> <C>
2.1 Agreement and Plan of Merger among Sunbeam
Corporation, Camper Acquisition Corp. and The Coleman
Company, Inc. dated as of February 27, 1998
(incorporated by reference to Exhibit 2.1 to The
Coleman Company, Inc. Current Report on Form 8-K/A
filed on March 5, 1998).
2.2 Agreement and Plan of Merger among Sunbeam
Corporation, Laser Acquisition Corp., CLN Holdings
Inc. and Coleman (Parent) Holdings Inc. dated as of
February 27, 1998 (incorporated by reference to
Exhibit 10.1 to The Coleman Company, Inc. Current
Report on Form 8-K/A filed on March 5, 1998).
2.3|X| Amendment 1 to Agreement and Plan of Merger, dated as
of March 29, 1998, among Sunbeam Corporation, Laser
Acquisition Corp., Coleman (Parent) Holdings Inc.,
and CLN Holdings Inc.
3.1 Certificate of Incorporation of The Coleman Company,
Inc., filed with the Secretary of State of Delaware
on December 17, 1991 (incorporated by reference to
Exhibit 3.1 to The Coleman Company, Inc. 1993 Annual
Report on Form 10-K).
3.2 Bylaws of The Coleman Company, Inc., as amended
(incorporated by reference to Exhibit 3.1 to The
Coleman Company, Inc. Form 10-Q for the period ended
June 30, 1997).
4.1 Specimen copy of definitive certificate of common
stock of The Coleman Company, Inc., par value $.01
per share (incorporated by reference to Exhibit 4.4
to The Coleman Company, Inc. 1992 Annual Report on
Form 10-K).
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
4.2|X| Subsidiary Borrowing Agreement dated as of February
12, 1999 among The Coleman Company, Inc., Sunbeam
Corporation, and First Union National Bank.
4.3|X| Subsidiary Borrower Security Agreement dated as of
February 12, 1999 between The Coleman Company, Inc.
and First Union National Bank.
4.4|X| Intercompany Note dated April 6, 1998 between The
Coleman Company, Inc. and Sunbeam Corporation.
4.5 Credit Agreement dated as of March 30, 1998 among
Sunbeam Corporation, the Subsidiary Borrowers
referred to therein, the Lenders party thereto,
Morgan Stanley Senior Funding, Inc., Bank of America
National Trust and Savings Association and First
Union National Bank (incorporated by reference to
Exhibit 10.a to the Sunbeam Corporation Form 10-Q for
the quarter ended March 30, 1998).
4.6 First Amendment to Credit Agreement dated as of May
8, 1998 among Sunbeam Corporation, the Subsidiary
Borrowers referred to therein, the Lenders party
thereto, Morgan Stanley Senior Funding, Inc., Bank of
America National Trust and Savings Association and
First Union National Bank (incorporated by reference
to Exhibit 10.b to the Sunbeam Corporation Form 10-Q
for the quarter ended March 30, 1998).
4.7 Second Amendment to Credit Agreement dated as of
March 30, 1998, among Sunbeam Corporation, the
Subsidiary Borrowers referred to therein, the Lenders
party thereto, Morgan Stanley Senior Funding, Inc.,
Bank of America National Trust and Savings
Association and First Union National Bank
(incorporated by reference to Exhibit 10.bb to the
Sunbeam Corporation Annual Report on Form 10-K/A for
the year ended December 28, 1997).
4.8 Third Amendment to Credit Agreement dated as of
October 19, 1998, among Sunbeam Corporation, the
Subsidiary Borrowers referred to therein, the Lenders
party thereto, Morgan Stanley Senior Funding, Inc.,
Bank of America National Trust and Savings
Association and First Union National Bank
(incorporated by reference to Exhibit 10.cc to the
Sunbeam Corporation Annual Report on Form 10-K/A for
the year ended December 28, 1997).
4.9|X| Waiver of Credit Agreement and Amendment to
Subsidiary Pledge and Security Agreement, dated as of
December 23, 1998 to the Credit Agreement dated as of
March 30, 1998 (as amended) among Sunbeam
Corporation, the Subsidiary Borrowers, the Lenders
party thereto, Morgan Stanley Senior Funding, Inc.,
Bank of America National Trust and Savings
Association, and First Union National Bank, and
Amendment dated as of December 23, 1998 to the
Subsidiary Pledge and Security Agreement dated as of
March 30, 1998 between Sunbeam Americas Holdings,
Ltd., the other Grantors party thereto, and First
Union National Bank.
4.10|X| Fourth Amendment, dated as of April 10, 1999, to
the Credit Agreement, dated as of March 30, 1998,
among Sunbeam Corporation, the Borrowers referred
to therein, the Lenders party thereto, Morgan
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Stanley Senior Funding, Inc., Bank of America
National Trust and Savings Association, and First
Union National Bank.
4.11|X| Fifth Amendment, Third Waiver and Agreement, dated
as of April 15, 1999, to and under the Credit
Agreement, dated as of March 30, 1998, among Sunbeam
Corporation, the Borrowers referred to therein, the
Lenders party thereto, Morgan Stanley Senior Funding,
Inc., Bank of America National Trust and Savings
Association, and First Union National Bank.
4.12|X| Omnibus Amendment to Collateral Documents, dated as
of April 15, 1999, to (a) the Parent Pledge and
Security Agreement, dated as of March 30, 1998
between Sunbeam Corporation and First Union National
Bank, (b) the Parent Security Agreement, dated as of
July 10, 1998 between the Parent and the
Administrative Agent; (c) the Subsidiary Pledge and
Security Agreement, dated as of March 30, 1998 among
each subsidiary of the Parent and the Administrative
Agent; and (d) the Subsidiary Security Agreement,
dated as of July 10, 1998 among the Grantors and the
Administrative Agent.
4.13 Intentionally Omitted.
4.14 Intentionally Omitted.
4.15|X| Amended and Restated Subordinated Intercompany Note,
dated as of April 6, 1998 between The Coleman
Company, Inc. and Sunbeam Corporation.
10.1 Cross-Indemnification Agreement dated as of February
26, 1992 among New Coleman Holdings Inc., Coleman
Finance Holdings Inc., The Coleman Company, Inc., and
certain subsidiaries of New Coleman Holdings Inc. and
The Coleman Company, Inc., (incorporated by reference
to Exhibit 10.1 to The Coleman Company, Inc. 1992
Annual Report on Form 10-K).
10.2 Amendment No. 1 dated as of December 30, 1992 to the
Cross-Indemnification Agreement (incorporated by
reference to Exhibit 10.2 to The Coleman Company,
Inc. 1992 Annual Report on Form 10-K).
10.3 Reimbursement Agreement dated as of February 26, 1992
between The Coleman Company, Inc., and MacAndrews &
Forbes Holdings Inc. (incorporated by reference to
Exhibit 10.4 to The Coleman Company, Inc. 1992 Annual
Report on Form 10-K).
10.4 Tax Allocation Agreement dated as of August 24, 1990
among MacAndrews & Forbes Holdings Inc., New Coleman
Holdings Inc. and subsidiaries of New Coleman
Holdings Inc. (incorporated by reference to Exhibit
10.29 to The Coleman Company, Inc. 1992 Annual Report
on Form 10-K).
10.5 Amendment No. 1 dated as of February 26, 1992 to the
Tax Allocation Agreement dated as of August 24, 1990
among MacAndrews & Forbes Holdings Inc., Mafco
Holdings Inc., New Coleman Holdings Inc. and
subsidiaries of New Coleman Holdings Inc.
(incorporated by reference to Exhibit 10.30 to The
Coleman Company, Inc. 1992 Annual Report on Form
10-K).
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.6 Amendment No. 2 dated as of December 30, 1992 to the
Tax Allocation Agreement dated as of August 24, 1990
among MacAndrews & Forbes Holdings Inc., New Coleman
Holdings Inc. and subsidiaries of New Coleman
Holdings Inc. (incorporated by reference to Exhibit
10.31 to The Coleman Company, Inc. 1992 Annual Report
on Form 10-K).
10.7 Amendment No. 3 dated as of May 27, 1993 to the Tax
Allocation Agreement dated as of August 24, 1990
among Mafco Holdings Inc., New Coleman Holdings Inc.
and subsidiaries of New Coleman Holdings Inc.
(incorporated by reference to Exhibit 10.45 to the
Coleman Holdings Inc. Registration Statement Form S-1
(File No. 33-67058), filed on August 6, 1993).
10.8 Tax Sharing Agreement II dated as of February 26,
1992, among Mafco Holdings Inc., Coleman Finance
Holdings Inc., The Coleman Company, Inc. and certain
subsidiaries of The Coleman Company, Inc.
(incorporated by reference to Exhibit 10.25 to The
Coleman Company, Inc. 1992 Annual Report on Form
10-K).
10.9 Amendment No. 1 dated as of December 30, 1992 to the
Tax Sharing Agreement II dated as of February 26,
1992, among Mafco Holdings Inc., Coleman Finance
Holdings Inc., The Coleman Company, Inc. and certain
subsidiaries of The Coleman Company, Inc.
(incorporated by reference to Exhibit 10.26 to The
Coleman Company, Inc. 1992 Annual Report on Form
10-K).
10.10 Supplemental Tax Sharing Agreement dated as of
February 26, 1992, between The Coleman Company, Inc.
and MacAndrews and Forbes Holdings Inc. (incorporated
by reference to Exhibit 10.32 to The Coleman Company,
Inc. 1992 Annual Report on Form 10-K).
10.11 Tax Sharing Agreement III dated as of February 26,
1992 among Mafco Holdings Inc., New Coleman Holdings
Inc., Coleman Finance Holdings Inc. and subsidiaries
of Coleman Finance Holdings Inc. (incorporated by
reference to Exhibit 10.27 to The Coleman Company,
Inc. 1992 Annual Report on Form 10-K).
10.12 Amendment No. 1 dated as of December 30, 1992 to the
Tax Sharing Agreement III dated as of February 26,
1992 among Mafco Holdings Inc., New Coleman Holdings
Inc., Coleman Finance Holdings Inc. and subsidiaries
of Coleman Finance Holdings Inc. (incorporated by
reference to Exhibit 10.28 to The Coleman Company,
Inc. 1992 Annual Report on Form 10-K).
10.13 Tax Sharing Agreement V dated as of May 27, 1993
among Mafco Holdings Inc., Coleman Worldwide
Corporation, The Coleman Company, Inc. and certain
subsidiaries of The Coleman Company, Inc.
(incorporated by reference to Exhibit 10.38 to the
Coleman Holdings Inc. Registration Statement Form S-1
(File 33-67058), filed on August 6, 1993).
10.14 Tax Sharing Termination Agreement dated as of May 27,
1993 among MacAndrews & Forbes Holdings Inc., New
Coleman Holdings Inc., Coleman Finance Holdings Inc.,
The Coleman Company, Inc. and subsidiaries of The
Coleman Company, Inc. and Coleman Finance Holdings
Inc. (incorporated by reference to Exhibit 10.40 to
the Coleman Holdings Inc. Registration Statement Form
S-1 (File 33-67058), filed on August 6, 1993).
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.15 Worldwide Registration Rights Agreement dated as of
May 27, 1993 among Coleman Worldwide Corporation, The
Coleman Company, Inc. the Lenders Party thereto and
the Agent (incorporated by reference to Exhibit 10.47
to the Coleman Holdings Inc. Registration Statement
Form S-1 (File 33-67058), filed on August 6, 1993).
10.16* The Coleman Company, Inc. Executive Severance Policy
effective as of February 27, 1998 (incorporated by
reference to Exhibit 10.16 to The Coleman Company,
Inc. 1997 Annual Report on Form 10-K).
10.17 Share Purchase Agreement dated as of February 27,
1996 by and among Butagaz S.N.C. and Bafiges S.A.
(incorporated by reference to Exhibit 10.26 to The
Coleman Company, Inc.
1995 Annual Report on Form 10-K).
10.18 Amendment to the Share Purchase Agreement dated as of
February 27, 1996 by and among Bafiges S.A. and
Butagaz S.N.C. (incorporated by reference to Exhibit
10.27 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.19 Shareholders Agreement dated as of February 27, 1996
by and among Butagaz S.N.C., The Coleman Company,
Inc. and Bafiges S.A. (incorporated by reference to
Exhibit 10.28 to The Coleman Company, Inc. 1995
Annual Report on Form 10-K).
10.20 Agreement dated as of February 27, 1996 by and
between Shell International Petroleum Company
Limited, Butagaz S.N.C. on the first part, and
Bafiges S.A. and The Coleman Company, Inc. on the
second part (incorporated by reference to Exhibit
10.29 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.21*|X| Letter Agreement dated as of August 19, 1997 between
The Coleman Company, Inc. and Mark Goldman.
10.22*|X| Letter Agreement dated as of January 7, 1999
between The Coleman Company, Inc. and Mark Goldman.
10.23 The Coleman Retirement Salaried Incentive Savings
Plan (incorporated by reference to Exhibit 10.3 to
The Coleman Company, Inc. Form 10-Q for the period
ended March 31, 1996).
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.24* The Coleman Retirement Incentive Savings Plan (the
"Savings Plan") (incorporated by reference to Exhibit
10.54 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.25* First Amendment dated as of October 11, 1994 to the
Savings Plan (incorporated by reference to Exhibit
10.55 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.26* Second Amendment dated as of January 1, 1995 to the
Savings Plan (incorporated by reference to Exhibit
10.56 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.27* Amendment dated as of December 14, 1995 to the
Savings Plan (incorporated by reference to Exhibit
10.60 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.28* Amendment dated as of December 14, 1995 to the
Savings Plan (incorporated by reference to Exhibit
10.61 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.29* Amendment dated as of January 1, 1996 to the Savings
Plan (incorporated by reference to Exhibit 10.62 to
The Coleman Company, Inc. 1995 Annual Report on Form
10-K).
10.30* New Coleman Holdings Inc. Excess Benefit Plan dated
as of January 1, 1995 (incorporated by reference to
Exhibit 10.1 to The Coleman Company, Inc. Form 10-Q
for the period ended June 30, 1996).
10.31* The New Coleman Company, Inc. Retirement Plan for
Salaried Employees (the "Retirement Plan")
(incorporated by reference to Exhibit 10.63 to The
Coleman Company, Inc. 1995 Annual Report on Form
10-K).
10.32* Amendment dated as of October 17, 1994 to the
Retirement Plan (incorporated by reference to Exhibit
10.64 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.33* Amendment dated as of December 14, 1995 to the
Retirement Plan (incorporated by reference to Exhibit
10.65 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.34* Amendment dated as of December 14, 1995 to the
Retirement Plan (incorporated by reference to Exhibit
10.66 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.35* Amendment dated as of October 12, 1995 to the
Retirement Plan (incorporated by reference to Exhibit
10.67 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.36* Amendment dated as of January 1, 1996 to the
Retirement Plan (incorporated by reference to Exhibit
10.68 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.37* Amendment dated as of December 31, 1995 to the
Retirement Plan (incorporated by reference to Exhibit
10.69 to The Coleman Company, Inc. 1995 Annual Report
on Form 10-K).
10.38* The Coleman Company, Inc. Executive Employees
Deferred Compensation Plan, as amended by the First
Amendment thereto (incorporated by reference to
Exhibit 10.11 to The Coleman Company, Inc.
Registration Statement on Form S-1 (File 33-44728),
filed on December 23, 1991).
10.39* The Coleman Company, Inc. 1992 Stock Option Plan, as
amended (incorporated by reference to Exhibit 10.3 to
The Coleman Company, Inc. Form 10-Q for the period
ended June 30, 1997).
10.40* The Coleman Company, Inc. 1993 Stock Option Plan, as
amended (incorporated by reference to Exhibit 10.1 to
The Coleman Company, Inc. Form 10-Q for the period
ended June 30, 1997).
10.41* The Coleman Company, Inc. 1996 Stock Option Plan, as
amended (incorporated by reference to Exhibit 10.53
to The Coleman Company, Inc. 1996 Annual Report on
Form 10-K).
10.42* Stock Purchase Agreement among The Coleman Company,
Inc., as Seller, Siebe plc, as Guarantor, and Ranco
Incorporated of Delaware, as Buyer, dated as of
February 18, 1998 (incorporated by reference to
Exhibit 10.56 to The Coleman Company, Inc. 1997
Annual Report on Form 10-K).
10.43* Amendment No. 2 to The New Coleman Company, Inc.
Retirement Plan for Salaried Employees (incorporated
by reference to Exhibit 10.57 to The Coleman Company,
Inc. 1997 Annual Report on Form 10-K).
10.44* Special Amendment to The New Coleman Company, Inc.
Retirement Plan for Salaried Employees (incorporated
by reference to Exhibit 10.58 to The Coleman Company,
Inc. 1997 Annual Report on Form 10-K).
10.45* The New Coleman Company, Inc. Pension Plan for Weekly
Salaried and Hourly Paid Employees (incorporated by
reference to Exhibit 10.59 to The Coleman Company,
Inc. 1997 Annual Report on Form 10-K).
10.46*|X| Amendments to The Coleman Retirement Incentive
Savings Plan, dated March 15, 1999.
10.47*|X| Amendments to The Coleman Monthly Salaried Retirement
Incentive Savings Plan, dated March 15, 1999.
10.48*|X| Supplement 1 to The Coleman Retirement Incentive
Savings Plan, dated March 15, 1999.
10.49*|X| Supplement 1 to The Coleman Monthly Salaried
Retirement Incentive Savings Plan, dated March 15,
1999.
10.50*|X| Appendix B to The Coleman Retirement Incentive
Savings Plan, dated March 15, 1999.
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.51*|X| Appendix B to The Coleman Monthly Salaried Retirement
Incentive Savings Plan, dated March 15, 1999.
10.52*|X| Amendment to The New Coleman Company, Inc. Retirement
Plan for Salaried Employees, dated March 15, 1999.
10.53|X| Support Services Agreement dated as of December 23,
1998, by and between Sunbeam Corporation, Inc.,
Sunbeam Products, Inc., The Coleman Company, Inc.
Application des Gaz, Eastpak Corporation, Coleman
Powermate, Inc., BRK Brands, Inc., and Signature
Brands, Inc.
10.54|X| Indemnification Agreement, dated as of April 12,
1999, between The Coleman Company, Inc. and A.
Whitman Marchand.
21.1|X| Subsidiaries of the Company.
23.1|X| Consent of Independent Auditors.
27|X| Financial Data Schedule, submitted electronically to
the Securities and Exchange Commission for
information only and not filed.
</TABLE>
- -------------
* Management Contracts and Compensatory Plans
|X| Filed herewith
(b) Reports on Form 8-K
There were no Current Reports on Form 8-K filed during the
three months ended December 31, 1998.
48
<PAGE>
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)
<TABLE>
<S> <C>
Date: April 15, 1999 By: /s/ Jerry W. Levin
------------------------------- -------------------------------------
Jerry W. Levin
Chairman of the Board,
Chief Executive Officer, and Director
Date: April 15, 1999 By: /s/ Gwen C. Wisler
------------------------------- -------------------------------------
Gwen C. Wisler
Executive Vice President and
Chief Financial Officer
Date: April 15, 1999 By: /s/ Lynn E. Feldkamp
------------------------------- -------------------------------------
Lynn E. Feldkamp
Principal Accounting Officer
</TABLE>
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
Date: April 15, 1999 By: /s/ Paul E. Shapiro
------------------------------- -------------------------------------
Paul E. Shapiro
Director
Date: By:
------------------------------- -------------------------------------
Whitman Marchand
Director
</TABLE>
49
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) AND (2) AND (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1998
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
The following consolidated financial statements of The Coleman
Company, Inc. and Subsidiaries are included in Item 8:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated Balance Sheets as of December 31, 1998 and 1997.... F-3
Consolidated Statements of Operations
for the years ended December 31, 1998, 1997 and 1996.......... F-4
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1998, 1997 and 1996.......... F-5
Consolidated Statements of Cash Flows
for the years ended December 31, 1998, 1997 and 1996.......... F-6
Notes to Consolidated Financial Statements...................... F-7
</TABLE>
Consolidated financial statement schedules of The Coleman Company,
Inc. and Subsidiaries included in Item 14(d):
All schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable and,
therefore, have been omitted.
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors
The Coleman Company, Inc.
We have audited the accompanying consolidated balance sheets of The
Coleman Company, Inc. and subsidiaries as of December 31, 1998 and 1997 and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1998.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of The Coleman Company, Inc. and subsidiaries at December 31, 1998
and 1997, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Wichita, Kansas
April 15, 1999
F-2
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
December 31,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................................... $ 23,413 $ 13,031
Accounts receivable, less allowance of $8,894 in 1998
and $8,930 in 1997.......................................................... 143,670 154,279
Notes receivable................................................................ 17,419 25,477
Inventories..................................................................... 230,126 236,327
Income tax refunds receivable - affiliate....................................... 1,019 14,860
Deferred tax assets............................................................. 26,926 26,378
Prepaid expenses and other current assets....................................... 19,627 21,344
----------- -----------
Total current assets........................................................ 462,200 491,696
Property, plant and equipment, net................................................ 145,823 175,494
Goodwill, net..................................................................... 282,015 332,468
Deferred tax assets and other..................................................... 43,219 42,106
----------- -----------
$ 933,257 $ 1,041,764
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt............................................... $ 110 $ 523
Short-term borrowings........................................................... 45,803 64,207
Accounts payable................................................................ 77,558 91,846
Accounts payable - affiliates................................................... 22,703 2,825
Accrued expenses................................................................ 101,114 93,796
----------- -----------
Total current liabilities................................................... 247,288 253,197
Long-term debt.................................................................... 362 477,276
Debt payable to affiliate......................................................... 365,063 --
Other liabilities................................................................. 75,231 69,586
Minority interest................................................................. 6,698 1,236
Contingencies.....................................................................
Stockholders' equity:
Preferred stock, par value $.01 per share;
20,000,000 shares authorized, no shares issued
or outstanding.............................................................. -- --
Common stock, par value $.01 per share;
80,000,000 shares authorized;
55,827,490 shares issued and outstanding in 1998;
53,433,414 shares issued and outstanding in 1997............................ 558 534
Additional paid-in capital...................................................... 221,730 172,072
Retained earnings............................................................... 21,977 80,296
Accumulated other comprehensive loss............................................ (5,650) (12,433)
----------- -----------
Total stockholders' equity.................................................. 238,615 240,469
----------- -----------
$ 933,257 $ 1,041,764
----------- -----------
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements
F-3
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Net revenues......................................................... $ 1,015,373 $ 1,154,294 $ 1,220,216
Cost of sales........................................................ 750,486 840,331 928,497
------------ ------------ ------------
Gross profit......................................................... 264,887 313,963 291,719
Selling, general and administrative expenses......................... 270,772 266,283 291,669
Interest expense, net................................................ 33,213 40,852 38,727
Amortization of goodwill and deferred charges........................ 19,584 11,338 10,473
Gain on sales of businesses.......................................... (32,411) -- --
Other expense, net................................................... 170 1,867 1,151
------------ ------------ ------------
Loss before income taxes, minority interest
and extraordinary item............................................ (26,441) (6,377) (50,301)
Income tax expense (benefit)......................................... 13,846 (5,227) (10,927)
Minority interest.................................................... 276 1,386 1,872
------------ ------------ ------------
Loss before extraordinary item....................................... (40,563) (2,536) (41,246)
Extraordinary loss on early extinguishment of debt,
net of income tax benefit of $11,474 in 1998,
and $431 in 1996................................................... (17,538) -- (647)
------------ ------------ ------------
Net loss............................................................. $ (58,101) $ (2,536) $ (41,893)
------------ ------------ ------------
------------ ------------ ------------
Basic and diluted loss per share:
Loss before extraordinary item..................................... $ (0.73) $ (.05) $ (0.78)
Extraordinary item................................................. (0.32) -- (0.01)
------------ ------------ ------------
Net loss....................................................... $ (1.05) $ (.05) $ (0.79)
------------ ------------ ------------
------------ ------------ ------------
Weighted average common shares outstanding:
Basic and diluted.................................................. 55,309 53,344 53,197
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements
F-4
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Common Stock Accumulated
------------------- Additional Other
Number Paid-In Retained Comprehensive
of Shares Amount Capital Earnings Income (Loss) Total
---------- ------ ---------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995.............. 53,177,280 $ 532 $ 165,466 $ 126,179 $ 165 $ 292,342
Comprehensive loss:
Net loss ........................... -- -- -- (41,893) -- (41,893)
Currency translation adjustment..... -- -- -- -- 3,011 3,011
Minimum pension liability
adjustment........................ -- -- -- -- (285) (285)
---------
Comprehensive loss............ (39,167)
Purchases of common stock............. (100,000) (1) (874) (1,454) -- (2,329)
Stock split issuance costs............ -- -- (93) -- -- (93)
Stock issued under stock
option plans..................... 145,140 1 1,737 -- -- 1,738
Stock option tax benefits............. -- -- 454 -- -- 454
---------- ----- ---------- --------- --------- ---------
Balance at December 31, 1996.............. 53,222,420 532 166,690 82,832 2,891 252,945
Comprehensive loss:
Net loss ........................... -- -- -- (2,536) -- (2,536)
Currency translation adjustment..... -- -- -- -- (14,686) (14,686)
Minimum pension liability
adjustment........................ -- -- -- -- (638) (638)
---------
Comprehensive loss............ (17,860)
Stock issued under stock
option plans..................... 210,994 2 2,358 -- -- 2,360
Stock option tax benefits............. -- -- 225 -- -- 225
Contribution to capital by parent..... -- -- 2,799 -- -- 2,799
---------- ----- ---------- --------- --------- ---------
Balance at December 31, 1997.............. 53,433,414 534 172,072 80,296 (12,433) 240,469
Comprehensive loss:
Net loss ........................... -- -- -- (58,101) -- (58,101)
Currency translation adjustment..... -- -- -- -- 7,126 7,126
Minimum pension liability
adjustment........................ -- -- -- -- (343) (343)
---------
Comprehensive loss............ (51,318)
Stock issued under stock
option plans..................... 2,394,076 24 36,207 -- -- 36,231
Stock option tax benefits............. -- -- 13,451 -- -- 13,451
Other................................. -- -- -- (218) -- (218)
---------- ----- ---------- --------- --------- ---------
Balance at December 31, 1998.............. 55,827,490 $ 558 $ 221,730 $ 21,977 $ (5,650) $ 238,615
---------- ----- ---------- --------- --------- ---------
---------- ----- ---------- --------- --------- ---------
</TABLE>
See Notes to Consolidated Financial Statements
F-5
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1998 1997 1996
----------- ----------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................................... $ (58,101) $ (2,536) $ (41,893)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation and amortization.................................... 44,697 37,977 36,358
Non-cash restructuring and other charges......................... 6,652 17,325 48,269
Gain on sales of businesses...................................... (32,411) -- --
Extraordinary loss on early extinguishment of debt............... 29,012 -- 1,078
Minority interest................................................ 276 1,386 1,872
Change in assets and liabilities,
net of effects from business acquisitions and dispositions:
Decrease in receivables..................................... 28,821 23,296 976
Decrease (increase) in inventories.......................... 851 35,250 (42,402)
(Decrease) increase in accounts payable..................... (2,426) 1,226 (12,308)
Other, net.................................................. 10,216 (22,683) (1,279)
---------- --------- ----------
Net cash provided (used) by operating activities....................... 27,587 91,241 (9,329)
---------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................................... (23,663) (26,973) (41,334)
Purchases of businesses, net of cash acquired.......................... -- (14,300) (161,875)
Net proceeds from sales of businesses and fixed assets................. 117,841 5,728 2,924
---------- --------- ----------
Net cash provided (used) by investing activities....................... 94,178 (35,545) (200,285)
---------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in short-term borrowings.................................... (23,125) 37,071 (11,043)
Net payments of revolving credit agreement borrowings.................. (52,578) (91,498) (2,779)
Proceeds from issuance of long-term debt............................... 174 -- 235,000
Net increase in borrowings from affiliate ............................. 365,063 -- --
Repayment of long-term debt, including redemption costs................ (447,229) (2,867) (6,648)
Debt issuance and refinancing costs.................................... -- (766) (3,902)
Purchases of Company common stock...................................... -- -- (2,329)
Proceeds from stock options exercised including tax benefits........... 49,682 2,585 2,192
---------- --------- ----------
Net cash (used) provided by financing activities....................... (108,013) (55,475) 210,491
---------- --------- ----------
Effect of exchange rate changes on cash................................ (3,370) (4,489) 4,357
---------- --------- ----------
Net increase (decrease) in cash and cash equivalents................... 10,382 (4,268) 5,234
Cash and cash equivalents at beginning of the year..................... 13,031 17,299 12,065
---------- --------- ----------
Cash and cash equivalents at end of the year........................... $ 23,413 $ 13,031 $ 17,299
---------- --------- ----------
---------- --------- ----------
</TABLE>
See Notes to Consolidated Financial Statements
F-6
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Coleman Company, Inc. ("Coleman" or the "Company") is a global
manufacturer and marketer of consumer products for outdoor recreation and
home hardware use.
Coleman is a subsidiary of Coleman Worldwide Corporation ("Coleman
Worldwide"). Coleman Worldwide is an indirect wholly-owned subsidiary of
Laser Acquisition Corp. ("Laser"), an indirect wholly-owned subsidiary of
Sunbeam Corporation ("Sunbeam"). Coleman Worldwide owns 44,067,520 shares of
the common stock of Coleman which represented approximately 79% of the
outstanding Coleman common stock as of December 31, 1998.
On February 27, 1998, CLN Holdings Inc. ("CLN Holdings"), the then
parent of Coleman Worldwide, and Coleman (Parent) Holdings Inc. ("Parent
Holdings"), the then parent company of CLN Holdings, entered into an
Agreement and Plan of Merger (as amended, the "Holdings Merger Agreement")
with Sunbeam and Laser. On March 30, 1998, pursuant to the Holdings Merger
Agreement, CLN Holdings was merged with and into Laser, with Laser continuing
as the surviving corporation and as a wholly-owned subsidiary of Sunbeam (the
"Holdings Merger"). In the Holdings Merger, Parent Holdings received
14,099,749 shares of Sunbeam common stock and $159,957 in cash in exchange
for all of the outstanding shares of CLN Holdings. As a result of the
Holdings Merger, Sunbeam became the indirect owner of 44,067,520 shares of
Coleman common stock held by Coleman Worldwide (the "Sunbeam Acquisition").
On August 12, 1998, Sunbeam announced that it had entered into a settlement
agreement with Parent Holdings, a subsidiary of MacAndrews & Forbes Holdings
Inc. ("M&F"), in connection with the Holdings Merger (the "Parent Holdings
Settlement Agreement"). The Parent Holdings Settlement Agreement, subject to
the terms of such settlement: (i) released Sunbeam from certain claims Parent
Holdings and its affiliates, including M&F, may have against Sunbeam arising
out of the Sunbeam Acquisition; and (ii) enabled Sunbeam to retain the
services of executive personnel affiliated with Parent Holdings who had
previously been involved with management of Coleman and who had been managing
Sunbeam since mid-June of 1998. Pursuant to the Parent Holdings Settlement
Agreement, Parent Holdings received from Sunbeam a five-year warrant (the
"Parent Holdings Warrant") to purchase up to an additional 23 million shares
of Sunbeam common stock at an exercise price of $7.00 per share, subject to
anti-dilution provisions.
Coincident with the execution of the Holdings Merger Agreement, the
Company, Sunbeam and Camper Acquisition Corp. ("CAC"), a wholly-owned
subsidiary of Sunbeam, entered into an Agreement and Plan of Merger (the
"Coleman Merger Agreement" and with the Holdings Merger Agreement,
collectively, the "Merger Agreements"), providing that among other things,
CAC will be merged with and into Coleman, with Coleman continuing as the
surviving corporation (the "Coleman Merger"). Pursuant to the Coleman Merger
Agreement, each share of the Company's common stock issued and outstanding
immediately prior to the effective time of the Coleman Merger (other than
shares held indirectly by Sunbeam and dissenting shares, if any) will be
converted into the right to receive (a) 0.5677 of a share of Sunbeam common
stock, with cash paid in lieu of fractional shares, and (b) $6.44 in cash,
without interest. In addition, outstanding stock options of Coleman
immediately vested upon consummation of the Holdings Merger Agreement and
unexercised stock options at the time of the Coleman Merger will be cashed
out by Sunbeam at a price per share equal to the difference between $27.50
per share and the exercise price of such options. In October 1998, Coleman
and Sunbeam entered into a memorandum of understanding to settle, subject to
court approval, certain class actions brought by minority shareholders of
Coleman against Coleman, Sunbeam and certain of their current and former
officers and directors challenging the proposed Coleman Merger. Under the
terms of the proposed settlement, if approved by the court, Sunbeam will
issue to the Coleman public shareholders five-year warrants to purchase up to
4.98 million shares of Sunbeam common stock at $7.00
F-7
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
per share, subject to certain anti-dilution provisions. These warrants will
generally have the same terms as the warrants previously issued to Parent
Holdings and will be issued when the Coleman Merger is consummated, which is
now expected to be during the second half of 1999. There can be no assurance
that the court will approve the settlement as proposed, although such
approval is not a condition to the consummation of the Coleman Merger.
The consummation of the Coleman Merger is contingent upon several
conditions including, among other things, the filing of a registration
statement under the Securities Act of 1933 (the "Securities Act") for the
purpose of registering the shares of Sunbeam common stock to be issued in the
Coleman Merger (the "Registration Statement") and that the Registration
Statement shall have become effective in accordance with the provisions of
the Securities Act. Sunbeam has filed a preliminary Registration Statement,
but is uncertain when the Registration Statement will become effective.
However, it is anticipated the Coleman Merger will be completed during the
second half of 1999. Upon consummation of the Coleman Merger, Coleman will
become an indirect wholly-owned subsidiary of Sunbeam.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries after elimination of all material intercompany
accounts and transactions.
CASH AND CASH EQUIVALENTS
All highly liquid investments with a maturity of three months or
less at the date of purchase are considered to be cash equivalents. The
Company's cash equivalents consist primarily of investments in money market
funds and commercial paper. The Company's cash equivalents are generally held
until maturity and are carried at cost, which approximates fair value.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost and depreciated on
a straight-line basis over the estimated useful lives of such assets as
follows: land improvements, 5 to 25 years; buildings and building
improvements, 7 to 45 years; and machinery and equipment, 3 to 15 years.
Leasehold improvements are amortized over their estimated useful lives or the
terms of the leases, whichever is shorter. Repairs and maintenance are
charged to operations as incurred, and significant expenditures for additions
and improvements are capitalized.
GOODWILL
Goodwill represents the excess of purchase price over the fair value
of identifiable assets related to various acquisitions, which is being
amortized on a straight-line basis over periods not in excess of 40 years.
The carrying amount of goodwill is reviewed if facts and circumstances
suggest it may be impaired. If this review indicates goodwill will not be
recoverable over the remaining amortization period, as determined based on
the estimated undiscounted cash flows of the entity acquired or other
qualitative factors, the carrying amount of the goodwill is reduced to
estimated fair value based on market value or discounted cash flows,
F-8
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
as appropriate. During 1998, the Company wrote off $8,759 of goodwill as a
result of its review of the Company's operations in Europe and changes in
certain operating strategies following the Sunbeam Acquisition. Accumulated
amortization aggregated $52,992 and $47,250 at December 31, 1998 and 1997,
respectively.
REVENUE RECOGNITION
The Company recognizes revenues at the time title passes to the
customer. Estimated customer returns and allowances are recognized at the
time of sale primarily based on historical experience.
RESEARCH AND DEVELOPMENT
Research and development expenditures are expensed as incurred. The
amounts charged against operations for the years ended December 31, 1998,
1997 and 1996 were $10,370, $11,871, and $11,082, respectively.
ADVERTISING AND PROMOTION EXPENSE
Production costs of future media advertising are deferred until the
advertising occurs. All other advertising and promotion costs are expensed
when incurred. The amounts charged against operations for the years ended
December 31, 1998, 1997 and 1996 were $52,062, $53,408, and $58,823,
respectively.
INSURANCE PROGRAMS
The Company obtains insurance coverage for catastrophic exposures as
well as those risks required to be insured by law or contract. It is the
policy of the Company to retain a significant portion of certain losses
related primarily to workers' compensation, employee health benefits,
physical loss and property, and product and vehicle liability. Provisions for
losses expected under these programs are recorded based upon the Company's
estimates of the aggregate liability for claims incurred.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign operations are generally
translated into United States dollars at the rates of exchange in effect at
the balance sheet date. Income and expense items are generally translated at
the weighted average exchange rates prevailing during each period presented.
Gains and losses resulting from foreign currency transactions are included in
the results of operations. Gains and losses resulting from translation of
financial statements of foreign subsidiaries and branches operating in
non-highly inflationary economies are recorded as a component of
stockholders' equity and other comprehensive income. Foreign subsidiaries and
branches operating in highly inflationary economies translate nonmonetary
assets and liabilities at historical rates and include translation
adjustments in the results of operations.
F-9
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
DERIVATIVE FINANCIAL INSTRUMENTS
INTEREST RATE SWAP AND CAP AGREEMENTS
The Company uses interest-rate swap and cap agreements to manage the
interest rate characteristics of its outstanding debt to a more desirable
fixed or variable rate basis or to limit the Company's exposure to rising
interest rates. Interest rate differentials to be paid or received as a
result of interest rate swap or cap agreements are accrued and recognized as
an adjustment of interest expense related to the designated debt. The fair
value of the swap and cap agreements and changes in the fair value as a
result of changes in market interest rates are not recognized in the
financial statements. Related premiums paid are amortized to interest expense
ratably during the life of the swap or cap agreement.
Gains and losses on termination of interest rate swap and cap
contracts are deferred and amortized as an adjustment to interest expense
over the original period of interest exposure, provided the designated
liability continues to exist. Realized and unrealized changes in fair value
of interest rate swap and caps designated with liabilities that no longer
exist are recorded as a component of the gain or loss arising from the
disposition of the designated liability.
FOREIGN CURRENCY OPTIONS AND FORWARD CONTRACTS
The Company uses foreign currency option and forward contracts
(collectively, "Foreign Currency Contracts") to reduce its exposure to
foreign currency risk related primarily to transactions with its foreign
subsidiaries, including amounts payable or receivable, firm commitments and
anticipated transactions. Foreign Currency Contracts designated and effective
as hedges are marked to market with realized and unrealized gains and losses
deferred and recognized in earnings when the designated transaction occurs.
Foreign Currency Contracts not designated as hedges, fail to be or continue
as effective hedges, or relate to transactions which are no longer probable
of occurring are included in income as foreign exchange gains or losses.
Discounts or premiums on forward contracts designated and effective as hedges
are accreted or amortized to expense using the straight-line method over the
term of the related contract. Discounts or premiums on forward contracts not
designated or effective as hedges are included in the mark to market
adjustment and recognized in income as foreign exchange gains or losses.
Initial premiums paid for purchased option contracts are amortized over the
related option period.
CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash and cash equivalents,
trade receivables and derivative financial instruments. The Company places
its funds into high credit quality financial institutions and, at times, may
be in excess of the federal depository insurance limit. Credit risk on trade
receivables is minimized as a result of the large and diversified nature of
the Company's worldwide customer base. Although the Company has one
significant customer (See Note 18), there have been no credit losses related
to this customer. With respect to its derivative contracts, the Company is
also subject to credit risk of non-performance by counterparties and its
maximum potential loss may exceed the amount recognized in the financial
statements. The Company controls its exposure to credit risk through credit
approvals, credit limits and monitoring procedures. Collateral is generally
not required for the Company's financial instruments.
F-10
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
CASH AND CASH EQUIVALENTS: The carrying amount reported in the
balance sheet for cash and cash equivalents approximates its fair
value.
LONG- AND SHORT-TERM DEBT: The carrying amounts of the Company's
borrowings under its foreign bank lines of credit, revolving
credit agreement and other variable rate debt, including debt
payable to affiliate, approximate their fair value. The fair value
of the Company's senior notes issues (see Note 9) was estimated
using discounted cash flow analysis based on the Company's
estimated current borrowing rate for similar types of borrowing
arrangements.
FOREIGN CURRENCY EXCHANGE CONTRACTS: The fair values of the
Company's foreign currency contracts were estimated based on
quoted market prices of comparable contracts, adjusted through
interpolation where necessary for maturity differences.
INTEREST RATE SWAP: The fair values of interest rate swap
agreements were the amounts at which they could be terminated,
based on estimates obtained from dealers.
The carrying amounts and fair values of the Company's financial
instruments are as follows:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
--------------------------- -------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
of Asset/ of Asset/ of Asset/ of Asset/
(Liability) (Liability) (Liability) (Liability)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents..................... $ 23,413 $ 23,413 $ 13,031 $ 13,031
Short-term debt............................... (45,803) (45,803) (64,207) (64,207)
Long-term debt excluding capital leases....... -- -- (477,499) (445,792)
Foreign currency exchange contracts........... 83 (22) 128 128
Debt payable to affiliate..................... (363,893) (363,893) -- --
Interest rate swap agreement.................. -- (930) -- (171)
</TABLE>
STOCK-BASED COMPENSATION
The Company accounts for stock-based compensation plans using the
intrinsic value method prescribed in Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees", and related
Interpretations. Accordingly, compensation cost for stock options is measured
as the excess, if any, of the quoted market price of Coleman's stock at the
date of the grant over the amount an employee must pay to acquire the stock.
F-11
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
EARNINGS PER SHARE
Basic loss per share is computed using the weighted average number
of shares of outstanding common stock. Diluted loss per share for the years
ended December 31, 1998, 1997 and 1996 is based only on the weighted average
number of common shares outstanding during each of those years, as the
inclusion of 192,400, 153,218, and 352,926 common share equivalents,
respectively, would have been antidilutive.
Stock options to purchase 923,670, 1,931,000, and 2,457,520 shares
of common stock were outstanding at December 31, 1998, 1997, and 1996,
respectively, but were not included in the computation of common share
equivalents because the option exercise price was greater than the average
market price of Coleman's common stock during each of the respective years.
RECLASSIFICATIONS
Certain prior year amounts in the financial statements have been
reclassified to conform to the current year presentation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ materially from those
estimates.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. SFAS
No. 133 requires an entity to recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value
with any unrealized gain or loss recognized as a component of net income or
other comprehensive income. SFAS No. 133 will be effective for the Company's
fiscal year beginning January 1, 2000. Earlier application of the provisions
of SFAS No. 133 are encouraged; however, the Company has not determined if it
will apply the provisions of SFAS No. 133 prior to January 1, 2000, nor has
the Company estimated the impact of applying the provisions of SFAS No. 133
on the Company's statement of financial position or statement of operations.
2. ACQUISITIONS AND DIVESTITURES
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 safety and security related
electronic products for residential and commercial applications. The Seatt
acquisition, which was accounted for under the purchase method, was completed
for approximately $65,300 including fees and expenses. The results of
operations of Seatt have been included in the consolidated financial
statements from the date of acquisition. In connection with the purchase
price allocation of the Seatt acquisition, the Company recorded goodwill of
approximately $38,800. On March 24, 1998, the Company sold Coleman Safety &
Security Products, Inc. ("CSS"), the successor to the assets acquired from
Seatt, to Ranco Incorporated of
F-12
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
Delaware ("Ranco"), a wholly-owned subsidiary of Siebe plc, for approximately
$95,798, net of fees and expenses. In connection with the sale of CSS, the
Company recorded a pre-tax gain of $25,098 during 1998.
On February 28, 1996, the Company purchased approximately 70% of the
outstanding shares of Application des Gaz, S.A. ("ADG" or "Camping Gaz"), a
leading manufacturer and distributor of camping appliances in Europe. The
Company completed the necessary steps to acquire the remaining 30% of the
outstanding shares during the second quarter of 1996. The cost of acquiring
all the shares of ADG was approximately $100,000 including fees and expenses.
The acquisition of Camping Gaz was accounted for under the purchase method.
In connection with the final allocation of purchase price to the fair values
of assets acquired and liabilities assumed, the Company recorded goodwill of
approximately $78,900, which is being amortized over 40 years on the
straight-line method. At acquisition, the Company recognized a liability in
the amount of $21,898 representing severance and other termination benefits
for certain production and administrative employees of Camping Gaz pursuant
to a plan adopted by management to integrate the Camping Gaz and Coleman
operations into a global recreation products business. During 1998, 1997, and
1996, approximately $2,161, $10,459, and $5,409, respectively, of severance
and other termination benefits were paid and charged against the liability.
The Company has recorded reductions to the liability of $1,696 related
primarily to changes in its initial estimate, which have been reflected as a
reduction of the cost to acquire Camping Gaz and has reduced the related
goodwill. As of December 31, 1998, $2,173 of this liability remains and is
expected to be paid by the first quarter of 2000.
The Company has included the results of operations of Camping Gaz in
the consolidated financial statements from March 1, 1996, the date on which
the Company obtained control of Camping Gaz, and has recognized minority
interest related to the remaining shares for the period March 1, 1996 through
June 30, 1996.
The following summarized, unaudited pro forma results of operations
for the year ended December 31, 1996 assume the acquisition of all the
outstanding shares of Camping Gaz occurred as of the beginning of 1996. The
pro forma results include certain adjustments, primarily reflecting increased
amortization and interest expense and a lower income tax provision, and are
not necessarily indicative of what the results of operations would have been
had the Camping Gaz acquisition occurred at the beginning of 1996. Moreover,
the pro forma information is not intended to be indicative of future results
of operations.
<TABLE>
<CAPTION>
Year Ended
December 31,
1996
------------
<S> <C>
Net revenues...................................................... $ 1,246,370
Loss before extraordinary item.................................... 41,407
Net loss.......................................................... 42,054
Basic loss per common share:
Loss before extraordinary item............................... $ 0.78
Net loss.................................................... 0.79
</TABLE>
F-13
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
On October 13, 1998, the Company sold Coleman Spas, Inc. ("Spas"), a
wholly-owned subsidiary of the Company, which manufactures and markets
portable spas and related products for the consumer market, to MAAX Holdings
Inc., a wholly-owned subsidiary of MAAX Inc., for approximately $17,040, net
of fees and expenses. In connection with the sale of Spas, the Company
recorded a pre-tax gain of $7,313 in 1998. The net proceeds from the sale of
Spas are subject to certain post-closing adjustments which could change the
pre-tax gain.
