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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(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 28, 1997
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 0001-000052
[SUNBEAM LOGO]
SUNBEAM CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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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)
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(561) 243-2100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS: NAME OF EACH EXCHANGE ON WHICH REGISTERED:
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COMMON STOCK, $0.01 PAR VALUE NEW YORK STOCK EXCHANGE
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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 [ ] No [x]
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/A or any amendment to this Form 10-K/A. [x]
The aggregate market value of all classes of the registrant's voting stock
held by non-affiliates as of November 4, 1998 was approximately $454,049,039.
On November 4, 1998, there were 100,857,462 shares of the registrant's
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1998 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/A
TABLE OF CONTENTS
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PART I
SIGNIFICANT FINANCIAL AND BUSINESS DEVELOPMENTS .......... 1
ITEM 3. LEGAL PROCEEDINGS ........................................ 4
PART II
ITEM 6. SELECTED FINANCIAL DATA .................................. 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 9
CONDITION AND RESULTS OF OPERATIONS ......................
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .............. 20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS 20
ON FORM 8-K ..............................................
SIGNATURES ....................................................... 23
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PART I
SIGNIFICANT FINANCIAL AND BUSINESS DEVELOPMENTS
1997 RESTRUCTURING
During 1997, Sunbeam Corporation (the "Company" or "Sunbeam") completed a
restructuring, resulting in a significant reduction in employees and
facilities. As a part of the restructuring, the Company divested certain of its
businesses and assets, including its furniture, time and temperature,
decorative bedding, gas heaters and logs, Counselor/registered trademark/ and
Borg/registered trademark/ scale businesses and its Biddeford, Maine textile
mill.
The Company's restructuring included the closure of 18 factories, 43
warehouses and 5 headquarters, resulting in the consolidation of all corporate
offices into a single headquarters office located in Delray Beach, Florida and
an operations center at its Hattiesburg manufacturing and distribution
facility. The number of manufacturing facilities was reduced from twenty-six to
eight (four in the US and four international).
COLEMAN, SIGNATURE BRANDS AND FIRST ALERT ACQUISITIONS
On March 2, 1998, the Company announced that it had entered into three
separate agreements to acquire The Coleman Company, Inc., Signature Brands USA,
Inc. and First Alert, Inc.
The Coleman Company, Inc. ("Coleman"), with 1997 revenues of approximately
$1.1 billion, is a leading manufacturer and marketer of outdoor recreational
products. It manufactures and distributes widely diversified product lines for
camping, leisure time and hardware markets, under the Coleman/registered
trademark/, Powermate/registered trademark/, Camping Gaz/registered trademark/
and Eastpak/registered trademark/ brand names. On March 30, 1998, the Company
acquired indirect beneficial ownership of 44,067,520 shares of Coleman common
stock, which represented approximately 81% of the total number of then
outstanding shares, from a subsidiary of MacAndrews & Forbes Holdings, Inc.
("M&F"), in exchange for 14,099,749 shares of the Company's common stock,
approximately $160 million in cash and the assumption of $1,016 million in
debt. The Company's agreement for the acquisition of the remaining publicly
held Coleman shares pursuant to a merger transaction (the "Coleman Merger")
provides that the remaining Coleman shareholders will receive .5677 shares of
the Company's common stock and $6.44 in cash for each share of Coleman common
stock outstanding. In addition, unexercised options under Coleman's stock
option plans will be cashed out at a price per share equal to the difference
between $27.50 per share and the exercise price of such options. The Company
now expects to complete the Coleman Merger during the first quarter of 1999.
See "Settlement of Coleman-Related Claims" below for information regarding the
settlement of certain claims relating to the Coleman acquisition, the terms of
which involve the issuance of warrants to purchase shares of the Company's
common stock at $7.00 per share.
On April 3, 1998, the Company acquired a more than 90% interest in
Signature Brands USA, Inc. ("Signature Brands") and First Alert, Inc. ("First
Alert") pursuant to cash tender offers for each company's outstanding shares.
The Company completed its acquisitions of the remaining publicly held shares of
each of Signature Brands and First Alert pursuant to merger transactions
consummated on April 6, 1998. Signature Brands, with 1997 revenues of
approximately $279 million, is a leading manufacturer of a comprehensive line
of consumer and professional products, including coffee makers marketed under
the Mr. Coffee/registered trademark/ brand name and consumer health products
marketed under the Health-o-Meter/registered trademark/, Counselor/registered
trademark/ and Borg/registered trademark/ brand names. First Alert, with
revenues of approximately $187 million, is the worldwide leader in residential
safety equipment including smoke and carbon monoxide detectors marketed under
the First Alert/registered trademark/ brand name. The consideration for the
Signature Brands and First Alert transactions was approximately $253 million
and $178 million, respectively, consisting of cash and the assumption of debt.
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ISSUANCE OF ZERO COUPON CONVERTIBLE DEBENTURES AND NEW BANK CREDIT FACILITY
In order to finance the acquisitions of Coleman, Signature Brands and
First Alert and to repay substantially all of the outstanding indebtedness of
the Company and the three acquired companies, the Company completed an offering
of Zero Coupon Convertible Senior Subordinated Debentures due 2018 (the
"Debentures") at a yield to maturity of 5% (or approximately $2,014 million
principal amount at maturity) on March 25, 1998, which netted approximately
$730 million of proceeds to the Company, and the Company borrowed approximately
$1,325 million under a new bank credit facility (the "New Credit Facility").
The Company was required to file a registration statement with the SEC to
register the Debentures by June 23, 1998, which registration statement has not
been filed. From June 23, 1998 until the day on which the registration
statement is filed and declared effective, the Company is required to pay to
the Debenture holders cash liquidated damages accruing, for each day during
such period, at a rate per annum equal to 0.25% during the first 90 days and
0.50% thereafter multiplied by the total of the issue price of the Debentures
plus the original issue discount thereon on such day. The Company made its
first payment of approximately $525,000 to the Debenture holders on September
25, 1998.
The New Credit Facility provided for aggregate borrowings of up to $1.7
billion pursuant to (A) a revolving credit facility in an aggregate principal
amount of up to $400 million, (B) an $800 million term loan maturing on March
31, 2005, and (C) a $500 million term loan maturing on September 30, 2006.
Pursuant to the New Credit Facility, interest accrues, at the Company's option:
(A) at the London Interbank Offered Rate ("LIBOR") plus an agreed upon interest
margin, or (B) at the base rate of the administrative agent (generally the
higher of the prime commercial lending rate of the administrative agent or the
Federal Funds Rate plus 1/2 of 1%) plus an agreed upon interest margin which
varies depending upon the Company's leverage ratio, as defined, and other
items. At June 30, 1998, the Company was not in compliance with the financial
covenants and ratios. The Company and its lenders entered into an agreement
dated June 30, 1998, which provided that compliance with the covenants would be
waived through December 31, 1998. Borrowings under the New Credit Facility are
secured by certain of the Company's assets, including its stock interest in
Coleman and certain other subsidiaries and certain of the Company's tangible
and intangible personal property. The New Credit Facility contains certain
covenants, including limitations on the ability of the Company and its
subsidiaries to engage in certain transactions and the requirement to maintain
certain financial covenants and ratios. Pursuant to an amendment dated October
19, 1998, the Company is not required to comply with the original financial
covenants and ratios under the New Credit Facility until April 10, 1999, but
will be required to comply with an earnings before interest, taxes,
depreciation and amortization covenant, the amounts of which are to be
determined, beginning February 1999. Concurrent with each of these amendments,
interest margin was increased. The margin continues to increase monthly through
March 1999 to a maximum of 400 basis points over LIBOR. At September 30, 1998,
following the scheduled repayment of a portion of the term loan, the New Credit
Facility was reduced to $1,698 million in total, of which approximately $1,453
million was outstanding and approximately $245 million was available. In
addition, the Company's cash balance at September 30, 1998 was approximately
$43 million.
The Company is working closely with its bank lenders and hopes to reach
agreement with the bank lenders on a further amendment to the New Credit
Facility containing revised financial covenants which the bank lenders and the
Company find mutually acceptable. There can be no assurance that such an
amendment, or a further waiver of the existing financial covenants, will be
entered into with the bank lenders by April 10, 1999. The failure to obtain
such an amendment or further waiver would result in a violation of the existing
covenants, which would permit the bank lenders to accelerate the maturity of
all outstanding borrowings under the New Credit Facility.
PRESS RELEASES RELATING TO THE COMPANY'S FIRST QUARTER 1998 RESULTS
On March 19, 1998, the Company issued a press release announcing the
possibility that its net sales for the first quarter of 1998 might be lower
than the range of Wall Street analysts' estimates of $285
2
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million to $295 million, but were expected to exceed the $253.4 million in net
sales achieved by the Company for the first quarter of 1997. On April 3, 1998,
the Company issued a press release announcing that the Company then expected
its net sales for the first quarter of 1998 would be approximately 5% lower
than those achieved in the first quarter of 1997 and that the Company would
report a loss for the quarter. On May 11, 1998, the Company announced results
for the first quarter of 1998, including revenues of $244.3 million, a net loss
from continuing operations of $7.8 million and a net loss of 52 cents per
share, and stated that it expected earnings per share in the range of $1.00 for
1998 and $2.00 for 1999. On June 15, 1998, the Company announced that such
forecasts should not be relied upon. Following each of these press releases,
the market price of the Company's stock fell substantially. The Company
subsequently issued a press release restating operating results for the first
quarter of 1998. See "Restatement of Financial Results" and Item 3--Legal
Proceedings, below.
MANAGEMENT AND BOARD CHANGES
On June 15 and 18, 1998, the Company announced the terminations of Albert
J. Dunlap as Chairman and Chief Executive Officer of the Company and Russell A.
Kersh as Vice-Chairman and Chief Financial Officer of the Company,
respectively. Messrs. Dunlap and Kersh resigned from the Board of Directors of
the Company effective August 5, 1998, and William T. Rutter resigned from the
Board of Directors effective July 8, 1998. On June 15, 1998, the Company also
announced that Jerry W. Levin had been elected as the Chief Executive Officer
and that Peter A. Langerman of Franklin Mutual Advisers, Inc., the investment
adviser to Franklin Mutual Series Fund, Inc., had been elected non-executive
Chairman of the Board of the Company. Mr. Levin and Howard Gittis of M&F and
Lawrence Sondike of Franklin Mutual Advisers, Inc. have been appointed to the
Board to fill the vacancies thereon and Director Faith Whittelsey has been
elected to fill the vacancy on the Audit Committee resulting from Mr. Rutter's
resignation. See "Executive Officers of the Registrant," below.
SEC INVESTIGATION
By letter dated June 17, 1998, the staff of the Division of Enforcement of
the SEC advised the Company that it was conducting an informal inquiry into the
Company's accounting policies and procedures and requested that the Company
produce certain documents. On July 2, 1998, the SEC issued a Formal Order of
Private Investigation, designating officers to take testimony and pursuant to
which a subpoena duces tecum was served on the Company requiring the production
of certain documents. On November 4, 1998, another SEC subpoena duces tecum
requiring the production of further documents was received by the Company. The
Company has provided numerous documents to the SEC staff and continues to
cooperate fully with the SEC staff.
RESTATEMENT OF FINANCIAL RESULTS
On June 25, 1998, the Company announced that its auditor, Arthur Andersen
LLP, would not consent to the inclusion of its opinion on the Company's 1997
financial statements in a registration statement the Company was planning to
file with the SEC. On June 30, 1998, the Company announced that the Audit
Committee of the Board of Directors would conduct a review of the Company's
prior financial statements and that therefore, those financial statements
should not be relied upon. The Company also announced that Deloitte & Touche
LLP had been retained to assist the Audit Committee and Arthur Andersen in
their review of the Company's prior financial statements. On August 6, 1998,
the Company announced that the Audit Committee of the Board of Directors had
determined that the Company would be required to restate its financial
statements for 1997, the first quarter of 1998, and possibly 1996, and that the
adjustments, while not then quantified, would be material. On October 20, 1998,
the Company announced the restatement of its financial results for a
six-quarter period from the fourth quarter of 1996 through the first quarter of
1998. See Part II.
SETTLEMENT OF COLEMAN-RELATED CLAIMS
On August 12, 1998, the Company announced that, following investigation
and negotiation conducted by a Special Committee of the Board, consisting of
four outside directors not affiliated with
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M&F, the Company had entered into a settlement agreement with a subsidiary of
M&F pursuant to which the Company was released from certain threatened claims
of M&F and its affiliates arising from the Coleman acquisition and M&F agreed
to provide certain management personnel and assistance to the Company in
exchange for the issuance to the M&F subsidiary of five-year warrants to
purchase up to 23 million shares of the Company's common stock at an exercise
price of $7.00 per share, subject to anti-dilution provisions.
On October 21, 1998, the Company announced that it had entered into a
Memorandum of Understanding to settle, subject to court approval, certain class
actions brought by shareholders of Coleman challenging the proposed Coleman
Merger. Under the terms of the proposed settlement, the Company will issue to
the Coleman public shareholders five-year warrants to purchase 4.98 million
shares of the Company's common stock at $7.00 per share. These warrants will
generally have the same terms as the warrants previously issued to M&F's
subsidiary and will be issued when the Coleman Merger is consummated, which is
now expected to be in the first quarter of 1999. There can be no assurance that
the court will approve the settlement as proposed.
OTHER MATTERS
By letter dated May 22, 1998, the Company was advised by the New York
Stock Exchange (the "NYSE") that the Company did not meet the continuing
listing standards of the NYSE because the Company did not have tangible net
assets of at least $12 million and average annual net income of at least
$600,000 for 1995, 1996 and 1997. The Company has met with NYSE officials;
intends to provide to the NYSE a plan demonstrating the Company's ability to
get back into compliance with the NYSE's listing standards; and anticipates
that the Company's stock will continue to be listed on the NYSE.
In early August 1998, the Company entered into agreements with Messrs.
Dunlap and Kersh pursuant to which the parties agreed to exchange certain
information relating to the shareholder litigation against them and not to
assert any claims against each other for a period of at least six months. The
Company also has paid to Messrs. Dunlap and Kersh amounts related to vacation
and employment benefits. The Company has also agreed, pursuant to the Company's
Bylaws, to advance them defense costs subject to an undertaking received from
each of them to repay all amounts so advanced if it is determined that they did
not meet the applicable standard of conduct for indemnification under Delaware
law.
On October 13, 1998, Coleman completed the sale of the stock of its wholly
owned subsidiary, Coleman Spas, Inc. to MAAX, Inc. for a purchase price of
approximately $18 million, subject to certain post closing adjustments.
ITEM 3. LEGAL PROCEEDINGS
On April 23, 1998, two class action lawsuits were filed on behalf of
purchasers of the Company's common stock in the U. S. District Court for the
Southern District of Florida against the Company and certain of its present and
former officers and directors alleging violations of the federal securities
laws as discussed below (the "Consolidated Federal Actions"). Since that date,
at least fifteen similar class actions have been filed in the same Court. One
of the lawsuits also names as defendant Arthur Andersen LLP, the Company's
independent accountants.
The complaints in the Consolidated Federal Actions allege to varying
degrees that the defendants (i) failed to disclose that the Company pre-sold
approximately $50 million of products pursuant to its "early buy" marketing
program in an effort to boost its 1997 sales and net income figures and (ii)
made material misrepresentations regarding the Company's business operations,
future prospects and anticipated earnings per share, in an effort to
artificially inflate the price of the Company stock long enough for the Company
to complete a $2 billion debt financing (supported with stock incentives)
necessary to complete the acquisitions of Coleman, Signature Brands and First
Alert, and for the individual defendants to enter into lucrative long-term
employment agreements with the Company. Each complaint alleges two counts of
securities fraud; one count against all defendants and one count against the
individual defendants.
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On June 16, 1998, the Court entered an Order consolidating all such filed
and all such subsequently filed class actions and providing time periods for
the filing of a Consolidated Amended Complaint and defendants' response
thereto. On June 22, 1998, two groups of plaintiffs made motions to be
appointed lead plaintiffs and to have their selection of counsel approved as
lead counsel. On July 20, 1998, the Court entered an Order appointing lead
plaintiffs and lead counsel (the "Smith Plaintiffs' Group"). This Order also
stated that it "shall apply to all subsequently filed actions which are
consolidated herewith". On August 28, 1998, plaintiffs in one of the
subsequently filed actions filed an objection to having their action
consolidated pursuant to the June 16, 1998 Order, arguing that the class period
in their action differs from the class periods in the originally filed
consolidated actions. On September 29, 1998, the Smith Plaintiffs' Group filed
its memorandum in opposition to this objection.
On April 7, 1998, a purported derivative action was filed in the Circuit
Court for the Fifteenth Judicial Circuit in and for Palm Beach County, Florida
against the Company and certain of its present and former officers and
directors. The action alleged that the individual defendants breached their
fiduciary duties and wasted corporate assets when the Company granted stock
options to three of its officers and directors on or about February 2, 1998 at
an exercise price of $36.85. On June 25, 1998, all defendants filed a motion to
dismiss the complaint for failure to make a presuit demand on the board of
directors of the Company. On October 22, 1998, plaintiff filed an amended
complaint against all but one of the defendants named in the original
complaint. The amended complaint no longer challenges the stock options, but
instead alleges that the individual defendants breached their fiduciary duties
by failing to have in place adequate accounting and sales controls, which
failure caused the inaccurate reporting of financial information to the public,
thereby causing an artificial inflation of the Company's financial statements
and stock price.
On June 25, 1998, four purported class actions were filed in the Court of
Chancery of the State of Delaware in New Castle County by minority shareholders
of Coleman against Coleman, certain of the Company's present and former
officers and directors and, as a nominal party, the Company. An additional
class action was filed on August 10, 1998, against the same parties. All of the
plaintiffs are represented by the same Delaware counsel and have agreed to
consolidate the class actions. These actions allege, in essence, that the
existing exchange ratio for the proposed merger between the Company and Coleman
is no longer fair to Coleman shareholders as a result of the recent decline in
the market value of the Company stock. On or about October 21, 1998, the
parties signed a memorandum of understanding to settle these class actions,
subject to court approval. See "SIGNIFICANT FINANCIAL AND BUSINESS
DEVELOPMENTS," above.
During the months of August and October 1998, purported class and
derivative actions were filed in the Court of Chancery of the State of Delaware
in New Castle County and in the U. S. District Court for the Southern District
of Florida by shareholders of the Company against the Company, M&F and certain
of the Company's present and former directors. These complaints allege that the
defendants breached their fiduciary duties when the Company entered into a
settlement agreement whereby M&F released the Company from any claims it may
have had arising out of the Company's acquisition of its interest in Coleman
and agreed to provide management support to the Company (the "Settlement
Agreement"). Pursuant to the Settlement Agreement, a M&F subsidiary was granted
five-year warrants to purchase up to an additional 23 million shares of the
Company's common stock at an exercise price of $7.00 per share. These
complaints also allege that the rights of the public shareholders have been
compromised, as the settlement would normally require shareholder approval
under the rules and regulations of the New York Stock Exchange ("NYSE"). The
Audit Committee of the Company's board determined that obtaining such
shareholder approval would have seriously jeopardized the financial viability
of the Company which is an allowable exception to the NYSE shareholder approval
requirement. An amended complaint has been filed in this action.
On September 16, 1998, an action was filed in the 56th Judicial District
Court of Galveston County, Texas alleging various claims in violation of the
Texas Securities Act and Texas Business and Commercial Code as well as common
law fraud as a result of the Company's alleged misstatements and omissions
regarding the Company's financial condition and prospects during a period
beginning May 1,
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1998 and ending June 16, 1998, in which the plaintiffs engaged in transactions
in the Company's stock. The Company is the only named defendant in this action.
The complaint requests recovery of compensatory damages, punitive damages and
expenses in an unspecified amount. This action has been removed to the U.S.
District Court for the Southern District of Texas and the Company has filed a
motion for consolidation of this case with the Consolidated Federal Actions.
Plaintiffs have moved to remand the case to Texas state court.
On October 30, 1998, a class action lawsuit was filed on behalf of certain
purchasers of the Company's Debentures in the U.S. District Court of the
Southern District of Florida against the Company and its prior Chief Executive
Officer and Chief Financial Officer, alleging violations of the federal
securities laws and common law fraud. The complaint alleges that the Company's
offering memorandum used for the marketing of the Debentures contained false
and misleading information regarding the Company's financial position and that
the defendants engaged in a plan to inflate the Company's earnings for the
purpose of defrauding the plaintiffs and others. The Company has not yet been
served with this complaint.
The Company intends to vigorously defend each of the foregoing lawsuits,
but cannot predict the outcome and is not currently able to evaluate the
likelihood of the Company's success in each case or the range of potential
loss. However, if the foregoing actions were determined adversely to the
Company, such judgments would likely have a material adverse effect on the
Company's financial position, results of operations and cash flow.
On July 2, 1998, the American Insurance Company ("American") filed suit
against the Company in the U.S. District Court for the Southern District of New
York requesting a declaratory judgment of the court that the directors' and
officers' liability insurance policy for excess coverage issued by American was
invalid and/or had been properly cancelled by American. The Company has moved
to transfer such action to the federal district court in which the Consolidated
Federal Actions are currently pending; American is opposing such motion. On
October 20, 1998, an action was filed by Federal Insurance Company in the U.S.
District Court for the Middle District of Florida requesting the same relief as
that requested by American in the previously filed action as to additional
coverage levels under the Company's directors' and officers' liability
insurance policy. The Company intends to pursue recovery from all of its
insurers if damages are awarded against the Company or its indemnified officers
and/or directors under any of the foregoing actions. The Company's failure to
obtain such insurance recoveries following an adverse judgement in any of the
lawsuits referred to above could have a material adverse effect on the
Company's financial position, results of operations and cash flow.
The Company and its subsidiaries are also involved in various lawsuits
arising from time to time which the Company considers to be ordinary routine
litigation incidental to its business. In the opinion of the Company, the
resolution of these routine matters, and of certain matters relating to prior
operations of the Company's predecessor, individually or in the aggregate, will
not have a material adverse effect upon the financial position or results of
operations of the Company.
See "Environmental Matters" under Item 1 and Note 12 to the Consolidated
Financial Statements for a description of certain legal proceedings related to
environmental matters, which description is incorporated herein by reference.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
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NAME AGE TITLE
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Jerry W. Levin ............ 54 President, Chief Executive Officer and Director
Paul E. Shapiro ........... 57 Executive Vice President and Chief Administrative Officer
Bobby G. Jenkins .......... 36 Executive Vice President and Chief Financial Officer
Karen K. Clark ............ 38 Vice President, Finance
Janet G. Kelley ........... 45 Vice President & General Counsel
Jack D. Hall .............. 53 President, International
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Jerry W. Levin was appointed President and Chief Executive Officer of
Sunbeam Corporation in June of 1998. Prior to that, Mr. Levin was Chairman and
Chief Executive Officer of The Coleman Company, Inc. as well as Chairman of
Revlon, Inc. and The Cosmetic Center, Inc. Mr. Levin was appointed Chairman and
Chief Executive Officer of Coleman in February 1997. He served as Chief
Executive Officer of Revlon, Inc. and Revlon Consumer Products Corporation from
1992 until January 1997. He had been President of Revlon from 1991 to 1992.
Prior to that, from 1989 to 1991, Mr. Levin was Chairman of The Coleman
Company, Inc. Mr. Levin has been Executive Vice President of MacAndrews &
Forbes Holding, Inc. since March 1989. For 15 years prior to joining MacAndrews
& Forbes, Mr. Levin held various senior executive positions with the Pillsbury
Company. Mr. Levin is a member of the Boards of Directors of Sunbeam
Corporation; Revlon, Inc.; The Coleman Company, Inc.; The Cosmetic Center,
Inc.; Ecolab, Inc. and U.S. Bancorp.
Paul E. Shapiro joined Sunbeam in June of 1998. He was Executive Vice
President and General Counsel of The Coleman Company from July 1997 until its
sale in March 1998. Before joining Coleman, he was Executive Vice President,
General Counsel and Chief Administrative Officer of Marvel Entertainment Group.
He had previously spent over 25 years in private law practice and as a business
executive, most recently as a shareholder in the law firm of Greenberg Traurig.
Mr. Shapiro is a member of the Boards of Directors of the Coleman Company, Inc.
and of Toll Brothers, Inc.
Bobby G. Jenkins joined Sunbeam in June 1998. He serves as Executive Vice
President and Chief Financial Officer of Sunbeam Corporation. Mr. Jenkins was
Chief Financial Officer of The Coleman Company's Outdoor Recreation division
from September 1997 to May 1998. Mr. Jenkins was Executive Vice President and
Chief Financial Officer of Marvel Entertainment Group, Inc. from December 1993
through June 1997. Mr. Jenkins was Assistant Vice President of Finance at
Turner Broadcasting System from August 1992 to November 1993. Prior to that,
Mr. Jenkins was with Price Waterhouse, last serving as Senior Audit Manager.
Karen Clark joined Sunbeam in April of 1998 as Vice President, Operations
Finance. She was previously the Vice President Finance of The Coleman Company,
a position she held since 1997. Prior to that, she was Corporate Controller for
Precision Castparts Corp. from 1994 and from 1990 to 1994, held various
positions with Tektronix.
Janet G. Kelley joined Sunbeam in March 1994 and was named General Counsel
in April of 1998. From 1994 to 1998, Ms. Kelley served as Group Counsel and
Associate General Counsel. Prior to joining Sunbeam, she was a partner in the
law firm of Wyatt, Tarrant & Combs in Louisville, Kentucky.
Jack D. Hall joined Sunbeam in October 1998. Prior to joining Sunbeam, Mr.
Hall held various positions with Revlon Inc., most recently serving as
Executive Vice President, Worldwide Sales and Marketing Development. Prior to
joining Revlon, he spent six years with International Playtex Inc. in a variety
of sales positions.
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PART II
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.
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FISCAL YEARS ENDED
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DECEMBER 28, DECEMBER 29, DECEMBER 31, JANUARY 1, JANUARY 2,
1997 1996(2) 1995 1995 1994
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(AS RESTATED-- (AS RESTATED--
SEE NOTE (1)) SEE NOTE (1))
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales ................................. $ 1,073.1 $ 984.2 $ 1,016.9 $ 1,044.3 $ 927.5
Cost of goods sold ........................ 831.0 896.9 809.1 764.4 674.2
Selling, general and administrative
expense ................................. 152.7 221.7 137.5 128.9 119.3
Restructuring, and asset
impairment (benefit) charges ............ (14.6) 110.1 -- -- --
---------- ---------- ---------- ---------- ---------
Operating earnings (loss) ................. $ 104.1 $ (244.5) $ 70.3 $ 151.0 $ 134.0
========== ========== ========== ========== =========
Earnings (loss) from continuing
operations .............................. $ 52.3 $ (170.2) $ 37.6 $ 85.3 $ 76.9
Earnings from discontinued
operations, net of taxes(3) ............. -- 0.8 12.9 21.7 11.9
Loss on sale of discontinued
operations, net of taxes(3) ............. (14.0) (39.1) -- -- --
Net earnings (loss) ....................... $ 38.3 $ (208.5) $ 50.5 $ 107.0 $ 88.8
EARNINGS (LOSS) PER SHARE DATA(4):
Average common and common
equivalent shares outstanding--
diluted ................................. 87.5 82.9 82.8 82.6 87.9
Diluted earnings (loss) per share
from continuing operations .............. $ 0.60 $ (2.05) $ 0.45 $ 1.03 $ 0.87
Diluted earnings (loss) per share ......... $ 0.44 $ (2.51) $ 0.61 $ 1.30 $ 1.01
Cash dividends declared per share ......... $ 0.04 $ 0.04 $ 0.04 $ 0.04 $ 0.04
BALANCE SHEET DATA (AT PERIOD END):
Working capital ........................... $ 369.1 $ 359.9 $ 411.7 $ 294.8 $ 261.4
Total assets .............................. 1,058.9 1,059.4 1,158.7 1,008.9 928.8
Long-term debt ............................ 194.6 201.1 161.6 124.0 133.4
Shareholders' equity ...................... 472.1 415.0 601.0 454.7 370.0
</TABLE>
- ----------------
(1) The financial data as of and for the fiscal years ended December 28, 1997
and December 29, 1996 was restated as described in Notes 1 and 13 to the
Consolidated Financial Statements.
(2) Includes special charges of $239.2 million before taxes. See Notes 8 and 9
to Notes to Consolidated Financial Statements.
(3) Represents earnings from the Company's furniture business, net of taxes and
the estimated loss on disposal. See Note 9 in the Consolidated Financial
Statements.
(4) Reflects the adoption of SFAS No. 128, EARNINGS PER SHARE.
8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
On June 30, 1998, the Company announced that the Audit Committee of the
Board of Directors was initiating a review into the accuracy of prior financial
statements. The Audit Committee's review has since been completed and, as a
result of its findings, the Company has restated its previously issued
Consolidated Financial Statements for 1996 and 1997. (See Notes 1, 13, 14 and
15 to the Consolidated Financial Statements.)
OVERVIEW
In November 1996, the Company announced the details of a restructuring
plan. By July 1997, the Company completed the major phases of the restructuring
plan. The plan included the consolidation of administrative functions, a
reduction in manufacturing and warehouse facilities (including a reduction in
the number of production facilities from 26 to 8 and warehouses from 61 to 18),
the elimination of over 6,000 positions (including 3,300 from the divestiture
of certain businesses described below and approximately 2,800 other positions,
some of which were outsourced), 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 plan also included the elimination of
certain businesses and product lines. In fiscal 1997, Sunbeam's core product
categories were Appliances, Health at Home, Personal Care and Comfort, Outdoor
Cooking and Away From Home. Other product categories and businesses were
divested in 1997, including the Company's furniture business and its time and
temperature, decorative bedding and Counselor/registered trademark/ and
Borg/registered trademark/ scale product lines. In addition, the Company sold
its textile mill in Biddeford, Maine in 1997, while entering into a supply
agreement with the mill for future production of blanket shells.
The Company's operating results for 1996 include pre-tax Restructuring and
Asset Impairment Charges of $110.1 million recorded for the restructuring plan
(see Note 8 to the Consolidated Financial Statements). Approximately $29.3
million of these charges were paid in cash in 1996 and 1997, primarily for
severance and other employee termination benefits, lease obligations and other
exit costs associated with facility closures. The Company estimates that
approximately $5.2 million will be expended in the future, primarily for lease
obligations. The amounts accrued at December 29, 1996, for Restructuring and
Asset Impairment Charges recorded in fiscal 1996, exceeded amounts ultimately
required. Accordingly, the fiscal 1997 Consolidated Statement of Operations
reflects the reversal of accruals no longer required and resulted in a
Restructuring and Asset Impairment Benefit of $14.6 million.
In 1996, in conjunction with the initiation of the restructuring plan, the
Company recorded additional charges totaling $129.1 million, reflected in Cost
of Sales; Selling, General and Administrative Expense ("SG&A"); and Loss on
Sale of Discontinued Operations. These charges related largely to inventory
write-downs as a result of the reduction in SKU's, costs related to outsourcing
and the divestiture of the furniture business. In 1997, the Company incurred
$38.3 million of expenses related to the restructuring effort undertaken in
1996. These expenses were primarily for equipment movement, package redesign,
employee relocation and recruiting, and an additional pre-tax loss on the sale
of discontinued operations due primarily to lower than anticipated sales
proceeds. (See Notes 8 and 9 to the Consolidated Financial Statements.)
9
<PAGE>
The charges and benefit described above are included in the following
categories in the 1997 and 1996 Consolidated Statements of Operations (in
millions):
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Restructuring and impairment (benefit) charge .......... $ (14.6) $ 110.1
Cost of goods sold ..................................... -- 60.8
Selling, general and administrative expenses ........... 15.8 10.1
Loss on sale of discontinued operations ................ 22.5 58.2
------- --------
$ 23.7 $ 239.2
======= ========
</TABLE>
These charges and benefit consisted of the following (in millions):
<TABLE>
<CAPTION>
1997 1996
--------- --------
<S> <C> <C>
Write-downs:
Fixed assets held for disposal, not in use ............................... $ -- $ 34.8
Fixed assets held for disposal, used until disposed ...................... -- 14.8
Inventory on hand ........................................................ -- 60.8
Other assets, principally trademarks and intangible assets ............... -- 19.1
------- ------
-- 129.5
------- ------
Restructuring accruals (including amounts expended in 1996):
Employee severance pay and fringes ....................................... (7.9) 24.7
Lease payments and termination fees ...................................... (6.7) 12.6
Other exit activity costs, principally facility closure expenses ......... -- 4.1
------- ------
(14.6) 41.4
------- ------
Other related costs incurred:
Employee relocation; equipment relocation and installation and other ..... 11.8 3.2
Transitional fees related to outsourcing arrangements .................... -- 4.9
Package redesign ......................................................... 4.0 2.0
------- ------
15.8 10.1
------- ------
Charges included in continuing operations ................................ 1.2 181.0
Loss on sale of discontinued operations .................................. 22.5 58.2
------- ------
$ 23.7 $239.2
======= ======
</TABLE>
At December 29, 1996, the net carrying value of inventory written-down as
part of the restructuring and asset impairment charges approximated $37.3
million. During 1997, this inventory, a portion of which was product of
discontinued operations, was sold for an amount substantially equivalent to its
net carrying value.
As further described in Note 12 to the Consolidated Financial Statements,
during the fourth quarter of 1996, the Company charged SG&A for increases of
$9.0 million in environmental reserves and $12.0 million in litigation
reserves. As described in Note 2 to the Consolidated Financial Statements, the
Company also charged $7.7 million to SG&A expenses in 1996 for compensation
costs associated with restricted stock awards and other costs related to the
employment of the then new senior management team.
During the first, second, third and fourth quarters of 1997, approximately
$0.5 million, $4.5 million, $1.5 million and $21.5 million, respectively, of
pre-tax liabilities provided in prior years and determined to be no longer
required were reversed and taken into income. Included in these reserves was
$8.1 million related to the litigation reserve increase in 1996. (See Note 12
to the Consolidated Financial Statements.)
10
<PAGE>
Additionally, effective in the second quarter of fiscal 1997, the Company
began capitalizing manufacturing supplies inventories, whereas, previously
these inventories were charged to operations when purchased. This change
increased operating earnings in fiscal 1997 by $2.8 million.
A reconciliation of earnings (loss) from continuing operations for 1997
and 1996, on an adjusted basis follows (in millions):
<TABLE>
<CAPTION>
1997 1996
--------- ------------
<S> <C> <C>
Operating earnings (loss), as reported .................................... $ 104.1 $ (244.5)
Add (deduct):
Restructuring, asset impairment and other related charges ................ 1.2 181.0
Environmental reserve increase principally related to
divested operations .................................................... -- 9.0
Litigation reserve increase relating to divested operation ............... -- 12.0
Restricted stock and other management compensation ....................... -- 7.7
Reversals of accruals no longer required ................................. (28.0) --
Capitalization of manufacturing supplies inventories ..................... (2.8) --
------- --------
Adjusted operating earnings (loss) ........................................ 74.5 (34.8)
Interest expense ......................................................... 11.4 13.6
Other expense, net ....................................................... -- 3.7
------- --------
Adjusted earnings (loss) from continuing operations before income taxes ... 63.1 (52.1)
Adjusted income taxes (benefit) .......................................... 56.3 (18.2)
------- --------
Adjusted earnings (loss) from continuing operations ....................... $ 6.8 $ (33.9)
======= ========
</TABLE>
After consideration of the adjustments above, 1996 results from continuing
operations reflect a loss and 1997 continuing operations are marginally
profitable. Due to a variety of factors, including sales in 1997 which
increased inventory positions at certain customers, distribution losses during
1997 and other items, as discussed below, the results for 1997 are not
indicative of future results. As discussed in Liquidity and Capital Resources,
below, and in Note 15 to the Consolidated Financial Statements, the 1998
results are expected to be impacted materially by charges related to, among
other items, a provision for excess inventory, a change in management, changes
in business operations resulting in part from acquisitions made in 1998, higher
interest costs related to higher debt levels, costs associated with litigation
and restructuring and asset impairment costs, as well as costs related to Year
2000 issues.
YEAR ENDED DECEMBER 28, 1997 COMPARED TO THE YEAR ENDED DECEMBER 29, 1996
Net sales for 1997 were $1,073.1 million, an increase of $88.9 million or
9% over 1996. After excluding: (i) $4.2 million and $30.8 million in 1997 and
1996, respectively, related to divested product lines which are not classified
as discontinued operations (time and temperature products, decorative bedding
and Counselor/registered trademark/ and Borg/registered trademark/ branded
scales), (ii) $31.3 million of sales in 1997 of discontinued inventory which
resulted primarily from the reduction of SKU's as part of the 1996
restructuring plan and for which the inventory carrying value was substantially
equivalent to the sales value, and (iii) a $5.4 million benefit from the
reduction of cooperative advertising accruals no longer required in 1997
(cooperative advertising costs are recorded as deductions in determining net
sales), net sales on an adjusted basis ("Adjusted Sales") increased 8% over the
prior year.
Adjusted Sales, on a worldwide basis, increased during 1997 primarily from
new product introductions, expanded distribution (particularly with the
Company's top ten customers), international geographic expansion and increased
inventory positions at certain customers. Adjusted Sales growth was
approximately 19% in the Appliance category and approximately 12% in Outdoor
Cooking. In the Health at Home category, Adjusted Sales increased approximately
5% while Adjusted Sales in the Personal Care and Comfort category decreased
approximately 13% during 1997. As customers reduce inventories to normal
levels, 1998 sales are expected to be adversely impacted.
11
<PAGE>
Sales increases in Appliances were driven by new products, such as
re-designed blenders and mixers, coffeemakers, irons, deep fryers and toasters,
and by increased distribution with large national mass retailers, combined with
higher inventory levels at certain customers. Sales of Outdoor Cooking products
increased in 1997 attributed to increased merchandising and advertising
programs, new distribution and higher inventory levels at certain customers.
During 1997, the Company lost a significant portion of its Outdoor Cooking
products distribution, including the majority of its grill accessory products
distribution. Accessories, which accounted for just over 10% of the Outdoor
Cooking sales volume in 1997, generate significantly better margins than the
average margins on sales of grills. These distribution changes are expected to
adversely impact Outdoor Cooking sales and margins in the future, until such
time as the distribution is regained.
Sales of Personal Care and Comfort products suffered during the fourth
quarter of 1997 as a result of lower than expected retail sell through of
electric blankets in key northern markets in late 1997 coupled with the
inability to service demand for king and queen sized blankets due to shortages
of blanket shells. The Company has shifted to a more level production for
blankets in 1998 in order to more adequately service the seasonal demand for
bedding products. Health at Home category sales increased as a result of new
products and improved distribution in the drug store channels. Both Personal
Care and Comfort and Health at Home sales were impacted by increased inventory
positions at customers in 1997. Away from Home sales increased in 1997 as a
result of new products, including cordless clippers and titanium blades,
coupled with increased distribution of commercially rated appliances. Also
contributing to the Company's sales growth in 1997 were its new retail outlet
stores, of which 22 were open by the end of 1997.
International sales, which represented 21% of total revenues in 1997, grew
25% during the year. This sales growth was driven primarily by 54 new 220 volt
product introductions and a general improvement in demand in export operations
and in Mexico. Net sales growth of approximately 35% was achieved in the Latin
American export sales organization. Most of this growth came from increased
business with three exporters. In Mexico and Venezuela, sales grew 30% and 24%,
respectively. Canada accounted for the majority of the remaining international
sales growth.
Excluding the effect of: (i) charges to cost of sales related to the
restructuring plan in 1996, (ii) the benefit of reducing reserves no longer
required in 1997, and (iii) the benefit in 1997 of capitalizing manufacturing
supplies inventories, gross margin as a percent of Adjusted Sales would have
been approximately 22% in 1997, an improvement of approximately 6 percentage
points from 16% in 1996. This increase reflects the results of lower overhead
spending, improved factory utilization and labor cost benefits resulting from
the Company's restructuring plan, coupled with reductions in certain materials
costs. The lower overhead spending resulted from a reduction in the number of
facilities operated by the Company. With fewer facilities used for production
purposes, the capacity of the remaining plants was more fully utilized. The
labor cost benefits were realized principally from shifting production to
Mexico. In addition, a broad based program to obtain lower costs for materials
contributed to the 1997 margin improvement.
Excluding the impact of: (i) the restructuring and asset impairment
charges to SG&A in 1997 and 1996, (ii) the 1996 charges for the environmental
accrual, litigation accrual, and restricted stock grant compensation, and (iii)
the 1997 benefit from the reversal of reserves no longer required, SG&A
improved to 14% of Adjusted Sales in 1997, down 5 percentage points from 19% in
1996. This improvement was partially the result of benefits from the
consolidation of six divisional and regional headquarters into one corporate
headquarters and one administrative operations center, reduced staffing levels,
a reduction in the number of warehouses, and Company-wide cost control
initiatives. Higher expenditures in 1996 for market research, new packaging and
other discretionary charges and higher bad debt expenses associated with
certain of the Company's customers also contributed to the decrease in SG&A
costs from 1996 to 1997.
Operating results for 1997 and 1996, on a comparable basis as described
above, were earnings of $74.5 million in 1997 and a loss of $34.8 million in
1996. On the same basis, operating margin increased
12
<PAGE>
11 percentage points to 7% of Adjusted Sales in 1997 versus a loss of 4% in
1996. This improvement resulted from the factors discussed above.
Interest expense decreased from $13.6 million in 1996 to $11.4 million in
1997 primarily as a result of lower average borrowing levels in 1997.
The 1997 effective income tax rate for continuing operations was higher
than the federal statutory income tax rate primarily due to state and local
taxes plus the effect of foreign earnings taxed at other rates and the increase
to the valuation reserve for deferred tax assets, offset in part by the
reversal of tax liabilities no longer required. For 1996, the effective income
tax rate for continuing operations equaled the federal statutory income tax
rate. For a reconciliation of income taxes computed at the federal statutory
tax rate to the amounts provided, see Note 10 to the Consolidated Financial
Statements.
The Company's diluted earnings per share from continuing operations was
$0.60 per share in 1997 versus a loss per share from continuing operations in
1996 of $2.05. The Company's share base utilized in the diluted earnings per
share calculation increased approximately 6% during 1997 as a result of an
increase in the number of shares of common stock outstanding due to the
exercise of stock options in 1997 and the inclusion of common stock equivalents
in the 1997 calculation.
The Company's discontinued furniture business, which was sold in March
1997, had revenues of $51.6 million in the first quarter of 1997 prior to the
sale and nominal earnings. In 1996, the discontinued furniture business had net
income of $0.8 million on revenues of $227.5 million and an estimated loss on
disposal of the business of $39.1 million, net of applicable income tax
benefits. The sale of the Company's furniture business assets (primarily
inventory, property, plant and equipment) was completed in March 1997.
The Company received $69.0 million in cash, retained approximately $50.0
million in accounts receivable and retained certain liabilities related to the
furniture business. The final purchase price for the furniture business was
subject to a post-closing adjustment based on the terms of the Asset Purchase
Agreement and in the first quarter of 1997, after completion of the sale, the
Company recorded an additional loss on disposal of $22.5 million pre-tax. See
discussion of Restructuring and Asset Impairment (Benefit) Charges in Note 8
and Discontinued Operations and Assets Held For Sale in Note 9 to the Company's
Consolidated Financial Statements for further information regarding sale of the
furniture business.
YEAR ENDED DECEMBER 29, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995
As described above, the Company's operating results for 1996 include: (i)
a pre-tax charge of $239.2 million recorded in conjunction with the
restructuring plan (see Notes 8 and 9 to the Consolidated Financial
Statements), (ii) charges related to increases in environmental ($9.0 million)
and litigation ($12.0 million) reserves (see Note 12 to the Consolidated
Financial Statements), and (iii) $7.7 million of charges related to restricted
stock grants made to the then new management team (see Note 2 to the
Consolidated Financial Statements).
Net sales in 1996 of $984.2 million represent a decrease of $32.7 million,
or 3%, from 1995. Domestic sales represented approximately 80% of total sales
of the Company in 1996 and decreased $28.5 million or 3% from 1995. This sales
decline was driven by lower sales of outdoor cooking products, which declined
7% and lower sales of bedding products which declined 9% from 1995, attributed
primarily to 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.
The Company's loss from continuing operations was $170.2 million or $2.05
per share for 1996 versus earnings from continuing operations of $37.6 million
or $0.45 per share (diluted) in 1995 largely
13
<PAGE>
as a result of the restructuring activities discussed above. The net loss for
1996 was $208.5 million, or $2.51 per share, compared to net earnings of $50.5
million, or $0.61 per share (diluted), for 1995. Excluding the impact in 1996
of the charges discussed above, operating earnings decreased from $70.2 million
in 1995 to a loss of $34.8 million in 1996.
International sales decreased $4.2 million or 2% from 1995 primarily as a
result of lower sales in Latin America which was attributed 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% in Canada as a result of the bankruptcy filing of the Company's then
largest Canadian customer offset by a 55% 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
restructuring and other charges, was 15% of sales in 1996, down from 20% in
1995, primarily from higher manufacturing costs and excess manufacturing
capacity.
SG&A expenses, excluding the impact of the charges described above, were
19% of sales in 1996 compared with 14% of sales in 1995. The higher 1996
expenses were due in part to higher than normal spending for market research,
advertising and similar programs and higher bad debt charges associated with
certain of the company's customers.
Operating losses, excluding the restructuring and special charges in 1996,
were $34.8 million in 1996, or 4% of sales, as compared with 1995's operating
earnings of $70.2 million, or 7% of sales. The decrease in operating results
between years is primarily a result of the factors discussed above.
Interest expense increased from $9.4 million in 1995 to $13.6 million in
1996 as a result of increased indebtedness of the Company for working capital
requirements and interest capitalized in 1995 related to the construction of
the Hattiesburg manufacturing and distribution center.
The effective income tax rate for 1996 equaled the federal statutory
income tax rate. In 1995, the effective income tax rate exceeded the federal
statutory income tax rate primarily due to state and local taxes plus the
effect of foreign earning and dividends taxes at other rates. For a
reconciliation of income taxes computed at the federal statutory tax rate to
the amounts provided, see Note 10 in the Notes to Consolidated Financial
Statements.
The Company's discontinued furniture business had revenues of $227.5
million in 1996, up 23% from $185.6 million in 1995. This revenue growth was
attributed primarily to the acquisition of the Samsonite/registered trademark/
furniture business in November 1995. Excluding the impact of this acquisition,
furniture business sales declined 2%. Earnings from the discontinued furniture
business, net of taxes, declined from $12.9 million in 1995 to $0.8 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/registered
trademark/ furniture business, higher distribution and warehousing costs,
particularly with resin furniture products and higher bad debt expenses. (See
Note 9 to the Consolidated Financial Statements.)
