<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-4
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ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
COLEMAN WORLDWIDE CORPORATION
(NAME OF ISSUER)
COLEMAN WORLDWIDE CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
LIQUID YIELD OPTION(TM) NOTES DUE MAY 27, 2013
(ZERO COUPON-SENIOR SECURED)
(TITLE OF CLASS OF SECURITIES)
193672 AA 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
BARRY F. SCHWARTZ
EXECUTIVE VICE PRESIDENT
COLEMAN WORLDWIDE CORPORATION
1767 DENVER WEST BOULEVARD
GOLDEN, COLORADO 80401
(303) 202-2400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
------------------------
Copy to:
ALAN C. MYERS
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
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MAY 23, 1997
(DATE TENDER OFFER FIRST PUBLISHED,
SENT OR GIVEN TO SECURITY HOLDERS)
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
Transaction Valuation Amount of Filing Fee*
($561,553,000 principal amount of $38,591.05
Liquid Yield Option(TM) Notes due
May 27, 2013 at $343.61
per $1,000 principal amount at maturity)
$192,955,226.33
</TABLE>
* In accordance with Rule 0-11 under the Securities Exchange Act of 1934, as
amended, the filing fee is determined by multiplying the transaction
valuation by one-fiftieth of one percent.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number or the form or
schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
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(TM)Trademark of Merrill Lynch & Co., Inc.
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<PAGE>
INTRODUCTION
This Issuer Tender Offer Statement on Schedule 13E-4 relates to the offer
by COLEMAN WORLDWIDE CORPORATION, a Delaware corporation (the 'Company'), to
accept for exchange for cash, pursuant to the Indenture dated as of May 27, 1993
between the Company and First Trust National Association, as successor Trustee,
any and all of its outstanding Liquid Yield Option(Trademark) Notes due May 27,
2013 (the 'LYONs') at $343.61 per $1,000 principal amount, net to the exchanging
holder of LYONs (a 'Holder'), upon the terms and subject to the conditions set
forth in the Offer to Accept LYONs for Exchange for Cash dated May 23, 1997 (the
'Offer to Accept LYONs for Exchange for Cash'), and in the related Letter of
Transmittal (which together constitute the 'Exchange Offer'), copies of which
are attached hereto as Exhibits (a)(l) and (a)(2), respectively.
Concurrently with the filing of this Issuer Tender Offer Statement on
Schedule 13E-4, the Company is filing a Rule 13e-3 Transaction Statement on
Schedule 13E-3 (the 'Schedule 13E-3') with the Securities and Exchange
Commission. The information in the Schedule 13E-3, the Offer to Accept LYONs for
Exchange for Cash and the Letter of Transmittal, including all exhibits thereto,
is expressly incorporated by reference herein in its entirety.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer of the securities to which this statement
relates is COLEMAN WORLDWIDE CORPORATION, a Delaware corporation (the
'Company'), which has its principal executive offices at 1767 Denver West
Boulevard, Golden, Colorado 80401.
(b) The information contained in 'INTRODUCTION', 'SPECIAL FACTORS--Purpose
of Exchange Offer', 'THE EXCHANGE OFFER--Amount of LYONs', '--Certain
Information Concerning the Company and Coleman' and '--Transactions and
Arrangements Concerning the LYONs' of the Offer to Accept LYONs for Exchange for
Cash is incorporated herein by reference.
(c) The information set forth in 'INTRODUCTION' and 'THE EXCHANGE
OFFER--Price Range of the LYONs and Coleman Common Stock; Interest and
Dividends' of the Offer to Accept LYONs for Exchange for Cash is incorporated
herein by reference.
(d) This statement is being filed by the Company.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in 'THE EXCHANGE OFFER--Source and Amount
of Funds' of the Offer to Accept LYONs for Exchange for Cash is incorporated
herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) The information set forth in 'INTRODUCTION', 'SPECIAL
FACTORS--Purpose of Exchange Offer', 'THE EXCHANGE OFFER--Effects of the
Exchange Offer', '--Source and Amount of Funds', '--Certain Information
Concerning the Company and Coleman' and '--Transactions and Arrangements
Concerning the LYONs' of the Offer to Accept LYONs for Exchange for Cash is
incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in 'INTRODUCTION' and 'THE EXCHANGE
OFFER--Transactions and Arrangements Concerning the LYONs' of the Offer to
Accept LYONs for Exchange for Cash is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The information set forth in 'SPECIAL FACTORS--Purpose of Exchange Offer',
'THE EXCHANGE OFFER--Source and Amount of Funds' and '--Transactions and
Arrangements Concerning the LYONs' of the Offer to Accept LYONs for Exchange for
Cash is incorporated herein by reference.
i
<PAGE>
ITEM 6. PERSONS RETAINED, EMPLOYED OR COMPENSATED.
The information set forth in 'THE EXCHANGE OFFER--Fees and Expenses' of the
Offer to Accept LYONs for Exchange for Cash is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The financial information set forth in 'THE EXCHANGE OFFER--Certain
Information Concerning the Company and Coleman' of the Offer to Accept LYONs for
Exchange for Cash is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in 'THE EXCHANGE OFFER--Certain Legal
Matters; Regulatory Approvals' of the Offer to Accept LYONs for Exchange for
Cash is incorporated herein by reference.
(c) The information set forth in 'THE EXCHANGE OFFER--Effects of the
Exchange Offer' of the Offer to Accept LYONs for Exchange for Cash is
incorporated herein by reference.
(d) Not applicable.
(e) Reference is hereby made to the Offer to Accept LYONs for Exchange for
Cash and the related Letter of Transmittal, copies of which are attached hereto
as Exhibits (a)(l) and (a)(2), respectively, and incorporated in their entirety
herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Accept LYONs for Exchange for Cash dated May 23, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to brokers, dealers, commercial banks, trust companies and
other nominees dated May 23, 1997.
(a)(5) Letter to clients for use by brokers, dealers, commercial banks,
trust companies and other nominees dated May 23, 1997.
(a)(6) Guidelines for Certification of Taxpayer Identification Number.
(a)(7) Press Release dated May 19, 1997.
(b) Indenture dated as of May 20, 1997 by and among Coleman Escrow Corp.,
Coleman Worldwide Corporation (only with respect to the non-recourse guarantee
and certain collateral security agreements contained in Articles X and XI
thereof) and First Trust National Association, as Trustee.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Consolidated Financial Statements for the Company for the fiscal years
ended December 31, 1996 and December 31, 1995 (audited) and for the three months
ended March 31, 1997 and 1996 (unaudited).
(h) Consolidated Financial Statements for Coleman for the fiscal years
ended December 31, 1996 and December 31, 1995 (audited) and for the three months
ended March 31, 1997 and 1996 (unaudited).
ii
<PAGE>
SIGNATURE
AFTER DUE INQUIRY AND TO THE BEST OF ITS KNOWLEDGE AND BELIEF, THE
UNDERSIGNED CERTIFIES THAT THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE,
COMPLETE AND CORRECT.
COLEMAN WORLDWIDE CORPORATION
By: /s/ BARRY F. SCHWARTZ
----------------------------------
Name: Barry F. Schwartz
Title: Executive Vice President
Dated: May 23, 1997
iii
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<S> <C>
(a)(1) -- Offer to Accept LYONs for Exchange for Cash dated May 23, 1997.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Notice of Guaranteed Delivery.
(a)(4) -- Letter to brokers, dealers, commercial banks, trust companies and other nominees dated May 23, 1997.
(a)(5) -- Letter to clients for use by brokers, dealers, commercial banks, trust companies and other nominees
dated May 23, 1997.
(a)(6) -- Guidelines for Certification of Taxpayer Identification Number.
(a)(7) -- Press Release dated May 19, 1997.
(b) -- Indenture dated as of May 20, 1997 by and among Coleman Escrow Corp., Coleman Worldwide Corporation
(only with respect to the non-recourse guarantee and certain collateral security agreements contained
in Articles X and XI thereof) and First Trust National Association, as Trustee.
(c) -- Not applicable.
(d) -- Not applicable.
(e) -- Not applicable.
(f) -- Not applicable.
(g) -- Consolidated Financial Statements for the Company for the fiscal years ended December 31, 1996 and
December 31, 1995 (audited) and for the three months ended March 31, 1997 and 1996 (unaudited).
(h) -- Consolidated Financial Statements for Coleman for the fiscal years ended December 31, 1996 and
December 31, 1995 (audited) and for the three months ended March 31, 1997 and 1996 (unaudited).
</TABLE>
<PAGE>
COLEMAN WORLDWIDE CORPORATION
OFFER TO ACCEPT FOR EXCHANGE FOR CASH
ANY AND ALL OUTSTANDING
LIQUID YIELD OPTION(TM) NOTES DUE MAY 27, 2013
(ZERO COUPON-SENIOR SECURED)
AT
$343.61 PER $1,000
PRINCIPAL AMOUNT AT MATURITY
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JUNE 20, 1997, UNLESS THE EXCHANGE OFFER IS EXTENDED.
Coleman Worldwide Corporation, a Delaware corporation (the 'Company'),
hereby offers to accept for exchange for cash, pursuant to the Indenture dated
as of May 27, 1993 (the 'Indenture'), between the Company and First Trust
National Association, as successor Trustee, any and all of its outstanding
Liquid Yield Option(Trademark) Notes due May 27, 2013 (the 'LYONs') at $343.61
per $1,000 principal amount at maturity, net to the exchanging holder of LYONs
(a 'Holder'), upon the terms and subject to the conditions set forth herein and
in the related Letter of Transmittal (which collectively constitute the
'Exchange Offer'). All LYONs validly surrendered for exchange in the Exchange
Offer and not withdrawn will be purchased upon the terms and subject to the
conditions of the Exchange Offer.
------------------------
ANY LYONS REMAINING OUTSTANDING ON MAY 27, 1998 WILL BE REDEEMED ON SUCH
DATE (OR AS SOON AS PRACTICABLE THEREAFTER) BY THE COMPANY IN ACCORDANCE WITH
THE TERMS OF THE INDENTURE FOR CASH AT A REDEMPTION PRICE OF $343.61 PER $1,000
PRINCIPAL AMOUNT AT MATURITY UNLESS, PRIOR TO THE CLOSE OF BUSINESS ON SUCH
DATE, HOLDERS ELECT TO EXCHANGE THEIR LYONS FOR 15.706 SHARES OF COMMON STOCK OF
THE COLEMAN COMPANY, INC. PER $1,000 PRINCIPAL AMOUNT AT MATURITY IN ACCORDANCE
WITH THE TERMS OF THE INDENTURE. ANY SUCH EXCHANGE WILL BE SUBJECT TO THE
COMPANY'S RIGHT TO ELECT TO PAY AN AMOUNT IN CASH EQUAL TO THE THEN MARKET VALUE
OF SUCH SHARES OF COMMON STOCK OF THE COLEMAN COMPANY, INC. IN LIEU, IN WHOLE OR
IN PART, OF DELIVERING SUCH SHARES. SEE THE INTRODUCTION.
THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM AMOUNT OF LYONS BEING
SURRENDERED FOR EXCHANGE. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS.
SEE THE EXCHANGE OFFER--SECTION 5.
------------------------
IMPORTANT
Any Holder desiring to surrender all or any portion of such Holder's LYONs
for exchange in the Exchange Offer should either (1) complete the Letter of
Transmittal or a facsimile copy thereof in accordance with the instructions in
the Letter of Transmittal, mail or deliver it and any other required documents
to First Trust National Association (the 'Depositary') at one of its addresses
set forth on the back cover of this Offer to Accept LYONs for Exchange for Cash,
and either mail or deliver the certificates for such LYONs to the Depositary
along with the Letter of Transmittal or deliver such LYONs pursuant to the
procedure for book-entry transfer set forth in THE EXCHANGE OFFER--Section 2, or
(2) request such Holder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such Holder. Holders having LYONs
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such person if they desire to surrender their LYONs
for exchange. Holders who wish to surrender LYONs for exchange in the Exchange
Offer and whose certificates for such LYONs are not immediately available should
surrender such LYONs for exchange by following the procedures for guaranteed
delivery set forth in THE EXCHANGE OFFER--Section 2.
The Depositary and the Depository Trust Company ('DTC') have confirmed that
the Exchange Offer is eligible for the DTC Automated Tender Offer Program
('ATOP'). Accordingly, DTC participants may electronically submit LYONs for
exchange pursuant to the Exchange Offer by causing DTC to transfer LYONs to the
Depositary in accordance with DTC's ATOP procedures for transfer. DTC will then
send an Agent's Message to the Depositary. See THE EXCHANGE OFFER--SECTION 2.
------------------------
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
HOLDER AS TO WHETHER TO SURRENDER LYONS FOR EXCHANGE OR REFRAIN FROM
SURRENDERING LYONS FOR EXCHANGE. EACH HOLDER MUST MAKE SUCH HOLDER'S OWN
DECISION WHETHER TO SURRENDER LYONS FOR EXCHANGE AND,
IF SO, THE AMOUNT OF LYONS TO SURRENDER FOR
EXCHANGE.
------------------------
The LYONs are exchangeable, at the option of the Holder, at any time on or
prior to maturity, unless previously redeemed or otherwise purchased, for shares
of common stock of The Coleman Company, Inc. (the 'Coleman Common Stock') at an
exchange rate of 15.706 shares of Coleman Common Stock per $1,000 principal
amount at maturity, subject to the Company's right to elect to pay an amount in
cash equal to the then market value of such shares in lieu, in whole or in part,
of delivering such shares of Coleman Common Stock. The LYONs and the Coleman
Common Stock are each listed and principally traded on the New York Stock
Exchange (the 'NYSE'). On May 5, 1997, the last full trading day prior to the
public announcement of the Company's intention to commence the Exchange Offer,
the reported closing bid for the LYONs and the reported closing price for the
Coleman Common Stock on the NYSE were $30 1/8 per $100 principal amount at
maturity and $16 3/8 per share, respectively. On May 22, 1997, the last full
trading day prior to the commencement of the Exchange Offer, the reported
closing bid for the LYONs and the reported closing price for the Coleman Common
Stock on the NYSE were $33 3/4 per $100 principal amount at maturity and $17
per share, respectively. Holders of LYONs are urged to obtain current market
quotations for the LYONs and the Coleman Common Stock. See THE EXCHANGE
OFFER--Section 6.
Questions and requests for assistance or for additional copies of this Offer
to Accept LYONs for Exchange for Cash, the Letter of Transmittal and the Notice
of Guaranteed Delivery may be directed to the Information Agent or the Dealer
Manager at their respective addresses and telephone numbers set forth on the
back cover page.
------------------------
The Dealer Manager for the Exchange Offer is:
BEAR, STEARNS & CO. INC.
May 23, 1997 (TM)Trademark of Merrill Lynch & Co., Inc.
------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER HOLDERS SHOULD SURRENDER FOR EXCHANGE OR REFRAIN FROM
SURRENDERING FOR EXCHANGE LYONS PURSUANT TO THE EXCHANGE OFFER. NO PERSON HAS
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION............................................................................................ 1
SPECIAL FACTORS......................................................................................... 3
1. Going Private..................................................................................... 3
2. Purpose of the Exchange Offer..................................................................... 3
3. Fairness of the Exchange Offer.................................................................... 4
THE EXCHANGE OFFER...................................................................................... 5
1. Amount of LYONs................................................................................... 5
2. Procedures for Exchanging LYONs................................................................... 6
3. Withdrawal Rights................................................................................. 8
4. Exchange of LYONs and Payment of Exchange Consideration........................................... 8
5. Certain Conditions of the Exchange Offer.......................................................... 10
6. Price Range of the LYONs and Coleman Common Stock; Interest and Dividends......................... 10
7. Effects of the Exchange Offer..................................................................... 11
8. Source and Amount of Funds........................................................................ 12
9. Certain Information Concerning the Company and Coleman............................................ 13
10. Transactions and Arrangements Concerning the LYONs................................................ 19
11. Certain Legal Matters; Regulatory Approvals....................................................... 19
12. Certain Federal Income Tax Consequences........................................................... 19
13. Extension of the Surrender Period; Termination; Amendments........................................ 20
14. Fees and Expenses................................................................................. 21
15. Miscellaneous..................................................................................... 21
</TABLE>
<PAGE>
To the Holders of Liquid Yield Option(Trademark) Notes due May 27, 2013
of Coleman Worldwide Corporation:
INTRODUCTION
Coleman Worldwide Corporation, a Delaware corporation (the 'Company'),
hereby offers to accept for exchange for cash pursuant to the Indenture dated as
of May 27, 1993 (the 'Indenture'), between the Company and First Trust National
Association, as successor Trustee, any and all of its outstanding Liquid Yield
Option(Trademark) Notes due May 27, 2013 (the 'LYONs') at $343.61 per $1,000
principal amount at maturity, net to the exchanging holder of LYONs (a
'Holder'), upon the terms and subject to the conditions set forth herein and in
the related Letter of Transmittal (which collectively constitute the 'Exchange
Offer'). The Exchange Offer and withdrawal rights will expire at 12:00 Midnight,
New York City time, on Friday, June 20, 1997, unless the Exchange Offer is
extended. See THE EXCHANGE OFFER--Sections 5 and 13.
Holders whose LYONs are exchanged for cash in the Exchange Offer will not
be obligated to pay brokerage commissions, solicitation fees or, subject to the
Instructions to the Letter of Transmittal, transfer taxes on such exchange. The
Company will pay all charges and expenses of Bear, Stearns & Co. Inc., which is
acting as the Dealer Manager (the 'Dealer Manager'), First Trust National
Association, which is acting as the Depositary (the 'Depositary'), and
Kissel-Blake Inc., which is acting as the Information Agent (the 'Information
Agent'), incurred in connection with the Exchange Offer.
ANY LYONS REMAINING OUTSTANDING ON MAY 27, 1998 WILL BE REDEEMED ON SUCH
DATE (OR AS SOON AS PRACTICABLE THEREAFTER) BY THE COMPANY IN ACCORDANCE WITH
THE TERMS OF THE INDENTURE FOR CASH AT A REDEMPTION PRICE OF $343.61 PER $1,000
PRINCIPAL AMOUNT AT MATURITY UNLESS, PRIOR TO THE CLOSE OF BUSINESS ON SUCH
DATE, HOLDERS ELECT TO EXCHANGE THEIR LYONS FOR 15.706 SHARES OF COLEMAN COMMON
STOCK PER $1,000 PRINCIPAL AMOUNT AT MATURITY IN ACCORDANCE WITH THE TERMS OF
THE INDENTURE. ANY SUCH EXCHANGE WILL BE SUBJECT TO THE COMPANY'S RIGHT TO ELECT
TO PAY AN AMOUNT IN CASH EQUAL TO THE THEN MARKET VALUE OF SUCH SHARES OF COMMON
STOCK OF THE COLEMAN COMPANY, INC. IN LIEU, IN WHOLE OR IN PART, OF DELIVERING
SUCH SHARES.
THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM AMOUNT OF LYONS
BEING SURRENDERED FOR EXCHANGE. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN
CONDITIONS. SEE THE EXCHANGE OFFER--SECTION 5.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY HOLDER AS TO WHETHER TO SURRENDER LYONS FOR EXCHANGE OR REFRAIN FROM
SURRENDERING LYONS FOR EXCHANGE. EACH HOLDER MUST MAKE SUCH HOLDER'S OWN
DECISION WHETHER TO SURRENDER LYONS FOR EXCHANGE AND, IF SO, THE AMOUNT OF LYONS
TO SURRENDER FOR EXCHANGE.
As of May 22, 1997, the Company had outstanding $561,553,000 principal
amount at maturity of LYONs which were held by approximately 86 Holders of
record. As of May 22, 1997, no directors or executive officers of the Company
owned any LYONs.
On May 27, 1993, $575,000,000 aggregate principal amount at maturity of
LYONs were issued at a discount at a price of $240.67 per $1,000 principal
amount at maturity, or an aggregate of approximately $134,200,000 in net
proceeds (before expenses) to the Company. The original issue price of each LYON
represents a yield to maturity of 7.25% per annum (computed on a semiannual bond
equivalent basis) calculated from May 27, 1993. As of May 22, 1997, the accreted
value of the LYONs was $319.67 per $1,000 principal amount at maturity
(representing the original issue price of $240.67 per $1,000 principal amount at
maturity plus accrued original issue discount to such date). The LYONs, which
absent redemption, exchange or other purchase, mature on May 27, 2013, receive
no periodic payments of interest and are effectively subordinated to all
existing and future liabilities, including indebtedness, of Coleman.
(TM)Trademark of Merrill Lynch & Co., Inc.
<PAGE>
The LYONs are secured by a pledge by the Company of 16,394,810 shares
(representing approximately 30.7% of shares outstanding) of common stock, par
value $.01 per share (the 'Coleman Common Stock'), of The Coleman Company, Inc.
('Coleman'). Pursuant to the terms of the Indenture, each LYON ($1,000 principal
amount at maturity) is exchangeable at the option of the Holder at any time on
or prior to maturity or prior to the close of business on a stated redemption
date for 15.706 shares of Coleman Common Stock (the 'Indenture Exchange Rate'),
subject to the Company's right to elect to pay an amount in cash equal to the
then market value of such shares in lieu, in whole or in part, of delivering
such shares of Coleman Common Stock. The Indenture Exchange Rate is not adjusted
for accrued original issue discount, but is subject to adjusment under certain
events affecting the Coleman Common Stock (e.g., stock dividends and stock
splits). Upon exchange, the Holder will not receive any cash payments
representing accrued original issue discount.
Holders of any LYONs outstanding on May 27, 1998, the first date the LYONs
become redeemable at the option of the Company, have the right to require the
Company to purchase such Holders' LYONs at $343.61 per $1,000 principal amount
at maturity. In addition, each Holder may, at any time on or prior to maturity,
unless previously redeemed or otherwise purchased, exchange such Holder's LYONs
in accordance with the terms of the Indenture for shares of Coleman Common Stock
at the Indenture Exchange Rate, subject to the Company's right to elect to pay
an amount in cash equal to the then market value of such shares in lieu, in
whole or in part, of delivering such shares of Coleman Common Stock. However,
regardless of whether any Holders exercise such rights to require the Company to
purchase such Holders' LYONs, on May 27, 1998 the Company intends to redeem all
LYONs remaining outstanding in accordance with the terms of the Indenture for
cash at a redemption price of $343.61 per $1,000 principal amount at maturity
unless, prior to the close of business on such date, Holders elect to exercise
such exchange rights.
In addition, 35 business days after the occurrence of an Additional
Purchase Right Event (as defined below), the LYONs must be purchased solely for
cash by the Company, at the option of the Holder, at a purchase price equal to
the original issue price plus accrued original issue discount of the LYONs
through but excluding the applicable purchase date. Pursuant to the terms of the
Indenture, an 'Additional Purchase Right Event' will occur, among other things,
if (i) Permitted Holders (defined in the Indenture to include Ronald O.
Perelman, his heirs and their affiliates) cease to beneficially own a majority
of the voting power and outstanding common stock of the Company, (ii) the
Company ceases to be the holder of record of a majority of the voting power and
outstanding Coleman Common Stock, (iii) any debt of the Company or any debt of
its wholly-owned subsidiaries is not paid within any applicable grace period
after maturity or is accelerated because of a default, (iv) the number of shares
of Coleman Common Stock the beneficial owners of which are not affiliates of
Coleman falls below 3,000,000 (subject to adjustment under certain
circumstances) as a result of purchases of Coleman Common Stock by the Company
or any of its affiliates, (v) Coleman or any of its subsidiaries incurs any
indebtedness if, after giving effect to such incurrence, Coleman's consolidated
ratio of debt to total capitalization would exceed 75%, (vi) the Company's
consolidated net worth as of the end of any fiscal quarter falls below specified
levels ($70 million at June 30, 1997), (vii) Permitted Holders own any Coleman
Common Stock other than through the Company or (viii) Coleman transfers all or
substantially all of its assets to any person. As of May 22, 1997, no Additional
Purchase Right Event exists.
On May 5, 1997, the last trading day prior to the public announcement of
the Company's intention to commence the Exchange Offer, the reported closing bid
for the LYONs and the reported closing price for the Coleman Common Stock on the
New York Stock Exchange ('NYSE') were $30 1/8 per $100 principal amount at
maturity and $16 3/8 per share, respectively. On May 22, 1997, the last trading
day prior to the commencement of the Exchange Offer, the reported closing bid
for the LYONs and the reported closing price for the Coleman Common Stock on the
NYSE were $33 3/4 per $100 principal amount at maturity and $17 per share,
respectively. Prices of the LYONs are quoted on the NYSE in prices per $100
principal amount at maturity. For further information regarding market prices of
the LYONs and the Coleman Common Stock, see 'Price Range of LYONs and Coleman
Common Stock; Interest and Dividends'. HOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE LYONS AND THE COLEMAN COMMON STOCK. See THE EXCHANGE
OFFER--Section 6.
2
<PAGE>
SPECIAL FACTORS
1. Going Private. The Exchange Offer may be deemed a 'going private'
transaction subject to Rule 13e-3 promulgated under the Securities Exchange Act
of 1934, as amended (the 'Exchange Act'), because the Exchange Offer may have
the effect of causing the LYONs to cease to be listed on the NYSE. In connection
with the Exchange Offer, the Company has filed with the Securities and Exchange
Commission (the 'SEC') a Schedule 13E-3 and a Schedule 13E-4 pursuant to Rules
13e-3 and 13e-4, respectively, under the Exchange Act. See SPECIAL
FACTORS--Section 2.
2. Purpose of the Exchange Offer. The Company is making the Exchange Offer
in accordance with its previously announced plan to retire, through exchanges
for cash or redemption, all outstanding LYONs on or prior to May 27, 1998 (the
'LYONs Retirement'), the first date the LYONs become redeemable at the option of
the Company and the first date Holders of LYONs have the right to require the
Company to purchase such Holders' LYONs.
Pursuant to the terms of the Indenture, the Company could be required to
purchase LYONs at the option of Holders on May 27, 1998 for cash at a redemption
price of $343.61 per $1,000 principal amount at maturity or on certain dates
thereafter at prices stated in the Indenture, or be required, at any time prior
to maturity, to exchange Holders' LYONs for shares of Coleman Common Stock at
the Indenture Exchange Rate, subject to the Company's right to elect to pay an
amount in cash equal to the then market value of such shares in lieu, in whole
or in part, of delivering such shares of Coleman Common Stock. In addition, on
May 27, 1998, $281,281,000 aggregate principal amount at maturity of Senior
Secured Discount Notes (the 'Coleman Holdings Notes') of Coleman Holdings Inc.
('Coleman Holdings'), the sole stockholder of the Company, mature. In light of
the foregoing, the Company has commenced the Exchange Offer as the first step
towards completion of the LYONs Retirement and the refinancing of the
indebtedness of the Company and Coleman Holdings. In furtherance of the
foregoing, on May 20, 1997, Coleman Escrow Corp., a newly formed holding company
of Coleman Holdings ('Coleman Escrow'), issued $600,475,000 aggregate principal
amount at maturity of Senior Secured First Priority Discount Notes due 2001 (the
'First Priority Notes') and $131,560,000 aggregate principal amount at maturity
of Senior Secured Second Priority Discount Notes due 2001 (the 'Second Priority
Notes' and, collectively with the First Priority Notes, the 'Senior Notes') to
fund through capital contributions (i) the LYONs Retirement and (ii) the
redemption of the Coleman Holdings Notes (the 'Coleman Holdings Notes
Redemption'). The net proceeds from the offerings of the Senior Notes of
approximately $455.3 million (the 'Escrowed Funds') was placed in escrow with
First Trust National Association, as Escrow Agent, in order to fund the LYONS
Retirement and the Coleman Holdings Notes Redemption. On May 22, 1997, Coleman
Holdings called the Coleman Holdings Notes for redemption on and as of July 15,
1997 for an aggregate redemption price of approximately $262.2 million.
Following the Coleman Holdings Notes Redemption, it is intended that Coleman
Holdings will be merged with Coleman Escrow (the 'Coleman Holdings Merger'), and
Coleman Escrow will own all of the shares of capital stock of the Company.
Following the LYONs Retirement, it is intended that the Company will be merged
with Coleman Escrow, with the Company continuing as the surviving corporation of
such merger and continuing to own the shares of Coleman Common Stock that are
owned by the Company at the time of such merger.
The LYONs are secured by a pledge by the Company of 16,394,810 shares of
Coleman Common Stock owned by it. Upon exchange of a LYON ($1,000 principal
amount at maturity) for cash in the Exchange Offer, 15.706 shares of Coleman
Common Stock, the number of shares for which each LYON ($1,000 principal amount
at maturity) is currently exchangeable, will be released from such pledge.
Pursuant to the terms of the escrow account into which the net proceeds from the
offerings of the Senior Notes have been deposited simultaneously with the
release of the Escrowed Funds from time to time in connection with the LYONs
Retirement, the Company is required to pledge the shares of Coleman Common Stock
released from the pledge securing any exchanged LYONs to secure the Senior
Notes.
The Exchange Offer provides Holders who are considering a sale of all or a
portion of their LYONs with the opportunity to exchange such LYONs for cash at a
price in excess of the market price of the LYONs on the date the Exchange Offer
was first announced without the usual transaction costs associated with market
sales. The Exchange Offer also provides Holders with an opportunity to exchange
their LYONs for cash at a price that is in excess of their accreted value, that
is in excess of the market value of the Coleman Common Stock for which the LYONs
could otherwise have been exchanged on the date the Exchange Offer was first
announced and that is equal to the redemption price to be paid on May 27, 1998.
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<PAGE>
THIS OFFER TO ACCEPT LYONS FOR EXCHANGE FOR CASH CONSTITUTES IRREVOCABLE
WRITTEN NOTICE OF THE COMPANY'S ELECTION, PURSUANT TO THE TERMS OF THE
INDENTURE, TO DELIVER CASH IN LIEU OF DELIVERING SHARES OF COLEMAN COMMON STOCK
UPON EXCHANGE OF LYONS SURRENDERED IN THE EXCHANGE OFFER.
If all LYONs are not exchanged for cash pursuant to the Exchange Offer,
from time to time following the Expiration Date (as defined below) or the
termination of the Exchange Offer, the Company may commence additional offers to
exchange LYONs for cash, upon such terms and at such prices as the Company may
determine, which may be more or less than the consideration to be paid upon
exchange pursuant to the Exchange Offer. Rule 13e-4 under the Exchange Act
prohibits the Company and its affiliates from offering to exchange LYONs for
cash, other than pursuant to the Exchange Offer, until at least 10 business days
after the Expiration Date or the termination of the Exchange Offer. Any possible
future offers to exchange LYONs for cash will depend on many factors, including
the market price of the LYONs, the results of the Exchange Offer, the Company's
business and financial position and general economic and market conditions. As
described above, on May 27, 1998 (or as soon as practicable thereafter) the
Company intends to redeem any LYONs remaining outstanding in accordance with the
terms of the Indenture for cash at a redemption price of $343.61 per $1,000
principal amount at maturity unless, prior to the close of business on such
date, Holders elect to exchange their LYONs for 15.706 shares of Coleman Common
Stock per $1,000 principal amount at maturity in accordance with the terms of
the Indenture. Any such exchange will be subject to the Company's right to elect
to pay an amount in cash equal to the then market value of such shares of
Coleman Common Stock in lieu, in whole or in part, of delivering such shares.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY HOLDER AS TO WHETHER TO SURRENDER LYONS FOR EXCHANGE OR REFRAIN FROM
SURRENDERING LYONS FOR EXCHANGE. EACH HOLDER MUST MAKE SUCH HOLDER'S OWN
DECISION WHETHER TO SURRENDER LYONS FOR EXCHANGE AND, IF SO, THE AMOUNT OF LYONS
TO SURRENDER FOR EXCHANGE. HOLDERS ARE URGED TO EVALUATE CAREFULLY ALL
INFORMATION IN THE EXCHANGE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS
AND MAKE THEIR OWN DECISION WHETHER TO SURRENDER THEIR LYONS FOR EXCHANGE, AND,
IF SO, THE PRINCIPAL AMOUNT OF LYONS TO SURRENDER FOR EXCHANGE.
Depending upon the principal amount of LYONs exchanged for cash pursuant to
the Exchange Offer, the LYONs remaining outstanding after the Expiration Date,
if any, may no longer meet the requirements for continued listing on the NYSE
and may, therefore, be delisted from such exchange. If, as a result of the
exchange of LYONs for cash pursuant to the Exchange Offer, the LYONs remaining
outstanding, if any, no longer meet the listing requirements of the NYSE, the
market for the LYONs could be adversely affected. See THE EXCHANGE
OFFER--Section 7.
Both the shares of Coleman Common Stock and the LYONs are currently
registered under the Exchange Act. The LYONs, however, are currently eligible
for deregistration under the Exchange Act upon application of the Company to the
SEC because the number of Holders of record is less than 300. To date, the
Company has not elected to deregister the LYONs under the Exchange Act but
reserves the right to do so in the future. The Coleman Common Stock will
continue to be registered under the Exchange Act following consummation of the
Exchange Offer. See THE EXCHANGE OFFER--Section 7.
3. Fairness of the Exchange Offer. On May 8, 1997, the Company's Board of
Directors (the 'Board') unanimously approved the Exchange Offer. The Board
concluded that the Exchange Offer is fair to LYON Holders. The Board makes no
recommendation, however, to any Holder as to whether to surrender LYONs for
exchange or refrain from surrendering LYONs for exchange for cash in the
Exchange Offer. Each Holder must make such Holder's own decision whether to
surrender such LYONs for exchange for cash in the Exchange Offer, and, if so,
the principal amount of LYONs to surrender for exchange. No director or
executive officer of the Company owns any LYONs.
In assessing the fairness of the Exchange Offer, the Board considered,
among other things, (i) current and historical market prices for the LYONs and
the Coleman Common Stock, (ii) the fact that the Exchange Offer consideration
represents a premium of approximately 29% over the market value of the Coleman
Common Stock for which the LYONs could otherwise have been exchanged (based on
the closing price of the Coleman Common Stock on May 22, 1997), (iii) the fact
that the Exchange Offer consideration represents a premium of approximately 15%
over the closing bid of the LYONs on May 5, 1997 (the last full day of trading
prior to public announcement of the Company's intention to commence the
Exchange Offer), (iv) the fact that the Exchange Offer consideration
represents a premium of approximately 1.8% over the closing bid of the LYONs
on May 22, 1997 (the last full trading day prior to the commencement of the
Exchange Offer), (v) the fact that the Exchange Offer consideration represents
a premium of approximately 7.5% over the
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<PAGE>
accreted value of the LYONs on May 22, 1997, and (vi) the fact that, although
no vote of Holders is required in connection with the Exchange Offer, Holders
are not required to surrender their LYONs for exchange in the Exchange Offer.
The Board also considered the fact that the Exchange Offer provided Holders the
opportunity to receive the May 27, 1998 redemption price almost one year
earlier. In addition, the Board took into account that the structure of the
Exchange Offer, which permits 15.706 shares of Coleman Common Stock to be
released from the pledge securing the LYONs upon exchange of a LYON ($1,000
principal amount at maturity) for cash, making such shares available to be
pledged to secure the Senior Notes. See INTRODUCTION and THE EXCHANGE
OFFER--Section 6.
In addition, the Board took note of the fact that on May 27, 1998 (or as
soon as practicable thereafter) the Company intends to redeem any LYONs
remaining outstanding in accordance with the terms of the Indenture for cash at
a redemption price of $343.61 per $1,000 principal amount at maturity unless,
prior to the close of business on such date, Holders elect to exchange their
LYONs for 15.706 shares of Coleman Common Stock per $1,000 principal amount at
maturity in accordance with the terms of the Indenture. Any such exchange will
be subject to the Company's right to elect to pay an amount in cash equal to the
then market value of such shares of Coleman Common Stock in lieu, in whole or in
part, of delivering such shares.
The Exchange Offer consideration represents a value of approximately $21.88
per share of Coleman Common Stock for which each LYON ($1,000 principal amount
at maturity) is currently exchangeable. In determining whether to surrender
LYONs for exchange and, if so, the amount of LYONs to surrender for exchange,
Holders should consider that the market value of the shares of Coleman Common
Stock for which each LYON is exchangeable is subject to fluctuation and that
LYONs not exchanged pursuant to the Exchange Offer may be exchanged, at the
option of the Holder, for shares of Coleman Common Stock (subject to the
Company's right to elect to pay an amount in cash equal to the then market value
of such shares, in lieu, in whole or in part, of delivering such shares) at any
time prior to the anticipated redemption of any LYONs remaining outstanding on
May 27, 1998 (or as soon as practicable thereafter). On May 22, 1997, the
reported closing price for the Coleman Common Stock on the NYSE was
$17. See THE EXCHANGE OFFER--Section 6.
In assessing the fairness of the Exchange Offer, the Board considered the
foregoing factors collectively and did not assign relative weights to them in
reaching its conclusion and did not consider any one factor as decisive.
The Company has not requested or received any opinion from any outside
party as to the fairness of the Exchange Offer or the consideration to be paid
to Holders upon exchange of LYONs in the Exchange Offer. The Board urges each
Holder to seek the advice of such Holder's own advisors in deciding whether to
surrender LYONs for exchange for cash in the Exchange Offer and, if so, the
principal amount of LYONs to surrender for exchange.
THE EXCHANGE OFFER
1. Amount of LYONs. The Company will, upon the terms and subject to the
conditions of the Exchange Offer and in accordance with the terms of the
Indenture, exchange for cash any and all of the outstanding LYONs that are
validly surrendered for exchange and not withdrawn prior to the Expiration Date.
LYONs must be surrendered for exchange in denominations of $1,000 principal
amount at maturity, or in an integral multiple of $1,000. The term 'Expiration
Date' means 12:00 Midnight, New York City time, on Friday, June 20, 1997, unless
and until the Company, in its sole discretion, shall have extended the period of
time during which the Exchange Offer is open, in which event the term
'Expiration Date' shall mean the latest time and date at which the Exchange
Offer, as so extended by the Company, shall expire. The Company expressly
reserves the right, in its sole discretion, at any time or from time to time, to
extend the period of time during which the Exchange Offer is open by giving oral
or written notice of such extension to the Depositary. There can be no
assurance, however, that the Company will exercise its right to extend the
Exchange Offer. For a description of the Company's right to extend the period of
time during which the Exchange Offer is open and to terminate, delay or amend
the Exchange Offer, see THE EXCHANGE OFFER--Section 13. See also THE EXCHANGE
OFFER--Section 5.
The Exchange Offer is not conditioned upon any minimum amount of LYONs
being surrendered for exchange. The Exchange Offer is subject to certain
conditions. See THE EXCHANGE OFFER--Section 5.
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If the Company makes a material change in the terms of the Exchange Offer
or the information concerning the Exchange Offer or if it waives a material
condition of the Exchange Offer, the Company will extend the Exchange Offer to
the extent required by applicable law. If a material change occurs in the
Exchange Offer, the Company shall make prompt disclosure of that change in a
manner reasonably calculated to inform Holders of the change.
2. Procedures for Exchanging LYONs. To surrender LYONs for exchange
pursuant to the Exchange Offer, either:
(a) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Accept LYONs for Exchange for Cash
and either (i) certificates for the LYONs to be surrendered for exchange
must be received by the Depositary at one of such addresses, (ii) such
LYONs must be delivered pursuant to the procedures for book-entry transfer
described below (and a confirmation of such delivery received by the
Depositary (a 'Book-Entry Confirmation')) or (iii) an electronic
transmission of acceptance causing DTC to transfer LYONs to the Depositary
in accordance with DTC's ATOP procedures must be effected, in each case by
the Expiration Date; or
(b) the guaranteed delivery procedure described below must be complied
with.
Submission of a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof) to the Depository will constitute completion and
delivery of the Exchange Notice required by the Indenture.
The Depositary will seek to establish accounts with respect to the LYONs at
DTC or the Philadelphia Depository Trust Company (collectively referred to as
the 'Book-Entry Transfer Facilities') for purposes of the Exchange Offer within
two business days after the date of this Offer to Accept LYONs for Exchange for
Cash and any financial institution that is a participant in the system of any
Book-Entry Transfer Facility may make book-entry delivery of LYONs by causing
each Book-Entry Transfer Facility to transfer such LYONs into the Depositary's
account in accordance with the procedures of such Book-Entry Transfer Facility.
Although delivery of LYONs may be effected through book-entry transfer, the
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or an Agent's Message (as defined below) in connection with a
book-entry delivery of LYONs, and any other required documents must, in any
case, be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Accept LYONs for Exchange for Cash by the Expiration
Date, or the guaranteed delivery procedure described below must be complied
with. Delivery of the Letter of Transmittal and any other required documents to
a Book-Entry Transfer Facility does not constitute delivery to the Depositary.
The term 'Agent's Message' means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility surrendering the LYONs for exchange that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Company may enforce such agreement against the participant.