3. RESTRUCTURING AND OTHER CHARGES
During 1996, 1997 and 1998, the Company recorded restructuring
charges totaling $66,202, $32,791 and $17,635, respectively. The charges
generally relate to integration of operations following business acquisitions
(including costs associated with consolidation of operations and severance),
elimination of product lines, consolidation and/or rationalization of
facilities, severance and employee termination costs and additional costs
related to these activities. There were no significant operations generated
from facilities or assets included in a restructuring charge since the date
of the charge.
In addition to the restructuring charges, the Company recorded other
charges during 1996, 1997 and 1998 totaling $7,998, $3,628 and $13,672,
respectively. These charges primarily relate to asset write-offs and
integration expense, but do not meet the criteria to qualify as restructuring
charges. These charges are combined with the restructuring charges in the
following table.
<TABLE>
<CAPTION>
Inventory Idle
Impairment and Other Facilities
of Fixed Asset Termination and Other
Assets Impairments Costs Exit Costs Total
---------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1996 Charges................... $ 10,012 $ 38,257 $ 2,018 $ 23,913 $ 74,200
Activity....................... (1,789) (25,875) (1,633) (12,429) (41,726)
-------- --------- -------- ---------- ---------
Balance at 12/31/96............ 8,223 12,382 385 11,484 32,474
1997 Charges................... 6,449 10,961 12,146 6,863 36,419
Activity....................... (6,530) (14,966) (9,729) (9,656) (40,881)
-------- --------- -------- ---------- ---------
Balance at 12/31/97............ 8,142 8,377 2,802 8,691 28,012
1998 Charges................... 1,288 3,956 15,668 10,395 31,307
Activity....................... (1,364) (10,524) (9,814) (15,747) (37,449)
-------- --------- -------- ---------- ---------
Balance at 12/31/98............ $ 8,066 $ 1,809 $ 8,656 $ 3,339 $ 21,870
-------- --------- -------- ---------- ---------
-------- --------- -------- ---------- ---------
</TABLE>
During 1996, the Company recorded restructuring charges of $66,202
and other charges of $7,998. The Company reflected $44,005 of the charges in
cost of sales and $30,195 in selling, general and administrative ("SG&A")
expenses. The components of the charges are as follows.
INTEGRATION OF CAMPING GAZ AND COLEMAN - Restructuring charges
totaling $29,067 were recorded to integrate the Camping Gaz operations.
Actions related to the integration included consolidating facilities,
eliminating duplicate product lines including related inventory and
equipment, and termination of employees. The charges for these actions are
included in the table above as follows: Impairment of Fixed Assets, $9,035;
Inventory and Other Asset Impairments, $6,437; Termination Costs, $1,799; and
Idle Facilities and Other Exit Costs, $11,796. The severance and termination
costs related to approximately 200 employees, all of
F-14
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
whom had left the Company by December 31, 1996. The severance and termination
costs and other exit costs were cash charges, while the fixed asset and
inventory and other asset impairments resulted in non-cash charges. The
integration actions were substantially complete by December 31, 1998, with the
disposal of an idle warehouse being the only significant remaining action to
be completed. The only significant adjustment recorded to the original charge
was to increase the allowance for the idle warehouse by $1,705 to $7,938. The
warehouse remains unsold at December 31, 1998.
EXIT LOW END ELECTRIC PRESSURE WASHER BUSINESS - The Company
recorded restructuring charges totaling $19,000 to exit the Company's low end
electric pressure washer business. The exit costs included $13,211 for
disposing of inventory and other assets, and $5,789 for other exit costs. The
inventory disposal was substantially complete by December 31, 1997, and
resulted in non-cash charges. The other exit costs were substantially paid by
December 31, 1997, and principally resulted in cash charges. No significant
adjustments were made to the original charge in subsequent periods.
EXIT A PORTION OF BATTERY POWERED LIGHT BUSINESS - Restructuring
charges totaling $18,135 were recorded to exit a portion of the Company's
battery powered light business during the year as part of a settlement with
another battery powered light manufacturer. The charges included $12,618 for
inventory and other asset impairments and $5,517 for other exit costs. Other
exit costs include $4,000 cash charges to settle litigation with the other
battery powered light manufacturer. The inventory was destroyed and the exit
costs were fully paid by December 31, 1997. No significant adjustments were
made to the original charge in subsequent periods.
OTHER CHARGES - The Company recorded other charges totaling $7,998
which principally consist of costs to exit portions of certain products and
recognition of quality issues related to these and other products. The costs
do not qualify as restructuring charges, but are included in the table above
since the amounts involved are larger than similar charges in prior years.
These costs are included in the table above as follows: Impairment of Fixed
Assets, $977; Inventory and Other Asset Impairments, $5,991; Termination
Costs, $219; and Idle Facilities and Other Exit Costs, $811.
During 1997, the Company recorded restructuring charges of $32,791
and other charges of $3,628. The Company reflected $19,673 of the charges in
cost of sales and $16,746 in SG&A expenses. Significant components of the
charges are as follows.
EXIT LOW-MARGIN PRODUCT LINES - The Company recorded restructuring
charges of $15,735 to eliminate several low-margin product lines including
the remaining pressure washer business and numerous stock keeping units in
the outdoor products business. The majority of these charges relate to
inventory disposals and related actions and are included in the table above
as follows: Impairment of Fixed Assets, $2,105; Inventory and Other Asset
Impairments, $10,290; Termination Costs, $1,503; and Idle Facilities and
Other Exit Costs, $1,837. The termination costs and other exit costs were
generally cash charges, while the charges for the inventory and other assets
were generally non-cash charges. The actions to exit the low-margin product
lines were substantially complete by December 31, 1998. The termination costs
related to approximately 25 employees, all of whom had left the Company by
December 31, 1997. No significant adjustments were made to the original
charge in subsequent periods.
CLOSE AND RELOCATE CERTAIN ADMINISTRATIVE AND SALES OFFICES - The
Company recorded restructuring and other charges totaling $14,943 to close
and relocate certain administrative and sales offices during the year. The
locations included corporate, domestic and international facilities and the
majority of the charges
F-15
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
related to employee termination benefits. The charges are included in the
table above as follows: Impairment of Fixed Assets, $1,617; Termination
Costs, $9,450; and Idle Facilities and Other Exit Costs, $3,876. This plan
was fully implemented in 1997, and substantially all of the termination and
other exit costs were cash charges. The termination costs related to
approximately 85 employees, all of whom left the Company by December 31,
1997. The fixed asset impairments resulted in non-cash charges. An additional
charge of approximately $5,347 was included in the 1998 restructuring charges
to add to the employee termination benefits due to the outcome of related
arbitration. The remaining amount of unpaid termination costs at December 31,
1998 of $4,264 is expected to be paid by December 31, 2000.
CLOSE SEVERAL MANUFACTURING FACILITIES - Restructuring charges
totaling $5,741 were recorded to close two domestic and one international
manufacturing facility in 1997 in order to further consolidate operations and
reduce costs. Costs associated with the closures are included in the table
above as follows: Impairment of Fixed Assets, $2,727; Inventory and Other
Asset Impairments, $671; Termination Costs $1,193; and Idle Facilities and
Other Exit Costs, $1,150. The actions associated with the facilities closure
were substantially complete as of December 31, 1997, and consisted of cash
charges for termination costs and other exit costs and primarily non-cash
charges for asset impairments. The termination costs related to approximately
415 employees, all of whom left the Company by December 31, 1997. No
significant adjustments were made to the original charge in subsequent
periods.
During 1998, the Company recorded $17,635 of restructuring charges
and other charges of $13,672. The Company reflected $1,062 of the charges in
cost of sales and $30,245 in SG&A expenses. Significant components of the
charges are as follows.
CLOSE FACILITIES - The Company recorded restructuring charges of
$3,507 to further consolidate operations and improve efficiency. The related
actions included closing several operations in Europe and one domestic
manufacturing facility during the year. The charges associated with the
closures are included in the table above as follows: Impairment of Fixed
Assets, $13; Inventory and Other Asset Impairments, $101; Termination Costs,
$2,547; and Idle Facilities and Other Exit Costs, $846. The termination costs
included severance benefits for approximately 150 employees, which had been
fully paid to the former domestic employees by December 31, 1998, and will be
fully paid to the European employees by December 31, 2000. The asset
impairment charges are principally non-cash charges and the related actions
were generally completed by December 31, 1998. The other exit costs are
primarily non-cash charges and have generally been paid by December 31, 1998.
No additional charges are anticipated in future periods from the foregoing
actions.
EMPLOYEE TERMINATION AND SEVERANCE - The Company recorded
restructuring and other charges totaling $7,891 following the Sunbeam
acquisition for the termination of 117 employees. The charges, all included
in Termination Costs in the above table, are cash charges which will be fully
paid by December 31, 2000. No additional charges are anticipated in future
periods related to this issue.
REVISE PRIOR YEAR ESTIMATES - The Company recorded restructuring and
other charges totaling $6,237 as adjustments to charges previously recorded
in 1996 and 1997, due to changes in facts and circumstances related to the
prior years' restructuring issues, including a change in the carrying value
of the idle warehouse identified as part of the integration of Camping Gaz
and Coleman and a change in the termination benefits related to the closure
and relocation of certain administrative and sales offices described above.
The charges are included in the table above as follows: Impairment of Fixed
Assets, $1,119; Inventory and Other Asset Impairments, ($419); Termination
Costs, $5,230; and Idle Facilities and Other Exit Costs, $307. As indicated
above, the idle warehouse remains held for sale at December 31, 1998, and the
additional termination costs
F-16
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
are expected be paid by December 31, 2000.
ACQUISITION OF COLEMAN BY SUNBEAM - The Company recorded other
charges totaling $13,672 resulting from expenses associated with the
acquisition of the Company by Sunbeam including advisory fees, abandoning a
company-wide enterprise resource computer software system, and terminating a
licensing services agreement with an affiliate of Parent Holdings. These
charges do not qualify as restructuring charges, but are included in the
table above because of the unusual nature of the costs. These charges are
included in the table above as follows: Impairment of Fixed Assets, $156;
Inventory and Other Asset Impairments, $4,274; and Idle Facilities and Other
Exit Costs, $9,242. No additional charges are anticipated in future periods
related to this issue.
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
December 31,
---------------------
1998 1997
--------- ---------
<S> <C> <C>
Raw material and supplies......................................... $ 45,395 $ 59,406
Work-in-process................................................... 6,539 7,813
Finished goods.................................................... 178,192 169,108
--------- ---------
$ 230,126 $ 236,327
--------- ---------
--------- ---------
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following:
<TABLE>
<CAPTION>
December 31,
---------------------
1998 1997
--------- ---------
<S> <C> <C>
Land and land improvements........................................ $ 6,429 $ 7,700
Buildings and building improvements............................... 73,964 79,101
Machinery and equipment........................................... 180,315 192,650
Construction-in-progress.......................................... 7,983 10,076
--------- ---------
268,691 289,527
Accumulated depreciation.......................................... (122,868) (114,033)
--------- ---------
$ 145,823 $ 175,494
--------- ---------
--------- ---------
</TABLE>
Depreciation expense was $25,672, $26,956, and $25,770 for the
years ended December 31, 1998, 1997 and 1996, respectively.
F-17
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
6. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
December 31,
---------------------
1998 1997
--------- ---------
<S> <C> <C>
Compensation and related benefits................................. $ 26,305 $ 20,385
Other............................................................. 74,809 73,411
--------- ---------
$ 101,114 $ 93,796
--------- ---------
--------- ---------
</TABLE>
7. OTHER LIABILITIES
Other liabilities consisted of the following:
<TABLE>
<CAPTION>
December 31,
---------------------
1998 1997
--------- ---------
<S> <C> <C>
Pensions and other postretirement benefits........................ $ 52,770 $ 49,121
Other............................................................. 22,461 20,465
--------- ---------
$ 75,231 $ 69,586
--------- ---------
--------- ---------
</TABLE>
8. SHORT-TERM BORROWINGS
The Company maintained short-term bank lines of credit at December
31, 1998 and 1997 aggregating approximately $76,390, and $115,249,
respectively, of which approximately $45,803 and $64,207 were outstanding at
December 31, 1998 and 1997, respectively. The weighted average interest rate
on amounts borrowed under these short-term lines was approximately 2.8% and
2.7% at December 31, 1998 and 1997, respectively.
Outstanding letters of credit aggregated approximately $40,606 and
$37,208 at December 31, 1998 and 1997, respectively.
9. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
December 31,
---------------------
1998 1997
--------- ---------
<S> <C> <C>
7.26% Senior Notes due 2007 (b)................................... $ -- $ 200,000
7.10% Senior Notes due 2006 (b)................................... -- 85,000
7.25% Senior Notes due 2008 (b)................................... -- 75,000
Revolving credit facility (a)..................................... -- 52,127
Term loan (a)..................................................... -- 64,894
Other............................................................. 472 778
--------- ---------
472 477,799
Less current portion.............................................. 110 523
--------- ---------
$ 362 $ 477,276
--------- ---------
--------- ---------
</TABLE>
F-18
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
---------------
a) In April 1996, the Company amended its credit agreement to: a)
provide a French Franc term loan, b) provide a $275,000 unsecured
revolving credit facility, c) allow for the Camping Gaz
acquisition and d) extend the maturity of the credit agreement.
Based upon the amended terms of the credit agreement, the Company
deemed the amended terms were substantially different from the
original terms of the credit agreement and therefore, accounted
for the transaction as an extinguishment of the old credit
agreement and creation of a new credit agreement. The
extraordinary loss recorded by the Company of $1,078 in 1996
represents a write-off of the unamortized financing costs
associated with the old credit agreement. In March 1998, in
connection with the Sunbeam Acquisition, the Company repaid all
outstanding indebtedness under the Company's credit agreement and
the credit agreement was terminated. In connection with the
termination of this agreement, the Company recorded an
extraordinary loss of $2,038 in 1998 which represents a write-off
of the related unamortized financing costs associated with the
credit agreement.
b) The Company's various senior notes aggregating $360,000 were
redeemed on April 21, 1998 at a cost of $383,395. The $23,395 of
redemption costs in excess of carrying value along with the
write-off of the related unamortized financing costs of $2,694 and
unamortized deferred interest rate swap losses of $885 are
reflected as an extraordinary loss on early extinguishment of
debt.
The aggregate scheduled amounts of long-term debt maturities in the
years 1999 through 2003 are $110, $175, $97, $24, and $24, respectively.
10. ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income (loss) consisted of the
following:
<TABLE>
<CAPTION>
Accumulated
Currency Minimum Other
Translation Pension Comprehensive
Adjustment Liability Income/(Loss)
----------- --------- -------------
<S> <C> <C> <C>
Balance at December 31, 1995......................... $ 165 $ -- $ 165
Current year pre-tax change.......................... 3,011 (470) 2,541
Tax benefit.......................................... -- 185 185
--------- --------- ---------
Balance at December 31, 1996......................... 3,176 (285) 2,891
Current year pre-tax change.......................... (9,946) (1,056) (11,002)
Tax (expense) benefit................................ (3,566) 418 (3,148)
Minority interest.................................... (1,174) -- (1,174)
--------- --------- ---------
Balance at December 31, 1997......................... (11,510) (923) (12,433)
Current year pre-tax change.......................... 8,142 (568) 7,574
Tax (expense) benefit................................ (602) 225 (377)
Minority interest.................................... (414) -- (414)
--------- --------- ---------
Balance at December 31, 1998......................... $ (4,384) $ (1,266) $ (5,650)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-19
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
11. DERIVATIVE FINANCIAL INSTRUMENTS
The Company enters into foreign currency forward exchange contracts
and purchased foreign currency options to mitigate a portion of the risk
related primarily to transactions with its foreign subsidiaries including
amounts payable or receivable, firm commitments and anticipated transactions.
The purpose of the Company's foreign currency risk management activities is
to protect the Company from the risk that future cash flows resulting from
transactions with its foreign subsidiaries will be adversely affected by
changes in exchange rates.
At December 31, 1998 and 1997, the Company had forward exchange
contracts and purchased options, all having maturities of less than one year,
to exchange various foreign currencies for U.S. dollars in the amount of
$63,286 and $1,580, respectively. The table below summarizes by currency, the
contractual amounts and related unrealized gain (loss) of the Company's
forward exchange and option contracts at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Purchased Recognized Deferred
Forward Option Total Unrealized Unrealized
Contracts Contracts Contracts Gain (Loss) Gain (Loss)
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
December 31, 1998
Currency:
Deutschemark............... $ 12,000 $ 18,369 $ 30,369 $ 207 $ --
Yen........................ 14,941 12,451 27,392 (655) --
Pound sterling............ 4,000 1,525 5,525 57 --
--------- --------- --------- ------- -----
Total $ 30,941 $ 32,345 $ 63,286 $ (391) $ --
--------- --------- --------- ------- -----
--------- --------- --------- ------- -----
December 31, 1997
Currency:
Yen........................ $ 1,580 $ -- $ 1,580 $ -- $ 128
--------- --------- --------- ------- -----
--------- --------- --------- ------- -----
</TABLE>
The Company also manages its interest rate risks through the use of
interest rate swaps under which the Company agrees to exchange, at specified
intervals, the difference between fixed- and variable-interest amounts
calculated on an agreed notional principal amount. As the Company's interest
bearing liabilities primarily represent variable-rate short- and long-term
debt, interest rate swaps are used to reduce the impact of changes in
interest rates on interest expense. At December 31, 1998, $25,000 of the
Company's debt payable to affiliate was subject to an interest rate swap
agreement. Under the interest rate swap agreement, the Company pays the
counterparty interest at a fixed rate of 6.115%, and the counterparty pays
the Company interest at a variable rate equal to the three month LIBOR over
the next three years.
The Company accounts for its interest rate swaps and caps using
hedge accounting with the net payable or receivable accrued as an adjustment
to current period interest expense. Unrealized gains or losses related to
interest rate swaps and caps are not reflected in the accompanying financial
statements. As of December 31, 1998 and 1997, the Company's interest rate
swaps and caps had a cumulative unrealized loss of approximately $930 and
$171, respectively.
F-20
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. INCOME TAXES
For all taxable periods ended on or prior to March 30, 1998, the
Company was included in the consolidated federal income tax return of M&F and
certain consolidated state tax returns of M&F or its affiliates
(collectively, the "M&F Consolidated Returns") pursuant to a tax sharing
agreement (the "Tax Sharing Agreement") between M&F, Coleman Worldwide and
Coleman. Pursuant to the Holdings Merger Agreement, the Tax Sharing Agreement
terminated with respect to M&F and its affiliates, but not with respect to
Coleman Worldwide. The Sunbeam Acquisition caused the Company to become
deconsolidated from the M&F Consolidated Return and resulted in the loss of
certain deferred tax assets which have been charged to income tax expense.
For periods ended subsequent to March 30, 1998, the Company will file its own
separate federal and certain state income tax returns until such time as
Sunbeam owns more than 80% of the outstanding Coleman common stock and also
will be included in certain other consolidated state income tax returns of
Sunbeam. For all periods presented, federal and state income taxes are
provided as if the Company filed its own income tax returns. The accompanying
consolidated balance sheet includes approximately $1,019 and $14,860 of
federal and state income taxes receivable from affiliates at December 31,
1998 and 1997, respectively.
For financial reporting purposes, (loss) earnings before income
taxes, minority interest and extraordinary item include the following
components:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
(Loss) earnings before income taxes, minority
interest and extraordinary item:
Domestic.......................................... $ (24,833) $ (14,129) $ (29,532)
Foreign........................................... (1,608) 7,752 (20,769)
--------- --------- ---------
$ (26,441) $ (6,377) $ (50,301)
--------- --------- ---------
--------- --------- ---------
</TABLE>
Significant components of the provision for income tax expense
(benefit) were as follow:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal.............................................. $ 2,093 $ (11,045) $ (709)
State .............................................. 72 -- (334)
Foreign.............................................. 2,868 1,485 3,454
--------- --------- ---------
Total current..................................... 5,033 (9,560) 2,411
--------- --------- ---------
Deferred:
Federal.............................................. 2,735 7,851 (10,686)
State .............................................. (1,323) (1,493) (2,178)
Foreign.............................................. 7,401 (2,025) (474)
--------- --------- ---------
Total deferred.................................... 8,813 4,333 (13,338)
--------- --------- ---------
$ 13,846 $ (5,227) $ (10,927)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-21
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
The effective tax rate on (loss) earnings before income taxes,
minority interest and extraordinary item varies from the current statutory
federal income tax rate as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
(Benefit) provision at statutory rate................... (35.0)% (35.0)% (35.0)%
State taxes, net........................................ (3.1) (15.2) (4.6)
Nondeductible amortization ............................. 29.0 37.1 5.0
Nondeductible merger costs.............................. 9.4 -- --
Deconsolidation tax charges............................. 17.5 -- --
Foreign operations...................................... 5.9 (66.4) 4.3
Change in tax rates..................................... 6.2 (20.8) --
Valuation allowance..................................... 29.0 37.0 7.0
Puerto Rico operations.................................. (2.2) (12.9) 0.4
Other, net.............................................. (4.3) (5.8) 1.2
----- ----- -----
Effective tax rate (benefit) provision.................. 52.4% (82.0)% (21.7)%
----- ----- -----
----- ----- -----
</TABLE>
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------
1998 1997
--------- ---------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits other than pensions....................... $ 12,991 $ 12,964
Reserves for self-insurance and warranty costs.................... 5,979 4,898
Pension liabilities............................................... 8,137 7,377
Inventory......................................................... 8,322 6,626
Net operating loss carryforwards.................................. 74,095 56,739
Other, net........................................................ 12,632 12,728
--------- ---------
Total deferred tax assets.................................... 122,156 101,332
Valuation allowance............................................... (45,058) (39,990)
--------- ---------
Net deferred tax assets.................................. 77,098 61,342
--------- ---------
Deferred tax liabilities:
Depreciation...................................................... 16,507 19,872
Other, net........................................................ 13,811 10,676
--------- ---------
Total deferred tax liabilities............................... 30,318 30,548
--------- ---------
Net deferred tax assets.................................. $ 46,780 $ 30,794
--------- ---------
--------- ---------
</TABLE>
The deferred tax account balance at December 31, 1998 differs from
the account balance at December 31, 1997 due primarily to the 1998 deferred
tax provision, the tax effects of foreign translation
F-22
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
adjustments, the exercise of employee stock options recorded as a component
of stockholders' equity and the tax effect of the benefit related to debt
extinguishment treated as an extraordinary item.
During 1998, the Company increased the valuation allowance related
to certain foreign deferred tax assets due to uncertainties over realization.
At December 31, 1998, the Company had net operating loss carryforwards
("NOLs") of approximately $160,227 for certain domestic and foreign income
tax purposes. These NOLs expire beginning in 1999.
The Company has not provided for taxes on undistributed foreign
earnings of approximately $19,153 at December 31, 1998, as the Company
intends to permanently reinvest these earnings in the future growth of the
business. Determination of the amount of unrecognized deferred U.S. income
tax liability is not practicable because of the complexities associated with
its hypothetical calculation.
13. RELATED PARTY TRANSACTIONS
BORROWINGS FROM SUNBEAM
The Company's ability to meet its current cash operating
requirements, including projected capital expenditures and other obligations,
is dependent upon a combination of cash flows from operations and advances or
loans to the Company from Sunbeam or its affiliates. Sunbeam has informed the
Company that it has the positive intent and ability to fund the Company's
cash requirements through April 10, 2000. Amounts loaned by Sunbeam are
represented by a promissory note (the "Intercompany Note") which totaled
$365,063 at December 31, 1998 and until the amendment and restatement of the
Intercompany Note described below, were due on demand. For 1998, the
Intercompany Note bore interest at a floating rate equal to the weighted
average interest rate incurred by Sunbeam on its outstanding convertible debt
and borrowings under its bank credit facility. The weighted average interest
rate charged by Sunbeam on the Intercompany Note during the year ended
December 31, 1998 was 7.1% and the total interest charged by Sunbeam to
Coleman was $20,991. Sunbeam also charged to Coleman a pro-rata share of
amortized debt issuance costs and unused bank credit facility commitment fees
totaling $743. Net amounts advanced from Sunbeam along with the related
unpaid interest and other costs are reflected as debt payable to affiliate in
the Company's consolidated balance sheet. Coleman is also a borrower under
Sunbeam's credit facility (the "Sunbeam Credit Facility") for purposes of
letters of credit borrowings.
On April 15,1999, Coleman, Sunbeam and, as to certain agreements,
the lenders under the Sunbeam Credit Facility entered into an amended and
restated Intercompany Note (the "Amended Intercompany Note"), intercompany
security and pledge agreements, an amendment to the Sunbeam Credit Facility
and certain other agreements (collectively, the "Agreements"). The Amended
Intercompany Note is due April 15, 2000. The Amended Intercompany Note bears
interest at an annual rate equal to (x) 4% if the six month London Interbank
Offering Rate ("LIBOR") quoted on the Telerate system is less than 6%, or (y)
5% if the six month LIBOR quoted on the Telerate system is 6% or higher,
subject to increases during an event of default, and interest will be payable
by adding the amount of such interest to the principal balance of the Amended
Intercompany Note. In addition, the Amended Intercompany Note provides that
an event of default under the Sunbeam Credit Facility will constitute an
event of default under the Amended Intercompany Note and that in certain
circumstances the payment on the Amended Intercompany Note will be
subordinate to Coleman's obligations under the Sunbeam Credit Facility.
Pursuant to the Agreements, Coleman has pledged to Sunbeam all of its
domestic assets, other than its real property, including 66% of the stock of
its domestic holding companies for its foreign subsidiaries and all of the
stock of its other domestic subsidiaries (but Coleman's subsidiaries have not
pledged their assets or stock of their subsidiaries), as security for the
Amended Intercompany Note. Sunbeam has pledged the Amended Intercompany Note
as security for the Sunbeam Credit Facility and assigned to such lenders the
security pledged by Coleman for the Amended Intercompany Note.
F-23
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
The Sunbeam Credit Facility provides for a revolving credit facility in
an aggregate principal amount of up to $400,000 (subject to certain reductions)
maturing March 31, 2005. In addition, pursuant to the Sunbeam Credit Facility,
Sunbeam has borrowed approximately $1,262,500 in two tranches of term loans with
scheduled repayments through maturity on March 31, 2005. As a result of
Sunbeam's operating losses during 1998, Sunbeam was not in compliance with the
financial covenants contained in the Sunbeam Credit Facility. In April 1999,
Sunbeam and its lenders entered into an amendment to the Sunbeam Credit Facility
which amended and added certain financial covenants and waived compliance with
certain other financial covenants through April 10, 2000. Interest accrues at a
rate selected at Sunbeam's option of: (i) LIBOR plus an agreed upon interest
margin which varies depending upon the occurrence of certain specified events
or, (ii) the base rate of the administrative agent (generally the higher of the
prime commercial lending rate of the administrative agent or the Federal Funds
Rate plus one-half of 1%), plus an agreed upon interest margin which varies
depending upon the occurrence of certain specified events.
Borrowings under the Sunbeam Credit Facility are secured by a pledge of
the stock of certain of Sunbeam's subsidiaries and by a security interest in
substantially all of the assets of Sunbeam and its material subsidiaries (other
than as described below, Coleman and its subsidiaries), including the Amended
Intercompany Note. Sunbeam has pledged its shares of Coleman common stock and
its shares of Sunbeam Corporation Canada Limited ("Sunbeam Canada") common stock
owned by it as security under the Sunbeam Credit Facility. In addition,
borrowings under the Sunbeam Credit Facility are guaranteed by certain of
Sunbeam's wholly owned material United States subsidiaries (but not Coleman) and
such subsidiary guarantees are secured as described above. Coleman has pledged
its inventory (but not that of its subsidiaries) and the proceeds from the sale
of such inventory as collateral for its letter of credit borrowings under the
Sunbeam Credit Facility.
The Sunbeam Credit Facility contains covenants customary for credit
facilities of a similar nature, including limitations on the ability of
Sunbeam and its subsidiaries, including Coleman, to, among other things, (i)
declare dividends or repurchase stock, (ii) prepay, redeem or repurchase
debt, incur liens and engage in sale-leaseback transactions, (iii) make loans
and investments, (iv) incur additional debt, (v) amend or otherwise alter
material agreements, (vi) make capital expenditures and Year 2000 remediation
expenditures, (vii) engage in mergers, acquisitions and asset sales, (viii)
engage in certain transactions with affiliates, (ix) settle certain
litigations, (x) alter its cash management system and (xi) alter the
businesses they conduct. The Sunbeam Credit Facility requires that the
registration statement for the shares of Sunbeam common stock to be issued in
the Coleman Merger be declared effective by October 30, 1999, and that the
Coleman Merger be consummated no more than 25 business days after such
registration statement is declared effective. Sunbeam is also required to
maximize its subsidiaries' utilization of available foreign credit facilities
and Sunbeam's accounts receivable facility and to comply with specified
financial covenants and ratios. The Sunbeam Credit Facility provides for
events of default customary for transactions of this type, including
nonpayment, misrepresentation, breach of covenant, cross-defaults,
bankruptcy, ERISA, judgments and change of ownership and control.
F-24
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
BUSINESS ACQUISITIONS
As of March 31, 1997, the Company purchased an inactive subsidiary
from an affiliate of M&F for net cash consideration of $1,031, including
transaction costs. The Company expects to realize certain foreign tax
benefits from this transaction in future years. Under certain circumstances,
a portion of these tax benefits will be payable to the affiliate to the
extent such tax benefits are realized by the Company. During the fourth
quarter of 1997, the Company purchased an inactive subsidiary from an
affiliate of M&F in a transaction in which the Company expects to realize
certain foreign tax benefits in future years and for which the Company agreed
to pay 50% of those realized benefits to the affiliate. The Company has
recorded a liability to the affiliate in the amount of $219 which represents
50% of the estimated amount of future tax benefits. The $2,799 excess value
of estimated realizable tax benefits acquired over the total acquisition
costs have been accounted for as a capital contribution due to M&F's common
control over each of the parties involved at the time of each transaction.
On December 31, 1998, the Canadian Coleman Company LTD ("Canadian
Coleman"), a subsidiary of Coleman, acquired a subsidiary from Sunbeam
("Canadian Sunbeam") in exchange for newly issued common stock of Canadian
Coleman. The issuance of additional common stock to Sunbeam reduced Coleman's
ownership in Canadian Coleman from 100% to approximately 57%. The Company has
accounted for this transaction in a manner similar to a pooling-of-interests
due to Sunbeam's common control over each of the parties involved in the
transaction. The $218 of excess book value of Coleman's 43% interest given up
in the net assets of Canadian Coleman prior to the transaction over Coleman's
57% interest received in the net assets of Canadian Sunbeam have been charged
to retained earnings. Subsequent to December 31, 1998, Canadian Coleman and
Canadian Sunbeam amalgamated to form Sunbeam Corporation (Canada) Limited.
INSURANCE PROGRAMS
Since the consummation of the Sunbeam Acquisition, Coleman has been
insured under policies maintained by Sunbeam or its affiliates, including
workers compensation and liability insurance. Until the consummation of the
Sunbeam Acquisition, Coleman was insured under policies maintained by M&F or
its affiliates, including workers compensation and liability insurance. The
Company's insurance expense including its allocable share of premium costs
from Sunbeam and M&F for such insurance was $6,269, $5,728 and $4,967 for the
years ended December 31, 1998, 1997 and 1996, respectively.
SERVICES ARRANGEMENTS
Until the Sunbeam Acquisition, from time to time, Coleman purchased,
at negotiated rates, specialized accounting and other services from M&F and
its affiliates. Coleman also provided, at negotiated rates, specialized
accounting services and other services to M&F and its affiliates. The net
expense for such services was $493 and $394 during 1998 and 1997,
respectively, and was immaterial in prior years.
Since the consummation of the Sunbeam Acquisition, the Company has
provided certain management services to Sunbeam and its affiliates and also
received certain management services from Sunbeam and its affiliates. These
services included, among other things, (i) executive, general administrative,
legal and financial services, (ii) factory management and inventory control
services, and (iii) sales and marketing services. For the year ended December
31, 1998, the cost of the services provided by the Company and charged to
Sunbeam and its affiliates in the amount of $2,268 has been reflected as a
reduction
F-25
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
in selling, general and administration ("SG&A") expenses, and the $3,009 of
charges to Coleman for services received by Coleman from Sunbeam and its
affiliates for such period has been included in SG&A expenses. The cost of
the services is assessed based on actual usage or other allocation methods
which management believes are reasonable.
LICENSING SERVICES
During 1997, the Company engaged an affiliate of M&F to provide
licensing services. The Company recorded expenses of $650 related to these
services in 1997. In connection with the Sunbeam Acquisition, during 1998 the
Company terminated the licensing services agreement and recorded $2,000 of
expense related to payments to be made under the terms of the termination
agreement and $225 of expense related to certain receivables from an
affiliate of Parent Holdings which were forgiven as part of the same
termination agreement.
OTHER
During 1998, Coleman purchased products for resale from Sunbeam for
approximately $17,537.
The Company subleased six thousand square feet of office space in
New York City from an affiliate of M&F pursuant to a month-to-month occupancy
memorandum (the "Lease") entered into during 1997. The Lease was terminated
during 1998. The rent paid by the Company pursuant to the Lease was $81 and
$158 during the years ended December 31, 1998 and 1997, respectively.
Prior to the Sunbeam Acquisition, Coleman purchased air
transportation services from a corporation, one of whose shareholders was a
director of Coleman until the consummation of the Sunbeam Acquisition. The
Company paid $168 and $158 for these services during the years ended December
31, 1998 and 1997, respectively.
In 1996, the Company entered into an agreement with an affiliate of
M&F in which the Company realized approximately $1,800 of net tax benefits
associated with certain foreign tax net operating loss carryforwards that had
not previously been recognized.
For all taxable periods ended on or prior to March 30, 1998, the
Company was included in the M&F Consolidated Returns and was party to the Tax
Sharing Agreement. Pursuant to the Holdings Merger Agreement, the Tax Sharing
Agreement terminated with respect to M&F and its affiliates, but not with
respect to Coleman Worldwide. See Note 12.
14. EMPLOYEE BENEFIT PLANS
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
The Company sponsors defined benefit plans covering certain
employees of the Company who meet eligibility requirements. The plans'
benefits are based on an employee's years of service. Effective January 1,
1999, the Company's retirement plan for salaried employees was amended to
convert the plan to a cash balance plan. The plans' assets primarily consist
of corporate stocks, mutual funds and fixed income securities. Funding of the
plans is based on actuarial computations that are designed to satisfy minimum
funding requirements of applicable regulations and to achieve adequate
funding of projected benefit obligations. The Company also provides certain
unfunded postretirement health and life insurance benefits
F-26
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
for certain retired employees.
The following table presents the funded status and amounts
recognized in the Company's consolidated balance sheet for the Company's
defined pension benefit and other postretirement plans:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
---------------------- -----------------------
December 31, December 31,
---------------------- -----------------------
1998 1997 1998 1997
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year.................. $ 43,246 $ 37,092 $ 19,080 $ 18,787
Service cost............................................. 3,076 3,081 919 927
Interest cost............................................ 3,157 2,813 1,473 1,453
Plan amendment........................................... (3,641) 222 (487) --
Plan participants' contributions......................... -- -- 58 74
Curtailment (gain) loss.................................. (300) 840 -- --
Benefits paid............................................ (1,112) (628) (1,206) (890)
Actuarial loss (gain).................................... 57 (174) 3,118 (1,271)
--------- --------- --------- ---------
Benefit obligation at end of year........................ 44,483 43,246 22,955 19,080
--------- --------- --------- ---------
Change in plan assets:
Fair value of plan assets at beginning of year........... 23,102 16,197 -- --
Actual return on plan assets............................. 2,577 2,946 -- --
Employer contributions................................... 1,737 4,587 1,148 816
Plan participants' contributions......................... -- -- 58 74
Benefits paid............................................ (1,112) (628) (1,206) (890)
--------- --------- --------- ---------
Fair value of plan assets at end of year................. 26,304 23,102 -- --
--------- --------- --------- ---------
Under funded plans........................................... (18,179) (20,144) (22,955) (19,080)
Unrecognized transition asset................................ -- -- (3,441) (3,707)
Unrecognized net actuarial loss (gain)....................... 1,774 6,259 (573) (3,817)
Unrecognized prior service cost (benefit).................... 43 130 (803) (404)
--------- --------- --------- ---------
Net amounts recognized....................................... $ (16,362) $ (13,755) $ (27,772) $ (27,008)
--------- --------- --------- ---------
--------- --------- --------- ---------
Amounts recognized in the consolidated balance sheet
consist of:
Accrued benefit liability.............................. $ (18,510) $ (15,424) $ (27,772) $ (27,008)
Intangible asset....................................... 54 143 -- --
Accumulated other comprehensive income................. 2,094 1,526 -- --
--------- --------- --------- ---------
Net amount recognized........................................ $ (16,362) $ (13,755) $ (27,772) $ (27,008)
--------- --------- --------- ---------
Weighted average assumptions as of December 31,
Discount rate............................................ 6.75% 7.50% 6.75% 7.50%
Expected return on plan assets........................... 9.00% 9.00% 9.00% 9.00%
Rate of compensation increase............................ 4.00% 5.00% 4.00% 5.00%
</TABLE>
F-27
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
Net pension expense and periodic postretirement benefit expense include
the following components:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Pension expense:
Service cost........................................ $ 3,076 $ 3,081 $ 3,098
Interest cost....................................... 3,157 2,813 2,442
Curtailment loss.................................... 79 972 --
Expected return on plan assets...................... (2,144) (1,623) (1,078)
Amortization of unrecognized
prior service cost .............................. 5 10 7
Amortization of net loss............................ 171 242 425
-------- -------- --------
Net pension expense............................ $ 4,344 $ 5,495 $ 4,894
-------- -------- --------
-------- -------- --------
Postretirement expense:
Service cost........................................ $ 919 $ 927 $ 1,044
Interest cost....................................... 1,473 1,453 1,454
Amortization of transition asset.................... (266) (266) (266)
Amortization of unrecognized
prior service benefit............................ (88) (88) (88)
Amortization of net gain............................ (126) (4) --
-------- -------- --------
Net periodic postretirement
benefit expense............................ $ 1,912 $ 2,022 $ 2,144
-------- -------- --------
-------- -------- --------
</TABLE>
The weighted-average assumed health care cost trend rates used for
postretirement benefits measurement purposes were 7% for 1999 then gradually
trending down to 5.0 % by the year 2003 and remaining at that level
thereafter. A 1% increase in the assumed health care cost trend rate would
increase the combined postretirement service and interest cost by
approximately 22% and the postretirement benefit obligation by approximately
19%. A 1% decrease in the assumed health care cost trend rate would decrease
the combined postretirement service and interest cost by approximately 18%
and the postretirement benefit obligation by approximately 16%.
SAVINGS PLAN
Coleman sponsors an employee savings plan under Section 401(k) of
the Internal Revenue Code. This plan covers substantially all of the
Company's full-time U.S. employees and effective January 1, 1999, this plan
allows employees to contribute up to 15% of their salary to the plan and the
Company matches, at 100%, employee contributions of up to 2% of their salary;
and at 50%, employee contributions from 2% to 4% of their salary. Amounts
charged to expense for matching contributions were $1,245, $1,401, and $1,314
for the years ended December 31, 1998, 1997 and 1996, respectively.
F-28
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
STOCK OPTION PLANS
The Company adopted The Coleman Company, Inc. 1992 Stock Option Plan
(the "1992 Stock Option Plan") in 1992. During 1993, the shareholders
approved the 1993 Stock Option Plan (the "1993 Stock Option Plan") and during
1996, the shareholders approved The Coleman Company, Inc. 1996 Stock Option
Plan (the "1996 Stock Option Plan"). Under the terms of the 1992 Stock Option
Plan, the 1993 Stock Option Plan and the 1996 Stock Option Plan (collectively
the "Stock Option Plans"), incentive stock options ("ISOs"), non-qualified
stock options ("NQSOs") and stock appreciation rights may be granted to key
employees of the Company and any of its affiliates from time to time. Stock
options have been granted under the Stock Option Plans with vesting terms and
maximum exercise terms of approximately five years and ten years,
respectively. The aggregate number of shares of common stock as to which
options and rights may be granted under the Stock Option Plans may not exceed
4,700,000.
The following table summarizes the stock option transactions under
the Stock Option Plans:
<TABLE>
<CAPTION>
1998 1997 1996
---------------------------- ------------------------------ -----------------------------
Weighted- Weighted- Weighted-
Average Average Average
Options Exercise Price Options Exercise Price Options Exercise Price
----------- -------------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding - January 1, 3,347,550 $ 15.14 3,017,630 $ 15.84 2,572,930 $ 15.25
Granted:
at market price 6,000 12.94 2,081,000 14.77 294,000 19.73
above market price -- -- 75,000 15.00 381,000 15.00
Exercised (2,405,950) 15.14 (220,750) 11.42 (154,890) 12.17
Forfeited (23,930) 13.63 (1,605,330) 16.49 (75,410) 14.19
---------- ---------- ----------
Outstanding - December 31, 923,670 15.14 3,347,550 15.14 3,017,630 15.84
---------- ---------- ----------
---------- ---------- ----------
Exercisable - December 31, 923,670 15.14 927,000 14.02 513,440 13.25
---------- ---------- ----------
---------- ---------- ----------
Weighted-average fair value
of options granted during
the year:
at market price $ 6.30 $ 7.43 $ 6.62
---------- ---------- ----------
---------- ---------- ----------
above market price $ -- $ 5.28 $ 3.21
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The following table summarizes information concerning currently
outstanding and exercisable options at December 31, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- -------------------------------------------------------------------- ---------------------------------
Range Weighted-Average
of Exercise Number Remaining Weighted-Average Number Weighted-Average
Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
- ------------- ----------- ---------------- ---------------- ----------- -----------------
<S> <C> <C> <C>
$12.25-$14.00 535,795 8.0 years $ 13.98 535,795 $ 13.98
$14.01-$20.38 387,875 8.2 16.75 387,875 16.75
------- -------
$12.25-$20.38 923,670 8.1 15.14 923,670 15.14
------- -------
------- -------
</TABLE>
F-29
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
As described in Note 1, the Company follows APB Opinion No. 25 in
accounting for stock compensation arrangements. Pro forma financial
information regarding net income and earnings per share has been determined
as if the Company had accounted for its employee stock options under the fair
value method of SFAS No. 123. The fair value of ISOs and NQSOs granted during
1998, 1997 and 1996 were estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rates of 5.51%, 6.53% and 6.11 % for 1998,
1997 and 1996, respectively, dividend yield of 0.0%, volatility of the
expected market price of the Company's common stock of 35.8%, 31.3% and 20.2%
for 1998, 1997 and 1996, respectively, and a weighted-average expected life
of the option of 7.1, 7.7 and 5.5 years for 1998, 1997 and 1996, respectively.
SFAS No. 123 requires the use of option valuation models, one of
which is the Black-Scholes model, that were not developed for use in valuing
ISOs or NQSOs. Further, these option valuation models require the input of
highly subjective assumptions, including the expected stock price volatility.
In management's opinion, based on the above, the existing models do not
necessarily provide a reliable single measure of the fair value of its ISOs
or NQSOs.
The following summarized, unaudited pro forma results of operations
assume the estimated fair value of the ISOs and NQSOs granted during the
years ended December 31, 1998, 1997 and 1996 is amortized to expense over the
ISOs' and NQSOs' vesting period. SFAS No. 123 does not require disclosure of
the effect of any grants of stock based compensation prior to 1995 and,
therefore, the pro forma effect of SFAS No. 123 on net earnings is not
representative of the pro forma effect on net earnings in future years.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1998 1997 1996
-------- ------- --------
<S> <C> <C> <C>
Pro forma net loss............................................ $ 64,535 $ 6,069 $ 42,760
Pro forma basic and diluted loss per common share............. 1.17 0.11 0.80
</TABLE>
15. COMMITMENTS AND CONTINGENCIES
SHAREHOLDER LAWSUITS
Beginning on June 25, 1998, several class action lawsuits were filed
in the Court of Chancery of the State of Delaware by minority stockholders of
Coleman against Coleman, Sunbeam and certain of their current and former
officers and directors. These actions were consolidated into a single class
action lawsuit. The actions allege, among other things, that the
consideration payable to the public stockholders of Coleman in the proposed
Coleman Merger is no longer fair to such stockholders as a result of the
decline in the market price of Sunbeam common stock. In October 1998, Coleman
and Sunbeam entered into a memorandum of understanding to settle, subject to
court approval, the consolidated class action lawsuit. Under the terms of the
proposed settlement, if approved by the court, Sunbeam will issue to the
minority stockholders of Coleman five-year warrants to purchase 4.98 million
shares of Sunbeam common stock at an exercise price of $7.00 per share,
subject to certain anti-dilution provisions. These warrants will generally
have the same terms as the Parent Holdings Warrant and will be issued when
the Coleman Merger is consummated, which is now expected to occur during the
second half of 1999. There can be no assurance that the court will approve
the settlement as proposed, although such approval is not a condition to the
consummation of the Coleman Merger.
F-30
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
LEASES
The Company leases manufacturing, administrative and sales
facilities and various types of equipment under operating lease agreements
expiring through 2007. Rental expense was $12,812, $15,620, and $14,164 for
the years ended December 31, 1998, 1997 and 1996, respectively. Minimum
rental commitments under all noncancellable operating leases with remaining
lease terms in excess of one year from December 31, 1998, aggregated $31,677;
such commitments for each of the five years subsequent to December 31, 1998
are $7,400, $6,178, $4,694, $3,815, and $2,008, respectively, and $7,582
thereafter.
ENVIRONMENTAL MATTERS
The operations of Coleman involve the use and disposal of substances
regulated under environmental protection laws. The Company has an environmental
policy intended to ensure the Company operates in compliance with applicable
environmental regulations. The Company does not anticipate charges to income for
environmental liabilities will have a material effect on the results of
operations in a particular year.
The Company accrues environmental remediation costs when it is both
probable that a liability has been incurred and the amount can be reasonably
estimated. Estimated costs, which are based upon experience with similar sites
and technical evaluations, are judgmental in nature and are recorded at
undiscounted amounts without considering the impact of inflation, and are
adjusted periodically to reflect changes in applicable laws or regulations,
changes in available technologies and receipt by the Company of new information.
