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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM _________ TO _________.
COMMISSION FILE NUMBER 1-52
[SUNBEAM LOGO]
SUNBEAM CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 25-1638266
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
1615 S. CONGRESS AVENUE, SUITE 200
DELRAY BEACH, FLORIDA 33445
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(561) 243-2100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS: NAME OF EACH EXCHANGE ON WHICH REGISTERED:
COMMON STOCK, $0.01 PAR VALUE NEW YORK STOCK EXCHANGE
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. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (section 229.405 of this chapter) 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. [ ]
The aggregate market value of all classes of the registrant's voting stock
held by non-affiliates as of March 21, 1997 was approximately $2,151,896,208.
On March 21, 1997, there were 84,497,304 shares of the registrant's Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1997 Annual Meeting of Shareholders
are incorporated by reference in Part III hereof.
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SUNBEAM CORPORATION AND SUBSIDIARIES
ANNUAL REPORT
ON FORM 10-K
TABLE OF CONTENTS
PAGE
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PART I
ITEM 1. BUSINESS
General. ................................................... 1
Restructuring and Growth Plan .............................. 1
Products ................................................ 2
Competitive Strengths .................................... 3
Customers ................................................ 4
Patents and Trademarks .................................... 5
Employees ................................................ 5
Seasonality ............................................. 5
Raw Materials ............................................. 5
Environmental Matters .................................... 5
ITEM 2. PROPERTIES ................................................ 9
ITEM 3. LEGAL PROCEEDINGS ....................................... 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ...... 10
EXECUTIVE OFFICERS OF THE REGISTRANT ..................... 10
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS ....................................... 12
ITEM 6. SELECTED FINANCIAL DATA ................................. 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ..................... 14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ............... 18
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE ..................... 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ...... 18
ITEM 11. EXECUTIVE COMPENSATION .................................... 18
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT ................................................ 19
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ............ 19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K ............................................. 19
SIGNATURES ............................................................ 22
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Sunbeam Corporation (collectively with its subsidiaries, the
"Company" or "Sunbeam") is a leading designer, manufacturer and
marketer of branded consumer products. The Company's primary business is the
manufacture, marketing and distribution of durable household consumer goods
through mass market and other distributors in the United States and
internationally. The Company also sells its products to commercial end users
such as hotels and other institutions (the "Away From Home" category of the
business).
The Company's product categories are: (1) Appliances (mixers,
blenders, food steamers, bread makers, rice cookers, coffee makers, toasters,
irons and garment steamers) (2) Health Care (vaporizers, humidifiers, air
cleaners, massagers, hot and cold packs, blood pressure monitors and scales) (3)
Personal Care and Comfort (shower massagers, hair clipper and trimmers, electric
warming blankets and throws) (4) Outdoor Cooking (electric, gas and charcoal
grills and grill accessories) and (5) Away From Home (clippers and related
products for the professional and veterinarian trade and sales of products to
commercial and institutional channels). The International Group is responsible
for sales (primarily of small appliances, personal care and comfort products,
professional clippers and related products and grills) in all countries other
than the United States.
Sunbeam products enjoy a long-standing reputation for quality, and a
majority of the Company's sales are from products which hold the number one or
two market share in their respective product categories.
The Company was organized in 1989 (as Sunbeam-Oster Company, Inc.) and in
September 1990, Sunbeam acquired the assets and assumed certain liabilities,
through a reorganization, of Allegheny International, Inc. (the "Predecessor"),
an entity operating as a debtor-in-possession under Chapter 11 of the United
States Bankruptcy Code since 1988. In August 1992, the Company completed a
public offering of 20,000,000 shares of its common stock. In May 1995, the
Company changed its name from Sunbeam-Oster Company, Inc. to Sunbeam
Corporation.
RESTRUCTURING AND GROWTH PLAN
In the Fall of 1996, under newly elected Chairman, Albert J. Dunlap, the
Company announced a major restructuring and growth plan. The restructuring
portion of the plan has been substantially completed, resulting in a significant
reduction in employees, facilities and costs, all of which is anticipated to
generate approximately $225 million in annual savings for the Company. As a part
of the restructuring plan, the Company also announced that it would divest
certain lines of business. The Company has completed the sales of its furniture,
time and temperature and decorative bedding businesses and anticipates the
completion of the divestiture of its textile mill in Biddeford, Maine and its
Counselor/Registered trademark/ and Borg/Registered trademark/ scale business in
the first half of 1997.
The Company's restructuring plan includes the closure of 18 factories and
6 office facilities, resulting in the consolidation of all corporate offices
into a single headquarters office located in Delray Beach, Florida and an
administrative facility at its Hattiesburg manufacturing and distribution
facility. The number of manufacturing facilities will be reduced from twenty-six
to eight (four in the US and four international). See "Properties" below.
The Company has also consolidated all purchasing functions, substantially
reduced the number of stock keeping units maintained by the Company and
outsourced certain back-office administrative activities.
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The Company has also developed a comprehensive three year growth plan for
its core businesses. Sunbeam's goal is for revenues to double, reaching $2
billion, by 1999, with operating margins improving to 20% of sales. This revenue
growth is anticipated to be derived, in large part, by the development of new
innovative products and the globalization of the Company. Domestically, the goal
is to introduce at least 30 new products each year. On the international side,
the Company has a goal to triple international sales to $600 million by 1999.
The Company expects to sign fifteen new international distributor and licensing
agreements by April 1997 and many more throughout the remainder of the year. The
Company has already launched 42 new 220 volt products for international markets.
The Company has also identified new channels of distribution as sales growth
opportunities, including commercial organizations and "direct to the
consumer" channels such as catalogs, the Internet and Sunbeam/Registered
trademark/ factory outlet stores.
Both international expansion and new product introductions will be
supported by a significant investment in a major new advertising program that is
geared to rebuilding SUNBEAM/Registered trademark/ and OSTER/Registered
trademark/ brand awareness in the marketplace. The Company is well on its way to
accomplishing its brand repositioning strategy, in large part due to a $12.0
million advertising campaign in the fourth quarter of 1996 which has already
increased Sunbeam's brand relevance with consumers by 25%, as tabulated by a
leading independent market research organization.
PRODUCTS
In connection with the Company's 1996 restructuring, the Company redefined
its core product categories as specified below:
APPLIANCES
Small kitchen appliances including Mixmaster/Registered trademark/ stand
mixers, hand mixers, Osterizer/Registered trademark/ blenders, food processors,
toasters, can openers, coffee makers, breadmakers, waffle makers, and culinary
accessories, are sold primarily under the Sunbeam/Registered trademark/,
Oster/Registered trademark/ and Oster Designer/Registered trademark/ brand
names. The Company holds the number one or two market positions in blenders,
mixers, and breadmakers. This product category also encompasses garment care
appliances consisting of irons and steamers. Sales of appliances accounted for
approximately 29% of the Company's domestic net sales in 1996.
HEALTH CARE
The Company markets its home health products under the trademark Health at
Home/Registered trademark/. These products include heating pads, bath scales,
blood pressure and other health-monitoring instruments, massagers, vaporizers,
humidifiers and dental care products. Sales of health care products accounted
for approximately 11% of the Company's domestic net sales in 1996.
PERSONAL CARE AND COMFORT
The Company's personal care products include shower massagers, consumer
hair clippers and trimmers and a broad line of electric blankets, comforters and
Cuddle-Up/Registered trademark/ heated throws. The Company holds the number one
market position in electric blankets and heated throws. Sales of personal care
and comfort products accounted for approximately 21% of the Company's domestic
net sales in 1996.
OUTDOOR COOKING
Sunbeam is a leading supplier of outdoor barbecue grills. Sunbeam has the
leading market share position in the gas grill industry. Barbecue grills consist
of propane, natural gas, electric and charcoal models sold primarily under the
Sunbeam/Registered trademark/ and Grillmaster/Registered trademark/ brand names.
Sales of outdoor cooking products accounted for approximately 29% of the
Company's domestic net sales in 1996.
AWAY FROM HOME
The Company markets a line of professional barber and beauty equipment,
including electric and battery clippers, replacement blades and other grooming
accessories sold to both conventional retailers and through professional
distributors. In addition, the Company is expanding the marketing of its
appliances and personal care and comfort products to institutional and
commercial channels. Sales of away from home products described above accounted
for approximately 5% of the Company's domestic net sales in 1996.
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INTERNATIONAL
The Company markets a variety of products (primarily small kitchen
appliances, personal care and comfort products, professional clippers and
related products and grills) outside the U.S. 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 a manufacturing facility in Venezuela, and sales
offices in the United Kingdom and Hong Kong. The Company's international
products are sourced from the Company's United States, Mexican or Venezuelan
manufacturing operations or from vendors primarily located in Asia.
International sales accounted for approximately 19% of the Company's total net
sales in 1996.
To date, the Company's activities outside the United States have been
primarily focused in Mexico, South and Central America and Canada. The Company
enjoys a strong market position in a number of product categories in Latin
America. The Oster- brand has the leading market share in small appliances in a
number of Latin American countries.The Company intends to focus on expanding its
business in South and Central America by introducing broader product offerings,
achieving increased market penetration and expanding geographically into South
American countries where the Company has historically not been represented by
introducing new 220 volt products. The Company has introduced 42 such products
in the last year and continues to develop such products at an increasing rate.
The Company also intends to expand its product offerings in the Far East and
Europe. The Company may choose to approach these markets directly through its
own operations, by acquisition, or through international joint ventures or other
types of strategic alliances. The Company has recently entered into new
distribution or licensing arrangements providing for the distribution of Sunbeam
and/or Oster goods into additional countries in South America, Africa and the
Far East.
COMPETITIVE STRENGTHS
Worldwide, Sunbeam competes in markets with a number of well-established
United States and foreign companies on the basis of various strengths, depending
on the country, product category and distribution channels. The Company believes
that it is well-positioned to pursue continued growth as a result of several
competitive strengths, which include the following.
DISTRIBUTION NETWORK. The Company has one of the premier mass merchant
distribution networks serving large national retailers in the United States. The
Company also has a strong network of well-established distributors and service
organizations in Latin America. The Company supports its customers needs with
strong warehousing and distribution capabilities, a broad, high-quality product
portfolio and electronic data interchange ("EDI") and just in time product
delivery capabilities. 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, television
shopping channels, hardware stores, home centers, drug and grocery stores, and
pet supply retailers, as well as independent distributors and military post
exchange outlets.
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STRONG POSITION IN CONSOLIDATING RETAIL ENVIRONMENT. The consolidation
trend in the retail industry has resulted in the emergence and global expansion
of large mass merchandisers that demand financially strong, efficient suppliers
which offer a broad range of innovative, quality products with the ability to
make timely shipments in large volumes and provide strong promotional and
merchandising support. The Company has benefited from this trend and believes it
has the opportunity to further expand distribution with a number of retailers
and increase its penetration of existing accounts. In 1996, the Company sold
products to virtually all of the top 100 U.S. retailers, including Wal-Mart,
Target Stores, Kmart, Sears, Roebuck & Co., Service Merchandise, Home Depot,
Lowes, Costco, Sam's Club, Walgreens, Eckerd and Bed Bath & Beyond.
BRAND NAME RECOGNITION. The Sunbeam/Registered trademark/ and
Oster/Registered trademark/ brands have been household names for generations.
The Company believes that these brands, along with its other well-known
secondary names such as Mixmaster/Registered trademark/ and Osterizer/Registered
trademark/ draw customers into retail stores specifically to purchase products
bearing these brand names. During the past year, the Company has spent over $75
million for advertising and sales promotion to support brand recognition.
MARKET LEADERSHIP. The majority of Sunbeam sales are from products in
which the Company holds the number one or two market share position. The Company
believes that this combination of leading brand-name products and breadth of
product offerings makes Sunbeam an attractive vendor to retailers who are
consolidating their suppliers.
CUSTOMERS
The rapid growth of large mass merchandisers and warehouse clubs and
changes in consumer shopping patterns have contributed to a significant
consolidation of the U.S. retail industry and the formation of dominant
multi-category retailers. Sunbeam has positioned itself to respond to the
challenges of this changing retail environment by pursuing strategic
relationships with large, high-volume merchandisers. The Company markets its
products through virtually every category of retailer including mass
merchandisers, catalog showrooms, warehouse clubs, department stores, hardware
stores, catalogues, television shopping channels, home centers, drug and grocery
stores, and pet supply retailers, as well as independent distributors and the
military post exchange services. The Company's largest customer, Wal-Mart
Stores, Inc., accounted for approximately 19% of sales in 1996.
Retailers are pursuing a number of strategies in their competition to
deliver the highest-quality, lowest-cost brand name products. A growing trend
among retailers is to purchase on a "just-in-time" basis in order to
reduce inventory costs and increase returns on investment. This trend has
required increased working capital investments for manufacturers and requires
manufacturers to more closely
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monitor consumer buying patterns as retailers shorten their lead times for
orders. Currently, most Sunbeam products sold to U.S. retailers are manufactured
at the Company's own facilities in North America. This enables the Company to
provide rapid, reliable delivery in order to maximize customers' inventory
turns. The Company intends to support its retail partners' "just-in-time"
inventory strategies through investments in, among other things, improved
forecasting systems, more responsive manufacturing and distribution capabilities
and electronic communications. Currently, Sunbeam has approximately 75% of its
U.S. customer sales on electronic data interchange (EDI) systems.
The amount of backlog orders at any point in time is not a significant
factor in the Company's business.
PATENTS AND TRADEMARKS
Sunbeam believes that an integral part of its strength is its ability to
capitalize on the Sunbeam/Registered trademark/ and Oster/Registered trademark/
trademarks which are registered in the United States and in numerous foreign
countries. Widely recognized throughout North America, South and Central America
and Europe, these registered trademarks, along with Osterizer/Registered
trademark/, Mixmaster/Registered trademark/, Toast Logic/ Trademark/,
Steammaster/Registered trademark/, Oskar/Registered trademark/,
Grillmaster/Registered trademark/ and "Blanket with a Brain/ Trademark/" brands
are important to the success of the Company's products. Other important
trademarks within Sunbeam include Oster Designer /Registered trademark/ line and
Cuddle-Up/Registered trademark/.
Sunbeam holds several 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.
EMPLOYEES
The Company currently has approximately 6,000 employees; as of December 29,
1996, the Company had approximately 9,000 employees. As a result of the
Company's restructuring plan, employment was reduced from approximately 12,000
people to approximately 6,000 people. Other than at two facilities (both of
which are expected to be sold or closed by fall of 1997), none of the Company's
full-time workforce has domestic union representation. Sunbeam has had no
labor-related work stoppages and, in the opinion of management, relations with
its employees are generally good.
SEASONALITY
On a consolidated basis, Sunbeam sales do not exhibit substantial
seasonality. However, sales of outdoor cooking products are strongest in the
first half of the year, while sales of appliances and personal care and comfort
products are strongest in the second half of the year. In addition, sales of a
number of the Company's products, including warming blankets, vaporizers,
humidifiers and grills may be impacted by weather conditions.
RAW MATERIALS
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,
resin, copper, and corrugated cardboard for cartons.
ENVIRONMENTAL MATTERS
The Company's operations, like those of comparable businesses, are subject
to certain federal, state, local and foreign environmental laws and regulations
in addition to laws and regulations regarding labeling and packaging of products
and the sale of products containing certain environmentally sensitive materials
("Environmental Laws"). The Company believes it is in substantial
compliance with all
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Environmental Laws which are applicable to its operations. Compliance with
Environmental Laws involves certain continuing costs; however, such costs of
ongoing compliance have not resulted, and are not anticipated to result, in a
material increase in the Company's capital expenditures or to have a material
adverse effect on the Company's results of operations, financial condition or
competitive position.
In addition to ongoing environmental compliance at its operations, the
Company also is actively engaged in certain environmental remediation activities
relating primarily to divested operations. As of December 31, 1996, the Company
had been identified by the United States Environmental Protection Agency
("EPA") as a potentially responsible party ("PRP") in connection
with seven (7) sites subject to the federal Superfund law and two (2) sites
subject to state Superfund laws comparable to the federal law (collectively the
"Environmental Sites"), exclusive of sites at which the Company has been
designated (or expects to be designated) as a de minimis (less than 1%)
participant .
The Superfund Act, and related state environmental remediation laws,
generally authorize governmental authorities to remediate a Superfund site and
to assess the costs against the PRPs or to order the PRPs to remediate the site
at their expense. Liability under the Superfund Law is joint and several and is
imposed on a strict basis, without regard to degree of negligence or
culpability. As a result, the Company recognizes its responsibility to determine
whether other PRPs at a Superfund site are financially capable of paying their
respective shares of the ultimate cost of remediation of the site. Whenever the
Company has determined that a particular PRP is not financially responsible, it
has assumed for purposes of establishing reserve amounts that such PRP will not
pay its respective share of the costs of remediation. To minimize the Company's
potential liability with respect to the Environmental Sites, the Company has
actively participated in steering committees and other groups of PRPs
established with respect to such sites. The Company currently is engaged in
active remediation activities at seven (7) sites, four (4) of which are among
the Environmental Sites referred to above, and three (3) of which have not been
designated as Superfund sites under federal or state law.
In addition, the Company is engaged in environmental remediation activities
at 2 sites in Newburgh Heights, Ohio, where a subsidiary formerly conducted
operations. The Company has been actively cooperating with the United States
Nuclear Regulatory Commission and state regulatory authorities in developing a
plan for remediation of those sites. Remediation of one of the sites, the
Harvard Avenue Site, is nearly complete. Active remediation is underway at the
other site-the Bert Avenue Site and is anticipated to be completed in 1997.
The Company's costs for environmental remediation activities have not had
a material adverse effect on the Company's results of operations, financial
condition or competitive position. The Company has established reserves to cover
the anticipated probable costs of remediation, based upon periodic reviews of
all sites for which the Company has, or may have, remediation responsibility. As
of December 29, 1996, the amount of such reserves was approximately five percent
of the Company's total liabilities as set forth in the consolidated financial
statements. Such environmental reserves do not consider offsets for potential
insurance recoveries from certain of the Company's liability insurance carriers
which the Company continues to pursue.
Due to uncertainty over the remedial measures to be adopted at some sites,
the possibility of changes in the Environmental Laws, and the fact that joint
and several liability with the right of contribution is possible at federal and
state Superfund sites, the Company's ultimate future liability with respect to
sites at which remediation has not been completed may vary from the amounts
reserved as of December 31, 1996. However, the Company believes, based on
existing information, that the costs of completing the environmental remediation
of all sites for which the Company has a remediation responsibility have been
adequately reserved and that the ultimate resolution of these matters will not
have a material adverse effect upon the Company's financial condition.
In December 1996, the Company reached a negotiated settlement with the EPA
with regard to a notice of violation concerning the construction and operation
of two paint lines at the Company's
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Neosho, MO facility prior to obtaining the necessary permits for construction
and operation. The original penalty proposed by the EPA was in the amount of
approximately $2 million, but the Company and the EPA have negotiated a
settlement of the EPA's lawsuit against the Company for a lesser amount. The
settlement amount of $829,825 recognizes the benefits of a "supplemental
environmental project" which consisted of the Company's installation of
nominal emission powder coating lines to replace solvent paint lines. The
Company is awaiting proposed settlement documentation from the EPA and
anticipates formal resolution of this matter by the second quarter of 1997.
In December 1996, the Company paid a negotiated penalty to the EPA in the
amount of $110,138 to settle violations arising from the Company's failure to
file certain mandatory Form R reports for 1990 through 1994. The originally
proposed penalties had been in the amount of $946,596, and the Company was able
to negotiate a reduced penalty amount due to the fact that the EPA agreed to
apply its self-policing/self-disclosure policy. The Company voluntarily notified
the EPA of its deficiencies in filing the Form R reports promptly upon learning
of the reporting deficiencies.
The Company is not a party to any other administrative or judicial
proceeding to which a governmental authority is a party and which involves
potential monetary sanctions, exclusive of interest and costs, of $100,000 or
more.
CAUTIONARY STATEMENTS
Certain of the information contained herein (including Management's
Discussion and Analysis of Financial Condition and Results of Operations)
contains "forward-looking" information, as that term is defined in the
Private Securities Litigation Reform Act of 1995, as the same may be amended
(herein the "Act") and in releases made by the Securities and Exchange
Commission ("SEC") from time to time.
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 and that actual results may
differ materially from those in the forward-looking statements as a result of
various factors.
/bullet/ The Company's performance should be expected to be affected by the
strength of the retail economy, primarily in the United States, but also in
Canada and Latin America. Weakness in consumer confidence and retail outlets
(including the financial weakness or bankruptcy of retail outlets, especially
mass merchants) should be expected to adversely impact the Company's future
financial results.
/bullet/ The Company operates in a highly competitive environment with
numerous competitors which are financially strong and capable of competing
effectively with the Company in the marketplace. Such competitors may take
actions to meet the Company's new product introductions and other initiatives.
Some competitors may be willing to accept lower margins and to reduce prices to
compete with the Company. As a result, the Company could fail to achieve
anticipated sales increases, to realize anticipated price increases, or
otherwise fail to meet its anticipated results. Any of such circumstances would
likely have an adverse effect on future financial performance, which effect
could be material.
/bullet/ The Company manufactures most of its products, although it also
sources some products from third parties. The Company's ability to realize
operating profits is dependent upon its ability to timely manufacture, source
and deliver products which may be sold for a profit. Labor difficulties, delays
in delivery or pricing of raw materials and/or sourced products, scheduling and
transportation difficulties, management dislocations and delays in development
and manufacture of new products can negatively affect operating profits.
/bullet/ As a consumer goods distributor, the Company's results of
operations can be negatively impacted by product liability lawsuits and/or by
higher than anticipated rates of warranty returns or other returns of goods.
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/bullet/ The Company expects to substantially increase the amount of
business conducted by it outside North America. If the Company fails to achieve
anticipated market penetration in areas of the world into which the Company
currently expects to expand its sales, such event is likely to have an adverse
effect on the Company's future financial performance, which effect could be
material. Expansion of the Company's sales in foreign markets depends upon many
factors, including the states of economies in foreign countries, the strength of
consumer demand in those countries for products which the Company sells (or
expects to sell in those markets), the strength of competition from other global
consumer products companies and other factors which may negatively affect the
Company's anticipated performance in those markets.
/bullet/ The Company currently manufactures some products and has sales in
such economies as those of Mexico and Venezuela, both of which economies have
been unstable or hyperinflationary in recent years. The economies of other
foreign countries important to the Company's expansion plans, including other
countries in Latin America and developing countries throughout the world, could
suffer similar instability in the future. Such factors as currency devaluations,
new tariffs, changes in monetary policies, inflation, governmental instability
and similar matters could negatively affect the Company's anticipated
performance in foreign markets. The occurrence of any of these circumstances
could have an adverse effect on future financial performance, which effect could
be material.
/bullet/ A significant portion of the cost of goods manufactured by the
Company in North America is raw material cost. The Company has implemented
changes in its purchasing function which the Company anticipates will enable it
to purchase raw materials more efficiently and economically than it has in the
past. The success of the Company's purchasing initiatives may be affected by
many factors beyond the Company's control, such as commodity pricing generally
and higher prices for the specific raw materials required by the Company. In
addition, the Company's initiatives to reduce the cost of raw materials simply
may not achieve savings in amounts which the Company anticipates. A material
failure by the Company to achieve the anticipated reductions in raw material
costs would likely have an adverse effect on anticipated future financial
performance, which effect could be material.
/bullet/ The Company anticipates realizing price increases for certain of
its products. The Company operates in a highly competitive industry, and its
ability to realize price increases may be limited due to competitive pressures.
If there is a material failure to realize anticipated price increases, margins
likely will be lower than anticipated by the Company, and this will likely have
an adverse effect on future financial performance, which effect could be
material.
/bullet/ The Company anticipates that it will be able to more rapidly
develop and introduce a substantial number of new and innovative products in the
future. However, the Company may prove unable to meet its more aggressive
schedules for future product development. Failure to develop and manufacture new
products in the amounts and with the quality anticipated or a failure to reduce
the cycle time for new product introductions would likely have an adverse effect
on future financial performance, which effect could be material.
/bullet/ Sales of certain of the Company's products can be negatively
impacted by abnormal weather conditions during different seasons and quarters of
the year.
/bullet/ The Company has entered into various arrangements with third
parties for the provision of back-office administrative services previously
provided with internal resources, including provision of all necessary computer
systems. Failure of any of these third party service providers to perform in
accordance with their respective agreements with the Company could result in
disruptions of the Company's normal business operations with a consequent impact
on sales, collections, cash flow and/or profitability.
/bullet/ The Company's profitability may be negatively impacted by
underabsorption of manufacturing costs resulting from underutilization of
manufacturing capacity if the Company's sales growth is less than anticipated.
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/bullet/ The Company's ability to realize the cost savings anticipated from
the restructuring plan will be affected by, among other items, the Company's
ability to complete facility rationalization initiatives in a timely manner
without negatively impacting production during such transition.
ITEM 2. PROPERTIES
In conjunction with the Company's formal restructuring plan and
divestiture activities, Sunbeam has reduced the total square footage of active
manufacturing, administrative, distribution and warehouse floorspace to 3.6
million square feet from 7.2 million square feet at the same time last year.
Active United States manufacturing, warehouse, and office locations (upon
completion of the restructuring plan) are set forth below. In addition to the
facilities set forth below, the Company leases warehouse space on a short-term
basis when needed and leases space in various malls for its Sunbeam outlet
stores. Except as otherwise noted, each location is used for manufacturing,
warehousing and related administrative office space.
UNITED STATES SQUARE FEET TITLE
- ------------- ----------- -----
Brownsville, Texas ............ 48,000 Leased(1)
Delray Beach, Florida ......... 51,073 Leased(2)
Del Rio, Texas ............... 10,560 Leased(1)
Hattiesburg, Mississippi ...... 725,000 Owned
Hattiesburg, Mississippi ...... 300,000 Leased(1)
McMinnville, Tennessee ......... 169,400 Leased
Neosho, Missouri ............... 853,714 Owned/Leased
Waynesboro, Mississippi ...... 887,200 Leased
----------
Total ........................ 3,044,947
==========
Active properties outside the United States are as follows:
INTERNATIONAL SQUARE FEET TITLE
- ------------- ----------- -----
Acuna, Mexico ............... 110,000 Owned
Barquisimeto, Venezuela ...... 75,686 Owned
Caracas, Venezuela ............ 9,867 Leased(3)
Kowloon, Hong Kong ............ 10,076 Leased(3)
Matamoros, Mexico ............ 91,542 Owned
Milton Kaynes, England ........ 5,928 Leased(3)
Tlalnepantla, Mexico ......... 297,927 Owned
---------
Total ..................... 601,026
=========
- ----------------
(1) Warehouse only
(2) Corporate headquarters
(3) Administration
(4) Warehouse and administration
The Company believes that its existing facilities will adequately provide
sufficient suitable capacity to implement its operating plans.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are 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 matters, and of certain matters relating to prior operations of the
Predecessor, individually or in the aggregate, will not have a material adverse
effect upon the financial position or results of operations of the Company. The
Company has established reserves for pending litigation which the Company
considers to be adequate to cover loss contingencies determined by the Company
associated with such proceedings.
9
<PAGE>
See "Environmental Matters" under Item 1 for a description of certain
legal proceedings related to environmental matters, which provision is
incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended December 29, 1996, there were no matters submitted
to a vote of the Company's security holders.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
Albert J. Dunlap ...... 59 Chairman, Chief Executive Officer and Director
Russell A. Kersh ...... 43 Executive Vice President, Finance and Administration
David C. Fannin ...... 51 Executive Vice President, General Counsel and Secretary
Donald R. Uzzi ......... 44 Executive Vice President, Consumer Products Worldwide
Jack Dailey ............ 57 Vice President, Corporate Purchasing and Logistics
Edwin T. Derecho ...... 39 Vice President, Treasurer
Robert J. Gluck ...... 39 Vice President, Controller
Lee Griffith ......... 56 Vice President, Sales
Janet G. Kelley ...... 43 Vice President, Associate General Counsel
Gary Mask ............ 48 Vice President, Human Resources
Kevin McBride ......... 42 Vice President, Marketing and Product Development
Ronald L. Newcomb ...... 53 Vice President, Manufacturing
R. Dixon Thayer ...... 45 Vice President, International
Robert P. Totte ...... 43 Vice President, Taxes
</TABLE>
ALBERT J. DUNLAP has been Chairman and Chief Executive Officer of Sunbeam
Corporation since July 18, 1996. From April 1994 to December 1995 he was
Chairman and Chief Executive Officer of Scott Paper Company. From 1991 to 1993,
Mr. Dunlap was the Managing Director and Chief Executive Officer of Consolidated
Press Holdings Limited (an Australian media, chemicals and agricultural
operation). Mr. Dunlap is a Director of General Oriental Investments Limited.
DAVID C. FANNIN has been Executive Vice President, General Counsel and
Secretary since January 1994. From 1979 until 1993, he was a partner in the law
firm of Wyatt, Tarrant and Combs.
RUSSELL A. KERSH has been Executive Vice President, Finance and
Administration of Sunbeam Corporation since July 22, 1996. From June 1994 to
December 1995 he was Executive Vice President, Finance and Administration of
Scott Paper Company. Mr. Kersh served as the Chief Operating Officer of Addidas
America from January 1993 to May 1994. He is a Director of Basic Petroleum
International, Ltd. (a Guatemalan petroleum company).
DONALD R. UZZI has been Executive Vice President, Consumer Products
Worldwide since January, 1997. From November 1996 to January 1997, he held the
position of Senior Vice President, Global Marketing. Mr. Uzzi joined the Company
in September 1996 as Vice President, Marketing and Product Development. From
January 1993 to July 1996, Mr. Uzzi served as President of the Beverage Division
of Quaker Oats. During 1990 to 1992, Mr. Uzzi was employed by Pepsi Cola as
Senior Vice President for North America (1992) and Vice President and General
Manager of the Mid-Atlantic Division (1990-1991).
JACK DAILEY has been Vice President, Corporate Purchasing and Logistics
since July 1996. He was Vice President, Purchasing at Scott Paper Company from
April 1994 to December 1995. Prior to that time, he was Vice President and
General Manager of North American Operation for Inmac (a business computer
products direct response company) from August 1988 to February 1994.
10
<PAGE>
EDWIN T. DERECHO joined the Company as Vice President and Treasurer in
October 1994. Prior to joining the Company, Mr. Derecho held the position of
Director of Capital Markets at PepsiCo, Inc. from March 1992. From 1986 to 1992
he was employed at Citibank, N.A., most recently as a Vice President.
ROBERT J. GLUCK has been a Vice President of the Company since December
1992 and was named Vice President, Controller in February 1995. Mr. Gluck was
employed by the public accounting firm of Ernst & Young from 1981 until 1992.
LEE GRIFFITH has been Vice President, Sales since September 1996. He was
previously with Scott Paper Company where he served as President and Chief
Executive Officer of Scott Paper Limited of Canada since January 1995. Prior to
that date, Mr. Griffith was employed by Scott Paper Company as Vice President,
Consumer Sales for North America (from 1994 to 1995) and Vice President, U.S.
Consumer Business (from 1988 to 1994).
JANET G. KELLEY has been Vice President since February 1996 and Associate
General Counsel since July 1995. She was Group Counsel from March 1994. From
1984 to 1994, Ms. Kelley was a partner in the law firm of Wyatt, Tarrant &
Combs.
GARY MASK joined the Company in March 1997 as Vice President, Human
Resources. He was employed as Vice President, Human Resources of Cavenham Forest
Industries (the successor to Crown Zellerbach Corporation) from 1984 through
February 1997.
KEVIN MCBRIDE has been Vice President, Marketing and Product Development
since January 1997. From January 1994 to June 1996, he was Vice President,
Marketing of Circle K Stores, Inc. From September 1991 to December 1993, he was
a Managing Director of Cambridge Group East, a management consulting company.
RONALD L. NEWCOMB has been Vice President, Manufacturing since September
1996. Prior to his employment with Sunbeam, Mr. Newcomb was Vice President,
Operations, Worldwide Household Products Group for Black & Decker from August
1994 to August 1996. From August 1989 to August 1994, he was Vice President of
Operations and Manufacturing for Textron Lycoming.
R. DIXON THAYER has been Vice President, International since September
1996. Prior to joining Sunbeam, Mr. Thayer was Vice President, Global Research,
Development Engineering and Global Growth for Kimberly Clark from December 1995.
Prior to that date, Mr. Thayer held various positions with Scott Paper Company,
including Vice President, New Product Development (from April to December 1995),
Vice President and General Manager of Europe ASH from January 1991 to April
1995.
ROBERT P. TOTTE has been Vice President, Taxes since May 1993. He was
National Tax Director for Domino's Pizza, Inc. from 1985 until 1993.
11
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock is listed and traded on the New York Stock Exchange under
the symbol "SOC". The Company has paid quarterly cash dividends of $.01
per share since December 15, 1992. The Company presently intends to continue to
pay cash dividends at a quarterly rate of $.01 per share; however, future
payments of cash dividends will be at the discretion of the Company's Board of
Directors and dependent upon the Company's results of operations, financial
condition and other relevant factors.
The following table sets forth the high and low sale prices for the Common
Stock for the calendar quarters indicated as reported by the New York Stock
Exchange Composite Tape:
MARKET PRICE
--------------------
HIGH LOW
--------- --------
1996:
Fourth Quarter ...... $29 1/2 $22 3/4
Third Quarter ...... $24 3/4 $12 1/4
Second Quarter ...... $17 1/8 $13 1/2
First Quarter ...... $19 3/4 $15 1/8
1995:
Fourth Quarter ...... $16 3/8 $13 1/2
Third Quarter ......... $17 1/8 $14
Second Quarter ...... $23 5/8 $12 1/2
First Quarter ......... $25 1/2 $22 3/8
On March 21, 1997 there were approximately 1,509 record holders of the
Company's Common Stock.
During the fourth quarter of 1996, the Company sold 2,000 shares of Common
Stock (from the Treasury account) to Director Faith Whittlesey for $27.63 per
share (the market value at the date of sale on December 5, 1996) in connection
with her appointment to the Board of Directors. This transaction was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933.
12
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following is a summary of certain financial information relating to the
Company. The summary should be read in conjunction with the Consolidated
Financial Statements of the Company included in this report. All amounts in the
table are expressed in millions, except per share data.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
------------------------------------------------------------------------
JANUARY 3, JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 29,
1993(1) 1994 1995 1995 1996(2)
------------- ------------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales ....................................... $ 839.8 $927.5 $1,044.3 $1,016.9 $ 984.2
Cost of goods sold .............................. 615.5 674.2 764.4 809.1 900.6
Selling, general and administrative
expense ......................................... 121.5 119.3 128.9 137.5 216.1
Restructuring, impairment and other costs ...... - - - - 154.8
-------- ------- --------- --------- -------
Operating earnings (loss) ........................ $ 102.8 $134.0 $ 151.0 $ 70.3 $(287.3)
======== ======= ========= ========= =======
Earnings (loss) from continuing operations
before cumulative effect of accounting
change ......................................... $ 53.5 $ 76.9 $ 85.3 $ 37.6 $(196.7)
Earnings from discontinued operations,
net of taxes(3) ................................ 12.1 11.9 21.7 12.9 0.8
Estimated loss on sale of discontinued
operations, net of taxes(3) .................... - - - - (32.4)
Earnings (loss) before cumulative effect of
accounting change ............................. $ 65.6 $ 88.8 $ 107.0 $ 50.5 $(228.3)
Net earnings(loss) .............................. $ 48.3 $ 88.8 $ 107.0 $ 50.5 $(228.3)
FULLY DILUTED EARNINGS PER SHARE
Average common and equivalent shares
outstanding ................................... 84.8 88.2 82.6 82.8 82.9
Earnings (loss) per share from continuing
operations before cumulative effect of
accounting change .............................. $ 0.63 $ 0.87 $ 1.03 $ 0.45 $ (2.37)
Earnings (loss) per share before cumulative
effect of accounting change ..................... $ 0.77 $ 1.01 $ 1.30 $ 0.61 $ (2.75)
Earnings (loss) per share of Common Stock ...... $ 0.57 $ 1.01 $ 1.30 $ 0.61 $ (2.75)
Cash dividends declared per share .............. $ 0.01 $ 0.04 $ 0.04 $ 0.04 $ 0.04
BALANCE SHEET DATA
(AT PERIOD END):
Working capital ................................. $ 400.2 $261.4 $ 294.8 $ 411.7 $ 352.6
Total assets ................................. 1,043.8 928.8 1,008.9 1,158.7 1,072.7
Long-term debt ................................. 133.5 133.4 124.0 161.6 201.1
Shareholder's equity ............................ 477.2 370.0 454.7 601.0 395.3
<FN>
- ----------------
(1) Net earnings for the fiscal year ended January 3, 1993 included a $17.3
million after-tax charge attributable to the adoption of Statement of
Financial Accounting Standards No. 106, EMPLOYERS ACCOUNTING FOR
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS.
(2) Includes special charges of $337.6 million before taxes. See Notes 2 and 3
to Notes to Consolidated Financial Statements.
(3) Represents earnings from the Company's furniture business, net of income
taxes and the estimated loss on disposal. See Note 3 to Notes to
Consolidated Financial Statements.
</FN>
</TABLE>
13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
YEAR ENDED DECEMBER 29, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995
On November 12, 1996 the Company announced a major restructuring and growth
plan designed to massively reduce its cost structure and grow the business in
order to restore higher levels of profitability for the Company. The cost
reduction portion of the restructuring and growth plan is expected to result in
anticipated annual savings estimated to be $225.0 million with 75% realization
of these savings in 1997 and the remaining 25% in 1998. These cost savings will
result primarily from the consolidation of administrative functions within the
Company, the rationalization of manufacturing and warehouse facilities
(including the reduction in the number of production facilities from 26 to 8 and
warehouses utilized from 61 to 18), the elimination of over 6,000 positions
(including 3,300 from the divestiture of non-core businesses described below and
the elimination of approximately 2,800 other positions), the centralization of
the Company's procurement function and the reduction of the Company's product
offerings and stock keeping units ("SKU's"). The restructuring and growth
plan also included a redefinition of the Company's core product categories and
the elimination of those businesses and product lines that do not fit the core
categories. Sunbeam's new core product categories are Appliances, Health Care,
Personal Care and Comfort, Outdoor Cooking and Away From Home. Product
categories and businesses which were determined to be non-core and have already
been divested include the Company's furniture business and time and the
temperature product line, both of which were sold in March 1997, and its
decorative bedding product line, sold in December 1996. The remaining non-core
product categories, which are planned for divestiture in the first half of 1997,
are Counselor/Registered trademark/ and Borg/Registered trademark/ scales and
the Company's textile mill in Biddeford, Maine.
The Company's operating results for 1996 include the effects of a pre-tax
special charge of $337.6 million recorded in conjunction with the implementation
of the restructuring and growth plan. Approximately 20% of the charge is for
cash items of which $63.8 million is accrued at December 29, 1996, primarily for
severance costs and lease and other facility exit costs that will be
substantially expended during 1997. The special charge to earnings is included
in the following categories on the consolidated statement of operations (in
millions):
<TABLE>
<CAPTION>
PRE-TAX DOLLAR AFTER-TAX
AMOUNT PER SHARE AMOUNT
----------------- ------------------
<S> <C> <C>
Restructuring, impairment and other costs ......... $154.9 $ (1.21)
Cost of sales .................................... 92.3 (0.72)
Selling, general and administrative ............... 42.5 (0.33)
Estimated loss from discontinued operations ...... 47.9 (0.39)
------- --------
Total ............................................. $337.6 $ (2.65)
======= ========
</TABLE>
As further described in Note 3, the sale of the Company's furniture
business assets (primarily inventory, property, plant and equipment) was
completed on March 17, 1997. The Company received $62.1 million in cash at
closing and expects to receive approximately $10.0 million by June 30, 1997. The
Company retained accounts receivable related to the furniture business of
approximately $50.0 million as of the closing date. The final purchase price for
the furniture business is subject to post-closing adjustment based on the terms
of the Asset Purchase Agreement. The Company will finalize its accounting for
the loss on disposal of the furniture business in the first quarter of 1997 and
could record an additional after-tax loss from discontinued operations. See
discussion of Restructuring, Impairment and Other Costs in Note 2 and
Discontinued Operations and Assets Held For Sale in Note 3 to the Company's
consolidated financial statements for further information regarding the
individual components of the special charge.
Net sales from continuing operations of $984.2 million for 1996 represents
a decrease of $32.7 million, or 3.2%, from 1995. The Company experienced a loss
from continuing operations of $196.7 million or $2.37 per share for 1996 versus
earnings from continuing operations of $37.6 million or $.45
14
<PAGE>
per share in 1995 primarily as a result of the restructuring activities
discussed above. The net loss for 1996 was $228.3 million, or $2.75 per share,
compared to net earnings of $50.5 million, or $0.61 per share, for 1995.
Excluding the impact of special charge items for 1996, earnings from continuing
operations before income taxes decreased from $60.6 million in 1995 to a loss of
$12.9 million in 1996.
Domestic sales represented approximately 80% of total sales of the Company
in 1996 and decreased $28.5 million or 3.4% from 1995. This sales decline was
driven by lower sales of outdoor cooking products, which declined 7.3% and lower
sales of bedding products which declined 9.0% from 1995, primarily as result of
lower decorative bedding sales (divested in December 1996). Domestic sales of
appliance products were flat with sales increases from new products such as
vegetable steamers and toaster ovens being offset by reduced pricing on
breadmakers. Sales of other product categories such as health and personal care
products and time and temperature products (divested in March 1997) were either
flat or declined slightly from 1995 levels.