FOREIGN OPERATIONS
During 1997 approximately 90% of the Company's business was conducted in
U.S. dollars (including both domestic sales, U.S. dollar denominated export
sales primarily to certain Latin American markets, Asian sales and the majority
of European sales). The Company's exposure to market risk from changes in
foreign currency and interest rates is generally insignificant. The Company's
non-U.S. dollar denominated sales are made principally by subsidiaries in
Mexico, Venezuela and Canada. Venezuela is considered a hyperinflationary
economy for accounting purposes for 1995, 1996 and 1997 and Mexico reverted to
hyperinflationary status for accounting purposes in 1997; therefore,
translation adjustments related to Venezuelan and Mexican net monetary assets
are included as a component of net earnings. Such translation adjustments were
not material to 1995, 1996 and 1997 operating results.
14
<PAGE>
On a limited basis, the Company selectively uses derivatives (foreign
exchange option and forward contracts) to manage 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 1995, 1996 and
1997. (See Note 4 to the Consolidated Financial Statements.)
SEASONALITY
On a consolidated basis, the Company's sales do not exhibit substantial
seasonality; however, sales are strongest during the fourth quarter of the
calendar year. Additionally, 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. Furthermore,
sales of a number of the Company's products, including warming blankets,
vaporizers, humidifiers and grills may be impacted by unseasonable weather
conditions.
LIQUIDITY AND CAPITAL RESOURCES
As of December 28, 1997, the Company had cash and cash equivalents of
$52.3 million, working capital excluding cash and cash equivalents of $316.8
million and total debt of $195.2 million. Cash used in operating activities
during 1997 was $6.0 million compared to $14.2 million provided by operating
activities in 1996. This decrease is primarily attributable to increased
inventory levels in 1997 and spending in 1997 related to the restructuring
initiatives accrued for in 1996, largely offset by an increase in cash
generated by earnings in 1997 and an income tax refund (net of tax payments) in
1997. Cash used in operating activities reflects proceeds of $58.9 million from
the Company's revolving trade accounts receivable securitization program
entered into in December 1997 as more fully described in Note 3 to the
Consolidated Financial Statements. The Company anticipates that cash used in
operating activities will increase during 1998, largely from increases in
inventory levels. As certain inventories built in 1997 in anticipation of 1998
sales volumes exceed the actual requirements, it will be necessary to dispose
of some portions of excess inventories at amounts less than cost. The Company
expects to continue to use the securitization program to finance a portion of
its accounts receivable.
Capital spending totaled $60.5 million in 1997 and was primarily for
capacity expansion initiatives and equipment and tooling for new products and
cost reduction. The new product capital spending in 1997 principally related to
the Appliance Category and included costs related to blenders, toasters,
standmixers, slow cookers and a soft serve ice cream product. Capital spending
in 1996 was $75.3 million (including $14.5 million related to the discontinued
furniture business) and was primarily attributable to equipment for new product
development, cost reduction initiatives and a $5.0 million warehouse expansion
financed with a capital lease. Capital spending in 1995 included 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 capital spending was related 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 1998 capital spending to be approximately 5%
of sales and primarily related to new product introductions, capacity additions
and certain facility rationalization initiatives.
Cash provided by investing activities also reflects $91.0 million in
proceeds from sales of businesses, assets and product categories as part of the
1996 restructuring plan. Cash used in investing activities for 1995 includes
the purchase of a portion of the Company's furniture business, which was
subsequently divested in full in March 1997.
Cash provided by financing activities totaled $16.4 million in 1997 and
reflects net borrowings of $5.0 million under the Company's revolving credit
facility, $12.2 million of debt repayments related to the divested furniture
business and other assets sold and $26.6 million in cash proceeds from the
exercise of stock options, substantially all by former employees of the
Company. In 1996, cash provided by financing activities of $45.3 million was
primarily from increased revolving credit facility borrowings
15
<PAGE>
to support working capital and capital spending requirements, $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. In 1995, cash provided by
financing activities of $27.8 million was primarily from increased revolving
credit facility borrowings of $40.0 million, offset by $13.1 million used for
the purchase of the Company's common stock for treasury. In July 1997, the
Company reduced the amount of available borrowings under its September 1996
unsecured five year revolving credit facility from $500 million to $250
million. In early 1998, the Company refinanced substantially all of the then
outstanding debt (see Note 15 to the Consolidated Financial Statements).
The Company is a party to various environmental proceedings. Substantially
all of the environmental proceedings of the Company, before consideration of
the acquisitions discussed below, related to previously divested operations. In
1996, a review of environmental exposures was undertaken as a result of the
Company's intent to accelerate 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 or results of operations.
On March 30, 1998, the Company, through a wholly-owned subsidiary,
acquired approximately 81% of the total number of then outstanding shares of
common stock of The Coleman Company, Inc. ("Coleman"), in exchange for
14,099,749 shares of the Company's common stock and approximately $160 million
in cash, as well as the assumption of $1,016 million in debt. The Company
expects to acquire the remaining equity interest in Coleman pursuant to a
merger transaction for approximately 6.7 million shares of common stock and
approximately $87 million in cash. In addition, as a result of litigation
related to the merger consideration, the Company has entered into a memorandum
of understanding (subject to court approval) pursuant to which the holders of
the remaining equity interest in Coleman will also receive five-year warrants
to purchase 4.98 million shares of Sunbeam common stock at $7.00 per share.
There can be no assurance that the court will approve the settlement as
proposed. (See Part I--Significant Financial and Business Developments, Item
3--Legal Proceedings and Note 15 to the Consolidated Financial Statements.)
Coleman is a leading manufacturer and marketer of consumer products for the
worldwide outdoor recreation market. Coleman's products have been sold
domestically and internationally under the Coleman registered trademark brand
name since the 1920's. The Company expects to acquire the remaining equity
interest in Coleman in the first quarter of 1999.
On April 6, 1998, the Company completed the cash acquisitions of First
Alert, Inc. ("First Alert"), a leading manufacturer of smoke and carbon
monoxide detectors, and Signature Brands USA, Inc. ("Signature Brands"), a
leading manufacturer of a comprehensive line of consumer and professional
products. The First Alert and the Signature Brands acquisitions were valued at
approximately $178 million and $253 million, respectively, including the
assumption of debt.
In order to finance the above acquisitions, and refinance substantially
all of the indebtedness of the Company, Coleman, First Alert and Signature
Brands, the Company consummated: (i) an offering of Zero Coupon Convertible
Senior Subordinated Debentures due 2018 (the "Debentures") at a yield to
maturity of 5% (approximately $2,014 million principal amount at maturity) in
March 1998, which resulted in approximately $730 million of net proceeds and,
(ii) entered into a revolving and term credit facility ("New Credit Facility")
in April 1998, which provided for an aggregate borrowing of up to $1.7 billion.
In March, 1998, the Company prepaid a $75.0 million 7.85% industrial
revenue bond related to its Hattiesburg facility originally due in 2009. In
connection with the early extinguishment of this debt, the Company will record
a charge of $8.6 million in the first quarter of 1998. Also, as a result of
repayment of certain indebtedness assumed in the Coleman acquisition, the
Company will recognize an extraordinary charge of approximately $104 million in
the second quarter of 1998.
At June 30, 1998, the Company was not in compliance with the covenants and
ratios under the New Credit Facility. The Company and its lenders entered into
an agreement dated June 30, 1998, which
16
<PAGE>
provided that compliance with the covenants would be waived through December
31, 1998. Subsequently, pursuant to an amendment dated October 19, 1998, the
Company is not required to comply with the original financial covenants and
ratios under the New Credit Facility until April 10, 1999, but will be required
to comply with an earnings before interest, taxes, depreciation and
amortization covenant, the amounts of which are to be determined, beginning
February 1999. At September 30, 1998, following the scheduled repayment of a
portion of the term loan, the New Credit Facility was reduced to $1,698 million
in total, of which approximately $1,453 million was outstanding and
approximately $245 million was available. In addition, the Company's cash
balance at September 30, 1998 was approximately $43 million.
The Company is working closely with its bank lenders and hopes to reach
agreement with the bank lenders on a further amendment to the New Credit
Facility containing revised financial covenants which the bank lenders and the
Company find mutually acceptable. There can be no assurance that such an
amendment, or a further waiver of the existing financial covenants, will be
entered into with the bank lenders by April 10, 1999. The failure to obtain
such an amendment or further waiver would result in a violation of the existing
covenants, which would permit the bank lenders to accelerate the maturity of
all outstanding borrowings under the New Credit Facility.
In December 1997, the Company entered into a revolving trade accounts
receivable securitization program, which expires December, 1998, to sell
without recourse, through a wholly-owned subsidiary, certain trade accounts
receivable, up to a maximum of $70.0 million. The Company, as agent for the
purchaser of the receivables, retains collection and administrative
responsibilities for the purchased receivables. At September 30, 1998, the
Company had sold approximately $20.0 million of accounts receivable under this
program.
At December 28, 1997, standby letters of credit aggregating $29 million
were outstanding, primarily for insurance, environmental and workers'
compensation issues. At September 30, 1998, the standby letters of credit
aggregated $56 million, including $5 million related to an acquired company,
and were predominately for insurance, pension, environmental and workers'
compensation issues.
For additional information relating to the Acquisitions, Debentures and
New Credit Facility, see Note 15 to the Consolidated Financial Statements.
The Company believes its borrowing capacity under the New Credit
Agreement, cash flow from the combined operations of the Company and its
acquired companies, existing cash and cash equivalent balances, and its
receivable securitization program will be sufficient to support working capital
needs, capital spending, and debt service for the foreseeable future. However,
if the Company is unable to satisfactorily amend the financial covenants and
ratio requirements of the New Credit Facility or obtain a further waiver of the
existing covenants and ratio requirements prior to April 10, 1999, the Company
expects it would, at that time, be in default of the requirements under the New
Credit Facility and, as noted above, the lenders could then require the
repayment of all amounts then outstanding under the New Credit Facility.
See, also, Item 3, "Legal Proceedings," above.
NEW ACCOUNTING STANDARDS
See Notes 1 and 15 to the Company's consolidated financial statements for
a discussion of Statement of Financial Accounting Standards ("SFAS") No. 130,
REPORTING COMPRESHENSIVE INCOME, SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION, SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, Statement of Position ("SOP") 98-1,
ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR
INTERNAL USE and SOP 98-5, REPORTING ON THE COSTS OF START-UP ACTIVITIES, which
are required to be adopted for periods beginning after June 15, 1997. The
adoption of these standards is not expected to
17
<PAGE>
have a material effect on the Company's consolidated results of operations,
financial position, or cash flows, although actual charges incurred may be
material due to Year 2000 issues, as discussed below.
YEAR 2000
The Company is continuing the process of assessing the impact of the Year
2000 on its operations, including those of its subsidiaries Coleman, First
Alert and Signature Brands which were acquired by the Company in the spring of
1998. The Company established a Year 2000 Program Management Office in the
third quarter of 1998 to manage such continuing assessment and the design and
remediation of the systems with assistance from three consulting firms. The
Company's continuing assessment encompasses the Company's information
technology functions along with the impact of the effects of noncompliance by
its vendors, service providers, customers, and financial institutions.
Additionally, the Company is assessing the impact of noncompliance of embedded
microprocessors in its products as well as equipment, such as security and
telephone systems and controls for lighting, heating/ventilation, and facility
access.
The Company relies on its information technology functions to perform many
tasks that are critical to its operations. Significant transactions that could
be impacted by Year 2000 noncompliance include, among others, purchases of
materials, production management, order entry and fulfillment, and payroll
processing. Systems and applications that have been identified by the Company
to date as not currently Year 2000 compliant and which are critical to the
Company's operations include its financial software systems, which process the
order entry, purchasing, production management, general ledger, accounts
receivable, and accounts payable functions, and critical applications in the
Company's manufacturing and distribution facilities, such as the warehouse
management application. The Company plans to complete corrective work with
respect to the Company's systems by the second quarter of 1999 with final
testing and implementation of such systems occurring in the third quarter of
1999. Management believes that, although there are significant systems that
will need to be modified or replaced, the Company's information systems
environment will be made Year 2000 compliant prior to January 1, 2000. The
Company's failure to timely complete such corrective work could have a material
adverse impact on the Company. The Company is not able to estimate possible
lost profits arising from such failure.
The Company is in the process of contacting its vendors and suppliers of
products and services to determine their Year 2000 readiness and plans. This
review includes third party providers to whom the Company has outsourced the
processing of its cash receipt and cash disbursement transactions and its
payroll. The Company plans to complete this review during the fourth quarter of
1998. The failure of certain of these third party suppliers to become Year 2000
compliant could have a material adverse impact on the Company.
Based on a reassessment of the Year 2000 project scope and approach, as
well as the time frame remaining to implement a solution for the Year 2000
issue, and an assessment of the requirements for operating information systems
in the Company, the current estimate of the total costs to address and remedy
Year 2000 issues and to enhance the Company's operating systems, including
costs for the acquired companies, is approximately $50 million. This estimate
includes the costs of software and hardware modifications and replacements and
fees to third party consultants, but excludes internal resources which are not
separately tracked by the Company with respect to the allocation of time to the
Year 2000 issues. The Company expects these expenditures to be financed through
operating cash flows or borrowings, as applicable. As of December 28, 1997, the
Company had expended less than $1 million related to new systems and
remediation to address Year 2000 and other systems issues, of which the
majority was for software licenses and was therefore recorded as capital
expenditures. Of the remaining estimated expenditures, it is anticipated that
approximately 25% will be incurred in 1998, with the remainder in 1999. As the
Company continues its assessment of the Year 2000 issues and its information
requirements to execute its business plans, the actual expenditures incurred or
to be incurred may differ materially from the amounts shown above.
18
<PAGE>
As part of the assessment of the Year 2000 on its operations, the Company
plans to establish a contingency plan for addressing any effects of the Year
2000 on its operations, whether due to noncompliance of the Company's systems
or those of third parties. The Company expects to complete such contingency
plan by September 30, 1999; such contingency plan will address alternative
processes, such as manual procedures to replace those processed by noncompliant
systems, potential alternative service providers, and plans to address
compliance issues as they arise. Subject to the nature of the systems and
applications which are not made Year 2000 compliant, the impact of such
non-compliance on the Company's operations could be material if appropriate
contingency plans cannot be developed prior to January 1, 2000.
EFFECTS OF INFLATION
For each of the three years in the period ended December 28, 1997, the
Company's cost of raw materials and other product remained relatively stable.
To the extent possible, the Company's objective is to offset the impact of
inflation through productivity enhancements, cost reductions and price
increases.
SUBSEQUENT EVENTS
See Note 15 to the Consolidated Financial Statements for subsequent events
information relating to, among other matters, a change in management,
litigation, change in fiscal year end and employment contracts entered into
with the former Chairman and Chief Executive Officer and other former senior
executives of the Company.
CAUTIONARY STATEMENTS
Certain statements in this Annual Report on Form 10-K/A may constitute
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995, as the same may be amended from time to time
(herein the "Act") and in releases made by the Securities and Exchange
Commission ("SEC") from time to time. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance, or achievements of the Company to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. When used in this Annual Report on
Form 10-K/A, the word "estimate," "project," "intend," "expect" and similar
expressions, when used in connection with the Company, including its
management, are intended to identify forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous important assumptions and other important factors that could
cause actual results to differ materially from those in the forward-looking
statements. These Cautionary Statements are being made pursuant to the Act,
with the intention of obtaining the benefits of the "Safe Harbor" provisions of
the Act. The Company cautions investors that any forward-looking statements
made by the Company are not guarantees of future performance. Important
assumptions and other important factors that could cause actual results to
differ materially from those in the forward-looking statements with respect to
the Company include, but are not limited to risks associated with (i) high
leverage, (ii) Sunbeam's ability to enter into an amendment to its credit
agreement containing financial covenants which it and its bank lenders find
mutually acceptable, or to continue to obtain waivers from its bank lenders
with respect to its compliance with the existing covenants contained in such
agreement, and to continue to have access to its revolving credit facility,
(iii) Sunbeam's ability to integrate the recently acquired Coleman, Signature
Brands and First Alert companies and expenses associated with such integration,
(iv) Sunbeam's sourcing of products from international vendors, including the
ability to select reliable vendors and to avoid delays in shipments, (v)
Sunbeam's ability to maintain and increase market share for its products at
anticipated margins, (vi) Sunbeam's ability to successfully introduce new
products and to provide on-time delivery and a satisfactory level of customer
service, (vii) changes in laws and regulations, including changes in tax rates,
accounting standards, environmental laws, occupational, health and safety laws,
(viii) access to foreign markets together with foreign economic conditions,
including currency fluctuations, (ix) uncertainty as to the effect of
competition in existing and potential
19
<PAGE>
future lines of business, (x) fluctuations in the cost and availability of raw
materials and/or products, (xi) changes in the availability and relative costs
of labor, (xii) effectiveness of advertising and marketing programs, (xiii)
economic uncertainty in Japan, Korea and other Asian countries, as well as in
Mexico, Venezuela, and other Latin American countries, (xiv) product quality,
including excess warranty costs, product liability expenses and costs of
product recalls, (xv) weather conditions which can have an unfavorable impact
upon sales of Sunbeam's products, (xvi) the numerous lawsuits against the
Company and the SEC investigation into the Company's accounting practices and
policies, and uncertainty regarding the Company's available coverage on its
directors' and officers' liability insurance, (xvii) the possibility of a
recession in the United States or other countries resulting in a decrease in
consumer demands for the Company's products, and (xviii) failure of the Company
and/or its suppliers of goods or services to timely complete the remediation of
computer systems to effectively process Year 2000 information and the costs
associated with such remediation. Other factors and assumptions not included in
the foregoing may cause the Company's actual results to materially differ from
those projected. The Company assumes no obligation to update any
forward-looking statements or these Cautionary Statements to reflect actual
results or changes in other factors affecting such forward-looking statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item appears in Item 14(a) of this report.
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. The exhibits listed in the accompanying index to exhibits are filed
as part of this report and include the management contracts or compensatory
plans or arrangements required pursuant to Item 601, which are designated as
Exhibits 10a to 10g and 10dd to 10gg.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- ------------------------------------------------------------------------------------------
<S> <C>
3.a Amended and Restated Certificate of Incorporation of Sunbeam(3)
3.b By-laws of Sunbeam, as amended*
4.a Indenture dated as of March 25, 1998, by and among the Company and Bank of New York,
Trust, with respect to the Zero Coupon Convertible Senior Subordinated Debentures due
2018(8)
4.b Registration Rights Agreement dated March 25, 1998, by and among the Company and
Morgan Stanley & Co., Inc., with respect to the Zero Coupon Convertible Senior
Subordinated Debentures due 2018(8)
4.c Registration Rights Agreement, dated as of March 29, 1998, between the Company and
Coleman (Parent) Holdings, Inc.(9)
4.d Settlement Agreement, dated as of August 12, 1998, by and between the Company and
Coleman (Parent) Holdings, Inc.(10)
4.e Amendment to Registration Rights Agreement, dated as of August 12, 1998, between the
Company and Coleman (Parent) Holding, Inc.*
10.a Employment Agreement dated as of February 20, 1998, by and between Sunbeam and Albert
J. Dunlap(7)
10.b Employment Agreement dated as of February 20, 1998, by and between Sunbeam and Russell
A. Kersh(7)
10.c Employment Agreement dated as of February 20, 1998, by and between Sunbeam and David
C. Fannin(7)
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- ----------------------------------------------------------------------------------------------
<S> <C>
10.d Employment Agreement dated as of January 1, 1997, by and between Sunbeam and Donald
Uzzi(5)
10.e Sunbeam Executive Benefit Replacement Plan(7)
10.f Amended and Restated Sunbeam Corporation Stock Option Plan*
10.g Performance Based Compensation Plan(7)
10.h Tax Sharing Agreement dated as of October 31, 1990, by and among Sunbeam, SAIL, SOHO,
Montey and the subsidiaries of Sunbeam listed therein(1)
10.i Guarantee Agreement, dated as of June 1, 1994, between Sunbeam and Continental Bank,
N.A., as Trustee(2)
10.j Trust Indenture, dated as of June 1, 1994, between Mississippi Business Finance Corporation
("MBFC"), and Continental Bank, N.A., as Trustee(2)
10.k Loan Agreement, dated as of June 1, 1994, between MBFC and Sunbeam(2)
10.l $75 million Sunbeam promissory note, dated as of June 21, 1994, payable to MBFC(2)
10.m Leasehold Deed of Trust and Security Agreement, dated as of June 1, 1994, among Sunbeam,
Jim B. Tohill, as Trustee, and MBFC(2)
10.n Credit Agreement dated as of September 16, 1996, among the Company, The Chase
Manhattan Bank and the Lenders named therein(4)
10.o 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(5)
10.p 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(5)
10.q Third Amendment dated as of November 6, 1997, to the Credit Agreement dated as of
September 16, 1996, among the Company, The Chase Manhattan Bank and the Lenders
named therein(7)
10.r Receivables Sale and Contribution Agreement dated as of December 4, 1997, between
Sunbeam Products, Inc. and Sunbeam Asset Diversification, Inc.(7)
10.s Receivables Purchase and Servicing Agreement dated as of December 4, 1997, between
Sunbeam Products, Inc., Llama Retail, L.P., Capital USA, LLC and Sunbeam Asset
Diversification, Inc.(7)
10.t Agreement and Plan of Merger among Sunbeam Corporation, Laser Acquisition Corp., CLN
Holdings, Inc., and Coleman (Parent) Holdings, Inc. dated as of February 27, 1998(7)
10.u Agreement and Plan of Merger among Sunbeam Corporation, Camper Acquisition Corp., and
The Coleman Company, Inc. dated as of February 27, 1998(7)
10.v Agreement and Plan of Merger between Sunbeam Corporation, Java Acquisition Corp., and
Signature Brands USA, Inc. dated as of February 28, 1998(7)
10.w Stock Purchase Agreement among Java Acquisition Corp. and the Sellers named therein dated
as of February 28, 1998(7)
10.x Agreement and Plan of Merger by and among Sunbeam Corporation, Sentinel Acquisition
Corp., and First Alert, Inc. dated as of February 28, 1998(7)
10.y Stock Sale Agreement among Sunbeam Corporation and the Shareholders named therein
dated as of February 28, 1998(7)
10.z Credit Agreement dated as of March 30, 1998, among Sunbeam Corporation, the Borrowers
referred to therein, the Lenders party thereto, Morgan Stanley Senior Funding, Inc., Bank of
America National Trust and Savings Association and First Union National Bank(8)
10.aa First Amendment to Credit Agreement dated as of May 8, 1998, among Sunbeam Corporation,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank(8)
10.bb Second Amendment to Credit Agreement dated as of March 30, 1998, among the Company,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank*
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- --------------------------------------------------------------------------------------------
<S> <C>
10.cc Third Amendment to Credit Agreement dated as of October 19, 1998, among the Company,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank*
10.dd Employment Agreement between the Company and Jerry W. Levin dated as of August 12,
1998*
10.ee Employment Agreement between the Company and Paul Shapiro dated as of August 12, 1998*
10.ff Employment Agreement between the Company and Bobby Jenkins dated as of August 12,
1998*
10.gg Agreement between the Company and David Fannin dated August 20, 1998*
10.hh First Amendment to Receivables Sale and Contribution Agreement dated April 2, 1998,
between Sunbeam Products, Inc. and Sunbeam Asset Diversification, Inc.*
10.ii First Amendment to Receivables Purchase and Servicing Agreement dated April 2, 1998,
between Llama Retail Funding, L.P., Capital USA, L.L.C., Sunbeam Products, Inc. and
Sunbeam Asset Diversification, Inc.*
10.jj Second Amendment to Receivables Purchase and Servicing Agreement dated July 29, 1998,
between Llama Retail Funding, L.P., Capital USA, L.L.C., Sunbeam Products, Inc. and
Sunbeam Asset Diversification, Inc.*
21. Subsidiaries of the Registrant(7)
27. Financial Data Schedule, submitted electronically to the Securities and Exchange Commission
for information only and not filed.
99.a Press Release dated January 28, 1997 regarding Sunbeam's 1997 earnings(7)
99.b Press Release dated March 2, 1998 regarding Sunbeam's acquisitions of The Coleman
Company, Inc., Signature Brands USA, Inc. and First Alert, Inc.(7)
99.c Press Release dated August 12, 1998, regarding issuance of warrants to MacAndrews & Forbes
Holding, Inc.*
99.d Press Release dated August 24, 1998 regarding the Company's new strategy and senior
management team*
99.e Press Release dated October 20, 1998 regarding the Company's restatement of its financial
results*
</TABLE>
- ----------------
(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 3, 1994.
(3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996.
(4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 29, 1996.
(5) Incorporated by reference to the Company's Annual report on Form 10-K for
the fiscal year ended December 29, 1996.
(6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 30, 1997.
(7) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 28, 1997.
(8) Incorporated by reference to the Company's Report on Form 10-Q for the
quarter ended March 30, 1998.
(9) Incorporated by reference to the Company's Report on Form 8-K filed April
13, 1998.
(10) Incorporated by reference to the Company's Report on Form 8-K filed August
14, 1998.
* Filed with this Report.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 1997.
(c) The exhibits required by Item 601 are filed herewith.
(d) The Financial Statement Schedules required by Regulation S-X are filed
herewith.
22
<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/ BOBBY G. JENKINS
----------------------------------
Bobby G. Jenkins
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated: November 12, 1998
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/ PETER A. LANGERMAN Chairman of the Board November 12, 1998
- -------------------------------
Peter A. Langerman
/s/ JERRY W. LEVIN President and November 12, 1998
- ------------------------------- Chief Executive Officer
Jerry W. Levin (Principal Executive Officer)
/s/ CHARLES M. ELSON Director November 12, 1998
- -------------------------------
Charles M. Elson
/s/ HOWARD GITTIS Director November 12, 1998
- -------------------------------
Howard Gittis
/s/ HOWARD G. KRISTOL Director November 12, 1998
- -------------------------------
Howard G. Kristol
/s/ LAWRENCE SONDIKE Director November 12, 1998
- -------------------------------
Lawrence Sondike
/s/ FAITH WHITTLESEY Director November 12, 1998
- -------------------------------
Faith Whittlesey
/s/ KAREN CLARK Vice President, Finance November 12, 1998
- ------------------------------- (Principal Accounting Officer)
Karen Clark
</TABLE>
23
<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 December 28, 1997, December 29, 1996 and December 31, 1995 F-3
Consolidated Balance Sheets as of December 28, 1997 and December 29, 1996 ............. F-4
Consolidated Statements of Shareholders' Equity
for the Fiscal Years Ended December 28, 1997, December 29, 1996 and December 31, 1995 F-5
Consolidated Statements of Cash Flows
for the Fiscal Years Ended December 28, 1997, December 29, 1996 and December 31, 1995 F-6
Notes to Consolidated Financial Statements ............................................ F-7
FINANCIAL STATEMENT SCHEDULE:*
II. Valuation and Qualifying Accounts ................................................. F-42
</TABLE>
- ----------------
* 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.
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 29, 1996
and December 28, 1997 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended December 28, 1997 (1997 and 1996 restated - see Notes 1 and 13).
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Sunbeam Corporation and
subsidiaries as of December 29, 1996 and December 28, 1997, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended December 28, 1997 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 (1997 and 1996 restated)
listed in the Index to Financial Statements and Financial Statement Schedule is
presented for the purpose of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
Schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
October 16, 1998, except with respect
to the matters discussed in Further Actions
in Note 15, as to which the date
is October 30, 1998.
F-2
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-----------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
1997 1996 1995
-------------- -------------- -------------
AS RESTATED, AS RESTATED,
SEE NOTE 13 SEE NOTE 13
<S> <C> <C> <C>
Net sales ..................................................... $1,073,090 $ 984,236 $1,016,883
Cost of goods sold ............................................ 830,956 896,938 809,130
Selling, general and administrative expense ................... 152,653 221,655 137,508
Restructuring and asset impairment (benefit) charges .......... (14,582) 110,122 --
---------- ----------- ----------
Operating earnings (loss) ..................................... 104,063 (244,479) 70,245
Interest expense .............................................. 11,381 13,588 9,437
Other expense, net ............................................ 12 3,738 173
---------- ----------- ----------
Earnings (loss) from continuing operations before
income taxes ................................................. 92,670 (261,805) 60,635
Income taxes (benefit):
Current ...................................................... 1,528 (22,419) (2,105)
Deferred ..................................................... 38,824 (69,206) 25,146
---------- ----------- ----------
40,352 (91,625) 23,041
---------- ----------- ----------
Earnings (loss) from continuing operations .................... 52,318 (170,180) 37,594
Earnings from discontinued operations, net of taxes ........... -- 839 12,917
Loss on sale of discontinued operations, net of taxes ......... (14,017) (39,140) --
---------- ----------- ----------
Net earnings (loss) ........................................... $ 38,301 $ (208,481) $ 50,511
========== =========== ==========
Earnings (loss) per share of common stock from
continuing operations:
Basic ....................................................... $ 0.62 $ (2.05) $ 0.46
========== =========== ==========
Diluted ..................................................... 0.60 (2.05) 0.45
========== =========== ==========
(Loss) earnings from discontinued operations:
Basic ....................................................... $ (0.17) $ (0.46) $ 0.16
========== =========== ==========
Diluted ..................................................... (0.16) (0.46) 0.16
========== =========== ==========
Net earnings (loss) per share of common stock:
Basic ....................................................... $ 0.45 $ (2.51) $ 0.62
========== =========== ==========
Diluted ..................................................... 0.44 (2.51) 0.61
========== =========== ==========
Weighted average common shares outstanding:
Basic ....................................................... 84,945 82,925 81,626
========== =========== ==========
Diluted ..................................................... 87,542 82,925 82,819
========== =========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 29,
1997 1996
-------------- -------------
AS RESTATED, AS RESTATED,
SEE NOTE 13 SEE NOTE 13
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................... $ 52,298 $ 11,526
Receivables, net ........................................................ 228,460 209,754
Inventories ............................................................. 304,900 164,345
Net assets of discontinued operations and other assets
held for sale ......................................................... -- 92,524
Deferred income taxes ................................................... -- 85,067
Prepaid expenses and other current assets ............................... 16,584 38,381
---------- ----------
Total current assets ................................................. 602,242 601,597
Property, plant and equipment, net ....................................... 249,524 229,393
Trademarks, trade names, goodwill and other, net ......................... 207,162 228,458
---------- ----------
$1,058,928 $1,059,448
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ....................................... $ 668 $ 921
Accounts payable ........................................................ 108,374 104,113
Restructuring accrual ................................................... 5,186 51,725
Other current liabilities ............................................... 118,899 84,986
---------- ----------
Total current liabilities ............................................ 233,127 241,745
Long-term debt ........................................................... 194,580 201,115
Other long-term liabilities ............................................. 154,300 149,247
Deferred income taxes ................................................... 4,842 52,308
Commitments and contingencies (Notes 5, 12 and 15)
Shareholders' equity:
Preferred stock (2,000,000 shares authorized, none outstanding) ......... -- --
Common stock (issued 89,984,425 and 88,441,479 shares) .................. 900 884
Paid-in capital ......................................................... 479,200 447,948
Retained earnings ....................................................... 89,801 54,899
Other ................................................................... (34,777) (25,310)
---------- ----------
535,124 478,421
Treasury stock, at cost (4,454,394 and 4,478,814 shares) ................ (63,045) (63,388)
---------- ----------
Total shareholders' equity ........................................... 472,079 415,033
---------- ----------
$1,058,928 $1,059,448
========== ==========
</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 EARNINGS (NOTE 2) STOCK
-------- ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1995 ....................... $ 932 $ 461,876 $ 285,990 $ (20,118) $ (174,070)
Net earnings .................................... -- -- 50,511 -- --
Common dividends ($0.04 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 (as restated, see Note 13) ............. -- -- (208,481) -- --
Common dividends ($0.04 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
(as restated, see Note 13) ..................... 884 447,948 54,899 (25,310) (63,388)
----- --------- ---------- --------- ----------
Net earnings (as restated, see Note 13) ......... -- -- 38,301 -- --
Common dividends ($0.04 per share)............... -- -- (3,399) -- --
Exercise of stock options ....................... 16 30,496 -- -- --
Amortization of unearned compensation ........... -- -- -- 5,322 --
Minimum pension liability ....................... -- -- -- (14,050) --
Other stock issuances ........................... -- 756 -- -- 343
Translation adjustments ......................... -- -- -- (739) --
----- --------- ---------- --------- ----------
Balance at December 28, 1997
(as restated, see Note 13) ..................... $ 900 $ 479,200 $ 89,801 $ (34,777) $ (63,045)
===== ========= ========== ========= ==========
</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
-----------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
1997 1996 1995
-------------- -------------- -------------
AS RESTATED, AS RESTATED,
SEE NOTE 13 SEE NOTE 13
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings (loss) ........................................... $ 38,301 $ (208,481) $ 50,511
Adjustments to reconcile net earnings (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization ............................... 39,757 47,429 44,174
Restructuring and asset impairment (benefit) charges......... (14,582) 110,122 --
Other non-cash special charges .............................. -- 70,847 --
Loss on sale of discontinued operations, net of taxes ....... 14,017 39,140 --
Deferred income taxes ....................................... 38,824 (69,206) 25,146
Increase (decrease) in cash from changes in operating
assets and liabilities from continuing operations:
Receivables, net ............................................ (57,843) (845) (4,499)
Proceeds from accounts receivable securitization ............ 58,887 -- --
Inventories ................................................. (140,555) 11,289 (4,874)
Account payable ............................................. 4,261 11,029 9,245
Restructuring accrual ....................................... (31,957) -- --
Prepaid expenses and other current assets and
liabilities ................................................ (16,092) 39,657 (8,821)
Income taxes payable ........................................ 52,052 (21,942) (18,452)
Payment of other long-term and non-operating liabilities ...... (1,401) (27,089) (21,719)
Other, net .................................................... 10,288 12,213 10,805
---------- ---------- ----------
Net cash (used in) provided by
operating activities .................................... (6,043) 14,163 81,516
---------- ---------- ----------
INVESTING ACTIVITIES:
Capital expenditures .......................................... (60,544) (75,336) (140,053)
Decrease in investments restricted for plant construction ..... -- -- 45,755
Proceeds from sale of divested operations and other assets..... 90,982 -- --
Purchase of businesses ........................................ -- -- (13,053)
Other, net .................................................... -- (860) --
---------- ---------- ----------
Net cash provided by (used in)
investing activities .................................... 30,438 (76,196) (107,351)
---------- ---------- ----------
FINANCING ACTIVITIES:
Net borrowings under revolving credit facility ................ 5,000 30,000 40,000
Issuance of long-term debt .................................... -- 11,500 --
Payments of debt obligations .................................. (12,157) (1,794) (5,417)
Proceeds from exercise of stock options ....................... 26,613 4,684 9,818
Purchase of common stock for treasury ......................... -- -- (13,091)
Sale of treasury stock ........................................ -- 4,578 --
Payments of dividends on common stock ......................... (3,399) (3,318) (3,268)
Other financing activities .................................... 320 (364) (264)
---------- ---------- ----------
Net cash provided by financing activities .................. 16,377 45,286 27,778
---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents ........................................ 40,772 (16,747) 1,943
Cash and cash equivalents at beginning of year ................. 11,526 28,273 26,330
---------- ---------- ----------
Cash and cash equivalents at end of year ....................... $ 52,298 $ 11,526 $ 28,273
========== ========== ==========
</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 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, catalogs, television shopping channels, Company-owned outlet
stores, 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.
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 1997, 1996 and 1995 ended on December 28, 1997, December 29, 1996, and
December 31, 1995 respectively, which encompassed 52-week periods (see Note
15).
RESTATEMENT
On June 30, 1998, the Company announced that the Audit Committee of the
Board of Directors was initiating a review into the accuracy of prior financial
statements. The Audit Committee's review has since been completed and, as a
result of its findings, the Company has restated its previously issued
Consolidated Financial Statements for 1996 and 1997. (See Notes 13, 14 and 15.)
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 sales returns and allowances,
product warranty, product liability, excess and obsolete inventory, litigation
and environmental exposures.
CASH AND CASH EQUIVALENTS
The Company considers highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
F-7
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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 1997 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 28, 1997. However, certain retailers
filed for bankruptcy protection in the last several years and it is possible
that additional credit losses could be incurred if the trends of retail
consolidation continue.
INVENTORIES
Inventories are stated at the lower of cost or market with cost being
determined principally by the first-in, first-out method.
In certain instances, the Company receives rebates from vendors based on
the volume of merchandise purchased. Vendor rebates are recorded as reductions
in the price of the purchased merchandise and are recognized in operations as
the related inventories are sold.
Effective in fiscal 1997, the Company began capitalizing manufacturing
supplies inventories, whereas previously these inventories were charged to
operations when purchased. This change increased pre-tax operating earnings in
fiscal 1997 by $2.8 million.
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:
<TABLE>
<S> <C>
Buildings and improvements ............... 20 to 40 years
Machinery, equipment and tooling ......... 3 to 15 years
Furniture and fixtures ................... 3 to 10 years
</TABLE>
Leasehold improvements are amortized on a straight-line basis over the
shorter of its estimated useful life or the term of the lease.
LONG-LIVED ASSETS
The Company accounts for long-lived assets pursuant to 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. The Company
continually evaluates factors, events and circumstances which include, but are
not limited to, the historical and projected operating performance of the
business operations, specific industry trends and general economic conditions
to assess whether the remaining estimated useful lives of long-lived assets may
warrant revision or whether the remaining asset values are recoverable through
future operations. When such factors, events or circumstances indicate that
F-8
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
long-lived assets should be evaluated for possible impairment, the Company uses
an estimate of undiscounted cash flows over the remaining lives of the assets
to measure the recoverability. See Note 8 for a discussion of asset impairment
charges in 1996 and Note 15 for a discussion of asset impairment charges
anticipated in 1998.
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 1997 and 1996 amounted to $12.3 million and $14.0
million respectively, of which $0.9 million and $0.4 million respectively, was
capitalized into the construction cost of the long-term assets.
AMORTIZATION PERIODS
Trademarks, trade names and goodwill are being amortized on a
straight-line basis over 20 to 40 years.
REVENUE RECOGNITION
The Company recognizes sales and related cost of goods sold from product
sales when title passes to the customers which is generally at the time of
shipment. Net sales is comprised of gross sales less provisions for estimated
customer returns, discounts, promotional allowances, cooperative advertising
allowances and costs incurred by the Company to ship product to customers.
Reserves for estimated returns are established by the Company concurrently with
the recognition of revenue. Reserves are established based on a variety of
factors, including historical return rates, estimates of customer inventory
levels, the market for the product and projected economic conditions. The
Company monitors these reserves and makes adjustment to them when management
believes that actual returns or costs to be incurred differ from amounts
recorded. In some situations, the Company has shipped product with the right of
return where the Company is unable to reasonably estimate the level of returns
and/or the sale is contingent upon the resale of the product. In these
situations, the Company does not recognize revenue upon product shipment, but
rather when it is reasonably expected the product will not be returned.
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.
PRODUCT LIABILITY
The Company provides for product liability costs it estimates will be
needed to cover future product liability costs for product sold during the
year. Estimates of product liability costs are periodically reviewed and
adjusted, when necessary, to consider actual experience, changes in product
design, warranty rates and other relevant factors.
INCOME TAXES
The Company accounts for income taxes under the liability method in
accordance with SFAS No. 109, ACCOUNTING FOR INCOME TAXES. The provision for
income taxes includes deferred income taxes
F-9
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
resulting from items reported in different periods for income tax and financial
statement purposes. Deferred tax assets and liabilities represent the expected
future tax consequences of the differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. The effects of changes in tax rates on deferred tax assets and
liabilities are recognized in the period that includes the enactment date. No
provision has been made for U.S. income taxes on approximately $45.6 million of
cumulative undistributed earnings of foreign subsidiaries at December 28, 1997
since it is the present intention of management to reinvest the undistributed
earnings indefinitely in foreign operations.
ADVERTISING COSTS
Media advertising costs included in Selling, General and Administrative
Expense ("SG&A") are expensed as incurred. Allowances provided to customers for
cooperative advertising are charged to operations, as earned, based on revenues
and are included as a deduction from gross sales in determining net sales.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of subsidiaries, other than those operating in
highly inflationary economies, 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 economies (Venezuela and
Mexico), 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 "Other Expense, net" in the accompanying
Consolidated Statements of Operations.
STOCK-BASED COMPENSATION PLANS
SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION 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 5. SFAS No. 123
does not impact the Company's results of operations, financial position or cash
flows.
F-10
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
In 1997, the Company adopted SFAS No. 128, EARNINGS PER SHARE. Basic
earnings per common share calculations are determined by dividing earnings
available to common shareholders by the weighted average number of shares of
common stock outstanding. Diluted earnings per share are determined by dividing
earnings available to common shareholders by the weighted average number of
shares of common stock and dilutive common stock equivalents outstanding (all
related to outstanding stock options and restricted stock discussed in Note 5).
The Company's reported primary earnings per share for 1995 has been restated to
comply with the requirements of SFAS No. 128. SFAS No. 128 had no impact on the
Company's reported loss per share for 1996 and no impact on the diluted
earnings per share reported in 1995. The effect of this accounting change on
previously reported earnings per share (EPS) for 1995 was as follows:
<TABLE>
<S> <C>
Earnings per share from continuing operations
Primary EPS as reported .................... $0.45
Effect of SFAS No. 128 ..................... 0.01
Basic EPS as restated ...................... 0.46
Earnings per share
Primary EPS as reported .................... $0.61
Effect of SFAS No. 128 ..................... 0.01
Basic EPS as restated ...................... 0.62
</TABLE>
The following reconciles the weighted average common basic and diluted
shares outstanding at the fiscal period ends (in thousands of shares):
<TABLE>
<CAPTION>
1997 1996 1995
---------- -------- ---------
<S> <C> <C> <C>
Basic average common shares outstanding ............ 84,945 82,925 81,626
Dilutive effect of stock options ................... 2,718 -- 737
Dilutive effect of stock warrants .................. -- -- 456
Effect of restricted stock ......................... (121) -- --
------ ------ ------
Diluted average common shares outstanding .......... 87,542 82,925 82,819
====== ====== ======
</TABLE>
For the year ended December 29, 1996, 1,552,684 shares related to stock
options and 78,654 shares related to restricted stock were not included in the
diluted average common shares outstanding, as the effect would have been
antidilutive.
RECLASSIFICATION
Certain prior year amounts have been reclassified to conform with the 1997
presentation.
NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 130, REPORTING COMPREHENSIVE INCOME. SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
in the financial statements. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997. Reclassification of financial statements for
earlier periods provided for comparative purposes is required. The adoption of
SFAS No. 130 will have no impact on the Company's consolidated results of
operations, financial position or cash flows.
F-11
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE AND RELATED INFORMATION. SFAS No. 131 establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
SFAS No. 131 is effective for financial statements for fiscal years beginning
after December 15, 1997. Financial statement disclosures for prior periods are
required to be restated. The Company is in the process of evaluating the
disclosure requirements. The adoption of SFAS No. 131 will have no impact on
consolidated results of operations, financial position or cash flow.
See Note 15 for new accounting standards issued subsequent to December 28,
1997.
2. SHAREHOLDERS' EQUITY
At December 28, 1997, the Company had 200,000,000 shares of $.01 par value
common stock authorized and there were 9,404,068 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 $4.6 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). The restricted stock award resulted in a $7.7 million
charge to SG&A in 1996.
On February 20, 1998 the Company entered into new three-year employment
agreements with its then Chairman and Chief Executive Officer and two other
senior officers of the Company. These agreements replaced previous employment
agreements entered into in July 1996 that were scheduled to expire in July
1999. Refer to Note 15 for additional information regarding the new employment
contracts, including the acceleration of vesting of the 1996 restricted stock
grants discussed above.
F-12
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. 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 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)
Amortization of unearned compensation ......... -- -- 5,322 5,322
Increase in minimum pension liability (net
of tax of $0. See Note 10)................... -- (14,050) -- (14,050)
Translation adjustments ....................... (739) -- -- (739)
--------- --------- --------- ---------
Balance at December 28, 1997 ................... $ (12,850) $ (20,213) $ (1,714) $ (34,777)
========= ========= ========= =========
</TABLE>
3. CREDIT FACILITIES AND LONG-TERM DEBT
In 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 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. The Notes were
repaid in March 1998. (See Note 15.)
In September 1996 (as subsequently amended), 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.
In July 1997, the Company reduced the amount of available borrowings under the
facility to $250 million. Under the Credit Agreement, the Company can borrow
under a competitive bid option, or at a spread above LIBOR (.5% at December 28,
1997) or at a bank base rate. In addition, the Company pays an annual facility
fee (.25% at December 28, 1997). The Credit Agreement contains certain
financial covenants. In 1998, the Credit Agreement was refinanced and
additional debt was incurred as discussed in Note 15, Subsequent Events.
During 1997, the Company repaid $12.2 million of long-term borrowings
related to the divested furniture operations and other assets sold.
F-13
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. CREDIT FACILITIES AND LONG-TERM DEBT--(CONTINUED)
At December 28, 1997, the aggregate annual principal payments on long-term
debt, excluding amounts outstanding under the Credit Agreement, due in each of
the years 1998-2002, were $0.7 million, $7.5 million, $7.6 million, $7.6
million and $7.7 million, respectively.
Long-term debt at the end of each fiscal year consists of the following
(in thousands):
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Revolving credit facility, weighted average interest rate of 5.99% and
5.60% for 1997, and for 1996, respectively .......................... $110,000 $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 3.92% and 4.95%, at December 28, 1997 and
December 29, 1996, respectively ..................................... 10,248 22,036
-------- --------
195,248 202,036
Less current portion of long-term debt ............................... 668 921
-------- --------
Long-term debt ....................................................... $194,580 $201,115
======== ========
</TABLE>
In December 1997, the Company entered into a revolving trade accounts
receivable securitization program, which expires December, 1998 to sell without
recourse, through a wholly-owned subsidiary, certain trade accounts receivable,
up to a maximum of $70.0 million. At December 28, 1997, the Company had
received approximately $58.9 million from the sale of trade accounts
receivable, of which $39.1 million related to sales recorded in fiscal 1997 and
the balance related to sales to be recognized in the first quarter of 1998.
Accordingly, at December 28, 1997, the accompanying Consolidated Balance Sheet
reflects a reduction in accounts receivable of $39.1 million and an increase in
other current liabilities of $19.8 million. The proceeds from the sale were
used to reduce borrowings under the Company's revolving credit facility. Costs
of the program, which primarily consist of the purchaser's financing cost of
issuing commercial paper backed by the receivables, totaled $0.2 million during
1997, and have been classified as interest expense in the accompanying
Consolidated Statements of Operations. The Company, as agent for the purchaser
of the receivables, retains collection and administrative responsibilities for
the purchased receivables.
4. FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company's financial instruments as of December
28, 1997 approximate market values 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 28, 1997 approximates market. The fair value of the
Company's fixed rate debt is estimated
F-14
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. FINANCIAL INSTRUMENTS--(CONTINUED)
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 1997, 1996 and 1995. No derivatives are entered into for trading
or speculative purposes. 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 29, 1996 and December 31, 1995 is not considered to be material,
either individually or in the aggregate. The Company had no derivative
financial instruments outstanding at December 28, 1997. The Company enters into
derivative contracts with counterparties that it believes to be creditworthy.
The Company does not enter into any leveraged derivative transactions.
As of December 29, 1996, $10.0 million of the Company's outstanding
floating rate debt was subject to interest rate swap agreements which expired
in 1997.
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 $16.6 million in 1997, $18.2
million in 1996 and $11.7 million in 1995. Options with notional value of $17.9
million, $25.4 million and $3.2 million expired in 1997, 1996 and 1995,
respectively. The Company held purchased option contracts with a notional value
of $1.4 million at December 29, 1996.
5. EMPLOYEE STOCK OPTIONS AND AWARDS
The Company has one stock-based compensation plan, the Amended and
Restated Sunbeam Corporation Stock Option Plan (the "Plan"). Under the Plan,
all 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 commences on the date of grant and expires on the tenth
anniversary of the date of grant subject to earlier cancellation. 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 employees and non-employee directors. See
Note 2 for a discussion of restricted stock awards made outside the Plan.
F-15
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. EMPLOYEE STOCK OPTIONS AND AWARDS--(CONTINUED)
In July 1996, options to purchase an aggregate of 3,000,000 shares (of
which 2,750,000 options were outstanding at December 28, 1997) were granted
outside of the Plan 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 then 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 exercisable in three annual
installments beginning July 17, 1996. Options for the remaining 250,000 shares
still outstanding are exercisable in three annual installments beginning on the
first anniversary of the July 22, 1996 grant date. On February 20, 1998 the
vesting provisions of the options granted outside the Plan were accelerated.
Additional restricted stock grants were made in February 1998, with a portion
thereof subsequently terminated. See further description in Note 15.
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 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 diluted earnings (loss) per share would have been
reduced to the pro forma amounts indicated below (in thousands except per share
amounts):
<TABLE>
<CAPTION>
1997 1996 1995
---------- -------------- ----------
<S> <C> <C> <C>
Net earnings/(loss)
As reported .................... $38,301 $ (208,481) $50,511
Pro forma ...................... $14,524 $ (218,405) $49,731
Diluted earnings/(loss) per share
As reported .................... $ 0.44 $ (2.51) $ 0.61
Pro forma ...................... $ 0.16 $ (2.63) $ 0.60
</TABLE>
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:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Expected volatility .............. 34.19% 36.78% 36.78%
Risk-free interest rate .......... 6.36% 6.34% 6.34%
Dividend yield ................... .1% .1% .1%
Expected life .................... 6 years 5 years 5 years
</TABLE>
F-16
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. EMPLOYEE STOCK OPTIONS AND AWARDS--(CONTINUED)
A summary of the status of the Company's outstanding stock options as of
December 28, 1997, December 29, 1996 and December 31, 1995, and changes during
the years ending on those dates is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------------- -------------------------------- -------------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
--------------- ---------------- --------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
PLAN OPTIONS
Outstanding at
beginning of year ......... 6,271,837 $19.43 4,610,387 $16.67 5,230,221 $14.85
Granted ..................... 3,105,263 32.40 4,061,450 20.39 1,928,500 18.61
Exercised ................... (1,549,196) 17.20 (622,994) 7.51 (1,142,348) 6.32
Canceled .................... (1,173,836) 21.10 (1,777,006) 18.64 (1,405,986) 21.06
---------- ---------- ----------
Outstanding at
end of year ............... 6,654,068 25.61 6,271,837 19.43 4,610,387 16.67
========== ========== ==========
Options exercisable
at year-end ............... 1,547,198 $19.13 1,655,450 $16.13 1,539,836 $11.47
Weighted-average fair
value of options
granted during
the year .................. $ 15.46 $ 14.76 $ 8.28
OPTIONS OUTSIDE PLAN
Outstanding at
beginning of year ......... 2,750,000 $12.43 692,500 $16.70 750,000 $16.70
Granted ..................... -- -- 3,000,000 12.65 -- --
Exercised ................... -- -- -- -- (57,500) 16.70
Canceled .................... -- -- (942,500) 16.27 -- --
------------ ------------ ------------
Outstanding at
end of year ............... 2,750,000 12.43 2,750,000 12.43 692,500 16.70
============ ============ ============
Options exercisable
at year-end ............... 1,750,000 $12.35 833,333 $12.25 505,000 $16.70
Weighted-average fair
value of options
granted during
the year .................. $ N/A $ 5.99 $ N/A
</TABLE>
F-17
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. EMPLOYEE STOCK OPTIONS AND AWARDS--(CONTINUED)
The following table summarizes information about stock options outstanding
at December 28, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
--------------------------------------------------------------
NUMBER WEIGHTED-AVERAGE
RANGE OF OUTSTANDING REMAINING WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/28/97 CONTRACTUAL LIFE (YEARS) EXERCISE PRICE
- ----------------------------- ------------- -------------------------- -----------------
<S> <C> <C> <C>
$5.00 to $14.99 ......... 3,514,556 8.2 $12.50
$15.00 to $19.99 ......... 485,240 7.4 16.30
$20.00 to $24.99 ......... 2,090,187 8.2 22.39
$25.00 to $29.99 ......... 1,786,007 9.0 25.99
$30.00 to $34.99 ......... 448,468 9.3 32.01
$35.00 to $39.99 ......... 336,820 9.5 38.77
$40.00 to $44.99 ......... 680,290 9.7 42.99
$45.00 and over .......... 62,500 9.7 46.22
--------- --- ------
$5.00 to $49.71 ......... 9,404,068 8.5 $21.76
========= === ======
</TABLE>
<TABLE>
<CAPTION>
OPTIONS EXERCISABLE
---------------------------------
NUMBER
RANGE OF EXERCISABLE WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/28/97 EXERCISE PRICE
- ----------------------------- ------------- -----------------
<S> <C> <C>
$5.00 to $14.99 ......... 2,108,255 $12.08
$15.00 to $19.99 ......... 219,466 16.50
$20.00 to $24.99 ......... 842,601 22.27
$25.00 and over........... 126,876 26.41
--------- ------
$5.00 to $27.36 ......... 3,297,198 $15.54
========= ======
</TABLE>
See Note 15 for certain items related to employee stock options and awards
occurring subsequent to December 28, 1997.
6. 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.
F-18
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. EMPLOYEE BENEFIT PLANS--(CONTINUED)
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>
1997 1996
----------- -----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested ............................................................. $ 126,941 $ 122,379
Non-vested ......................................................... 288 375
--------- ---------
Accumulated benefit obligations ..................................... 127,229 122,754
Plan assets at fair value ........................................... 116,485 116,522
--------- ---------
Accumulated benefit obligations in excess of plan assets ............ 10,744 6,232
Unrecognized net loss ............................................... (25,192) (19,537)
Additional minimum liability ........................................ 25,192 10,255
--------- ---------
Pension liability (prepaid) recognized on the balance sheet ......... $ 10,744 $ (3,050)
========= =========
</TABLE>
Net periodic pension cost for the Company's U.S. defined benefit pension
plans for each fiscal year include the following components (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------------ ----------- ------------
<S> <C> <C> <C>
Service cost-benefits earned during the period .......... $ 157 $ 411 $ 331
Interest cost-accumulated benefit obligations ........... 8,970 9,071 10,620
Actual return on plan assets ............................ (12,511) (816) (20,985)
Net amortization and deferral ........................... 4,338 (7,518) 11,332
--------- -------- ---------
Net periodic pension cost ............................... $ 954 $ 1,148 $ 1,298
========= ======== =========
Assumptions:
Discount rate .......................................... 7.25% 7.75% 7.25%
Long-term rate of return on assets ..................... 7.25% 7.75% 9.50%
</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 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.
F-19
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. EMPLOYEE BENEFIT PLANS--(CONTINUED)
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>
1997 1996
---------- ----------
<S> <C> <C>
Accumulated postretirement benefit obligation .......... $14,220 $14,555
Plan assets ............................................ -- --
------- -------
Accumulated postretirement benefit obligation in excess
of plan assets ........................................ 14,220 14,555
Unrecognized reduction in prior service cost ........... 15,934 18,877
Unrecognized net gain .................................. 240 95
------- -------
Accrued postretirement benefit obligation recognized
on the balance sheet .................................. $30,394 $33,527
======= =======
</TABLE>
Net periodic postretirement benefit cost for each fiscal year includes the
following components (in thousands):
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Interest cost ............................................ $ 983 $ 1,042
Amortization of reduction in prior service cost .......... (2,943) (2,943)
-------- --------
Net periodic postretirement benefit credit ............... $ (1,960) $ (1,901)
======== ========
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation is 8.8% for 1998 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 28,
1997 and the net periodic postretirement benefit cost for 1997 by approximately
8%. The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% at December 28, 1997 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 the performance of the Company, in an amount up to 10% of eligible
compensation. The Company provided $1.8 million in 1997, $1.7 million in 1996
and $4.1 million in 1995 for its defined contribution plans.
F-20
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. SUPPLEMENTARY FINANCIAL STATEMENT DATA
Supplementary Balance Sheet data at the end of each fiscal year is as
follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Receivables:
Trade ............................................. $ 250,699 $ 227,043
Sundry ............................................ 7,794 2,412
---------- ----------
258,493 229,455
Valuation allowance ............................... (30,033) (19,701)
---------- ----------
$ 228,460 $ 209,754
========== ==========
Inventories:
Finished goods .................................... $ 193,864 $ 86,681
Work in process ................................... 25,679 25,392
Raw materials and supplies ........................ 85,357 52,272
---------- ----------
$ 304,900 $ 164,345
========== ==========
Property, plant and equipment:
Land .............................................. $ 1,793 $ 2,524
Buildings and improvements ........................ 98,054 95,619
Machinery and equipment ........................... 248,138 259,460
---------- ----------
Furniture and fixtures ............................ 7,327 8,044
---------- ----------
355,312 365,647
---------- ----------
Accumulated depreciation and amortization ......... (105,788) (136,254)
---------- ----------
$ 249,524 $ 229,393
========== ==========
Trademarks, trade names, goodwill and other:
Trademarks and trade names ........................ $ 237,095 $ 245,307
Goodwill .......................................... 24,687 38,823
Accumulated amortization .......................... (56,880) (57,261)
---------- ----------
204,902 226,869
Other assets ...................................... $ 2,260 $ 1,589
---------- ----------
$ 207,162 $ 228,458
========== ==========
</TABLE>
Inventory and property, plant and equipment in 1996 exclude assets of
discontinued operations and other assets held for sale.
(See Note 15 regarding asset valuation / impairment in 1998.)
F-21
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. SUPPLEMENTARY FINANCIAL STATEMENT DATA--(CONTINUED)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Other current liabilities:
Payrolls, commissions and employee benefits .......... $ 12,227 $ 16,779
Advertising and sales promotion ...................... 34,749 23,815
Product warranty ..................................... 21,498 23,883
Accounts receivable securitization liability ......... 19,750 --
Sales returns ........................................ 7,846 6,058
Other ................................................ 22,829 14,451
-------- --------
$118,899 $ 84,986
======== ========
Other long-term liabilities:
Accrued postretirement benefit obligation ............ $ 30,394 $ 33,527
Accrued pension ...................................... 10,744 --
Product liability and workers compensation ........... 41,901 34,870
Other ................................................ 71,261 80,850
-------- --------
$154,300 $149,247
======== ========
</TABLE>
Supplementary Statements of Operations and Cash Flows data for each fiscal
year are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Other expense, net:
Interest income .......................... $ (2,561) $ (1,255) $ (3,657)
Other, net ............................... 2,573 4,993 3,830
--------- -------- --------
$ 12 $ 3,738 $ 173
========= ======== ========
Advertising and sales promotion ........... $ 71,151 $ 72,313 $ 57,274
========= ======== ========
Cash paid (received) during the period for:
Interest (net of capitalization) ......... $ 13,058 $ 13,397 $ 12,555
========= ======== ========
Income taxes (net of refunds) ............ $ (44,508) $ (540) $ 13,936
========= ======== ========
</TABLE>
NON-CASH TRANSACTIONS
In connection with a warehouse expansion related to the electric blanket
business, the Company entered into a $5 million capital lease obligation in
1996.
8. RESTRUCTURING AND ASSET IMPAIRMENT (BENEFIT) CHARGES
In November 1996, the Company announced the details of a restructuring
plan. The plan included the consolidation of administrative functions within
the Company, the reduction 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 (see Note 9).
As part of the restructuring plan, the Company consolidated six divisional
and regional headquarters functions into a single worldwide corporate
headquarters in Delray Beach, Florida and
F-22
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. RESTRUCTURING AND ASSET IMPAIRMENT (BENEFIT) CHARGES--(CONTINUED)
outsourced certain back office activities resulting in a reduction in total
back-office/administrative headcount. Overall, the restructuring plan called
for a reduction in the number of production facilities from 26 to 8 and the
elimination of over 6,000 positions from the Company's workforce, including
3,300 from the disposition of certain business operations and the elimination
of approximately 2,800 other positions. The Company completed the major phases
of the restructuring plan by July 1997.
In conjunction with the implementation of the restructuring plan, the
Company recorded a pre-tax charge of approximately $239.2 million in the fourth
quarter of 1996. This amount is recorded as follows in the accompanying
Consolidated Statement of Operations: $110.1 million in Restructuring and Asset
Impairment Charges, as further described below; $60.8 million in Cost of Goods
Sold related principally to inventory write-downs as a result of a reduction in
SKU's and costs of inventory liquidation programs; $10.1 million in Selling,
General and Administrative Expense, principally for costs relating to
outsourcing and package redesign, and $58.2 million ($39.1 million net of
taxes) in Loss on Sale of Discontinued Operations related to the divestiture of
its furniture business. In 1997, upon completion of the sale of the furniture
business, the Company recorded an additional pre-tax loss of $22.5 million from
discontinued operations ($14.0 million net of taxes) due primarily to lower
than anticipated sales proceeds. (See Note 9.)
The amounts accrued at December 29, 1996, relating to Restructuring and
Asset Impairment Charges recorded in fiscal 1996, exceeded amounts ultimately
required. Accordingly, the fiscal 1997 Consolidated Statement of Operations
includes $14.6 million of benefit related to the reversal of accruals no longer
required. Of the total benefit, $5.8 million was recorded in the third quarter
and $8.8 million in the fourth quarter of 1997.
Amounts included in Restructuring and Asset Impairment Charges in 1996 in
the accompanying Consolidated Statement of Operations include cash items such
as severance and other employee costs of $24.7 million, lease obligations and
other exit costs associated with facility closures of $16.7 million, and other
costs related to the implementation of the restructuring plan. Non-cash
Restructuring and Asset Impairment Charges in 1996 included $68.7 million
related to asset write-downs to net realizable value for disposals of excess
facilities and equipment and certain 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. The following table sets
forth the details and the cumulative activity in the restructuring accrual as
of December 28, 1997 (in millions):
<TABLE>
<CAPTION>
ACCRUAL BALANCE ACCRUAL BALANCE
AT DECEMBER 29, CASH NON-CASH AT DECEMBER 28,
1996 REDUCTIONS REDUCTIONS REVERSALS 1997
----------------- ------------ ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C>
Severance and other
employee costs ............................ $19.1 $10.0 $ -- $ 7.9 $1.2
Closure and consolidation of
facilities and related exit costs ......... 32.6 11.2 10.7 6.7 4.0
----- ----- ----- ----- ----
Total ....................................... $51.7 $21.2 $10.7 $14.6 $5.2
===== ===== ===== ===== ====
</TABLE>
During 1997, the Company recorded SG&A charges of $15.8 million for
equipment relocation, severance, package redesign and other items related to
the 1996 restructuring plan.
F-23
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. DISCONTINUED OPERATIONS AND OTHER ASSETS HELD FOR SALE
As part of the restructuring plan, the Company also announced the
divestiture of the furniture business, by a sale of assets. In February 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 $69 million in cash. The Company retained accounts receivable related
to the furniture business of approximately $50.0 million as of the closing date
and retained certain liabilities.
In connection with the furniture divestiture, the Company recorded a
provision for estimated losses to be incurred on the sale of $39.1 million in
1996, net of applicable income tax benefits of $19.9 million and an additional
loss of $14.0 million, net of applicable income tax benefits of $8.5 million in
the first quarter of 1997 predominately as a result of lower than anticipated
sales proceeds. Although the discontinued furniture operations were profitable,
net income had declined from $21.7 million in 1994 to $0.8 million in 1996.
This decline, along with the Company's announcement that it intended to divest
this line of business contributed to the loss on sale. Results of operations
from the discontinued furniture business were $0.8 million in 1996 and $12.9
million in 1995, net of applicable income taxes of $0.5 million and $7.9
million, respectively. Earnings from the discontinued furniture business in
1997 were not material. Revenues for the discontinued furniture business were
$51.6 million in 1997, $227.5 million in 1996 and $185.6 million in 1995.
Revenues and expenses related to the furniture business are excluded from
results from continuing operations and are presented as a single line item,
Earnings from Discontinued Operations, net of taxes, in the Consolidated
Statements of Operations.
At December 29, 1996, the Net Assets of Discontinued Operations and Other
Assets Held for Sale as presented in the accompanying Consolidated Balance
Sheet were (in thousands):
<TABLE>
<S> <C>
Current assets ............................ $ 40,435
Property, plant and equipment ............. 62,412
--------
Total assets ............................. 102,847
Current liabilities ....................... 10,323
--------
Total liabilities ........................ 10,323
--------
Net Assets of Discontinued Operations
and Other Assets Held for Sale ......... $ 92,524
========
</TABLE>
In addition to the furniture business divestiture, the Company also
completed the sale of other product lines and assets in 1997 as part of its
restructuring plan, including time and temperature products,
Counselor/registered trademark/ and Borg/registered trademark/ scales and a
textile facility. Losses incurred on the disposal of these assets, which
consist primarily of write-downs of assets to net realizable value, are
included in Restructuring and Asset Impairment Charges in 1996 in the
Consolidated Statements of Operations as described in Note 8.
F-24
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. INCOME TAXES
Earnings (loss) from continuing operations before income taxes for each
fiscal year is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---------- -------------- ----------
<S> <C> <C> <C>
Domestic .......... $80,946 $ (244,255) $54,646
Foreign ........... 11,724 (17,550) 5,989
------- ---------- -------
$92,670 $ (261,805) $60,635
======= ========== =======
</TABLE>
Income tax provisions include current and deferred taxes (tax benefits)
for each fiscal year as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------- ------------
<S> <C> <C> <C>
Current:
Federal ......... $ (3,421) $ (22,924) $ (1,329)
State ........... 3,266 (202) (1,402)
Foreign ......... 1,683 707 626
-------- --------- --------
1,528 (22,419) (2,105)
-------- --------- --------
Deferred:
Federal ......... 30,554 (57,211) 23,127
State ........... 3,962 (11,050) 1,962
Foreign ......... 4,308 (945) 57
-------- --------- --------
38,824 (69,206) 25,146
-------- --------- --------
$ 40,352 $ (91,625) $ 23,041
======== ========= ========
</TABLE>
A reconciliation of income tax expense (benefit) 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>
1997 1996 1995
------------ ------------- ----------
<S> <C> <C> <C>
Income tax computed at the federal statutory
tax rate ................................................... $ 32,435 $ (91,631) $21,222
State and local taxes (net of federal benefit) .............. 4,698 (7,313) 364
Foreign earnings and dividends taxed at other rates ......... 1,888 5,967 419
Valuation allowance ......................................... 18,900 -- --
Reversal of tax liabilities no longer required .............. (13,333) -- --
Other, net .................................................. (4,236) 1,352 1,036
--------- --------- -------
$ 40,352 $ (91,625) $23,041
========= ========= =======
</TABLE>
F-25
<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>
1997 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 ......... $ 16,701 $ 33,514 $51,685 $ 28,447
Book/tax basis difference in
intangible assets ...................... -- (70,881) -- (72,587)
Book/tax basis difference in
other assets ........................... 10,047 (24,842) 19,276 (13,406)
Reserves and accruals for
divested operations .................... 3,872 20,832 8,905 24,043
Valuation allowances .................... (39,772) 16,561 -- --
Other ................................... 9,152 19,974 5,201 (18,805)
--------- --------- ------- ---------
$ -- $ (4,842) $85,067 $ (52,308)
========= ========= ======= =========
</TABLE>
The Company establishes valuation allowances in accordance with the
provisions of Statement of Financial Accounting Standards No. 109, ACCOUNTING
FOR INCOME TAXES. The Company continually reviews the adequacy of the valuation
allowances and recognizes tax benefits when it is more likely than not that the
benefits will be realized. In the fourth quarter of 1997, the Company increased
the valuation allowance by $23.2 million reflecting management's assessment
that it is more likely than not that the net deferred tax asset will not be
realized through future taxable income. Of this amount, approximately $18.9
million related to deferred tax assets, the majority of which was recognized as
a benefit in the first three quarters of 1997. The remainder, or $4.3 million,
related to minimum pension liabilities and was therefore recorded as an
adjustment in shareholders' equity.
11. CUSTOMER AND GEOGRAPHIC DATA
Classes of products which contributed more than 10% to consolidated net
sales were outdoor home use durable products and indoor home use durable
products. Sales of outdoor home use durable products amounted to $292.1 million
in 1997, $256.9 million in 1996 and $269.0 million in 1995. Sales of indoor
home use durable products were $781.0 million in 1997, $680.7 million in 1996
and $688.3 million in 1995.
The Company's largest customer accounted for approximately 20% of
consolidated net sales in 1997 and 19% in 1996 and 1995.
F-26
<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. Information about the
Company's domestic and international operations for each fiscal year is as
follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------------- -------------- -------------
<S> <C> <C> <C>
Net sales:
Domestic ........................................... $ 843,518 $ 800,969 $ 829,423
International (includes U.S. export sales) ......... 229,572 183,267 187,460
---------- ---------- ----------
$1,073,090 $ 984,236 $1,016,883
========== ========== ==========
Operating earnings (loss):
Domestic ........................................... $ 91,108 $ (207,765) $ 70,423
International (includes U.S. export sales) ......... 43,011 (3,078) 24,301
---------- ---------- ----------
134,119 (210,843) 94,724
Unallocated expenses and eliminations .............. (30,056) (33,636) (24,479)
---------- ---------- ----------
$ 104,063 $ (244,479) $ 70,245
========== ========== ==========
Identifiable assets:
Domestic ........................................... $ 862,399 $ 768,282 $1,040,591
International ...................................... 129,883 73,675 67,563
---------- ---------- ----------
992,282 841,957 1,108,154
Corporate assets ................................... 66,646 217,491 50,530
---------- ---------- ----------
$1,058,928 $1,059,448 $1,158,684
========== ========== ==========
</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.
F-27
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. COMMITMENTS AND CONTINGENCIES
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 28, 1997, 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 nine
sites, four of which are among the Environmental Sites referred to above, and
five 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 a site 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 this site; which remediation is expected
to be substantially completed during 1998.
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 28, 1997, and
December 29, 1996, the amount of such reserves was less than 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 28, 1997. 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 in the fourth quarter of
1996. 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, results of operations or cash flows.
F-28
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
LEASES
The Company rents certain facilities, equipment and retail stores under
operating leases. Rental expense for operating leases amounted to $7.4 million
in 1997, $8.0 million for 1996 and $8.6 million for 1995. The minimum future
rentals due under noncancelable operating leases as of December 28, 1997
aggregated $30.9 million. The amounts payable in each of the years 1998-2002
and thereafter are $4.8 million, $4.6 million, $4.2 million, $3.9 million, $3.4
million and $10.0 million, respectively.
LETTERS OF CREDIT
At December 28, 1997, standby letters of credit aggregating $29 million
were outstanding, primarily for insurance, environmental and workers'
compensation issues.
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 predecessor remained the primary
obligor in accordance with the respective loan documents. Such obligations,
which amounted to approximately $19.0 million at December 28, 1997, 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.
LITIGATION
The Company is involved in various lawsuits arising from time to time in
the ordinary course of business and/or 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 recorded a $12.0 million charge
related to a case for which an adverse development arose near year-end. In
1997, this case was favorably resolved and, as a result, $8.1 million of the
charge established in 1996 was reversed into income primarily in the fourth
quarter of 1997.
The Company believes, based on existing information, that anticipated
probable costs of litigation matters existing as of December 31, 1997 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, results
of operations or cash flows. See Note 15 for additional information regarding
litigation.
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 1997 was comprised of a self-insurance
retention of $1 million per occurrence.
F-29
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
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 material adverse effect on the financial position, results of operations
or cash flows of the Company.
PURCHASE COMMITMENT
In conjunction with the sale of the Biddeford, Maine textile mill in 1997,
the Company entered into a five-year agreement to purchase blanket shells from
the mill. The agreement provides for a minimum purchase commitment each year of
the contract. As of December 28, 1997, the Company had remaining minimum
commitments under the contract of approximately $107 million.
F-30
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. RESTATEMENT
Subsequent to the issuance of the Company's Consolidated Financial
Statements for the fiscal years ended December 28, 1997 and December 29, 1996,
it was determined that the reported results generally inflated 1997 results at
the expense of 1996 results. Upon examination, it was determined certain
revenue was improperly recognized (principally "bill and hold" and guaranteed
sales transactions), certain costs and allowances were not accrued or were
improperly recorded (principally allowances for returns, cooperative
advertising, and customer charge-backs as well as deductions and reserves for
product liability and warranty expense) and certain costs were inappropriately
included in, and subsequently charged to, restructuring, asset impairment and
other costs within the Consolidated Statement of Operations. As a result, the
accompanying Consolidated Financial Statements as of December 28, 1997 and
December 29, 1996, and for the years then ended, present the restated results.
A summary of the effects of the restatement follows (in thousands, except
per share data):
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEARS ENDED
---------------------------------------------------------------
DECEMBER 28, DECEMBER 29,
1997 1996
------------------------------ ------------------------------
AS AS
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net sales ........................................... $1,168,182 $1,073,090 $ 984,236 $ 984,236
Cost of goods sold .................................. 837,683 830,956 900,573 896,938
Selling, general and administrative expense ......... 131,056 152,653 214,029 221,655
Restructuring and asset impairment
(benefit) charges ................................. -- (14,582) 154,869 110,122
---------- ---------- ---------- ----------
Operating earnings (loss) ........................... 199,443 104,063 (285,235) (244,479)
Interest expense .................................... 11,381 11,381 13,588 13,588
Other (income) expense, net ......................... (1,218) 12 3,738 3,738
---------- ---------- ---------- ----------
Earnings (loss) from continuing operations
before income taxes ............................... 189,280 92,670 (302,561) (261,805)
Income taxes (benefit) .............................. 66,152 40,352 (105,890) (91,625)
---------- ---------- ---------- ----------
Earnings (loss) from continuing operations .......... 123,128 52,318 (196,671) (170,180)
Loss from discontinued operations, net .............. (13,713) (14,017) (31,591) (38,301)
---------- ---------- ---------- ----------
Net earnings (loss) ................................. $ 109,415 $ 38,301 $ (228,262) $ (208,481)
========== ========== ========== ==========
Earnings (loss) per share of common stock
from continuing operations:
Basic .............................................. $ 1.45 $ 0.62 $ (2.37) $ (2.05)
Diluted ............................................ $ 1.41 $ 0.60 $ (2.37) $ (2.05)
Loss from discontinued operations:
Basic .............................................. $ (0.16) $ (0.17) $ (0.38) $ (0.46)
Diluted ............................................ $ (0.16) $ (0.16) $ (0.38) $ (0.46)
Net earnings (loss) per share of common stock:
Basic .............................................. $ 1.29 $ 0.45 $ (2.75) $ (2.51)
Diluted ............................................ $ 1.25 $ 0.44 $ (2.75) $ (2.51)
</TABLE>
F-31
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. RESTATEMENT--(CONTINUED)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
---------------------------------------------------------------
AS OF DECEMBER 28, AS OF DECEMBER 29,
1997 1996
------------------------------ ------------------------------
AS AS
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents ............................ $ 52,378 $ 52,298 $ 11,526 $ 11,526
Receivables, net ..................................... 295,550 228,460 213,438 209,754
Inventories .......................................... 256,180 304,900 162,252 164,345
Net assets of discontinued operations and
other assets held for sale ......................... -- -- 102,847 92,524
Deferred income taxes ................................ 36,706 -- 93,689 85,067
Prepaid expenses and other current assets ............ 17,191 16,584 40,411 38,381
---------- ---------- ---------- ----------
Total current assets ............................... 658,005 602,242 624,163 601,597
Property, plant and equipment, net ................... 240,897 249,524 220,088 229,393
Trademarks, trade names, goodwill and
other net .......................................... 221,382 207,162 228,458 228,458
---------- ---------- ---------- ----------
Total assets ....................................... $1,120,284 $1,058,928 $1,072,709 $1,059,448
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt .................... $ 668 $ 668 $ 921 $ 921
Accounts payable ..................................... 105,580 108,374 107,319 104,113
Restructuring accrual ................................ 10,938 5,186 63,834 51,725
Other current liabilities ............................ 80,913 118,899 99,509 84,986
---------- ---------- ---------- ----------
Total current liabilities .......................... 198,099 233,127 271,583 241,745
Long-term debt ....................................... 194,580 194,580 201,115 201,115
Other long-term liabilities .......................... 141,109 154,300 152,451 149,247
Deferred income taxes ................................ 54,559 4,842 52,308 52,308
Preferred stock ...................................... -- -- -- --
Common stock ......................................... 900 900 884 884
Paid-in capital ...................................... 483,384 479,200 447,948 447,948
Retained earnings .................................... 141,134 89,801 35,118 54,899
Other ................................................ (30,436) (34,777) (25,310) (25,310)
Treasury stock ....................................... (63,045) (63,045) (63,388) (63,388)
---------- ---------- ---------- ----------
Total shareholders' equity ......................... 531,937 472,079 395,252 415,033
---------- ---------- ---------- ----------
Total liabilities and shareholders' equity ......... $1,120,284 $1,058,928 $1,072,709 $1,059,448
========== ========== ========== ==========
</TABLE>
F-32
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. UNAUDITED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL 1997(A)
----------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------------------- ----------------------- ----------------------- ----------------------
AS AS AS AS
PREVIOUSLY AS PREVIOUSLY AS PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales ......................... $ 253.5 $ 252.5 $287.6 $271.4 $289.0 $286.8 $338.1 $262.4
Gross profit ...................... 67.7 58.3 74.5 55.3 88.8 76.5 99.5 52.1
Operating earnings ................ 34.7 17.1 43.0 16.8 54.9 45.1 66.8 25.1
Earnings from
continuing operations ............ 20.6 9.0 26.2 8.7 34.6 27.5 41.7 7.1
Basic earnings per share from
continuing operations(c) ......... $ 0.24 $ 0.11 $ 0.31 $ 0.10 $ 0.41 $ 0.32 $ 0.49 $ 0.08
Diluted earnings per share from
continuing operations(c) ......... 0.24 0.11 0.30 0.10 0.39 0.31 0.47 0.08
Earnings from discontinued
operations, net of taxes ......... -- -- -- -- -- -- -- --
(Loss) benefit on sale of
discontinued operations,
net of taxes ..................... (13.7) (13.7) -- -- -- (2.7) -- 2.4
Net earnings (loss) ............... 6.8 (4.7) 26.2 8.7 34.6 24.8 41.8 9.5
Basic earnings (loss) benefit
per share(c) ..................... 0.08 (0.06) 0.31 0.10 0.41 0.29 0.49 0.11
Diluted earnings (loss)
per share(c) ..................... 0.08 (0.06) 0.30 0.10 0.39 0.28 0.47 0.11
</TABLE>
<TABLE>
<CAPTION>
FISCAL 1996(A)
-----------------------------------------------
FIRST SECOND
QUARTER QUARTER
----------------------- -----------------------
AS AS
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
------------ ---------- ------------ ----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales ............................. $229.7 $229.7 $253.9 $253.9
Gross profit (loss) ................... 48.1 48.1 47.2 47.2
Operating earnings (loss)(b) .......... 15.5 15.5 9.2 9.2
Earnings (loss) from
continuing operations ................ 6.7 6.7 2.8 2.8
Basic earnings (loss) per share
from continuing operations(c) ........ $ 0.08 $ 0.08 $ 0.03 $ 0.03
Diluted earnings (loss) per share
from continuing operations(c) ........ 0.08 0.08 0.03 0.03
Earnings (loss) from discontinued
operations, net of taxes ............. 10.7 10.7 4.4 4.4
Loss on sale of discontinued
operations, net of taxes ............. -- -- -- --
Net earnings (loss) ................... 17.4 17.4 7.2 7.2
Basic earnings (loss)
per shares(c) ........................ 0.21 0.21 0.09 0.09
Diluted earnings
(loss) pershare(c) ................... 0.21 0.21 0.09 0.09
<CAPTION>
FISCAL 1996(A)
-----------------------------------------------------
THIRD FOURTH
QUARTER QUARTER
----------------------- -----------------------------
AS AS
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
------------ ---------- ----------------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales ............................. $ 231.8 $ 231.8 $ 268.8 $ 268.8
Gross profit (loss) ................... 28.8 28.8 (40.5) (36.8)
Operating earnings (loss)(b) .......... (20.7) (20.7) (289.2)(b) (248.4)
Earnings (loss) from
continuing operations ................ (15.8) (15.8) (190.4) (163.9)
Basic earnings (loss) per share
from continuing operations(c) ........ $ (0.19) $ (0.19) $ (2.29) $ (1.97)
Diluted earnings (loss) per share
from continuing operations(c) ........ (0.19) (0.19) (2.29) (1.97)
Earnings (loss) from discontinued
operations, net of taxes ............. (2.3) (2.3) (12.0) (12.0)
Loss on sale of discontinued
operations, net of taxes ............. -- -- (32.4) (39.1)
Net earnings (loss) ................... (18.1) (18.1) (234.8) (215.0)
Basic earnings (loss)
per shares(c) ........................ (0.22) (0.22) (2.83) (2.59)
Diluted earnings
(loss) pershare(c) ................... (0.22) (0.22) (2.83) (2.59)
</TABLE>
- ----------------
(a) Each quarter consists of a 13-week period.
(b) Refer to Notes 8 and 9 regarding the Company's 1996 restructuring plan.
(c) Reflects the adoption of SFAS No. 128, EARNINGS PER SHARE.
F-33
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. UNAUDITED QUARTERLY FINANCIAL DATA--(CONTINUED)
During the first, second, third and fourth quarters of fiscal 1997,
approximately $0.5 million, $4.5 million, $1.5 million and $21.5 million,
respectively, of pre-tax liabilities no longer required were reversed and taken
into income. Included in these reserves is the $8.1 million litigation reserve
reversal discussed in Note 12. Additionally, during the fourth quarter of
fiscal 1997, approximately $13.3 million of tax liabilities no longer required
were reversed and taken into income.
15. SUBSEQUENT EVENTS (UNAUDITED)
NEW EMPLOYMENT AGREEMENTS
On February 20, 1998 the Company entered into new three-year employment
agreements with its then Chairman and Chief Executive Officer and two other
senior officers of the Company. These agreements replaced previous employment
agreements entered into in July 1996 that were scheduled to expire in July
1999.
The new employment agreement for the Company's then Chairman provided for,
among other items, the acceleration of vesting of 200,000 shares of restricted
stock and the forfeiture of the remaining 133,333 shares of unvested restricted
stock granted under the July 1996 agreement as further described in Note 2, a
new equity grant of 300,000 shares of unrestricted stock, a new grant of a
ten-year option to purchase 3,750,000 shares of the Company's common stock with
an exercise price equal to the fair market value of the stock at the date of
grant and exercisable in three equal annual installments beginning on the date
of grant and the acceleration of vesting of 833,333 outstanding stock options
granted under the July 1996 agreement as further described in Note 5. In
addition, the new employment agreement with the then Chairman and Chief
Executive Officer provided for income tax gross-ups with respect to any tax
assessed on the equity grant and acceleration of vesting of restricted stock.
The new employment agreements with the two other then senior officers
provided for, among other items, the grant of a total of 180,000 shares of
restricted stock that vest in four equal annual installments beginning the date
of grant, the acceleration of vesting of 44,000 shares of restricted stock and
the forfeiture of the remaining 29,332 shares of unvested restricted stock
granted under the July 1996 agreements, new grants of ten-year options to
purchase a total of 1,875,000 shares of the Company's common stock with an
exercise price equal to the fair market value of the stock at the date of grant
and exercisable in four equal annual installments beginning on the date of
grant and the acceleration of vesting of 383,334 outstanding stock options
granted under the July 1996 agreements. In addition, the new employment
agreements provided for income tax gross-ups with respect to any tax assessed
on the restricted stock grants and acceleration of vesting of restricted stock.
Compensation expense attributed to the equity grant, the acceleration of
vesting of restricted stock and the related income tax gross-ups will be
recognized in the first quarter of 1998 and compensation expense related to the
new restricted stock grants and related tax gross-ups will be amortized to
expense beginning in the first quarter of 1998 over the period in which the
restrictions lapse. Total compensation expense to be recognized in the first
quarter of 1998 related to these items is expected to be approximately $31
million.
On June 15, 1998, the Company's Board of Directors announced the removal
of the then Chairman and Chief Executive Officer and subsequently announced the
removal or resignation of other senior
F-34
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
officers, including the Company's Chief Financial Officer. In connection with
the removal or resignation of the senior officers and the termination of their
restricted stock grants the unamortized portion of the deferred compensation
expense attributable to the restricted stock grants, will be reversed and
compensation expense of approximately $0.9 million recognized in the first
quarter for unvested restricted stock grants will be reversed into income in
the second and third quarters of 1998. Other costs related to the resignations
and terminations will be recognized, as appropriate, in 1998. The Company and
certain of its former officers are in disagreement as to the Company's
obligations to these individuals under prior employment agreements and arising
from their terminations. The Board of Directors has installed a new Chief
Executive Officer and senior management team.
ACQUISITIONS
On March 30, 1998, the Company, through a wholly-owned subsidiary,
acquired approximately 81% of the total number of then outstanding shares of
common stock of The Coleman Company, Inc. ("Coleman"), from a subsidiary of
MacAndrews & Forbes Holdings, Inc. ("M&F"), in exchange for 14,099,749 shares
of the Company's common stock and approximately $160 million in cash as well as
the assumption of $1,016 million in debt. Coleman is a leading manufacturer and
marketer of consumer products for the worldwide outdoor recreation market. Its
products have been sold domestically under the Coleman/registered trademark/
brand name since the 1920's.
On August 12, 1998, the Company announced that, following investigation
and negotiation conducted by a Special Committee of the Board consisting of
four outside directors not affiliated with M&F, the Company had entered into a
settlement agreement with a subsidiary of M&F pursuant to which the Company was
released from certain threatened claims of M&F and its affiliates arising from
the Coleman acquisition and M&F agreed to provide certain management personnel
and assistance to the Company in exchange for the issuance to the M&F
subsidiary of five-year warrants to purchase up to 23 million shares of the
Company's common stock at an exercise price of $7.00 per share, subject to
anti-dilution provisions. The financial statement impact of the settlement,
which will be material in amount, will be recorded in the third quarter of
1998.
The Company expects to acquire the remaining equity interest in Coleman
pursuant to a merger transaction in which the existing Coleman minority
shareholders will receive .5677 shares of the Company's common stock and $6.44
in cash for each share of Coleman common stock outstanding. In addition,
unexercised options under Coleman's stock option plans will be cashed out at a
price per share equal to the difference between $27.50 and the exercise price
of such options. The Company expects to issue approximately 6.7 million shares
of common stock and expend approximately $87 million in cash to complete the
Coleman acquisition. (See Litigation and Further Actions below.)
On April 6, 1998, the Company completed the cash acquisitions of First
Alert, Inc. ("First Alert"), a leading manufacturer of smoke and carbon
monoxide detectors, and Signature Brands USA, Inc. ("Signature Brands"), a
leading manufacturer of a comprehensive line of consumer and professional
products. The First Alert and the Signature Brands acquisitions were valued at
approximately $178 million and $253 million, respectively, including the
assumption of debt.
The above acquisitions will be accounted for by the purchase method of
accounting and the results of operations of the acquired entities will be
included in the Company's Consolidated Statement of Operations from the
respective acquisition dates.
F-35
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
DEBENTURES AND NEW CREDIT FACILITY
In order to finance the above acquisitions, and refinance substantially
all of the indebtedness of the Company, Coleman, First Alert, and Signature
Brands, the Company consummated: (i) an offering (the "Offering") of Zero
Coupon Convertible Senior Subordinated Debentures due 2018 (the "Debentures")
at a yield to maturity of 5% (approximately $2,014 million principal amount at
maturity) in March 1998, which resulted in approximately $730 million of net
proceeds and, (ii) entered into a revolving and term credit facility ("New
Credit Facility") in April 1998.
The Debentures are exchangeable for shares of the Company's common stock
at an initial conversion rate of 6.575 shares for each $1,000 principal amount
at maturity of the Debentures, subject to adjustment upon occurrence of certain
events. The Company was required to file a registration statement with the
Securities and Exchange Commission to register the Debentures by June 23, 1998,
which registration statement has not been filed. From June 23, 1998 until the
day on which the registration statement is filed and declared effective, the
Company is required to pay to the Debenture holders cash liquidated damages
accruing, for each day during such period, at a rate per annum equal to 0.25%
during the first 90 days and 0.50% thereafter multiplied by the total of the
issue price of the Debentures plus the original issue discount thereon on such
day. The Company made its first payment of approximately $525,000 to the
Debenture holders on September 25, 1998.
The New Credit Facility provided for an aggregate borrowings of up to $1.7
billion pursuant to: (i) a revolving credit facility in an aggregate principal
amount of up to $400 million, maturing March 31, 2005; (ii) an $800 million
term loan maturing on March 31, 2005, and (iii) a $500 million term loan
maturing September 30, 2006. Interest accrues at a rate selected at the
Company's option of: (i) the London Interbank Offered Rate ("LIBOR") plus an
agreed upon interest margin which varies depending upon the Company's leverage
ratio, as defined, and other items or, (ii) the base rate of the administrative
agent (generally the higher of the prime commercial lending rate of the
administrative agent or the Federal Funds Rate plus 1/2 of 1%), plus an agreed
upon interest margin which varies depending upon the Company's leverage ratio,
as defined, and other items. At June 30, 1998, the Company was not in
compliance with the financial covenants and ratios required. The Company and
its lenders entered into an agreement dated June 30, 1998, which provided that
compliance with the covenants would be waived through December 31, 1998.
Borrowings under the New Credit Facility are secured by certain of the
Company's assets, including its stock interest in Coleman and certain other
subsidiaries and certain of the Company's tangible and intangible personal
property. The New Credit Facility contains certain covenants, including
limitations on the ability of the Company and its subsidiaries to engage in
certain transactions and the requirement to maintain certain financial
covenants and ratios. Pursuant to an amendment dated October 19, 1998, the
Company is not required to comply with the original financial covenants and
ratios under the New Credit Facility until April 10, 1999, but will be required
to comply with an earnings before interest, taxes, depreciation and
amortization covenant, the amounts of which are to be determined, beginning
February 1999. Concurrent with each of these amendments, interest margin was
increased. The margin continues to increase monthly through March 1999 to a
maximum of 400 basis points over LIBOR. At September 30, 1998, following the
scheduled repayment of a portion of the term loan, the New Credit Facility was
reduced to $1,698 million in total, of which approximately $1,453 million was
outstanding and approximately $245 million was available. In addition, the
Company's cash balance at September 30, 1998 was approximately $43 million.
F-36
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
The Company is working closely with its bank lenders and hopes to reach
agreement with the bank lenders on a further amendment to the New Credit
Facility containing revised financial covenants which the bank lenders and the
Company find mutually acceptable. There can be no assurance that such an
amendment, or a further waiver of the existing financial covenants, will be
entered into with the bank lenders by April 10, 1999. The failure to obtain
such an amendment or further waiver would result in a violation of the existing
covenants, which would permit the bank lenders to accelerate the maturity of
all outstanding borrowings under the New Credit Facility.
In March, 1998, the Company prepaid a $75.0 million 7.85% industrial
revenue bond related to its Hattiesburg facility originally due in 2009. In
connection with the early extinguishment of this debt, the Company will record
a charge of $8.6 million in the first quarter of 1998. Also, as a result of
repayment of certain indebtedness assumed in the Coleman acquisition, the
Company will recognize an extraordinary charge of approximately $104 million in
the second quarter of 1998.
At September 30, 1998, the standby letters of credit aggregated $56
million, including $5 million related to an acquired company, and were
predominately for insurance, pension, environmental and workers' compensation
issues.
SEC INVESTIGATION
By letter dated June 17, 1998, the staff of the Division of Enforcement of
the SEC advised the Company that it was conducting an informal inquiry into the
Company's accounting policies and procedures and requested that the Company
produce certain documents. On July 2, 1998, the SEC issued a Formal Order of
Private Investigation, designating officers to take testimony and pursuant to
which a subpoena duces tecum was served on the Company requiring the production
of certain documents. The Company has provided numerous documents to the SEC
staff and continues to cooperate fully with the SEC staff. The Company cannot
predict the term of such investigation or its potential outcome.
LITIGATION
On April 23, 1998, two class action lawsuits were filed on behalf of
purchasers of the Company's common stock in the U. S. District Court for the
Southern District of Florida against the Company and certain of its present and
former officers and directors alleging violations of the federal securities
laws as discussed below (the "Consolidated Federal Actions"). Since that date,
at least fifteen similar class actions have been filed in the same Court. One
of the lawsuits also names as defendant Arthur Andersen LLP, the Company's
independent accountants.
The complaints in the Consolidated Federal Actions allege to varying
degrees that the defendants (i) failed to disclose that the Company pre-sold
approximately $50 million of products pursuant to its "early buy" marketing
program in an effort to boost its 1997 sales and net income figures and (ii)
made material misrepresentations regarding the Company's business operations,
future prospects and anticipated earnings per share, in an effort to
artificially inflate the price of the Company stock long enough for the Company
to complete a $2 billion debt financing (supported with stock incentives)
necessary to complete the acquisitions of Coleman, Signature Brands and First
Alert, and for the individual defendants to enter into lucrative long-term
employment agreements with the Company. Each complaint alleges two counts of
securities fraud; one count against all defendants and one count against the
individual defendants.