It is difficult to estimate the ultimate level of future environmental
expenditures due to a number of uncertainties surrounding environmental
liabilities. These uncertainties include the applicability of laws and
regulations, changes in environmental remediation requirements, the enactment of
additional regulations, uncertainties surrounding remediation procedures
including the development of new technologies, the identification of new sites
for which the Company could be a potentially responsible party ("PRP"),
information relating to the exact nature and extent of the contamination at each
site and the extent of required clean up efforts and the varying costs of
alternative remediation strategies.
The Company has recorded reserves for environmental matters which it
believes are adequate based upon facts known to the Company, applicable laws and
regulations, status of remediation efforts, ongoing investigations, technical
evaluations, and individual circumstances related to each site. Amounts charged
against operations for environmental remediation activities for the years ended
December 31, 1998, 1997, and 1996 were $7,629, $1,766, and $834, respectively.
The increase in amounts charged to operations for the year ended December 31,
1998, relates to revised environmental cost estimates resulting from ongoing
investigations, feasibility studies, technical evaluations, and monitoring
procedures.
GILBERT AND MOSLEY SITE
As a result of investigations undertaken in 1986, the Kansas
Department of Health and Environment ("KDHE") discovered that groundwater in
the Wichita area (the "Gilbert and Mosley Site") was contaminated with
volatile organic compounds ("VOCs"). Coleman occupied a facility within the
boundaries of the Gilbert and Mosley Site. Subsequent investigations in the
area, including investigations in November 1998 by Coleman, indicated the
groundwater beneath the Coleman property is contaminated with VOCs. Coleman
is in the process of remediating the contamination on its property.
F-31
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
The City of Wichita (the "City") has entered into a voluntary agreement
with KDHE in which the City agreed to investigate and then remediate
contamination at the Gilbert and Mosley Site. Coleman has entered into an
agreement with KDHE in which Coleman agreed to perform a similar study for the
Coleman property and to implement remedial activities at its property. In
addition, Coleman entered into an agreement with the City in which Coleman
agreed to fund its proportionate share of the City's study and remediation of
the Gilbert and Mosley Site.
In December 1996, the City completed a preliminary study of the
proportionate share of remediation costs which the City alleges should be the
responsibility of Coleman. The preliminary study proposed an allocation to
Coleman of $7,964 of site response costs. Coleman disagrees with both the City's
methodology and assumptions as well as with the conclusion of the City's
preliminary study. Since completion of the preliminary study, additional site
investigation work has been performed by the City in an attempt to design
appropriate remedies. The City has submitted its final remediation proposals to
the KDHE in March 1999.
MAIZE SITE
Coleman has undertaken a soil and groundwater investigation at its
facility in Maize, Kansas (the "Maize Site"). Results indicate limited VOCs
contamination is present in the groundwater under and to the southeast of the
facility. The data has been reported to the KDHE, and Coleman has entered into
an agreement with KDHE to implement appropriate remedial actions. The
remediation system has been installed, and Coleman is in the process of
remediating the contaminated groundwater.
NORTHEAST SITE
In 1990, Coleman undertook a soil and groundwater investigation of its
facility in northeast Wichita (the "Northeast Site"). Results indicated the
presence of VOCs in the groundwater and soils. Although some of the
contamination may be a result of Coleman's operations at the facility, the data
also indicated contamination was migrating onto the Coleman property from
upgradient sources. Coleman reported the initial results of its study to KDHE.
Coleman has also provided copies of all data to the United States Environmental
Protection Agency (the "EPA"), at its request. The EPA has not initiated any
actions against the Company with respect to the Northeast Site. An agreement has
been entered into with KDHE to undertake additional investigatory activities,
and an interim remediation system has been installed.
During 1998, KDHE approved the remedial investigation report prepared
by Coleman and requested Coleman to prepare and submit a remedial system design
to address off-site contamination. Coleman is in the process of developing the
feasibility study which will propose several potential alternatives for
remediating the on-site soil and groundwater contamination sources and the
off-site groundwater contamination resulting from the on-site sources. In
addition, Coleman has revised its estimate for remediation of on-site soil
contamination and off-site groundwater contamination based upon the results of
preliminary ongoing investigations and monitoring procedures.
The Northeast Site is located in an area of Wichita which the KDHE has
designated as the North Industrial Corridor Site ("NIC Site"). The City has
entered into a voluntary agreement with KDHE in which the City agreed to
investigate and then remediate contamination at the NIC Site. In June 1996,
Coleman entered into an agreement with the City in which Coleman agreed to fund
its proportionate share, if any, of the cost to remediate the NIC Site. The City
has not completed its remedial investigation on the NIC Site. In April 1999,
Coleman, along with several other parties, received a demand from the EPA to pay
the EPA's past investigative and oversight cost for a former EPA site which is
now part of the NIC Site. Coleman
F-32
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
believes that it has both equitable and legal defenses to the EPA's demand for
payment of these costs and Coleman intends to defend itself vigorously with
respect to the EPA's demand.
LAKE CITY SITE
In 1992, Coleman undertook a soil and groundwater investigation of
its facility in Lake City, South Carolina (the "Lake City Site"). Results
indicated limited VOC and fuel oil contamination in the soil and groundwater.
In both instances, the contamination appeared to relate to activities of a
previous occupant of the Lake City Site. The results of the investigation
were reported to the appropriate South Carolina environmental agency and the
prior owner agreed to take over further site investigations and remediation
actions and reimbursed Coleman for a significant part of Coleman's past costs
related to site investigation.
The Company has not been named as a PRP by the EPA nor does it have
joint and several liability with any other PRP for remediation at any of the
above sites.
J.C. PENNCO SITE
Coleman has been identified as a PRP for the presence of hazardous
substances at the J.C. Pennco Site in San Antonio, Texas. In January 1999,
Coleman agreed to settle its alleged liability with the EPA, and in March 1999,
Coleman agreed to settle its alleged liability with the Texas Natural Resource
Conservation Commission.
OTHER
The Company is involved in various claims and legal actions arising
in the ordinary course of business. The Company believes the ultimate
disposition of these matters is not expected to have a material adverse
effect on the Company's consolidated financial condition or results of
operations.
Coleman and an affiliate of M&F ("Holdings") are parties to a
cross-indemnification pursuant to which Coleman has agreed to indemnify
Holdings, its officers, directors, employees, control persons, agents and
representatives against all past, present and future liabilities, including
product liability and environmental matters, related to the initial assets of
Coleman, which Coleman acquired from such affiliate in December 1991. In
addition, pursuant to this cross-indemnification agreement, Holdings agreed
to indemnify Coleman and its officers, directors, employees, agents and
representatives against all other liabilities of Holdings or any of its
subsidiaries, including liabilities relating to the assets it did not
transfer to Coleman in December 1991. This cross-indemnification agreement
survived the Sunbeam Acquisition and will survive the Coleman Merger.
In connection with the 1995 purchase of substantially all of the
assets of Active Technologies, Inc. ("ATI"), the Company may also be required
to make payments to the predecessor owner of ATI of up to $18,750 based on
the Company's sales of ATI related products and royalties received by the
Company for licensing arrangements related to ATI patents. As of December 31,
1998, the amounts paid under the terms of this agreement have been immaterial.
The Company is party to a license agreement which requires payments
of minimum guaranteed royalties aggregating to $10,738 at December 31, 1998;
such commitments for each of the four years remaining under the agreement
subsequent to December 31, 1998 are $1,745, $2,434, $3,010, and $3,549,
respectively.
As more fully described in Note 13, the Company relies upon
borrowings from Sunbeam for the Company's liquidity needs.
F-33
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
16. CASH FLOW REPORTING
The Company uses the indirect method to report cash flows from
operating activities. Interest paid was $41,165, $42,217, and $37,608 and net
income taxes (refunded) paid were $(11,427), $(16,138) and $7,041 for the
years ended December 31, 1998, 1997 and 1996, respectively. Certain non-cash
transactions relating to acquisitions and the issuance of long-term debt have
been reported in Notes 2 and 9.
17. PREFERRED STOCK
The Company has authorized 20,000,000 shares of preferred stock, par
value $0.01 per share. The Company's Certificate of Incorporation authorizes
the Board of Directors to provide for the issuance of a series of preferred
stock, to establish the number of shares of each such series and to fix the
designation, powers, preferences and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof.
18. SEGMENT INFORMATION
DESCRIPTIVE INFORMATION ABOUT REPORTABLE SEGMENTS
Coleman has four reportable segments: Outdoor Recreation, Powermate,
Eastpak and International. The Outdoor Recreation segment produces and sells
lanterns, stoves, coolers, sleeping bags, camping accessories and other
products primarily used in outdoor recreation activities. The Powermate
segment produces and sells portable power generators, air compressors and
related accessories primarily used in homes and small businesses. The Eastpak
segment produces and sells book bags, backpacks, travel adventure gear and
other accessories for recreational use. The International segments produces
and sells recreational appliances and thermal products and sells products
produced domestically or purchased directly from outside vendors. The
Company's reportable segments are business units that offer different
products. The reportable segments are each managed separately because they
manufacture or distribute distinct products in distinct markets and areas of
the world.
The "All Other" segment includes information related to (i) the
Company's safety and security business and its spas business, both of which
were sold during 1998, (ii) royalty revenues from license agreements and
(iii) the Company's retail operations.
Coleman evaluates performance and allocates resources based on
profit or loss from operations before income taxes, minority interest,
interest expense, amortization of goodwill and deferred charges, gain on sale
of businesses, and foreign exchange gains or losses. The accounting policies
of the reportable segments are the same as those described in the summary of
significant accounting policies except as to elimination of intersegment
sales. Generally, intersegment sales are made at cost plus a share of
operating profit.
F-34
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
INFORMATION ABOUT SEGMENT PROFITS AND SEGMENT ASSETS
<TABLE>
<CAPTION>
Outdoor All
Recreation Powermate Eastpak International Other Total
---------- --------- ------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1998:
Revenues from external customers..... $ 384,643 $ 202,405 $ 43,954 $ 335,158 $ 49,213 $ 1,015,373
Intersegment revenues................ 59,033 6,807 31,991 -- -- 97,831
Segment profit (loss)................ 9,340 12,351 (7,894) 7,777 3,765 25,339
Segment assets....................... 218,189 133,514 86,504 342,377 6,193 786,777
Depreciation expense................. 14,923 3,136 626 5,726 1,091 25,502
Restructuring and other
charges (credit)................... 3,945 5,834 (110) 5,089 2,725 17,483
Expenditures for long-lived assets... 8,400 2,436 1,142 6,769 2,495 21,242
Year Ended December 31, 1997:
Revenues from external customers..... 423,265 201,865 55,239 345,698 128,227 1,154,294
Intersegment revenues................ 47,850 6,443 39,821 1,152 114 95,380
Segment profit (loss)................ 27,589 (1,553) 1,355 24,731 22,168 74,290
Segment assets....................... 270,920 129,235 93,106 308,794 96,154 898,209
Depreciation expense................. 15,707 3,156 396 5,320 2,200 26,779
Restructuring and other charges...... 7,643 12,136 1,351 5,293 -- 26,423
Expenditures for long-lived assets... 8,688 3,281 1,840 9,076 2,671 25,556
Year Ended December 31, 1996:
Revenues from external customers..... 412,143 270,525 44,229 375,105 118,214 1,220,216
Intersegment revenues................ 72,367 5,235 18,143 530 2 96,277
Segment profit (loss)................ 8,143 (6,189) (3,034) 7,024 14,350 20,294
Segment assets....................... 303,618 181,782 78,870 342,353 102,871 1,009,494
Depreciation expense................. 15,196 2,460 283 6,264 1,702 25,905
Restructuring and other charges...... 25,235 19,000 -- 26,632 -- 70,867
Expenditures for long-lived assets... 16,415 7,947 1,086 9,240 5,645 40,330
</TABLE>
F-35
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
RECONCILIATION OF SELECTED SEGMENT INFORMATION TO THE COMPANY'S CONSOLIDATED
TOTALS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1998 1997 1996
------------ ------------ -------------
<S> <C> <C> <C>
REVENUES:
Total revenues for reportable segments..................... $ 1,063,991 $ 1,121,333 $ 1,198,277
Other revenues............................................. 49,213 128,341 118,216
Elimination of intersegment revenues....................... (97,831) (95,380) (96,277)
------------ ------------ -------------
Total consolidated revenues.............................. $ 1,015,373 $ 1,154,294 $ 1,220,216
------------ ------------ -------------
------------ ------------ -------------
PROFIT OR LOSS:
Total segment profit....................................... $ 25,339 $ 74,290 $ 20,294
Unallocated items:
Corporate expenses....................................... (17,400) (16,614) (16,910)
Corporate restructuring charges.......................... (13,824) (9,996) (3,334)
Interest expense, net.................................... (33,213) (40,852) (38,727)
Amortization of goodwill and deferred charges............ (19,584) (11,338) (10,473)
Gain on sales of businesses.............................. 32,411 -- --
Other expense, net....................................... (170) (1,867) (1,151)
------------ ------------ -------------
Income before taxes and minority interest............ $ (26,441) $ (6,377) $ (50,301)
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1998 1997 1996
------------ ------------ -------------
<S> <C> <C> <C>
ASSETS:
Total assets for reportable segments....................... $ 786,777 $ 898,209 $ 1,009,494
Unallocated amounts:
Corporate assets, including goodwill..................... 146,480 143,555 150,592
------------ ------------ -------------
Total consolidated assets............................ $ 933,257 $ 1,041,764 $ 1,160,086
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
ENTERPRISE-WIDE DISCLOSURES
PRODUCT REVENUES:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1998 1997 1996
------------ ------------ -------------
<S> <C> <C> <C>
Outdoor recreation products................................ $ 778,981 $ 859,647 $ 859,555
Hardware products.......................................... 236,392 294,647 360,661
------------ ------------ -------------
Total consolidated revenues.............................. $ 1,015,373 $ 1,154,294 $ 1,220,216
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
F-36
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
GEOGRAPHIC AREA REVENUES:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1998 1997 1996
----------- ------------ ------------
<S> <C> <C> <C>
United States.............................................. $ 628,644 $ 759,097 $ 803,325
Europe .................................................. 213,193 201,820 188,838
Other foreign countries.................................... 173,536 193,377 228,053
----------- ------------ ------------
Total consolidated revenues.............................. $ 1,015,373 $ 1,154,294 $ 1,220,216
----------- ------------ ------------
----------- ------------ ------------
</TABLE>
GEOGRAPHIC AREA LONG-LIVED ASSETS:
<TABLE>
<CAPTION> December 31,
---------------------------------------
1998 1997 1996
----------- ------------ ------------
<S> <C> <C> <C>
United States.............................................. $ 110,411 $ 136,021 $ 146,698
Europe .................................................. 30,106 30,845 32,320
Other foreign countries.................................... 5,306 8,628 20,164
----------- ------------ ------------
Total consolidated assets................................ $ 145,823 $ 175,494 $ 199,182
----------- ------------ ------------
----------- ------------ ------------
</TABLE>
MAJOR CUSTOMER:
Revenues from one customer of the Company's Outdoor Recreation
segment accounted for approximately 16%, 13% and 15% of the Company's
consolidated net revenues in the years ended December 31, 1998, 1997 and
1996, respectively.
F-37
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
(IN THOUSANDS, EXCEPT SHARE DATA)
19. QUARTERLY FINANCIAL SUMMARIES (UNAUDITED)
Summarized quarterly financial data for 1998 and 1997 are as follow:
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------
March 31, June 30, September 30, December 31,
----------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
1998
Net revenues............................... $ 244,499 $ 326,407 $ 245,324 $ 199,143
Gross profit (a)........................... 68,722 93,700 64,480 37,985
Earnings (loss) before
extraordinary item (a).................. (1,414) 5,097 (7,008) (37,238)
Net earnings (loss) (a).................... (2,646) (11,209) (7,008) (37,238)
Basic earnings (loss) per share:
Earnings (loss) before
extraordinary item................... $ (0.03) $ 0.09 $ (0.13) $ (0.67)
Net earnings (loss).................... (0.05) (0.20) (0.13) (0.67)
1997
Net revenues............................... $ 295,464 $ 383,514 $ 252,434 $ 222,882
Gross profit (a)........................... 81,042 101,913 69,867 61,141
Net earnings (loss) (a).................... 699 10,119 (8,077) (5,277)
Basic earnings (loss) per share............ $ 0.01 $ 0.19 $ (0.15) $ (0.10)
</TABLE>
(a) Includes restructuring and other charges (credits) as follows:
<TABLE>
<S> <C> <C> <C> <C>
1998
Gross profit.......................... $ -- $ 1,000 $ 139 $ (77)
Earnings before extraordinary item.... 13,220 9,935 4,361 416
Net earnings.......................... 13,220 9,935 4,361 416
1997..................................
Gross profit.......................... (425) 11,402 9,010 (314)
Net earnings ......................... 2,435 11,547 9,433 (914)
</TABLE>
F-38
<PAGE>
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER, dated as of March
29, 1998, among Sunbeam Corporation, a Delaware corporation ("LASER"), Laser
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Laser ("LASER MERGER SUB"), Coleman (Parent) Holdings Inc., a Delaware
corporation ("PARENT HOLDINGS"), and CLN Holdings Inc. ("HOLDINGS"), a
Delaware corporation and a wholly owned subsidiary of Parent Holdings.
WHEREAS, Laser, Laser Merger Sub, Parent Holdings and Holdings have
entered into an Agreement and Plan of Merger, dated as of February 27, 1998
(the "MERGER AGREEMENT"), providing for the merger of Holdings with Laser
Merger Sub, as provided therein;
WHEREAS, defined terms used herein shall have the meanings ascribed
thereto in the Merger Agreement, except as otherwise provided herein; and
WHEREAS, Section 2.8 of the Merger Agreement provides that, at any
time prior to the Holdings Effective Time, Holdings may elect, in its sole
discretion, upon notice to Laser, to effectuate the Holdings Merger such that
Holdings will be merged with and into Laser Merger Sub, with Laser Merger Sub
as the Surviving Corporation for all purposes under the Merger Agreement, and
that, in such event, the parties to the Merger Agreement shall execute an
appropriate amendment thereto to reflect the foregoing.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
This Amendment No. 1 shall constitute the election of Holdings and
the notice to Laser contemplated by Section 2.8 of the Merger Agreement, and
the parties hereto hereby agree that accordingly, notwithstanding anything to
the contrary in the Merger Agreement, upon the terms and subject to the
conditions set forth therein, and in accordance with the DGCL, at the
Holdings Effective Time (as defined in Section 2.3 thereof), Holdings shall
be merged with and into Laser Merger Sub, and following the Holdings
Effective Time, Laser Merger Sub shall continue as the Surviving Corporation,
and the separate corporate existence of Holdings shall cease. All of the
provisions of the Merger Agreement shall be and hereby are deemed to be
amended and modified to the extent necessary to reflect appropriately the
foregoing election, notice and agreement, including Section 2.4 of the Merger
Agreement, to reflect that the certificate of incorporation of the Surviving
Corporation shall be the certificate of incorporation of Laser Merger Sub as
in effect at the Holdings Effective Time.
Except as amended hereby, the Merger Agreement shall remain in full
force and effect in all respects.
<PAGE>
IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
SUNBEAM CORPORATION
By: /s/ Albert J. Dunlap
---------------------------
Name: Albert J.Dunlap
Title: Chairman of the Board and Chief
Executive Officer
LASER ACQUISITION CORP.
By: /s/ Albert J. Dunlap
---------------------------
Name: Albert J. Dunlap
Title: Chairman of the Board
CLN HOLDINGS INC.
By: /s/ Glenn P. Dickes
---------------------------
Name: Glenn P. Dickes
Title: Vice President
COLEMAN (PARENT) HOLDINGS INC.
By: /s/ Glenn P. Dickes
---------------------------
Name: Glenn P. Dickes
Title: Vice President
<PAGE>
SUBSIDIARY BORROWING AGREEMENT
SUBSIDIARY BORROWING AGREEMENT, dated as of February 12,
1999 (this "AGREEMENT"), among THE COLEMAN COMPANY, INC., a Delaware
corporation (the "SUBSIDIARY"), SUNBEAM CORPORATION, a Delaware corporation
(the "PARENT"), and FIRST UNION NATIONAL BANK, as administrative agent (with
its successors in such capacity, the "ADMINISTRATIVE Agent") for the several
banks and other financial institutions or entities (the "LENDERS") from time
to time parties to the Credit Agreement, dated as of March 30, 1998 (as
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among the Parent, the Subsidiary Borrowers (as defined in the
Credit Agreement) from time to time parties thereto, the Lenders, the
Administrative Agent, Bank of America National Trust and Savings Association,
as Documentation Agent, and Morgan Stanley Senior Funding, Inc., as
Syndication Agent.
The parties hereto hereby agree as follows:
1. Capitalized terms used herein but not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
2. In order to permit the Subsidiary to request the
issuance of Letters of Credit for its own account, the Parent hereby
designates, pursuant to Section 2.19 of the Credit Agreement, the Subsidiary
as a Subsidiary Borrower under the Credit Agreement.
3. The Parent and the Subsidiary represent and warrant that
the Applicable Representations and Warranties are true and correct on and as
of the date hereof, but only, in the case of the Subsidiary, to the extent
such representations and warranties are applicable to it.
4. The Parent agrees that its guaranty contained in Article
9 of the Credit Agreement will apply to the obligations of the Subsidiary as
a Subsidiary Borrower.
5. Upon (a) execution of (i) this Agreement by the Parent,
the Subsidiary and the Administrative Agent, (ii) the Subsidiary Borrower
Security Agreement dated as of the date hereof by the Subsidiary and the
Administrative Agent and (iii) the Second Waiver dated as of the date hereof
under the Credit Agreement by the Parent, the Subsidiary, the Administrative
Agent and the Required Lenders and (b) the satisfaction of the conditions set
forth in Section 2.19 of the Credit Agreement (after giving effect to such
Second Waiver), the Subsidiary shall be a party to the Credit Agreement and
shall be a Subsidiary Borrower and a Borrower for all purposes thereof, and
the Subsidiary hereby agrees to be bound by all provisions of the Credit
Agreement to the extent applicable to it in its capacity as a Subsidiary
Borrower, until such time as the principal of and interest on all Loans, all
LC Disbursements and all other amounts, in each case, payable by the
Subsidiary in its capacity as a Subsidiary Borrower under the Credit
Agreement shall have been paid in full or assumed by the Parent pursuant to
an instrument
<PAGE>
acceptable to the Administrative Agent, PROVIDED that, without the prior
written consent of the Administrative Agent and the Required Lenders, the
Subsidiary shall not be permitted to borrow Loans in its capacity as a
Subsidiary Borrower and shall only be permitted to utilize the Revolving
Commitments in its capacity as a Subsidiary Borrower to request the issuance
of Letters of Credit for its account in an aggregate undrawn face amount not
to exceed (a) $50,000,000 on account of Trade Letters of Credit and (b)
$2,200,000 on account of standby Letters of Credit.
6. This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
7. This Agreement may be executed in any number of
counterparts (including by facsimile transmission), each of which shall be an
original, and all of which, when taken together, shall constitute one
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their authorized officers as of the date
first appearing above.
THE COLEMAN COMPANY, INC.
By: /s/ Robert P. Totte
---------------------------
Name: Robert P. Totte
Title: Vice President
SUNBEAM CORPORATION
By: /s/ Ronald R. Richter
---------------------------
Name: Ronald R. Richter
Title: Vice President
FIRST UNION NATIONAL BANK,
as Administrative Agent
By: /s/ T. M. Molitor
---------------------------
Name: T. M. Molitor
Title: Senior Vice President
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SUBSIDIARY BORROWER SECURITY AGREEMENT
AGREEMENT (this "AGREEMENT"), dated as of February 12, 1999, between
THE COLEMAN COMPANY, INC. (with its successors, the "SUBSIDIARY BORROWER")
and FIRST UNION NATIONAL BANK, as Administrative Agent (with its successors
in such capacity, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, Sunbeam Corporation (with its successors, the
"PARENT"), the Subsidiary Borrowers referred to therein, the Lenders party
thereto, Morgan Stanley Senior Funding, Inc., as Syndication Agent, Bank of
America National Trust and Savings Association, as Documentation Agent, and
First Union National Bank, as Administrative Agent, are parties to a Credit
Agreement dated as of March 30, 1998 (as amended, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"); and
WHEREAS, as of the date hereof, the Subsidiary Borrower, the
Parent and the Administrative Agent have entered into a Subsidiary Borrowing
Agreement (as amended, supplemented or otherwise modified from time to time,
the "SUBSIDIARY BORROWING AGREEMENT"); and
WHEREAS, in order to induce the Lenders and the Administrative
Agent to permit the Subsidiary Borrower to become a party to the Credit
Agreement by executing the Subsidiary Borrowing Agreement, the Subsidiary
Borrower has agreed to grant a continuing security interest in and to the
Collateral (as hereafter defined) to secure the Secured Obligations (as
hereafter defined);
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement
and not otherwise defined herein have, as used herein, the respective
meanings provided for therein. The following additional terms, as used
herein, have the following respective meanings:
"COLLATERAL" has the meaning set forth in Section 3.
"DOCUMENTS" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing Inventory, now owned or
hereafter acquired by the Subsidiary Borrower.
"INVENTORY" means all "INVENTORY" (as defined in the UCC), now
owned or hereafter acquired by the Subsidiary Borrower, wherever located, and
shall also mean and include, without
<PAGE>
limitation, all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed
therefrom and all substances, if any, commingled therewith or added thereto.
"LETTER OF CREDIT OBLIGATION" means at any time any
reimbursement obligation of the Subsidiary Borrower with respect to any LC
Disbursement or other obligation of the Subsidiary Borrower to make a payment
in connection with a Letter of Credit issued for the account of the
Subsidiary Borrower, including contingent obligations with respect to amounts
which are then, or may thereafter become, available for drawing under Letters
of Credit issued for the account of the Subsidiary Borrower and then
outstanding.
"LIQUID INVESTMENTS" means Permitted Investments; PROVIDED that
(i) each Liquid Investment shall mature within 30 days after it is acquired
by the Administrative Agent and (ii) in order to provide the Administrative
Agent, for the benefit of the Secured Parties, with a perfected security
interest therein, each Liquid Investment shall be either:
(A) evidenced by negotiable certificates or instruments, or, if
non-negotiable, then issued in the name of the Administrative
Agent, which (together with any appropriate instruments of
transfer) are delivered to, and held by, the Administrative Agent
or an agent thereof (which shall not be the Parent or any of its
Affiliates) in the State of New York or North Carolina; or
(B) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury
regulations and as to which (in the opinion of counsel to the
Administrative Agent) appropriate measures shall have been taken
for perfection of the Security Interests.
"PERFECTION CERTIFICATE" means a certificate substantially in
the form of Exhibit A, completed and supplemented with the schedules and
attachments contemplated thereby to the satisfaction of the Administrative
Agent, and duly executed by the chief legal officer of the Subsidiary
Borrower.
"PERMITTED LIENS" means the Security Interests and the Liens on
the Collateral permitted to be created, to be assumed or to exist pursuant to
Section 6.02 of the Credit Agreement.
"PROCEEDS" means all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or
other realization upon, Collateral, including without limitation all claims
of the Subsidiary Borrower against third parties for loss of, damage to or
destruction of, or for proceeds payable under, or unearned premiums with
respect to, policies of insurance in respect of, any Collateral, and any
condemnation or requisition payments with respect to any Collateral, in each
case whether now existing or hereafter arising.
"SECURED OBLIGATIONS" means the obligations secured under this
Agreement, including all obligations of the Subsidiary Borrower under or in
respect of the Subsidiary Borrowing Agreement and the Credit Agreement,
including without limitation, its obligations in
2
<PAGE>
respect of (i) all principal of and interest (including, without limitation,
any interest which accrues after or would accrue but for the commencement of
any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of the Subsidiary Borrower, whether or not allowed or
allowable as a claim in any such proceeding) on any loan made to the
Subsidiary Borrower under, or any note issued by the Subsidiary Borrower
pursuant to, the Credit Agreement, (ii) all Letter of Credit Obligations and
all interest thereon (including without limitation, any interest which
accrues after or would accrue but for the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Subsidiary Borrower, whether or not allowed or
allowable as a claim in any such proceeding), (iii) all other amounts payable
by the Subsidiary Borrower under the Subsidiary Borrowing Agreement, the
Credit Agreement and any other Loan Document to which the Subsidiary Borrower
is a party, and (iv) any renewals or extensions of any of the foregoing; it
being understood that, unless and until the Subsidiary Borrower becomes a
Subsidiary Guarantor, the Secured Obligations shall not include the
obligations of the Parent or any other Obligor (other than the Subsidiary
Borrower) under the Credit Agreement or any other Loan Document.
"SECURED PARTIES" means the Agents and the Lenders, and
"SECURED PARTY" means any of them.
"SECURITY INTERESTS" means the security interests in the
Collateral granted hereunder securing the Secured Obligations.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York; PROVIDED that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or
non-perfection of the Security Interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Subsidiary
Borrower represents and warrants as follows:
(a) The Subsidiary Borrower has good and marketable title to
all of the Collateral, free and clear of any Liens other than the
Permitted Liens.
(b) The Subsidiary Borrower has not performed any acts which
might prevent the Administrative Agent from enforcing any of the
terms of this Agreement or which would limit the Administrative
Agent in any such enforcement. Other than financing statements or
other similar or equivalent documents or instruments with respect
to the Security Interests and Permitted Liens, no financing
statement, mortgage, security agreement or similar or equivalent
document or instrument covering all or any part of the Collateral
is on file or of record in any jurisdiction in which such filing
or recording would be effective to perfect a Lien on such
Collateral. No Collateral is in the possession of any Person
(other than the Subsidiary Borrower) asserting any claim thereto
or security interest therein, except that the Administrative Agent
or its designee may have possession of Collateral as contemplated
hereby.
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<PAGE>
(c) The information set forth in the Perfection Certificate
delivered to the Administrative Agent prior to the execution of
this Agreement is correct and complete. Not later than 60 days
following the date of such delivery, the Subsidiary Borrower shall
furnish to the Administrative Agent file search reports from each
UCC filing office set forth in Schedule 7 to its Perfection
Certificate confirming the filing information set forth in such
Schedule.
(d) The Security Interests constitute valid security interests
under applicable law securing the Secured Obligations. When UCC-1
financing statements, including the collateral description in the
form of Schedule 6(A) to the Perfection Certificate, shall have
been filed in the offices specified in the Perfection Certificate,
the Security Interests shall constitute perfected security
interests in the Collateral (except Inventory in transit) to the
extent that a security interest therein may be perfected by filing
pursuant to the UCC, prior to all other Liens and rights of others
therein except for the Permitted Liens.
(e) The Inventory is insured in accordance with the
requirements of the Credit Agreement.
(f) All Inventory manufactured by the Subsidiary Borrower has
or will have been produced in compliance with the applicable
requirements of the Fair Labor Standards Act, as amended.
SECTION 3. THE SECURITY INTERESTS. (a) In order to secure
the full and punctual payment of the Secured Obligations in accordance with
the terms thereof, and to secure the performance of all of the obligations of
the Subsidiary Borrower hereunder and under the Subsidiary Borrowing
Agreement, the Credit Agreement and the other Loan Documents to which it is a
party, the Subsidiary Borrower hereby grants to the Administrative Agent for
the ratable benefit of the Secured Parties a continuing security interest in
and to all of the following property of the Subsidiary Borrower, whether now
owned or existing or hereafter acquired or arising and regardless of where
located (all being collectively referred to as the "COLLATERAL"):
(i) Documents;
(ii) Inventory;
(iii) All books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and
other computer materials and records) of the Subsidiary Borrower
pertaining to any of the Collateral; and
(iv) All Proceeds of all or any of the Collateral described in
clauses 3(a)(i) through 3(a)(iii) hereof.
(b) The Security Interests are granted as security only and
shall not subject any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Subsidiary Borrower with respect
to any of the Collateral or any transaction in connection therewith.
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<PAGE>
(c) Notwithstanding the foregoing, the Collateral shall not
include (i) any contracts or agreements to the extent the inclusion thereof
would violate a prohibition on assignment that is effective under relevant
law or (ii) any accounts receivable or other accounts (as defined in the UCC).
SECTION 4. FURTHER ASSURANCES; COVENANTS. (a) The Subsidiary
Borrower will not change (i) its name, identity or corporate structure in any
manner unless it shall have given the Administrative Agent not less than 10
days' prior written notice thereof and delivered an opinion of counsel with
respect thereto in accordance with Section 4(h); (ii) the location of its
chief executive office or chief place of business from a location described
in its Perfection Certificate to a location not described in its Perfection
Certificate unless it shall have given the Administrative Agent not less than
30 days' prior written notice thereof and delivered an opinion of counsel
with respect thereto in accordance with Section 4(h); or (iii) the locations
where it keeps or holds any Collateral (other than Inventory in transit) or
any records relating thereto from a location described in its Perfection
Certificate to a location not described in its Perfection Certificate unless
it gives the Administrative Agent written notice within 10 days thereof and
delivers an opinion of counsel with respect thereto in accordance with
Section 4(h). The Subsidiary Borrower shall not in any event change the
location of any Collateral if such change would cause the Security Interests
in such Collateral to lapse or cease to be perfected.
(b) The Subsidiary Borrower will, from time to time, at its
expense and in such manner and form as the Administrative Agent may require,
execute, deliver, file and record any statement, assignment, instrument,
document, agreement or other paper and take any other action (including,
without limitation, any filings of financing or continuation statements under
the UCC) that from time to time may be necessary or desirable, or that the
Administrative Agent may request, in order to create, preserve, perfect,
confirm or validate the Security Interests or to enable the Administrative
Agent and the other Secured Parties to obtain the full benefits of this
Agreement, or to enable the Administrative Agent to exercise and enforce any
of its rights, powers and remedies hereunder with respect to any of the
Collateral. To the extent permitted by applicable law, the Subsidiary
Borrower hereby authorizes the Administrative Agent to execute and file
financing statements or continuation statements without the Subsidiary
Borrower's signature appearing thereon. The Subsidiary Borrower agrees that a
carbon, photographic, photostatic or other reproduction of this Agreement or
of a financing statement is sufficient as a financing statement. The
Subsidiary Borrower shall pay the costs of, or incidental to, any recording
or filing of any financing or continuation statements concerning the
Collateral.
(c) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of the Subsidiary Borrower's
agents or processors upon the occurrence and during the continuance of an
Event of Default and upon the written request of the Administrative Agent,
the Subsidiary Borrower shall notify such warehouseman, bailee, agent or
processor of the Security Interests created hereby and to hold all such
Collateral for the Administrative Agent's account subject to the
Administrative Agent's instructions.
(d) The Subsidiary Borrower shall keep full and accurate
books and records relating to the Collateral, and stamp or otherwise mark
such books and records in such manner as the Required Lenders may reasonably
require in order to reflect the Security Interests.
5
<PAGE>
(e) Without the prior written consent of the Required
Lenders, the Subsidiary Borrower will not sell, lease, exchange, assign or
otherwise dispose of, or grant any option with respect to, any Collateral
except that, subject to the rights of the Administrative Agent and the other
Secured Parties hereunder if an Event of Default shall have occurred and be
continuing, the Subsidiary Borrower may (x) sell, lease or exchange Inventory
in the ordinary course of business and (y) consummate any Asset Sale or other
disposition of assets permitted by the terms of the Credit Agreement.
(f) Within 10 days following the execution of this
Agreement, the Subsidiary Borrower will cause the Administrative Agent to be
named as an insured party and loss payee on each insurance policy covering
risks relating to any of its Inventory. The Subsidiary Borrower will deliver
to the Administrative Agent, upon request of the Administrative Agent, the
insurance policies for such insurance or certificates of insurance evidencing
such coverage. Each such insurance policy shall include effective waivers by
the insurer of all claims for insurance premiums against the Administrative
Agent or any other Secured Party, provide for coverage to the Administrative
Agent regardless of the breach by the Subsidiary Borrower of any warranty or
representation made therein, not be subject to co-insurance, provide that
upon the occurrence and during the continuance of an Event of Default, all
insurance proceeds in excess of $200,000 per claim shall be adjusted with and
payable to the Administrative Agent and provide that no cancellation,
termination or material modification thereof shall be effective until at
least 30 days after receipt by the Administrative Agent of notice thereof.
The Subsidiary Borrower hereby appoints the Administrative Agent as its
attorney-in-fact to make proof of loss, claim for insurance and adjustments
with insurers, and to execute or endorse all documents, checks or drafts in
connection with payments made as a result of any insurance policies.
(g) The Subsidiary Borrower will, promptly upon request,
provide to the Administrative Agent all information and evidence it may
reasonably request concerning the Collateral to enable the Administrative
Agent to enforce the provisions of this Agreement.
(h) (i) Not more than six months prior to or 10 days after
each date on which the Subsidiary Borrower proposes to take any action
contemplated by Section 4(a)(i) or Section 4(a)(iii) and (ii) not more than
six months nor less than 30 days prior to each date on which the Subsidiary
Borrower proposes to take any action contemplated by Section 4(a)(ii), the
Subsidiary Borrower shall, at the Subsidiary Borrower's cost and expense,
cause to be delivered to the Secured Parties an opinion of counsel,
satisfactory to the Administrative Agent, substantially in the form of
Exhibit B to the effect that all financing statements and amendments or
supplements thereto, continuation statements and other documents required to
be recorded or filed in order to perfect and protect the Security Interests
for a period, specified in such opinion, continuing until a date not earlier
than eighteen months from the date of such opinion, against all creditors of
and purchasers from the Subsidiary Borrower have been filed in each filing
office necessary for such purpose and that all filing fees and taxes, if any,
payable in connection with such filings have been paid in full; PROVIDED that
if such opinion states that the only recordings or filings required in order
to perfect and protect the Security Interests are continuation statements,
such opinion need only address such perfection and protection of the Security
Interests for a period, specified in such opinion, continuing until a date
not earlier than six months from the date of such opinion.
6
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SECTION 5. GENERAL AUTHORITY. The Subsidiary Borrower hereby
irrevocably appoints the Administrative Agent its true and lawful attorney,
with full power of substitution, in the name of the Subsidiary Borrower, the
Agents, the Lenders or otherwise, for the sole use and benefit of the Secured
Parties, but at the Subsidiary Borrower's expense, to the extent permitted by
law to exercise, at any time and from time to time while an Event of Default
has occurred and is continuing and the Administrative Agent, pursuant to a
request of the Required Lenders, has notified the Subsidiary Borrower of its
decision to so exercise, all or any of the following powers with respect to
all or any of the Collateral:
(a) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due thereon or by virtue
thereof,
(b) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(c) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, as fully and effectually
as if the Administrative Agent were the absolute owner thereof,
and
(d) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
PROVIDED that the Administrative Agent shall give the Subsidiary Borrower not
less than ten days' prior notice of the time and place of any sale or other
intended disposition of any of the Collateral, except any Collateral which is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Administrative Agent and the
Subsidiary Borrower agree that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.
SECTION 6. REMEDIES UPON EVENT OF DEFAULT. (a) If any Event
of Default has occurred and is continuing, the Administrative Agent may
exercise on behalf of the Secured Parties all rights of a secured party under
the UCC (whether or not in effect in the jurisdiction where such rights are
exercised) and, in addition, the Administrative Agent may, without being
required to give any notice, except as herein provided or as may be required
by mandatory provisions of law, (i) apply cash, if any, then held by it as
Collateral as specified in Section 8 and (ii) if there shall be no such cash
or if such cash shall be insufficient to pay all the Secured Obligations in
full, sell the Collateral or any part thereof at public or private sale, for
cash, upon credit or for future delivery, and at such price or prices as the
Administrative Agent may deem satisfactory. The Administrative Agent or any
Lender may be the purchaser of any or all of the Collateral so sold at any
public sale (or, if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations, at any private sale). The Subsidiary Borrower
will execute and deliver such documents and take such other action as the
Administrative Agent deems necessary or advisable in order that any such sale
may be made in compliance with law. Upon any such sale the Administrative
Agent shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold
the Collateral so sold to it absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of the
Subsidiary Borrower which
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may be waived, and the Subsidiary Borrower, to the extent permitted by law,
hereby specifically waives all rights of redemption, stay or appraisal which
it has or may have under any law now existing or hereafter adopted. The
notice (if any) of such sale required by Section 5 shall (A) in the case of a
public sale, state the time and place fixed for such sale, and (B) in the
case of a private sale, state the day after which such sale may be
consummated. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Administrative
Agent may fix in the notice of such sale. At any such sale the Collateral
may be sold in one lot as an entirety or in separate parcels, as the
Administrative Agent may determine. The Administrative Agent shall not be
obligated to make any such sale pursuant to any such notice. The
Administrative Agent may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be
made at any time or place to which the same may be so adjourned. In the case
of any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Administrative Agent
until the selling price is paid by the purchaser thereof, but the
Administrative Agent shall not incur any liability in the case of the failure
of such purchaser to take up and pay for the Collateral so sold and, in the
case of any such failure, such Collateral may again be sold upon like notice.
The Administrative Agent, instead of exercising the power of sale herein
conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction. For the purposes of obtaining executory process, the
Subsidiary Borrower does hereby confess judgment in favor of the
Administrative Agent for the full amount of the Secured Obligations.
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(b) For the purpose of enforcing any and all rights and
remedies under this Agreement the Administrative Agent may, at any time when
an Event of Default has occurred and is continuing, (i) require the
Subsidiary Borrower to, and the Subsidiary Borrower agrees that it will, at
the Subsidiary Borrower's expense and upon the request of the Administrative
Agent, forthwith assemble all or any part of the Collateral as directed by
the Administrative Agent and make it available at a place designated by the
Administrative Agent which is, in its opinion, reasonably convenient to the
Administrative Agent and the Subsidiary Borrower, whether at the premises of
the Subsidiary Borrower or otherwise, (ii) to the extent permitted by
applicable law, enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral is or may be located, and
without charge or liability to it seize and remove such Collateral from such
premises, (iii) have access to and use the Subsidiary Borrower's books and
records relating to the Collateral and (iv) prior to the disposition of the
Collateral, store or transfer it without charge in or by means of any storage
or transportation facility owned or leased by the Subsidiary Borrower,
process, repair or recondition it or otherwise prepare it for disposition in
any manner and to the extent the Administrative Agent deems appropriate and,
in connection with such preparation and disposition, use without charge any
trademark, trade name, copyright, patent or technical process used by the
Subsidiary Borrower. The Administrative Agent may also render any or all of
the Collateral unusable at the Subsidiary Borrower's premises and may dispose
of such Collateral on such premises without liability for rent or costs.
SECTION 7. LIMITATION ON DUTY OF ADMINISTRATIVE AGENT IN
RESPECT OF COLLATERAL. Beyond the exercise of reasonable care in the custody
thereof, the Administrative Agent shall have no duty as to any Collateral in
its possession or control or in the possession or control of any agent or
bailee or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto. The Administrative
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords its own
property, and shall not be liable or responsible for any loss or damage to
any of the Collateral, or for any diminution in the value thereof, by reason
of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by the Administrative Agent in
good faith.
SECTION 8. APPLICATION OF PROCEEDS. (a) Upon the occurrence
and during the continuance of an Event of Default, the proceeds of any sale
of, or other realization upon, all or any part of the Collateral and any cash
held shall be applied by the Administrative Agent in the following order of
priorities:
FIRST, to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and
counsel for the Administrative Agent, and all expenses,
liabilities and advances incurred or made by the Administrative
Agent in connection therewith, and any other unreimbursed expenses
for which any Secured Party is to be reimbursed pursuant to
Section 10.03 of the Credit Agreement or Section 11 hereof and
unpaid fees owing to the Agents under the Credit Agreement;
SECOND, to the ratable payment of the Secured Obligations which
constitute the unpaid principal of the Loans and, subject to the
second sentence of subsection (b), Letter of
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Credit Obligations and the unpaid reimbursement obligations which
constitute Secured Obligations;
THIRD, to the ratable payment of the Secured Obligations arising
in respect of accrued but unpaid interest on the Secured
Obligations in accordance with the provisions of the Credit
Agreement;
FOURTH, to the ratable payment of all other Secured Obligations,
until all Secured Obligations shall have been paid in full; and
FINALLY, to payment to the Subsidiary Borrower or its successors
or assigns, or as a court of competent jurisdiction may direct, of
any surplus then remaining from such proceeds.
(b) The Administrative Agent may make distributions hereunder
in cash or in kind or, on a ratable basis, in any combination thereof. If at
any time any monies collected or received by the Administrative Agent are
distributable pursuant to this Section in respect of a Letter of Credit
Obligation which is a contingent obligation at such time, then the
Administrative Agent shall invest such amounts in Liquid Investments selected
by it and shall hold all such amounts so distributable and all such Liquid
Investments and the net proceeds thereof in trust for application to the
payment of such Letter of Credit Obligation at such time as such Letter of
Credit Obligation is no longer a contingent obligation. If the
Administrative Agent holds any amounts which were distributable in respect of
any Letter of Credit Obligation after all Letters of Credit issued for the
account of the Subsidiary Borrower have expired and all amounts payable with
respect thereto have been paid, such amounts shall be applied in the order
set forth in subsection (a) above.
(c) In making the determinations and allocations required by
this Section, the Administrative Agent shall have no liability to any Secured
Party for actions taken in reliance on information supplied by the Secured
Parties as to the amounts of the Secured Obligations held by them. All
distributions made by the Administrative Agent pursuant to this Section shall
be final, and the Administrative Agent shall have no duty to inquire as to
the application by the Secured Parties of any amount distributed to them.
However, if at any time the Administrative Agent determines that an
allocation or distribution previously made pursuant to this Section was based
on a mistake of fact (including, without limiting the generality of the
foregoing, mistakes based on any assumption that principal or interest has
been paid by payments which are subsequently recovered from the recipient
thereof through the operation of any bankruptcy, reorganization, insolvency
or other laws or otherwise), the Administrative Agent may in its discretion,
but shall not be obligated to, adjust subsequent allocations and
distributions hereunder so that, on a cumulative basis, the Administrative
Agent and the other Secured Parties receive the distributions to which they
would have been entitled if such mistake of fact had not been made.