The Depositary and DTC have confirmed that the Exchange Offer is eligible
for ATOP. Accordingly, DTC participants may electronically surrender LYONs for
exchange pursuant to the Exchange Offer by causing DTC to transfer LYONs to the
Depositary in accordance with DTC's ATOP procedures for transfer. DTC will then
send an Agent's Message to the Depositary.
Except as otherwise provided below, all signatures on a Letter of
Transmittal must be guaranteed by a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (each, an 'Eligible
Institution'). Signatures on a Letter of Transmittal need not be guaranteed if
(a) the Letter of Transmittal is signed by the registered Holder of the LYONs
surrendered for exchange therewith and such registered Holder has not completed
either the box entitled 'Special Delivery Instructions' or the box entitled
'Special Payment Instructions' on the Letter of Transmittal or (b) such LYONs
are surrendered for exchange for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal.
If a LYON is registered in the name of a person other than the signer of
the Letter of Transmittal, or if payment is to be made, or a LYON not accepted
for exchange or not surrendered is to be returned, to a person other than the
registered Holder(s), then the LYON must be endorsed or accompanied by
appropriate bond
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<PAGE>
powers, in either case signed exactly as the name(s) of the registered Holder(s)
appear on the LYON, with the signature(s) on such LYON or bond powers guaranteed
as described above. See Instructions 1 and 5 of the Letter of Transmittal.
Unless an exemption applies under applicable law and regulations, the
Depositary will be required to withhold, and will withhold, 31% of the gross
proceeds otherwise payable to a Holder or other payee pursuant to the Exchange
Offer unless the Holder or other payee provides such Holder's taxpayer
identification number (social security number or employer identification number)
and certifies that such number is correct. Each Holder surrendering LYONs for
exchange (and, if applicable, each other payee) should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding,
unless an applicable exemption exists and is proven in a manner satisfactory to
the Company and the Depositary. See THE EXCHANGE OFFER--Section 4.
In certain instances, the Depositary will be required to withhold, and will
withhold, 30% (or a reduced rate pursuant to a tax treaty) from the amount
payable pursuant to the Exchange Offer to a foreign Holder or such Holder's
agent. See THE EXCHANGE OFFER--Section 4.
If a Holder desires to surrender LYONs for exchange pursuant to the
Exchange Offer and such Holder's certificates for LYONs are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary by the Expiration Date, such LYONs may nevertheless be surrendered
for exchange if all of the following conditions are met:
(i) such surrender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Company is received by
the Depositary (as provided below) by the Expiration Date; and
(iii) the certificates for such LYONs (or a Book-Entry Confirmation),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees (or, in the
case of a book-entry transfer or ATOP transfer, an Agent's Message), and
any other documents required by the Letter of Transmittal, are received by
the Depositary within three NYSE trading days after the date of execution
of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice.
THE METHOD OF DELIVERY OF LYONS, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY,
AND ANY ACCEPTANCE OR AGENT'S MESSAGE TRANSMITTED THROUGH ATOP, IS AT THE OPTION
AND RISK OF THE EXCHANGING HOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR LYONS ARE SENT BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for exchange of any LYONs will be
determined by the Company, in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any or all
surrenders of LYONs for exchange determined by it not to be in proper form or
the acceptance for exchange of LYONs that may, in the opinion of the Company's
counsel, be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Exchange Offer or any defect or irregularity in the
surrender for exchange of any LYONs of any particular Holder whether or not
similar defects or irregularities are waived in the case of other Holders. None
of the Company, the Dealer Manager, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defect or
irregularity in surrenders of LYONs for exchange or incur any liability for
failure to give any such notification. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the Letter of Transmittal and
the Instructions thereto) will be final and binding. Certificates for all LYONs
not exchanged will be returned (or, in the case of LYONs delivered by book-entry
transfer, such LYONs not exchanged will be credited to the account maintained
with one of the Book-Entry Transfer Facilities by the participant therein who so
delivered such LYONs) as soon as practicable after the Expiration Date without
expense to the Holder.
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3. Withdrawal Rights. Surrenders of LYONs for exchange for cash pursuant
to the Exchange Offer may be withdrawn at any time prior to the Expiration Date.
Thereafter, such surrenders are irrevocable, except that they may be withdrawn
after July 19, 1997 unless theretofore accepted for exchange as provided in this
Offer to Accept LYONs for Exchange for Cash. If the Company extends the period
of time during which the Exchange Offer is open, is delayed in accepting for
exchange or exchanging the LYONs or is unable to accept for exchange or exchange
LYONs pursuant to the Exchange Offer for any reason, then, without prejudice to
the Company's rights under the Exchange Offer, the Depositary may, on behalf of
the Company, retain all LYONs surrendered for exchange, and such LYONs may not
be withdrawn except as otherwise provided in this Section 3, subject to Rule
13e-4(f)(5) under the Exchange Act, which provides that the issuer making the
offer shall either pay the consideration offered, or return the securities
surrendered, promptly after the termination or withdrawal of an exchange offer.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal, or a properly transmitted Agent's Message through ATOP, must be
timely received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Accept LYONs for Exchange for Cash and must specify the
name of the persons who surrendered the LYONs to be withdrawn, the amount of
LYONs to be withdrawn and the registered owner of the LYONs to be withdrawn, if
different from the name of the person who surrendered the LYONs for exchange. If
LYONs to be withdrawn have been delivered to the Depositary by either physical
delivery of certificates or book-entry transfer, a signed notice of withdrawal
with signatures guaranteed by an Eligible Institution (except in the case of
LYONs exchanged by an Eligible Institution) must be surrendered prior to the
release of such LYONs. In addition, such notice must specify, in the case of
LYONs surrendered for exchange by delivery of certificates, the certificate
numbers shown on the particular certificates evidencing the LYONs to be
withdrawn or, in the case of LYONs delivered by book-entry transfer, the name
and number of the account at one of the Book-Entry Transfer Facilities to be
credited with the withdrawn LYONs. Withdrawals may not be rescinded, and LYONs
withdrawn will thereafter be deemed not validly surrendered for exchange for
purposes of the Exchange Offer. However, withdrawn LYONs may be resurrendered
for exchange by again following one of the procedures described in THE EXCHANGE
OFFER--Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding. None of the Company,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defect or irregularity in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Questions and requests for assistance may be directed to the Depositary,
the Information Agent or the Dealer Manager at their respective addresses and
telephone numbers indicated on the back cover page of this Offer to Accept LYONs
for Exchange for Cash. Requests for additional copies of this Offer to Accept
LYONs for Exchange for Cash, the Letter of Transmittal and other related
documents should be directed to the Information Agent or the Dealer Manager.
4. Exchange of LYONs and Payment of Exchange Consideration. Upon the terms
and subject to the conditions of the Exchange Offer, the Company will exchange
any and all LYONs properly surrendered for exchange and not withdrawn as soon as
practicable after the Expiration Date. For purposes of the Exchange Offer, the
Company will be deemed to have exchanged LYONs which are properly surrendered
for exchange and not withdrawn when, as and if it gives oral or written notice
to the Depositary of its acceptance of such LYONs for exchange pursuant to the
Exchange Offer.
Until the LYONs are exchanged by the Company pursuant to the Exchange
Offer, the LYONs will continue to be outstanding and owned of record by Holders
surrendering for exchange. Upon acceptance of the LYONs for exchange, the
Company will direct the Depositary to deliver the LYONs accepted for exchange to
the exchange agent under the Indenture for exchange. At that time, the LYONs
will be deemed exchanged by the Company, and thereafter those LYONs will be
cancelled and will no longer be considered to be outstanding.
THIS OFFER TO ACCEPT LYONS FOR EXCHANGE FOR CASH CONSTITUTES IRREVOCABLE
WRITTEN NOTICE OF THE COMPANY'S ELECTION, PURSUANT TO THE TERMS OF THE
INDENTURE, TO DELIVER CASH IN LIEU OF DELIVERING SHARES OF COLEMAN COMMON STOCK
UPON EXCHANGE OF LYONS SURRENDERED IN THE EXCHANGE OFFER.
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<PAGE>
Payment for LYONs exchanged pursuant to the Exchange Offer will be made by
depositing the aggregate Exchange Offer consideration therefor with the
Depositary, which will act as agent for Holders that surrendered LYONs for
exchange for the purpose of receiving payment from the Company and transmitting
payment to such Holders. Notwithstanding any other provision hereof, payment for
LYONs accepted for exchange pursuant to the Exchange Offer will in all cases be
made only after timely receipt by the Depositary of certificates for such LYONs
(or a Book-Entry Transfer Confirmation), a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) or, in the case of a book-entry
transfer or ATOP transfer, an Agent's Message, with any required signature
guarantees and any other required documents. Except as specifically provided in
this Offer to Accept LYONs for Exchange for Cash, under no circumstances will
interest be paid on the Exchange Offer consideration, regardless of any delay in
making such payment.
The Company will pay all transfer taxes, if any, payable on the exchange of
LYONs pursuant to the Exchange Offer; provided, however, that, if payment of the
Exchange Offer consideration is to be made to, or (in the circumstances
permitted by the Exchange Offer) if unexchanged LYONs are to be registered in
the name of, any person other than the registered Holder, or if certificates
surrendered for exchange are registered in the name of any person other than the
person signing the Letter of Transmittal, the amount of all transfer taxes, if
any (whether imposed on the registered Holder or such other person), payable on
account of the transfer to such person will be deducted from the Exchange Offer
consideration unless evidence satisfactory to the Company of the payment of such
taxes or exemption therefrom is surrendered. See Instruction 6 of the Letter of
Transmittal.
Under the Federal income tax backup withholding rules, unless an exemption
applies, 31% of the gross proceeds payable to a Holder or other payee pursuant
to the Exchange Offer must be withheld and remitted to the United States
Treasury, unless the Holder or other payee provides such Holder's taxpayer
identification number (employer identification number or social security number)
to the Depositary and certifies that such number is correct. Therefore, unless
such an exemption exists and is proven in a manner satisfactory to the
Depositary, each Holder surrendering LYONs for exchange should complete and sign
the Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding.
Certain Holders (including, among others, all corporations and certain foreign
persons) are not subject to backup withholding. In order for a foreign person to
qualify for an exemption, that Holder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. See Instruction 8 of the Letter
of Transmittal. Backup withholding is not an additional tax; any amounts so
withheld may be credited against the United States Federal income tax liability
of the Holder, or refunded if the amounts withheld exceed such liability.
The Company may be required to withhold Federal income tax at a rate of 30%
from the proceeds payable pursuant to the Exchange Offer to a Holder (or such
Holder's agent) who is, or holds LYONs on behalf of, a foreign beneficial owner
(a 'Foreign Holder') to the extent such proceeds constitute accrued original
issue discount, unless the Foreign Holder properly files a Form W-8 on behalf of
the beneficial owner or unless a reduced rate of withholding is applicable as
described below. For this purpose, a Foreign Holder is any beneficial owner of
LYONs that is not (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States, or (iii) an estate or trust, the income of which is
subject to United States Federal income taxation regardless of its source. A
Foreign Holder will be exempt from withholding if (i) the Foreign Holder
provides a properly executed Form W-8 (or a substitute Form W-8) to the
Depositary certifying as to such Foreign Holder's non-United States status, (ii)
such Foreign Holder does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote and (iii) such Foreign Holder is not a controlled foreign corporation
related to the Company through stock ownership. Alternatively, a Foreign Holder
may claim a reduced rate or exemption from withholding on the grounds that such
proceeds paid pursuant to the Exchange Offer are eligible for a reduced
withholding rate or are exempt under a tax treaty, or are exempt because such
proceeds are effectively connected with the conduct of a trade or business
within the United States, by delivering to the Depositary a properly executed
statement claiming such reduced rate or exemption. Such statements can be
obtained from the Depositary. See Instruction 8 of the Letter of Transmittal. A
Foreign Holder may be eligible to file for a refund of such tax or a portion of
such tax if such Foreign Holder is entitled to a reduced rate of withholding and
the Company withheld at a higher rate. Foreign Holders are urged to consult
their own tax advisors regarding the application of United States Federal income
tax withholding, including eligibility for a withholding tax reduction or
exemption and the refund procedure.
9
<PAGE>
5. Certain Conditions of the Exchange Offer. Notwithstanding any other
provision of the Exchange Offer, and in addition to (and not in limitation of)
the Company's right to extend or amend the Exchange Offer at any time in its
sole discretion, the Company will not be required to accept for exchange or
exchange any LYONs surrendered for exchange, and may terminate or amend the
Exchange Offer or may postpone (subject to the requirements of the Exchange Act
for prompt payment for or return of LYONs) the acceptance for exchange of, and
the exchange of LYONs surrendered for exchange, if at any time on or after May
23, 1997 and before the Expiration Date any of the following shall have occurred
(or shall have been determined by the Company in its sole discretion to have
occurred):
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, or before any court, authority, agency or tribunal,
domestic or foreign, which challenges the making of the Exchange Offer, the
exchange of some or all of the LYONs for cash pursuant to the Exchange
Offer or otherwise relates in any manner to the Exchange Offer;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Exchange Offer, Coleman
or the Company or any of its subsidiaries, by any court or any authority,
agency or tribunal, domestic or foreign, which, in the Company's sole
judgment, would or might, directly or indirectly:
(i) make the acceptance for exchange or exchange of some or all of
the LYONs illegal or otherwise restrict or prohibit consummation of the
Exchange Offer; or
(ii) delay or restrict the ability of the Company, or render the
Company unable, to accept for exchange or exchange some or all of the
LYONs; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities quoted on any national
securities exchange or on the Nasdaq; (ii) commencement of a war, armed
hostilities or other international or national emergency; (iii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States; or (iv) any limitation (whether or
not mandatory) by any United States governmental authority on the extension
of credit generally by banks or other financial institutions;
and, in the reasonable judgment of the Company, in any such case and regardless
of the circumstances (including any action or inaction by the Company) giving
rise to such condition, such event makes it inadvisable to proceed with the
Exchange Offer or with such acceptance for exchange, exchange or payment.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition, and any such
condition may be waived by the Company, in whole or in part, at any time and
from time to time in its sole discretion. The Company's failure at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right; the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances; and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by the Company
concerning the events described above will be final and binding on all parties.
6. Price Range of the LYONs and Coleman Common Stock; Interest and
Dividends. The LYONs are listed and traded on the NYSE under the symbol
'CLNFF'. The Coleman Common Stock is listed and principally traded on the NYSE
under the symbol 'CLN' and has unlisted trading privileges on the Midwest Stock
Exchange and the Pacific Stock Exchange. The following table sets forth, for
each period shown, the range of high and low sales prices of the LYONs and the
Coleman Common Stock as reported on the NYSE Composite Tape. The Coleman Common
Stock price has been adjusted retroactively for a June 1996 stock split effected
in the form of a dividend of one share of Coleman Common Stock for each
outstanding share of Coleman Common Stock.
10
<PAGE>
<TABLE>
<CAPTION>
COLEMAN
LYONS COMMON STOCK
PRICE RANGE* PRICE RANGE
------------- -------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
1995
1st Quarter............................................................ $30 3/4 $25 3/4 $19 15/16 $16 1/4
2nd Quarter............................................................ 30 1/4 27 1/2 19 1/8 15 1/2
3rd Quarter............................................................ 32 28 3/4 19 9/16 17 11/16
4th Quarter............................................................ 30 1/4 28 18 3/4 16 3/8
1996
1st Quarter............................................................ 40 28 26 16 5/16
2nd Quarter............................................................ 37 31 1/2 23 1/4 19 13/16
3rd Quarter............................................................ 34 28 3/4 21 5/8 13 3/4
4th Quarter............................................................ 29 3/4 28 15 1/4 11 3/4
1997
1st Quarter............................................................ 30 1/4 27 1/2 16 1/8 11 1/2
2nd Quarter (through May 22, 1997)..................................... 34 1/8 28 3/8 19 1/8 12 7/8
</TABLE>
- ------------------
* Prices of LYONs are quoted on the NYSE in prices per $100 principal amount at
maturity. For example, a price of $26 1/2 is equivalent to $265.00 per $1,000
principal amount at maturity.
On May 5, 1997, the last full trading day prior to the public announcement
of the Company's intention to commence the Exchange Offer, the reported closing
bid for the LYONs and the reported closing price for the Coleman Common Stock on
the NYSE were $30 1/8 per $100 principal amount at maturity and $16 3/8 per
share, respectively. On May 22, 1997, the last trading day prior to the
commencement of the Exchange Offer, the reported closing bid for the LYONs and
the reported closing price for the Coleman Common Stock on the NYSE were
$33 3/4 per $100 at maturity principal amount and $17 per share,
respectively. Holders are urged to obtain current market quotations for the
LYONs and the Coleman Common Stock.
The LYONs were issued at $240.67 per $1,000 principal amount at maturity, a
substantial discount from their principal amount due at maturity. The Company
makes no periodic payments of interest on the LYONs.
As of May 22, 1997, Coleman had approximately 53,357,996 million shares of
Coleman Common Stock outstanding, 44,067,520 (which represent approximately 83%
of the outstanding Coleman Common Stock) of which are held by the Company.
Coleman has not declared a cash dividend on the Coleman Common Stock
subsequent to its initial public offering on March 4, 1992. The declaration and
payment of dividends are subject to the discretion of the Board of Directors of
Coleman and subject to certain limitations under Delaware law, and is also
limited by the terms of Coleman's existing bank credit facility. The timing,
amount and form of dividends, if any, will depend, among other things, on
Coleman's results of operations, financial condition, cash requirements and
other factors deemed relevant by the Board of Directors of Coleman.
7. Effects of the Exchange Offer. Depending upon the principal amount of
LYONs exchanged for cash pursuant to the Exchange Offer, the LYONs remaining
outstanding after the Expiration Date, if any, may no longer meet the
requirements for continued listing on the NYSE and may, therefore, be delisted
from such exchange. Published guidelines for the NYSE indicate that the NYSE
would consider delisting if the aggregate market value or principal amount of
publicly held LYONs is reduced to less than $1 million. In addition, the LYONs
would be delisted from the NYSE if they were no longer registered under the
Exchange Act.
It is possible that even if the LYONs were to be delisted from the NYSE,
the LYONs remaining outstanding, if any, would continue to trade on another
securities exchange or in the over-the-counter market and that quotations would
continue to be reported through such exchange or through the National
Association of Securities Dealers or other sources. The continuation of such
trading and the continued availability of such quotations would depend, however,
upon a number of factors, including the number of Holders remaining at such
time, the interest in maintaining a market in the LYONs on the part of
securities firms and the possible termination of registration under the Exchange
Act as described below.
If, as a result of the exchange of LYONs for cash pursuant to the Exchange
Offer, the LYONs remaining outstanding, if any, no longer meet the listing
requirements of the NYSE, the market for the LYONs could be
11
<PAGE>
adversely affected, and there can be no assurance that any trading market for
the LYONs will exist after consummation of the Exchange Offer. An issue of
securities with a smaller outstanding market value available for public trading
(the 'float') may command a lower price than would a comparable issue of
securities with a greater float. Therefore, the market price for LYONs that are
not exchanged pursuant to the Exchange Offer may be adversely affected to the
extent that the amount of LYONs exchanged pursuant to the Exchange Offer reduces
the float.
Both the shares of the Coleman Common Stock and the LYONs are currently
registered under the Exchange Act, which requires, among other things, the
Company to comply with certain reporting requirements contained in the Exchange
Act. The LYONs, however, are currently eligible for deregistration under the
Exchange Act upon application of the Company to the SEC because the number of
Holders of record is less than 300. To date, the Company has not elected to
deregister the LYONs under the Exchange Act but reserves the right to do so in
the future. Termination of the registration of the LYONs under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to the SEC, although, pursuant to the terms of the Indenture, the
Company would be required to continue to provide the Trustee with reports
containing substantially the same information as would have been required to be
filed with the SEC had the Company continued to be subject to the Exchange Act
reporting requirements. If registration of the LYONs under the Exchange Act were
to be terminated, the LYONs would no longer be eligible for NYSE or other
national securities exchange listing or Nasdaq reporting. The Coleman Common
Stock will continue to be registered under the Exchange Act following
consummation of the Exchange Offer.
The LYONs and the Coleman Common Stock are currently 'margin securities'
under the rules of the Federal Reserve Board, which has the effect, among other
things, of allowing brokers to extend credit on the collateral of the LYONs and
the Coleman Common Stock. Following the purchase of LYONs pursuant to the
Exchange Offer, the LYONs (if any remain outstanding after the Exchange Offer
and until such time as any such outstanding LYONs are redeemed, which is
expected to occur on May 27, 1998 or as soon as practicable thereafter) and the
Coleman Common Stock will continue to be 'margin securities' for purposes of the
Federal Reserve Board's margin regulations. However, if registration of the
LYONs under the Exchange Act were terminated, the LYONs would no longer be
'margin securities' under the Rules of the Federal Reserve Board.
8. Source and Amount of Funds. Assuming that all outstanding LYONs are
exchanged for cash pursuant to the Exchange Offer, the total amount of funds
required by the Company to consummate the Exchange Offer, and to pay related
fees and expenses, is estimated to be approximately $194.0 million. The funds
used to consummate the exchange of LYONs for cash pursuant to the Exchange Offer
are expected to be provided through a capital contribution from Coleman Escrow.
Coleman Escrow intends to fund such capital contribution with a portion of the
Escrowed Funds obtained from the offerings of the Senior Notes. See SPECIAL
FACTORS--Section 2.
The First Priority Notes originally were issued at an issue price of
$649.49 per $1,000 principal amount at maturity. The Second Priority Notes
originally were issued at an issue price of $608.12 per $1,000 principal amount
at maturity. The original issue price of (i) each First Priority Note represents
a yield to maturity of 11.18% per annum and (ii) each Second Priority Note
represents a yield to maturity of 12.78% per annum, in each case calculated on a
semiannual basis from May 20, 1997. No periodic payments of interest will be
made on the Senior Notes.
The Senior Notes are (i) prior to the Coleman Holdings Merger, secured by a
pledge of all of the shares of capital stock of Coleman Holdings, (ii)
guaranteed on a non-recourse basis by the Company (the 'Non-Recourse Guaranty'),
which Non-Recourse Guaranty has initially been secured by a pledge of 522,710
shares of Coleman Common Stock that were available to be pledged and,
simultaneously with the Coleman Holdings Notes Redemption, will also be secured
by a pledge of the 26,000,000 shares of Coleman Common Stock currently pledged
to secure the Coleman Holdings Notes, and (iii) simultaneously with the Coleman
Holdings Notes Redemption, will be secured by a pledge of all of the shares of
capital stock of the Company. In addition, simultaneously with any release of
Escrowed Funds from time to time in connection with the LYONs Retirement, the
Non-Recourse Guaranty will also be secured by the shares of Coleman Common Stock
for which such exchanged LYONs are exchangeable that are released from the
pledge to secure any exchanged LYONs. Upon consummation of the Coleman Holdings
Notes Redemption and the LYONs Retirement, the Senior Notes will be secured by a
pledge of 44,067,520 shares of Coleman Common Stock, less any shares of Coleman
Common Stock delivered upon exchange of LYONs.
12
<PAGE>
Coleman Escrow currently anticipates that in order to pay the principal
amount at maturity of the Senior Notes, it will be required to adopt one or more
alternatives, such as seeking capital contributions or loans from its
affiliates, refinancing its indebtedness or selling its equity securities or the
equity securities or assets of Coleman. However, no determination has been made
by Coleman Escrow as to which alternatives it will pursue to pay the principal
amount at maturity of the Senior Notes.
9. Certain Information Concerning the Company and Coleman.
Description of the Company's Business
The Company is a holding company formed in March 1993. Its only significant
asset consists of 44,067,520 shares of Coleman Common Stock (which represent
approximately 83% of the outstanding shares of Coleman Common Stock). The
Company has no operations of its own. The Company is an indirect wholly owned
subsidiary of Mafco Holdings Inc., a corporation wholly owned by Ronald O.
Perelman. Information regarding Mr. Perelman's business address, principal
occupation or employment and five-year employment history is set forth in
Schedule I hereto. The LYONs are not guaranteed by Coleman or by any other
affiliate of the Company. The Company's principal executive office is located at
1767 Denver West Boulevard, Golden, Colorado 80401.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of the Company and certain other information are set forth in Schedule
I hereto.
Description of Coleman's Business
Coleman is a leading manufacturer and marketer of consumer products for the
outdoor recreation and hardware markets on a global basis. Coleman's products
have been sold domestically and internationally under the Coleman brand name
since the 1920s. Coleman participates in two primary markets, outdoor recreation
and hardware. Coleman's principal outdoor recreation products include a
comprehensive line of lanterns and stoves for outdoor recreational use,
fuel-related products such as disposable fuel cartridges, a broad range of
coolers and jugs, sleeping bags, backpacks, tents, outdoor folding furniture,
portable electric lights, spas, camping accessories and other products for
recreational use. Coleman's principal hardware products include portable
generators, portable and stationary air compressors, and safety and security
products such as smoke alarms, carbon monoxide detectors and thermostats.
Coleman's principal executive office is located at 1767 Denver West Boulevard,
Golden, Colorado 80401.
Summary Historical Financial Information of the Company
Set forth below is certain summary historical financial information
relating to the Company and its respective subsidiaries for the three months
ended March 31, 1997 and March 31, 1996, and the years ended December 31, 1996
and December 31, 1995. Due to the Company's approximate 83% ownership of
Coleman, the financial statements of the Company include the accounts of Coleman
and its subsidiaries after elimination of all material intercompany accounts and
transactions. Minority interest primarily represents the minority stockholders'
proportionate share of the results of operations and equity of Coleman. The
information relating to the Company and its subsidiaries was derived from (i)
the unaudited consolidated financial statements included in the Company's
Quarterly Report on Form 10-Q for the quarters, ended March 31, 1997 and March
31, 1996 (the 'Company 10-Qs'), and (ii) the audited consolidated financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 (the 'Company 10-K'). Copies of the Company's audited
consolidated financial statements for the years ended December 31, 1996 and
December 31, 1995 have been filed as an exhibit to the Schedule 13E-4 and the
Schedule 13E-3 filed by the Company with the SEC in connection with the Exchange
Offer. The summary financial information which follow is qualified in its
entirety by reference to the Company 10-Qs and the Company 10-K and all of the
financial statements and related notes contained therein, which are incorporated
by reference herein. Copies of the Company 10-Qs and the Company 10-K may be
obtained as set forth in Section 15. The statements of operations data for the
three-month periods ended March 31, 1997 and March 31, 1996 are unaudited;
however, in the opinion of management of the Company all adjustments (consisting
only of normal recurring accruals) necessary for a fair statement of the results
of operations for the three-month periods ended March 31, 1997 and March 31,
1996 have been included. Results for the interim periods are not necessarily
indicative of results for the full year.
13
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
SUMMARY FINANCIAL INFORMATION
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
------------------------ ----------------------
1997 1996 1996 1995
---------- ---------- ---------- --------
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net Revenues............................................. $ 295,464 $ 273,560 $1,220,216 $933,574
Cost of sales(a)......................................... 214,422 192,594 928,497 649,427
---------- ---------- ---------- --------
Gross profit............................................. 81,042 80,966 291,719 284,147
Selling, general and administrative expenses(a).......... 65,923 46,776 291,862 174,870
Asset impairment charge(b)............................... -- -- -- 12,289
Interest expense, net.................................... 13,854 11,056 50,767 35,930
Amortization of goodwill and deferred charges............ 3,010 2,392 11,056 8,309
Other (income) expense, net.............................. 271 (2,721) (1,604) 283
---------- ---------- ---------- --------
Earnings (loss) before income taxes, minority interest
and extraordinary item................................ (2,016) 23,463 (60,362) 52,466
Income tax (benefit) expense(a).......................... (775) 8,692 (14,753) 19,861
Minority interest in earnings of Camping Gaz............. 112 -- 1,872 --
Minority Interest in earnings (loss) of Coleman.......... 120 2,535 (7,262) 6,696
---------- ---------- ---------- --------
Earnings (loss) before extraordinary item................ (1,473) 12,236 (40,219) 25,909
Extraordinary loss on early extinguishment of debt, net
of income taxes....................................... -- (582) (1,244) (787)
---------- ---------- ---------- --------
Net (loss) earnings...................................... $ (1,473) $ 11,654 $ (41,463) $ 25,122
---------- ---------- ---------- --------
---------- ---------- ---------- --------
BALANCE SHEET DATA (AT PERIOD END):
Total Assets............................................. $1,253,432 $1,084,562 $1,206,449 $906,389
Long-term debt (including current portion)............... 746,500 645,994 758,207 520,691
Minority interest........................................ 44,598 52,390 45,088 49,266
Total stockholder's equity............................... 60,308 113,711 62,668 101,673
PER SHARE DATA:
Book value per common share.............................. $ 60.3 $ 113.7 $ 62.7 $ 101.7
RATIO OF EARNINGS TO FIXED CHARGES......................... (c) 2.90x (c) 2.25x
</TABLE>
- ------------------
(a) During 1996, Coleman recorded restructuring and certain other charges
totaling $52,516, net of tax. Cost of sales includes a pre-tax charge of
$44,005, selling, general and administrative expenses include a pre-tax
charge of $30,195, and the provision for income tax benefit includes $21,684
of net tax benefits resulting from these charges.
(b) Asset impairment charge reflects primarily the non-recurring charge taken in
connection with the adoption of Statement on Financial Accounting Standards
No. 121.
(c) The deficiency of earnings to fixed charges was $60,362 and $2,016 for the
year ended December 31, 1996 and the three months ended March 31, 1997,
respectively.
SUMMARY HISTORICAL FINANCIAL INFORMATION OF COLEMAN
Set forth below is certain summary historical financial information
relating to Coleman and its respective subsidiaries. Minority interest primarily
represents the minority stockholders' proportionate share of results of
operations and equity of Coleman. The summary historical information consists of
summary information relating to the three months ended March 31, 1997 and March
31, 1996, and the years ended December 31, 1996 and December 31, 1995. The
information relating to Coleman and its subsidiaries was derived from (i) the
unaudited consolidated financial statements included in Coleman's Quarterly
Reports on Form 10-Q for the quarter ended
14
<PAGE>
March 31, 1997 and March 31, 1996 (the 'Coleman 10-Qs'), and (ii) the audited
consolidated financial statements included in Coleman's Annual Report on Form
10-K for the year ended December 31, 1996 (the 'Coleman 10-K'). Copies of
Coleman's audited consolidated financial statements for the years ended December
31, 1996 and December 31, 1995 have been filed as an exhibit to the Schedule
13E-4 and the Schedule 13E-3 filed by the Company with the SEC in connection
with the Exchange Offer. The summary financial information which follows is
qualified in its entirety by reference to the Coleman 10-Qs and the Coleman 10-K
and all of the financial statements and related notes contained therein, which
are incorporated by reference herein. Copies of the Coleman 10-Qs and the
Coleman 10-K may be obtained as set forth in Section 15. The statements of
operations data for the three-month periods ended March 31, 1997 and March 31,
1996 are unaudited; however, in the opinion of management of Coleman all
adjustments (consisting only of normal recurring accruals) necessary for a fair
statement of the results of operations for the three-month periods ended March
31, 1997 and March 31, 1996 have been included. Results for the interim periods
are not necessarily indicative of results for the full year.
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
SUMMARY FINANCIAL INFORMATION
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
------------------------ ----------------------
1997 1996 1996 1995
---------- ---------- ---------- --------
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net Revenues............................................. $ 295,464 $ 273,560 $1,220,216 $933,574
Cost of sales(a)......................................... 214,422 192,594 928,497 649,427
---------- ---------- ---------- --------
Gross profit............................................. 81,042 80,966 291,719 284,147
Selling, general and administrative expenses(a).......... 65,873 46,737 291,669 174,688
Asset impairment charge(b)............................... -- -- -- 12,289
Interest expense, net.................................... 10,712 8,081 38,727 24,545
Amortization of goodwill and deferred charges............ 2,865 2,247 10,473 7,745
Other expense, net....................................... 271 30 1,151 334
---------- ---------- ---------- --------
Earnings (loss) before income taxes, minority interest
and extraordinary item................................ 1,321 23,871 (50,301) 64,546
Income tax (benefit) expense(a).......................... 510 8,832 (10,927) 24,479
Minority interest in earnings of Camping Gaz............. 112 -- 1,872 --
---------- ---------- ---------- --------
Earnings (loss) before extraordinary item................ 699 15,039 (41,246) 40,067
Extraordinary loss on early extinguishment of debt, net
of income taxes....................................... -- -- (647) (787)
---------- ---------- ---------- --------
Net (loss) earnings...................................... $ 699 $ 15,039 $ (41,893) $ 39,280
---------- ---------- ---------- --------
---------- ---------- ---------- --------
BALANCE SHEET DATA (AT PERIOD END):
Total assets............................................. $1,205,062 $1,019,589 $1,160,086 $844,487
Long-term debt (including current portion)............... 568,764 480,364 583,613 355,257
Minority interest........................................ 1,549 -- 1,608 --
Total stockholders' equity............................... 249,977 306,490 252,945 292,342
PER SHARE DATA:
(Loss) earnings per common share before extraordinary
items................................................. $ 0.01 $ 0.28 $ (0.78) $ 0.75
Book value per common share.............................. 4.70 5.77 4.75 5.50
RATIO OF EARNINGS TO FIXED CHARGES......................... 1.10x 3.56x (c) 3.13x
</TABLE>
(Footnotes on next page)
15
<PAGE>
(Footnotes from previous page)
- ------------------
(a) During 1996, Coleman recorded restructuring and certain other charges
totaling $52,516, net of tax. Cost of sales includes a pre-tax charge of
$44,005, selling, general and administrative expenses include a pre-tax
charge of $30,195, and the provision for income tax benefit includes $21,684
of net tax benefits resulting from these charges.
(b) Asset impairment charge reflects primarily the non-recurring charge taken in
connection with the adoption of Statement on Financial Accounting Standards
No. 121.
(c) The deficiency of earnings to fixed charges was $50,301 for the year ended
December 31, 1996.
PRO FORMA FINANCIAL INFORMATION
The following unaudited summary pro forma consolidated condensed statements
of operations data for the three months ended March 31, 1997 and the year ended
December 31, 1996 give pro forma effect to the contribution by Coleman Escrow to
the Company of $194.0 million and the use of such funds to exchange all
outstanding LYONs for cash pursuant to the Exchange Offer and to pay related
fees and expenses (collectively, the 'Transaction'), in each case, as if the
Transaction had been consummated on January 1, 1996, and the pro forma
consolidated balance sheet data as of March 31, 1997 and December 31, 1996 give
pro forma effect to the Transaction as if the Transaction had been consummated
on March 31, 1997 and December 31, 1996, respectively. The pro forma financial
information assumes that all outstanding LYONs are exchanged for cash in the
Exchange Offer. The pro forma adjustments are based upon available information
and certain assumptions that management of the Company believes are reasonable
under the circumstances. The summary pro forma financial data do not purport to
represent the results of operations or the financial position of the Company and
its subsidiaries that actually would have occurred had the Transaction been
consummated on the aforesaid dates. Following the LYONs Retirement and the
Coleman Holdings Notes Redemption, the Company will be merged with Coleman
Escrow, with the Company continuing as the surviving corporation in such merger.
The summary pro forma financial data should be read in conjunction with the
historical consolidated financial information in the consolidated financial
statements contained in the Company 10-Qs and the Company 10-K.
16
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
--------------------------------------- ---------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA ACTUAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents............... $ 12,866 $ 193,955 (1) $ 12,866 $ 17,299 $ 193,955 (1) $ 17,299
(193,955)(2) (193,955)(2)
Accounts and notes receivable, net...... 271,617 271,617 209,942 209,942
Inventories............................. 288,166 288,166 287,502 287,502
Deferred tax assets..................... 39,895 39,895 40,466 40,466
Prepaid assets and other................ 16,611 16,611 14,885 14,885
---------- ----------- ---------- ---------- ----------- ----------
Total current assets................. 629,155 629,155 570,094 570,094
Property, plant and equipment, net........ 194,739 194,739 199,182 199,182
Intangible assets related to business
acquired, net........................... 341,907 341,907 349,761 349,761
Note receivable affiliate................. 47,739 47,739 54,739 54,739
Deferred tax assets and other............. 39,892 (5,043)(2) 34,849 32,673 (5,121)(2) 27,552
---------- ----------- ---------- ---------- ----------- ----------
$1,253,432 $ (5,043) $1,248,389 $1,206,449 $ (5,121) $1,201,328
---------- ----------- ---------- ---------- ----------- ----------
---------- ----------- ---------- ---------- ----------- ----------
Current Liabilities:
Accounts and notes payable.............. $ 194,462 $ 194,462 $ 132,841 $ 132,841
Other current liabilities............... 115,902 115,902 113,691 113,691
---------- ----------- ---------- ---------- ----------- ----------
Total current liabilities............ 310,364 310,364 246,532 246,532
Long-term debt............................ 745,770 (177,736)(2) 568,034 757,460 (174,594)(2) 582,866
Income taxes payable--affiliate........... 16,681 (8,079)(2) 8,602 18,528 (9,303)(2) 9,225
Other liabilities......................... 75,711 75,711 76,173 76,173
Minority interest......................... 44,598 44,598 45,088 45,088
Stockholder's equity...................... 60,308 (13,183)(2) 241,080 62,668 (15,179)(2) 241,444
193,955 (1) 193,955 (1)
---------- ----------- ---------- ---------- ----------- ----------
$1,253,432 $ (5,043) $1,248,389 $1,206,449 $ (5,121) $1,201,328
---------- ----------- ---------- ---------- ----------- ----------
---------- ----------- ---------- ---------- ----------- ----------
</TABLE>
- ------------------
(1) Reflects the capital contribution by Coleman Escrow to the Company.
(2) Reflects the LYONs Retirement at the Exchange Offer price of $343.61 per
$1,000 principal amount of LYONs. Stockholder's equity reflects the
extraordinary loss, net of taxes, representing the write-off of deferred
charges related to the LYON's, expenses related to the Exchange Offer, and
the premium of the Exchange Offer price over the accreted value of the
LYONs.
17
<PAGE>
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997 YEAR ENDED DECEMBER 31, 1996
--------------------------------------- -------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA ACTUAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenues................................ $ 295,464 $ $ 295,464 $1,220,216 $ $1,220,216
Cost of sales............................... 214,422 214,422 928,497 928,497
---------- ----------- ---------- ---------- ----------- ----------
Gross profit................................ 81,042 81,042 291,719 291,719
Selling, general and administrative
expenses.................................. 65,923 65,923 291,862 291,862
Interest expense, net....................... 13,854 (3,142)(1) 10,712 50,767 (12,051)(1) 38,716
Amortization of goodwill and deferred
charges................................... 3,010 (78)(1) 2,932 11,056 (313)(1) 10,743
Other income, net........................... 271 271 (1,604) (1,604)
---------- ----------- ---------- ---------- ----------- ----------
Earnings (loss) before income taxes,
minority interest and extraordinary item.. (2,016) 3,220 1,204 (60,362) 12,364 (47,998)
Provision (benefit) for income taxes........ (775) 1,224 (2) 449 (14,753) 4,698 (2) (10,055)
Minority interest........................... 232 232 (5,390) (5,390)
---------- ----------- ---------- ---------- ----------- ----------
Earnings before extraordinary item.......... $ (1,473) $ 1,996 $ 523 $ (40,219) $ 7,666 $ (32,553)
---------- ----------- ---------- ---------- ----------- ----------
---------- ----------- ---------- ---------- ----------- ----------
</TABLE>
- ------------------
(1) Reflects the elimination of interest expense and amortization of deferred
financing costs relating to the LYONs. To the extent that not all LYONs are
exchanged in the Exchange Offer, the Company will continue to incur interest
expense on the outstanding principal amount of the LYONs not exchanged at a
rate of 7.25%.
(2) Reflects the tax effects of the pro forma adjustments.
18
<PAGE>
10. Transactions and Arrangements Concerning the LYONs. Except as
described in this Offer to Accept LYONs for Exchange for Cash or as set forth on
Schedule II hereto, (i) neither the Company nor, to the Company's knowledge, any
of the persons listed in Schedule I hereto, any associate or subsidiary of any
of the foregoing, any executive officer or director of any such subsidiary or
any pension, profit-sharing or similar plan of the Company, beneficially owns or
has any right to acquire, directly or indirectly, any securities of the Company;
(ii) neither the Company nor, to the Company's knowledge, any of the persons or
entities referred to above has effected any transaction in respect of the LYONs
during the past 60 days and; (iii) the Company has not purchased any LYONs since
January 1, 1995. Except as set forth in this Offer to Accept LYONs for Exchange
for Cash, neither the Company nor, to its knowledge, any of the persons listed
on Schedule I hereto is a party to any contract, arrangement, understanding or
relationship, directly or indirectly, with any other person with respect to any
securities of the Company. Except as set forth in this Offer to Accept LYONs for
Exchange for Cash, neither the Company nor, to the Company's knowledge, any of
the persons listed on Schedule I hereto or any of its affiliates has current
plans or proposals which relate to or would result in any extraordinary
corporate transaction involving the Company or any of its subsidiaries, such as
the acquisition or disposition of securities of the Company, a merger,
reorganization, liquidation or the sale or transfer of a material amount of
assets (although the Company from time to time may consider various acquisition
or divestiture opportunities), any change in its current Board of Directors or
management, any material change in the present dividend rate or policy,
indebtedness or capitalization, any material change in its business or corporate
structure, any material change in its certificate of incorporation or by-laws,
causing a class of its equity securities to become delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association, causing a
class of its equity securities to become eligible for termination of
registration pursuant to the Exchange Act, the suspension of the Company's
obligation to file reports pursuant to Section 13 or 15(d) of the Exchange Act,
or any actions similar to any of the foregoing. Except as set forth in this
Offer to Accept LYONs for Exchange for Cash, since January 1, 1995, there have
been no contacts, negotiations or transactions between the Company or, to the
Company's knowledge, any of the persons listed on Schedule I hereto or any of
the Company's affiliates, on the one hand, and any third party, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets. See SPECIAL FACTORS-- Section 2 and THE EXCHANGE
OFFER--Section 7.