F-37
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
On June 16, 1998, the Court entered an Order consolidating all such filed
and all such subsequently filed class actions and providing time periods for
the filing of a Consolidated Amended Complaint and defendants' response
thereto. On June 22, 1998, two groups of plaintiffs made motions to be
appointed lead plaintiffs and to have their selection of counsel approved as
lead counsel. On July 20, 1998, the Court entered an Order appointing lead
plaintiffs and lead counsel (the "Smith Plaintiffs' Group"). This Order also
stated that it "shall apply to all subsequently filed actions which are
consolidated herewith". On August 28, 1998, plaintiffs in one of the
subsequently filed actions filed an objection to having their action
consolidated pursuant to the June 16, 1998 Order, arguing that the class period
in their action differs from the class periods in the originally filed
consolidated actions. On September 29, 1998, the Smith Plaintiffs' Group filed
its memorandum in opposition to this objection.
On April 7, 1998, a purported derivative action was filed in the Circuit
Court for the Fifteenth Judicial Circuit in and for Palm Beach County, Florida
against the Company and certain of its present and former officers and
directors. The action alleged that the individual defendants breached their
fiduciary duties and wasted corporate assets when the Company granted stock
options to three of its officers and directors on or about February 2, 1998 at
an exercise price of $36.85. On June 25, 1998, all defendants filed a motion to
dismiss the complaint for failure to make a presuit demand on the board of
directors of the Company. (See Further Actions, below.)
On June 25, 1998, four purported class actions were filed in the Court of
Chancery of the State of Delaware in New Castle County by minority shareholders
of Coleman against Coleman, certain of the Company's present and former
officers and directors and, as a nominal party, the Company. An additional
class action was filed on August 10, 1998, against the same parties. All of the
plaintiffs are represented by the same Delaware counsel and have agreed to
consolidate the class actions. These actions allege, in essence, that the
existing exchange ratio for the proposed merger between the Company and Coleman
is no longer fair to Coleman shareholders as a result of the recent decline in
the market value of the Company stock. (See Further Actions, below.)
During the months of August and October 1998, purported class and
derivative actions were filed in the Court of Chancery of the State of Delaware
in New Castle County and in the U. S. District Court for the Southern District
of Florida by shareholders of the Company against the Company, M&F and certain
of the Company's present and former directors. These complaints allege that the
defendants breached their fiduciary duties when the Company entered into a
settlement agreement with M&F whereby M&F released the Company from any claims
it may have had arising out of the Company's acquisition of its interest in
Coleman and agreed to provide management support to the Company (the
"Settlement Agreement"). Pursuant to the Settlement Agreement, a subsidiary of
M&F was granted five-year warrants to purchase up to an additional 23 million
shares of the Company's common stock at an exercise price of $7.00 per share.
These complaints also allege that the rights of the public shareholders have
been compromised, as the settlement would normally require shareholder approval
under the rules and regulations of the New York Stock Exchange ("NYSE"). The
Audit Committee of the Company's board determined that obtaining such
shareholder approval would have seriously jeopardized the financial viability
of the Company which is an allowable exception to the NYSE shareholder approval
requirements.
On September 16, 1998, an action was filed in the 56th Judicial District
Court of Galveston County, Texas alleging various claims in violation of the
Texas Securities Act and Texas Business and Commercial Code as well as common
law fraud as a result of the Company's alleged misstatements and
F-38
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
omissions regarding the Company's financial condition and prospects during a
period beginning May 1, 1998 and ending June 16, 1998, in which the plaintiffs
engaged in transactions in the Company's stock. The Company is the only named
defendant in this action. The complaint requests recovery of compensatory
damages, punitive damages and expenses in an unspecified amount. This action
has been removed to the U.S. District Court for the Southern District of Texas
and the Company has filed a motion for consolidation of this case with the
Consolidated Federal Actions. Plaintiffs have moved to remand the case to Texas
state court.
The Company intends to vigorously defend each of the foregoing lawsuits,
as well as the Debentures purchasers' lawsuit reflected under Further Actions,
below, but cannot predict the outcome and is not currently able to evaluate the
likelihood of the Company's success in each case or the range of potential
loss. However, if the foregoing actions were determined adversely to the
Company, such judgments would likely have a material adverse effect on the
Company's financial position, results of operations and cash flows.
On July 2, 1998, the American Insurance Company ("American") filed suit
against the Company in the U.S. District Court for the Southern District of New
York requesting a declaratory judgment of the court that the directors' and
officers' liability insurance policy for excess coverage issued by American was
invalid and/or had been properly cancelled by American. The Company has moved
to transfer such action to the federal district court in which the Consolidated
Federal Actions are currently pending; American is opposing such motion. (See
Further Actions, below). The Company intends to pursue recovery from all of its
insurers if damages are awarded against the Company or its indemnified officers
and/or directors under any of the foregoing actions. The Company's failure to
obtain such insurance recoveries following an adverse judgement in any of the
foregoing shareholder lawsuits or the Debentures purchasers' lawsuit referred
to under Further Actions, below, could have a material adverse impact on the
Company's financial position, results of operations and cash flow.
The Company and its subsidiaries are also involved in various lawsuits
arising from time to time which the Company considers to be ordinary routine
litigation incidental to its business. In the opinion of the Company, the
resolution of these routine matters, and of certain matters relating to prior
operations 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.
FURTHER ACTIONS
On October 22, 1998, the plaintiff in the case filed April 7, 1998,
amended the complaint against all but one of the defendants named in the
original complaint. The amended complaint no longer challenges the stock
options, but instead alleges that the individual defendants breached their
fiduciary duties by failing to have in place adequate accounting and sales
controls, which failure caused the inaccurate reporting of financial
information to the public, thereby causing an artificial inflation of the
Company's financial statements and stock price.
On October 21, 1998, the Company announced that it had entered into a
Memorandum of Understanding to settle, subject to court approval, certain class
actions brought by shareholders of Coleman challenging the proposed Coleman
Merger. Under the terms of the proposed settlement, the Company will issue to
the Coleman public shareholders five-year warrants to purchase 4.98 million
shares of the Company's common stock at $7.00 per share. These warrants will
generally have the same
F-39
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
terms as the warrants previously issued to a subsidiary of M&F and will be
issued when the Coleman Merger is consummated, which is now expected to be in
the first quarter of 1999. There can be no assurance that the Court will
approve the settlement as proposed.
On October 20, 1998, an action was filed by Federal Insurance Company in
the U.S. District Court for the Middle District of Florida requesting the same
relief as that requested by American in the previously filed action as to
additional coverage levels under the Company's directors' and officers'
liability insurance policy.
On October 30, 1998, a class action lawsuit was filed on behalf of certain
purchasers of the Company's Debentures in the U.S. District Court of the
Southern District of Florida against the Company and its prior Chief Executive
Officer and Chief Financial Officer, alleging violations of the federal
securities laws and common law fraud. The complaint alleges that the Company's
offering memorandum used for the marketing of the Debentures contained false
and misleading information regarding the Company's financial position and that
the defendants engaged in a plan to inflate the Company's earnings for the
purpose of defrauding the plaintiffs and others. The Company has not yet been
served with this complaint.
RESTRUCTURING AND ASSET IMPAIRMENT
In 1998, as a result of decisions to outsource a substantial number of
products previously made by the Company, certain facilities and equipment will
either no longer be used or will be used in a significantly different manner.
Accordingly, certain assets recorded at December 28, 1997 will be written down
in 1998 to reflect the fair market value of items held for disposition or to
reflect impairment for items where the future utility is altered by the
sourcing change. Personnel at the Mexico City manufacturing plant were notified
in the second quarter of 1998 that the plant is scheduled for closure at
year-end 1998. Accordingly, a liability related to plant closure will be
recorded in the second quarter of 1998.
ANNUAL MEETING ACTIONS
At the Company's annual meeting held May 12, 1998, the shareholders
approved the following actions: (i) to amend the Company's Certificate of
Incorporation increasing the authorized common stock to 500 million shares;
(ii) to amend the Company's stock option plan to increase the number of
available shares to 16.5 million; and (iii) to grant stock options to certain
of the Company's now former officers. (See New Employment Agreements, above.)
OPTIONS REPRICING
In August, 1998 the Company approved a plan to reprice outstanding common
stock options held by the Company's employees. The repricing program provides
for outstanding options with exercise prices in excess of $10.00 per share to
be exchanged on a voluntary basis in an exchange ratio ranging from
approximately 2 to 3 old options for one new option, (as determined by
reference to a Black-Scholes model) with the exercise price of the new options
set at $7.00 per share.
CHANGE IN FISCAL YEAR END
To standardize the fiscal period ends of the Company and its acquired
entities, effective with its 1998 fiscal year, the Company has changed its
fiscal year end from the Sunday nearest December 31 to a calendar year.
Accordingly, quarterly reporting will follow the calendar quarters.
F-40
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
NEW ACCOUNTING STANDARDS
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position 98-1, ACCOUNTING FOR THE COSTS OF
COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE ("SOP 98-1"). SOP 98-1
requires computer software costs associated with internal use software to be
expensed as incurred until certain capitalization criteria are met. The Company
will adopt SOP 98-1 prospectively beginning January 1, 1999. Adoption of this
Statement is not expected to have a material impact on the Company's
consolidated financial position or results of operations, although actual
charges incurred may be material due to Year 2000 issues.
In April 1998, the AICPA issued Statement of Position 98-5, REPORTING ON
THE COSTS OF START-UP ACTIVITIES ("SOP 98-5"). SOP 98-5 requires all costs
associated with pre-opening, pre-operating and organization activities to be
expensed as incurred. The Company will adopt SOP 98-5 beginning January 1,
1998. Adoption of the Statement is not expected to have a material impact on
the Company's consolidated financial position or results of operations.
In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES for fiscal years beginning after June 15,
1999. SFAS No. 133 requires the recognition of all derivatives in the
consolidated balance sheet as either assets or liabilities measured at fair
value. The Company will adopt SFAS No. 133 effective for the 2000 calendar year
end. The Company has not yet determined the impact SFAS No. 133 will have on
its financial position or results of operations when such statement is adopted.
F-41
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEARS 1997, 1996 AND 1995
(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:
$ (2,000)(a)
Fiscal year ended 8,948 (b)
December 28, 1997 (as restated) ................ $19,701 $17,297 17 (c) $30,033
======= ======= ========= =======
$ (233)(a)
Fiscal year ended 19,911 (b)
December 29, 1996 (as restated) ................ $12,326 $27,053 -- (c) $19,701
======= ======= ========= =======
$ 715(a)
Fiscal year ended 6,988 (b)
December 31, 1995 .............................. $ 9,416 $10,651 38 (c) $12,326
======= ======= ========= =======
</TABLE>
- ----------------
Notes: (a) Reclassified to/from accrued liabilities for customer deductions.
(b) Accounts written off as uncollectible.
(c) Foreign currency translation adjustment.
<TABLE>
<CAPTION>
ADDITIONS ENDING
BEGINNING CHARGED CASH NON-CASH ACCRUAL
DESCRIPTION ACCRUAL TO INCOME REDUCTIONS REDUCTIONS REVERSALS BALANCE
- ----------------------- ----------- ----------- ------------ ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Restructuring accrual:
1997 $51.7 $ -- $21.2 $10.7 $14.6 $ 5.2
1996 13.8 110.1 8.1 64.1 -- 51.7
1995 16.2 -- 2.4 -- -- 13.8
</TABLE>
<TABLE>
<CAPTION>
ADDITIONS ENDING
BEGINNING CHARGED CASH NON-CASH ACCRUAL
DESCRIPTION ACCRUAL TO INCOME REDUCTIONS REDUCTIONS BALANCE
- ------------- ----------- ----------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C>
Allowances and Reserves for Loss on Discontinued Operations:
1997 $58.2 $ 22.5 $6.1 $71.6 $ 3.0
1996 -- 58.2 -- -- 58.2
1995 -- -- -- -- --
</TABLE>
F-42
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- --------------------------------------------------------------------------------------------
<S> <C>
3.b By-laws of Sunbeam, as amended
4.e Amendment to Registration Rights Agreement, dated as of August 12, 1998, between the
Company and Coleman (Parent) Holding, Inc.
10.f Amended and Restated Sunbeam Corporation Stock Option Plan
10.bb Second Amendment to Credit Agreement dated as of March 30, 1998, among the Company,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank
10.cc Third Amendment to Credit Agreement dated as of October 19, 1998, among the Company,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank
10.dd Employment Agreement between the Company and Jerry W. Levin dated as of August 12,
1998
10.ee Employment Agreement between the Company and Paul Shapiro dated as of August 12, 1998
10.ff Employment Agreement between the Company and Bobby Jenkins dated as of August 12,
1998
10.gg Agreement between the Company and David Fannin dated August 20, 1998
10.hh First Amendment to Receivables Sale and Contribution Agreement dated April 2, 1998,
between Sunbeam Products, Inc. and Sunbeam Asset Diversification, Inc.
10.ii First Amendment to Receivables Purchase and Servicing Agreement dated April 2, 1998,
between Llama Retail Funding, L.P., Capital USA, L.L.C., Sunbeam Products, Inc. and
Sunbeam Asset Diversification, Inc.
10.jj Second Amendment to Receivables Purchase and Servicing Agreement dated July 29, 1998,
between Llama Retail Funding, L.P., Capital USA, L.L.C., Sunbeam Products, Inc. and
Sunbeam Asset Diversification, Inc.
27. Financial Data Schedule, submitted electronically to the Securities and Exchange Commission
for information only and not filed.
99.c Press Release dated August 12, 1998, regarding issuance of warrants to MacAndrews & Forbes
Holding, Inc.
99.d Press Release dated August 24, 1998 regarding the Company's new strategy and senior
management team
99.e Press Release dated October 20, 1998 regarding the Company's restatement of its financial
results
</TABLE>
EXHIBIT 3.b
BY-LAWS
OF
SUNBEAM CORPORATION
---------------------
(As Amended as of June 16, 1998)
ARTICLE I
OFFICES
Section 1.1 REGISTERED OFFICE. The registered office of the Corporation
within the State of Delaware shall be located at the principal place of business
in said State of such corporation or individual acting as the Corporation's
registered agent in Delaware.
Section 1.2 OTHER OFFICES. The Corporation may also have offices and
places of business at such other places both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1 PLACE OF MEETINGS. All meetings of stockholders shall be
held at the principal office of the Corporation, or at such other place within
or without the State of Delaware as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2.2 ANNUAL MEETINGS. The annual meeting of stockholders for the
election of directors shall be held at such time on such day, other than a legal
holiday, as the Board of Directors in each such year determines. At the annual
meeting, the stockholders entitled to vote for the election of directors shall
elect, by a plurality vote, a Board of Directors and transact such other
business as may properly come before the meeting.
Section 2.3 SPECIAL MEETINGS. Special meetings of stockholders, for any
purpose or purposes, may be called by the Chairman of the Board of Directors.
Any such request shall state the purpose or purposes of the proposed meeting. At
any special meeting of stockholders, only such business may be transacted as is
related to the purpose or purposes set forth in the notice of such meeting.
Section 2.4 NOTICE OF MEETINGS. Written notice of every meeting of
stockholders, stating the place, date and hour thereof and, in the case of a
special meeting of stockholders, the purpose or purposes thereof and the person
or persons by whom or at whose direction such meeting has been called and such
notice is being issued, shall be given not less than ten (10) nor more than
<PAGE>
sixty (60) days before the date of the meeting, either personally or by mail, by
or at the direction of the Chairman of the Board, to each stockholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the stock transfer books of the
Corporation. Nothing herein contained shall preclude the stockholders from
waiving notice as provided in Section 4.1 hereof.
Section 2.5 QUORUM. The holders of a majority of the issued and
outstanding shares of stock of the Corporation entitled to vote, represented in
person or by proxy, shall be necessary to and shall constitute a quorum for the
transaction of business at any meeting of stockholders. If, however, such quorum
shall not be present or represented at any meeting of stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At any such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. Notwithstanding the foregoing, if after any
such adjournment the Board of Directors shall fix a new record date for the
adjourned meeting, or if the adjournment is for more than thirty (30) days, a
notice of such adjourned meeting shall be given as provided in Section 2.4
hereof, but such notice may be waived as provided in Section 4.1 hereof.
Section 2.6 VOTING. At each meeting of stockholders, each holder of
record of shares of stock entitled to vote shall be entitled to vote in person
or by proxy, and each such holder shall be entitled to one vote for every share
standing in his name on the books of the Corporation as of the record date fixed
by the Board of Directors or prescribed by law and, if a quorum is present, a
majority of the shares of such stock present or represented at any meeting of
stockholders shall be the vote of the stockholders with respect to any item of
business, unless otherwise provided by any applicable provision of law, by these
By-Laws or by the Certificate of Incorporation.
Section 2.7 PROXIES. Every stockholder entitled to vote at a meeting or
by consent without a meeting may authorize another person or persons to act for
him by proxy. Each proxy shall be in writing executed by the stockholder giving
the proxy or by his duly authorized attorney. No proxy shall be valid after the
expiration of three (3) years from its date, unless a longer period is provided
for in the proxy. Unless and until voted, every proxy shall be revocable at the
pleasure of the person who executed it, or his legal representatives or assigns
except in those cases where an irrevocable proxy permitted by statute has been
given.
Section 2.8 CONSENTS. Whenever a vote of stockholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action by any provision of statute, the Certificate of Incorporation or these
By-Laws, the meeting, prior notice thereof and vote of stockholders may be
dispensed with if the holders of shares having not less than the minimum number
of votes that would have been necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted
shall consent in writing to the taking of such action. Where corporate action is
taken in such matter by less than unanimous written consent, prompt written
notice of the taking of such action shall be given thereto.
Section 2.9 STOCK RECORDS. The Secretary or agent having charge of the
stock transfer
<PAGE>
books shall make, at least ten (10) days before each meeting of stockholders, a
complete list of the stockholders entitled to vote at such meeting or any
adjournment thereof, arranged in alphabetical order and showing the address of
and the number and class and series, if any, of shares held by each. For a
period of ten (10) days prior to such meeting, such list shall be kept at the
principal place of business of the Corporation or at the office of the transfer
agent or registrar of the Corporation and such other places as required by
statute and shall be subject to inspection by any stockholder at any time during
usual business hours. Such list shall also be produced and kept open at the time
and place of the meeting and shall be subject to the inspection of any
stockholder at any time during the meeting.
ARTICLE III
DIRECTORS
Section 3.1 NUMBER. The number of directors of the Corporation which
shall constitute the entire Board of Directors shall not be less than three nor
more than twelve as fixed from time to time by a vote of a majority of the
entire Board, provided, however, that the number of directors shall not be
reduced so as to shorten the term of any director at the time in office.
Section 3.2 RESIGNATION AND REMOVAL. Any director may resign at any
time upon notice of resignation to the Corporation. Any director may be removed
at any time by vote of the stockholders then entitled to vote for the election
of directors at a special meeting called for that purpose, either with or
without cause.
Section 3.3 NEWLY CREATED DIRECTORSHIP AND VACANCIES. Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason whatsoever shall be
filled by vote of the Board. If the number of directors then in office is less
than a quorum, such newly created directorships and vacancies may be filled by a
vote of a majority of the directors then in office. Any director elected to fill
a vacancy shall be elected until the next meeting of stockholders at which the
election of directors is in the regular course of business, and until his
successor has been elected and qualified.
Section 3.4 POWERS AND DUTIES. Subject to the applicable provisions of
law, these By-Laws or the Certificate of Incorporation, but in furtherance and
not in limitation of any rights therein conferred, the Board of Directors shall
have the control and management of the business and affairs of the Corporation
and shall exercise all such powers of the Corporation and do all such lawful
acts and things as may be exercised by the Corporation.
Section 3.5 PLACE OF MEETINGS. All meetings of the Board of Directors
may be held either within or without the State of Delaware.
Section 3.6 ANNUAL MEETINGS. An annual meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting to the newly elected directors shall
be necessary in order to legally constitute the meeting, provided a quorum shall
be present, or the newly elected directors may act by the written consent of all
of such directors.
<PAGE>
Section 3.7 REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice, and at such time and at such place as
shall from time to time be fixed, in advance, by resolution of the Board.
Section 3.8 SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board and shall be called by the
Secretary upon the request of any two directors. Written notice of each special
meeting of directors stating the time and place of the meeting shall be given to
each director at least twenty-four (24) hours before such meeting, provided that
neither the business to be transacted at, nor the purpose of, any special
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
Section 3.9 NOTICE OF MEETINGS. Notice of each special meeting of the
Board shall be given by the Secretary or an Assistant Secretary and shall state
the place, date and time of the meeting. Notice of each such meeting shall be
given orally or shall be mailed to each director at his residence or usual place
of business. If notice of less than three (3) days is given, it shall be oral,
whether by telephone or in person, or sent by special delivery mail, facsimile
or telegraph. If mailed, the notice shall be given when deposited in the United
States mail, postage prepaid. Notice of any adjourned meeting, including the
place, date and time of the new meeting, shall be given to all directors not
present at the time of the adjournment, as well as to the other directors unless
the place, date and time of the new meeting is announced at the adjourned
meeting. Nothing herein contained shall preclude the directors from waiving
notice as provided in Section 4.1 hereof.
Section 3.10 QUORUM AND VOTING. At all meetings of the Board of
Directors, a majority of the entire Board shall be necessary to and shall
constitute a quorum for the transaction of business, unless otherwise provided
by any applicable provision of law, by these By-Laws, or by the Certificate of
Incorporation. The act of a majority of the directors present at the time of the
vote, if a quorum is present at such time, shall be the act of the Board of
Directors, unless otherwise provided by an applicable provision of law, by these
By-Laws or by the Certificate of Incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, until a quorum shall be present.
Section 3.11 COMPENSATION. The salaries and other compensation of
directors for services to the Corporation as directors, officers or otherwise
shall be fixed by, or in the manner prescribed by, the Board of Directors,
irrespective of any personal interest of any of its members.
Section 3.12 BOOKS AND RECORDS. The directors may keep the books of the
Corporation, except such as are required by law to be kept within the state,
outside of the State of Delaware, at such place or places as they may from time
to time determine.
Section 3.13 ACTION WITHOUT A MEETING. Any action required or permitted
to be taken by the Board, or by a committee of the Board, may be taken without a
meeting if all members of the Board or the committee, as the case may be,
consent in writing to the adoption of a resolution authorizing the action. Any
such resolution and the written consents thereto by the members of the Board or
committee shall be filed with the minutes of the proceedings of the Board or
committee.
<PAGE>
Section 3.14 TELEPHONE PARTICIPATION. Any one or more members of the
Board, or any committee of the Board, may participate in a meeting of the Board
or committee by means of a conference telephone call or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
Section 3.15 EXECUTIVE COMMITTEE. The Board of Directors may, by
resolution adopted by the Board, appoint an Executive Committee, consisting of
not less than three (3) directors, at least one of whom is not a beneficial
owner, or the representative of a beneficial owner, of 10% or more of the
Corporation's outstanding common stock. The Executive Committee shall keep
minutes of its meetings and report the same to the Board. The Executive
Committee shall have and may exercise all of the powers of the Board to the
maximum extent provided under the Delaware General Corporation Law.
Section 3.16 OTHER COMMITTEES OF THE BOARD. The Board, by resolution
adopted by a majority of the entire Board, may designate such other committees,
each consisting of one or more directors and having such title as the Board may
consider to be a proper description of its function. The Board may designate one
or more directors as alternate members of any such other committee. Such
alternate members may replace any absent member or members at any meeting of
such other committee. Each other committee (including the members thereof) shall
serve at the pleasure of the Board and shall keep minutes of its meetings and
report the same to the Board. Except as otherwise provided by law, each such
committee, to the extent provided in the resolution establishing it, shall have
and may exercise all the authority of the Board with respect to all matters.
Section 3.17 MANDATORY RETIREMENT. No nominee for election as a
director shall be seventy (70) years or older on the date of election. A
director who attains the age of seventy (70) during his or her term of office
shall complete his or her term but shall not be eligible to stand for reelection
thereafter.
ARTICLE IV
WAIVER
Section 4.1 WAIVER. Whenever a notice is required to be given by any
provision of law, by these By-Laws, or by the Certificate of Incorporation, a
written waiver, signed by the person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to such notice. Attendance
of a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
<PAGE>
ARTICLE V
OFFICERS
Section 5.1 EXECUTIVE OFFICERS. The officers of the Corporation shall
be the Chairman of the Board, a Treasurer and Secretary. Any person may hold two
or more of such offices. The officers of the Corporation shall be elected
annually (and from time to time by the Board of Directors, as vacancies occur),
at the annual meeting of the Board of Directors following the meeting of
stockholders at which the Board of Directors was elected.
Section 5.2 OTHER OFFICERS. The Board of Directors may appoint such
other officers and agents, including a Chief Executive Officer, President, Chief
Financial Officer, Vice President, Assistant Vice Presidents, Secretaries,
Assistant Secretaries and Assistant Treasurers, as it shall at any time or from
time to time deem necessary or advisable.
Section 5.3 AUTHORITIES AND DUTIES. All officers, as between themselves
and the Corporation, shall have such authority and perform such duties in the
management of business and affairs of the Corporation as may be provided in
these By-Laws, or, to the extent not so provided, as may be prescribed by the
Board of Directors.
Section 5.4 TENURE AND REMOVAL. The officers of the Corporation shall
be elected or appointed to hold office until their respective successors are
elected or appointed. All officers shall hold office at the pleasure of the
Board of Directors, and any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors for cause or
without cause at any regular or special meeting.
Section 5.5 VACANCIES. Any vacancy occurring in any office of the
Corporation, whether because of death, resignation or removal, with or without
cause, or any other reason, shall be filled by the Board of Directors.
Section 5.6 COMPENSATION. The salaries and other compensation of all
officers and agents of the Corporation shall be fixed by or in the manner
prescribed by the Board of Directors.
Section 5.7 CHAIRMAN OF THE BOARD. The Chairman of the Board, or in his
absence, the Chief Executive Officer, shall preside at all meetings of the
stockholders and the directors and shall see to it that all resolutions and
orders of the Board are carried into effect, and, in connection therewith, shall
be authorized to delegate to the other executive officers such of his powers and
duties at such times and in such manner as he may deem advisable. The Chairman
of the Board shall perform such other duties as are properly required of him by
the Board of Directors.
Section 5.8 PRESIDENT OR CHIEF EXECUTIVE OFFICER. The President, or the
Chief Executive Officer, shall have the general charge of the business and
affairs of the Corporation, and, in the absence of the Chairman, he shall
preside at all meetings of the stockholders and the directors and exercise the
other powers and perform the other duties of the Chairman or designate the
executive officers of the Corporation by whom such other powers shall be
exercised and other duties
<PAGE>
performed; and he shall have such other powers and duties as the Board of
Directors or the Chairman of the Board may from time to time prescribe. Except
where by law or by order of the Board of Directors the signature of the Chairman
of the Board is required, the President or Chief Executive Officer shall have
the same power as the Chairman of the Board to execute instruments on behalf of
the Corporation.
Section 5.9 SECRETARY. The Secretary shall attend all meetings of the
stockholders and all meetings of the Board of Directors and shall record all
proceedings taken at such meetings in a book to be kept for that purpose; he
shall see that all notices of meetings of stockholders and meetings of the Board
of Directors are duly given in accordance with the provisions of these By-Laws
or as required by law; he shall be the custodian of the records and of the
corporate seal or seals of the Corporation; he shall have authority to affix the
corporate seal or seals to all documents, the execution of which, on behalf of
the Corporation, under its seal, is duly authorized, and when so affixed it may
be attested by his signature; and in general, he shall perform all duties
incident to the office of the Secretary of a corporation, and such other duties
as the Board of Directors may from time to time prescribe.
Section 5.10 TREASURER. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit, or cause to be deposited, in the name and to the
credit of the Corporation, all moneys and valuable effects in such banks, trust
companies, or other depositories as shall from time to time be selected by the
Board of Directors. He shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation; he shall render to the
Chairman of the Board and to each member of the Board of Directors, whenever
requested, an account of all of his transactions as Treasurer and of the
financial condition of the Corporation; and in general, he shall perform all of
the duties incident to the office of the Treasurer of a corporation, and such
other duties as the Board of Directors may from time to time prescribe.
Section 5.11 OTHER OFFICERS. The Board of Directors may also elect or
may delegate to the Chairman of the Board or the Chief Executive Officer the
power to appoint such other officers as he may at any time or from time to time
deem advisable, and any officers so elected or appointed shall have such
authority and perform such duties as the Board of Directors, the Chairman of the
Board or the Chief Executive Officer, if the Chairman or the Chief Executive
Officer shall have appointed them, may from time to time prescribe.
ARTICLE VI
PROVISIONS RELATING TO STOCK CERTIFICATES AND STOCKHOLDERS
Section 6.1 FORM AND SIGNATURE. The shares of the Corporation shall be
represented by a certificate signed by the Chairman of the Board or the
President or any Vice President and by the Secretary or any Assistant Secretary
or the Treasurer, or any Assistant Treasurer, and shall bear the seal of the
Corporation or a facsimile thereof. Each certificate representing shares shall
state upon its face (a) that the Corporation is formed under the laws of the
State of Delaware, (b) the name of the person or persons to whom it is issued,
(c) the number of shares which such certificate
<PAGE>
represents and (d) the par value, if any, of each share represented by such
certificate.
Section 6.2 REGISTERED STOCKHOLDERS. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares of stock to receive dividends or other distributions, and to
vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of stock, and shall not be bound to
recognize any equitable or legal claim to or interest in such shares on the part
of any other person.
Section 6.3 TRANSFER OF STOCK. Upon surrender to the Corporation or the
appropriate transfer agent, if any, of the Corporation, of a certificate
representing shares of stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, and, in the event that the
certificate refers to any agreement restricting transfer of the shares which it
represents, proper evidence of compliance with such agreement, a new certificate
shall be issued to the person entitled thereto, and the old certificate
cancelled and the transaction recorded upon the books of the Corporation.
Section 6.4 LOST CERTIFICATES, ETC. The Corporation may issue a new
certificate for shares in place of any certificate theretofore issued by it,
alleged to have been lost, mutilated, stolen or destroyed, and the Board may
require the owner of such lost, mutilated, stolen or destroyed certificate, or
his legal representatives, to make an affidavit of the fact and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation on account of the alleged loss,
mutilation, theft or destruction of any such certificate or the issuance of any
such new certificate.
Section 6.5 RECORD DATE. For the purpose of determining the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express written consent to any corporate
action without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board may fix, in advance, a record date. Such date shall not be more than
sixty (60) nor less than ten (10) days before the date of any such meeting, nor
more than sixty (60) days prior to any other action.
Section 6.6 REGULATIONS. Except as otherwise provided by law, the Board
may make such additional rules and regulations, not inconsistent with these
By-Laws, as it may deem expedient, concerning the issue, transfer and
registration of certificates for the securities of the Corporation. The Board
may appoint, or authorize any officer of officers to appoint, one or more
transfer agents and one or more registrars and may require all certificates for
shares of capital stock to bear the signature or signatures of any of them.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1 DIVIDENDS AND DISTRIBUTIONS. Dividends and other
distributions upon or with
<PAGE>
respect to outstanding shares of stock of the Corporation may be declared by the
Board of Directors at any regular or special meeting, and may be paid in cash,
bonds, property, or in stock of the Corporation. The Board shall have full power
and discretion, subject to the provisions of the Certificate of Incorporation or
the terms of any other corporate document or instrument to determine what, if
any, dividends or distributions shall be declared and paid or made.
Section 7.2 CHECKS, ETC. All checks or demands for money and notes or
other instruments evidencing indebtedness or obligations of the Corporation
shall be signed by such officer or officers or other person or persons as may
from time to time be designated by the Board of Directors.
Section 7.3 SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
Section 7.4 FISCAL YEAR. The fiscal year of the Corporation shall end
on December 31 each year and each fiscal quarter of the Corporation shall end on
the last day of every third month of each calendar year.
Section 7.5 GENERAL AND SPECIAL BANK ACCOUNTS. The Board may authorize
from time to time the opening and keeping of general and special bank accounts
with such banks, trust companies or other depositories as the Board may
designate or as may be designated by any officer or officers of the Corporation
to whom such power of designation may be delegated by the Board from time to
time. The Board may make such special rules and regulations with respect to such
bank accounts, not inconsistent with the provisions of these By-Laws, as it may
deem expedient.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS
Section 8.1 INDEMNIFICATION BY CORPORATION. To the extent permitted by
law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment) the Corporation shall indemnify
any person against any and all judgments, fines, amounts paid in settling or
otherwise disposing of threatened, pending or completed actions, suits or
proceedings, whether by reason of the fact that he, his testator or intestate
representative, is or was a director or officer of (or a plan fiduciary or plan
administrator of any employee benefit plan sponsored by) the Corporation or of
(or by) any other corporation of any type or kind, domestic or foreign, which he
served in any capacity at the request of the Corporation. Expenses so incurred
by any such person in defending or investigating a threatened or pending civil
or criminal action or proceeding shall at his request be paid by the Corporation
in advance of the final disposition of such action or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation as authorized by
<PAGE>
this Article VIII. The foregoing right of indemnification shall in no way be
exclusive of any other rights or indemnification to which any such person may be
entitled, under any By-law, agreement, vote of shareholders or disinterested
directors or otherwise, and shall inure to the benefit of the heirs, executors
and administrators of such person.
ARTICLE IX
ADOPTION AND AMENDMENTS
Section 9.1 POWER TO AMEND. These By-Laws may be amended or repealed
and any new By-Laws may be adopted by the Board of Directors; provided that
these By-Laws and any other By-Laws amended or adopted by the Board of Directors
may be amended, may be reinstated, and new By-Laws may be adopted, by the
stockholders of the Corporation entitled to vote at the time for the election of
directors.
AMENDED JUNE 16, 1998
Exhibit 4.e
EXECUTION COPY
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
AMENDMENT, dated as of August 24, 1998 (this "AMENDMENT"), to
the REGISTRATION RIGHTS AGREEMENT, dated as of March 29, 1998 (the "REGISTRATION
RIGHTS AGREEMENT"), by and among SUNBEAM CORPORATION, a Delaware corporation
("LASER" or "SUNBEAM"), and COLEMAN (PARENT) HOLDINGS INC., a Delaware
corporation ("PARENT HOLDINGS"). Capitalized terms used in this Amendment have
the meanings ascribed to them in the Registration Rights Agreement unless
otherwise defined herein. References to Articles and Sections shall, unless
otherwise stated, be to the Articles and Sections of the Registration Rights
Agreement. In all respects not inconsistent with the terms and provisions of
this Amendment, the Registration Rights Agreement shall continue to be in full
force and effect in accordance with the terms and conditions thereof, and is
hereby ratified, adopted, approved and confirmed. From and after the date
hereof, each reference to the Registration Rights Agreement therein or in any
other instrument or document shall be deemed a reference to the Registration
Rights Agreement as amended hereby, unless the context otherwise requires, and
this Amendment and the Registration Rights Agreement shall for all purposes and
matters be considered as one agreement, including that all of the ministerial
and miscellaneous provisions of the Registration Rights Agreement shall apply
equally thereto as so amended and to this Amendment.
WHEREAS, pursuant to the Holdings Merger Agreement, by and
among Sunbeam, a subsidiary of Sunbeam, CLN HOLDINGS INC., a Delaware
corporation and wholly owned subsidiary of Parent Holdings ("HOLDINGS"), and
Parent Holdings, the Holdings Merger was consummated on March 30, 1998 and
Holdings became an indirect wholly owned subsidiary of Sunbeam; and
WHEREAS, following consummation of the Holdings Merger, the
shares of Holdings Common Stock issued and outstanding immediately prior to the
effective time of the Holdings Merger were converted into an aggregate of (A)
14,099,749 fully paid and nonassessable shares of common stock, par value $.01
per share, of Sunbeam ("LASER COMMON STOCK") and (B) $159,956,756 in cash,
without interest thereon; and
WHEREAS, following the dismissal by Sunbeam of certain of its
executive officers in mid-June 1998, Sunbeam retained certain senior officers
employed by Affiliates of Parent Holdings as executive officers of Sunbeam; and
WHEREAS, Sunbeam and Parent Holdings have entered into a
Settlement Agreement (the "SETTLEMENT AGREEMENT") pursuant to which Sunbeam will
issue to Parent Holdings certain warrants to purchase shares of Laser Common
Stock (the "WARRANTS") and has agreed to enter into this Agreement; and
WHEREAS, in order to induce Parent Holdings to enter into the
Settlement Agreement, Sunbeam has agreed to amend the Registration Rights
Agreement and modify the registration rights with respect to the shares of Laser
Common Stock issued to Parent Hold-
<PAGE>
ings in the Holdings Merger and to provide for registration rights with respect
to the Warrants and Laser Common Stock issuable upon exercise of the Warrants.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 is amended with respect to certain of the
definitions therein as follows:
The definition of the term "AGREEMENT" is amended and restated
in its entirety to mean the Registration Rights Agreement as amended by this
Amendment.
The definition of the term "REGISTRABLE SECURITIES" is amended
and restated in its entirety to mean (i) the Holdings Merger Stock, (ii) the
Warrants, and (iii) any shares of Laser Common Stock issued pursuant to the
Warrants, and, in each case, any other securities issued or issuable upon or in
respect of such securities by way of conversion, exchange, dividend, split or
combination, recapitalization, merger, consolidation, other reorganization or
otherwise. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when such securities have been sold or
otherwise transferred by Parent Holdings pursuant to the Shelf Registration
Statement or pursuant to Rule 144 under the Securities Act.
The following defined term shall be added to the list of
definitions in their respective alphabetically ordered positions:
The term "HOLDINGS MERGER STOCK" shall mean the shares of
Laser Common Stock issued to Parent Holdings in the Holdings Merger.
The term "WARRANTS" shall mean the warrants to purchase
23,000,000 (Twenty-Three Million) shares of Laser Common Stock issued to Parent
Holdings pursuant to Warrant No. W-1 dated August 24, 1998.
-2-
<PAGE>
ARTICLE II
REQUIRED REGISTRATION
Sections 2.1, 2.2 and 2.3 of Article II are amended and
restated to read in their entirety as follows:
Section 2.1 REQUIRED REGISTRATION.
(a) FORM S-3. Promptly following a demand to such effect from
any holder of Registrable Securities, Laser shall prepare and file with the SEC
a registration statement (the "SHELF REGISTRATION STATEMENT") on an appropriate
form permitting registration of the Registrable Securities so as to permit the
resale of the Registrable Securities pursuant to an offering on a delayed or
continuous basis under the Securities Act and shall use reasonable best efforts
to (i) cause the Shelf Registration Statement to be declared effective by the
SEC as promptly as practicable thereafter and (ii) permit the Shelf Registration
Statement to be used by Affiliates of Camper for resales of shares of Laser
Common Stock held by such Affiliates ; PROVIDED, HOWEVER, that any such
Affiliate using the Shelf Registration Statement shall agree in writing to be
bound by all of the restrictions, limitations and obligations of Parent Holdings
contained in this Agreement.
(b) EFFECTIVENESS. Laser shall use reasonable best efforts to
keep the Shelf Registration Statement continuously effective under the
Securities Act until the date that is the earliest to occur of (i) the date by
which all Registrable Securities have been sold and (ii) the date by which all
Registrable Securities are eligible for immediate sale to the public without
registration under Rule 144 under the Securities Act, with such sale not being
limited by the volume restrictions thereunder or otherwise.
(c) AMENDMENTS/SUPPLEMENTS. Laser shall amend and supplement
the Shelf Registration Statement and the prospectus contained therein if
required by the rules, regulations or instructions applicable to the
registration form used by Laser for such Shelf Registration Statement, if
required by the Securities Act.
(d) OFFERINGS. At any time from and after the date on which
the Shelf Registration Statement is declared effective by the SEC (the
"EFFECTIVE DATE"), Parent Holdings, subject to the restrictions and conditions
contained herein and in the Merger Agreement and the Warrants to the extent
applicable, and subject further to compliance with all applicable state and
federal securities laws, shall have the right to dispose of all or any portion
of the Registrable Securities.
Section 2.2 HOLDBACK AGREEMENT.
From and after the Effective Date, upon the request of Laser,
Parent Holdings shall not effect any public sale or distribution (including
sales pursuant to Rule 144) of Registrable Securities that are equity securities
of Laser, or any securities convertible into or ex-
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<PAGE>
changeable or exercisable for such securities, including the Warrants, (other
than any such sale or distribution of such securities pursuant to registration
of such securities on Form S-8 or any successor form) during the period
commencing on the date on which Laser commences a Laser Offering through the
sixty (60)-day period immediately following the closing date of such Laser
Offering; PROVIDED, HOWEVER, that Parent Holdings shall not be obligated to
comply with this Section 2.2 on more than two (2) occasions in any twelve
(12)-month period; and PROVIDED, FURTHER, that notwithstanding anything to the
contrary in this Section 2.2 or Section 2.3, in no event shall Parent Holdings
be disabled from effecting offers or sales of Registrable Securities for more
than one-hundred-and-twenty (120) days during any twelve (12)-month period.
Section 2.3 BLACKOUT PROVISIONS.
In the event that, at any time while the Shelf Registration
Statement remains effective, Laser determines in its reasonable judgment and in
good faith that the sale of Registrable Securities would require disclosure of
material information which Laser has a bona fide business purpose for preserving
as confidential, Parent Holdings shall, upon receiving written notice from Laser
of such good faith determination, suspend sales of the Registrable Securities
for a period beginning on the date of receipt of such notice and expiring on the
earlier of (i) the date upon which such material information is disclosed to the
public or ceases to be material or (ii) forty-five (45) days after the receipt
of such notice from Laser; PROVIDED, HOWEVER, that Parent Holdings shall not be
obligated to comply with this Section 2.3 on more than two (2) occasions in any
twelve (12) month period; and PROVIDED, FURTHER, that notwithstanding anything
to the contrary in this Section 2.3 or Section 2.2, in no event shall Parent
Holdings be disabled from effecting offers or sales of Registrable Securities
for more than one-hundred-and-twenty (120) days during any twelve (12)-month
period.
* * *
Section 2.4(a) of Article II is hereby amended by deleting the
word "and" from the end of paragraph (12) thereof, replacing the period at the
end of paragraph (13) thereof with "; and" and adding the following additional
paragraph:
(14) will enter into customary agreements (including an
underwriting agreement in customary form) and take such actions as are
reasonably required in order to expedite or facilitate the sale of such
Registrable Securities, including, without limitation, cooperation, and causing
its officers, employees and advisors to cooperate, with the sellers of such
Registrable Securities and the underwriter(s), if any, including participation
in meetings and road shows held in connection with such sale.
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<PAGE>
ARTICLE III
TRANSFERS OF REGISTRABLE SECURITIES
Sections 3.1 and 3.2 of Article III are amended and restated
to read in their entirety as follows:
Section 3.1 TRANSFERABILITY OF REGISTRABLE SECURITIES.
(a) Parent Holdings may not Transfer the Registrable
Securities, other than
(1) pursuant to Rule 144;
(2) pursuant to the Shelf Registration
Statement; or
(3) in any other Transfer exempt from
registration under the Securities Act, and as to which Laser
has received an opinion of counsel, reasonably satisfactory to
Laser, that such Transfer is so exempt;
and shall in no event Transfer any Registrable Securities in violation of the
Settlement Agreement.
Section 3.2 RESTRICTIVE LEGENDS.
Parent Holdings hereby acknowledges and agrees that, during
the term of this Agreement, all of the Registrable Securities shall include the
legend set forth in Section 7.2 of the Holdings Merger Agreement, the legend set
forth on the Warrants or as provided in the Warrants or as may otherwise be
reasonably appropriate to reflect the fact that such Registrable Securities have
not been issued in transactions registered under the Securities Act, unless at
the time such Registrable Securities have been registered under the Securities
Act.
ARTICLE IV
MISCELLANEOUS
Sections 4.5 and 4.11 of Article IV are amended and restated
in their entirety to read as follows:
Section 4.5 BINDING EFFECT; ASSIGNMENT.
This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, executors, successors and permitted assigns, but, except as expressly
contemplated herein, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned, directly or indirectly, by Laser or
Parent Holdings without the prior written consent of the other (except in the
case of
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<PAGE>
any assignment in whole or in part by Parent Holdings to any Affiliate,
as to which no such consent shall be required); PROVIDED, that in connection
with a bona fide pledge of any Registrable Securities to secure indebtedness or
other obligations, Parent Holdings may assign its rights, interests and
obligations hereunder to the beneficiary of such pledge in whole or in part.
Upon any permitted assignment (other than in connection with any such bona fide
pledge), this Agreement shall be amended to substitute or add the assignee as a
party hereto in a writing reasonably acceptable to the other party.
Section 4.11 Termination; Restrictive Legend.
This Agreement shall terminate only following such time as
Sunbeam shall have no further obligation under Section 2.1(b) to use its
reasonable best efforts to keep the Shelf Registration Statement effective;
PROVIDED, HOWEVER, that the provisions of Section 2.6 hereof shall survive
termination of this Agreement. It is understood and agreed that any restrictive
legends set forth on any Registrable Securities shall be removed by delivery of
substitute certificates without such legends and such Registrable Securities
shall no longer be subject to the terms of this Agreement or upon the resale of
such Registrable Securities in accordance with the terms of this Agreement.
ARTICLE V
OTHER
The following provisions shall also apply to this Amendment:
Section 5.1 EFFECTIVENESS OF THIS AMENDMENT. The provisions of
this Amendment shall be effective as of the date hereof.
Section 5.2 COUNTERPARTS. This Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 5.3 GOVERNING LAW. This Amendment shall be governed by
the laws of the State of New York, without regard to the principles of conflicts
of law thereof.
Section 5.4 NO WAIVER. The execution, delivery and
performance of this Amendment shall not operate as a waiver of any condition,
power, remedy or right exercisable in accordance with the Registration Rights
Agreement, and shall not constitute a waiver of any provision of the
Registration Rights Agreement, except as expressly provided herein.
Section 5.5 DESCRIPTIVE HEADINGS. The article and section
headings contained in this Amendment are solely for the purpose of reference,
are not part of the agreement of the parties and shall not in any way affect the
meaning or interpretation of this Amendment.
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<PAGE>
IN WITNESS WHEREOF, the undersigned hereby agree to be bound
by the terms and provisions of this Amendment as of the date first above
written.
SUNBEAM CORPORATION
By: /s/ JANET G. KELLEY
------------------------------------
Name: Janet G. Kelley
Title: Vice President and
General Counsel
COLEMAN (PARENT) HOLDINGS INC.