SECTION 9. CONCERNING THE ADMINISTRATIVE AGENT. The
provisions of Article 8 of the Credit Agreement shall inure to the benefit of
the Administrative Agent in respect of this Agreement and shall be binding
upon the parties to the Credit Agreement in such respect. In furtherance and
not in derogation of the rights, privileges and immunities of the
Administrative Agent therein set forth:
10
<PAGE>
(a) The Administrative Agent is authorized to take all such
action as is provided to be taken by it as Administrative Agent
hereunder and all other action reasonably incidental thereto. As
to any matters not expressly provided for herein (including,
without limitation, the timing and methods of realization upon the
Collateral) the Administrative Agent shall act or refrain from
acting in accordance with written instructions from the Required
Lenders or, in the absence of such instructions, in accordance
with its discretion.
(b) The Administrative Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for
the validity, perfection, priority or enforceability of the
Security Interests in any of the Collateral, whether impaired by
operation of law or by reason of any action or omission to act on
its part hereunder. The Administrative Agent shall have no duty
to ascertain or inquire as to the performance or observance of any
of the terms of this Agreement by the Subsidiary Borrower.
SECTION 10. APPOINTMENT OF CO-AGENTS. At any time or times,
in order to comply with any legal requirement in any jurisdiction, the
Administrative Agent may appoint another bank or trust company or one or more
other Persons, either to act as co-agent or co-agents, jointly with the
Administrative Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Administrative
Agent, include provisions for the protection of such co-agent or separate
agent similar to the provisions of Section 9).
SECTION 11. EXPENSES. In the event that the Subsidiary
Borrower fails to comply with the provisions of the Subsidiary Borrowing
Agreement, the Credit Agreement or this Agreement, such that the value of any
Collateral or the validity, perfection, rank or value of any Security
Interest is thereby diminished or potentially diminished or put at risk, the
Administrative Agent if requested by the Required Lenders may, but shall not
be required to, effect such compliance on behalf of the Subsidiary Borrower,
and the Subsidiary Borrower shall reimburse the Administrative Agent for the
costs thereof on demand. All insurance expenses and all expenses of
protecting, storing, warehousing, appraising, insuring, handling,
maintaining, and shipping the Collateral, any and all excise, property,
sales, and use taxes imposed by any state, federal, or local authority on any
of the Collateral, or in respect of periodic appraisals and inspections of
the Collateral to the extent the same may be requested by the Required
Lenders from time to time, or in respect of the sale or other disposition
thereof, shall be borne and paid by the Subsidiary Borrower; and if the
Subsidiary Borrower fails to promptly pay any portion thereof when due, the
Administrative Agent or, if an Event of Default shall have occurred and be
continuing, any other Secured Party may, at its option, but shall not be
required to, pay the same and charge the Subsidiary Borrower's account
therefor, and the Subsidiary Borrower agrees to reimburse the Administrative
Agent or such other Secured Party therefor on demand. All sums so paid or
incurred by the Administrative Agent or any other Secured Party for any of
the foregoing and any and all other sums for which the Subsidiary Borrower
may become liable hereunder and all costs and expenses (including attorneys'
fees, legal expenses and court costs) reasonably incurred by the
Administrative Agent or any other Secured Party in enforcing or protecting
the Security Interests or any of their rights or remedies under this
Agreement, shall,
11
<PAGE>
together with interest thereon until paid at the rate applicable to ABR
Borrowings plus 2%, be additional Secured Obligations hereunder.
SECTION 12. TERMINATION OF SECURITY INTERESTS; RELEASE OF
COLLATERAL. (a) Upon the repayment in full of all Secured Obligations, the
termination of the commitments of the Lenders under the Credit Agreement to
make Loans to the Subsidiary Borrower and to issue Letters of Credit for its
account and the expiration or cancellation of all Letters of Credit issued
for the account of the Subsidiary Borrower, the Security Interests shall
terminate and all rights to the Collateral shall revert to the Subsidiary
Borrower.
(b) Upon the consummation of any sale or exchange of
Collateral permitted by clause (x) of Section 4(e), the Security Interests
created hereby in the Collateral subject to such sale or exchange (but not in
any Proceeds that constitute Collateral arising from such sale or exchange)
shall cease immediately without any further action on the part of any Lender
or the Administrative Agent.
(c) Except as provided otherwise in the Credit Agreement,
upon the consummation of any Asset Sale permitted by the terms of the Credit
Agreement, the Administrative Agent shall release the Collateral (but not any
Proceeds thereof) sold pursuant to such Asset Sale. Any such release shall
not require the consent of any Lender, and the Administrative Agent shall be
fully protected in relying on a certificate of the Parent or the Subsidiary
Borrower as to whether any particular Asset Sale is permitted by the terms of
the Credit Agreement.
(d) In addition to releases of Collateral effected by
subsection (b) or permitted pursuant to subsection (c), at any time and from
time to time prior to such termination of the Security Interests, the
Administrative Agent may release any of the Collateral with the prior written
consent of the Required Lenders; PROVIDED that any release of all or
substantially all of the Collateral (for purposes of this proviso, as defined
in the Credit Agreement) shall require the consent of all of the Lenders.
(e) Upon the termination of the Security Interests or any
release of Collateral permitted by this Section, the Administrative Agent
will, at the expense of the Subsidiary Borrower, execute and deliver to the
Subsidiary Borrower such documents as the Subsidiary Borrower shall
reasonably request to evidence the termination of the Security Interests or
the release of such Collateral, as the case may be.
SECTION 13. NOTICES. All notices and other communications
provided for herein shall be given in accordance with Section 10.01 of the
Credit Agreement.
12
<PAGE>
SECTION 14. WAIVERS, NON-EXCLUSIVE REMEDIES. No failure on
the part of the Administrative Agent to exercise, and no delay in exercising
and no course of dealing with respect to, any right under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise
by the Administrative Agent of any right under this Agreement, the Subsidiary
Borrowing Agreement, the Credit Agreement or any other Loan Document preclude
any other or further exercise thereof or the exercise of any other right.
The rights in this Agreement, the Subsidiary Borrowing Agreement, the Credit
Agreement and the other Loan Documents are cumulative and are not exclusive
of any other remedies provided by law.
SECTION 15. SUCCESSORS AND ASSIGNS. This Agreement is for the
benefit of the Secured Parties and their successors and assigns, and in the
event of an assignment of all or any of the Secured Obligations in accordance
with the provisions of the Credit Agreement to the extent applicable to the
indebtedness or obligation so assigned, may be transferred with such
indebtedness or obligation. This Agreement shall be binding on the
Subsidiary Borrower and its successors and assigns.
SECTION 16. CHANGES IN WRITING. Neither this Agreement nor
any provision hereof may be changed, waived, discharged or terminated orally,
but only in writing signed by the Subsidiary Borrower and the Administrative
Agent with the consent of the Required Lenders (or, solely in the case of
this Section or any provision of Section 12 specifying the circumstances
under which the consent of all Lenders is required to release Collateral, all
the Lenders).
SECTION 17. NEW YORK LAW. This Agreement shall be construed
in accordance with and governed by the laws of the State of New York, except
as otherwise required by mandatory provisions of law and except to the extent
that remedies provided by the laws of any jurisdiction other than New York
are governed by the laws of such jurisdiction.
SECTION 18. SEVERABILITY. If any provision hereof is invalid
or unenforceable in any jurisdiction, then, to the fullest extent permitted
by law, (i) the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be liberally construed in favor of the
Administrative Agent and the other Secured Parties in order to carry out the
intentions of the parties hereto as nearly as may be possible; and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any
other jurisdiction.
SECTION 19. COLLATERAL DOCUMENT. This Agreement shall constitute a
Collateral Document for all purposes under the Credit Agreement and the other
Loan Documents.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
THE COLEMAN COMPANY, INC.
By: /s/ Robert P. Totte
---------------------------
Name: Robert P. Totte
Title: Vice President
FIRST UNION NATIONAL BANK,
as Administrative Agent
By: /s/ T. M. Molitor
---------------------------
Name: T. M. Molitor
Title: Senior Vice President
14
<PAGE>
EXHIBIT A
PERFECTION CERTIFICATE
The undersigned, the chief legal officer of THE COLEMAN COMPANY, INC.,
a Delaware corporation (the "SUBSIDIARY BORROWER"), hereby certifies with
reference to the Subsidiary Borrower Security Agreement, dated as of
February __, 1999, between the Subsidiary Borrower and FIRST UNION NATIONAL
BANK, as Administrative Agent (terms defined therein being used herein as
therein defined), to each Secured Party as follows:
1. NAMES. (a) The exact company name of the Subsidiary
Borrower as it appears in its certificate of incorporation or certificate of
formation is as follows:
(b) Set forth below is each other company name the Subsidiary
Borrower has had within the past five years, together with the date of the
relevant change:
(c) Except as set forth in Schedule 1, the Subsidiary Borrower has
not changed its identity or company structure in any way within the past five
years.
[Changes in identity or company structure would include mergers, consolidations
and acquisitions, as well as any change in the form, nature or jurisdiction of
organization. If any such change has occurred, include in Schedule 1 the
information required by paragraphs 1, 2 and 3 of this certificate as to each
acquiree or constituent party to a merger or consolidation.]
(d) The following is a list of all other names (including
trade names or similar appellations) used by the Subsidiary Borrower or any
of its divisions or other business units at any time during the past five
years:
2. CURRENT LOCATIONS. (a) The chief executive office of the
Subsidiary Borrower is located at the following address:
<PAGE>
MAILING ADDRESS COUNTY STATE
- ---------------------------------- --------------- ----------
(b) The following are all the places of business of the
Subsidiary Borrower not identified above:
MAILING ADDRESS COUNTY STATE
- ---------------------------------- --------------- ----------
(c) The following are all the locations where the Subsidiary
Borrower maintains any Inventory not identified above:
MAILING ADDRESS COUNTY STATE
- ---------------------------------- --------------- ----------
(d) The following are the names and addresses of all Persons
other than the Subsidiary Borrower which have possession of any of the
Subsidiary Borrower's Inventory:
MAILING ADDRESS COUNTY STATE
- ---------------------------------- --------------- ----------
3. PRIOR LOCATIONS. (a) Set forth below is the information
required by subparagraphs 2(a) and 2(b) above with respect to each location
or place of business maintained by the Subsidiary Borrower at any time during
the past five years:
(b) Set forth below is the information required by subparagraphs 2(c)
and 2(d) above with respect to each location or bailee where or with whom
Inventory has been lodged at any time during the past four months:
4. UNUSUAL TRANSACTIONS. Except as set forth in Schedule 4,
all Inventory has been acquired by the Subsidiary Borrower in the ordinary
course of its business.
5. FILE SEARCH REPORTS. Attached hereto as Schedule 5(A) is
a true copy of a file search report conducted by [Lexis] in each jurisdiction
identified in paragraph 2 or 3 above with respect to each name set forth in
paragraph 1 above. Attached hereto as Schedule 5(B) is a true copy of each
financing statement or other filing identified in such file search reports as
supplied to us by [Lexis].
2
<PAGE>
6. UCC FILINGS. A duly signed financing statement on Form
UCC-1, including a collateral description in the form of Schedule 6(A)
hereto, will be duly filed in the Uniform Commercial Code filing office in
each jurisdiction identified in paragraph 2 hereof.
7. SCHEDULE OF FILINGS. Within 30 days of the date hereof a
schedule in the form of Schedule 7 hereto setting forth filing information
with respect to the filings described in paragraph 6 above will be delivered
to the Administrative Agent.
8. FILING FEES. All filing fees and taxes payable in
connection with the filings described in paragraph 6 above have been or will
be paid.
IN WITNESS WHEREOF, we have hereunto set our hands this ___ day
of February, 1999.
THE COLEMAN COMPANY, INC.
By:
---------------------------
Name:
Title:
3
<PAGE>
EXHIBIT B
OPINION OF COUNSEL FOR SUBSIDIARY BORROWER
* * * *
1. The Subsidiary Borrower Security Agreement creates a valid
security interest, for the benefit of the Secured Parties, in all Collateral
(as defined in the Subsidiary Borrower Security Agreement) to the extent the
UCC is applicable thereto (the "SECURITY INTEREST").
2. UCC financing statements and amendments thereto (collectively, the
"FINANCING STATEMENTS") have been filed in the filing offices listed in
Schedule 7 to the Perfection Certificate (the "FILING JURISDICTIONS"), which
are all of the offices in which filings are required to perfect the Security
Interest, to the extent the Security Interest may be perfected by filing
under the UCC, and no further filing or recording of any document or
instrument or other action will be required so to perfect the Security
Interest, except that (i) continuation statements with respect to each
Financing Statement must be filed within [six months prior to the last
day of each consecutive five-year period beginning on the filing date];
(ii) additional filings may be necessary if the Subsidiary Borrower changes
its name, identity or company structure or the jurisdiction in which its
places of business, its chief executive office or the Collateral are located;
and (iii) we express no opinion on the perfection of, or need for further
filing or recording to perfect, the Security Interest in goods now or
hereafter located in any jurisdiction other than the Filing Jurisdictions.
3. Based solely upon our review of the search report dated ______ of
[search firm], a copy of which is attached hereto, there are:
(a) no UCC financing statements which name the Subsidiary
Borrower as debtor or seller and cover any of the Collateral, other than
the Financing Statements, and the financing statements with respect to
Permitted Liens annexed as Schedule 5(A) to the Perfection Certificate,
listed in the available records in the UCC filing offices set forth in
paragraphs 2 and 3 of the Perfection Certificate, which include all of
the offices prescribed under the UCC as the offices in which filings
should have been made to perfect security interests in the Collateral;
and
(b) no notices of the filing of any federal tax lien (filed
pursuant to Section 6323 of the Internal Revenue Code) or any lien of the
Pension Benefit Guaranty Corporation (filed pursuant to Section 4068 of
ERISA) covering any of the Collateral listed in the available records in
the [UCC filing office in state of the Subsidiary Borrower's chief
executive office], which is the only office having files which must be
searched in order to fully determine the existence of notices of the
filing of federal tax liens (filed pursuant to Section 6323 of the
Internal Revenue Code) and liens of the Pension Benefit Guaranty
Corporation (filed pursuant to Section 4068 of ERISA) on the Collateral.
4. The Security Interest validly secures the payment of all future
Loans made by the Lenders to the Subsidiary Borrower pursuant to the Credit
Agreement and all reimbursement obligations after the date hereof with
respect to Letters of Credit issued for the account of the Subsidiary
Borrower, whether or not at the time such Loans are made or Letters of Credit
are
<PAGE>
issued an Event of Default or other event not within the control of the
Lenders has relieved or may relieve the Lenders from their obligations to
make such Loans or issue such Letters of Credit, and is perfected to the
extent set forth in paragraph 2 above with respect to such future Loans and
reimbursement obligations. Insofar as the priority thereof is governed by
the UCC, the Security Interest has the same priority with respect to such
future Loans and reimbursement obligations as it does with respect to Loans
made or reimbursement obligations incurred on the date hereof.
2
<PAGE>
INTERCOMPANY NOTE
Dated: April 6, 1998
FOR VALUE RECEIVED, the undersigned, The Coleman Company, Inc., a
Delaware corporation (the "PAYOR"), hereby promises to pay to the order of
Sunbeam Corporation, a Delaware corporation (the "PAYEE"), on demand, any and
all Indebtedness (as defined in the Credit Agreement referred to below)
(including interest thereon) owed to the Payee by the Payor from time to time.
The undersigned agrees that the accounts of the Payee shall be "prima
facie" evidence of Indebtedness (including interest thereon) owed to the
Payee by the undersigned and the amounts repaid by the undersigned to the
Payee. All advances made by the Payee to the Payor hereunder, and all
payments made on account of principal and interest hereof, shall be recorded
by the Payee, and, prior to any transfer hereof, shall be endorsed on the
schedule attached hereto which is part of this Intercompany Note.
The undersigned also agrees to pay on demand all costs and expenses
(including reasonable fees and expenses of counsel) incurred by the Payee in
enforcing this Intercompany Note.
This Note is one of the Intercompany Agreements referred to in a Pledge
and Security Agreement (as defined in, and entered into pursuant to the
Credit Agreement dated as of March 30, 1998 (as amended, supplemented or
modified from time to time, the "CREDIT AGREEMENT") among Sunbeam
Corporation, the Subsidiary Borrowers referred to therein, the Lenders party
thereto, Morgan Stanley Senior Funding, Inc., as Syndication Agent, Bank of
America National Trust and Savings Association, as Documentation Agent and
First Union National Bank, as Administrative Agent). Capitalized terms used
in this Intercompany Note and not otherwise defined have the respective
meanings assigned to them in such Pledge and Security Agreement or the Credit
Agreement.
<PAGE>
If at any time demand is made against the Payor under, and pursuant to
the terms of, any guaranty executed by the Payor in connection with the
Secured Obligations (as defined in the Pledge and Security Agreement), this
Intercompany Note, and the payment obligations of the Payor evidenced hereby,
shall therewith be null and void and the Payee shall be deemed to have
contributed such obligations to the capital of the Payor.
The Indebtedness evidenced by this Intercompany Note is subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations in the manner and to the extent set forth below:
(a) In the event of (i) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Payor or to its
creditors as such, or to its properties or assets, or (ii) any liquidation,
dissolution or other winding-up of the Payor, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (iii)
any assignment for the benefit of creditors or any other marshaling of assets
or liabilities of the Payor, then and in any such event the holders of
Secured Obligations shall be entitled to receive payment in full of all
amounts due on or to become due on or in respect of Secured Obligations then
outstanding, in cash or in any other manner acceptable to the holders of
Secured Obligations, before the holder is entitled to receive any payment or
distribution of any kind or character on account of principal of or interest
on this Intercompany Note, and to that end the holders of Secured Obligations
shall be entitled to receive, for application to the payment thereof, any
payment or distribution of assets of the Payor of any kind or character
including, without limitation, securities that are subordinated in right of
payment to all Secured Obligations to substantially the same extent as, or to
a greater extent than, this Intercompany Note, that may be payable or
deliverable in respect of this Intercompany Note in any such case,
proceeding, dissolution, liquidation or other winding-up or event referred to
in clauses (i) through (iii) above.
(b) In the event that the Payee shall receive any payment or
distribution of assets of the Payor of any kind or character in respect of
principal of or interest on this Intercompany Agreement in contravention of
subsection (a) hereof, then and in such event such payment or distribution
shall be received and held by the Payee in trust for the holders of the
Secured Obligations and shall be paid over or delivered forthwith to the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other Person making payment or distribution of assets of the Payor
in trust for the holders of, and for application to the payment of, all
Secured Obligations remaining unpaid, to the extent necessary to pay all
Secured Obligations in full, in cash or in any other manner acceptable to the
holders of Secured Obliga-
<PAGE>
tions, after giving effect to any concurrent payment or distribution to or
for the holders of Secured Obligations.
The undersigned hereby waives presentment for payment, demands, notice
of dishonor and protest of this Intercompany Note and further agrees that
none of its terms or provisions may be waived, altered, modified or amended
except as the Payee may consent in a writing duly signed for and on its
behalf.
No failure or delay on the part of the Payee in exercising any of its
rights, powers or privileges hereunder shall operate as a waiver thereof, nor
shall a single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege. The remedies provided herein are
cumulative and are not exclusive of any remedies provided by law.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
The Coleman Company, Inc.
Address:
By: Robert P. Totte
Title: Vice President
<PAGE>
WAIVER OF CREDIT AGREEMENT AND AMENDMENT TO
SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
WAIVER dated as of December 23, 1998 to the Credit Agreement dated as of
March 30, 1998 (as amended, the "CREDIT AGREEMENT") among SUNBEAM CORPORATION
(the "PARENT"), the SUBSIDIARY BORROWERS referred to therein, the LENDERS
party thereto, MORGAN STANLEY SENIOR FUNDING, INC., as Syndication Agent,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation
Agent, and FIRST UNION NATIONAL BANK, as Administrative Agent (the
"ADMINISTRATIVE AGENT"), and AMENDMENT dated as of December 23, 1998 to the
Subsidiary Pledge and Security Agreement dated as of March 30, 1998 (the
"SUBSIDIARY PLEDGE AGREEMENT") between SUNBEAM AMERICAS HOLDINGS, LTD.
("SAHL"), the other GRANTORS party thereto, and the ADMINISTRATIVE AGENT.
W I T N E S S E T H :
WHEREAS, the parties hereto desire to (i) waive the provisions of the
Credit Agreement to the extent necessary to permit the sale by SAHL of all of
the shares of common stock of Sunbeam Corporation (Canada) Limited ("SUNBEAM
CANADA") to The Canadian Coleman Company Limited ("CANADIAN COLEMAN") in
exchange for approximately 43% of the shares of common stock of Canadian
Coleman (the "CANADIAN COLEMAN SHARES"), and the subsequent amalgamation of
Sunbeam Canada and Canadian Coleman into a new entity, Sunbeam Corporation
(Canada) Ltd., approximately 43% of the shares of common stock of which shall
be owned by SAHL (the "AMALGAMATED SHARES") (all such transactions
collectively, the "CANADIAN RESTRUCTURING"), and (ii) amend the Subsidiary
Pledge Agreement to replace the pledge of 66% of the shares of common stock
of Sunbeam Canada with the pledge of the Canadian Coleman Shares and (once
they are issued) Amalgamated Shares owned by SAHL;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS; REFERENCES. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit
Agreement or the Subsidiary Pledge Agreement has the meaning assigned to such
term in the Credit Agreement or the Subsidiary Pledge Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other
similar reference contained in the Credit Agreement or the Subsidiary Pledge
Agreement shall, after this Waiver and Amendment becomes effective, refer to
the Credit Agreement or the Subsidiary Pledge Agreement as waived or amended
hereby.
<PAGE>
SECTION 2. WAIVER. The Lenders hereby waive the provisions of the Credit
Agreement (including, without limitation, Section 6.03(a) thereof) to the
extent (and only to the extent) necessary to permit the Canadian
Restructuring; provided that for avoidance of doubt the parties agree that
Canadian Coleman and any successor shall constitute, and is hereby designated
by the Parent to be, a Material Subsidiary.
SECTION 3. AMENDMENT OF SUBSIDIARY PLEDGE AND SECURITY AGREEMENT. The
Subsidiary Pledge and Security Agreement is hereby amended in the following
respects:
a. The definition of "Direct Subsidiary" is amended to add the
following sentence at the end thereof:
"For purposes of this definition, each of The Canadian Coleman Company
Limited and any successor, including, without limitation, Sunbeam Corporation
(Canada) Ltd., shall constitute a Direct Subsidiary of Sunbeam Americas
Holdings, Ltd."
b. Schedule II is amended and restated in its entirety to read
as set forth in the attached Schedule II.
SECTION 4. REPRESENTATIONS OF PARENT. The Parent represents and
warrants that (i) the representations and warranties of the Parent set forth
in Article 3 of the Credit Agreement will be true on and as of the Waiver and
Amendment Effective Date and (ii) no Default will have occurred and be
continuing on such date.
SECTION 5. GOVERNING LAW. This Waiver and Amendment shall be governed
by and construed in accordance with the laws of the State of New York.
SECTION 6. COUNTERPARTS. This Waiver and Amendment may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 7. EFFECTIVENESS. This Waiver and Amendment shall become
effective on the date (the "WAIVER AND AMENDMENT EFFECTIVE DATE") when the
Administrative Agent shall have received from each of the Parent, the
Grantors, the Administrative Agent and the Required Lenders a counterpart
hereof signed by such party or facsimile or other written confirmation (in
form satisfactory to the Administrative Agent) that such party has signed a
counterpart hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Waiver and Amendment
to be duly executed as of the date first above written.
SUNBEAM CORPORATION
By Robert Totte
---------------------------------
Name: Robert Totte
Title: Vice President
DDG I, INC.
By Robert Totte
---------------------------------
Name: Robert Totte
Title: Vice President
GHI I, INC.
By Robert Totte
---------------------------------
Name: Robert Totte
Title: Vice President
OP II, INC.
By Robert Totte
---------------------------------
Name: Robert Totte
Title: Vice President
SUNBEAM AMERICAS HOLDINGS,
LTD.
By Robert Totte
---------------------------------
Name: Robert Totte
Title: Vice President
<PAGE>
LASER ACQUISITION CORP.
By Robert P. Totte
---------------------------------
Name: Robert P. Totte
Title: Vice President
COLEMAN WORLDWIDE CORP.
By Robert P. Totte
---------------------------------
Name: Robert P. Totte
Title: Vice President
SIGNATURE BRANDS, INC.
By Ronald R. Richter
---------------------------------
Name: Ronald R. Richter
Title: Vice President and
Treasurer
SIGNATURE BRANDS USA, INC.
By Ronald R. Richter
---------------------------------
Name: Ronald R. Richter
Title: Vice President and
Treasurer
BBK BRANDS, INC.
By Robert P. Totte
---------------------------------
Name: Robert P. Totte
Title: Vice President
<PAGE>
FIRST ALERT, INC.
By Ronald R. Richter
---------------------------------
Name: Ronald R. Richter
Title: Vice President and
Treasurer
SUNBEAM PRODUCTS, INC.
By Ronald R. Richter
---------------------------------
Name: Ronald R. Richter
Title: Vice President and
Treasurer
MORGAN STANLEY SENIOR
FUNDING, INC.
By Michael Hart
---------------------------------
Name: Michael Hart
Title: Principal
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By H. G. Wheelock
---------------------------------
Name: H. G. Wheelock
Title: Vice President
FIRST UNION NATIONAL BANK, as
Lender and as Administrative Agent
By T. M. Molitor
---------------------------------
Name: T. M. Molitor
Title: Vice President
<PAGE>
AMENDMENT NO. 4 TO CREDIT AGREEMENT
AMENDMENT dated as of April 10, 1999 to the Credit Agreement
dated as of March 30, 1998 (as amended by Amendment No. 1 dated as of May 8,
1998, Amendment No. 2 dated as of June 30, 1998 and Amendment No. 3 dated as of
October 19, 1998, the "CREDIT AGREEMENT") among SUNBEAM CORPORATION (the
"PARENT"), the SUBSIDIARY BORROWERS referred to therein, the LENDERS party
thereto, MORGAN STANLEY SENIOR FUNDING, INC., as Syndication Agent, BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation Agent, and
FIRST UNION NATIONAL BANK, as Administrative Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto desire to amend the Credit
Agreement to extend the period for certain waivers and agreements from April 10,
1999 to April 15, 1999, all as more fully set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS; REFERENCES. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Credit Agreement has the meaning assigned to such term in the Credit Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other similar
reference contained in the Credit Agreement shall, after this Amendment becomes
effective, refer to the Credit Agreement as amended hereby. Except as herein
specifically amended, all terms and provisions of the Credit Agreement shall
remain in full force and effect and shall be performed by the parties hereto
according to its terms and provisions. This Amendment is limited as specified
and shall not constitute a modification or waiver of any other provision of the
Credit Agreement or any other Loan Document.
SECTION 2. EXTENSION OF TRANCHE A AVAILABILITY PERIOD. The
definition of "TRANCHE A AVAILABILITY PERIOD" in Section 1.01 of the Credit
Agreement is amended to replace the date "April 10, 1999" with the date "April
15, 1999."
SECTION 3. CONDITIONS TO EACH CREDIT EVENT. The last sentence
of Section 4.04 of the Credit Agreement is amended to replace "April 10, 1999"
with "April 15, 1999".
SECTION 4. COMPLIANCE WITH LAWS AND CONTRACTS. Paragraph (c)
of Section 5.07 of the Credit Agreement is amended to replace "April 10, 1999"
with "April 15, 1999."
SECTION 5. APPROVED HEDGING AGREEMENTS. Section 5.10 of the
Credit Agreement is amended to change the time period set forth therein from
"375 days" to "380 days".
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SECTION 6. LEVERAGE RATIO; INTEREST COVERAGE RATIO; FIXED
CHARGE COVERAGE RATIO. Each of Section 6.12, Section 6.13 and Section 6.14 of
the Credit Agreement is amended to replace "April 10, 1999" with "April 15,
1999" in the proviso therein.
SECTION 7. WAIVER.
(a) The Lenders waive any Event of Default that existed on
June 30, 1998, which waiver shall expire on April 15, 1999. Except as set forth
in paragraph (b) below, this Waiver shall not constitute a waiver of any Event
of Default existing on or after July 1, 1998.
(b) The Lenders waive, until April 15, 1999, any Default or
Event of Default by reason of the failure of the Parent to comply with the
requirement of Section 5.01(a) (FINANCIAL STATEMENTS AND OTHER INFORMATION) of
the Credit Agreement to deliver to the Administrative Agent on or before March
31, 1999 the financial statements set forth in such Section (the "1998 FINANCIAL
STATEMENTS").
SECTION 8. GOVERNING LAW. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 9. COUNTERPARTS. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
SECTION 10. EFFECTIVENESS. This Amendment shall become
effective on the date when the Administrative Agent shall have received from
each of the Parent, the Subsidiary Borrowers and the Required Lenders a
counterpart hereof signed by such party or facsimile or other written
confirmation (in form satisfactory to the Administrative Agent) that such party
has signed a counterpart hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
SUNBEAM CORPORATION
By Bobby Jenkins
---------------------------------------
Name: Bobby Jenkins
Title: Chief Financial Officer
THE COLEMAN COMPANY, INC.
By Bobby Jenkins
---------------------------------------
Name: Bobby Jenkins
Title: Vice President
MORGAN STANLEY SENIOR FUNDING, INC.,
individually and as Syndication Agent
By R. Bram Smith
---------------------------------------
Name: R. B. Smith
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, individually and as
Documentation Agent
By H. G. Wheelock
---------------------------------------
Name: H. G. Wheelock
Title: Vice President
FIRST UNION NATIONAL BANK,
individually and as Administrative Agent
By T. M. Molitor
---------------------------------------
Name: T. M. Molitor
Title: Senior Vice President
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AMENDMENT NO. 5 TO CREDIT AGREEMENT
AMENDMENT NO. 5, THIRD WAIVER AND AGREEMENT (this "AMENDMENT"),
dated as of April 15, 1999, to and under the Credit Agreement, dated as of
March 30, 1998 (as amended by Amendment No. 1 dated as of May 8, 1998,
Amendment No. 2 dated as of June 30, 1998 and Amendment No. 3 dated as of
October 19, 1998 and Amendment No. 4 dated as of April 10, 1999, as so
amended, the "CREDIT AGREEMENT"), among SUNBEAM CORPORATION (the "PARENT"),
the SUBSIDIARY BORROWERS referred to therein, the LENDERS party thereto,
MORGAN STANLEY SENIOR FUNDING, INC., as Syndication Agent, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation Agent, and FIRST
UNION NATIONAL BANK, as Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Parent, the Subsidiary Borrowers, the Lenders and the
Agents are parties to the Credit Agreement;
WHEREAS, the Parent has requested that the Administrative Agent and
the Lenders agree to continue to waive, until April 10, 2000, certain
provisions of the Credit Agreement and, in connection therewith, to amend the
Credit Agreement, all as more fully set forth below;
WHEREAS, the Administrative Agent and the Lenders are willing to agree
to such requested waivers and amendments, but only upon the terms and
conditions of this Amendment; and
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. DEFINED TERMS; REFERENCES. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit
Agreement has the meaning assigned to such term in the Credit Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other
similar reference contained in the Credit Agreement shall, after this
Amendment becomes effective, refer to the Credit Agreement as amended hereby.
Except as herein specifically amended, all terms and provisions of the
Credit Agreement shall remain in full force and effect and shall be performed
by the parties hereto according to its terms and provisions. This Amendment
is limited as specified and shall not constitute a modification, amendment or
waiver of any other provision of the Credit Agreement or any other Loan
Document or indicate the Lenders' willingness to consent to any such other
modification, amendment or waiver.
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SECTION 2. DELETION AND ADDITION OF CERTAIN DEFINED TERMS. Section
1.01 of the Credit Agreement is amended:
(a) to delete in their entirety the defined terms "EXISTING
RECEIVABLES PROGRAM", "MARGIN STOCK", "OPERATING UNIT" and "PERMITTED
ACQUISITION" in such Section; and
(b) to add in their appropriate alphabetical order in such
Section the following defined terms:
"AGGREGATE EXPOSURE" means, at any time, the amount equal to the
sum of (i) the Revolving Credit Exposure and unused Revolving
Commitments, (ii) the outstanding principal amount of Tranche A Term
Loans and unused Tranche A Term Commitments and (iii) the outstanding
principal amount of Tranche B Term Loans, in each case of all of the
Lenders at such time.
"BLOCKED ACCOUNT AGREEMENT" means one or more blocked account
agreements to be entered into by the Parent, The Chase Manhattan Bank and
the Administrative Agent, on terms reasonably satisfactory to the Parent,
the Administrative Agent and the Lenders.
"BUSINESS PLAN" means (a) in respect of the 1999 fiscal year of
the Parent, the business plan for such fiscal year delivered to the
Lenders on March 18, 1999 (February 8, 1999 in the case of operating
forecasts) and (b) in respect of the 2000 fiscal year of the Parent, the
business plan for such fiscal year delivered to the Lenders pursuant to
Section 5.02(C).
"CAPITAL INVESTMENT": has the meaning set forth in the Existing
Receivables Program Purchase Agreement.
"COLEMAN COLLATERAL DOCUMENTS" means the guarantees, pledge
agreements, security agreements, mortgages and any other instruments or
agreements executed pursuant to any of the foregoing, in each case as
reasonably requested by the Administrative Agent, and in form and
substance substantially the same as the existing Loan Documents executed
by the Obligors (or otherwise in form and substance satisfactory to the
Administrative Agent), to be executed by each of Coleman and its domestic
subsidiaries (other than Kansas Acquisition Corp. and Coleman
International Holdings, LLC) to guarantee (effective upon the occurrence
of the Coleman Merger Effective Date) the obligations of each other
Obligor under this Agreement, the Coleman Collateral Documents and the
other Loan Documents and to provide (effective upon the occurrence of the
Coleman Merger Effective Date) Liens upon substantially all of the assets
of Coleman and its domestic subsidiaries (subject to customary
limitations with respect to Kansas Acquisition Corp. and Coleman
International Holdings, LLC) to secure their respective obligations under
this Agreement, the Coleman Collateral Documents and the other Loan
Documents.
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"COLEMAN CONDITIONS" means (i) the execution and delivery on or
before May 25, 1999 of the Coleman Collateral Documents and (ii) the
filing with the SEC of an amended S-4 Registration Statement (reflecting
the comments received by the Parent in a letter from the SEC dated July
8, 1998) with respect to the registration of the shares of common stock
of the Parent to be issued in connection with consummation of the merger
that will result in Coleman becoming a Wholly Owned Subsidiary.
"COLEMAN INTERCOMPANY COLLATERAL DOCUMENTS" means, collectively,
(i) the Intercompany Pledge and Security Agreement dated as of April 15,
1999, between Coleman and the Parent, (ii) the Intercompany Security
Agreement dated as of April 15, 1999, between Coleman and the Parent and
(iii) any other instruments or agreements executed to secure the Coleman
Intercompany Note, as each of the foregoing may be amended, supplemented
or otherwise modified from time to time.
"COLEMAN INTERCOMPANY NOTE" means the Amended and Restated
Subordinated Intercompany Note, dated April 6, 1998, made by Coleman in
favor of the Parent, as amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"COLEMAN MERGER EFFECTIVE DATE" means the first date on which both
of the following conditions have been satisfied: (i) a properly executed
certificate of merger has been filed with the Secretary of State of
Delaware evidencing the merger of Camper Acquisition Corp. with and into
Coleman and resulting in Coleman becoming a Wholly Owned Subsidiary and
(ii) the Administrative Agent has received evidence reasonably
satisfactory to it (including such legal opinions, certificates,
evidences of corporate action, subordination agreements or other
documents as the Administrative Agent may reasonably request, all in form
and substance reasonably satisfactory to the Administrative Agent) that
the Liens created by the Coleman Collateral Documents constitute valid
and perfected Liens, subject only to any Permitted Liens, on the
collateral granted thereby.
"COLEMAN REVOLVING COMMITMENT RESERVE" means the $52,500,000
reserve to be established under the Revolving Commitments on August 31,
1999 if the Coleman Merger Effective Date has not occurred on or before
such date, which reserve shall be utilized solely for the purpose set
forth in Section 5.08(vi).
"CONCENTRATION ACCOUNT" means, collectively, the accounts, account
no. 910-2-635126, established by Sunbeam Products, Inc. and account no.
323-8-58821, established by Coleman, each maintained at the office of The
Chase Manhattan Bank at 270 Park Avenue, New York, New York 10017, that
shall be used for the daily concentration of funds received by the Parent
or any of its Subsidiaries from the operation of their businesses or
otherwise.
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"DESIGNATED FOREIGN CURRENCIES" means the currencies set forth on
Schedule B and any other available and freely convertible foreign
currency requested by any Borrower and approved by the Administrative
Agent and all of the Lenders in accordance with Section 10.02(b).
"DOLLAR EQUIVALENT" means with respect to the principal amount of
any Eurocurrency Loan made or outstanding in any Designated Foreign
Currency, at any date of determination thereof, an amount in dollars
equivalent to such principal amount or such other amount calculated on
the basis of the Spot Rate of Exchange.
"EURO" means the single currency of the European Union (i) as
constituted by the Treaty of Rome of March 25, 1957, as amended by the
Single European Act 1986 and the Maastricht Treaty (which was signed at
Maastricht on February 7, 1992, and came into force on November 1, 1993),
as amended from time to time, and (ii) as referred to in the legislative
measures of the European Union for the introduction of, changeover to or
operation of the euro in one or more member states.
"EXISTING RECEIVABLES PROGRAM": means the accounts receivable
sales program established pursuant to (i) the Receivables Sale and
Contribution Agreement dated as of December 4, 1997, between Sunbeam
Products, Inc. and Sunbeam Asset Diversification, Inc., (ii) the
Existing Receivables Program Purchase Agreement and (iii) any receivables
sale agreement executed and delivered after the Fifth Amendment Effective
Date in accordance with Section 6.09(b)(y).
"EXISTING RECEIVABLES PROGRAM PURCHASE AGREEMENT" means the
Receivables Purchase and Servicing Agreement dated as of December 4, 1997
(as amended, supplemented or otherwise modified prior to the Fifth
Amendment Effective Date or in accordance with Section 6.09(b)), by and
among Llama Retail Funding, L.P., Capital USA, L.L.C., Sunbeam Asset
Diversification, Inc. and Sunbeam Products, Inc.
"FIFTH AMENDMENT EFFECTIVE DATE" means the Amendment Effective
Date under and as defined in Amendment No. 5, Third Waiver and Agreement,
dated as of April 15, 1999, to and under this Agreement.
"INACTIVE SUBSIDIARY" means any Subsidiary of the Parent which
(and only for so long as such Subsidiary) (i) does not own assets with an
aggregate book value in excess of $500,000 and (ii) is not engaged in any
business.
"INTERNATIONAL GROUP" means the collective reference to the
Strategic Business Units designated as Europe, Japan, Latin America,
Asia/Pacific and Canada.
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"MANDATORY PREPAYMENT AMOUNT" has the meaning set forth in
Section 2.09(b).
"NON-CORE ASSETS" means the non-core assets of the Parent and its
Subsidiaries listed on Schedule C hereto.
"RECEIVABLES PURCHASE LIMIT" means $70,000,000 or such other
amount designated as the "Purchase Limit" pursuant to the Existing
Receivables Program Purchase Agreement.
"SEC" means the United States Securities and Exchange Commission,
or any successor thereto.
"S-4 REGISTRATION STATEMENT" means the Registration Statement on
Form S-4 under the Securities Act of 1933, as amended, with respect to
the registration of the shares of common stock of the Parent to be issued
in connection with the consummation of the merger that will result in
Coleman becoming a Wholly Owned Subsidiary, including any supplements or
exhibits thereto and any amendments thereof.
"SPOT RATE OF EXCHANGE" means with respect to any Designated
Foreign Currency, at any date of determination thereof, the spot rate of
exchange in London that appears on the display page applicable to such
Designated Foreign Currency on the Telerate System Incorporated Service
(or such other page as may replace such page on such service for the
purpose of displaying the spot rate of exchange in London); PROVIDED that
if there shall at any time no longer exist such a page on such service,
the spot rate of exchange shall be determined by reference to another
similar rate publishing service selected by the Administrative Agent, and
if no such similar rate publishing service is available, the spot rate of
exchange shall be determined by reference to the published rate of the
Administrative Agent in effect at such date for similar commercial
transactions.
"YEAR 2000 COMPATIBILITY EXPENDITURES" means costs incurred
(whether capitalized or recognized as an operating expense) in connection
with the testing, reprogramming and, if required, the replacement of non-
compliant information technology systems to permit the proper functioning
in and following the year 2000 of (a) computer systems of the Parent and
its Consolidated Subsidiaries and (b) systems and equipment supplied by
third parties or with which the systems of the Parent or any of its
Consolidated Subsidiaries interface.".
SECTION 3. DEFINITION OF ASSET SALES. The definition of "ASSET SALES"
in Section 1.01 of the Credit Agreement is amended (a) to replace the comma
immediately before the reference to "(iii)" in such definition with the word
"and" and (b) to delete in its entirety the phrase "and (iv) dispositions of
any Margin Stock for fair value" in such definition.
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SECTION 4. DEFINITION OF BUSINESS DAY. The definition of "BUSINESS
DAY" in Section 1.01 of the Credit Agreement is amended (a) to add
immediately after the phrase "a Eurodollar Loan" in such definition the
phrase "in dollars" and (b) to add immediately before the period at the end
of such definition the proviso ", PROVIDED FURTHER that when used in
connection with a Eurocurrency Loan in any Designated Foreign Currency, the
term "Business Day" shall also exclude any day on which banks are not open
for dealings in deposits in such Designated Foreign Currency in London,
England and the principal financial center of such Designated Foreign
Currency, and PROVIDED FURTHER that when such term is used for the purpose of
determining the date on which the LIBO Rate is determined under this
Agreement for any Eurocurrency Loan denominated in euro for any Interest
Period therefor and for purposes of determining the first and last day of any
Interest Period, references in this Agreement to Business Day shall be deemed
to be references to any day that is not (x) a Saturday or Sunday, (y)
Christmas Day or New Year's Day or (z) any other day on which the
Trans-European Real-time Gross Settlement Operating System (or any successor
settlement system) is not operating (as determined by the Administrative
Agent)".
SECTION 5. DEFINITION OF COLLATERAL DOCUMENTS. The definition of
"COLLATERAL DOCUMENTS" in Section 1.01 of the Credit Agreement is amended:
(a) to add immediately after the term "the Pledge and Security
Agreements," in such definition the phrase "the Coleman Collateral
Documents, the Coleman Intercompany Collateral Documents,"; and
(b) to replace the reference to "Section 5.09" in the
parenthetical in such definition with a reference to "Sections 2.19,
5.09 and 5.11".
SECTION 6. DEFINITION OF CONSOLIDATED EBITDA. The definition of
"CONSOLIDATED EBITDA" in Section 1.01 of the Credit Agreement is amended to
add immediately after the phrase "and other similar non-cash charges" in
paragraph (2) of such definition the phrase "not requiring a future cash
expenditure".
SECTION 7. DEFINITION OF ERISA AFFILIATE. The definition of "ERISA
AFFILIATE" in Section 1.01 of the Credit Agreement is amended:
(a) to add immediately after the word "means" in such
definition the following phrase "(i) with respect to the Parent, Coleman
and"; and
(b) to add immediately before the period at the end of such
definition the phrase and "(ii) any trade or business (whether or not
incorporated) that, together with Coleman, is treated as a single
employer under the Sections of ERISA or the Code set forth in clause (i)
above".
SECTION 8. DEFINITION OF ERISA EVENT. The definition of "ERISA EVENT"
in Section 1.01 of the Credit Agreement is amended:
(a) to delete the word "or" immediately preceding the reference
to "(g)" in such definition;
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(b) to replace the phrase "or the receipt by" in clause (g) in
such definition with the word "from";
(c) to delete the phrase "from the Parent or any ERISA
Affiliate of any notice," in clause (g) in such definition; and
(d) to add immediately before the period at the end of such
definition the following new clause (h) "or (h) any other event or
condition shall occur after the Fifth Amendment Effective Date with
respect to a Plan or any other U.S. or non-U.S., funded or unfunded,
pension or welfare plan sponsored or maintained by the Parent, Coleman or
any of their respective ERISA Affiliates which could reasonably be
expected to have a Material Adverse Effect".
SECTION 9. REFERENCES TO EURODOLLAR. All references to "Eurodollar"
and "eurodollar" in the Credit Agreement shall be deemed to be references to
"Eurocurrency" and "eurocurrency", respectively.
SECTION 10. DEFINITION OF EXCESS CASH FLOW. The definition of "EXCESS
CASH FLOW" in Section 1.01 of the Credit Agreement is amended to delete the
proviso at the end of such definition.
SECTION 11. DEFINITION OF EXCLUDED TAXES. The definition of "EXCLUDED
TAXES" in Section 1.01 of the Credit Agreement is amended:
(a) to replace the word "and" immediately preceding the
reference to "(c)" in such definition with a comma;
(b) to replace each reference to the term "Foreign Lender" in
clause (c) in such definition with "Lender";
(c) to replace the phrase "any withholding tax" with the phrase
"any U.S. withholding tax"; and
(d) to replace the phrase "or is attributable to such Foreign
Lender's failure" with the phrase "and (d) any withholding tax that is
attributable to a Foreign Lender's failure".
SECTION 12. DEFINITION OF LEVERAGE RATIO. The definition of "LEVERAGE
RATIO" in Section 1.01 of the Credit Agreement is amended to delete in its
entirety the second sentence in such definition.
SECTION 13. DEFINITION OF LIBO RATE. The definition of "LIBO RATE" in
Section 1.01 of the Credit Agreement is amended:
(a) to replace the words "dollar deposits" in the parenthetical
in the first sentence in such definition with the phrase "deposits in
dollars or in the applicable Designated Foreign Currency";
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(b) to replace the phrase "the rate for dollar deposits" in
the first sentence in such definition with the phrase "the rate for
deposits in dollars or in the applicable Designated Foreign Currency";
and
(c) to add immediately after the phrase "at which dollar
deposits of $5,000,000" in the second sentence in such definition the
phrase ", or the Dollar Equivalent of the applicable Designated Foreign
Currency equal to $3,000,000,".