International sales decreased $4.2 million or 2.2% from 1995 primarily as
a result of lower sales in Latin America due to political and/or economic
instability in several countries such as Ecuador, Peru, Columbia and Venezuela
(which suffered a bolivar devaluation in April 1996), a sales decline of 11.2%
in Canada as a result of the bankruptcy filing of the Company's then largest
Canadian customer offset by a 55.0% increase in sales in Mexico as a result of a
more stable economic environment in 1996.
The Company's gross margin percentage, excluding the impact of special
charges, was 17.9% of sales in 1996, down from 20.4% in 1995, primarily from the
underabsorption of higher manufacturing costs and excess manufacturing capacity
that has now been realigned for 1997 and beyond by the Company's restructuring
and growth plan cost reduction initiatives.
Selling, general and administrative ("SG&A") expenses, excluding the
impact of special charges described above, were 17.6% of sales in 1996 primarily
as a result of an inflated cost structure that has now been realigned for 1997
and beyond. In addition, a $12.0 million fourth quarter 1997 media advertising
campaign and one-time expenditures for market research, new packaging, and other
growth plan initiatives resulted in higher than normal SG&A spending in 1996.
Also included in 1996 SG&A costs were $7.7 million of compensation expense
resulting from restricted stock awards made in connection with the employment of
a new senior management team.
Interest expense for 1996 increased from $9.4 million in 1995 to $13.6
million as a result of increased indebtedness of the Company for working capital
requirements and non-recurring capitalized interest in 1995 related to the
construction of the Hattiesburg manufacturing and distribution center.
The effective income tax rate for 1996 decreased 3 percentage points from
1995 to 35.0% as a result of certain foreign and state operating losses for
which no tax benefits were recorded and the non-deductibility of compensation
expense related to restricted stock awards.
The Company's discontinued furniture operations had revenues of $227.5
million in 1996, up 22.6% from $185.6 million in 1995. This revenue growth was
the result of the acquisition of the Samsonite/Registered trademark/ furniture
business in November 1995. Excluding the impact of this acquisition, furniture
business sales declined 2.1%. Earnings from the discontinued furniture
operations, net of taxes, declined from $12.9 million in 1995 to $.8 million in
1996 primarily as a result of lower gross margins from reduced pricing,
underabsorption of higher manufacturing costs and higher raw material costs. In
addition, SG&A costs increased due to the inclusion of the Samsonite- furniture
business, higher distribution and warehousing costs, particularly with resin
furniture products, and higher bad debt expenses.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED JANUARY 1, 1995
Net sales from continuing operations of $1,016.9 million for 1995 decreased
$27.4 million, or 2.6%, from 1994. Earnings from continuing operations were
$37.6 million or $.45 per share in 1995 compared to $85.3 million in 1994 or
$1.03 per share.
15
<PAGE>
Domestic sales represented approximately 82% of total Company sales for
1995 and decreased $23.4 million or 2.7% below 1994 levels due to an 8.6%
decline in sales of outdoor cooking products offset by a 5.4% increase in
appliance sales from new product introductions in late 1994 and 1995 and an
11.5% increase in sales of warming blankets and heated throws. Sales of other
product categories, including health and personal care products, and time and
temperature products (divested in March 1997), declined 6.1% in 1995.
International sales decreased by $4.0 million or 2.1% below 1994 levels
primarily as a result of a 53.8% decrease in sales in Mexico as a result of the
peso devaluation in late 1994 and the 1995 recession offset by increased sales
from expanded distribution in South and Central America, higher sales in
Venezuela resulting from consumer anticipation of the devaluation of the bolivar
and higher gas grill sales in Europe.
For 1995, the gross margin percentage decreased from 26.8% to 20.4%. The
decline in margin was due primarily to (1) manufacturing inefficiencies arising
from lower than planned production rates, (2) increased promotional expenses,
(3) certain inventory writedowns, primarily related to outdoor products unsold
from the 1995 season, (4) increased appliance warranty expenses, (5) increases
in raw material prices not fully recovered by selling price increases and (6) a
higher level of close-out sales of household products in connection with the
transition to the Hattiesburg facility and in anticipation of new product
launches planned for 1996.
Operating earnings for 1995 were $70.2 million, a decrease of $80.8 million
from 1994. As a percentage of sales, operating earnings decreased 7.6 percentage
points to 6.9% which is primarily attributable to the gross margin percentage
decline. SG&A increased from 12.3% to 13.5% of net sales in 1995. SG&A in dollar
terms increased $8.7 million in 1995 to $137.5 million primarily from (1)
increased provisions for bad debts and customer deductions associated with the
bankruptcy filings of certain of the Company's retail customers, (2)
non-recurring costs associated with the start-up of the Hattiesburg distribution
center (which caused the Company to incur additional costs for temporary
distribution labor, overtime costs and costs of outside distribution services as
well as delaying closure of a former warehouse), (3) costs associated with
International expansion activities in the Far East and Europe, (4) increased
depreciation expense related to investments in information systems and the
Hattiesburg distribution center and (5) increased investments in product design
engineering resources.
Interest expense for the year ended December 31, 1995 increased $2.5
million, or 35.3%, over 1994 due primarily to increased indebtedness of the
Company in support of working capital and capital spending requirements.
The effective income tax rate decreased from 41.1% to 38.0%, or 3.1
percentage points, from 1994. The reduced effective tax rate was a result of (1)
increased earnings of certain foreign operations and dividend payments from the
Company's Venezuelan subsidiary, which allowed for the utilization of net
operating loss carryforwards and foreign tax credits for which no tax benefits
were recorded, and (2) state income tax benefits associated with the Hattiesburg
facility.
The Company's discontinued furniture operations had revenues of $186.5
million in 1995, up 20.9% from $154.2 million in 1994. This revenue growth was
the result of the acquisition of the Rubbermaid- resin furniture business in
September 1994. Excluding the impact of this acquisition, furniture business
sales increased 3.9% primarily from additional sales of wrought iron furniture.
Earnings from the discontinued furniture operations, net of taxes, declined from
$21.7 million in 1994 to $12.9 million in 1995 primarily as a result of lower
gross margins from higher raw material costs, particularly resin. In addition,
SG&A costs increased due to the inclusion of the resin furniture business and
from higher distribution and warehousing costs associated with the resin
facility. In addition, the bankruptcy filing of one large customer adversely
impacted the discontinued furniture business operating results in 1995.
FOREIGN OPERATIONS
During 1996 almost 90% of the Company's business was conducted in U.S.
dollars (including both domestic sales and U.S. dollar denominated export sales
primarily to certain Latin American markets).
16
<PAGE>
The Company's non-U.S. dollar denominated sales are made principally by
subsidiaries in Mexico, Venezuela, Canada and Europe. Venezuela is considered a
hyperinflationary economy for accounting purposes; therefore, translation
adjustments related to Venezuelan net monetary assets are included as a
component of net earnings. Such translation adjustments were not material to
1995 and 1996 operating results. As a result of continued inflation, Mexico will
be considered a hyperinflationary economy for accounting purposes beginning in
1997.
LIQUIDITY AND CAPITAL RESOURCES
As of December 29, 1996, the Company had cash and cash equivalents of $11.5
million and total debt of $202.0 million. Cash provided by operating activities
during 1996 was $14.2 million compared to $81.5 million in 1995. This decrease
is primarily attributable to the reduction in earnings (loss) before non-cash
charges (depreciation, restructuring and other non-cash special charges, loss on
discontinued operations and deferred taxes).
Capital spending, inclusive of a $5.0 million warehouse expansion financed
with a capital lease, totaled $75.3 million in 1996 (including $14.5 million
related to the discontinued furniture operations) and was primarily attributable
to new product development, cost reduction initiatives and warehouse expansions.
Capital spending in 1995 reflected approximately $59.4 million associated with
the Hattiesburg facility, $27.4 million related to new product development and
$10.8 million attributable to the discontinued furniture business. The remaining
1995 spending was primarily attributable to cost reduction projects,
productivity initiatives and environmental compliance including $14.4 million
for a powder coat paint system for outdoor cooking products. The Company
anticipates 1997 capital spending to be approximately 75% of 1996 levels and
primarily related to new product introductions and certain facility
rationalization initiatives.
Cash used in investing activities for 1995 and 1994 also includes the
purchase of certain furniture businesses, both of which were included in the
divestiture of the Company's furniture business completed in March 1997. Cash
used in investing activities in 1994 is net of $23.5 million received from the
surrender of certain life insurance policies on former employees of the Company.
Cash provided by financing activities in 1996 includes $30.0 million in net
borrowings under the Company's $500.0 million revolving credit facility, $11.5
million in new issuances of long-term debt and $4.6 million in proceeds from the
sale of treasury shares to certain executives of the Company. Cash used in
financing activities in 1995 reflects $13.1 million used for the purchase of
treasury stock in connection with a stock repurchase program the Company had
authorized in 1995 and which it discontinued in late 1996.
The Company is a party to various environmental matters, substantially all
related to previously divested operations. In connection with the Company's
restructuring plan a comprehensive review of environmental exposures was
undertaken and the Company accelerated its strategy for the resolution and
settlement of certain environmental claims. This review and change in strategy
resulted in additional environmental reserves being recorded in 1996 as more
fully described in Note 12 to the consolidated financial statements. In
management's opinion, the ultimate resolution of these environmental matters
will not have a material adverse effect upon the Company's financial condition.
On a limited basis, the Company selectively uses derivatives (interest rate
swaps and foreign exchange option and forward contracts) to manage interest rate
and foreign exchange exposures that arise in the normal course of business. No
derivative contracts are entered into for trading or speculative purposes. The
use of derivatives did not have a material impact on the Company's financial
results in 1996 and 1995. See Note 6 to the Company's consolidated financial
statements.
The Company believes its cash flow from operations, existing cash and cash
equivalent balances as well as its revolving credit facility will be sufficient
to finance its requirements to support working capital needs, remaining cash
expenditures required to implement its restructuring and growth plan,
17
<PAGE>
capital expenditures and debt service in the foreseeable future.
NEW ACCOUNTING STANDARDS
In December 1995, Statement of Financial Accounting Standard ("SFAS")
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, was issued. SFAS No. 123
allows either adoption of a fair value method for accounting for stock-based
compensation plans or continuation of accounting under APB No. 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES, and related interpretations with supplemental
disclosures.
The Company has chosen to account for its stock options and employee stock
purchase plans using the intrinsic value based method prescribed in APB Opinion
No. 25 and, accordingly, does not recognize compensation expense for stock
option grants made at an exercise price equal to or in excess of the fair market
value of the stock at the date of grant. Pro forma net income and earnings per
share amounts as if the fair value method had been adopted are presented in Note
7 to the consolidated financial statements. The adoption of SFAS No. 123 will
not impact the Company's results of operations, financial position or cash
flows.
CAUTIONARY STATEMENTS
The Company's Cautionary Statements set forth in Part I, Item 1 of this
report, under the heading "Cautionary Statements," are incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item appears in Item 14(a) of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the Company's directors is incorporated by reference
to the information set forth under the caption "Election of Directors" in
the Company's Proxy Statement for the 1997 Annual Meeting of Shareholders (the
"Proxy Statement"), which Proxy Statement will be filed with the
Securities and Exchange Commission (the "SEC") not later than 120 days
after the end of the Company's fiscal year pursuant to Regulation 14A.
Information regarding executive officers of the Registrant is included under a
separate caption in Part I hereof. Information regarding compliance with Section
16(a) of the Exchange Act is incorporated by references to the information
included under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding this item is incorporated by reference to the
information included under the captions "Executive Compensation",
"Compensation Committee Interlocks and Insider Participation" and
"Directors' Compensation" in the Company's Proxy Statement, which will
be filed with the SEC not later than 120 days after the end of the Company's
fiscal year pursuant to Regulation 14A.
18
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding this item is incorporated by reference to the
information included under the captions "Security Ownership of Certain
Shareholders" and "Security Ownership by Management" in the Company's
Proxy Statement, which will be filed with the SEC not later than 120 days after
the end of the Company's fiscal year pursuant to Regulation 14A.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding this item is incorporated by reference to the
information included under the caption "Certain Relationships and Related
Transactions" in the Company's Proxy Statement, which will be filed with the
SEC not later than 120 days after the end of the Company's fiscal year pursuant
to Regulation 14A.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The consolidated financial statements, related notes thereto and
the report of independent certified public accountants required by Item 8 are
listed on page F-1 herein.
(2) The listing of financial statement schedules appears on page F-1
herein.
(3)(a) Exhibits required by Item 601 are set forth below, including the
management contracts or compensatory plans or arrangements required pursuant to
Item 601 which are designated as Exhibits 10a to 10i and 10s to 10cc.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------
<S> <C>
2a. Asset Purchase Agreement dated February 10, 1997, among Sunbeam Products, Inc., Sunbeam
Furniture Company, OP II, Inc., Jacuzzi Outdoor Products, Inc., Sunbeam Corporation and
U.S. Industries, Inc.
2b. Amendment to Asset Purchase Agreement dated as of March 17, 1997, among Sunbeam
Products, Inc., Sunbeam Furniture Company, OP II, Inc., Sunlite Casual Furniture, Inc.,
Sunbeam Corporation and U.S. Industries, Inc.
3a. Amended and Restated Certificate of Incorporation of Sunbeam.(10)
3b. By-laws of Sunbeam, as amended(11)
10a. Employment Agreement dated as of July 18, 1996, by and between Sunbeam and Albert
J.Dunlap.(10)
10b. Employment Agreement dated as of July 22, 1996, by and between Sunbeam and Russell A.
Kersh.(11)
10c. Employment Agreement dated as of July 29, 1996, by and between Sunbeam and David C.
Fannin.(11)
10d. Employment Agreement dated as of January 1, 1997, by and between Sunbeam and Donald
Uzzi.
10e. Sunbeam Executive Benefit Replacement Plan.(7)
10f. Amended and Restated Sunbeam Equity Team Plan.
10g. Performance Based Compensation Plan.
10h. Sunbeam Deferred Compensation Plan for Outside Directors dated as of December 15,
1993.(2)
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------
<S> <C>
10i. Employment Agreement dated as of June 24, 1996, by and between the Company and Charles
J. Thayer.(10)
10j. Tax Sharing Agreement dated as of October 31, 1990 by and among Sunbeam, SAIL, SOHO,
Montey and the subsidiaries of Sunbeam listed therein.(1)
10k. Guarantee Agreement, dated as of June 1, 1994, between Sunbeam and Continental Bank,
N.A., as Trustee.(4)
10l. Trust Indenture, dated as of June 1, 1994, between Mississippi Business Finance Corporation
("MBFC"), and Continental Bank, N.A., as Trustee.(4)
10m. Loan Agreement, dated as of June 1, 1994, between MBFC and Sunbeam.(4)
10n. $75 million Sunbeam promissory note, dated as of June 21,1994, payable to MBFC.(4)
10o. Leasehold Deed of Trust and Security Agreement, dated as of June 1, 1994, among Sunbeam,
Jim B. Tohill, as Trustee, and MBFC.(4)
10p. Credit Agreement dated as of September 16, 1996, among the Company, The Chase
Manhattan Bank and the Lenders named therein.(11)
10q. First Amendment dated as of November 21, 1996 to the Credit Agreement dated as of
September 16, 1996, among the Company, The Chase Manhattan Bank and the Lenders
named therein.
10r. Second Amendment dated as of January 31, 1997 to the Credit Agreement dated as of
September 16, 1996, among the Company, The Chase Manhattan Bank and the Lenders
named therein.
10s. Employment Agreement dated as of August 1, 1993, by and between Sunbeam and Roger W.
Schipke.(3)
10t. First Amendment to Employment Agreement between the Company and Roger W. Schipke
dated as of June 1, 1994.(5)
10u. Equity Award Agreement dated as of August 1, 1993, by and between Sunbeam and Roger W.
Schipke.(3)
10v. Amendment to Equity Award Agreement and Stock Pledge Agreement dated September 1,
1994, by and between the Company and Roger W. Schipke.(5)
10w. Employment Agreement made and effective as of January 1, 1994, by and between the
Company and James J. Clegg.(6)
10x. Employment Agreement made and effective as of January 1, 1994, by and between the
Company and Paul M. O'Hara.(7)
10y. Agreement between the Company and Roger W. Schipke dated as of December 12, 1995.(9)
10z. Agreement and Release between Roger W. Schipke and the Company dated May 22, 1996.(10)
10aa. Agreement and Release between James J. Clegg and the Company dated July 23, 1996(10).
10bb. Agreement and Release between Paul M. O'Hara and the Company dated August 7, 1996.(11)
10cc. Agreement, Release, Covenant Not to Sue and Confidentiality Agreement between James D.
Wilson and the Company dated March 15, 1997.
11. Calculations of Earnings Per Share of Common Stock.
21. Subsidiaries of the Registrant.
23. Consent of Arthur Andersen LLP.
27. Financial Data Schedule, submitted electronically to the Securities and Exchange
Commission for information only and not filed.
<FN>
- ----------------
(1) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1990.
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended July 4, 1993.
20
<PAGE>
(3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended October 3, 1993.
(4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended July 3, 1994.
(5) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended October 2, 1994.
(6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended April 3, 1994.
(7) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended January 1, 1995.
(8) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended July 2, 1995.
(9) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 21, 1995.
(10) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996.
(11) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 29, 1996.
</FN>
</TABLE>
(b) Reports on Form 8-K.
The registrant filed a report on Form 8-K on November 12, 1996.
(c) Exhibits
The exhibits required by Item 601 are filed herewith.
(d) Financial Statement Schedules
The Financial Statement Schedules required by Regulation S-X are filed
herewith.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SUNBEAM CORPORATION
BY: /s/ RUSSELL A. KERSH
--------------------------------
RUSSELL A. KERSH
Executive Vice President,
Finance and Administration
(Principal Financial Officer)
Dated: March 31, 1997
Pursuant to the requirements of the Securities 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 date indicated.
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE DATE
------------------ ----- ----
<S> <C> <C>
/s/ ALBERT J. DUNLAP Chairman, Chief Executive March 31, 1997
- ------------------------------ Officer and Director
Albert J. Dunlap (Principal Executive Officer)
/s/ CHARLES M. ELSON Director March 31, 1997
- ------------------------------
Charles M. Elson
/s/ RUSSELL A. KERSH Executive Vice President, March 31, 1997
- ------------------------------ Finance and Administration
Russell A. Kersh and Director
/s/ HOWARD G. KRISTOL Director March 31, 1997
- ------------------------------
Howard G. Kristol
/s/ PETER A. LANGERMAN Director March 31, 1997
- ------------------------------
Peter A. Langerman
/s/ CHARLES J. THAYER Director March 31, 1997
- ------------------------------
Charles J. Thayer
/s/ FAITH WHITTLESEY Director March 31, 1997
- ------------------------------
Faith Whittlesey
/s/ ROBERT J. GLUCK Vice President, Controller March 31, 1997
- ------------------------------ (Principal Accounting Officer)
Robert J. Gluck
</TABLE>
22
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
FINANCIAL STATEMENTS:
Report of Independent Certified Public Accountants ................................. F-2
Consolidated Statements of Operations
for the Fiscal Years Ended January 1, 1995, December 31, 1995 and December 29, 1996 F-3
Consolidated Balance Sheets as of December 31, 1995 and December 29, 1996 ............ F-4
Consolidated Statements of Shareholders' Equity
for the Fiscal Years Ended January 1, 1995, December 31, 1995 and December 29, 1996 F-5
Consolidated Statements of Cash Flows
for the Fiscal Years Ended January 1, 1995, December 31, 1995 and December 29, 1996 F-6
Notes to Consolidated Financial Statements .......................................... F-7
FINANCIAL STATEMENT SCHEDULE:*
II. Valuation and Qualifying Accounts ................................................ F-27
<FN>
- ----------------
* All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore not included
herein.
</FN>
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Sunbeam Corporation:
We have audited the accompanying consolidated balance sheets of Sunbeam
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1995
and December 29, 1996 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended December 29, 1996. These consolidated financial statements and the
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedule 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 financial statements referred to above present fairly,
in all material respects, the financial position of Sunbeam Corporation and
subsidiaries as of December 31, 1995 and December 29, 1996, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended December 29, 1996 in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the accompanying
index to the financial statements and financial statement schedule is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not a required part of the basic financial statements. This schedule has
been subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
January 29, 1997, except with respect to the matters
discussed in Note 3, as to which the date is March 17, 1997.
F-2
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
------------------------------------------------
JANUARY 1, DECEMBER 31, DECEMBER 29,
1995 1995 1996
------------- --------------- --------------
<S> <C> <C> <C>
Net sales ................................................ $1,044,247 $1,016,883 $ 984,236
Cost of goods sold ....................................... 764,355 809,130 900,573
Selling, general and administrative expense ............... 128,836 137,508 216,129
Restructuring, impairment and other costs ............... - - 154,869
---------- ---------- ---------
Operating earnings (loss) ................................. 151,056 70,245 (287,335)
Interest expense .......................................... 6,974 9,437 13,588
Other (income) expense, net .............................. (712) 173 1,638
---------- ---------- ---------
Earnings (loss) from continuing operations before
income taxes ............................................. 144,794 60,635 (302,561)
Income taxes (benefit):
Current ................................................ 33,227 (2,105) (28,062)
Deferred ................................................ 26,283 25,146 (77,828)
---------- ---------- ---------
59,510 23,041 (105,890)
---------- ---------- ---------
Earnings (loss) from continuing operations ............... 85,284 37,594 (196,671)
Earnings from discontinued operations, net of taxes ...... 21,727 12,917 839
Estimated loss on sale of discontinued operations,
net of taxes ............................................. - - (32,430)
---------- ---------- ---------
Net earnings (loss) ....................................... $ 107,011 $ 50,511 $(228,262)
========== ========== =========
Earnings (loss) per share of common stock from
continuing operations .................................... $ 1.03 $ 0.45 $ (2.37)
========== ========== =========
Net earnings (loss) per share of common stock ............ $ 1.30 $ 0.61 $ (2.75)
========== ========== =========
Weighted average common shares outstanding ............... 82,553 82,819 82,925
========== ========== =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29,
1995 1996
--------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......................................... $ 28,273 $ 11,526
Receivables, net ................................................... 216,195 213,438
Inventories ......................................................... 209,106 162,252
Net assets of discontinued operations and other assets
held for sale ...................................................... 101,632 102,847
Deferred income taxes ................................................ 26,333 93,689
Prepaid expenses and other current assets ........................... 19,543 40,411
--------- ---------
Total current assets ............................................. 601,082 624,163
Property, plant and equipment, net .................................... 287,080 220,088
Trademarks and trade names, net ....................................... 214,006 200,262
Other assets ......................................................... 56,516 28,196
--------- ---------
$1,158,684 $1,072,709
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt ............... $ 1,166 $ 921
Accounts payable ................................................... 94,191 107,319
Restructuring accrual ................................................ 13,770 63,834
Other current liabilities .......................................... 80,204 99,509
--------- ---------
Total current liabilities ....................................... 189,331 271,583
Long-term debt ...................................................... 161,133 201,115
Other long-term liabilities .......................................... 50,088 64,376
Non-operating liabilities ............................................. 80,167 88,075
Deferred income taxes ................................................ 76,932 52,308
Commitments and contingencies (Notes 12 and 13)
Shareholders' equity:
Preferred stock (2,000,000 shares authorized, none outstanding) ...... - -
Common stock (issued 87,802,667 and 88,441,479 shares) ............... 878 884
Paid-in capital ...................................................... 441,786 447,948
Retained earnings ................................................... 266,698 35,118
Other ............................................................... (24,880) (25,310)
--------- ---------
684,482 458,640
Treasury stock, at cost (5,905,600 and 4,478,814 shares) ............ (83,449) (63,388)
--------- ---------
Total shareholders' equity ........................................ 601,033 395,252
--------- ---------
$1,158,684 $1,072,709
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED OTHER TREASURY
STOCK CAPITAL WARRANTS EARNINGS (NOTE 4) STOCK
--------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 ......... $876 $440,012 $ 2,368 $ 182,148 $ (14,043) $ (174,070)
Net earnings ..................... - - - 107,011 - -
Common dividends
($.04 per share) .................. - - - (3,169) - -
Exercise of stock options
and warrants ....................... 56 21,864 (2,368) - - -
Issuance of restricted stock ...... - - - - (108) -
Amortization of unearned
compensation ..................... - - - - 1,269 -
Minimum pension liability ......... - - - - (561) -
Translation adjustments ............ - - - - (6,675) -
---- -------- ------- --------- --------- ----------
Balance at January 1, 1995 ......... 932 461,876 - 285,990 (20,118) (174,070)
---- -------- ------- --------- --------- ----------
Net earnings ..................... - - - 50,511 - -
Common dividends
($.04 per share) .................. - - - (3,268) - -
Exercise of stock options ......... 20 17,013 - - - -
Amortization of unearned
compensation ..................... - - - - 582 -
Retirement of treasury shares ...... (74) (37,103) - (66,535) - 103,712
Purchase of common stock
for treasury ..................... - - - - - (13,091)
Minimum pension liability ......... - - - - (199) -
Translation adjustments ............ - - - - (5,145) -
---- -------- ------- --------- --------- ----------
Balance at December 31, 1995 ...... 878 441,786 - 266,698 (24,880) (83,449)
---- -------- ------- --------- --------- ----------
Net loss ........................... - - - (228,262) - -
Common dividends
($.04 per share) .................. - - - (3,318) - -
Exercise of stock options ......... 6 7,313 - - - -
Grant of restricted stock ......... - (1,120) - - (14,346) 15,466
Amortization of unearned
compensation ..................... - - - - 7,707 -
Minimum pension liability ......... - - - - 4,963 -
Retirement and sale of
treasury shares .................. - (31) - - - 4,595
Translation adjustments ............ - - - - 1,246 -
---- -------- ------- --------- --------- ----------
Balance at December 29, 1996 ...... $884 $447,948 $ - $ 35,118 $ (25,310) $ (63,388)
==== ======== ======= ========= ========= ==========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
------------------------------------------------
JANUARY 1, DECEMBER 31, DECEMBER 29,
1995 1995 1996
------------- --------------- --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings (loss) .......................................... $ 107,011 $ 50,511 $ (228,262)
Adjustments to reconcile net earnings to net cash provided
by operating activities: ......................................
Depreciation and amortization .............................. 35,766 44,174 47,429
Restructuring, impairment and other costs .................. - - 154,869
Other non-cash special charges .............................. - - 128,800
Estimated loss on sale of discontinued operations,
net of taxes ................................................ - - 32,430
Deferred income taxes ....................................... 26,283 25,146 (77,828)
Increase (decrease) in cash from changes in working capital:
Receivables, net ............................................. (48,228) (4,499) (13,829)
Inventories ................................................ (36,760) (4,874) (11,651)
Prepaid expenses and other current assets .................. 792 (2,498) 4,288
Accounts payable ............................................. 5,567 9,245 14,735
Income taxes payable ....................................... 16,818 (18,452) (21,942)
Payment of other long-term and non-operating liabilities ...... (17,310) (21,719) (27,089)
Other, net ................................................... (9,104) 4,482 12,213
--------- --------- ----------
Net cash provided by operating activities .................. 80,835 81,516 14,163
--------- --------- ----------
INVESTING ACTIVITIES:
Capital expenditures .......................................... (90,929) (140,053) (75,336)
Decrease (increase) in investments restricted for
plant construction ............................................. (46,362) 45,755 -
Purchase of businesses ....................................... (19,284) (13,053) -
Cash surrender value of life insurance policies ............... 23,549 - -
Sale of marketable securities, net ........................... 14,708 - -
Other, net ................................................... 200 - (860)
--------- --------- ----------
Net cash used in investing activities ..................... (118,118) (107,351) (76,196)
--------- --------- ----------
FINANCING ACTIVITIES:
Net borrowings under revolving credit facility ............... 35,000 40,000 30,000
Issuance of long-term debt .................................... 78,013 - 11,500
Payments of debt obligations ................................. (127,446) (5,417) (1,794)
Proceeds from exercise of stock options and warrants ......... 19,151 9,818 4,684
Purchase of common stock for treasury ........................ - (13,091) -
Sale of treasury stock ....................................... - - 4,578
Payments of dividends on common stock ........................ (3,169) (3,268) (3,318)
Other financing activities .................................... 2,606 (264) (364)
--------- --------- ----------
Net cash provided by financing activities .................. 4,155 27,778 45,286
--------- --------- ----------
Net increase (decrease) in cash and
cash equivalents ........................................ (33,128) 1,943 (16,747)
Cash and cash equivalents at beginning of year .................. 59,458 26,330 28,273
--------- --------- ----------
Cash and cash equivalents at end of year ........................ $ 26,330 $ 28,273 $ 11,526
========= ========= ==========
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Sunbeam Corporation ("Sunbeam" or the "Company") is a leading
designer, manufacturer and marketer of branded consumer products. The
Sunbeam/Registered trademark/ and Oster/Registered trademark/ brands have been
household names for generations, and the Company is a market share leader in
many of its product categories.
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, television shopping
channels, hardware stores, home centers, drug and grocery stores, pet supply
retailers, as well as independent distributors and the military. The Company
also sells its products to commercial end users such as hotels and other
institutions.
Approximately 80% of total Company sales are generated in the United
States. The remaining sales are generated primarily in Latin America, Mexico,
Canada and Europe.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and all majority-owned subsidiaries that it controls. All material intercompany
balances and transactions have been eliminated.
PRESENTATION OF FISCAL PERIODS
The Company's fiscal year ends on the Sunday nearest December 31. Fiscal
years 1994, 1995 and 1996 ended on January 1, 1995, December 31, 1995 and
December 29, 1996, respectively, which encompassed a 52-week period.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates. Significant accounting estimates include the establishment of the
allowance for doubtful accounts, reserves for product warranty, product
liability, excess and obsolete inventory, litigation and environmental exposures
and the estimated loss on the sale of discontinued operations.
CONCENTRATIONS OF CREDIT RISK
Substantially all of the Company's trade receivables are due from
retailers and distributors located throughout the United States, Latin America
and Canada. Approximately 35% of the Company's sales in 1996 were to its five
largest customers. The Company establishes its credit policies based on an
ongoing evaluation of its customers creditworthiness and competitive market
conditions and establishes its allowance for doubtful accounts based on an
assessment of exposures to credit losses at each balance sheet date. The Company
believes its allowance for doubtful accounts is sufficient based on the credit
exposures outstanding at December 29, 1996. However, several retailers filed for
bankruptcy protection and/or reported lower sales and earnings in 1996 and if
retail softness occurs in 1997, it is possible that additional credit losses
could be incurred.
F-7
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
INVENTORIES
Inventories are stated at the lower of cost or market with cost being
determined principally by the first-in, first-out method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. The Company provides for
depreciation using primarily the straight-line method in amounts that allocate
the cost of property, plant and equipment over the following useful lives:
Buildings and improvements ............ 20 to 40 years
Machinery, equipment and tooling ...... 3 to 15 years
Furniture and fixtures ............... 3 to 10 years
Leasehold improvements are amortized on a straight-line basis over the
shorter of the useful life of the improvement or the term of the lease.
LONG-LIVED ASSETS
During 1996, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. See Notes 2 and 3 for a
discussion of asset impairment charges as a result of the implementation of the
Company's restructuring and growth plan.
CAPITALIZED INTEREST
Interest costs for the construction of certain long-term assets are
capitalized and amortized over the related assets' estimated useful lives.
Total interest costs during 1995 and 1996 amounted to $12.7 million and $14.0
million, respectively, of which $3.3 million and $.4 million, respectively, was
capitalized into the construction cost of the long-term assets.
AMORTIZATION PERIODS
Trademarks and trade names are being amortized on a straight-line basis
over 40 years.
REVENUE RECOGNITION
The Company recognizes revenue from product sales at the time of shipment.
Net sales is comprised of gross sales less provisions for expected customer
returns, discounts, promotional allowances and co-operative advertising.
WARRANTY COSTS
The Company provides for warranty costs in amounts it estimates will be
needed to cover future warranty obligations for products sold during the year.
Estimates of warranty costs are periodically reviewed and adjusted, when
necessary, to consider actual experience.
F-8
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
ADVERTISING COSTS
Advertising costs, included in "Selling, General and Administrative
Expense," are expensed as incurred. Co-operative advertising costs are
expensed ratably over the year in relation to revenues.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of subsidiaries, other than those operating in
highly inflationary environments, are translated into U.S. dollars at year-end
exchange rates, with resulting translation gains and losses accumulated in a
separate component of shareholders' equity. Income and expense items are
converted into U.S. dollars at average rates of exchange prevailing during the
year.
For subsidiaries operating in highly inflationary environments,
specifically Venezuela, inventories and property, plant and equipment are
translated at the rate of exchange on the date the assets were acquired, while
other assets and liabilities are translated at year-end exchange rates.
Translation adjustments for those operations are included in results of
operations.
STOCK-BASED COMPENSATION PLANS
In 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION. SFAS No. 123 allows
either adoption of a fair value method for accounting for stock-based
compensation plans or continuation of accounting under Accounting Principles
Board ("APB") Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES,
and related interpretations with supplemental disclosures.
The Company has chosen to account for its stock options using the intrinsic
value based method prescribed in APB Opinion No. 25 and, accordingly, does not
recognize compensation expense for stock option grants made at an exercise price
equal to or in excess of the fair market value of the stock at the date of
grant. Pro-forma net income and earnings per share amounts as if the fair value
method had been adopted are presented in Note 7 herein. The adoption of SFAS No.
123 will not impact the Company's results of operations, financial position or
cash flows.
EARNINGS PER SHARE OF COMMON STOCK
Earnings per common share calculations are determined by dividing earnings
(loss) available to common shareholders by the weighted average number of shares
of common stock and dilutive common stock equivalents outstanding. Primary and
fully diluted earnings per share are equivalent for each of the fiscal years
presented.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to reflect discontinued
operations as described in Note 3.
2. RESTRUCTURING, IMPAIRMENT AND OTHER COSTS
On November 12, 1996, the Company announced the details of its
restructuring and growth plan for the future. The cost reduction phase of the
plan includes the consolidation of administrative
F-9
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
2. RESTRUCTURING, IMPAIRMENT AND OTHER COSTS-(CONTINUED)
functions within the Company, the rationalization of manufacturing and warehouse
facilities, the centralization of the Company's procurement function, and
reduction of the Company's product offerings and stock keeping units
("SKU's"). The Company also announced plans to divest several lines of
business which it determined are not core for Sunbeam (see Note 3).
Since the restructuring plan was announced, the Company has consolidated
six divisional and regional headquarters functions into a single worldwide
corporate headquarters in Delray Beach, Florida and outsourced certain back
office activities resulting in a 50% reduction in total back-office/
administrative headcount. Overall, the restructuring plan calls for a reduction
in the number of production facilities from 26 to 8 and warehouses from 61 to
18. The restructuring plan will result in the elimination of over 6,000
positions from the Company's workforce, including 3,300 from the disposition of
non-core business operations and the elimination of approximately 2,800 other
positions. The Company completed the major phases of the restructuring plan by
January 1997.
In conjunction with the implementation of the restructuring and growth
plan, the Company recorded a pre-tax special charge to earnings of approximately
$337.6 million in the fourth quarter of 1996. This amount is allocated as
follows in the accompanying Consolidated Statement of Operations: $154.9 million
to Restructuring, Impairment and Other Costs as further described below; $92.3
million to Cost of Goods Sold related principally to inventory write-downs from
the reduction in SKU's and costs of inventory liquidation programs; $42.5
million to Selling, General and Administrative expenses principally for
increases in environmental and litigation reserves (see Notes 12 and 13) and
other reserve categories; and the estimated pre-tax loss on the divestiture of
the Company's furniture business of approximately $47.9 million.
Amounts included in Restructuring, Impairment and Other Costs in the
accompanying Consolidated Statement of Operations include cash items such as
severance and other employee costs of $43.0 million, lease obligations and other
exit costs associated with facility closures of $12.6 million, $7.5 million of
start-up costs on back office outsourcing initiatives and other costs related to
the implementation of the restructuring and growth plan. Expenditures for the
cash restructuring items will be substantially completed in 1997. Non-cash
Restructuring, Impairment and Other Costs include $91.8 million related to asset
write-downs to net realizable value for disposals of excess facilities and
equipment and non-core product lines, write-offs of redundant computer systems
from the administrative back-office consolidations and outsourcing initiatives
and intangible, packaging and other asset write-downs related to exited product
lines and SKU reductions.
3. DISCONTINUED OPERATIONS AND OTHER ASSETS HELD FOR SALE
As part of the restructuring plan and redefinition of its core businesses,
the Company also announced the divestiture of the furniture business, by a sale
of assets. On February 10, 1997, the Company entered into an agreement to sell
the business to U.S. Industries, Inc. which was completed on March 17, 1997. In
connection with the sale of these assets (primarily inventory, property, plant
and equipment), the Company received approximately $62.1 million in cash at
closing and, in addition, expects to receive approximately $10.0 million by June
30, 1997. The Company retained accounts receivable related to the furniture
business of approximately $50.0 million as of the closing date. The final
purchase price is subject to post-closing adjustments based on the terms of the
Asset Purchase Agreement.
In connection with the furniture divestiture, the Company recorded a
provision for estimated losses to be incurred on the sale of $32.4 million, net
of applicable income tax benefits. The Company will
F-10
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
3. DISCONTINUED OPERATIONS AND OTHER ASSETS HELD FOR SALE-(CONTINUED)
finalize its accounting for the loss on disposal of the furniture business in
the first quarter of 1997 and could record an additional after-tax loss from
discontinued operations. Earnings from the discontinued furniture business were
$21.7 million in 1994, $12.9 million in 1995 and $.8 million in 1996, net of
applicable income taxes of $15.2 million, $7.9 million and $.5 million,
respectively. Revenues for the discontinued furniture business were $154.2
million in 1994, $185.6 million in 1995 and $227.5 million in 1996. These
revenues are not included in sales as reported in the accompanying Consolidated
Statement of Operations.
In addition to the furniture business divestiture, the Company also
announced its intent to sell other non-core product lines and assets as part of
its restructuring plan, including time and temperature products,
Counselor/Registered trademark/ and Borg/Registered trademark/ scales,
decorative bedding products and a textile facility. Anticipated losses to be
incurred on the disposal of these assets, which consist primarily of write-downs
of assets to net realizable value, are included in Restructuring, Impairment and
Other Costs in the Consolidated Statement of Operations as described in Note 2.
The Company completed the sale of its decorative bedding product line in
December 1996 and its time and temperature product line in March 1997. The
remaining asset divestitures are expected to be completed in the first half of
1997.
4. SHAREHOLDERS' EQUITY
The Company has 200,000,000 shares of $.01 par value common stock
authorized. At December 29, 1996 there were 9,021,837 shares of common stock
reserved for issuance upon the exercise of outstanding stock options.
In June 1995, the Company retired 7,376,395 shares of common stock held in
treasury, and such shares were returned to the status of authorized but unissued
shares. As a result, $103.7 million assigned to treasury stock has been
eliminated with a corresponding decrease to common stock, paid-in capital and
retained earnings. In 1995, the Company repurchased 905,600 shares of its common
stock at a total cost of $13.1 million.
In July 1996, the Company sold 321,786 shares of common stock for total
proceeds of approximately $4.4 million, and granted 1,100,000 shares of
restricted stock in connection with the employment of a new Chairman and Chief
Executive Officer and certain other officers of the Company. Compensation
expense attributable to the restricted stock awards is being amortized to
expense beginning in 1996 over the periods in which the restrictions lapse
(which in the case of 333,333 shares, was immediately upon the date of grant, in
the case of 666,667 shares, is equally over two years from the date of grant and
in the case of the remaining restricted shares, is equally over three years from
the dates of grant). Total compensation expense recognized for restricted stock
grants in 1996 was $7.7 million.
F-11
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
4. SHAREHOLDERS' EQUITY-(CONTINUED)
Information regarding other changes in shareholders' equity is summarized
below (in thousands):
<TABLE>
<CAPTION>
CURRENCY MINIMUM
TRANSLATION PENSION UNEARNED
ADJUSTMENTS LIABILITY COMPENSATION TOTAL
-------------- ------------ --------------- ------------------
<S> <C> <C> <C> <C>
Balance at January 2, 1994 .................. $ (1,537) $ (10,366) $ (2,140) $ (14,043)
Issuance of restricted stock ............... - - (108) (108)
Amortization of unearned compensation ...... - - 1,269 1,269
Increase in minimum pension liability
(net of tax of $357) ........................ - (561) - (561)
Translation adjustments ..................... (6,675) - - (6,675)
-------- --------- -------- ----------
Balance at January 1, 1995 .................. (8,212) (10,927) (979) (20,118)
Amortization of unearned compensation ...... - - 582 582
Increase in minimum pension liability
(net of tax of $127) ........................ - (199) - (199)
Translation adjustments ..................... (5,145) - - (5,145)
-------- --------- -------- ----------
Balance at December 31, 1995 ............... (13,357) (11,126) (397) (24,880)
Grant of restricted stock .................. - - (14,346) (14,346)
Amortization of unearned compensation ...... - - 7,707 7,707
Decrease in minimum pension liability
(net of tax of $2,672) ...................... - 4,963 - 4,963
Translation adjustments ..................... 1,246 - - 1,246
-------- --------- -------- ----------
Balance at December 29, 1996 ............... $(12,111) $ (6,163) $ (7,036) $ (25,310)
======== ========= ======== ==========
</TABLE>
5. CREDIT FACILITIES AND LONG-TERM DEBT
In June 1994, the Mississippi Business Finance Corporation ("MBFC")
issued $75 million of 7.85% Industrial Development Revenue Notes (the
"Notes") maturing serially in eleven equal annual installments beginning
June 1999 to certain institutional investors through a private placement. The
MBFC loaned the proceeds of the Notes to a subsidiary of the Company under a
non-recourse loan agreement (the "Hattiesburg Loan") restricting the use
of such funds to the acquisition, design, construction and equipping of the
Hattiesburg, Mississippi manufacturing and distribution center. The Notes are
guaranteed by the Company and the Hattiesburg Loan is secured by the Hattiesburg
facility.