11. Certain Legal Matters; Regulatory Approvals. The Company is not aware
of any license or regulatory permit that appears to be material to its business
that might be adversely affected by its exchange of LYONs for cash pursuant to
the Exchange Offer or of any approval or other action by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, that would be required for the Company's exchange of LYONs for cash
pursuant to the Exchange Offer. Should any such approval or other action be
required, the Company currently contemplates that it will seek such approval or
other action. The Company cannot predict whether it may determine that it is
required to delay the acceptance for exchange of, or payment for, LYONs
surrendered for exchange pursuant to the Exchange Offer pending the outcome of
any such matter. There can be no assurance that any such approval or other
action, if needed, would be obtained or would be obtained without substantial
conditions or that the failure to obtain any such approval or other action might
not result in adverse consequences to the Company's business. The Company's
obligations under the Exchange Offer to accept LYONs for exchange is subject to
certain conditions. See THE EXCHANGE OFFER--Section 5.
12. Certain Federal Income Tax Consequences. The following is a general
summary of certain U.S. federal income tax considerations generally applicable
to the Exchange Offer under current law. The general summary set forth below is
based upon current laws, regulations, rulings and judicial decisions, all of
which are subject to change, possibly with retroactive effect. The discussion
below does not address all aspects of U.S. federal income taxation that may be
relevant to particular Holders in the context of their specific investent
circumstances or certain types of Holders subject to special treatment under
such laws (e.g. financial institutions, tax-exempt organizations, foreign
corporations and individuals who are not citizens or residents of the U.S.). In
addition, the discussion does not address any aspect of state, local or foreign
taxation.
EACH HOLDER SHOULD CONSULT WITH SUCH HOLDER'S TAX ADVISOR IN DETERMINING
THE FEDERAL, STATE, LOCAL AND ANY OTHER TAX CONSEQUENCES TO THE PARTICULAR
HOLDER OF THE EXCHANGE OF LYONS PURSUANT TO THE EXCHANGE OFFER AND ANY
19
<PAGE>
CHANGES IN APPLICABLE TAX LAWS SUBSEQUENT TO THE DATE HEREOF AND ANY PROPOSED
LEGISLATION.
In general, a Holder will recognize gain or loss on the exchange of LYONs
for cash pursuant to the Exchange Offer equal to the difference, if any, between
the Holder's tax basis in the LYONs and the cash received by the Holder upon
such exchange. The Holder's tax basis will be, in general, the Holder's original
cost for the LYONs increased by any market discount and original issue discount
previously included in income by the Holder during the period the LYONs are held
by the Holder. Such gain or loss generally will be capital gain or capital loss
if the LYONs are held as a capital asset, and the capital gain or capital loss
will be long-term if the Holder's holding period for the LYONs is more than one
year on the sale date. However, in the case of a Holder who acquired LYONs at a
market discount within the meaning of Sections 1276 and 1278(a)(2) of the
Internal Revenue Code of 1986, as amended, gain recognized upon the exchange of
such LYONs for cash will constitute ordinary income to the extent of the accrued
market discount not previously included in the Holder's income.
Certain foreign Holders may be subject to United States federal withholding
tax with respect to the LYONs. See THE EXCHANGE OFFER--Section 4.
13. Extension of the Surrender Period; Termination; Amendments. The
Company expressly reserves the right, in its sole discretion, at any time or
from time to time and regardless of whether or not any of the events set forth
in THE EXCHANGE OFFER--Section 5 shall have occurred or shall be deemed by the
Company to have occurred, to extend the period of time during which the Exchange
Offer is open and thereby delay acceptance for exchange of any LYONs by giving
oral or written notice of such extension to the Depositary. During any such
extension, all LYONs previously surrendered for exchange and not exchanged or
withdrawn will remain subject to the Exchange Offer, except to the extent that
such LYONs may be withdrawn as set forth in THE EXCHANGE OFFER--Section 3. The
Company also expressly reserves the right, in its sole discretion, to terminate
the Exchange Offer and not accept for exchange any LYONs not theretofore
accepted for exchange upon the occurrence of any of the conditions specified in
THE EXCHANGE OFFER--Section 5 by giving oral or written notice of such
termination to the Depositary and making a public announcement thereof. Any
delay by the Company of payment of Exchange Offer consideration for LYONs which
it has accepted for exchange is limited by Rule 13e-4(f)(5) promulgated under
the Exchange Act, which requires that the Company must pay the consideration
offered or return the LYONs surrendered for exchange promptly after termination
or withdrawal of an exchange offer. Subject to compliance with applicable law,
the Company further reserves the right, in its sole discretion, and regardless
of whether or not any of the events set forth in THE EXCHANGE OFFER--Section 5
shall have occurred or shall be deemed by the Company to have occurred, to amend
the Exchange Offer in any respect (including, without limitation, by decreasing
or increasing the consideration offered in the Exchange Offer upon exchange of
LYONs or by decreasing the number of LYONs being sought in the Exchange Offer).
Any extension, termination or amendment to the Exchange Offer will be followed
by public announcement thereof, such announcement, in the case of an extension,
to be issued no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date. Any public announcement made
pursuant to the Exchange Offer will be disseminated promptly to Holders in a
manner reasonably designed to inform Holders of such change. Without limiting
the manner in which the Company may choose to make a public announcement, except
as required by applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
making a release to the Dow Jones News Service.
If the Company materially changes the terms of the Exchange Offer or the
information concerning the Exchange Offer, the Company will extend the Exchange
Offer to the extent required by applicable law. The minimum period during which
an offer must remain open following material changes in the terms of the offer
or information concerning the offer (other than a change in price or a change in
percentage of securities sought) will depend on the facts and circumstances,
including the relative materiality of such terms or information. The SEC has
stated that, as a general rule, it is of the view that an offer should remain
open for a minimum of five business days from the date that notice of such a
material change is first published, sent or given. If (i) the Company increases
or decreases the consideration offered upon exchange of LYONs or the Company
decreases the number of LYONs being sought and (ii) the Exchange Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from, and including, the date that notice of such
increase or decrease
20
<PAGE>
is first published, sent or given, the Exchange Offer will be extended until the
expiration of such period of ten business days.
14. Fees and Expenses. Bear, Stearns & Co. Inc., is acting as Dealer
Manager for the Company in connection with the Exchange Offer. The Dealer
Manager will receive reasonable and customary compensation for its services,
will be reimbursed by the Company for its reasonable out-of-pocket expenses,
including attorneys' fees, and will be indemnified against certain liabilities
in connection with the Exchange Offer, including liabilities under the federal
securities laws. The Dealer Manager has provided, and continues to provide
investment banking and other financial advisory services to the Company in the
ordinary course of its business.
The Depositary and the Information Agent will each receive reasonable and
customary compensation for their services in connection with the Exchange Offer,
will also be reimbursed for certain out-of-pocket expenses, and will be
indemnified against certain liabilities in connection with the Exchange Offer,
including certain liabilities under the federal securities laws. None of the
Dealer Manager, the Depositary nor the Information Agent has been retained to
make solicitations or recommendations in connection with the Exchange Offer. As
of May 21, 1997, the Dealer Manager held approximately $1,435,000 million in
aggregate principal amount of LYONs and intends to surrender all such LYONs for
exchange in the Exchange Offer.
Estimated fees and expenses incurred or to be incurred by the Company in
connection with the Exchange Offer are approximately as follows:
<TABLE>
<S> <C>
Legal fees and expenses....................................... $ 150,000
SEC filing fee................................................ $ 38,541
Depository fee................................................ $ 1,000
Dealer Manager and Information Agent fees.................... $ 700,000(1)
Printing and mailing fees..................................... $ 75,000
Miscellaneous expenses........................................ $ 35,459
----------
Total.................................................... $1,000,000
----------
----------
</TABLE>
- ------------------
(1) Assumes all outstanding LYONs are exchanged for cash in the Exchange Offer.
The Company will not pay fees or commissions to any broker, dealer,
commercial bank, trust company or other person (other than fees to the Dealer
Manager) for soliciting the surrender of LYONs pursuant to the Exchange Offer.
The Company will, however, on request, reimburse such person for customary
handling and mailing expenses incurred in forwarding materials in respect of the
Exchange Offer to the beneficial owners for which they act as nominees. No such
broker, dealer, commercial bank or trust company has been authorized to act as
the Company's agent for purposes of this Exchange Offer. The Company will pay
(or cause to be paid) any transfer taxes on the exchange of LYONs for cash
pursuant to the Exchange Offer, except as otherwise provided in Instruction 6 of
the Letter of Transmittal. Other than as described above, no fees will be paid
to brokers, dealers or others by the Company in connection with the Exchange
Offer.
15. Miscellaneous. The Company 10-Qs , the Company 10-K, the Coleman 10-Qs
and the Coleman 10-K have been filed with the SEC. Written requests for such
documents should be addressed to: Investor Relations, Coleman Worldwide
Corporation, 1767 Denver West Boulevard, Golden, Colorado 80401, in the case of
documents filed by the Company, or to Investor Relations, The Coleman Company
Inc., 1767 Denver West Boulevard, in the case of documents filed by Coleman.
Telephone requests may be directed to the Corporate Secretary, at (303)
202-2400, in the case of documents filed by the Company or Coleman.
The Company and Coleman are each subject to the informational requirements
of the Exchange Act, and in accordance therewith, file reports, proxy statements
and other information with the SEC. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the SEC's regional offices located at 7 World Trade Center, 13th
Floor, Suite 1300, New York, New York 10048 and Suite 1400, Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material may also
be obtained by mail from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Such information may
also be accessed electronically by means of SEC's home page on the Internet
(http://www.sec.gov.). In addition, such reports, proxy statements and other
information concerning the Company
21
<PAGE>
and Coleman can be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, on which exchange certain
securities of the Company and Coleman are listed. The Company has also filed a
Schedule 13E-4 and a Schedule 13E-3 with the SEC. These documents contain
additional information with respect to the Exchange Offer. Such Schedules and
certain amendments thereto may be examined and copies may be obtained at the
same places and in the same manner as set forth above (except that such
Schedules may not be available in the regional offices of the SEC).
The Company is not aware of any jurisdiction in which the making of the
Exchange Offer would not be in compliance with the laws of such jurisdiction. To
the extent that the Company becomes aware that the making of the Exchange Offer
in any given jurisdiction would not be in compliance with applicable law, the
Company will make a good faith effort to comply with such law. If, after such
good faith effort, the Company cannot comply with any such law, the Exchange
Offer will not be made to (nor will surrenders for exchange be accepted from or
on behalf of) Holders residing in such jurisdiction. The Exchange Offer is not
being made to, nor will surrenders for exchange be accepted from, or on behalf
of, Holders in any jurisdiction in which the making or acceptance of the
Exchange Offer would not be in compliance with the laws of such jurisdiction.
COLEMAN WORLDWIDE CORPORATION
May 23, 1997
22
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY
Directors and Executive Officers of the Company. Set forth below is the
name, current business address, citizenship and the present principal occupation
or employment and material occupations, positions, offices or employments for
the past five years of each director and executive officer of the Company.
Unless otherwise indicated, each person identified below is employed by the
Company. Directors are identified by an asterisk. Each such person is a citizen
of the United States.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
Ronald O. Perelman* .......... Director and Chairman of the Board of Directors of the Company since its
MacAndrews & Forbes formation in 1993 and has been Chairman of the Board of Directors and Chief
Holdings Inc. Executive Officer of Mafco Holdings Inc. ('Holdings') and MacAndrews & Forbes
35 East 62nd Street Holdings Inc. ('MacAndrews Holdings'), diversified holding companies, and various
New York, NY 10021 affiliates for more than the past five years. Mr. Perelman is also Chairman of
the Board of Directors of Andrews Group Incorporated ('Andrews Group'),
Consolidated Cigar Holdings Inc. ('Cigar Holdings '), Mafco Consolidated Group
Inc. ('Mafco Consolidated'), Meridian Sports Incorporated ('Meridian') and M & F
Worldwide Corp. ('M & F'), and Mr. Perelman is the Chairman of the Executive
Committees of the Boards of Marvel Entertainment Group, Inc. ('Marvel'), Revlon
Consumer Products Corporation ('Revlon Products'), Revlon, Inc. ('Revlon') and
Coleman. Mr. Perelman is also a Director of the following corporations which file
reports pursuant to the Exchange Act: Andrews Group, Coleman, Coleman Holdings
Inc., Cigar Holdings, Consolidated Cigar Corporation ('Cigar Corp.'), California
Federal Bank, A Federal Savings Bank ('CalFed'), The Cosmetic Center Inc.
('Cosmetic Center'), First Nationwide Holdings Inc. ('First Nationwide
Holdings'), First Nationwide (Parent) Holdings Inc. ('First Nationwide Parent'),
Mafco Consolidated, Marvel, Marvel III Holdings Inc. ('Marvel III'), Marvel
(Parent) Holdings Inc. ('Marvel Parent'), Meridian, M & F, Pneumo Abex
Corporation ('Pneumo Abex'), Revlon Worldwide Corporation ('Revlon Worldwide'),
Revlon, Revlon Products and Toy Biz, Inc. ('Toy Biz'). (On December 27, 1996,
Marvel Parent, Marvel III and Marvel and several of its subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the United States
Bankruptcy Code.)
Donald G. Drapkin* ........... Director of the Company and Coleman Holdings since their respective formations
MacAndrews & Forbes and of Coleman since 1989. He has been Vice Chairman and a Director of MacAndrews
Holdings Inc. Holdings and various of its affiliates since 1987. Mr. Drapkin is also a Director
35 East 62nd Street of the following corporations which file reports pursuant to the Exchange Act:
New York, NY 10021 Algos Pharmaceutical Corporation, Andrews Group, Cigar Holdings, Consolidated
Cigar, Marvel, Marvel Parent, Marvel III, Revlon Products, Revlon, Revlon
Worldwide, Toy Biz and VIMRx Pharmaceuticals Inc. Mr. Drapkin was a partner in
the law firm of Skadden, Arps, Slate, Meagher & Flom for more than five years
prior to March 1987. (On December 27, 1996, Marvel Parent, Marvel III and Marvel
and several of its subsidiaries filed voluntary petitions
for reorganization under Chapter 11 of the United States Bankruptcy Code.)
</TABLE>
S-I-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
Irwin Engelman ............... Executive Vice President, Chief Financial Officer and Treasurer of the Company
MacAndrews & Forbes and Coleman Holdings since February 1997 and has been Executive Vice President,
Holdings Inc. Chief Financial Officer and Director of Holdings and MacAndrews Holdings,
35 East 62nd Street diversified holding companies, and various affiliates since 1992. Mr. Engelman
New York, NY 10021 was Executive Vice President and Chief Financial Officer of GAF Corporation, a
specialty chemical and building materials company, from 1990 to 1992. Mr.
Engelman was President and Chief Operating Officer of Citytrust Bancorp Inc. from
1988 to 1990; Executive Vice President of the Blackstone Group LP from 1987 to
1988; and Executive Vice President of General Foods Corporation for more than
five years prior to 1987. (On December 27, 1996, Marvel Parent and Marvel III, of
which Mr. Engelman is an executive officer, filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code.)
<S> <C>
Jerry W. Levin* .............. Director of the Company and Coleman Holdings since March 14, 1994. He has been a
The Coleman Company, Inc. director of Coleman since 1989 and served as Chairman of the Board of Coleman
625 Madison Avenue until October 1990. Mr. Levin has been Chairman of the Board of Coleman and
New York, NY 10022 Chief Executive Officer of Coleman since February 1997. Mr. Levin has been
Chairman of the Board of Revlon and of Revlon Products since November 1995 and a
Director of Revlon and Revlon Products since their respective formations in 1992
until November 1995. Mr. Levin has been Executive Vice President of MacAndrews
Holdings since March 1989. For 15 years prior to joining MacAndrews Holdings, he
held various senior executive positions with The Pillsbury Company. Mr. Levin is
also a Director of the following corporations which file reports pursuant to the
Exchange Act: Cosmetic Center, Ecolab, Inc., First Bank System, Inc., Meridian,
Revlon, Revlon Products and Revlon Worldwide.
Barry F. Schwartz ............ Executive Vice President and General Counsel of the Company and Coleman Holdings
MacAndrews & Forbes since September 1994 and Executive Vice President and General Counsel of Holdings
Holdings Inc. and MacAndrews Holdings, a diversified holding company, and various affiliates
35 East 62nd Street since 1993 and was Senior Vice President of Holdings and MacAndrews Holdings from
New York, NY 10021 1989 to 1993. (On December 27, 1996, Marvel Parent and Marvel III, of which Mr.
Schwartz is an executive officer, filed voluntary petitions for reorganization
under Chapter 11 of the United States Bankruptcy Code.)
Bruce Slovin* ................ Director of the Company and Coleman Holdings since their respective formations
MacAndrews & Forbes and of Coleman since February 1993 and President of Coleman Holdings and the
Holdings Inc. Company since August 1, 1995. He has been President of MacAndrews Holdings, a
35 East 62nd Street diversified holding company, and various affiliates for more than the past five
New York, NY 10021 years. Mr. Slovin is a Director of the following corporations which file reports
pursuant to the Exchange Act: Andrews Group, Cantel Industries, Inc., Meridian,
Continental Health Affiliates, Inc., Infu-Tech, Inc. and M & F.
</TABLE>
S-I-2
<PAGE>
SCHEDULE II
CERTAIN TRANSACTIONS INVOLVING LYONS
The following table sets forth certain information concerning exchanges of
LYONs for cash pursuant to the terms of the Indenture since January 1, 1995.
<TABLE>
<CAPTION>
RANGE OF PRICES
PER $1000
PRINCIPAL AMOUNT
PRINCIPAL AT MATURITY WEIGHTED
AMOUNT ------------------ AVERAGE
PURCHASED LOW HIGH PRICE
---------- ------- ------- --------
<S> <C> <C> <C> <C>
1995
First Quarter.................................................... $3,045,000 $294.49 $311.18 $295.04
Second Quarter................................................... -- -- -- --
Third Quarter.................................................... -- -- -- --
Fourth Quarter................................................... -- -- -- --
1996
First Quarter.................................................... $ 375,000 $320.99 $357.31 $347.17
Second Quarter................................................... -- -- -- --
Third Quarter.................................................... -- -- -- --
Fourth Quarter................................................... -- -- -- --
1997
First Quarter.................................................... -- -- -- --
Second Quarter................................................... -- -- -- --
</TABLE>
S-II-1
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for LYONs
and any other required documents should be sent or delivered by each Holder or
such Holder's broker, dealer, commercial bank, trust company or other nominee to
the Depositary at one of its addresses set forth below.
The Depositary for the Exchange Offer is:
FIRST TRUST NATIONAL ASSOCIATION
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
First Trust National Association (612) 244-1537 First Trust National Association
Corporate Trust Depositary 180 East 5th Street
P.O. Box 64485 4th Floor Window
St. Paul, MN 55164-9549 St. Paul, MN 55101
Attn: Corporate Trust Attn: Corporate Trust
</TABLE>
Any questions or requests for assistance or for additional copies of this
Offer to Accept LYONs for Exchange for Cash, the Letter of Transmittal or the
Notice of Guaranteed Delivery may be directed to the Information Agent at the
telephone numbers and addresses below. You may also contact the Dealer Manager
or your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Exchange Offer. To confirm your delivery of your
LYONs, you are directed to contact the Depositary.
The Information Agent for the Exchange Offer is:
KISSEL-BLAKE INC.
110 Wall Street, 11th Floor
New York, New York 10005
Call Toll Free:
1-800-554-7733
Banks and Brokers call:
212-344-6733
(call collect)
The Dealer Manager for the Exchange Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-4054
(call collect)
<PAGE>
LETTER OF TRANSMITTAL
IN RESPECT OF
LIQUID YIELD OPTION(TRADEMARK) NOTES DUE MAY 27, 2013
(ZERO COUPON-SENIOR SECURED)
OF
COLEMAN WORLDWIDE CORPORATION
PURSUANT TO THE OFFER TO ACCEPT LYONS FOR EXCHANGE FOR CASH
DATED MAY 23, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JUNE 20, 1997, UNLESS THE EXCHANGE OFFER IS EXTENDED.
The Depositary for the Exchange Offer is:
FIRST TRUST NATIONAL ASSOCIATION
By Mail: By Facsimile Transmission: By Hand or Overnight
First Trust National (612) 244-1537 Courier:
Association First Trust National
Corporate Trust Confirm By Telephone: Association
Depositary (612) 973-5800 180 East 5th Street
P.O. Box 64485 4th Floor Window
St. Paul, MN 59164-9549 St. Paul, MN 55101
Attn: Corporate Trust Attn: Corporate Trust
------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE
ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER
OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by holders (each a 'Holder' and,
collectively, the 'Holders') of Liquid Yield Option(Trademark) Notes due May 27,
2013 (the 'LYONs') of Coleman Worldwide Corporation (the 'Company') if: (i)
certificates representing LYONs are to be physically delivered to the Depositary
herewith by such Holders; (ii) surrender of LYONs for exchange is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
('DTC') or the Philadelphia Depository Trust Company ('Philadep') (each, a
'Book-Entry Transfer Facility' and, collectively, the 'Book-Entry Transfer
Facilities'); (iii) surrender of LYONs for exchange is to be made by guaranteed
delivery; or (iv) surrender of LYONs for exchange is to be made according to the
DTC Automated Tender Offer Program ('ATOP'), in each case pursuant to the
procedures set forth in 'THE EXCHANGE OFFER--Procedures for Exchanging LYONs' in
the Offer to Accept LYONs for Exchange for Cash.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
The undersigned should complete, execute and deliver this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer (as defined below).
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Offer to Accept LYONs for Exchange for Cash.
Your bank or broker can assist you in completing this form. The
instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers as
indicated at the end of this Letter of Transmittal. Additional copies of the
Offer to Accept LYONs for Exchange for Cash, this Letter of Transmittal or other
documents may be obtained from the Information Agent, the Dealer Manager or from
brokers, dealers, commercial banks, trust companies or other nominees. See
Instruction 12 below.
- ------------------
(TM) Trademark of Merrill Lynch & Co., Inc.
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF LYONS SURRENDERED
(SEE INSTRUCTIONS)
NAME(S) AND ADDRESS(ES) OF REGISTERED CERTIFICATE(S)
HOLDER(S) (ATTACH ADDITIONAL LIST, IF NECESSARY
(PLEASE FILL IN, IF BLANK) (SEE INSTRUCTION 3))
AMOUNT
AMOUNT OF OF
LYONS LYONS
REPRESENTED SURRENDERED
CERTIFICATE BY FOR
NUMBER(S)* CERTIFICATE(S)* EXCHANGE**
<S> <C> <C> <C>
TOTAL LYONS
</TABLE>
* Need not be completed by Holders delivering LYONs by book-entry transfer or
in accordance with DTC's ATOP procedures for transfer.
** Unless otherwise indicated, it will be assumed that the amount of all LYONs
delivered to the Depositary are being surrendered for exchange. See
Instruction 4. Surrenders of LYONs for exchange may be made only in
denominations of $1,000 principal amount, or in integral multiples of
$1,000 principal amounts.
/ / CHECK HERE IF LYONS SURRENDERED FOR EXCHANGE ARE BEING DELIVERED BY BOOK-
ENTRY TRANSFER (INCLUDING THROUGH ATOP) TO THE DEPOSITARY'S ACCOUNT AT ONE
OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:
Name of Institution Surrendering for Exchange _____________________________
Check Box of Applicable Book-Entry Transfer Facility:
/ / DTC / / Philadep
Account Transaction Code
Number: ------------------------------ Number: ---------------------------
/ / CHECK HERE IF CERTIFICATES FOR LYONS SURRENDERED FOR EXCHANGE ARE BEING
DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) ____________________________________________
Date of Execution of Notice of Guaranteed Delivery ________________________
Name of Eligible Institution which Guaranteed Delivery ____________________
If Delivery is by book-entry transfer:
Name of Institution Surrendering for Exchange _____________________________
Check Box of Applicable Book-Entry Transfer Facility:
/ / DTC / / Philadep
Account Transaction Code
Number: ------------------------------ Number: ---------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND SURRENDER THEIR LYONS FOR
EXCHANGE MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY. HOLDERS WHO
WISH TO RECEIVE THE EXCHANGE OFFER CONSIDERATION PURSUANT TO THE EXCHANGE OFFER
MUST VALIDLY SURRENDER FOR EXCHANGE (AND NOT WITHDRAW) THEIR LYONS TO THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
- --------------------------------------------------------------------------------
Ladies and Gentlemen:
The undersigned hereby surrenders to Coleman Worldwide Corporation, a
Delaware corporation (the 'Company'), the certificates described above for
Liquid Yield Option(Trademark) Notes due May 27, 2013 (the 'LYONs') for exchange
for cash at $343.61 per $1,000 principal amount at maturity, net to the
exchanging holder of LYONs (a 'Holder'), upon the terms and subject to the
conditions set forth in the Offer to Accept LYONs for Exchange for Cash dated
May 23, 1997 (the 'Offer to Accept LYONs for Exchange for Cash'), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which
collectively constitute the 'Exchange Offer').
The undersigned understands that the 'Expiration Date' for purposes of the
Exchange Offer means 12:00 Midnight, New York City time on Friday, June 20,
1997, unless and until the Company shall, in its sole discretion, have extended
the period of time for which the Exchange Offer is to remain open, in which
event the term 'Expiration Date' shall mean the latest time and date to which
such Exchange Offer shall have been so extended by the Company.
Subject to and effective upon acceptance by the Company for exchange of,
and payment of the Exchange Offer consideration for, the principal amount of
LYONs surrendered for exchange with or pursuant to this Letter of Transmittal,
the undersigned, pursuant to the Indenture dated as of May 27, 1993 (the
'Indenture'), between the Company and First Trust National Association, as
successor Trustee, hereby surrenders for exchange, assigns and transfers to or
upon the order of the Company all right, title and interest in and to all the
LYONs that are being surrendered for exchange hereby. The undersigned hereby
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned (with full knowledge that the Depositary
also acts as the agent of the Company) with respect to such LYONs, with full
power of substitution (such power-of-attorney being deemed to be an irrevocable
power coupled with an interest) to (i) present such LYONs and all evidences of
transfer and authenticity to, or transfer ownership of, such LYONs on the
account books maintained by any Book-Entry Transfer Facilities to, or upon the
order of, the Company; (ii) present such LYONs for exchange and transfer on the
books of the Company; and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such LYONs, all in accordance with the terms
and conditions of the Exchange Offer.
LYONs surrendered for exchange may be withdrawn by written notice of
withdrawal received by the Depositary, or by a properly transmitted 'Agents
Message' (as defined in the Offer to Accept LYONs in Exchange for Cash) through
ATOP, prior to the Expiration Date. In the event of termination of the Exchange
Offer, the LYONs surrendered for exchange pursuant to the Exchange Offer will be
returned promptly to the Holder surrendering for exchange.
If any LYONs surrendered for exchange are not exchanged pursuant to the
Exchange Offer for any reason, or if LYONs are delivered for a greater principal
amount of LYONs than are surrendered for exchange, such unexchanged LYONs or
LYONs not surrendered for exchange, as the case may be, will be returned without
expense to the Holder surrendering for exchange (or, in the case of LYONs
surrendered for exchange by book-entry transfer, such LYONs will be credited to
an account maintained at the appropriate Book-Entry Transfer Facility), in
either case as promptly as practicable following the acceptance for exchange of
LYONs pursuant to the Exchange Offer or the termination of the Exchange Offer,
as the case may be.
The undersigned understands that surrenders for exchange of LYONs pursuant
to any of the procedures described in 'THE EXCHANGE OFFER--Procedures for
Exchanging LYONS' of the Offer to Accept LYONs for Exchange for Cash and in the
instructions hereto and acceptance thereof by the Company will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer. The undersigned understands
that the Company will be deemed to have accepted LYONs validly surrendered for
exchange (or defectively surrendered for exchange LYONs with respect to which
the Company has waived such defect) if, as, and when the Company gives oral or
written notice thereof to the Depositary.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to surrender for exchange, assign and transfer the
LYONs surrendered for exchange hereby, and that, when such LYONs are accepted
for exchange by the Company, the Company will acquire good title thereof, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim or right. The undersigned will, upon request, execute and
deliver any additional documents the Depositary or the Company deems necessary
or desirable to complete the surrender, assignment, transfer and exchange of the
LYONs surrendered for exchange hereby. The undersigned has read and agrees to
all the terms of the Offer to Accept LYONs for Exchange for Cash and this Letter
of Transmittal.
All authority herein conferred or agreed to be conferred by this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned, and any obligation of the undersigned hereunder shall be
binding upon the heirs, executors, administrators, personal and legal
representatives, successors and assigns of the undersigned. Except as stated in
the Offer to Accept LYONs for Exchange for Cash, this surrender for exchange is
irrevocable.
The undersigned understands that the delivery and surrender of the LYONs is
not effective, and the risk of loss of the LYONs does not pass to the
Depositary, until the receipt by the Depositary of this Letter of Transmittal,
or a facsimile hereof, properly completed and duly executed, together with all
accompanying evidences of authority and any other required documents in form
satisfactory to the Company. All questions as to form of all documents and the
validity (including the time of receipt) and acceptance of LYONs for exchange
and withdrawals of LYONs will be determined by the Company at its sole
discretion, which determination shall be final and binding.
The names and addresses of the registered Holders should be printed, if
they are not already printed above, as they appear on the certificates
representing the LYONs surrendered herewith. The certificates and the amount of
LYONs that the undersigned wishes to surrender should be indicated in the
appropriate boxes.
- ------------------
(TM)Trademark of Merrill Lynch & Co., Inc.
<PAGE>
Unless otherwise indicated herein under 'Special Issuance Instructions',
the undersigned hereby requests that any LYONs representing principal amounts
not surrendered for exchange or not accepted for exchange be issued in the
name(s) of the undersigned (and in the case of LYONs surrendered for exchange by
book-entry transfer, by credit to the account at the Book-Entry Transfer
Facility designated above), and that checks for payment of the Exchange Offer
consideration be issued to the order of the undersigned. Similarly, unless
otherwise indicated herein under 'Special Delivery Instructions', the
undersigned hereby requests that any LYONs representing principal amounts not
surrendered for exchange or accepted for exchange and checks for payment of the
Exchange Offer consideration be delivered to the undersigned at the address
shown below the undersigned's signature(s). In the event that the 'Special
Issuance Instructions' box or the 'Special Delivery Instructions' box is, or
both are, completed, the undersigned hereby requests that any LYONs representing
principal amounts not surrendered for exchange or not accepted for exchange be
issued in the name(s) of, such LYONs be delivered to, and checks for payment of
the Exchange Offer consideration be issued in the name(s) of, and checks be
delivered to, the person(s) at the address(es) so indicated, as applicable. The
undersigned recognizes that the Company has no obligation pursuant to the
'Special Issuance Instructions' box or 'Special Delivery Instructions' box to
transfer any LYONs from the name of the registered Holder(s) thereof if the
Company does not accept for exchange any of the principal amount of such LYONs
so surrendered for exchange.
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5, 6 AND 7)
To be completed ONLY if the check for the Exchange Offer consideration for
LYONs accepted for exchange and/or LYONs not surrendered for exchange or not
accepted for exchange are to be issued in the name of someone other than the
undersigned registered Holder(s) of LYONs.
Issue / / check / / certificates to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(ZIP CODE)
________________________________________________________________________________
(TAXPAYER IDENTIFICATION NO.)
(SEE SUBSTITUTE FORM W-9 HEREIN)
Credit unexchanged LYONs delivered by book-entry transfer to the Book Entry
Transfer Facility Account set forth below:
/ / DTC
/ / Philadep
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5, 6, AND 7)
To be completed ONLY if the check for the Exchange Offer consideration for
LYONs accepted for exchange and/or LYONs not surrendered for exchange or not
accepted for exchange are to be mailed to someone other than the undersigned
registered Holder(s) of LYONs at an address other than that shown below the
undersigned registered Holder(s) of LYONs signature(s).
Mail / / check / / certificates to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(ZIP CODE)
________________________________________________________________________________
(TAXPAYER IDENTIFICATION NO.)
(SEE SUBSTITUTE FORM W-9 HEREIN)
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL HOLDERS OF LYONS SURRENDERING FOR EXCHANGE
REGARDLESS OF WHETHER LYONS ARE BEING PHYSICALLY DELIVERED HEREWITH)
In order to validly surrender LYONs for exchange pursuant to the Exchange
Offer, this Letter of Transmittal must be signed by the registered Holder(s) of
LYONs exactly as their name(s) appear(s) on the LYONs certificate(s) or, if
surrendered for exchange by a participant in one of the Book-Entry Transfer
Facilities, exactly as such participant's name appears on a security position
listing as the owner of LYONs, or by person(s) authorized to become registered
Holder(s) by endorsements and documents transmitted with this Letter of
Transmittal.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below
under 'Capacity' and submit evidence satisfactory to the Company of such
person's authority to so act. See Instruction 5 below.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATORY
Date: ,
------------- -------
Name(s):
-----------------------------------------------------------------------
(PLEASE PRINT)
- --------------------------------------------------------------------------------
Capacity (full title):
---------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-------------------------------------------------
SIGNATURE GUARANTEE (SEE INSTRUCTION 1 BELOW)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
- --------------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
- --------------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(PRINTED NAME)
- --------------------------------------------------------------------------------
(TITLE)
Dated: ,
------------- -------
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE
EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a participant in the Security Transfer
Agents Medallion Program, the Stock Exchange Medallion Program or the New York
Stock Exchange Medallion Signature Guarantee Program (each, an 'Eligible
Institution') unless (a) this Letter of Transmittal is signed by the registered
Holder(s) of the LYONs (which term, for purposes of this document, shall include
any participant in one of the Book-Entry Transfer Facilities whose name appears
on the security position listing as the owner of the LYONs) surrendered herewith
and such Holder(s) have not completed either of the boxes entitled 'Special
Payment Instructions' or 'Special Delivery Instructions' on this Letter of
Transmittal or (b) such LYONs are surrendered for the account of an Eligible
Institution. See Instruction 5.
2. DELIVERY OF THE LETTER OF TRANSMITTAL AND LYONS. This Letter of
Transmittal is to be used if (a) certificates are to be forwarded herewith, (b)
surrender of LYONs for exchange is to be made by book-entry transfer, or (c)
surrender of LYONS for exchange is to be made through ATOP, in each case
pursuant to the procedures set forth in 'THE EXCHANGE OFFER--Procedures for
Exchanging LYONS' of the Offer to Accept LYONs for Exchange for Cash.
Certificates for all physically delivered LYONs, a confirmation of a book-entry
transfer of all LYONs delivered electronically into the Depositary's account at
one of the Book-Entry Transfer Facilities or confirmation of surrender through
ATOP, together in each case with a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees,
or an Agent's Message in connection with a book-entry delivery of LYONs, and any
other documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth at the end of this Letter of
Transmittal prior to the Expiration Date.
Holders whose certificates are not immediately available or who cannot
deliver their LYONs and all other required documents to the Depositary by the
Expiration Date must surrender their LYONs pursuant to the guaranteed delivery
procedure set forth in 'THE EXCHANGE OFFER--Procedures for Exchanging LYONS' of
the Offer to Accept LYONs for Exchange for Cash. Pursuant to such procedure: (a)
such surrender must be made by or through an Eligible Institution, (b) a
properly completed and duly executed Notice of Guaranteed Delivery substantially
in the form provided by the Company must be received by the Depositary by the
Expiration Date and (c) the certificates for all physically delivered LYONs, or
a confirmation of a book-entry transfer of all LYONs delivered electronically
into the Depositary's account at one of the Book-Entry Transfer Facilities, or
an electronic transmission of acceptance causing DTC to transfer LYONs to the
Depositary in accordance with DTC's ATOP procedures, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, and any other documents required by this
Letter of Transmittal, must be received by the Depositary within three New York
Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice. For
LYONs to be validly surrendered for exchange pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery by the
Expiration Date.
THE METHOD OF DELIVERY OF LYONS, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE EXCHANGING HOLDER AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR
LYONS ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
No alternative, conditional or contingent surrenders will be accepted, and
no certificates representing less than $1,000 principal amount of LYONs will be
exchanged. By executing this Letter of Transmittal (or facsimile thereof), each
Holder surrendering LYONs for exchange waives any right to receive any notice of
the acceptance of such Holder's LYONs for exchange.
SUBMISSION OF A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL
(OR A FACSIMILE THEREOF) TO THE DEPOSITARY WILL CONSTITUTE COMPLETION AND
DELIVERY OF THE EXCHANGE NOTICE REQUIRED BY THE INDENTURE
<PAGE>
DATED AS OF MAY 27, 1993, BETWEEN THE COMPANY AND FIRST TRUST NATIONAL
ASSOCIATION, AS SUCCESSOR TRUSTEE.
3. INADEQUATE SPACE. If the space provided in the box captioned
'Description of LYONs Surrendered' is inadequate, the certificate numbers and/or
the amount of LYONs should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. PARTIAL SURRENDERS AND UNPURCHASED LYONS. (Not applicable to Holders who
deliver LYONs by book-entry transfer.) Surrenders of LYONs for exchange pursuant
to the Exchange Offer will be accepted only in principal amounts equal to $1,000
or integral multiples thereof. If less than the entire amount represented by any
certificate delivered to the Depositary is to be surrendered, fill in the amount
of LYONs that is to be surrendered in the box entitled 'Amount of LYONs
Surrendered for Exchange'. If such amount of LYONs is exchanged, a new
certificate for the remainder of the amount of LYONs represented by the old
certificate(s) will be sent (or, if surrendered for exchange by book-entry
transfer, returned by credit to the account at the Book-Entry Facility
designated herein) to and in the name of the registered Holder(s) (unless
otherwise provided by such Holder(s) having completed either of the boxes
entitled 'Special Payment Instructions' or 'Special Delivery Instructions' on
the Letter of Transmittal) as promptly as practicable following the expiration
or termination of the Exchange Offer. The entire amount of LYONs represented by
the certificate(s) listed and delivered to the Depositary will be deemed to have
been surrendered for exchange unless otherwise indicated.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered Holder(s) of the
LYONs surrendered herewith, the signature(s) must correspond with the name(s) as
written on the face of the certificates without any change whatsoever. If this
Letter of Transmittal is signed by a participant in one of the Book-Entry
Transfer Facilities whose name is shown as the owner of the LYONs surrendered
for exchange hereby, the signature must correspond with the name shown on the
security position listing as the owner of the LYONs.
If any of the LYONs surrendered herewith are registered in the name of two
or more joint owners, each such owner must sign this Letter of Transmittal. If
any of the LYONs surrendered herewith are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered Holder(s) of the
LYONs surrendered herewith, no endorsements of certificates or bond powers are
required unless payment is to be made, or the certificates for LYONs not
surrendered or not exchanged are to be issued, in the name(s) of any person(s)
other than the registered Holder(s). Signatures on any such certificates or bond
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered Holder(s) of the LYONs surrendered herewith, however, the
certificates must be endorsed or accompanied by appropriate bond powers and
signed exactly as the name(s) of the registered Holder(s) appear(s) on the
certificates for such LYONs and signature(s) on any such certificate(s) or bond
powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal or any certificate is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, agent, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing by giving such person's full title
in such capacity and proper evidence satisfactory to the Company of the
authority of such person to act in such capacity must be submitted.
6. TRANSFER TAXES. Except as provided in this Instruction, the Company
will pay any transfer taxes with respect to the exchange of LYONs pursuant to
the Exchange Offer other than withholding taxes as described under 'Important
Tax Information' below. See Instruction 8. If, however, payment of the Exchange
Offer consideration is to be made to, or LYONs not surrendered for exchange or
not exchanged are to be registered in the name of, any person other than the
registered Holder(s), the amount of all transfer taxes, if any (whether imposed
on the registered Holder(s) or such other person), payable on account of the
transfer to such person will be deducted from the Exchange Offer consideration
unless satisfactory evidence of the payment of such taxes or exemption therefrom
is submitted.