SECTION 14. DEFINITION OF MAJOR CASUALTY PROCEEDS. The definition of
"MAJOR CASUALTY PROCEEDS" in Section 1.01 of the Credit Agreement is amended
to replace the reference to "$10,000,000" with a reference to "$1,000,000".
SECTION 15. DEFINITION OF REVOLVING CREDIT EXPOSURE. The definition of
"REVOLVING CREDIT EXPOSURE" is amended to add immediately after the phrase
"such Lender's Revolving Loans" in such definition the parenthetical
"(including without limitation, in the case of Revolving Loans then
outstanding in any Designated Foreign Currency, the Dollar Equivalent of the
aggregate principal amount thereof)".
SECTION 16. DEFINITION OF SUBSIDIARY GUARANTORS. The definition of
"SUBSIDIARY GUARANTORS" is amended in its entirety to read as follows:
"SUBSIDIARY GUARANTORS" means each Subsidiary party to the
Subsidiary Guarantee and each other Person who becomes a party to the
Subsidiary Guarantee pursuant to Section 5.09.".
SECTION 17. DEFINITION OF TRANCHE A AVAILABILITY PERIOD. The
definition of "TRANCHE A AVAILABILITY PERIOD" in Section 1.01 of the Credit
Agreement is amended to replace the date "April 10, 1999" with the date
"April 10, 2000".
SECTION 18. REVOLVING CREDIT COMMITMENTS. Paragraph (c) of Section
2.01 of the Credit Agreement is amended to add immediately before the period
at the end of the first sentence in such paragraph the following proviso:
"; PROVIDED, HOWEVER, that no Lender shall make any Revolving Credit Loan
in any Designated Foreign Currency to any Subsidiary Borrower other than
to Coleman after the occurrence of the Coleman Merger Effective Date,
PROVIDED FURTHER that no Lender shall make any Revolving Loan in any
Designated Foreign Currency if, after giving effect to the making of such
Revolving Loan, the Dollar Equivalent of the then outstanding Revolving
Loans in any Designated Foreign Currencies would exceed $40,000,000 (it
being understood and agreed that the Administrative Agent shall calculate
the Dollar Equivalent of the then outstanding Revolving Loans in any
Designated Foreign Currency on the date on which the Administrative Agent
receives a notice of Borrowing with respect to any Revolving Loan for
purposes of determining compliance with this paragraph); PROVIDED FURTHER
that if the Coleman Merger Effective Date shall not have occurred prior
to August 31, 1999, from and after such date until the Coleman Merger
Effective Date, no Lender shall make any Revolving Loan (other than with
respect to the making of a Revolving Loan for
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the purpose set forth in Section 5.08(vi)) if, after giving effect to
the making of such Revolving Loan, the sum of the Revolving Credit
Exposure of all Lenders, plus the Coleman Revolving Commitment
Reserve, would exceed the Revolving Commitments".
SECTION 19. REVOLVING CREDIT BORROWINGS. Section 2.02 of the Credit
Agreement is amended:
(a) to add immediately before the first sentence in paragraph
(b) of such Section the following sentence "The Revolving Loans may be
made in dollars or in any Designated Foreign Currency.";
(b) to add immediately after the words "such Borrowing shall
be" in the first sentence in paragraph (c) of such Section the
parenthetical "(or in the case of Eurocurrency Borrowings to be made in
any Designated Foreign Currency, the Dollar Equivalent of the principal
amount that is)"; and
(c) to add immediately before the period at the end of the
first sentence in paragraph (c) of such Section the phrase ", if such
Borrowing is requested to be made in dollars, and $3,000,000, if such
Borrowing is requested to be made in any Designated Foreign Currency".
SECTION 20. REQUESTS FOR ABR BORROWINGS. Section 2.03 of the Credit
Agreement is amended:
(a) to replace the reference to "10:00 a.m., Charlotte, North
Carolina" in clause (b) in such Section with a reference to "1:00 p.m.,
Charlotte, North Carolina time";
(b) to replace the phrase "three Business Days before the date
of the proposed Borrowing" in clause (a) in the first sentence in such
Section with the phrase "(i) three Business Days before the date of the
proposed Eurocurrency Borrowing, if the requested Eurocurrency Borrowing
is to be made in dollars or (ii) four Business Days before the date of
the proposed Eurocurrency Borrowing, if the requested Eurocurrency
Borrowing is to be made in any Designated Foreign Currency"; and
(c) to add immediately before the semicolon in clause (v) in
such Section the phrase "and if such Eurocurrency Borrowing is to be made
in any Designated Foreign Currency, the Designated Foreign Currency
thereof".
SECTION 21. NOTICE OF ISSUANCE OF LETTERS OF CREDIT. Paragraph (b) of
Section 2.04 of the Credit Agreement is amended to add immediately after the
words "at least three Business Days" in the third parenthetical in such
paragraph the phrase ", or in the case of Trade Letters of Credit, one
Business Day,".
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SECTION 22. FUNDING OF BORROWINGS. Section 2.05 of the Credit
Agreement is amended:
(a) to add immediately before the words "wire transfer" in
paragraph (a) of such Section the phrase "in dollars or the applicable
Designated Foreign Currency, as requested by the Borrower in its notice
of Borrowing,";
(b) to add immediately after the phrase "12:00 noon, Charlotte,
North Carolina time," in paragraph (a) of such Section the parenthetical
"(or by 3:00 p.m., Charlotte, North Carolina time, in the case of an ABR
Borrowing for which a notice has been given on the same Business Day of
the proposed Borrowing in compliance with Section 2.03)";
(c) to replace "at (i)" in the second sentence in paragraph (b)
of such Section with the phrase "(y) in the case of Loans to be made in
dollars, at (i)";
(d) to add immediately before the period at the end of the
second sentence in paragraph (b) of such Section the phrase "and (z) in
the case of Eurocurrency Loans to be made in any Designated Foreign
Currency, at (i) in the case of such Lender, the rate customary in such
Designated Foreign Currency for settlement of similar inter-bank
obligations, as quoted by the Administrative Agent or (ii) in the case of
the Borrower, the interest rate applicable to the Eurocurrency Loans";
and
(e) to add immediately after paragraph (b) at the end of such
Section the following new paragraph (c):
"(c) Notwithstanding any other provision contained
herein, in the event that any Lender gives notice to the
Administrative Agent that it is unable to fund Revolving Loans in
any Designated Foreign Currency at a reasonable cost to it, the
Administrative Agent shall, until such notice is withdrawn and to
the extent necessary in order to excuse such Lender from making
any Revolving Loans in such Designated Foreign Currency and to
continue to make available to the Borrowers the full aggregate
amount of the Revolving Commitments, reallocate from time to time
among the Lenders the outstanding Revolving Loans denominated in
dollars and the Revolving Loans in such Designated Foreign
Currency; PROVIDED that, in the event that the Lenders the
Applicable Percentages of which aggregate 51% of the Revolving
Commitments of all Lenders give such notice to the Administrative
Agent, the Lenders shall not be required to make any Revolving
Loans in such Designated Foreign Currency until any such notice
has been withdrawn so that the Lenders the Applicable Percentages
of which aggregate 51% of the Revolving Commitments of all Lenders
have either not given any such notice or have withdrawn any such
notice.".
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SECTION 23. INTEREST ELECTIONS. Section 2.06 of the Credit Agreement
is amended:
(a) to add immediately after the phrase "convert such
Borrowing" in the second sentence in paragraph (a) of such Section the
phrase "(if such Borrowing was made in dollars)";
(b) to add immediately after the phrase "the affected
Borrowing" in the third sentence in paragraph (a) of such Section the
phrase "(if such Borrowing was made in dollars)";
(c) to add immediately after the phrase "Interest Election
Request applies" in clause (i) in paragraph (c) of such Section the
phrase ", whether such Borrowing was made in dollars or in any Designated
Foreign Currency";
(d) to replace the phrase "such Borrowing shall" in the first
sentence in paragraph (e) of such Section with the phrase "(a) such
Borrowing, if such Borrowing was made in dollars, shall";
(e) to add immediately before the period at the end of the
first sentence in paragraph (e) of such Section the phrase "or (b) such
Borrowing, if such Borrowing was made in any Designated Foreign Currency,
shall be continued for the shortest available Interest Period as
determined by the Administrative Agent"; and
(f) to add in clause (ii) in the second sentence in paragraph
(e) of such Section (i) immediately after the words "each Eurodollar
Borrowing" in such clause the words "made in dollars" and (ii)
immediately before the period at the end of such sentence the phrase "and
each Eurocurrency Borrowing made in any Designated Foreign Currency shall
be continued for the shortest available Interest Period as determined by
the Administrative Agent".
SECTION 24. REPAYMENT OF TERM LOANS. (a) Paragraph (a) of Section 2.09
of the Credit Agreement is amended to add at the end thereof the following
proviso:
"PROVIDED that, effective upon the date of satisfaction of the
Coleman Conditions (or on the first such date to occur thereafter
on which no Default or Event of Default shall have occurred and be
continuing), the date of payment of (y) the $66,750,000
installment of the Tranche A Term Loans scheduled to be paid on
each of September 30, 1999 and March 31, 2000 and (z) the
$2,500,000 installment of the Tranche B Term Loans scheduled to be
paid on each of September 30, 1999 and March 31, 2000, in each
case, shall be extended to April 10, 2000."
(b) Paragraph (b) of Section 2.09 of the Credit Agreement is amended:
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(i) to add immediately before clause (i)(x) in such paragraph
the following new clause (i)(w):
"(w)(1) on September 30, 1999 with the amount, if any, by which
the sum (the "MANDATORY PREPAYMENT AMOUNT") of funds on deposit in
the Concentration Account on such date, after giving effect to
Section 2.09(d)(ii), PLUS the aggregate amount of the unused
Revolving Commitments (calculated in the case of September 30,
1999 only, exclusive of the Coleman Revolving Commitment Reserve)
on such date exceeds $115,000,000 and (2) on December 31, 1999
with the amount, if any, by which the Mandatory Prepayment Amount
exceeds $125,000,000; PROVIDED that the amount prepaid on
September 30, 1999, when added to the amount prepaid on December
31, 1999, in each case in accordance with this clause (w), shall
not exceed $69,250,000.";
(ii) to add immediately after the reference to "(x)" in clause
(i)(x) in such paragraph the phrase "except as otherwise set forth in
Section 2.09(d)(i)";
(iii) to replace the phrase ", exceeds $15,000,000" in clause
(i)(x)(1) in such paragraph with the phrase "(or in the case of the 1999
fiscal year of the Parent, made from and after the Fifth Amendment
Effective Date during such fiscal year), exceeds $1,000,000";
(iv) to delete in their entirety clauses (A) and (B) in the
proviso in clause (i)(x) in such paragraph;
(v) to delete "and (C)" in the proviso in clause (i)(x) in such
paragraph;
(vi) to delete the words "whether" and "or otherwise" in the
proviso in clause (i)(x) in such paragraph; and
(vii) to add immediately after the words "reduction under this
paragraph" in the first sentence of clause (iii) in such paragraph the
parenthetical "(other than with respect to prepayments under clause
(i)(w) of this paragraph)".
(c) Paragraph (b)(iv) of Section 2.09 of the Credit Agreement is
amended in its entirety to read as follows:
"(iv) The amount of any repayment of the Term Loans made pursuant
to clauses (i) or (ii) of this paragraph shall be applied (A) in the
direct order of maturity of each subsequent scheduled repayment of the
Term Loans, through and including the repayment due on September 30,
2000, to be made by the Borrowers pursuant to paragraph (a) of this
Section and (B) to reduce ratably the amount of all remaining scheduled
repayments of the Term Loans due after September 30, 2000.".
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SECTION 25. MANDATORY REPAYMENT OF REVOLVING LOANS. Section 2.09 of
the Credit Agreement is amended to add immediately after paragraph (c) at the
end of such Section the following new paragraph (d):
"(d) The Parent shall repay or cause a Subsidiary Borrower to
repay the Revolving Loans (but shall not be required to reduce the
Revolving Commitments) (i) on the date on which the Parent or any of its
Subsidiaries shall receive any Net Cash Proceeds with respect to any
Asset Sale of Non-Core Assets consummated prior to April 10, 2000, but
solely if, and solely to the extent that, the aggregate Net Cash Proceeds
from such Asset Sale, when combined with all other Asset Sales of Non-
Core Assets consummated prior to April 10, 2000, shall be equal to or
less than $50,000,000 (the amount of any such Net Cash Proceeds in excess
of $50,000,000 shall be applied to the prepayment of the Term Loans in
accordance with Section 2.09 (b)(i)(x)), (ii) on each Business Day to the
extent that funds on deposit in the Concentration Account exceed
$15,000,000 and (iii) on August 31, 1999 if the Coleman Merger Effective
Date shall not have occurred prior to such date, to the extent necessary
to establish the Coleman Revolving Commitment Reserve under the Revolving
Commitments.".
SECTION 26. OPTIONAL PREPAYMENT OF LOANS. Section 2.10 of the Credit
Agreement is amended:
(a) to replace the phrase "a Eurodollar Borrowing, not later
than 11:00 a.m., New York City time, three Business Days before the date
of prepayment" in paragraph (b)(i) of such Section with the phrase "a
Eurocurrency Borrowing (A) made in dollars, not later than 11:00 a.m.,
Charlotte, North Carolina time, three Business Days before the date of
prepayment and (B) made in any Designated Foreign Currency, not later
than 11:00 a.m., Charlotte, North Carolina time, four Business Days
before the date of prepayment"; and
(b) to replace the reference to "New York City time" in
paragraph (b)(ii) of such Section with a reference to "Charlotte, North
Carolina time".
SECTION 27. FEES. Section 2.11 of the Credit Agreement is amended:
(a) to replace the phrase "at the rate of 1% per annum" in
clause (i)(A) in paragraph (b) of such Section with "(y) prior to the
Coleman Merger Effective Date, at the rate of .75% per annum and (z) on
or after the Coleman Merger Effective Date, at the rate of .50% per
annum; PROVIDED that upon the occurrence and during the continuance of an
Event of Default, such rate shall in each case be changed to 1.00% per
annum";
(b) to change the reference to paragraph "(d)" in such Section
to a reference to paragraph "(e)"; and
(c) to add to such Section the following new paragraph (d):
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"(d) The Parent agrees that on the Fifth Amendment
Effective Date the Lenders shall have earned a fee in an amount
equal to .25% of the Commitments as of the Fifth Amendment
Effective Date; PROVIDED that the Parent shall have until the
earlier of (i) September 30, 2000 and (ii) the date on which the
Commitments shall have terminated and the principal of and
interest on the Loans and all other amounts payable by the
Obligors under this Agreement and the other Loan Documents shall
have been paid in full, to pay such fee to the Administrative
Agent, for the account of each Lender; PROVIDED FURTHER that (x)
if the Aggregate Exposure shall have been reduced, on or before
September 30, 2000, to $1,000,000,000 or less, such fee shall be
in an amount equal to .25% of such Commitments, (y) if the
Aggregate Exposure shall have been reduced, on or before
September 30, 2000, to $1,200,000,000 or less (but not reduced to
$1,000,000,000 or less), such fee shall be increased and fully
earned in an amount equal to .50% of such Commitments and (z) if
the Aggregate Exposure shall not have been reduced to
$1,200,000,000 or less on or before September 30, 2000, such fee
shall be increased and fully earned in an amount equal to 1.00% of
such Commitments.".
SECTION 28. INTEREST. (a) Paragraph (a) of Section 2.12 of the Credit
Agreement is amended to replace the second and third sentences in such
paragraph with the following:
"The "APPLICABLE ABR MARGIN" means (i) for each day prior to the
satisfaction of the Coleman Conditions, 2.50%; (ii) on and after
the date of satisfaction of the Coleman Conditions, for each day
for the period (A) prior to the earlier of the Coleman Merger
Effective Date and September 1, 1999, 2.00%; (B) on and after
September 1, 1999 and prior to the earlier of the Coleman Merger
Effective Date and October 1, 1999, 2.25%; (C) on and after
October 1, 1999 and prior to the Coleman Merger Effective Date,
2.50%; (D) from and including the Coleman Merger Effective Date to
the date of the occurrence of the event described in clause (E)
below, 1.75%; (E) from and including any date after the Coleman
Merger Effective Date on which the Aggregate Exposure is less than
or equal to $1,500,000,000 to the date of the occurrence of the
event described in clause (F) below, 1.50%; and (F) from and
including any date after the Coleman Merger Effective Date on
which the Aggregate Exposure is less than or equal to
$1,200,000,000, 1.25%; PROVIDED that the Applicable ABR Margin
shall not be reduced on the date set forth for such reduction in
clause (A), (D), (E) or (F) above if any Default or Event of
Default shall have occurred and be continuing on such date, but
such reduction shall become effective on the first date thereafter
on which no Default or Event of Default shall have occurred and be
continuing.
(b) Paragraph (b) of Section 2.12 of the Credit Agreement is amended
to replace the second and third sentences in such paragraph with the following:
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"The "APPLICABLE EUROCURRENCY MARGIN" means (i) for each day prior
to the satisfaction of the Coleman Conditions, 3.75%; (ii) on and
after the date of satisfaction of the Coleman Conditions for each
day for the period (A) prior to the earlier of the Coleman Merger
Effective Date and September 1, 1999, 3.25%; (B) on and after
September 1, 1999, and prior to the earlier of the Coleman Merger
Effective Date and October 1, 1999, 3.50%; (C) on and after
October 1, 1999 and prior to the Coleman Merger Effective Date,
4.00%; (D) from and including the Coleman Merger Effective Date to
the date of the occurrence of the event described in clause (E)
below, 3.00%; (E) from and including any date after the Coleman
Merger Effective Date on which the Aggregate Exposure is less than
or equal to $1,500,000,000 to the date of the occurrence of the
event described in clause (F) below, 2.75%; and (F) from and
including any date after the Coleman Merger Effective Date on
which the Aggregate Exposure is less than or equal to
$1,200,000,000, 2.50%"; PROVIDED that the Applicable Eurocurrency
Margin shall not be reduced on the date set forth for such
reduction in clause (A), (D), (E) or (F) above if any Default or
Event of Default shall have occurred and be continuing on such
date, but such reduction shall become effective on the first date
thereafter on which no Default or Event of Default shall have
occurred and be continuing." .
(c) Paragraph (c) of Section 2.12 of the Credit Agreement is amended
in its entirety to read as follows:
"(c) Notwithstanding the foregoing, (i) from the date of
the occurrence and during the continuance of an Event of Default,
the Loans shall bear interest, after as well as before judgment,
at a rate per annum equal to 2% plus the rate otherwise applicable
to the Loans as provided in the preceding paragraphs of this
Section and (ii) if any overdue interest on any Loan or any fee or
other amount payable hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a
rate per annum equal to 2% plus the rate applicable to ABR Loans
as provided in paragraph (a) of this Section, from the date of
such non-payment until such overdue interest, fee or other amount
is paid in full (after as well as before judgment).".
SECTION 29. BREAK FUNDING PAYMENTS. Section 2.15 is amended to add
immediately before the comma at the end of clause (a) in such Section the
phrase "and other than with respect to prepayments pursuant to Section
2.09(d)(ii)".
SECTION 30. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF
SET-OFFS. Paragraph (a) of Section 2.17 of the Credit Agreement is amended to
add immediately after the phrase "on the date when due," in such paragraph
the phrase "in dollars or, in the case of Eurocurrency Loans outstanding in
any Designated Foreign Currency, such Designated Foreign Currency and whether
in dollars or any Designated Foreign Currency,".
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SECTION 31. SUBSIDIARY BORROWINGS. Section 2.19 of the Credit
Agreement is amended:
(a) to add immediately after the phrase "a Subsidiary Borrower
Pledge and Security Agreement" in paragraph (b) of such Section the
phrase ", a security agreement, substantially in the form of the Parent
Security Agreement, dated as of July 10, 1998, by the Parent in favor of
the Administrative Agent, and any other security agreements or other
documents requested by the Administrative Agent pursuant to Section 5.11,
in each case"; and
(b) to delete the phrase "of Davis Polk & Wardwell, special
counsel for the Agents, substantially in the form of Exhibit J, and each"
in paragraph (c) of such Section.
SECTION 32. ADDITIONAL MULTICURRENCY PROVISIONS. Article 2 is amended
to add immediately after Section 2.20 at the end of such Article the
following new Section 2.21:
"SECTION 2.21. CONTROLS; CURRENCY EXCHANGE RATE FLUCTUATIONS. (a)
In the event that at any time the Parent determines that by reason of
currency exchange rates any aggregate or individual limits or sublimits
set forth in Section 2.01(c) have been breached, in each case, by more
than 5%, the Parent shall immediately notify the Administrative Agent
(which notice shall promptly be confirmed in writing).
(b) The Administrative Agent will calculate the Revolving
Credit Exposure (including any portion made in any Designated Foreign
Currency) with respect to all of the Lenders from time to time, and in
any event on each date of receipt of a notice of Borrowing and otherwise
not less frequently than once each calendar month.
(c) In the event that on any date the Administrative Agent
calculates that any of such limits or sublimits shall have been breached,
in each case, by more than 5%, the Administrative Agent shall give notice
to such effect to the Parent and the Lenders.
(d) Within five Business Days after notification to the
Administrative Agent pursuant to clause (a) above or receipt of notice
pursuant to paragraph (c) above, the Parent will, or will cause the
Borrowers to, make such repayments or prepayments of Revolving Loans
(together with interest accrued to the date of such repayment or
prepayment) as shall be necessary to eliminate any excess above any such
limit or sublimit, unless by the time such repayment or prepayment is
required to be made, such limit or sublimit is no longer breached by
reason of currency exchange rate fluctuations. If any such repayment or
prepayment of a Eurocurrency Loan pursuant to this Section occurs on a
day which is not the last day of the then current Interest Period with
respect thereto, the Parent shall pay to the Lenders such amounts, if
any, as may be required pursuant to Section 2.15.".
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SECTION 33. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE
REPRESENTATION AND WARRANTY. Section 3.04 of the Credit Agreement is amended:
(a) to add immediately before the phrase "reported on by Arthur
Andersen LLP" in paragraph (a) of such Section the words "restated and";
and
(b) to add immediately after the phrase "Since December 28,
1997" in paragraph (b) of such Section the parenthetical "(or December
31, 1998 from and after such date)".
SECTION 34. LITIGATION REPRESENTATION AND WARRANTY. Paragraph (c) of
Section 3.06 of the Credit Agreement is amended (after giving effect to
Section 65 below) to replace the phrase "the date of this Agreement" in such
paragraph with the term "the Fifth Amendment Effective Date".
SECTION 35. ERISA. Section 3.10 of the Credit Agreement is amended to
replace each reference to "$25,000,000" in such Section with a reference to
"$40,000,000".
SECTION 36. DISCLOSURE REPRESENTATION AND WARRANTY. Section 3.11 of
the Credit Agreement is amended to add the phrase "on or after September 30,
1998 (in the case of any determination of the truth and correctness of this
representation on or after the Fifth Amendment Effective Date)" in the second
sentence of such Section (a) immediately before the phrase "by or on behalf
of any Obligor" and (b) immediately after the phrase "or delivered".
SECTION 37. GUARANTORS REPRESENTATION AND WARRANTY. Section 3.12 of
the Credit Agreement is amended to add immediately after the phrase "the
United States of America" in the parenthetical in such Section the phrase
"and prior to the Coleman Merger Effective Date, Coleman and its
subsidiaries".
SECTION 38. PLEDGED ASSETS REPRESENTATION AND WARRANTY. Article 3 of
the Credit Agreement is amended to add immediately after Section 3.16 at the
end of such Article the following new Section 3.17:
"SECTION 3.17. PLEDGED ASSETS. Except as set forth on Schedule
3.17, as of the Fifth Amendment Effective Date all of the material assets
of the Parent and the Subsidiary Guarantors have been pledged as
Collateral to the Administrative Agent, for the benefit of the Lenders,
pursuant to the Collateral Documents.".
SECTION 39. CONDITIONS TO EACH CREDIT EVENT. Section 4.04 of the
Credit Agreement is amended:
(a) to add immediately after clause (c) of such Section the
following new clauses (d), (e) and (f):
"(d) At the time of and immediately after giving effect
to such Borrowing (and the proposed use of such Borrowing on such
date of
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Borrowing), the funds on deposit in the Concentration Account
shall not exceed $15,000,000.
(e) At the time of and immediately after giving effect
to such Borrowing, the aggregate Capital Investment shall not be
less than 85% of the Receivables Purchase Limit, PROVIDED that, if
the aggregate Capital Investment is less than 85% of the
Receivables Purchase Limit at such time, this condition shall
nonetheless be deemed satisfied so long as at the time of and
immediately after giving effect to such Borrowing, no less than
85% of the aggregate Outstanding Balance of all Receivables of
Designated Obligors owned by Sunbeam Products, Inc. shall be
Eligible Receivables (as each such term is defined in the Existing
Receivables Program Purchase Agreement);
(f) At the time of and immediately after giving effect
to such Borrowing, if such Borrowing is in a Designated Foreign
Currency, there shall be no unused borrowing availability under
any foreign lines of credit providing borrowings in such
Designated Foreign Currency.";
(b) to replace the phrase "paragraphs (b) and (c)" in the
penultimate paragraph of such Section with the phrase "paragraphs (b)
through (f)"; and
(c) to delete in its entirety the last paragraph of such
SECTION 40. FINANCIAL STATEMENTS. Section 5.01 is amended:
(a) to add immediately after the phrase "each of the first
three fiscal quarters of each fiscal year of the parent" in paragraph (b)
of such Section the phrase "(and within 90 days after the end of the
fourth fiscal quarter of each fiscal year of the Parent after 1998)";
(b) to replace the phrase "its consolidated balance sheet and
related statements of operations, stockholders' equity" in paragraph (b)
of such Section with the phrase "its consolidated and consolidating
balance sheet and related consolidated and consolidating statements of
operations";
(c) to add immediately after the phrase "the previous fiscal
year," in paragraph (b) of such Section the phrase "and, as it relates to
the consolidated financial statements,";
(d) to add immediately after the phrase "clause (a) or (b)
above" in paragraph (c) of such Section the phrase "and clauses (A) and
(J) of Section 5.02";
(e) to replace the phrase "Sections 6.01 and 6.11 through 6.15"
in paragraph (c) of such Section with the phrase "Sections 6.01 and 6.11
through 6.17";
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(f) to amend paragraph (f) of such Section in its entirety as
follows:
"(f) [Intentionally Omitted]."; and
(g) to delete the phrase "that notes a "reportable condition""
at the end of paragraph (g) of such Section.
SECTION 41. ADDITIONAL INFORMATIONAL REQUIREMENTS. Section 5.02 of the
Credit Agreement is amended:
(a) to replace the reference to "$25,000,000" in paragraph (c)
of such Section with a reference to "$40,000,000";
(b) (i) to delete the word "and" at the end of paragraph (c) of
such Section, (ii) to replace the period at the end of paragraph (d) of
such Section with "; and", and (iii) to add immediately after paragraph
(d) of such Section the following new paragraph (e):
"(e) any development, event, or condition that, alone or
together with any other like developments, events or conditions,
could reasonably be expected to result in the payment by or
liability of the Parent or any of its Subsidiaries under or
pursuant to or as a result of Environmental Laws in an aggregate
amount exceeding $2,500,000.";
(c) to replace paragraphs (A) through (K) with the following
new paragraphs (A) through (K):
"(A) As soon as available, but no later than 35 days
after the end of March and April, 1999 and no later than 30 days
after the end of each month thereafter, a copy of the following
financial statements (on a preliminary basis in the case of March,
April and June, 1999):
(1) consolidated statement of operations for the
Parent and its Consolidated Subsidiaries for the month then ended
and year-to-date;
(2) consolidated balance sheet for the Parent and
its Consolidated Subsidiaries for the month then ended;
(3) consolidated statement of cash flow for the
Parent and its Consolidated Subsidiaries for the month then ended;
(4) operating statements for each Strategic
Business Unit for the month then ended and year-to-date (except
the Special Markets Strategic Business Unit, which is reported as
part of the operations of other Strategic Business Units);
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(5) balance sheets for the Parent, Signature,
First Alert, and the International Group, PROVIDED that as soon as
available, but not later than 30 days after each month beginning
with October, 1999, the Borrower will provide balance sheets for
each Strategic Business Unit (except the Special Markets Strategic
Business Unit, which is reported as part of the operations of
other Strategic Business Units);
(6) as soon as available, but not later than 30
days after each month beginning with October, 1999, cash flow
statements for each Strategic Business Unit (except the Special
Markets Strategic Business Unit, which is reported as part of the
operations of other Strategic Business Units), in each case for
the month then ended and year-to-date;
setting forth, in the case of the consolidated balance sheets, in
comparative form the projected figures set forth in the Business
Plan covering such month and the figures as of the end of the
corresponding month of the prior year and December 31, 1998 and,
in the case of the consolidated operating statements and cash
flows, in comparative form the projected figures set forth in the
Business Plan covering such month and the figures for the
corresponding month of the prior year, certified by a responsible
officer of the Borrower as being fairly stated in all material
respects (subject to certain accounts which are adjusted to GAAP
on a quarterly basis). Operating statements for each Strategic
Business Unit are to be presented in comparative form with the
projected figures in the Business Plan covering such month.
Concurrent with these reports, the Borrower will provide
commentary explaining significant variances from the Business Plan
covering such month and, where relevant, prior periods.
(B) On or before the 15th day and the last Business Day
of each month, cash forecasts, showing weekly cash needs (and
existing and forecasted liquidity under all financing and
securitization arrangements) for the succeeding 13 weeks from the
date of preparation of such forecasts.
(C) On or before December 31, 1999, a Business Plan for
the 2000 fiscal year of the Parent setting forth for each
Strategic Business Unit and on a consolidated basis monthly
forecasted results from operations, cash flows and balance sheets.
(D) On or before December 31, 1999, projections for the
fiscal years 2001 and 2002 of the Parent setting forth for each
Strategic Business Unit and on a consolidated basis projected
results from operations, cash flows and balance sheets.
(E) On or before September 30, 1999, the Parent shall
present to the Lenders its written plan for meeting the
amortization payments due April 10, 2000.
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(F) Biweekly, a report summarizing the status of the
Parent's Year 2000 Computer Compatibility Project until such time
as a Financial Officer delivers a certificate to the
Administrative Agent certifying that such project is materially
complete.
(G) On or before the last day of each month, (i) a
report summarizing the status of all consummated and pending
Non-Core Asset Sales, (ii) a report summarizing the status of any
other Asset Sale involving realized or projected Net Cash Proceeds
in excess of $1,000,000 and (iii) a report of the acquisition by
the Parent or any Subsidiary of any material unencumbered assets
during such month.
(H) On or before the last day of each month, a report
summarizing the status of all litigation described in Section 6.19
(and any other litigation commenced after the Fifth Amendment
Effective Date if such other litigation involves potential
liability and/or projected costs in excess of $2,500,000),
including all fees and expenses incurred by the Parent or any of
its Subsidiaries to the extent such amounts have been reported to
the Parent.
(I) On or before the last day of each month, a report
summarizing available "point of sale" information with respect to
retail "sell through" and retailer inventories.
(J) No later than 30 days after the end of each month, a
report of (i) the amounts of all intercompany loans and advances
made by the Parent to Coleman, and any repayments made by Coleman
under the Coleman Intercompany Note during such month, (ii) the
outstanding principal amount (including capitalized interest
thereon) of the Coleman Intercompany Note as of the end of such
month and (iii) the amount of accrued and capitalized interest for
such month with respect to the Coleman Intercompany Note.
(K) Biweekly, a report with respect to the status of the
S-4 Registration Statement, and within one Business Day after the
receipt thereof, a copy of any comments provided by the SEC to the
Parent or Coleman on the S-4 Registration Statement."; and
(d) to delete the clause "and each Operating Unit; provided
that as soon as possible, such review shall be with respect to the
Parent" at the end of the last paragraph in such Section.
SECTION 42. INSURANCE. Section 5.05 of the Credit Agreement is amended
to add immediately before the period at the end of such Section the phrase ",
which insurance shall, within 30 days after the Fifth Amendment Effective
Date, name the Administrative Agent as the loss payee for the proceeds of any
policy relating to such insurance covering damage to tangible
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property of the Parent and its Subsidiaries; and furnish to the
Administrative Agent upon written request, full information as to the
insurance carried".
SECTION 43. COMPLIANCE WITH ENVIRONMENTAL LAWS. Section 5.07 of the
Credit Agreement is amended to amend paragraph (c) in its entirety to read as
follows:
"(c) The Parent will, and will cause each of its Subsidiaries
to, (i) comply with all applicable Environmental Laws, and obtain, comply
with and maintain any and all permits required under applicable
Environmental Laws; and (ii) take reasonable efforts to ensure that all
of its tenants, subtenants, contractors, subcontractors, and invitees
comply with all Environmental Laws, and obtain, comply with and maintain
all Environmental Permits, applicable to any of them, PROVIDED that the
failure of the Parent or any of its Subsidiaries to so obtain, comply or
maintain shall not be deemed to constitute a violation of this covenant
so long as (i) upon learning of any failure, the Parent or the applicable
Subsidiary, as the case may be, shall undertake all reasonable efforts to
remedy such failure, and (ii) such failure and any other failure to
obtain, comply with or maintain the obligations imposed by the foregoing
sentence, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect."
SECTION 44. USE OF PROCEEDS. Section 5.08 of the Credit Agreement is
amended:
(a) to delete the phrase "and Permitted Acquisitions" from
clause (iv) of the first sentence of such Section;
(b) to delete the word "and" immediately preceding the
reference to "(v)" in the first sentence of such Section; and
(c) to add immediately before the period at the end of the
first sentence of such Section the phrase "and (vi) in the case of the
Coleman Revolving Commitment Reserve if the Coleman Merger Effective Date
shall not have occurred prior to August 31, 1999, only to pay cash
consideration for common stock of Coleman required in connection with the
consummation of the merger that will result in Coleman becoming a Wholly
Owned Subsidiary".
SECTION 45. FURTHER ASSURANCES. Section 5.09 of the Credit Agreement
is amended:
(a) to add immediately after the words "the United States" in
the second parenthetical in clause (i) in paragraph (b) in such Section
the parenthetical "(or a Subsidiary engaged in no business other than the
ownership of the capital stock or other equity interests in one or more
Subsidiaries)";
(b) to add immediately after the words "the United States" in
the second parenthetical in clause (ii) in paragraph (b) in such Section
the parenthetical
22
<PAGE>
"(or a Material Subsidiary engaged in no business other than ownership
of the capital stock or other equity interests in one or more Material
Subsidiaries";
(c) to add the following new paragraph at the end of Section
5.09(b):
"Notwithstanding anything to the contrary contained
in this Section 5.09(b), the Coleman Collateral Documents
will govern with respect to the timing and extent of
guarantees to be executed and Liens to be granted by
Coleman and its subsidiaries."; and
(d) to add immediately after paragraph (d) at the end of such
Section the following new paragraph (e):
"(e) In addition to the Parent's obligations under this
Section 5.09, the Required Lenders shall have the right from time
to time after the Fifth Amendment Effective Date in the good faith
exercise of their discretion to require the Parent (and the Parent
shall in any event have the right) to (i) cause each Subsidiary or
Person which becomes a Subsidiary (other then Coleman and its
subsidiaries prior to the Coleman Merger Effective Date, any
Inactive Subsidiary, any Subsidiary organized under the laws of
any jurisdiction outside of the United States, or any Subsidiary
engaged in no business other than the ownership of the capital
stock or other equity interests of one or more entities organized
under the laws of any jurisdiction outside of the United States)
to become a party to the Subsidiary Guarantee as guarantor in the
manner set forth in clause (i) of Section 5.09(b), (ii) pledge or
cause to be pledged the capital stock or other equity interests of
such Subsidiary in the manner and subject to the limitations
contained in clause (ii) of Section 5.09(b) and (iii) cause any
such Subsidiary to take the actions as contemplated by the second
paragraph of clause (ii) of Section 5.09(b) and by Section
5.09(d).".
SECTION 46. LIENS ON ASSETS. Section 5.11 of the Credit Agreement is
amended:
(a) to add immediately after the phrase "require the Parent" in
the first sentence of such Section the phrase "or any Subsidiary Borrower
(other than Coleman prior to the Coleman Merger Effective Date)";
(b) to add immediately after the phrase "obligations of the
Parent" in the first sentence of such Section the phrase ", the
Subsidiary Borrowers";
(c) to add immediately after the phrase "Within 30 days after
any such request, the Parent" in the third sentence of such Section the
phrase "and the applicable Subsidiary Borrower";
(d) to delete the phrase "of the Parent" immediately after the
phrase "appropriate Subsidiary Guarantor" in the third sentence of such
Section;
23
<PAGE>
(e) to add immediately after the phrase "Within 45 days after a
request for security pursuant hereto, the Parent" in the fourth sentence
of such Section the phrase "and the applicable Subsidiary Borrower";
(f) to delete the phrase "of the Parent" immediately after the
phrase "appropriate Subsidiary Guarantor" in the fourth sentence of such
Section; and
(g) to add immediately after the phrase "satisfaction of the
Parent's" in the fourth sentence of such Section the phrase "or the
appropriate Subsidiary Borrower's".
SECTION 47. S-4 REGISTRATION STATEMENT. Article 5 of the Credit
Agreement is amended to add immediately after Section 5.13 at the end of such
Article the following new Section 5.14:
"SECTION 5.14. S-4 REGISTRATION STATEMENT. The Parent and
Coleman will at all times use their respective reasonable best efforts to
expedite the filing of the S-4 Registration Statement with the SEC and to
expedite the process pursuant to which the SEC will declare the S-4
Registration Statement effective.".
SECTION 48. LIENS. Section 6.02 of the Credit Agreement is amended:
(a) to amend paragraph (e) of such Section in its entirety as
follows:
"(e) [Intentionally Omitted];"; and
(b) to amend paragraph (f) of such Section to replace the
phrase "agreements for limited recourse sales by the Parent or any of its
Subsidiaries for cash of such accounts receivable" in such paragraph with
the phrase "the Existing Receivables Program".
SECTION 49. FUNDAMENTAL CHANGES. Section 6.03 of the Credit Agreement
is amended:
(a) to delete in its entirety the parenthetical "(other than
Margin Stock that is disposed of for fair value)" in paragraph (a) of
such Section; and
(b) to delete the words "whether" and "or otherwise" in clause
(i) in paragraph (c) of such Section.
24
<PAGE>
SECTION 50. PERMITTED INVESTMENTS. Section 6.04 of the Credit
Agreement is amended:
(a) to add at the end of clause (b) in such Section immediately
before the semicolon the following proviso "; PROVIDED that, prior to the
Coleman Merger Effective Date, the Parent and its Subsidiaries (other
than Coleman and its subsidiaries) will not make Investments in the
capital stock of, or make capital contributions to, Coleman or any
subsidiary of Coleman (other than to consummate the merger (after the S-4
Registration Statement is declared effective by the SEC) that will result
in Coleman becoming a Wholly Owned Subsidiary)";
(b) to add at the end of clause (c) in such Section immediately
before the semicolon the following proviso:
"; PROVIDED that the Parent and its Subsidiaries will not make any
loans and advances to (x) Coleman or any of its subsidiaries,
except that the Parent may make loans and advances to Coleman
under the Coleman Intercompany Note or (y) any Inactive Subsidiary
in an amount in excess of $100,000, except loans and advances
related to environmental remediation, litigation and product
liability issues;";
(c) to delete the word "and" at the end of clause (e);
(d) to amend clause (f) in such Section in its entirety to read
as follows:
"(f) capital contributions, or deemed capital
contributions, by Sunbeam Products, Inc. in Sunbeam Asset
Diversification, Inc. pursuant to the Existing Receivables
Program; and"; and
(e) to add immediately after clause (f) in such Section the
following new clause (g):
"(g) Investments as of the Effective Date by the Parent
in any Subsidiary and made by any Subsidiary in the Parent or any
other Subsidiary.".
SECTION 51. RESTRICTED PAYMENTS; VOLUNTARY PAYMENTS. Section 6.06 of
the Credit Agreement is amended:
(a) (i) to delete in their entirety clauses (ii), (v), (vi) and
(vii) in paragraph (a) of such Section, (ii) to renumber clauses (iii)
and (iv) in paragraph (a) of such Section as clauses (ii) and (iii),
respectively, and (iii) to insert at the end of new clause (ii) in
paragraph (a) of such Section the following proviso "PROVIDED that prior
to the Coleman Merger Effective Date, Coleman may only declare and pay
dividends ratably with respect to its capital stock which are payable
solely in additional shares of its capital stock, and"; and
25
<PAGE>
(b) (i) to add a reference to "(i)" immediately after the
phrase "retire, purchase, acquire, defease or" in paragraph (b) of such
Section and (ii) to add immediately before the period at the end of such
Section the phrase "or (ii) otherwise make any optional prepayment in
respect of the principal of any Indebtedness other than Indebtedness
under this Agreement and any intercompany Indebtedness permitted under
this Agreement".
SECTION 52. TRANSACTIONS WITH AFFILIATES. Section 6.07 of the Credit
Agreement is amended:
(a) to replace the word "and" immediately preceding the
reference to "(d)" in such Section with a comma; and
(b) to add immediately before the period at the end of such
Section the phrase "and (e) the transactions contemplated by the Coleman
Intercompany Note".
SECTION 53. MODIFICATION OF CERTAIN DOCUMENTS. Section 6.09 of the
Credit Agreement is amended:
(a) to add immediately before the first sentence of such
Section a reference to "(a)";
(b) to replace the word "or" immediately before the reference
to "(ii)" in new paragraph (a) of such Section with a semicolon;
(c) to delete the phrase "which by its terms is expressly
subordinated in right of payment to the Loans and the reimbursement
obligations with respect to LC Disbursements" from clause (ii) in such
Section;
(d) to add immediately before the period at the end of new
paragraph (a) of such Section the following new clause (iii) "or (iii)
except as permitted under the Collateral Documents, consent to or solicit
or enter into any amendment or supplement to, or any waiver or other
modification of any Pledged Instrument (as defined in the Parent Pledge
and Security Agreement) or any document or instrument evidencing the
grant of any collateral securing any Collateral under (and as defined in)
any of the Collateral Documents, including without limitation, any
Pledged Instrument evidencing Indebtedness owed by Coleman to the
Parent."; and
(e) to add immediately after the first paragraph of such
Section the following new paragraph (b):
"(b) From and after the Fifth Amendment Effective Date,
without the consent of the Required Lenders, (x) the Parent will
not, and will not permit any of its Subsidiaries to, consent to or
solicit or enter into
26
<PAGE>
any amendment or supplement to, or any waiver or other
modification of, the Existing Receivables Program Purchase
Agreement, the Receivables Sale and Contribution Agreement
dated as of December 4, 1997 between Sunbeam Products, Inc. and
Sunbeam Asset Diversification, Inc. or any receivables sale
agreements of the type described in clause (y) below if such
amendment, supplement, waiver or other modification (i) would
result in a reduction of the Receivables Purchase Limit, (ii)
would result in an amendment, supplement, waiver or other or
modification of the definitions of the terms "Capital
Investment", "Eligible Receivable", "Applicable Margin
Reserve", "Dilution Reserve", "Fee Reserve" or "Yield Reserve"
if any such amendment, supplement, waiver or modification would
have the effect set forth in clause (iii) below or (iii) would
otherwise reduce the financing available to the Parent or any
of its Subsidiaries pursuant to the Existing Receivables
Program or have an adverse effect on the interests of the
Lenders or the Administrative Agent and (y) the Parent will
not, and will not permit any of its Subsidiaries to, enter into
any receivables sale agreement relating to the Existing
Receivables Program other than a receivables sale agreement
intended to provide for the inclusion of certain accounts
receivable of the Parent or such Subsidiary in the Existing
Receivables Program, which receivables sale agreement shall be
in form and substance reasonably satisfactory to the Required
Lenders.".
SECTION 54. CAPITAL EXPENDITURES. Section 6.11 is amended to add at
the end of such Section the following new paragraph:
"Notwithstanding the foregoing, Consolidated Capital Expenditures
at any time during each of the periods set forth below will not exceed
the amount set forth below opposite such period (in each case excluding
Year 2000 Compatibility Expenditures which would otherwise have been
included in Consolidated Capital Expenditures for such period):
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
January 1, 1999 - June 30, 1999 $40,000,000
January 1, 1999 - September 30, 1999 $50,000,000
January 1, 1999 - December 31, 1999 $55,000,000
January 1, 1999 - March 31, 2000
</TABLE>
SECTION 55. LEVERAGE RATIO. Section 6.12 of the Credit Agreement is
amended to delete the proviso in such Section.
SECTION 56. INTEREST COVERAGE RATIO. Section 6.13 of the Credit
Agreement is amended to delete the proviso in such Section.
27
<PAGE>
SECTION 57. FIXED CHARGE COVERAGE RATIO. Section 6.14 of the Credit
Agreement is amended to delete the proviso in such Section.
SECTION 58. CONSOLIDATED EBITDA. Section 6.15 is amended in its
entirety to read as follows:
"SECTION 6.15. CONSOLIDATED EBITDA. At the last day of each
month set forth below, Consolidated EBITDA (excluding Year 2000
Compatibility Expenditures, bank amendment expenditures and expenditures
for the Lenders' advisors, in each case to the extent deducted in
determining Consolidated EBITDA) for the period from January 1, 1999
through the last day of such month will not be less than the amount set
forth below opposite such month:
<TABLE>
<CAPTION>
Month Consolidated EBITDA
----- -------------------
<S> <C>
April, 1999 $6,300,000
May, 1999 $18,000,000
June, 1999 $31,400,000
July, 1999 $46,200,000
August, 1999 $55,250,000
September, 1999 $74,000,000
October, 1999 $89,900,000
November, 1999 $107,950,000
December, 1999 $113,500,000
January, 2000 $110,000,000
February, 2000 $110,000,000
March, 2000 $121,000,000".