In September 1996, the Company entered into a $500 million syndicated
unsecured five year revolving credit facility (the "Credit Agreement")
which replaced a previous credit facility of $500 million. The Credit Agreement
was amended in November 1996 and January 1997. Under the Credit Agreement, the
Company can borrow under a competitive bid option, or at a spread above LIBOR
(currently .50%) or at a bank base rate. In addition, the Company pays an annual
facility fee (currently .25%). The Credit Agreement contains certain financial
covenants.
The aggregate annual principal payments on long-term debt, excluding
amounts outstanding under the Credit Agreement, due in each of the years
1997-2001, are $.9 million, $.7 million, $7.7 million, $7.9 million and $7.9
million, respectively.
F-12
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
5. CREDIT FACILITIES AND LONG-TERM DEBT-(CONTINUED)
Long-term debt at the end of each fiscal year consists of the following (in
thousands):
<TABLE>
<CAPTION>
1995 1996
----------- ----------
<S> <C> <C>
Revolving credit facility, weighted average interest rate of 5.99% and
5.68% at December 31, 1995, and December 29, 1996, respectively ...... $75,000 $105,000
Hattiesburg industrial revenue bond due 2009, fixed interest rate
of 7.85% ............................................................ 75,000 75,000
Other long-term borrowings, due through 2012, weighted average
interest rate of 6.84% and 4.95%, at December 31, 1995 and
December 29, 1996, respectively .................................... 11,609 22,036
-------- ---------
$161,609 $202,036
======== =========
</TABLE>
6. FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company's financial instruments as of December
29, 1996 approximate market based upon the following methods and assumptions:
CASH AND CASH EQUIVALENTS-The carrying amount of cash and cash equivalents
is assumed to approximate fair value as cash equivalents include all highly
liquid, short-term investments with original maturities of three months or less.
SHORT AND LONG-TERM DEBT-The carrying value of the Company's various debt
outstanding as of December 29, 1996 approximates market. The fair value of the
Company's fixed rate debt is estimated using discounted cash flow analysis,
based upon the market yield of public debt securities of comparable credit
quality and maturity. The carrying value of the Company's variable rate debt is
assumed to approximate market based upon periodic adjustments of the interest
rate to the current market rate in accordance with the terms of the debt
agreements.
LETTERS OF CREDIT-The Company utilizes stand-by letters of credit to back
certain financing instruments and insurance policies and commercial letters of
credit guaranteeing various international trade activities. The contract amounts
of the letters of credit approximate their fair value.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company selectively uses derivatives to manage interest rate and
foreign exchange exposures that arise in the normal course of business. The use
of derivatives did not have a material impact on the Company's results of
operations in either 1995 and 1996. No derivatives are entered into for trading
or speculative purposes. Interest rate swaps are used to achieve or maintain a
desired mix of fixed and floating rate debt in the Company's debt portfolio.
Foreign exchange option and forward contracts are used to hedge a portion of the
Company's underlying exposures denominated in foreign currency. Although the
market value of derivative contracts at any single point in time will vary with
changes in interest and/or foreign exchange rates, the difference between the
carrying value and fair value of such contracts at December 31, 1995 and
December 29, 1996 is not considered to be material, either individually or in
the aggregate. The Company enters into derivative contracts with counterparties
that it believes to be creditworthy. The Company does not enter into any
leveraged derivative transactions.
F-13
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
6. FINANCIAL INSTRUMENTS-(CONTINUED)
As of December 29, 1996, $10.0 million of the Company's outstanding
floating rate debt was subject to interest rate swap agreements. Under the terms
of the contract, the Company receives a floating interest rate and pays a fixed
interest rate. The differential to be paid or received is accrued as interest
rates change and recognized as an adjustment to interest expense.
In order to mitigate the transaction exposures that may arise from changes
in foreign exchange rates, the Company purchases foreign currency option
contracts to hedge anticipated transactions. The option contracts typically
expire within one year. Any realized gains on options are not deferred but are
recognized in income in the period when the hedged exposure is recognized. The
Company purchased options with a notional value of $11.7 million in 1995 and
$18.2 million in 1996. Options with notional value of $3.2 million and $25.4
million expired in 1995 and 1996, respectively. The Company held purchased
option contracts with a notional value of $8.6 million and $1.4 million at
December 31, 1995 and December 29, 1996, respectively.
The Company has intercompany balances that are denominated in foreign
currency. A portion of these balances are hedged using forward exchange
contracts, and gains and losses on these contracts are included in the
accompanying Consolidated Statement of Operations. The Company had forward
exchange contracts with a notional value of $2.2 million December 31, 1995 and
none outstanding at December 29, 1996.
7. EMPLOYEE STOCK OPTIONS AND AWARDS
At December 29, 1996, the Company had one stock-based compensation plan,
the Amended and Restated Sunbeam Corporation Equity Team Plan (the
"Plan"). Under the Plan, all domestic employees are eligible for grants of
options to purchase up to an aggregate of 11,300,000 shares of the Company's
common stock at an exercise price equal to or in excess of the fair market value
of the stock on the date of grant. The term of each option generally commences
on the date of grant and expires on the tenth anniversary of the date of grant.
Options generally become exercisable over a three to five year period.
The Plan also provides for the grant of restricted stock awards of up to
200,000 shares, in the aggregate, to selected executives, employees and
non-employee directors. Restrictions lapse ratably over a three to seven year
period from the date of grant. In 1994, 5,000 shares of restricted stock were
granted under the Plan and in 1996, 25,574 shares were granted under the Plan.
In July 1996, options to purchase an aggregate of 3,000,000 shares were
granted outside of the Plan (of which 2,750,000 options are outstanding at
December 29, 1996) at exercise prices equal to the fair market value of the
Company's common stock on the dates of grant in connection with the employment
of a new Chairman and Chief Executive Officer and certain other executive
officers of the Company. These outstanding options have terms of ten years and,
with respect to options for 2,500,000 shares, are excercisable in three annual
installments beginning July 17, 1996. Options for the remaining 250,000 shares
still outstanding are excercisable in three annual installments beginning on the
first anniversary of the July 22, 1996 grant date. See Note 4 for a discussion
of restricted stock awards made outside of the Plan.
The Company applies APB Opinion No. 25 and related Interpretations in
accounting for its stock options. Accordingly, no compensation cost has been
recognized for outstanding stock options. Had
F-14
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
7. EMPLOYEE STOCK OPTIONS AND AWARDS-(CONTINUED)
compensation cost for the Company's outstanding stock options been determined
based on the fair value at the grant dates for those options consistent with
SFAS No. 123, the Company's net earnings (loss) and earnings (loss) per share
would have been reduced to the pro forma amounts indicated below (in thousands
except per share amounts):
1995 1996
---------- ------------
Net earnings (loss)
As reported ............ $50,511 $ (228,262)
Pro forma ............ $47,377 $ (248,890)
Earnings (loss) per share
As reported ............ $ 0.61 $ (2.75)
Pro forma ............ $ 0.57 $ (3.00)
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1995 and 1996: expected volatility of 36.78%, a
risk-free interest rate of 6.34 %, a dividend yield of .1%; and an expected life
of 5 years.
A summary of the status of the Company's outstanding stock options as of
December 31, 1995 and December 29, 1996, and changes during the years ending on
those dates is presented below:
<TABLE>
<CAPTION>
1995 1996
------------------------------------- --------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
--------------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C>
PLAN OPTIONS
Outstanding at beginning of year ...... 5,230,221 $14.85 4,610,387 $ 16.67
Granted .............................. 1,928,500 18.61 4,061,450 20.39
Exercised .............................. (1,142,348) 6.32 (622,994) 7.51
Canceled .............................. (1,405,986) 21.06 (1,777,006) 18.64
----------- -----------
Outstanding at end of year ............ 4,610,387 16.67 6,271,837 19.43
=========== ===========
Options exercisable at year-end ...... 1,539,836 $11.47 1,655,450 $ 16.13
Weighted-average fair value of
options granted during the year ....... $ 8.28 $ 14.76
OPTIONS OUTSIDE PLAN
Outstanding at beginning of year ...... 750,000 $16.70 692,500 $ 16.70
Granted .............................. - - 3,000,000 12.65
Exercised .............................. (57,500) 16.70 - -
Canceled .............................. - - (942,500) 16.27
----------- -----------
Outstanding at end of year ............ 692,500 16.70 2,750,000 12.43
=========== ===========
Options exercisable at year-end ...... 505,000 $16.70 833,333 $ 12.25
Weighted-average fair value of
options granted during the year ....... - $ 5.99
</TABLE>
F-15
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
7. EMPLOYEE STOCK OPTIONS AND AWARDS-(CONTINUED)
The following table summarizes information about stock options outstanding
at December 29, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------------------ -----------------------------------
NUMBER WEIGHTED-AVERAGE NUMBER
RANGE OF OUTSTANDING REMAINING WEIGHTED-AVERAGE EXERCISABLE WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/29/96 CONTRACTUAL LIFE EXERCISE PRICE AT 12/29/96 EXERCISE PRICE
- --------------- -------------- ------------------- ------------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
$5.00 to $14.99 ...... 1,378,417 7.6 years $11.61 596,316 $7.80
$15.00 to $19.99 ...... 824,037 8.1 years 16.50 245,240 17.31
$20.00 to $24.99 ...... 3,657,583 8.9 years 22.24 811,894 21.86
Over $25.00 ......... 411,800 10.0 years 26.49 2,000 25.16
----------- ----------
$5.00 to $27.38 ...... 6,271,837 8.6 years $19.43 1,655,450 $16.13
=========== ==========
</TABLE>
8. EMPLOYEE BENEFIT PLANS
RETIREMENT PLANS
The Company sponsors several defined benefit pension plans covering
eligible U.S. salaried and hourly employees. Benefit accruals under such plans
covering all U.S. salaried employees were frozen, effective December 31, 1990.
Therefore no credit in the pension formula is given for service or compensation
after that date. However, employees continue to earn service toward vesting in
their interest in the frozen plans as of December 31, 1990. Employees of
non-U.S. subsidiaries generally receive retirement benefits from Company
sponsored plans or from statutory plans administered by governmental agencies in
their countries.
The funded status of the Company's U.S. defined benefit pension plans at
the end of each fiscal year follows (in thousands):
<TABLE>
<CAPTION>
1995 1996
----------- ----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested ......................................................... $132,765 $122,379
Non-vested ...................................................... 558 375
-------- --------
Accumulated benefit obligations ................................. 133,323 122,754
Plan assets at fair value ....................................... 122,162 116,522
-------- --------
Accumulated benefit obligations in excess of plan assets ......... 11,161 6,232
Unrecognized net loss ............................................. (17,891) (19,537)
Additional minimum liability .................................... 17,891 10,255
-------- --------
Pension liability (prepaid) recognized on the balance sheet ...... $ 11,161 $ (3,050)
======== ========
</TABLE>
F-16
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
8. EMPLOYEE BENEFIT PLANS-(CONTINUED)
Net periodic pension cost for the Company's U.S. defined benefit pension
plans for each fiscal year includes the following components (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------------ ------------ ---------
<S> <C> <C> <C>
Service cost-benefits earned during the period ...... $ 396 $ 331 $ 411
Interest cost-accumulated benefit obligations ...... 10,325 10,620 9,071
Actual return on plan assets ........................ 3,581 (20,985) (816)
Net amortization and deferral ........................ (13,416) 11,332 (7,518)
-------- -------- -------
Net periodic pension cost ........................... $ 886 $ 1,298 $ 1,148
======== ======== =======
Assumptions:
Discount rate ....................................... 8.75% 7.25% 7.75%
Long-term rate of return on assets .................. 9.00% 9.50% 7.75%
</TABLE>
The Company funds its pension plans in amounts consistent with applicable
laws and regulations. Pension plan assets include corporate and U.S. government
bonds and cash equivalents.
The assets, liabilities and pension costs of the Company's non-U.S.
defined benefit retirement plans are not material to the consolidated financial
statements.
OTHER POSTRETIREMENT BENEFITS
The Company provides health care and life insurance benefits to certain
former employees who retired from the Company prior to March 31, 1991. The
Company has consistently followed a policy of funding the cost of postretirement
health care and life insurance benefits on a pay-as-you-go basis.
Effective July 1, 1993, various amendments to the Company's postretirement
benefits program were adopted. The amendments included increases in retiree
contribution levels for certain retiree groups and the discontinuation of
medical and/or life insurance coverage for certain retirees who qualify for
Medicare. These amendments resulted in an unrecognized reduction in prior
service cost which is being amortized over future years.
The following table presents the funded status reconciled with the amounts
recognized in the Company's Consolidated Balance Sheet at the end of each
fiscal year (in thousands):
<TABLE>
<CAPTION>
1995 1996
---------- ---------
<S> <C> <C>
Accumulated postretirement benefit obligation ......... $15,127 $14,555
Plan assets .......................................... - -
-------- --------
Accumulated postretirement benefit obligation in excess
of plan assets ....................................... 15,127 14,555
Unrecognized reduction in prior service cost ......... 21,820 18,877
Unrecognized net gain ................................. 95 95
-------- --------
Accrued postretirement benefit obligation recognized
on the balance sheet ................................. $37,042 $33,527
======== ========
</TABLE>
F-17
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
8. EMPLOYEE BENEFIT PLANS-(CONTINUED)
Net periodic postretirement benefit cost for each fiscal year includes the
following components (in thousands):
<TABLE>
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
Interest cost ....................................... $ 1,353 $ 1,042
Amortization of reduction in prior service cost ...... (2,943) (2,943)
------- -------
Net periodic postretirement benefit credit ............ $(1,590) $(1,901)
======= =======
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation is 9.5% for 1997 and is assumed to decrease
gradually to 6% by 2003 and remain at that level thereafter. A one percentage
point increase in the assumed health care cost trend rate for each year would
increase the accumulated postretirement benefit obligation as of December 29,
1996 and the net periodic postretirement benefit cost for 1996 by approximately
8%. The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% at December 31, 1995 and December
29, 1996.
DEFINED CONTRIBUTION PLANS
The Company sponsors defined contribution profit sharing plans covering
eligible employees. Company contributions to these plans include employer
matching contributions as well as discretionary profit sharing contributions
depending on both the performance of the Company, in an amount up to 10% of
eligible compensation. The Company provided $5.8 million in 1994, $4.1 million
in 1995 and $1.7 million in 1996 for its defined contribution plans.
F-18
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
9. SUPPLEMENTARY FINANCIAL STATEMENT DATA
Supplementary Balance Sheet data at the end of each fiscal year is as
follows (in thousands):
<TABLE>
<CAPTION>
1995 1996
------------ -----------
<S> <C> <C>
Receivables:
Trade .......................................... $ 224,201 $ 227,043
Sundry .......................................... 4,320 2,412
--------- ---------
228,521 229,455
Valuations allowances ........................... (12,326) (16,017)
--------- ---------
$ 216,195 $ 213,438
========= =========
Inventories:
Finished goods ................................. $ 120,018 $ 85,213
Work in process ................................. 25,609 25,167
Raw materials and supplies ..................... 63,479 52,272
--------- ---------
$ 209,106 $ 162,252
========= =========
Property, plant and equipment:
Land .......................................... $ 2,783 $ 2,524
Buildings and improvements ..................... 90,898 95,619
Machinery and equipment ........................ 293,985 258,199
--------- ---------
387,666 356,342
Accumulated depreciation and amortization ...... (100,586) (136,254)
--------- ---------
$ 287,080 $ 220,088
========= =========
Trademarks and trade names:
Gross .......................................... $ 245,307 $ 245,307
Accumulated amortization ........................ (31,301) (45,045)
--------- ---------
$ 214,006 $ 200,262
========= =========
</TABLE>
Inventory and property, plant and equipment exclude assets of discontinued
operations and other assets held for sale.
<TABLE>
<CAPTION>
1995 1996
----------- ----------
<S> <C> <C>
Other current liabilities:
Payrolls, commissions and employee benefits ...... $ 23,550 $18,536
Advertising and sales promotion .................. 16,543 21,794
Product warranty ................................. 15,592 23,883
Other ............................................. 24,519 35,296
--------- ---------
$ 80,204 $ 99,509
========= =========
Non-operating liabilities:
Accrued postretirement benefit obligation ......... $ 37,042 $ 33,527
Accrued pension ................................. 11,161 -
Other ............................................. 31,964 54,548
--------- ---------
$ 80,167 $ 88,075
========= =========
</TABLE>
F-19
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
9. SUPPLEMENTARY FINANCIAL STATEMENT DATA-(CONTINUED)
Supplementary Statements of Operations and Cash Flows data for each fiscal
year are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Other (income) expense, net:
Interest income ........................ $ (3,911) $ (3,657) $ (1,255)
Other .................................... 3,199 3,830 2,893
-------- -------- --------
$ (712) $ 173 $ 1,638
======== ======== ========
Advertising and sales promotion ......... $ 56,104 $ 62,299 $ 78,733
======== ======== ========
Cash paid (received) during the period for:
Interest (net of capitalization) ......... $ 7,461 $ 12,555 $ 13,397
======== ======== ========
Income taxes (net of refunds) ............ $ 23,595 $ 13,936 $ (540)
======== ======== ========
</TABLE>
Non-Cash Transactions:
In connection with the acquisition of the outdoor resin furniture business
from Rubbermaid Incorporated in 1994, the Company assumed certain long-term
debt in the amount of $5 million.
In connection with a warehouse expansion related to the electric blanket
business, the Company entered into a $5 million capital lease obligation in
1996.
10. INCOME TAXES
Earnings (loss) from continuing operations before income taxes for each
fiscal year is summarized as follows (in thousands):
1994 1995 1996
----------- ---------- ----------
Domestic ...... $134,720 $54,646 $(285,011)
Foreign ...... 10,074 5,989 (17,550)
--------- -------- ----------
$144,794 $60,635 $(302,561)
========= ======== ==========
F-20
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
10. INCOME TAXES-(CONTINUED)
Income tax provisions include current and deferred taxes (tax benefits) for
each fiscal year as follows (in thousands):
1994 1995 1996
---------- ------------ -------------
Current:
Federal ...... $28,769 $ (1,329) $ (28,567)
State ......... 3,289 (1,402) (202)
Foreign ...... 1,169 626 707
-------- -------- ---------
33,227 (2,105) (28,062)
-------- -------- ---------
Deferred:
Federal ...... 21,850 23,127 (65,833)
State ......... 1,901 1,962 (11,050)
Foreign ...... 2,532 57 (945)
-------- -------- ---------
26,283 25,146 (77,828)
-------- -------- ---------
$59,510 $ 23,041 $(105,890)
======== ======== =========
A reconciliation of income tax expense with the expected income tax
computed by applying the federal statutory income tax rate to earnings (loss)
from continuing operations before income taxes for each fiscal year is as
follows (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Income tax computed at the federal statutory
tax rate ................................................ $50,678 $21,222 $ (105,896)
State and local taxes (net of federal benefit) ............ 3,373 364 (7,313)
Foreign earnings and dividends taxed at other rates ...... 2,011 419 5,967
Non-deductible expenses ................................. 2,062 872 3,373
Other, net ................................................ 1,386 164 (2,021)
-------- -------- -----------
$59,510 $23,041 $ (105,890)
======== ======== ===========
</TABLE>
F-21
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
10. INCOME TAXES-(CONTINUED)
The major components of the Company's net current deferred tax asset and
net long-term deferred tax liability at the end of each fiscal year are as
follows (in thousands):
<TABLE>
<CAPTION>
1995 1996
----------------------------------- --------------------------------
CURRENT LONG-TERM CURRENT LONG-TERM
DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX
ASSET LIABILITY ASSET LIABILITY
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Operating reserves and accruals ...... $16,389 $ 23,562 $60,307 $ 28,447
Book/tax basis difference in
trademarks and trade names ......... - (73,172) - (72,587)
Book/tax basis difference in
other assets ........................ 2,036 (27,957) 19,276 (13,406)
Reserves for non-operating assets
and non-operating liabilities ...... 3,616 25,484 8,905 24,043
Other .............................. 4,292 (24,849) 5,201 (18,805)
-------- -------- -------- --------
$26,333 $(76,932) $93,689 $(52,308)
======== ======== ======== ========
</TABLE>
As of December 29, 1996, the Company is in a net deferred tax asset
position of approximately $41.4 million. Management believes that it is more
likely than not that the net deferred tax asset will be realized based on a
combination of refund of taxes paid in prior years and available in the
carryback period, reversals of existing taxable temporary differences and the
generation of future taxable income. Deferred U.S. income taxes are not provided
on the undistributed earnings of foreign subsidiaries, since such earnings are
considered to be permanently reinvested. At December 29, 1996, the cumulative
amount of undistributed earnings of foreign subsidiaries on which U.S. federal
income taxes have not been provided was approximately $25.7 million. It is not
practicable to calculate the amount of unrecognized deferred U.S. income tax
liability on such undistributed foreign earnings because of the complexities
associated with its hypothetical calculation.
11. CUSTOMER AND GEOGRAPHIC DATA
Classes of products which contributed more than 10% to consolidated sales
were outdoor home use durable products and indoor home use durable products.
Sales of outdoor home use durable products amounted to $294.2 million in 1994,
$269.0 million in 1995 and $256.9 million in 1996. Sales of indoor home use
durable products were $698.8 million in 1994, $688.3 million in 1995 and $680.7
million in 1996.
The Company's largest customer accounted for approximately 17% of
consolidated sales in 1994, 19% in 1995 and 19% in 1996.
F-22
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
11. CUSTOMER AND GEOGRAPHIC DATA-(CONTINUED)
The Company's operations are conducted in the United States and
international markets, principally in Latin America, Canada and Mexico.
Information about the Company's domestic and international operations for each
fiscal year is as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Net sales:
Domestic ....................................... $ 852,796 $ 829,423 $ 800,969
International (includes U.S. export sales) ...... 191,451 187,460 183,267
--------- --------- ---------
$1,044,247 $1,016,883 $ 984,236
========= ========= =========
Operating earnings (loss):
Domestic .......................................... $ 148,254 $ 70,423 $(246,577)
International (includes U.S. export sales) ...... 29,336 24,301 (5,022)
--------- --------- ---------
177,590 94,724 (251,599)
Unallocated expenses and eliminations ............ (26,534) (24,479) (35,736)
--------- --------- ---------
$ 151,056 $ 70,245 $(287,335)
========= ========= =========
Identifiable assets:
Domestic .......................................... $ 969,964 $1,040,591 $ 781,788
International .................................... 68,301 67,563 73,430
--------- --------- ---------
1,038,265 1,108,154 855,218
Corporate assets ................................. 74,664 50,530 217,491
--------- --------- ---------
$1,112,929 $1,158,684 $1,072,709
========= ========= =========
</TABLE>
Unallocated expenses and eliminations include corporate administrative
expenses, intangible amortization, certain pension and postretirement benefit
costs or credits, and eliminations of intercompany income and expense.
Identifiable assets are those used directly in the operations, and exclude
non-operating, corporate and deferred tax assets. Sales between geographic areas
are not material and are made primarily at cost plus a markup.
12. ENVIRONMENTAL MATTERS
The Company's operations, like those of comparable businesses, are subject
to certain federal, state, local and foreign environmental laws and regulations.
As of December 29, 1996, the Company had been identified as a potentially
responsible party ("PRP") in connection with seven sites subject to the
federal Superfund law and two sites subject to state Superfund laws comparable
to the federal law (collectively the "Environmental Sites"), exclusive of
sites at which the Company has been designated (or expects to be designated) as
a DE MINIMIS (less than 1%) participant. Substantially all of these sites relate
to divested operations of the Company.
The Company currently is engaged in active remediation activities at seven
sites, four of which are among the Environmental Sites referred to above, and
three of which have not been designated as Superfund sites under federal or
state law. In addition, the Company is engaged in environmental remediation
activities at two sites in Newburgh Heights, Ohio, where a subsidiary formerly
conducted operations. The Company has been actively cooperating with the United
States Nuclear Regulatory Commission and state regulatory authorities in
developing a plan for remediation of those sites.
F-23
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
12. ENVIRONMENTAL MATTERS-(CONTINUED)
Remediation at one of the two sites is essentially complete and remediation of
the other site is expected to be substantially complete during 1997.
The Company has established reserves, in accordance with SFAS No. 5,
ACCOUNTING FOR CONTINGENCIES, to cover the anticipated probable costs of
remediation, based upon periodic reviews of all sites for which the Company has,
or may have remediation responsibility. As of December 29, 1996, the amount of
such reserves was approximately 5% of the Company's total liabilities as set
forth in the consolidated financial statements. Liability under the Superfund
law is joint and several and is imposed on a strict basis, without regard to
degree of negligence or culpability. As a result, the Company recognizes its
responsibility to determine whether other PRP's at a Superfund site are
financially capable of paying their respective shares of the ultimate cost of
remediation of the site. Whenever the Company has determined that a particular
PRP is not financially responsible, it has assumed for purposes of establishing
reserve amounts that such PRP will not pay its respective share of the costs of
remediation. To minimize the Company's potential liability with respect to the
Environmental Sites, the Company has actively participated in steering
committees and other groups of PRP's established with respect to such sites. The
Company continues to pursue the recovery of some environmental remediation costs
from certain of its liability insurance carriers; however, such potential
recoveries have not been offset against potential liabilities and have not been
considered in determining the Company's environmental reserves.
Due to uncertainty over remedial measures to be adopted at some sites, the
possibility of changes in environmental laws and regulations and the fact that
joint and several liability with the right of contribution is possible at
federal and state Superfund sites, the Company's ultimate future liability with
respect to sites at which remediation has not been completed may vary from the
amounts reserved as of December 29, 1996. In connection with the Company's
restructuring plan, in the fourth quarter of 1996 a comprehensive review of all
environmental exposures was performed and the Company accelerated its strategy
for the resolution and settlement of certain environmental claims. As a result,
the Company recorded additional environmental reserves of approximately $9.0
million. The Company believes, based on existing information, that the costs of
completing environmental remediation of all sites for which the Company has a
remediation responsibility have been adequately reserved, and that the ultimate
resolution of these matters will not have a material adverse effect upon the
Company's financial condition.
13. OTHER COMMITMENTS AND CONTINGENCIES
LEASES
The Company rents certain facilities and equipment under operating leases.
Rental expense for operating leases amounted to $8.8 million for 1994, $8.6
million for 1995 and $8.0 million for 1996. The minimum future rentals due under
noncancelable operating leases as of December 29, 1996 aggregated $11.9 million.
The amounts payable in each of the years 1997-2001 and thereafter are $1.4
million, $1.4 million, $1.3 million, $1.3 million, $1.3 million and $5.2
million, respectively.
CERTAIN DEBT OBLIGATIONS
Responsibility for servicing certain debt obligations of the Company's
predecessor were assumed by third parties in connection with the acquisition of
former businesses, although the Company's
F-24
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
13. OTHER COMMITMENTS AND CONTINGENCIES-(CONTINUED)
predecessor remained the primary obligor in accordance with the respective loan
documents. Such obligations, which amounted to approximately $20.6 million at
December 29, 1996, and the corresponding receivables from the third parties, are
not included in the consolidated balance sheets since these transactions
occurred prior to the issuance of SFAS No. 76, EXTINGUISHMENT OF DEBT.
Management believes that the third parties will continue to meet their
obligations pursuant to the assumption agreements.
Letters of credit aggregating $29.2 million were outstanding as of December
29, 1996.
LITIGATION
The Company is involved in various lawsuits arising from time to time in
the ordinary course of business and related to divested operations of the
Company. The Company has established reserves, in accordance with SFAS No. 5,
ACCOUNTING FOR CONTINGENCIES, to cover the anticipated probable costs of
litigation matters, based upon periodic reviews of all cases. In the fourth
quarter of 1996, the Company increased litigation reserves by approximately
$17.7 million based on adverse developments in the status of certain claims,
primarily related to divested operations of the Company. The Company believes,
based on existing information, that anticipated probable costs of litigation
matters have been adequately reserved, and that the ultimate resolution of these
matters will not have a material adverse effect upon the Company's financial
condition.
PRODUCT LIABILITY MATTERS
The Company is party to various personal injury and property damage
lawsuits relating to its products and incidental to its business. Annually, the
Company sets its product liability insurance program based on the Company's
current and historical claims experience and the availability and cost of
insurance. The Company's program for 1996 was comprised of a self-insurance
retention of $1 million per occurrence.
Cumulative amounts estimated to be payable by the Company with respect to
pending and potential claims for all years in which the Company is liable under
its self-insurance retention have been accrued as liabilities. Such accrued
liabilities are necessarily based on estimates (which include actuarial
determinations made by independent actuarial consultants as to liability
exposure, taking into account prior experience, numbers of claims and other
relevant factors); thus, the Company's ultimate liability may exceed or be less
than the amounts accrued. The methods of making such estimates and establishing
the resulting liability are reviewed continually and any adjustments resulting
therefrom are reflected in current operating results.
Historically, product liability awards have rarely exceeded the Company's
individual per occurrence self-insured retention. There can be no assurance,
however, that the Company's future product liability experience will be
consistent with its past experience. Based on existing information, the Company
believes that the ultimate conclusion of the various pending product liability
claims and lawsuits of the Company, individually or in the aggregate, will not
have a materially adverse effect on the financial position or results of
operations of the Company.
F-25
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
14. UNAUDITED QUARTERLY FINANCIAL DATA
FISCAL 1996(a)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
---------- ---------- ---------- ------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales ....................................... $229.7 $253.9 $231.8 $ 268.8
Gross profit (loss) .............................. 48.1 47.2 28.8 (40.4)
Operating earnings (loss) ........................ 15.5 9.2 (20.7) (291.3)(c)
Earnings (loss) from continuing operations ...... 6.7 2.8 (15.8) (190.4)
Earnings (loss) per share from continuing
operations .................................... .08 .03 (.19) (2.29)
Earnings (loss) from discontinued operations,
net of taxes .................................... 10.7 4.4 (2.3) (11.9)
Estimated loss on sale of discontinued operations,
net of taxes .................................... - - - (32.4)
Net earnings (loss) .............................. 17.4 7.2 (18.1) (234.8)
Net earnings (loss) per share(b) ............... .21 .09 (.22) (2.83)
</TABLE>
<TABLE>
<CAPTION>
FISCAL 1995(a)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
---------- ---------- ---------- ------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales ....................................... $244.6 $241.9 $246.3 $284.1
Gross profit .................................... 58.9 49.3 53.6 46.0
Operating earnings .............................. 32.3 15.1 19.1 3.7 (d)
Earnings from continuing operations ............ 17.9 8.1 9.9 1.7
Earnings per share from continuing operations ... .22 .10 .12 .01
Earnings (loss) from discontinued operations,
net of taxes .................................... 12.1 3.3 (0.9) (1.6)
Net earnings .................................... 30.0 11.4 9.0 0.1
Net earnings per share(b) ........................ .36 .14 .11 --
<FN>
- ----------------
(a) Each quarter consists of a 13-week period.
(b) Primary and fully diluted earnings per share amounts are equivalent.
(c) Refer to Note 2 and 3 regarding the Company's 1996 restructuring and growth
plan.
(d) Operating earnings for the Fourth Quarter of 1995 include charges related to
the Company's inventory reduction initiatives which resulted in approximately
$12.0 million of excess capacity costs attibutable to lower production levels.
</FN>
</TABLE>
F-26
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEARS 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ----------- ---------- ---------- ---------------- ------------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts and cash discounts:
$ (233)(a)
Fiscal year ended 19,911 (b)
December 29, 1996 .............................. $12,326 $23,369 - (c) $16,017
======== ======== =============== ========
$ 715 (a)
Fiscal year ended 6,988 (b)
December 31, 1995 .............................. $ 9,416 $10,651 38 (c) $12,326
======== ======== =============== ========
$ 700 (a)
Fiscal year ended 3,487 (b)
January 1, 1995 ................................. $10,795 $ 2,996 188 (c) $ 9,416
======== ======== =============== ========
<FN>
- ----------------
Notes: (a) Reclassified to accrued liabilities for customer deductions.
(b) Accounts written off as uncollectible.
(c) Foreign currency translation adjustment.
</FN>
</TABLE>
F-27
EXHIBIT 2.a
ASSET PURCHASE AGREEMENT
among
SUNBEAM PRODUCTS, INC.
SUNBEAM FURNITURE COMPANY
OP II, INC.
and
JACUZZI OUTDOOR PRODUCTS, INC.
And Joined In By
SUNBEAM CORPORATION
and
U.S. INDUSTRIES, INC.
Dated February 10, 1997
<PAGE>
<TABLE>
TABLE OF CONTENTS
Page
<C> <C>
1. Purchase and Sale of Assets.......................................................... 2
2. Excluded Liabilities................................................................. 6
3. Assumed Liabilities.................................................................. 6
4. Closing, Purchase Price, Adjustment, Etc. ........................................... 7
A. Closing........................................................................ 7
B. Purchase Price; Allocation..................................................... 8
C. Payment of Estimated Purchase Price to the Sunbeam
Transferors on Date of Closing................................................. 8
D. Payment of Purchase Price...................................................... 9
E. Determination of Purchase Price................................................ 9
5. Representations and Warranties of the Sunbeam Transferors............................ 11
A. Corporate Standing............................................................. 11
B. Power and Authority of the Sunbeam Transferors;
Authorization.................................................................. 11
C. Binding Effect................................................................. 12
D. No Conflict.................................................................... 12
E. Consents....................................................................... 12
F. Financial Information.......................................................... 12
G. Ordinary Course................................................................ 13
H. Taxes.......................................................................... 13
I. Governmental Matters........................................................... 14
J. Title and Survey Matters....................................................... 14
L. Legal Proceedings.............................................................. 15
M. Licenses and Permits; Compliance with Laws..................................... 15
N. Collective Bargaining Agreements; Labor Con-
troversies; Etc................................................................ 16
O. Contracts...................................................................... 17
P. Employee Benefit Plans......................................................... 18
Q. Intellectual Property.......................................................... 18
R. Environmental Matters.......................................................... 18
S. IRB Agreements................................................................. 20
T. Licenses of Intangible Personal Property....................................... 21
U. Brokers and Finders' Fees...................................................... 21
V. Entire Business; Condition of Assets........................................... 21
W. Knowledge...................................................................... 22
X. No Warranties.................................................................. 22
i
<PAGE>
Page
6. Representations and Warranties of Buyer.............................................. 22
A. Corporate Standing............................................................. 22
B. Power and Authority of Buyer; Authorization.................................... 22
C. Binding Effect................................................................. 23
D. No Conflict.................................................................... 23
E. Brokers' and Finders' Fees..................................................... 23
F. No Warranties.................................................................. 23
7. Matters Prior to Closing............................................................. 24
A. Ancillary Agreements........................................................... 24
B. Obligations of Seller Prior to Closing......................................... 25
C. Obligations of Buyer Prior to Closing.......................................... 28
D. Conditions Precedent to Obligations of Buyer................................... 28
E. Conditions Precedent to Obligations of the Sunbeam
Transferors.................................................................... 30
8. Document Deliveries.................................................................. 31
A. Deliveries of the Sunbeam Transferors.......................................... 31
B. Buyer's Deliveries............................................................. 32
9. Tax Returns; Bulk Transfer Laws...................................................... 32
10. Survival of Representations and Warranties........................................... 33
11. Indemnification...................................................................... 33
A. Remedies....................................................................... 33
B. Third-Party Claims............................................................. 36
C. Exclusivity.................................................................... 37
D. Limitations on Indemnity....................................................... 37
E. ERISA Indemnification.......................................................... 38
12. Public Announcements................................................................. 39
13. Prorations and Adjustments........................................................... 40
A. Expenses....................................................................... 40
B. Time of Prorations and Adjustments............................................. 40
14. Records; Access to Information....................................................... 40
15. Notices.............................................................................. 42
16. Third Party Rights................................................................... 43
17. Parties in Interest; Assignment...................................................... 43
18. Construction; Governing Law.......................................................... 43
19. Entire Agreement; Amendment and Waiver............................................... 43
ii
<PAGE>
Page
20. Severability......................................................................... 44
21. Counterparts......................................................................... 44
22. Expenses............................................................................. 44
23. Further Assurances................................................................... 44
24. Schedules............................................................................ 44
25. Guaranty by Sunbeam.................................................................. 45
26. Guaranty by USI...................................................................... 45
27. Post-Closing Matters................................................................. 46
A. Employment..................................................................... 46
B. Vacations, Sick Days and Holidays.............................................. 47
C. No Third Party Beneficiaries................................................... 48
D. Certain Tax Matters............................................................ 48
E. Accounts; Product Returns...................................................... 49
F. Confidentiality and No-Hire.................................................... 51
G. Non-Competition................................................................ 51
H. Product Marking; Burden of Proof............................................... 53
I. Sunbeam Guaranties............................................................. 53
28. Termination.......................................................................... 53
A. Terms of Termination........................................................... 53
B. Effect of Termination.......................................................... 54
</TABLE>
iii
<PAGE>
Exhibits
Exhibit A -- Transition Services Agreement Term Sheet
Exhibit B -- Manufacturing Services Agreement Term Sheet
Exhibit C -- Form of Opinion of General Counsel of Sunbeam
Exhibit D -- Form of Opinion of General Counsel of USI
iv
<PAGE>
List of Schedules
ASSETS:
- -------
Schedule 1.A Permits
Schedule 1.C(1) Assumed Contracts
Schedule 1.C(2) IRB Agreements
Schedule 1.E Warranties
Schedule 1.F Intellectual Property
Schedule 1.G Leased Premises
Schedule 1.H Real Property
EXCLUDED ASSETS:
- ----------------
Schedule 1.M(1) Computer Hardware, Software, Etc.
Schedule 1.M(4) Intellectual Property
Schedule 1.M(12) Assets Utilized in Other Businesses
Schedule 1.M(13) Other Assets
REPRESENTATIONS AND WARRANTIES OF SELLERS:
- ------------------------------------------
Schedule 5.E Consents
Schedule 5.F(1) Assets and Assumed Liabilities
Schedule 5.F(2) Accounting Principles
Schedule 5.G Ordinary Course
Schedule 5.H(1) Taxes
Schedule 5.I Governmental Matters
Schedule 5.L Legal Proceedings
Schedule 5.M(1) Licenses and Permits
Schedule 5.M(2) Compliance with Laws
Schedule 5.N(1) Collective Bargaining Agreements
Schedule 5.N(2) Labor Controversies (strikes, work
stoppages, etc.)
Schedule 5.N(3) Labor Controversies (complaints with
governmental authorities, etc.)
Schedule 5.N(5) Labor Controversies (mass layoffs or
plant closings)
Schedule 5.O(1) Omitted Material Assumed Contracts
Schedule 5.O(2) Defaults on Material Contracts
Schedule 5.P Employee Benefit Plans
Schedule 5.Q(1) Intellectual Property Claims
Schedule 5.Q(2) Maintenance of Intellectual Property
Schedule 5.R Environmental Matters Disclosure
Schedule
Schedule 5.T Licenses of Intangible Personal
Property
Schedule 5.V(1) Retained Material Assets
Schedule 5.V(2) Outsourced Services
Schedule 5.W Individuals Charged with "Knowledge"
v
<PAGE>
MATTERS PRIOR TO CLOSING:
- -------------------------
Schedule 7.B(1)(e) Compensation and Incentive Arrangements
Schedule 7.B(1)(f) Employee Benefit Plans
Schedule 7.D(5) Assignments of Assumed Contracts
DOCUMENT DELIVERIES:
- --------------------
Schedule 14.A Record Retention Policy
POST-CLOSING MATTERS:
- ---------------------
Schedule 27.A(1) Employment
Schedule 27.A(2) Key Employees
Schedule 27.E(4) Seller's Promotional Programs
Schedule 27.E(7) Seller's Warranty Return Policies
Schedule 27.F Employees of Buyer, No Hire
Schedule 27.I Guaranty Arrangements
vi
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT") is made February 10,
1997, by and among SUNBEAM PRODUCTS, INC., a Delaware corporation ("SUNBEAM
PRODUCTS"), SUNBEAM FURNITURE COMPANY, a Delaware corporation ("SUNBEAM
FURNITURE"; and together with Sunbeam Products, "SELLERS") OP II, Inc., a
Florida corporation ("SUNBEAM OP"; and together with the Sellers, the "SUNBEAM
TRANSFERORS") and Jacuzzi Outdoor Products, Inc., a Delaware corporation
("BUYER"). This Agreement is joined in by Sunbeam Corporation, a Delaware
corporation and the indirect parent corporation of the Sunbeam Transferors
("SUNBEAM") and U.S. Industries, Inc., a Delaware corporation and the indirect
parent corporation of Buyer ("USI").
W I T N E S S E T H:
WHEREAS, the Sellers are engaged in the business (the "BUSINESS")
of designing, manufacturing and distributing furniture products, including
aluminum style furniture, aluminum folding furniture, wrought iron furniture,
cushions and pads and accessories, resin furniture, casual indoor furniture,
commercial and folding furniture, and high-end patio furniture (collectively,
the "PRODUCTS");
WHEREAS, the Sunbeam Transferors desire to sell, and Buyer
desires to purchase, all of the assets and rights, except those assets and
rights which are expressly excluded herein, employed by the Sunbeam Transferors
in the operation of the Business, in accordance with and subject to the terms
and provisions of this Agreement; and
WHEREAS, the Sunbeam Transferors and Buyer desire to enter into
certain agreements regarding transitional matters, including the license of the
Sunbeam(R) trademark owned by Sunbeam OP, in connection with Buyer's purchase of
assets pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations and warranties herein contained, intending to be
legally bound, and subject to and on the terms and conditions herein set forth,
the Sunbeam Transferors and Buyer agree as follows:
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1. PURCHASE AND SALE OF ASSETS.