7. SPECIAL ISSUANCE AND SPECIAL DELIVERY INSTRUCTIONS. Holders
surrendering LYONs for exchange should indicate in the applicable box or boxes
the name and address to which LYONs for principal amounts not
<PAGE>
surrendered for exchange or not accepted for exchange or checks for payment of
the Exchange Offer consideration are to be issued or sent, if different from the
name and address of the Holder signing this Letter of Transmittal. In the case
of issuance in a different name, the taxpayer identification or social security
number of the person named must also be indicated. If no instructions are given,
LYONs not surrendered for exchange or not accepted for exchange will be
returned, and Exchange Offer consideration will be paid (subject to the terms
and conditions of the Exchange Offer) to the Holder surrendering for exchange.
Any Holder surrendering for exchange by book-entry transfer may request that
LYONs not surrendered for exchange or not accepted for exchange be credited to
such account at either of the Book-Entry Transfer Facilities as such Holder may
designate under the caption 'Special Issuance Instructions'. If no such
instructions are given, any such LYONs not surrendered for exchange or not
accepted for exchange will be returned by crediting the account at the Book-
Entry Transfer Facility designated above.
8. TAXPAYER IDENTIFICATION NUMBER. Each Holder surrendering LYONs for
exchange is required to provide the Depositary with the Holder's correct
taxpayer identification number ('TIN'), generally the Holder's social security
or federal employer identification number, on Substitute Form W-9, which is
provided under 'Important Tax Information' below, or alternatively, to establish
another basis for exemption from backup withholding. A Holder must cross out
item (2) in the Certification box on Substitute Form W-9 if such Holder may be
subject to backup withholding. If the Depositary is not provided with the
correct taxpayer identification number, the Holder may be subject to a $50
penalty imposed by the Internal Revenue Service, and any Exchange Offer
consideration paid to the Holder may be subject to backup withholding tax. Any
amount withheld under these rules will be creditable against the Holder's
federal income tax liability; and if withholding results in an overpayment of
taxes, a refund may be obtained. The box in Part 3 of the form should be checked
if the Holder surrendering for exchange has not been issued a TIN and has
applied for a TIN or intends to apply for a TIN in the near future. If the box
in Part 3 is checked and the Depositary is not provided with a TIN within 60
days, thereafter the Depositary will withhold 31% on all such payments of the
Exchange Offer consideration until a TIN is provided to the Depositary. Foreign
Holders must submit a completed Form W-8 in order to be exempt from the 31%
federal income tax backup withholding on the payment of the Exchange Offer
consideration.
9. IRREGULARITIES. All questions as to the form of all documents and the
validity (including time of receipt) and acceptance of surrenders for exchange
and withdrawals of LYONs will be determined by the Company, in its sole
discretion, which determination shall be final and binding. ALTERNATIVE,
CONDITIONAL OR CONTINGENT SURRENDERS FOR EXCHANGE WILL NOT BE CONSIDERED VALID.
The Company reserves the absolute right to reject any or all LYONs surrendered
for exchange that are not in proper form or the acceptance of which would, in
the Company's opinion, be unlawful. The Company also reserves the right to waive
any defects, irregularities or conditions of surrender for exchange as to
particular LYONs. The Company's interpretations of the terms and conditions of
the Exchange Offer (including the instructions in this Letter of Transmittal)
will be final and binding. Any defect or irregularity in connection with
surrenders for exchange of LYONs must be cured within such time as the Company
determines, unless waived by the Company. Surrenders for exchange of LYONs shall
not be deemed to have been made until all defects or irregularities have been
waived by the Company or cured. None of the Company, the Depositary, the Dealer
Manager, the Information Agent or any other person will be under any duty to
give notice of any defects or irregularities in surrenders of LYONs for
exchange, or will incur any liability to Holders for failure to given any such
notice.
10. WAIVER OF CONDITIONS. The Company expressly reserves the absolute
right, in its sole discretion, to amend or waive any of the conditions to the
Exchange Offer in the case of any LYONs surrendered for exchange, in whole or in
part, at any time and from time to time.
11. MUTILATED, LOST, STOLEN OR DESTROYED LYONS. Any Holder whose LYONs
have been mutilated, lost, stolen or destroyed should write to the Trustee,
First Trust National Association, attention of Corporate Trust Department, for
further instructions.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to
the procedure for surrendering LYONs for exchange and requests for assistance or
additional copies of the Offer to Accept LYONs for Exchange for Cash and this
Letter of Transmittal may be directed to the Dealer Manager or the Information
Agent, whose addresses and telephone numbers appear below.
<PAGE>
IMPORTANT TAX INFORMATION
Under Federal income tax laws, a Holder whose LYONs are accepted for
exchange in the Exchange Offer is required to provide the Depositary (as payer)
with such Holder's correct TIN on Substitute Form W-9 below or otherwise
establish a basis for exemption from backup withholding. If such Holder is an
individual, the TIN is his social security number. If the Depositary is not
provided with the correct taxpayer identification number and certificate of no
loss of exemption from backup withholding or other adequate basis for exemption,
the Holder may be subject to a $50 penalty imposed by the Internal Revenue
Service, and any Exchange Offer consideration paid to the Holder may be subject
to a 31% backup withholding tax. Any amount withheld under these rules will be
creditable against the Holder's Federal income tax liability and if withholding
results in an overpayment of taxes, a refund may be obtained.
Certain Holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that Holder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification on Substitute Form W-9 for additional instructions.
EACH HOLDER IS URGED TO CONSULT WITH SUCH HOLDERS TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE EXCHANGE AND THE APPLICABILITY AND EFFECT OF
FEDERAL, STATE, LOCAL AND OTHER TAX LAWS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding, each nonexempt Holder must provide his
correct TIN by completing the applicable form provided in this Letter of
Transmittal, certifying that the TIN provided is correct (or that such Holder is
awaiting a TIN) and that (i) the Holder has not been notified by the Internal
Revenue Service that he is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the Holder that he is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Holder is required to give the Depositary its TIN (e.g., social
security number or employer identification number). If the LYONs are held in
more than one name or are held not in the name of the actual owner, consult the
enclosed 'Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9' for additional guidance on which number to report.
<PAGE>
PAYER'S NAME: FIRST TRUST NATIONAL ASSOCIATION
SUBSTITUTE PART 1 -- PLEASE
PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND ------------------------------
CERTIFY BY SIGNING Social Security Number
AND DATING BELOW.
FORM W-9
OR
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE ------------------------------
Employer Identification Number
PART II PART III
PAYER'S REQUEST FOR CERTIFICATION -- Awaiting TIN
TAXPAYER Under penalties of ------------------
IDENTIFICATION perjury, I certify
NUMBER (TIN) that:
(1) The number shown
on this form is my
correct taxpayer
identification number
(or I am waiting for a
number to be issued to
me); and
(2) I am not subject
to backup withholding
because (i) I am exempt
from backup
withholding, or (ii) I
have not been notified
by the Internal Revenue
Service ('IRS') that I
am subject to backup
withholding as a result
of failure to report
all interest or
dividends, or (iii) the
IRS has notified me
that I am no longer
subject to backup
withholding.
CERTIFICATE INSTRUCTIONS -- You must cross out item
(2) in Part 2 above if you have been notified by the
IRS that you are subject to backup withholding
because of underreporting interest or dividends on
your tax return. However, if after being notified by
the IRS that you are subject to backup withholding
you received another notification from the IRS
stating that you are no longer subject to backup
withholding, do not cross out item (2).
SIGNATURE: _________________________________________ DATE: __________________
NAME: ______________________________________________
(PLEASE PRINT)
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART III OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Officer or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within 60 days, 31% of all reportable
payments made to me thereafter will be withheld until I provide a number.
SIGNATURE: _________________________________________ DATE: __________________
NAME: ______________________________________________
(PLEASE PRINT)
<PAGE>
Requests for assistance or additional copies of the Offer to Accept LYONs
for Exchange for Cash and this Letter of Transmittal may be obtained from the
Information Agent or the Dealer Manager at their respective addresses or
telephone numbers set forth below.
The Information Agent for the Exchange Offer is:
KISSEL-BLAKE INC.
110 Wall Street, 11th Floor
New York, NY 10005
Banks and Brokers call
(212) 344-6733 (collect)
Call Toll Free 1-800-554-7733
The Dealer Manager for the Exchange Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-2000
<PAGE>
NOTICE OF GUARANTEED DELIVERY
IN RESPECT OF
LIQUID YIELD OPTION(TRADEMARK) NOTES DUE MAY 27, 2013
(ZERO COUPON-SENIOR SECURED)
OF
COLEMAN WORLDWIDE CORPORATION
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JUNE 20, 1997, UNLESS THE EXCHANGE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE EXCHANGE OFFER IS:
FIRST TRUST NATIONAL ASSOCIATION
By Mail: By Facsimile Transmission: By Hand or Overnight
First Trust National (612) 244-1537 Courier:
Association First Trust National
Corporate Trust Confirm By Telephone: Association
Depository (612) 973-5800 180 East 5th Street
P.O. Box 64485 4th Floor Window
St. Paul, MN 55164-9549 St. Paul, MN 55101
Attn: Corporate Trust Attn: Corporate Trust
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR A
TRANSMISSION VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
This Notice of Guaranteed Delivery or one substantially equivalent
hereto must be used to accept the offer by Coleman Worldwide Corporation (the
'Company') to accept for exchange for cash any and all of its outstanding Liquid
Yield Option(TM) Notes due May 27, 2013 (the 'LYONs') at $343.61 per
$1,000 principal amount at maturity, net to the exchanging holder of LYONs (a
'Holder'), upon the terms and subject to the conditions set forth in the Offer
to Accept LYONs for Exchange for Cash dated May 23, 1997 (the 'Offer to Accept
LYONs for Exchange for Cash') and in the related Letter of Transmittal (which
collectively constitute the 'Exchange Offer') if certificates for the LYONs are
not immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary by the Expiration Date.
This form must be delivered by an Eligible Institution (as defined
below) by hand or transmitted by telegram, facsimile transmission or mail to the
Depositary as set forth below. All capitalized terms used herein but not defined
herein have the meaning given them in the Offer to Accept LYONs for Exchange for
Cash.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on the Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
- ------------------
(TM)Trademark of Merrill Lynch & Co., Inc.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby surrender(s) for exchange for cash, pursuant to the
terms of the Indenture dated as of May 27, 1993 between the Company and First
Trust National Association, as successor Trustee, and upon the terms and subject
to the conditions set forth in the Offer to Accept LYONs for Exchange for Cash
and in the related Letter of Transmittal, receipt of which is hereby
acknowledged, the principal amount LYONs set forth below pursuant to the
guaranteed delivery procedures described in 'THE EXCHANGE OFFER--Procedures for
Exchanging LYONS' in the Offer to Accept LYONs for Exchange for Cash.
The undersigned understands that LYONs surrendered for exchange will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof. The undersigned understands that LYONs surrendered for exchange
pursuant to the Exchange Offer may not be withdrawn, except under the limited
circumstances described in the Offer to Accept LYONs for Exchange for Cash.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and every obligation of the undersigned under
this Notice of Guaranteed Delivery shall be binding upon the heirs, personal
representatives, executors, administrators, successors, assigns, trustees in
bankruptcy and other legal representatives of the undersigned.
PLEASE SIGN AND COMPLETE
Signature(s) of Registered Holders or
Authorized Signatory: __________________________________________________________
________________________________________________________________________________
Name(s) of Registered Holder(s):
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Principal Amount of LYONs Surrendered
for Exchange:
________________________________________________________________________________
________________________________________________________________________________
Certificate No(s). of LYONs (if available):
________________________________________________________________________________
________________________________________________________________________________
Address(es): ___________________________________________________________________
________________________________________________________________________________
Zip Code
Area Code and Telephone No.:
________________________________________________________________________________
________________________________________________________________________________
If LYONs will be delivered by book-entry transfer (including through ATOP),
check trust company below:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Depository Account No.: ________________________________________________________
Date: __________________________________________________________________________
This Notice of Guaranteed Delivery must be signed by the Holder(s) of LYONs
exactly as their name(s) appear on LYONs or on a security position listing as
the owner of LYONs, or by person(s) authorized to become registered holder(s) by
endorsements and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s): _______________________________________________________________________
________________________________________________________________________________
Capacity (full title) __________________________________________________________
Address(es) ____________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
DO NOT SEND LYONS WITH THIS FORM. LYONS SHOULD BE SENT TO THE DEPOSITARY
TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL.
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange, Inc. Medallion Signature Program or the
Stock Exchange Medallion Program (each, an 'Eligible Institution'), hereby
guarantees (i) that the LYONs surrendered for exchange hereby are in proper form
for exchange (pursuant to the procedures set forth in 'THE EXCHANGE
OFFER--Procedures for Exchanging LYONs' of the Offer to Accept LYONs for
Exchange for Cash), and (ii) the Depositary will receive (a) such LYONS, or a
Book-Entry Confirmation of the transfer of such LYONs into the Depositary's
account at a Book-Entry Transfer Facility, or a confirmation of DTC's transfer
of LYONs to the Depositary in accordance with DTC's ATOP procedures for transfer
(pursuant to the procedure for book-entry transfer and ATOP transfer,
respectively, set forth in the in 'THE EXCHANGE OFFER--Procedures for Exchanging
LYONs' in the Offer to Accept LYONs for Exchange for Cash), and (b) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof), with
any required signature guarantees (or, in the case of a book-entry transfer or
ATOP transfer, an Agent's Message), and any other documents required by the
Letter of Transmittal, all within three New York Stock Exchange, Inc. trading
days after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and LYONs
to the Depositary within the time period shown herein. Failure to do so could
result in a financial loss to such Eligible Institution.
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(Zip Code)
Area Code and
Telephone No.: _________________________________________________________________
________________________________________________________________________________
(Authorized Signature)
Name: __________________________________________________________________________
(Please Print)
Title: _________________________________________________________________________
Dated: __________________________________________________________________ , 1997
<PAGE>
[BEAR STEARNS LOGO] BEAR, STEARNS & CO. INC.
245 PARK AVENUE
NEW YORK, NEW YORK 10167
(212) 272-2000
ATLANTA o BOSTON
CHICAGO o DALLAS o LOS ANGELES
NEW YORK o SAN FRANCISCO
FRANKFURT o GENEVA o HONG KONG
LONDON o PARIS o TOKYO
COLEMAN WORLDWIDE CORPORATION
OFFER TO ACCEPT FOR EXCHANGE FOR CASH
ANY AND ALL OUTSTANDING
LIQUID YIELD OPTION(TM) NOTES DUE MAY 27, 2013
(ZERO COUPON-SENIOR SECURED)
AT $343.61 PER $1,000
PRINCIPAL AMOUNT AT MATURITY
May 23, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY,JUNE 20, 1997, UNLESS THE EXCHANGE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Enclosed for your consideration is an Offer to Accept LYONs for Exchange
for Cash dated May 23, 1997 (the 'Offer to Accept LYONs for Exchange for Cash')
and a form of Letter of Transmittal (which collectively constitute the 'Exchange
Offer') relating to the offer by Coleman Worldwide Corporation (the 'Company')
to accept for exchange for cash, pursuant to the Indenture dated as of May 27,
1993 (the 'Indenture'), between the Company and First Trust National
Association, as successor Trustee, any and all of its outstanding Liquid Yield
Option(TM) Notes due May 27, 2013 (the 'LYONs') at $343.61 per $1,000 principal
amount at maturity, net to the exchanging holder of LYONs (a 'Holder'), upon the
terms and subject to the conditions set forth in the Offer to Accept LYONs for
Exchange for Cash and in the related Letter of Transmittal. All LYONs validly
surrendered for exchange in the Exchange Offer and not withdrawn will be
purchased upon the terms and subject to the conditions of the Exchange Offer.
ANY LYONS REMAINING OUTSTANDING ON MAY 27, 1998 WILL BE REDEEMED ON SUCH
DATE (OR AS SOON AS PRACTICABLE THEREAFTER) BY THE COMPANY IN ACCORDANCE WITH
THE TERMS OF THE INDENTURE FOR CASH AT A REDEMPTION PRICE OF $343.61 PER $1,000
PRINCIPAL AMOUNT AT MATURITY UNLESS, PRIOR TO THE CLOSE OF BUSINESS ON SUCH
DATE, HOLDERS ELECT TO EXCHANGE THEIR LYONS FOR 15.706 SHARES OF COMMON STOCK OF
THE COLEMAN COMPANY, INC. PER $1,000 PRINCIPAL AMOUNT AT MATURITY IN ACCORDANCE
WITH THE TERMS OF THE INDENTURE. ANY SUCH EXCHANGE WILL BE SUBJECT
- ------------------
(TM) Trademark of Merrill Lynch & Co., Inc.
<PAGE>
TO THE COMPANY'S RIGHT TO ELECT TO PAY AN AMOUNT IN CASH EQUAL TO THE THEN
MARKET VALUE OF SUCH SHARES OF COMMON STOCK OF THE COLEMAN COMPANY, INC. IN
LIEU, IN WHOLE OR IN PART, OF DELIVERING SUCH SHARES.
THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM AMOUNT OF LYONS
BEING SURRENDERED FOR EXCHANGE. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN
CONDITIONS. SEE 'EXCHANGE OFFER-CERTAIN CONDITIONS OF THE EXCHANGE OFFER' OF THE
OFFER TO ACCEPT LYONS FOR EXCHANGE FOR CASH.
We are asking you to contact your clients for whom you hold LYONs
registered in your name or in the name of your nominee. In addition, we ask you
to contact your clients who, to your knowledge, hold LYONs registered in their
own names.
FOR YOUR INFORMATION AND FOR FORWARDING TO YOUR CLIENTS, FOR WHOM YOU HOLD
LYONS REGISTERED IN YOUR NAME OR IN THE NAME OF YOUR NOMINEE, WE ARE ENCLOSING
EACH OF THE FOLLOWING DOCUMENTS:
1. THE OFFER TO ACCEPT LYONS FOR EXCHANGE FOR CASH dated May 23,
1997.
2. A LETTER OF TRANSMITTAL for your use in connection with the
surrender for exchange of the LYONs and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information relating
to backup federal income tax withholding.
3. A printed form of a 'TO OUR CLIENTS' letter, including
Instructions, which may be sent to your clients for whose account you hold
LYONs registered in your name or the name of your nominee with space
provided for obtaining the clients' instructions with regard to the
Exchange Offer.
4. A NOTICE OF GUARANTEED DELIVERY to be used to surrender LYONs for
exchange if certificates for the LYONs are not immediately available or the
procedures for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the Depositary by the
Expiration Date.
5. A return envelope addressed to First Trust National Association,
the Depositary.
YOUR PROMPT ATTENTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS
PROMPTLY. THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, JUNE 20, 1997, UNLESS EXTENDED.
The Company will not pay fees or commissions to any broker, dealer,
commercial bank, trust company or other nominee (other than the Dealer Manager)
for soliciting the surrender of LYONs pursuant to the Exchange Offer. The
Company will, however, on request, reimburse such person for customary handling
and mailing expenses incurred in forwarding materials in respect of the Exchange
Offer to the beneficial owners for which they act as nominees. No such broker,
dealer, commercial bank, trust company or other nominee has been authorized to
act as the Company's agent for purposes of this Exchange Offer. The Company will
pay (or cause to be paid) any transfer taxes on the exchange of LYONs for cash
pursuant to the Exchange Offer, except as otherwise provided in Instruction 6 of
the Letter of Transmittal. Other than as described above, no fees will be paid
to brokers, dealers or others by the Company in connection with the Exchange
Offer.
If a Holder desires to surrender LYONs for exchange pursuant to the
Exchange Offer and such Holder's certificates for LYONs are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary by the Expiration Date, such LYONs may nevertheless be surrendered
for exchange in accordance with the guaranteed delivery procedures set forth in
the Offer to Accept LYONs for Exchange for Cash under the caption 'THE EXCHANGE
OFFER--Procedures for Exchanging LYONs.'
In order to accept the Exchange Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be
delivered to the Depositary with either certificate(s) representing the LYONs
surrendered for exchange, confirmation of their book-entry transfer, or
confirmation of surrender through ATOP, all in accordance with the instructions
set forth in the Letter of Transmittal and the Offer to Accept LYONs for
Exchange for Cash.
2
<PAGE>
Additional copies of the enclosed material may be obtained from the
Information Agent, Kissel-Blake Inc., by calling (212) 344-6733 (collect) or
(800) 554-7733.
Very truly yours,
BEAR, STEARNS & CO. INC.
Attn: Jonathan Ezrow
(800) 843-7457 (toll-free)
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON
AS AN AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE
DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON
BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS
EXPRESSLY MADE IN THE OFFER TO ACCEPT LYONS FOR EXCHANGE FOR CASH OR THE LETTER
OF TRANSMITTAL.
3
<PAGE>
COLEMAN WORLDWIDE CORPORATION
OFFER TO ACCEPT FOR EXCHANGE FOR CASH
ANY AND ALL OUTSTANDING
LIQUID YIELD OPTION(TM) NOTES DUE MAY 27, 2013
(ZERO COUPON-SENIOR SECURED)
AT $343.61 PER $1,000
PRINCIPAL AMOUNT AT MATURITY
May 23, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, JUNE 20, 1997, UNLESS THE EXCHANGE OFFER IS
EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Accept LYONs for Exchange
for Cash dated May 23, 1997 (the 'Offer to Accept LYONs for Exchange for Cash')
and a form of Letter of Transmittal (which collectively constitute the 'Exchange
Offer') relating to the offer by Coleman Worldwide Corporation (the 'Company')
to accept for exchange for cash, pursuant to the Indenture dated as of May 27,
1993 (the 'Indenture'), between the Company and First Trust National
Association, as successor Trustee, any and all of its outstanding of the Liquid
Yield Option(Trademark) Notes due May 27, 2013 (the 'LYONs') at $343.61 per
$1,000 principal amount at maturity, net to the exchanging holder of LYONs (a
'Holder'), upon the terms and subject to the conditions set forth in the Offer
to Accept LYONs for Exchange for Cash and in the related Letter of Transmittal.
All LYONs validly surrendered for exchange in the Exchange Offer and not
withdrawn will be purchased upon the terms and subject to the conditions of the
Exchange Offer.
ANY LYONS REMAINING OUTSTANDING ON MAY 27, 1998 WILL BE REDEEMED ON SUCH
DATE (OR AS SOON AS PRACTICABLE THEREAFTER) BY THE COMPANY IN ACCORDANCE WITH
THE TERMS OF THE INDENTURE FOR CASH AT A REDEMPTION PRICE OF $343.61 PER $1,000
PRINCIPAL AMOUNT AT MATURITY UNLESS, PRIOR TO THE CLOSE OF BUSINESS ON SUCH
DATE, HOLDERS ELECT TO EXCHANGE THEIR LYONS FOR 15.706 SHARES OF COMMON STOCK OF
THE COLEMAN COMPANY, INC. PER $1,000 PRINCIPAL AMOUNT AT MATURITY IN ACCORDANCE
WITH THE TERMS OF THE INDENTURE. ANY SUCH EXCHANGE WILL BE SUBJECT TO THE
COMPANY'S RIGHT TO ELECT TO PAY AN AMOUNT IN CASH EQUAL TO THE THEN MARKET VALUE
OF SUCH SHARES OF COMMON STOCK OF THE COLEMAN COMPANY, INC. IN LIEU, IN WHOLE OR
IN PART, OF DELIVERING SUCH SHARES.
THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM AMOUNT OF LYONS
BEING SURRENDERED FOR EXCHANGE. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN
CONDITIONS. SEE 'EXCHANGE OFFER--CERTAIN CONDITIONS OF THE EXCHANGE OFFER' OF
THE OFFER TO ACCEPT LYONS FOR EXCHANGE FOR CASH.
The material is being forwarded to you as the beneficial owner of LYONs
carried by us for your account or benefit but not registered in your name. A
surrender for exchange of any LYONs pursuant to the terms of the Exchange Offer
may only be made by us as the registered Holder and pursuant to your
instructions. Therefore, the Company urges beneficial owners of LYONs registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
to contact such registered Holder promptly if they wish to surrender LYONs for
exchange pursuant to terms of the Exchange Offer.
- ------------------
(Trademark) Trademark of Merrill Lynch & Co., Inc.
<PAGE>
Accordingly, we request instructions as to whether you wish us to surrender
for exchange any or all such LYONs held by us for your account or benefit,
pursuant to the terms and conditions set forth in the enclosed Offer to Accept
LYONs for Exchange for Cash and in the related Letter of Transmittal. We urge
you to read carefully the Offer to Accept LYONs for Exchange for Cash and the
related Letter of Transmittal before instructing us to surrender your LYONs for
exchange.
YOUR PROMPT ATTENTION IS REQUESTED. THE EXCHANGE OFFER AND WITHDRAWAL
RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JUNE 20, 1997,
UNLESS EXTENDED.
Your attention is directed to the following:
1. The Exchange Offer consideration is $343.61 per $1,000 principal
amount at maturity.
2. The Exchange Offer is for any and all outstanding LYONs.
3. The obligation of the Company to accept LYONs surrendered for
exchange in the Exchange Offer is subject to certain conditions set forth
in the Offer to Accept LYONs for Exchange for Cash under the caption 'THE
EXCHANGE OFFER--Certain Conditions of the Exchange Offer'.
4. Any transfer taxes incident to the surrender of LYONs for exchange
pursuant to the Exchange Offer will be paid by the Company, except as
provided in the Offer to Accept LYONs for Exchange for Cash and the
instructions to the Letter of Transmittal.
If you wish to have us surrender for exchange any or all of your LYONs held
by us for your account or benefit please so instruct us by completing, executing
and returning to us the instruction form that appears on the following page. IF
YOU ARE THE BENEFICIAL OWNER OF LYONS CARRIED BY US FOR YOUR ACCOUNT OR BENEFIT
BUT NOT REGISTERED IN YOUR NAME, THE LETTER OF TRANSMITTAL (FURNISHED TO YOU FOR
INFORMATIONAL PURPOSES ONLY) MAY NOT BE USED BY YOU TO SURRENDER FOR EXCHANGE
LYONS HELD BY US FOR YOUR ACCOUNT OR BENEFIT.
2
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Offer to Accept LYONs for Exchange
for Cash and the related Letter of Transmittal in connection with the Exchange
Offer by Coleman Worldwide Corporation.
THIS WILL INSTRUCT YOU TO SURRENDER FOR EXCHANGE UPON THE TERMS OF THE
EXCHANGE OFFER THE PRINCIPAL AMOUNT OF LYONS, AS INDICATED BELOW, WHICH ARE HELD
BY YOU FOR THE ACCOUNT OR BENEFIT OF THE UNDERSIGNED.
Signature(s): _________________________________ Address(es): ________________
_______________________________________________ _____________________________
Zip Code
Name(s) of Registered Holder(s): Area Code and Telephone No.:
_______________________________________________ _____________________________
_______________________________________________ Date: _______________________
Please Print
Principal Amount of LYONs Surrendered for Exchange:
_______________________________________________
_______________________________________________
Certificate No(s). of LYONs (if available):
_______________________________________________
_______________________________________________
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYOR.
- --Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payor.
- -------------------------------------------------------------
GIVE THE TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
- -------------------------------------------------------------
1. An individual's ac- The individual
count
2. Two or more individ- The actual owner of the
uals (joint account) account or, if combined
funds, the first individual
on the account(1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint funds,
either person(1)
4. Custodian account of The minor(2)
a minor (Uniform Gift
to Minors Act)
5. Adult and minor The adult or, if the minor
(joint account) is the only contributor, the
minor(1)
6. Account in the name The ward, minor, or in-
of guardian or com- competent person(3)
mittee for a designat-
ed ward, minor, or
incompetent person
7. a. The usual The grantor-trustee(1)
revocable savings
trust account
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust under
state law
8. Sole proprietorship The owner(4)
account
- -------------------------------------------------------------
- -------------------------------------------------------------
GIVE THE TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
- -------------------------------------------------------------
9. A valid trust, estate, The legal entity (Do not
or pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity itself
is not designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational organi-
zation account
12. Partnership account The partnership
held in the name of
the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of Agri-
culture in the name of
a public entity (such
as a State or local
government, school
district, or prison)
that receives agricul-
tural program pay-
ments
- --------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish
such person's social security number.
(4) Show your individual name. You may also enter your business name. You
may use either your social security number or your employer
identification number.
(5) List first and circle the name of the legal trust, estate or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisers Act
of 1940 who regularly acts as a broker are exempt. Payments subject to reporting
under Sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries, Inc.,
Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
o Payments to nonresident aliens subject to withholding under Section
1441 of the Code.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid
in money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding
include the following:
o Payments of interest on obligations issued by individuals. NOTE: You
may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payor's trade or business and you have
not provided your correct taxpayer identification number to the payor.
o Payments of tax-exempt interest (including exempt-interest dividends
under Section 852 of the Code).
o Payments described in Section 6049(b)(5) of the Code to non-resident
aliens.
o Payments on tax-free covenant bonds under Section 1451 of the Code.
o Payments made by certain foreign organizations.
o Payments of mortgage interest to you.
o Payments made to an appropriate nominee.
Exempt payees described above should file substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND
DATE THE FORM AND RETURN IT TO THE PAYOR. IF YOU ARE A NONRESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYOR A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage
dividends, that are not subject to information reporting are also not subject to
backup withholding. For details, see Sections 6041, 6041A(a), 6045, and 6050A
and 6050N of the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payors must be given the numbers whether or not
recipients are requires to file tax returns. Payors must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payor. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a payor, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. --Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
FOR IMMEDIATE RELEASE
COLEMAN HOLDINGS INC. TO REDEEM SENIOR SECURED DISCOUNT
NOTES DUE 1998 AND COLEMAN WORLDWIDE CORPORATION TO
COMMENCE OFFER TO EXCHANGE FOR CASH LIQUID YIELD
OPTION(TM) NOTES DUE 2013 WITH PROCEEDS OF OFFERING BY PARENT
NEW YORK, NY - May 19, 1997 - Coleman Holdings Inc. and Coleman
Worldwide Corporation jointly announced today that a newly formed parent holding
company will issue Senior Secured Discount Notes due 2001 in a transaction
scheduled to close on May 20, 1997. The net proceeds of the parent's notes,
which are expected to be approximately $455.3 million, will be used by Coleman
Holdings to redeem on or about July 15, 1997, its Senior Secured Discount Notes
due 1998, and Coleman Worldwide to retire its Liquid Yield Option(TM) Notes
("LYONs"(TM)) due 2013. Upon redemption of the Coleman Holdings Notes and
retirement of the LYONs, the parent's notes will be secured by a pledge of the
shares of The Coleman Company, Inc. common stock owned by Coleman Worldwide.
Coleman Worldwide will commence an offer later this week to exchange
the LYONs for cash at $343.61 per $1,000 principal amount at maturity of LYONs.
Each LYON is currently exchangeable into Coleman common stock having a value of
$263.08 per $1,000 principal amount at maturity, based on the May 16, 1997, New
York Stock Exchange per share closing price of Coleman common stock of $16 3/4.
Any LYONs remaining outstanding on May 27, 1998, will be redeemed by Coleman
Worldwide at their redemption price of $343.61 per $1,000 principal amount at
maturity.
Coleman Holdings is a holding company whose only significant asset is
all of the capital stock of Coleman Worldwide. Coleman Worldwide is a holding
company whose only significant asset is approximately 83% of the outstanding
Coleman common stock.
The offering of the parent's notes is not being registered under the
Securities Act of 1933, as amended, and such notes may not be offered or sold in
the United States absent registration or an applicable exemption from the
registration requirements. Documents relating to the LYONs offer will be filed
with the Securities and Exchange Commission and delivered to LYONs holders
shortly.
* * * * *
<PAGE>
2
Information in this Press Release includes forward looking statements
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements include, without limitation, the expectation
that the Coleman Holdings Notes and the LYONs will be redeemed and retired. All
such forward-looking statements involve risks and uncertainties. In addition to
factors that are described in the SEC filings of Coleman Holdings and Coleman
Worldwide, the following factors could cause actual results to differ materially
from those expressed in the forward-looking statements: difficulties or delays
in consummating the sale of the parent's notes, the proceeds from which will be
used to redeem the Coleman Holdings Notes and retire the LYONs, as well as other
difficulties in effecting such redemption and retirements.
* * * * *
Contact: James T. Conroy
212-572-5980
- --------------------------
(TM) Trademark of Merrill Lynch & Co., Inc.
<PAGE>
EXECUTION COPY
================================================================================
COLEMAN ESCROW CORP.
Senior Secured First Priority Discount Notes due 2001
Senior Secured Second Priority Discount Notes due 2001
and
Senior Secured First Priority Discount Exchange Notes due 2001
Senior Secured Second Priority Discount Exchange Notes due 2001
----------
INDENTURE
Dated as of May 20, 1997
----------
FIRST TRUST NATIONAL ASSOCIATION
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
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ARTICLE I Definitions and Incorporation by Reference
SECTION 1.01. Definitions......................................................................1
SECTION 1.02. Other Definitions...............................................................22
SECTION 1.03. Incorporation by Reference of Trust Indenture Act...............................23
SECTION 1.04. Rules of Construction...........................................................24
ARTICLE II The Securities
SECTION 2.01. Form and Dating.................................................................25
SECTION 2.02. Execution and Authentication....................................................27
SECTION 2.03. Registrar and Paying Agent......................................................28
SECTION 2.04. Paying Agent To Hold Money in Trust.............................................28
SECTION 2.05. Securityholder Lists............................................................28
SECTION 2.06. Transfer and Exchange...........................................................29
SECTION 2.07. Replacement Securities..........................................................29
SECTION 2.08. Outstanding Securities..........................................................30
SECTION 2.09. Temporary Securities............................................................30
SECTION 2.10. Cancellation....................................................................30
SECTION 2.11. CUSIP Numbers...................................................................31
SECTION 2.12. Book-Entry Provisions for U.S. Global Note......................................31
SECTION 2.13. Special Transfer Provisions.....................................................33
ARTICLE III Redemption
SECTION 3.01. Notices to Trustee..............................................................37
SECTION 3.02. Selection of Securities To Be Redeemed..........................................38
SECTION 3.03. Notice of Redemption............................................................38
SECTION 3.04. Effect of Notice of Redemption..................................................39
SECTION 3.05. Deposit of Redemption Price.....................................................40
SECTION 3.06. Securities Redeemed in Part.....................................................40
ARTICLE IV Covenants
SECTION 4.01. Payment of Securities...........................................................40
SECTION 4.02. SEC Reports.....................................................................40
SECTION 4.03. Limitation on Debt of the Company, Holdings and
Worldwide...............................................................41
SECTION 4.04. Limitation on Debt of Coleman and its Subsidiaries and
Limitation on Preferred Stock of Coleman................................41
SECTION 4.05. Limitation on Restricted Payments...............................................44
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock..............................47
SECTION 4.07. Limitation on Transactions with Affiliates......................................48
SECTION 4.08. Change of Control...............................................................50
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SECTION 4.09. Limitation on Other Business Activities.........................................52
SECTION 4.10. Required Stock Ownership; Limitation on Liens...................................52
SECTION 4.11. Holdings Notes Redemption; LYONS Retirement.....................................53
SECTION 4.12. Compliance Certificate..........................................................53
SECTION 4.13. Further Instruments and Acts....................................................53
ARTICLE V Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets.......................................54
ARTICLE VI Defaults and Remedies
SECTION 6.01. Events of Default...............................................................55
SECTION 6.02. Acceleration....................................................................57
SECTION 6.03. Other Remedies..................................................................57
SECTION 6.04. Waiver of Past Defaults.........................................................58
SECTION 6.05. Control by Majority.............................................................58
SECTION 6.06. Limitation on Suits.............................................................58
SECTION 6.07. Rights of Holders To Receive Payment............................................59
SECTION 6.08. Collection Suit by Trustee......................................................59
SECTION 6.09. Trustee May File Proofs of Claim................................................59
SECTION 6.10. Priorities......................................................................60
SECTION 6.11. Undertaking for Costs...........................................................60
SECTION 6.12. Waiver of Stay or Extension Laws................................................61
ARTICLE VII Trustee
SECTION 7.01. Duties of Trustee...............................................................61
SECTION 7.02. Rights of Trustee...............................................................62
SECTION 7.03. Individual Rights of Trustee....................................................63
SECTION 7.04. Trustee's Disclaimer............................................................63
SECTION 7.05. Notice of Defaults..............................................................63
SECTION 7.06. Reports by Trustee to Holders...................................................63
SECTION 7.07. Compensation and Indemnity......................................................64
SECTION 7.08. Replacement of Trustee..........................................................64
SECTION 7.09. Successor Trustee by Merger.....................................................65
SECTION 7.10. Eligibility; Disqualification...................................................66
SECTION 7.11. Preferential Collection of Claims Against Company...............................66
ARTICLE VIII Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance................................66
SECTION 8.02. Conditions to Defeasance........................................................67
SECTION 8.03. Application of Trust Money......................................................69
SECTION 8.04. Repayment to Company............................................................69
SECTION 8.05. Indemnity for Government Obligations............................................69
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SECTION 8.06. Reinstatement...................................................................70
ARTICLE IX Amendments
SECTION 9.01. Without Consent of Holders......................................................70
SECTION 9.02. With Consent of Holders.........................................................71
SECTION 9.03. Compliance with Trust Indenture Act.............................................72
SECTION 9.04. Revocation and Effect of Consents
and Waivers.............................................................72
SECTION 9.05. Notation on or Exchange of Securities...........................................73
SECTION 9.06. Trustee To Sign Amendments......................................................73
SECTION 9.07. Payment for Consent.............................................................73
ARTICLE X Non-Recourse Guaranty
SECTION 10.01. Guaranty.......................................................................74
SECTION 10.02. Guaranty Absolute..............................................................74
SECTION 10.03. Waivers........................................................................76
SECTION 10.04. Waiver of Subrogation and Contribution.........................................77
SECTION 10.05. Certain Agreements.............................................................77
SECTION 10.06. No Waiver; Cumulative Remedies.................................................78
SECTION 10.07. Continuing Guaranty............................................................78
SECTION 10.08. Severability...................................................................78
ARTICLE XI Security And Pledge Of Collateral
SECTION 11.01. Grant of Security Interest.....................................................78
SECTION 11.02. Delivery of Collateral.........................................................80
SECTION 11.03. Representations and Warranties.................................................80
SECTION 11.04. Further Assurances.............................................................81
SECTION 11.05. Dividends; Voting Rights; Substitution and Partial
Release of Collateral..................................................82
SECTION 11.06. Trustee Appointed Attorney-in-Fact.............................................87
SECTION 11.07. Trustee May Perform............................................................88
SECTION 11.08. Trustee's Duties...............................................................88
SECTION 11.09. Remedies upon Event of Default.................................................88
SECTION 11.10. Application of Proceeds........................................................89
SECTION 11.11. Continuing Lien................................................................89
SECTION 11.12. Certificates and Opinions......................................................89
SECTION 11.13. Additional Agreements..........................................................89
ARTICLE XII Miscellaneous
SECTION 12.01. Trust Indenture Act Controls...................................................90
SECTION 12.02. Notices........................................................................90
SECTION 12.03. Communication by Holders with Other Holders....................................91
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SECTION 12.04. Certificate and Opinion as to Conditions Precedent.............................91
SECTION 12.05. Statements Required in Certificate or Opinion..................................92
SECTION 12.06. When Securities Disregarded....................................................92
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar...................................92
SECTION 12.08. Legal Holidays.................................................................93
SECTION 12.09. Governing Law..................................................................93
SECTION 12.10. No Recourse Against Others.....................................................93
SECTION 12.11. Successors.....................................................................93
SECTION 12.12. Multiple Originals.............................................................93
SECTION 12.13. Table of Contents; Headings....................................................93
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Schedule I - Pledged Shares
Exhibit A - Form of First Priority Initial Note
Exhibit B - Form of Second Priority Initial Note
Exhibit C - Form of First Priority Exchange Note
Exhibit D - Form of Second Priority Exchange Note
Exhibit E - Form of Certificate to Be Delivered Upon Termination of
Restricted Period
Exhibit F - Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors
Exhibit G - Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S
Exhibit H - Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Rule 144A
</TABLE>
iv
<PAGE>
INDENTURE dated as of May 20, 1997, between COLEMAN
ESCROW CORP., a Delaware corporation (the "Company"), and
FIRST TRUST NATIONAL ASSOCIATION, a national banking
association, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Accreted Value" as of any date (the "Specified Date") means,
with respect to each $1,000 Principal Amount at Maturity of Securities:
(i) if the Specified Date is one of the following dates (each
a "SemiAnnual Accrual Date"), the amount set forth opposite such date
below under Column 1, in the case of First Priority Initial Notes and
First Priority Exchange Notes, or under Column 2, in the case of Second
Priority Initial Notes and Second Priority Exchange Notes:
Semi-Annual Accreted Value
- ----------- --------------
Accrual Date
- ------------
Column 1 Column 2
(First Priority Notes) (Second Priority Notes)
---------------------- -----------------------
May 20, 1997 $649.49 $608.12
November 15, 1997 $684.59 $646.15
May 15, 1998 $722.67 $687.75
November 15, 1998 $762.87 $732.02
May 15, 1999 $805.30 $779.15
November 15, 1999 $850.10 $829.30
May 15, 2000 $897.38 $882.69
November 15, 2000 $947.30 $939.51
May 15, 2001 $1,000.00 $1,000.00
<PAGE>
2
(ii) if the Specified Date occurs between two
Semi-Annual Accrual Dates, the sum of (A) the Accreted Value
for the Semi-Annual Accrual Date immediately preceding the
Specified Date and (B) an amount equal to the product of (i)
the Accreted Value for the immediately following Semi-Annual
Accrual Date less the Accreted Value for the immediately
preceding Semi-Annual Accrual Date and (ii) a fraction, the
numerator of which is the number of days from the immediately
preceding Semi-Annual Accrual Date to the Specified Date,
using a 360-day year of twelve 30-day months, and the
denominator of which is 180 (or, if the Semi-Annual Accrual
Date immediately preceding the Specified Date is May 20, 1997,
the denominator of which is 175).