By: /s/ GLEN DICKAS
------------------------------------
Name: Glen Dickas
Title:
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EXHIBIT 10.f
AMENDED AND RESTATED
SUNBEAM CORPORATION
STOCK OPTION PLAN
(Amended as of May 12, 1998)
1. PURPOSE.
The purpose of the Sunbeam Corporation Stock Option 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) 16,300,000 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
<PAGE>
of the Company (the "Annual Meeting"), the number of shares of
Restricted Stock to be issued shall 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
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<PAGE>
without Cause; or (C) 90 days after the date of
termination of employment in the case of resignation,
voluntary departure or 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 (from and
after July 18, 1996) shall become exercisable with
respect to one-third of the shares subject to the
Option beginning on the first anniversary of the
Grant Date and as to an additional one-third on each
of the second and third 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,
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, 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
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retroactively, in whole or in part, by the Committee
in its sole discretion; provided, 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
4
<PAGE>
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.
(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-third of the Restricted
Stock subject to all other Restricted Stock Awards on
each of the first through the third 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, 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, 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.
5
<PAGE>
(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 of 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
contemplating such conduct, unless and until the Committee
shall have received reasonable
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<PAGE>
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 be equal to the average selling price
of a share of Stock on the exchange or national market system
on which the Stock is traded, on the date of grant of an
option to acquire Stock pursuant to the Plan, 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 corporation, in each case providing
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terms no less favorable to the holder of such Options than would an
assumption or substitution described in Treasury Regulation /Section/
1.425-1(a) that would not constitute a "modification" for purposes of
Code /Section/ 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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(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
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treatment relating to the 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
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present, former or future employee, officer or agent
of the Company or any of its subsidiaries.
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
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<PAGE>
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
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: Delray Beach, Florida; New
York, New York; Kansas City, Missouri; Jackson, Mississippi; 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
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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) 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.
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 "non-employee
directors" 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 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.
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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 Sunbeam Corporation Stock Option 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).
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).
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As amended on May 12, 1998
15
EXHIBIT 10.bb
[EXECUTION COPY]
AMENDMENT NO. 2 TO CREDIT AGREEMENT
AMENDMENT dated as of June 30, 1998 to the Credit Agreement dated as of
March 30, 1998 (as amended by Amendment No. 1 dated as of May 8, 1998, the
"CREDIT AGREEMENT") among SUNBEAM CORPORATION (the "PARENT"), the SUBSIDIARY
BORROWERS referred to therein, the LENDERS party thereto, MORGAN STANLEY SENIOR
FUNDING, INC., as Syndication Agent, BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Documentation Agent, and FIRST UNION NATIONAL BANK, as
Administrative Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto desire to amend the Credit Agreement to (i)
extend the availability period for certain commitments and modify the permitted
use of proceeds of loans under those commitments, (ii) make certain conforming
changes to the commitments schedule, (iii) increase pricing, (iv) modify the
conditions to borrowing and issuance, amendment, renewal and extension of
letters of credit, (v) add certain informational requirements and modify others,
(vi) extend the time period by which the Parent is required to enter into
hedging agreements, (vii) modify the transactions with affiliates covenant and
change of control event of default, (viii) modify the negative covenants
relating to the maximum leverage ratio, minimum interest coverage ratio and
minimum fixed charge ratio permitted during certain periods, (ix) waive until
December 31, 1998 any event of default in existence on June 30, 1998 and (x)
make certain other changes, all as more fully set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS; REFERENCES. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby. Except as herein specifically
amended, all terms and provisions of the Credit Agreement shall remain in full
force and effect and shall be performed by the parties hereto according to its
terms and provisions. This Amendment is limited as specified and shall not
constitute a modification,
<PAGE>
acceptance or waiver of any other provision of the Credit Agreement or any other
Loan Document.
SECTION 2. DELETION OF CERTAIN DEFINITIONS AND RELATED REFERENCE. The
definitions of "Applicable Leverage Ratio", "Applicable Rate" and "Performance
Period" are deleted from Section 1.01 of the Credit Agreement, and the phrase
"(except as expressly provided in the definition of 'Applicable Leverage
Ratio')" is deleted from clause (ii) of Section 10.02(b) of the Credit
Agreement.
SECTION 3. EXTENSION OF TRANCHE A AVAILABILITY PERIOD. The definition
of "Tranche A Availability Period" in Section 1.01 of the Credit Agreement is
amended to replace the date "June 30, 1998" with the date "December 31, 1998".
SECTION 4. COMMITMENTS SCHEDULE. Schedule 2.01 to the Credit Agreement
is amended to read in its entirety as set forth in Schedule 2.01 hereto.
SECTION 5. FEES. (a) The first sentence of paragraph (a) of Section
2.11 of the Credit Agreement is amended in its entirety to read as follows:
The Parent agrees to pay to the Administrative Agent for the
account of each Lender a commitment fee, which shall accrue at
the rate of .50% per annum on the daily aggregate unused
amount of the Commitments of such Lender; PROVIDED that, if
such Lender continues to have any Revolving Credit Exposure
after its Revolving Commitment terminates, then such
commitment fee shall continue to accrue on the daily amount of
such Lender's Revolving Credit Exposure from and including the
date on which its Revolving Commitment terminates to but
excluding the date on which such Lender ceases to have any
Revolving Credit Exposure.
(b) The first sentence of paragraph (b) of Section 2.11 of the Credit
Agreement is amended in its entirety to read as follows:
The Parent agrees to pay (i) to the Administrative Agent for
the account of each Lender a participation fee with respect to
its participations in Letters of Credit, which shall accrue at
the rate of 2.75% per annum on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) and (ii) to the
Issuing Bank a fronting fee, which shall
2
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accrue at the rate of 1/4% per annum on the average daily
amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements), as well as the
Issuing Bank's standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder.
SECTION 6. INTEREST. Paragraphs (a) and (b) of Section 2.12 of the
Credit Agreement are amended in their entirety to read as follows:
(a) The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the rate of 1.75% per annum.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the rate of 3.00% per annum.
SECTION 7. CONDITIONS TO EACH CREDIT EVENT. Section 4.04 of the Credit
Agreement is amended to add at the end thereof the following:
Notwithstanding the foregoing, on or prior to December 31, 1998 the
condition set forth in paragraph (b) above shall be deemed satisfied to the
extent that the representations and warranties set forth in Section 3.01,
Section 3.02, Section 3.03, Section 3.05, the first sentence of Section 3.07
(except as to any failure to comply prior to June 30, 1998; as to federal
securities laws; as to the Parent's failure to file, or any delay in filing and
causing to become effective, registration statements covering the Subordinated
Notes and the shares of Parent common stock issued pursuant to the Coleman
Acquisition Documents; as to any representations and warranties contained in the
Coleman Acquisition Documents; and as to any other matter resulting from the
Parent's inability to provide financial statements as required by law, rules or
regulations or any applicable agreements or instruments), Section 3.08, Section
3.09, Section 3.10, Section 3.12, Section 3.13, Section 3.15 and Section 3.16
(collectively, the "Applicable Representations and Warranties") are true and
correct, and the condition set forth in paragraph (c) above shall be deemed
satisfied to the extent that no Default shall have occurred and be continuing
with respect to any event specified in clause (a), (b), (c) (but only with
respect to the Applicable Representations and Warranties), (d) (other than with
respect to Article 6), (e) (but only with respect to Sections 5.01, 5.09 and
5.11), (h), (i), (j), (m), (n) or (o) of Article 7.
SECTION 8. QUARTERLY FINANCIAL STATEMENTS. Clause (b) of Section 5.01
is amended to add the following before the semi-colon at the end thereof:
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(and, for any fiscal quarter ended prior to December 31, 1998, to such
qualifications as may be appropriate in light of the review by Arthur
Andersen LLP and Deloitte & Touche LLP of the accuracy of the Parent's
financial statements for periods ending on or prior to June 30, 1998)
SECTION 9. ADDITIONAL INFORMATIONAL AND OTHER REQUIREMENTS AND
UNDERSTANDINGS. Section 5.02 of the Credit Agreement is amended to add at the
end thereof the following:
In addition, (i) unless otherwise agreed by the Required Lenders and
the Parent, senior management of the Parent (if requested by the Required
Lenders, together with representatives of its independent public accountants)
will meet with representatives of the Lenders biweekly, commencing the week of
July 6, 1998, to review the operations, business affairs and financial condition
of the Parent and its Subsidiaries; and (ii) the Parent will furnish the
following information, in form and substance satisfactory to the Agents, to the
Administrative Agent as of the following dates:
(w) within 30 days of the end of each calendar month (other
than a calendar month which is the last month of a fiscal quarter),
monthly financial statements in form and substance reasonably
satisfactory to the Agents relating to the Parent's four principal
product segments, and all other monthly financial statements prepared
by management of the Parent;
(x) on or before dates to be agreed to by the Parent and the
Administrative Agent, cash forecasts of the Parent and its
Subsidiaries, showing (A) weekly cash needs through August 15, 1998 and
September 30, 1998 and (B) monthly cash needs for each of October,
November and December, 1998;
(y) on or before a date to be agreed to by the Parent and the
Administrative Agent, projections for each month during the remainder
of the Parent's fiscal year 1998 and initial extrapolations for each
month during the Parent's fiscal year 1999, substantially in the form
previously provided in the Confidential Information Memorandum dated
June 1998, relating to the Parent's four principal product segments;
and
(z) on or before a date to be agreed to by the Parent and the
Administrative Agent, Schedules 3.01(a), 3.01(b), 3.03, 3.06 and 3.16,
updated to show the changes (if any) that would be required if such
Schedules had been prepared as of June 30, 1998.
4
<PAGE>
SECTION 10. DISCUSSION RIGHTS. The reference to "independent
accountants" in Sections 5.02 and 5.06 of the Credit Agreement shall include all
accounting firms retained by the Parent or its agents (including, without
limitation, Arthur Andersen LLP and Deloitte & Touche LLP).
SECTION 11. COMPLIANCE WITH LAWS AND CONTRACTS. Section 5.07 of the
Credit Agreement is amended to add the following paragraph (c) at the end
thereof
(c) Notwithstanding the foregoing clauses (a) and (b), the
Company's obligations under this Section with respect to the exceptions
set forth in the parentheses following the reference to Section 3.07 in
the last paragraph of Section 4.04 shall not be effective until
December 31, 1998.
SECTION 12. USE OF PROCEEDS OF TRANCHE A TERM LOANS. The second
sentence of Section 5.08 of the Credit Agreement is amended to read in its
entirety as follows:
The proceeds of the Tranche A Term Loans will be used (i) if received
prior to June 30, 1998, only to repay certain of the Refinanced
Indebtedness, and (ii) if received after June 30, 1998, only to pay
cash consideration for common stock of Coleman required in connection
with the consummation of the merger that will result in Coleman
becoming a Wholly Owned Subsidiary.
SECTION 13. APPROVED HEDGING AGREEMENTS. Section 5.10 of the Credit
Agreement is amended to change the time period set forth therein from "60 days"
to "270 days".
SECTION 14. REQUIRED PAYMENTS. Clause (b) of Section 6.06 of the Credit
Agreement is amended to insert after the words "required interest payments" the
words "and Liquidated Damages (as such term is defined in the Indenture)".
SECTION 15. TRANSACTIONS WITH AFFILIATES. Section 6.07 of the Credit
Agreement is amended to replace the word "and" with a comma at the end of clause
(b), and to add the following before the period at the end of Section 6.07:
and (d) issuances of common stock of the Parent (or options or warrants
to purchase common stock of the Parent) to Affiliates of the Parent
SECTION 16. LEVERAGE RATIO; INTEREST COVERAGE RATIO; FIXED CHARGE
COVERAGE RATIO. Each of Section 6.12, Section 6.13 and Section 6.14 of the
Credit Agreement is amended to add at the end thereof (in the case of Section
6.14, immediately before the period at the end thereof) the following proviso:
5
<PAGE>
; PROVIDED that the obligation of the Parent to comply with this
covenant at June 30, 1998 and September 30, 1998 shall not be effective
until December 31, 1998.
SECTION 17. CHANGE OF CONTROL EVENT OF DEFAULT. Clause (m) of Article 7
of the Credit Agreement is amended to read in its entirety as follows:
(m) a Change of Control shall occur (other than as a result of
the acquisition of beneficial ownership, directly or indirectly, by
MacAndrews & Forbes Holdings, Inc. or its Affiliates of shares of
capital stock of the Parent);
SECTION 18. WAIVER. The Lenders waive any Event of Default that existed
on June 30, 1998, which waiver shall expire on December 31, 1998. This Waiver
shall not constitute a waiver of any Event of Default existing on or after July
1, 1998.
SECTION 19. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 20. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 21. EFFECTIVENESS. This Amendment shall become effective on the
date (the "AMENDMENT EFFECTIVE DATE") when the Administrative Agent shall have
received (i) from each of the Parent and the Required Lenders, a counterpart
hereof signed by such party or facsimile or other written confirmation (in form
satisfactory to the Administrative Agent) that such party has signed a
counterpart hereof, (ii) all certificates, notes and instruments required to be
delivered to it as collateral pursuant to the Loan Documents on or prior to the
date hereof, and (iii) certificates representing all shares of common stock of
The Coleman Company, Inc. currently owned by the Parent and its Subsidiaries.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
SUNBEAM CORPORATION
By /s/ PETER A. LANGERMAN
---------------------------------
Name: Peter A. Langerman
Title: Chairman of the Board
MORGAN STANLEY SENIOR
FUNDING, INC.,
individually and as Syndication
Agent
By /s/ MICHAEL R. HART
---------------------------------
Name: Michael R. Hart
Title: Principal
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
individually and as Documentation
Agent
By /s/ DEIRDRE B. DOYLE
---------------------------------
Name: Deirdre B. Doyle
Title: Vice President
FIRST UNION NATIONAL BANK,
individually and as
Administrative Agent
By /s/ THOMAS M. MOLITOR
---------------------------------
Name: Thomas M. Molitor
Title: Vice President
7
<PAGE>
SCHEDULE 2.01
<TABLE>
<CAPTION>
COMMITMENTS
REVOLVING TRANCHE A TERM TRANCHE B TERM
LENDER COMMITMENT COMMITMENT COMMITMENT
<S> <C> <C> <C>
Morgan Stanley Senior Funding, Inc. $160,000,000 $320,000,000 $200,000,000
Bank of America National Trust and $120,000,000 $240,000,000 $150,000,000
Savings Association
First Union National Bank $120,000,000 $240,000,000 $150,000,000
Total $400,000,000 $800,000,000 $500,000,000
</TABLE>
8
Exhibit 10.cc
[EXECUTION COPY]
AMENDMENT NO. 3 TO CREDIT AGREEMENT
AMENDMENT dated as of October 19, 1998 to the Credit Agreement dated as
of March 30, 1998 (as amended by Amendment No. 1 dated as of May 8, 1998 and
Amendment No. 2 dated as of June 30, 1998, the "Credit Agreement") among SUNBEAM
CORPORATION (the "Parent"), the SUBSIDIARY BORROWERS referred to therein, the
LENDERS party thereto, MORGAN STANLEY SENIOR FUNDING, INC., as Syndication
Agent, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation
Agent, and FIRST UNION NATIONAL BANK, as Administrative Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto desire to amend the Credit Agreement to (i)
provide that the Existing Forrest County Letter of Credit (as hereinafter
defined) and the Existing BANTSA Letter of Credit be deemed to have been issued
pursuant to the Credit Agreement, (ii) decrease the fees applicable to Trade
Letters of Credit (as hereinafter defined), (iii) increase the rate of interest
applicable to ABR Borrowings and Eurodollar Borrowings, (iv) add certain
informational requirements and modify others and (v) extend the period for
certain waivers and agreements from December 31, 1998 to April 10, 1999, all as
more fully set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby. Except as herein specifically
amended, all terms and provisions of the Credit Agreement shall remain in full
force and effect and shall be performed by the parties hereto according to its
terms and provisions. This Amendment is limited as specified and shall not
constitute a modification or waiver of any other provision of the Credit
Agreement or any other Loan Document.
SECTION 2. Existing Forrest County Letter of Credit. A definition of
"Existing Forrest County Letter of Credit" is added in alphabetical order to
Section 1.01 of the Credit Agreement to read as follows:
1
<PAGE>
""Existing Forrest County Letter of Credit"" means Letter of
Credit No. S547031 issued by First Union National Bank for the benefit of
Forrest County, Mississippi in the maximum stated amount of $6,346,527.78 having
an expiry date of no later than March 31, 1999, unless extended in accordance
with the provisions thereof."
SECTION 3. LC Exposure. The definition of "LC Exposure" in Section 1.01
of the Credit Agreement is amended by deleting clause (a) thereof and replacing
it with the following:
"(a) the aggregate undrawn amount of all outstanding Letters of Credit,
Trade Letters of Credit, the Existing BANTSA Letter of Credit, the Existing
CoreStates Letters of Credit and the Existing Forrest County Letter of Credit at
such time plus"
SECTION 4. Operating Unit. A definition of "Operating Unit" is added in
alphabetical order to Section 1.01 of the Credit Agreement to read as follows:
""Operating Unit" means each of (i) the domestic operations of
Coleman, (ii) the domestic operations of First Alert, (iii) the domestic
operations of the Parent and all its Subsidiaries other than those included in
clauses (i) and (ii) above and (iv) all international operations of the Parent
and its Subsidiaries."
SECTION 5. Strategic Business Unit. A definition of "Strategic Business
Unit" is added in alphabetical order to Section 1.01 of the Credit Agreement to
read as follows:
""Strategic Business Unit" means each of the separate business
units listed on Schedule A hereto which represent the principal product segments
or groups of the Parent."
SECTION 6. Extension of Tranche A Availability Period. The definition
of "Tranche A Availability Period" in Section 1.01 of the Credit Agreement is
amended to replace the date "December 31, 1998" with the date "April 10, 1999."
SECTION 7. Trade Letters of Credit. (a) A definition of "Trade Letter
of Credit" is added in alphabetical order to Section 1.01 of the Credit
Agreement to read as follows:
""Trade Letter of Credit" means a Letter of Credit issued to
support the purchase or sale of goods in the ordinary course of business."
(b) The last sentence of paragraph (b) of Section 2.04 of the Credit
Agreement is amended by replacing "and" after "200,000,000" with a comma, and
adding after "(ii)" the following:
2
<PAGE>
"LC Exposure relating to Trade Letters of Credit shall not
exceed $75,000,000 and (iii)"
SECTION 8. Letters of Credit. The following new paragraphs (l) and (m)
are added to the end of Section 2.04 of the Credit Agreement:
"(l) Existing Forrest County Letter of Credit. The parties
hereto agree that, as of the date hereof, the Existing Forrest County Letter of
Credit shall be deemed to have been issued pursuant to this Agreement and all
provisions hereof shall apply thereto as if such Existing Forrest County Letter
of Credit were issued hereunder on such date.
(m) Existing BANTSA Letter of Credit. The parties hereto agree
that, as of the date hereof, the Existing BANTSA Letter of Credit shall be
deemed to have been issued pursuant to this Agreement and all provisions hereof
shall apply thereto as if such BANTSA Letter of Credit were issued hereunder on
such date."
SECTION 9. Fees. The first sentence of paragraph (b) of Section 2.11 of
the Credit Agreement is amended to replace "at the rate of 2.75% per annum" with
"(A) in the case of Trade Letters of Credit, at the rate of 1% annum and (B) in
the case of all other Letters of Credit, at the Applicable Eurodollar Margin as
it may change from time to time less 1/4% per annum".
SECTION 10. Interest. Paragraphs (a) and (b) of Section 2.12 of the
Credit Agreement are amended in their entirety to read as follows:
"(a) The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable ABR Margin per annum.
The "Applicable ABR Margin" means for each day through December 31, 1998, 1.75%;
for each day during the month of January, 1999, 2.00%; for each day during the
month of February, 1999, 2.25%; for each day during the month of March, 1999,
2.50%; and for each day thereafter, 2.75%; provided that on each date when the
Parent shall fail to deliver any of the information required by the next to last
paragraph of Section 5.02, the Applicable ABR Margin shall automatically and
permanently, increase by an additional .25%. Notwithstanding the foregoing, in
no event shall the Applicable ABR Margin be greater than 2.75%.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Eurodollar Margin per annum, as it may change from
time to time. The "Applicable Eurodollar Margin" means for each day through
December 31, 1998, 3.00%; for each day during the month of January, 1999, 3.25%;
for each day during the month of February, 1999, 3.50%; for each day during the
month of March, 1999, 3.75%; and for each day thereafter, 4.00%; provided that
on each date when the Parent shall fail to deliver any of the information
required by the
3
<PAGE>
next to last paragraph of Section 5.02, the Applicable Eurodollar Margin shall
automatically and permanently, increase by an additional .25%. Notwithstanding
the foregoing, in no event shall the Applicable Eurodollar Margin be greater
than 4.00%."
SECTION 11. Conditions to Each Credit Event. The last sentence of
Section 4.04 of the Credit Agreement is amended to replace "December 31, 1998"
with "April 10, 1999".
SECTION 12. Additional Informational and Other Requirements and
Understandings. The last paragraph of Section 5.02 of the Credit Agreement
beginning with "In addition" is deleted in its entirety and replaced with the
following paragraphs:
"In addition, the Parent will furnish the following information, in
form and substance reasonably satisfactory to the Agents, to the Administrative
Agent as of the following dates:
(A) within 30 days of the end of each month beginning with the
month of November, 1998, monthly income statements for each Operating
Unit; provided that, as soon as available, the Parent shall instead
furnish such information for each Strategic Business Unit;
(B) on or before November 13, 1998, income statement
projections for each Operating Unit for each month, beginning with the
month of October, 1998, during the remainder of the Parent's fiscal
year 1998; provided that, as soon as available, the Parent shall
instead furnish such information for each Strategic Business Unit;
(C) on or before the 15th day and the last Business Day of
each month, commencing October 30, 1998, cash forecasts of each
Operating Unit, showing weekly cash needs for the succeeding 12 weeks
from the date of preparation; provided that, as soon as available, the
Parent shall instead furnish such information for each Strategic
Business Unit;
(D) as soon as available, but in no event later than December
15, 1998, (1) final income statements of each Strategic Business Unit
for the Parent's fiscal year 1997 and (2) final income statement
projections of each Strategic Business Unit for the Parent's fiscal
year 1998;
(E) on or before December 15, 1998, preliminary income
statement projections for the Parent's fiscal years 1999, 2000 and
2001, (1) for each Strategic Business Unit and (2) on a consolidated
and consolidating basis for the Parent;
4
<PAGE>
(F) on or before January 6, 1999, projections for the Parent's
fiscal year 1999 of (1) balance sheets and related cash flows of each
Operating Unit; provided that, as soon as available, the Parent shall
instead furnish such information for each Strategic Business Unit and
(2) consolidated and consolidating balance sheets and related cash
flows of the Parent;
(G) on or before January 15, 1999, final income statement
projections, on a monthly basis, for the Parent's fiscal year 1999, (1)
for each Operating Unit; provided that, as soon as available, the
Parent shall instead furnish such information for each Strategic
Business Unit and (2) on a consolidated and a consolidating basis for
the Parent;
(H) on or before January 15, 1999, final income statement
projections, on a monthly basis, for the Parent's fiscal year 1998, (1)
for each Operating Unit; provided that, as soon as available, the
Parent shall instead furnish such information for each Strategic
Business Unit and (2) on a consolidated and a consolidating basis for
the Parent;
(I) on or before February 1, 1999, final projections of the
balance sheet and related income statement and cash flows, for the
Parent's fiscal year 1999 (1) for each Operating Unit; provided that,
as soon as available, the Parent shall instead furnish such information
for each Strategic Business Unit and (2) on a consolidated and
consolidating basis for the Parent;
(J) on or before February 8, 1998, final projections of the
balance sheet and related income statement and cash flows, for the
Parent's fiscal years 2000 and 2001 (1) for each Operating Unit;
provided that, as soon as available, the Parent shall instead furnish
such information for each Strategic Business Unit and (2) on a
consolidated and a consolidating basis for the Parent; and
(K) on or before February 28, 1999, drafts of (1) the Parent's
final consolidated balance sheet and related income statement,
stockholders' equity and cash flows as of the end of and for the
Parent's fiscal year 1998, setting forth in each case in comparative
form the figures for the previous year and (2) each Operating Unit's
balance sheet and related income statement and cash flows as of the end
of the Parent's fiscal year 1998, setting forth in each case in
comparative form the figures for such year; provided that, as soon as
available, the Parent shall instead furnish such information for each
Strategic Business Unit.
5
<PAGE>
In addition, as requested by the Required Lenders, senior management of
the Parent (if requested by the Required Lenders, together with representatives
of its independent public accountants) shall continue to meet with
representatives of the Lenders, to review the operations, business affairs and
financial condition of the Parent and each Operating Unit; provided that as soon
as possible, such reviews shall be with respect to the Parent and each Strategic
Business Unit."
SECTION 13. Compliance with Laws and Contracts. Paragraph (c) of
Section 5.07 of the Credit Agreement is amended to replace "December 31, 1998"
with "April 10, 1999."
SECTION 14. Approved Hedging Agreements. Section 5.10 of the Credit
Agreement is amended to change the time period set forth therein from "270 days"
to "375 days."
SECTION 15. Indebtedness. (a) Paragraph (b) of Section 6.01 of the
Credit Agreement is amended by deleting clauses (ii) and (iii) in their entirety
and "(iv)" and replacing them with "(ii)";
(b) Schedule 6.01 to the Credit Agreement is amended to delete
therefrom all references to the Existing BANTSA Letter of Credit and the
Existing CoreStates Letters of Credit.
SECTION 16. Leverage Ratio; Interest Coverage Ratio; Fixed Charge
Coverage Ratio. The proviso at the end of each of Section 6.12, Section 6.13 and
Section 6.14 of the Credit Agreement is amended to read in its entirety as
follows:
"; provided that the obligation of the Parent to comply with
this covenant at June 30, 1998, September 30, 1998 and December 31, 1998 shall
not be effective until April 10, 1999."
SECTION 17. Consolidated EBITDA. Section 6.15 of the Credit Agreement
is hereby amended by adding a new clause (c) at the end thereof:
"(c) During each of the months of February, March and April,
1999, Consolidated EBITDA will not be less than 80% of the Consolidated EBITDA
set forth in the final income statement plan for such month delivered pursuant
to Section 5.02(G)."
SECTION 18. Waiver. The Lenders waive any Event of Default that existed
on June 30, 1998, which waiver shall expire on April 10, 1999. This Waiver shall
not constitute a waiver of any Event of Default existing on or after July 1,
1998.
SECTION 19. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
6
<PAGE>
SECTION 20. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 21. Effectiveness. This Amendment shall become effective on the
date (the "Amendment Effective Date") when the Administrative Agent shall have
received from each of the Parent and the Required Lenders a counterpart hereof
signed by such party or facsimile or other written confirmation (in form
satisfactory to the Administrative Agent) that such party has signed a
counterpart hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
SUNBEAM CORPORATION
By /s/ BOBBY JENKINS
---------------------------------------------
Name: Bobby Jenkins
Title: Executive Vice President and
Chief Financial Officer
MORGAN STANLEY SENIOR FUNDING, INC.,
individually and as Syndication Agent
By /s/ R. BRAM SMITH
---------------------------------------------
Name: R. Bram Smith
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION,
individually and as Documentation Agent
By /s/ H.G. WHEELOCK
---------------------------------------------
Name: H.G. Wheelock
Title: VP
FIRST UNION NATIONAL BANK,
individually and as Administrative Agent
By /s/ T.M. MOLITOR
---------------------------------------------
Name: T.M. Molitor
Title: SVP
7
<PAGE>
SCHEDULE A
First Alert
Health Division
Coleman
Powermate
Eastpak
Europe
Japan
Latin America
Asia/Pacific
Outdoor Cooking
Appliances
Personal Care & Comfort
Canada
Retail Stores
Surplus (special markets)
Licensing
EXHIBIT 10.dd
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 12, 1998, between Sunbeam
Corporation, a Delaware corporation (the "Company") and Jerry Levin (the
"Executive").
The Company wishes to employ the Executive, and the Executive wishes to
accept such employment, on the terms and conditions set forth in this Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
1. EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1. EMPLOYMENT, DUTIES. The Company hereby employs the Executive for
the Term (as defined in Section 2.1), to render services to the Company as Chief
Executive Officer or in such other executive position as may be mutually agreed
upon by the Company and the Executive, and to perform such other duties
consistent with such position as may be assigned to the Executive by the Board
of Directors of the Company (the "Board"); provided that this Agreement shall
not prevent the Executive from continuing to perform services for members of the
group of companies, consisting of MacAndrews & Forbes Holdings, Inc., a Delaware
corporation ("Holdings"), together with each direct or indirect parent,
subsidiary, division, or affiliated corporation or entity of Holdings, and to
continue services as a director on the boards on which he currently serves, to
the extent that the provision of any such services does not materially interfere
with the performance of services by the Executive for the Company under this
Agreement.
1.2. ACCEPTANCE. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, and subject to the proviso in Section 1.1, to devote substantially all
of the Executive's business time, energy and skill to such employment, and to
use the Executive's best efforts, skill and ability to promote the Company's
interests. The Executive further agrees to accept election, and to serve during
all or any part of the Term, as an officer or director of the Company and of any
subsidiary or affiliate of the Company, without any compensation therefor other
than that specified in this Agreement, if elected to any such position by the
shareholders or by the Board of Directors of the Company or of any subsidiary or
affiliate, as the case may be. The Executive hereby represents and warrants that
the Executive is not subject to any other agreement, including without
limitation any agreement not to compete or confidentiality agreement, which
would be violated by the Executive's performance of services hereunder.
1.3. LOCATION. The duties to be performed by the Executive hereunder
shall be performed primarily at the office of the Company in Palm Beach County,
Florida, subject to reasonable travel requirements on behalf of the Company.
2. TERM OF EMPLOYMENT; CERTAIN POST-TERM BENEFITS.
2.1. THE TERM. The term of the Executive's employment under this
Agreement (the "Term") shall commence on June 15, 1998 and shall end on June 14,
2001; PROVIDED, that, in the event the Settlement Agreement by and between the
Company and Coleman (Parent)
<PAGE>
Holdings, Inc., a Delaware corporation, dated as of August 12, 1998, is
terminated in accordance with its terms or otherwise, this Agreement, shall, at
the election of the Executive made during the 30-day period from and after such
termination, be void AB INITIO and of no further effect 60 days following such
election, and the Executive shall be treated as voluntarily terminating
employment under this Agreement.
2.2. SPECIAL CURTAILMENT. The Term shall end earlier than the original
termination date provided in Section 2.1, if sooner terminated pursuant to
Section 4.
3. COMPENSATION; BENEFITS.
3.1. SALARY. As compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Executive during the Term a
base salary, payable semi-monthly in arrears, at the annual rate of not less
than $1,000,000 (the "Base Salary"), less such deductions or amounts to be
withheld as required by applicable law and regulations. In the event that the
Company, in its sole discretion, from time to time determines to increase the
Base Salary, such increased amount shall, from and after the effective date of
the increase, constitute "Base Salary" for purposes of this Agreement.
3.2. ANNUAL BONUS. In addition to the amounts to be paid to the
Executive pursuant to Section 3.1, the Executive will be eligible to receive a
performance-based bonus with respect to each year of the Term commencing in
1999, based upon a target bonus opportunity of 100% of Base Salary, payable
within 90 days following the end of the Company's fiscal year. Performance goals
for such bonuses shall be determined by the Compensation Committee of the Board
of Directors. Upon expiration of the Term without renewal, the Executive shall
be eligible to receive a pro rata performance-based bonus for the final bonus
period commencing during the Term based upon performance through June 30, 2001,
and payable within 90 days following such expiration of the Term.
3.3. GUARANTEED BONUS. For 1998, the Executive shall receive a
guaranteed bonus equal to $541,667 (the "1998 Bonus"), payable on or before
January 15, 1999.
3.4. BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the Executive
during the Term in the performance of the Executive's services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as the Company customarily may require of its officers
PROVIDED, HOWEVER, that the maximum amount available for such expenses during
any period may be fixed in advance by the Chairman or Vice Chairman of the Board
of Directors or the Board of Directors.
3.5. VACATION. During the Term, the Executive shall be entitled to a
vacation period or periods of four weeks taken in accordance with the vacation
policy of the Company during each year of the Term. Vacation time not used by
the end of a year shall be forfeited.
3.6. FRINGE BENEFITS. During the Term, the Executive shall be entitled
to all benefits for which the Executive shall be eligible under any qualified
pension plan, 401(k) plan, group insurance or other so-called "fringe" benefit
plan which the Company provides to its
-2-
<PAGE>
employees generally, together with executive medical benefits for the Executive,
the Executive's spouse and the Executive's children as from time to time in
effect for officers of the Company generally. The Executive shall be entitled to
participate in the Company's relocation program in connection with entering into
this Agreement. The Executive shall be entitled to participate in the Company's
relocation program in connection with entering into this Agreement.
3.7. STOCK OPTIONS. The Company shall grant to the Executive on the
date hereof, subject to the receipt of shareholder approval to the extent
required under (1) Section 162(m) of the Internal Revenue Code of 1986, as
amended, (2) the terms of the Amended and Restated Sunbeam Corporation Stock
Option Plan (the "Option Plan"), if the grant is to be made under such plan, or
(3) the shareholder approval policy of the New York Stock Exchange, which
shareholder approval shall be requested by the Company when it next solicits
proxies from its shareholders, non-qualified stock options (the "Options") with
a scheduled 10-year term to purchase shares of the common stock of the Company,
par value $.01 per share (the "Common Stock"). The Options shall be granted in
an amount and at the exercise prices as set forth on Appendix I to this
Agreement. The Options shall vest and become exercisable in full on June 14,
2001 (if the Executive remains employed pursuant to this Agreement as of such
date) or, to the extent the Option is outstanding, upon a "Change in Control" of
the Company. The Options shall be subject to earlier vesting or forfeiture as
set forth in Section 4. The Options shall be subject to all other terms and
conditions as set forth in an Option Agreement between the Company and the
Executive. For purposes of this Agreement, unless otherwise provided herein,
Change in Control shall have the meaning set forth in the Option Plan as in
effect as of the date of this Agreement.
3.8. ADDITIONAL BENEFITS. During the Term, the Executive shall be
entitled to such additional benefits generally provided to other senior
executives of the Company, and to the other benefits specified in Appendix I to
this Agreement.
4. TERMINATION.
4.1. DEATH. If the Executive shall die during the Term, the Term shall
terminate and no further amounts or benefits shall be payable hereunder, except
that the Executive's legal representatives shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the longer of 12 months or the end of the Term
(as in effect immediately prior to the Executive's death). The Options shall
become vested and exercisable as of the Executive's death during the Term
(provided, that, to the extent shareholder approval continues to be required
under Section 3.7, such accelerated vesting and exercisability shall occur upon
such approval), and shall remain exercisable for three years following the later
of such death during the Term or the receipt of any required shareholder
approval with respect to such Options, by the beneficiary designated by the
Executive on a form prescribed for such purpose by the Company, or in the
absence of such designation by the Executive's legal representative.
4.2. DISABILITY. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (i) a
period of six consecutive months or (ii) for shorter periods aggregating six
months during any twelve month period, the Company may at any time
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after the last day of the six consecutive months of disability or the day on
which the shorter periods of disability shall have equalled an aggregate of six
months, by written notice to the Executive (but before the Executive has
recovered from such disability), terminate the Term and no further amounts or
benefits shall be payable hereunder, except that the Executive shall be entitled
to receive continued payments in an amount equal to 60% of the Base Salary, in
the manner specified in Section 3.1, until the longer of 12 months or the end of
the Term (as in effect immediately prior to such termination). Upon the
Executive's termination for disability, the Options shall, subject to the
receipt of any required shareholder approval under Section 3.7, continue to vest
and become exercisable pursuant to their original vesting schedule, and shall
remain exercisable for three years following vesting. If the Executive shall die
before receiving all payments to be made by the Company in accordance with this
Section 4.2, such payments shall be made to the beneficiary designated by the
Executive on a form prescribed for such purpose by the Company, or in the
absence of such designation to the Executive's legal representative.
4.3. CAUSE/VOLUNTARY TERMINATION. In the event of gross neglect by the
Executive of the Executive's duties hereunder, conviction of the Executive of
any felony, conviction of the Executive of any lesser crime or offense involving
the property of the Company or any of its subsidiaries or affiliates, willful
misconduct by the Executive in connection with the performance of any material
portion of the Executive's duties hereunder, a willful breach by the Executive
of Sections 5, 6 or 7 or any other material provision of this Agreement or any
other conduct on the part of the Executive which would make the Executive's
continued employment by the Company materially prejudicial to the best interests
of the Company, the Company may at any time by written notice to the Executive
terminate the Term and, upon such termination, this Agreement shall terminate
and the Executive shall be entitled to receive no further amounts or benefits
hereunder, except any as shall have been earned to the date of such termination
and owed to the Executive. In the event the Executive voluntarily terminates
employment (other than pursuant to Section 4.4 as a result of a breach of this
Agreement by the Company), this Agreement shall terminate and the Executive
shall be entitled to receive no further amounts or benefits hereunder, except
any as shall have been earned by and owned to the Executive as of the date of
such termination. Upon a termination of the Executive's employment under this
Section 4.3, all unvested Options shall be immediately forfeited.
4.4. COMPANY BREACH. In the event of (a) the breach of any material
provision of this Agreement by the Company (including without limitation the
failure to obtain shareholder approval of the stock option grant described under
Section 3.7, to the extent such approval is required under such Section 3.7, at
or prior to the Company's first annual meeting of shareholders following the
date of this Agreement) or (b) a Change in Control of the Company (provided,
that, for purposes of the definition of "Change in Control" under this
provision, "Person" shall not include any entity that as of the date of this
Agreement owns more than 10% of the outstanding shares of the Common Stock), the
Executive shall be entitled to terminate the Term upon 60 days' prior written
notice to the Company. Upon such termination, or in the event the Company
terminates the Term or this Agreement other than pursuant to the provisions of
Sections 4.2 or 4.3, the Company shall continue to provide the Executive (i)
payments of Base Salary, in the manner and amount specified in Section 3.1, (ii)
at the time such bonus payments would have otherwise been paid, the sum of (A)
in the event of the Executive's termination prior
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to payment of the 1998 Bonus, the 1998 Bonus and (B) an amount equal to the
Executive's target bonus opportunity percentage as in effect as of the date of
termination, multiplied by the Executive's Base Salary as of the date of
termination, payable with respect to each remaining bonus period which would
otherwise have ended during the Term (the "Full Bonus Periods"), and payable on
a pro rata basis for the final bonus period which would have otherwise commenced
during the scheduled Term following the last Full Bonus Period (based upon the
portion of such bonus period which would have been completed as of the end of
the scheduled Term), and (iii) medical, dental, life and long-term disability
insurance benefits in the manner and amounts specified in Sections 3.6 (provided
that the Executive shall continue to bear the cost of such benefits required to
be paid by employees) or, for a period of twelve months after the last day of
the month in which termination described in this Section 4.4 occurred, whichever
is longer (the "Damage Period"); PROVIDED, HOWEVER, that if the Executive
becomes reemployed with another employer and is eligible to receive medical or
other welfare benefits under another employee-provided plan, the medical and
other welfare benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility. In addition,
upon such termination of employment, each of the Options shall immediately vest
and become exercisable in full (provided, that, to the extent shareholder
approval continues to be required under Section 3.7, such accelerated vesting
and exercisability shall occur upon receipt of such approval). Such Options
shall remain exercisable for three years following the later of the Executive's
termination of employment or the receipt of any required shareholder approval
with respect to such Options. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced (except as provided in this Section 4.4)
whether or not the Executive obtains other employment.
4.5. LITIGATION EXPENSES. Except as provided for in Section 5.7, if the
Company and the Executive become involved in any action, suit or proceeding
relating to the alleged breach of this Agreement by the Company or the
Executive, and if a judgment in such action, suit or proceeding is rendered in
favor of the Executive with respect to a material portion of such action, suit
or proceeding, the Company shall reimburse the Executive for all expenses
(including reasonable attorneys' fees) reasonably incurred by the Executive in
connection with such action, suit or proceeding.
5. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION.
5.1. In view of the fact that the Executive's work for the Company will
bring the Executive into close contact with many confidential affairs of the
Company not readily available to the public, and plans for future developments,
the Executive agrees:
5.1.1. To keep and retain in the strictest confidence all confidential
matters of the Company, including, without limitation, "know how", trade
secrets, customer lists, pricing policies, operational methods, technical
processes, formulae, inventions and research projects, other business affairs of
the Company, and any information whatsoever concerning any director, officer,
employee or agent of the Company or their respective family members learned by
the Executive heretofore or hereafter, and not to disclose them to anyone
outside of the Company, either during or after the Executive's employment with
the Company, except in the course of performing the Executive's duties hereunder
or with the Company's express written consent.
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The foregoing prohibitions shall include, without limitation, directly or
indirectly publishing (or causing, participating in, assisting or providing any
statement, opinion or information in connection with the publication of) any
diary, memoir, letter, story, photograph, interview, article, essay, account or
description (whether fictionalized or not) concerning any of the foregoing,
publication being deemed to include any presentation or reproduction of any
written, verbal or visual material in any communication medium, including any
book, magazine, newspaper, theatrical production or movie, or television or
radio programming or commercial; and
5.1.2. To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof) relating to the Company's business
and all property associated therewith, which the Executive may then possess or
have under the Executive's control.
5.2. During the Term, the Executive shall not, directly or indirectly,
on his own behalf or behalf of any other person or entity, enter the employ of,
or render any services to, any person, firm or corporation engaged in any
business competitive with the business of the Company or of any of its
subsidiaries or affiliates; the Executive shall not engage in such business on
the Executive's own account; and the Executive shall not become interested in
any such business, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee, trustee, consultant,
or in any other relationship or capacity PROVIDED, HOWEVER, that nothing
contained in this Section 5.2 shall be deemed to prohibit the Executive from
acquiring, solely as an investment, up to five percent (5%) of the outstanding
shares of capital stock of any public corporation.
5.3. If the Executive willfully commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the
Company shall have the right to terminate the Executive's employment (with the
consequences set forth in Section 4.3 above), and the following additional
rights and remedies:
5.3.1. The right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company; and
5.3.2. The right and remedy to require the Executive to account for and
pay over to the Company all compensation, profits, monies, accruals, increments
or other benefits (collectively "Benefits") derived or received by the Executive
as the result of any transactions constituting a breach of any of the provisions
of Sections 5.1 or 5.2, and the Executive hereby agrees to account for and pay
over such Benefits to the Company.
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
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5.4. If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, hereafter are construed to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.
5.5. If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, are held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, said provision shall then be
enforceable.
5.6. The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of any
state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other states within the geographical scope of such covenants as to breaches of
such covenants in such other respective jurisdictions, the above covenants as
they relate to each state being for this purpose severable into diverse and
independent covenants.
5.7. In the event that any action, suit or other proceeding in law or
in equity is brought to enforce the covenants contained in Sections 5.1 and 5.2
or to obtain money damages for the breach thereof, and such action results in
the award of a judgment for money damages or in the granting of any injunction
in favor of the Company, all expenses (including reasonable attorneys' fees) of
the Company in such action, suit or other proceeding shall (on demand of the
Company) be paid by the Executive. In the event the Company fails to obtain a
judgment for money damages or an injunction in favor of the Company, all
expenses (including reasonable attorneys' fees) of the Executive in such action,
suit or other proceeding shall (on demand of the Executive) be paid by the
Company.
6. INVENTIONS AND PATENTS.
6.1. The Executive agrees that all processes, technologies and
inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive's work with the Company
or any of its subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of its subsidiaries
or affiliates or are conceived or made on the Company's time or with the use of
the Company's facilities or materials. The Executive shall further: (a) promptly
disclose such Inventions to the Company; (b) assign to the Company, without
additional compensation, all patent and other rights to such Inventions for the
United States and foreign countries; (c) sign all papers necessary to carry out
the foregoing; and (d) give testimony in support of the Executive's
inventorship.
6.2. If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Executive within two
years after the termination of the
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Executive's employment by the Company, it is to be presumed that the Invention
was conceived or made during the Term.
6.3. The Executive agrees that the Executive will not assert any rights
to any Invention as having been made or acquired by the Executive prior to the
date of this Agreement, except for Inventions, if any, disclosed to the Company
in writing prior to the date hereof.
7. INTELLECTUAL PROPERTY.
The Company shall be the sole owner of all the products and proceeds of
the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term, free
and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
8. INDEMNIFICATION.
The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred or
sustained by the Executive in connection with any action, suit or proceeding to
which the Executive may be made a party by reason of the Executive being an
officer, director or employee of the Company or of any subsidiary or affiliate
of the Company.
9. NOTICES.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
If to the Company, to:
Sunbeam Corporation
1615 South Congress Avenue
Suite 200
Delray Beach, Florida 33445
Attention: General Counsel
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If to the Executive, to him at his residential address as currently on
file with the Company.
10. GENERAL.
10.1. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely in Delaware.
10.2. The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
10.3. This Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so
set forth.
10.4. This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii) to
third parties in connection with any sale, transfer or other disposition of all
or substantially all of its business or assets; in any event the obligations of
the Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of its business
or assets.
10.5. This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any time
or times to require performance of any provision hereof shall in no manner
affect the right at a later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
11. SUBSIDIARIES AND AFFILIATES.
11.1. As used herein, the term "subsidiary" shall mean any corporation
or other business entity controlled directly or indirectly by the corporation or
other business entity in question, and the term "affiliate" shall mean and
include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the corporation or other
business entity in question.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SUNBEAM CORPORATION
By: /s/ PETER A. LANGERMAN
-------------------------------------
/s/ [ILLEGIBLE]
-------------------------------------
Senior VP
/s/ JERRY LEVIN
-------------------------------------
Jerry Levin
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APPENDIX I
STOCK OPTIONS.
The Executive's Options shall be granted for the following number of
shares of Common Stock, at the following exercise prices per share: (i)
1,750,000 shares at a $7.00 per share exercise price, (ii) 500,000 shares at a
$14.00 per share exercise price and (iii) 500,000 shares at a $10.50 per share
exercise price.
EMPLOYEE BENEFITS.
1. AUTOMOBILE. The Company shall afford the Executive the right to use
an automobile on a continuing basis. The Company shall pay, upon presentation of
an expense statement, all reasonable expenses associated with the operation of
such automobile, including, without limitation, all reasonable maintenance and
insurance expenses. The automobile furnished by the Company shall be a late
model top-of-the-line vehicle to be reasonably selected by the Executive. Upon
the expiration of the Term, the Executive promptly shall return the automobile
to the Company.
2. CLUB MEMBERSHIP. The Company shall reimburse the Executive, upon
presentation of an expense statement, for all reasonable initiation fees and
periodic dues for membership in a club of the Executive's choice.