On and subject to the terms and conditions of this Agreement,
Buyer agrees to purchase from the Sunbeam Transferors, and the Sunbeam
Transferors agree to sell, convey, transfer, assign and deliver to Buyer, at the
Closing (as defined in Section 4.A), all of the Sunbeam Transferors' direct or
indirect right, title and interest in and to all of the assets relating to the
Business, of every kind and description, wherever located, whether tangible or
intangible, real, personal or mixed, as the same shall exist as of the Closing
Date (as defined in Section 4.A), including without limitation those certain
assets set forth below, but excluding the Excluded Assets (as defined in Section
1.M)(collectively, the "ASSETS"), free and clear of all liens, restrictions and
encumbrances, subject only to Permitted Liens (as defined in Section 5.J(2)):
A. To the extent transferable, the government permits and
licenses which are listed on SCHEDULE 1.A;
B. All robotics, equipment (including construction in progress),
tools, inspection equipment and other equipment, furnishings and machinery,
spare parts, furniture, office furnishings, fixtures, computer equipment,
systems and software, and all other personal property and tangible property
related to the Business or located at the Leased Premises or the Real Property
and all such items located at the Murfreesboro, Tennessee and Portland,
Tennessee facilities of Sellers and all administrative and office furnishings
and equipment located at the Nashville, Tennessee facility of Sellers and those
items to be listed on a schedule dated as of February 3, 1997, which Sellers
shall provide to Buyer no later than February 12, 1997, and which shall be
updated as of the Closing Date (collectively, the "EQUIPMENT");
C. All rights of Sellers under those contracts, licenses, leases
and agreements relating to the Business that will be assigned to and assumed by
Buyer at the Closing and which are listed on SCHEDULE 1.C(1) (collectively, the
"ASSUMED CONTRACTS"), including, without limitation, all rights of Sellers under
the loan agreements, promissory notes, guaranty agreements and reimbursement
agreements listed on SCHEDULE 1.C(2) (the "IRB AGREEMENTS") entered into by
Sunbeam Products in connection with the issuance of the Paragould, Arkansas and
Waynesboro, Georgia industrial revenue bonds, subject, however, to the
provisions of Section 1.O hereof;
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D. All rights of Sellers in and to the product lines and
inventory, including raw materials, packaging supplies, work-in-process and
finished goods of the Business including, without limitation, those items to be
listed on a schedule dated as of February 3, 1997, which Sellers shall provide
to Buyer no later than February 12, 1997, and which shall be updated as of the
Closing Date (collectively, the "INVENTORY");
E. The vendors', suppliers', manufacturers' and contractors'
warranties, representations and guaranties in respect of any Asset, including,
without limitation, those which are listed on SCHEDULE 1.E;
F. All patents, copyrights, trademarks, registrations, trade
secrets, technology, processes, inventions, designs, drawings, blueprints,
specifications, patterns, royalties, privileges, know-how, rights in research,
development, and commercially practiced processes (including all such items with
respect to which any Sunbeam Transferor is a sublicensee, in such case only
insofar as permitted under the applicable sublicense agreement), and all other
similar intangible personal property owned or licensed by any Sunbeam
Transferor, in each case, relating to the Business (collectively, the
"INTELLECTUAL PROPERTY"), including, without limitation, that listed on SCHEDULE
1.F, subject, however, to the provisions of Section 1.0 hereof;
G. All rights of Sellers, including any prepaid rent, security
deposits and options to renew or purchase in connection therewith, in the leased
real property listed on SCHEDULE 1.G, together with, to the extent owned or
leased by Sellers, all buildings, fixtures and improvements erected thereon
(collectively, the "LEASED PREMISES");
H. All right, title and interest of Sellers in the real property
listed on SCHEDULE 1.H, together with all buildings, fixtures and improvements
erected thereon, and all easements and rights-of-way and other appurtenances
thereto (collectively, the "REAL PROPERTY");
I. All papers, documents, instruments, books and records, files,
agreements, books of account and other records pertaining solely to the Assets
or the Business, including all customer and vendor lists, and all files and
documents (including credit information) to the extent pertaining solely to such
customers and vendors, and other business and financial records, files, books
and documents (whether in hard copy or computer format) to the extent pertaining
solely to the Assets or the
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Business, including manuals and data, sales and advertising materials, sales,
distribution and purchase correspondence, all personnel and employment records
relating to the Transferred Employees (as defined in Section 27.A), and any
information relating to taxes imposed on the Assets;
J. All of the rights, claims, credits, causes of action or rights
of set-off of the Sunbeam Transferors against third parties to the extent
relating to or affecting the Assets or the Assumed Liabilities (as defined in
Section 3);
K. Subject to the limitations provided for by the Trademark
License Agreement (as defined in Section 7.A) all goodwill associated with the
Business; and
L. All other assets and rights of every kind and nature, real or
personal, tangible or intangible, that are owned and used by Sellers in
connection with the Business, except for assets and rights specifically excluded
pursuant to Section 1.M below.
M. The Assets shall EXCLUDE, HOWEVER, the following items
(collectively, the "EXCLUDED ASSETS"):
(1) Subject to the rights to be granted pursuant to the
Transition Services Agreement (as defined in Section 7.A), any computer
hardware, software, supplies or other materials which are used in
Sellers' other businesses and identified on SCHEDULE 1.M(1);
(2) Sellers' minute books, stock transfer records, qualifications
to conduct business as a foreign corporation, and other documents
relating to the organization, maintenance, and existence of each Seller
as a corporation;
(3) Each Sunbeam Transferor's rights under or in connection
with this Agreement;
(4) The intellectual property relating to the Business
described on SCHEDULE 1.M(4);
(5) Unless otherwise mutually agreed by Sellers and Buyer prior
to the Closing Date, all accounts receivable accrued on the books of
Sellers resulting from the operations of the Business prior to the
Closing Date, including, without limitation, all accounts receivable
representing obligations of any Seller or any of its
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subsidiaries, divisions or affiliates (I.E., intercompany or
interdivisional accounts receivable);
(6) Cash on hand on the Closing Date, including bank accounts,
cash equivalents and temporary cash investments (including petty cash)
pertaining to the Business;
(7) Claims or rights of any Sunbeam Transferor against third
parties relating to liabilities or obligations that do not relate to the
Assets and are not Assumed Liabilities;
(8) Claims of any Seller for refunds of taxes and other
governmental charges for any period, or any portion of any period,
ending on or prior to the Closing Date, whether or not such Seller has
filed a claim for any such refund before the Closing Date;
(9) All assets and rights of every kind and nature, real or
personal, tangible or intangible, that are owned and used by Sellers in
connection with their wooden outdoor furniture business;
(10) All assets and rights of every kind and nature, real or
personal, tangible or intangible, relating to the Portland, Tennessee,
Nashville, Tennessee and Murfreesboro, Tennessee facilities of Sellers,
except (a) Equipment and Inventory located at the Portland facility, (b)
administrative and office furnishings and equipment located at the
Nashville facility, (c) rights under the Portland Lease (as defined in
Section 7.A), (d) Equipment and Inventory located at the Murfreesboro
facility and (e) rights under the Manufacturing Services Agreement (as
defined in Section 7.A);
(11) All assets and rights of every kind and nature
relating to the Plans (as defined in Section 5.P);
(12) Those assets utilized both in the Business and in
Sellers' other businesses and identified on SCHEDULE
1.M(12); and
(13) Those assets identified on SCHEDULE 1.M(13).
N. To the extent the Assets include licenses, permits, agreements
or other rights that cannot be assigned or the assignment of which requires
consents which have not been obtained as of the Closing Date, Sellers will use
commercially reasonable efforts to obtain such consents (with respect to any
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assignable rights) and shall provide Buyer with the practical benefit of such
Assets, by operating agreements, leases, or otherwise, on terms and conditions
mutually acceptable to Sellers and Buyer. If and when such consent(s) have been
obtained, the applicable Seller(s) will promptly assign and convey such Asset(s)
to Buyer for no additional consideration.
O. Nothing in this Agreement shall be construed as an attempt or
agreement to assign any contract, agreement, license, lease or other commitment
that is nonassignable without the consent of the other party or parties thereto
unless such consent shall have been given, subject, however, to the covenant of
Sellers in Section 1.N hereof.
2. EXCLUDED LIABILITIES.
Buyer shall not assume any liabilities or obligations of the
Sunbeam Transferors (whether known or unknown and whether absolute, accrued,
contingent, liquidated or unliquidated or otherwise and whether arising out of
the Business or the other businesses or operations of the Sunbeam Transferors,
the ownership or operation of any of the Assets or any facilities, or the
manufacture or sale of any product, the consummation of the transactions under
this Agreement or otherwise), except such liabilities and obligations as Buyer
shall expressly assume and agree to perform pursuant to Section 3.
3. ASSUMED LIABILITIES.
On and subject to the terms and conditions of this Agreement, at
the Closing, Buyer shall assume and become responsible for the following
liabilities of Sellers, but only to the extent specifically set forth below and
subject to any defenses or rights of offset to which any Seller is entitled or
that are or may be asserted in good faith against the obligee to whom such
obligations are owed (collectively, the "ASSUMED LIABILITIES"):
A. All obligations of Sellers arising under the Assumed Contracts
after the Closing Date, provided, however, that Buyer does not assume any such
liability or obligation arising, coming due or to be performed after the Closing
Date which is attributable to any action or failure to act by the applicable
Seller under any Assumed Contract prior to the Closing Date, unless and to the
extent such liability or obligation is reflected on the Schedule of Assets and
Liabilities (as defined in Section 5.F);
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B. Purchase orders for the repair of Equipment in the ordinary
course of business that shall be listed on a schedule dated as of February 3,
1997, which Sellers shall provide to Buyer no later than February 12, 1997 and
which shall be updated as of the Closing Date;
C. Purchase orders for raw materials and supplies used in the
Business in the ordinary course of business that shall be listed on a schedule
dated as of February 3, 1997, which Sellers shall provide to Buyer no later than
February 12, 1997 and which shall be updated as of the Closing Date, or with
respect to raw materials and supplies which are scheduled to be or are delivered
after Closing in the ordinary course of business in accordance with past
practices;
D. Vacation and other benefits accrued as of the Closing Date in
accordance with the Plans as reflected on the Schedule of Assets and Liabilities
for the Transferred Employees (as defined in Section 27.A) and the other
obligations pertaining to such employees that are expressly set forth in Section
27.A hereof (the "EMPLOYEE OBLIGATIONS");
E. All obligations relating to any return of Products by a
customer of the Business after the Closing, other than in connection with a
warranty claim, to the extent expressly provided in Section 27.E(5);
F. All obligations of Sellers arising out of warranty claims
asserted after the Closing Date, other than personal injury claims, subject to
the limited obligation of Sellers to indemnify Buyer pursuant to Section
11.A(1)(f) of this Agreement; and
G. To the extent not included in and subject to any limitations
contained in Sections 3.A through 3.F, liabilities arising out of the ongoing
and ordinary operation of the Business by Buyer after the Closing Date.
4. CLOSING, PURCHASE PRICE, ADJUSTMENT, ETC.
A. CLOSING. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Assets and the assumption of the Assumed
Liabilities contemplated hereby shall take place at a closing (the "CLOSING") at
the offices of Weil, Gotshal & Manges LLP, in New York, New York, on the later
of (i) March 3, 1997 as of 12:01 a.m. (such time being the "EFFECTIVE TIME") and
(ii) the date that is two business days following the satisfaction or waiver of
all conditions to the
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Closing set forth in Sections 7.D and 7.E, or at such other date and location as
Buyer and Sellers may mutually agree (such date and time of closing being herein
called the "CLOSING DATE").
B. PURCHASE PRICE; ALLOCATION. The aggregate purchase price for
the Assets shall be a sum equal to the net result of the addition and
subtraction of the following amounts derived from the Final Statement (as
defined in Section 4.E):
(1) the sum of (a) the net book value of the property, plant and
equipment included in the Assets plus (b) the net book value of the
Inventory and (c) the amount of any security or cash deposits or
accounts, including prepaid rent, if any, transferred to Buyer from
Sellers, MINUS
(2) the sum of (a) $21 million dollars and, to the extent
reflected on the Schedule of Assets and Liabilities, (b) indebtedness
assumed by Buyer pursuant to the IRB Agreements, (c) the Employee
Obligations and (d) liabilities relating to the Assumed Contracts
(collectively, the "PURCHASE PRICE"). The parties agree to allocate the
Purchase Price (together with the Assumed Liabilities) among the Assets,
the license granted in connection with the Trademark License Agreement
and the agreement of Sellers contained in Section 27.G hereof as agreed
by Buyer and Seller prior to Closing in a manner consistent with
Treasury Regulation ss. 1.1060-IT(f). Buyer shall prepare in a timely
manner and present to Sellers for their review a Form 8594 Asset
Acquisition Statement of Allocation consistent with such allocation.
Buyer and the Sunbeam Transferors shall promptly confer and reach
agreement regarding such form and each shall timely file such
agreed-upon form and shall file a copy of such form with its federal
income tax return for the period that includes the date of the Closing.
Each of Buyer and the Sunbeam Transferors further agrees not to take any
position inconsistent with such allocation for any tax purpose.
C. PAYMENT OF ESTIMATED PURCHASE PRICE TO THE SUNBEAM TRANSFERORS
ON DATE OF CLOSING. On and at the Closing, in consideration for the sale,
conveyance, transfer, assignment and delivery to Buyer of the Assets, subject to
the assumption of the Assumed Liabilities, Buyer shall pay to the Sunbeam
Transferors, as directed, an amount equal to $78,385,000 (the "ESTIMATED
PURCHASE PRICE"), by wire transfer of immediately available funds to an account
designated in writing by the Sunbeam Transferors not less than two business days
prior to the Closing.
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D. PAYMENT OF PURCHASE PRICE.
(1) The difference between the Estimated Purchase Price and the
Purchase Price shall be paid, after determination of the Purchase Price
pursuant to Section 4.E hereof, as follows:
(a) Buyer shall pay to the Sunbeam Transferors
the amount by which the Purchase Price shall exceed
the Estimated Purchase Price; or
(b) the Sunbeam Transferors shall pay to Buyer the amount
by which the Purchase Price shall be less than the Estimated
Purchase Price.
(2) Any payment required under Section 4.D(1) shall be made
within ten (10) days after the determination of the Purchase Price, by
payment of such amount by wire transfer of immediately available funds
to an account designated in writing by the party to receive such payment
not less than two business days prior to such payment. Any payment
required under paragraph (1) above shall bear interest at the index rate
of Chase Manhattan Bank, N.A. as of the Closing Date, from the Closing
Date through the date of payment.
E. DETERMINATION OF PURCHASE PRICE.
(1) As promptly as practicable after Closing, and no later than
fifteen (15) business days after the Closing Date, Sellers shall, at
their expense, prepare, or cause to be prepared, and shall deliver to
Buyer a statement certified by Sellers' independent auditors utilizing
generally accepted auditing standards setting forth, as of the Effective
Time, the Purchase Price, based upon the accounting records of the
Business and supported in reasonable detail, determined on a basis
consistent with the preparation of the Statement of Assets and
Liabilities, subject to and in accordance with the Accounting Principles
(the "FINAL STATEMENT"). Buyer and its accountants shall have the
opportunity to observe the physical count of the Inventory and Equipment
(which may begin prior to the Closing Date) in connection with the
preparation of the Final Statement and shall have full access to all
information used by Sellers in preparing the Final Statement, including
the work papers of their accountants.
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(2) Promptly following receipt of the Final Statement, Buyer
shall review the same and, within twenty (20) business days after such
receipt, Buyer shall deliver to Sellers a certificate setting forth its
acceptance of, or objections to, the Final Statement, together with a
summary of the reasons therefor (which shall be limited to the
mathematical accuracy of the Final Statement and any assertion that the
Purchase Price as derived from the Final Statement has not been
determined on the basis set forth in paragraph (1) above) and
adjustments which, in its view, are necessary to eliminate such
objections.
(3) If Buyer accepts the Final Statement (or does not so object
within such twenty (20) business day period), the determination of the
Purchase Price by Sellers shall be deemed final and binding as of such
twentieth (20th) business day.
(4) To the extent Buyer objects within such twenty (20) business
day period to the Final Statement, Buyer and Sellers shall use
reasonable efforts during the following fifteen (15) business day period
to resolve any such objections. If Buyer and Sellers resolve all such
differences and each signs a certificate to that effect, the Final
Statement, as so adjusted, shall be deemed final and binding for
purposes of this Agreement. If Buyer and Sellers resolve some of such
differences, the items as to which the parties have agreed shall be
final and binding for purposes of this Agreement and the remaining items
shall be determined as provided below. Notwithstanding any dispute
between Buyer and Sellers described in this Section 4.E(4), Buyer or
Sellers, as applicable, shall pay, in accordance with Section 4.D above,
the amount of the Purchase Price that is not being disputed under this
Section 4.E(4).
(5) To resolve any objections raised by Buyer that are not
resolved as provided above, the parties shall refer their remaining
differences to a nationally recognized firm of independent public
accountants, as to which Sellers and Buyer shall mutually agree (the
"CPA FIRM"), who shall, acting as experts and not as arbitrators,
determine on the basis of the Accounting Principles and the formula set
forth in Section 4.B hereof, and only with respect to the remaining
differences so submitted, whether and to what extent, if any, the
Purchase Price as derived from the Final Statement requires adjustment.
Sellers and Buyer shall direct the CPA Firm to use its best efforts to
render its determination as soon as practicable, but in no event later
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than 45 days following the referral of differences to such CPA Firm. The
decision of the CPA Firm will be final, conclusive, and binding on the
parties, and no party will institute any suit with regard to the dispute
or controversy except to enforce the decision. Sellers and Buyer shall
make readily available to the CPA Firm all relevant books and records
and any work papers (including those of the parties' respective
accountants) relating to the Statement of Assets and Liabilities and the
Final Statement and all other items reasonably requested by the CPA
Firm. Each party will pay an equal share of the costs, expenses and fees
of the CPA Firm, and each will separately pay its own attorneys' and
accountants' fees and expenses; PROVIDED, in any action to enforce the
decisions of the CPA Firm, the successful party shall recover its
reasonable attorney's fees from the unsuccessful party.
5. REPRESENTATIONS AND WARRANTIES OF THE SUNBEAM TRANSFERORS.
The Sunbeam Transferors represent and warrant to Buyer as
follows, except that Sunbeam OP represents and warrants only as set forth in
Sections A, B, C, D, E, J(2), Q, T, W and X:
A. CORPORATE STANDING. Each of the Sunbeam Transferors is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has full corporate power to carry
on its business and to own, lease and operate its Assets, and to carry on the
Business as now conducted. To the knowledge of the Sunbeam Transferors, each of
the Sunbeam Transferors is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the ownership or operation
of its Assets or the conduct of the Business requires such qualification.
B. POWER AND AUTHORITY OF THE SUNBEAM TRANSFERORS; AUTHORIZATION.
Each of the Sunbeam Transferors has all requisite corporate power and authority
to execute and deliver this Agreement and each of the Ancillary Agreements (as
defined in Section 7.A(5)) to which it will be a party and to perform its
obligations hereunder and thereunder. The execution, delivery and performance by
each Sunbeam Transferor of this Agreement and each of the Ancillary Agreements
to which it will be a party have been duly and validly authorized by all
necessary corporate action on the part of each Sunbeam
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Transferor and no additional corporate authorization or consent is required in
connection with the execution, delivery and performance by each Sunbeam
Transferor of this Agreement and each of the Ancillary Agreements to which it
will be a party.
C. BINDING EFFECT. This Agreement has been duly executed and
delivered by each Sunbeam Transferor. This Agreement constitutes, and each of
the Ancillary Agreements, when executed and delivered by the parties thereto,
will constitute the legal, valid and binding obligation of the Sunbeam
Transferor(s) party thereto, enforceable against such Sunbeam Transferor(s) in
accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditor's rights and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
D. NO CONFLICT. The execution, delivery and performance by
each Sunbeam Transferor of this Agreement and each of the Ancillary Agreements
to which it will be a party does not, and the consummation of the transactions
contemplated hereby and thereby, does not and will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination or acceleration of any
obligation under, or the creation of a lien, security interest or other
encumbrance on any of the Assets (any such conflict, violation, default, right
of termination or acceleration, loss or creation, a "VIOLATION") pursuant to,
any provision of the Certificate of Incorporation or Bylaws of any Sunbeam
Transferor or result in any Violation pursuant to any mortgage, indenture,
contract, agreement, permit, license, judgment, decree, order, law or regulation
applicable to any Sunbeam Transferor, the Business or the Assets.
E. CONSENTS. Except for the consents and filings listed on
SCHEDULE 5.E, and the approval required by the Hart- Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), if any, no consent,
approval, waiver, or authorization of, or registration, notice, or filing with,
any court, administrative agency or other governmental authority or other person
is required by or with respect to any Sunbeam Transferor in connection with the
execution, delivery and performance of this Agreement and the Ancillary
Agreements.
F. FINANCIAL INFORMATION. Sellers have furnished to Buyer a
schedule of the Assets of the Business and the Assumed Liabilities as of
December 29, 1996, as set forth on SCHEDULE 5.F(1), which, at Buyer's sole
option, shall be updated prior to the Closing Date to reflect the Assets of the
Business and the
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Assumed Liabilities as of February 3, 1997 (the "SCHEDULE OF ASSETS AND
LIABILITIES"). The values of the Assets reflected on the Schedule of Assets and
Liabilities are the carrying values of such Assets on Sellers' books and records
and such Schedule of Assets and Liabilities has been prepared in accordance with
accounting principles, methods and procedures which are in all respects in
accordance with the accounting principles, methods and procedures set forth on
SCHEDULE 5.F(2) (the "ACCOUNTING PRINCIPLES") and the Schedule of Assets and
Liabilities was prepared from the same books and records used by Sunbeam in
preparing its publicly reported year-end accounts.
G. ORDINARY COURSE. Since the date of the Schedule of Assets
and Liabilities, except as set forth on SCHEDULE 5.G, the Business has been
operated in the ordinary course of business consistent with past practice and
there has been no material (i) change in the Business, the Assets or the manner
of conducting the Business, (ii) transaction relating to the Assets or the
Business outside of the ordinary course of business consistent with past
practice or (iii) lien created or assumed with respect to any of the Assets,
except Permitted Liens.
H. TAXES. Sellers have filed or will file on a timely basis all
tax returns, reports and declarations required to be filed with respect to taxes
pertaining to the Assets or the Business, and have paid or, will pay all taxes
due and owing as of or before the Closing Date, except for such taxes, if any,
that are being contested in good faith. There are no liens for unpaid taxes upon
the Assets and there exist no facts which could give rise to such a lien. Except
as set forth on SCHEDULE 5.H, there is no action, suit, proceeding,
investigation, audit or claim now pending against or with respect to the
Business or any of the Assets with regard to any tax or assessment, nor is any
claim for any additional tax or assessment asserted by any governmental
authority, and Sellers have not received from any governmental authority any
written notice of a proposed adjustment, deficiency or underpayment of any taxes
pertaining to the Assets or the Business, the non-payment of which could result
in (i) a lien or other encumbrance of any type on any of the Assets, or (ii) a
liability which could be asserted against Buyer or Buyer's assets as a result of
the acquisition of the Assets, and which notice has not been satisfied by
payment or been withdrawn. None of the Assets is property which Buyer or an
affiliate of Buyer will be required to treat as "tax-exempt use property"
(within the meaning of Section 168(h)(1) of the Code). Except for the IRB
Agreements in connection with the Paragould, Arkansas facility, no "industrial
development bonds" (within the meaning of Section 103 of the Internal Revenue
Code of 1954, as amended
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and in effect immediately prior to the enactment of the Tax Reform Act of 1986),
"private activity bonds" (within the meaning of Section 141 of the Code), or
other tax-exempt financings are outstanding which have been used to finance the
Assets.
I. GOVERNMENTAL MATTERS. Sellers are not, on the date
hereof, required to make any material capital improvements or other expenditures
to comply with any Environmental Laws (as defined in Section 5.R hereof) or any
law or rules, regulations, orders, or citations presently in effect of any
governmental agency having jurisdiction. Except as disclosed on SCHEDULE 5.I, no
unpaid fines or penalties have been assessed or notices or citations issued
against Sellers pursuant to any Environmental Laws or any other rules,
regulations or orders of EEOC or any other federal, state or local department or
agency. To Seller's knowledge, no facts, circumstances or conditions exist which
might reasonably give rise to any such material claims, investigations, orders,
demands, proceedings or litigation associated with Sellers' compliance with any
Environmental Laws or other laws, rules, regulations or requirements of any
governmental entity with jurisdiction.
J. TITLE AND SURVEY MATTERS
(1) Sellers have delivered to Buyer each survey on the Real
Property that is in the possession of Sellers.
(2) Sellers have, and will transfer to Buyer at Closing, good,
valid and marketable title to the Inventory and Equipment and each Sunbeam
Transferor owns its respective Assets free and clear of all liens, restrictions,
claims, charges, security interests, or other encumbrances (collectively
"Liens"), except for liens for taxes not yet due or being contested in good
faith, other similar statutory liens for amounts not yet due, and liens securing
Assumed Liabilities (collectively "PERMITTED LIENS").
(3) Sellers have good and marketable fee simple title to each
Real Property, free and clear of any and all Liens other than Permitted Liens.
No right of redemption or similar right exists or remains in effect with respect
to any Real Property. On the Closing Date, Sellers will convey to Buyer good,
marketable and indefeasible title to the Real Property, subject only to
Permitted Liens. Subject to any consent identified as required herein, Sellers
shall convey their interest to each Leased Premises. In each case, the legal
descriptions of the Real Property and the Leased Premises (identified in
Schedules
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1.G & 1.H respectively) describe Sellers' entire interest at each facility.
(4) There are no parties that have any right of use or occupancy
derived from or granted by Sellers to all or any portion of the Real Property or
Leased Premises.
K. INVENTORY. Subject to any reserve or allowance shown on the
Schedule of Assets and Liabilities in accordance with the Accounting Principles,
the Inventory is good and useable on a normal basis in the existing product
lines of the Business and is merchantable and fit for the particular purpose for
which it is intended. The net book value of all inventory of Product which is
located in Canada (which is not owned by Sellers or otherwise included in the
Inventory) is less than $100,000. The Inventory does not include any items
manufactured or sold using any RubbermaidTM trademark.
L. LEGAL PROCEEDINGS. Except as set forth on SCHEDULE 5.L, (i)
there are no claims of any kind or any actions, suits, orders, notices of
violation, directives, proceedings, arbitrations or investigations pending or,
to the knowledge of Sellers, threatened against or affecting the Business or any
of the Assets which would (a) impair or delay the ability of the Sunbeam
Transferors to perform their obligations pursuant to this Agreement or the
Ancillary Agreements or (b) have an effect that is, or could reasonably be
expected to be, materially adverse to the value of the Assets taken as a whole,
or materially adverse to the business, financial condition or results of
operations of the Business taken as a whole and (ii) neither any Seller (with
respect to its operation of the Business or its ownership of its Assets), the
Business nor any of the Assets is subject to any order, writ, judgment, award,
injunction or decree of any court or governmental or regulatory authority of
competent jurisdiction or any arbitrator. This Section 5.L does not apply to
legal proceedings arising under Environmental Laws.
M. LICENSES AND PERMITS; COMPLIANCE WITH LAWS. Sellers hold all
permits, licenses and authorizations of all governmental entities which are
material to the operation of the Business and the Assets and each Seller, the
Business and the Assets is fully in compliance with the terms thereof. A correct
and complete list of such material licenses, permits and authorizations is set
forth on SCHEDULE 5.M(1). Except as set forth on SCHEDULE 5.M(2), neither Seller
is in violation of any applicable law, regulation, ordinance, permit, license,
order, or any other applicable requirement of any governmental body or court
with respect to the operation of the Business or any of the
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Assets and no written notice has been received by any Seller or the Business
alleging any such violations, which could result in a material liability.
N. COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES; ETC.
(1) The applicable Seller is a party to the collective bargaining
agreements listed on SCHEDULE 5.N(1) with respect to certain employees
of such Seller engaged in the operations of the Business and there are
no other labor or collective bargaining agreements which pertain to any
other employees of Sellers engaged in the operations of the Business. No
labor organization or group of employees of Sellers engaged in the
operations of the Business has made a pending demand for recognition or
certification, there are no representation or certification proceedings
or petitions seeking a representation proceeding presently pending or
threatened in writing to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority and
there are no organizing activities involving the Company or any Company
Subsidiary pending with any labor organization or group of employees of
Sellers engaged in the operations of the Business.
(2) Except as set forth on SCHEDULE 5.N(2), there are no strikes,
work stoppages, slowdowns, lockouts, material arbitrations or material
grievances or other material labor disputes pending or threatened in
writing against or involving the Sellers with respect to employees
engaged in the operations of the Business, and there are no unfair labor
practice charges, grievances or complaints pending or threatened in
writing by or on behalf of any employee or group of employees of Sellers
engaged in the operations of the Business which, if individually or
collectively resolved against the Sellers, could result in a material
liability.
(3) Except as set forth on SCHEDULE 5.N(3), with respect to
employees of Sellers engaged in the operations of the Business, there
are no complaints, charges or claims against the Sellers pending or
threatened with any public or governmental authority, arbitrator or
court based on, arising out of, in connection with, or otherwise
relating to the employment or termination of employment by any Seller of
any individual which, if individually or collectively resolved against
the Sellers, could result in a material liability.
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(4) With respect to employees of Sellers engaged in the
operations of the Business, Seller is in material compliance with all
laws, regulations and orders relating to the employment of labor,
including all such laws, regulations and orders relating to wages,
hours, the Workers Adjustment and Retraining Notification Act ("WARN"),
collective bargaining, discrimination, civil rights, safety and health,
workers' compensation and the collection and payment of withholding
and/or social security taxes and similar taxes.
(5) Except as set forth on SCHEDULE 5.N(5), with respect to the
operations of the Business, there has been no "mass layoff" or "plant
closing" as defined by WARN within the six (6) months prior to Closing.
O. CONTRACTS. Except as set forth on SCHEDULE 5.O(1), the Assumed
Contracts do not omit any lease, contract, agreement or understanding that is
material to the operation of the Business or the Assets. Each of the Assumed
Contracts is a valid and binding agreement of the applicable Seller and, to the
knowledge of Sellers, is in full force and effect. No event or condition has
occurred or exists, or, to the knowledge of Sellers, is alleged by any of the
other parties thereto to have occurred or existed, which constitutes, or with
lapse of time or giving of notice or both might constitute a material default or
breach by the applicable Seller or any other party under any of the Assumed
Contracts or, with respect to the Assumed Contracts listed on SCHEDULE 5.O(2),
any default or breach by the applicable Seller or any other party thereto. The
applicable Seller enjoys peaceful and undisturbed possession under all leases or
licenses with respect to any of the Assets or under which any portion of the
Business is operating. No Seller is party to and the Business and the Assets are
not bound by, any contract, agreement, instrument, lease, license, arrangement
or understanding, or subject to any other restriction, which has had, or could
reasonably be expected to have, a materially adverse effect on the operations or
financial condition of the Business or the Assets. With respect to the guaranty
agreements entered into or contemplated to be entered into by Sellers with
certain customers (the "SUNBEAM GUARANTIES"), SCHEDULE 5.0(3) lists the
following categories of matters (by category): (a) all Sunbeam Guaranties which
have been signed by customers and returned to Sellers, (b) all customers to
which Sellers have sent, but not yet received, a signed Sunbeam Guaranty, and
(c) to Sellers' knowledge, all customers with whom Sellers have had discussions
relating to the Sunbeam Guaranties. Except for items 1.A and 1.B on Schedule
1.C(1), which have minimum purchase
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requirements, and items 1.C, 1.D, 1.G and 1.H, which are for a term extending
beyond the 1997 selling season (but have no minimum purchase requirements), the
raw materials/commodities contracts listed on Schedule 1.C(1) do not include any
minimum purchase commitments and such contracts only relate to the 1997 selling
season. The purchase orders referenced in Sections 3.B and 3.C expire no later
than August 31, 1997.
P. EMPLOYEE BENEFIT PLANS. SCHEDULE 5.P sets forth all "employee
benefit plans," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all other employee benefit
arrangements or payroll practices, including, without limitation, severance pay,
sick leave, vacation pay, salary continuation for disability, consulting or
other compensation agreements, retirement, deferred compensation, bonus, stock
purchase, hospitalization, medical insurance, life insurance and scholarship
programs maintained by Sellers or any of their affiliates or to which Sellers or
any of their affiliates contributed or is obligated to contribute thereunder
with respect to which any Employee participates (the "PLANS"). True, correct and
complete copies of each of the Plans and related trust documents, any amendments
thereto and any summary plan descriptions thereto have been made available or
delivered to Buyer by Sellers.
Q. INTELLECTUAL PROPERTY. Except as set forth on SCHEDULE 5.Q(1),
(i) no person has made or, to the knowledge of the Sunbeam Transferors,
threatened to make, any claims that the operations of the Business are in
violation of or infringe upon any patents, trade secrets, trademarks or trade
names, trademark or trade name registrations, service marks or service mark
registrations, copyrights or copyright registrations or any other proprietary or
trade rights of any third party and (ii) there are no actions or proceedings
pending or, to the knowledge of the Sunbeam Transferors, threatened, which
challenge the right of any Seller to make, use or sell products or services
embodying, and, to the knowledge of the Sunbeam Transferors, no person is
infringing or otherwise violating, the Intellectual Property. As of the Closing
Date, all taxes, royalties, fees and other payments due and payable and
necessary to maintain the ownership and license to use, as the case may be, the
Intellectual Property shall have been made, except as set forth on SCHEDULE
5.Q(2) or as Buyer shall consent in connection with the consultation
contemplated by Section 7.B(1)(d)(ii).
R. ENVIRONMENTAL MATTERS. The following definitions
shall apply to the terms listed below when used in this Agreement:
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"ENVIRONMENTAL LAWS" shall mean any and all prevailing and
applicable federal, state and local statutes, codes, rules, regulations,
permits, ordinances and orders of any governmental entity as of the Closing Date
relating to the storage, handling, disposal, treatment, investigation, Release,
potential Release, threatened Release, remediation or other regulation of
Hazardous Substances in any media, including but not limited to air,
groundwater, building interior, water or soil, including, by way of example and
not limitation, CERCLA, RCRA, TSCA, and the Clean Water Act.
"HAZARDOUS SUBSTANCE" shall mean any substance, combination of
substances, material, waste, gas or particulate matter which has been determined
to be a health danger, soil, water or air contaminant or which is regulated
under any prevailing and applicable Environmental Law, including, but not
limited to, any material or substance which is (i) defined in any Environmental
Law as a 'hazardous waste,' 'hazardous material,' 'hazardous substance,'
'extremely hazardous waste,' or 'restricted hazardous waste'; (ii) composed of
petroleum or has a petroleum base; (iii) composed of asbestos or material
containing asbestos in a friable form; (iv) a polychlorinated biphenyl; (v) a
radioactive material; (vi) designated as a pollutant pursuant to federal law
including Section 311 of the Clean Water Act, 33 U.S.C. ss. 1251 (33 U.S.C. ss.
1317); (vii) defined as a 'hazardous waste' pursuant to the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq. (42 U.S.C. ss. 6903);
or (viii) defined as a 'hazardous substance' pursuant to Section 101 of CERCLA.
"RELEASE" shall mean any dumping, pouring, pumping, emitting,
leaching, spilling, disposal, spreading, leaking or discharging of any Hazardous
Substance into any media, whether soil, surface water, building interior,
groundwater, air or any combination of the foregoing.
Except as set forth on the Disclosure Schedule (as defined in Section 8.A):
(1) Sellers conduct and have conducted the operations of the
Business, including, without limitation, with respect to the ownership,
use and maintenance of the Real Property and the Leased Premises, in
material compliance with all applicable Environmental Laws.
(2) To Seller's knowledge, the Real Property and the Leased
Premises and their respective existing and prior uses comply in all
material respects with all Environmental Laws.
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(3) To Seller's knowledge, all Hazardous Substances that have
been removed from or disposed of by Seller or its agents off the Real
Estate or the Leased Premises have been handled, transported, stored,
treated and disposed of in compliance in all material respects with all
Environmental Laws. Neither the Business, the Real Property nor the
Leased Premises is subject to any liabilities, claims, judgments,
orders, notices of violation, settlements, permits, licenses, liens,
writs, injunctions or decrees relating to the manufacturing, processing,
use, generation, treatment, handling, storage, disposal, transportation,
presence, Release, potential Release or threatened Release of any
Hazardous Substance (collectively, an "ENVIRONMENTAL EVENT").
(4) Sellers and their agents have no knowledge of any claim,
potential claim, action, suit, proceeding, hearing or investigation,
based on or related to any Environmental Event relating to the Business,
the Real Property or the Leased Premises. To the knowledge of Sellers,
no notice of any Environmental Event was given to any person or entity
that occupied the Leased Premises or the Real Property prior to the date
said locations were occupied by or used in the Business.
(5) All permits, licenses, consents and authorizations necessary
for full compliance in all material respects with Environmental Law have
been obtained and are valid and in full force and effect for the Real
Property and the Leased Premises. To Seller's knowledge, no application,
report or other document or information filed with or furnished to any
federal, state or local governmental body, authority or agency contains
any material inaccuracies or false or materially misleading statements.
(6) Seller and its agents have no knowledge of the Release,
potential Release or threatened Release of any Hazardous Substance on,
in, under, within or around the Real Property or Leased Premises which
is not in compliance in all material respects with all applicable
Environmental Laws.
S. IRB AGREEMENTS. No event or condition has occurred or exists,
or, to the knowledge of Sellers, is alleged by any of the other parties thereto
to have occurred or existed, which constitutes, or with the lapse of time or
giving of notice or both would reasonably be expected to constitute, a default
or breach under any of the IRB Agreements and all other agreements,
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instruments, certificates and other documents entered into or delivered by
Sellers in connection with the IRB Agreements. The applicable Sellers have paid
all amounts currently due and have performed all current obligations under the
IRB Agreements and all other agreements, instruments, certificates and other
documents entered into or delivered by Sellers in connection with the IRB
Agreements. The amounts receivable relating to the bond issued by the
Development Authority of Burke County in 1996, which constitutes an Asset to be
transferred to Buyer, in the aggregate, will defease the amounts payable
pursuant to the lease pertaining to the Waynesboro, Georgia facility, which
obligation constitutes an Assumed Liability. On and after the Effective Time, no
liability or obligation will exist relating to the Gaston County Flexible Rate
Demand Industrial Revenue Bonds (Allibert Inc. Project), Series 1987A (the
"STANLEY IRBS") which could (i) be asserted against Buyer or Buyer's assets as a
result of the acquisition of the Assets or (ii) result in a lien or other
encumbrance of any type on any of the Assets.
T. LICENSES OF INTANGIBLE PERSONAL PROPERTY. There are listed on
SCHEDULE 5.T all material licenses or similar agreements or arrangements
relating to the Business, to which any Seller is a party either as licensee or
licensor, for any intangible personal property (collectively, "INTANGIBLE
PERSONAL PROPERTY"). Except as set forth on SCHEDULE 5.T (i) no proceedings are
pending or, to the knowledge of Sellers, threatened, that challenge the rights
of Sellers in any material respect in and to or the right to make, use or sell
products or processes embodying, any such Intangible Personal Property or any
license thereof and (ii) there are no pending or, to the knowledge of Sellers,
threatened claims, demands or proceedings, restricting the right of the
applicable Sellers to use, charging Sellers with infringement of, or making any
other claim with respect to, any of such Intangible Personal Property or any
license thereof.
U. BROKERS AND FINDERS' FEES. Except as to the engagement by
Sellers of Chase Securities, Inc. (whose fees and expenses shall be borne
exclusively by Sellers), neither Sellers nor any of their officers, directors or
employees have employed any broker, finder or financial advisor or incurred any
liability for fees or commissions payable to any broker, finder or financial
advisor in connection with the negotiations relating to or the transactions
contemplated by this Agreement.
V. ENTIRE BUSINESS; CONDITION OF ASSETS. The Assets and the
Ancillary Agreements constitute all of the assets, properties and rights,
together with the services of the
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Transferred Employees, necessary to conduct the Business in all respects as
currently conducted and, except as set forth on SCHEDULE 5.V(1), there are no
material Assets of the Business that Sellers will retain following the Closing.
All services provided to the Business by (i) Sellers and Sunbeam (which are the
only entities within the Sunbeam Corporate Structure which provide services to
the Business) or (ii) third parties who provide services to support the
operation of the Business, are described on SCHEDULE 5.V(2). To the knowledge of
Sellers, there are no (i) material structural defects in any of the buildings or
other improvements situated on the Leased Premises or the Real Property or (ii)
building systems, structures, improvements, fixed assets or equipment owned,
leased or used by Seller and required for the conduct of the Business as
currently conducted that are not in all material respects in good condition and
working order, normal wear and tear excepted, and adequate in quality and
quantity for the current normal operation of the Business.
W. KNOWLEDGE. Whenever used in this Section 5, "to the
knowledge of Sellers" shall mean the actual knowledge of those persons listed
on SCHEDULE 5.W.
X. NO WARRANTIES. Other than as explicitly provided in this
Section 5, neither Sellers nor any of their respective affiliates, in this
Agreement or any other agreement, instrument or document contemplated by this
Agreement, makes any other express or implied representation or warranty with
respect to the Assets or the use thereof in the Business.
6. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Sellers as follows:
A. CORPORATE STANDING. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power to own, lease and operate its assets and to carry
on its business as currently conducted. To the knowledge of Buyer, Buyer is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership of its properties or the conduct of its
business requires such qualification.