</TABLE>
SECTION 59. ADDITIONAL NEGATIVE COVENANTS. Article 6 is amended to add
immediately after Section 6.15 at the end of such Article the following new
Sections 6.16, 6.17, 6.18, 6.19, 6.20 and 6.21:
"SECTION 6.16. OUTSTANDING REVOLVING LOANS. At the last day of
each month set forth below, the aggregate outstanding amount of Revolving
Loans (without giving effect to (x) any reduction of the Revolving Loans
pursuant to Section 2.09(d)(i) in excess of $20,000,000 or (y) any use of
Revolving Loans, including under the Coleman Revolving Commitment
Reserve, to consummate the merger that will result in Coleman becoming a
Wholly Owned Subsidiary) will not exceed the amount set forth below
opposite such month:
28
<PAGE>
<TABLE>
<CAPTION>
Month Outstanding Revolving Loans
----- ---------------------------
<S> <C>
April, 1999 $290,400,000
May, 1999 $303,700,000
June, 1999 $279,100,000
July, 1999 $281,400,000
August, 1999 $264,200,000
September, 1999 $257,300,000
October, 1999 $277,000,000
November, 1999 $224,200,000
December, 1999 $185,200,000
January, 2000 $201,500,000
February, 2000 $217,800,000
March, 2000 $234,100,000
</TABLE>
SECTION 6.17. YEAR 2000 COMPATIBILITY EXPENDITURES. At the last
day of each fiscal quarter of the Parent set forth below, Year 2000
Compatibility Expenditures (on an aggregate basis for the Parent and its
Consolidated Subsidiaries) for the period, on a cumulative basis, from
January 1, 1999 through the last day of such fiscal quarter will not be
more than the amount set forth below opposite such fiscal quarter:
<TABLE>
<CAPTION>
Year 2000
Fiscal Quarter Compatibility Expenditures
-------------- --------------------------
<S> <C>
June 30, 1999 $37,500,000
September 30, 1999 $45,000,000
December 31, 1999 $50,000,000
</TABLE>
SECTION 6.18. CASH MANAGEMENT. The Parent will not, and will not
permit any Subsidiary to fail to maintain a system of cash management
that concentrates in the Concentration Account (a) on a daily basis all
available funds from the domestic operations of the Parent and its
Subsidiaries (except that in connection with certain retail operations,
the related regional store bank accounts will be swept a minimum of once
each week) and (b) within two Business Days after receipt thereof in the
United States by the Parent or any Subsidiary, all funds
29
<PAGE>
from the foreign operations of the Parent and its Subsidiaries (which
funds shall be remitted to the Unites States in a manner consistent with
past practices), which Concentration Account shall at all times on and
after May 25, 1999 be subject to the Blocked Account Agreement.
SECTION 6.19. LITIGATION SETTLEMENT. Without the consent of the
Required Lenders (which consent shall not be unreasonably withheld or
delayed), the Parent will not settle any litigation relating to the
restatement in October, 1998 of the financial statements of the Parent
and its Consolidated Subsidiaries for the 1996 and 1997 fiscal years of
the Parent and for the fiscal quarter of the Parent ended March 31, 1998,
requiring the payment of money (not paid by insurance carriers or other
third parties) on an aggregate basis for all such litigation in excess of
$1,000,000.
SECTION 6.20. FOREIGN CREDIT FACILITIES. The Parent will not,
and will not permit any Subsidiary to, fail to use its reasonable best
efforts to maximize utilization of and maintain any foreign credit
facilities in existence on the Fifth Amendment Effective Date which
provide for borrowings in foreign currencies.
SECTION 6.21. EXISTING RECEIVABLES PROGRAM. The Parent will not,
and will not permit any Subsidiary to, fail to use its reasonable best
efforts (a) to maintain the Existing Receivables Program and comply with
the terms and provisions thereof, (b) to maximize the aggregate Capital
Investment up to the Receivables Purchase Limit and (c) if the Capital
Investment falls below the level of Capital Investment assumed in the
Business Plan in respect of the 1999 fiscal year of the Parent (or in
respect of the 2000 fiscal year of the Parent, $30,000,000 for January
and February and $35,000,000 for March) for any period of 30 consecutive
days, to supplement or replace the Existing Receivables Program with an
alternative accounts receivables program, which alternative accounts
receivables program shall be on terms and conditions reasonably
satisfactory to the Required Lenders, such that the aggregate financing
received by the Parent and its Subsidiaries from all such accounts
receivables programs is at least equal to such assumed level of Capital
Investment.".
SECTION 60. EVENTS OF DEFAULT. Article 7 of the Credit Agreement is
amended:
(a) to delete the parenthetical "(with respect to the Parent's
existence)" in paragraph (d) of such Article;
(b) to replace the reference to "$25,000,000" in paragraph (l)
of such Section with a reference to "$40,000,000";
(c) to add immediately after the semicolon at the end of
paragraph (o) of such Article the word "or"; and
30
<PAGE>
(d) to add (in order to supersede Section 5.09(c)) immediately
after paragraph (o) at the end of such Article the following new
paragraphs (p) and (q);
"(p) (i) the S-4 Registration Statement has not been
declared effective by the SEC on or before October 30, 1999, (ii)
the Coleman Merger Effective Date shall not have occurred within
25 Business Days after the SEC declares the S-4 Registration
Statement effective or (iii) the cash consideration (including
without limitation, payments on account of the exercise of any
appraisal rights, but excluding related legal, accounting and
other customary fees and expenses) to consummate the merger that
will result in Coleman becoming a Wholly Owned Subsidiary exceeds
$87,500,000; or
(q) Coleman and each of its applicable subsidiaries
shall fail to execute and deliver by May 25, 1999 the Coleman
Collateral Documents, or the Parent (and to the extent applicable,
the Subsidiaries) shall fail to execute and deliver by May 25,
1999 the Blocked Account Agreement".
SECTION 61. NOTICES. Paragraph (a) of Section 10.01 of the Credit
Agreement is amended in its entirety to read as follows:
"(a) if to a Borrower, to it at Sunbeam Corporation, 2381
Executive Center Drive, Boca Raton, Florida 33431, Attention: Mr.
Bobby Jenkins (Telecopy No. (561) 912-4263);".
SECTION 62. WAIVERS; AMENDMENTS. Section 10.02 of the Credit Agreement
is amended:
(a) to add the phrase ", the Subsidiary Borrowers" immediately
following the phrase "entered into by the Parent" and the phrase "or by
the Parent"; and
(b) to add immediately following the phrase "with Revolving
Commitments," in paragraph (b)(iii) of such Section the phrase ", amend
or otherwise modify Schedule B or".
SECTION 63. ASSIGNMENTS. Paragraph (b) of Section 10.04 of the Credit
Agreement is amended (a) to delete the phrase "and, after the Agents have
notified the Parent that primary syndication has been completed, the Parent"
in the parenthetical in clause (i) in the first proviso in such paragraph,
(b) to replace the phrase "each of the Parent and the Administrative Agent
otherwise consent" in clause (ii) in such paragraph with the phrase "the
Administrative Agent otherwise consents" and (c) to delete the second proviso
in such paragraph.
31
<PAGE>
SECTION 64. RIGHT OF SETOFF. Section 10.08 of the Credit Agreement is
amended to delete the phrase "held by such Lender or any of its Affiliates"
in the first sentence of such Section.
SECTION 65. ADDITION OF SCHEDULES AND NEW EXHIBIT. The Credit
Agreement is amended:
(a) to replace Schedule 2.01 (Commitments), Schedule 3.01(a)
(Material Domestic Subsidiaries), Schedule 3.01(b) (Material Foreign
Subsidiaries), Schedule 3.06 (Litigation and Environmental Matters) and
Schedule A (Strategic Business Units) thereto with new Schedules in the
forms attached to this Amendment as Exhibits A, B, C, D and E,
respectively,
(b) to amend Schedule 3.16 (Outstanding Principal Indebtedness)
to the Credit Agreement to add immediately after Section I.A.5. in such
Schedule a reference to "C. Subordinated Notes";
(c) to amend Schedule 6.01 to the Credit Agreement (Outstanding
Indebtedness) to the Credit Agreement to add immediately after Section
I.5. in such Schedule a reference to "6. Subordinated Notes at maturity
-- $2,014,000,000"; and
(d) to add new a Schedule 3.17 (Material Unencumbered Assets),
Schedule B (Designated Foreign Currencies) and Schedule C (Non-Core
Assets) thereto (and a corresponding reference in the table of contents
of the Credit Agreement) in the forms attached to this Amendment as
Exhibits F, G and H, respectively.
SECTION 66. CONSENT WITH RESPECT TO COLEMAN AS SUBSIDIARY BORROWER.
Pursuant to the Second Waiver, dated as of February 12, 1999, under the
Credit Agreement and the Subsidiary Borrowing Agreement, dated as of February
12, 1999 (the "COLEMAN BORROWING AGREEMENT"), among the Parent, Coleman and
the Administrative Agent, Coleman became a Subsidiary Borrower under the
Credit Agreement, PROVIDED, HOWEVER, such Second Waiver provided that without
the prior written consent of the Administrative Agent and the Required
Lenders, Coleman would not be permitted to borrow Loans in its capacity as a
Subsidiary Borrower and could only request the issuance of Letters of Credit
for its account in accordance with the terms contained in the Coleman
Borrowing Agreement. The Administrative Agent and the Lenders hereby consent
to permit Coleman, in its capacity as a Subsidiary Borrower, on and after the
Coleman Merger Effective Date, to borrow Loans and to request Letters of
Credit in accordance with Article 2 of the Credit Agreement.
SECTION 67. WAIVERS OF FINANCIAL STATEMENT DELIVERY, HEDGING
OBLIGATIONS, FINANCIAL COVENANTS AND REPRESENTATIONS. (a) The Lenders hereby
waive, until April 10, 2000, any Default or Event of Default arising by
reason of the representations and warranties contained in Sections 3.04
(FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE), 3.06 (LITIGATION AND
ENVIRONMENTAL MATTERS) and 3.07 (COMPLIANCE WITH LAWS AND AGREEMENTS) of the
Credit
32
<PAGE>
Agreement to have proven to have been materially incorrect when made or
deemed made at any time prior to the Fifth Amendment Effective Date;
(b) The Lenders hereby waive, until April 10, 2000, any Default or
Event of Default arising by reason of the representation and warranty
contained in Section 3.11 (DISCLOSURE) of the Credit Agreement to have proven
to have been materially incorrect when made or deemed made at any time prior
to the Fifth Amendment Effective Date; PROVIDED that such waiver is
conditioned upon the representation and warranty contained in the second
sentence of such Section 3.11 on and after the Fifth Amendment Effective Date
to be true and correct (for purposes of Section 4.04(b), and not materially
incorrect, for purposes of paragraph (c) of Article 7) in respect of all
reports, financial statements, certificates or other information (taken as a
whole) furnished on or after September 30, 1998 by or on behalf of any
Obligor to the Administrative Agent or any Lender.
(c) The Lenders hereby waive, until April 10, 2000, (i) any Default or
Event of Default arising by reason of the representation and warranty contained
in Section 3.04(c) or Section 3.14 (ACQUISITION DOCUMENTS) of the Credit
Agreement to have proven to have been materially incorrect when made or deemed
made and (ii) the condition under Section 4.04(b) that each representation and
warranty referenced in clause (i) be true and correct when made or deemed made.
(d) The Lenders hereby waive any Default or the Event of Default
arising by reason of the failure by the Parent to comply with the requirement
contained in Section 5.01(a) (FINANCIAL STATEMENTS) of the Credit Agreement to
furnish, by March 31, 1999, its audited consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end of
and for the 1998 fiscal year of the Parent (the "1998 FINANCIAL STATEMENTS");
PROVIDED that such waiver is conditioned upon the 1998 Financial Statements
being furnished to the Administrative Agent (and compliance with Section 5.01(a)
being achieved) on or before April 30, 1999.
(e) The Lenders hereby waive, until April 10, 2000, any Default or
Event of Default arising by reason of the failure by the Parent to comply with
Section 5.10 (APPROVED HEDGING AGREEMENTS) of the Credit Agreement.
(f) The Lenders hereby waive, until April 10, 2000, (i) any Events
of Default arising by reason of the failure by the Parent to comply with
Section 6.12 (LEVERAGE RATIO), Section 6.13 (INTEREST COVERAGE RATIO) and
Section 6.14 (FIXED CHARGE COVERAGE RATIO) of the Credit Agreement at the
last day of the fiscal quarters of the Parent ending June 30, 1998, September
30, 1998 and December 31, 1998 and (ii) any Event of Default arising by
reason of any failure by the Parent to comply with Section 6.12 (LEVERAGE
RATIO), Section 6.13 (INTEREST COVERAGE RATIO) and Section 6.14 (FIXED CHARGE
COVERAGE RATIO) of the Credit Agreement at the last day of any fiscal quarter
of the Parent during the 1999 fiscal year of the Parent and at the last day
of the fiscal quarter of the Parent ending March 31, 2000.
33
<PAGE>
(g) The Lenders hereby waive, until April 10, 2000, any Default or
Event of Default that existed on June 30, 1998. This waiver shall not
constitute a waiver of any Default or Event of Default existing on or after
July 1, 1998 after giving effect to this Amendment.
SECTION 68. AGREEMENTS.
(a) In addition to the Lenders' inspection and meeting rights under
Section 5.02 and 5.06 of the Credit Agreement, and the right of the Parent to at
any time request a meeting with the Lenders, if the Parent determines that the
S-4 Registration Statement may not be declared effective by the SEC on or before
October 30, 1999 or that the Coleman merger may not be consummated within 25
Business Days after the S-4 Registration Statement is declared effective by the
SEC, and if the Parent so requests, the Lenders will meet with the Parent on or
about September 30, 1999 and will consider and discuss in good faith any
proposal that the Parent determines to make to amend or waive paragraph (p) of
Article 7 of the Credit Agreement.
(b) Subject to paragraph (c) below, if paragraph (p) of Article 7
is amended at the request of the Parent after the Amendment Effective Date,
including without limitation, to extend the October 30, 1999 date and/or the
25-Business Day time period set forth therein, or the Lenders agree to waive
the occurrence of any Event of Default under such paragraph (p) of Article 7,
the Lenders agree that no fee (including without limitation, any extension,
waiver or amendment fee) will be payable to the Lenders in connection with
any such amendment or waiver, PROVIDED that (i) as of the effective date of
any such amendment or waiver, no other Default or Event of Default shall have
occurred and be continuing and (ii) the Parent has demonstrated to the
reasonable satisfaction of the Lenders that the Parent and its Subsidiaries
were at all times in compliance with Section 5.14 of the Credit Agreement.
(c) (i) The agreement of the Lenders to meet at the request of the
Parent (and to consider and discuss any proposal) as set forth in paragraph (a)
above, and to forego the payment of a fee as set forth in paragraph (b) above,
shall not constitute the Lenders' consent or indicate their willingness to at
any time consent to any amendment or waiver of paragraph (p) of Article 7, (ii)
the Lenders shall have no obligation whatsoever, express or implied, to agree or
consent to any proposed amendment or waiver of paragraph (p) of Article 7, (iii)
the decision whether to agree to any such amendment or waiver shall be at the
sole discretion of the Lenders and (iv) the Lenders expressly reserve all of
their rights and remedies upon the occurrence and during the continuance of any
Default or Event of Default. The reservation of rights set forth in clauses (i)
through (iv) of this paragraph (c) shall remain in effect regardless of (A)
whether any such amendment or waiver request is made before or after the
occurrence of an Event of Default under such paragraph (p) of Article 7, (B) any
fact or circumstance, including the circumstances giving rise to any such
potential request for an amendment or waiver or any such Event of Default, (C)
the fact that the Parent and its Subsidiaries may at all times have complied
with Section 5.14 or (D) whether the Parent determines to propose the payment of
a fee in connection with any such proposed amendment or waiver.
SECTION 69. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
34
<PAGE>
SECTION 70. COUNTERPARTS. This Amendment may be signed in any number
of counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
SECTION 71. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. After giving
effect to this Amendment, the Parent and the Subsidiary Borrower (to the
extent applicable to it thereunder) hereby represent and warrant that all
representations and warranties contained in the Credit Agreement are true and
correct on and as of the Amendment Effective Date (unless stated to relate to
a specific earlier date, in which case, such representations and warranties
shall be true and correct as of such earlier date) and that no Default or
Event of Default shall have occurred and be continuing or would result from
the execution and delivery of this Amendment.
SECTION 72. EFFECTIVENESS. This Amendment shall become effective on
the date (the "AMENDMENT EFFECTIVE DATE") on which:
(a) the Administrative Agent shall have received from each of the
Parent, the Subsidiary Borrower and the Lenders, a counterpart hereof signed by
such party or facsimile or other written confirmation (in form satisfactory to
the Administrative Agent) that such party has signed a counterpart hereof;
(b) the Administrative Agent shall have received from each party
thereto a counterpart to an omnibus amendment to the Collateral Documents,
substantially in the form attached to this Amendment as Exhibit I, signed on
behalf of such party or facsimile or other written confirmation (in form
satisfactory to the Administrative Agent) that such party has signed a
counterpart thereof;
(c) the Administrative Agent shall have received from the Parent the
amended and restated intercompany note, substantially in the form attached to
this Amendment as Exhibit J (the "COLEMAN INTERCOMPANY NOTE"), signed on behalf
of Coleman and indorsed to the order of the Administrative Agent;
(d) the Parent shall have received, with a copy for the Administrative
Agent, counterparts to the following documents (collectively with the Coleman
Intercompany Note, the "COLEMAN INTERCOMPANY DOCUMENTS"): (i) a pledge and
security agreement, substantially in the form attached to this Amendment as
Exhibit K, signed on behalf of each party thereto, (ii) a security agreement,
substantially in the form attached to this Amendment as Exhibit L, signed on
behalf of each party thereto, and (iii) a patent security agreement, a trademark
security agreement and a copyright security agreement, substantially in the
forms attached as Exhibits B, C and D, respectively, to Exhibit L to this
Amendment, in each case, signed on behalf of each party thereto;
(e) the Administrative Agent shall have received all certificates,
notes, instruments and other documents required to be delivered to it as
collateral pursuant to the Collateral Documents (after giving effect to the
omnibus amendment referenced in clause (b) above) and the Coleman Intercompany
Documents;
35
<PAGE>
(f) the Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders and
dated the Amendment Effective Date) of Skadden, Arps, Slate, Meagher & Flom
LLP, special counsel for the Obligors and of Janet Kelley, Esq., associate
general counsel for the Obligors, and general counsel to Coleman,
collectively covering such matters relating to the Obligors, the Loan
Documents or the Coleman Intercompany Documents as the Required Lenders shall
reasonably request;
(g) the Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of the
Parent, the authorization of the transactions contemplated by the Coleman
Intercompany Documents and any other legal matters relating to any of the
foregoing, all in form and substance satisfactory to the Administrative Agent
and its counsel;
(h) the Lenders shall be (and by their execution hereof, hereby
confirm that they are) satisfied with (a) all of their legal, regulatory and
financial due diligence and (b) the cash flow and other projections and other
financial information provided by the Parent for the period through March 31,
2000; and
(i) the Administrative Agent shall have received payment of all
fees and other amounts due and payable pursuant to the Credit Agreement,
including reimbursement or payment of all out-of-pocket expenses of the
Administrative Agent and the Lenders invoiced to the Parent and required to
be reimbursed or paid by the Parent under the Credit Agreement.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
SUNBEAM CORPORATION
By /s/ J.W. Levin
---------------------------
Name: Jerry Levin
Title: Chairman, President and CEO
THE COLEMAN COMPANY, INC.
By /s/ J.W. Levin
---------------------------
Name: Jerry Levin
Title: Chairman and CEO
MORGAN STANLEY SENIOR FUNDING, INC.,
individually and as Syndication Agent
By /s/ Michael Hart
---------------------------
Name: Michael Hart
Title: Principal
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, individually and as
Documentation Agent
By /s/ H.G. Wheelock
---------------------------
Name: H.G. Wheelock
Title: Vice President
FIRST UNION NATIONAL BANK,
individually and as Administrative Agent
By /s/ T.M. Molitor
---------------------------
Name: T.M. Molitor
Title: SVP
<PAGE>
OMNIBUS AMENDMENT TO COLLATERAL DOCUMENTS
AMENDMENT (this "AMENDMENT"), dated as of April 15, 1999, to:
(a) the Parent Pledge and Security Agreement, dated as of March 30, 1998 (as
amended by a Substitution Agreement dated on or about July 10, 1998, and as
heretofore otherwise amended, supplemented or otherwise modified, the "PARENT
PLEDGE AND SECURITY AGREEMENT"), between SUNBEAM CORPORATION (with its
successors, the "PARENT") and FIRST UNION NATIONAL BANK, as Administrative
Agent; (b) the Parent Security Agreement, dated as of July 10, 1998 (as
heretofore amended, supplemented or otherwise modified, the "PARENT SECURITY
AGREEMENT"), between the Parent and the Administrative Agent; (c) the Subsidiary
Pledge and Security Agreement, dated as of March 30, 1998 (as amended by
Amendment No. 1 dated as of July 10, 1998, a Substitution Agreement dated on or
about July 10, 1998, an Amendment dated as of December 23, 1998, and as
heretofore otherwise amended, supplemented or otherwise modified, the
"SUBSIDIARY PLEDGE AND SECURITY AGREEMENT"), among each subsidiary of the Parent
signatory thereto (with their respective successors, the "GRANTORS") and the
Administrative Agent; and (d) the Subsidiary Security Agreement, dated as of
July 10, 1998 (as heretofore amended, supplemented or otherwise modified, the
"SUBSIDIARY SECURITY AGREEMENT"; and together with the foregoing agreements,
collectively, the "COLLATERAL DOCUMENTS"), among the Grantors and the
Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Parent and the Administrative Agent are parties
to the Credit Agreement, dated as of March 30, 1998 (as amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), among the Parent,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan
Stanley Senior Funding, Inc., as Syndication Agent, Bank of America National
Trust and Savings Association, as Documentation Agent, and the Administrative
Agent;
WHEREAS, pursuant to the Credit Agreement, the Parent and the
Grantors executed the Collateral Documents in favor of the Administrative Agent;
WHEREAS, the parties to the Credit Agreement are entering into
an Amendment No. 5, Third Waiver and Agreement, dated as of even date herewith
(the "FIFTH AMENDMENT"), to and under the Credit Agreement; and
WHEREAS, in connection with the Fifth Amendment, the parties
to the Collateral Documents have agreed to amend the Collateral Documents as
more fully set forth below;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
<PAGE>
SECTION 1. DEFINED TERMS; REFERENCES. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Credit Agreement has the meaning assigned to such term in the Credit Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other similar
reference contained in the applicable Collateral Document shall, after this
Amendment becomes effective, refer to such Collateral Document as amended
hereby. Except as herein specifically amended, all terms and provisions of each
Collateral Document shall remain in full force and effect and shall be performed
by the parties thereto according to its terms and provisions. This Amendment is
limited as specified and shall not constitute a modification, amendment or
waiver of any other provision of the Collateral Documents or indicate the
Lenders' willingness to consent to any such other modification, amendment or
waiver.
SECTION 2. AMENDMENT TO PARENT PLEDGE AND SECURITY AGREEMENT.
The Parent Pledge and Security Agreement is amended as follows:
(a) Section 1 of the Parent Pledge and Security Agreement is
amended:
(i) to add in its appropriate alphabetical order in
such Section the following new definition:
""INVESTMENT PROPERTY" means all "investment
property" as such term is defined in Section 9-115 of
the Uniform Commercial Code as in effect from time to
time in the State of New York.";
(ii) to add the phrase ", including without
limitation, the Intercompany Agreements" immediately before
the period at the end of the definition of "PLEDGED
INSTRUMENTS" in such Section; and
(iii) to add immediately after each reference to the
term "the Parent" in the definition of "SECURED OBLIGATIONS"
in such Section the phrase "or any Subsidiary Borrower";
(b) Section 2 of the Parent Pledge and Security Agreement is
amended:
(i) to add immediately after the phrase "its Direct
Subsidiaries" in the third sentence in paragraph (A) in such
Section the phrase "and Indirect Subsidiaries"; and
(ii) to add immediately after paragraph (C) in such
Section the following new paragraph (D):
"(D) PLEDGED INSTRUMENTS. Each Pledged
Instrument and each document and instrument that
secures or guarantees payment of such Pledged
Instrument constitutes the legal, valid and binding
obligation of the maker thereof, enforceable in
accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or
other
2
<PAGE>
laws affecting creditors' rights generally and
subject to general principles of equity, regardless
of whether considered in a proceeding in equity or at
law. As of March 31, 1999, the outstanding principal
balance of the Intercompany Agreement, dated April 6,
1998, made by Coleman in favor of the Parent was not
less than $395,000,000 and, as of the Fifth Amendment
Effective Date, such Intercompany Agreement is not
subject to any defense, counterclaim or offset
whatsoever, other than the right to make repayments
thereunder.";
(c) Section 3 of the Parent Pledge and Security Agreement is
amended:
(i) to add immediately after the phrase "any of its
Direct Subsidiaries" in paragraph (A)(2) of such Section the
phrase "or Indirect Subsidiaries";
(ii) to add immediately after the phrase "any of its
Direct Domestic Subsidiaries" in paragraph (A)(3) in such
Section the phrase "or Indirect Subsidiaries";
(iii) to renumber paragraphs "(A)(4)" and "(A)(5)" in
such Section as new paragraphs "(A)(5)" and "(A)(6)",
respectively;
(iv) to add immediately after paragraph (A)(3) in
such Section the following new paragraph (A)(4):
"(4) all Investment Property;";
(v) to replace the phrase "clauses (1) through (4)
hereof" in new paragraph (A)(6) in such Section with the
phrase "clauses (1) through (5) hereof (including without
limitation, all dividends or other income from the Investment
Property or the Pledged Securities, collections thereon or
distributions or payments with respect thereto) and all
collateral security and guarantees given by any Person with
respect to all or any of the collateral described in clauses
(1) through (5) hereof (including without limitation, the
collateral security provided under the Coleman Intercompany
Collateral Documents)";
(vi) to replace the word "owes" in each of paragraphs
(B), (C) and (D) in such Section with the words "instrument
evidencing"; and
(vii) to add immediately after the phrase "any of its
Direct Subsidiaries" in paragraph (E) in such Section the
phrase "or Indirect Subsidiaries";
(d) Section 5 of the Parent Pledge and Security Agreement is
amended:
(i) to add immediately before the period at the end
of the first sentence in paragraph (A) in such Section the
parenthetical "(including without limitation, in the case of
any Investment Property and any other relevant Collateral,
taking
3
<PAGE>
any actions reasonably deemed necessary to enable the
Administrative Agent to obtain "control" (within the meaning
of the applicable Uniform Commercial Code) with respect
thereto and, in the case of any Pledged Instrument secured by
any collateral, execute and deliver UCC-1 financing statements
or UCC assignments, as appropriate, in form and substance
satisfactory to the Administrative Agent, evidencing the
pledge and assignment to the Administrative Agent of the
interests of the Parent in such collateral securing such
Pledged Instrument, and original counterparts of each security
document and guarantee executed in connection with the grant
of any collateral to secure any such Pledged Instrument)"; and
(ii) to add immediately after paragraph (B) in such
Section the following new paragraphs (C) and (D):
"(C) The Parent authorizes the
Administrative Agent to endorse on a schedule to each
Intercompany Agreement, all loans and advances made
by the Parent to any Direct Subsidiary or Indirect
Subsidiary (including without limitation, any
Intercompany Agreement made by Coleman in favor of
the Parent), and all payments made on account of
principal and the amounts of interest paid or
capitalized. Each such endorsement shall constitute
"prima facie" evidence of any Indebtedness (including
interest thereon) owed by such Direct Subsidiary or
Indirect Subsidiary and the amounts repaid by such
Direct Subsidiary or Indirect Subsidiary. The failure
to make any such endorsement shall not affect the
obligations of such Direct Subsidiary or Indirect
Subsidiary under such Intercompany Agreement.
(D) The Parent agrees that it will not, in
any manner that could reasonably be expected to
materially impair the value of such Pledged
Instrument as Collateral or the rights of the Parent
with respect thereto (i) enter into any agreement
amending or supplementing any Pledged Instrument or
any document or instrument evidencing any collateral
security or guarantee with respect to such Pledged
Instrument; (ii) waive or release any obligation of
any party to any Pledged Instrument or to any
document or instrument evidencing the collateral
security or guarantee with respect to such Pledged
Instrument; (iii) release any Pledged Instrument or
any collateral security or guarantee with respect to
such Pledged Instrument; or (iv) fail to exercise
promptly and diligently any right which it may have
under, or in respect of, any such Pledged Instrument,
including without limitation, any failure which could
result in any right of offset against sums payable
under any such Pledged Instrument; PROVIDED that,
without the prior written consent of the
Administrative Agent and the other Secured Parties,
or otherwise as expressly set forth in the Coleman
Intercompany Collateral Documents, the Parent shall
not (x) at any time take or omit to take any action
of the type contemplated by clauses (i) through (iv)
above in respect of any Pledged Instrument
constituting an Intercompany Agreement made by
Coleman in favor of the Parent, or any
4
<PAGE>
document or instrument evidencing any collateral
security or guarantee with respect to such
Intercompany Agreement (including without limitation,
the Coleman Intercompany Collateral Documents) or (y)
other than to make loans and advances permitted by
the Credit Agreement under such Intercompany
Agreement and, subject to the rights of the
Administrative Agent under this Agreement (including
without limitation, under Sections 8 and 10 after the
occurrence and during the continuance of a Default or
an Event of Default), to collect repayments under
such Intercompany Agreement, exercise any rights and
remedies against Coleman under such Intercompany
Agreement or under the Coleman Intercompany
Collateral Documents, all of which rights and
remedies have been pledged and assigned to the
Administrative Agent pursuant to this Agreement,
constitute Collateral under this Agreement, and shall
be exercised by the Administrative Agent, for the
benefit of the Secured Parties, to the extent, at the
times and in the manner set forth in this Agreement
and the Coleman Intercompany Collateral Documents.";
(e) Section 9 of such Parent Pledge and Security Agreement is
amended to add immediately after each reference to the term "the
Pledged Stock" in such Section the phrase "and the Investment
Property"; and
(f) Section 11 of the Parent Pledge and Security Agreement is
amended to add immediately after the parenthetical "(whether or not in
effect in the jurisdiction where such rights are exercised)" in the
first sentence in such Section the phrase ", including without
limitation, all rights of a secured party under the Uniform Commercial
Code in respect of any collateral security granted by any Person to
secure any Pledged Instrument or any other Collateral, including
without limitation, under the Coleman Intercompany Collateral Documents
to secure the Intercompany Agreement made by Coleman".
SECTION 3. AMENDMENT TO PARENT SECURITY AGREEMENT. The Parent
Security Agreement is amended as follows:
(a) Section 1 of the Parent Security Agreement is amended:
(i) to add immediately after each reference to the
term "the Parent" in the definitions of "LETTER OF CREDIT
OBLIGATION" and "SECURED OBLIGATIONS" in such Section the
phrase "or any Subsidiary Borrower";
(b) Section 4 of the Parent Security Agreement is amended:
(i) to add immediately after the term "Asset Sale" in
clause (y) in paragraph (i) in such Section the phrase "or
other disposition"; and
(ii) to amend paragraph (l) in such Section in its
entirety to read as follows:
5
<PAGE>
"(l) In the event the Parent proposes to
take any action contemplated by Section 4(a)(i),
4(a)(ii) or 4(a)(iii), at the request of the
Administrative Agent, the Parent shall, at its cost
and expense, and prior to taking such proposed
action, cause to be delivered to the Secured Parties
an opinion of counsel, satisfactory to the
Administrative Agent, substantially in the form of
Exhibit E, or otherwise in form and substance, and
covering such matters relating to such action,
reasonably satisfactory to the Administrative
Agent."; and
(c) Section 12 of the Parent Security Agreement is amended to
add immediately after each reference to "Asset Sale" in paragraph (c)
in such Section the phrase "or other disposition".
SECTION 4. AMENDMENT TO SUBSIDIARY PLEDGE AND SECURITY
AGREEMENT. The Subsidiary Pledge and Security Agreement is amended as follows:
(a) Section 1 of the Subsidiary Pledge and Security Agreement
is amended:
(i) to add in its appropriate alphabetical order in
such Section the following new definition:
"INVESTMENT PROPERTY" means all "investment
property" as such term is defined in Section 9-115 of
the Uniform Commercial Code as in effect from time to
time in the State of New York.";
(ii) to add the phrase ", including without
limitation, the Intercompany Agreements" immediately before
the period at the end of the definition of "PLEDGED
INSTRUMENTS" in such Section; and
(iii) to replace the term "Foreign Direct Subsidiary
Shares" in the definition of "PLEDGED STOCK" in such Section
with the term "Direct Foreign Subsidiary Shares";
(b) Section 2 of the Subsidiary Pledge and Security Agreement
is amended:
(i) to add immediately after the phrase "each Direct
Domestic Subsidiary" in the second sentence in paragraph (A)
in such Section the parenthetical "(or in the case of Coleman
prior to the Coleman Merger Effective Date, all of the issued
and outstanding capital stock of Coleman owned by such
Grantor)";
6
<PAGE>
(ii) to replace the term "Foreign Direct Subsidiary"
in the second sentence in paragraph (A) in such Section with
the phrase "Direct Foreign Subsidiary";
(iii) to add immediately after the phrase "each
Direct Foreign Subsidiary" (as amended by clause (ii) above)
in the second sentence in paragraph (A) in such Section the
parenthetical "(or in the case of Sunbeam Corporation (Canada)
Limited, all of the issued and outstanding stock of Sunbeam
Corporation (Canada) Limited owned by such Grantor)";
(iv) to add immediately before the phrase "any of
their Direct Subsidiaries" in the third sentence in paragraph
(A) in such Section the phrase "the Parent, any Material
Subsidiaries or"; and
(v) to add immediately after paragraph (C) in such
Section the following new paragraph (D):
"(D) PLEDGED INSTRUMENTS. Each Pledged
Instrument and each document and instrument that
secures or guarantees payment of such Pledged
Instrument constitutes the legal, valid and binding
obligation of the maker thereof, enforceable in
accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and
subject to general principles of equity, regardless
of whether considered in a proceeding in equity or at
law. Sunbeam Products, Inc. hereby represents and
warrants that, as of the Fifth Amendment Effective
Date, the outstanding principal balance on the
Material Subsidiary Intercompany Agreement dated
April, 1998, made by Coleman in favor of Sunbeam
Products, Inc. was $0. Coleman Worldwide Corporation
hereby represents that, as of the Fifth Amendment
Effective Date, the outstanding principal balance on
the Intercompany Agreement dated July 10, 1998, made
by Coleman in favor of Coleman Worldwide Corporation
was $0. Upon the request of the relevant Grantor, the
Administrative Agent shall deliver promptly, after
the Fifth Amendment Effective Date, each such
Intercompany Agreement to such Grantor for
cancellation.";
(c) Section 3 of the Subsidiary Pledge and Security Agreement
is amended:
(i) to add immediately before the phrase "any of its
Direct Subsidiaries" in paragraph (A)(2) of such Section the
phrase "the Parent, any Material Subsidiary or";
(ii) to add immediately before the phrase "any of its
Direct Domestic Subsidiaries" in paragraph (A)(3) in such
Section the phrase "any Material Subsidiary or";
7
<PAGE>
(iii) to renumber paragraphs "(A)(3)" and "(A)(4)" in
such Section as new paragraphs "(A)(4)" and "(A)(5)",
respectively;
(iv) to add immediately after paragraph (A)(2) in
such Section the following new paragraph (A)(3):
"(3) all Investment Property; and";
(v) to replace the phrase "clauses (1) through (3)
hereof" in new paragraph (A)(5) in such Section with the
phrase "clauses (1) through (4) hereof (including without
limitation, all dividends or other income from the Investment
Property or the Pledged Securities, collections thereon or
distributions or payments with respect thereto) and all
collateral security and guarantees given by any Person with
respect to all or any of the collateral described in clauses
(1) through (4) hereof";
(vi) to replace the word "owes" in each of paragraphs
(B), (C) and (D) in such Section with the words "instrument
evidencing"; and
(vii) to add immediately before the phrase "or any of
their Direct Subsidiaries" in paragraph (E) in such Section
the phrase ", the Parent, any Material Subsidiary";
(e) Section 5 of the Subsidiary Pledge and Security Agreement
is amended:
(i) to add immediately before the period at the end
of the first sentence in paragraph (A) in such Section the
parenthetical "(including without limitation, in the case of
any Investment Property and any other relevant Collateral,
taking any actions reasonably deemed necessary to enable the
Administrative Agent to obtain "control" (within the meaning
of the applicable Uniform Commercial Code) with respect
thereto and, in the case of any Pledged Instrument secured by
any collateral, execute and deliver UCC-1 financing statements
or UCC assignments, as appropriate, in form and substance
satisfactory to the Administrative Agent, evidencing the
pledge and assignment to the Administrative Agent of the
interests of the applicable Grantor in such collateral
securing such Pledged Instrument, and original counterparts of
each security document and guarantee executed in connection
with the grant of any collateral to secure any such Pledged
Instrument)"; and
(ii) to add immediately after paragraph (B) in such
Section the following new paragraphs (C) and (D):
"(C) Each Grantor authorizes the
Administrative Agent to endorse on a schedule to each
Intercompany Agreement or Material Subsidiary
Intercompany Agreement, all loans and advances made
by such Grantor to any Direct Subsidiary or Indirect
Subsidiary, and all payments
8
<PAGE>
made on account of principal and the amounts of
interest paid or capitalized. Each such endorsement
shall constitute "prima facie" evidence of any
Indebtedness (including interest thereon) owed by
such Direct Subsidiary or Material Subsidiary and the
amounts repaid by such Direct Subsidiary or Material
Subsidiary. The failure to make any such endorsement
shall not affect the obligations of such Direct
Subsidiary or Material Subsidiary under such
Intercompany Agreement or Material Subsidiary
Intercompany Agreement.
(D) Each Grantor agrees that it will not, in
any manner that could reasonably be expected to
materially impair the value of such Pledged
Instrument as Collateral or the rights of such
Grantor with respect thereto (i) enter into any
agreement amending or supplementing any Pledged
Instrument or any document or instrument evidencing
any collateral security or guarantee with respect to
such Pledged Instrument; (ii) waive or release any
obligation of any party to any Pledged Instrument or
to any document or instrument evidencing the
collateral security or guarantee with respect to such
Pledged Instrument; (iii) release any Pledged
Instrument or any collateral security or guarantee
with respect to such Pledged Instrument; or (iv) fail
to exercise promptly and diligently any right which
it may have under, or in respect of, any such Pledged
Instrument, including without limitation, any failure
which could result in any right of offset against
sums payable under any such Pledged Instrument";
(f) Section 8 of the Subsidiary Pledge and Security Agreement
is amended to add immediately after each reference to the term "the
Pledged Stock" in such Section the phrase "and the Investment
Property";
(g) Section 10 of the Subsidiary Pledge and Security Agreement
is amended to add immediately after the parenthetical "(whether or not
in effect in the jurisdiction where such rights are exercised)" in the
first sentence in such Section the phrase ", including without
limitation, all rights of a secured party under the Uniform Commercial
Code in respect of any collateral security granted by any Person to
secure any Pledged Instrument or any other Collateral"; and
(h) Schedules I and II to the Subsidiary Pledge and Security
Agreement are replaced with new Schedules I and II in the forms
attached to this Amendment as Exhibits A and B, respectively.
SECTION 5. AMENDMENT TO SUBSIDIARY SECURITY AGREEMENT. The
Subsidiary Security Agreement is amended as follows:
(a) Section 1 of the Subsidiary Security Agreement is amended:
9
<PAGE>
(i) to add immediately after each reference to the
term "the Parent" in the definition of "LETTER OF CREDIT
OBLIGATION" in such Section the phrase "or any Subsidiary
Borrower"; and
(ii) to replace each reference to the term "the
Parent" in the definition of "SECURED OBLIGATIONS" in such
Section with the term "the Obligors"; and
(b) Section 4 of the Subsidiary Security Agreement is amended:
(i) to add immediately after the term "Asset Sale" in
clause (y) in paragraph (i) in such Section the phrase "or
other disposition"; and
(ii) to amend paragraph (l) in such Section in its
entirety to read as follows:
"(l) In the event a Grantor proposes to take
any action contemplated by Section 4(a)(i), 4(a)(ii)
or 4(a)(iii), at the request of the Administrative
Agent, such Grantor shall, at its cost and expense,
and prior to taking such proposed action, cause to be
delivered to the Secured Parties an opinion of
counsel, satisfactory to the Administrative Agent,
substantially in the form of Exhibit E, or otherwise
in form and substance, and covering such matters
relating to such action, reasonably satisfactory to
the Administrative Agent."; and
(c) Section 12 of the Subsidiary Security Agreement is amended
to add immediately after each reference to "Asset Sale" in paragraph
(c) in such Section the phrase "or other disposition".
SECTION 6. GOVERNING LAW. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 7. COUNTERPARTS. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
SECTION 8. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. After
giving effect to this Amendment, each of the Parent and the Grantors hereby
represents and warrants that all representations and warranties applicable to
the Parent or such Grantor, as the case may be, contained in the Credit
Agreement and the other Loan Documents are true and correct as of the date
hereof and that no Default or Event of Default shall have occurred and be
continuing or would result from the execution and delivery of this Amendment.
SECTION 9. EFFECTIVENESS. This Amendment shall become
effective on the date on which the Administrative Agent shall have received from
the Parent and each of the Grantors, a counterpart hereof signed by such party
or facsimile or other written confirmation (in form satisfactory to the
Administrative Agent) that such party has signed a counterpart hereof.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
SUNBEAM CORPORATION
By /s/ Bobby Jenkins
--------------------------------------
Name:
Title:
BRK BRANDS, INC.
By /s/ Bobby Jenkins
--------------------------------------
Name:
Title:
COLEMAN WORLDWIDE CORPORATION
By /s/ Ronald R. Richter
--------------------------------------
Name:
Title:
DDG I, INC.
By /s/ Janet Kelley
--------------------------------------
Name:
Title:
FIRST ALERT, INC.
By /s/ Bobby Jenkins
--------------------------------------
Name:
Title:
<PAGE>
GHI I, INC.
By /s/ Janet Kelley
--------------------------------------
Name:
Title:
LASER ACQUISITION CORPORATION
By /s/ Bobby Jenkins
--------------------------------------
Name:
Title:
SI II, INC.
By /s/ Janet Kelley
--------------------------------------
Name:
Title:
SIGNATURE BRANDS, INC.
By /s/ Bobby Jenkins
--------------------------------------
Name:
Title:
SIGNATURE BRANDS USA, INC.
By /s/ Bobby Jenkins
--------------------------------------
Name:
Title:
SUNBEAM AMERICAS HOLDINGS, LTD.
By /s/ Bobby Jenkins
--------------------------------------
Name:
Title:
<PAGE>
SUNBEAM PRODUCTS, INC.
By /s/ Bobby Jenkins
--------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By /s/ T.M. Molitor
--------------------------------------
Name: T.M. Molitor
Title: SVP
<PAGE>
OP II, INC.
By /s/ Janet Kelley
--------------------------------------
Name: Janet Kelley
Title: Vice President
<PAGE>
AMENDED AND RESTATED
SUBORDINATED INTERCOMPANY NOTE
April 6, 1998 New York, New York
FOR VALUE RECEIVED, the undersigned, THE COLEMAN COMPANY, INC., a
Delaware corporation, (the "PAYOR"), hereby promises to pay to the order of
SUNBEAM CORPORATION, a Delaware corporation, or any subsequent holder of this
Note (including any such subsequent holder, the "PAYEE"), in lawful money of
the United States of America and in immediately available funds on the
Maturity Date, any and all loans or advances made by the Payee to the Payor
from time to time, together with interest thereon as set forth below, as
evidenced by appropriate entries of loans and repayments in the Payee's books
and records, which entries are authorized to be recorded on the schedule
hereto as set forth below.
SECTION 1. INTEREST. The Payor promises to pay in like money on
the last day of each calendar month and on the Maturity Date interest on the
unpaid principal amount hereof from time to time outstanding under this Note
at the Applicable Rate (calculated on the basis of a year of 360 days and
actual days elapsed), PROVIDED that interest on the unpaid principal amount
of this Note shall be capitalized on the last day of each calendar month
prior to the month in which the Maturity Date occurs by increasing the unpaid
principal amount of this Note by the amount of interest that shall have
accrued during such month. Upon the occurrence and during the continuance of
an Event of Default, the principal amount outstanding under this Note
(including capitalized interest) shall bear interest at the Applicable Rate
plus 2%.
SECTION 2. RECORDATION OF PAYMENTS. The holder of this Note is
authorized to endorse on the schedule annexed hereto and made a part hereof
or on a continuation thereof which shall be attached hereto and made a part
hereof all loans and advances made by the Payee to the Payor hereunder, and
all payments made on account of principal and the amounts of capitalized
interest. Each such endorsement shall constitute "prima facie" evidence of
Indebtedness (including capitalized interest thereon) owed to the Payee by
the Payor and the amounts repaid by the Payor to the Payee. The failure to
make any such endorsement shall not affect the obligations of the Payor
hereunder.
SECTION 3. DEFINITIONS. The following terms, as used herein, have
the following respective meanings:
"ADMINISTRATIVE AGENT" means First Union National Bank, as
administrative agent for the Sunbeam Lenders under the Sunbeam Credit
Agreement.
<PAGE>
"APPLICABLE RATE" means (i) 4% at any time when the LIBO Rate is
less than 6% and (ii) 5% at any time when the LIBO Rate is 6% or higher.
"COLEMAN COLLATERAL DOCUMENTS" has the meaning set forth in the
Sunbeam Credit Agreement.
"COLEMAN INTERCOMPANY COLLATERAL DOCUMENTS" means the Intercompany
Pledge and Security Agreement, the Intercompany Security Agreement and any
other instruments or agreements at any time executed to secure this Note.
"COLEMAN INTERCOMPANY LOAN DOCUMENTS" means, collectively, this
Note and the Coleman Intercompany Collateral Documents.
"COLEMAN MERGER EFFECTIVE DATE" has the meaning set forth in the
Sunbeam Credit Agreement.
"DEFAULT" means any event or condition which constitutes an Event
of Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"EVENT OF DEFAULT" has the meaning set forth in Section 7.
"GAAP" means generally accepted accounting principles in the United
States of America.
"GOVERNMENTAL AUTHORITY" means the government of the United States
of America, any other nation or any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"INTERCOMPANY PLEDGE AND SECURITY AGREEMENT" means the Intercompany
Pledge and Security Agreement, dated as of even date herewith, between the
Payor and the Payee, as amended, supplemented or otherwise modified from time
to time with the prior written consent of the Administrative Agent.