Whenever the redemption price, Due Amount or Put Amount is paid in connection
with the redemption, purchase or repurchase of a portion of a Security, the
Accreted Value of such Security is reduced by the Accreted Value of the portion
of the Security so redeemed, purchased or repurchased.
"Affiliate" of any specified Person means (i) any other Person
which, directly or indirectly, is in control of, is controlled by or is under
common control with such specified Person or (ii) any other Person who is a
director or officer (A) of such specified Person, (B) of any subsidiary of such
specified Person or (C) of any Person described in clause (i) above. For
purposes of this definition, control of a Person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Applicable Premium" means, with respect to a Security at any
time, the greater of (i) 1.0% of the Accreted Value of such Security at such
time and (ii) the excess of (A) the present value at such time of the Principal
Amount at Maturity plus any required interest payments due on such Security,
computed using a discount rate equal to the Treasury Rate plus 100 basis points,
over (B) the Accreted Value of such Security at such time.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
shares of Capital Stock of a Subsidiary of the Company (other than directors'
qualifying shares and other than Capital Stock of an Unrestricted Subsidiary or
a Non-Recourse Subsidiary), property or other assets (each referred to for the
purposes of this definition as a "disposition") by the Company or any of its
Subsidiaries (other than an Unrestricted Subsidiary or a Non-Recourse
Subsidiary) (including any disposition by means of a merger, consolidation or
similar transaction) other than (i) a disposition by a Subsidiary of Coleman to
Coleman
<PAGE>
3
or by Coleman or a Subsidiary of Coleman to a Wholly Owned Recourse Subsidiary,
(ii) a disposition of property or assets by Coleman or its Subsidiaries at fair
market value in the ordinary course of business, (iii) a disposition by Coleman
or its Subsidiaries of obsolete assets or inventory in the ordinary course of
business, (iv) a disposition subject to or permitted by Section 4.05, (v) a
disposition by the Company, Holdings or Worldwide of any Unrestricted Assets,
(vi) a disposition of (A) Capital Stock of Holdings to the Company, (B) Capital
Stock of Worldwide to Holdings or the Company or (C) Capital Stock of Coleman to
Worldwide, Holdings or the Company, (vii) an issuance of employee stock options,
(viii) the Mergers and (ix) a disposition by Coleman or any of its Subsidiaries
in which Coleman or its Subsidiaries receive as consideration Capital Stock of
(or similar interests in) a Person engaged in, or assets that will be used in,
the businesses of Coleman and its Wholly Owned Recourse Subsidiaries, or
additionally, in the case of a disposition by a Subsidiary that is not a Wholly
Owned Recourse Subsidiary, the business of such Subsidiary, existing on the
Issue Date or in businesses reasonably related thereto, as determined by the
Board of Directors of Coleman, the determination of which shall be conclusive
and evidenced by a resolution of the Board of Directors of Coleman.
"Average Life" means, with respect to any Debt, the quotient
obtained by dividing (i) the sum of the products of (a) the number of years from
the date of the transaction or event giving rise to the need to calculate the
Average Life of such Debt to the date, or dates, of each successive scheduled
principal payment of such Debt multiplied by (b) the amount of each such
principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any committee thereof duly authorized to
act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of a Person means any obligation
which is required to be classified and accounted for as a capital lease on the
face of a balance sheet of such Person prepared in accordance with GAAP; the
amount of such obligation shall be the capitalized amount thereof, determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
<PAGE>
4
"Capital Stock" of any Person means any and all shares,
interests (including partnership interests), rights to purchase, warrants,
options, participations or other equivalents of or interests in (however
designated) equity of such Person, including any Preferred Stock, but excluding
any debt securities convertible into or exchangeable for such equity.
"Change of Control" means the occurrence of any of the
following events:
(i) prior to the earlier to occur of the first public offering
of Voting Stock of Parent or the first public offering of Voting Stock
of the Company, the Permitted Holders cease to be the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of a majority in the aggregate of the total
voting power of the Voting Stock of the Company, whether as a result of
Issuance of securities of the Company, any merger, consolidation,
liquidation or dissolution of the Company, any direct or indirect
transfer of securities by Parent or otherwise (for purposes of this
clause (i) and clause (ii) below, the Permitted Holders shall be deemed
to beneficially own any Voting Stock of a corporation (the "specified
corporation") held by any other corporation (the "parent corporation")
so long as the Permitted Holders beneficially own (as so defined),
directly or indirectly, in the aggregate a majority of the voting power
of the Voting Stock of the parent corporation);
(ii) any "Person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in clause (i) above,
except that a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of
the Voting Stock of the Company; provided, however, that the Permitted
Holders "beneficially own" (as defined in clause (i) above), directly
or indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of the Company than such other Person and do
not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors of
the Company (for the purposes of this clause (ii), such other Person
shall be deemed to beneficially own any Voting Stock of a specified
corporation held by a parent corporation, if such other Person
"beneficially owns" (as defined in this clause (ii)), directly or
indirectly, more than 35% of the voting power of the Voting Stock of
such parent corporation and the Permitted Holders "beneficially own"
(as defined in clause (i) above), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock
of such parent corporation and do not have
<PAGE>
5
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of such
parent corporation); or
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders
of the Company was approved by a vote of 66-2/3% of the directors of
the Company then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
"Closing Price" on any Trading Day with respect to the per
share price of any Capital Stock means the last reported sales price regular way
or, in case no such reported sale takes place on such Trading Day, the average
of the reported closing bid and asked prices regular way, on the principal
national securities exchange on which such Capital Stock is listed or admitted
to trading or, if not listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers Automated Quotations
National Market System or, if such Capital Stock is not listed or admitted to
trading on any national securities exchange or quoted on such National Market
System, the average of the closing bid and asked prices in the over-the-counter
market as furnished by any New York Stock Exchange member firm that is selected
from time to time by the Company for that purpose and is reasonably acceptable
to the Trustee.
"Code" means the Internal Revenue Code of 1986, as amended.
"Coleman" means The Coleman Company, Inc., a Delaware
corporation, and its successors.
"Coleman Common Stock" means the common stock, par value $.01
per share, of Coleman, as such common stock may from time to time be
reclassified or otherwise changed.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Consolidated EBITDA Coverage Ratio" means, for any period,
the ratio of (i) the aggregate amount of EBITDA for such period to (ii)
Consolidated
<PAGE>
6
Interest Expense for such period; provided, however, that (1) if Coleman or any
Subsidiary of Coleman has Issued any Debt since the beginning of such period
that remains outstanding or if the transaction giving rise to the need to
calculate the Consolidated EBITDA Coverage Ratio is an Issuance of Debt, or
both, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such Debt as if such Debt
had been Issued on the first day of such period and the discharge of any other
Debt Refinanced or otherwise discharged with the proceeds of such new Debt as if
such discharge had occurred on the first day of such period, (2) if since the
beginning of such period Coleman or any Subsidiary of Coleman shall have made
any Asset Disposition, EBITDA for such period shall be reduced by an amount
equal to the EBITDA (if positive) directly attributable to the assets which are
the subject of such Asset Disposition for such period, or increased by an amount
equal to the EBITDA (if negative), directly attributable thereto for such period
and Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any Debt of
Coleman or any Subsidiary of Coleman Refinanced or otherwise discharged with
respect to Coleman and its continuing Subsidiaries in connection with such Asset
Dispositions for such period (or if the Capital Stock of any Subsidiary of
Coleman is sold, the Consolidated Interest Expense for such period directly
attributable to the Debt of such Subsidiary to the extent Coleman and its
continuing Subsidiaries are no longer liable for such Debt after such sale) and
(3) if since the beginning of such period Coleman or any Subsidiary of Coleman
(by merger or otherwise) shall have made an Investment in any Subsidiary of
Coleman (or any Person which becomes a Subsidiary of Coleman) or an acquisition
of assets which constitutes all or substantially all of an operating unit of a
business, including any Investment or acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto, as if such Investment or acquisition occurred
on the first day of such period. For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of assets, an Investment in any
Person, an Asset Disposition, the amount of income or earnings relating thereto,
or the amount of Consolidated Interest Expense associated with any Debt, the pro
forma calculations shall be determined in good faith by a responsible financial
or accounting Officer of Coleman. If any Debt bears a floating rate of interest
and is being given pro forma effect, the interest on such Debt shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period.
"Consolidated Interest Expense" means, for any period, the sum
of (a) the interest expense, net of any interest income, of Coleman and its
consolidated Subsidiaries (other than Non-Recourse Subsidiaries) for such period
as determined in accordance with GAAP consistently applied, plus (b) Preferred
Stock dividends in respect of Preferred Stock of Coleman or any Subsidiary of
Coleman (other than a
<PAGE>
7
Non-Recourse Subsidiary) held by Persons other than Coleman or a Wholly Owned
Recourse Subsidiary, plus (c) the cash contributions to an employee stock
ownership plan of Coleman and its Subsidiaries (other than Non-Recourse
Subsidiaries) to the extent such contributions are used by an employee stock
ownership plan to pay interest.
"Consolidated Net Income" means with respect to any Person,
for any period, the consolidated net income (or loss) of such Person and its
consolidated Subsidiaries for such period as determined in accordance with GAAP,
adjusted to the extent included in calculating such net income (or loss), by
excluding (i) all extraordinary gains or losses; (ii) the portion of net income
(or loss) of such Person and its consolidated Subsidiaries attributable to
minority interests in unconsolidated Persons except to the extent that, in the
case of net income, cash dividends or distributions have actually been received
by such Person or one of its consolidated Subsidiaries (subject, in the case of
a dividend or distribution received by a Subsidiary of such Person, to the
limitations contained in clause (v) below) and, in the case of net loss, such
Person or any Subsidiary of such Person has actually contributed, lent or
transferred cash to such unconsolidated Person; (iii) net income (or loss) of
any other Person attributable to any period prior to the date of combination of
such other Person with such Person or any of its Subsidiaries on a "pooling of
interests" basis; (iv) net gains or losses in respect of dispositions of assets
by such Person or any of its Subsidiaries (including pursuant to a
sale-and-leaseback arrangement) other than in the ordinary course of business;
(v) the net income of any Subsidiary of such Person to the extent that the
declaration of dividends or distributions by that Subsidiary of that income is
not at the time permitted, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulations applicable to that Subsidiary or its shareholders;
(vi) any net income or loss of any Non-Recourse Subsidiary, except that such
Person's equity in the net income of any such Non-Recourse Subsidiary for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Non-Recourse Subsidiary during such
period to such Person as a dividend or other distribution; and (vii) the
cumulative effect of a change in accounting principles; provided, however, that
in calculating Consolidated Net Income of Coleman, net income of a Subsidiary of
the type described in clause (v) of this definition shall not be excluded.
"Consolidated Net Worth" of any Person means, at any date, all
amounts which would, in conformity with GAAP, be included under shareholders'
equity on a consolidated balance sheet of such Person at such date, less any
amounts attributable to Redeemable Stock or Exchangeable Stock.
<PAGE>
8
"Credit Agreement" means the Amended and Restated Credit
Agreement dated as of August 3, 1995, by and among Coleman, Credit Suisse and
the Banks named therein, as the same may be amended or restated from time to
time.
"Debt" of any Person means, without duplication,
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such Person is responsible or liable;
(ii) all Capital Lease Obligations of such Person;
(iii) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable and other
accrued current liabilities arising in the ordinary course of
business);
(iv) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i)
through (iii) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon or,
if and to the extent drawn upon, such drawing is reimbursed no later
than the third Business Day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit);
(v) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of, in the case of a
Subsidiary of Coleman, any Preferred Stock and, in the case of any
other Person, any Redeemable Stock (but excluding in each case any
accrued dividends);
(vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
Guarantees of such obligations and dividends; and
<PAGE>
9
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Delivered Shares" means any shares of Coleman Common Stock
delivered by Worldwide upon an exchange of the LYONS to the holders thereof
pursuant to Section 10.01(a) of the LYONS Indenture.
"Due Amount" as of any date means with respect to each $1,000
Principal Amount at Maturity of Securities, the Accreted Value thereof on such
date plus any premium due and payable thereon.
"EBITDA" means, for any period, the Consolidated Net Income of
Coleman for such period, plus the following to the extent included in
calculating such Consolidated Net Income: (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization
expense, (v) all other noncash charges (excluding any noncash charge to the
extent that it requires an accrual of or a reserve for cash disbursements for
any future period) and (vi) foreign currency gains or losses.
"Escrow Agent" means the Escrow Agent from time to time under
the Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement dated as of May
15, 1997, between the Company and First Trust National Association, as escrow
agent thereunder, as amended from time to time.
"Escrowed Funds" has the meaning ascribed thereto in the
Escrow Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the First Priority Exchange Notes and
the Second Priority Exchange Notes, collectively.
"Exchangeable Stock" means any Capital Stock of a Person which
by its terms or otherwise is required to be exchanged or converted or is
exchangeable or
<PAGE>
10
convertible at the option of the holder into another security (other than
Capital Stock of such Person which is neither Exchangeable Stock nor Redeemable
Stock).
"First Priority Exchange Notes" means the Senior Secured First
Priority Discount Exchange Notes due 2001 of the Company.
"First Priority Initial Notes" means the Senior Secured First
Priority Discount Notes due 2001 of the Company.
"Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles in the United States, as in effect from
time to time, except that for purposes of calculating the Consolidated EBITDA
Coverage Ratio, it shall mean generally accepted accounting principles in the
United States as in effect on the Issue Date.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Debt or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantor" means Worldwide.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holdings" means Coleman Holdings Inc., a Delaware
corporation.
"Holdings Indenture" means the Indenture dated as of July 15,
1993, between Holdings and the trustee thereunder, pursuant to which the
Holdings Notes were issued, as such agreement may be amended from time to time.
"Holdings Merger" means the merger of Holdings with and into
the Company.
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11
"Holdings Notes" means the Senior Secured Discount Notes Due
1998 of Holdings and the Series B Senior Secured Discount Notes Due 1998 of
Holdings.
"Holdings Notes Redemption" means the redemption of all of the
Holdings Notes by Holdings pursuant to paragraph 5 thereof.
"Initial Notes" means the First Priority Initial Notes and the
Second Priority Initial Notes, collectively.
"Investment" in any Person means any loan or advance to, any
net payment on a guarantee of, any acquisition of Capital Stock, equity
interest, obligation or other security of, or capital contribution or other
investment in, such Person. Investments shall exclude advances to customers and
suppliers in the ordinary course of business. The term "Invest" has a
corresponding meaning. For purposes of the definitions of "Non-Recourse
Subsidiary," "Unrestricted Subsidiary" and "Restricted Payment" and for purposes
of Section 4.05, (i) "Investment" shall include a designation after the Issue
Date of a Subsidiary as a Non-Recourse Subsidiary, and such Investment shall be
valued at an amount equal to the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time that such Subsidiary is designated a Non-Recourse
Subsidiary; and (ii) any property transferred to or from a Non-Recourse
Subsidiary or an Unrestricted Subsidiary shall be valued at its fair market
value at the time of such transfer, in each case as determined in good faith by
the Board of Directors of the Company (or of Coleman in the case of a
Non-Recourse Subsidiary), and if such property so transferred (including in a
series of related transactions) has a fair market value, as so determined by the
Board of Directors, in excess of $10 million, such determination shall be
confirmed by an independent appraiser.
"Issue" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Debt or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary of another Person (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be issued
by such Subsidiary at the time it becomes a Subsidiary of such other Person.
"Issue Date" means the date of original issue of the Initial
Notes.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open in the State of New York or in
the state where the principal office of the Trustee is located.
"Lien" means any mortgage, pledge, security interest,
conditional sale or other title retention agreement or other similar lien.
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12
"LYONS" means the Liquid Yield Option(TM)(1) Notes due 2013 of
Worldwide.
"LYONS Default" means any event which is, or after notice or
passage of time or both would be, an event of default under the LYONS Indenture.
"LYONS Escrow Agreement" means the Escrow and Pledge Agreement
dated as of May 27, 1993, between Worldwide and First Trust National
Association, as escrow agent thereunder, as amended from time to time.
"LYONS Indenture" means the Indenture, dated as of May 27,
1993, between Worldwide and First Trust National Association, as successor
trustee, pursuant to which the LYONS were issued, as it may be amended from time
to time.
"MacAndrews & Forbes Holdings" means MacAndrews & Forbes
Holdings Inc., a Delaware corporation, and its successors.
"Mafco Consolidated Group" means the "Affiliated Group"
(within the meaning of Section 1504(a)(1) of the Code) of which Mafco Holdings
is the common parent.
"Mafco Holdings" means Mafco Holdings Inc., a Delaware
corporation and its successors.
"Market Value" means as of any date the sum of (i) in respect
of Coleman Pledged Shares, an amount equal to the product of (x) the average of
the Closing Prices per share of Coleman Common Stock during the five Trading
Days ending immediately preceding such date and (y) the number of Coleman
Pledged Shares, (ii) as to Collateral consisting of cash, the amount of such
cash, (iii) as to any other Collateral having a purported value equal to or less
than $5 million, the fair market value thereof as of such date as determined by
the Board of Directors of the Company (the determination of which shall be
conclusive and shall be evidenced by a resolution of such Board of Directors of
the Company), and (iv) as to any other Collateral having a purported value of
more than $5 million, the fair market value thereof as of such date as
determined by an independent appraiser.
"Merger" means the Holdings Merger or the Worldwide Merger, as
the case may be.
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(1) Trademark of Merrill Lynch & Co., Inc.
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13
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Debt or other obligations
relating to such properties or assets or received in any other noncash form)
therefrom, in each case net of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required or estimated in good faith to be
required to be accrued as a liability under Generally Accepted Accounting
Principles, as a consequence of such Asset Disposition, (ii) all payments made
on any Debt which is secured by any assets subject to such Asset Disposition, in
accordance with the terms of any Lien upon or other security agreement of any
kind with respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law be
repaid out of the proceeds from or in connection with such Asset Disposition and
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition; provided, however, that in connection with an Asset Disposition to
a Subsidiary of Coleman (other than a Wholly Owned Recourse Subsidiary), Net
Available Cash will be deemed to be a percentage of Net Available Cash (as
calculated above) equal to (A) 100% minus (B) Coleman's percentage ownership in
such Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
estimated in good faith to be payable as a result thereof.
"Non-Convertible Capital Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible common
stock of such corporation; provided, however, that Non-Convertible Capital Stock
shall not include any Redeemable Stock or Exchangeable Stock.
"Non-Recourse Debt" means Debt or that portion of Debt (i) as
to which neither the Company nor its Subsidiaries (other than a Non-Recourse
Subsidiary or an Unrestricted Subsidiary) (A) provide credit support (including
any undertaking, agreement or instrument which would constitute Debt), (B) is
directly or indirectly liable or (C) constitute the lender and (ii) no default
with respect to which (including any rights which the holders thereof may have
to take enforcement action against the assets of a Non-Recourse Subsidiary or an
Unrestricted Subsidiary) would permit (upon
<PAGE>
14
notice, lapse of time or both) any holder of any other Debt of the Company or
its Subsidiaries (other than Non-Recourse Subsidiaries or Unrestricted
Subsidiaries) to declare a default on such other Debt or cause the payment
thereof to be accelerated or payable prior to its Stated Maturity.
"Non-Recourse Subsidiary" means a Subsidiary of Coleman (i)
which has been designated as such by Coleman, (ii) which has no Debt other than
Non-Recourse Debt and (iii) which is in the same line of business as Coleman
and its Wholly Owned Subsidiaries existing on the Issue Date or in businesses
reasonably related thereto.
"Note Purchase Agreements" means (i) the Note Purchase
Agreements, each dated as of August 3, 1995, between Coleman and the Purchasers
named therein, as amended from time to time, relating to Coleman's 7.26% Senior
Notes due 2007, and (ii) the Note Purchase Agreements, each dated as of May 1,
1996, between Coleman and the Purchasers named therein, as amended from time to
time relating to Coleman's 7.10% Senior Notes, Series A, due 2006, and 7.25%
Senior Notes, Series B, due 2008.
"Obligations" means (a) the full and punctual payment of
Principal of and interest, if any, on the Securities when due, whether at
maturity, by acceleration, by redemption or otherwise, and all other monetary
obligations of the Company under this Indenture and the Securities and (b) the
full and punctual performance of all other obligations of the Company under this
Indenture and the Securities.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, Vice Chairman, the President or a Vice President
(regardless of Vice Presidential designation), and by the Treasurer, an
Assistant Treasurer, Secretary or an Assistant Secretary, of the Company, and
delivered to the Trustee. One of the Officers signing an Officers' Certificate
given pursuant to Section 4.12 shall be the principal executive, financial or
accounting officer of the Company.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company (or its Parent or one of its Subsidiaries)
or the Trustee.
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15
"Parent" means Coleman (Parent) Holdings Inc., a Delaware
corporation, and any other Person which acquires or owns directly or indirectly
80% or more of the Voting Stock of the Company.
"Permitted Affiliate" means any individual that is a director
or officer of the Company, of a Subsidiary of the Company or of an Unrestricted
Affiliate; provided, however, that such individual is not also a director or
officer of MacAndrews & Forbes Holdings or any Person that controls MacAndrews &
Forbes Holdings.
"Permitted Holders" means Ronald O. Perelman (or in the event
of his incompetence or death, his estate, heirs, executor, administrator,
committee or other personal representative (collectively, "heirs")) or any
Person controlled, directly or indirectly, by Ronald O. Perelman or his heirs.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Principal" of a Security as of any date means the Accreted
Value of the Security as of such date plus the premium, if any, payable on the
Security which is due or overdue or is to become due on such date.
"Principal Amount at Maturity" of a Security means the amount
specified as such on the face of such Security.
"Put Amount" as of any date means, with respect to each $1,000
Principal Amount at Maturity of Securities, the sum of (a) the Accreted Value
thereof on such date and (b) 1% of the Accreted Value thereof on such date (if
such date is a Semi-Annual Accrual Date) or (if such date is not a Semi-Annual
Accrual Date) the preceding Semi-Annual Accrual Date.
"QIB" means a "Qualified Institutional Buyer" under Rule 144A.
"Redeemable Stock" means, with respect to any Person, Capital
Stock of such Person that by its terms or otherwise is required to be redeemed
on or prior to the
<PAGE>
16
first anniversary of the Stated Maturity of the Securities or is redeemable at
the option of the holder thereof at any time on or prior to the first
anniversary of the Stated Maturity of the Securities.
"Refinance" means, in respect of any Debt, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to Issue
Debt in exchange or replacement for, such Debt. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Costs" means, with respect to any Debt or
Preferred Stock being Refinanced, any premium actually paid thereon and
reasonable costs and expenses, including underwriting discounts, in connection
with such Refinancing; provided, that if any Debt Issued in connection with such
a Refinancing is Issued at a discount, Refinancing Costs shall be an amount
equal to the accreted value (as of the Stated Maturity of the Debt being
Refinanced) of the portion of such Debt used to pay such premium, costs and
expenses.
"Registration Agreement" means the Registration Agreement
dated May 20, 1997, between the Company and Bear, Stearns & Co. Inc., Chase
Securities Inc. and Credit Suisse First Boston Corporation.
"Registered Exchange Offer" has the meaning ascribed thereto
in the Registration Agreement.
"Restricted Cash" means any cash received by Worldwide
pursuant to a Tax Sharing Agreement, the LYONS Escrow Agreement or the
Securities Loan Agreement.
"Restricted Payment" means, as to any Person making a
Restricted Payment, (i) any dividend or any distribution on or in respect of the
Capital Stock of such Person (including any payment in connection with any
merger or consolidation involving such Person) or to the holders of the Capital
Stock of such Person (except dividends or distributions payable solely in the
Non-Convertible Capital Stock of such Person or in options, warrants or other
rights to purchase the Non-Convertible Capital Stock of such Person), (ii) any
purchase, redemption or other acquisition or retirement for value of any Capital
Stock of the Company or of any direct or indirect parent of the Company, (iii)
any purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, of any Subordinated Obligation (other than the
purchase, repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of acquisition),
(iv) any Investment in any Affiliate of
<PAGE>
17
the Company other than (x) a Subsidiary of the Company, (y) an Affiliate of the
Company which will become a Subsidiary of the Company as a result of any such
Investment and (z) an Unrestricted Affiliate, or (v) any Investment in a
Non-Recourse Subsidiary or an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Second Priority Exchange Notes" means the Senior Secured
Second Priority Discount Exchange Notes due 2001 of the Company.
"Second Priority Initial Notes" means the Senior Secured
Second Priority Discount Notes due 2001 of the Company.
"Securities" means the Initial Notes and the Exchange Notes,
treated as a single class of securities for all purposes other than as expressly
provided herein.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Loan Agreement" means the Securities Loan
Agreement dated as of May 27, 1993, among Merrill Lynch Pierce, Fenner & Smith
Incorporated, Worldwide and the securities loan custodian thereunder, as amended
from time to time.
"Semi-Annual Accrual Date" has the meaning set forth in the
definition of Accreted Value.
"Series" means all Securities having the same designation,
treated as a separate class of securities from those Securities having a
different designation. There are four Series of Securities that may be issued
pursuant to this Indenture: (1) the First Priority Initial Notes, (2) the Second
Priority Initial Notes, (3) the First Priority Exchange Notes and (4) the Second
Priority Exchange Notes.
"Shelf Registration Statement" has the meaning ascribed
thereto in the Registration Agreement.
"Significant Subsidiary" means (i) any Subsidiary (other than
a Non- Recourse Subsidiary and other than an Unrestricted Subsidiary) of the
Company which at the time of determination either (A) had assets which, as of
the date of the Company's most recent quarterly consolidated balance sheet,
constituted at least 5% of the Company's total assets on a consolidated basis as
of such date, in each case determined in accordance with Generally Accepted
Accounting Principles, or (B) had
<PAGE>
18
revenues for the 12-month period ending on the date of the Company's most recent
quarterly consolidated statement of income which constituted at least 5% of the
Company's total revenues on a consolidated basis for such period, or (ii) any
Subsidiary of the Company (other than a Non-Recourse Subsidiary and other than
an Unrestricted Subsidiary) which, if merged with all Defaulting Subsidiaries
(as defined below) of the Company, would at the time of determination either (A)
have had assets which, as of the date of the Company's most recent quarterly
consolidated balance sheet, would have constituted at least 10% of the Company's
total assets on a consolidated basis as of such date or (B) have had revenues
for the 12-month period ending on the date of the Company's most recent
quarterly consolidated statement of income which would have constituted at least
10% of the Company's total revenues on a consolidated basis for such period
(each such determination being made in accordance with Generally Accepted
Accounting Principles). "Defaulting Subsidiary" means any Subsidiary of the
Company (other than a Non-Recourse Subsidiary and other than an Unrestricted
Subsidiary) with respect to which an event described under Section 6.01(6),
6.01(7), 6.01(8) or 6.01(9) has occurred and is continuing.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency).
"Subordinated Obligation" means any Debt of the Company
(whether outstanding on the date hereof or hereafter Issued) which is
subordinate or junior in right of payment to the Securities.
"Subsidiary" means, with respect to any Person, any
corporation, association, partnership or other business entity of which more
than 50% of the total voting power of shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned, directly or indirectly, by (i) such Person, (ii)
such Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Tax Sharing Agreements" means (i) the Tax Sharing Agreement
dated as of May 27, 1993, by and among Mafco Holdings, Worldwide, Coleman and
its subsidiaries and any entities which become parties thereto, (ii) the Tax
Sharing Agreement dated as of May 27, 1993, by and among Mafco Holdings,
Worldwide and any entities which become parties thereto, (iii) the Tax Sharing
Agreement dated as of July 22, 1993 between Mafco Holdings and Holdings, and
(iv) any amendments to any of the foregoing and any other tax allocation
agreement between the Company or any of
<PAGE>
19
its Subsidiaries with the Company or any direct or indirect shareholder of the
Company with respect to consolidated or combined tax returns including the
Company or any of its Subsidiaries but only to the extent that amounts payable
from time to time by the Company or any such Subsidiary under any such agreement
do not exceed the corresponding tax payments that the Company or such Subsidiary
would have been required to make to any relevant taxing authority had the
Company or such Subsidiary not joined in such consolidated or combined returns,
but instead had filed returns including only the Company or its Subsidiaries
(provided that any such agreement may provide that, if the Company or any such
Subsidiary ceases to be a member of the affiliated group of corporations of
which Mafco Holdings is the common parent for purposes of filing a consolidated
Federal income tax return (such cessation, a "Deconsolidation Event"), then the
Company or such Subsidiary shall indemnify such direct or indirect shareholder
with respect to any Federal, state or local income, franchise or other tax
liability (including any related interest, additions or penalties) imposed on
such shareholder as the result of an audit or other adjustment with respect to
any period prior to such Deconsolidation Event that is attributable to the
Company, such Subsidiary or any predecessor business thereof (computed as if the
Company, such Subsidiary or such predecessor business, as the case may be, were
a stand-alone entity that filed separate tax returns as an independent
corporation), but only to the extent that any such tax liability exceeds any
liability for taxes recorded on the books of the Company or such Subsidiary with
respect to any such period).
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof, in each case, maturing within 360 days of the date of
acquisition thereof, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company (including the Trustee)
which is organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States of America having
capital, surplus and undivided profits aggregating in excess of $250,000,000 and
whose debt is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) or any money-market fund sponsored by any
registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate or Subsidiary of the Company) organized and
in existence under the laws of the United States of America or any foreign
country recognized by the United States of America with a rating at the time as
of which any investment therein is made of "P-2" (or
<PAGE>
20
higher) according to Moody's Investors Service, Inc. or "A-2" (or higher)
according to Standard and Poor's Corporation and (v) securities with maturities
of six months or less from the date of acquisition backed by standby or direct
pay letters of credit issued by any bank satisfying the requirements of clause
(ii) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the Issue Date.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday, other than any such day on which securities are not traded on the
applicable securities exchange or in the applicable securities market.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two business days prior
to the date fixed for repayment or, in the case of defeasance, prior to the date
of deposit (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the then
remaining average life to Stated Maturity of the Securities; provided, however,
that if the average life to Stated Maturity of the Securities is not equal to
the constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the average life to Stated Maturity of the Securities is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Triggering Event" means the occurrence of any of the
following:
(i) any of Holdings, Worldwide or Coleman pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
<PAGE>
21
or takes any comparable action under any foreign laws relating to insolvency; or
(ii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against any of Holdings, Worldwide
or Coleman in an involuntary case;
(B) appoints a Custodian of any of Holdings,
Worldwide or Coleman or for any substantial part of its
property; or
(C) orders the winding up or liquidation of any of
Holdings, Worldwide or Coleman;
or any similar relief is granted under any foreign laws and the order or decree
remains unstayed and in effect for 60 days.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Affiliate" means a Person (other than a
Subsidiary of Coleman) controlled (as defined in the definition of an
"Affiliate") by Coleman, in which no Affiliate of the Company (other than (w)
Coleman, Holdings or Worldwide, (x) a Wholly Owned Recourse Subsidiary of
Coleman, (y) a Permitted Affiliate and (z) another Unrestricted Affiliate) has
an Investment.
"Unrestricted Assets" means (i) Withdrawn Shares, (ii) Capital
Stock of Unrestricted Subsidiaries and (iii) all dividends, cash and other
property and proceeds (including proceeds of sale) from time to time received,
receivable or otherwise distributed in respect of or in exchange for any of the
foregoing.
"Unrestricted Subsidiary" means a Subsidiary of the Company,
which (i) is acquired or organized by the Company or Worldwide or any other
Unrestricted Subsidiary (or any combination of the foregoing), (ii) is
capitalized only with Unrestricted Assets, cash or Temporary Cash Investments,
(iii) does not have any Debt (A) which is held by the Company, (B) as to which
the Company or any of its
<PAGE>
22
Subsidiaries (other than an Unrestricted Subsidiary) has provided credit support
(other than as permitted by Section 4.03(3)) or (C) any default as to which
would permit any holder (whether upon notice, after lapse of time or both) of
any Debt of the Company or any of its Subsidiaries (other than an Unrestricted
Subsidiary) to declare a default on such Debt or (except, in the case of the
LYONS, upon the occurrence of an event that gives the holders of LYONS an option
to require Worldwide to purchase such holders' LYONS) to cause the payment
thereof to be accelerated prior to its Stated Maturity and (iv) conducts no
trade or business other than ownership of Coleman Common Stock.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Recourse Subsidiary" means a Subsidiary of a
Person (other than a Non-Recourse Subsidiary and other than an Unrestricted
Subsidiary) all the Capital Stock of which (other than directors' qualifying
shares) is owned by such Person or another Wholly Owned Recourse Subsidiary.
"Worldwide" means Coleman Worldwide Corporation, a Delaware
corporation, and its successors.
"Worldwide Merger" means the merger of the Company with and
into Worldwide.
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Agent Members"........................................................... 2.12
"Applicable Collateral"................................................... 11.05(g)
"Applicable Portion"...................................................... 11.05(g)
"Bankruptcy Law".......................................................... 6.01
"Coleman Collateral"...................................................... 11.01(b)
"Coleman Pledged Shares".................................................. 11.01(b)(i)
"Collateral".............................................................. 11.01(d)
"Collateral Release Request".............................................. 11.05(f)
<PAGE>
23
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"covenant defeasance option".............................................. 8.01(b)
"CUSIP"................................................................... 2.11
"Custodian"............................................................... 6.01
"Default Amount".......................................................... 6.02
"Determination Date"...................................................... 11.05(f)
"DTC"..................................................................... 4.10
"Event of Default"........................................................ 6.01
"Exempt Transaction"...................................................... 4.07(b)
"Guaranteed Obligations".................................................. 10.01
"Guaranty"................................................................ 10.01
"Holdings Collateral"..................................................... 11.01(a)(iv)
"Holding Company Collateral".............................................. 8.01(b)
"Holdings Pledged Shares"................................................. 11.01(a)(i)
"IAI Global Note"......................................................... 2.01(b)
"IAIs".................................................................... 2.01(b)
"indemnitee".............................................................. 7.07
"legal defeasance option"................................................. 8.01(b)
"Notice of Default"....................................................... 6.01
"Offshore Notes Exchange Date"............................................ 2.01(c)
"Outstanding"............................................................. 2.08
"Paying Agent"............................................................ 2.03
"Permanent Offshore Physical Notes"....................................... 2.01(c)
"Physical Notes".......................................................... 2.01(e)
"Pledged Shares".......................................................... 11.01(d)
"QIB Global Note"......................................................... 2.01(b)
"Registrar"............................................................... 2.03
"restricted period"....................................................... 2.01(c)
"Substitute Collateral"................................................... 11.01(c)
"Temporary Offshore Physical Notes"....................................... 2.01(c)
"U.S. Global Note"........................................................ 2.01(c)
"U.S. Physical Notes"..................................................... 2.01(d)
"Withdrawn Collateral".................................................... 11.05(i)
"Withdrawn Shares"........................................................ 11.05(i)
"Worldwide Collateral..................................................... 11.01(a)(v)
"Worldwide Pledged Shares"................................................ 11.01(a)(ii)
<PAGE>
24
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP and all accounting calculations
will be determined in accordance with such principles;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured debt shall not be deemed to be subordinate or
junior to secured debt merely by virtue of its nature as unsecured
debt;
<PAGE>
25
(7) the principal amount of any noninterest bearing or other
discount security at any date of Issuance shall be the principal amount
thereof that would be shown on a balance sheet of the issuer dated such
date prepared in accordance with GAAP and accretion of principal on
such security shall be deemed to be the Issuance of Debt; provided,
however, that the accretion of principal on such security shall not be
deemed to be the Issuance of Debt if the issuer elects, at the time of
original Issuance of such security, to treat such accretion as if, on
such date of original Issuance, there were an additional Issuance of
Debt in an aggregate principal amount equal to the excess of the
principal amount at maturity of such security over the principal amount
thereof that would be shown on a balance sheet of the issuer dated such
date prepared in accordance with GAAP (except to the extent otherwise
provided in Section 4.03(a)(1)), and, unless repaid or redeemed, the
amount of such additional Issuance of Debt shall be treated as being
outstanding for all purposes under this Indenture until such security
is paid in full;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater; and
(9) whenever in this Indenture or the Securities it is
provided that the Accreted Value, the Put Amount, the Due Amount or the
Principal Amount at Maturity with respect to a Security shall be paid,
such provision shall be deemed to require (whether or not so expressly
stated) the simultaneous payment of any accrued and unpaid interest to
the date of payment on such Security payable pursuant to paragraph 1 of
the Securities.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. (a) The First Priority Initial
Notes and the Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Indenture. The Second Priority Initial Notes and
the Trustee's certificate of authentication thereon shall be substantially in
the form of Exhibit B, which is hereby incorporated in and expressly made a part
of this Indenture. The First Priority Exchange Notes and the Trustee's
<PAGE>
26
certificate of authentication thereon shall be in substantially in the form of
Exhibit C, which is hereby incorporated in and expressly made a part of this
Indenture. The Second Priority Exchange Notes and the Trustee's certificate of
authentication thereof shall be in substantially in the form of Exhibit D, which
is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in Exhibits A, B, C and D are part of the
terms of this Indenture.
(b) The Initial Notes offered and sold in reliance on Rule
144A to QIBs or on another exemption under the Securities Act to institutional
"Accredited Investors" (as defined in Rule 501(a)(1), (2), (3) or (7) of the
Securities Act) ("IAIs") will be issued on the Issue Date in the form of four
permanent global Securities (with separate CUSIP numbers) two of which will be
substantially in the form set forth in Exhibit A, with respect to the First
Priority Initial Notes, and the other two of which will be substantially in the
form set forth in Exhibit B, with respect to the Second Priority Initial Notes
(each a "U.S. Global Note") deposited with the Trustee, as custodian for the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. One U.S. Global Note (which may be represented by more
than one certificate, if so required by the Depositary's rules regarding the
maximum principal amount to be represented by a single certificate) will
represent First Priority Initial Notes sold to QIB's, another U.S. Global Note
will represent Second Priority Initial Notes sold to QIB's (each a "QIB Global
Note"), another U.S. Global Note will represent First Priority Initial Notes
sold to IAIs and the final U.S. Global Note will represent Second Priority
Initial Notes sold to IAIs (each a "IAI Global Note"). The aggregate principal
amount of each U.S. Global Note may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for the
Depositary or its nominee, as hereinafter provided. Transfers of Initial Notes
from QIBs to IAIs, and from IAIs to QIBs, will be represented by appropriate
increases and decreases to the respective amounts of the appropriate U.S. Global
Notes, as more fully provided in Section 2.13.
(c) Initial Notes offered and sold in reliance on Regulation
S, if any, shall be issued initially in the form of temporary certificated Notes
in registered form substantially in the form set forth in Exhibit A, with
respect to the First Priority Initial Notes, and Exhibit B, with respect to the
Second Priority Initial Notes (the "Temporary Offshore Physical Notes"). The
Temporary Offshore Physical Notes will be registered in the name of, and held
by, a temporary certificate holder designated by Bear Stearns & Co. Inc. until
the later of the completion of the distribution of the Initial Notes and the
termination of the "restricted period" (as defined in Regulation S) with respect
to the offer and sale of the Initial Notes (the "Offshore Notes Exchange Date").
The Company shall promptly notify the Trustee in writing of the occurrence of
the Offshore Notes Exchange Date and, at any time following the Offshore Notes
Exchange Date,
<PAGE>
27
upon receipt by the Trustee and the Company of a certificate substantially in
the form set forth in Exhibit E, the Company shall execute, and the Trustee
shall authenticate and deliver, one or more permanent certificated Notes in
registered form substantially in the form set forth in Exhibit A, with respect
to the First Priority Initial Notes, and Exhibit B, with respect to the Second
Priority Initial Notes (the "Permanent Offshore Physical Notes") in exchange for
the Temporary Offshore Physical Notes of like tenor and amount.