B. POWER AND AUTHORITY OF BUYER; AUTHORIZATION. Buyer has all
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements and to
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perform its obligations hereunder and thereunder. The execution, delivery and
performance by Buyer of this Agreement and the Ancillary Agreements have been
duly and validly authorized by all necessary corporate action on the part of
Buyer and no additional corporate authorization or consent is required in
connection with the execution, delivery and performance by Buyer of this
Agreement and each of the Ancillary Agreements.
C. BINDING EFFECT. This Agreement has been duly executed and
delivered by Buyer. This Agreement constitutes, and each of the Ancillary
Agreements, when executed and delivered by the parties thereto, will constitute
the legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with their respective terms, subject to bankruptcy, insolvency, reor-
ganization, moratorium and similar laws of general applicability relating to or
affecting creditor's rights and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
D. NO CONFLICT. The execution, delivery and performance by
Buyer of this Agreement and the Ancillary Agreements does not, and the
consummation of the transactions contemplated hereby and thereby, does not and
will not, violate or conflict with any of the provisions of any charter
instrument or bylaw of Buyer or violate or conflict with or constitute a default
under any mortgage, indenture, contract, agreement, permit, license, instrument
or trust or any order or ruling of any governmental authority to which Buyer is
a party or by which Buyer is bound, or violate any provision of law, statute,
rule or regulation to which Buyer is subject.
E. BROKERS' AND FINDERS' FEES. Except as to the engagement by
Buyer of CS First Boston Corporation (whose fees and expenses shall be borne
exclusively by Buyer), neither Buyer nor any of its officers, directors or
employees has employed any broker, finder or financial advisor or incurred any
liability for fees or commissions payable to any broker, finder or financial
advisor in connection with the negotiations relating to or the transactions
contemplated by this Agreement.
F. NO WARRANTIES. Other than as explicitly provided in this
Section 6, neither Buyer nor any of its respective affiliates, in this Agreement
or any other agreement, instrument or document contemplated by this Agreement,
makes any other express or implied representation or warranty on behalf of
Buyer.
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7. MATTERS PRIOR TO CLOSING.
A. ANCILLARY AGREEMENTS.
(1) On the Closing Date, Buyer (or a different
wholly-owned subsidiary of USI designated by Buyer) and Sunbeam OP,
shall execute and deliver an agreement (the "TRADEMARK LICENSE
AGREEMENT") which provides for Sunbeam OP to grant to Buyer (or such
other subsidiary) the exclusive right to use the Sunbeam(R) trademark in
North America for indoor and outdoor furniture product categories for
products sold by Buyer for a term of five (5) years following the
Closing Date on a royalty-free basis. The Trademark License Agreement
shall contain standard terms and conditions for a third-party
intellectual property license, shall not contain any minimum sales
requirements, and shall allow Buyer to utilize the Sunbeam(R) trademark
in connection with line extensions which are within this Agreement's
definition of "Product." In addition, the Trademark License Agreement
shall provide for an option for Buyer to extend such Agreement in
accordance with the terms of the Agreement, for an additional five (5)
year term (with no option payment), at a then-current market royalty
rate (as defined in the Agreement), subject to a minimum rate of 3% of
net sales and a maximum royalty rate of 8% of net sales.
(2) On the Closing Date, Buyer and Sunbeam Products shall
execute and deliver an agreement (the "TRANSITION SERVICES AGREEMENT"),
including the terms set forth in EXHIBIT A hereto, pursuant to which (a)
Seller will (directly or through third parties) provide administrative
services to Buyer as described in Exhibit A, for fees in an amount
estimated to cover the costs of providing such services by Sunbeam
Products, and escalating over the term of the Transition Services
Agreement, for a term as described in Exhibit A, after which Sellers
will provide reasonable accommodation to Buyer to the extent necessary
for Buyer to establish alternative services using its best efforts, and
during which extension Buyer will cover all cost of Sellers, PROVIDED,
that in no event shall such extension cause such services to be provided
for a period of more than twelve (12) months following the Closing Date.
Buyer will provide access and transitional services to be mutually
agreed to Sellers with respect to inventory and other matters relating
to items retained by Sellers which are located at facilities controlled
by Buyer post-Closing.
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(3) On the Closing Date, Buyer and Sunbeam Products shall
execute and deliver a lease with respect to the Portland, Tennessee
free-standing office facility (the "PORTLAND LEASE") of a term of three
(3) months, with month-to-month tenancy thereafter which shall be
terminable, after the first three (3) months of occupancy, by either
party on thirty (30) days' written notice, at a market rate rental cost
to be agreed by the parties.
(4) On the Closing Date, Buyer and Sunbeam Products shall
execute and deliver an agreement (the "MANUFACTURING SERVICES
AGREEMENT"), including the terms set forth on EXHIBIT B hereto, pursuant
to which Seller, through its Murfreesboro, Tennessee facility, shall
manufacture and provide Product to Buyer's requirements through June 30,
1997. The Manufacturing Services Agreement shall also provide for
maintenance in the ordinary course of, and the removal by Buyer of the
fixed assets, including information systems hardware and software
located at the Murfreesboro facility upon the expiration of such
Agreement at Buyer's cost.
(5) On the Closing Date, Buyer and Sunbeam Products shall
execute and deliver an agreement (the "STANLEY DISTRIBUTION AGREEMENT";
and together with the Trademark License Agreement, the Transition
Services Agreement, the Portland Lease and the Manufacturing Services
Agreement, the "ANCILLARY AGREEMENTS"), pursuant to which Buyer, through
the Stanley, North Carolina facility, shall provide distribution
services for grills located at the Stanley North Carolina facility
through September 30, 1997, for fees in an amount estimated to cover the
costs of providing such services by Buyer.
B. OBLIGATIONS OF SELLERS PRIOR TO CLOSING.
From the date of this Agreement until the Closing Date, Sellers
shall:
(1) Conduct the Business only in the usual, regular and
ordinary course consistent with past practice, and preserve intact for
Buyer the goodwill of the Business and the present relationship between
the Business and the employees, suppliers, clients, customers and others
having business relations with Sellers with respect to the Business.
During the period from the date hereof to the Closing Date, except as
otherwise provided for in this
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Agreement or as Buyer shall otherwise consent, Sellers shall not, with
respect to the Business:
(a) enter into commitments for new capital
expenditures in excess of $500,000 in the aggregate;
(b) dispose of or incur, create or assume any lien,
restriction or encumbrance on any material Asset or Assets which,
in the aggregate, are material to the Business, it being agreed
by Buyer that Sellers may sell obsolete or excess inventory
(including raw materials and work in progress) of the Business to
consolidators, liquidators or others in non-ordinary course
transactions;
(c) enter into any material transaction outside of
the ordinary course of business consistent with past practice;
(d) amend any term of, waive any right under or
allow to lapse or expire, (i) any contract, permit, lease,
arrangement or understanding which constitutes an Assumed
Contract or which is material to the Business or (ii) any item of
Intellectual Property, unless Buyer otherwise consents in
connection with Sellers' consultation with Buyer regarding any
filing or other action necessary to maintain such Intellectual
Property from the date of this Agreement until the Closing Date;
(e) make any change to, or amend in any way, the
contracts, salaries, wages, or other compensation of any officer,
director, employee, agent, or other similar representative of
Seller engaged in the operations of the Business other than
changes, amendments that (i) are made in the ordinary course of
business and consistent with past practice, (ii) do not and will
not result in increases of more than 5% in the salary, wages or
other compensation of any such Person, and (iii) do not and will
not exceed, in the aggregate, 5% of the total salaries, wages,
and other compensation of all employees of the Division, except
that Sellers may pay or perform employee compensation and other
incentive arrangements intended to facilitate the consummation of
the transactions contemplated hereby, all of such compensation
and incentive arrangements being described on SCHEDULE 7.B(1)(E);
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(f) except as described in SCHEDULE 7.B(1)(F),
adopt, enter into, amend, alter or terminate, partially or
completely, any Plan;
(g) assume, enter into, amend, alter or terminate
any labor or collective bargaining agreement to which the
operations of the Business is affected thereby;
(h) offer any additional Sunbeam Guaranty
that has not been extended to a customer prior to the
Closing Date; or
(i) agree, in writing or otherwise, to do
any of the foregoing.
(2) Use their best efforts to take all action and to do
all things necessary, proper, or advisable in order to consummate and
make effective the transactions contemplated by this Agreement and the
Ancillary Agreements;
(3) Afford Buyer, its accountants, counsel, technical
advisors, and other representatives free and reasonable access during
normal business hours to the offices, equipment, personnel, facilities,
records, files, contracts and agreements of Sellers relating to the
Assets and the Business and furnish Buyer with all material information
concerning the Assets and the Business;
(4) Not take any action or omit to take any action which
will result in the material violation by Sellers of any law applicable
to the transactions contemplated by this Agreement or the Ancillary
Agreements or cause a material breach by Sellers of any of the
representations and warranties of Sellers set forth in this Agreement or
the Ancillary Agreements or any lease, agreement, contract or commitment
to which any Seller is a party;
(5) Use their best efforts to obtain prior to Closing all
consents by third parties required to be obtained by Sellers with
respect to its performance of this Agreement and the Ancillary
Agreements and cooperate fully with Buyer in connection with Buyer's
requests and applications for the governmental authorizations, approvals
and consents which are necessary for the ownership and operation of the
Business following the Closing Date;
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(6) Provide to Buyer a supplemental Schedule in the event
of any changes taking place after the date of this Agreement which would
have been reflected in any Schedule to this Agreement had such changes
taken place before the preparation of the Schedule (it being understood
that such supplemental Schedules shall constitute an amendment to this
Agreement, except to the limited extent provided in Section 24); and
(7) Remove all Inventory from the Portland, Tennessee
facility and deliver such Inventory to a facility to be transferred to
Buyer (it being understood that the Murfreesboro, Tennessee facility is
not being transferred to Buyer) by no later than February 28, 1997.
C. OBLIGATIONS OF BUYER PRIOR TO CLOSING.
From the date of this Agreement until the Closing Date, Buyer
shall:
(1) Use its best efforts to take all action and to do all
things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement and the
Ancillary Agreements;
(2) Not take any action or omit to take any action which
will result in the material violation by Buyer of any law applicable to
the transactions contemplated by this Agreement or the Ancillary
Agreements or cause a material breach by Buyer of any of the
representations and warranties of Buyer set forth in this Agreement or
the Ancillary Agreements; and
(3) Use its best efforts to obtain prior to Closing all
consents by third parties and all governmental authorizations which are
necessary for Buyer's performance of this Agreement and the Ancillary
Agreements.
D. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations
of Buyer under this Agreement are subject, at the option of Buyer, to the
satisfaction at or prior to the Closing Date of each of the following
conditions:
(1) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Sellers contained in this Agreement
shall be true and correct in all material respects on and as of the
Closing Date as though made at and as of that date, and Sellers shall
have delivered to Buyer a
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certificate to that effect dated the Closing Date and executed by a
duly authorized officer of each Seller.
(2) COMPLIANCE WITH COVENANTS. Seller shall have performed
and complied in all material respects with all terms, agreements,
covenants and conditions of this Agreement to be performed or complied
with by it at or prior to the Closing Date, and Sellers shall have
delivered to Buyer a certificate to that effect dated the Closing Date
and executed by a duly authorized officers of each Seller.
(3) HSR ACT. The applicable waiting period (and any
extension thereof) under the HSR Act, if any, shall have expired or been
terminated.
(4) LEGAL ACTIONS OR PROCEEDINGS. No court or governmental
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order which is in effect on the
Closing Date and prohibits the consummation of the Closing. No legal
action or proceeding shall have been instituted or threatened seeking to
restrain, prohibit, invalidate or otherwise affect the consummation of
the transactions contemplated hereby or pursuant to the Ancillary
Agreements or which would, if adversely decided, have a material adverse
effect on the operations or financial condition of the Business.
(5) ASSIGNMENTS OF ASSUMED CONTRACTS. Sellers shall have
obtained all the authorizations, consents, waivers and approvals
required in connection with the assignment of the Assumed Contracts that
are set forth on SCHEDULE 7.D(5).
(6) CONSENTS. Buyer shall have been furnished with written
consents and permits in forms acceptable to Buyer of any and all
persons, including without limitation government agencies, authorities
and third parties, required to be obtained prior to the consummation of
the transactions contemplated hereby or pursuant to the Ancillary
Agreements.
(7) SUPPLEMENTAL SCHEDULES. Sellers shall have
furnished to Buyer all supplemental Schedules, if any, required by
Section 7.B(6).
(8) ANCILLARY AGREEMENTS. The applicable
Sunbeam Transferors shall have duly executed and delivered to
Buyer
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the Ancillary Agreements and the other documents referred to in Section
8.A.
(9) REAL ESTATE MATTERS. Buyer shall have received at or
prior to Closing an irrevocable commitment for title insurance covering
the Real Property and Leased Premises in which Seller has an insurable
interest from a title insurance company reasonably acceptable to Buyer
to issue an American Land Title Association (Extended) Owner's Policy of
Title Insurance in amounts to be determined by Buyer, at Buyer's
expense. The commitment shall show to the reasonable satisfaction of
Buyer that immediately prior to the Closing Date the appropriate Seller
had good and marketable title in fee simple absolute to the Real
Property, free and clear of all liens, mortgages, security interests,
pledges, charges, encumbrances, covenants, conditions, restrictions and
other matters of record, except for Permitted Liens. Such commitment
shall not contain the standard preprinted exceptions.
(10) PARAGOULD IRB DILIGENCE. Sellers shall have provided
to Buyer all documentation relating to the City of Paragould, Arkansas
ARKLA Industries Project, Series 1979 Industrial Revenue Bonds. Buyer
shall have completed its due diligence relating to such bonds to its
reasonable satisfaction.
(11) NO MATERIAL ADVERSE CHANGE. Since the date of the
Statement of Assets and Liabilities, neither the Assets nor the Business
shall have suffered a change or series of related changes that
individually or in the aggregate is, or could reasonably be expected to
be, materially adverse to the value of the Assets taken as a whole, or
materially adverse to the business, financial condition, results of
operations or prospects of the Business taken as a whole, except any
such change or series of related changes resulting from any substantial
national or international calamity or emergency or general economic
factors which are outside the control of Sellers and also affect other
participants in the outdoor furniture industry.
E. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SUNBEAM
TRANSFERORS. The obligations of the Sunbeam Transferors under this Agreement are
subject, at the option of the Sunbeam Transferors, to the satisfaction at or
prior to the Closing Date of each of the following conditions:
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(1) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects on and as of the
Closing Date as though made at and as of that date, and Buyer shall have
delivered to Sellers a certificate to that effect dated the Closing Date
and executed by a duly authorized officer of Buyer.
(2) COMPLIANCE WITH COVENANTS. Buyer shall have performed
and complied in all material respects with all terms, agreements,
covenants and conditions of this Agreement to be performed or complied
with by it at or prior to the Closing Date, and Buyer shall have
delivered to Sellers a certificate to that effect.
(3) HSR ACT. The applicable waiting period (and any
extension thereof) under the HSR Act, if any, shall have expired or been
terminated.
(4) LEGAL ACTIONS OR PROCEEDINGS. No court or governmental
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order which is in effect on the
Closing Date and prohibits the consummation of the Closing. No legal
action or proceeding shall have been instituted or threatened seeking to
restrain, prohibit, invalidate or otherwise affect the consummation of
the transactions contemplated hereby or pursuant to the Ancillary
Agreements.
(5) CONSENTS. Sellers shall have been furnished with
written consents and permits in forms acceptable to Sellers of any and
all persons, including without limitation government agencies,
authorities and third parties, required to be obtained prior to the
consummation of the transactions contemplated hereby or pursuant to the
Ancillary Agreements.
(6) ANCILLARY AGREEMENTS. Buyer shall have duly
executed and delivered to Sellers the Ancillary Agreements
and the other documents referred to in Section 8.B.
8. DOCUMENT DELIVERIES.
A. DELIVERIES OF THE SUNBEAM TRANSFERORS. At the Closing, the
Sunbeam Transferors shall deliver to Buyer the following:
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(1) A bill of sale, assignments to accomplish the transfer
of the Assumed Contracts and the Intellectual Property and deeds to
accomplish the transfer of the Real Property, each signed on behalf of
the applicable Sunbeam Transferor(s), and such other documents as Buyer
may reasonably request in order to accomplish the sale of the Assets to
Buyer;
(2) Each of the Ancillary Agreements, in a form
reasonably acceptable to Buyer and signed on behalf of the
applicable Sunbeam Transferor(s);
(3) A disclosure schedule relating to the representations
and warranties of Sellers contained in Section 5.R (the "DISCLOSURE
SCHEDULE");
(4) The consent of Samsonite Corporation to the assignment
(and, if necessary to transfer as a matter of law, amendment) of that
certain Trademark License Agreement dated November 20, 1995;
(5) A renewal of the lease pertaining to the
Nacogdoches, Texas facility which is for a term of one year;
(6) All consents required pursuant to the terms
of the IRB Agreements;
(7) The opinion of the General Counsel of Sunbeam, dated
as of the Closing Date, addressed to USI and Buyer substantially to the
effect set forth in Exhibit C hereto;
(8) The certificates described in Section 7.D(l)
and (2); and
(9) Such other documents as are reasonably
requested by counsel for Buyer.
B. BUYER'S DELIVERIES. At the Closing, Buyer shall
deliver to Sellers the following:
(1) The Estimated Purchase Price;
(2) An assumption agreement with respect to the
Assumed Liabilities signed on behalf of Buyer;
(3) Each of the Ancillary Agreements, signed on
behalf of Buyer;
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(4) The opinion of the General Counsel of USI, dated as of
the Closing Date, addressed to Sunbeam and Sellers substantially to the
effect set forth in Exhibit C hereto;
(5) The certificates described in Section 7.E(l)
and (2); and
(6) Such other documents as are reasonably
requested by counsel for Sellers.
9. TAX RETURNS; BULK TRANSFER LAWS.
Buyer agrees to waive compliance by Sellers with the
requirements of any applicable Bulk Sales Act or Bulk Transfers Act.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Except with respect to Section 11.E herein, and notwithstanding
any investigation made by or on behalf of Buyer, all representations and
warranties contained in this Agreement by any party to this Agreement and in any
contract, certificate or other instrument delivered by or on behalf of any party
pursuant to this Agreement shall survive the Closing for a period of eighteen
(18) months following the Closing Date, and any claims relating thereto must be
asserted in writing prior to the expiration of such eighteen (18) month period;
in the event that notice of any claim for indemnification is given within such
eighteen (18) month period, the representations and warranties that are subject
of such indemnification claim shall survive until such time as such claim is
finally resolved.
11. INDEMNIFICATION.
A. REMEDIES.
(1) Subject to the limitations set forth in Section 11.D, Sellers
shall defend and indemnify Buyer and its directors, officers,
shareholders and other affiliates, and attorneys and agents ("BUYER
INDEMNIFIED PARTIES"), and hold the Buyer Indemnified Parties harmless
and reimburse the Buyer Indemnified Parties for any and all claims,
suits, actions, losses, liabilities, damages, demands, orders or
directives of an administrative agency, regulatory authority or court
having jurisdiction over such matters (an "ENVIRONMENTAL AUTHORITY"),
judgments, settlements (including, without limitation, fines, penalties,
and
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criminal or civil judgements and settlements), costs (including, without
limitation, costs of investigation or remediation of Hazardous
Substances, damage to natural resources and court costs) and expenses
(including, without limitation, attorneys' and accountants' fees)
(hereinafter "LOSS" or "LOSSES") suffered or incurred by the Buyer
Indemnified Parties, and successors or assigns thereto as a result of,
or with respect to:
(a) Subject to Section 10, any breach or inaccuracy
of any representation or warranty of Sellers set forth in Section
5 or in any other agreement or certificate executed by Sellers in
connection herewith, including the Ancillary Agreements;
(b) Any breach of or noncompliance by Sellers with
any covenant or agreement of Sellers contained in this Agreement
or in any agreement executed by Sellers in connection herewith,
including the Ancillary Agreements;
(c) Any liability arising out of the operation of
the Business before the Closing Date other than the Assumed
Liabilities, whether or not relating to the Business or the
Assets including, without limitation, all liabilities for damage
or injury to person or property arising on account of any
products identifiable (determined as provided in Section 27.H) as
manufactured by Sellers before the Closing Date, regardless of
when sold and based on any theory of liability, including product
warranty, and any liability relating to the Sunbeam Guaranties;
(d) Operation of the Business or use of the Real
Property or Leased Premises prior to Closing pertaining to (i)
the investigation, remediation or cleanup of any Hazardous
Material(s) required by any Environmental Law as of the Closing
Date and located at, on, in or under the Real Property, the
Leased Premises or property affected by the migration of
Hazardous Material(s) from the Real Property or Leased Premises
("REAL ESTATE MATTER"), (ii) fines, penalties or corrective
action required to bring operations at the Real Property or
Leased Premises into compliance, in all material respects, with
any Environmental Law as of the Closing Date ("COMPLIANCE
MATTER") and (iii) the transportation treatment and handling,
recycling, sale or offsite disposal, of Hazardous Materials
generated
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or otherwise used (A) by Seller with respect to the
Business, or (B) by Seller at the Real Property or Leased
Premises;
(e) Correction, investigation or remediation of
material violations of any Environmental Laws which are
identified as a consequence of any environmental regulatory
audits performed by Buyer prior to the Closing Date at the Real
Property and Leased Premises (the "ENVIRONMENTAL AUDITS");
(f) Any liability arising out of warranty claims
(other than personal injury claims) asserted prior to the fourth
anniversary of the Closing Date with respect to Products
manufactured by Seller prior to the Closing Date, regardless of
when sold;
(g) Any bulk sales provision contained in the
Uniform Commercial Code applicable to the transactions
contemplated hereby; and
(h) Any and all actions, suits, directives, orders
or notices of violation issued by any Environmental Authority,
proceedings, claims, demands, assessments or judgments incident
to any of the foregoing.
(2) Subject to the limitations set forth in Section 11.D,
Buyer shall defend and indemnify Sellers and their directors, officers,
shareholders and other affiliates, and attorneys and agents ("SELLER
INDEMNIFIED PARTIES"), and hold the Seller Indemnified Parties harmless
and reimburse the Seller Indemnified Parties for any and all Losses
suffered or incurred by the Seller Indemnified Parties or any successors
or assigns thereto as a result of, or with respect to:
(a) Subject to Section 10, any breach or material
inaccuracy of any representation or warranty of Buyer set forth
in Section 6 or in any other agreement or certificate executed by
Buyer in connection herewith, including the Ancillary Agreements;
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(b) Any breach of or material noncompliance by
Buyer with any covenant or agreement of Buyer contained in this
Agreement or in any other agreement executed by Buyer in
connection herewith, including the Ancillary Agreements;
(c) The Assumed Liabilities;
(d) The liabilities described in Exhibit B
with respect to the closure of the Murfreesboro,
Tennessee facility by Sellers;
(e) Except to the extent Sellers are obligated to
indemnify the Buyer Indemnified Parties pursuant to Section
11.A(1), the operation of the Business by Buyer after the Closing
Date; and
(f) Any and all actions, suits, proceedings,
claims, demands, assessments and judgments incident to any of the
foregoing.
B. THIRD-PARTY CLAIMS. (1) Any party entitled to indemnification
hereunder ("INDEMNITEE") receiving notice of any third-party claim upon which
indemnification may be sought hereunder shall promptly give written notice of
the same to the party who is required to pay indemnification ("INDEMNITOR"),
including a brief description of the claim and, where practicable, an estimate
of the amount thereof. The Indemnitor shall, within ten (10) days after receipt
of such notice, notify the Indemnitee as to whether the Indemnitor desires to
contest the same. If the Indemnitor shall decline to contest the claim or shall
fail to respond to such notice, the Indemnitee shall have the right to undertake
the defense, compromise or settlement of the same (in its sole discretion) on
behalf of and for the account and risk of the Indemnitor. If the Indemnitor (a)
so notifies the Indemnitee that the claim is to be contested, (b) agrees in
writing to be responsible for all judgments, damages, settlements, awards and
other liabilities that may arise therefrom, regardless of any limitation that
may apply to the obligations of the Indemnitor herein or otherwise, or any time
limits that may apply to the Indemnitee's right to obtain indemnity, and (c)
provides the Indemnitee with adequate security and assurance of the Indemnitor's
ability to satisfy the same, then the Indemnitor shall be entitled to control
the defense thereof by counsel of its own selection and at its own expense. Each
party shall give the other party all information and assistance which the latter
may reasonably request in defending any matter hereunder.
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(2) Response to any Loss or potential Loss which pertains
to those matters identified as a material violation of an Environmental
Law which requires corrective action as set forth in the Environmental
Audits, a Real Estate Matter or Compliance Matter, shall be managed by
the Buyer Indemnified Parties who shall be obligated to (i) provide
Sellers with prompt written notice ("ENVIRONMENTAL CLAIM NOTICE") of
each such loss for which an indemnification is claimed hereunder, (ii)
provide Sellers with copies of any documents transmitted to or from any
governmental entities regarding each such Loss, (iii) use commercially
reasonable and cost-effective methods of satisfying the requirements of
any applicable Environmental Laws, and (iv) provide Seller with true
copies of invoices or other charges associated with each such Loss,
which invoices shall be promptly paid by Seller in accordance with
Paragraph B(3) of this Section 11. Within ten (10) days following
receipt of any Environmental Claim Notice, Seller shall notify Buyer of
its intent, if any, to participate in the selection of the manner, scope
or detail of any remedial actions, investigations or related response
actions (collectively "Environmental Response Actions"). Buyer intends
to undertake in order to address any Real Estate Matter, Compliance
Matter or those matters identified as a material violation of any
Environmental Law which requires correction in any Environmental Audits.
If Seller chooses to participate in any such Environmental Response
Action, Buyer will allow Seller to consult in, contribute to or
otherwise provide meaningful input to the actions required to be
undertaken by Buyer. Buyer, however, will have final control over the
method, scope, nature and detail of all Environmental Response Actions,
PROVIDED, HOWEVER, that such actions shall be commercially reasonable
and cost-effective, and PROVIDED FURTHER, that with respect to any
matter identified as a material violation of an Environmental Law which
requires corrective action identified in the Environmental Audits,
Seller shall be given the opportunity to correct such matters prior to
the Closing Date.
(3) All invoices or other costs associated with any
Environmental Response Action shall be paid by Buyer, who will be
reimbursed by Seller for 85% of the full amount of each such invoice or
cost within thirty days of Seller's receipt of same.
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C. EXCLUSIVITY. The provisions of this Section 11 shall
provide the sole and exclusive remedy with respect to any of the matters
referred to herein or in any certificate or document delivered pursuant hereto.
D. LIMITATIONS ON INDEMNITY. Notwithstanding anything to the
contrary in this Section 11 and other than with respect to Section 11.E hereof,
Seller and Buyer agree as follows:
(1) Payments by the Indemnitor pursuant to this Section 11
shall be limited to the amount of any Losses that remain after deducting
therefrom any tax benefit to the Indemnitee and any insurance proceeds
received by Indemnitee. A tax benefit will be considered to be
recognized by the Indemnitee for purposes of this Section 11.D in the
tax period in which the indemnity payment occurs;
(2) With respect to any indemnification pursuant to
paragraph A(1)(a) or A(2)(a) of this Section 11, no Indemnitor will have
any obligation to indemnify any Indemnitee pursuant to this Section 11
unless and until the aggregate of all Losses of the Indemnitee on
account of such breaches exceeds $1 million, in which case the
Indemnitor will then be obligated to indemnify the Indemnitee for all
such Losses except the first $250,000, and (ii) the total obligation of
either Sellers or Buyer under this Section 11 with respect to such
matters shall not exceed $32.5 million, PROVIDED, that the limitations
contained in this Section 11.D(2) shall not apply to Sellers' obligation
to indemnify Buyer for any breach or inaccuracy of any representation or
warranty of Seller set forth in Section 5.H, 5.P or 5.R.
(3) As conditions precedent to the obligation of the
Seller to defend and indemnify the Buyer Indemnified Parties with
respect to any Loss which pertains to those matters identified as a
material violation of an Environmental Law which requires corrective
action identified in the Environmental Audits, a Real Estate Matter or
Compliance Matter, the Buyer Indemnified Parties shall not, other than
as required by applicable law and upon as much prior written notice to
the Sellers as may be practicable in the circumstances, communicate,
directly or indirectly, orally or in writing, with any Environmental
Authority. The foregoing shall not be construed to require prior Notice
to Seller of regular communications with
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Environmental Authorities required to operate the Business pursuant to
applicable Environmental Laws.
(4) With respect to the Environmental Audits referred to
in Section 11.A(1)(e) above, such Environmental Audits shall be
conducted pursuant to a License Agreement to be executed by the parties.
(5) The indemnification obligations set forth in this
Section 11, as it pertains to environmental matters, including but not
limited to those arising under Section 11.A(1)(a), (d) or (e), shall
expire on the tenth (10th) anniversary of the Closing Date.
E. ERISA INDEMNIFICATION. Sellers shall indemnify and hold
harmless Buyer in respect of any and all Losses resulting from or relating to
each of the following:
(1) any Plan and any other "employee benefit plan" within
the meaning of Section 3(3) of ERISA maintained by Sellers or any trade
or business (whether or not incorporated) under control or treated as a
single employer with Sellers under Section 414(b), (c), (m) or (o) of
the Code ("ERISA AFFILIATE") or to which Sellers or any ERISA Affiliate
contributed or is obligated to contribute thereunder, including any
multiemployer plan, including any liability (i) to the PBGC under Title
IV of ERISA; (ii) relating to a multiemployer plan; (iii) with respect
to non-compliance with the notice and benefit continuation requirements
of COBRA; (iv) with respect to any non-compliance with ERISA or any
other applicable laws; or (v) with respect to any suit, proceeding or
claim which is brought against Buyer;
(2) the employment, termination of employment, including a
constructive termination, or failure to employ by Sellers of any
individual (including, but not limited to, any employee of Sellers
engaged in the operations of the Business) attributable to any actions
or inactions prior to the Closing Date, including, without limitation,
with respect to any liabilities arising under WARN; and
(3) any claims by any employee of Sellers engaged in the
operations of the Business for workers compensation and medical benefits
relating to such workers compensation incurred after the Closing to the
extent the same relate to an injury or illness originating prior to the
Closing.
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Indemnification under this Section 11.E shall not be subject to
any deductible or cap, and this indemnification provision shall survive until
the period in which it is no longer possible for an employee or a third party to
bring a claim relating to the matters covered in this Section 11.E under the
applicable statute of limitations period.
12. PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, neither
Sunbeam or any Seller nor USI or Buyer shall, without the prior written approval
of the other party, make any press release or other public announcement
concerning the transactions contemplated by this Agreement, except (1) Sunbeam
and USI shall prepare mutually agreeable press releases after the signing of
this Agreement, and each of Sunbeam and USI shall issue its respective press
release at a mutually agreeable time, (2) Sunbeam and USI shall prepare a
mutually agreeable notice to the employees of the Business concerning this
Agreement, and Sunbeam and USI shall deliver the notice to the employees at a
mutually agreeable time, and (3) to the extent that either party shall be so
obligated by law as advised in writing by counsel, in which case the other party
shall be so advised and the parties shall use their best efforts to cause a
mutually agreeable release or announcement to be issued. Except as provided in
this Section 12, prior to the Closing Date, Sunbeam or any Seller and USI or
Buyer may disclose information with respect to the transaction contemplated
hereby to their respective employees, agents, consultants and third parties only
to the extent such persons have a need to know such information.
13. PRORATIONS AND ADJUSTMENTS.
A. EXPENSES. To the extent, if any, that wages, current rents,
security deposits, contract deposits, or advance payments, property and payroll
taxes, assessments, utility charges, insurance premiums, employee benefits
constituting Assumed Liabilities and any other prepaid or deferred expenses
relate to the Assets purchased hereunder, they shall be prorated or reimbursed,
as the case may be, as of the Closing Date, subject in the case of taxes to the
provisions of Section 27.D. Sellers shall receive all revenues and shall be
responsible for all expenses and liabilities, including any and all tax
payments, allocable to the period prior to such date (except for the Assumed
Liabilities), including payments due prior to such date under such prorated
contracts, and Buyer shall receive all revenues and shall, to the extent agreed
hereunder, be responsible for all expenses and liabilities, including any and
all tax payments, allocable to the period subsequent to such date.
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B. TIME OF PRORATIONS AND ADJUSTMENTS. The prorations and
adjustments contemplated by this Section, to the extent practicable, shall be
made on and as of the Closing Date. As to those prorations and adjustments not
capable of being ascertained on such date, any adjustment and proration shall be
made within ninety (90) calendar days of the Closing Date, subject in the case
of taxes to the provisions of Section 27.D.
14. RECORDS; ACCESS TO INFORMATION.
A. Sellers shall grant access to Buyer during normal business
hours on reasonable prior request, any books and records not transferred to
Buyer pursuant to this Agreement that in any manner relate to the Business, the
Assets or Assumed Liabilities, and permit Buyer to make copies of the same. All
books and records relating to the Business shall be retained for the applicable
periods stated in the record retention policy attached as SCHEDULE 14.A hereto;
provided, however, that upon the written request of the other party, the party
in possession of such books and records shall retain any books and records
specified in such request for any reasonable period specified in such request
that is longer than the applicable period stated in SCHEDULE 14.A.
B. In order to facilitate the resolution of any governmental
investigation or inquiry or of any claims made by or against or incurred by
Sellers prior to or after the Closing, or for other legitimate business reasons,
upon reasonable notice, Buyer shall, after the Closing: (i) afford the officers,
employees and authorized agents and representatives of Sellers reasonable
access, during normal business hours, to the offices, properties, books and
records of Buyer with respect to the Business or the Assets, (ii) furnish to the
officers, employees and authorized agents and representatives of Sellers such
additional financial and other information regarding the Business or the Assets
as Sellers may from time to time reasonably request and (iii) make available to
Sellers, the employees of Buyer whose assistance, testimony or presence is
necessary to assist Sellers in evaluating any such claims and in defending such
claims, including the presence of such persons as witnesses in hearings or
trials for such purposes; PROVIDED, HOWEVER, that such investigation shall not
unreasonably interfere with the businesses or operations of Buyer or any of its
affiliates or subsidiaries; PROVIDED FURTHER, HOWEVER, that Buyer shall not be
obligated to disclose any information which it holds under a legally binding
obligation of confidentiality or which is protected by any privilege.
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In order to facilitate the resolution of any claims made by or
against or incurred by Buyer after the Closing or for other legitimate business
reasons, upon reasonable notice, Sellers shall, after the Closing: (i) afford
the officers, employees and authorized agents and representatives of Buyer
reasonable access, during normal business hours, to the offices, properties,
books and records of Sellers with respect to the Business or the Assets for the
period prior to the Closing Date, (ii) furnish to the officers, employees and
authorized agents and representatives of Buyer such additional financial and
other information regarding the Business and the Assets for the period prior to
the Closing Date as Buyer may from time to time reasonably request and (iii)
make available to Buyer, the employees of Buyer whose assistance, testimony or
presence is necessary to assist Buyer in evaluating any such claims and in
defending such claims, including the presence of such persons as witnesses in
hearings or trials for such purposes; PROVIDED, HOWEVER, that such investigation
shall not unreasonably interfere with the businesses or operations of Sellers or
any of their affiliates or subsidiaries; PROVIDED FURTHER, HOWEVER, that Sellers
shall not be obligated to disclose any information that it holds under a legally
binding obligation of confidentiality or which is protected by any privilege.
C. Notwithstanding anything to the contrary in Section 14.A,
Sellers and Buyer shall (i) each provide the other with such assistance as may
reasonably be requested by either of them in connection with the preparation of
any tax return ("RETURN"), audit or other examination by any taxing authority or
judicial or administration proceedings relating to liability for any federal,
state, local or foreign taxes, and in connection with the compliance by either
of them with the IRS record retention program, (ii) each retain and provide the
other, and Sellers shall retain and provide Buyer, with any pre-Closing records
or other information which may be relevant to such Return, audit or examination,
proceeding or determination, and (iii) each provide the other with any final
determination of any such audit or examination, proceeding or determination that
affects any amount required to be shown on any Return of the other for any
period. Without limiting the generality of the foregoing, Buyer and Sellers
shall retain, until the applicable statute of limitations (including any
extensions) have expired, copies of all Returns, supporting work schedules and
other records or information which may be relevant to such returns for all tax
periods or portions thereof ending before or including the Closing Date and
shall not destroy or otherwise dispose of any such records without first
providing the other party with a reasonable opportunity to review and copy the
same.
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15. NOTICES.
All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be mailed by first class,
registered, or certified mail, postage prepaid, or sent via overnight courier
service, or sent by confirmed facsimile, or delivered personally:
If to Buyer, to:
U.S. Industries, Inc.
101 Wood Avenue South
Iselin, New Jersey 08830
Attention: General Counsel
Facsimile: 908-767-2208
If to Sellers, to:
Sunbeam Products, Inc.
Suite 200
1615 South Congress Avenue
Delray Beach, Florida 33445
Attention: Janet G. Kelley
Facsimile: 561-243-2105
or to such other address of which the addressee shall have notified the sender
in writing. Notices mailed in accordance with this section shall be deemed given
when mailed, and notices sent by overnight courier service shall be deemed given
when placed in the hands of a representative of such service.
16. THIRD PARTY RIGHTS.
It is the intention of the parties that nothing in this Agreement
shall be deemed to create any right with respect to any person or entity not a
party to this Agreement.
17. PARTIES IN INTEREST; ASSIGNMENT.
All covenants and agreements contained in this Agreement by or on
behalf of either of the parties to this Agreement shall bind and inure to the
benefit of their respective successors and assigns, whether so expressed or not.
No party to this Agreement may assign its rights or delegate its obligations
under this Agreement to any other person or entity without the express prior
written consent of the other party, except that Buyer may assign its rights and
delegate its obligations to a subsidiary or affiliated corporation of Buyer,
provided that such assignment
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and delegation shall not relieve Buyer of its obligations under this Agreement.
18. CONSTRUCTION; GOVERNING LAW.
The section headings contained in this Agreement are inserted as
a matter of convenience and shall not affect in any way the construction of the
terms of this Agreement. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware.
19. ENTIRE AGREEMENT; AMENDMENT AND WAIVER.
This Agreement, including the Schedules hereto, constitutes and
contains the entire Agreement between the parties hereto with respect to the
transactions contemplated hereby and supersedes any prior writing by the
parties. The parties may, by mutual agreement in writing, amend this Agreement
in any respect, and any party, as to such party, may in writing (1) extend the
time for the performance of any obligations of any other party; (2) waive any
inaccuracies in representations and warranties by any other party, or; (3) waive
performance of any obligations by any other party; and (4) waive the fulfillment
of any condition that is precedent to the performance by such party of any of
its obligations hereunder. No such waiver shall be deemed to constitute the
waiver of any other breach of the same or of any other term or condition of this
Agreement. Any such amendment or waiver must be signed by an officer of the
parties or party to such amendment or waiver.
20. SEVERABILITY.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the remaining
provisions.
21. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, any
one of which need not contain the signatures of more than one party but all of
which taken together shall constitute one and the same Agreement.
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22. EXPENSES.
Each party to this Agreement shall pay any and all fees and
expenses that such party may incur in connection with the transactions
contemplated by this Agreement except as otherwise provided pursuant to that
certain letter agreement, dated January 23, 1997, between Sunbeam Products, Inc.
and Buyer.
23. FURTHER ASSURANCES.
At and after the date hereof, Buyer and the Sunbeam Transferors
will, without further consideration, promptly execute and deliver such other
instruments and documents and do all other acts and things as the other party or
parties may reasonably request in order to effect or confirm the transactions or
obtain the benefits contemplated by this Agreement. Buyer shall allow Sellers
access to, and otherwise cooperate with Sellers with respect to, the assets
retained by Sellers following the Closing Date. Buyer shall use its reasonable
commercial efforts to arrange for release or replacement of guarantees of
Sellers relating to the Assumed Liabilities which are in effect on the Closing
Date. In the event Buyer is unable to cause such guarantees to be released or
replaced, Buyer shall reimburse Sellers for all amounts, costs and expenses
reasonably paid or incurred by Sellers with respect thereto.
24. SCHEDULES.
The Schedules attached to this Agreement, including and any
supplements to such Schedules made by Sellers after the date of this Agreement
as provided in Section 7.B(6), and the Disclosure Schedule delivered by Sellers,
including any supplements to such Disclosure Schedule constitute a part of this
Agreement and are incorporated herein by reference in their entirety as if fully
set forth in this Agreement at the point where first mentioned. Notwithstanding
the foregoing, any supplements to such Schedules made by Sellers after the date
of this Agreement shall not be deemed to modify any representation or warranty
set forth herein for purposes of Section 7.E(1) (it being understood that such
supplements shall modify the representations and warranties set forth herein for
all purposes following the Closing Date). The disclosure of any matter in any
schedule to this Agreement shall expressly not be deemed to constitute an
admission by any Sunbeam Transferor or to otherwise create a presumption that
any such matter is material for the purposes of this Agreement or any other
purpose.
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25. GUARANTY BY SUNBEAM.
By joining in this Agreement, Sunbeam guarantees to Buyer the
full and prompt payment and performance by Sellers of all of Sellers' covenants
and obligations under this Agreement and the Ancillary Agreements, including
payment of any indemnification. If Sellers do not perform a covenant or
obligation under this Agreement or any Ancillary Agreement, Sunbeam shall
promptly perform the covenant or obligation. This guaranty is an absolute,
irrevocable, primary, continuing, unconditional, and unlimited guaranty of
performance and payment, and is not a guaranty of collection. This guaranty
shall remain in full force and effect (and shall remain in effect
notwithstanding any amendment to this Agreement) until all of Sellers'
obligations under this Agreement and all Ancillary Agreements have been paid,
observed, performed or discharged in full. Sunbeam has full capacity, power and
authority to enter into this Agreement and to carry out the covenants and
agreements specifically made by Sellers in this Agreement, and this Agreement is
binding on Sunbeam and enforceable against Sunbeam in accordance with the terms
of this Agreement.