"INTERCOMPANY SECURITY AGREEMENT" means the Intercompany Security
Agreement, dated as of even date herewith, between the Payor and the Payee,
as amended, supplemented or otherwise modified from time to time with the
prior written consent of the Administrative Agent.
"LIBO RATE" means the rate appearing on Page 3750 of the Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service as determined by the Payor from
time to time for purposes of providing rate quotations comparable to those
currently provided on such page of such Service, providing quotations of
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<PAGE>
interest rates applicable to dollar deposits in the London interbank market)
as the rate for dollar deposits with a three-month maturity.
"LIEN" means, with respect to any asset, (i) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (ii) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect as any of
the foregoing) relating to such asset and (iii) in the case of securities,
any purchase option, call or similar right of a third party with respect to
such securities.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i)
the business, assets, operations, prospects or condition, financial or
otherwise, of the Payor and its Subsidiaries taken as a whole, (ii) the
ability of the Payor to perform its obligations under this Note and the other
Coleman Intercompany Loan Documents or (iii) the ability of the Payee to
practically realize the rights and benefits, taken as a whole, intended to be
afforded to the Payee under the Coleman Intercompany Loan Documents.
"MATERIAL SUBSIDIARY" means (i) any Subsidiary of the Payor that
meets the definition of "significant subsidiary" contained as of the date
hereof in Regulation S-X of the Securities and Exchange Commission; PROVIDED
THAT, for purposes of this definition of "Material Subsidiary", all
references in Regulation S-X to "10 percent" shall be deemed to be references
to "5 percent", (ii) any Subsidiary of the Payor that directly or indirectly
owns common stock of a Material Subsidiary and (iii) any Subsidiary of the
Payor set forth on Schedules 3.01(a) and (b) of the Sunbeam Credit Agreement.
"MATURITY DATE" means April 15, 2000, PROVIDED that if the
obligations under this Note are accelerated pursuant to Section 7 prior to
such date, the Maturity Date shall be such earlier date of acceleration.
"PAYOR OBLIGATIONS" means the obligations of the Payor (a) under
the Sunbeam Credit Agreement and the Sunbeam Loan Documents, including
without limitation, (i) all principal of and interest (including without
limitation, any interest which accrues after or would accrue but for the
commencement of any case or proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Payor, whether or not allowed
or allowable as a claim in any such proceeding) on any loan under, or any
note issued pursuant to, the Sunbeam Credit Agreement, (ii) all reimbursement
obligations with respect to any letter of credit issued under the Sunbeam
Credit Agreement, (iii) all other amounts payable by the Payor under the
Sunbeam Loan Documents and (iv) any renewals or extensions of any of the
foregoing and (b) from and after the Coleman Merger Effective Date, under the
Coleman Collateral Documents.
"PERSON" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at
any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial
3
<PAGE>
statements if such financial statements were prepared in accordance with GAAP
as of such date, as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which securities or other
ownership interests representing more than 50% of the equity or more than 50%
of the ordinary voting power or, in the case of a partnership, more than 50%
of the general partnership interests are, as of such date, owned, controlled
or held, or (b) of which, as of such date, the parent or one or more
subsidiaries of the parent or the parent and one or more subsidiaries of the
parent has possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies thereof, whether through
the ability to exercise voting power, by contract or otherwise.
"SUNBEAM CREDIT AGREEMENT" means the Credit Agreement, dated as of
March 30, 1998, among the Payee, the Subsidiary Borrowers (including the
Payor) referred to therein, the lenders party thereto, Morgan Stanley Senior
Funding, Inc., as Syndication Agent, Bank of America National Trust and
Savings Association, as Documentation Agent and the Administrative Agent, as
amended, supplemented or otherwise modified from time to time.
"SUNBEAM LENDERS" means the lenders party to the Sunbeam Credit
Agreement.
"SUNBEAM LOAN DOCUMENTS" means the "Loan Documents" as defined in
the Sunbeam Credit Agreement.
"SUNBEAM OBLIGORS" means the "Obligors" as defined in the Sunbeam
Credit Agreement.
"SUNBEAM PLEDGE AND SECURITY AGREEMENT" means the Parent Pledge
and Security Agreement, dated as of March 30, 1998, between the Payor and the
Administrative Agent, as amended, supplemented or otherwise modified from
time to time.
"TAXES" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
SECTION 4. SECURITY. This Note is secured as provided in the
Coleman Intercompany Collateral Documents. Reference is hereby made to the
Coleman Intercompany Collateral Documents for a description of the property
and assets in which a security interest has been granted, the nature and
extent of the security, the terms and conditions upon which the security
interests were granted and the rights of the holder of this Note in respect
thereof. This Note, including all of the Payee's rights and remedies
hereunder, and all of the collateral securing this Note pursuant to the
Coleman Intercompany Collateral Documents, have been pledged and assigned by
the Payee to the Administrative Agent, for the benefit of the Sunbeam
Lenders, pursuant to the Sunbeam Pledge and Security Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Payor represents
and warrants as follows:
(a) The Payor is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to
4
<PAGE>
carry on its business as now conducted and, except where the failure
to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do
business in, and is in good standing in, each jurisdiction
where such qualification is required.
(b) The execution, delivery and performance by the Payor of the
Coleman Intercompany Loan Documents are within the Payor's corporate powers
and have been duly authorized by all necessary corporate action. Each
Coleman Intercompany Loan Document has been duly executed and delivered by
the Payor and constitutes a legal, valid and binding obligation of the
Payor, enforceable against the Payor in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
(c) The execution, delivery and performance by the Payor of the
Coleman Intercompany Loan Documents (i) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are
in full force and effect, (ii) will not violate in any material respect any
applicable law or regulation or the charter, by-laws or other
organizational documents of the Payor or any of its Subsidiaries or any
order of any Governmental Authority, (iii) will not violate or result in a
default under any indenture, agreement or other instrument binding upon the
Payor or any of its Subsidiaries or its assets, or give rise to a right
thereunder to require any payment to be made by the Payor or any of its
Subsidiaries and (iv) will not result in the creation or imposition of any
Lien on any asset of the Payor or any of its Subsidiaries (other than the
Liens created by the Coleman Intercompany Collateral Documents).
(d) (i) The Payor has good title to, or valid leasehold interests
in, all its real and personal property material to its business, except for
minor defects in title that do not interfere with its ability to conduct
its business as currently conducted or to utilize such properties for their
intended purposes.
(ii) The Payor owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property material to
its business, and the use thereof by the Payor does not infringe upon the
rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
(e) There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge
of the Payor, threatened against or affecting the Payor or any of its
Material Subsidiaries (i) as to which there is a reasonable possibility of
an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect, considering, among other things, reserves
established by the Payor or its applicable Subsidiaries, or (ii) that
involve the Coleman Intercompany Loan Documents.
5
<PAGE>
(f) Each of the Payor and its Subsidiaries is in compliance with all
laws, regulations and orders of any Governmental Authority applicable to it
or its property and all indentures, agreements and other instruments
binding upon it or its property, except where the failure to do so could
not reasonably be expected to result in a Material Adverse Effect. No
Event of Default under paragraphs (a) through (e) of Section 7 has occurred
and is continuing, and no Event of Default applicable to the Payor (in its
capacity as a Subsidiary Borrower under the Sunbeam Credit Agreement) has
occurred and is continuing under paragraph (f) of Section 7.
(g) Each of the Payor and its Material Subsidiaries has timely filed
or caused to be filed all tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been
paid by it, except Taxes that are being contested in good faith by
appropriate proceedings and for which the Payor or such Material
Subsidiary, as applicable, has set aside on its books adequate reserves.
(h) Each of the representations and warranties made by the Payor in
the Coleman Intercompany Collateral Documents is true and correct.
(i) As of March 31, 1999, the principal amount outstanding under this
Note was not less than $395,000,000.
SECTION 6. COVENANTS.
(a) Except as expressly permitted under the Sunbeam Credit Agreement,
the Payor will, and will cause each of its Material Subsidiaries to, do or
cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence and the rights, licenses, permits,
privileges and franchises material to the conduct of its business.
(b) The Payor will, and will cause each of its Material Subsidiaries
to, pay its obligations, including liabilities for Taxes, that if not paid
before the same shall become delinquent or in default, could result in a
Material Adverse Effect, except where (i) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (ii) the Payor
or such Material Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (iii) the failure to make
payment pending such contest could not reasonably be expected to result in
a Material Adverse Effect.
(c) The Payor will, and will cause each of its Material Subsidiaries
to, (i) keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear
excepted, and (ii) maintain, with financially sound and reputable insurance
companies or through programs of self-insurance (including levels of
self-insured retention), insurance in such amounts and against such risks
and, in the case of self-insurance, at such levels and in such amounts
(including without limitation comprehensive general liability insurance,
workers compensation insurance, product liability insurance, business
interruption insurance and environmental insurance) as are
6
<PAGE>
customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.
(d) The Payor will, at its sole cost and expense, do, execute,
acknowledge and deliver all such further acts, deeds, conveyances,
mortgages, assignments, notices or assignments and transfers as the Payee
shall from time to time reasonably request, which may be necessary or
desirable from time to time to assure, perfect, convey, assign and transfer
to the Payee the property and rights conveyed or assigned pursuant to the
Coleman Intercompany Collateral Documents.
(e) The Payor will, and will cause each of its Subsidiaries or
Material Subsidiaries, as the case may be, to, comply with the covenants
contained in Article 6 of the Sunbeam Credit Agreement which are applicable
to it as a Subsidiary or Material Subsidiary, as the case may be, of the
Payee and, in the case of the Payor, as a Subsidiary Borrower under and as
defined in the Sunbeam Credit Agreement.
SECTION 7. EVENTS OF DEFAULT. If any of the following events
("EVENTS OF DEFAULT") shall occur:
(a) the Payor shall fail to pay any amount on this Note when and as
the same shall become due and payable;
(b) any representation or warranty made or deemed made by or on
behalf of the Payor in or in connection with any of the Coleman
Intercompany Loan Documents or any amendment or modification thereof or
waiver hereunder or thereunder, shall prove to have been materially
incorrect when made or deemed made;
(c) the Payor shall fail to observe or perform any covenant,
condition or agreement contained in any of the Coleman Intercompany Loan
Documents (other than those specified in paragraph (a) or (b) of this
Section 7), and such failure shall continue unremedied for a period of
30 days;
(d) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Payor or any of its Material Subsidiaries or its
debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Payor or
any of its Material Subsidiaries or for a substantial part of its assets,
and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(e) the Payor or any of its Material Subsidiaries shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to contest
in a timely and
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appropriate manner, any proceeding or petition described in
paragraph (d) of this Section 7, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Payor or any of its Material Subsidiaries or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors, (vi) become unable,
admit in writing or fail generally to pay its debts as they become due, or
(vii) take any action for the purpose of effecting any of the foregoing; or
(f) an Event of Default shall have occurred under, and as defined in,
the Sunbeam Credit Agreement;
then, and in every such event (other than an event with respect to the Payor
described in paragraph (d) or (e) of this Section 7), and at any time
thereafter during the continuance of such event, the Payee may, by notice to
the Payor, declare the principal amount outstanding under this Note to be due
and payable, and thereupon the principal amount outstanding under this Note,
together with all capitalized and accrued interest thereon and all fees and
other obligations of the Payor accrued hereunder, shall become due and
payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Payor; and in case of any
event with respect to the Payor described in paragraph (d) or (e) of this
Section 7, the principal amount outstanding under this Note, together with
all capitalized and accrued interest thereon and all fees and other
obligations of the Payor accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Payor.
SECTION 8. SUBORDINATION. The amounts evidenced by this Note are
subordinate and subject in right of payment to the prior payment in full of
the Payor Obligations in the manner and to the extent set forth below:
(a) In the event of (i) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relative to the Payor
or to its creditors as such, or to its properties or assets, or (ii) any
liquidation, dissolution or other winding-up of the Payor, whether
voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (iii) any assignment for the benefit of creditors or any
other marshaling of assets or liabilities of the Payor, then and in any
such event the holders of the Payor Obligations shall be entitled to
receive payment in full of all amounts due on or to become due on or in
respect of Payor Obligations then outstanding, in cash or in any other
manner acceptable to the holders of the Payor Obligations, before the Payee
is entitled to receive any payment or distribution of any kind or character
(including, without limitation, securities that are subordinated in right
to payment to all Payor Obligations to substantially the same extent as, or
to a greater extent than, this Note, that may be payable or deliverable in
respect of this Note), in any such case, proceeding, dissolution,
liquidation or other winding-up or event referred to in clauses (i) through
(iii) above.
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(b) In the event that the Payee shall receive any payment or
distribution of assets of the Payor of any kind or character in respect of
principal of or interest on this Note in contravention of subsection (a)
hereof, then and in such event such payment or distribution shall be
received and held by the Payee in trust for the holders of the Payor
Obligations and shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or
other Person making payment or distribution of assets of the Payor in trust
for the holders of, and for application to the payment of, all Payor
Obligations in full, in cash or in any other manner acceptable to the
holders of the Payor Obligations, after giving effect to any concurrent
payment or distribution to or for the holders of the Payor Obligations.
SECTION 9. MISCELLANEOUS.
(a) EXPENSES. The Payor shall pay or reimburse all out-of-pocket
costs and expenses reasonably incurred by the Payee, including the
reasonable fees, charges and disbursements of counsel for the Payee, in
connection with any amendment, waiver, supplement or modification to, or
the enforcement or protection of the Payee's rights under, this Note and
the other Coleman Intercompany Loan Documents.
(b) NOTICES. The Payor shall provide prompt written notice to the
Payee and the Administrative Agent of the occurrence of any Default or
Event of Default. All notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as
follows:
(i) if to the Payor, to it at The Coleman Company, Inc., 2381
Executive Center Drive, Boca Raton, Florida 33431, Attention: Ms.
Gwen Wisler, (telecopy: (561) 912-4303);
(ii) if to the Payee, to it at Sunbeam Corporation, 2381
Executive Center Drive, Boca Raton, Florida 33431, Attention: Mr.
Bobby Jenkins (telecopy: (561) 912-4263); and
with a copy to:
(iii) First Union National Bank, One First Union Center, 301
South College Street, DC-5, Charlotte, North Carolina 28288,
Attention: Thomas M. Molitor, (telecopy: (704) 374-3300).
Each party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other party hereto. All
notices and other communications given to either party hereto in accordance
with the provisions of this Note shall be deemed to have been given on the
date of receipt.
(c) WAIVERS; NON-EXCLUSIVE REMEDIES. No failure or delay by the
Payee in exercising any right or power under this Note or any other Coleman
Intercompany Loan
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Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Payee under this Note and the other
Coleman Intercompany Loan Documents are cumulative and are not exclusive of
any rights or remedies that the Payee would otherwise have.
(d) AMENDMENTS. Neither this Note nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements
in writing entered into by the Payor and the Payee, with the prior written
consent of the Administrative Agent.
(e) SUCCESSORS AND ASSIGNS . The provisions of this Note shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns (including the Administrative Agent as
assignee of the Payee), PROVIDED that, without the prior written consent of
the Payee and the Administrative Agent, the Payor may not assign or
otherwise transfer any of its rights or obligations under this Note or any
of the other Coleman Intercompany Loan Documents.
(f) WAIVERS OF PRESENTMENT. All parties now or hereafter liable with
respect to this Note, whether maker, principal, surety, guarantor,
endorser, or otherwise, hereby waive presentment for payment, demand,
notice of dishonor, protest and all other notices of any kind.
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(g) RESTATEMENT. This Note is in replacement and substitution for,
and shall not constitute a novation, release or satisfaction of, that
certain Intercompany Note dated April 6, 1998, made by the Payor payable to
the Payee, which Intercompany Note is being amended and restated as set
forth herein.
(h) NEW YORK LAW. This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
(i) SEVERABILITY. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be liberally construed in favor of the Payee
in order to carry out the intentions of the parties hereto as nearly as may
be possible; and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction.
THE COLEMAN COMPANY, INC.
By: /s/ J.W. Levin
------------------------------
Name: Jerry Levin
Title: Chairman and CEO
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August 19, 1997
Mr. Mark Goldman
Dear Mark:
The purpose of this letter is to outline the basic terms of an agreement for
you to continue working with Coleman beginning January 1, 1998. The following
are the key elements of our agreement:
Title: Chairman, Eastpak
Effective Date: January 1, 1998
Salary: $300,000.00/annual
Bonus Target: 70% of base salary. Prorate if leave during the year for
"non cause".
Stock Options: 20,000 shares to be approved by the first
compensation committee meeting in 1998. Vesting will be
accelerated from our normal practice such that 50% will vest
at 6 months at the date of issue and 50% will vest 6 months
thereafter.
Car Allowance: $725.00/month
Vacation: 4 weeks
Benefits: Standard Coleman benefits
Notice Period: Six months for either party in 1998, three months thereafter.
Upon our reaching agreement on these key elements, we will complete a more
formal Employment Agreement between us.
I look forward to your continued involvement and leadership of Eastpak to
grow both in revenue and income in the future on a global basis.
Sincerely,
/s/ Jerry Levin I concur: /s/ Mark Goldman
- --------------------- ------------------------
Chairman and CEO
Date: 10/01/97
--------------------------------
<PAGE>
January 7, 1999
Mark Goldman
Eastpak, Inc.
Cross Point Tower 1, 12th Floor
Lowell, MA 01851-8113
Dear Mark:
The purpose of this letter is to set forth the terms of our agreement
for your continued employment with Coleman. The following are the key
elements of our agreement:
Title: Chairman, Eastpak
Effective Date: January 1, 1999
Salary: $300,000.00/annual
Bonus Target: 70% of Salary, to be prorated if you terminate
employment during the year for any reason other than
good cause.
Stock Options: 30,000 shares, subject to approval by the Sunbeam
Compensation Committee. Vesting will be accelerated
from our normal practice such that 50% will vest on
July 1, 1999
and 50% will vest on December 31, 1999.
Car Allowance: $725.00/month
Vacation: 4 weeks
Benefits: Standard Sunbeam benefits.
Notice Period: Three months by either party.
If you agree to these basic terms, we will complete a more formal
Employment Agreement as soon as possible.
Sincerely,
Jerry W. Levin
---------------------
Jerry W. Levin, CEO
Agreed to by:
Mark Goldman
- ----------------
Mark Goldman
<PAGE>
AMENDMENTS TO THE COLEMAN
RETIREMENT INCENTIVE SAVINGS PLAN ("CRISP")
AMENDMENTS TO CRISP
The following Amendments to the Coleman Retirement Incentive Savings
Plans ("CRISP") are made effective as of the dates stated herein by The
Coleman Company, Inc. (the "Company").
WHEREAS, the Company has reserved the right to amend the Plan; and
WHEREAS, it is desirable to make certain amendments to the Plan.
NOW, THEREFORE, the Plan shall be amended as follows:
1. A new paragraph shall be added effective retroactively to January 1, 1998
at the end of Section 3.6, to read as follows:
Notwithstanding anything to the contrary, an Employee shall not incur
a Severance from Service and no distribution shall be made to any
individual upon an employment transfer involving the Employer or any
Affiliate or any other circumstance where the Employee would not have
a "Separation from Service" under the provisions of the Code or any
other judicial or administrative interpretation thereof;
2. Section 2.1(l) shall be amended effective retroactively to January 1, 1997
to read as follows:
(l) ELIGIBLE EMPLOYEE means an Employee who is employed and
compensated (by a payroll check issued directly from the Employer
to the Employee or direct payroll deposit made to the Employee?s
account) by an Employer. An Employee shall not be an Eligible
Employee if such person 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;
<PAGE>
(3) Included in a group listed in Appendix A attached to this
document;
(4) A leased employee within the meaning of Code Section 414(n);
(5) Effective January 1, 1996, any person employed by the
Company on a weekly or hourly basis in the continental
United States; or
(6) Covered by an outsourcing or leasing agreement (regardless
of their employment status with Employer).
3. Section 2.1(q) shall be amended retroactively to January 1, 1997 to read as
follows:
The term "Highly Compensated Employee" means any Employee who was a 5%
owner at any time during the current or preceding Plan Year, or for
the preceding Plan Year received compensation from the Employer in
excess of $80,000 and, if the Employer so elects, was in the top-paid
20% of Employees. For purposes of determining the number of employees
in the top-paid 20%, the following employees are excluded: employees
who have not completed six months of service; employees who normally
work less than 17-1/2 hours per week; employees who normally work
during not more than six months during any Plan Year; employees who
have not attained age 21; and to the extent allowable under Treasury
regulation, employees covered by a collective bargaining agreement
between employee representatives and the Company or an Affiliate;
4. Section 5.2(b) shall be amended retroactively effective to January 1, 1990,
to read as follows:
(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 retires on or after age 55;
(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.
5. Section 7.1 shall be amended retroactively to January 1, 1997 by replacing
the first full paragraph before subsection (a) with the following:
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 the individually directed accounts
(sometimes hereinafter referred
<PAGE>
to as "IDAs") for Participants. Each Participant shall invest his or
her Accounts among the Fund or Funds so established. In the event any
Participant fails or refuses to make a designation among the Fund or
Funds so established, such Participant's Account shall be invested in
the Savings Fund (or its successor). All such Funds shall be
established an maintained in according with the following subsections:
6. Section 14.3 shall be amended retroactively to January 1, 1997 by adding a
new unnumbered paragraph at the end thereof to read as follows:
The beneficiary of any benefits assigned to Alternate Payee under a
domestic relations order shall be such person or persons as the
Alternate Payee may designate; which designation may include, but
shall not be limited to Alternate Payee's estate. All designations
shall be clearly set forth in the domestic relations order or on such
form or forms as the Plan Administrator shall prescribe for such
purpose. In the event no beneficiary is designated, benefits shall
revert to Participant.
7. Sections 6.2 and 6.3 shall be amended retroactively to January 1, 1998 as
follows:
The references to $3,500 contained in Sections 6.2 and 6.3 shall be
increased to $5,000;
8. Section 5.2 shall be amended retroactively to January 1, 1998 by adding a
new subsection C, as follows:
C. SPECIAL VESTING RULES. A Member who terminates employment
between March 31, 1998 and March 30, 2001 and who begins to
receive severance benefits under the Laser severance policy
or The Coleman Company, Inc. Executive Severance Policy
between March 31, 1998 and March 30, 2001, shall be fully
(100%) vested in such Member's Prior Plan accounts.
<PAGE>
IN WITNESS WHEREOF, the authorized officers of The Coleman Company, Inc. have
signed this document and have affixed the corporate seal, effective as of the
15 day of March, 1999.
THE COLEMAN COMPANY, INC.
ATTEST:
By /s/ Ronald R. Richter
-----------------------
Ronald R. Richter
Its Vice President and Treasurer
By /s/ Janet G. Kelley
---------------------
Janet G. Kelley
Its Vice President and Secretary
<PAGE>
AMENDMENTS TO THE COLEMAN MONTHLY SALARIED
RETIREMENT INCENTIVE SAVINGS PLAN
AMENDMENTS TO MS CRISP
The following Amendments to the Monthly Salaried Coleman Retirement
Incentive Savings Plans ("MS CRISP") are made effective as of the dates
stated herein by The Coleman Company, Inc. (the "Company").
WHEREAS, the Company has reserved the right to amend the Plan; and
WHEREAS, it is desirable to make certain amendments to the Plan.
NOW, THEREFORE, the Plan shall be amended as follows:
1. A new paragraph shall be added retroactively to January 1, 1998 at the end
of Section 3.6, to read as follows:
Notwithstanding anything to the contrary, an Employee shall not incur
a Severance from Service and no distribution shall be made to any
individual upon an employment transfer involving the Employer or any
Affiliate or any other circumstance where the Employee would not have
a "Separation from Service" under the provisions of the Code or any
other judicial or administrative interpretation thereof;
2. The last paragraph of section 2.1(h) shall be amended retroactively to
January 1, 1997 to read as follows:
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);
3. Section 2.1(l) shall be amended effective retroactively to January 1, 1997
to read as follows:
(l) ELIGIBLE EMPLOYEE means an Employee who is employed and
compensated (by a payroll check issued directly from the Employer
to the Employee or direct payroll deposit made to the Employee's
account) by an Employer. An Employee shall not be an Eligible
Employee if such person is --
(1) Not on the Employer's United States payroll;
<PAGE>
(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;
(3) Included in a group listed in Appendix A attached to this
document;
(4) A leased employee within the meaning of Code Section 414(n);
(5) Effective January 1, 1996, any person employed by the
Company on a weekly or hourly basis in the continental
United States; or
(6) Covered by an outsourcing or leasing agreement (regardless
of their employment status with Employer).
4. Section 2.1(q) shall be amended retroactively to January 1, 1997 to read as
follows:
The term "Highly Compensated Employee" means any Employee who was a 5%
owner at any time during the current or preceding Plan Year, or for
the preceding Plan Year received compensation from the Employer in
excess of $80,000 and, if the Employer so elects, was in the top-paid
20% of Employees. For purposes of determining the number of employees
in the top-paid 20%, the following employees are excluded: employees
who have not completed six months of service; employees who normally
work less than 17-1/2 hours per week; employees who normally work
during not more than six months during any Plan Year; employees who
have not attained age 21; and to the extent allowable under Treasury
regulation, employees covered by a collective bargaining agreement
between employee representatives and the Company or an Affiliate;
5. Section 5.2(b) shall be amended retroactively effective to January 1, 1990,
to read as follows:
(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 retires on or after age 55;
(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.
<PAGE>
6. Section 7.1 shall be amended retroactively to January 1, 1997 by replacing
the first full paragraph before subsection (a) with the following:
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 the 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 Participant fails or refuses to make
a designation among the Fund or Funds so established, such
Participant's Account shall be invested in the Savings Fund (or its
successor). All such Funds shall be established an maintained in
according with the following subsections:
7. Section 14.3 shall be amended retroactively to January 1, 1997 by adding a
new unnumbered paragraph at the end thereof to read as follows:
The beneficiary of any benefits assigned to Alternate Payee under a
domestic relations order shall be such person or persons as the
Alternate Payee may designate; which designation may include, but
shall not be limited to Alternate Payee's estate. All designations
shall be clearly set forth in the domestic relations order or on such
form or forms as the Plan Administrator shall prescribe for such
purpose. In the event no beneficiary is designated, benefits shall
revert to Participant.
8. Sections 6.2 and 6.3 shall be amended retroactively to January 1, 1998 as
follows:
The references to $3,500 contained in Sections 6.2 and 6.3 shall be
increased to $5,000;
9. Section 5.2 shall be amended retroactively to January 1, 1998 by adding a
new subsection C, as follows:
C. SPECIAL VESTING RULES. A Member who terminates employment
between March 31, 1998 and March 30, 2001 and who begins to
receive severance benefits under the Laser severance policy
or The Coleman Company, Inc. Executive Severance Policy
between March 31, 1998 and March 30, 2001, shall be fully
(100%) vested in such Member's Prior Plan accounts.
<PAGE>
IN WITNESS WHEREOF, the authorized officers of The Coleman Company, Inc. have
signed this document and have affixed the corporate seal, effective as of the
15 day of March, 1999.
THE COLEMAN COMPANY, INC.
ATTEST:
By /s/ Ronald R. Richter
------------------------
Ronald R. Richter
Its Vice President and Treasurer
By /s/ Janet G. Kelley
--------------------
Janet G. Kelley
Its Vice President and Secretary
<PAGE>
SUPPLEMENT 1
TO
COLEMAN
RETIREMENT INCENTIVE SAVINGS PLAN
The following Amendments to the Coleman Retirement Incentive Savings
Plans ("CRISP") are made effective as of the dates stated herein by The
Coleman Company, Inc. (the "Company").
WHEREAS, the Company has reserved the right to amend the Plan; and
WHEREAS, it is desirable to make certain amendments to the Plan.
NOW, THEREFORE, the Plan shall be amended as follows:
SUPPLEMENT 1 shall be added and shall read as follows:
TRANSFER OF ACCOUNTS OF PARTICIPANTS TRANSFERRED TO EMPLOYMENT WITH
ADVANCED TECHNOLOGY SERVICES, INC.
A. Background and Purpose. Effective as of July 6, 1998, The Coleman
Company, Inc. outsourced certain maintenance operations to Advanced
Technology Services, Inc. ("ATS") and in the process transferred the
employment of certain of its employees ("Transferred Employees") to
employment with ATS. Effective as of the closing ("Closing") of the
transfer, Transferred Employees ceased to participate in this Plan.
The purpose of this Supplement is to provide special rules relating to
the transfer from this Plan to the Advanced Technology Services, Inc.
401(k) Profit Sharing Plan ("ATS Plan") of plan accounts of certain
Transferred Employees as of July 6, 1998, or such other date as may be
provided by the Plan Administrator ("Transfer Date").
B. Contributions. Prior to the Transfer Date, the Employer shall make or
shall cause to be made all contributions on behalf of Transferred
Employees in such amounts as may be required under the terms of the
Plan for periods prior to the Closing.
C. Full Vesting. Each Transferred Employee shall be fully vested in and
have a nonforfeitable right to the entire balances in his Account,
regardless of his number of years of service.
D. Election. In accordance with rules established by the Plan
Administrator each Transferred Employee may elect to have his Account
remain in the
<PAGE>
Plan and be held and distributed upon a separation from service in
accordance with the terms of the Plan. Any Transferred Employee who
does not elect to have his Account remain in the Plan shall have his
Account transferred to the ATS Plan pursuant to paragraph E below.
E. Transfer of Accounts. Effective as of the Transfer Date, the Plan
Accounts of Transferred Employees (other than those Transferred
Employees who elect to have their vested balances remain in this Plan
pursuant to paragraph D above) are being transferred to the ATS Plan.
The transfer of such Accounts shall be made in accordance with Section
401(a)(12) and Section 414(l) of the Internal Revenue Code and the
regulations thereunder. After such transfer, no Transferred Employee
whose Account is being transferred, or other person claiming benefits
for or on account of such Transferred Employee, shall be entitled to
or have any interest in benefits under this Plan.
F. Transfer of Assets. As soon as practicable after the Transfer Date,
the Plan Administrator shall direct the Trustee to transfer to the
trust that funds benefits under the ATS Plan cash (or such other
assets as the Plan Administrator
may determine, including loans from the Plan to Transferred Employees)
equal to the value of the Accounts that are transferred pursuant to
paragraph E above.
G. Accounts. Any account transferred pursuant to paragraph E above shall
be adjusted as of the Transfer Date in accordance with the provisions
of the Plan. Such account balances, as so adjusted, shall be added to
account balances in the ATS Plan for Transferred Employees.
Thereafter, such accounts shall be adjusted and be payable to
participants and their beneficiaries in accordance with the terms of
the ATS Plan, subject to the requirements of Section 411(d)(6) of the
Internal Revenue Code.
H. Use of Terms. Terms used in this Supplement shall, unless otherwise
defined in this Supplement, have the meanings set forth in the Plan.
<PAGE>
IN WITNESS WHEREOF, the authorized officers of The Coleman Company, Inc. have
signed this document and have affixed the corporate seal, effective as of the
15 day of March, 1999.
THE COLEMAN COMPANY, INC.
ATTEST:
By /s/ Ronald R. Richter
-----------------------
Ronald R. Richter
Its Vice President and Treasurer
By /s/ Janet G. Kelley
---------------------
Janet G. Kelley
Its Vice President and Secretary
<PAGE>
SUPPLEMENT 1
TO
COLEMAN MONTHLY SALARIED
RETIREMENT INCENTIVE SAVINGS PLAN
The following Amendments to the Coleman Retirement Monthly Salaried
Incentive Savings Plans ("MS CRISP") are made effective as of the dates stated
herein by The Coleman Company, Inc. (the "Company").
WHEREAS, the Company has reserved the right to amend the Plan; and
WHEREAS, it is desirable to make certain amendments to the Plan.
NOW, THEREFORE, the Plan shall be amended as follows:
SUPPLEMENT 1 shall be added and shall read as follows:
TRANSFER OF ACCOUNTS
OF PARTICIPANTS TRANSFERRED TO
EMPLOYMENT WITH ADVANCED TECHNOLOGY SERVICES, INC.
A. Background and Purpose. Effective as of July 6, 1998, The Coleman
Company, Inc. outsourced certain maintenance operations to Advanced
Technology Services, Inc. ("ATS") and in the process transferred the
employment of certain of its employees ("Transferred Employees") to
employment with ATS. Effective as of the closing ("Closing") of the
transfer, Transferred Employees ceased to participate in this Plan.
The purpose of this Supplement is to provide special rules relating to
the transfer from this Plan to the Advanced Technology Services, Inc.
401(k) Profit Sharing Plan ("ATS Plan") of plan accounts of certain
Transferred Employees as of July 6, 1998, or such other date as may be
provided by the Plan Administrator ("Transfer Date").
B. Contributions. Prior to the Transfer Date, the Employer shall make or
shall cause to be made all contributions on behalf of Transferred
Employees in such amounts as may be required under the terms of the
Plan for periods prior to the Closing.
C. Full Vesting. Each Transferred Employee shall be fully vested in and
have a nonforfeitable right to the entire balances in his Account,
regardless of his number of years of service.
<PAGE>
D. Election. In accordance with rules established by the Plan
Administrator each Transferred Employee may elect to have his Account
remain in the Plan and be held and distributed upon a separation from
service in accordance with the terms of the Plan. Any Transferred
Employee who does not elect to have his Account remain in the Plan
shall have his Account transferred to the ATS Plan pursuant to
paragraph E below.
E. Transfer of Accounts. Effective as of the Transfer Date, the Plan
Accounts of Transferred Employees (other than those Transferred
Employees who elect to have their vested balances remain in this Plan
pursuant to paragraph D above) are being transferred to the ATS Plan.
The transfer of such Accounts shall be made in accordance with Section
401(a)(12) and Section 414(l) of the Internal Revenue Code and the
regulations thereunder. After such transfer, no Transferred Employee
whose Account is being transferred, or other person claiming benefits
for or on account of such Transferred Employee, shall be entitled to
or have any interest in benefits under this Plan.
F. Transfer of Assets. As soon as practicable after the Transfer Date,
the Plan Administrator shall direct the Trustee to transfer to the
trust that funds benefits under the ATS Plan cash (or such other
assets as the Plan Administrator
may determine, including loans from the Plan to Transferred Employees)
equal to the value of the Accounts that are transferred pursuant to
paragraph E above.
G. Accounts. Any account transferred pursuant to paragraph E above shall
be adjusted as of the Transfer Date in accordance with the provisions
of the Plan. Such account balances, as so adjusted, shall be added to
account balances in the ATS Plan for Transferred Employees.
Thereafter, such accounts shall be adjusted and be payable to
participants and their beneficiaries in accordance with the terms of
the ATS Plan, subject to the requirements of Section 411(d)(6) of the
Internal Revenue Code.
H. Use of Terms. Terms used in this Supplement shall, unless otherwise
defined in this Supplement, have the meanings set forth in the Plan.
<PAGE>
IN WITNESS WHEREOF, the authorized officers of The Coleman Company, Inc. have
signed this document and have affixed the corporate seal, effective as of the
15 day of March, 1999.
THE COLEMAN COMPANY, INC.
ATTEST:
By /s/ Ronald R. Richter
-----------------------
Ronald R. Richter
Its Vice President and Treasurer
By /s/ Janet G. Kelley
----------------------
Janet G. Kelley
Its Vice President and Secretary
<PAGE>
APPENDIX B
TO
COLEMAN RETIREMENT INCENTIVE SAVINGS PLAN
The following Amendments to the Coleman Retirement Incentive Savings
Plans ("CRISP") are made effective as of the dates stated herein by The
Coleman Company, Inc. (the "Company").
WHEREAS, the Company has reserved the right to amend the Plan; and
WHEREAS, it is desirable to make certain amendments to the Plan.
NOW, THEREFORE, the Plan shall be amended as follows:
APPENDIX B shall be added and shall read as follows:
On or about April 1, 1997, a portion of the Coleman Powermate
Employees' 401(k) Plan (the "Prior Plan") was merged into this
Plan. The prohibition against reduction or elimination of
protected benefits shall fully apply and no protected benefit
shall be reduced or eliminated except as otherwise permitted by
statute, regulation or other IRS administrative announcement. In
addition to the accounts otherwise maintained under the Plan for
Members the following additional Prior Plan accounts shall be
maintained: 401(k) account, rollover account, post-tax
contribution account, and matching account. The following
paragraphs describe the treatment of certain benefits which have
been preserved or modified in accordance with MS CRISP or
applicable law.
NORMAL FORM OF PAYMENT. The normal form of payment for the
Member's Prior Plan accounts , as well as for that portion of the
Member's accounts under this Plan which are attributable to
contributions (both Member and Employer) made with respect to the
period prior to January 1, 1999, shall be a Qualified Joint and
Survivor Annuity (as defined in the Prior Plan) and the qualified
preretirement survivor annuity, and the rules of the Prior Plan
concerning the same shall apply. The portion of the Member's
accounts under this Plan which are attributable to contributions
(both Member and Employer) made with respect to the period prior
to January 1, 1999 shall be treated, for purposes of Sections
401(a)(11) and 417 of the Code as accounts which are separate from
the portion of the Member's accounts under this Plan which are
attributable to contributions (both Member and Employer) made with
respect to the period after December 31, 1999.
<PAGE>
HARDSHIP AND AGE 59-1/2 WITHDRAWALS. Hardship and
age 59-1/2 withdrawals from the Member's accounts shall be made in
accordance with Section 6.6 of this Plan; provided, however, that:
(i) to the extent that a withdrawal is otherwise permitted
pursuant to Section 6.6 of this Plan, such withdrawal must
be made from the Member's accounts, in the following
sequence:
(A) from the Member's Prior Plan post-tax contribution
account (notwithstanding the absence of a reference
to post-tax contributions under Section 6.6),
(B) after the Prior Plan post-tax contribution account
has been depleted, from the Member's Prior Plan
rollover account (as well as from any Rollover
Contributions Account under this Plan attributable
to rollovers made with respect to the period prior
to January 1, 1999), and
(C) after the accounts referenced in clause (B) have
been depleted, from the Member's Prior Plan 401(k)
account (as well as from the Member's Before-Tax
Contributions Account attributable to contributions
made with respect to the period prior to January 1,
1999), and
(D) after the accounts referenced in clause (C) have
been depleted, from the Member's other accounts
under this Plan, but only to the extent that a
withdrawal from such other accounts is otherwise
permitted pursuant to Section 6.6 of this Plan;
(ii) to the extent that such a withdrawal is made from any of
the Member's foregoing accounts referenced under clauses
(A), (B) or (C) of the foregoing subsection (i), the normal
form of payment of any withdrawal under Section 6.6 shall
be a Qualified Joint and Survivor Annuity (as defined in
the Prior Plan), unless the Member elects to receive a lump
sum cash payment, and the rules of the Prior Plan
concerning the selection of such optional form of benefit
payment shall apply.
(iii) in determining the income tax consequences to the Member of
a withdrawal pursuant to Section 6.6 of this Plan, the
rules of Section 72(d)(2) of the Code shall apply.
VESTING. The 5-year vesting schedule set forth in Section
5.2 of the Plan shall apply in determining the vested percentage
of the Member's
<PAGE>
Prior Plan matching and profit sharing accounts rather than the
7-year vesting currently being utilized under the
Prior Plan.
Any forfeitures arising from a Participant's accounts shall
be applied as described in Section 6.3(f) and Section 4.2 of the
Plan.
BENEFICIARY DESCRIPTION. The beneficiary of a Member's
Prior Plan accounts , as well as for that portion of the Member's
accounts under this Plan which are attributable to contributions
(both Member and Employer) made with respect to the period prior
to January 1, 1999, shall be such person or persons, or entity or
entities, designated in a written instrument filed by the Member
with the Plan Administrator. If the Member fails to file a
beneficiary description with the Plan Administrator, or if the
designated Beneficiary predeceases Member or cannot be found after
the Member's death, such accounts shall be paid to the Member's
surviving spouse; or if the Member's spouse fails to survive the
Member, such accounts shall be paid to the Member's then surviving
children, in equal shares; or if the Member's spouse and children
fail to survive the Member, such accounts shall be paid to the
Member's estate. A Member shall have the right to make a
beneficiary designation at any time during the Member's lifetime
and to change a beneficiary designation at any time and from time
to time during the Member's lifetime by filing a late beneficiary
designation with the Plan Administrator.
Notwithstanding the foregoing, in the case of a Member subject to
the qualified preretirement survivor annuity rules, the
beneficiary of that Member shall, to the extent of the qualified
preretirement survivor annuity, be the Member's spouse unless a
qualified election has been made providing otherwise.
<PAGE>
IN WITNESS WHEREOF, the authorized officers of The Coleman Company, Inc. have
signed this document and have affixed the corporate seal, effective as of the
15 day of March, 1999.
THE COLEMAN COMPANY, INC.
ATTEST:
By /s/ Ronald R. Richter
-------------------------
Ronald R. Richter
Its Vice President and Treasurer
By /s/ Janet G. Kelley
----------------------
Janet G. Kelley
Its Vice President and Secretary
<PAGE>
APPENDIX B
TO
COLEMAN MONTHLY SALARIED
RETIREMENT INCENTIVE SAVINGS PLAN
The following Amendments to the Coleman Monthly Salaried Retirement
Incentive Savings Plans ("MS CRISP") are made effective as of the dates
stated herein by The Coleman Company, Inc. (the "Company").
WHEREAS, the Company has reserved the right to amend the Plan; and
WHEREAS, it is desirable to make certain amendments to the Plan.
NOW, THEREFORE, the Plan shall be amended as follows:
APPENDIX B shall be added and shall read as follows:
On or about April 1, 1997, a portion of the Coleman Powermate
Employees' 401(k) Plan (the "Prior Plan") was merged into this
Plan. The prohibition against reduction or elimination of
protected benefits shall fully apply and no protected benefit
shall be reduced or eliminated except as otherwise permitted by
statute, regulation or other IRS administrative announcement. In
addition to the accounts otherwise maintained under the Plan for
Members the following additional Prior Plan accounts shall be
maintained: 401(k) account, rollover account, post-tax
contribution account, and matching account. The following
paragraphs describe the treatment of certain benefits which have
been preserved or modified in accordance with MS CRISP or
applicable law.
NORMAL FORM OF PAYMENT. The normal form of payment for the
Member's Prior Plan accounts , as well as for that portion of the
Member's accounts under this Plan which are attributable to
contributions (both Member and Employer) made with respect to the
period prior to January 1, 1999, shall be a Qualified Joint and
Survivor Annuity (as defined in the Prior Plan) and the qualified
preretirement survivor annuity, and the rules of the Prior Plan
concerning the same shall apply. The portion of the Member's
accounts under this Plan which are attributable to contributions
(both Member and Employer) made with respect to the period prior
to January 1, 1999 shall be treated, for purposes of Sections
401(a)(11) and 417 of the Code as accounts which are separate from
the portion of the Member's accounts under this Plan which are
attributable to contributions (both Member and Employer) made with
respect to the period after December 31, 1999.
<PAGE>
HARDSHIP AND AGE 59-1/2 WITHDRAWALS. Hardship and age
59-1/2 withdrawals from the Member's accounts shall be made in
accordance with Section 6.6 of this Plan; provided, however, that:
(i) to the extent that a withdrawal is otherwise permitted
pursuant to Section 6.6 of this Plan, such withdrawal must
be made from the Member's accounts, in the following
sequence:
(A) from the Member's Prior Plan post-tax contribution
account (notwithstanding the absence of a reference
to post-tax contributions under Section 6.6),
(B) after the Prior Plan post-tax contribution account
has been depleted, from the Member's Prior Plan
rollover account (as well as from any Rollover
Contributions Account under this Plan attributable
to rollovers made with respect to the period prior
to January 1, 1999), and
(C) after the accounts referenced in clause (B) have
been depleted, from the Member's Prior Plan 401(k)
account (as well as from the Member's Before-Tax
Contributions Account attributable to contributions
made with respect to the period prior to January 1,
1999), and
(D) after the accounts referenced in clause (C) have
been depleted, from the Member's other accounts
under this Plan, but only to the extent that a
withdrawal from such other accounts is otherwise
permitted pursuant to Section 6.6 of this Plan;
(ii) to the extent that such a withdrawal is made from any of
the Member's foregoing accounts referenced under clauses
(A), (B) or (C) of the foregoing subsection (i), the normal
form of payment of any withdrawal under Section 6.6 shall
be a Qualified Joint and Survivor Annuity (as defined in
the Prior Plan), unless the Member elects to receive a lump
sum cash payment, and the rules of the Prior Plan
concerning the selection of such optional form of benefit
payment shall apply.
(iii) in determining the income tax consequences to the Member of
a withdrawal pursuant to Section 6.6 of this Plan, the
rules of Section 72(d)(2) of the Code shall apply.
VESTING. The 5-year vesting schedule set forth in Section
5.2 of the Plan shall apply in determining the vested percentage
of the Member's
<PAGE>
Prior Plan matching and profit sharing accounts rather than the
7-year vesting currently being utilized under the
Prior Plan.
Any forfeitures arising from a Participant's accounts shall
be applied as described in Section 6.3(f) and Section 4.2 of the
Plan.
BENEFICIARY DESCRIPTION. The beneficiary of a Member's
Prior Plan accounts , as well as for that portion of the Member's
accounts under this Plan which are attributable to contributions
(both Member and Employer) made with respect to the period prior
to January 1, 1999, shall be such person or persons, or entity or
entities, designated in a written instrument filed by the Member
with the Plan Administrator. If the Member fails to file a
beneficiary description with the Plan Administrator, or if the
designated Beneficiary predeceases Member or cannot be found after
the Member's death, such accounts shall be paid to the Member's
surviving spouse; or if the Member's spouse fails to survive the
Member, such accounts shall be paid to the Member's then surviving
children, in equal shares; or if the Member's spouse and children
fail to survive the Member, such accounts shall be paid to the
Member's estate. A Member shall have the right to make a
beneficiary designation at any time during the Member's lifetime
and to change a beneficiary designation at any time and from time
to time during the Member's lifetime by filing a late beneficiary
designation with the Plan Administrator.