EXHIBIT 10.ee
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 12, 1998, between Sunbeam
Corporation, a Delaware corporation (the "Company") and Paul Shapiro (the
"Executive").
The Company wishes to employ the Executive, and the Executive wishes to
accept such employment, on the terms and conditions set forth in this Agreement.
Accordingly, the Company and the Executive hereby agree as
follows:
1. EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1. EMPLOYMENT, DUTIES. The Company hereby employs the Executive for
the Term (as defined in Section 2.1), to render services to the Company as
Executive Vice President and Chief Administrative Officer or in such other
executive position as may be mutually agreed upon by the Company and the
Executive, and to perform such other duties consistent with such position as may
be assigned to the Executive by the Board of Directors of the Company (the
"Board"); provided that this Agreement shall not prevent the Executive from
continuing to perform services for members of the group of companies, consisting
of MacAndrews & Forbes Holdings, Inc., a Delaware corporation ("Holdings"),
together with each direct or indirect parent, subsidiary, division, or
affiliated corporation or entity of Holdings, and to continue services as a
director on the boards on which he currently serves, to the extent that the
provision of any such services does not materially interfere with the
performance of services by the Executive for the Company under this Agreement.
1.2. ACCEPTANCE. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, and subject to the proviso in Section 1.1, to devote substantially all
of the Executive's business time, energy and skill to such employment, and to
use the Executive's best efforts, skill and ability to promote the Company's
interests. The Executive further agrees to accept election, and to serve during
all or any part of the Term, as an officer or director of the Company and of any
subsidiary or affiliate of the Company, without any compensation therefor other
than that specified in this Agreement, if elected to any such position by the
shareholders or by the Board of Directors of the Company or of any subsidiary or
affiliate, as the case may be. The Executive hereby represents and warrants that
the Executive is not subject to any other agreement, including without
limitation any agreement not to compete or confidentiality agreement, which
would be violated by the Executive's performance of services hereunder.
1.3. LOCATION. The duties to be performed by the Executive hereunder
shall be performed primarily at the office of the Company in Palm Beach County,
Florida, subject to reasonable travel requirements on behalf of the Company.
2. TERM OF EMPLOYMENT; CERTAIN POST-TERM BENEFITS.
2.1. THE TERM. The term of the Executive's employment under this
Agreement (the "Term") shall commence on June 15, 1998 and shall end on June 14,
2001; PROVIDED, that, in the event the Settlement Agreement by and between the
Company and Coleman (Parent)
<PAGE>
Holdings, Inc., a Delaware corporation, dated as of August 12, 1998 is
terminated in accordance with its terms or otherwise, this Agreement shall, at
the election of the Executive made during the 30-day period from and after such
termination, be void AB INITIO and of no further effect 60 days following such
election, and the Executive shall be treated as voluntarily terminating
employment under this Agreement.
2.2. SPECIAL CURTAILMENT. The Term shall end earlier than the original
termination date provided in Section 2.1, if sooner terminated pursuant to
Section 4.
3. COMPENSATION; BENEFITS.
3.1. SALARY. As compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Executive during the Term a
base salary, payable semi-monthly in arrears, at the annual rate of not less
than $600,000 (the "Base Salary"), less such deductions or amounts to be
withheld as required by applicable law and regulations. In the event that the
Company, in its sole discretion, from time to time determines to increase the
Base Salary, such increased amount shall, from and after the effective date of
the increase, constitute "Base Salary" for purposes of this Agreement.
3.2. ANNUAL BONUS. In addition to the amounts to be paid to the
Executive pursuant to Section 3.1, the Executive will be eligible to receive a
performance-based bonus with respect to each year of the Term commencing in
1999, based upon a target bonus opportunity of 75% of Base Salary, payable
within 90 days following the end of the Company's fiscal year. Performance goals
for such bonuses shall be determined by the Compensation Committee of the Board
of Directors. Upon expiration of the Term without renewal, the Executive shall
be eligible to receive a pro rata performance-based bonus for the final bonus
period commencing during the Term based upon performance through June 30, 2001,
and payable within 90 days following such expiration of the Term.
3.3. GUARANTEED BONUS. For 1998, the Executive shall receive a
guaranteed bonus equal to $243,750 (the "1998 Bonus"), payable on or before
January 15, 1999.
3.4. BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the Executive
during the Term in the performance of the Executive's services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as the Company customarily may require of its officers
PROVIDED, HOWEVER, that the maximum amount available for such expenses during
any period may be fixed in advance by the Chairman or Vice Chairman of the Board
of Directors or the Board of Directors.
3.5. VACATION. During the Term, the Executive shall be entitled to a
vacation period or periods of four weeks taken in accordance with the vacation
policy of the Company during each year of the Term. Vacation time not used by
the end of a year shall be forfeited.
3.6. FRINGE BENEFITS. During the Term, the Executive shall be entitled
to all benefits for which the Executive shall be eligible under any qualified
pension plan, 401(k) plan, group insurance or other so-called "fringe" benefit
plan which the Company provides to its
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employees generally, together with executive medical benefits for the Executive,
the Executive's spouse and the Executive's children as from time to time in
effect for officers of the Company generally. The Executive shall be entitled to
participate in the Company's relocation program in connection with entering into
this Agreement.
3.7. STOCK OPTIONS. The Company shall grant to the Executive on the
date hereof, subject to the receipt of shareholder approval to the extent
required under (1) Section 162(m) of the Internal Revenue Code of 1986, as
amended, (2) the terms of the Amended and Restated Sunbeam Corporation Stock
Option Plan (the "Option Plan"), if the grant is to be made under such plan, or
(3) the shareholder approval policy of the New York Stock Exchange, which
shareholder approval shall be requested by the Company when it next solicits
proxies from its shareholders, non-qualified stock options (the "Options") with
a scheduled 10-year term to purchase shares of the common stock of the Company,
par value $.01 per share (the "Common Stock"). The Options shall be granted in
an amount and at the exercise price as set forth on Appendix I to this
Agreement. The Options shall vest and become exercisable in full on June 14,
2001 (if the Executive remains employed pursuant to this Agreement as of such
date) or, to the extent the Option is outstanding, upon a "Change in Control" of
the Company. The Options shall be subject to earlier vesting or forfeiture as
set forth in Section 4. The Options shall be subject to all other terms and
conditions as set forth in an Option Agreement between the Company and the
Executive. For purposes of this Agreement, unless otherwise provided herein,
Change in Control shall have the meaning set forth in the Option Plan as in
effect as of the date of this Agreement.
3.8. ADDITIONAL BENEFITS. During the Term, the Executive shall be
entitled to such additional benefits generally provided to other senior
executives of the Company, and to the other benefits specified in Appendix I to
this Agreement.
4. TERMINATION.
4.1. DEATH. If the Executive shall die during the Term, the Term shall
terminate and no further amounts or benefits shall be payable hereunder, except
that the Executive's legal representatives shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the longer of 12 months or the end of the Term
(as in effect immediately prior to the Executive's death). The Options shall
become vested and exercisable as of the Executive's death during the Term
(provided, that, to the extent shareholder approval continues to be required
under Section 3.7, such accelerated vesting and exercisability shall occur upon
such approval), and shall remain exercisable for three years following the later
of such death during the Term or the receipt of any required shareholder
approval with respect to such Options, by the beneficiary designated by the
Executive on a form prescribed for such purpose by the Company, or in the
absence of such designation by the Executive's legal representative.
4.2. DISABILITY. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (i) a
period of six consecutive months or (ii) for shorter periods aggregating six
months during any twelve month period, the Company may at any time after the
last day of the six consecutive months of disability or the day on which the
shorter
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periods of disability shall have equalled an aggregate of six months, by
written notice to the Executive (but before the Executive has recovered from
such disability), terminate the Term and no further amounts or benefits shall be
payable hereunder, except that the Executive shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the longer of 12 months or the end of the Term
(as in effect immediately prior to such termination). Upon the Executive's
termination for disability, the Options shall, subject to the receipt of any
required shareholder approval under Section 3.7, continue to vest and become
exercisable pursuant to their original vesting schedule, and shall remain
exercisable for three years following vesting. If the Executive shall die before
receiving all payments to be made by the Company in accordance with this Section
4.2, such payments shall be made to the beneficiary designated by the Executive
on a form prescribed for such purpose by the Company, or in the absence of such
designation to the Executive's legal representative.
4.3. CAUSE/VOLUNTARY TERMINATION. In the event of gross neglect by the
Executive of the Executive's duties hereunder, conviction of the Executive of
any felony, conviction of the Executive of any lesser crime or offense involving
the property of the Company or any of its subsidiaries or affiliates, willful
misconduct by the Executive in connection with the performance of any material
portion of the Executive's duties hereunder, a willful breach by the Executive
of Sections 5, 6 or 7 or any other material provision of this Agreement or any
other conduct on the part of the Executive which would make the Executive's
continued employment by the Company materially prejudicial to the best interests
of the Company, the Company may at any time by written notice to the Executive
terminate the Term and, upon such termination, this Agreement shall terminate
and the Executive shall be entitled to receive no further amounts or benefits
hereunder, except any as shall have been earned to the date of such termination
and owed to the Executive. In the event the Executive voluntarily terminates
employment (other than pursuant to Section 4.4 as a result of a breach of this
Agreement by the Company), this Agreement shall terminate and the Executive
shall be entitled to receive no further amounts or benefits hereunder, except
any as shall have been earned by and owned to the Executive as of the date of
such termination. Upon a termination of the Executive's employment under this
Section 4.3, all unvested Options shall be immediately forfeited.
4.4. COMPANY BREACH. In the event of (a) the breach of any material
provision of this Agreement by the Company (including without limitation the
failure to obtain shareholder approval of the stock option grant described under
Section 3.7, to the extent such approval is required under such Section 3.7, at
or prior to the Company's first annual meeting of shareholders following the
date of this Agreement) or (b) a Change in Control of the Company (provided,
that, for purposes of the definition of "Change in Control" under this
provision, "Person" shall not include any entity that as of the date of this
Agreement owns more than 10% of the outstanding shares of the Common Stock), the
Executive shall be entitled to terminate the Term upon 60 days' prior written
notice to the Company. Upon such termination, or in the event the Company
terminates the Term or this Agreement other than pursuant to the provisions of
Sections 4.2 or 4.3, the Company shall continue to provide the Executive (i)
payments of Base Salary, in the manner and amount specified in Section 3.1, (ii)
at the time such bonus payments would have otherwise been paid, the sum of (A)
in the event of the Executive's termination prior to payment of the 1998 Bonus,
the 1998 Bonus and (B) an amount equal to the Executive's target
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bonus opportunity percentage as in effect as of the date of termination,
multiplied by the Executive's Base Salary as of the date of termination, payable
with respect to each remaining bonus period which would have otherwise ended
during the Term (the "Full Bonus Periods"), and payable on a pro rata basis for
the final bonus period which would have otherwise commenced during the scheduled
Term following the last Full Bonus Period (based upon the portion of such bonus
period which would have been completed as of the end of the scheduled Term), and
(iii) medical, dental, life and long-term disability insurance benefits in the
manner and amounts specified in Sections 3.6 (provided that the Executive shall
continue to bear the cost of such benefits required to be paid by employees) or,
for a period of twelve months after the last day of the month in which
termination described in this Section 4.4 occurred, whichever is longer (the
"Damage Period"); PROVIDED, HOWEVER, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or other welfare
benefits under another employee-provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided under such other
plan during such applicable period of eligibility. In addition, upon such
termination of employment, each of the Options shall immediately vest and become
exercisable in full (provided, that, to the extent shareholder approval
continues to be required under Section 3.7, such accelerated vesting and
exercisability shall occur upon receipt of such approval). Such Options shall
remain exercisable for three years following the later of the Executive's
termination of employment or the receipt of any required shareholder approval
with respect to such Options. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced (except as provided in this Section 4.4)
whether or not the Executive obtains other employment.
4.5. LITIGATION EXPENSES. Except as provided for in Section 5.7, if the
Company and the Executive become involved in any action, suit or proceeding
relating to the alleged breach of this Agreement by the Company or the
Executive, and if a judgment in such action, suit or proceeding is rendered in
favor of the Executive with respect to a material portion of such action, suit
or proceeding, the Company shall reimburse the Executive for all expenses
(including reasonable attorneys' fees) reasonably incurred by the Executive in
connection with such action, suit or proceeding.
5. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION.
5.1. In view of the fact that the Executive's work for the Company will
bring the Executive into close contact with many confidential affairs of the
Company not readily available to the public, and plans for future developments,
the Executive agrees:
5.1.1. To keep and retain in the strictest confidence all confidential
matters of the Company, including, without limitation, "know how", trade
secrets, customer lists, pricing policies, operational methods, technical
processes, formulae, inventions and research projects, other business affairs of
the Company, and any information whatsoever concerning any director, officer,
employee or agent of the Company or their respective family members learned by
the Executive heretofore or hereafter, and not to disclose them to anyone
outside of the Company, either during or after the Executive's employment with
the Company, except in the course of performing the Executive's duties hereunder
or with the Company's express written consent. The foregoing prohibitions shall
include, without limitation, directly or indirectly publishing (or
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causing, participating in, assisting or providing any statement, opinion or
information in connection with the publication of) any diary, memoir, letter,
story, photograph, interview, article, essay, account or description (whether
fictionalized or not) concerning any of the foregoing, publication being deemed
to include any presentation or reproduction of any written, verbal or visual
material in any communication medium, including any book, magazine, newspaper,
theatrical production or movie, or television or radio programming or
commercial; and
5.1.2. To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof) relating to the Company's business
and all property associated therewith, which the Executive may then possess or
have under the Executive's control.
5.2. During the Term, the Executive shall not, directly or indirectly,
on his own behalf or behalf of any other person or entity, enter the employ of,
or render any services to, any person, firm or corporation engaged in any
business competitive with the business of the Company or of any of its
subsidiaries or affiliates; the Executive shall not engage in such business on
the Executive's own account; and the Executive shall not become interested in
any such business, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee, trustee, consultant,
or in any other relationship or capacity PROVIDED, HOWEVER, that nothing
contained in this Section 5.2 shall be deemed to prohibit the Executive from
acquiring, solely as an investment, up to five percent (5%) of the outstanding
shares of capital stock of any public corporation.
5.3. If the Executive willfully commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the
Company shall have the right to terminate the Executive's employment (with the
consequences set forth in Section 4.3 above), and the following additional
rights and remedies:
5.3.1. The right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company; and
5.3.2. The right and remedy to require the Executive to account for and
pay over to the Company all compensation, profits, monies, accruals, increments
or other benefits (collectively "Benefits") derived or received by the Executive
as the result of any transactions constituting a breach of any of the provisions
of Sections 5.1 or 5.2, and the Executive hereby agrees to account for and pay
over such Benefits to the Company.
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
5.4. If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, hereafter are construed to be invalid or unenforceable, the same
shall not affect the
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remainder of the covenant or covenants, which shall be given full
effect, without regard to the invalid portions.
5.5. If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, are held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, said provision shall then be
enforceable.
5.6. The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of any
state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other states within the geographical scope of such covenants as to breaches of
such covenants in such other respective jurisdictions, the above covenants as
they relate to each state being for this purpose severable into diverse and
independent covenants.
5.7. In the event that any action, suit or other proceeding in law or
in equity is brought to enforce the covenants contained in Sections 5.1 and 5.2
or to obtain money damages for the breach thereof, and such action results in
the award of a judgment for money damages or in the granting of any injunction
in favor of the Company, all expenses (including reasonable attorneys' fees) of
the Company in such action, suit or other proceeding shall (on demand of the
Company) be paid by the Executive. In the event the Company fails to obtain a
judgment for money damages or an injunction in favor of the Company, all
expenses (including reasonable attorneys' fees) of the Executive in such action,
suit or other proceeding shall (on demand of the Executive) be paid by the
Company.
6. INVENTIONS AND PATENTS.
6.1. The Executive agrees that all processes, technologies and
inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive's work with the Company
or any of its subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of its subsidiaries
or affiliates or are conceived or made on the Company's time or with the use of
the Company's facilities or materials. The Executive shall further: (a) promptly
disclose such Inventions to the Company; (b) assign to the Company, without
additional compensation, all patent and other rights to such Inventions for the
United States and foreign countries; (c) sign all papers necessary to carry out
the foregoing; and (d) give testimony in support of the Executive's
inventorship.
6.2. If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Executive within two
years after the termination of the Executive's employment by the Company, it is
to be presumed that the Invention was conceived or made during the Term.
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6.3. The Executive agrees that the Executive will not assert any rights
to any Invention as having been made or acquired by the Executive prior to the
date of this Agreement, except for Inventions, if any, disclosed to the Company
in writing prior to the date hereof.
7. INTELLECTUAL PROPERTY.
The Company shall be the sole owner of all the products and proceeds of
the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term, free
and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
8. INDEMNIFICATION.
The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred or
sustained by the Executive in connection with any action, suit or proceeding to
which the Executive may be made a party by reason of the Executive being an
officer, director or employee of the Company or of any subsidiary or affiliate
of the Company.
9. NOTICES.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
If to the Company, to:
Sunbeam Corporation
1615 South Congress Avenue
Suite 200
Delray Beach, Florida 33445
Attention: General Counsel
If to the Executive, to him at:
2199 N.W. 30th Road
Boca Raton, Florida 33431
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10. GENERAL.
10.1. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely in Delaware.
10.2. The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
10.3. This Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so
set forth.
10.4. This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii) to
third parties in connection with any sale, transfer or other disposition of all
or substantially all of its business or assets; in any event the obligations of
the Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of its business
or assets.
10.5. This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any time
or times to require performance of any provision hereof shall in no manner
affect the right at a later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
11. SUBSIDIARIES AND AFFILIATES.
11.1. As used herein, the term "subsidiary" shall mean any corporation
or other business entity controlled directly or indirectly by the corporation or
other business entity in question, and the term "affiliate" shall mean and
include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the corporation or other
business entity in question.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SUNBEAM CORPORATION
By: /s/ RON DUNBAR
-------------------------------------
Sr VP
/s/ PETER A. LANGERMAN
-------------------------------------
/s/ PAUL SHAPIRO
-------------------------------------
Paul Shapiro
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APPENDIX I
STOCK OPTIONS.
The Executive's Options shall be granted for 600,000 shares of Common
Stock, at an exercise price of $7.00 per share.
EMPLOYEE BENEFITS.
1. AUTOMOBILE. The Company shall afford the Executive the right to use
an automobile on a continuing basis. The Company shall pay, upon presentation of
an expense statement, all reasonable expenses associated with the operation of
such automobile, including, without limitation, all reasonable maintenance and
insurance expenses. The automobile furnished by the Company shall be a late
model top-of-the-line vehicle to be reasonably selected by the Executive. Upon
the expiration of the Term, the Executive promptly shall return the automobile
to the Company.
2. CLUB MEMBERSHIP. The Company shall reimburse the Executive,
upon presentation of an expense statement, for all reasonable initiation fees
and periodic dues for membership in a club of the Executive's choice.
EXHIBIT 10.ff
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 12, 1998, between
Sunbeam Corporation, a Delaware corporation (the "Company") and Bobby Jenkins
(the "Executive").
The Company wishes to employ the Executive, and the Executive wishes to
accept such employment, on the terms and conditions set forth in this Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
1. EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1. EMPLOYMENT, DUTIES. The Company hereby employs the Executive for
the Term (as defined in Section 2.1), to render exclusive and full-time services
to the Company as Executive Vice President and Chief Financial Officer or in
such other executive position as may be mutually agreed upon by the Company and
the Executive, and to perform such other duties consistent with such position as
may be assigned to the Executive by the Board of Directors of the Company (the
"Board").
1.2. ACCEPTANCE. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, to devote the Executive's entire business time, energy and skill to
such employment, and to use the Executive's best efforts, skill and ability to
promote the Company's interests. The Executive further agrees to accept
election, and to serve during all or any part of the Term, as an officer or
director of the Company and of any subsidiary or affiliate of the Company,
without any compensation therefor other than that specified in this Agreement,
if elected to any such position by the shareholders or by the Board of Directors
of the Company or of any subsidiary or affiliate, as the case may be. The
Executive hereby represents and warrants that the Executive is not subject to
any other agreement, including without limitation any agreement not to compete
or confidentiality agreement, which would be violated by the Executive's
performance of services hereunder.
1.3. LOCATION. The duties to be performed by the Executive hereunder
shall be performed primarily at the office of the Company in Palm Beach County,
Florida, subject to reasonable travel requirements on behalf of the Company.
2. TERM OF EMPLOYMENT; CERTAIN POST-TERM BENEFITS.
2.1. THE TERM. The term of the Executive's employment under this
Agreement (the "Term") shall commence on June 15, 1998 and shall end on June 14,
2001; PROVIDED, that, in the event the Settlement Agreement by and between the
Company and Coleman (Parent) Holdings, Inc., a Delaware corporation, dated as of
August 12, 1998, is terminated in accordance with its terms or otherwise, this
Agreement shall, at the election of the Executive made during the 30-day period
from and after such termination, be void AB INITIO and of no further effect 60
days following such election, and the Executive shall be treated as voluntarily
terminating employment under this Agreement.
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2.2. SPECIAL CURTAILMENT. The Term shall end earlier than the original
termination date provided in Section 2.1, if sooner terminated pursuant to
Section 4.
3. COMPENSATION; BENEFITS.
3.1. SALARY. As compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Executive during the Term a
base salary, payable semi-monthly in arrears, at the annual rate of not less
than $365,000 (the "Base Salary"), less such deductions or amounts to be
withheld as required by applicable law and regulations. In the event that the
Company, in its sole discretion, from time to time determines to increase the
Base Salary, such increased amount shall, from and after the effective date of
the increase, constitute "Base Salary" for purposes of this Agreement.
3.2. ANNUAL BONUS. In addition to the amounts to be paid to the
Executive pursuant to Section 3.1, the Executive will be eligible to receive a
performance-based bonus with respect to each year of the Term commencing in
1999, based upon a target bonus opportunity of 60% of Base Salary, payable
within 90 days following the end of the Company's fiscal year. Performance goals
for such bonuses shall be determined by the Compensation Committee of the Board
of Directors. Upon expiration of the Term without renewal, the Executive shall
be eligible to receive a pro rata performance-based bonus for the final bonus
period commencing during the Term based upon performance through June 30, 2001,
and payable within 90 days following such expiration of the Term.
3.3. GUARANTEED BONUS. For 1998, the Executive shall receive a
guaranteed bonus equal to $118,625 (the "1998 Bonus"), payable on or before
January 15, 1999.
3.4. BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the Executive
during the Term in the performance of the Executive's services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as the Company customarily may require of its officers
PROVIDED, HOWEVER, that the maximum amount available for such expenses during
any period may be fixed in advance by the Chairman or Vice Chairman of the Board
of Directors or the Board of Directors.
3.5. VACATION. During the Term, the Executive shall be entitled to a
vacation period or periods of four weeks taken in accordance with the vacation
policy of the Company during each year of the Term. Vacation time not used by
the end of a year shall be forfeited.
3.6. FRINGE BENEFITS. During the Term, the Executive shall be entitled
to all benefits for which the Executive shall be eligible under any qualified
pension plan, 401(k) plan, group insurance or other so-called "fringe" benefit
plan which the Company provides to its employees generally, together with
executive medical benefits for the Executive, the Executive's spouse and the
Executive's children as from time to time in effect for officers of the Company
generally. The Executive shall be entitled to participate in the Company's
relocation program in connection with entering into this Agreement.
3.7. STOCK OPTIONS. The Company shall grant to the Executive on the
date
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hereof, subject to the receipt of shareholder approval to the extent
required under (1) Section 162(m) of the Internal Revenue Code of 1986, as
amended, (2) the terms of the Amended and Restated Sunbeam Corporation Stock
Option Plan (the "Option Plan"), if the grant is to be made under such plan, or
(3) the shareholder approval policy of the New York Stock Exchange, which
shareholder approval shall be requested by the Company when it next solicits
proxies from its shareholders, non-qualified stock options (the "Options") with
a scheduled 10-year term to purchase shares of the common stock of the Company,
par value $.01 per share (the "Common Stock"). The Options shall be granted in
an amount and at the exercise price as set forth on Appendix I to this
Agreement. The Options shall vest and become exercisable in full on June 14,
2001 (if the Executive remains employed pursuant to this Agreement as of such
date) or, to the extent the Option is outstanding, upon a "Change in Control" of
the Company. The Options shall be subject to earlier vesting or forfeiture as
set forth in Section 4. The Options shall be subject to all other terms and
conditions as set forth in an Option Agreement between the Company and the
Executive. For purposes of this Agreement, unless otherwise provided herein,
Change in Control shall have the meaning set forth in the Option Plan as in
effect as of the date of this Agreement.
3.8. ADDITIONAL BENEFITS. During the Term, the Executive shall be
entitled to such additional benefits generally provided to other senior
executives of the Company.
4. TERMINATION.
4.1. DEATH. If the Executive shall die during the Term, the Term shall
terminate and no further amounts or benefits shall be payable hereunder, except
that the Executive's legal representatives shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the longer of 12 months or the end of the Term
(as in effect immediately prior to the Executive's death). The Options shall
become vested and exercisable as of the Executive's death during the Term
(provided, that, to the extent shareholder approval continues to be required
under Section 3.7, such accelerated vesting and exercisability shall occur upon
such approval), and shall remain exercisable for three years following the later
of such death during the Term or the receipt of any required shareholder
approval with respect to such Options, by the beneficiary designated by the
Executive on a form prescribed for such purpose by the Company, or in the
absence of such designation by the Executive's legal representative.
4.2. DISABILITY. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (i) a
period of six consecutive months or (ii) for shorter periods aggregating six
months during any twelve month period, the Company may at any time after the
last day of the six consecutive months of disability or the day on which the
shorter periods of disability shall have equalled an aggregate of six months, by
written notice to the Executive (but before the Executive has recovered from
such disability), terminate the Term and no further amounts or benefits shall be
payable hereunder, except that the Executive shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the longer of 12 months or the end of the Term
(as in effect immediately prior to such termination). Upon the Executive's
termination for disability, the
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Options shall, subject to the receipt of any required shareholder approval
under Section 3.7,continue to vest and become exercisable pursuant to their
original vesting schedule, and shall remain exercisable for three years
following vesting. If the Executive shall die before receiving all payments to
be made by the Company in accordance with this Section 4.2, such payments shall
be made to the beneficiary designated by the Executive on a form prescribed for
such purpose by the Company, or in the absence of such designation to the
Executive's legal representative.
4.3. CAUSE/VOLUNTARY TERMINATION. In the event of gross neglect by the
Executive of the Executive's duties hereunder, conviction of the Executive of
any felony, conviction of the Executive of any lesser crime or offense involving
the property of the Company or any of its subsidiaries or affiliates, willful
misconduct by the Executive in connection with the performance of any material
portion of the Executive's duties hereunder, a willful breach by the Executive
of Sections 5, 6 or 7 or any other material provision of this Agreement or any
other conduct on the part of the Executive which would make the Executive's
continued employment by the Company materially prejudicial to the best interests
of the Company, the Company may at any time by written notice to the Executive
terminate the Term and, upon such termination, this Agreement shall terminate
and the Executive shall be entitled to receive no further amounts or benefits
hereunder, except any as shall have been earned to the date of such termination
and owed to the Executive. In the event the Executive voluntarily terminates
employment (other than pursuant to Section 4.4 as a result of a breach of this
Agreement by the Company), this Agreement shall terminate and the Executive
shall be entitled to receive no further amounts or benefits hereunder, except
any as shall have been earned by and owned to the Executive as of the date of
such termination. Upon a termination of the Executive's employment under this
Section 4.3, all unvested Options shall be immediately forfeited.
4.4. COMPANY BREACH. In the event of a breach of any material provision
of this Agreement by the Company (including without limitation the failure to
obtain shareholder approval of the stock option grant described under Section
3.7, to the extent such approval is required under such Section 3.7, at or prior
to the Company's first annual meeting of shareholders following the date of this
Agreement) or (b) a Change in Control of the Company (provided, that, for
purposes of the definition of "Change in Control" under this provision, "Person"
shall not include any entity that as of the date of this Agreement owns more
than 10% of the outstanding shares of the Common Stock), the Executive shall be
entitled to terminate the Term upon 60 days' prior written notice to the
Company. Upon such termination, or in the event the Company terminates the Term
or this Agreement other than pursuant to the provisions of Sections 4.2 or 4.3,
the Company shall continue to provide the Executive (i) payments of Base Salary,
in the manner and amount specified in Section 3.1, (ii) at the time such bonus
payments would have otherwise been paid, the sum of (A) in the event of the
Executive's termination prior to payment of the 1998 Bonus, the 1998 Bonus and
(B) an amount equal to the Executive's target bonus opportunity percentage as in
effect as of the date of termination, multiplied by the Executive's Base Salary
as of the date of termination, payable with respect to each remaining bonus
period which would have otherwise ended during the Term (the "Full Bonus
Periods"), and payable on a pro rata basis for the final bonus period which
would have otherwise commenced during the scheduled Term following the last Full
Bonus Period (based upon the portion of such bonus period which would have been
completed as of the end of the scheduled Term),
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and (iii) medical, dental, life and long-term disability insurance benefits in
the manner and amounts specified in Sections 3.6 (provided that the Executive
shall continue to bear the cost of such benefits required to be paid by
employees) or, for a period of twelve months after the last day of the month in
which termination described in this Section 4.4 occurred, whichever is longer
(the "Damage Period"); PROVIDED, HOWEVER, that if the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employee-provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility. In addition, upon
such termination of employment, each of the Options shall immediately vest and
become exercisable (provided, that, to the extent shareholder approval continues
to be required under Section 3.7, such accelerated vesting and exercisability
shall occur upon receipt of such approval) in an amount equal to (a) the number
of shares subject to such Option, multiplied by (b) (i) the number of full and
partial months during the Term prior to the Executive's termination of
employment, divided by (ii) thirty-six. The vested portion of the Options shall
remain exercisable for three years following the later of the Executive's
termination of employment or the receipt of any required shareholder approval
with respect to such Options, and the remaining portion of the Options shall be
forfeited upon the Executive's termination of employment. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced (except as
provided in this Section 4.4) whether or not the Executive obtains other
employment.
4.5. LITIGATION EXPENSES. Except as provided for in Section 5.7, if the
Company and the Executive become involved in any action, suit or proceeding
relating to the alleged breach of this Agreement by the Company or the
Executive, and if a judgment in such action, suit or proceeding is rendered in
favor of the Executive with respect to a material portion of such action, suit
or proceeding, the Company shall reimburse the Executive for all expenses
(including reasonable attorneys' fees) reasonably incurred by the Executive in
connection with such action, suit or proceeding.
5. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION.
5.1. In view of the fact that the Executive's work for the Company will
bring the Executive into close contact with many confidential affairs of the
Company not readily available to the public, and plans for future developments,
the Executive agrees:
5.1.1. To keep and retain in the strictest confidence all confidential
matters of the Company, including, without limitation, "know how", trade
secrets, customer lists, pricing policies, operational methods, technical
processes, formulae, inventions and research projects, other business affairs of
the Company, and any information whatsoever concerning any director, officer,
employee or agent of the Company or their respective family members learned by
the Executive heretofore or hereafter, and not to disclose them to anyone
outside of the Company, either during or after the Executive's employment with
the Company, except in the course of performing the Executive's duties hereunder
or with the Company's express written consent. The foregoing prohibitions shall
include, without limitation, directly or indirectly publishing (or causing,
participating in, assisting or providing any statement, opinion or information
in
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connection with the publication of) any diary, memoir, letter, story,
photograph, interview, article, essay, account or description (whether
fictionalized or not) concerning any of the foregoing, publication being deemed
to include any presentation or reproduction of any written, verbal or visual
material in any communication medium, including any book, magazine, newspaper,
theatrical production or movie, or television or radio programming or
commercial; and
5.1.2. To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof) relating to the Company's business
and all property associated therewith, which the Executive may then possess or
have under the Executive's control.
5.2. During the Term, the Executive shall not, directly or indirectly,
on his own behalf or behalf of any other person or entity, enter the employ of,
or render any services to, any person, firm or corporation engaged in any
business competitive with the business of the Company or of any of its
subsidiaries or affiliates; the Executive shall not engage in such business on
the Executive's own account; and the Executive shall not become interested in
any such business, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee, trustee, consultant,
or in any other relationship or capacity PROVIDED, HOWEVER, that nothing
contained in this Section 5.2 shall be deemed to prohibit the Executive from
acquiring, solely as an investment, up to five percent (5%) of the outstanding
shares of capital stock of any public corporation.
5.3. If the Executive commits a willful breach, or threatens to commit
a breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the right to terminate the Executive's employment (with the
consequences set forth in Section 4.3 above), and the following additional
rights and remedies:
5.3.1. The right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company; and
5.3.2. The right and remedy to require the Executive to account for and
pay over to the Company all compensation, profits, monies, accruals, increments
or other benefits (collectively "Benefits") derived or received by the Executive
as the result of any transactions constituting a breach of any of the provisions
of Sections 5.1 or 5.2, and the Executive hereby agrees to account for and pay
over such Benefits to the Company.
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
5.4. If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, hereafter are construed to be invalid or unenforceable, the same
shall not affect the
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remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
5.5. If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, are held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, said provision shall then be
enforceable.
5.6. The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of any
state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other states within the geographical scope of such covenants as to breaches of
such covenants in such other respective jurisdictions, the above covenants as
they relate to each state being for this purpose severable into diverse and
independent covenants.
5.7. In the event that any action, suit or other proceeding in law or
in equity is brought to enforce the covenants contained in Sections 5.1 and 5.2
or to obtain money damages for the breach thereof, and such action results in
the award of a judgment for money damages or in the granting of any injunction
in favor of the Company, all expenses (including reasonable attorneys' fees) of
the Company in such action, suit or other proceeding shall (on demand of the
Company) be paid by the Executive. In the event the Company fails to obtain a
judgment for money damages or an injunction in favor of the Company, all
expenses (including reasonable attorneys' fees) of the Executive in such action,
suit or other proceeding shall (on demand of the Executive) be paid by the
Company.
6. INVENTIONS AND PATENTS.
6.1. The Executive agrees that all processes, technologies and
inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive's work with the Company
or any of its subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of its subsidiaries
or affiliates or are conceived or made on the Company's time or with the use of
the Company's facilities or materials. The Executive shall further: (a) promptly
disclose such Inventions to the Company; (b) assign to the Company, without
additional compensation, all patent and other rights to such Inventions for the
United States and foreign countries; (c) sign all papers necessary to carry out
the foregoing; and (d) give testimony in support of the Executive's
inventorship.
6.2. If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Executive within two
years after the termination of the
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Executive's employment by the Company, it is to be presumed that the Invention
was conceived or made during the Term.
6.3. The Executive agrees that the Executive will not assert any rights
to any Invention as having been made or acquired by the Executive prior to the
date of this Agreement, except for Inventions, if any, disclosed to the Company
in writing prior to the date hereof.
7. INTELLECTUAL PROPERTY.
The Company shall be the sole owner of all the products and proceeds of
the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term, free
and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
8. INDEMNIFICATION.
The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred or
sustained by the Executive in connection with any action, suit or proceeding to
which the Executive may be made a party by reason of the Executive being an
officer, director or employee of the Company or of any subsidiary or affiliate
of the Company.
9. NOTICES.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
If to the Company, to:
Sunbeam Corporation
1615 South Congress Avenue, Suite 200
Delray Beach, Florida 33445
Attention: General Counsel
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<PAGE>
If to the Executive, to him at:
2806 North Foxpoint Circle
Wichita, Kansas 67226
10. GENERAL.
10.1. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely in Delaware.
10.2. The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
10.3. This Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so
set forth.
10.4. This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii) to
third parties in connection with any sale, transfer or other disposition of all
or substantially all of its business or assets; in any event the obligations of
the Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of its business
or assets.
10.5. This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any time
or times to require performance of any provision hereof shall in no manner
affect the right at a later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
11. SUBSIDIARIES AND AFFILIATES.
11.1. As used herein, the term "subsidiary" shall mean any corporation
or other business entity controlled directly or indirectly by the corporation or
other business entity in question, and the term "affiliate" shall mean and
include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the corporation or other
business entity in question.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
SUNBEAM CORPORATION
By: /s/ PETER A. LANGERMAN
-------------------------------------
By: /s/ [ILLEGIBLE]
-------------------------------------
Sr VP
/s/ BOBBY JENKINS
-------------------------------------
Bobby Jenkins
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APPENDIX I
STOCK OPTIONS.
The Executive's Options shall be granted for 450,000 shares of Common
Stock, at an exercise price of $7.00 per share.
EXHIBIT 10.gg
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of the 20th day of
August, 1998 (the "date hereof"), by and between SUNBEAM CORPORATION, a
Delaware corporation (the "Company"), and David C. Fannin ("Employee").
RECITALS:
A. The Company and Employee nominally are parties to a certain
Employment Agreement dated as of January 20, 1998, as amended by Amendment No.
1 dated as of March 30, 1998 (collectively the "Employment Agreement"). The
Company takes the position that such Employment Agreement may not be valid,
binding or enforceable against the Company, and Employee takes the position that
such Employment Agreement is valid, binding and fully enforceable in all
respects. The purpose of this Agreement is to resolve all matters between the
Company and Employee without any determination or admission by either party as
to whether the Employment Agreement is, or ever was, valid, binding or
enforceable, and the parties agree that no provision hereof shall be construed
in any manner as evidence of (i) the validity, binding effect or enforceability
of the Employment Agreement or (ii) the lack thereof;
B. The Company and Employee also were, or are, parties to a certain
Employment Agreement dated as of July 29, 1996 (the "1996 Agreement"), and they
also desire to terminate the 1996 Agreement as part of their Agreement
hereunder.
C. The Company and Employee desire an amicable resolution to their
association and to have good relations thereafter and have mutually agreed to
the termination of Employee's employment by the Company, upon the further terms
and conditions hereof;
NOW, THEREFORE, in consideration of the Recitals, which are
incorporated by reference herein, and the mutual promises, agreements and
undertakings set forth below, the Company and Employee, each intending to be
legally bound, agree as follows:
SECTION 1. RESIGNATION AND EFFECTIVE DATE; CONSULTING PERIOD. A.
Employee hereby resigns his employment with the Company, effective as of the
Effective Date (defined in Section 1B below), and the Employment Agreement and
the 1996 Agreement are hereby terminated, effective as of the Effective Date
(without any admission or determination as to whether or not the Employment
Agreement is, or ever was, valid, binding or enforceable), but subject to the
payments to Employee and the performance by the Company of the other obligations
of the Company hereunder which by their terms are to be made and performed at or
prior to the Effective Date. Employee also hereby resigns, effective the date
hereof, any and all elected or appointed offices or directorships (from which he
has not already resigned) held by him with the Company and/or any of its
subsidiaries or any member of the "Sunbeam Group," as defined below, including
without limitation The Coleman Company, Inc. The Company hereby agrees that
Employee's separation from the Company is a termination by mutual agreement,
without cause. The language of certain provisions of the 1996 Agreement is
incorporated by reference in this Agreement, as provided in Sections 6A, 6B and
7 hereof, as a matter of convenience only.
B. The effective date ("Effective Date") as such term is used in this
Agreement, and the date on which Employee's resignation of his employment and
the termination of the 1996 Agreement and the Employment Agreement shall be
effective, is the date following the day on which Employee's right to revoke
this Agreement as set forth in Section 5D hereof expires. Between the date
hereof and the
<PAGE>
Effective Date, Employee shall continue to receive his salary and benefits and
agrees to be available on call for consultation with the Company at all
reasonable times, but he shall no longer be required to devote his full time and
attention to the business of the Company.
SECTION 2. PAYMENTS TO EMPLOYEE. The Company shall pay the following
to Employee:
A. CASH SEVERANCE PAYMENTS. The Company shall pay to Employee cash severance
of $825,000, of which $525,000 shall be paid on the Effective Date and the
balance (without interest) in 18 equal monthly installments of $16,667 each,
beginning on the first day of October 1998 and continuing on the first day of
each month thereafter until paid in full. Such payments shall be subject to
all necessary withholding for taxes but such payments shall not otherwise be
reduced for any reason.
B. VACATION PAY. On the Effective Date, the Company shall pay to
Employee an amount in cash equal to $77,808 for unused vacation days in the
years of 1996, 1997 and 1998. Such payment shall be subject to all necessary
withholding for taxes but such payment shall not otherwise be reduced for any
reason.
C. EBRP ACCOUNT. On the Effective Date, the Company shall pay to Employee an
amount equal to the balance in his Executive Benefit Replacement Plan (otherwise
known as the "SERP") account with the Company, which amount is $127,801.14. For
this purpose, the Company hereby agrees that Employee shall receive the final
approximately four (4) months of service credit for full vesting of Company
matching payments under the SERP plan. Such payment shall be subject to
withholdings for taxes, but such payment otherwise shall not be reduced for any
reason.
D. REIMBURSEMENT OF EXPENSES. The Company shall reimburse Employee for any and
all business expenses for which he is entitled to reimbursement under the
Company's expense reimbursement policies and procedures in effect on the date
hereof. Employee shall submit all expenses for reimbursement within sixty (60)
days from the Effective Date, and the Company shall process such expenses for
payment promptly upon receipt from Employee.
SECTION 3. BENEFIT PLANS. Employee's family health, dental and basic
life insurance coverages shall be continued at the expense of the Company for
18 months, through and including the last day of the calendar month which is 18
months after the month in which the Effective Date occurs, or until Employee
and his family shall be eligible for paid insurance coverages at another place
of employment, whichever shall first occur. In the event any of the Company's
insurance plans do not permit the Company's continued coverage of Employee and
his family, the Company shall reimburse Employee promptly upon request for the
cost of acquiring equivalent insurance coverages on his own during such period;
provided that the Company's payment for life insurance coverage for Employee
shall not exceed $1,200.00 per month. In the event Employee shall not be
eligible for other such insurance coverages at the end of such 18 month period,
he shall be entitled for an additional period of 18 months to continue family
insurance coverages at his own expense under the provisions of COBRA.
SECTION 4. STOCK OPTIONS AND RESTRICTED STOCK.
A. Employee is vested in certain stock options, as set forth on EXHIBIT A
attached hereto and incorporated by reference herein. Since Employee has been
an executive officer of the Company
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within the meaning of Section 16 of the Securities Exchange Act of 1934, and
since the Company's Stock Option Plan provides that Section 16 officers shall
have three (3) years following termination of employment within which to
exercise their options, Employee shall have a period of three (3) years from the
Effective Date in which to exercise such stock options; provided, however, that
Employee shall not exercise any such stock options during the period beginning
on the Effective Date and ending on the sixth month anniversary of the Effective
Date.
B. The option to acquire up to 750,000 shares of the Company's common stock
(both the vested and the unvested portion thereof) granted to Employee on
February 1, 1998 is hereby forfeited and terminated by agreement of the parties
as of the Effective Date and the payment of the amounts payable to Employee on
the Effective Date, pursuant to Section 2A above.
C. Employee holds the number of shares of formerly restricted stock set forth on
EXHIBIT A attached hereto and has heretofore received from the Company all tax
gross-up payments required with respect to such restricted shares. On the
Effective Date and the payment of the amounts payable to Employee on the
Effective Date, pursuant to Section 2A above, Employee shall forfeit all other
rights to restricted shares purportedly granted pursuant to the Employment
Agreement and shall deliver to the Company all documentation in his possession,
if any, representing such forfeited shares.
D. Employee acknowledges that he is hereby forfeiting the aforesaid options and
restricted stock, as set forth in Sections 4B and 4C above, purportedly granted
pursuant to the Employment Agreement (without any admission or determination as
to whether or not the Employment Agreement is, or ever was, valid, binding or
enforceable), and he does so freely and willingly in consideration of the other
compensation and benefits provided to him hereunder.
SECTION 5. RELEASES. A. In consideration of the payments and other
benefits to be provided to Employee hereunder, Employee hereby RELEASES and
FOREVER DISCHARGES the Company and its subsidiaries and their respective
predecessors, officers, directors, shareholders, agents, employees, legal
representatives, successors, trustees, fiduciaries and assigns (individually
and collectively the "Sunbeam Group"), of and from (and does hereby WAIVE), any
and all rights, claims, grievances, arbitrations, or causes of action which
Employee has asserted, could assert, or which could be asserted on his behalf
relating to his hiring, employment with the Company prior to the date of
execution and delivery of this Agreement, his separation from such employment
or post-employment benefits, and under any federal, state or local law,
ordinance, regulation or rule. Employee also WAIVES ANY AND ALL RIGHTS under the
laws of any jurisdictions in the United States that would limit the foregoing
release and waiver. Employee recognizes that, among other things, he is
releasing the Sunbeam Group, of and from any and all claims he might have
against it, or any of them, for pain and suffering, emotional distress,
compensatory and punitive damages and for employment discrimination based on
age (including claims under the federal Age Discrimination in Employment Act of
1967, as amended ("ADEA")or comparable state laws), sex, national origin, race
or color, mental or physical handicap or disability, or religious belief under
both federal and any similar state or local laws. Employee hereby expressly
waives and releases any right to reinstatement by the Sunbeam Group. Employee
also COVENANTS NOT TO SUE the Sunbeam Group, or any of them, for any of the
matters covered by this Section 5.
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B. There is excepted from the scope of this Release and Covenant not to Sue any
and all claims which Employee may have (i) under this Agreement (including
claims for indemnification from the Company, as provided in Section 6A below)
and (ii) any claim, cross claim or counterclaim which Employee may have against
the Company's former Chairman and CEO, Albert J. Dunlap, or its former Executive
Vice President and CFO, Russell A. Kersh.
C. Employee acknowledges that neither Sunbeam nor any member of the Sunbeam
Group is releasing Employee hereby from any claim or cause of action; however,
the Company hereby agrees, effective on the Effective Date, that if the Company
or any of its subsidiaries or affiliates asserts in writing any claim for
damages or alleged wrongdoing against Employee for any cause or reason
whatsoever, Employee's release of the Company, as set forth in Section 5A
hereof, shall automatically be void and of no effect, without any requirement
that Employee return to the Company any of the consideration provided to him for
such release.
D. EMPLOYEE ACKNOWLEDGES THAT THE COMPANY HAS GIVEN HIM ADEQUATE TIME WITHIN
WHICH TO CONSIDER THIS AGREEMENT AND HAS ADVISED HIM IN WRITING TO CONSULT WITH
COUNSEL BEFORE SIGNING THIS AGREEMENT, AND EMPLOYEE HAS CONSULTED WITH COUNSEL.
EMPLOYEE ACKNOWLEDGES THAT HE UNDERSTANDS AND THAT HE HAS ENTERED INTO THIS
AGREEMENT FREELY AND VOLUNTARILY.