26. GUARANTY BY USI.
By joining in this Agreement, USI guarantees to Sellers the full
and prompt payment and performance by Buyer of all of Buyer's covenants and
obligations under this Agreement and the Ancillary Agreements, including payment
of any indemnification. If Buyer does not perform a covenant or obligation under
this Agreement or any Ancillary Agreement, USI shall promptly perform the
covenant or obligation. This guaranty is an absolute, irrevocable, primary,
continuing, unconditional, and unlimited guaranty of performance and payment,
and is not a guaranty of collection. This guaranty shall remain in full force
and effect (and shall remain in effect notwithstanding any amendment to this
Agreement) until all of Buyer's obligations under this Agreement and all
Ancillary Agreements have been paid, observed, performed or discharged in full.
USI has full capacity, power and authority to enter into this Agreement and to
carry out the covenants and agreements specifically made by Buyer in this
Agreement, and this Agreement is binding on USI and enforceable against USI in
accordance with the terms of this Agreement.
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27. POST-CLOSING MATTERS.
A. EMPLOYMENT.
(1) Buyer shall offer employment, effective upon the
Closing Date, to all the persons actively employed by Sellers and
engaged in the Business as of the Closing Date, except those engaged in
the Business at the Murfreesboro, Tennessee facility (other than those
Murfreesboro employees described on Exhibit B hereto, who shall be
offered employment). In addition, Buyer shall offer employment to those
persons employed by Sellers and engaged in the Business, except those
engaged in the Business at the Murfreesboro, Tennessee facility (other
than those Murfreesboro employees described on Exhibit B hereto, who
shall be offered employment) who are inactive as of the Closing Date
(collectively with the active employees referred to above, the
"EMPLOYEES") in accordance with its standard hiring procedures, subject
to the following conditions: (i) if on medical leave, such individual is
released by his or her physician to return to active employment, (ii)
such individual actually reports for active employment with Buyer
immediately upon (a) the end of the approved leave of absence pursuant
to the Family Medical and Leave Act or (b) such medical release and
(iii) the facility of the Business such person is employed with is then
operating; and PROVIDED, HOWEVER, no individual shall be offered
employment under this provision after six (6) months from the Closing
Date or after the expiration of any applicable federal or state law
period, if later. Sellers shall retain liability and responsibility for
any benefits in accordance with the Plans with respect to such inactive
employees until, and if, any such employee shall be employed by Buyer.
Those Employees who accept such offer of employment by Buyer are herein
referred to as "TRANSFERRED EMPLOYEES." With respect to Employees, Buyer
agrees to make such offers of employment, which shall include
compensation rates that are no less than those provided by Sellers, as
of the Closing Date, and Buyer shall provide to the Transferred
Employees as of the Closing Date (a) employee benefit plans, programs or
arrangements, including, but not limited to, a severance plan,
reasonably equivalent in the aggregate to those maintained by Sellers
with respect to the Business on the date of Closing for the benefit of
Employees, as listed on SCHEDULE 27.A(1) hereto, or (b) at Buyer's
option, a benefit plan consisting of plans, programs and arrangements,
including but not limited to, a severance plan, of equal or greater
total benefit in the aggregate for all Employees, it
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being understood that Buyer shall have the right to amend or terminate
any and all such plans, programs and arrangements. With respect to the
Employees named on SCHEDULE 27.A(2), Buyer shall not terminate the
employment of such Employees for a term of six (6) months following the
Closing Date, except for cause (it being understood that any cessation
of employment following a diminution in or a relocation of duties shall
not be deemed to be a constructive termination not for cause by Buyer).
(2) Buyer shall indemnify and hold harmless Sellers from
any and all claims by such Employees for damages resulting from an
employment decision made by Buyer with respect to such Employees,
including, without limitation, with respect to any liabilities arising
under WARN or the Family Medical and Leave Act, and from any and all
costs (including counsel fees) associated with defending same.
(3) Sellers and Buyer agree that Buyer has purchased
substantially all the property used in Sellers' trade or business, and
in connection therewith, Buyer shall employ individuals who immediately
before the Closing Date were employed in such trade or business by
Sellers. Accordingly, pursuant to Rev. Proc. 84-77, provided that
Sellers provide Buyer with all necessary payroll records for the
calendar year which includes the Closing Date, Buyer shall furnish a
Form W-2 to each employee employed by Buyer who had been employed by
Sellers disclosing all wages and other compensation paid for such
calendar year, and taxes withheld therefrom, and Sellers shall be
relieved of the responsibility to do so.
B. VACATIONS, SICK DAYS AND HOLIDAYS. As of the Closing Date,
Buyer shall adopt, at its expense, vacation, sick day and holiday plans for
Transferred Employees to succeed Sellers' vacation, sick day and holiday plans.
For the remainder of the calendar year in which the Closing occurs, such plans
shall be equal to and in place of what Sellers would have provided to such
Transferred Employees. Thereafter, such plans shall be equal to the plans that
Buyer generally provides for its employees except that such plans shall provide
vacation, sick day and holidays to each eligible Transferred Employee on the
basis of his or her continuous service with Sellers and Buyer. As of the Closing
Date, Sellers shall provide Buyer with a list of their employees engaged in the
Business and their vacations and sick days for the remainder of the year in
which the Closing occurs.
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C. NO THIRD PARTY BENEFICIARIES. No provision contained in
Sections 27.A or 27.B above shall create any third party beneficiary or other
rights in any employee or former employee of Sellers (or any beneficiary or
dependent thereof) in respect of continued employment or resumed employment with
either Buyer or the Business and no provision of said Sections 27.A or 27.B
shall create any such rights in any such persons in respect of any benefits that
may be provided under any employee benefit plan or arrangement that may be
established by Buyer.
D. CERTAIN TAX MATTERS.
(1) All transfer, sales, use, recording, stamp and other
similar transaction taxes ("TRANSACTION TAXES") imposed upon or incurred
by either of the parties hereto in connection with this Agreement and
the transactions contemplated hereby shall be shared equally by the
Sunbeam Transferors, on the one hand, and the Buyer, on the other hand.
Sellers and Buyer shall jointly prepare and file, or cause to be
prepared and filed, all necessary Transaction Tax returns and other
documents with respect to all Transaction Taxes, and each party shall
bear its own expense in a connection therewith. Sellers and Buyer agree
to cooperate in any endeavor to effect a reduction in any such
Transaction Taxes, and shall provide each other with all applicable
exemption certificates associated with any Transaction Taxes on or prior
to the Closing Date.
(2) Notwithstanding anything contained herein to the
contrary, all property taxes, personal property taxes and similar ad
valorem obligations (including, without limitation, any such taxes which
Sellers are contractually obligated to pay under any lease agreement) in
respect of the Assets that relate to periods beginning prior to the
Closing Date and ending after the Closing Date ("STRADDLE PERIODS")
shall be prorated in accordance with the rules provided in Section
164(d) of the Code. Sellers shall prepare and file, or shall cause to be
prepared and filed, on a timely basis, all Straddle Period tax returns,
to the extent a return is required. Sellers shall provide each such
Straddle Period tax return to Buyer for its review and consent not less
than ten (10) business days in advance of the due date thereof, or shall
give written notice to Buyer of the amount due if a return is not
required, and, upon Buyer's review and consent to the amount thereof,
Buyer shall pay to Sellers its prorated portion of the tax shown to be
due on each such return or in such notice not less
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than five (5) business days before the due date of such payment.
(3) Except as provided in Sections 27.D(1) and (2) above,
(x) Sellers shall be responsible for and shall pay any and all taxes
with respect to the Business related to all periods prior to (and up to
and including) the close of business on the Closing Date, and (y) Buyer
shall be responsible for and shall pay any and all taxes with respect to
the Business relating to all periods after the close of business on the
Closing Date.
E. ACCOUNTS; PRODUCT RETURNS.
(1) (a) In the event that accounts receivable of the
Business which are Excluded Assets are collected by the Business or
Buyer, Buyer shall pay, within ten (10) days following the end of each
calendar month with respect to amounts received and identified, any and
all such accounts receivable to Sellers.
(b) In the event that accounts receivable of the Business
which are not Excluded Assets are collected by Sellers, Sellers shall
pay, within ten (10) days following the end of each calendar month with
respect to amounts received and identified, any and all such accounts
receivable to Buyer. In the event that accounts payable of the Business
which are not Assumed Liabilities are paid by Buyer, Sellers shall
reimburse, within ten (10) days following the end of each calendar
month, any and all such amounts paid to Buyer.
(2) With respect to accounts receivable of the Business
which are Excluded Assets, Sellers will utilize collection practices and
procedures which are consistent with those utilized in the other
businesses of Sellers in the ordinary course of such businesses with
respect to accounts of the same status.
(3) All offsets or charges (including without limitation
those relating to volume rebates and cooperative advertising) against
any accounts receivable of the Business by customers, which are
allocable to sales of the Business from January 1, 1997 until September
30, 1997, except any such offsets or charges relating to the Sunbeam
Guaranties, shall be borne two-thirds by Buyer (up to a maximum of $2.5
million) and one-third by Sellers. Notwithstanding the foregoing,
offsets or charges directly attributable to sales
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made by Sellers or Buyer, respectively, shall be borne by Sellers or
Buyer, respectively. All offsets or charges relating to the Sunbeam
Guaranties shall be fully directly attributable to sales made by Sellers
for purposes of this Agreement. Sellers or Buyer, respectively, shall
reimburse to the other party, by October 10, 1997, the amount
attributable to Sellers or Buyer, respectively, pursuant to this Section
27.E(3). Until September 30, 1997, Buyer shall offer programs involving
volume rebates and cooperative advertising substantially in accordance
with the past practices of Sellers, which practices are described on
SCHEDULE 27.E(3), unless Sellers otherwise consent.
(4) In the event that non-defective Products manufactured
and sold prior to the Closing Date are returned to the Business or Buyer
for any reason whatsoever (such Products being "SELLER NDRS"), Buyer
agrees to process return authorizations for such Seller NDRs in
accordance with Sellers' ordinary course practices as in effect prior to
the Closing Date. Buyer shall pay to Sunbeam Products sixty percent
(60%) of the standard cost, as of the Closing Date, of such Seller NDRs
to the extent Sellers have a related offset to their accounts
receivable. Promptly upon their receipt of such payment, Sellers shall
release the entire claim relating to such Seller NDRs against the
appropriate account debtor. In the event that Buyer has an offset to its
accounts receivable relating to Seller NDRs, Sellers shall pay to Buyer
the amount of such offset minus sixty percent (60%) of the standard
cost, as of the Closing Date, of such Seller NDRs. Buyer shall present
Sunbeam Products with a statement of charges and related reimbursement
obligations on a monthly basis (when applicable). Sellers shall have the
right of reasonable access, with prior notice, to Buyer's books and
records relating to the calculation of reimbursements for the Seller
NDRs.
(5) (a) In the event that Products manufactured and sold
by the Business after the Closing Date are returned to any Seller,
Sellers agree to promptly forward all such returned Products to Buyer,
at Buyer's expense.
(b) In the event that any item not constituting a Product
included in the Assets is returned to Buyer, Buyer agrees to promptly
forward all such returned items to Seller, at Seller's expense.
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(6) For a period of four (4) years following the Closing
Date, Buyer shall process warranty return authorizations in accordance
with the past practices of Sellers, which practices are described on
SCHEDULE 27.E(6), unless Sellers otherwise consent. Sellers shall have
the right of reasonable access, with prior notice, to Buyer's books and
records relating to the processing of warranty return authorizations
during such four (4) year period.
F. CONFIDENTIALITY AND NO-HIRE. The terms of the letter agreement
dated as of November 12, 1996 (the "CONFIDENTIALITY AGREEMENT") between Sunbeam
Products and USI are hereby incorporated by reference and shall continue in full
force and effect until the Closing. Sellers shall not, and shall not permit any
of their affiliates to, knowingly provide or make available, directly or
indirectly, any confidential or proprietary information used primarily in the
Business to any third party. Sellers shall cooperate with Buyer in any efforts
by Buyer to enforce any non-disclosure or confidentiality agreements included in
the Assumed Contracts, including without limitation any confidentiality
agreements with employees or agents of Sellers and with any prospective
purchasers of the Business. If any confidentiality or nondisclosure agreements
of Sellers relating to the Business are, by their terms, non-assignable, Seller
shall, at the request of Buyer, take all actions reasonably requested by Buyer
to enforce such agreement. Buyer hereby agrees that for a period of two (2)
years from the Closing Date, Buyer will (i) keep confidential and not disclose
to others any information provided to it by Sellers and not related to the
Business, and (ii) except as provided in Section 27.A(1), not hire any of the
management or other employees of Seller without obtaining prior written consent
of Sellers, which consent may be withheld in the sole discretion of Sellers.
Sellers shall not, and shall not permit any of their affiliates to, hire, offer
to hire, or solicit for employment any person who has been an employee of Buyer
engaged in the Business and is listed on SCHEDULE 27.F, without the consent of
Buyer, until such person has been separated from employment by Buyer for at
least one (1) year, except in the event that such person's employment was
terminated at the sole election of Buyer or a different subsidiary of USI.
G. NON-COMPETITION. For a period of five (5) years from the
Closing Date, neither Sellers nor any of their affiliates will directly or
indirectly engage in any Competitive Activities (as hereinafter defined). The
term "COMPETITIVE ACTIVITIES" shall mean:
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(i) engage in, continue in or carry on any business
which competes with the Business or is substantially similar
thereto, including owning or controlling any financial interest
in any corporation, partnership, firm or other form of business
organization which is so engaged; PROVIDED, HOWEVER, that nothing
herein shall prohibit (i) the acquisition by any Seller or any of
its affiliates of a diversified company having not more than 30%
of its sales (based on its most recent annual financial
statements) attributable to the marketing, production or sale of
products which compete directly with those sold by the Business,
PROVIDED, that if the annual sales so attributable exceed $35
million, Buyer will cause such sales to not exceed $35 million
within 18 months; or (ii) the acquisition of any Seller or any of
its affiliates by a company (A) having not more than 20% of its
sales (based on its most recent annual financial statements)
attributable to the marketing, production or sale of products
which compete directly with those sold by the Business or (B)
with respect to which such competing business units are divested
within 18 months so that such Seller or affiliate could comply
with clause (ii)(A) hereof; and PROVIDED FURTHER that ownership
by any Seller or any affiliate of securities having no more than
5% of the outstanding voting power of a company listed on any
national securities exchange or traded actively in the national
over the counter market shall not be deemed a violation of this
Section 27.G.
(ii) consult with, advise or assist, whether or not
for consideration, any corporation, partnership, firm or other
business organization which is now or becomes a competitor of
Buyer in any aspect with respect to the Business if such advice,
consultation or assistance relates to such competitor's
activities in relation to the Business, including, but not
limited to, promoting or otherwise endorsing the products of any
such competitor; soliciting customers or otherwise serving as an
intermediary for any such competitor; lending money or rendering
any other form of financial assistance to or engaging in any form
of business transaction on other than an arm's length basis with
any such competitor; or
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(iii) engage in any practice, the purpose of which
is to evade the provisions of this covenant not to compete.
The parties agree that the geographic scope of this covenant not
to compete shall extend throughout North America. In the event a court of
competent jurisdiction determines that the provisions of this covenant not to
compete are excessively broad as to duration, geographical scope or activity, it
is expressly agreed that this covenant not to compete shall be construed so that
the remaining provisions shall not be affected, but shall remain in full force
and effect, and any such over-broad provision shall be deemed, without further
action on the part of any person, to be modified, amended and/or limited, but
only to the extent necessary to render the same valid and enforceable in such
jurisdiction.
H. PRODUCT MARKING; BURDEN OF PROOF. Buyer shall stamp or
otherwise mark all Products manufactured by Buyer after the Closing Date so as
to enable such Products to be distinguished from Products manufactured by or for
Sellers prior to the Closing Date. After Closing, Buyer shall promptly provide
an officer's certificate to Sellers certifying that Buyer has complied with this
Section 27.H, which certificate shall be accompanied by an example or examples
of the stamps or other marks applied to such Products by Buyer. Buyer shall mark
such Products in accordance with the methods set forth on SCHEDULE 27.H, or such
other methods to which Sellers consent in writing, such consent not to be
unreasonably withheld.
I. SUNBEAM GUARANTIES. Buyer shall use its commercially
reasonable efforts to comply with the terms of delivery set forth in the
purchase orders of customers of the Business which are covered by the Sunbeam
Guaranties. Buyer shall treat the purchase orders of customers which are covered
by the Sunbeam Guaranties no less favorably than the purchase orders of
customers which are not covered by the Sunbeam Guaranties.
J. PAYMENTS ON ACCOUNTS. Sellers shall pay, in accordance
with their terms, all accounts payable outstanding on the Closing Date, except
those which constitute Assumed Liabilities or payables being disputed by Sellers
in good faith.
K. PARAGOULD GRILL PRESS. Sellers shall remove the press
used in manufacturing outdoor grills from the Paragould, Arkansas facility in
compliance with the terms of the lease (including, without limitation,
restoration provisions thereof) pertaining to such facility, by May 31, 1997.
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L. REMOVAL OF TRANSFERRED EQUIPMENT. Buyer shall remove (1) all
Equipment from the Portland, Tennessee manufacturing facility and the Nashville,
Tennessee facility by March 31, 1997 and (2) all administrative and office
furnishings and equipment located at the Portland free-standing office facility
promptly following the termination of the Portland Lease.
28. TERMINATION.
A. TERMS OF TERMINATION. This Agreement may be terminated at
any time prior to the Closing Date:
(1) by Buyer, if the conditions set forth in Section 7.D
shall not have been complied with or performed in any material respect
and such noncompliance or nonperformance shall not have been waived,
cured or eliminated (or by its nature cannot be cured or eliminated) by
Sellers on or before March 15, 1997;
(2) by Sellers, if the conditions set forth in Section 7.E
shall not have been complied with or performed in any material respect
and such noncompliance or nonperformance shall not have been waived,
cured or eliminated (or by its nature cannot be cured or eliminated) by
Buyer on or before March 15, 1997; or
(3) by Buyer or Sellers, in the event the Closing Date has
not occurred on or prior to the close of business on March 15, 1997 or
such later date as the parties hereto may agree in writing (unless such
event has been caused by the breach of this Agreement by the party
seeking such termination).
B. EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 28.A hereof, this Agreement shall thereafter
become void and have no effect, and no party hereto shall have any liability to
any other party hereto or its stockholders or directors or officers in respect
thereof, except as provided in Section 22 hereof and except that
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nothing herein shall relieve any party from liability for any breach hereof.
(SIGNATURES BEGIN ON NEXT PAGE)
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IN WITNESS WHEREOF, the parties hereto have caused this Asset
Purchase Agreement to be executed by their duly authorized officers as of the
day and year first written above.
SUNBEAM PRODUCTS, INC.
By: /s/ DAVID C. FANNIN
------------------------------------
Name: David C. Fannin
Title: Executive Vice President
SUNBEAM FURNITURE COMPANY
By: /s/ JANET KELLEY
------------------------------------
Name: Janet Kelley
Title: Vice President
OP II, INC.
By: /s/ JANET KELLEY
------------------------------------
Name: Janet Kelley
Title: Vice President
JACUZZI OUTDOOR PRODUCTS, INC.
By: /s/ GEORGE H. MACLEAN
------------------------------------
Name: George H. MacLean
Title: Vice President
Agreed and Acknowledged
SUNBEAM CORPORATION
By: /s/ DAVID. C. FANNIN
-----------------------------------
Name: David C. Fannin
Title: Executive Vice President
U.S. INDUSTRIES, INC.
By: /s/ JOHN A. MISTRETTA
- --------------------------------------
Name: John A. Mistretta
Title: Group Vice President
EXHIBIT 2.b
AMENDMENT TO ASSET PURCHASE AGREEMENT
AMENDMENT (this "Amendment"), dated as of March 17, 1997, to the
Asset Purchase Agreement (the "Agreement"), dated February 10, 1997, among
SUNBEAM PRODUCTS, INC., a Delaware corporation ("Sunbeam Products"), SUNBEAM
FURNITURE COMPANY, a Delaware corporation ("Sunbeam Furniture"), OP II, INC., a
Florida corporation ("Sunbeam OP"; and, together with Sunbeam Products and
Sunbeam Furniture, the "Sunbeam Transferors"), and SUNLITE CASUAL FURNITURE,
INC. (as assignee of Jacuzzi Outdoor Products, Inc.), a Delaware corporation
(the "Buyer"), and joined in by Sunbeam Corporation, a Delaware corporation and
the indirect parent corporation of the Sunbeam Transferors and U.S.
Industries, Inc., a Delaware corporation and the indirect parent corporation of
Buyer.
W I T N E S S E T H:
WHEREAS, the parties hereto desire to amend the Agreement; and
WHEREAS, Section 19 of the Agreement permits amendments to the
Agreement by written instrument signed by the parties to such amendment.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I.
AMENDMENTS TO THE AGREEMENT
1.1. PURCHASE AND SALE OF ASSETS. (a) Section 1.B of the
Agreement is hereby amended by (i) inserting the clause "(except for the
Murfreesboro Assets, as defined in the Manufacturing Services Agreement (as
defined in Section 7.A), subject, however, to the rights to purchase the
Murfreesboro Assets pursuant to the Manufacturing Services Agreement)" after
"Business", (ii) deleting the words "Murfreesboro, Tennessee and", (iii)
changing the word "facilities" on the eighth line to "facility" therein and (iv)
adding the words "provided to Buyer within five business days after the Closing
Date" and after the words "Closing Date".
(b) Section 1.C of the Agreement is hereby amended by deleting
the words "Paragould, Arkansas and" from such Section.
(c) Section 1.D of the Agreement is hereby amended by (i)
inserting the clause "(except such inventory located at the
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Murfreesboro facility, subject, however, to the rights granted pursuant to the
Manufacturing Services Agreement)" after "Business" and (ii) adding the words
"and provided to Buyer within five business days after the Closing Date" after
the words "Closing Date".
(d) Section 1.M(10) of the Agreement is hereby amended by
replacing subsection 1.M(10)(d) therein with the following: "(d) rights to
purchase Equipment and Inventory included in the Murfreesboro Assets pursuant to
the Manufacturing Services Agreement".
1.2. ASSUMED LIABILITIES. (a) Section 3.B is hereby amended
by inserting the clause "(except such purchase orders relating to Equipment
located at the Murfreesboro facility)" after "in the ordinary course of
business" therein.
(b) Section 3.C of the Agreement is hereby amended by inserting
the clause "(except such purchase orders relating to raw materials and supplies
to be delivered to the Murfreesboro facility)" after "Business" and after "in
accordance with past practices" therein.
(c) Sections 3.B and 3.C of the Agreement are amended by adding
the words "and provided to Buyer within five business days after the Closing
Date" (i) at the end of Section 3.B and (ii) after the words "Closing Date" in
the fifth line of Section 3.C.
1.3. CLOSING. Section 4.A of the Agreement is hereby amended by
substituting "March 17, 1997" in place of "March 3, 1997."
1.4. PURCHASE PRICE. The first sentence in Section 4.B(2) of the
Agreement is hereby amended by (i) substituting "$31" in place of "$21" (ii)
deleting clause (b) in its entirety, (iii) renumbering clauses (c) and (d)
therein as (b) and (c).
1.5. ESTIMATED PURCHASE PRICE. (a) Section 4.C of the Agreement
is hereby amended by deleting it in its entirety and replacing it with the
following:
"On and at the Closing, in consideration for the sale,
conveyance, transfer, assignment and delivery to Buyer of the
Assets, subject to the assumption of the Assumed Liabilities,
Buyer shall pay $62,137,000 (the "ESTIMATED PURCHASE PRICE",
which has been calculated based on ANNEX A hereto) in the manner
set forth below:
(i) If Sellers have satisfied the closing condition set forth
in Section 7.D(10) hereof, Buyer shall
2
<PAGE>
pay to the Sunbeam Transferors, as directed, an amount
equal to $62,137,000 by wire transfer of immediately
available funds to an account designated in writing by the
Sunbeam Transferors no less than two business days prior
to the Closing; or
(ii) If Buyer has waived the closing condition set forth in
Section 7.D(10), Buyer shall pay: (a) to the Sunbeam
Transferors, as directed, an amount equal to $42,137,000
by wire transfer of immediately available funds to an
account designated in writing by the Sunbeam Transferors
no less than two business days prior to the Closing and
(b) to the Escrow Agent (as defined in Section 8.A(9)), an
amount equal to $20,000,000 (the "Escrow Amount") by wire
transfer of immediately available funds to an account
designated in writing by the Escrow Agent."
(b) Section 4.E(1) of the Agreement is hereby amended by (i)
substituting "thirty (30)" in place of "fifteen (15)" and (ii) deleting the
parenthetical in the last sentence thereof and replacing it with "(which has
occurred prior to the Closing Date)".
1.6. FINANCIAL INFORMATION. Section 5.F of the Agreement is
hereby amended by inserting "(1)" before "Sellers have furnished" at the
beginning therein and by adding the following subsection (2) at the end thereof:
(2) Sellers have furnished to Buyer Statements of Operations
for the Business (including separate Statements of
Operations relating to the Sunbeam Furniture Business and
the Samsonite Business) for the two months ended March 2,
1997, as set forth on SCHEDULE 5.F(3). Such Statements of
Operations were derived from Sellers' books and records
and are true and correct in all material respects as to
the matters presented therein. Such Statements of
Operations have been prepared on a basis which is
consistent with the past practices of Sellers.
1.7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. Section
7.D of the Agreement is hereby amended by (a) adding the following language to
the end of the first sentence thereof:
"PROVIDED, that Buyer agrees that it shall waive the closing
condition set forth in Section 7.D(10) if Sellers fail to deliver
the documents referenced in
3
<PAGE>
Section 8.A(9)(i) through (iv) despite the exercise of best
efforts by Sellers; and
(b) deleting subsection (10) in its entirety and replacing it
with the following:
(10) Sellers shall have provided to Buyer evidence of the
defeasance of all obligations relating to the City of
Paragould, Arkansas ARKLA Industries Project, Series
1979 Industrial Revenue Bonds (the "PARAGOULD IRBS"). The
City of Paragould shall have delivered to Buyer a warranty
deed sufficient to deliver marketable title to the
Paragould, Arkansas facility formerly subject to lease in
connection with the Paragould IRBs.
1.8. DOCUMENT DELIVERIES. Section 8.A of the Agreement is
hereby amended by (a) amending subsection (5) thereto to add the following
language at the end thereof: "at an annual rental rate of $512,500" and (b)
adding the following subsections thereto immediately following subsection (8)
and prior to subsection (9), which is renumbered (11):
(9) Copies of the following items relating to the Paragould
IRBs: (i) documents evidencing the defeasance of the
Paragould IRBs, (ii) the redemption notice to be sent to
holders of the Paragould IRBs, (iii) a warranty deed to
accomplish the transfer of the Paragould facility formerly
subject to lease to Buyer signed by the City of Paragould,
(iv) such other documents as Buyer may reasonably
request in order to accomplish the delivery of the
Paragould facility to Buyer free and clear of all Liens;
PROVIDED, if Sellers despite the exercise of their best
efforts are unable to deliver the documents referenced in
clauses (i) through (iv) above by the close of business on
the Closing Date, then in lieu of the foregoing Sellers
shall instead deliver at the Closing copies of the
following items relating to the Paragould IRBs: (i) an
escrow agreement (the "Escrow Agreement") in form
mutually agreeable to Sellers, Buyer and Friday, Eldredge
& Clark (the "Escrow Agent") providing for the payment of
the Escrow Amount to Sellers upon (x) the defeasance of
the Paragould IRBs and (y) the transfer to Buyer of all
real property in Paragould, Arkansas currently leased and
owned by Sunbeam Products (it being understood that title
to the owned parcel shall not be transferred to Buyer
until such time as title to the leased parcel may be
transferred), (ii) a sublease in form mutually agreeable
to
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<PAGE>
Sunbeam Products and Buyer of the parcel at the Paragould
Facility currently leased by Sunbeam Products and a lease
in form mutually agreeable to Sunbeam Products and Buyer
of the parcel at the Paragould facility currently owned by
Sunbeam Products, each for a term equal to the term of the
Escrow Agreement with an alternative term of six months,
with an option to renew at Buyer's sole discretion for an
additional term of one year if Sunbeam Products fails to
deliver good marketable title by March 31, 1997 and (iii)
forms of all documents and certificates necessary to
accomplish the defeasance of the Paragould IRBs and
delivery of title after the Closing Date.
(10) Copies of an irrevocable redemption notice given by
Sunbeam Products in relation to the Stanley IRBs; and
1.9. INDEMNIFICATION. Section 11.A(1) of the Agreement is
hereby amended by adding the following subsection (i) thereto:
(i) Any matter or thing or action or failure to act by Sunbeam
Products, Arkla Industries, Arkla, Arkla Products, Preway,
Alibert, Inc., any guarantor of the Paragould IRBs, any
transferee of any of the foregoing, or any other person or
entity, whether in suit or not, arising out of, under, or
in connection in any way with the Paragould IRBs or the
Stanley IRBS, or any of the documents, instruments or
agreements executed in connection therewith (collectively,
the "BOND DOCUMENTS") whenever arising or accruing or
resulting in any way from any action or failure to act by
Sunbeam Products, Arkla Industries, Arkla, Arkla Products,
Preway, Alibert, Inc., any guarantor of the Paragould
IRBs, any transferee of any of the foregoing, or any other
person or entity, including, without limitation, any and
all losses, claims, demands, damages, liabilities or
expenses whatsoever caused by any breach or alleged breach
by Sunbeam Products, Arkla Industries, Arkla, Arkla
Products, Preway, Alibert, Inc., any guarantor of the
Paragould IRBs, or any such person or entity or any
agent thereof under any of the respective Bond Documents
or resulting from any claim against any Indemnified Party
by the bond trustee under the indenture relating to the
Paragould IRBs or the Stanley IRBs, the holders of any
Paragould IRBs or Stanley IRBs, or any other party to or
beneficiary of any of the other Bond Documents with
respect thereto.
5
<PAGE>
1.10. LIMITATIONS ON INDEMNITY. Section 11.D(2) of the Agreement
is hereby amended by inserting "5.F(2)," before "5.H" therein and by adding the
following clause at the end thereof:
or for any liabilities arising out of the matters referenced on
SCHEDULE 11.D(2).
1.11. FURTHER ASSURANCES. Section 23 of the Agreement is hereby
amended by inserting the following sentence after the first sentence therein:
Sellers shall cooperate with, and use their commercially
reasonable efforts to assist, Buyers in obtaining substitute
hazardous waste generator E.P.A. identification numbers, solid
waste registration numbers and other permits and licenses listed
on Schedule 1.M(13).
1.12. POST-CLOSING MATTERS. Section 27 of the Agreement is
hereby amended by adding the following Sections M and N at the end thereof:
M. REDEMPTION OF THE STANLEY IRBS. On the Closing Date, Sunbeam
Products shall deliver irrevocable notice to the bond trustee for the Stanley
IRBs exercising its right to call the Stanley IRBs for redemption on the
earliest practicable date for which notice can be given in accordance with the
terms of the indenture, which in any event shall not be more than 15 business
days after the Closing Date. Sunbeam Products shall take all necessary action to
insure that the Stanley IRBs are redeemed, in whole, within 15 business days
after the Closing Date.
N. JOINT USE OF SPACE IN THE MCCORMICK CENTER. Seller has leased
or entered into a license agreement for space at the McCormick Place in Chicago,
Illinois for the 1997 National Hardware Show (running from August 10, 1997 to
August 13, 1997). Subject to Seller obtaining any necessary consents, Sellers
and Purchasers agree that they will share the space on the third floor so leased
on an equal square footage basis for the 1997 show. Sellers and Purchasers
further agree that the respective portions of the space will be separated by a
ten foot aisle taken equally from each party's space. Purchasers agree to
reimburse Sellers for Sellers actual cost on a per foot basis, to lease or
license the space in amount proportionate to the space used by Purchaser plus
one-half of the aisle. Each party shall be responsible for the cost of its
respective display at the show.
6
<PAGE>
ARTICLE II.
MISCELLANEOUS
2.1. INTENT OF THE PARTIES WITH RESPECT TO CERTAIN MATTERS.
(a) Sellers and Buyer agree that it is their intent
(notwithstanding any failure to amend any provisions of the Agreement herein to
express such intent) that the Paragould IRBs are not included in the Assets, and
the obligations of Sellers under the Paragould IRBs are not included in the
Assumed Liabilities, and any provision in the Agreement that is not so amended
herein shall be deemed amended to express such intent.
(b) Sellers and Buyer agree that it is their intent
(notwithstanding any failure to amend any provisions of the Agreement herein to
express such intent) that the Murfreesboro Assets (as defined in the
Manufacturing Services Agreement) are not included in the Assets, and shall not
be purchased and sold under the Agreement on the Closing Date; that the
Murfreesboro Assets shall instead be purchased and sold at the times and for the
consideration described in the Manufacturing Services Agreement; and that any
provision in the Agreement that is not so amended herein shall be deemed amended
to express such intent.
2.2. DEFINITIONS. Capitalized terms used in this Amendment and
not defined herein shall have the meanings ascribed thereto in the Agreement.
2.3. EFFECT OF AMENDMENT; RESTATEMENT. Except as amended by this
Amendment, the Agreement shall be unamended and remain in full force and effect.
The Agreement, as amended by this Amendment, is hereinafter referred to as the
"Agreement", and the parties hereto hereby agree that the Agreement may be
restated to reflect the amendments provided for in this Amendment.
2.4. GOVERNING LAW. This amendment shall be governed by and
interpreted in accordance with the laws of the State of Delaware.
2.5. COUNTERPARTS. This Amendment may be executed in
counterparts, each of which shall be an original and all of which shall together
constitute one and the same instrument.
(SIGNATURES BEGIN ON NEXT PAGE)
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers as of the date first
written above.
SUNBEAM PRODUCTS, INC.
By: /s/ DAVID C. FANNIN
----------------------------
Name: David C. Fannin
Title: Executive Vice President
SUNBEAM FURNITURE COMPANY
By: /s/ DAVID C. FANNIN
-----------------------------
Name: David C. Fannin
Title: Vice President
OP II, INC.
By: /s/ JANET KELLEY
-----------------------------
Name: Janet Kelley
Title: Vice President
SUNLITE CASUAL FURNITURE, INC.
By: /s/ JOHN A. MISTRETTA
-----------------------------
Name: John A. Mistretta
Title: Vice President
Agreed and Acknowledged
SUNBEAM CORPORATION
By: /S/ DAVID C. FANIN
------------------------------
Name: David C. Fannin
Title: Executive Vice President
U.S. INDUSTRIES, INC.
By: /s/ JOHN A. MISTRETTA
------------------------------
Name: John A. Mistretta
Title: Vice President
8
<PAGE>
ANNEX A
SUNBEAM FURNITURE
PURCHASE PRICE ADJUSTMENT WORKSHEET
The Outdoor, Samsonite, and Consolidated information is derived from Schedule
5.F(1), "Statements of Assets and Liabilities", as provided in the executed
purchase agreement dated February 10, 1997, as amended as of March 17, 1997.
This statement is adjusted to exclude inventory and fixed asset values
associated with the Murfreesboro facility not being immediately transferred to
the purchasers, and the additional discount.
NOTE THAT PURCHASER REALIZES THE BENEFIT OF THE EXCESS AND OBSOLETE RESERVE AT
MURFREESBORO AT TIME OF SALE.
<TABLE>
<CAPTION>
$Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
Amended
Purchase Less: Less:
Less: Agreement Murfreesboro Additional Revised
Outdoor Samsonite Consolidated Discount Total Inventory/FA Discount Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Petty Cash 2 2 4
Inventory:
Raw Materials 8,621 4,924 13,545 (3,739)
Work in Process 5,989 3,596 9,585 (2,719)
Finished Goods 30,266 1,806 32,072 (1,706)
Other (a) 562 - 562 -
Seasonal Variance 7,282 - 7,282 -
Excess and Obsolete (7,300) (1,068) (8,368) -
Shrink/BTP (500) (145) (645) -
Standards Revaluation (3,042) 55 (2,987) (55)
Net Inventory 41,878 9,168 51,046 (8,219)
Prepaid Expenses
Rents 213 118 331
Deposits 15 - 15
Other (b) 47 97 144
Net PP&E 51,070 2,870 53,940 (2,529)
Total Assets 93,225 12,255 105,480 (10,748)
Accrued Payroll
& Vacation 1,209 386 1,595
IRB (c) - - -
Total Liabilities 1,209 386 1,595
Net Amount $ 92,016 $11,869 $103,885 $ (21,000) $ 82,885 $(10,748) $ (10,000) $62,137
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes raw materials in transit ($559K) and repack parts ($3K)
(b) Includes prepaid royalty, holiday, and other
(c) To be paid by Sunbeam outside of closing
9
EXHIBIT 10.d
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, effective as of January 1, 1997 (the
"Effective Date"), by and between DONALD R. UZZI (the "Executive") and SUNBEAM
CORPORATION, a Delaware corporation (the "Company").
RECITALS
WHEREAS, the Executive is currently employed by the Company; and
WHEREAS, Company desires to retain the Executive and the Executive
desires to furnish services to the Company on the terms and conditions
hereinafter set forth; and
WHEREAS, the parties desire to enter into this Agreement setting forth
the revised terms and conditions of the employment relationship of the Executive
with the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and
the Executive hereby accepts such employment, on the terms and conditions
hereinafter set forth.
2. EMPLOYMENT PERIOD. The period of employment of the Executive by the
Company hereunder (the "Employment Period") shall commence on the Effective Date
and shall end on December 31, 1999 (or the Date of Termination (as defined in
Section 6 below), if earlier).
3. POSITION AND DUTIES. The Executive shall serve as Executive Vice
President, Worldwide Consumer Products, and shall have such responsibilities,
duties and authority as are consistent with such position and such other duties
as may from time to time be assigned to him by the Chief Executive Officer. The
Executive agrees to devote substantially all his working time, attention and
energies to the performance of his duties for the Company.
4. PLACE OF PERFORMANCE. The principal place of employment of the
Executive shall be at the Company's principal executive offices in Palm Beach
County, Florida, or such other location as may be agreed to by the Board. In the
event that the Company's principal executive offices are moved from Palm Beach
County, Florida, the Company shall promptly pay, or reimburse the Executive
for, all reasonable expenses incurred by the Executive relating to any change of
the Executive's residence from Palm Beach County, Florida, in connection with
his employment hereunder, including, without limitation, reasonable expenses
for himself and his family of travel, moving, storage and suitable lodging and
maintenance, and the Company shall reimburse the Executive on a grossed up basis
in the event that any tax is assessed upon him in relation to any such expenses.
The Company shall pay or reimburse the Executive for all reasonable costs and
expenses of residential relocation incurred by him in connection with each and
every additional change, if any, in the location of the principal executive
offices of the Company, and the Executive shall be reimbursed by the Company on
a grossed up basis in the event that any tax is assessed upon him in relation to
any such costs or expenses.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. As compensation for the performance by the
Executive of his duties hereunder, during the Employment Period the Company
shall pay the Executive a base salary
<PAGE>
at an annual rate of $400,000 (the "Base Salary"), which Base Salary
shall be payable in substantially equal semi-monthly installments. It is agreed
that there shall be no increase or decrease in the Base Salary during the
Employment Period. The parties agree that the Executive shall not be entitled to
participate in any other bonus or incentive compensation programs of the
Company.
(b) STOCK OPTION GRANTS. Effective as of the Effective Date, by
action of the Executive Development and Compensation Committee of the Board of
Directors, the Executive has been granted (in addition to options previously
granted to him) a stock option (the "Option Award") to purchase 100,000 shares
of Common Stock pursuant to the Company's Equity Team Plan ("Option Plan"),
which options are granted upon the terms and conditions as set forth in the
Option Plan (at an exercise price of $25.73 per share). Such Option Award shall
vest in equal increments on the first, second and third anniversaries of the
grant date and shall be subject to and modified by all other terms and
provisions of this Agreement, as expressly set forth herein. In the event of any
conflict between any terms of the Option Plan and the terms and provisions of
this Agreement, the terms and provisions of this Agreement shall take precedence
and shall be controlling as between such documents.
(c) EXPENSES. During the Employment Period, the Company shall
reimburse the Executive for all reasonable business expenses in
accordance with applicable policies and procedures then in force.
(d) VACATION AND OTHER ABSENCES. The Executive shall be entitled
to paid vacation and other paid absences, whether for holidays, illness,
personal time or any similar purposes, during the Employment Period in
accordance with policies applicable generally to other Executive Vice Presidents
of the Company; provided, however, that the Executive shall always be entitled
to at least six weeks of paid vacation in each calendar year and pro rata for
part of a year. Up to four weeks per year of unused vacation may be maintained
by the Executive on a cumulative basis and may be subsequently used in any year
or if not so used, the Executive shall be compensated for any unused vacation
days upon the termination of this Agreement for any reason.
(e) TAX PLANNING SERVICES. During the Employment Period, the
Company shall provide the Executive with tax-related advice and services without
cost or expense to him and shall reimburse the Executive on a grossed up basis
in the event that any tax is assessed upon him in relation to such services.
(f) OTHER BENEFITS. During the Employment Period, the Executive
shall be eligible to participate at no cost or expense to him in welfare plans
and programs (including any tax-deferred savings plan, group life insurance
plan, medical and dental insurance plan, and accident and disability insurance
plan) ("Benefit Plans") applicable generally to employees and/or senior
executives of the Company. The Company will waive, or obtain the waiver of, any
waiting periods for eligibility under the Benefit Plans or will provide
comparable benefits to the Executive without cost to him during the waiting
period.