(d) Initial Notes offered and sold other than as described in
the preceding two paragraphs, if any, shall be issued in the form of permanent
certificated Notes in registered form in substantially the form set forth in
Exhibit A, with respect to the First Priority Initial Notes and Exhibit B, with
respect to the Second Priority Initial Notes (the "U.S. Physical Notes").
(e) The Temporary Offshore Physical Notes, Permanent Offshore
Physical Notes and U.S. Physical Notes are sometimes collectively herein
referred to as the "Physical Notes".
SECTION 2.02. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and make available for delivery
(1) First Priority Initial Notes for original issue in an aggregate Principal
Amount at Maturity of $600,475,000, (2) Second Priority Initial Notes for
original issue in an aggregate Principal Amount at Maturity of $131,560,000, (3)
First Priority Exchange Notes from time to time for issue only in exchange for a
like principal amount of First Priority Initial Notes, and (4) Second Priority
Exchange Notes from time to time for issue only in exchange for a like principal
amount of Second Priority Initial Notes, in each case upon a written order of
the Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company. Such order shall specify the
amount of the Securities to be authenticated, the date on which the Securities
are to be authenticated and whether the Securities are to be First Priority
<PAGE>
28
Initial Notes, Second Priority Initial Notes, First Priority Exchange Notes or
Second Priority Exchange Notes. The aggregate Principal Amount at Maturity of
First Priority Initial Notes and First Priority Exchange Notes outstanding at
any time may not exceed the amount specified in clause (1) of this paragraph
except as provided in Section 2.07 and the aggregate Principal Amount at
Maturity of Second Priority Initial Notes and Second Priority Exchange Notes
outstanding at any time may not exceed the amount specified in clause (2) of
this paragraph except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands. The Company agrees to pay to any
authenticating agent compensation for its services hereunder.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate comp ensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Recourse
Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer
agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. On or prior
to each due date of the Principal and interest, if any, on any Security, the
Company shall deposit with the Paying Agent a sum sufficient to pay such
Principal and interest when so becoming due. The Company shall require each
Paying Agent (other than the Trustee) to agree in writing that the Paying Agent
shall hold in trust for the benefit of
<PAGE>
29
Securityholders or the Trustee all money held by the Paying Agent for the
payment of Principal of or interest, if any, on the Securities and shall notify
the Trustee of any default by the Company in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee and
to account for any funds disbursed by the Paying Agent. Upon complying with this
Section, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each Semi-Annual Accrual Date, as of the date occurring 15
days preceding such Date, and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401(1)
of the Uniform Commercial Code are met. When Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
Principal Amount at Maturity of Securities of other denominations, the Registrar
shall make the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's or co-registrar's
request. The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any transfer or
exchange pursuant to this Section. The Company shall not be required to make and
the Registrar need not register transfers or exchanges of Securities selected
for redemption (except, in the case of Securities to be redeemed in part, the
portion thereof not to be redeemed) or any Securities for a period of 15 days
before a selection of Securities to be redeemed.
Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of Principal of and interest, if any, on such Security and for all other
purposes whatsoever, whether or not such
<PAGE>
30
Security is overdue, and none of the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar shall be affected by notice to the contrary.
Any Holder of a U.S. Global Note shall, by acceptance of such
Global Note, agree that transfers of beneficial interest in such Global Note may
be effected only through a book-entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in such
Global Note shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant
to this Section 2.06 will evidence the same debt, will be part of the same
Series and will be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security
has become due and payable, the Company, in its discretion, may instead of
issuing a new Security, pay such Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding
("Outstanding") at any time are all Securities authenticated and delivered by
the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section as not Outstanding. A Security
does not cease to be Outstanding because the Company or an Affiliate of the
Company holds the Security.
If a Security is paid or replaced pursuant to Section 2.07, it
ceases to be Outstanding unless the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a bona fide
purchaser.
<PAGE>
31
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all Principal and interest, if any, payable on that date with
respect to the Securities (or portions thereof) to be redeemed or maturing, as
the case may be, then on and after that date such Securities (or portions
thereof) cease to be Outstanding, the Accreted Value of such Securities ceases
to increase and interest, if any, on them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may execute and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall execute and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities upon surrender of such
temporary Securities at the office or agency of the Company, without charge to
the Holder.
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel Securities surrendered for registration of transfer, exchange, payment or
cancellation and deliver such canceled Securities to the Company upon the
Company's written request. The Company may not Issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 2.12. Book-Entry Provisions for U.S. Global Note.
(a) Each U.S. Global Note initially shall (i) be registered in
the name of the Depositary for such U.S. Global Note or the nominee of such
Depositary and (ii) be delivered to the Trustee as custodian for such
Depositary.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any U.S.
Global Note held on their
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behalf by the Depositary, or the Trustee as its custodian, or under the U.S.
Global Note, and the Depositary may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such U.S.
Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or shall impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Security.
(b) Transfers of a U.S. Global Note shall be limited to
transfers of such U.S. Global Note in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in a
U.S. Global Note may be transferred in accordance with the rules and procedures
of the Depositary and the provisions of Section 2.13. If required to do so
pursuant to any applicable law or regulation, beneficial owners may obtain U.S.
Physical Notes in exchange for their beneficial interests in a U.S. Global Note
upon written request in accordance with the Depositary's and the Registrar's
procedures. In addition, U.S. Physical Notes shall be transferred to all
beneficial owners in exchange for their beneficial interests in a U.S. Global
Note if (i) the Depositary notifies the Company that it is unwilling or unable
to continue as Depositary for such U.S. Global Note or the Depositary ceases to
be a clearing agency registered under the Exchange Act, at a time when the
Depositary is required to be so registered in order to act as Depositary, and in
each case a successor depositary is not appointed by the Company within 90 days
of such notice or, (ii) the Company executes and delivers to the Trustee and the
Registrar an Officers' Certificate stating that such U.S. Global Note shall be
so exchangeable or (iii) an Event of Default has occurred and is continuing and
the Registrar has received a request from the Depositary.
(c) In connection with any transfer of a portion of the
beneficial interest in a U.S. Global Note pursuant to subsection (b) of this
Section to beneficial owners who are required to hold U.S. Physical Notes, the
Registrar shall reflect on its books and records the date and a decrease in the
Principal Amount at Maturity of such U.S. Global Note in an amount equal to the
Principal Amount at Maturity of the beneficial interest in the U.S. Global Note
to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Physical Notes of like tenor and
amount.
(d) In connection with the transfer of an entire U.S. Global
Note to beneficial owners pursuant to subsection (b) of this Section, such U.S.
Global Note shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in such U.S. Global
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Note, an equal aggregate Principal Amount at Maturity of U.S. Physical Notes of
authorized denominations.
(e) Any U.S. Physical Note delivered in exchange for an
interest in a U.S. Global Note pursuant to subsection (c) or subsection (d) of
this Section shall, except as otherwise provided by paragraph (f) of Section
2.13, bear the applicable legend regarding transfer restrictions applicable to
the U.S. Physical Note set forth in Exhibit A, with respect to the First
Priority Initial Notes, or Exhibit B, with respect to the Second Priority
Initial Notes.
(f) The registered holder of a U.S. Global Note may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Notes.
SECTION 2.13. Special Transfer Provisions. Unless and until an
Initial Note is transferred or exchanged under an effective registration
statement under the Securities Act, the following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors.
The following provisions shall apply with respect to the registration of any
proposed transfer of an Initial Note to any IAI which is not a QIB (excluding
Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Initial
Note if (x) the requested transfer is at least two years after the
original issue date of the Initial Note or (y) the proposed transferee
has delivered to the Registrar a certificate substantially in the form
set forth in Exhibit F.
(ii) If the proposed transferee is an Agent Member, and the
Initial Note to be transferred consists of U.S. Physical Notes or an
interest in the QIB Global Note, upon receipt by the Registrar of (x)
the document, if any, required by paragraph (i) and (y) instructions
given in accordance with the Depositary's and the Registrar's
procedures therefor, the Registrar shall reflect on its books and
records the date and an increase in the principal amount at maturity of
the IAI Global Note in an amount equal to (x) the principal amount at
maturity of the U.S. Physical Notes to be transferred, and the Trustee
shall cancel the U.S. Physical Note so transferred or (y) the amount at
maturity of the beneficial interest in the QIB Global Note to be so
transferred (in which case the Registrar shall reflect on its books and
records the date and an appropriate decrease in the principal amount at
maturity of the QIB Global Note).
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(iii) If the proposed transferee is entitled to receive a U.S.
Physical Note as provided in Section 2.12 and the proposed transferor
is an Agent Member holding a beneficial interest in a U.S. Global Note,
upon receipt by the Registrar of (x) the documents, if any, required by
paragraph (i) and (y) instructions given in accordance with the
Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and a decrease in the
principal amount at maturity of such U.S. Global Note in an amount
equal to the principal amount at maturity of the beneficial interest in
such U.S. Global Note to be transferred, and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more U.S.
Physical Notes of like tenor and amount.
(iv) If the Initial Note to be transferred consists of U.S.
Physical Notes and the proposed transferee is entitled to receive a
U.S. Physical Note as provided in Section 2.12, upon receipt by the
Registrar of the document, if any, required by paragraph (i), the
Registrar shall register such transfer and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more U.S.
Physical Notes of like tenor and amount.
(v) Notwithstanding any provision herein to the contrary,
transfers by an IAI which is not a QIB cannot be made to any other IAI
which is not a QIB.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of an Initial Note to
a QIB (excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of U.S. Physical
Notes, Temporary Offshore Physical Notes, Permanent Offshore Physical
Notes or an interest in the IAI Global Note, the Registrar shall
register the transfer if such transfer is being made by a proposed
transferor who has provided the Registrar with a certificate
substantially in the form set forth in Exhibit H hereto.
(ii) If the proposed transferee is an Agent Member, and the
Initial Note to be transferred consists of U.S. Physical Notes,
Temporary Offshore Physical Notes, Permanent Offshore Physical Notes or
an interest in the IAI Global Note, upon receipt by the Registrar of
(x) the document, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and an increase in the principal amount at
maturity of the QIB Global Note in an amount equal to (x) the principal
amount at maturity of the U.S. Physical Notes, Temporary Offshore
Physical Notes or Permanent Offshore Physical Notes, as the case may
be, to be transferred, and the Trustee
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shall cancel the Physical Note so transferred or (y) the amount at
maturity of the beneficial interest in the IAI Global Note to be so
transferred (in which case the Registrar shall reflect on its books and
records the date and an appropriate decrease in the principal amount at
maturity of the IAI Global Note).
(iii) If the proposed transferee is entitled to receive a U.S.
Physical Note as provided in Section 2.12 and the proposed transferor
is an Agent Member holding a beneficial interest in a U.S. Global Note,
upon receipt by the Registrar of (x) the documents, if any, required by
paragraph (i) and (y) instructions given in accordance with the
Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and a decrease in the
principal amount at maturity of such U.S. Global Note in an amount
equal to the principal amount at maturity of the beneficial interest in
such U.S. Global Note to be transferred, and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more U.S.
Physical Notes of like tenor and amount.
(iv) If the Initial Note to be transferred consists of U.S.
Physical Notes, Temporary Offshore Physical Notes or Permanent Offshore
Physical Notes and the proposed transferee is entitled to receive a
U.S. Physical Note as provided in Section 2.12, upon receipt by the
Registrar of the document, if any, required by paragraph (i), the
Registrar shall register such transfer and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more U.S.
Physical Notes of like tenor and amount.
(c) Transfers by Non-U.S. Persons Prior to June 29, 1997. The
following provisions shall apply with respect to registration of any proposed
transfer of an Initial Note by a Non-U.S. Person prior to June 29, 1997:
(i) The Registrar shall register the transfer of any Initial
Note (x) if the proposed transferee is a Non-U.S. Person and the
proposed transferor has provided the Registrar with a certificate
substantially in the form set forth in Exhibit G hereto or (y) if the
proposed transferee is a QIB and the proposed transferor has provided
the Registrar with a certificate substantially in the form set forth in
Exhibit H hereto. Unless clause (ii) below is applicable, the Company
shall execute, and the Trustee shall authenticate and deliver, one or
more Temporary Offshore Physical Notes of like tenor and amount.
(ii) If the proposed transferee is an Agent Member in
connection with a proposed transfer of an Initial Note to a QIB, upon
receipt by the Registrar of (x) the document, if any, required by
paragraph (i) and (y) instructions given in accordance with the
Depositary's and the Registrar's procedures therefor, the
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36
Registrar shall reflect on its books and records the date and an
increase in the principal amount at maturity of the QIB Global Note in
an amount equal to the principal amount at maturity of the Temporary
Offshore Physical Note to be transferred, and the Registrar shall
cancel the Temporary Offshore Physical Notes so transferred.
(d) Transfers by Non-U.S. Persons on or After June 29, 1997.
The following provisions shall apply with respect to any transfer of an Initial
Note by a Non-U.S. Person on or after June 29, 1997:
(i)(x) If the Initial Note to be transferred is a Permanent
Offshore Physical Note, the Registrar shall register such transfer, (y)
if the Initial Note to be transferred is a Temporary Offshore Physical
Note, upon receipt of a certificate substantially in the form set forth
in Exhibit G from the proposed transferor, the Registrar shall register
such transfer and (z) in the case of either clause (x) or (y), unless
clause (ii) below is applicable, the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Permanent Offshore
Physical Notes of like tenor and amount.
(ii) If the proposed transferee is an Agent Member in
connection with a proposed transfer of an Initial Note to a QIB, upon
receipt by the Registrar of instructions given in accordance with the
Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and an increase in the
principal amount at maturity of the QIB Global Note in an amount equal
to the principal amount at maturity of the Temporary Offshore Physical
Note or of the Permanent Offshore Physical Note to be transferred, and
the Trustee shall cancel the Physical Note so transferred.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of an Initial Note to a
Non-U.S. Person:
(i) Prior to June 29, 1997, the Registrar shall register any
proposed transfer of an Initial Note to a Non-U.S. Person upon receipt
of a certificate substantially in the form set forth in Exhibit G from
the proposed transferor and the Company shall execute, and the Trustee
shall authenticate and make available for delivery, one or more
Temporary Offshore Physical Notes.
(ii) On and after June 29, 1997, the Registrar shall register
any proposed transfer to any Non-U.S. Person (w) if the Initial Note to
be transferred is a Permanent Offshore Physical Note, (x) if the
Initial Note to be transferred is a Temporary Offshore Physical Note,
upon receipt of a certificate substantially in the form set forth in
Exhibit G from the proposed transferor, (y) if the Initial Note to be
transferred is a U.S. Physical Note or an interest in a U.S. Global
Note, upon receipt of a certificate substantially in
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the form set forth in Exhibit G from the proposed transferor and (z) in
the case of either clause (w), (x) or (y), the Company shall execute,
and the Trustee shall authenticate and deliver, one or more Permanent
Offshore Physical Notes of like tenor and amount.
(iii) If the proposed transferor is an Agent Member holding a
beneficial interest in a U.S. Global Note, upon receipt by the
Registrar of (x) the document, if any, required by paragraph (i), and
(y) instructions in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and a decrease in the principal amount at
maturity of such U.S. Global Note in an amount equal to the principal
amount at maturity of the beneficial interest in the U.S. Global Note
to be transferred and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Permanent Offshore Physical Notes
of like tenor and amount.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless either (i) the circumstances contemplated by the paragraph of Section
2.01(c) (relating to Permanent Offshore Physical Notes) or paragraph (a)(i)(x),
(d)(i) or (e)(ii) of this Section 2.13 exist or (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
(g) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.12 or this Section
2.13. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Registrar.
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ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities or is required to
redeem Securities pursuant to paragraph 6 of the Securities, it shall notify the
Trustee in writing of the redemption date, the paragraph of the Securities
pursuant to which the redemption will occur, the Principal Amount at Maturity of
Securities to be redeemed and which Series of Securities are to be redeemed. If
the Company is required to redeem the Securities pursuant to paragraph 6 of the
Securities the Company shall also so notify the Escrow Agent concurrently with
its notification to the Trustee.
In the case of a redemption pursuant to paragraph 5 of the
Securities, the Company shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. In the case of a redemption pursuant to paragraph
6 of the Securities, the Company shall give such notices to the Trustee and the
Escrow Agent provided for in this Section promptly after the occurrence of a
Triggering Event but at least 40 days before the redemption date unless the
Trustee consents to a shorter period. Any notice delivered pursuant to paragraph
5 of the Securities shall be accompanied by an Officers' Certificate to the
effect that such redemption will comply with the conditions herein. If fewer
than all the Securities are to be redeemed, the record date relating to such
redemption for determining the Holders to whom notice of redemption will be sent
pursuant to Section 3.03 shall be selected by the Company and given to the
Trustee, which record date shall be not less than 15 days after the date of
notice to the Trustee unless the Trustee consents to a shorter period.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee in its discretion shall
select the particular Securities in a given Series to be redeemed (i) in the
case of a redemption pursuant to paragraph 5 of the Securities, either on a pro
rata basis or by lot or by a method that complies with applicable legal and
securities exchange requirements, if any, and that the Trustee considers fair
and appropriate, and (ii) in the case of a redemption pursuant to paragraph 6 of
the Securities, on a pro rata basis in accordance with the respective Accreted
Values of each Security at the redemption date. The Trustee shall make the
selection from Outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the Principal Amount at Maturity
of Securities that have denominations larger than $1,000. Securities and
portions of them the Trustee selects shall be in amounts of Principal Amount at
Maturity of $1,000 or a whole multiple of $1,000. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for
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redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. In the case of a
redemption pursuant to paragraph 5 of the Securities, at least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed. In the case of a redemption pursuant to paragraph 6 of the
Securities, at least 30 days before the date for redemption of Securities, the
Company shall mail a notice of redemption by first-class mail to each Holder of
Securities to be redeemed.
Any notice delivered pursuant to this Section 3.03 shall
identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption
price;
(5) if fewer than all the Outstanding Securities are
to be redeemed, the identification of the particular
Securities to be redeemed as well as the aggregate Principal
Amount at Maturity of Securities to be redeemed and if any
Security is being redeemed in part, the portion of the
Principal Amount at Maturity of such Security to be redeemed
and that after the redemption date and upon surrender of such
Security a new Security or Securities will be issued of the
same Series having a Principal Amount at Maturity equal to the
Principal Amount at Maturity of the Security surrendered less
the Principal Amount at Maturity of the portion of the
Security redeemed;
(6) that, unless the Company defaults in making such
redemption payment, the Accreted Value on Securities (or
portion thereof) called for redemption ceases to increase and
interest, if any, thereon ceases to accrue on and after the
redemption date;
(7) the paragraph of the Securities pursuant to which
the Securities called for redemption are being redeemed;
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(8) the CUSIP number printed on the Securities being
redeemed; and
(9) that no representation is made as to the
correctness or accuracy of the CUSIP number, if any, listed in
such notice or printed on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, if any, to the redemption
date. Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. On or prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest, if any, on
all Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to the
Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security of
the same Series having a Principal Amount at Maturity equal to the Principal
Amount at Maturity of the Security surrendered less the Principal Amount at
Maturity of the portion of the Security so redeemed.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the Principal of and interest, if any, on the Securities on the
dates and in the manner provided in the Securities and in this Indenture.
Principal and interest shall be considered paid on the date due if on such date
the Trustee or the Paying Agent holds in
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41
accordance with this Indenture money sufficient to pay all Principal and
interest then due. The Company shall pay interest on overdue Principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be required to be subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, from and after the date (the "reporting date") of
effectiveness of a Registration Statement (as defined in the Registration
Agreement), the Company shall file or cause to be filed with the SEC and provide
the Trustee and Holders with the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) specified in Sections 13 and 15(d) of the Exchange Act.
Prior to the reporting date, the Company shall provide the Trustee and Holders
with information that is substantially similar to that required to be provided
to such Persons after the reporting date. The Company also shall comply with the
other provisions of TIA ss. 314(a).
SECTION 4.03. Limitation on Debt of the Company, Holdings and
Worldwide. The Company shall not Issue any Debt and the Company shall not permit
Holdings or Worldwide to Issue any Debt or Preferred Stock; provided, however,
that the foregoing shall not prohibit the Issuance of the following Debt:
(1) the Securities and Debt Issued by the Company in exchange
for, or the proceeds of which are used to Refinance, any Debt permitted
by this clause (1); provided, however, that in the case of any Debt
(other than the Exchange Notes) Issued in connection with a
Refinancing, (x) the principal amount or, in the case of Debt Issued at
a discount, the accreted value of the Debt so Issued shall, as of the
date of the Stated Maturity of the Debt being Refinanced, not exceed
the sum of (i) the principal amount or, if the Debt being Refinanced
was Issued at a discount, the accreted value of the Debt being
Refinanced as of the date of the Stated Maturity of the Debt being
Refinanced and (ii) any Refinancing Costs associated with such
Refinancing, and (y) the Debt so Issued shall not provide for the
payment of principal or interest in cash prior to the Stated Maturity
of the Securities and shall not have a Stated Maturity prior to the
Stated Maturity of the Securities;
(2) the Holdings Notes and the LYONS; and
(3) Debt consisting solely of a Guarantee by the Company or
Worldwide of obligations of another Person of the type referred to in
clauses (i) through (vi) of the definition of "Debt", in respect of
which Guarantee the holder thereof shall have no recourse to the
Company or Worldwide other than
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to Unrestricted Assets pledged by the Company or Worldwide to secure
such Guarantee; provided, however, that this clause (3) shall not
permit the Company or Worldwide to assume the obligation of such other
Person.
SECTION 4.04. Limitation on Debt of Coleman and its
Subsidiaries and Limitation on Preferred Stock of Coleman. (a) The Company shall
not permit Coleman or any Subsidiary of Coleman to Issue, directly or
indirectly, any Debt; provided, however, that Coleman and its Subsidiaries will
be permitted to Issue Debt if, at the time of such Issuance, the Consolidated
EBITDA Coverage Ratio for the period of the most recently completed four
consecutive fiscal quarters ending at least 45 days prior to the date such Debt
is Issued exceeds the ratio of 2.5 to 1.0.
(b) Notwithstanding the foregoing, Coleman and its
Subsidiaries may Issue the following Debt:
(1) Debt Issued pursuant to the Credit Agreement, any
Refinancing thereof or any other credit agreement, indenture or other
agreement, in an aggregate principal amount not to exceed $350 million
outstanding at any one time;
(2) Debt Issued pursuant to the Note Purchase Agreements, any
Refinancing thereof or any other credit agreement, indenture or other
agreement, in an aggregate principal amount not to exceed at any one
time outstanding $360 million plus any Refinancing Costs associated
with any such Refinancing; provided, however, that the Debt so Issued
shall not have an Average Life shorter than the Average Life of the
Debt outstanding under the Note Purchase Agreements on the Issue Date
or Stated Maturity prior to the earliest Stated Maturity of the Debt
outstanding under the Note Purchase Agreements on the Issue Date;
(3) Debt (in addition to Debt described in clauses (1) and (2)
above) Issued for working capital and general corporate purposes in an
aggregate principal amount at the time of such Issue which, when taken
together with the aggregate principal amount then outstanding of all
other Debt Issued pursuant to this clause (3), shall not exceed the sum
of (i) 50% of the book value of the inventory of Coleman and its
consolidated Subsidiaries and (ii) 80% of the book value of the
accounts receivable of Coleman and its consolidated Subsidiaries, in
each case as determined in accordance with GAAP;
(4) Debt of Coleman Issued to and held by a Wholly Owned
Recourse Subsidiary and Debt of a Subsidiary of Coleman Issued to and
held by Coleman or a Wholly Owned Recourse Subsidiary; provided,
however, that any
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subsequent Issuance or transfer of any Capital Stock that results in
any such Wholly Owned Recourse Subsidiary ceasing to be a Wholly Owned
Recourse Subsidiary or any subsequent transfer of such Debt (other than
to Coleman or a Wholly Owned Recourse Subsidiary) shall be deemed, in
each case, to constitute the Issuance of such Debt by Coleman or of
such Debt by such Subsidiary;
(5) Debt (other than Debt described in clause (1), (2), (3) or
(4) above) outstanding on the Issue Date and Debt Issued to Refinance
any Debt permitted by this clause (5), by clause (7) below or by
Section 4.04(a); provided, however, that in the case of a Refinancing,
(x) the principal amount of the Debt so Issued shall not exceed the
principal amount of the Debt being Refinanced plus any Refinancing
Costs associated with such Refinancing and (y) the Debt so Issued shall
not have an Average Life shorter than the Average Life of the Debt
being Refinanced or Stated Maturity prior to the Stated Maturity of the
Debt being Refinanced;
(6) Debt Issued and arising out of purchase money obligations
for property acquired in an amount not to exceed, for the period
through December 31, 1997, $15 million, plus for each fiscal year
thereafter, $15 million; provided, however, that any such amounts which
are available to be utilized during any period and are not so utilized
may be utilized during any succeeding period;
(7) Debt of a Subsidiary of Coleman Issued and outstanding on
or prior to the date on which such Subsidiary was acquired by Coleman
(other than Debt Issued as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Subsidiary became a Subsidiary of Coleman or was acquired by Coleman);
(8) Non-Recourse Debt of a Non-Recourse Subsidiary; provided,
however, that if any such Debt thereafter ceases to be Non-Recourse
Debt of a Non-Recourse Subsidiary, then such event shall be deemed for
the purposes of this Section 4.04 to constitute the Issuance of such
Debt by the Issuer thereof; and
(9) Debt (in addition to Debt described in clauses (1) through
(8) above and in Section 4.04(a)) in an aggregate principal amount
outstanding at any time not to exceed $75 million.
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44
(c) The Company shall not permit Coleman to Issue any
Preferred Stock; provided, however, that Coleman may Issue the following
Preferred Stock:
(1) Preferred Stock of Coleman Issued to and held by the
Company, Holdings or Worldwide or a Wholly Owned Recourse Subsidiary of
Coleman; provided, however, that any subsequent issuance or transfer of
any Capital Stock that results in any such Wholly Owned Recourse
Subsidiary ceasing to be a Wholly Owned Recourse Subsidiary of Coleman
or any subsequent transfer of such Preferred Stock (other than to the
Company or a Wholly Owned Recourse Subsidiary of the Company or
Holdings or Worldwide) shall be deemed, in each case, to constitute the
Issuance of such Preferred Stock by Coleman; and
(2) Preferred Stock (other than Preferred Stock described in
clause (1) but including the Preferred Stock referred to in the proviso
to clause (1) above) Issued by Coleman; provided, however, that the
liquidation value of any Preferred Stock Issued pursuant to this clause
(2) shall constitute Debt of Coleman for purposes of this Section 4.04.
(d) To the extent Coleman or any Subsidiary of Coleman
Guarantees any Debt of Coleman or of a Subsidiary of Coleman, such Guarantee and
such Debt will be deemed to be the same indebtedness and only the amount of the
Debt will be deemed to be outstanding. If Coleman or a Subsidiary of Coleman
Guarantees any Debt of a Person that, subsequent to the Issuance of such
Guarantee, becomes a Subsidiary, such Guarantee and the Debt so Guaranteed shall
be deemed to be the same indebtedness, which shall be deemed to have been Issued
when the Guarantee was Issued and shall be deemed to be permitted to the extent
the Guarantee was permitted when Issued.
SECTION 4.05. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any of its Subsidiaries, directly or
indirectly, to make any Restricted Payment if, at the time of the making of such
Restricted Payment:
(1) a Default shall have occurred or be continuing (or would
result therefrom); or
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45
(2) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of:
(i) 50% of Consolidated Net Income (or, if such
aggregate Consolidated Net Income is a deficit, minus 100% of
such deficit) of the Company accrued during the period
(treated as one accounting period) from January 1, 1997, to
the end of the most recent fiscal quarter ending at least 45
days prior to the date of such Restricted Payment;
(ii) the aggregate Net Cash Proceeds from sales of
Capital Stock of the Company or cash capital contributions
made to the Company and, without duplication, any earnings
thereon or proceeds thereof to the extent invested in
Temporary Cash Investments on or after the Issue Date; and
(iii) the amount by which Debt of the Company is
reduced on or after the Issue Date upon any conversion or
exchange of Debt of the Company into Capital Stock of the
Company which is not Redeemable Stock or Exchangeable Stock.
(b) Section 4.05(a) shall not prohibit the following (none of
which shall be included in the calculation of the amount of Restricted Payments,
except to the extent expressly provided in clause (viii) below):
(i) so long as no Default has occurred and is continuing or
would result from such transaction, any Restricted Payment to the
extent it consists of Unrestricted Assets;
(ii) any purchase or redemption of Capital Stock or
Subordinated Obligations out of the proceeds from the substantially
concurrent sale of Capital Stock;
(iii) any purchase or redemption of Subordinated Obligations
out of the proceeds from the substantially concurrent sale of
Subordinated Obligations;
(iv) dividends or distributions made by Coleman to the
Company, Holdings or Worldwide and to its other stockholders on a pro
rata basis;
(v) dividends or distributions made by Worldwide to the
Company or Holdings;
(vi) dividends or distributions made by Holdings to the
Company;
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46
(vii) dividends or distributions made by a Subsidiary of
Coleman or by an Unrestricted Subsidiary to the Company, Holdings,
Worldwide, Coleman or a Subsidiary of Coleman or to an Unrestricted
Subsidiary and, if a Subsidiary of Coleman or such Unrestricted
Subsidiary is not wholly owned, to its other stockholders pro rata to
the extent they are not Affiliates of the Company (other than (w)
Coleman, (x) a Subsidiary of Coleman, (y) an Unrestricted Affiliate and
(z) a Permitted Affiliate);
(viii) dividends paid within 60 days after the date of
declaration thereof, or Restricted Payments made within 60 days after
the making of a binding commitment in respect thereof, if at such date
of declaration or of such commitment such dividend or other Restricted
Payment would have complied with this Section; provided, however, that
at the time of payment of such dividend or the making of such
Restricted Payment, no other Default shall have occurred and be
continuing (or result therefrom); provided further, however, that such
dividend or other Restricted Payment shall be included in the
calculation of the amount of Restricted Payments;
(ix) purchases, redemptions, defeasances or acquisitions of
Non- Recourse Debt by a Non-Recourse Subsidiary;
(x) dividends and distributions made by Coleman or its
Subsidiaries in respect of Preferred Stock of Coleman permitted by
Section 4.04(b) or in respect of Preferred Stock of such Subsidiaries
permitted by Section 4.04(a);
(xi) Investments in Affiliates of the Company consisting of
Debt permitted by Section 4.03(3) or Investments consisting of Debt of
Unrestricted Subsidiaries;
(xii) so long as no Default or (so long as the LYONS Indenture
is in effect) no LYONS Default has occurred and is continuing or would
result from such transaction, dividends or distributions made by the
Company to the extent attributable to (A) the net proceeds of the
Issuance of Debt by Non- Recourse Subsidiaries, or (B) cash dividends
or distributions received from Unrestricted Subsidiaries of the Company
or Worldwide (other than dividends or distributions paid to Worldwide
or the Company out of dividends or distributions received by
Unrestricted Subsidiaries in respect of shares of Coleman Common
Stock);
(xiii) so long as no Default or (so long as the LYONS
Indenture is in effect) no LYONS Default has occurred and is continuing
or would result from
<PAGE>
47
such transaction, the contribution by the Company or Worldwide to an
Unrestricted Subsidiary of the Withdrawn Shares;
(xiv) so long as no Default or (so long as the LYONS Indenture
is in effect) no LYONS Default has occurred and is continuing or would
result from such transaction, Restricted Payments to the extent
attributable to Restricted Cash;
(xv) dividends or other Restricted Payments consisting solely
of funds released from time to time pursuant to Section 2(k) of the
Escrow Agreement to the extent such funds are not needed for the
Capital Contributions (as defined in the Escrow Agreement) to be made
to Worldwide;
(xvi) dividends or other Restricted Payments consisting solely
of funds released from the Escrow Agreement after all Holdings Notes
have been redeemed and all LYONS have been retired; and
(xvii) any Restricted Payment to the extent it consists of the
disposition of any Mafco Demand Notes (as defined in the LYONS
Indenture) after all LYONS have been retired.
(c) The Company or any Subsidiary of the Company may take
actions to make a Restricted Payment in anticipation of the occurrence of any of
the events described in Section 4.05(b); provided, however, that the making of
such Restricted Payment shall be conditioned upon the occurrence of such event.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company shall not, and shall not permit Holdings or Worldwide to,
make any Asset Disposition.
(b) The Company shall not permit Coleman or any Subsidiary of
Coleman (other than a Non-Recourse Subsidiary) to make any Asset Disposition
unless:
(i) Coleman or such Subsidiary receives consideration at the
time of such Asset Disposition at least equal to the fair market value,
as determined in good faith by the Board of Directors of Coleman, the
determination of which shall be conclusive and evidenced by a
resolution of the Board of Directors of Coleman (including as to the
value of all non-cash consideration), of the Capital Stock and assets
subject to such Asset Disposition;
(ii) at least 75% of the consideration consists of cash, cash
equivalents, readily marketable securities which Coleman intends, in
good faith,
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48
to liquidate promptly after such Asset Disposition or the assumption of
liabilities (including, in the case of the sale of the Capital Stock of
a Subsidiary of Coleman, liabilities of such Subsidiary) (provided,
however, that in respect of an Asset Disposition, more than 25% of the
consideration may consist of consideration other than cash, cash
equivalents, such readily marketable securities or such assumed
liabilities if (x) such Asset Disposition is approved by a majority of
those members of the Board of Directors of Coleman having no personal
stake in such Asset Disposition and (y) if such Asset Disposition
involves aggregate consideration in excess of $10 million (with the
value of any non-cash consideration being determined by a majority of
those members of the Board of Directors of Coleman having no personal
stake in such Asset Disposition), such Asset Disposition has been
determined, in the written opinion of a nationally recognized
investment banking firm, to be fair from a financial point of view to
Coleman or such Subsidiary, as the case may be); and
(iii) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by Coleman (or such Subsidiary, as
the case may be) at Coleman's election (1) to the prepayment, repayment
or repurchase of Debt of Coleman or Debt of a Wholly Owned Recourse
Subsidiary or, additionally in the case of an Asset Disposition by a
Subsidiary that is not a Wholly Owned Recourse Subsidiary, Debt of such
Subsidiary (in each case other than Debt owed to (x) an Unrestricted
Subsidiary, (y) a Non-Recourse Subsidiary or (z) an Affiliate of the
Company which is not a Subsidiary of the Company) (whether or not the
related loan commitment is permanently reduced in connection
therewith), (2) to the investment by Coleman or such Wholly Owned
Recourse Subsidiary (or, additionally in the case of an Asset
Disposition by a Subsidiary that is not a Wholly Owned Recourse
Subsidiary, the investment by such Subsidiary) in (x) assets to replace
the assets that were the subject of such Asset Disposition, (y) assets
that (as determined by the Board of Directors of Coleman, the
determination of which shall be conclusive and evidenced by a
resolution of such Board of Directors) will be used in the businesses
of Coleman and its Wholly Owned Recourse Subsidiaries (or, additionally
in the case of an Asset Disposition by a Subsidiary that is not a
Wholly Owned Recourse Subsidiary, the businesses of such Subsidiary)
existing on the Issue Date or in businesses reasonably related thereto
or (z) Temporary Cash Investments or (3) to make a Restricted Payment
to Worldwide, Holdings or the Company.
Notwithstanding the foregoing provisions of this Section
4.06(b), Coleman and its Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 4.06(b) except to the extent that
the aggregate Net Available Cash from all Asset Dispositions made by Coleman and
its Subsidiaries which are not applied in accordance with this Section 4.06(b)
exceed $10 million.
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49
SECTION 4.07. Limitation on Transactions with Affiliates. (a)
None of the Company, Holdings or Worldwide shall conduct any business or enter
into any transaction or series of similar transactions (including the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate of the Company or any legal or beneficial owner of 10% or more of
the voting power of the Voting Stock of the Company or with an Affiliate of any
such owner.
(b) The Company shall not permit Coleman or any of its
Subsidiaries (other than a Non-Recourse Subsidiary) to conduct any business or
enter into any transaction or series of similar transactions (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company or any legal or beneficial owner of
10% or more of the voting power of the Voting Stock of the Company or with an
Affiliate of any such owner unless
(i) the terms of such business, transaction or series of
transactions are (A) set forth in writing and (B) at least as favorable
to Coleman or such Subsidiary as terms that would be obtainable at the
time for a comparable transaction or series of similar transactions in
arm's-length dealings with an unrelated third Person and
(ii) to the extent that such business, transaction or series
of transactions is known by the Board of Directors of Coleman or of
such Subsidiary to involve an Affiliate of the Company or a legal or
beneficial owner of 10% or more of the voting power of the Voting Stock
of the Company or an Affiliate of such owner, then
(A) with respect to a transaction or series of
related transactions, other than any purchase or sale of
inventory in the ordinary course of business, involving
aggregate payments or other consideration in excess of
$5,000,000, such transaction or series of related transactions
has been approved (and the value of any noncash consideration
has been determined) by a majority of those members of the
Board of Directors of Coleman having no personal stake in such
business, transaction or series of transactions and
(B) with respect to a transaction or series of
related transactions, other than any distribution arrangement
or any purchase or sale of inventory, in each case in the
ordinary course of business (an "Exempt Transaction"),
involving aggregate payments or other consideration in excess
of $25,000,000 (with the value of any noncash consideration
being determined by a majority of those members of the Board
of Directors of Coleman having no personal stake in such
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50
business, transaction or series of transactions), such
transaction or series of related transactions has been
determined, in the written opinion of a nationally recognized
investment banking firm to be fair, from a financial point of
view, to Coleman or such Subsidiary.
(c) The provisions of Section 4.07(a) and 4.07(b) shall not
prohibit:
(i) any Restricted Payment permitted to be paid pursuant to
Section 4.05;
(ii) any transaction between Coleman and any of its
Subsidiaries; provided, however, that no portion of any minority
interest in any such Subsidiary is owned by (x) any Affiliate (other
than the Company, Holdings, Worldwide, Coleman, a Wholly Owned Recourse
Subsidiary of Coleman, a Permitted Affiliate or an Unrestricted
Affiliate) of the Company or (y) any legal or beneficial owner of 10%
or more of the voting power of the Voting Stock of the Company or any
Affiliate of such owner (other than the Company, Holdings, Worldwide,
Coleman, any Wholly Owned Recourse Subsidiary of Coleman or an
Unrestricted Affiliate);
(iii) any transaction between Subsidiaries of Coleman;
provided, however, that no portion of any minority interest in any such
Subsidiary is owned by (x) any Affiliate (other than the Company,
Holdings, Worldwide, Coleman, a Wholly Owned Recourse Subsidiary of
Coleman, a Permitted Affiliate or an Unrestricted Affiliate) of the
Company or (y) any legal or beneficial owner of 10% or more of the
voting power of the Voting Stock of the Company or any Affiliate of
such owner (other than the Company, Holdings, Worldwide, Coleman, any
Wholly Owned Recourse Subsidiary of Coleman or an Unrestricted
Affiliate);
(iv) any transaction between Coleman or a Subsidiary of
Coleman and its own employee stock ownership plan;
(v) any transaction with an officer or director of any
Subsidiary of the Company entered into in the ordinary course of
business (including compensation or employee benefit arrangements with
any such officer or director); provided, however, such officer holds,
directly or indirectly, no more than 10% of the outstanding Capital
Stock of the Company;
(vi) any business or transaction with an Unrestricted
Affiliate;
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51
(vii) any transaction pursuant to which Mafco Holdings will
provide the Company and its Subsidiaries at their request and at the
cost to Mafco Holdings with certain allocated services to be purchased
from third party providers, such as legal and accounting services,
insurance coverage and other services;
(viii) any transaction contemplated by the Escrow Agreement,
the Securities Loan Agreement or the Tax Sharing Agreements;
(ix) any Guarantee Issued by the Company or Worldwide
permitted by Section 4.03(3); and
(x) the Mergers.
SECTION 4.08. Change of Control. (a) Upon a Change of Control,
each Holder shall have the right to require that the Company repurchase all or
any part of such Holder's Securities at a repurchase price in cash equal to
their Put Amount as of the date of repurchase, plus accrued and unpaid interest,
if any, to the date of repurchase in accordance with the terms contemplated in
Section 4.08(b).
(b) Within 45 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to repurchase all or any part of
such Holder's Securities at a repurchase price in cash equal to their
Put Amount as of the date of repurchase plus accrued and unpaid
interest, if any, to the date of repurchase;
(2) the circumstances and relevant facts regarding such Change
of Control;
(3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent
with this Section, that a Holder must follow in order to have its
Securities repurchased.
(c) Holders electing to have a Security repurchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least 10 Business Days
prior to the repurchase date. Holders will be entitled to withdraw their
election if the Trustee or the Company receives not later than three Business
Days prior to the repurchase date, a facsimile
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52
transmission or letter setting forth the name of the Holder, the Principal
Amount at Maturity of the Security which was delivered for purchase by the
Holder and a statement that such Holder is withdrawing his election to have such
Security purchased.