THE PARTIES FURTHER ACKNOWLEDGE THAT FOR A PERIOD OF SEVEN (7) DAYS
FOLLOWING THE EXECUTION OF THIS AGREEMENT, I.E. ON OR BEFORE August 27, 1998,
EMPLOYEE MAY REVOKE THIS AGREEMENT. SUCH REVOCATION SHALL BE MADE IN WRITING AND
DELIVERED TO THE GENERAL COUNSEL OF THE COMPANY BY THE CLOSE OF BUSINESS ON SUCH
DATE. IF NOT REVOKED ON OR BEFORE SUCH DATE, THIS AGREEMENT SHALL THEREAFTER BE
IRREVOCABLE.
SECTION 6. INDEMNIFICATION; D&O INSURANCE COVERAGE; CONSULTING.
A. The Company hereby affirms to Employee that the indemnification provisions
in Section 11 of the 1996 Agreement shall continue in effect in perpetuity, and
such provisions are incorporated by reference herein and shall survive the
termination of the 1996 Agreement. The Company further affirms that Employee has
been and will continue to be entitled to indemnification for his service as an
officer, employee and director of any and all subsidiaries and affiliates of the
Company (including without limitation The Coleman Company, Inc.) to the fullest
extent permitted by Delaware Law, and the Certificate of Incorporation and
Bylaws of the Company, including the right (upon providing the required
undertaking to the Company) to be advanced fees and expenses for the defense of
any proceedings prior to the final disposition of such proceedings as set forth
above.
B. The Company shall continue to provide Employee with directors and
officers (D&O) insurance coverage comparable in all respects to that provided
from time to time to the Company's directors and officers for such period of
time as will cover any applicable statute of limitation on actions which could
be brought against Employee, arising out of his service as an employee, officer
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and director of the Company or any affiliate of the Company or of the Sunbeam
Group.
C. The Company believes that it will need to consult with Employee from
time to time, and will need Employee's full cooperation in connection with
legal matters (including litigation, proceedings, claims, investigations and
inquiries) involving or relating to the Company and the members of the Sunbeam
Group and to events or circumstances occurring or existing during Employee's
employment with the Company. Employee hereby agrees to consult from time to
time and to fully cooperate with the Company and to provide to the Company any
and all documents and information in his possession as requested by the Company
from time to time and related to such matters; provided that such consultation,
cooperation and providing of documents and information shall not unreasonably
interfere with any other occupation in which Employee is engaged, and provided
further that (1) Employee shall be promptly reimbursed by the Company the amount
of out of pocket expenses reasonably incurred by him in providing such
cooperation, consulting, providing of documents and information and (2) Employee
shall have access to the files and records of the Company as reasonably required
for him to provide such consulting services. In consideration of Employee's
agreement, the Company shall pay to Employee $250,000, payable in 18 monthly
installments (without interest) of $13,889 each, beginning on the first day of
October 1998 and continuing on the first day of each calendar month thereafter
until paid in full. Such payments shall be subject to all necessary withholding
for taxes, but such payments otherwise shall not be reduced for any reason.
SECTION 7. AGREEMENT AS TO SECTION 280G; OTHER PROVISIONS OF THE
EMPLOYMENT AGREEMENT INCORPORATED HEREIN. The parties believe that Section 280G
of the Internal Revenue Code is not applicable to the payments and benefits
provided to Employee pursuant to this Agreement, and each party shall file its
or his tax returns consistent with this understanding. In the event, however,
that the Internal Revenue Service should take a contrary position, the Company
hereby agrees that the gross -up provisions of Section 8 of the 1996 Agreement
are incorporated by reference herein and shall be applicable to such situation,
but without prejudice to the Company's right to challenge such position of the
Internal Revenue Service. In addition, the Non-Mitigation provisions of Section
9 of the 1996 Agreement are incorporated by reference as if set forth at length
herein and shall survive the termination of the 1996 Agreement. The parties also
hereby incorporate by reference the Confidentiality and Noncompetition
provisions of Section 10 of the 1996 Agreement, and Employee expressly
acknowledges his obligations of Confidentiality and Noncompetition thereunder
from and after the date hereof. In consideration of Employee's agreement to be
bound by the provisions of Section 10 of the 1996 Agreement for a total period
of three (3) years from the Effective Date, the Company shall pay to Employee
$50,000, payable in 18 monthly installments (without interest) of $2,778 each,
beginning on the first day of October 1998 and continuing on the first day of
each calendar month thereafter until paid in full. Such payments shall be
subject to all necessary withholding for taxes but such payments otherwise shall
not be reduced for any reason.
SECTION 8. MISCELLANEOUS.
a. This Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, legatees, devisees, personal
representatives, successors and assigns. 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
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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 shall 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, the
term "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 8(a) or which otherwise becomes bound by
all the terms and provisions of this Agreement or by operation of law.
b. Any uncertainty or ambiguity shall not be construed for or against either
party as an attribution of drafting to either party.
c. Whenever possible, each provision of this Agreement shall be construed and
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement or the application thereof to any party
or circumstance shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition without
invalidating the remainder of such provision or any other provision of this
Agreement or the application of such provision to other parties or
circumstances.
d. All discussions, correspondence, understandings and agreements heretofore
made between the parties are superseded by and merged into this Agreement,
which alone fully and completely expresses the agreement between the parties
with respect to the subject matter hereof (except for provisions of the 1996
Agreement which are specifically referred to or incorporated by reference
herein), and the same is entered into with neither party relying upon any
statement or representation made by or on behalf of any party not embodied in
this Agreement. Any modification of this Agreement may be made only by a
written agreement signed by both of the parties to this Agreement.
e. This Agreement shall be governed in all respects by the internal laws of the
State of Delaware, without regard to principles of conflicts of laws.
f. This Agreement may be signed in counterparts, each of which shall constitute
an original hereof.
g. Nothing contained herein shall inure to the benefit of any third party, and
nothing contained herein shall serve as an admission by the Company as to the
enforceability of the Employment Agreement or any similar employment agreement
entered into with any other employee of the Company. Rather, this Agreement
constitutes the settlement and compromise of certain claims, with each party
voluntarily surrendering certain rights and incurring certain obligations in
compromise of other rights and obligations.
h. Any press release or press statement regarding Employee's separation from
employment by the Company shall reflect the amicable nature of Employee's
separation and that Employee is leaving the Company voluntarily or by mutual
agreement.
6
<PAGE>
i. Except as otherwise provided herein, all controversies, claims or disputes
arising out of or related to this Agreement shall be settled in the State of
Florida under the rules of the American Arbitration Association ("AAA") as the
sole and exclusive remedy of either party, and judgment upon the award rendered
by the arbitrator(s) may be entered in any court of competent jurisdiction in
the State of Florida or elsewhere. The costs of the arbitration shall be borne
as determined by the arbitrator(s); PROVIDED, HOWEVER, that if the Company's
position is not substantially upheld, as determined by the arbitrator(s), the
expenses of Employee (including without limitation, fees and expenses payable
to the AAA and the arbitrator(s), fees and expenses payable to witnesses,
including expert witnesses, fees and expenses payable to attorneys and other
professionals, expenses of Employee in attending the hearings, costs in
connection with obtaining and presenting evidence and costs of transcribing the
proceedings), as determined by the arbitrator(s), shall be reimbursed to him by
the Company. Notwithstanding the foregoing, 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
proceedings) seeking to enforce specifically Employee's obligations of
confidentiality and noncompetition by means of seeking an injunction or other
equitable relief.
j. 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, or by recognized courier service (such as UPS, FedEx or similar
service) with signature required, addressed as follows:
If to Employee:
David C. Fannin
3900 Galt Ocean Drive
Apartment #1601
Playa del Mar
Fort Lauderdale, FL 33308
If to the Company:
Sunbeam Corporation
1615 South Congress Avenue
Delray Beach, FL 33445
Attn: Chairman of the Board
or to such other address as either party may have furnished to the other in
writing in accordance with the notice provisions hereof. Notices of change of
address shall be effective only upon actual receipt.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the dates set forth below and as of the date and year first above written.
EMPLOYEE SUNBEAM CORPORATION
/s/ DAVID C. FANNIN /s/ SUNBEAM CORPORATION
- ----------------------- -------------------------
DAVID C. FANNIN By: /s/ PETER LANGERMAN
-------------------------
Its: Chairman of the Board
Date: August 20, 1998 Date: August , 1998
8
<PAGE>
EXHIBIT A
Employee is fully vested in the following stock options, at the
exercise prices noted:
<TABLE>
<CAPTION>
OPTIONS TO ACQUIRE EXERCISE PRICE GRANT DATE
------------------ -------------- ----------
<S> <C> <C>
60,000 shares $21.42 Jan. 1, 1994
75,000 shares 15.32 July 29, 1996
42,000 shares 14.39 Nov. 1, 1995
23,000 shares 14.94 Nov. 21, 1995
</TABLE>
STOCK
Employee holds the following shares of stock, formerly restricted, and
currently subject to no restriction (other than any restrictions which may be
imposed by applicable securities laws):
14,833 shares
9
EXHIBIT 10.hh
FIRST AMENDMENT TO
RECEIVABLES SALE AND CONTRIBUTION AGREEMENT
THIS FIRST AMENDMENT TO RECEIVABLES SALE AND CONTRIBUTION AGREEMENT,
dated as of April 2, 1998, is entered into by and between SUNBEAM PRODUCTS,
INC., a Delaware corporation (the "PARENT") and SUNBEAM ASSET DIVERSIFICATION,
INC., a Delaware corporation ("FUNDING"). Capitalized terms used but not
otherwise defined herein shall have the meaning given to such terms in the
Agreement (as defined below).
WHEREAS, the parties hereto entered into that certain Receivables Sale
and Contribution Agreement, dated as of December 4, 1997 (the "AGREEMENT"); and
WHEREAS, the parties hereto desire to amend the Agreement in certain
respects as provided herein;
NOW THEREFORE, in consideration of the promises and other mutual
covenants contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENTS.
(a) Sections 12(a) and (b) are hereby amended and
restated to read in their entirety as follows:
"(a) THIS SALE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO
CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
(b) THE PARENT AND FUNDING HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN NEW YORK
CITY, NEW YORK, AND EACH WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH ON THE SIGNATURE PAGE HEREOF AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE
BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE PARENT
AND FUNDING EACH HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER, AND CONSENTS TO THE GRANTING OF
<PAGE>
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
PARENT OR FUNDING TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION
OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 2. AGREEMENT IN FULL FORCE AND EFFECT AS AMENDED.
Except as specifically amended hereby, the Agreement
shall remain in full force and effect. All references to the Agreement shall be
deemed to mean the Agreement as modified hereby. This Amendment shall not
constitute a novation of the Agreement but shall constitute an amendment
thereof. The parties hereto agree to be bound by the terms and conditions of the
Agreement, as amended by this Amendment, as though such terms and conditions
were set forth herein.
SECTION 3. MISCELLANEOUS.
(a) This Amendment may be executed in any number of
counterparts, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument but all
of which together shall constitute one and the same agreement.
(b) The descriptive headings of the various sections
of this Amendment are inserted for convenience of reference only and shall not
be deemed to affect the meaning or construction of any of the provisions hereof.
(c) This Agreement may not be amended or otherwise
modified except as provided in this Agreement.
(d) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS.
[Remainder of Page Intentionally Left Blank]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers
thereunto duly authorized as of the date first written above.
SUNBEAM PRODUCTS, INC.
By: /s/ RUSSELL A. KERSH
---------------------------------
Name: Russell A. Kersh
Title: Ex. VP
1615 South Congress Avenue
Suite 200
Delray Beach, Florida 33345
Attention: Treasurer
Telecopier No.: (561) 243-2027
SUNBEAM ASSET DIVERSIFICATION, INC.
By: /s/ RUSSELL A. KERSH
---------------------------------
Name: Russell A. Kersh
Title: Ex. VP
300 Delaware Avenue
Suite 1704
Wilmington, Delaware 19801
Attention:
Telecopier No.:
3
EXHIBIT 10.ii
FIRST AMENDMENT TO
RECEIVABLES PURCHASE AND SERVICING AGREEMENT
THIS FIRST AMENDMENT TO RECEIVABLES PURCHASE AND SERVICING AGREEMENT,
dated April 2, 1998, is entered into by and among LLAMA RETAIL FUNDING, L.P., as
Purchaser, CAPITAL USA, L.L.C., as Administrative Agent, SUNBEAM ASSET
DIVERSIFICATION, INC., as Seller, and SUNBEAM PRODUCTS, INC., as Servicer.
Capitalized terms used but not otherwise defined herein shall have the meaning
given to such terms in the Agreement (as defined below).
WHEREAS, the parties hereto entered into that certain Receivables
Purchase and Servicing Agreement, dated as of December 4, 1997 (the
"AGREEMENT"); and
WHEREAS, the parties hereto desire to amend the Agreement in certain
respects as provided herein;
NOW THEREFORE, in consideration of the promises and other mutual
covenants contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENTS.
(a) Sections 10.9(a) and (b) are hereby amended and
restated to read in their entirety as follows:
"(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO
CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
(b) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED
IN NEW YORK CITY, NEW YORK, AND EACH WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE
ADDRESSES SET FORTH ON THE ATTACHED SCHEDULE 3, AND SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME
SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES
TO THIS AGREEMENT HEREBY WAIVES ANY OBJECTION BASED ON FORUM
NON CONVENIENS AND ANY OBJECTION TO
<PAGE>
VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 10.9(B)
SHALL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
ANY SUCH PARTY'S RIGHT TO BRING ANY ACTION OR PROCEEDING IN
THE COURTS OF ANY OTHER JURISDICTION."
SECTION 2. AGREEMENT IN FULL FORCE AND EFFECT AS AMENDED.
Except as specifically amended hereby, the Agreement
shall remain in full force and effect. All references to the Agreement shall be
deemed to mean the Agreement as modified hereby. This Amendment shall not
constitute a novation of the Agreement, but shall constitute an amendment
thereof. The parties hereto agree to be bound by the terms and conditions of the
Agreement, as amended by this Amendment, as though such terms and conditions
were set forth herein.
SECTION 3. MISCELLANEOUS.
(a) This Amendment may be executed in any number of
counterparts, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument but all
of which together shall constitute one and the same agreement.
(b) The descriptive headings of the various sections
of this Amendment are inserted for convenience of reference only and shall not
be deemed to affect the meaning or construction of any of the provisions hereof.
(c) This Agreement may not be amended or otherwise
modified except as provided in this Agreement.
(d) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS.
[Remainder of Page Intentionally Left Blank]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
SUNBEAM ASSET DIVERSIFICATION, INC.,
as Seller
By: /s/ RUSSELL A. KERSH
----------------------------------
Name: Russell A. Kersh
Title: Executive Vice President
LLAMA RETAIL FUNDING, L.P.,
as Purchaser,
By Llama Retail Funding Corp.,
its general partner
By: /s/ CHARLES T. BROWNING
----------------------------------
Name: Charles T. Browning
Title: Vice President
SUNBEAM PRODUCTS, INC.,
individually and as Servicer
By: /s/ RUSSELL A. KERSH
----------------------------------
Name: Russell A. Kersh
Title: Executive Vice President
CAPITAL USA, L.L.C.,
as Administrative Agent
By: /s/ CHARLES T. BROWNING
----------------------------------
Name: Charles T. Browning
Title: Chief Financial Officer
3
EXHIBIT 10.jj
SECOND AMENDMENT TO
RECEIVABLES PURCHASE AND SERVICING AGREEMENT
THIS SECOND AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT, dated as of
July 29, 1998 (this "AMENDMENT"), is entered into by and among LLAMA RETAIL
FUNDING, L.P., as Purchaser, SUNBEAM ASSET DIVERSIFICATION, INC., as Seller,
CAPITAL USA, L.L.C., as Administrative Agent, and SUNBEAM PRODUCTS, INC., as
Parent and as Servicer. Capitalized terms used and not otherwise defined herein
are used as defined in the Agreement (as defined below).
WHEREAS, the parties hereto entered into that certain Receivables
Purchase and Servicing Agreement, dated as of December 4, 1997, amended by First
Amendment to Receivables Purchase and Servicing Agreement dated April 2, 1998
collectively, (the "AGREEMENT"); and
WHEREAS, the parties hereto desire to amend the Agreement in certain
respects as provided herein;
NOW THEREFORE, in consideration of the premises and the other mutual
covenants contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENTS.
(a) The definitions list set forth in Annex I to the Agreement is
hereby amended and restated to read in its entirety in the form of Annex I to
this Amendment.
(b) Schedule 4 to the Agreement is hereby amended and restated to read
in its entirety in the form of Schedule 4 to this Amendment.
SECTION 2. AGREEMENT IN FULL FORCE AND EFFECT AS AMENDED. Except as
specifically amended hereby, the Agreement shall remain in full force and
effect. All references to the Agreement shall be deemed to mean the Agreement as
modified hereby. This Amendment shall not constitute a novation of the
Agreement, but shall constitute an amendment thereof. The parties hereto agree
to be bound by the terms and conditions of the Agreement, as amended by this
Amendment, as though such terms and conditions were set forth herein.
SECTION 3. MISCELLANEOUS.
(a) This Amendment may be executed in any number of
counterparts, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument but all
of which together shall constitute one and the same agreement.
<PAGE>
(b) The descriptive headings of the various sections of this
Amendment are inserted for convenience of reference only and shall not be deemed
to affect the meaning or construction of any of the provisions hereof.
(c) This Amendment may not be amended or otherwise modified
except as provided in the Agreement.
(d) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS.
[Remainder of Page Intentionally Left Blank]
2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE SELLER: SUNBEAM ASSET DIVERSIFICATION, INC.
By: /s/ RONALD R. RICHTER
---------------------------------
Title: Vice President - Treasurer
Dated: August 25, 1998
THE SERVICER AND
THE ORIGINATOR: SUNBEAM PRODUCTS, INC.
By: /s/ RONALD R. RICHTER
---------------------------------
Title: Vice President - Treasurer
Dated: August 25, 1998
THE PURCHASER: LLAMA RETAIL FUNDING, L.P.
By Llama Retail Funding Corp.,
its general partner
By: /s/ CHARLES T. BROWNING
---------------------------------
Title: Charles T. Browning
Vice President
THE ADMINISTRATIVE AGENT: CAPITAL USA, L.L.C.
By: /s/ CHARLES T. BROWNING
---------------------------------
Title: Charles T. Browning
Chief Financial Officer
<PAGE>
ANNEX I
DEFINITIONS
ACCRUED DAILY FEES AND EXPENSES: With respect to any Collection Period, the
product of (a) the Purchase Limit less the average of the daily Capital
Investment during such Collection Period, (b) a fraction (i) the numerator of
which is the number of days in the Collection Period ending on such day and (ii)
the denominator of which is 360, and (c) the Program Fee Rate.
ACCRUED DAILY SERVICING FEE: With respect to any Collection Period, the product
of (a) the Servicing Fee Rate, (b) the Average Outstanding Balance of all Pool
Receivables for such Collection Period, and (c) the actual number of days in
such Collection period divided by 360.
ACCRUED DAILY YIELD: With respect to any Collection Period, the sum of (a) the
product of (i) a fraction (A) the numerator of which is the number of days in
the Collection Period ending on such day and (B) the denominator of which is
360, (ii) the Applicable Margin and (iii) the average of the daily Capital
Investment during such Collection Period, plus (b) the Seller's Share of (i) the
amount of discount which has accrued during such Collection Period on Commercial
Paper issued by the Purchaser, and (ii) the amount of interest which has accrued
during such Collection Period on Liquidity Loans, minus (c) the Seller's Share
of the amount of net gains and net income realized on Permitted Investments in
the Investment Subaccount of the Collateral Account during such Collection
Period, as determined by the Administrative Agent.
ADDITIONAL LIQUIDITY COSTS: Any additional costs to the Purchaser under any
Liquidity Agreement resulting from any: (a) changes in the basis of taxation of
any amounts payable to the lender under the Liquidity Agreement; (b) imposition
or modification of any reserve, special deposit or similar requirements relating
to any assets or liabilities of such lender, or the commitment of such entity to
make Liquidity Loans; (c) alteration of the amount of capital required to be
maintained in respect of its Liquidity Loans; (d) change in or interpretation
of any law or regulation or compliance with any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law); or (e) imposition of any other condition affecting this Agreement.
ADMINISTRATIVE AGENT: Capital USA, L.L.C. as Administrative Agent hereunder,
together with its successors and assigns.
ADVERSE CLAIM: Any claim of ownership or any lien, security interest, title
retention, trust or other charge or encumbrance, or other type of preferential
arrangement having the effect or purpose of creating a lien or security
interest, other than the security interest created under this Agreement.
AFFECTED OBLIGOR: (a) Any Tier I Obligor, as to which any of such Obligor's
short-term unsecured ratings is reduced below the applicable Minimum Rating, (b)
any Tier II Obligor as to which such Obligor's short-term or long-term unsecured
rating is reduced below the applicable
<PAGE>
Minimum Rating, (c) any Tier I Obligor as to which a Rating Withdrawal (as
defined in the definition of "Tier I Obligor") has occurred and both the
Thirty-Day and Forty-Five Day Periods (as such terms are defined in the
definition of "Tier I Obligor") have passed and neither a Rating Agency
Confirmation nor a Liquidity Agent Confirmation (as defined in the definition of
"Tier I Obligor") has been delivered or (d) any Tier II Obligor as to which a
Rating Withdrawal (as defined in the definition of "Tier II Obligor") has
occurred and a Liquidity Agent Confirmation (as defined in the definition of
Tier II Obligor) has not been delivered within the Thirty-Day Period (as defined
in the definition of "Tier II Obligor"), and fifteen calendar days have passed
since the end of such Thirty-Day Period.
AFFILIATE: As to any Person, any other Person that, directly or indirectly, is
in control of, is controlled by, or is under common control with, such Person
within the meaning of control under Section 15 of the Securities Act of 1933, as
amended.
AGREEMENT: This Receivables Purchase and Servicing Agreement which include the
exhibits, annexes and schedules hereto and thereto and any amendment or
supplement hereto and thereto.
APPLICABLE MARGIN: 1.00% per annum as to Tier I Obligors and 1.30% per annum as
to Tier II Obligors.
APPLICABLE MARGIN RESERVE: As defined in Exhibit A.
AVAILABLE FUNDS: On any Business Day, all amounts on deposit in the Collection
Account, including, without limitation, funds deposited pursuant to Section
2.7(b) other than Escrowed Amounts.
AVERAGE OUTSTANDING BALANCE OF ALL POOL RECEIVABLES: For any period, the sum of
the Outstanding Balance of Pool Receivables (other than Defaulted Receivables)
on each day during such period, divided by the number of days in such period.
BALANCE SHEET DATE: December 29, 1996.
BILLED AMOUNT: With respect to any Receivable, the amount billed to the Obligor
thereof, net of contractual adjustments, discounts, Promotional Allowances, or
other reductions permitted under the terms of the related Contract.
BILLING DATE: The date on which the invoice with respect to a Receivable was
generated by the Originator.
BUSINESS DAY: Any day of the year other than a Saturday, Sunday or any day on
which banks generally are required, or authorized, to close in New York, New
York or Fayetteville, Arkansas.
CAPITAL INVESTMENT: At any time, the (a) original amount paid to the Seller for
a Receivable Interest at the time of its purchase by the Purchaser pursuant to
this Agreement, MINUS (b) any
A-2
<PAGE>
amounts deposited into the Collateral Account in reduction of such Capital
Investment pursuant to Sections 2.8, 2.9 or 2.10 (such reduction to be effective
only after the expiration of the Escrow Period, if applicable).
CLOSING DATE: December 4, 1997.
COLLATERAL ACCOUNT: The account maintained with the Collateral Agent into which
amounts payable to the Purchaser hereunder are to be deposited.
COLLATERAL AGENT: The financial institution acting as collateral agent on behalf
of the Purchaser, the Liquidity Agent and the Depositary.
COLLATERAL AGREEMENT: Any agreement among the Collateral Agent, the Purchaser,
the Administrative Agent, a Liquidity Agent and the Depositary in connection
with the administration of the Collateral Account and the grant of the security
interest by the Purchaser to the Collateral Agent of certain assets of the
Purchaser.
COLLECTION ACCOUNT: The Eligible Bank Account described in Section 2.5.
COLLECTION PERIOD: With respect to any calculation or disbursement of Accrued
Daily Yield, Accrued Daily Fees and Expenses or Accrued Daily Servicing Fees,
the number of days elapsed from and including the last date as of which
calculations or disbursements of Accrued Daily Yield, Accrued Daily Fees and
Expenses or Accrued Daily Servicing Fees were made but excluding the effective
date of such calculation or disbursement.
COLLECTIONS: With respect to any Receivable, all (a) cash collections and other
cash proceeds of such Receivable, (b) all amounts deemed to have been received
pursuant to Section 2.10 and (c) all other proceeds of such Receivables.
COMMERCIAL PAPER: Commercial paper notes issued by the Purchaser to fund the
Purchases hereunder and under Other Receivables Purchase Agreements.
CONTRACT: Any written agreement (or agreements) pursuant to, or under, which the
Obligor thereof shall be obligated to make one or more payments to the
Originator.
CP DISRUPTION EVENT: The inability of the Purchaser, at any time, whether as a
result of a prohibition, a contractual restriction or any other event or
circumstances whatsoever, to raise funds through the issuance of its commercial
paper notes (whether or not constituting commercial paper notes issued to fund
Purchases hereunder) in the United States commercial paper market.
CREDIT AND COLLECTION POLICIES: The credit, collection, customer relations and
service policies of the Originator in effect on the Effective Date, as set forth
in writing and delivered to and approved by the Purchaser, the Administrative
Agent and the Liquidity Agent on or before the
A-3
<PAGE>
Effective Date pursuant to Section 3.1, and, as such policies may hereafter be
amended, modified or supplemented from time to time with the written consent of
the Administrative Agent and the Liquidity Agent; PROVIDED, however, that no
such consent shall be required for any amendment, modification or supplement
that does not have an adverse effect on either (I) the collectibility of any
Receivable or (II) the timeliness of any payment in respect of any Receivable.
CUMULATIVE SALES: For any period, the Billed Amounts of all Eligible Receivables
originated by the Originator during such period.
DEBT: As to any Person; any and all (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) obligations of such Person to pay the
deferred purchase price of property or services, (d) obligations of such Person
as lessee under leases which have been or should be, in accordance with GAAP,
recorded as capital leases, (e) obligations secured by any lien or other charge
upon property or assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations, (f) obligations of
such Person under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise assure
a creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to in clauses (a) through (e) above, and (g) liabilities in
respect of unfunded vested benefits under plans covered by ERISA. For the
purposes hereof, the term "guarantee" shall include any agreement, whether such
agreement is on a contingency or otherwise, to purchase, repurchase or otherwise
acquire Debt of any other Person, or to purchase, sell or lease, as lessee or
lessor, property or services, in any such case primarily for the purpose or
enabling another person to make payment of Debt, or to make any payment (whether
as an advice capital contribution, purchase of an equity interest or otherwise)
to assure a minimum equity, asset base, working capital or other balance sheet
or financial condition, in connection with the Debt of another Person, or to
supply funds to or in any manner invest in another Person in connection with
Debt of such Person.
DEFAULTED RECEIVABLE: Each Receivable the Obligor of which has taken any action,
or suffered any event to occur, of the type described in Section 7.1(c).
DELINQUENT RECEIVABLE: Any Receivable, other than a Defaulted Receivable, as to
which any payment, or part thereof, remains unpaid for more than 30 days past
its Receivables Maturity Date.
DEPOSITARY: United States Trust Company of New York, or any other Person
designated as the successor Depositary from time to time in connection with the
issuance by the Purchaser of Commercial Paper.
DESIGNATED OBLIGOR: Each Tier I Obligor and Tier II Obligor listed on Schedule 4
to this Agreement, as the same may be revised from time to time by the
Administrative Agent.
A-4
<PAGE>
DILUTED RECEIVABLE: Any Receivable as to which (a) all or any portion of the
Billed Amount thereof is reduced or canceled for any reason other than payment,
(b) the Servicer determines in accordance with its usual collection policies to
be uncollectible or (c) any payment or portion thereof remains unpaid for more
than 90 days from the related Receivables Maturity Date.
DILUTION RESERVE: As defined in Exhibit A.
DILUTIONS: On any date of determination and for any indicated period, the sum of
(a) all reductions and cancellations of the Billed Amount of Receivables that
occur for any reason other than payment, (b) the full Billed Amount of all
Receivables the Servicer has determined in accordance with its usual collection
policies to be uncollectible and (c) the full Billed Amount of all Receivables
as to which any payment or portion thereof remains unpaid for more than 90 days
from the related Receivables Maturity Date.
DOLLAR and $: Lawful currency of the United States of America.
EFFECTIVE DATE: The date on which all conditions precedent to the effectiveness
of this Agreement have been satisfied as designated by the Administrative Agent.
ELIGIBLE BANK ACCOUNT: Any account that is: (a) a segregated deposit account
maintained with a depository institution or trust company whose short-term
unsecured debt obligations are rated not less than A-1 by S&P and P-1 by
Moody's, or (b) a segregated trust account maintained with, and on the corporate
trust side of, a federally or state chartered depository institution, (i) whose
long-term unsecured debt obligations are rated at least BBB by S&P and Baa2 by
Moody's or (ii) as to which the Liquidity Agent has consented and the Rating
Agencies have indicated in writing that the maintenance of such Eligible Bank
Account with such depository institution will not result in the reduction or
withdrawal of its then-existing rating of the Commercial Paper; PROVIDED that
deposits with the commercial, savings or other department of such depository
institution or trust company shall not constitute Permitted Investments (if
otherwise satisfying the definition therefor) for such segregated trust account
unless other Permitted Investments in an amount at least equal to the amount
deposited have been pledged by such depository institution to and set aside
under control of the trust department as collateral security for the deposit.
ELIGIBLE RECEIVABLE: At any time, a Receivable:
(a) the Obligor of which is a Designated Obligor;
(b) which is denominated and payable in Dollars in the United States of
America;
(c) the Billed Amount of which is (i) net of any set-off, recoupment,
or other reductions (including, without limitation, reductions resulting from
product returns and billing errors) and (ii) required to be paid pursuant to the
terms of the related Contract, if any;
A-5
<PAGE>
(d) which has not been disputed, compromised, adjusted, extended,
satisfied, subordinated, rescinded or modified;
(e) which is not a Delinquent Receivable, a Defaulted Receivable or a
Diluted Receivable;
(f) which was created in accordance with the requirements of (i)
applicable law, (ii) the Contract pertaining thereto (a copy of which has been
delivered to the Administrative Agent) and (iii) the Credit and Collection
Policies;
(g) which was purchased on or prior to the relevant Purchase Date
pursuant to the Receivables Sale Agreement and which immediately prior to its
transfer to the Purchaser hereunder was owned by the Seller free and clear of
any Adverse Claim and as to which, upon its inclusion in the Receivables Pool,
the Purchaser will have purchased an undivided interest therein free and clear
of any Adverse Claim;
(h) as to which all necessary documentation (including an invoice) for
payment of such Receivable by the Obligor thereof has been submitted to such
Obligor and all other obligations of the Originator in respect thereof have been
fulfilled;
(i) which is an "account" within the meaning of the UCC of the
jurisdiction where each of the Originator's and the Seller's principal executive
office(s) are located;
(j) which does not in any material respect contravene any laws, rules
or regulations applicable thereto;
(k) which constitutes the legal, valid and binding obligation of the
Obligor thereof and is not subject to any dispute, claim or offset;
(l) as to which neither the Originator nor the Seller had any knowledge
of any fact which should have led either to expect at the time of sale of such
Receivable that the Billed Amount of such Receivable would not be paid in full
when due;
(m) which is required to be paid in full by its Receivables Maturity
Date;
(n) which arises out of a "current transaction" as defined in Section
3(a)(3) of the Securities Act of 1933, as amended; and
(o) which complies with such additional criteria and requirements as
the Administrative Agent may from time to time specify to the Seller following 5
days' notice (the initial such other criteria and requirements being described
on Schedule 1 to this Agreement);
PROVIDED, however, that any Receivable the Obligor of which is either a Tier I
Obligor or a Tier II Obligor on the date such Receivable becomes a Pool
Receivable shall remain an Eligible
A-6
<PAGE>
Receivable for 180 days after such Obligor becomes an Affected Obligor,
PROVIDED, FURTHER, however, that no Receivable of an Affected Obligor arising on
or after the date such Obligor becomes an Affected Obligor shall constitute an
Eligible Receivable.
ERISA: The Employee Retirement Income Security Act of 1974, as it may be amended
from time to time, and the regulations promulgated thereunder.
ESCROW PERIOD: With respect to any Escrowed Amount, the period expiring on the
91st day (or such longer period as may be required by Section 547 of the United
Stated Bankruptcy Code to the extent the Seller or the Originator was an
"insider" within the meaning of Section 547 of the United States Bankruptcy Code
at the time of such transfer) following the deposit or allocation of such
Escrowed Amount into the Escrowed Amount Subaccount.
ESCROWED AMOUNT: On any Business Day, an amount equal to the sum of all amounts
required to be paid by the Seller, the Servicer or the Originator pursuant to
Sections 2.10, 8.1, 10.3 or otherwise, to the extent such amounts have been
deposited into the Collection Account by the Seller, the Originator or the
Servicer or allocated in accordance with Sections 2.7, 2.8 or 2.10 out of
amounts otherwise payable to the Seller, the Servicer or the Originator, as the
case may be, and with respect to which the related Escrow Period shall not have
expired. In no event shall Escrowed Amounts include payments made by an Obligor
in respect of the Pool Receivables.
ESCROWED AMOUNT SUBACCOUNT: Has the meaning specified in Section 2.5.
EURODOLLAR LOAN: A Liquidity Loan which bears interest at a rate per annum
determined on the basis of the London interbank offered rate.
FEE RESERVE: As defined in Exhibit A.
FINAL PURCHASE DATE: The earlier of (i) December 3, 1998 or such later date as
may be agreed to in writing by the Administrative Agent, in its sole discretion
and (ii) the expiration date of the Liquidity Agreement.
GAAP: Generally accepted accounting principles as in effect in the United
States, consistently applied, as of the date of such application.
GOVERNMENTAL AUTHORITY: The United States of America, any state, local or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions thereof or pertaining thereto.
INCIPIENT EVENT: An event which, upon the giving of notice or the passage of
time, or both, would become a Termination Event.
INDEMNIFIED AMOUNTS: Has the meaning specified in Section 8.1(a).
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<PAGE>
INDEMNIFIED PARTY: Has the meaning specified in Section 8.1(a).
LIQUIDITY AGENT: The financial institution acting as liquidity agent under a
Liquidity Agreement.
LIQUIDITY AGREEMENT: Any agreement with financial entities in connection with
the provision of liquidity and/or credit support for Commercial Paper issued by
the Purchaser.
LIQUIDITY LOANS: Borrowings or sales by the Purchaser under a Liquidity
Agreement.
LOCKBOX ACCOUNT: The bank account established with the Lockbox Bank pursuant to
the Lockbox Agreement into which all Collection in respect of Pool Receivables
shall be deposited.
LOCKBOX AGREEMENT: The agreement among the Administrative Agent, the Agent, the
Purchaser and the Lockbox Bank, with respect to the Lockbox Account.
LOCKBOX BANK: State Street Bank and its successors and permitted assigns.
MATERIAL AMOUNT: $50,000,000, as adjusted in the reasonable judgment of the
Administrative Agent and the Liquidity Agent upon written notice to the
Originator and the Servicer.
MAXIMUM INVESTMENT PERCENTAGE: 100%.
MINIMUM DILUTION RESERVE AMOUNT: $0.
MINIMUM INVESTMENT AMOUNT: $100,000.
MINIMUM PURCHASE AMOUNT: $100,000.
MINIMUM RATING: As to any Tier I Obligor at any time, a short term senior
unsecured debt rating by S&P of A-1 and by Moody's of P-1. As to any Tier II
Obligor, (i) a short term senior unsecured debt rating by S&P of A-2 and by
Moody's of P-2, and (ii) a long term senior unsecured debt rating by S&P of BBB
and by Moody's of Baa2.
MONTHLY REPORT: The monthly report of the Servicer, substantially in the form of
Exhibit C hereto.
MOODY'S: Moody's Investors Service, Inc. and any successor thereto.
NET RECEIVABLES POOL BALANCE: As defined in Exhibit A.
OBLIGOR: A Person obligated to make payments pursuant to a Contract.
A-8
<PAGE>
OFFICER'S CERTIFICATE: With respect to any Person, a certificate signed by the
Chairman of the Board, Vice Chairman of the Board, the President, a Vice
President, the Treasurer, the Secretary or any other duly authorized officer of
such Person acceptable to the Administrative Agent.
ORIGINATOR: Has the meaning specified in the Receivables Sale Agreement.
ORIGINATOR JUDGMENT AMOUNT: A Material Amount.
OTHER COSTS: Has the meaning specified in Section 10.3(a)
OTHER RECEIVABLES PURCHASE AGREEMENTS: Other agreements for the purchase or
funding of trade receivables of any Designated Obligor entered into from time to
time by the Purchaser.
OUTSTANDING BALANCE: Of any Receivable, at any time, an amount (not less than
zero) equal to (a) its Billed Amount, MINUS (b) all Collections received with
respect thereto, MINUS (c) (without duplication) all amounts for discounts or
any other modifications to the Billed Amount; PROVIDED, that if the
Administrative Agent or the Servicer makes a determination that all payments
with respect to such Receivable have been made, its Outstanding Balance shall be
deemed to be zero for all purposes.
PERMITTED INVESTMENTS: One or more of the following obligations which (a) are
denominated and payable in Dollars (b) acquired at a purchase price of not
greater than par, (c) have a predetermined and unalterable fixed Dollar amount
of principal due at maturity and (d) do not have an "r" suffix to its rating by
S&P:
(i) direct obligations of, or guaranteed as to the full and timely
payment of principal and interest by, the United States or obligations of any
agency or instrumentality thereof, when such obligations are backed by the full
faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i);
PROVIDED, that the short-term debt obligations of the party agreeing to
repurchase are rated at least A-1 by S&P and P-1 by Moody's;
(iii) federal funds, certificates of deposit, time deposits and
bankers' acceptances (which shall each have an original maturity of not more
than 90 days or, in the case of bankers' acceptances, shall in no event have an
original maturity of more than 365 days) of any United States depository
institution or trust company incorporated under the laws of the United States or
any state; PROVIDED, that the short-term obligations of such depository
institution or trust company are rated at least A-1 by S&P and P-1 by Moody's;
(iv) commercial paper (having original maturities of not more than 30
days) of any corporation incorporated under the laws of the United States or any
state thereof which on the date of acquisition are rated at least A-1 by S&P and
P-1 by Moody's;
A-9
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(v) securities of money market funds rated at least Am by S&P, and A
by Moody's; and
(vi) such other investments as may be acceptable to the Purchaser and
the Liquidity Agent and with respect to which each Rating Agency shall have
confirmed in writing to the Purchaser and the Administrative Agent that such
investment shall not result in a withdrawal or reduction of the then current
rating by such Rating Agency of the Commercial Paper.
PERSON: An individual, partnership, corporation (including a business trust),
joint stock company, limited liability company, limited partnership, trust,
association, joint venture, Governmental Authority or any other entity of
whatever nature.
POOL RECEIVABLE: A Receivable in the Receivables Pool.
PROGRAM DOCUMENTS: The Liquidity Loan Agreement, the Collateral Agent Agreement,
the Depositary Agreement, the Commercial Paper, the Administrative Agent
Agreement, the Lockbox Agreement, the Indemnification Letter and the Dealer
Agreements.
PROGRAM FEE RATE: .125% as adjusted from time to time by written notice from the
Administrative Agent to the Seller; any such change to be as a result of either
a change in the credit quality of the Originator or a change in the pricing to
the Purchaser under the Liquidity Agreement, as determined by the Administrative
Agent.
PROMOTIONAL ALLOWANCE: With respect to any Receivable, the maximum amount of
promotional discounts or similar deductions or rebates that the Originator has
indicated to the Obligor thereof in writing may be charged against such
Receivable.
PURCHASE: Each purchase by the Purchaser of a Receivables Interest in accordance
with the provisions of Article II hereof.
PURCHASE CONDITIONS: The conditions precedent to each Purchase required to be
satisfied pursuant to Section 3.2 of this Agreement.
PURCHASE DATE: Any Business Day on which the Purchaser makes a Purchase.
PURCHASE LIMIT: $70,000,000.
PURCHASE NOTIFICATION: The written notice from the Administrative Agent, on
behalf of the Purchaser, delivered to the Seller notifying the Seller that the
Purchaser has determined to make a Purchase requested by the Seller, which
notice shall be in form of Exhibit E.
PURCHASE TERMINATION DATE: The earliest to occur of: (a) the date so designated
pursuant to Section 7.1 of this Agreement as a result of the occurrence of a
Termination Event, (b) the date designated in writing by the Seller to each of
the Purchaser and the Administrative Agent, such
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<PAGE>
date to occur no earlier than 10 Business Days following receipt by the last
party to receive such notice and (c) the Final Purchase Date.
PURCHASER: Llama Retail Funding, L.P., a Delaware limited partnership.
RATING AGENCY: Each of Moody's and S&P.
RECEIVABLE: On any day, any indebtedness of any Obligor under a Contract,
whether constituting an account, chattel paper, instrument or general
intangible, (a) that arises from a sale of merchandise or the performance of
services by the Originator and (b) in which the Seller has acquired an interest
pursuant to the Receivables Sale Agreement. Each Receivable shall include the
right to payment of any interest or finance charges and other obligations of
such Obligor with respect thereto.
RECEIVABLE MATURITY DATE: For any Receivable, the due date for payment specified
in the related Contract (not greater than 120 days), or, if no due date is so
specified, 120 days from the Billing Date for such Receivable; notwithstanding
the foregoing, with the prior written consents of the Administrative Agent and
the Liquidity Agent, up to 15% of the Net Receivables Pool Balance may be
comprised of Eligible Receivables with payment due dates of up to 180 days.
RECEIVABLES INTEREST: At any time, an undivided percentage ownership interest at
such time in (i) all then outstanding Pool Receivables; (ii) all Related
Security with respect to such Pool Receivables and (iii) all Collections with
respect to, and other proceeds of, such Pool Receivables and the Related
Security.
RECEIVABLES POOL: At any time, all then outstanding Receivables. If, with
respect to any Receivables Interest, a Receivable is a Pool Receivable on the
day immediately preceding the Purchase Termination Date, such Receivable shall
continue to be considered a Pool Receivable with respect to such Receivables
Interest at all times thereafter.
RECEIVABLES SALE AGREEMENT: The Receivables Sale and Contribution Agreement,
dated as of an even date herewith, between the Originator and the Seller in the
form delivered to the Administrative Agent pursuant to the requirements of
Section 3.1 with such amendments as may have been approved by the Administrative
Agent, the Agent and the Liquidity Agent.
RECORDS: All Contracts and other documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) prepared and
maintained by the Originator, the Servicer or the Seller with respect to
Receivables and Obligors.
REGULATORY CHANGE: Any and all changes after the Effective Date in federal,
state or foreign law or regulations or the adoption or making after such date of
any interpretation, directive or request applying to the provider of the
Liquidity Loans of or under any federal, state or foreign law or regulations
(whether or not having the force of law) by any Governmental Authority
(including
A-11
<PAGE>
the Federal Reserve Board), or foreign governmental authority, charged with the
interpretation or administration thereof.
RELATED DOCUMENTS: The Receivables Sale Agreement, the Sale Assignment, this
Agreement and all agreements, instruments, certificates, financing statements or
other documents required to be delivered hereunder or thereunder.
RELATED SECURITY: With respect to any Pool Receivable:
(i) all of the Seller's right, title and interest in and to all
purchase orders or other agreements that relate to such Pool Receivable;
(ii) all of the Seller's interest in the merchandise (including
returned merchandise), if any, relating to the sale which gave rise to such Pool
Receivable;
(iii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Pool Receivable,
whether pursuant to the Contract related to such Pool Receivable or otherwise;
(iv) all guarantees and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such Pool
Receivable whether pursuant to the Contract related to such Pool Receivable or
otherwise;
(v) all Collections and Records with respect to any of the foregoing;
and
(vi) all proceeds of any of the foregoing.
REQUEST NOTICE: A notice consisting of (a) an Officer's Certificate of the
Seller, substantially in the form of Exhibit D, together with all schedules
thereto and (b) data in the form of a computer print-out, tape or other form to
be agreed upon from time to time by the Administrative Agent and the Seller,
which enables the Administrative Agent to identify all Receivables of the Seller
and the Required Information with respect thereto.
REQUIRED INFORMATION: With respect to a Receivable, (a) the invoice number, (b)
the Billed Amount, (c) any discounts, (d) the Receivable Maturity Date thereof,
(e) the Billing Date, (f) whether or not such Receivable is an Eligible
Receivable, (g) the Obligor thereof and (h) such other additional items from
time to time requested by the Administrative Agent.
REVOLVING PERIOD: The period commencing on the Effective Date of this Agreement
and ending on the day prior to the Purchase Termination Date.
S&P: Standard & Poor's, a Division of The McGraw-Hill Companies Inc. and any
successor thereto.
A-12
<PAGE>
SALE ASSIGNMENT: The assignment entered into between the Originator and the
Seller pursuant to the Receivables Sale Agreement.
SELLER: Sunbeam Asset Diversification, Inc.
SELLER'S SHARE: As of any date, the ratio (determined by the Administrative
Agent) of the Capital Investment under this Agreement to the aggregate of the
Capital Investment under this Agreement and the aggregate capital investments
made by the Purchaser under all Other Receivables Purchase Agreements as of such
date; PROVIDED, HOWEVER, that for the purposes of making the allocations
specified in Section 10.3(c), the Seller's Share shall be equal to the ratio
(determined by the Administrative Agent) of the Purchase Limit to the aggregate
of the Purchase Limit and the purchase limits under all Other Receivables
Purchase Agreements.
SERVICER: The Originator and its permitted successors and assigns from time to
time hereunder.
SERVICING FEE: A fee payable by the Seller to the Servicer or Successor Servicer
on each Settlement Date equal to (a) the sum of the Accrued Daily Servicing Fees
for each Collection Period during the related Settlement Period, MINUS (b) any
amounts owing by the Servicer (as Originator) to the Purchaser pursuant to
Section 2.10.
SERVICING FEE RATE: 1.0%
SERVICING RECORDS: All documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) prepared and
maintained by the Servicer with respect to the Pool Receivables and the
Obligors.
SETTLEMENT DATE: The fifth Business Day following the end of each Settlement
Period, or more frequently at the option of the Purchaser and the Administrative
Agent.