6. TERMINATION. The Executive's employment hereunder may be
terminated as follows:
(a) DEATH. The Executive's employment shall terminate upon
his death, and the date of his death shall be the Date of Termination.
2
<PAGE>
(b) DISABILITY. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from his duties hereunder on a full-time basis for one hundred and twenty
(120) consecutive days and, within thirty (30) days after written Notice of
Termination (as defined in Section 6(g) hereof), shall not have returned to the
performance of his duties hereunder on a full-time basis ("Disability"), the
Company may terminate the Executive's employment hereunder. In this event, the
Date of Termination shall be thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have returned to the performance of
his duties on a full-time basis during such thirty (30) day period).
(c) CAUSE. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment hereunder:
(i) upon the Executive's conviction for the
commission of a felony (or a plea of nolo contendere thereto);
(ii) willful failure by the Executive substantially
to perform his duties hereunder (other than any such failure
resulting from the Executive's incapacity due to Disability). For
purposes hereof, no act or failure to act by the Executive shall be
considered "willful" unless done or omitted to be done by him not in
good faith or without reasonable belief that his action or omission
was in the best interests of the Company or contrary to written
instructions of the Chief Executive Officer or the Board of
Directors; or
(iii) failure of the Executive to meet the
performance objectives prescribed for him by the Company's Chief
Executive Officer, in good faith, from time to time. In event
termination for Cause is premised on this subsection (c)(iii), the
Executive shall be given written notice of his performance
deficiencies and a thirty (30) day period within which to correct or
overcome those deficiencies. If the Executive shall be unable or
unwilling to correct such deficiencies in performance during such
thirty (30) day period, then his Date of Termination shall be the
date following such thirty (30) period on which the Company's Chief
Executive Officer advises the Executive in writing (in a Notice of
Termination) that he has failed to correct the deficiencies in
performance, providing in reasonable detail the reasons for such
determination by the Chief Executive Officer.
The Date of Termination shall be the date specified in the
Notice of Termination; provided, however, that, in the case of a
termination for Cause under clause (ii) above, the Date of
Termination shall not be earlier than 30 days after delivery of the
Notice of Termination. Anything herein to the contrary
notwithstanding, if, following a termination of the Executive's
employment by the Company for Cause based upon the conviction of the
Executive for a felony, such conviction is overturned in a final
determination on appeal, the Executive shall be entitled to the
payments and the economic equivalent of the benefits the Executive
would have received if his employment had been terminated by the
Company without Cause.
(d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The
Executive may terminate his employment hereunder for Good Reason, provided that
the Executive shall have delivered a Notice of Termination (as defined in
Section 6(g) hereof) within ninety (90) days after the occurrence of the event
of Good Reason giving rise to such termination. For purposes of this
3
<PAGE>
Agreement, "Good Reason" shall mean the occurrence of one or more of the
following circumstances, without the Executive's express written consent, which
are not remedied by the Company within thirty (30) days of receipt of the
Executive's Notice of Termination:
(i) an assignment to the Executive of any duties
materially inconsistent with his positions, duties, responsibilities and
status with the Company or any material limitation of the powers of the
Executive not consistent with the powers of the Executive contemplated
by Section 3 hereof; or
(ii) any removal of the Executive from, or any
failure to re-elect the Executive to, the executive officer position
specified in Section 3 of this Agreement (or to another senior executive
position with the Company at no decrease in compensation); or
(iii) any other material breach by the Company of
this Agreement.
In the event of a termination for Good Reason, the Date of
Termination shall be the date specified in the Notice of Termination, which
shall be no more than thirty (30) days after the Notice of Termination.
(e) OTHER TERMINATIONS. The Company may terminate the
Executive's employment hereunder at any time, subject to the provisions of
Section 7(e) hereof. The Executive may terminate his employment at any time
subject to the provisions of Section 7(d) hereof. If the Executive's employment
is terminated hereunder for any reason other than as set forth in Sections 6(a)
through 6(d) hereof, the date on which a Notice of Termination is given or any
later date (within 30 days) set forth in such Notice of Termination shall be the
Date of Termination.
(f) TERMINATION BY THE EXECUTIVE UPON CHANGE IN CONTROL.
Upon a Change in Control (as defined below), the Executive shall have the right,
upon delivery to the Company of a Notice of Termination (which shall specify a
Date of Termination not less than 30 days after such Notice of Termination), to
terminate his employment under this Agreement and to receive the payments
provided pursuant to Section 7(f) below. If the Executive shall elect to
terminate his employment with the Company other than upon a Change in Control,
he shall receive only the compensation referred to in Section 7(d) below. For
purposes of this Agreement, a Change in Control shall mean the occurrence of
any one of the following events:
(i) any "person" as such term is used in Sections
3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended,
becomes a "beneficial owner," as such term is used in Rule 3d-3
promulgated under that Act, of 25% or more of the voting stock of the
Company (other than a person that is currently the beneficial owner of
such percentage of the Company's voting stock);
(ii) the majority of the Board consists of
individuals other than Incumbent Directors, which term means the members
of the Board on the date of this Agreement and the individuals
designated as directors by the Chief Executive Officer of the Company;
provided that any person becoming a director subsequent to such date
whose election or nomination for election was supported by two-thirds of
the directors who then comprised the Incumbent Directors shall be
considered to be an Incumbent Director;
(iii) the Company, without the Executive's
consent, adopts any
4
<PAGE>
plan of liquidation providing for the distribution of all or
substantially all of its assets; or
(iv) all or substantially all of the assets or
business of the Company are disposed of pursuant to a merger,
consolidation or other transaction (unless the shareholders of the
Company immediately prior to such merger, consolidation or other
transaction beneficially own, directly or indirectly, in substantially
the same proportion as they owned the voting stock of the Company, all
of the voting stock or other ownership interests of the entity or
entities, if any, that succeed to the business of the Company).
(g) NOTICE OF TERMINATION. Any termination of the
Executive's employment hereunder by the Company or by the Executive (other than
termination pursuant to Section 6(a) hereof) shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 13
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated. If any dispute concerning a Notice of Termination of
the Executive's employment under Section 6(b), 6(c) or 6(d) hereof results in a
determination that a proper basis for such termination did not exist under such
section, the Executive's employment under this Agreement shall be treated, with
respect to a Notice of Termination pursuant to Section 6(b) or 6(c) hereof, as
having been terminated pursuant to Section 6(e) hereof or, with respect to a
Notice of Termination pursuant to Section 6(d) hereof, as having not been
terminated.
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) DISABILITY PERIOD. During any period during the
Employment Period that the Executive fails to perform his duties hereunder as a
result of incapacity due to physical or mental illness ("Disability Period"),
the Executive shall continue to (i) receive his full Base Salary and (ii)
participate in the Benefit Plans. Such payments made to the Executive during the
Disability Period shall be reduced by the sum of the amounts, if any, payable to
the Executive at or prior to the time of any such payment under disability
benefit plans of the Company or under the Social Security disability insurance
program, and which amounts were not previously applied to reduce any such
payment.
(b) DEATH. If the Executive's employment hereunder is
terminated as a result of death, then:
(i) the Company shall pay the Executive's estate or
designated beneficiary, as soon as practicable after the Date of
Termination, any Base Salary installments due in the month of death and
any reimbursable expenses, accrued or owing the Executive hereunder as
of the Date of Termination; and
(ii) the Options granted to the Executive pursuant
to the Option Award shall become vested and exercisable, as of the Date
of Termination, to the extent such Option Award would have otherwise
become vested on or before the first anniversary of the Date of
Termination, and all vested Options shall remain exercisable for a
period of one year following such Date of Termination and shall
thereafter be completely forfeited and canceled; any Options that would
not have become vested and exercisable on or before the first
anniversary of the Date of Termination shall terminate and be forfeited
as of the
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Date of Termination.
(c) DISABILITY. If the Executive's employment hereunder is
terminated as a result of Disability, then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses, accrued or owing the Executive hereunder for
services as of the Date of Termination; and
(ii) the Options granted to the Executive pursuant
to the Option Award shall become vested and exercisable, as of the Date
of Termination, to the extent such Option Award would have otherwise
become vested on or before the first anniversary of the Date of
Termination, and all vested Options shall remain exercisable for a
period of three years following such Date of Termination and shall
thereafter be completely forfeited and canceled; any Options that would
not have become vested and exercisable on or before the first
anniversary of the Date of Termination shall terminate and be forfeited
as of the Date of Termination.
(d) CAUSE OR BY EXECUTIVE OTHER THAN FOR GOOD REASON. If
the Executive's employment hereunder is terminated by the Company for Cause or
by the Executive other than for Good Reason, then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses accrued or owing the Executive hereunder for
services as of the Date of Termination; and
(ii) the Executive shall immediately forfeit any
unvested portion of the Option Award. In the event of termination by the
Company for Cause, the Executive shall have the right to exercise the
vested unexercised portion of the Option Award for a period of ninety
(90) days after the Date of Termination, and the unexercised portion of
such Option Award shall be forfeited thereafter. In the event of
termination by the Executive other than for Good Reason the Executive
shall have the right to exercise the vested unexercised portion of the
Option Award for a period of one year following the Date of Termination
and the unexercised portion of such Option Award shall be forfeited
thereafter.
(e) TERMINATION BY COMPANY WITHOUT CAUSE OR BY THE
EXECUTIVE WITH GOOD REASON. If the Executive's employment hereunder is
terminated by the Company (other than for Cause or Disability) or by the
Executive for Good Reason, then:
(i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses, accrued or owing the Executive hereunder for
services as of the Date of Termination;
(ii) the Company shall immediately pay to the
Executive as liquidated damages and not as a penalty a lump sum amount
equal to the total Base Salary that would have otherwise been payable to
the Executive with respect to the period commencing immediately
following the Date of Termination and ending on July 29, 1999, at the
annualized rate in effect at the time Notice of Termination is given;
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<PAGE>
(iii) the Options granted to the Executive pursuant
to the Option Award shall become fully vested and exercisable, as of the
Date of Termination, and the Option Award shall remain exercisable for
the balance of its original 10-year term; and
(iv) the Executive shall continue to participate in
all employee benefit plans and programs in which the Executive was
entitled to participate immediately prior to the Date of Termination, in
accordance with the terms of such plans and programs as in effect from
time to time, through December 31, 1999; provided that the Executive's
continued participation is permitted under the general terms and
provisions of such plans and programs. In the event that the Executive's
participation in any such plan or program is barred, the Company shall
arrange to provide the Executive and his dependents with benefits
substantially the same as those which the Executive and his dependents
would otherwise have been entitled to receive under such plans and
programs from which their continued participation is barred or provide
their economic equivalent.
(f) TERMINATION UPON CHANGE IN CONTROL. If the
Executive shall elect to terminate his employment under this Agreement
upon a Change in Control, the Company shall pay to the Executive the
payments described in Sections 7(e)(i), (ii), (iii) and (iv) above.
8. GROSS-UP FOR EXCISE TAX. In the event that the Executive
receives any payment or benefit (including but not limited to the payments or
benefits pursuant to Section 7 of this Agreement) (a "Payment") that is subject
to the excise tax (the "Excise Tax") under Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), the Company shall pay to the
Executive, as soon thereafter as practicable, an additional amount (a "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction
of any Excise Tax imposed upon the Payment and any federal, state and local
income tax and Excise Tax imposed upon the Gross-Up Payment shall be equal to
the Payment. The determination of whether an Excise Tax is due in respect of any
payment or benefit, the amount of the Excise Tax and the amount of the Gross-Up
Payment shall be made by an independent auditor (the "Auditor") jointly selected
by the Company and the Executive and paid by the Company. If the Executive and
the Company cannot agree on the firm to serve as the Auditor, then the Executive
and the Company shall each select one nationally recognized accounting firm and
those two firms shall jointly select the nationally recognized accounting firm
to serve as the Auditor. Notwithstanding the foregoing, for purposes of
determining the Gross-Up Payment in respect of any Payment, (i) any other
payments or benefits received or to be received by the Executive in connection
with a Change in Control or the Executive's termination of employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a Change in
Control or any person affiliated with the Company or such person) shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2) of the
Code, and all "excess parachute payments" within the meaning of Section 280G of
the Code shall be treated as subject to the Excise Tax, unless in the opinion of
tax counsel selected by the Auditor, such other payments or benefits (in whole
or in part) do not constitute parachute payments, or are otherwise not subject
to the Excise Tax, and (ii) the Executive shall be deemed to pay federal income
tax at the highest marginal rate applicable in the calendar year in which the
Gross-Up Payment is made, and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
on the Date of Termination, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes. In the
event the actual Excise Tax or such income tax is more or less than the amount
used to calculate the Gross-Up Payment, the
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Executive or the Company, as the case may be, shall pay to the other an amount
reflecting the actual Excise Tax or such income tax0 , plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code.
9. MITIGATION. The Executive shall not be required to mitigate
amounts payable pursuant to Section 7 hereof by seeking other employment or
otherwise, nor shall there be any offset against such payments on account of (a)
any remuneration attributable to any subsequent employment that he may obtain or
(b) any claims the Company may have against the Executive.
10. CONFIDENTIAL INFORMATION, REMOVAL OF DOCUMENTS,
NON-COMPETITION.
(a) CONFIDENTIAL INFORMATION. The Executive shall hold in
a fiduciary capacity for the benefit of the Company and its subsidiaries (the
"Sunbeam Entities") all trade secrets, confidential information, and knowledge
or data relating to the Sunbeam Entities and the businesses and investments of
the Sunbeam Entities, which shall have been obtained by the Executive during the
Executive's employment by the Company, including such information with respect
to any products, improvements, formulas, designs or styles, processes, services,
customers, suppliers, marketing techniques, methods, future plans or operating
practices ("Confidential Information"); PROVIDED, HOWEVER, that Confidential
Information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by the Executive) or any
specific information or type of information generally not considered
confidential by persons engaged in the same business as the Company, or
information disclosed by the Company or any officer thereof to a third party
without restrictions on the disclosure of such information. Except as may be
required or appropriate in connection with his carrying out his duties under
this Agreement, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process, communicate
or divulge any such Confidential Information to anyone other than the Company
and those designated by the Company.
(b) REMOVAL OF DOCUMENTS. All records, files, drawings,
documents, models, and the like relating to the business of the Sunbeam
Entities, which the Executive prepares, uses or comes into contact with and
which contain Confidential Information shall not be removed by the Executive
from the premises of any Sunbeam Entity (without the written consent of the
Company) during or after the Employment Period unless such removal shall be
required or appropriate in connection with his carrying out his duties under
this Agreement, and, if so removed by the Executive, shall be returned to such
Sunbeam Entity immediately upon termination of the Executive's employment
hereunder.
(c) NON-COMPETITION. During (i) the Executive's employment
with the Company and (ii) the two (2) year period immediately following the
Executive's Date of Termination, the Executive (A) shall not engage, anywhere
within the geographical areas in which any Sunbeam Entity is then conducting its
business operations, directly or indirectly, alone, in association with or as
a shareholder, principal, agent, partner, officer, director, employee or
consultant of any other organization, in any business (a "Competitive Business")
which competes with any business then being conducted by such Sunbeam Entity;
(B) shall not solicit or encourage any officer, employee or consultant of any of
the Sunbeam Entities to leave the employ of any of the Sunbeam Entities for
employment by or with any Competitive Business; and (C) shall not solicit,
divert or take away, or attempt to divert or to take away, the business or
patronage of any of the customers or accounts, or prospective customers or
accounts, of any Sunbeam Entity, which were contacted, solicited or served by
the Executive while employed by the Company; provided, however,
9
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that nothing herein shall prohibit the Executive from owning a maximum of two
percent (2%) of the outstanding stock of any publicly traded corporation.
Following the Date of Termination, ownership by the Executive of not more than
five percent (5%) of any publicly traded corporation shall not constitute a
violation hereof. If, at any time, the provisions of this Section 10(c) shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 10(c) shall
be considered divisible and shall become and be immediately amended to only such
area, duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter; and
the Executive agrees that this Section 10(c) as so amended shall be valid and
binding as though any invalid or unenforceable provision had not been included
herein. For purposes of this Section 10(c), the design, manufacture and
marketing of outdoor barbecue grills, casual outdoor and indoor furniture and
small kitchen appliances shall be construed to be a Competitive Business;
provided, however, that the gross revenues derived from sales of such products
by such competitor are greater than the lesser of (i) 10% of its total revenues
and (ii) $500,000,000.
(d) REMEDIES. In the event of a breach or threatened
breach of this Section 10, the Executive agrees that the Company shall be
entitled to apply for injunctive relief in a court of appropriate jurisdiction
to remedy any such breach or threatened breach, the Executive acknowledging
that damages would be inadequate and insufficient.
(e) CONTINUING OPERATION. Any termination of the
Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 10.
11. INDEMNIFICATION. The Company shall indemnify the Executive to
the full extent permitted by law and the By-laws of the Company for all
expenses, costs, liabilities and legal fees which the Executive may incur in the
discharge of all his duties hereunder, including, without limitation, the right
to be paid in advance by the Company for his expenses in defending a civil or
criminal action, proceeding or investigation prior to the final disposition
thereof. The Executive shall be insured under the Company's Directors' and
Officers' Liability Insurance Policy as in effect from time to time.
Notwithstanding any other provision of this Agreement to the contrary, any
termination of the Executive's employment or of this Agreement shall have no
effect on the continuing operation of this Section 11.
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12. SUCCESSORS; BINDING AGREEMENT.
(a) COMPANY'S SUCCESSORS. No rights or obligations of the
Company under this Agreement may be assigned or transferred by the Company
except that such rights or obligations may be assigned or transferred pursuant
to a merger or consolidation in which the Company is not the continuing entity,
or the sale or liquidation of all or substantially all of the business and/or
assets of the Company, provided that the assignee or transferee is the successor
to all or substantially all of the business and/or assets of the Company and
such assignee or transferee assumes the liabilities, obligations and duties of
the Company, as contained in this Agreement, either contractually or as a matter
of law. The Company will require any such successor to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. As used in this Agreement (except in the definition of Change in
Control), "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 12 or which otherwise becomes bound
by all the terms and provisions of this Agreement or by operation of law.
(b) EXECUTIVE'S SUCCESSORS. This Agreement shall not be
assignable by the Executive. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. Upon the Executive's death, all amounts to
which he is entitled hereunder, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
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13. NOTICE. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Donald R. Uzzi
-----------------------
-----------------------
If to the Company:
Sunbeam Corporation
1615 South Congress Avenue
Suite 200
Delray Beach, FL 33445
Attn: General Counsel
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
14. MISCELLANEOUS. No provisions of this Agreement may be
modified unless such modification is agreed to in writing signed by the
Executive and an authorized officer of the Company. Any waiver or discharge must
be in writing and signed by the Executive or such an authorized officer of the
Company, as the case may be. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware without regard to its conflicts of law principles.
15. WITHHOLDING. Any payments provided for in this Agreement
shall be paid net of any applicable withholding of taxes required under federal,
state or local law.
16. ARBITRATION.
(a) Except as otherwise provided herein, all
controversies, claims or disputes arising out of or related to this Agreement
shall be settled under the rules of the American Arbitration Association then
in effect in the State of Florida, as the sole and exclusive remedy of either
party, and judgment upon such award rendered by the arbitrator(s) may be entered
in any court of competent jurisdiction. The costs of the arbitration shall be
borne as determined by the arbitrators PROVIDED, HOWEVER, that if the Company's
position is not substantially upheld, as determined by the arbitrators, the
expenses of the Executive (including, without limitation, fees and expenses
payable to the AAA and the arbitrators, fees and expenses payable to witnesses,
including expert witnesses, fees and expenses payable to attorneys and other
professionals, expenses of the Executive in attending the hearings, costs in
connection with obtaining and presenting evidence and
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costs of transcription of the proceedings), as determined by the arbitrators,
shall be reimbursed to him by the Company.
(b) Notwithstanding the provisions of Section 16(a) above,
the parties agree that nothing contained herein shall preclude the Company from
bringing an action in a court of competent jurisdiction (whether prior to or
during any arbitration proceeding) seeking to specifically enforce the
provisions of Section 10 hereof by means of seeking an injunction or other
equitable relief.
17. ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the terms
of the Option Plan set forth the entire agreement of the parties hereto in
respect of the subject matter contained herein, supersede all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto; and any prior agreement of the parties hereto or thereto in
respect of the subject matter contained herein or therein, including but not
limited to that certain Employment Agreement between the Company and the
Executive dated January 1, 1995, is hereby terminated and canceled. This
Agreement may be signed in counterparts.
18. CONFLICT WITH OPTION PLAN. To the extent, if any, of any
inconsistency or conflict between the terms and provisions of this Agreement and
the Option Plan, this Agreement shall control in all matters.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on August 7,
1996 to be effective as of the Effective Date.
SUNBEAM CORPORATION
By:___________________
Name: ALBERT J. DUNLAP
Title: CHAIRMAN & CEO
______________________
Donald R. Uzzi
12
e EXHIBIT 10.f
AMENDED AND RESTATED
SUNBEAM CORPORATION
EQUITY TEAM PLAN
(Amended as of December 5, 1996)
1. PURPOSE.
The purpose of the Sunbeam Corporation Equity Team Plan is to provide
incentives for selected executives, key employees, Outside Directors and
Designated Others to promote the financial success and progress of
Sunbeam Corporation. Capitalized terms used throughout this Plan shall
have the meanings ascribed to them in Section 16 hereof.
2. STOCK SUBJECT TO THE PLAN.
(a) Subject to the provisions of this Section and Section 9, the
maximum number of shares of Stock that may be issued under the
Plan is 11,500,000 shares, to be allocated as follows:
(i) 11,300,000 shares may be issued in connection with the
grant of Options pursuant to Section 3; and
(ii) 200,000 shares may be issued in connection with the grant
of Restricted Stock Awards pursuant to Section 3.
Such shares may be either authorized but unissued shares or
treasury shares.
(b) The number of shares subject to an Option or a Restricted
Stock Award that has been granted under the Plan shall no longer
be charged against the limitation provided in Section 2(a), and
may again be made subject to Options or Restricted Stock Awards,
as the case may be, to the extent that Options expire unexercised
or are terminated, surrendered or canceled before exercise or
Restricted Stock Awards are forfeited, terminated, surrendered or
canceled due to a Participant's termination of employment or
service as an Outside Director or for any other reason.
3. GRANTS OF OPTIONS AND RESTRICTED STOCK AWARDS.
(a) Subject to the provisions of the Plan, the Committee may at any
time, or from time to time, grant Options to officers, key
employees, Outside Directors of the Company (or its subsidiaries)
and Designated Others.
(b) Subject to the provisions of the Plan, the Committee may at any
time, or from time to time, grant shares of Stock which are
subject to the Restrictions set forth in Section 4(b)
("Restricted Stock") to officers, key employees and Outside
Directors of the Company (or its subsidiaries) and Designated
Others.
(c) The Committee shall cause shares of Restricted Stock to be
issued to each Outside Director immediately and automatically
upon his or her election, re-election or appointment as a
Director of the Company. If such Outside Director is elected at
an Annual Meeting of the Shareholders of the Company (the "Annual
Meeting"), the number of shares of Restricted Stock to be issued
shall
<PAGE>
be 1,500. The number of shares of Restricted Stock to be issued
to an Outside Director who is elected or appointed at any time
other than at an Annual Meeting shall be 1,500 multiplied by a
fraction, the numerator of which shall be the number of days
after the date of such election to and including the date of the
next Annual Meeting (which for such purpose shall be assumed to
be the next May 15) and the denominator of which shall be 365;
provided, however, (i) that in the case of an Outside Director
elected to the Board for the first time during the period
beginning August 1, 1996 and ending December 31, 1996, the number
of such shares shall not be prorated, and each such Outside
Director shall receive 1,500 shares for the period of his service
between the date of his election and the date of the next Annual
Meeting (assumed to be May 15, 1997); and (ii) that each
incumbent Outside Director, elected prior to August 1, 1996,
shall receive that number of shares of Restricted Stock which
results from applying to 1,500 such shares the proration formula
provided above, using for such calculation the period from August
6, 1996 until and including the date of the next Annual Meeting
(assumed to be May 15, 1997).
(d) Deleted.
(e) Each Option shall be evidenced by a Stock Option Agreement, and
each Restricted Stock Award shall be evidenced by a Restricted
Stock Award Agreement, each in a form approved by the Committee
or by a Company officer designated by the Committee.
(f) Notwithstanding any other provision of the Plan, no person shall
be granted Options for more than 250,000 shares of Stock or
Restricted Stock Awards for more than 25,000 shares of Stock in
any single fiscal year of the Company.
4. TERMS AND CONDITIONS.
(a) OPTIONS.
(i) An Option shall entitle the Participant who holds it to
exercise the Option on and subject to the terms,
conditions and restrictions of the Plan (as the Plan may
be amended from time to time) and such additional terms,
conditions and restrictions as may be imposed by the
Committee at the time of grant.
(ii) Unless otherwise specified by the Committee, the term
of each Option granted prior to May 15, 1996 (herein the
"1996 Amendment Date") and which is In-the-Money as of the
1996 Amendment Date shall commence on the date of grant of
the Option and shall expire at the close of business on
the earlier of (A) the tenth anniversary of the date of
grant or (B) the 45th day following the termination of the
Participant's employment with, or service as director of,
the Company (or a subsidiary). Unless otherwise specified
by the Committee, the term of each Option granted on or
after the 1996 Amendment Date and the term of each Option
granted prior to the 1996 Amendment Date which is Out-
of-the- Money as of the 1996 Amendment Date, shall
commence on the Grant Date of the Option and shall expire
at the close of business on the earliest of (A) the tenth
anniversary of the Grant Date; or (B) the third
anniversary of the date of termination of the
Participant's employment with, or service as a director
of, the Company (or a subsidiary), in the case of
retirement or termination by the Company without Cause; or
(C) 90 days after the date of termination of employment in
the case of resignation, voluntary departure or
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termination by the Company with Cause; or (D) in the case
of a Designated Other, the date specified in the Stock
Option Agreement. Notwithstanding the foregoing sentence,
Participants who are subject to Section 16(b) of the
Exchange Act shall have until the earlier of (A) the tenth
anniversary of the Grant Date; or (B) the third
anniversary of the date of termination of their employment
with, or service as a director of the Company, regardless
of the cause, within which to exercise Options which are
granted on or after the 1996 Amendment Date and Options
which are Out-of-the-Money as of the 1996 Amendment Date;
provided, however, that no such Option may be exercised by
any such person during the period beginning on the date of
termination and ending on the six month anniversary of the
date of termination.
(iii) All Restrictions shall lapse with respect to the
Restricted Stock subject to a Restricted Stock Award made
to an Outside Director pursuant to Section 3(c) hereof
immediately and automatically upon the Director's
acceptance of election or appointment as a Director of the
Company, as evidenced in such manner as may be established
by the Committee. Unless otherwise specified by the
Committee (which is empowered to provide different vesting
schedules with respect to any grant of Options or
Restricted Stock), all other Options granted under the
Plan shall become exercisable with respect to 20% of the
shares subject to the Option beginning on the first
anniversary of the Grant Date and as to an additional 20%
on each of the second, third, fourth and fifth
anniversaries of the Grant Date (each twelve month period
ending on an anniversary of a Grant Date being referred to
herein as an "Option Year"), provided in each case that
the Participant shall have remained an employee or a
director of the Company (or a subsidiary), or in the case
of a Designated Other, shall have remained in the position
set forth in the Stock Option Agreement, continuously
since the Grant Date. Notwithstanding the foregoing,
during the remaining term of any options (if not already
so exercisable) : (A) if a Participant's employment or
service as a director, or in the case of a Designated
Other, the period of service as defined in the Stock
Option Agreement, terminates due to death, all Options
held by the Participant at death shall become immediately
exercisable in full; (B) upon a Change in Control, coupled
with a Change in Status of a Participant, all Options held
by such Participant who is then an employee or director of
the Company (or a subsidiary) shall become immediately
exercisable in full; and (C) in the event that the
exercisability of an Option accelerates due to a Change in
Control and a Change in Status, Participants who are
subject to Section 16(b) of the Exchange Act may not sell
the shares acquired upon such accelerated exercise within
six months of the Grant Date of such Option.
(iv) Except to the extent permitted by Rule 16b-3 or its
successor, Options shall not be sold, assigned,
transferred, pledged, hypothecated, or otherwise disposed
of, except by will or the laws of descent and
distribution, pursuant to a qualified domestic relations
order ("QDRO") as defined in the Code or ERISA (or the
rules thereunder) or as otherwise set forth in this
Section 4(a)(iv). Each Option shall be exercisable during
the lifetime of a Participant only by the Participant to
whom it was granted, and after the Participant's death
only by the Participant's estate or legal representative.
To the extent exercisable, an Option may be exercised in
whole at any time, or in part from time to time, during
the term of the Option.
(v) Any Option may be converted, modified, forfeited or
canceled, prospectively or retroactively, in whole or in
part, by the Committee in its sole discretion; provided,
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<PAGE>
however, that no such action shall adversely affect the
rights of any Participant under any Option granted prior
to such action without his consent. Except as may be
otherwise provided in an Agreement, the Committee may, in
its sole discretion, in whole or in part, waive any
restrictions or conditions applicable to, or accelerate
the vesting of, any Option.
(b) STOCK AWARDS.
(i) Upon the grant of a Restricted Stock Award, a stock
certificate representing a number of shares of Stock equal
to the number of shares of Restricted Stock granted to a
Participant shall be registered in the Participant's name
but shall be held in custody by the Company for the
Participant's account. The Participant shall generally
have the rights and privileges of a stockholder as to such
Restricted Stock, including the right to vote such
Restricted Stock, except that the following restrictions
(the "Restrictions") shall apply: (A) the Participant
shall not be entitled to delivery of the certificate until
the Restricted Period (set forth in paragraph (iii) below)
applicable to such Restricted Stock has expired or
terminated and until any other conditions prescribed by
the Committee are satisfied; (B) none of the Restricted
Stock may be sold, transferred, assigned, pledged, or
otherwise encumbered or disposed of during the Restricted
Period applicable to such Restricted Stock and prior to
the satisfaction of any other conditions prescribed by the
Committee; and (C) shares of Restricted Stock shall be
forfeited and all rights of the Participant to such
Restricted Stock shall terminate without further
obligation on the part of the Company unless the
Participant has (1) remained an employee or a director of
the Company (or a subsidiary) until the expiration or
termination of the Restricted Period applicable to such
Restricted Stock (or in the case of a Designated Other,
the duration specified in the Restricted Stock Award
Agreement) and (2) satisfied any other conditions
prescribed by the Committee applicable to such Restricted
Stock. At the discretion of the Committee, cash and stock
dividends with respect to the Restricted Stock may be
either currently paid or withheld by the Company for the
Participant's account. Cash dividends so withheld by the
Committee shall not be subject to forfeiture. Upon the
forfeiture of any shares of Restricted Stock, such
forfeited Restricted Stock shall be transferred to the
Company without further action by the Participant. The
Participant shall have the same rights and privileges, and
be subject to the Restrictions, with respect to any shares
or other property received pursuant to Section 9.
(ii) Upon the expiration or termination of the Restricted
Period with respect to shares of Restricted Stock and the
satisfaction of any other conditions prescribed by the
Committee, the Restrictions applicable to such Restricted
Stock shall lapse and a stock certificate for the number
of shares of Stock with respect to which the Restricted
Period has lapsed shall be delivered, free of all
restrictions, except any that may be imposed by law, to
the Participant or the Participant's beneficiary or
estate, as the case may be. The Company shall not be
required to deliver any fractional share of Stock but will
pay, in lieu thereof, the Fair Market Value (determined as
of the date the Restricted Period expires or terminates)
of such fractional share to the Participant or the
Participant's beneficiary or estate, as the case may be.
No payment will be required from the Participant upon the
issuance or delivery of any shares of Stock under this
paragraph, except that any amount necessary to satisfy
applicable federal, state or local tax requirements shall
be withheld or paid promptly upon notification of the
amount due and prior to or concurrently with the issuance
or delivery of a certificate representing such shares.
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(iii) Unless otherwise specified by the Committee at the
time of the award and included in the Restricted Stock
Award Agreement, the Restrictions shall also lapse with
respect to one-fifth of the Restricted Stock subject to
all other Restricted Stock Awards on each of the first
through the fifth anniversaries of the Grant Date,
provided in each case that the Participant shall have
remained an employee or a director of the Company (or a
subsidiary) continuously since the date of grant (or in
the case of a Designated Other, shall have complied with
the terms and conditions of the Restricted Stock Award
Agreement). Notwithstanding the foregoing: (A) if a
Participant's employment or service as a director, or in
the case of a Designated Other, the period defined in the
Restricted Stock Award Agreement, terminates due to death,
the Restrictions shall lapse with respect to all
Restricted Stock Awards held by the Participant at death
(if not already so lapsed); (B) upon a Change in Control,
coupled with a Change in Status of a Participant, the
Restrictions shall lapse with respect to all Restricted
Stock Awards held by such Participant who is an employee
or director of the Company (or a subsidiary) (if not
already so lapsed); and (C) in the event of an accelerated
lapse of Restrictions due to a Change in Control and a
Change in Status, Participants who are subject to Section
16(b) of the Exchange Act may not sell the shares of Stock
whose Restrictions have so lapsed within six months of the
Grant Date of the Restricted Stock Award pursuant to which
such Stock was received. The "Restricted Period" as to any
shares constituting part of a Restricted Stock Award shall
be the period of time commencing with the Grant Date of a
Restricted Stock Award and ending with the date on which
the Restrictions lapse with respect to any such shares, or
any portion thereof.
(c) In the event that the acceleration of (i) the exercisability
of an Option or (ii) the lapse of Restrictions relating to
Restricted Stock upon a Change in Control and a Change in Status
results in excise tax pursuant to Section 4999 of the Code, or
any successor or similar provision thereto, or comparable state
or local tax laws, the Company shall pay to the Participant such
additional compensation as is necessary (after taking into
account all Federal, state and local income and excise taxes
payable by the Participant as a result of the receipt of such
compensation ) to place the Participant in the same after-tax
position he would have been in had no such excise tax (or any
interest or penalties thereon) been paid or incurred. The amount
of such payment shall be determined by the independent accounting
firm serving as the Company's outside auditor immediately prior
to the Change in Control.
5. EXERCISE OF OPTIONS.
(a) The Exercise Price of the shares purchasable under an Option
shall be the Fair Market Value per share on the Grant Date of
such Option, subject to subsequent adjustment pursuant to the
provisions of Section 9.
(b) Options shall be considered exercised (herein the "Exercise
Date") on the date written notice, in such form as the Committee
may prescribe, is received by the Option Plan Administrator of
the Company, advising of the exercise of an Option and either
transmitting payment of the total Exercise Price for the number
of shares of Stock involved or electing one of the alternative
payment procedures set forth in Section 5(c) below.
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(c) The Exercise Price shall be paid in cash (including cash
obtained through a margin loan on the shares as to which the
Option is being exercised) or (and provided (x) the use of the
following procedure by a Participant would comply with safeguards
established by the Committee designed to avoid "short-swing"
profits to the Participant under Section 16(b) of the Exchange
Act, and (y) does not otherwise violate any applicable laws)
through (i) a broker-assisted cashless exercise program
established by the Committee, based on the actual proceeds from
the sale of share of Stock; or (ii) in shares of Stock, valued on
the basis of the closing market price of the Stock on the
Exercise Date.
(d) Subject to the provisions of Section 6 and the other
provisions of the Plan, the Stock Option Agreement and the
Option, the Company shall issue shares of Stock in the
Participant's name as soon as practicable (but in no event later
than 30 days) after the Exercise Date. The Participant shall not
be deemed to be a holder of any shares pursuant to an Option, and
shall not have any rights as a stockholder in connection with
such shares, until the date of transfer of shares of Stock to the
Participant. The Company shall have no liability of any nature
whatsoever to any Participant by reason of any change in the
market price of the Stock during the period of time between the
Exercise Date and the date on which any shares of Stock resulting
from the exercise are issued or sold.
6. RESTRICTIONS.
(a) Notwithstanding any other provision of the Plan, an Option or
Restricted Stock Award to the contrary, no Option shall be
exercised, and the Company shall not be obligated to issue or
transfer shares of Stock under any Option or Restricted Stock
Award, until the Company shall have received such assurances as
the Company may reasonably request from its counsel that the
exercise of the Option and the issuance and transfer of shares
pursuant to the Option or Restricted Stock Award will not violate
the Securities Act of 1933, as amended, or any other applicable
Federal or state laws. In connection with any such issuance or
transfer, the Participant shall, if requested by the Company,
give assurances satisfactory to counsel to the Company, in
respect of the Participant's investment intent or such other
matters as counsel to the Company may deem necessary or desirable
to assure compliance with all applicable legal requirements.
(b) No provisions of the Plan or any Option or Restricted Stock Award
shall be interpreted or construed to obligate the Company to
register any Stock under Federal or state law.
(c) The Company and the Committee reserve the right to
investigate at any time the circumstances surrounding any
exercise of Options, including any investigation regarding
whether a Participant is in compliance with the provisions of
Section 13 hereof (or has threatened or is reasonably believed to
intend to violate the provisions of Section 13 hereof), and the
Company and the Committee shall have no liability or
responsibility to any Participant for any alleged damage
sustained by the Participant by reason of any delay in the
implementation of an Option exercise during the pendency of any
such investigation, whether by reason of any change in the market
price of the Stock or otherwise.
(d) Notwithstanding any other provision hereof, the Committee shall
have the right at any time to deny or delay a Participant's
exercise Options if such Participant is reasonably believed by
the Committee (i) to be engaged in material conduct adversely
affecting the Company or (ii) to be
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contemplating such conduct, unless and until the Committee shall
have received reasonable assurance that the Participant is not
engaged in, and is not contemplating, such material conduct
adverse to the interests of the Company.
(e) Participants are and at all times shall remain subject to the
trading window policies adopted by the Company from time to time
throughout the period of time during which they may exercise
Options or sell Restricted Stock granted pursuant to the Plan.
Participants may request at any time a copy of any calendar of
scheduled open windows by contacting the Option Plan
Administrator.
7. FAIR MARKET VALUE.
(a) During any period that the Company's Stock is Actively Traded, Fair
Market Value shall equal the arithmetic average of the closing prices of
a share of Stock on the exchange or national market system on which the
Stock is traded, for the last twenty market trading days prior to the
date of determination of Fair Market Value, or pursuant to such other
method as the Committee may reasonably specify for determining the
Stock's Fair Market Value.
(b) During any period during which the Company's Stock is not Actively
Traded, Fair Market Value shall be determined by the Committee.
8. TERM.
This Amended and Restated Plan shall be effective as of the date set
forth on the first page hereof. No Option or Restricted Stock Award
shall be granted under the Plan after February 12, 2006, but the Plan
shall continue in effect thereafter with respect to any previously
granted Options and Restricted Stock Awards that remain outstanding and
the duration of any such grant or award shall not be affected by the
expiration of the Plan.
9. ADJUSTMENTS.
In the event that any recapitalization, or reclassification, split-up or
consolidation of shares of Stock shall be effected, or the outstanding
shares of Stock shall, in connection with a merger or consolidation of
the Company or a transaction or series of related transactions that
results in the sale of all or substantially all of the Company's assets,
be exchanged for a different number or class of shares of stock or other
securities or property of the Company or any other Person, or a record
date or dates for determination of holders of Stock entitled to receive
a dividend payable in stock or a liquidating dividend (or series of
dividends) shall occur, equitable and proportional adjustments aimed at
preventing the inequitable enlargement or dilution of any rights
hereunder shall be made to (i) the number and class of shares or other
securities or property that may be issued or transferred pursuant to the
Plan and any outstanding Options and Restricted Stock Awards and (ii)
the Exercise Price to be paid per share under any outstanding Options;
PROVIDED, HOWEVER, that in the event of a merger or consolidation of the
Company, or similar transaction pursuant to which the outstanding Stock
is exchanged for cash or other property, the unexercised Options shall
thereafter be exercisable for, and the Restricted Stock Awards shall
entitle the Participant to receive, the cash or other property which an
Option or Restricted Stock Award holder, as the case may be, would have
been entitled to receive had the Options been exercised, or the
Restrictions relating to the Restricted Stock Award lapsed, immediately
prior to the record date for such merger, consolidation or similar
transaction except to the extent that provision is made in writing in
connection with such transaction for (1) the assumption of the Options
by, or the substitution for the Options of new options covering the
stock of, a successor acquiring
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<PAGE>
corporation, in each case providing terms no less favorable to
the holder of such Options than would an assumption or
substitution described in Treasury Regulation ss.1.425-1(a) that
would not constitute a "modification" for purposes of Code
ss.424(a), and (2) the substitution for Restricted Stock Awards
of stock of a successor or acquiring corporation having terms no
less favorable to the holder thereof than the terms of the
Restricted Stock Award in effect before such transaction.
10. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. The
Committee shall, subject to the provisions of the Plan, have full
power and authority to administer the Plan, to select the
Participants in the Plan, and, except for grants and awards which
are automatically made to Outside Directors as provided pursuant
to Section 3 of the Plan, to determine the number of shares to be
made subject to each Option and Restricted Stock Award and all
terms and conditions of each Option and Restricted Stock Award.
The Committee shall have the power to interpret the Plan and to
adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. All actions taken and
all interpretations and determinations made by the Committee
shall be final and binding upon all Participants, the Company and
all other interested persons, absent a determination by a court
of competent jurisdiction that the Committee has acted in bad
faith or has engaged in reckless or willful misconduct.
(b) Members of the Committee and the Board and officers administering
this Plan shall be fully protected in taking actions under the
Plan or in relying upon the advice of counsel and shall incur no
liability except for bad faith, recklessness or willful
misconduct in the performance of their duties.