(d) On the repurchase date, all Securities repurchased by the
Company under this Section shall be delivered to the Trustee for cancellation,
and the Company shall pay the repurchase price to the Holders entitled thereto.
Upon surrender of a Security that is repurchased under this Section in part, the
Company shall execute and the Trustee shall authenticate for the Holder thereof
(at the Company's expense) a new Security having a Principal Amount at Maturity
equal to the Principal Amount at Maturity of the Security surrendered less the
portion of the Principal Amount at Maturity of the Security repurchased.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.09. Limitation on Other Business Activities. (a) The
Company shall not engage in any trade or business other than the ownership of
the Capital Stock of Coleman, Worldwide and Holdings and one or more
Unrestricted Subsidiaries.
(b) The Company shall not permit Holdings to engage in any
trade or business other than the ownership of the Capital Stock of Coleman and
Worldwide.
(c) The Company shall not permit Worldwide to engage in any
trade or business other than the ownership of the Capital Stock of Coleman and
one or more Unrestricted Subsidiaries.
SECTION 4.10. Required Stock Ownership; Limitation on Liens.
(a) The Company shall at all times be, or cause Worldwide to be, the legal and
beneficial owner of the Coleman Pledged Shares. The Company shall at all times
be, or cause Worldwide together with the Company to be, the legal and beneficial
owner of at least a majority of the voting power of the Voting Stock of Coleman
(including the Coleman Pledged Shares) (treating Coleman Pledged Shares, any
Coleman Common Stock pledged for the benefit of the holders of LYONS or Holdings
Notes or subject to any other Lien permitted by this Section 4.10 and any
Coleman Common Stock subject to or lent pursuant to the Securities Loan
Agreement as held legally and beneficially by
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53
the Company or Worldwide); provided, however, that the Company and Worldwide
will be deemed to be the legal and beneficial owner of any Coleman Common Stock
held of record by a nominee for Depositary Trust Company ("DTC") or any other
public clearing corporation (a "public clearing corporation" is any member of
the Federal Reserve System registered as a clearing agency pursuant to the
provisions of Section 17A of the Exchange Act), if the books of DTC or such
other public clearing corporation, as the case may be, show that such Coleman
Common Stock is held solely for the account of the Company or Worldwide, subject
to any Lien permitted by this Section 4.10. The Company shall at all times prior
to the Holdings Merger be the legal and beneficial owner of 100% of the Capital
Stock of Holdings. The Company shall at all times prior to the Worldwide Merger
be, or cause Holdings to be, the legal and beneficial owner of 100% of the
Capital Stock of Worldwide.
(b) The Company shall not create or permit to exist any Lien
on the Collateral directly owned by it, other than the Lien of this Indenture.
The Company shall not permit Worldwide to create or permit to exist any Lien on
the Collateral directly owned by Worldwide, other than the Lien of (or with
respect to) the Holdings Indenture, the LYONS Indenture or this Indenture.
(c) The Company shall not create or permit to exist any Lien
to secure Debt of the Company on terms more favorable to the holders of such
Debt than the terms of the collateral for the Securities in this Indenture,
including the initial loan to value ratio in respect of such Debt compared to
the initial loan to value ratio of the Collateral in respect of the Securities,
unless contemporaneously therewith effective provision is made to secure the
Securities equally and ratably with such Debt with a Lien on the same assets
securing such Debt for so long as such Debt is secured by such Lien; provided,
however, that, if such Debt is a Subordinated Obligation, the Lien securing such
Debt shall be subordinate and junior to the Lien securing the Securities with
the same or lesser relative priority as such Subordinated Obligation shall have
with respect to the Securities; provided further, however, that this Section
4.10(c) shall not apply to Liens created as permitted by Section 4.03(3).
(d) The limitations set forth in this Section 4.10 shall not
be applicable from and after the time that all the Collateral shall have been
released from the Lien of this Indenture pursuant to Article XI.
SECTION 4.11. Holdings Notes Redemption; LYONS Retirement. The
Company shall cause (i) Holdings to redeem all of the Holdings Notes by no later
than July 31, 1997, and (ii) Worldwide to redeem or otherwise retire all of the
LYONS by no later than June 10, 1998; provided that, in each case, no Triggering
Event shall have occurred and be continuing.
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54
SECTION 4.12. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default by the Company and whether or not the signers know
of any Default that occurred during such period. If they do, the certificate
shall describe the Default, its status and what action the Company is taking or
proposes to take with respect thereto. The Company also shall comply with TIA
ss. 314(a)(4). The Trustee shall have no responsibility or obligation to monitor
the Company's compliance with its obligations set forth in Sections 4.03, 4.04,
4.05, 4.06, 4.07, 4.08(a), (b), (c), (d) (only with respect to the Company's
obligation to pay the purchase price to the Holders entitled thereto) and (e),
4.09, 4.10 and 4.11 or whether a Change of Control has occurred.
SECTION 4.13. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. (a)
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (if not the
Company) shall be a Person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia
and such Person shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of the Company under the Securities
and this Indenture;
(ii) except in the case of either Merger, immediately after
giving effect to such transaction (and treating any Debt which becomes
an obligation of the resulting, surviving or transferee Person or any
of its Subsidiaries as a result of such transaction as having been
Issued by such Person or such Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing;
(iii) except in the case of either Merger, immediately after
giving effect to such transaction, the resulting, surviving or
transferee Person shall
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55
have a Consolidated Net Worth in an amount which is not less than the
Consolidated Net Worth of the Company immediately prior to such
transaction; and
(iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
(b) The resulting, surviving or transferee Person shall be the
successor Company and shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture, and thereafter,
except in the case of a lease, the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities.
(c) Following consummation of the Holdings Merger, the
provisions of Article IV restricting the activities of Holdings shall not be
applicable to the surviving corporation. Following consummation of the Worldwide
Merger, the provisions of Article IV restricting the activities of Worldwide
shall not be applicable to the surviving corporation.
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest, if any,
on any Security when the same becomes due and payable and such default continues
for a period of 30 days;
(2) the Company (i) defaults in the payment of the Principal
of any Security when the same becomes due and payable at its Stated Maturity,
upon redemption, upon declaration or otherwise or (ii) fails to redeem or
purchase Securities when required pursuant to this Indenture or the Securities;
(3)(i) the Company fails to comply with Section 5.01, (ii) the
Company fails to comply with Section 4.10(a) or 4.11 or (iii) the Trustee shall
fail to have a perfected security interest in the Collateral;
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56
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08 (other than a failure to purchase Securities), 4.09 or
4.10(b) and such failure continues for 30 days after the notice specified below;
(5) the Company fails to comply with any of its agreements in
the Securities or this Indenture or the Escrow Agreement (other than those
referred to in (1), (2), (3) or (4) above) and such failure continues for, or
any of the Company's or Worldwide's representations and warranties set forth in
Section 11.03 proves to have been materially false at the time it was made and
is not cured within, 60 days after the notice specified below;
(6) Debt of the Company or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or is accelerated
by the holders thereof because of a default, the total principal amount of the
portion of such Debt that is unpaid or accelerated exceeds $25,000,000 or its
foreign currency equivalent and such default continues for 5 days after the
notice specified below;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors; or takes any comparable action under any foreign laws
relating to insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
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or any similar relief is granted under any foreign laws and the order or decree
remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess
of $25,000,000 is entered against the Company or any Significant Subsidiary and
is not discharged and either (A) an enforcement proceeding has been commenced by
any creditor upon such judgment or decree or (B) there is a period of 60 days
following the entry of such judgment or decree during which such judgment or
decree is not discharged, waived or the execution thereof stayed and, in the
case of (B), such default continues for 10 days after the notice specified
below; or
(10) Worldwide fails to pay when due the purchase price of
LYONS tendered to it by and at the option of the holders thereof pursuant to the
terms of the LYONS Indenture and the total purchase price of such LYONS that is
unpaid exceeds $25 million.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4), (5), (6) or (9)(B) is not an Event
of Default until the Trustee or the Holders of at least 25% in Principal Amount
at Maturity of the Securities notify the Company of the Default and the Company
does not cure such Default within the time specified after receipt of such
Notice. Such Notice must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any event which with the giving of notice and the lapse of time would become
an Event of Default under clause (4), (5), (6) or (9)(B), its status and what
action the Company is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company or the
Holders of at
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58
least 25% in Principal Amount at Maturity of the Securities by notice to the
Company and the Trustee may declare the Accreted Value of and accrued interest
(if any) on all the Securities as of the date of such declaration (collectively,
the "Default Amount") to be due and payable immediately. If an Event of Default
specified in Section 6.01(7) or (8) with respect to the Company occurs, the
Default Amount on all the Securities as of the date of such Event of Default
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Securityholders. The
Holders of a majority in Principal Amount at Maturity of the Securities by
notice to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of Principal or
interest that has become due solely because of acceleration. No such rescission
shall affect any subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of Principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in Principal Amount at Maturity of the Securities by notice to the
Trustee and the Company may waive an existing Default and its consequences
except (i) a Default in the payment of the Principal of or interest on a
Security or (ii) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Securityholder affected. When a
Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in Principal Amount at Maturity of the Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee under this
Indenture. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or, subject to Section 7.01, that the
Trustee determines is unduly prejudicial to the rights of other Securityholders
or would involve the Trustee in personal liability; provided, however, that the
Trustee may take any other action deemed proper by the Trustee that is not
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inconsistent with such direction. Prior to taking any action hereunder, the
Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking such
action.
SECTION 6.06. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in Principal Amount at
Maturity of the Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in Principal Amount at Maturity
of the Securities do not give the Trustee a direction inconsistent with
the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or (except as
expressly provided herein) priority over another Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment. Notwith
standing any other provision of this Indenture, the right of any Holder to
receive payment of Principal of and interest, if any, on the Securities held by
such Holder, on or after the respective due dates expressed in the Securities,
or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default in payment of interest or Principal specified in Section 6.01(1) or (2)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
Principal and interest, if any, remaining unpaid (together with interest on such
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
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SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may, but shall have no obligation to, file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee and the Securityholders allowed in any judicial proceedings relative to
the Company, its creditors or its property and, unless prohibited by law or
applicable regulations, may, but shall have no obligation to, vote on behalf of
the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial proceeding
is hereby authorized by each Holder to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Holders of First Priority Initial Notes and First
Priority Exchange Notes for amounts due and unpaid on such Securities
for Principal and interest, if any, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for Principal and interest, if any, respectively;
THIRD: to Holders of Second Priority Initial Notes and Second
Priority Exchange Notes for amounts due and unpaid on such Securities
for Principal and interest, if any, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for Principal and interest, if any, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date (which shall be not less
than one Business Day following the record date) and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing
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by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including rea
sonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder for the enforcement of the payment of the Principal of, or interest (if
any) on, any Security on or after the respective due dates expressed in such
Security or a suit by Holders of more than 10% in Principal Amount at Maturity
of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent man would exercise or use under the circumstances in the
conduct of such man's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such opinions or
certificates which by any provision hereof are specifically required to
be furnished to the Trustee, the Trustee shall examine
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the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own wilful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(e) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(f) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(g) Every provision of this Indenture relating in any way to
the Trustee or its conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of each paragraph of this
Section and Section 7.02 (unless expressly not applicable) and to the provisions
of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on
and shall be protected in acting or refraining from acting on any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any
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63
action it takes or omits to take in good faith in reliance on the Officers'
Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the Securities or of the proceeds from the Securities, and it shall not
be responsible for any statement in the Indenture or in any document Issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of Principal of or interest, if any, on any
Security, the Trustee
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may withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06. Reports by Trustee to Holders. The Trustee shall
transmit to Holders such reports concerning the Trustee and its actions under
this Indenture as may be required pursuant to the TIA at the times and in the
manner provided pursuant thereto. To the extent that any such report is required
by the TIA with respect to any 12-month period, such report shall cover the
12-month period ending each May 15 and shall be transmitted by the next
succeeding each August 15. The Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time such compensation as shall be agreed to in
writing from time to time by the Company and the Trustee for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee and each of the Trustee's
agents, officers, directors, employees and stockholders (each an "indemnitee")
against any and all loss, liability, damage, claim or expense (including
attorneys' fees and expenses) incurred by each indemnitee in connection with the
acceptance or administration of this trust and the performance of its duties
hereunder. Each indemnitee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and any or all indemnitees may have separate counsel and the
Company shall pay the fees and expenses of any such counsel. The Company need
not reimburse any expense or indemnify against any loss, liability or expense
incurred by any indemnitee through its own wilful misconduct, negligence or bad
faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay Principal of and interest, if any, on particular Securities.
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65
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(7) or (8) with
respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in Principal
Amount at Maturity of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company, is removed
by Holders of a majority in Principal Amount at Maturity of the Securities and
they do not promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not accept appointment within 60
days after the retiring Trustee tenders its resignation or is removed, the
retiring Trustee, the Company or the Holders of a majority in Principal Amount
at Maturity of the Securities may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
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66
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
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ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all Outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (ii) all Outstanding Securities have become due and payable and
the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity all Outstanding Securities, including interest thereon, if any (other
than Securities replaced pursuant to Section 2.07), and if in either case the
Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Sections 8.01(c) and 8.06, cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel as to the satisfaction of all conditions to such
satisfaction and discharge of this Indenture and at the cost and expense of the
Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company at
any time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 5.01(iii) and
Article XI and Guarantor's obligations under Articles X and XI and the operation
of Section 6.01(3)(ii) and (iii), 6.01(4), 6.01(6), 6.01(7) (with respect to
Significant Subsidiaries only), 6.01(8) (with respect to Significant
Subsidiaries only), 6.01(9) and 6.01(10) ("covenant defeasance option"). The
Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in 6.01(3)(ii) and
(iii), 6.01(4), 6.01(6), 6.01(7) (with respect to Significant Subsidiaries
only), 6.01(8) (with respect to Significant Subsidiaries only), 6.01(9) and
6.01(10) or because of the failure of the Company to comply with clause (iii) of
Section 5.01 or with Article XI or because of Guarantor's failure to comply with
Article X or XI.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obliga tions that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06
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shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of Principal and
interest, if any, on the Securities to maturity or redemption, as the
case may be (it being understood that any U.S. Government Obligations
previously deposited with the Trustee pursuant to Section 11.05(g) may
be designated for this purpose);
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay Principal and
interest, if any, when due on all the Secur ities to maturity or
redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period; provided, however, that the foregoing condition need not be met
if at the time of the deposit, the Company delivers to the Trustee
either (x) an Officers' Certificate to the effect set forth in clause
(y)(II) below together with an Opinion of Counsel (which may rely on
such Officers' Certificate as to the matters stated therein) to the
effect that such deposit would not constitute a preference that could
be avoided under Section 547 of Title 11, United States Code,
notwithstanding that 123 days have not passed since the date of the
deposit, or (y) an Officers' Certificate to the effect that the Market
Value, determined as of the date of the deposit, of the Collateral (I)
is greater than the Accreted Value of the then-Outstanding Securities
at the end of such 123-day period and (II) is greater than the fair
market value, determined as of the date of deposit, of the money or
U.S. Government Obligations being deposited;
(4) no Default has occurred and is continuing on the date of
such deposit and after giving effect thereto;
(5) the deposit does not constitute a default under any other
agreement binding on the Company;
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(6) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(7) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(9) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article VIII have been complied with.
Notwithstanding the foregoing provisions of this Section, the
conditions set forth in the foregoing paragraphs (2), (3), (4), (5), (6), (7)
and (8) need not be satisfied so long as, at the time the Company makes the
deposit described in paragraph (1), (i) no Default under Section 6.01(1),
6.01(2), 6.01(7) or 6.01(8) has occurred and is continuing on the date of such
deposit and after giving effect thereto and (ii) either (x) a notice of
redemption has been mailed pursuant to Section 3.03 providing for redemption of
all the Securities 40 days after such mailing and the provisions of Section 3.01
with respect to such redemption shall have been complied with or (y) the Stated
Maturity of the Securities will occur within 40 days. If the conditions in the
preceding sentence are satisfied, the Company shall be deemed to have exercised
its covenant defeasance option.
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Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of Principal of and interest, if any, on the
Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of Principal or interest, if any, that remains unclaimed
for two years, and, thereafter, Securityholders entitled to the money must look
to the Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the Principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest, if any, on or Principal of any
Securities because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
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ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are Issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities or to
secure (or provide additional security for) the Securities;
(5) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(6) to provide for issuance of the Exchange Notes, which will
have terms substantially identical in all material respects to the
Initial Notes (except that the cash interest provisions and transfer
restrictions contained in the Initial Notes will be modified or
eliminated, as appropriate), and which will be treated together with
any Outstanding Initial Notes, as a single issue of securities;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA or to otherwise comply
with the TIA; or
(8) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
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SECTION 9.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in Principal Amount at Maturity of the Outstanding Securities. However,
without the consent of each Securityholder affected, an amendment may not:
(1) reduce the Principal Amount at Maturity of Securities
whose Holders must consent to an amendment;
(2) reduce the rate of or extend the time for payment of
interest, if any, on any Security;
(3) reduce the Principal of or extend the Stated Maturity of
any Security or reduce the Accreted Value, Put Amount, Due Amount or
Default Amount of any Security;
(4) reduce the premium or amount payable upon the redemption
of any Security or change the time at which any Security may be
redeemed in accordance with Article III;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Article XI that adversely affects such
Securityholder;
(7) make any change in Section 4.08 relating to the date by
which the Company must purchase, or in the obligation of the Company to
purchase, tendered shares, the definition of Change of Control, 6.04 or
6.07 or the second sentence of this Section; or
(8) make any change to paragraph 6 of the Securities or the
definition of Triggering Event.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
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SECTION 9.03. Compliance with Trust Indenture Act. Every amend
ment to this Indenture or the Securities shall comply with the TIA as then in
effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers.
Any amendment to this Indenture or the Securities shall become effective in
accordance with its terms when executed and delivered by the Company and the
Trustee provided that the Company has received the requisite consents prior
thereto. The Company shall not be obligated to execute any such amendment
regardless of whether such consents have been received. Any waiver shall become
effective when the requisite consents have been received or such later time as
the Company may elect by notice to the Trustee. A consent to an amendment or a
waiver by a Holder of a Security shall bind the Holder and every subsequent
Holder of that Security or portion of the Security that evidences the same debt
as the consenting Holder's Security, even if notation of the consent or waiver
is not made on the Security. However, any such Holder or subsequent Holder may
revoke the consent or waiver as to such Holder's Security or portion of the
Security if the Trustee receives the notice of revocation prior to the time that
the Company receives the requisite number of consents to such proposed amendment
or waiver. After an amendment or waiver becomes effective, it shall bind every
Securityholder. A consent to any amendment or waiver hereunder by any Holder
given in connection with a tender of such Holder's Securities shall not be
rendered invalid by such tender.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall Issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to Issue a new Security shall not affect the validity of such
amendment.
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SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article IX if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company, any
Affiliate of the Company nor any Subsidiary shall, directly or indirectly, pay
or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities
unless such consideration is offered to be paid or agreed to be paid to all
Holders which so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or amendment.
ARTICLE X
Non-Recourse Guaranty
SECTION 10.01. Guaranty. The Guarantor, as primary obligor and
not merely as surety, hereby irrevocably and unconditionally guarantees the
punctual payment when due, whether at Stated Maturity, by acceleration or
otherwise, of all Obligations of the Company now or hereafter existing under
this Indenture whether for Principal of or interest (if any) on the Securities,
expenses, indemnification or otherwise (all such Obligations guaranteed hereby
by the Guarantor being the "Guaranteed Obligations"). The guaranty of the
Guarantor under this Article X is herein referred to as this "Guaranty".
Notwithstanding anything herein to the contrary, the
Guarantor's liability under this Article X and Article XI shall be limited to
the Coleman Collateral provided by it and any Substitute Collateral provided by
it and the proceeds realized by the Trustee upon the sale or other realization
of such Coleman Collateral and Substitute Collateral and pledged pursuant to
Article XI, it being understood that it is the intention of the foregoing that
this Guaranty otherwise is a nonrecourse obligation of the Guarantor and that
the Trustee's and the Holders' rights to recover against the Guarantor hereunder
shall be limited solely to the Coleman Collateral provided by it and any
Substitute Collateral provided by it and the proceeds realized by the Trustee
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upon the sale or other realization of such Coleman Collateral and Substitute
Collateral and pledged pursuant to Article XI.
Subject to the limited recourse set forth in the immediately
preceding paragraph, the Guarantor agrees to pay, in addition to the amount
stated above, any and all expenses (including reasonable counsel fees and
expenses) incurred by the Trustee or the Holders in enforcing any rights under
this Article X with respect to the Guarantor.
Without limiting the generality of the foregoing, this
Guaranty guarantees, to the extent provided herein, the payment of all amounts
which constitute part of the Guaranteed Obligations and would be owed by the
Company under this Indenture or the Securities but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company.
SECTION 10.02. Guaranty Absolute. This Guaranty is
irrevocable, absolute, present and unconditional. The Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
this Indenture, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Trustee or the Holders with respect thereto. The obligations of the Guarantor
under this Guaranty are independent of the Guaranteed Obligations, and a
separate action or actions may be brought and prosecuted against the Guarantor
to enforce this Guaranty, irrespective of whether any action is brought against
the Company or any other guarantor or whether the Company or any other guarantor
is joined in any such action or actions. The liability of the Guarantor under
this Guaranty shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of this Indenture
or the Securities with respect to the Company or any agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from this
Indenture, including any increase in the Guaranteed Obligations
resulting from the extension of additional credit to the Company or
otherwise;
(c) the failure to give notice to the Guarantor of the
occurrence of a Default under the provisions of this Indenture or the
Securities;
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(d) any taking, exchange, release or nonperfection of any
Collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(e) any manner of application of Collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any Collateral or any other assets of the
Company;
(f) any failure, omission, delay by or inability on the part
of the Trustee or the Holders to assert or exercise any right, power or
remedy conferred on the Trustee or the Holders in this Indenture or the
Securities;
(g) any change in the corporate structure, or termination,
dissolution, consolidation or merger of the Company or any guarantor
with or into any other entity, the voluntary or involuntary
liquidation, dissolution, sale or other disposition of all or
substantially all the assets of the Company or any Guarantor, the
marshaling of the assets and liabilities of the Company or any
guarantor, the receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with
creditors, or readjustment of, or other similar proceedings affecting
the Company or any guarantor, or any of the assets of any of them;
(h) the assignment of any right, title or interest of the
Trustee or any Holder in this Indenture or the Securities to any other
Person; or
(i) any other event or circumstance (including any statute of
limitations), whether foreseen or unforeseen and whether similar or
dissimilar to any of the foregoing, that might otherwise constitute a
defense available to, or a discharge of, the Company or a guarantor,
other than payment in full of the Guaranteed Obligations; it being the
intent of the Guarantor that its obligations hereunder shall not be
discharged except by payment of all amounts owing pursuant to this
Indenture or the Securities, subject to the second paragraph of Section
10.01.
This Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time any payment or performance with respect to
any of the Guaranteed Obligations is rescinded or must otherwise be returned by
the Trustee, any Holder or any other Person upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment or
performance had not been made or occurred. The obligations of the Guarantor
under this Guaranty shall not be subject to reduction, termination or other
impairment by any set-off, recoupment, counterclaim or defense or for any other
reason.
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SECTION 10.03. Waivers. The Guarantor hereby irrevocably
waives, to the extent permitted by applicable law:
(a) promptness, diligence, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations and this
Guaranty;
(b) any requirement that the Trustee, any Holder or any other
Person protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against the
Company or any other Person or any Collateral, or obtain any relief
pursuant to this Indenture or pursue any other available remedy;
(c) all right to trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Indenture or the
Securities;
(d) any defense arising by reason of any claim or defense
based upon an election of remedies by the Trustee or any Holder which
in any manner impairs, reduces, releases or otherwise adversely affects
its subrogation, contribution or reimbursement rights or other rights
to proceed against the Company or any other Person or any Collateral;
and
(e) any duty on the part of the Trustee or any Holder to
disclose to the Guarantor any matter, fact or thing relating to the
business, operation or condition of the Company and its assets now
known or hereafter known by the Trustee or such Holder.
SECTION 10.04. Waiver of Subrogation and Contribution. Until
this Indenture has been discharged, the Guarantor hereby irrevocably waives any
claim or other right which it may now or hereafter acquire against the Company
or any guarantor that arise from the existence, payment, performance or
enforcement of the Guarantor's obligations under this Guaranty, including any
right of subrogation, reimbursement, exoneration, contribution, indemnification,
any right to participate in any claim or remedy of the Trustee or any Holder
against the Company or any guarantor or any Collateral which the Trustee or any
Holder now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including the right
to take or receive from the Company, directly or indirectly, in cash or other
property or by setoff or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to the Guarantor in
violation of the preceding sentence and the Guaranteed Obligations shall not
have been paid in full, such amount shall be deemed to have been paid to the
Guarantor for the benefit of, and held in trust for the benefit of, the Trustee,
and the Holders, and shall forthwith be paid to the Trustee for the benefit of
the
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Holders to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of this Indenture. The
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by this Indenture and that the waivers
set forth in this Section 10.04 are knowingly made in contemplation of such
benefits.
SECTION 10.05. Certain Agreements. The Guarantor covenants and
agrees that, as a condition to the acceptability of this Guaranty to the Trustee
and the Holders, the Guarantor will:
(a) comply in all material respects with all applicable laws,
rules, regulations and orders, such compliance to include paying when
due all taxes, assessments and governmental charges imposed upon it or
upon its property except to the extent contested in good faith; and
(b) except as contemplated by the Worldwide Merger, preserve
and maintain its corporate existence, rights (charter and statutory)
and franchises; provided, however, that the Guarantor shall not be
required to preserve any right or franchise if the Board of Directors
of the Guarantor shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Guarantor and
the loss thereof is not disadvantageous in any material respect to the
Guarantor or the Holders.
SECTION 10.06. No Waiver; Cumulative Remedies. No failure on
the part of the Trustee or any Holder to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. The Trustee and
the Holders shall have all the rights and remedies granted in this Indenture and
available at law or in equity, and these same rights and remedies may be pursued
separately, successively or concurrently against the Company or the Guarantor,
or any Collateral, subject in the case of the Guarantor to the limited recourse
set forth in the second paragraph of Section 10.01.
SECTION 10.07. Continuing Guaranty. This Guaranty is a
continuing guaranty and shall (a) remain in full force and effect until the
earliest of (i) the release of all the Coleman Collateral and all the Substitute
Collateral, if any, provided by the Guarantor pursuant to Article XI, (ii) the
sale or other disposition of all the Coleman Collateral and all the Substitute
Collateral, if any, provided by the Guarantor and the application of the
proceeds thereof in accordance with this Indenture and (iii) the consummation of
the Worldwide Merger, (b) be binding upon the Guarantor and
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(c) enure to the benefit of and be enforceable by the Trustee, the Holders and
their successors, transferees and assigns.
SECTION 10.08. Severability. Any provision of this Article X
which is prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non- authorization, without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
ARTICLE XI
Security And Pledge Of Collateral
SECTION 11.01. Grant of Security Interest. (a) To secure the
full and punctual payment when due and the full and punctual performance of the
Obligations, the Company hereby grants to the Trustee, for the benefit of the
Trustee and the Holders, a security interest in all its right, title and
interest in and to the following property, whether now owned by the Company or
hereafter acquired and whether now existing or hereafter coming into existence,
other than such of the following which are released from the Lien of this
Indenture pursuant to Section 11.05 (the "Holding Company Collateral"):
(i) all the shares of Capital Stock of Holdings, which on the
date hereof are identified on Schedule I hereto (the "Holdings Pledged
Shares");
(ii) all the shares of Capital Stock of Worldwide delivered to
the Trustee pursuant to Section 11.04(i) (the "Worldwide Pledged
Shares");
(iii) all certificates representing any of the Holdings
Pledged Shares or the Worldwide Pledged Shares;
(iv) all dividends, cash, instruments and other property and
proceeds from time to time received, receivable or otherwise
distributed in respect of or in an exchange for any of the Holdings
Pledged Shares or the certificates therefor (collectively with the
Holdings Pledged Shares and the certificates therefor, the "Holdings
Collateral"); and
(v) all dividends, cash, instruments and other property and
proceeds from time to time received, receivable or otherwise
distributed in respect of or in an exchange for any of the Worldwide
Pledged Shares or the certificates
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therefor (collectively with the Worldwide Pledged Shares and the
certificates therefor, the "Worldwide Collateral").
(b) To secure the full and punctual payment when due and the
full and punctual performance of the Obligations and the Guaranteed Obligations,
respectively, each of the Company and Worldwide hereby grants to the Trustee,
for the benefit of the Trustee and the Holders, a security interest in all its
right, title and interest in and to the following property, whether nor owned by
the Company or Worldwide, as the case may be, or thereafter acquired and whether
now existing or hereafter coming into existence, other than such of the
following which are released from the Lien of this Indenture pursuant to Section
11.05 (the "Coleman Collateral"):
(i) the shares of Coleman Common Stock identified on Schedule
I hereto and all other shares of Coleman Common Stock delivered to the
Trustee pursuant to Section 11.04(ii), (iii) or (iv) (the "Coleman
Pledged Shares", which term shall exclude Withdrawn Shares);
(ii) all certificates representing any of the Coleman Pledged
Shares; and
(iii) all dividends, cash, instruments and other property and
proceeds from time to time received, receivable or otherwise
distributed in respect of or in an exchange for any of the foregoing.
(c) To secure the full and punctual payment when due and the
full and punctual performance of the Obligations and the Guaranteed Obligations,
respectively, each of the Company and Worldwide hereby grants to the Trustee,
for the benefit of the Trustee and the Holders, a security interest in all its
right, title and interest in and to the following property, whether now owned by
the Company or Worldwide (as the case may be) or hereafter acquired and whether
now existing or hereafter coming into existence, other than such of the
following which are released from the Lien of this Indenture pursuant to Section
11.05 (the "Substitute Collateral"):
(i) all money and securities deposited with the Trustee
pursuant to Section 11.05(g); and
(ii) all dividends, cash, instruments and other property and
proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for the foregoing.
(d) Holding Company Collateral, Coleman Collateral, and
Substitute Collateral are hereinafter collectively referred to as "Collateral,"
and Holdings Pledged
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Shares, Worldwide Pledged Shares and Coleman Pledged Shares are hereinafter
collectively referred to as the "Pledged Shares".
SECTION 11.02. Delivery of Collateral. Any and all
certificates or instruments representing or evidencing Collateral shall be
delivered to and held by or on behalf of the Trustee pursuant hereto and shall
be in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Trustee. The Trustee shall have the right, at any
time after the occurrence and during the continuance of an Event of Default, in
its discretion and, except in the case of the Coleman Pledged Shares, without
notice to the Company or Worldwide, to transfer to or to register in the name of
the Trustee or any of its nominees any or all of the Collateral. In addition,
the Trustee shall have the right at any time to exchange certificates or
instruments representing or evidencing Collateral for certificates or
instruments of different denominations.
SECTION 11.03. Representations and Warranties. Each of the
Company and Worldwide hereby represents and warrants as follows:
(a) It is the record and beneficial owner of the Pledged
Shares described on Schedule I (as the same may be revised from time to time
pursuant to Section 11.04) as being owned by it, free and clear of any Lien,
except for the Lien created by this Indenture, the Holdings Indenture or the
LYONS Indenture, as the case may be.
(b) It has or will have, full corporate power, authority and
legal right to pledge all the Pledged Shares described on Schedule I (as the
same may be revised from time to time pursuant to Section 11.04) as being owned
by it and all other Collateral pledged by it pursuant to this Indenture.
(c) The Pledged Shares described on Schedule I (as the same
may be revised from time to time pursuant to Section 11.04) as being owned by it
have been or will be, duly authorized and are validly issued, fully paid and
non-assessable.
(d) The pledge in accordance with the terms of this Indenture
of the Pledged Shares described on Schedule I (as the same may be revised from
time to time pursuant to Section 11.04) as being owned by it creates or will
create, as the case may be, a valid and perfected first priority Lien on such
Pledged Shares, securing payment of the Obligations or the Guaranteed
Obligations, as the case may be.
(e) (i) The Holdings Pledged Shares constitute 100% of the
Capital Stock of Holdings, (ii) the Worldwide Pledged Shares will constitute
100% of the
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Capital Stock of Worldwide, and (iii) as of the date of the Worldwide Merger,
the Coleman Pledged Shares will constitute all of the Coleman Common Stock owned
by the Company.
(f) At the date of this Indenture, there are no existing
options, warrants, calls or commitments of any character relating to any
authorized and unissued Capital Stock of Holdings or Worldwide.
SECTION 11.04. Further Assurances. Each of the Company and
Worldwide agrees that at any time and from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents and take all
further action that may be necessary or that the Trustee may reasonably request
in order to perfect and protect any Lien granted or purported to be granted
hereby or to enable the Trustee to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the foregoing, (i)
upon the consummation of the Holdings Notes Redemption, the Company shall
deliver, or shall cause Holdings to pledge and deliver, to the Trustee all
shares of Capital Stock of Worldwide and provide to the Trustee a revised
Schedule I, (ii) on the date of any release from the Lien of the LYONS Indenture
or the Holdings Indenture of any shares of Coleman Common Stock, Worldwide shall
deliver to the Trustee all shares of Coleman Common Stock so released (other
than any Delivered Shares) and provide to the Trustee a revised Schedule I,
(iii) from time to time as they become available to be pledged to the Trustee,
Worldwide shall deliver to the Trustee any other shares of Coleman Common Stock
owned or acquired by it and not previously delivered to the Trustee and provide
to the Trustee a revised Schedule I, (iv) upon receipt thereof, the Company
shall deliver to the Trustee any shares of Coleman Common Stock acquired by the
Company and not previously delivered to the Trustee and provide to the Trustee a
revised Schedule I, and (v) at the time of any release of any Coleman Pledged
Shares pursuant to Section 11.05, the Company or Worldwide shall provide to the
Trustee a revised Schedule I. Any such revised Schedule I shall reflect any
changes made necessary by the applicable delivery or release, at which time each
of the Company and Worldwide shall be deemed to make its representations and
warranties set forth in Section 11.03(a)-(e) with respect to Schedule I, as so
revised.
SECTION 11.05. Dividends; Voting Rights; Substitution and
Partial Release of Collateral.
(a) Each of the Company and Worldwide shall promptly deliver
to the Trustee all dividends and other distributions paid in respect of the
Pledged Shares and any Substitute Collateral. All such dividends and other
distributions shall be held by the Trustee as Collateral and shall, if received
by the Company or Worldwide, be received in trust for the benefit of the
Trustee, be segregated from the other property or
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funds of the Company or Worldwide and be forthwith delivered to the Trustee as
Collateral in the same form as so received (with any necessary endorsement). Any
cash dividends or distributions delivered to or otherwise held by the Trustee
pursuant to this Section 11.05, and any other cash constituting Collateral
delivered to the Trustee, shall be invested, at the written direction of the
Company or Worldwide, by the Trustee in Temporary Cash Investments.
(b) [Reserved]
(c) As long as no Default shall have occurred and be
continuing and until written notice thereof from the Trustee to the Company, the
Company or Worldwide shall be entitled to exercise any and all voting and other
consensual rights relating to Pledged Shares or any part thereof for any
purpose; provided, however, that no vote shall be cast, and no consent, waiver
or ratification given or action taken, which would be inconsistent with or
violate any provision of this Indenture or the Securities.
(d) Upon the occurrence and during the continuance of a
Default, all rights of the Company or Worldwide to exercise the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to
Section 11.05(c) shall cease upon notice from the Trustee to the Company and
upon the giving of such notice all such rights shall thereupon be vested in the
Trustee who shall thereupon have the sole right to exercise such voting and
other consensual rights.
(e) In order to permit the Trustee to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant to Section
11.05(d), and to receive all dividends and distributions which it may be
entitled to receive under Section 11.05(a), the Company or Worldwide shall, if
necessary, upon written notice of the Trustee, from time to time execute and
deliver to the Trustee such instruments as the Trustee may reasonably request.
(f) As long as no Default shall have occurred and be
continuing, prior to the discharge or defeasance of this Indenture and after all
Holdings Notes have been redeemed and all LYONS have been retired, the Company
or Worldwide, as applicable, shall be entitled from time to time to request the
Trustee to release all or a portion of the Coleman Collateral subject to the
Lien of this Indenture; provided, however, that (i) such request (a "Collateral
Release Request") must be in writing and accompanied by an Officers' Certificate
and an Opinion of Counsel stating that all conditions precedent to the release
of such Coleman Collateral pursuant to this Section 11.05(f) have been complied
with, (ii) the date of such Collateral Release Request (the "Determination
Date") is not more than five Business Days prior to the date of the release
requested thereunder and (iii) either (x) the conditions set forth in
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84
Section 11.05(g) are met or (y) the conditions set forth in Section 11.05(k) are
met. Any such Collateral Release Request shall specify whether Worldwide or the
Company (as the case may be) intends to meet the conditions set forth in Section
11.05(g) or 11.05(k). Upon satisfaction of the foregoing conditions, the Lien of
this Indenture on such Coleman Collateral to be released shall terminate and all
such Collateral shall be released without any further action on the part of the
Trustee or any other Person.
(g) No Coleman Collateral shall be released from the Lien of
this Indenture pursuant to any Collateral Release Request which specifies that
the conditions of this Section 11.05(g) are to be met unless:
(i) the Company or Worldwide deposits with the Trustee money
or U.S. Government Obligations for the payment of the Principal Amount
at Maturity and interest, if any, on the Securities or the Applicable
Portion thereof;
(ii) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without reinvestment will provide cash at such
times and in such amounts as will be sufficient to pay the Principal
Amount at Maturity and interest, if any, when due on all the Securities
or the Applicable Portion thereof to maturity;
(iii) no Default or (so long as the LYONS Indenture is in
effect) no LYONS Default has occurred and is continuing on the date of
such deposit and after giving effect thereto;
(iv) the ratio of (A) the Market Value, determined as of the
Determination Date relating to such Collateral Release Request, of the
Coleman Collateral that will remain, if any, subject to the Lien of
this Indenture immediately following such release to (B) the aggregate
Accreted Value of the Securities (other than the Applicable Portion
thereof and other than any Securities the payment of which has
theretofore been provided pursuant to clause (i) of this Section
11.05(g)) Outstanding as of such Determination Date is (x) at least
equal to the ratio of the Market Value, determined as of such
Determination Date, of the Coleman Collateral subject to the Lien of
this Indenture immediately prior to such release to the aggregate
Accreted Value of the Securities (including the Applicable Portion
thereof but excluding Securities the payment of which has theretofore
been provided pursuant to clause (i) of this Section 11.05(g))
Outstanding as of such Determination Date, but is (y) in no event less
than 1.5 to 1.00;
<PAGE>
85
(v) the Market Value, determined as at the Determination Date
relating to such Collateral Release Request, of the Coleman Collateral
that will remain, if any, subject to the Lien of this Indenture
immediately following such release is at least equal to the aggregate
Principal Amount at Maturity of the Securities (other than the
Applicable Portion thereof and other than any Securities the payment of
which has theretofore been provided pursuant to clause (i) of this
Section 11.05(g)) Outstanding as of such Determination Date;
(vi) as of the Determination Date relating to such Collateral
Release Request, the Company will be in compliance with Section 4.10(a)
after giving effect to such release and to the deposit pursuant to
clause (i) of this Section 11.05(g) with respect to the Applicable
Portion of the Securities;
(vii) unless the Company provides an Officers' Certificate to
the effect that the Market Value of the Coleman Collateral to be
released pursuant to such Collateral Release Request (the "Applicable
Collateral") is greater than the fair market value, determined as of
such Determination Date, of the money or U.S. Government Obligations
being deposited, 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or (8) with
respect to the Company or Worldwide occurs which is continuing at the
end of the period;
(viii) the Company delivers to the Trustee an Opinion of
Counsel to the effect that the Person providing such Substitute
Collateral does not constitute, or is qualified as, a regulated
investment company under the Investment Company Act of 1940;
(ix) the deposit does not constitute a default under any other
agreement binding on the Company or Worldwide; and
(x) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such deposit of U.S. Government Obligations and will be subject to
Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such deposit had not
occurred.
For purposes of this Section 11.05, the "Applicable Portion"
shall mean, with respect to any Collateral Release Request, Securities having an
aggregate Principal Amount at Maturity equal to the product of (A) the aggregate
Principal Amount at Maturity of Securities Outstanding as of the Determination
Date relating to such Collateral Release Request (after deducting therefrom the
aggregate Principal Amount
<PAGE>
86
at Maturity of Securities the payment of which has theretofore been provided
pursuant to clause (i) of this Section 11.05(g)) and (B) a fraction, the
numerator of which is the Market Value, determined as of such Determination
Date, of the Applicable Collateral and the denominator of which is the aggregate
Market Value of all Coleman Collateral at such time. The Series deemed to be
included in the Applicable Portion and all prior Applicable Portions are, first,
any First Priority Initial Notes and First Priority Exchange Notes then
Outstanding and, second, any Second Priority Initial Notes and Second Priority
Exchange Notes then Outstanding.