Notwithstanding the foregoing, in the case of a Member subject to
the qualified preretirement survivor annuity rules, the
beneficiary of that Member shall, to the extent of the qualified
preretirement survivor annuity, be the Member's spouse unless a
qualified election has been made providing otherwise.
<PAGE>
IN WITNESS WHEREOF, the authorized officers of The Coleman Company, Inc. have
signed this document and have affixed the corporate seal, effective as of the
15 day of March, 1999.
THE COLEMAN COMPANY, INC.
ATTEST:
By /s/ Ronald R. Richter
-------------------------
Ronald R. Richter
Its Vice President and Treasurer
By /s/ Janet G. Kelley
-----------------------
Janet G. Kelley
Its Vice President and Secretary
<PAGE>
AMENDMENT TO THE NEW
COLEMAN COMPANY, INC.
RETIREMENT PLAN FOR SALARIED EMPLOYEES
A new Article XV is hereby added to The New Coleman Company, Inc. Retirement
Plan for Salaried Employees, as of midnight on December 31, 1998 (the
"Effective Date"), as follows:
ARTICLE XV CESSATION OF ACCRUALS AS OF MIDNIGHT ON DECEMBER 31, 1998
15.1 SCOPE. The provisions of this Article 15 shall apply, notwithstanding
any other provision of the Plan to the contrary.
15.2 CESSATION OF ACCRUALS. For all purposes of determining the amount of
retirement benefits (or other benefits) otherwise payable to, or on account
of, each Member under the Plan (assuming such benefits are otherwise vested),
such Member shall be deemed to have a Termination of Service (and to have
otherwise ended such Member's participation in the Plan) as of midnight on
December 31, 1998 (or as of the date of such person's actual such Termination
of Service, if earlier). Consistent with the foregoing:
(i) the provisions of Sections 5.5(c), 5.5(d) and 5.5(e) shall not apply
with respect to any transfers of employment on or after January 1, 1999;
provided, however, that the provisions of this Article XV shall be
disregarded in determining the extent to which the provisions of Sections
5.5(c) and Section 5.5(e) shall in fact apply to any Member with respect to
any transfer of employment occurring prior to January 1, 1999, and
(ii) the provisions of Appendix A shall not apply with respect to any
Member who otherwise first becomes a "Transferred Member" (as defined in such
Appendix) on or after January 1, 1999 and, even with respect to any Member
who first becomes a Transferred Member prior to that date, such person shall
be deemed to have no periods of employment with "Canadian Coleman" (as
defined in such Appendix), for purposes of determining such person's Credited
Service and Final Average Compensation, on or after January 1, 1999.
The effect of this Section 15.2 is, subject to the potential application of
Sections 5.5(c) and 5.5(e) with respect to transfers of employment prior to
January 1, 1999, to freeze the accrued benefit of each Member under the Plan,
as of a date no later than the end of December 31, 1998, and the provisions
of this Section 15.2 shall be interpreted to accomplish this result.
15.3 NO EFFECT ON OTHER PLAN PROVISIONS. Except to the extent provided in
the aforementioned Section 15.2, all other provisions of the Plan (including,
but not limited to, provisions relating to (i) vesting, (ii) eligibility for
early retirement benefits and (iii)
<PAGE>
the determination of when a Member has terminated employment, or retired, so
that benefits under the Plan are first payable) shall continue in full force
and effect.
IN WITNESS WHEREOF, the authorized officers of The Coleman Company, Inc. have
signed this document and have affixed the corporate seal, effective as of the
15 day of March, 1999.
THE COLEMAN COMPANY, INC.
ATTEST:
By /s/ Ronald R. Richter
-------------------------
Ronald R. Richter
Its Vice President and Treasurer
By /s/ Janet G. Kelley
-----------------------
Janet G. Kelley
Its Vice President and Secretary
<PAGE>
SUPPORT SERVICES AGREEMENT
THIS SUPPORT SERVICES AGREEMENT is entered into as of December 23, 1998,
by and between SUNBEAM CORPORATION, INC., a Delaware corporation, and SUNBEAM
PRODUCTS, INC., a Delaware Corporation, (each a "Provider"), and THE COLEMAN
COMPANY, INC., a Delaware Corporation, APPLICATION DES GAZ, S.A. a French
corporation, EASTPAK CORPORATION, a Delaware Corporation, COLEMAN POWERMATE,
INC., a Nebraska corporation, BRK BRANDS, INC., a Delaware corporation, and
SIGNATURE BRANDS, INC., a Ohio corporation, (each a "Recipient").
WHEREAS, Recipient, directly or through subsidiary or affiliated
companies, is engaged in the purchase, manufacture, sourcing, promotion and
distribution of certain consumer products, including but not limited to small
appliances, bedding (electric and other), health and personal care products,
barber and beauty equipment, hair clippers, animal care products, clocks and
weather instruments, barbecue grills and outdoor furniture (collectively the
"Products") worldwide;
WHEREAS, Recipient is a subsidiary or affiliated company of Provider and
Recipient desires to secure certain technical support services for its
business operations, as well as those of its subsidiary or affiliated
companies;
WHEREAS, Provider has the expertise to undertake such support services;
WHEREAS, Provider is willing to undertake such support in exchange for
appropriate compensation; and
WHEREAS, the parties desire to specify the terms on which such services
will be provided to Recipient by Provider.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, the parties hereby agree as follows.
ARTICLE 1. SERVICES AND COMPENSATION
SECTION 1.1. PROVISION OF SERVICES. Provider shall promptly provide
the services set forth in Exhibit A to this Agreement to Recipient, and its
subsidiary or affiliated companies listed in Exhibit B hereto, which may be
revised from time to time as the parties agree.
SECTION 1.2. RATES. Provider shall provide quarterly reports to
Recipient listing the services that Provider has provided Recipient.
Compensation for such services shall be charged at fair market rates, as
reflected in the quarterly financial statements issued by Provider, which
rates shall be reviewed from time to time by the parties.
SECTION 1.3. PAYMENT BY RECIPIENT. Recipient shall pay to Provider
the amount stated in such quarterly Report within thirty (30) days following
receipt of such Report.
<PAGE>
SECTION 1.4 PAYMENT OF EXPENSES. Recipient shall promptly reimburse
Provider for all out of pocket expenses incurred in providing any service
pursuant to this Agreement, including but not limited to fees of third party
providers and all travel and living expenses incurred in connection with the
services to be provided.
SECTION 1.5. CURRENCY. All financial obligations originating from the
terms and conditions of this Agreement shall be denominated in United States
Dollars.
SECTION 1.6. EXAMINATION OF BOOK AND RECORDS. Recipient and Provider
shall each have the right at its respective expense to examine the books and
records of the other party during normal business hours at such other party's
offices on giving reasonable notice.
ARTICLE II. TERM AND TERMINATION
SECTION 2.1. TERM. This Agreement shall remain in effect until
terminated by either party.
SECTION 2.2. TERMINATION. Either party may terminate this Agreement
by a written notice sent to the other party not less than thirty (30) days
prior to the effective date of termination.
ARTICLE III. MISCELLANEOUS PROVISIONS
SECTION 3.1. NOTICES. Any and all notices, elections, offers,
acceptances, and demands permitted or required to be made under this
Agreement shall be in writing, signed by the person giving such notice,
election, offer, acceptance, or demand and shall be delivered personally, or
sent by registered or certified mail, to the party, at its address on file
with the other party or at such other address as may be supplied in writing.
The date of personal delivery or the date of mailing, as the case may be,
shall be the date of such notice, election, offer, acceptance, or demand.
SECTION 3.2. FORCE MAJEURE. If the performance of any part of this
Agreement by either party, or of any obligation under this Agreement, is
prevented, restricted, interfered with, or delayed by reason of any cause
beyond the reasonable control of the party liable to perform, unless
conclusive evidence to the contrary is provided, the party so affected shall,
on giving written notice to the other party, be excused from such performance
to the extent of such prevention, restriction, interference, or delay,
provided that the affected party shall use its reasonable best efforts to
avoid or remove such causes of nonperformance and shall continue performance
with the utmost dispatch whenever such causes are removed. When such
circumstances arise, the parties shall discuss what, if any, modification of
the terms of this Agreement may be required in order to arrive at an
equitable solution.
SECTION 3.3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
on and shall inure to the benefit of the parties, Affiliates, their
respective successors, successors in title, and assigns, and each party
agrees, on behalf of it, its Affiliates, successors, successors in title, and
assigns, to execute any instruments that may be necessary or appropriate to
carry out and execute the purpose and intentions of this Agreement and hereby
authorizes and directs its Affiliates,
2
<PAGE>
successors, successors in title, and assigns to execute any and all such
instruments. Each and every successor in interest to any party or Affiliate,
whether such successor acquires such interest by way of gift, devise,
assignment, purchase, conveyance, pledge, hypothecation, foreclosure, or by
any other method, shall hold such interest subject to all of the terms and
provisions of this Agreement. The rights of the parties, Affiliates, and
their successors in interest, as among themselves and shall be governed by
the terms of this Agreement, and the right of any party, Affiliate or
successor in interest to assign, sell or otherwise transfer or deal with its
interests under this Agreement shall be subject to the limitations and
restrictions of this Agreement.
SECTION 3.4. AMENDMENT. No change, modification, or amendment of this
Agreement shall be valid or binding on the parties unless such change or
modification shall be in writing signed by the party or parties against whom
the same is sought to be enforced.
SECTION 3.5. REMEDIES CUMULATIVE. The remedies of the parties under
this Agreement are cumulative and shall not exclude any other remedies to
which the party may be lawfully entitled.
SECTION 3.6. FURTHER ASSURANCES. Each party hereby covenants and
agrees that it shall execute and deliver such deeds and other documents as
may be required to implement any of the provisions of this Agreement.
SECTION 3.7. NO WAIVER. The failure of any party to insist on strict
performance of a covenant hereunder or of any obligation hereunder shall not
be a waiver of such party's right to demand strict compliance therewith in
the future, nor shall the same be construed as a novation of this Agreement.
SECTION 3.8. INTEGRATION. This Agreement constitutes the full and
complete agreement of the parties.
SECTION 3.9. CAPTIONS. Titles or captions of articles and paragraphs
contained in this Agreement are inserted only as a matter of convenience and
for reference, and in no way define, limit, extend, or describe the scope of
this Agreement or the intent of any provision hereof.
SECTION 3.10. NUMBER AND GENDER. Whenever required by the context, the
singular number shall include the plural, the plural number shall include the
singular, and the gender of any pronoun shall include all genders.
SECTION 3.11. COUNTERPARTS. This Agreement may be executed in multiple
copies, each of which shall for all purposes constitute an Agreement, binding
on the parties, and each partner hereby covenants and agrees to execute all
duplicates or replacement counterparts of this Agreement as may be required.
SECTION 3.12. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the United States.
3
<PAGE>
SECTION 3.13. COMPUTATION OF TIME. Whenever the last day for the
exercise of any privilege or the discharge of any duty hereunder shall fall
on a Saturday, Sunday, or any public or legal holiday, whether local or
national, the person having such privilege or duty shall have until 5:00 p.m.
on the next succeeding business day to exercise such privilege, or to
discharge such duty.
SECTION 3.14. SEVERABILITY. In the event any provision, clause,
sentence, phrase, or word hereof, or the application thereof in any
circumstances, is held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder hereof, or of the application of any such provision, sentence,
clause, phrase, or word in any other circumstances.
SECTION 3.15. COSTS AND EXPENSES. Unless otherwise provided in this
Agreement, each party shall bear all fees and expenses incurred in performing
its obligations under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SUNBEAM CORPORATION SUNBEAM PRODUCTS, INC.
By: Robert P. Totte By: Robert P. Totte
-------------------------- ---------------------------
Name: Robert P. Totte Name: Robert P. Totte
------------------------ -------------------------
(Type or Print) (Type or Print)
Title: Vice President, Taxes Title: Vice President, Taxes
------------------------ -------------------------
Date: Date:
------------------------ -------------------------
THE COLEMAN COMPANY, INC. APPLICATION DES GAZ, S.A.
By: Ronald R. Richter By: Bjorn Blomberg
-------------------------- ---------------------------
Name: Ronald R. Richter Name: Bjorn Blomberg
------------------------ -------------------------
(Type or Print) (Type or Print)
Title: Vice President and Treasurer Title: President Directeur General
------------------------ -------------------------
Date: Date:
------------------------ -------------------------
4
<PAGE>
EASTPAK CORPORATION COLEMAN POWERMATE, INC.
By: Steven Berreth By: Steven Berreth
-------------------------- ---------------------------
Name: Steven Berreth Name: Steven Berreth
------------------------ -------------------------
(Type or Print) (Type or Print)
Title: Assistant Secretary Title: Assistant Secretary
------------------------ -------------------------
Date: 12/23/98 Date: 12/23/98
------------------------ -------------------------
BRK BRANDS, INC. SIGNATURE BRANDS, INC.
By: Janet Kelley By: Janet Kelley
-------------------------- ---------------------------
Name: Janet G. Kelley Name: Janet G. Kelley
------------------------ -------------------------
(Type or Print) (Type or Print)
Title: Vice President, General Title: Vice President, General
Counsel and Secretary Counsel and Secretary
------------------------ -------------------------
Date: Date:
------------------------ -------------------------
5
<PAGE>
EXHIBIT A
SERVICES
A. PRODUCT DESIGN. Assistance relating to the development, design and
manufacture of Products, including but not limited to the furnishing of
detail and assembly drawings, bills of materials, process and material
specifications, performance specifications, purchasing specifications,
photographs, service information, test data, operating instructions and
similar general engineering and manufacturing information as well as
designs and specifications relating to manufacturing equipment, tools,
dies, jigs, fixtures, gauges and similar items necessary or useful to
enable Recipient to manufacture or cause to be manufactured on its behalf
the Products.
B. MARKETING. Assistance in researching, developing and implementing
marketing and promotional plans for the distribution and sale of the
Products, including but no limited to research and assistance in developing
effective marketing plans for the Products in the Territory, access to any
and all marketing research conducted by the Provider, provision of
marketing manuals and other marketing or promotional material, printing or
other development of marketing and promotional materials and general advise
and assistance from time to time as requested by Recipient.
C. SOURCING. Assistance in locating and contracting with unrelated parties
for the sourcing of Products, including but not limited to location of
suppliers, evaluation and testing of products, review and evaluation of
manufacturing facilities and management ability of such third party
suppliers, negotiation of terms for supply of Products to Recipient and or
other affiliates of Recipient for purposes of obtaining the lowest possible
unit price and provision of legal, insurance and import/export advise.
D. MIS. Assistance in acquiring, programming and maintaining appropriate and
efficient management information systems that are compatible with those
maintained by the Provider.
E. FINANCIAL AND TAX. Assistance in implementing general tax and accounting
policies and procedures for maximizing available financial information and
minimizing tax impacts.
F. TRAINING. Assistance in training personnel in all aspect of operation of
the business, including on-site training at the facilities of the Provider
and/or the Recipient.
G. MANUFACTURING. Assistance in all aspects of manufacturing, whether
conducted by Recipient or any third party providing Products to Recipient,
including but not limited to modifying machinery, equipment or
installations and advice regarding
<PAGE>
such modification, testing machinery or Products, establishing and
maintaining appropriate quality control processes and measures and
advising as to new processes and methods of manufacture.
H. HUMAN RESOURCES. Assistance in all aspects of personnel management,
including but not limited to assistance, training and advice regarding
employment, promotion, termination, training and compensation of personnel
and establishment of policies and procedures for management of personnel.
I. LEGAL RESOURCES. Assistance in all aspects of legal advice and counsel,
including but not limited to assistance, training, advice and counsel on
litigation, import and export laws, antitrust, marketing and promotions
law, employment and labor law, establishment of policies and procedures for
legal compliance, corporate secretarial and structure matters, and
intellectual property and international law.
Exhibit A - Page 2
<PAGE>
EXHIBIT B
SUBSIDIARY OR AFFILIATED COMPANIES
DDG I, Inc. (a Delaware corporation)
Sunbeam Americas Holdings, Ltd. (a Delaware corporation)
Sunbeam Corporation (Canada) Ltd.
GH II, Inc. (a Delaware corporation)
Sunbeam Services, Inc. (a Delaware corporation)
Sunbeam Holdings S.A. de C.V. (MX)
Sunbeam-Oster de Acuna s.A. de C.V.
Sunbeam Mexicana S.A. de C.V.
Sunbeam-Oster de Matamoros, S.A. de C.V.
PH III, Inc. (a Florida corporation)
Sunbeam International FSC, Inc. (Barbados)
SI II, Inc. (a Florida corporation)
Oster de Venezuela, S.A. (Venezuela)
Sunbeam Europe Limited (UK)
Oster International GmbH (Germany)
Sunbeam International (Asia) (Hong Kong)
Sunbeam Japan K.K. (Japan)
OP II, Inc. (a Florida corporation)
Sunbeam Asset Diversification, Inc. (a Delaware
corporation)
Wallingford Insurance Company Ltd. (Bermuda)
Sunbeam del Peru, S.A.
Sunbeam Latin America, Inc. (a Delaware corporation)
Exhibit B - Page 1
<PAGE>
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT is made and entered into as of the
12th day of April, 1999 (the "Agreement") between The Coleman Company, Inc.,
a Delaware corporation, (the "Company"), and Whitman Marchand (the
"Independent Director").
WHEREAS, the Company's Board of Directors, pursuant to a resolution
unanimously adopted by such Board of Directors, authorized the Independent
Director to consider, negotiate and approve (if the Independent Director
deems it appropriate), on behalf of the Board of Directors of the Company,
the terms and conditions of certain transactions and arrangements with
Sunbeam Corporation, a Delaware corporation and the indirect beneficial owner
of approximately 80% of the Company's issued and outstanding capital stock
("Sunbeam"), relating to (i) the proposed pledge by the Company of assets to
secure the Company's demand note payable to Sunbeam, and (ii) the proposed
execution by the Company of revisions to such note or a new or amended note
to Sunbeam (collectively, the "Transactions"); and
WHEREAS, in order to induce the Independent Director to accept the
additional duties, responsibilities and burdens associated with considering,
negotiating and approving (if appropriate) the Transactions, the Company
desires, and the Board of Directors resolved, to provide the Independent
Director with the compensation and indemnification arrangements set forth
herein; and
WHEREAS, the Independent Director is willing to serve as an
independent director of the Company in connection with the Transactions and
continue to accept such duties on the terms set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. SERVICE OF THE INDEPENDENT DIRECTOR; SCOPE OF INDEMNIFICATION.
The Independent Director hereby agrees to consider, negotiate and (if
appropriate) approve the Transactions on and subject to the terms set forth
herein and in the resolution of the Board of Directors described in the recitals
hereto. The Board of Directors hereby authorizes the Independent Director to
retain, at the expense of the Company, legal and financial advisors in
connection with his consideration and negotiation of the Transactions. It is
understood and agreed that the In-
<PAGE>
dependent Director, in his sole discretion, may resign from such position at
any time and for any reason. The Company's obligation to indemnify the
Independent Director in the manner set forth in this Agreement shall continue
in full force and effect, consistent with the terms of Section 9 of this
Agreement, notwithstanding any termination of appointment or resignation of
the Independent Director that may occur.
2. COMPENSATION AND EXPENSE REIMBURSEMENT. As compensation for his
services as a member of the Board of Directors, the Independent Director
shall receive from the Company a fee in the amount of twenty-five thousand
dollars ($25,000) and as compensation for his services as an independent
director of the Company in connection with considering, negotiating and (if
appropriate) approving the Transactions, the Independent Director shall
receive an additional fee in the amount of twenty-five thousand dollars
($25,000) (collectively, the "Fees"). The fees shall be payable to the
Independent Director upon the execution of this Agreement by the parties
hereto. The compensation arrangements contained in this Section 2 shall be
subject to further review, from time to time, by the Board of Directors of
the Company to determine whether any supplemental fees shall be paid to the
Independent Director. In addition to the foregoing, the Independent Director
shall be reimbursed by the Company for his out-of-pocket travel and other
reasonable expenses (including reasonable attorneys' fees and expenses)
incurred in connection with his service, in a manner consistent with the
Company's policies and procedures pertaining to the reimbursement of the
expenses incurred by members of its Board of Directors.
3. INDEMNITY.
(a) In the event that a the Independent Director is, or is
threatened to be made, a party to or participant in any Proceeding (as
defined in Section 12(d) of this Agreement), whether such Proceeding is by or
in the right of the Company, any third party or any other person or entity,
the Company hereby agrees to hold harmless and indemnify the Independent
Director from and against any and all Expenses (as defined in Section 12(b)
of this Agreement), judgments, penalties, liabilities, losses, claims,
damages, fines and amounts, including but not limited to amounts paid in
settlement, incurred by the Independent Director, or incurred on his behalf,
to the fullest extent authorized or permitted by applicable law, by the
Certificate of Incorporation of the Company and by the Company's By-Laws, as
the foregoing may be amended, restated or otherwise modified from time to
time, and including, without limitation, any and all Expenses, judgments,
penalties, liabilities, losses, claims, damages, fines and amounts (including
but not limited to amounts paid in settlement) arising out of or relating to
the actual or alleged acts, omissions, negligence or active
<PAGE>
or passive wrongdoing of the Independent Director. The only limitation that
shall exist upon the Company's indemnification obligations pursuant to this
Agreement is that the Company shall not be obligated to make any
indemnity-related payment to the Independent Director that is finally
determined (pursuant to the procedures, and subject to the presumptions, set
forth in Sections 6 and 7 hereof) to be unlawful under Delaware law.
(b) Notwithstanding any other provision of this Agreement to
the contrary, to the extent that the Independent Director is a party to and
is successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified pursuant to subsection (a) above to the maximum extent permitted
by law. However, in the event that (i) the Independent Director is not
wholly successful in a Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters in
such Proceeding, and (ii) it is determined that it is unlawful for the
Independent Director to be indemnified with respect to such unsuccessful
claims, issues or matters, in such instance the Company shall indemnify the
Independent Director against all Expenses incurred by the Independent
Director, or incurred on his behalf, in connection with each successfully
resolved claim, issue or matter. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in a Proceeding by
dismissal, with or without prejudice shall be deemed to be a success on the
merits or otherwise as to such claim, issue or matter.
4. INDEMNIFICATION FOR EXPENSES INCURRED AS A WITNESS. Notwithstanding any
other provision of this Agreement to the contrary, to the extent that the
Independent Director is, by reason of his service as an independent director
of the Company, a witness in any Proceeding to which the Independent Director
is not a party, the Independent Director shall be indemnified for and against
all Expenses actually and reasonably incurred by the Independent Director or
incurred on his behalf in connection therewith.
5. ADVANCEMENT OF EXPENSES. Notwithstanding any other provision of this
Agreement to the contrary, the Company shall advance or directly pay all
Expenses incurred by or on behalf of the Independent Director in connection
with any Proceeding relevant hereto within thirty (30) days after the receipt
by the Company of a statement or statements from the Independent Director
requesting such advances or payments from time to time, whether prior to or
after final disposition of such Proceeding. Such statement or statements
shall reasonably evidence the Expenses incurred by or on behalf of, or
charged to, the Independent Director. In connection herewith, the
Independent Director hereby agrees and undertakes to repay any Expenses
advanced or paid hereunder if ultimately it is determined that the
Independent
<PAGE>
Director is not entitled to be indemnified or reimbursed for such Expenses in
any given instance. The foregoing undertaking to repay such Expenses by the
Independent Director shall be unsecured and interest-free. Notwithstanding
the foregoing, the obligation of the Company to advance Expenses pursuant to
this Section 5 shall be subject to the condition that, if, when and to the
extent that the Company reasonably determines that the Independent Director
would not be permitted to be indemnified under applicable law (subject to the
terms and conditions of Section 6 of this Agreement), the Company shall be
entitled to reimbursement. within thirty (30) days of such determination, by
the Independent Director for all such amounts theretofore paid; provided,
however, that if the Independent Director has commenced or thereafter
commences legal proceedings in a court of competent jurisdiction to secure a
determination that he should be indemnified under applicable law, any
determination made by the Company that the Independent Director is not
entitled to indemnification under applicable law in a given instance shall
not be binding, and the Independent Director shall not be required to
reimburse the Company for any advance or payment of Expenses until a final
judicial determination is made with respect thereto (as to which all rights
of appeal therefrom have been exhausted or have lapsed).
6. PROCEDURES AND PRESUMPTIONS FOR DETERMINATION OF ENTITLEMENT TO
INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. It is the intent of this
Agreement to secure for the Independent Director rights of indemnity and
advancement of Expenses that are as favorable and as broad as permitted under
the law and public policy of the State of Delaware. Accordingly, the parties
hereby agree that the following procedures and presumptions shall apply in
the event of any question or dispute as to whether the Independent Director
is entitled to indemnification or advancement of Expenses under this
Agreement:
(a) To obtain indemnification or any advancement of Expenses by the Company
under this Agreement, the Independent Director shall submit to the Company a
written request, including therein or therewith such documentation and
information as is reasonably available to the Independent Director and as may
be reasonably necessary to enable the Company to determine whether and to
what extent the Independent Director is entitled to indemnification or
advancement of Expenses. The Secretary of the Company shall promptly upon
receipt of such a request for indemnification or advancement of Expenses,
advise the Board of Directors in writing that the Independent Director has
requested indemnification, advancement of Expenses or contribution. The
Independent Director's failure to strictly comply with the procedural
requirements set forth in this Section 6, however, shall not relieve the
Company of any obligation it may have to indemnify or advance hereunder and
shall not alter or
<PAGE>
waive any presumptions for determination of entitlement to indemnification or
advancement of Expenses contained herein.
(b) Upon each submission of a written request by the Independent Director
for indemnification pursuant to subsection (a) above, determination with
respect to the Independent Director's entitlement thereto shall be made in
accordance with one of the following methods, the selection of which method
shall be at the discretion of the Independent Director: (i) by a majority
vote of the Disinterested Directors (as defined in Section 12(a) hereof),
even if such Disinterested Directors constitute less than a quorum of the
Board of Directors of the Company; (ii) by Independent Counsel (as defined in
Section 12(c) of this Agreement) in a written opinion, pursuant and subject
to the procedures and selection processes set forth in subsection (c) below;
or (iii) by a majority vote of the Company's stockholders, pursuant and
subject to the procedures set forth in subsection (g) below. Upon each
submission of a written request by the Independent Director for advancement
of Expenses by the Company pursuant to subsection (a) above, such advancement
of Expenses shall be made by the Company in accordance with the provisions of
Section 5 hereof, provided, that in the event that the Company fails to
advance Expenses in accordance therewith the Independent Director shall be
entitled to an adjudication thereof pursuant to Section 7(a) of this
Agreement and provided, further, that the presumptions contained in this
Section 6 shall apply to the resolution, adjudication or settlement of any
disputes relating to advancement of Expenses hereunder.
(c) If the Independent Director elects for the determination
of entitlement to indemnification to be made by Independent Counsel pursuant
to subsection (b) above, the Independent Counsel shall be selected as
provided in this subsection (c). The Independent Counsel shall be selected
by the Independent Director (unless the Independent Director requests that
the selection be made by the Board of Directors). The Independent Director
or the Board of Directors of the Company, as the case may be, may, within ten
(10) days after the written notice of selection is provided, deliver to the
Company or to the Independent Director, as the case may be, a written
objection to such selection; provided, however, that any such objection may
be asserted only on the grounds that the selected Independent Counsel does
not meet the requirements set forth in the definition of "Independent
Counsel" contained in Section 12(c) of this Agreement. and the objection
shall set forth with particularity the factual basis of such assertion.
Absent a proper and timely objection, the counsel so selected shall act as
Independent Counsel. If a written objection is made and substantiated, the
selected Independent Counsel may not serve as Independent Counsel unless and
until such objection is withdrawn or a court of competent jurisdiction has
<PAGE>
determined that such objection is without merit. If, within twenty (20) days
after the Independent Director's submission of a written request for
indemnification pursuant to subsection (a) above and his election to have his
entitlement to indemnification determined by Independent Counsel, no
Independent Counsel shall have been selected, or objections to selection have
not been resolved, either the Company or the Independent Director may
petition the Court of Chancery of the State of Delaware for resolution of any
objection made by the Company or the Independent Director to the other's
selection of Independent Counsel and/or for the appointment of an Independent
Counsel selected by the court or by such other perso as the court may
designate. The Company shall pay any and all Expenses of such Independent
Counsel relating to its performance of services in connection herewith, and
the Company shall pay all Expenses incident to the procedures contained in
this subsection (c), irrespective of the manner in which such Independent
Counsel was selected or appointed.
(d) In making a determination with respect to the Independent
Director's entitlement to indemnification hereunder, and as available in the
resolution, adjudication or settlement of any disputes relating to
indemnification or advancement hereunder, the person(s) or entity making such
determination or facilitating the resolution, adjudication or settlement of
such dispute shall presume, and by its execution of this Agreement the
Company hereby agrees to presume, that the Independent Director is entitled
to indemnification or advancement of Expenses under this Agreement if the
Independent Director has submitted a request for indemnification or
advancement of Expenses in accordance with subsection (a) above. Anyone
seeking to overcome this presumption shall have the burden of proof and the
burden of persuasion, by clear and convincing evidence. In addition, if the
person(s) or entity making a determination pursuant to subsection (b) above
shall determine that the Independent Director is not entitled to
indemnification hereunder, such determination shall not create a presumption
against the Independent Director's entitlement to indemnification in any
later action, suit or proceeding initiated by the Independent Director to
enforce his rights under this Agreement.
(e) The Independent Director shall be deemed to have acted in
good faith if the Independent Director's action is based on the Independent
Director's good faith reliance upon the records or books of account of the
Company or any other person, enterprise or entity, including financial
statements, or on information supplied to the Independent Director by the
officers of the Company or such other person, enterprise or entity in the
course of their duties, or on the advice of legal counsel for the Company or
the Independent Director or on information or records given or reports made
to the Company or the Independent Director by an independent certified public
<PAGE>
accountant, by a financial advisor or by an appraiser or other expert
selected by the Company or the Independent Director. In addition, the
knowledge and/or actions, or failure to act, of any director, officer, agent
or employee of the Company or any other person, enterprise or entity shall
not be imputed to the Independent Director for purposes of determining the
Independent Director's right to indemnification or advancement of Expenses
under this Agreement. Irrespective of whether the foregoing provisions of
this subsection (e) are satisfied, it shall be presumed in any event that the
Independent Director has at all times acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of
the Company. Anyone seeking to overcome this presumption shall have the
burden of proof and the burden of persuasion, by clear and convincing
evidence.
(f) The Company acknowledges that a settlement or other
disposition of a Proceeding short of final judgment may be desirable if it
permits a party to avoid expense, delay, distraction, disruption and
uncertainty. In the event that any Proceeding to which the Independent
Director is a party is resolved in any manner other than by adverse judgment
against the Independent Director (including, without limitation, settlement
of such Proceeding with or without payment of money or other consideration),
it shall not be presumed that the Independent Director has not been
successful on the merits or otherwise in such Proceeding.
(g) The Independent Director shall reasonably cooperate with
the person(s) or entity making the determination regarding the Independent
Director's entitlement to indemnification, including providing to such
person(s) or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure
and which is reasonably available to the Independent Director and reasonably
necessary to such determination. Any Expenses incurred by the Independent
Director in so cooperating with the person(s) or entity making such
determination shall be borne by the Company (irrespective of the
determination as to the Independent Director's entitlement to
indemnification), and the Company hereby agrees to indemnify and hold
harmless the Independent Director therefrom.
7. REMEDIES.
(a) In the event that (i) a determination is made pursuant to
Section 6 of this Agreement that the Independent Director is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not
timely made pursuant to Section 5 of this Agreement, (iii) no determination
of entitlement to indemnification is made pursuant to Section 6 of this
Agreement within one hundred twenty (120)
<PAGE>
days after receipt by the Company of the request for indemnification, (iv)
payment of indemnification is not made within ten (10) days after a
determination has been made that the Independent Director is entitled to
indemnification pursuant to Section 6 of this Agreement, or (v) the Company
has not complied with any other term of this Agreement intended for the
benefit of the Independent Director; then, in any such event, the Independent
Director shall be entitled to an adjudication of the foregoing in an
appropriate court of the State of Delaware, or in any other court of
competent jurisdiction. The Company shall not oppose the Independent
Director's right to seek any such adjudication.
(b) In the event that a determination shall have been made pursuant to
Section 6 of this Agreement that the Independent Director is not entitled to
indemnification, any judicial proceeding commenced pursuant to this Section 7
shall be conducted in all respects as a de novo trial, on the merits, and the
Independent Director shall not be prejudiced by reason of that adverse
determination.
(c) If a determination shall have been made pursuant to Section 6 of
this Agreement that the Independent Director is entitled to indemnification,
the Company shall be bound by such determination in any judicial proceeding
commenced pursuant to this Section 7, absent a prohibition of such
indemnification under applicable law.
(d) In the event that the Independent Director, pursuant to this
Section 7, seeks a judicial adjudication of his rights under, or to recover
damages for breach of, this Agreement or to recover under any directors' and
officers' liability insurance policies maintained by the Company, the Company
shall pay on his behalf, in advance, any and all Expenses incurred by him in
such judicial adjudication regardless of whether the Independent Director
ultimately is determined to be entitled to such indemnification, advancement
of expenses or insurance recovery.
(e) The Company shall be precluded from asserting in any judicial
proceeding commenced pursuant to this Section 7 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and
shall stipulate in any such court that the Company is bound by all the
provisions of this Agreement.
8. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS;
INSURANCE; SUBROGATION.
<PAGE>
(a) The rights of indemnification set forth in this Agreement
shall not be deemed exclusive of any other rights to which the Independent
Director may at any time be entitled under applicable law, the Certificate of
Incorporation of the Company, or the By-Laws of the Company. No amendment,
alteration or repeal of this Agreement or any provision hereof shall limit or
restrict any right of the Independent Director under this Agreement in
respect of any action taken or omitted by the Independent Director in his
capacity as an independent director of the Company prior to such amendment,
alteration or repeal. To the extent that a change in the law, whether by
statute or judicial decision, permits greater indemnification or advancement
rights than currently are afforded under the Company's Certificate of
Incorporation, the Company's By-Laws and this Agreement, it is the intent of
the parties hereto that the Independent Director shall enjoy by this
Agreement the greater benefits so afforded by such change. No right or
remedy conferred herein is intended to be exclusive of any other right or
remedy of the Independent Director, and every other right or remedy shall be
cumulative and in addition to every other right or remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder shall not prevent the concurrent
assertion or employment of any other right or remedy.
(b) To the extent that the Company maintains an
insurance policy or policies providing liability insurance for directors,
officers, employees, agents or fiduciaries of the Company or of any other
corporation partnership, joint venture, employee benefit plan or other
enterprise which such person serves at the request of the Company, the
Independent Director shall be covered by such policy or policies in
accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee, agent or fiduciary under
such policy or policies.
(c) In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
the Independent Director who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any payment
of amounts otherwise indemnifiable hereunder if and to the extent that the
Independent Director otherwise and actually has received such payment under
any insurance policy, contract, agreement or otherwise.
<PAGE>
9. DURATION OF AGREEMENT. All agreements and obligations of the
Company contained herein shall continue with respect to the Independent
Director during the period in which the Independent Director serves as an
independent director of the Company and shall continue in perpetuity
thereafter, whether or not the Independent Director is acting or serving in
such capacity at the time any expense, judgment, penalty, liability, loss,
claim, damage, fine or amount is incurred for which indemnification or
advancement can be provided under this Agreement. This Agreement shall be
binding upon, shall inure to the benefit of and shall be enforceable by the
parties hereto and their respective successors (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), assigns,
spouses, heirs, executors and personal and legal representatives. This
Agreement shall continue in effect irrespective of whether the Independent
Director continues to serve as an independent director of the Company or
whether the Independent Director's appointment as an independent director of
the Company is terminated for any reason.
10. REVOCATION. If the Board of Directors in its sole discretion
(without the vote of the Independent Director) determines to provide any
security to the Independent Director for the Company's obligations hereunder,
any such security, once provided to the Independent Director, may not be
revoked or released without the prior written consent of the Independent
Director.
11. ENFORCEMENT; ENTIRE AGREEMENT.
(a) The Company expressly confirms and agrees that it has
entered into this Agreement and has assumed the obligations imposed on it
hereby in order to induce the Independent Director to serve as an independent
director of the Company, and the Company acknowledges that such the
Independent Director is relying upon this Agreement in agreeing to serve.
(b) Subject to Section 8 hereof, this Agreement
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, oral, written and implied, between the parties hereto with
respect to the subject matter hereof.
12. DEFINITIONS. For purposes of this Agreement:
(a) "Disinterested Director" means a member of the Board
of Directors of the Company who is not and was not a party to the Proceeding
in respect of which indemnification is sought by the Independent Director.
<PAGE>
(b) "Expenses" shall include all reasonable attorneys'
fees, retainers, court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements or expenses
of the types customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, participating, or being or
preparing to be a witness in any Proceeding or other proceeding of the type
described in the definition of "Proceeding" set forth below.
(c) "Independent Counsel" means a law firm, or a member
of a law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent: (i)
the Company or the Independent Director in any matter (other than with
respect to matters concerning the rights of the Independent Director under
this Agreement), or (ii) any other party to the Proceeding giving rise to a
claim for indemnification hereunder. Notwithstanding the foregoing, the term
"Independent Counsel" shall not include any person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Company or the Independent Director in an
action to determine the Independent Director's rights under this Agreement.
(d) "Proceeding" includes any action, threatened,
pending or completed action, suit, litigation, claim, arbitration, mediation,
alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened, pending or completed
proceedings whether brought by or in the right of the Company or otherwise
and whether civil, criminal, administrative or investigative, in which the
Independent Director was, is or will be involved as a party or otherwise, (i)
by reason of the fact that the Independent Director is or was an independent
director of the Company, or (ii) by reason of any action taken by him or of
any inaction on his part while acting as an independent director of the
Company, in each case whether or not he is acting or serving in such capacity
at the time any Expense, judgment, penalty, liability, loss, claim, damage,
fine or other amount for which indemnification can be provided under this
Agreement is incurred or imposed.
13. SEVERABILITY. If any provision or provisions of this
Agreement shall be held by a court of competent jurisdiction to be invalid,
void, illegal or otherwise unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitations each portion of any section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable that is not itself invalid, illegal or unenforceable) shall not
be affected or impaired in any way thereby and shall remain enforceable to
the fullest extent permitted by law; and (b) to the fullest extent possible,
the provisions of this Agreement (including, without limitations each portion
of
<PAGE>
any section of this Agreement containing any such provision held to be
invalid, illegal or unenforceable that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent
manifested thereby.
14. MODIFICATION AND WAIVER. No supplement. modification,
waiver, termination or amendment of all or any portion of this Agreement
shall be binding unless expressed in a written instrument executed by the
relevant parties hereto. No waiver of any term or provision of this
Agreement shall be deemed or shall constitute a waiver of any other terms or
provisions hereof (whether or not similar), and any such waiver shall be
effective only in the specific instance, for the specific duration and for
the express purpose for which it is given. Any waiver or failure to insist
upon strict compliance with any term or provision of this Agreement shall not
operate as a waiver of, or an estoppel with respect to, any subsequent or
other failure to comply.
15. NOTICE OF SERVICE BY THE INDEPENDENT DIRECTOR. The
Independent Director agrees promptly to notify the Company in writing upon
being served with any summons, citation, subpoena, complaint, indictment or
other document relating to any Proceeding or matter which may be subject to
indemnification covered hereunder. The failure to so notify the Company
shall not relieve the Company of any obligation which it may have to the
Independent Director under this Agreement or otherwise.
16. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered to and receipted for by the party to whom said
notice or other communication shall have been directed, (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed, or (iii) sent by facsimile, the
successful transmission and receipt of which is confirmed in a written
report, in each instance to the addresses and/or facsimile numbers set forth
below:
(a) If to the Independent Director, to:
Whitman Marchand
BY FEDEX
Alden Partridge Drive
Ridge Condo 3A
Quechee, Vermont 05059
<PAGE>
BY CERTIFIED MAIL
Box 47
Quechee, Vermont 05059
Facsimile: (802) 295-5196
with a copy (which shall not constitute effective
notice) to:
Thomas D. Balliett, Esq.
Kramer Levin Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Facsimile: (212)715-8000
(b) If to the Company, to:
The Coleman Company, Inc.
2111 East 37th Street North
Wichita, Kansas 67219
with a copy (which shall not constitute effective
notice) to:
Blaine V. Fogg, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Facsimile: (212) 735-2000;
or to such other address or facsimile number as may have been furnished to
the Independent Director by the Company or to the Company by the Independent
Director, as the case may be.
17. IDENTICAL COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same
agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of
this Agreement.
<PAGE>
18. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction or interpretation thereof.
19. GOVERNING LAW. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware without application of the conflict of laws principles
thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
THE COLEMAN COMPANY
By: Janet G. Kelley
----------------------------------------
Name: Janet G. Kelley
Title: Vice President, General Counsel
and Secretary
THE INDEPENDENT DIRECTOR
Whitman Marchand
-------------------------------------------
Whitman Marchand
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES
The following is a list of all the subsidiaries of The Coleman Company, Inc.
<TABLE>
<CAPTION>
JURISDICTION OF ASSUMED
NAME INCORPORATION NAME
<S> <C> <C>
Application des Gaz, S.A. France
Australian Coleman, Inc. Kansas
Bafiges S.A. France
Beacon Exports, Inc. Kansas
C C Outlet, Inc. Delaware Camp Coleman
C M O, Inc. Florida
Camping Gaz do Brasil Brazil
Camping Gaz Great Britian Limited United Kingdom
Camping Gaz (Poland) Poland
Camping Gaz Suisse AG Switzerland
Camping Gaz CS, Spol. SRO Czech Republic
Camping Gaz GmbH Austria
Camping Gaz International
Deutschland GmbH Germany
Camping Gaz Hellas Greece
Camping Gaz International
(Portugal) Ltd. Portugal
Camping Gaz Kft Hungary
Camping Gaz Philippines, Inc. Philippines
</TABLE>
<PAGE>
SUBSIDIARIES, CONTINUED
<TABLE>
<CAPTION>
JURISDICTION OF ASSUMED
NAME INCORPORATION NAME
<S> <C> <C>
Camping Gaz Italie Srl Italy
Campiran SA Iran
Coleman Argentina, Inc. Delaware
Coleman Asia Limited Hong Kong
Coleman Country, Ltd. Kansas Coleman Dubai
Coleman (Deutschland) GmbH Germany
Coleman do Brasil Ltda. Brazil
Coleman Europe N.V. Belgium
Coleman Holland B.V. The Netherlands
Coleman International Holdings, LLC Delaware
Coleman International SARL Switzerland
Coleman Japan Co., Ltd. Japan
Coleman Lifestyles K.K. Japan
Coleman Mexico S. A. de C.V. Mexico
Coleman Powermate
Compressors, Inc. Delaware
Coleman Powermate, Inc. Nebraska
Coleman Puerto Rico, Inc. Delaware
Coleman SARL France
</TABLE>
<PAGE>
SUBSIDIARIES, CONTINUED
<TABLE>
<CAPTION>
JURISDICTION OF ASSUMED
NAME INCORPORATION NAME
<S> <C> <C>
Coleman SVB S.r.l. Italy
Coleman Taymar Limited United Kingdom
Coleman U.K. Holdings Limited United Kingdom
Coleman U.K. PLC United Kingdom
Coleman Venture Capital, Inc. Kansas
Eastpak Corporation Delaware American
Lifestyles Group
Eastpak Manufacturing Corporation Delaware
Epigas International Limited United Kingdom
General Archery Industries, Inc. Arkansas
J G K, Inc. Delaware
Kansas Acquisition Corp. Delaware
Nippon Coleman, Inc. Kansas
Pearson Holdings, Inc. Arkansas
Productos Coleman, S.A. Spain
PT Camping Gaz Indonesia Indonesia
River View Corporation of Barling, Inc. Arkansas
Sierra Corporation of Fort Smith, Inc. Arkansas
Sunbeam Corporation (Canada) Limited Ontario (Canada)
TCCI Management Inc. Delaware
Taymar Gas Limited United Kingdom
</TABLE>
<PAGE>
SUBSIDIARIES, CONTINUED
<TABLE>
<CAPTION>
JURISDICTION OF ASSUMED
NAME INCORPORATION NAME
<S> <C> <C>
Tsana Internacional, S.A. Costa Rica
Woodcraft Equipment Company Missouri
</TABLE>
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference (i) in the Registration
Statement dated February 25, 1993 (Form S-8 No. 33-58726) pertaining to The
Coleman Company, Inc. 1992 Stock Option Plan and in the Related Prospectus,
(ii) in the Registration Statement dated January 18, 1994 (Form S-8 No.
33-74144) pertaining to The Coleman Company, Inc. 1993 Stock Option Plan and
in the related Prospectus, and (iii) in the Registration Statement dated May
12, 1997 (Form S-8 No. 333-26907) pertaining to The Coleman Company, Inc.
1996 Stock Option Plan and in the related Prospectus, of our report dated
April 15, 1999, with respect to the consolidated financial statements of The
Coleman Company, Inc. included in its Annual Report (Form 10-K) for the year
ended December 31, 1998.
ERNST & YOUNG LLP
Wichita, Kansas
April 15, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AS FILED IN THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 23,413
<SECURITIES> 0
<RECEIVABLES> 169,983
<ALLOWANCES> 8,894
<INVENTORY> 230,126
<CURRENT-ASSETS> 462,200
<PP&E> 268,691
<DEPRECIATION> 122,868
<TOTAL-ASSETS> 933,257
<CURRENT-LIABILITIES> 247,288
<BONDS> 362
0
0
<COMMON> 558
<OTHER-SE> 238,057
<TOTAL-LIABILITY-AND-EQUITY> 933,257
<SALES> 1,009,128
<TOTAL-REVENUES> 1,015,373
<CGS> 750,486
<TOTAL-COSTS> 750,486
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,451
<INTEREST-EXPENSE> 33,213
<INCOME-PRETAX> (26,441)
<INCOME-TAX> 13,846
<INCOME-CONTINUING> (40,563)
<DISCONTINUED> 0
<EXTRAORDINARY> (17,538)
<CHANGES> 0
<NET-INCOME> (58,101)
<EPS-PRIMARY> (1.05)
<EPS-DILUTED> (1.05)
</TABLE>