(c) Except as required by Rule 16b-3 with respect to grants of
Options to individuals who are subject to Section 16 of the
Exchange Act, or as otherwise required for compliance with Rule
16b-3 or other applicable law, the Committee may delegate all or
any part of its authority under the Plan to an employee,
employees or committee of employees.
(d) To the extent the Committee deems it necessary, appropriate or
desirable to comply with foreign law or practices and to further
the purpose of the Plan, the Committee may, without amending this
Plan, establish special rules applicable to Options granted to
Participants who are foreign nationals, are employed outside the
United States, or both, including rules that differ from those
set forth in the Plan, and grant Options to such Participants in
accordance with those rules.
(e) Determinations by the Committee under the Plan relating to the
form, amount and terms and conditions of grants and awards need
not be uniform, and may be made selectively among persons who
receive or are eligible to receive grants and awards under the
Plan, whether or not such persons are similarly situated.
11. GENERAL PROVISIONS.
(a) Nothing in this Plan or in any instrument executed pursuant
hereto shall confer upon any Person any right to continue in the
employment or other service of the Company (or any subsidiary),
or shall affect the right of the Company (or any subsidiary) to
terminate the employment or other service of any person at any
time with or without Cause.
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<PAGE>
(b) The Company may make appropriate provisions for the
withholding of any taxes which the Company determines it is
required to withhold in connection with any Option or Restricted
Stock Award including, at the request of a Participant and
provided that it does not violate any applicable laws, the
payment of such withholding taxes through a broker-assisted sale
of a sufficient number of shares underlying the Option or subject
to the Restricted Stock Award or by delivery to the Company of
shares of Stock previously owned by the Participant, in either
case having an actual sale price equal to the amount of such
taxes. Notwithstanding the foregoing, a Participant whose
transactions in Stock are subject to Section 16(b) of the
Exchange Act may make a share withholding election only if it
complies with safeguards established by the Committee designed to
avoid "short swing" profits to the Participant under Section
16(b) of the Exchange Act. The certificates evidencing a
Restricted Stock Award made to an Outside Director pursuant to
Section 3(c) hereof shall be automatically reduced by 28% to
provide for the estimated Federal income tax payment obligation
of the Outside Director, or by such other higher percentage as
may be required by law to be withheld, with the Company remitting
to the appropriate tax authorities the fair market value of the
Restricted Stock Award for which the certificates are not so
delivered.
(c) By accepting any benefits under the Plan, each Participant,
and each Person claiming under or through the Participant, shall
be conclusively deemed to have indicated acceptance and
ratification of, and consent to, all provisions of the Plan. Each
Participant hereby further agrees that amendments and
modifications to the Plan, which may be adopted from time to time
by the Committee and/or the Board of the Corporation (as set
forth in Section 12 hereof), shall be binding upon such
Participant and upon all Options or Restricted Stock which the
Participant may hold, including (with retroactive effect) Options
or Restricted Stock previously granted to the Participant, except
to the extent set forth in Section 12 hereof.
(d) With respect to Participants subject to Section 16 of the
Exchange Act, transactions under the Plan are intended to comply
with all applicable provisions of Rule 16b-3 or its successor. To
the extent any provision the Plan or action by the Plan
administrators fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the
Committee.
(e) A Participant shall have no rights as a stockholder of the
Company with respect to any Shares to be issued upon exercise of
an Option until such Participant has exercised such Option and
becomes a holder of such Shares.
12. AMENDMENTS; MODIFICATION AND TERMINATION.
This Plan may be amended or modified by the Committee, with ratification
by the Board, or terminated by the Board, at any time and in any
respect, except that no amendment shall be made without the approval of
the shareholders of the Company if shareholder approval would be
required by Rule 16b-3 under the Exchange Act or any other law or rule
of any governmental authority, stock exchange or other self-regulatory
organization to which the Company is subject. No such amendment,
modification or termination shall have effect to reduce the number of
shares as to which any Option or Restricted Stock Award previously has
been granted to a Participant; to extend the vesting schedule with
respect to any Option or Restricted Stock Award or to extend the period
of non-competition or confidentiality as set forth in Section 13 hereof.
In the event of the passage of any law, rule or regulation or a
determination by any regulatory agency or court, requiring an adverse
change in the Company's accounting or tax treatment relating to the
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<PAGE>
Plan, the Committee shall have the right to modify the terms of
outstanding Options and Restricted Stock Awards to the extent
necessary to avoid the adverse consequences of such change.
13. CONFIDENTIALITY AND NON-COMPETITION; CONDUCT NOT IN THE INTEREST OF THE
CORPORATION.
By accepting Options or Restricted Stock Awards under the Plan and as a
condition to the exercise of Options and the enjoyment of any of the
benefits of the Plan, each Participant agrees as follows:
(a) CONFIDENTIALITY -- During the period of each
Participant's employment or service as a director with the
Company (or the Participant's engaging in any other
activity with or for the Company) and for a two year
period thereafter, each Participant shall treat and
safeguard as confidential and secret all Confidential
Information received by such Participant at any time.
Without the prior written consent of the Company, except
as required by law, such Participant will not disclose or
reveal any Confidential Information to any third party
whatsoever or use the same in any manner except in
connection with the businesses of the Company and its
subsidiaries. In the event that a Participant is requested
or required (by oral questions, interrogatories, requests
for information or documents, subpoena, civil
investigative demand or other process) to disclose (i) any
Confidential Information or (ii) any information relating
to his opinion, judgment or recommendations concerning the
Company or its subsidiaries as developed from the
Confidential Information, Participant will provide the
Company with prompt written notice of any such request or
requirement so that the Company may seek an appropriate
protective order or waive compliance with the provisions
contained herein. If, failing the entry of a protective
order or the receipt of a waiver hereunder, Participant
is, in the reasonable opinion of his counsel, compelled to
disclose Confidential Information, Participant shall
disclose only that portion of the Confidential Information
which his counsel advises that he is compelled to disclose
and will exercise best efforts to obtain assurances that
confidential treatment will be accorded such Confidential
Information.
(b) NON-COMPETITION -- During the period of employment
with the Company or its subsidiaries of any Participant
(other than a director) compensated at a rate (including
bonuses) in excess of $75,000 per year in cash
compensation from his employment with the Company or any
of its subsidiaries (determined as of the most recently
completed fiscal year of the Company), and, for a two-year
period thereafter (the "Non-Compete Period"), each such
Participant shall not, without prior written consent of
the Committee, do, directly or indirectly, any of the
following:
(1) own, manage, control or participate in the
ownership, management, or control of, or be employed
or engaged by or otherwise affiliated or associated
with, any other corporation, partnership,
proprietorship, firm, association or other business
entity, or otherwise engage in any business which
competes with the business of the Company or any of
its subsidiaries (as such business is conducted
during the term of such Participant's employment
with the Company or its subsidiaries) in the
geographical regions in which such business is
conducted; PROVIDED, HOWEVER, that the ownership of
a maximum of one percent of the outstanding stock of
any publicly traded corporation shall not violate
this covenant; or
(2) employ, solicit for employment or assist in
employing or soliciting for employment any present,
former or future employee, officer or agent of the
Company or any of its subsidiaries.
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In the event any court of competent jurisdiction should
determine that the foregoing covenant of non-competition
is not enforceable because of the extent of the
geographical area or the duration thereof, then the
Company and the affected Participant hereby petition such
court to modify the foregoing covenant to the extent, but
only to the extent, necessary to create a covenant which
is enforceable in the opinion of such court, with the
intention of the parties that the Company shall be
afforded the maximum enforceable covenant of
non-competition which may be available under the
circumstances and applicable law.
(c) Each Participant acknowledges that remedies at law for
any breach by him of this section 13 may be inadequate and
that the damages resulting from any such breach are not
readily susceptible to being measured in monetary terms.
Accordingly, each Participant acknowledges that upon his
violation of any provision of this Section 13, the Company
will be entitled to immediate injunctive relief and may
obtain an order restraining any threatened or future
breach. Each Participant further agrees, subject to the
proviso at the end of this sentence, that if he violates
any provision of this Section 13, he shall immediately
forfeit any rights and benefits under this Plan and shall
return to the Company any unexercised Options and forfeit
the rights under any Restricted Stock Awards and shall
return any shares of Stock held by such Participant
received upon exercise of any Option or the lapse of the
Restrictions relating to Restricted Stock Awards granted
hereunder, together with any proceeds from sales of any
shares of Stock received upon exercise of such Options or
the lapse of Restrictions of such Restricted Stock Awards;
PROVIDED, HOWEVER, that upon violation of subsection (b)
of this Section, the forfeiture and return provisions
contained in this sentence shall apply only to Options
which have become exercisable, and Restricted Stock, the
Restrictions with respect to which have lapsed, and in any
such case the proceeds of sales therefrom, during the two
year period immediately prior to termination of the
Participant's employment. Nothing in this Section 13 will
be deemed to limit, in any way, the remedies at law or in
equity of the Company, for a breach by Participant of any
of the provisions of this Section 13.
(d) Each Participant agrees to provide written notice of
the provisions of this Section 13 to any future employer
of Participant, and the Company expressly reserves the
right to provide such notice to the Participant's future
employer(s).
(e) If any provision or part of any provision of this
Section 13 is held for any reason to be unenforceable, (i)
the remainder of this Section 13 shall nevertheless remain
in full force and effect and (ii) such provision or part
shall be deemed to be amended in such manner as to render
such provision enforceable.
14. GOVERNING LAW.
The validity, construction and effect of the Plan and any rules relating
to the Plan shall be determined in accordance with the laws of the State
of Delaware and applicable Federal law.
15. ARBITRATION.
The Company and each Participant hereby agree that in the event of any
dispute or controversy arising with respect to the Plan, any Stock
Option Agreement, the exercise of any Option (or the disallowance of any
exercise at any time, for any reason) or any other matter relating to
Options or Restricted Stock Awards, then such dispute or controversy
shall be submitted by the parties to mandatory and binding arbitration
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before a panel of arbitrators appointed by the American Arbitration
Association ("AAA"), each of whom shall be knowledgeable in matters of
securities in general and, if possible, the administration of stock
option programs similar to the Plan. The arbitration proceedings shall
be conducted in whichever of the following cities is closest to the work
location of the affected Participant: Fort Lauderdale, Florida; Chicago,
Illinois; New York, New York; Kansas City, Missouri; Jackson,
Mississippi; Nashville, Tennessee or Atlanta, Georgia. The decision of
the Company as to which city is closest to the work location of the
Participant shall be conclusive and binding, except for manifest error.
The decision of the arbitrators shall be rendered in writing, shall be
promptly rendered after a hearing on the matter and shall be final,
conclusive and binding and may be incorporated in a final judgment
rendered by any court of competent jurisdiction.
Notwithstanding the foregoing, nothing contained herein shall preclude
the Company from seeking injunctive or other relief from any court of
competent jurisdiction to enforce the provisions of Section 13 hereof.
16. DEFINITIONS.
The following terms, when used in the Plan, shall have the meanings set
forth below:
ACTIVELY TRADED: Trading of Company Stock on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National
Market System in an average weekly volume that equals at least
0.20% of the then outstanding Company Stock for each of at least
four weeks in a row.
BENEFICIAL OWNER: With respect to any securities of the Company,
any Person who is a beneficial owner of such securities as
defined in rule 13d-3 under the Exchange Act. The Committee may
from time to time adopt interpretations or pronouncements as to
who shall be deemed to be Beneficial Owners of the Company's
outstanding voting securities as of a given date, which
interpretation shall be final and binding on all Participants,
the Company and all other interested Persons.
BOARD: The Board of Directors of the Company.
CAUSE: Any cause stated in an employment agreement between the
Company and the Participant and/or material violations of
employment agreements or the terms of this Plan, acts of
dishonesty with respect to the Company, insubordination,
divulging confidential information about the Company,
interference with the relationship between the Company and any
supplier, client, customer, similar person, or performance of any
act or omission which the Committee, in its sole discretion,
deems to be sufficiently injurious to the interest of the Company
to constitute cause.
CHANGE IN CONTROL: The occurrence of any of the following: (i) a
merger or consolidation to which the Company is a party if the
individuals and entities who were stockholders of the Company
immediately prior to the effective date of such merger or
consolidation are Beneficial Owners of less than 50% of the total
combined voting power for election of directors of the surviving
corporation following the effective date of such merger or
consolidation; or (ii) any Person becomes the Beneficial Owner in
the aggregate of securities of the Company representing 50% or
more of the total combined voting power of the Company's then
issued and outstanding securities unless such Person (or a Person
owned directly or indirectly by such Person) was the Beneficial
Owner, directly or indirectly, as of the Grant Date applicable to
the affected Participant, of more than 50% of the Company's
voting securities outstanding as of such Grant Date; or (iii)
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the sale of all or substantially all of the assets of the Company
to any person or entity that is not a wholly-owned subsidiary of
the Company; or (iv) the stockholders of the Company approve any
plan or proposal for the liquidation of the Company.
CHANGE IN STATUS: The occurrence with respect to a Participant,
of any of the following (but only if such event occurs within two
(2) years following a Change in Control): (i) any reduction in
the aggregate annual compensation paid or payable to a
Participant, or any material reduction in the aggregate benefit
coverages provided to such Participant under the Company's
standard benefit package for all employees; (ii) the assignment
to the Participant of any duties inconsistent in any material
respect with the Participant's position (including status,
offices, titles and reporting responsibilities), authorities,
duties or responsibilities as in effect immediately prior to the
date of the Change in Control; (iii) the Company's requiring the
Participant to be based at any office, facility or location other
than the office, facility or location at which the Participant
was based immediately prior to the date of the Change in Control;
(iv) if the Participant is a party to any employment agreement
with the Company, any material breach by the Company of such
agreement, or any purported termination by the Company of the
Participant's employment otherwise than as permitted by such
employment agreement; or (v) in the case of a director, the
removal of a director or the failure to nominate the director for
reelection.
CODE: Internal Revenue Code of 1986, as amended.
COMMITTEE: A committee designated by the Board consisting of not
less than two members of the Board who are "disinterested
persons," as defined in Rule 16b-3 under the Exchange Act, to
administer the Plan.
COMPANY: Sunbeam Corporation (formerly known as Sunbeam-Oster
Company, Inc.)
CONFIDENTIAL INFORMATION: Any information not generally known to
the public, including, without limiting the generality of the
foregoing, any customer lists, supplier lists, trade secrets,
invention, formulas, methods or processes, whether or not
patented or patentable, channels of distribution, business plans,
pricing policies and records, financial information of any sort
and inventory records of the Company or any affiliate (and such
other information normally understood to be confidential or
otherwise designated as such in writing by the Company or its
subsidiaries). It is not necessary, however, that any information
be formally designated as "confidential" if it falls within any
of the foregoing categories and is not generally known to the
public.
DESIGNATED OTHER: Any consultant, advisor, contractor or agent of
the Company or its subsidiaries, who is not an employee, officer
or Outside Director of the Company and who is granted Options or
a Restricted Stock Award pursuant to this Plan.
EFFECTIVE DATE: January 1, 1991; Amended and Restated as of
May 15, 1996.
ERISA: Titles I and IV of the Employee Retirement Income
Security Act of 1974, as amended.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXERCISE PRICE: The Exercise Price of shares purchasable upon
exercise of an Option, as
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determined pursuant to the terms of Section 5(a).
FAIR MARKET VALUE: The fair market value of a share of Stock, as
determined pursuant to the terms of Section 7.
GRANT DATE: The date as of which the Committee (or such other
committee of the Board of Directors of the Company as shall be
empowered to grant Options or to make awards of Restricted Stock)
shall grant Options or Restricted Stock, as the case may be, to a
Participant under the Plan, as so designated by such Committee.
IN-THE-MONEY: Options to acquire Stock are considered to be
"in-the-money" if the exercise price of the Option is less than
the current market price of the Stock.
NEXT OPTION INCREMENT: This term shall have the meaning ascribed
to it in Section 4(a)(iii).
OPTION: An option, granted under the Plan, to purchase shares of
Stock at the Exercise Price. Options granted under the Plan shall
not be incentive stock options pursuant to Section 422 of the
Code.
OPTION YEAR: This term shall have the meaning ascribed to it in
Section 4(a)(iii).
OUT-OF-THE-MONEY: Options to acquire Stock are considered to be
"out-of-the-money" if the exercise price is equal to or greater
than the current market price of the Stock.
OUTSIDE DIRECTOR: A director of the Company who is not either:
(i) an officer or employee of the Company, or (ii) a Beneficial
Owner of, or an officer or employee of any Person which is a
direct or indirect Beneficial Owner of, more than 10% of the
outstanding Stock.
PARTICIPANT: An officer, employee, Outside Director of the
Company (or a subsidiary of the Company) or Designated Other who
is granted an Option or a Restricted Stock Award under the Plan
by the Committee. Upon the death of a Participant, the
"Participant" shall be deemed to mean the Participant's estate or
legal representative.
PERSON: Any individual, corporation, partnership, association,
company, trust, joint venture or other organization or entity or
group of associated persons or entities acting in concert. As
used herein, references to the male gender shall include the
female gender or the neuter, as applicable.
PLAN: The Equity Team Plan herein set forth, as it may be amended
from time to time.
RESTRICTED PERIOD: This term shall have the meaning ascribed to
it in Section 4(b)(iii).
RESTRICTED STOCK: Shares of Stock granted pursuant to Section
3(b) or (c) of the Plan.
RESTRICTED STOCK AWARD: The grant of Shares of Restricted Stock
to a Participant pursuant to Section 3(b) or 3(c) of the Plan.
RESTRICTED STOCK AWARD AGREEMENT: The agreement described in
Section 3(e).
14
<PAGE>
RESTRICTIONS: The restrictions described in Section 4(b) relating
to Restricted Stock.
"SHARES" or "STOCK": The Common Stock, $0.01 par value per share,
of the Company, or such other class of securities as may be
applicable pursuant to the provisions of Section 9.
STOCK OPTION AGREEMENT: The agreement described in Section 3(e).
15
EXHIBIT 10.g
SUNBEAM BONUS PLAN
ELIGIBILITY: All exempt and non-exempt employees. Note:
"hourly" production workers, Operating
Committee members and certain other
executives are not eligible to participate.
PLAN DESIGN: 1. Each fiscal year, the Operating Committee
will establish a minimum level of acceptable
performance, below which the Bonus Pool will
be zero. Performance of the corporation will
be expressed in terms of Earnings Per Share
(EPS).
2. All payouts under the Plan are
discretionary and any payments under the
Plan must be authorized by the Operating
Committee.
3. All payments will be in cash, paid during
the first quarter following the end of the
fiscal year.
TARGET BONUS POOL: The target bonus pool will be the sum total
of each participants target bonus amount.
The actual earned bonus pool will be determined
at fiscal year end by comparing actual
financial performance to targeted
performance as determined by the Corporate
Business Plan. No bonuses will be paid if
the Company fails to reach its minimum
objectives.
TARGET PAYOUTS: EXEMPT - a percentage of base earnings
NON-EXEMPT - a flat dollar amount
PAYOUT PARAMETERS: 1. below minimum performance standard = 0
payout
2. minimum payout threshold = 75% of target
3. maximum payout limit = 200% of target
Individual Payouts
1. four (4) quantitative objectives established
for each employee
2. objectives reviewed by supervisor
3. payouts will be determined by a
combination of Company EPS performance and
individual performance against mutually
agreed upon goals & objectives
<PAGE>
1997 SUNBEAM BONUS PLAN
Self Funding Structure
===============================================================================
EPS* Available % of Target Bonus
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$1.39 or less 0%
- -------------------------------------------------------------------------------
$1.40 - $1.49 75%
- -------------------------------------------------------------------------------
$1.50 - $1.59 85%
- -------------------------------------------------------------------------------
$1.60 - $1.69 100%
- -------------------------------------------------------------------------------
$1.70 - $1.79 120%
- -------------------------------------------------------------------------------
$1.80 - $1.89 140%
- -------------------------------------------------------------------------------
$1.90 - $1.99 160%
- -------------------------------------------------------------------------------
$2.00 - $2.09 180%
- -------------------------------------------------------------------------------
$2.10 or more 200%
===============================================================================
* Earnings per share (EPS): Basically, net sales minus total cost of doing
business (overhead, materials, direct labor) equals operating profit. operating
profit minus taxes and debt expense equals net earnings. Net earnings divided by
outstanding shares of stock equals EPS.
What does this mean to me? If our sales go up and/or if our expenses and debt
are reduced, then earnings per share (and the value of Sunbeam stock) goes up.
EXAMPLES:
At the end of 1997, the EPS is $1.65. 100% of the target bonus
is available for payout.
If the EPS is $1.37, then our minimum threshold was not reached and therefore,
there will be no bonuses.
If the EPS is $2.58, then the maximum 200% of target bonus will be available for
payout.
Remember, once the Company performance has established the available bonus
amount (e.g., 100% of target in our first example and 200% of target in our
third example), your INDIVIDUAL bonus will be determined by your performance on
your four (4) objectives.
EXHIBIT 10.q
FIRST AMENDMENT dated as of November 21, 1996 (this
"AMENDMENT") to the Credit Agreement dated as of September
16, 1996 (the "AGREEMENT"), among SUNBEAM CORPORATION (the
"Company"), the Borrowing Subsidiaries (as such term is
defined therein; together with the Company, the
"Borrowers"), the Lenders listed in Schedule 2.01 thereof
(the "Lenders") and THE CHASE MANHATTAN BANK, as
administrative agent for the Lenders (in such capacity,
the "Administrative Agent"). Capitalized terms used herein
and defined in the Agreement have the meanings set forth
in the Agreement.
WHEREAS the Borrowers have requested and the Administrative Agent
and the Lenders are willing to amend a certain provision of the Agreement as set
forth herein.
NOW, THEREFORE, for and in consideration of the premises and
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree, on the terms and subject to the
conditions set forth herein, as follows:
SECTION 1. AMENDMENT. Section 6.06 of the Agreement is hereby amended
by deleting therefrom the reference to "$250,000,000" and replacing it with a
reference to "$300,000,000".
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to each of the Lenders and the Administrative Agent that as of the date
hereof:
(a) The representations and warranties set forth in Article III
of the Agreement are true and correct in all material respects with the
same effect as if made on the date hereof, except to the extent such
representations and warranties expressly relate to an earlier date.
(b) No Event of Default or Default has occurred and is
continuing.
SECTION 3. CONDITIONS TO EFFECTIVENESS. This Amendment shall become
effective on the date that the Administrative Agent shall have received duly
executed counterparts of this Amendment that, when taken together, bear the
signatures of the Company and the Required Lenders.
SECTION 4. AGREEMENT. Except as specifically stated herein, the
provisions of the Agreement are and shall remain in full force and
<PAGE>
2
effect. As used therein, the terms "Agreement", "herein", "hereunder",
"hereinafter", "hereto", "hereof" and words of similar import shall, unless the
context otherwise requires, refer to the Agreement as amended hereby.
SECTION 5. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. COUNTERPARTS. This Amendment may be executed in two
or more counterparts, each of which shall constitute an original but
all of which when taken together shall constitute but one contract.
SECTION 7. EXPENSES. The Company agrees to reimburse the Administrative
Agent for its reasonable out-of-pocket expenses in connection with this
Amendment, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the date first
written above.
SUNBEAM CORPORATION,
by
/S/ EDWIN T. DERECHO
-----------------------------
Name: Edwin T. Derecho
Title: Vice President
Treasurer
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent,
by
/S/ ELLEN GERTZOG
----------------------------
Name: Ellen Gertzog
Title: Vice President
<PAGE>
3
BANK OF AMERICA ILLINOIS,
by
/S/ LAURENS F. SCHAAD, JR.
------------------------------
Name: Laurens F. Schaad, Jr.
Title: Vice President
THE BANK OF NEW YORK,
by
/S/ DAVID C. SIEGEL
------------------------------
Name: David C. Siegel
Title: Assistant Vice
President
THE BANK OF NOVA SCOTIA,
by
/S/ FRANK F. SANDLER
-------------------------------
Name: Frank F. Sandler
Title: Relationship Manager
NORTHERN TRUST COMPANY,
by
/S/ JAMES F. T. MONHART
-------------------------------
Name: James F. T. Monhart
Title: Vice President
PNC BANK, KENTUCKY, INC.,
by
/S/ JIM NEIL
------------------------------
Name: Jim Neil
Title: Jim Neil
THE FUJI BANK LIMITED,
by
/S/ MASANOBU KOBAYASHI
------------------------------
Name: Masanobu Kobayashi
Title: Vice President &
Manager
<PAGE>
4
CREDIT SUISSE,
by
/S/ JAN KOFOL
------------------------------
Name: Jan Kofol
Title: Jan Kofol
by
/S/ KRISTINN R. KRISTINSSON
------------------------------
Name: Kristinn R. Kristinsson
Title: Associate
CREDIT LYONNAIS, NEW YORK BRANCH,
by
/S/ JACQUES-YVES MULLIEZ
------------------------------
Name: Jacques-Yves Mulliez
Title: Senior Vice President
NATIONSBANK,
by
/S/ RICHARD M. STARKE
------------------------------
Name: Richard M. Starke
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
by
/S/ ROBERT H. WOLOHAN
------------------------------
Name: Robert H. Wolohan
Title: Corporate Banking Officer
WACHOVIA BANK OF GEORGIA, N.A.,
by
/S/ PATRICK A. PHELAN
------------------------------
Name: Patrick A. Phelan
Title: Assistant Vice
President
<PAGE>
5
FIRST UNION NATIONAL BANK OF
FLORIDA,
by
/S/ MARY A. MORGAN
------------------------------
Name: Mary A. Morgan
Title: Vice President and
Senior Portfolio
Manager
THE BANK OF TOKYO-MITSUBISHI TRUST
LTD.,
by
/S/ RANDY L. GLASS
------------------------------
Name: Randy L. Glass
Title: Vice President
SAKURA BANK, LIMITED,
by
/S/ HIROYASU IMANISHI
------------------------------
Name: Hiroyasu Imanishi
Title: V.P. & Senior Manager
EXHIBIT 10.r
SECOND AMENDMENT dated as of January 31, 1997 (this
"Amendment") to the Credit Agreement dated as of September
16, 1996 (as amended, the "Credit Agreement"), among
SUNBEAM CORPORATION (the "Company"), the BORROWING
SUBSIDIARIES (as defined therein), the LENDERS (as defined
therein), and THE CHASE MANHATTAN BANK, as Administrative
Agent.)
A. Pursuant to the Credit Agreement, the Lenders have agreed to
extend credit to the Borrowers, in each case pursuant to the terms and subject
to the conditions set forth therein.
B. The Company has requested that certain provisions contained in
the Credit Agreement be waived and amended as set forth herein.
C. The Lenders are willing to so waive and amend the Credit
Agreement pursuant to the terms and subject to the conditions set forth herein.
D. Capitalized terms used herein without definition shall have
the meanings ascribed to them in the Credit Agreement.
In consideration of the premises and the agreements, provisions
and covenants herein contained, the parties hereto hereby agree, on the terms
and subject to the conditions set forth herein, as follows:
SECTION 1. WAIVER OF SECTION 6.05 OF THE CREDIT AGREEMENT. The
Required Lenders hereby waive compliance with Section 6.05(b) of the Credit
Agreement for the quarter ended December 29, 1996.
SECTION 2. AMENDMENT TO DEFINITION OF CONSOLIDATED INTEREST
COVERAGE RATIO. The Definition of "Consolidated Interest Coverage Ratio" is
hereby amended and restated as follows:
"CONSOLIDATED INTEREST COVERAGE RATIO" means, as of the last day
of any fiscal quarter, for the four fiscal quarters then ended (or such fewer
number of full quarters as have elapsed since December 30, 1996 to the date of
determination), the ratio of (a) Consolidated EBIT to
<PAGE>
2
(b) Consolidated Interest Expense, in each case for such period.
SECTION 3. AMENDMENT TO SECTION 6.05(B) OF THE CREDIT AGREEMENT.
Section 6.05(b) of the Credit Agreement is hereby amended and restated as
follows:
(b) The Consolidated Interest Coverage Ratio as of the last day
of any fiscal quarter, commencing with the fiscal quarter ending on March 30,
1997, will not be less than 2.0 to 1.0.
SECTION 4. ACKNOWLEDGEMENT OF INCURRENCE OF SPECIAL CHARGES. The
Company acknowledges and agrees that, as of the last day of the fiscal quarter
ended December 29, 1996, the Company had incurred special charges in excess of
$300,000,000, and that any special charges incurred after such date shall be
included in determining compliance with the covenants set forth in Article VI of
the Credit Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to each of the Lenders and the Agent that:
(a) Before and after giving effect to this Amendment, the
representations and warranties set forth in Section 3 of the Credit
Agreement are true and correct in all material respects with the same
effect as if made on the date hereof, except to the extent such
representations and warranties expressly relate to an earlier date
(specifically excluding herefrom representations and warranties required
to be made only as of the date of the Credit Agreement).
(b) After giving effect to this Amendment, no Event of Default or
Default has occurred and is continuing.
SECTION 6. CONDITION TO EFFECTIVENESS. This Amendment shall
become effective as of the date when the Agent shall have received counterparts
of this Amendment that, when taken together, bear the signatures of the Company
and the Required Lenders.
SECTION 7. CREDIT AGREEMENT. Except as specifically stated
herein, the provisions of the Credit Agreement are and shall remain in full
force and effect. As
<PAGE>
3
used therein, the terms "Agreement", "herein", "hereunder", "hereinafter",
"hereto", "hereof" and words of similar import shall, unless the context
otherwise requires, refer to the Credit Agreement as amended hereby.
SECTION 8. APPLICABLE 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 executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract.
SECTION 10. EXPENSES. The Company agrees to reimburse the Agent
for its out-of-pocket expenses in connection with this Amendment, including the
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel
for the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed by their respective authorized officers as of the day and
year first written above.
SUNBEAM CORPORATION,
by
/S/ EDWIN T. DERECHO
--------------------------------
Name: Edwin T. Derecho
Title: Vice President and
Treasurer
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent,
by
/S/ ELLEN GERTZOG
--------------------------------
Name: Ellen Gertzog
Title: Vice President
<PAGE>
4
BANK OF AMERICA ILLINOIS,
by
/S/ LAURENS F. SCHAAD, JR.
-----------------------------------
Name: Laurens F. Schaad, Jr.
Title: Vice President
NATIONSBANK,
by
/S/ RICHARD M. STARKE
-----------------------------------
Name: Richard M. Starke
Title: Vice President
THE BANK OF NEW YORK,
by
/S/ DAVID C. SIEGEL
-----------------------------------
Name: David C. Siegel
Title: Assistant Vice
President
THE BANK OF NOVA SCOTIA,
by
/S/ FRANK F. SANDLER
-----------------------------------
Name: Frank F. Sandler
Title: Relationship Manager
CREDIT LYONNAIS, NEW YORK BRANCH,
by
/S/ ALAIN PAPIASSE
-----------------------------------
Name: Alain Papiasse
Title: Executive Vice
President
<PAGE>
5
THE FIRST NATIONAL BANK OF CHICAGO,
by
/S/ ROBERT H. WOLOHAN
--------------------------
Name: Robert H. Wolohan
Title: Corporate Banking
Officer
FIRST UNION NATIONAL BANK OF
FLORIDA,
by
/S/ MARY A. MORGAN
-----------------------------------
Name: Mary A. Morgan
Title: Vice President and
Senior Portfolio
Manager
NORTHERN TRUST COMPANY,
by
/S/ JOHN J. CONWAY
-----------------------------------
Name: John J. Conway
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.,
by
/S/ PATRICK A. PHELAN
-----------------------------------
Name: Patrick A. Phelan
Title: Assistant Vice
President
THE BANK OF TOKYO-MITSUBISHI TRUST
LTD.,
by
/S/ RANDY L. GLASS
-----------------------------------
Name: Randy L. Glass
Title: Vice President
<PAGE>
6
CREDIT SUISSE,
by
/S/ C. ELDIN
-----------------------------------
Name: C. Eldin
Title: Director
by
/S/ T. MUOIO
-----------------------------------
Name: T. Muoio
Title: Associate
THE FUJI BANK LIMITED,
by
/S/ MASANOBU KOBAYASHI
-----------------------------------
Name: Masanobu Kobayashi
Title: Vice President and
Manager
PNC BANK, KENTUCKY, INC.,
by
/S/ JAMES D. NEIL
-----------------------------------
Name: James D. Neil
Title: Vice President
SAKURA BANK, LIMITED,
by
/S/ HIROYASU IMANISHI
------------------------------------
Name: Hiroyasu Imanishi
Title: Vice President and
Senior Manager
THE YASUDA TRUST AND BANKING
COMPANY, LIMITED, NEW YORK BRANCH,
by
/S/ MORIKAZU KIMURA
-----------------------------------
Name: Morikazu Kimura
Title: Chief Representative
EXHIBIT 10.cc
AGREEMENT, RELEASE, COVENANT NOT TO SUE
AND CONFIDENTIALITY AGREEMENT
The undersigned employee ("Employee") of Sunbeam Corporation (the
"Company") has been advised that Employee's employment is being terminated, as
of March 15, 1997. For the sole consideration of (i) twelve (12) months
continuation of base salary, less required deductions (the "Severance Payment"),
payable in a lump sum, and (ii) the continuation of the Company's current level
of contribution to medical and dental insurance coverages for a period of twelve
(12) months (provided Employee elects to continue coverage under the provisions
of COBRA and continues to make the Employee's required contribution towards the
cost of such coverages) [(i) and (ii) herein are collectively the "Benefits"],
Employee (including all successors and assigns) hereby:
RELEASES, FOREVER DISCHARGES and COVENANTS NOT TO SUE the Company and
any affiliated company, their predecessors, past and present officers,
directors, shareholders, agents, employees, attorneys, successors and assigns
(individually and collectively "SUNBEAM"), of and from (and does hereby WAIVE),
any and all rights, contracts, claims (including claims sounding in tort),
damages, attorney fees, causes of action, rights to future employment or
reinstatement and suits (collectively "Claims") (whether or not presently known,
suspected or claimed), relating to, directly or indirectly, Employee's hiring,
employment with or separation from employment by SUNBEAM, under any federal,
state or local law, ordinance, regulation or rule, or under any court decree.
Employee also WAIVES ANY AND ALL RIGHTS under the laws of any jurisdictions in
the United States that would limit the foregoing Release, Waiver and Covenant.
Employee is releasing SUNBEAM from any and all Claims for pain and suffering,
emotional distress, compensatory and punitive damages, attorney fees and for
employment discrimination based on age (including claims under the federal Age
Discrimination in Employment Act ("ADEA") and any comparable state or local
laws), sex, national origin, race or color, mental or physical handicap or
disability, sexual orientation or religious belief. Employee agrees that
SUNBEAM, by offering the Severance Payment and this Agreement, does not hereby
admit that it violated any of Employee's rights in any way. THIS RELEASE BY
EMPLOYEE DOES NOT SERVE TO RELEASE OR WAIVE ANY RIGHTS OF EMPLOYEE TO
INDEMNIFICATION AS A FORMER OFFICER OF SUNBEAM, AND ALL OF SUCH RIGHTS TO
INDEMNIFICATION SHALL CONTINUE IN FORCE AND EFFECT.
EMPLOYEE ALSO UNDERSTANDS AND AGREES:
1) THIS IS OUR ENTIRE AGREEMENT, AND I HAVE UP TO 45 DAYS TO REVIEW
AND CONSIDER IT. I HAVE BEEN TOLD TO CONSULT A LAWYER BEFORE SIGNING
THIS AGREEMENT. I ENTER INTO THIS AGREEMENT FREELY AND VOLUNTARILY;
2) I HAVE 7 DAYS FOLLOWING SIGNING THIS AGREEMENT TO REVOKE OR
CANCEL IT (BUT ONLY WITH RESPECT TO CLAIMS UNDER ADEA);
3) THIS AGREEMENT DOES NOT RELEASE OR WAIVE ANY RIGHTS OR CLAIMS
THAT MAY ARISE AFTER THIS DOCUMENT IS SIGNED BY ME;
4) THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE
UNTIL AFTER THE 7 DAY PERIOD DURING WHICH I CAN REVOKE OR CANCEL IT; AND
5) I AM SUBJECT TO THE CONFIDENTIALITY AND NON-DUPLICATION OF
BENEFITS PROVISIONS SET FORTH BELOW AS A FURTHER CONDITION TO THE
RECEIPT OF BENEFITS UNDER THIS AGREEMENT.
SUBJECT TO FURTHER TERMS ON THE SECOND PAGE OF THIS DOCUMENT
<PAGE>
(ADDITIONAL TERMS)
1. CONFIDENTIALITY - As a participant in the SUNBEAM CORPORATION EQUITY
TEAM PLAN (Option Plan), the confidentiality and non-competition provisions of
that Plan are incorporated by reference herein, and I acknowledge my obligation
to abide by the terms thereof. If I am a party to any other specific undertaking
of confidentiality and/or non-competition in connection with my employment by
SUNBEAM, I hereby acknowledge my obligation to abide by the terms thereof and
agree that such agreement or undertaking is not superseded in any manner by this
Agreement. In all events, whether I am a party to any such other agreement or
not, I hereby agree as follows:
That from and after the date hereof, I shall treat as confidential all
"Confidential Information" in my possession or to which I have been
provided access during my employment by SUNBEAM. I will not reveal or
disclose any such Confidential Information to any party without the
prior written consent of SUNBEAM, except as required by law. If I am
required by legal process, subpoena or otherwise legally required to
disclose any Confidential Information, I will immediately contact
SUNBEAM and advise it of such requirement and will cooperate with
SUNBEAM in protecting its Confidential Information. I understand that a
breach of this Confidentiality Agreement shall be grounds for
forfeiting any Benefits provided by this Agreement or any other benefit
which SUNBEAM may provide to me.
As used herein, the term CONFIDENTIAL INFORMATION means: any
information about SUNBEAM, its products or business, which is not
generally known to the public, including without limitation any
customer lists, supplier lists, trade secrets, inventions, formulas,
methods or processes, whether or not patented or patentable, channels
of distribution, business plans, pricing policies and records,
financial information of any sort and inventory records of SUNBEAM or
any affiliate (and such other information normally understood to be
confidential or otherwise designated as such in writing by SUNBEAM). It
is not necessary, however, that any information be formally designated
as "confidential" if it falls within any of the foregoing categories
and is not generally known to the public, in order to be covered by
this Confidentiality Agreement.
2. NON-DUPLICATION OF BENEFITS - The amount of Severance Payment
hereunder shall be reduced on a dollar for dollar basis by any disability,
severance, separation or termination pay benefits that the Company pays or is
required to pay to Employee through insurance or otherwise under any plan or
contract or under any federal or state law, or by any amount Employee owes the
Company; provided, however, that the Severance Payment shall never be less than
two (2) weeks' base salary, and such amount is acknowledged to be full and
adequate consideration for this Agreement.
EMPLOYEE SUNBEAM CORPORATION
/s/ James Wilson /s/ David C. Fannin
- ---------------------- ------------------------------
Name: James D. Wilson Title:Executive Vice President
Date: March 17, 1997 Name:David C. Fannin
Date: March 19, 1997
WITNESSED AS TO EMPLOYEE BY:
/s Karl Schinn
- ---------------------------------
By: Karl Schinn
Date: March 17, 1997
EXHIBIT 11.
SUNBEAM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS (LOSS)
PER SHARE OF COMMON STOCK
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-----------------------------------------------
JANUARY 1 DECEMBER 31, DECEMBER 29,
1995 1995 1996
------------ --------------- --------------
<S> <C> <C> <C>
Net earnings (loss) applicable to common shareholders ...... $107,011 $50,511 $ (228,262)
========= ======== ==========
Weighted average number of common shares outstanding ...... 79,180 81,626 82,925
Add:
Common shares issuable for exercise of warrants and
options, net of shares assumed to have been acquired
with proceeds therefrom .................................... 3,373 1,193 -
--------- -------- ----------
Number of shares applicable to earnings per share
calculation ................................................ 82,553 82,819 82,925
========= ======== ==========
Earnings (loss) per share of Common Stock .................. $ 1.30 $ .61 $ (2.75)
========= ======== ==========
</TABLE>
EXHIBIT 21.
SUNBEAM CORPORATION AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
JURISDICTION OF
COMPANY NAME INCORPORATION DOING BUSINESS AS
- ------------ ---------------- ------------------
<S> <C> <C>
Sunbeam Americas Holdings, Ltd. ...... Delaware -
Goose Holdings, Inc. .................. Delaware -
Sunbeam Products, Inc. ............... Delaware Sunbeam Consumer Products Worldwide
OP II, Inc. ........................... Florida -
Duck Holdings, Inc. .................. Delaware -
</TABLE>
EXHIBIT 23.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K, into the Company's
previously filed Registration Statement File Nos. 33-61610, 33-87950 and
333-21413.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
March 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-29-1996
<CASH> 11,526
<SECURITIES> 0
<RECEIVABLES> 229,455
<ALLOWANCES> 16,017
<INVENTORY> 162,252
<CURRENT-ASSETS> 624,163
<PP&E> 356,342
<DEPRECIATION> 136,254
<TOTAL-ASSETS> 1,072,709
<CURRENT-LIABILITIES> 271,583
<BONDS> 201,115
0
0
<COMMON> 884
<OTHER-SE> 394,368
<TOTAL-LIABILITY-AND-EQUITY> 1,072,709
<SALES> 984,236
<TOTAL-REVENUES> 984,236
<CGS> 900,573
<TOTAL-COSTS> 900,573
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,588
<INCOME-PRETAX> (302,561)
<INCOME-TAX> (105,890)
<INCOME-CONTINUING> (196,671)
<DISCONTINUED> (31,591)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (228,262)
<EPS-PRIMARY> (2.75)
<EPS-DILUTED> (2.75)
</TABLE>