SETTLEMENT PERIOD: In the case of the initial Settlement Period, the period
beginning with the Effective Date to and including the last day of the calendar
month in which such Effective Date occurs; with respect to the final Settlement
Period, the period ending on the Purchase Termination Date and beginning with
the first day of the calendar month in which the Purchase Termination Date
occurs; and with respect to all other Settlement Periods, each calendar month.
SUBSIDIARY: As to any Person, any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the Board of Directors or other Persons performing similar functions
are at the time directly or indirectly owned by such Person.
SUCCESSOR SERVICER: Has the meaning specified in Section 6.8.
A-13
<PAGE>
TAX or TAXES: All taxes, charges, fees, levies or other assessment, including,
without limitation, income, gross receipts, profits, withholding, excise,
property, sales, use, occupation and franchise taxes (including, in each such
case, any interest, penalties or additions attributable to or imposed on or with
respect to any such taxes, charges, fees or other assessments) imposed by the
United States, any state or political subdivision thereof, any foreign
government or any other jurisdiction or taxing authority.
TERMINATION EVENT: Has the meaning specified in Section 7.1.
TIER 1 OBLIGOR: Any Obligor listed on Schedule 4 hereto as a "Tier I Obligor,"
PROVIDED, however that the short term senior unsecured debt rating of such
Obligor is equal to or better than the Minimum Rating, PROVIDED further, however
that if the short term unsecured debt rating for any Tier I Obligor is at any
time withdrawn (and not replaced with a rating which is lower than the Minimum
Rating for a Tier I Obligor) by either Rating Agency or is otherwise not
available from either Rating Agency (as used in this definition, a "Rating
Withdrawal") for more than five (5) consecutive Business Days (as used in this
definition, the last day of such period being the "Withdrawal Date"), then the
Administrative Agent shall on the day following the Withdrawal Date notify the
Seller, the Servicer and the Liquidity Agent of such action and request the
Rating Agency or Agencies that withdrew the rating or from whom such rating is
no longer available to confirm to the Administrative Agent in writing (as used
in this definition, a "Rating Agency Confirmation") that such Rating Agency's
short-term unsecured debt rating for the Purchaser will not be reduced as a
result of such Rating Withdrawal. Upon receipt of any such Rating Agency
Confirmation, the Administrative Agent shall notify the Seller, the Servicer and
the Liquidity Agent of such Rating Agency Confirmation and such Tier I Obligor
shall remain a Tier I Obligor until such time, if ever, as it would subsequently
fail to qualify as a Tier I Obligor. If either Rating Agency issues a rating of
the short-term senior unsecured debt of such Obligor which is less than the
Minimum Rating for a Tier I Obligor, then such Obligor shall, as of the date of
rating, be deemed to be an Affected Obligor (as defined in clause (a) of such
definition). If a Rating Agency Confirmation is not received by the
Administrative Agent within thirty (30) calendar days from the Withdrawal Date
(as used in this definition, the "Thirty Day Period," during which period such
Tier I Obligor shall remain a Tier I Obligor), then the Administrative Agent
shall notify the Seller, the Servicer and the Liquidity Agent in writing thereof
and make written request of the Liquidity Agent to confirm that such Tier I
Obligor become a Tier II Obligor (as used in this definition, a "Liquidity Agent
Confirmation"), and, if the Liquidity Agent (x) fails to make such Liquidity
Agent Confirmation within forty-five (45) calendar days from the end of the
Thirty Day Period (as used in this definition, the "Forty-Five Day Period"),
then such Tier I Obligor shall no longer be a Designated Obligor as of the
forty-sixth day following the end of the Thirty Day Period or (y) makes such
Liquidity Agent Confirmation within the Forty-Five Day Period, then on the
forty-sixth day following the end of the Thirty Day Period such Tier I Obligor
shall become a Tier II Obligor. In either case, such Tier I Obligor shall remain
a Tier I Obligor during such Forty-Five Day Period.
TIER II OBLIGOR: Any Obligor listed on Schedule 4 hereto as a "Tier II Obligor,"
or which has become a Tier II Obligor in accordance with the definition of Tier
I Obligor, PROVIDED, however
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<PAGE>
that the short term senior unsecured debt rating and long term senior unsecured
debt rating of such Obligor is equal to or better than the Minimum Rating,
PROVIDED further, however that if the short term senior unsecured debt rating or
both long term senior unsecured debt rating for any Tier II Obligor are at any
time withdrawn (and not replaced with a rating which is lower than the Minimum
Rating for a Tier II Obligor) by both Rating Agencies or is otherwise not
available from both Rating Agencies (as used in this definition, a "Rating
Withdrawal") for more than five (5) consecutive Business Days (as used in this
definition, the last day of such period being the "Withdrawal Date"), then the
Administrative Agent shall notify the Seller, the Servicer and the Liquidity
Agent of such action and request the Liquidity Agent to confirm (as used in this
definition, a "Liquidity Agent Confirmation") that such Tier II Obligor may
remain a Tier II Obligor, and, if the Liquidity Agent (x) fails to make such
Liquidity Agent Confirmation within thirty (30) calendar days from the
Withdrawal Date (as used in this definition, the "Thirty Day Period" during
which period, such Tier II Obligor shall remain a Tier II Obligor), then such
Tier II Obligor shall no longer be a Designated Obligor as of the forty-sixth
(46th) day following the Withdrawal Date or (y) makes such Liquidity Agent
Confirmation within the Thirty Day Period, then such Tier II Obligor shall
remain a Tier II Obligor until such time, if ever, as it would subsequently fail
to qualify as a Tier II Obligor.
UCC: For any jurisdiction, the Uniform Commercial Code as from time to time in
effect in such jurisdiction.
YIELD SUBACCOUNT: The Yield Subaccount of the Collateral Account.
YIELD RESERVE: As defined in Exhibit A.
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SCHEDULE 4
To
RECEIVABLES PURCHASE AND SERVICING AGREEMENT
DESIGNATED OBLIGORS
I. TIER I OBLIGORS.
OBLIGOR NAME
1. Home Depot, Inc.
2. J.C. Penney Company, Inc.
3. Lowe's Companies, Inc.
4. May Department Stores Co.
5. Toys "R" Us, Inc.
6. Wal-Mart Stores, Inc.
II. TIER II OBLIGORS.
OBLIGOR NAME
1. Price Costco, Inc.
2. Sears, Roebuck and Company
3. Target Stores, a division of
Dayton-Hudson Corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SUNBEAM CORPORATION FINANCIAL STATEMENTS FOR THE PERIOD ENDED DECEMBER 28, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> DEC-28-1997
<CASH> 52,298
<SECURITIES> 0
<RECEIVABLES> 258,493
<ALLOWANCES> 30,033
<INVENTORY> 304,900
<CURRENT-ASSETS> 602,242
<PP&E> 355,312
<DEPRECIATION> 105,788
<TOTAL-ASSETS> 1,058,928
<CURRENT-LIABILITIES> 233,127
<BONDS> 194,580
0
0
<COMMON> 900
<OTHER-SE> 471,179
<TOTAL-LIABILITY-AND-EQUITY> 1,058,928
<SALES> 1,073,090
<TOTAL-REVENUES> 1,073,090
<CGS> 830,956
<TOTAL-COSTS> 830,956
<OTHER-EXPENSES> 12
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,381
<INCOME-PRETAX> 92,670
<INCOME-TAX> 40,352
<INCOME-CONTINUING> 52,318
<DISCONTINUED> (14,017)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,301
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.44
</TABLE>
EXHIBIT 99.c
[SUNBEAM LOGO]
Contacts: Investment Community Media
Marc R. Shiffman George Sard/Maureen Bailey
Sunbeam Corporation Sard Verbinnen & Co.
(561) 243-2142 (212) 687-8080
SUNBEAM TO ISSUE 5-YEAR WARRANTS TO MACANDREWS & FORBES
TO SETTLE ITS CLAIMS RELATING TO COLEMAN ACQUISITION AND
TO SECURE CONTINUING SERVICES OF SUNBEAM'S TOP OFFICERS
-----------------------------------------------------------------
DELRAY BEACH, FL, AUGUST 12, 1998 -- Sunbeam Corporation (NYSE: SOC) today
announced it has entered into a settlement agreement with MacAndrews & Forbes
Holdings, Inc. The agreement releases Sunbeam from any claims MacAndrews &
Forbes may have against Sunbeam arising out of Sunbeam's acquisition of
MacAndrews & Forbes' interest in The Coleman Company, Inc; enables Sunbeam to
retain the services of MacAndrews & Forbes executive personnel who have been
managing Sunbeam since mid-June 1998, including Jerry W. Levin, the Company's
Chief Executive Officer; and provides for MacAndrews & Forbes to continue to
give other management support to Sunbeam.
MacAndrews & Forbes currently owns approximately 14 million Sunbeam
shares, or approximately 14% of Sunbeam's presently outstanding shares, which it
received in the Coleman transaction in March 1998 when Sunbeam was trading at
prices above $40 per share. Pursuant to the settlement agreement, MacAndrews &
Forbes will receive from Sunbeam five-year warrants to purchase an additional 23
million Sunbeam shares at an exercise price of $7.00 per share and containing
customary anti-dilution provisions.
In connection with the agreement, Levin and certain other Sunbeam
executives are signing three-year employment agreements with Sunbeam. The others
include Paul Shapiro, Executive Vice President and Chief Administrative Officer,
and Bobby Jenkins, Executive Vice President and Chief Financial Officer.
The settlement agreement with MacAndrews & Forbes, including the terms of
the warrants, was negotiated and approved on behalf of Sunbeam by a Special
Committee of four outside directors, none of whom has any affiliation with
MacAndrews & Forbes. The members of the Special Committee are Howard Kristol
(Chairman), Charles Elson, Peter Langerman, and Faith
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<PAGE>
Whittlesey. They were assisted by an independent financial advisor, The
Blackstone Group, and independent legal counsel, Weil, Gotshal & Manges.
The transaction normally would require shareholder approval under New York
Stock Exchange policy. However, the Audit Committee of Sunbeam's Board of
Directors determined that the delay that would be necessary to secure
shareholder approval prior to the issuance of the warrants would be extensive,
particularly in light of the ongoing investigation by the Securities and
Exchange Commission of Sunbeam's accounting practices and policies and the
Company's previously disclosed intention to restate its historical financial
statements; would inhibit Sunbeam's ability to reach a settlement with
MacAndrews & Forbes and to retain and hire senior management essential to
Sunbeam's business; and thus would seriously jeopardize the financial viability
of the Company. Accordingly, the Audit Committee, pursuant to an exception
provided in the NYSE shareholder approval policy for such a situation, expressly
approved the Company's omission to seek the shareholder approval that would
otherwise have been required under that policy. The NYSE has accepted the
Company's application of the exception.
In reliance on the NYSE exception, Sunbeam is mailing to all shareholders
a letter notifying them of its intention to issue the warrants without seeking
their approval. Ten days after such letter is mailed, the Company will
consummate the transaction and issue the warrants.
"The Special Committee unanimously determined that this settlement
agreement is in the best interest of all Sunbeam shareholders," said Peter
Langerman, Chairman of Sunbeam. "It will immediately give Sunbeam a strong
senior management team that knows the business, will eliminate the risk of
protracted legal proceedings, as well as the costs, burdens and substantial
potential liability inherent in any such litigation, and will position Sunbeam
to move ahead."
"We are fully committed to helping Sunbeam succeed. Our interests are
aligned with all other Sunbeam shareholders because these warrants will only
have value if Sunbeam shares appreciate from current levels," said Howard
Gittis, Vice Chairman of MacAndrews & Forbes.
"I am very pleased that this complex issue has been satisfactorily
resolved and our senior management team can devote its full attention to
completing the new organization and revitalizing Sunbeam's business. We will
have more to announce shortly, concerning our new strategy, organizational
structure and senior management team," said Jerry W. Levin.
Sunbeam Corporation is a leading consumer products company that designs,
manufactures and markets, nationally and internationally, a diverse portfolio of
consumer products under such world-
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<PAGE>
class brands as Sunbeam/registered trademark/, Oster/registered trademark/,
Grillmaster/registered trademark/, Coleman/registered trademark/, Mr.
Coffee/registered trademark/), First Alert/registered trademark/,
Powermate/registered trademark/, Health o meter/registered trademark/,
Eastpak/registered trademark/ and Campingaz/registered trademark/.
# # #
EXHIBIT 99.d
[SUNBEAM LOGO]
Contacts: INVESTMENT COMMUNITY MEDIA
Marc R. Shiffman George Sard/Maureen Bailey
Sunbeam Corporation Sard Verbinnen & Co.
(561) 243-2142 (212) 687-8080
SUNBEAM OUTLINES NEW STRATEGY, ORGANIZATIONAL STRUCTURE,
SENIOR MANAGEMENT TEAM
REVERSES PREVIOUS MANAGEMENT'S ANNOUNCED DECISION TO CLOSE FOUR FACTORIES;
EASTPAK AND POWERMATE COMPRESSOR BUSINESSES WILL NOT BE DIVESTED
- --------------------------------------------------------------------------------
DELRAY BEACH, FL, AUGUST 24, 1998 -- Sunbeam Corporation (NYSE:SOC)
today announced a new organizational structure and senior management team, and
outlined its strategy for revitalizing Sunbeam.
"Although we still have much to do in the short term to stabilize
Sunbeam's businesses, our strategic focus is on growth," said Jerry W. Levin,
President and Chief Executive Officer of Sunbeam. "With some of the most
powerful brand names in consumer durables, we will focus on our consumers. We
are now conducting consumer research which should have a significant impact on
our rate of new product introductions in the second half of 1999."
"In contrast to the prior management's approach, we are decentralizing
operations while maintaining centralized support. Our goal is to increase
accountability at the business unit level, and to give our employees the tools
they need to build their businesses. We are shifting Sunbeam's focus to
increasing quality in products and customer service," Levin added.
Sunbeam also announced that it will no longer pay a quarterly dividend of
$0.01 per share.
NEW ORGANIZATION STRUCTURE
--------------------------
Sunbeam will be organized into three Operating Groups: Outdoor Leisure,
Household Products, and International, as well as a Corporate Group. Household
Products will report directly to Levin. The Outdoor Leisure and International
Groups will each be headed by a group president. All three operating groups will
also have a chief financial officer. Legal, employee
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benefits, licensing, outlet stores, and several other support functions will be
housed in the Corporate Group so they can meet business needs across the entire
Sunbeam organization.
The operating groups will be organized into 17 strategic business units.
Each business unit will have a general manager and controller as well as human
resources, operations, R&D, MIS and sales functions. Where it makes sense, these
operating functions will be consolidated at the group level and will serve more
than one business unit. Each business unit will develop a three-year strategic
plan and annual operating plans. The performance of each business unit will be
measured on its operating income, cash flow and sales growth.
The business units will be headquartered as follows:
BUSINESS UNIT LOCATION
First Alert Aurora, IL
Heath o Meter Bridgeview, IL
Coleman Wichita, KS
Powermate Kearny, NE
Eastpak Lowell, MA
Europe Brussels, Belgium
Japan Tokyo, Japan
Latin America Miami Lakes, FL
Asia/Pacific Sydney, Australia
All other business units will be headquartered at Sunbeam's corporate
offices in Delray Beach, FL.
NEW SENIOR MANAGEMENT TEAM
--------------------------
Sunbeam also announced a new senior management team, which brings together
several key Sunbeam veterans and recent recruits with a number of proven
executives who have previously worked with Levin, many at Coleman before it was
acquired by Sunbeam. "With this leadership team," Levin said, "I am confident
that we will succeed in turning Sunbeam into a world-class consumer products
company, and making it a great place to work." The management group has
extensive experience in consumer-focused businesses, which will be central to
Sunbeam's strategy, particularly as it increases its emphasis on brand building
and marketing.
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CORPORATE Jerry W. Levin, President & Chief Executive Officer
Chief Administrative Officer Paul E. Shapiro, Executive Vice President
Chief Financial Officer Bobby Jenkins, Executive Vice President
Human Resources Ronald H. Dunbar, Senior Vice President
R&D/Product Development Robert H. Beck, Senior Vice President
Operations Ronald J. Nold, Senior Vice President
Robin Esterson, Vice President
Finance Karen K. Clark, Vice President
Corporate Development/ Marc R. Shiffman, Vice President
Investor Relations
Legal Janet G. Kelley, Vice President & General Counsel
Kenneth Bell, Vice President, Prod. Liability/Risk Mgmt.
Licensing Linda Morgenstern, Vice President
MIS Albert R. Lapierre, Vice President
Retail Graham Crowther, Vice President
Sales Arthur B. Drogue, Vice President
Special Markets (Surplus) Terry J. Marshall, Vice President
Treasurer Ronald R. Richter, Vice President
HOUSEHOLD PRODUCTS
Chief Financial Officer Al LeFevre, Vice President
Appliances Marc Haberman, Vice President & Acting General Manager
Blankets/ Clippers Andrew C. Hill, Vice President & General Manager
First Alert Michael J. Paxton, President
Health o Meter Beth Bronner, President
Professional Products Joseph A. Tadeo, Vice President and General Manager
OUTDOOR LEISURE Frank J. Feraco, President
Chief Financial Officer Gwen Wisler, Senior Vice President
Coleman Bill Phillips, Senior Vice President & General Manager
Outdoor Cooking Frank J. Feraco, Acting General Manager
Powermate Frank J. Feraco, Acting General Manager
Eastpak Mark Goldman, Chairman
Rafael Labrador, President & CEO
INTERNATIONAL Jack D. Hall, President
Chief Financial Officer David J. Seibel, Vice President
Latin America Franz Schmid, President
Japan Hiroshi Suzuki, President
Europe/Africa/Middle East Bjorn Blomberg, President
Asia/Pacific Peter King, President
</TABLE>
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<PAGE>
SUNBEAM'S FACTORIES
-------------------
As part of its ongoing review, Sunbeam's management has reevaluated a
decision by former management to close eight plants, and concluded that four of
the plants will remain open. They are the Coleman plants in Maize, Kansas, and
Pocola, Oklahoma; the First Alert plant in Aurora, Illinois; and the Sunbeam
plant in Acuna, Mexico. In addition, as previously announced, the Mr. Coffee
plant in Glenwillow, Ohio, will remain open at least until February 1, 1999, to
give employees, government agencies and other interested parties time to see if
they can develop a plan to demonstrate that the plant can be cost-competitive.
The Sunbeam plant in Mexico City, scheduled to close in September, will remain
open until December to build sufficient inventories to assure a reliable supply
of products to our customers. The two other plants, the Coleman components plant
in Costa Rica and the Coleman sleeping bags plant in Cedar City, Utah, have
already been closed.
"The plants are being kept open," Levin said, "to ensure a high level of
quality and customer service, as well as a consistency of supply." Noting that
the Company would continue to seek manufacturing synergies and cost savings,
Levin added, "While we are setting very high performance standards for all of
our facilities, we won't destabilize our brands, product quality and customer
relationships by cutting too fast and too far. A thorough analysis of a number
of the facilities targeted to close by previous management has not produced
business or economic justification for proceeding."
Sunbeam also said it will not sell two of the business units slated for
sale by former management: Eastpak and the Powermate compressor business. "Both
are excellent businesses and we have the right team to grow them," Levin said.
The Coleman Spa business will be divested, as previously announced.
INCENTIVE COMPENSATION
----------------------
Compensation will be structured to incentivize employees to increase
shareholder value. While annual salaries and bonuses will be cash-based, Sunbeam
will provide long-term compensation in the form of stock options. A stock option
replacement program will be implemented for Sunbeam personnel employed prior to
June 30, 1998. Under this plan, up to 6.45 million stock options outstanding at
exercise prices over $10 per share can be relinquished by the employee for a
lesser
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<PAGE>
amount of stock options with a $7.00 exercise price, potentially reducing option
float by approximately 3.45 million shares.
Members of executive management have signed two- or three-year employment
agreements with Sunbeam and have been granted stock options at $7.00 per share,
with the exception of Mr. Levin, whose options have exercise prices of $7.00,
$10.50 and $14.00.
BIOGRAPHIES OF SUNBEAM SENIOR MANAGEMENT TEAM
---------------------------------------------
/bullet/ ROBERT H. BECK, JR., SENIOR VICE PRESIDENT, RESEARCH &
DEVELOPMENT/PRODUCT DEVELOPMENT. Beck, 56, joined Sunbeam in June from
Solvay Automotive, where he was Vice President, Engineering.
Previously, he was Vice President, Engineering & Technology of Sterling
Plumbing, and before that, General Manager of its Professional Products
Division. At Owens-Corning Fiberglass, he was Research Director before
being named Vice President & General Manager of the FRPC Division.
Beck, who holds an M.S. degree and a Ph.D. in Materials Science from
Michigan State University, began his career in research at Ford Motor
Company.
/bullet/ KENNETH BELL, VICE PRESIDENT, PRODUCT LIABILITY AND RISK MANAGEMENT.
Bell, age 42, has been Vice President, Litigation Counsel for Sunbeam,
with responsibility for product regulatory issues, accident
investigations and product recalls. Previously he served as Vice
President, Litigation Counsel for the Coleman Company. A graduate of
Wichita State University with a B.S. degree, he earned a J.D. degree at
Washburn University.
/bullet/ BJORN BLOMBERG, PRESIDENT, EUROPE. Blomberg, 50, who was Vice President
& General Manager of Coleman International, will continue to head
Sunbeam-Europe. Before joining Coleman in 1996, Blomberg was President
of PRIMUS AB, a leading Swedish manufacturer of gas appliances.
Previously, he was President of BTG Inc. and Elkem Chemicals, Inc., and
Operations Manager at the Japanese division of The Sandvik Group. He
holds a Masters of Science degree in Industrial and Management
Engineering from the Technical University of Linkoping, Sweden.
/bullet/ BETH BRONNER, PRESIDENT, HEALTH O METER. Bronner, 47, joins Sunbeam
from Citibank, where she has been Senior Vice President & Director of
Marketing for its North American Consumer Bank for two years.
Previously, she was Vice President-Business Markets for
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<PAGE>
AT&T Communications Service Group, and, before that, Vice President of
its Consumer Markets unit. A former President of Revlon Professional
(Salon Products), North America, her consumer brand experience also
includes senior management and marketing positions with Slim Fast
Foods, Haagen-Daz and Nabisco Brands. A graduate of Vassar College,
Bronner also holds an MBA in marketing and finance from the University
of Chicago.
/bullet/ KAREN CLARK, VICE PRESIDENT, FINANCE. Clark, 38, joined Coleman in 1997
as Vice President-Finance. She had been Corporate Controller for
Precision Castparts Corp, a complex metal manufacturer in Portland,
Oregon. She also served as Corporate Planning Manager for Tektronix
and, for nine years, was a public accountant with Arthur Anderson,
Ernst & Young, and Dobbins, DeGuire & Tucker. A Certified Public
Accountant, she earned her B.S. degree at Montana State University.
/bullet/ GRAHAM CROWTHER, VICE PRESIDENT, RETAIL. Crowther, 46, joined The
Coleman Company in 1997 as Director of Stores for the Camp Coleman
Division. Previously, he was Regional Director of Stores for Leather
Loft Stores, where he directed seven district managers and 84 stores.
He has also had experience as a buyer. Crowther holds a B.S. in
Business Administration from New Hampshire College.
/bullet/ ARTHUR B. (ART) DROGUE, VICE PRESIDENT, SALES. Drogue, 54, joined
Sunbeam in June from Nabisco, where he worked for 10 years in a variety
of senior sales positions, most recently as Vice President,
International Sales. Previously, he headed Nabisco's U.S. field sales
for business across all classes of trade, including grocery, club, mass
merchandisers, drug, telemarketing, military, private label and new
business development. A graduate of Stetson University, he holds a B.A.
degree in Economics.
/bullet/ RONALD H. DUNBAR, SENIOR VICE PRESIDENT, HUMAN RESOURCES. Dunbar, 61,
has been at Revlon, Inc. since 1991 as Senior Vice President, Human
Resources and a Corporate Officer. Prior to joining Revlon, Dunbar
spent two years as Senior Vice President and General Manager of Arnold
Menn, executive outplacement consultants. For 11 years, he was
Executive Vice President and Chief Human Resources Officer for Ryder
System, Inc. He holds a B.S. in Economics from Michigan State
University.
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<PAGE>
/bullet/ ROBIN ESTERSON, VICE PRESIDENT, OPERATIONS PLANNING. Esterson, 34, has
been Vice President, Corporate Development-Domestic for Coleman. He
previously worked in a variety of general management and operating
positions at Revlon, Inc. He earned a B.S. degree in Mechanical
Engineering from Carnegie-Mellon University, and an MBA from The
Wharton School of the University of Pennsylvania.
/bullet/ FRANK J. FERACO, PRESIDENT, OUTDOOR LEISURE GROUP. Feraco, 51, joined
Sunbeam in May 1998 from Kohler Co., where he was President and Sector
Executive for its $1.7 billion International/Sterling Plumbing Group.
Prior to joining Kohler in 1996, he held a variety of key operating
positions with Danaher Corporation and with the Skil Corporation
subsidiary of Emerson Electric. He holds a B.A. degree from the
University of Rhode Island.
/bullet/ MARK GOLDMAN, CHAIRMAN, EASTPAK. Goldman, 43, founded Eastpak in 1976
following his graduation from the University of Rochester that same
year. He is credited with many of the design and marketing innovations
that have led to today's unprecedented popularity of backpacks as both
sports equipment and fashion accessories. Goldman sold Eastpak to The
Coleman Company in 1994, while remaining as President and CEO of the
business.
/bullet/ MARC HABERMAN, VICE PRESIDENT AND ACTING GENERAL MANAGER, APPLIANCES.
Haberman, 35, joins Sunbeam from McKinsey & Company, Inc., where he has
been a management consultant for six years, principally dealing with
marketing strategy, brand management and retail issues. Previously, he
was a brand manager for Procter & Gamble Company, where he had P&L
responsibility for Bounce fabric softener. He holds a B.S. degree in
Economics, Management and Marketing from the University of
Pennsylvania's Wharton School and an MBA from Columbia University.
/bullet/ JACK D. HALL, PRESIDENT, INTERNATIONAL. Hall, 53, has been Executive
Vice President, Worldwide Sales and Marketing Development for Revlon
Inc, where he has held a variety of senior sales and marketing
positions since 1986. Prior to joining Revlon, he spent six years with
International Playtex, Inc., in a various of sale capacities. His
experience also includes
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<PAGE>
four years with Johnson & Johnson Baby Products and with Procter &
Gamble Co. .He holds a B.S. degree in Marketing and Psychology from
Miami University in Oxford, Ohio.
/bullet/ ANDREW C. HILL, VICE PRESIDENT AND GENERAL MANAGER, BLANKETS AND
CLIPPERS. Hill, 37, joined The Coleman Company is 1994 as Group Product
Manager for Specialty Products and in 1997, was promoted to Vice
President, Specialty Products. Previously, he was Director of Marketing
for Sunbeam-Oster, where he worked for eight years in a variety of
industrial design and marketing functions. Prior to joining Sunbeam, he
was an industrial designer for W.R. Grace, Inc., and before that, U.S.
Corrugated Fibre Box, Inc. He holds a B.S. degree in Industrial Design
from Auburn University.
/bullet/ JANET G. KELLEY, GENERAL COUNSEL. Kelley, 45, was named General Counsel
of Sunbeam in April. In her four years with the Company, she has had
responsibility for Federal securities law compliance, acquisitions
counsel, international legal matters, and other key legal,
environmental and risk management departments. Prior to joining Sunbeam
in 1994, she was a partner in a law firm in Louisville. A graduate of
Morehead State University with a B.A. in Political Science and
Philosophy, Kelley earned a J.D. at the University of Kentucky.
/bullet/ BOBBY JENKINS, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER.
Jenkins, 36, is the former Chief Financial Officer of the Coleman
Company Outdoor Recreation Group. He joined Coleman from Marvel
Entertainment Group, where he served as Executive Vice President and
Chief Financial Officer for four years. He previously worked at Turner
Broadcasting System, Inc. and Price Waterhouse. He holds a B.S. degree
in Business Administration from the University of North Carolina.
/bullet/ PETER KING, PRESIDENT, ASIA/PACIFIC. King, 36, joined Coleman,
Australia as General Manager in 1997. Previously, he was Director of
Sales and Marketing for PUMA Australia, where he served for 13 years in
a variety of sales and marketing functions. Prior to joining Puma, he
was associated with CHP, Limited, a mining and resource company. King
holds a B.A. degree in Business Administration from the University of
Melbourne.
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<PAGE>
/bullet/ RAFAEL LABRADOR, PRESIDENT & CHIEF EXECUTIVE OFFICER, EASTPAK.
Labrador, 53, joined Eastpak in 1997 from Liz Claiborne, Inc., where he
was President of International Operations. Previously, he was founding
CEO and a partner in a chain of specialty retailers in France, Spain,
Italy, Belgium and Portugal. Labrador, who has more than 20 years of
experience in operations and marketing, earned a B.S. degree in
Industrial Engineering at the Georgia Institute of Technology and an
MBA from the Harvard Business School.
/bullet/ ALBERT R. LAPIERRE, VICE PRESIDENT, MANAGEMENT INFORMATION SYSTEMS.
Lapierre, 46, joined Sunbeam in May from Coopers & Lybrand LLP
Consulting, where he was a consultant to Sunbeam on its conversion to
unified information systems. A graduate of Utah State University, he
holds an MBA in Management from Fairleigh Dickenson University.
/bullet/ AL LEFEVRE, VICE PRESIDENT AND CFO-HOUSEHOLD PRODUCTS GROUP. Lefevre,
38, was named Vice President, Finance, for Sunbeam's Household Products
in April. Lefevre, who joined Sunbeam in 1997 as a director of sales
operations, has extensive experience in finance and accounting,
including three years as finance director for the Gatorade subsidiary
of Quaker Oats as well as an auditor for Arthur Anderson. He earned a
B.S. degree in accounting at Valparaiso University.
/bullet/ TERRY J. MARSHALL, VICE PRESIDENT, SPECIAL MARKETS. Marshall, 55, joins
Sunbeam from Revlon Inc. where, as Vice President, Special Markets,
International, he developed functions to identify, control and
liquidate excess inventories. He joined Revlon's Prestige Fragrance and
Cosmetics Division in 1993 from Blue Bell International Inc., the
specialty cleaning products company he founded in 1992. Previously, he
spent 16 years with IKEA, as Vice President, Distribution Services for
North America. He joined IKEA from Canada Safeway Limited, where he
worked for 12 years. Marshall is a graduate of the University of
British Columbia.
/bullet/ LINDA MORGENSTERN, VICE PRESIDENT, LICENSING. Morgenstern, 45, joined
Sunbeam in June from Morningstar Media, Inc., the marketing and
licensing consulting company she founded in 1994. Previously, she
worked at Sony Corporation, where she headed Sony Wonder Division, a
family entertainment products division. She holds a B.A. degree from
Brooklyn College.
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<PAGE>
/bullet/ RONALD J. (JOE) NOLD, SENIOR VICE PRESIDENT, OPERATIONS. Nold, 57, has
been with Coleman for 30 years, most recently as Executive Vice
President, Operations. He has had extensive senior management
experience in manufacturing and international business, including Vice
President, Manufacturing of Coast Catamaran Corp., President and
General Manager of Soniform, Inc., and General Manager of the
Manufactured Housing Division of Coleman. Nold holds a B.S. in
Industrial Arts from Fort Hays Kansas State College.
/bullet/ MICHAEL J. PAXTON, PRESIDENT, FIRST ALERT. Paxton, 52, has been
Chairman, President and CEO of O-Cedar Brands, Inc., since 1996. An
18-year veteran of Pillsbury/Grand Metropolitan PLC, he served as
President of the Pillsbury Baked Goods Division for three years before
being named President and CEO of the Haagen-Daz Company. He earned both
his BBA and MBA at the University of Cincinnati.
/bullet/ BILL PHILLIPS, SENIOR VICE PRESIDENT AND GENERAL MANAGER, COLEMAN.
Phillips, 45, has been Vice President and General Manager of Coleman's
Outdoor Recreation Division. In his 20 years with Coleman, he has
headed a variety of senior sales and management functions, including
field, regional and national sales.
/bullet/ RONALD R. RICHTER, VICE PRESIDENT AND TREASURER. Richter, 53, joined
Sunbeam in March as Treasurer and, for three months, served as acting
head of Investor Relations. Prior to joining Sunbeam, he was Group Vice
President/Senior Banker of the automotive group of ABN AMRO N.A. Bank
in Chicago. Previously, he was Managing Director of Bank of America, a
title he also held at Continental Bank. Richter earned both his BS and
MBA degrees at Northern Illinois University.
/bullet/ FRANZ SCHMID, PRESIDENT, LATIN AMERICA. Schmid, 45, who has been acting
President of International for Sunbeam since April, will return to his
previous position as head of Sunbeam's extensive Latin American
operations. Schmid, a native Venezuelan, is a 15-year Sunbeam veteran.
Before joining Sunbeam, he was Vice President of Sales & Marketing and
Director of Operations for Carsa Group, a leading Peruvian equipment
distributor. Schmid holds a B.A. in Economics from the Universidad
Catolica Andres Bello in Caracas, Venezuela, and a B.A. in Business
Administration from Universidad de Lima in Peru.
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<PAGE>
/bullet/ DAVID J. SEIBEL, VICE PRESIDENT AND CFO, INTERNATIONAL. Seibel, 35,
joins Sunbeam from Revlon Inc., where he has been Director of
International Treasury since 1996. He also served as Acting Treasurer
of Coleman Inc. in 1997. Prior to joining Revlon, he was Director of
Global Treasury for Estee Lauder Companies. Previously, he was a
manager in the Treasury department of Allied Signal Inc., a position he
also held at Random House, Inc. A graduate of Worcester Polytechnic
Institute, with a B.S. degree in Finance, he earned an MBA in
International Finance at Fordam University.
/bullet/ PAUL E. SHAPIRO, EXECUTIVE VICE PRESIDENT AND CHIEF ADMINISTRATIVE
OFFICER. Shapiro, 57, was Executive Vice President, General Counsel of
the Coleman Company from July 1997 until its sale in March 1998. Before
joining Coleman, he was Executive Vice President, General Counsel and
Chief Administrative Officer of Marvel Entertainment Group. He had
previously spent over 25 years in private law practice and as a
business executive, most recently as a shareholder in the firm of
Greenberg Traurig. He holds LL.B. and J.D. degrees from the University
of Pennsylvania.
/bullet/ MARC R. SHIFFMAN, VICE PRESIDENT, CORPORATE DEVELOPMENT AND INVESTOR
RELATIONS. Shiffman, 31, headed Corporate Development-International &
Investor Relations, as well as Corporate Communications & Government
Affairs for The Coleman Company from February 1997 until its sale in
March 1998. Prior to joining Coleman, he held a management position in
Corporate Finance and Investor Relations for Revlon, Inc. He holds a
B.S. in Economics from the University of Pennsylvania's Wharton School,
and an MBA from The University of Chicago Graduate School of Business.
/bullet/ HIROSHI SUZUKI, PRESIDENT, JAPAN. Suzuki, 51, has been president of
Coleman Japan Co., Ltd., since 1990. Previously, he was Representative
Director of Yves St. Laurent Japan K.K. He has also worked in a variety
of senior management positions for Helene Curtis Japan, Warner Lambert
K.K., and Johnson & Johnson Far East, Inc. A graduate of Keio
University, Suzuki holds a B.A. in Law and a Masters degree in
International Management from the American Graduate School of
International Management.
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<PAGE>
/bullet/ JOSEPH A. TADEO, VICE PRESIDENT AND GENERAL MANAGER, PROFESSIONAL
PRODUCTS. Tadeo, 51, has been Vice President, Sales and Marketing for
Sunbeam's Commercial Products, a position he held previously for the
Scott Paper Company. Tadeo also served as Chairman of Scott's Channel
Access Development Task Force, responsible for recommending a new
distribution strategy for the Company's world-wide businesses. Tadeo
holds a B.S. and an MBA from Drexel University.
/bullet/ GWEN C. WISLER, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
OUTDOOR LEISURE GROUP. Wisler, 38, has been Vice President and CFO of
the International Division of The Coleman Company since 1997.
Previously, she was Vice President and Chief Accounting Officer of New
World Communications Group Incorporated. A former Senior Audit Manager
for Price Waterhouse LLP, where she worked for 12 years, Wisler also is
a former CFO of Cobb Partners, investment managers. She earned a joint
BSBA degree at Ohio State University.
Sunbeam Corporation is a leading consumer products Company that designs,
manufactures and markets, nationally and internationally, a diverse portfolio of
consumer products under such world-class brands as Sunbeam/registered
trademark/, Oster/registered trademark/, Grillmaster/registered trademark/,
Coleman/registered trademark/, Mr. Coffee/registered trademark/), First
Alert/registered trademark/, Powermate/registered trademark/, Health o
meter/registered trademark/, Eastpak/registered trademark/ and
Campingaz/registered trademark/.
# # #
EXHIBIT 99.e
[SUNBEAM LOGO]
Contacts: INVESTMENT COMMUNITY MEDIA
Marc R. Shiffman George Sard/Maureen Bailey
Sunbeam Corporation Sard Verbinnen & Co.
(561) 243-2142 (212) 687-8080
SUNBEAM TO RESTATE FINANCIAL RESULTS;
DISCLOSES ADJUSTMENTS FOR 1996, 1997 AND FIRST QUARTER OF 1998
-- Lenders Agree to Modify Covenants Through April 10, 1999 --
--------------------------
DELRAY BEACH, FL, OCTOBER 20, 1998--Sunbeam Corporation (NYSE: SOC) today
announced that the Audit Committee of its Board of Directors, Arthur Andersen
LLP, Deloitte & Touche LLP, and Sunbeam's management have completed the
previously announced review of the Company's financial statements for 1996, 1997
and the first quarter of 1998. Based on their findings, Sunbeam will restate
financial results for a six-quarter period from the fourth quarter of 1996
through the first quarter of 1998.
Arthur Andersen is Sunbeam's auditor and was its auditor during the periods
which were reviewed. Deloitte & Touche was retained as a consultant to assist in
the review. On August 6, 1998, Sunbeam announced that it would be necessary to
restate results for 1997, the 1998 first quarter and possibly 1996, and that the
adjustments, while not then quantified, would be material.
Sunbeam today said previously issued financial statements generally
overstated the loss for 1996, overstated the profits for 1997 and understated
the loss for the first quarter of 1998. Sunbeam concluded, based upon its
review, that for certain periods revenue was incorrectly recognized (principally
"bill and hold" and guaranteed sales transactions), certain costs and allowances
were not accrued or were incorrectly recorded (principally allowances for sales
returns, co-op advertising, customer deductions and reserves for product
liability and warranty expense) and certain costs were incorrectly included in
and charged to restructuring, asset impairment and other costs.
Howard Kristol, Chairman of the Sunbeam Board's Audit Committee, said,
"Today's announcement results from an intensive review conducted by the Audit
Committee and
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<PAGE>
management over a period of nearly four months with assistance from two
international accounting firms. We are satisfied that Sunbeam's restated
financial results are fairly presented. The Company is putting in place controls
and procedures to ensure the integrity of its financial data in the future."
Jerry W. Levin, President and Chief Executive Officer of Sunbeam, said,
"With the restatement behind us, we will now be able to fully focus our efforts
on growing the business and restoring profitability. Our financial results for
the remainder of 1998 will be negatively affected by significant charges related
to operational changes, excess inventory and other non-recurring items. The
adjustments being announced today and the charges for this year will be largely
non-cash and therefore will not have a significant effect on Sunbeam's
liquidity. In addition, an agreement with our lenders to modify covenant
requirements through April 10, 1999 will provide financial resources to run our
businesses and allow us to meet our obligations."
Results are being restated as follows:
1996
----
Sunbeam will restate its fourth quarter 1996 loss from continuing
operations to $163.9 million, or $1.98 per share, versus the originally reported
loss of $190.4 million, or $2.29 per share. The restated fourth quarter net loss
is $215.0 million, or $2.59 per share, versus the originally reported net loss
of $234.8 million, or $2.83 per share. The restated 1996 loss from continuing
operations is $170.2 million, or $2.05 per share, versus the originally reported
loss from continuing operations of $196.7 million, or $2.37 per share. The
restated 1996 net loss is $208.5 million, or $2.51 per share, versus the
originally reported 1996 net loss of $228.3 million or $2.75 per share. The
restated 1996 results from continuing operations include $181.0 million of
restructuring, restructuring-related and other one-time pretax charges. Without
these items, Sunbeam would have reported income from continuing operations of
$10.8 million, or $0.13 per share. In 1996, basic and diluted earnings per share
were the same.
1997
----
Sunbeam will restate 1997 revenue to $1,073.1 million, versus the
originally reported $1,168.2 million. Restated 1997 earnings from continuing
operations are $52.3 million, or $0.62 per basic share and $0.60 per diluted
share, versus the originally reported 1997 earnings from continuing operations
of $123.1 million, or $1.45 per basic share and $1.41 per diluted share. The
restated 1997 net income is $38.3 million, or $0.45 per basic share and $0.44
per diluted
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<PAGE>
share, versus the originally reported 1997 net income of $109.4 million, or
$1.29 per basic share and $1.25 per diluted share. Additionally, 1997 earnings
from continuing operations includes approximately $59 million of non-recurring
benefit primarily from the reversal of restructuring and certain operating and
tax accruals. Excluding these items, Sunbeam would have reported a loss from
continuing operations in 1997 of $6.4 million, $0.08 per share.
FIRST QUARTER 1998
------------------
Sunbeam will restate first quarter 1998 revenue to $247.6 million, versus
the originally reported $244.3 million. The loss from continuing operations is
restated to $45.5 million or $0.53 cents per share, versus the originally
reported loss from continuing operations of $39.0 million or $0.45 per share.
The restated first quarter 1998 net loss is $54.1 million, or $0.63 per share,
versus the originally reported net loss of $44.6 million, or $0.52 per share.
Additionally, the first quarter loss from continuing operations includes $3.0
million of non-recurring benefit from the reversal of an operating accrual.
Excluding this item, the loss from continuing operations would have been $48.5
million, or $0.56 per share. Basic and diluted per share results were the same
in the period.
A summary of the effects of the restatement for the relevant periods is
attached.
Within the next several weeks, Sunbeam expects to file with the Securities
and Exchange Commission an amended Form 10-K for the year ended December 28,
1997 (which will include restated results for 1996 and 1997) and an amended Form
10-Q for the quarter ended March 31, 1998 (which will include restated results
for the quarter ended March 30, 1997.) Shortly thereafter, the Company expects
to report results for the second quarter ended June 30, 1998, and for the third
quarter ended September 30, 1998 (which will include restated results for the
same periods in the prior year.)
Sunbeam also announced that it has reached an agreement with its lenders to
modify covenant requirements in Sunbeam's credit agreement through April 10,
1999. As a result, Sunbeam will continue to have access to its revolving credit
facility.
Sunbeam Corporation is a leading consumer products company that designs,
manufactures and markets, nationally and internationally, a diverse portfolio of
consumer products under such world-class brands as Sunbeam/registered
trademark/, Oster/registered trademark/, Grillmaster/registered trademark/,
Coleman/registered trademark/, Mr. Coffee/registered trademark/), First
Alert/registered trademark/, Powermate/registered trademark/, Health o
meter/registered trademark/, Eastpak/registered trademark/ and
Campingaz/registered trademark/.
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<PAGE>
CAUTIONARY STATEMENTS
CERTAIN STATEMENTS IN THIS PRESS RELEASE CONSTITUTE "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE, OR ACHIEVEMENTS
OF SUNBEAM TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE, OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS DUE
TO VARIOUS FACTORS, INCLUDING THOSE SET FORTH UNDER THE CAPTIONS "CAUTIONARY
STATEMENTS" IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 1997, AND THE FORM 10-Q FOR THE QUARTER ENDED MARCH 1998, AS SUCH
MAY BE AMENDED.
# # #
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<PAGE>
<TABLE>
<CAPTION>
SUNBEAM CORPORATION AND SUBSIDIARIES
SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS DATA
THREE MONTHS ENDED MARCH 31, 1998 AND YEARS ENDED DECEMBER 28, 1997 AND DECEMBER 29, 1996
($ IN 000S EXCEPT PER SHARE DATA)
FISCAL YEARS ENDED
THREE MONTHS ENDED -------------------------------------------------------
MARCH 31, DECEMBER 28, DECEMBER 29,
1998 1997 1996
--------------------------- ------------------------- --------------------------
(unaudited)
AS PREVIOUSLY AS AS PREVIOUSLY AS AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 244,296 $ 247,601 $ 1,168,182 $1,073,090 $ 984,236 $ 984,236
Cost of goods sold 211,459 213,828 837,683 830,956 900,573 896,938
Selling, general and administrative
expense 68,841 71,139 131,056 152,653 214,029 221,655
Restructuring and impairment
(benefit) charge --- --- --- (14,582) 154,869 110,122
-----------------------------------------------------------------------------------------
Operating (loss) earnings (36,004) (37,366) 199,443 104,063 (285,235) (244,479)
Interest expense 5,072 5,073 11,381 11,381 13,588 13,588
Other expense (income), net 2,367 3,165 (1,218) 12 3,738 3,738
-----------------------------------------------------------------------------------------
(Loss) earnings from continuing
operations before income taxes (43,443) (45,604) 189,280 92,670 (302,561) (261,805)
Income tax (benefit) expense (4,458) (122) 66,152 40,352 (105,890) (91,625)
-----------------------------------------------------------------------------------------
(Loss) earnings from continuing
operations (38,985) (45,482) 123,128 52,318 (196,671) (170,180)
Loss from discontinued operations, net --- --- (13,713) (14,017) (31,591) (38,301)
Extraordinary charge (5,608) (8,624) --- --- --- ---
=========================================================================================
Net (loss) earnings $ (44,593) $ (54,106) $ 109,415 $ 38,301 $ (228,262) $(208,481)
=========================================================================================
(Loss) earnings per share of common
stock from continuing operations:
Basic $ (0.45) $ (0.53) $ 1.45 $ 0.62 $ (2.37) $ (2.05)
=========================================================================================
Diluted $ (0.45) $ (0.53) $ 1.41 $ 0.60 $ (2.37) $ (2.05)
=========================================================================================
Net (loss) earnings per share of
common stock:
Basic $ (0.52) $ (0.63) $ 1.29 $ 0.45 $ (2.75) $ (2.51)
=========================================================================================
Diluted $ (0.52) $ (0.63) $ 1.25 $ 0.44 $ (2.75) $ (2.51)
=========================================================================================
Average number of common and
common equivalent shares
outstanding:
Basic 86,390 86,390 84,945 84,945 82,925 82,925
=========================================================================================
Diluted 86,390 86,390 87,542 87,542 82,925 82,925
=========================================================================================
</TABLE>