(h) Notwithstanding anything to the contrary in Section
11.05(f), (g), (k) or (l), upon satisfaction by the Company of the conditions
set forth in Article VIII to its legal defeasance option, its covenant
defeasance option or to the discharge of this Indenture, the Lien of this
Indenture on all the Collateral shall terminate and all the Collateral shall be
released without any further action on the part of the Trustee or any other
Person. Upon the release from the Lien of this Indenture of all the Coleman
Collateral pursuant to Section 11.05, the Lien of this Indenture on all the
Holding Company Collateral shall terminate and all the Holding Company
Collateral shall be released without any further action on the part of the
Trustee or any other Person. Upon the release of any Collateral pursuant to this
Article XI, the Trustee shall execute and deliver to the Company an instrument
or instruments acknowledging the release of such Collateral from this Indenture
and the discharge of the Lien on such Collateral created by this Article XI, and
will duly assign, transfer and deliver to the Company or Worldwide (without
recourse and without any representation or warranty) such Withdrawn Collateral.
(i) Any Coleman Pledged Shares which are released from the
Lien of this Indenture shall be referred to herein as "Withdrawn Shares" and,
together with any cash or instruments or other Collateral which are released
from the Lien of this Indenture, as "Withdrawn Collateral".
(j) [Reserved]
(k) In connection with or after (x) any redemption of less
than all the Securities or (y) any delivery by the Company of less than all the
Securities for cancellation, as long as no Default shall have occurred and be
continuing, the Company shall be entitled to deliver a Collateral Release
Request to the Trustee to release a pro rata portion of the Coleman Collateral
subject to this Indenture; provided, however, that:
(i) the ratio of (A) the Market Value, determined as of the
Determination Date relating to such Collateral Release Request, of the
Coleman Collateral that will remain subject to the Lien of this
Indenture immediately
<PAGE>
87
following such release to (B) the aggregate Accreted Value of the
Securities (other than Securities the payment of which has theretofore
been provided pursuant to clause (i) of Section 11.05(g)) Outstanding
as of such Determination Date after giving effect to such redemption or
delivery for cancellation shall be (x) at least equal to the ratio of
the Market Value, determined as of such Determination Date, of the
Coleman Collateral subject to the Lien of this Indenture immediately
prior to such release to the aggregate Accreted Value of the Securities
(other than Securities the payment of which has theretofore been
provided pursuant to clause (i) of Section 11.05(g)) Outstanding as of
such Determination Date prior to giving effect to such redemption or
delivery, but shall (y) in no event be less than 1.5 to 1.00;
(ii) the Market Value, determined as at the Determination Date
relating to such Collateral Release Request, of the Coleman Collateral
that will remain, if any, subject to the Lien of this Indenture
immediately following such release is at least equal to the aggregate
Principal Amount at Maturity of the Securities (other than any
Securities the payment of which has theretofore been provided pursuant
to clause (i) of Section 11.05(g)) Outstanding as of such Determination
Date after giving effect to such redemption or delivery; and
(iii) as of the Determination Date relating to such Collateral
Release Request, the Company will be in compliance with Section 4.10(a)
after giving effect to such release and to such redemption or delivery.
(l) In connection with a redemption of Securities pursuant to
paragraph 5 of the Securities or in connection with any purchase of Securities
pursuant to Section 4.08 or in connection with the payment at maturity of the
Principal Amount at Maturity of the Securities, the Company or Worldwide shall
be entitled to request the Trustee to release Substitute Collateral having a
fair market value on such redemption date or purchase date equal to an amount
necessary in whole or in part to pay the redemption price or purchase price of
the Securities to be redeemed or purchased or to pay at maturity the Principal
Amount at Maturity of the Securities. Upon the release of such Collateral and
after the Company complies with the provisions of Section 11.12, the Trustee
shall execute and deliver to the Company an instrument or instruments
acknowledging the release of such Collateral from this Indenture and the
discharge of the Lien on such Collateral created by this Article XI, and will
duly assign, transfer and deliver to or at the direction of the Company (without
recourse and without any representation or warranty) such Collateral.
Notwithstanding the foregoing, the Trustee shall be entitled to receive, as a
condition to any release of Collateral under this Section 11.05(l), an Officer's
Certificate to the effect that such release will not result in a Default
hereunder. Upon the release of Substitute Collateral pursuant to this Section
11.05(l), the Principal Amount at Maturity and Accreted Value of Securities
<PAGE>
88
the payment of which has theretofore been provided pursuant to clause (i) of
Section 11.05(g) after giving effect to such redemption or repurchase shall be
deemed to be reduced by the Principal Amount at Maturity or Accreted Value,
respectively, of the Securities so redeemed or repurchased with such Substitute
Collateral.
(m) At the Company's reasonable request, the Trustee will
execute and deliver such documents and take such other actions as may be
reasonably requested to facilitate the release of the escrowed property in
accordance with the terms of the Escrow Agreement.
(n) Upon the consummation of the Holdings Merger, the Holdings
Collateral shall be automatically released from the Lien of this Indenture, and
upon the consummation of the Worldwide Merger, the Worldwide Collateral shall be
automatically released from the Lien of this Indenture.
SECTION 11.06. Trustee Appointed Attorney-in-Fact. Each of the
Company and Worldwide hereby appoints the Trustee as its attorney-in-fact, with
full authority in its place and stead and in its name or otherwise, from time to
time in the Trustee's discretion but only after the occurrence and during the
continuance of an Event of Default, to take any action and to execute any
instrument which the Trustee may deem necessary or advisable in order to
accomplish the purposes of this Article XI, including to receive, endorse and
collect all instruments made payable to it representing any dividend, interest
payment or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same. This power, being coupled with an
interest, is irrevocable.
SECTION 11.07. Trustee May Perform. If either the Company or
Worldwide fails to perform any agreement contained in this Article XI, the
Trustee may itself perform, or cause performance of, such agreement, and the
expenses of the Trustee incurred in connection therewith shall be payable by the
Company under Section 7.07.
SECTION 11.08. Trustee's Duties. The powers conferred on the
Trustee under this Article XI are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Trustee shall have
no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral.
SECTION 11.09. Remedies upon Event of Default. If any Event of
Default shall have occurred and be continuing, the Trustee may exercise in
respect of
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89
the Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies provided a secured party
upon the default of a debtor under the Uniform Commercial Code at that time, and
the Trustee may also, without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any of the Trustee's offices or elsewhere,
for cash, on credit or for future delivery, upon such terms as the Trustee may
determine to be commercially reasonable, and the Trustee or any Securityholder
may be the purchaser of any or all of the Collateral so sold and thereafter hold
the same, absolutely, free from any right or claim of whatsoever kind. Each of
the Company and Worldwide agrees that, to the extent notice of sale shall be
required by law, at least 10 days' notice to it of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Trustee shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. The
Trustee may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. The Trustee shall
incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale conducted in a commercially reasonable manner. Each
of the Company and Worldwide hereby waives any claims against the Trustee
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if the Trustee accepts the first offer received
and does not offer such Collateral to more than one offeree.
Each of the Company and Worldwide recognizes that, by reason
of certain prohibitions contained in the Securities Act and applicable state
securities laws, the Trustee may be compelled, with respect to any sale of all
or any part of the Collateral, to limit purchasers to those who will agree,
among other things, to acquire such Collateral for their own account, for
investment, and not with a view to the distribution or resale thereof. Each of
the Company and Worldwide acknowledges and agrees that any such sale may result
in prices and other terms less favorable to the seller than if such sale were a
public sale without such restrictions and, notwithstanding such circumstances,
agrees that any such sale shall be deemed to have been made in a commercially
reasonable manner. The Trustee shall be under no obligation to delay the sale of
any of the Pledged Shares for the period of time necessary to permit the Company
to register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Company or Worldwide would agree
to do so.
SECTION 11.10. Application of Proceeds. Upon the occurrence
and during the continuance of an Event of Default and after the acceleration of
the Securities pursuant to Section 6.02 (so long as such acceleration has not
been
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90
rescinded), any cash held by the Trustee as Collateral and all cash proceeds
received by the Trustee in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral, shall be applied by the
Trustee in the manner specified in Section 6.10.
SECTION 11.11. Continuing Lien. Except as provided in Section
11.05, this Indenture shall create a continuing Lien on the Collateral that
shall (i) remain in full force and effect until payment in full of the
Securities, (ii) be binding upon the Company and Worldwide and their respective
successors and assigns and (iii) enure to the benefit of the Trustee and its
successors, transferees and assigns.
SECTION 11.12. Certificates and Opinions. The Company shall
comply with (a) TIA ss. 314(b), relating to Opinions of Counsel regarding the
Lien of this Indenture and (b) TIA ss. 314(d), relating to the release of
Collateral from the Lien of this Indenture and Officers' Certificates or other
documents regarding fair value of the Collateral, to the extent such provisions
are applicable. Any certificate or opinion required by TIA ss. 314(d) may be
executed and delivered by an Officer of the Company to the extent permitted by
TIA ss. 314(d).
SECTION 11.13. Additional Agreements. The Company agrees that,
upon the occurrence and during the continuance of a Default hereunder, it will,
at any time and from time to time, upon the written request of the Trustee, use
its best efforts to take or to cause the issuer of the Coleman Pledged Shares
and any other securities distributed in respect of the Coleman Pledged Shares
(collectively with the Coleman Pledged Shares, the "Pledged Securities") to take
such action and prepare, distribute or file such documents, as are required or
advisable in the reasonable opinion of counsel for the Trustee to permit the
public sale of such Pledged Securities. The Company further agrees to indemnify,
defend and hold harmless the Trustee, each Holder, any underwriter and their
respective officers, directors, affiliates and controlling persons from and
against all loss, liability, expenses, costs of counsel (including reasonable
fees and expenses of legal counsel to the Trustee), and claims (including the
costs of investigation) that they may incur insofar as such loss, liability,
expense or claim arises out of or is based upon any alleged untrue statement of
a material fact contained in any prospectus (or any amendment or supplement
thereto) or in any notification or offering circular, or arises out of or is
based upon any alleged omission to state a material fact required to be stated
therein or necessary to make the statements in any thereof not misleading,
except insofar as the same may have been caused by any untrue statement or
omission based upon information furnished in writing to the Company or the
issuer of such Pledged Securities by the Trustee or any Holder expressly for use
therein. The Company further agrees, upon such written request referred to
above, to use its best efforts to qualify, file or register, or cause the issuer
of such Pledged Securities to qualify, file or register, any of the Pledged
Securities under the Blue Sky or other securities laws of such states as may be
requested by the Trustee and keep effective, or
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91
cause to be kept effective, all such qualifications, filings or registrations.
The Company will bear all costs and expenses of carrying out its obligations
under this Section 11.13. The Company acknowledges that there is no adequate
remedy at law for failure by it to comply with the provisions of this Section
11.13 and that such failure would not be adequately compensable in damages, and
therefore agrees that its agreements contained in this Section 11.13 may be
specially enforced.
ARTICLE XII
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 12.02. Notices. Any notice or communication shall be
in writing and delivered in Person or mailed by first-class mail addressed as
follows:
if to the Company or the Guarantor:
5900 North Andrews Avenue, Suite 700
Fort Lauderdale, Florida 33309-7098
Attention: Secretary
Telephone: (954) 772-9000
Facsimile: (954) 938-7811
if to the Trustee:
First Trust National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attention of Corporate Trust Department
Telephone: (312) 228-9400
Facsimile: (312) 228-9459
The Company, the Guarantor or the Trustee by notice to the
other parties hereto may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall
be sent by first-class mail to the Securityholder at the Securityholder's
address as it appears on the
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92
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed to a Securityholder in
the manner provided above, it is duly given, whether or not the addressee
receives it.
SECTION 12.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Guarantor, the Trustee, the Registrar and anyone
else shall have the protection of TIA ss. 312(c).
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with;
provided, however, that, in the case of such application or request as to which
the furnishing of such documents, certificates or opinions is specifically
required by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be furnished.
SECTION 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture (other than the Officer's Certificate
required by Section 4.12) shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
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93
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with.
SECTION 12.06. When Securities Disregarded. In determining
whether the Holders of the required Principal Amount of Maturity of Securities
have concurred in any direction, waiver or consent, Securities owned by the
Company or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company shall be disregarded
and deemed not to be Outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities Outstanding at the
time shall be considered in any such determination.
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 12.08. Legal Holidays. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest (if any) shall accrue for the intervening period. If a
regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 12.09. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 12.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company, the Guarantor or the
Trustee shall not have any liability for any obligations of the Company, the
Guarantor or the Trustee under the Securities or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each
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94
Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the Issue of the Securities.
SECTION 12.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
each of the Guarantor and the Trustee in this Indenture shall bind its
successors.
SECTION 12.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 12.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
<PAGE>
95
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
COLEMAN ESCROW CORP.,
by
----------------------------------
Title:
FIRST TRUST NATIONAL
ASSOCIATION, as Trustee,
by
----------------------------------
Title:
The Guarantor has caused this Indenture to be duly executed as
of the date first written above solely to acknowledge and accept its obligations
set forth in Articles X and XI herein.
COLEMAN WORLDWIDE
CORPORATION,
by
----------------------------------
Title:
<PAGE>
SCHEDULE I
Pledged Shares
--------------
No. of Owner of
Shares Cert. No. Issuer Pledged Shares
------ --------- ------ --------------
1,000 3 Coleman Holdings Inc. Coleman Escrow Corp.
250,000 6928 The Coleman Company, Coleman Worldwide
Inc. Corporation
136,355 6546 The Coleman Company, Coleman Worldwide
Inc. Corporation
23,912 5870 The Coleman Company, Coleman Worldwide
Inc. Corporation
2,943 5869 The Coleman Company, Coleman Worldwide
Inc. Corporation
50,000 5830 The Coleman Company, Coleman Worldwide
Inc. Corporation
50,000 5829 The Coleman Company, Coleman Worldwide
Inc. Corporation
8,000 5679 The Coleman Company, Coleman Worldwide
Inc. Corporation
1,500 5159 The Coleman Company, Coleman Worldwide
Inc. Corporation
<PAGE>
EXHIBIT A
[FORM OF FACE OF FIRST PRIORITY INITIAL NOTE]
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT, (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (1)(D) OR (1)(E), TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, (ii) AND IN EACH OF THE FOREGOING
CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE COMPANY AND THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
<PAGE>
2
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), THIS SECURITY HAS ORIGINAL ISSUE DISCOUNT. FOR
PURPOSES OF SECTION 1273 OF THE CODE, THE ISSUE PRICE IS $649.49 AND THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT IS $350.51, IN EACH CASE PER $1000 PRINCIPAL AMOUNT
AT MATURITY OF THIS SECURITY. FOR PURPOSES OF SECTION 1275 OF THE CODE, THE
ISSUE DATE OF THIS SECURITY IS MAY 20, 1997. FOR PURPOSES OF SECTION 1272 OF THE
CODE, THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS 11 1/8%. IN ADDITION,
THERE MAY BE CONTINGENT INTEREST PAYABLE ON THIS SECURITY.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF
DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTIONS 2.12 AND 2.13 OF THE INDENTURE.](2)
- --------
(2) Bracketed language is the Global Note Legend to be included only on the
Global Notes.
<PAGE>
No. CUSIP
COLEMAN ESCROW CORP.
Senior Secured First Priority Discount Note due 2001
Principal Amount at Maturity $
-------------
Coleman Escrow Corp., a Delaware corporation, promises to pay
to , or registered assigns, the
principal sum of Dollars on May 15,
2001.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
COLEMAN ESCROW CORP.
by
------------------------------
Vice President
------------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
FIRST TRUST NATIONAL [Seal]
ASSOCIATION
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF FIRST PRIORITY INITIAL NOTE]
COLEMAN ESCROW CORP.
Senior Secured First Priority Discount Note due 2001
1. Interest
In the event that (1) by July 7, 1997, a registration
statement has not been filed with the Securities and Exchange Commission with
respect to the proposed Registered Exchange Offer or the resale of the Initial
Notes, then Coleman Escrow Corp., a Delaware corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on this Security from and
including July 7, 1997 until but excluding the earlier of (i) the date such
registration statement is filed and (ii) November 17, 1997, or (2) by November
17, 1997, neither (i) a Registered Exchange Offer is consummated nor (ii) a
Shelf Registration Statement with respect to the resale of the Initial Notes is
declared effective, the Company promises to pay interest on this Security from
and including, November 17, 1997 until but excluding the earlier of (i) the
consummation of the Registered Exchange Offer and (ii) the effective date of
such Shelf Registration Statement, in each case payable in cash semiannually in
arrears on May 15 and November 15, commencing November 15, 1997, at a rate per
annum equal to 0.50% of the Accreted Value of this Security as of the SemiAnnual
Accrual Date immediately preceding the date on which such interest is payable.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Except as provided above, there will be no periodic payments of
interest. The Company shall pay interest on overdue Principal at the rate of
12 1/8% per annum, and it shall pay interest on overdue installments of interest
at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest, if any, referred to in
paragraph 1 above (except defaulted interest) on the Securities to the persons
who are registered holders of Securities (including Exchange Notes issued in
respect of Initial Notes pursuant to the Registered Exchange Offer) at the close
of business on the May 1 or November 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect Principal payments. The Company will pay Principal in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay Principal and interest, if any,
by check payable in such money; provided, that all
<PAGE>
2
payments with respect to U.S. Global Notes and Physical Notes the holders of
which have given wire transfer instructions to the Company, will be required to
be made by wire transfer of immediately available funds to the accounts
specified by the holders thereof.
3. Paying Agent and Registrar
Initially, First Trust National Association ("Trustee"), will
act as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated Wholly Owned Recourse Subsidiaries may act as Paying
Agent, Registrar, co-registrar or transfer agent.
4. Indenture
The Company issued the Securities under an Indenture dated as
of May 20, 1997 ("Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa- 77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are secured obligations of the Company limited
to with respect to the First Priority Initial Notes, $600,475,000 aggregate
Principal Amount at Maturity, and with respect to the Second Priority Initial
Notes, $131,560,000 aggregate Principal Amount at Maturity (each subject to
Section 2.07 of the Indenture). This Security is one of the First Priority
Initial Notes referred to in the Indenture. The Securities include the First
Priority Initial Notes, the Second Priority Initial Notes and any Exchange Notes
issued in exchange for the Initial Notes pursuant to the Indenture. The First
Priority Initial Notes, the Second Priority Initial Notes and the Exchange Notes
are treated as a single class of securities under the Indenture except as
expressly provided therein. The Indenture imposes certain limitations on, among
other things, the issuance of debt and redeemable stock by the Company, the
issuance of debt and preferred stock by Holdings, Worldwide, Coleman and its
Subsidiaries, the payment of dividends and other distributions on, and
acquisitions or retirements of, the Company's Capital Stock, the creation of
liens on assets of the Company, the sale or transfer of assets and Subsidiary
stock and transactions with Affiliates.
<PAGE>
3
5. Optional Redemption
Except as set forth below, the Securities may not be redeemed
by the Company prior to May 15, 2000. On and after such date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
redemption prices listed below (expressed as percentages of Accreted Value as of
the redemption date) for the periods indicated plus accrued and unpaid interest,
if any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due, if any, on the relevant interest
payment date):
Period Redemption Price
------ ----------------
From May 15, 2000 through 102.781%
May 14, 2001
Thereafter, the Company may redeem the Securities in whole at any time or in
part from time to time at a redemption price of 100% of the Principal Amount at
Maturity of the Securities to be redeemed plus accrued and unpaid interest, if
any, to the redemption date.
The Securities may be redeemed at the option of the Company at
any time as a whole at a redemption price equal to the sum of (i) the Accreted
Value thereof at the date of redemption, plus (ii) the Applicable Premium at the
date of redemption.
6. Mandatory Redemption
In the event a Triggering Event occurs at any time when any
amount of the Escrowed Funds shall remain subject to the escrow of the Escrow
Agreement, the Company shall redeem the Securities (or a portion thereof, if the
proviso to this sentence is applicable), at a redemption price in cash equal to
100% of the Accreted Value thereof at the redemption date, plus accrued and
unpaid interest, if any, to the redemption date on the 45th day (or if such day
is not a Business Day, the next following Business Day) following the occurrence
of a Triggering Event; provided, however, that if the amount of Escrowed Funds
remaining subject to the escrow of the Escrow Agreement at the redemption date
(the "Available Funds") is less than the aggregate Accreted Value of all the
Securities at the redemption date, then the Company shall be obligated to redeem
pursuant to this paragraph only a portion of the Securities having an aggregate
Accreted Value at the redemption date equal to the amount of Available Funds.
<PAGE>
4
7. Notice of Redemption
Notice of redemption pursuant to paragraph 5 will be mailed at
least 30 days but not more than 60 days before the redemption date and notice of
redemption pursuant to paragraph 6 will be mailed promptly following the
occurrence of a Triggering Event but at least 30 days before the redemption date
to each Holder of Securities to be redeemed at his registered address.
Securities in denominations larger than $1,000 Principal Amount at Maturity may
be redeemed in part but only in whole multiples of $1,000 Principal Amount at
Maturity. If money sufficient to pay the redemption price of all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date Accreted Value ceases to increase, and
interest, if any, ceases to accrue, on such Securities (or such portions
thereof) called for redemption.
8. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to the Put Amount of the Securities
to be repurchased plus accrued and unpaid interest, if any, to the date of
repurchase, in each case as provided in, and subject to the terms of, the
Indenture.
9. Guarantee; Security; Priority
To secure the due and punctual payment of the Principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, (i) Coleman Worldwide Corporation
("Guarantor") has guaranteed the Obligations on a non-recourse basis pursuant to
the terms of the Indenture and (ii) each of the Company and the Guarantor has
granted a security interest in the Collateral provided by it to the Trustee for
the benefit of the Holders of Securities pursuant to the Indenture. The
Collateral is subject to release from the Lien of the Indenture to the extent
provided therein. Proceeds of Collateral will be applied first to pay all First
Priority Initial Notes and First Priority Exchange Notes in full before any
payments are made on the Second Priority Initial Notes or the Second Priority
Exchange Notes.
<PAGE>
5
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of Principal Amount at Maturity of $1,000 and whole multiples of
$1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of Principal or interest, if any,
remains unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its request unless an abandoned property law designates
another person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
13. Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of Principal and interest, if any, on the Securities to
redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders
<PAGE>
6
of at least a majority in Principal Amount at Maturity outstanding of the
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in Principal Amount
at Maturity outstanding of the Securities. Subject to certain exceptions set
forth in the Indenture, without the consent of any Securityholder, the Company
and the Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article V of the Indenture,
or to provide for uncertificated Securities in addition to or in place of
certificated Securities, or to add guarantees with respect to the Securities or
to secure (or provide additional security for) the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company, or
to provide for the issuance of the Exchange Notes, or to comply with any request
of the SEC in connection with qualifying the Indenture under the Act or to
otherwise comply with the Act, or to make any change that does not adversely
affect the rights of any Securityholder. A consent to any amendment or waiver of
any provision in the Indenture or in the Securities by any Holder given in
connection with a tender of such Holder's Securities shall not be rendered
invalid by such tender.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest, if any, on the Securities; (ii) default in
payment of Principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 or paragraph 6 of the Securities, upon declaration or otherwise, or
failure by the Company to redeem or purchase Securities when required; (iii)
failure by the Company to comply with other agreements in the Indenture or the
Securities or the Escrow Agreement, in certain cases subject to notice and lapse
of time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other Debt of the Company or any Significant
Subsidiary if the total principal amount on the portion of such Debt that is
accelerated (or so unpaid) exceeds $25,000,000 and continues for 5 days after
the required notice to the Company or such Significant Subsidiary; (v) certain
events of bankruptcy or insolvency with respect to the Company or any
Significant Subsidiary; (vi) certain judgments or decrees for the payment of
money in excess of $25,000,000; and (vii) failure by the Guarantor to purchase
LYONS when required and the aggregate purchase price of such LYONS not so
purchased exceeds $25 million. If an Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in Principal Amount at Maturity of
the Securities may declare the Default Amount of all the Securities to be due
and payable immediately. Certain events of bankruptcy or insolvency are Events
of Default which will result in the Default Amount of the Securities being due
and payable immediately upon the occurrence of such Events of Default.
<PAGE>
7
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in Principal
Amount at Maturity of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of any
continuing Default (except a Default in payment of Principal or interest) if it
determines that withholding notice is in their interest.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company, the Guarantor or the Trustee shall not have any liability for any
obligations of the Company, the Guarantor or the Trustee under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by
<PAGE>
8
the entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture which
has in it the text of this Security in larger type. Requests may be made to:
Coleman Escrow Corp., 5900 North Andrews Avenue, Suite 700, Fort Lauderdale,
Florida 33309-7098, Attention: Secretary.
<PAGE>
- --------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of the Company. The agent may substitute another to
act for him.
Date: Your Signature:
-------------------------- ---------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
------------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES EXCEPT PERMANENT
OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note occurring prior
to the date that is the earlier of (i) the date of an effective registration
statement with respect to the Registered Exchange Offer or the resale of the
Initial Notes and (ii) May 20, 1999, the undersigned confirms that without
utilizing any general solicitation or general advertising that:
[Check One]
[ ](a) this Note is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
<PAGE>
2
or
[ ](b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished that comply with the conditions
of transfer set forth in this Note and the Indenture.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Note in the name of any Person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.06 of the Indenture shall have
been satisfied.
Date:
----------------------- -----------------------------------------
NOTICE: The signature must correspond
with the name as written
upon the face of the
within-mentioned instrument
in every particular,
without alteration or any
change whatsoever.
Signature Guarantee:
------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: NOTICE: To be executed by an executive officer.
-----------------------
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.08 of the Indenture, check the box:
/ /
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.08 of the Indenture, state the
Principal Amount at Maturity: $
Date: Your Signature:
------------------ ---------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Your Signature:
---------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
------------------------------------------------------------
(Signature must be guaranteed)
<PAGE>
EXHIBIT B
[FORM OF SECOND PRIORITY INITIAL NOTE]
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT, (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (1)(D) OR (1)(E) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, (ii) AND IN EACH OF THE FOREGOING
CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE COMPANY AND THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), THIS SECURITY HAS ORIGINAL ISSUE DISCOUNT. FOR
PURPOSES OF SECTION 1273 OF THE CODE, THE ISSUE PRICE IS $608.12 AND THE AMOUNT
OF ORIGINAL ISSUE
<PAGE>
2
DISCOUNT IS $391.88, IN EACH CASE PER $1000 PRINCIPAL AMOUNT AT MATURITY OF THIS
SECURITY. FOR PURPOSES OF SECTION 1275 OF THE CODE, THE ISSUE DATE OF THIS
SECURITY IS MAY 20, 1997. FOR PURPOSES OF SECTION 1272 OF THE CODE, THE YIELD TO
MATURITY (COMPOUNDED SEMI-ANNUALLY) IS 12 7/8%. IN ADDITION, THERE MAY BE
CONTINGENT INTEREST PAYABLE ON THIS SECURITY.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF
DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTIONS 2.12 AND 2.13 OF THE INDENTURE.](3)
- --------
(3) Bracketed language is the Global Note Legend to be included only on the
Global Notes.
<PAGE>
No. CUSIP
COLEMAN ESCROW CORP.
Senior Secured First Priority Discount Note due 2001
Principal Amount at Maturity $______________
Coleman Escrow Corp., a Delaware corporation, promises to pay
to , or registered assigns, the
principal sum of Dollars on May 15,
2001.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
COLEMAN ESCROW CORP.
by
---------------------------
Vice President
---------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
FIRST TRUST NATIONAL [Seal]
ASSOCIATION
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF SECOND PRIORITY INITIAL NOTE]
COLEMAN ESCROW CORP.
Senior Secured Second Priority Discount Note due 2001
1. Interest
In the event that (1) by July 7, 1997, a registration
statement has not been filed with the Securities and Exchange Commission with
respect to the proposed Registered Exchange Offer or the resale of the Initial
Notes, then Coleman Escrow Corp., a Delaware corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on this Security from and
including July 7, 1997 until but excluding the earlier of (i) the date such
registration statement is filed and (ii) November 17, 1997, or (2) by November
17, 1997, neither (i) a Registered Exchange Offer is consummated nor (ii) a
Shelf Registration Statement with respect to the resale of the Initial Notes is
declared effective, the Company promises to pay interest on this Security from
and including, November 17, 1997 until but excluding the earlier of (i) the
consummation of the Registered Exchange Offer and (ii) the effective date of
such Shelf Registration Statement, in each case payable in cash semiannually in
arrears on May 15 and November 15, commencing November 15, 1997, at a rate per
annum equal to 0.50% of the Accreted Value of this Security as of the
Semi-Annual Accrual Date immediately preceding the date on which such interest
is payable. Interest will be computed on the basis of a 360-day year of twelve
30-day months. Except as provided above, there will be no periodic payments of
interest. The Company shall pay interest on overdue Principal at the rate of
137/8% per annum, and it shall pay interest on overdue installments of interest
at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest, if any, referred to in
paragraph 1 above (except defaulted interest) on the Securities to the persons
who are registered holders of Securities (including Exchange Notes issued in
respect of Initial Notes pursuant to the Registered Exchange Offer) at the close
of business on the May 1 or November 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect Principal payments. The Company will pay Principal in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay Principal and interest, if any,
by check payable in such money; provided, that all payments with respect to U.S.
Global Notes and Physical Notes the holders of which have given wire transfer
<PAGE>
2
instructions to the Company, will be required to be made by wire transfer of
immediately available funds to the accounts specified by the holders thereof.
3. Paying Agent and Registrar
Initially, First Trust National Association ("Trustee"), will
act as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated Wholly Owned Recourse Subsidiaries may act as Paying
Agent, Registrar, co-registrar or transfer agent.
4. Indenture
The Company issued the Securities under an Indenture dated as
of May 20, 1997 ("Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa- 77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are secured obligations of the Company limited
to with respect to the First Priority Initial Notes, $600,475,000 aggregate
Principal Amount at Maturity, and with respect to the Second Priority Initial
Notes, $131,560,000 aggregate Principal Amount at Maturity (each subject to
Section 2.07 of the Indenture). This Security is one of the Second Priority
Initial Notes referred to in the Indenture. The Securities include the First
Priority Initial Notes, the Second Priority Initial Notes and any Exchange Notes
issued in exchange for the Initial Notes pursuant to the Indenture. The First
Priority Initial Notes, the Second Priority Initial Notes and the Exchange Notes
are treated as a single class of securities under the Indenture except as
expressly provided therein. The Indenture imposes certain limitations on, among
other things, the issuance of debt and redeemable stock by the Company, the
issuance of debt and preferred stock by Holdings, Worldwide, Coleman and its
Subsi diaries, the payment of dividends and other distributions on, and
acquisitions or retirements of, the Company's Capital Stock, the creation of
liens on assets of the Company, the sale or transfer of assets and Subsidiary
stock and transactions with Affiliates.
5. Optional Redemption
<PAGE>
3
Except as set forth below, the Securities may not be redeemed
by the Company prior to May 15, 2000. On and after such date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
redemption prices listed below (expressed as percentages of Accreted Value as of
the redemption date) for the periods indicated plus accrued and unpaid interest,
if any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due, if any, on the relevant interest
payment date):
Period Redemption Price
------ ----------------
From May 15, 2000 through 103.219%
May 14, 2001
Thereafter, the Company may redeem the Securities in whole at any time or in
part from time to time at a redemption price of 100% of the Principal Amount at
Maturity of the Securities to be redeemed plus accrued and unpaid interest, if
any, to the redemption date.
The Securities may be redeemed at the option of the Company at
any time as a whole at a redemption price equal to the sum of (i) the Accreted
Value thereof at the date of redemption, plus (ii) the Applicable Premium at the
date of redemption.
6. Mandatory Redemption
In the event a Triggering Event occurs at any time when any
amount of the Escrowed Funds shall remain subject to the escrow of the Escrow
Agreement, the Company shall redeem the Securities (or a portion thereof, if the
proviso to this sentence is applicable), at a redemption price in cash equal to
100% of the Accreted Value thereof at the redemption date, plus accrued and
unpaid interest, if any, to the redemption date on the 45th day (or if such day
is not a Business Day, the next following Business Day) following the occurrence
of a Triggering Event; provided, however, that if the amount of Escrowed Funds
remaining subject to the escrow of the Escrow Agreement at the redemption date
(the "Available Funds") is less than the aggregate Accreted Value of all the
Securities at the redemption date, then the Company shall be obligated to redeem
pursuant to this paragraph only a portion of the Securities having an aggregate
Accreted Value at the redemption date equal to the amount of Available Funds.
7. Notice of Redemption
<PAGE>
4
Notice of redemption pursuant to paragraph 5 will be mailed at
least 30 days but not more than 60 days before the redemption date and notice of
redemption pursuant to paragraph 6 will be mailed promptly following the
occurrence of a Triggering Event but at least 30 days before the redemption date
to each Holder of Securities to be redeemed at his registered address.
Securities in denominations larger than $1,000 Principal Amount at Maturity may
be redeemed in part but only in whole multiples of $1,000 Principal Amount at
Maturity. If money sufficient to pay the redemption price of all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date Accreted Value ceases to increase, and
interest, if any, ceases to accrue, on such Securities (or such portions
thereof) called for redemption.
8. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to the Put Amount of the Securities
to be repurchased plus accrued and unpaid interest, if any, to the date of
repurchase, in each case as provided in, and subject to the terms of, the
Indenture.
9. Guarantee; Security; Priority
To secure the due and punctual payment of the Principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, (i) Coleman Worldwide Corporation
("Guarantor") has guaranteed the Obligations on a non-recourse basis pursuant to
the terms of the Indenture and (ii) each of the Company and the Guarantor has
granted a security interest in the Collateral provided by it to the Trustee for
the benefit of the Holders of Securities pursuant to the Indenture. The
Collateral is subject to release from the Lien of the Indenture to the extent
provided therein. Proceeds of Collateral will be applied first to pay all First
Priority Initial Notes and First Priority Exchange Notes in full before any
payments are made on the Second Priority Initial Notes or the Second Priority
Exchange Notes.
<PAGE>
5
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of Principal Amount at Maturity of $1,000 and whole multiples of
$1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of Principal or interest, if any,
remains unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its request unless an abandoned property law designates
another person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
13. Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of Principal and interest, if any, on the Securities to
redemption or maturity, as the case may be.
<PAGE>
6
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in Principal Amount at Maturity outstanding of
the Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in Principal Amount
at Maturity outstanding of the Securities. Subject to certain exceptions set
forth in the Indenture, without the consent of any Securityholder, the Company
and the Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article V of the Indenture,
or to provide for uncertificated Securities in addition to or in place of
certificated Securities, or to add guarantees with respect to the Securities or
to secure (or provide additional security for) the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company, or
to provide for the issuance of the Exchange Notes, or to comply with any request
of the SEC in connection with qualifying the Indenture under the Act or to
otherwise comply with the Act, or to make any change that does not adversely
affect the rights of any Securityholder. A consent to any amendment or waiver of
any provision in the Indenture or in the Securities by any Holder given in
connection with a tender of such Holder's Securities shall not be rendered
invalid by such tender.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest, if any, on the Securities; (ii) default in
payment of Principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 or paragraph 6 of the Securities, upon declaration or otherwise, or
failure by the Company to redeem or purchase Securities when required; (iii)
failure by the Company to comply with other agreements in the Indenture or the
Securities or the Escrow Agreement, in certain cases subject to notice and lapse
of time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other Debt of the Company or any Significant
Subsidiary if the total principal amount on the portion of such Debt that is
accelerated (or so unpaid) exceeds $25,000,000 and continues for 5 days after
the required notice to the Company or such Significant Subsidiary; (v) certain
events of bankruptcy or insolvency with respect to the Company or any
Significant Subsidiary; (vi) certain judgments or decrees for the payment of
money in excess of $25,000,000; and (vii) failure by the Guarantor to purchase
LYONS when required and the aggregate purchase price of such LYONS not so
purchased exceeds $25 million. If an Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in Principal Amount at Maturity of
the Securities may declare the Default Amount of all the
<PAGE>
7
Securities to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Default Amount of the
Securities being due and payable immediately upon the occurrence of such Events
of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in Principal
Amount at Maturity of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may with hold from Securityholders notice of any
continuing Default (except a Default in payment of Principal or interest) if it
determines that withholding notice is in their interest.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company, the Guarantor or the Trustee shall not have any liability for any
obligations of the Company, the Guarantor or the Trustee under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
<PAGE>
8
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request and without
charge to the Securityholder a copy of the Indenture which has in it the text of
this Security in larger type. Requests may be made to: Coleman Escrow Corp.,
5900 North Andrews Avenue, Suite 700, Fort Lauderdale, Florida 33309-7098,
Attention: Secretary.
<PAGE>
- --------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of the Company. The agent may substitute another to
act for him.
Date: Your Signature:
-------------------------- ---------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
------------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES EXCEPT PERMANENT
OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note occurring prior
to the date that is the earlier of (i) the date of an effective registration
statement with respect to the Registered Exchange Offer or the resale of the
Initial Notes and (ii) May 20, 1999, the undersigned confirms that without
utilizing any general solicitation or general advertising that:
[Check One]
[ ](a) this Note is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
<PAGE>
2
or
[ ](b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished that comply with the conditions
of transfer set forth in this Note and the Indenture.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Note in the name of any Person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.06 of the Indenture shall have
been satisfied.
Date:
---------------- ----------------------------------------------
NOTICE: The signature must correspond
with the name as written
upon the face of the
within-mentioned instrument
in every particular,
without alteration or any
change whatsoever.
Signature Guarantee:
------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: NOTICE: To be executed by an executive officer.
-----------------------
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.08 of the Indenture, check the box:
/ /
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.08 of the Indenture, state the
Principal Amount at Maturity: $
Date: Your Signature:
------------------ ---------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Your Signature:
---------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
------------------------------------------------------------
(Signature must be guaranteed)
<PAGE>
EXHIBIT C
[FORM OF FACE OF FIRST PRIORITY EXCHANGE NOTE]
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), THIS SECURITY HAS ORIGINAL ISSUE DISCOUNT. FOR
PURPOSES OF SECTION 1273 OF THE CODE, THE ISSUE PRICE IS $649.49 AND THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT IS $350.51, IN EACH CASE PER $1,000 PRINCIPAL AMOUNT
AT MATURITY OF THIS SECURITY. FOR PURPOSES OF SECTION 1275 OF THE CODE, THE
ISSUE DATE OF THIS SECURITY IS MAY 20, 1997. FOR PURPOSES OF SECTION 1272 OF THE
CODE, THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS 11 1/8%. IN ADDITION,
THERE MAY BE CONTINGENT INTEREST PAYABLE ON THIS SECURITY.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF
DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTIONS 2.12 AND 2.13 OF THE INDENTURE.](4)
- --------
(4) Bracketed language is the Global Note Legend to be included only in the
Global Notes.
<PAGE>
No. CUSIP
COLEMAN ESCROW CORP.
Senior Secured First Priority Discount Note due 2001
Principal Amount at Maturity $
--------------
Coleman Escrow Corp., a Delaware corporation, promises to pay
to , or registered assigns, the
principal sum of Dollars on May 15,
2001.
Additional provisions of this Security are set forth on the
other side of this Security.
COLEMAN ESCROW CORP.
by
--------------------------
Vice President
--------------------------
Assistant Secretary
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
FIRST TRUST NATIONAL [Seal]
ASSOCIATION
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF FIRST PRIORITY EXCHANGE NOTE]
COLEMAN ESCROW CORP.
Senior Secured First Priority Discount Exchange Note due 2001
1. Interest
There will be no periodic payments of interest. Coleman Escrow
Corp., a Delaware corporation (such corporation, and its successors and assigns
under the Indenture hereinafter referred to, being called the "Company"), shall
pay interest on overdue Principal at the rate of 12 1/8% per annum, and it shall
pay interest on overdue installments of interest at the same rate to the extent
lawful.
2. Method of Payment
Holders must surrender Securities to a Paying Agent to collect
Principal payments. The Company will pay Principal in money of the United States
that at the time of payment is legal tender for payment of public and private
debts. However, the Company may pay Principal and interest, if any, by check
payable in such money; provided, that all payments with respect to U.S. Global
Notes and Physical Notes the holders of which have given wire transfer
instructions to the Company, will be required to be made by wire transfer of
immediately available funds to the accounts specified by the holders thereof.
3. Paying Agent and Registrar
Initially, First Trust National Association ("Trustee"), will
act as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated Wholly Owned Recourse Subsidiaries may act as Paying
Agent, Registrar, co-registrar or transfer agent.
4. Indenture
The Company issued the Securities under an Indenture dated as
of May 20, 1997 ("Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used
<PAGE>
2
herein and not defined herein have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms, and Securityholders are
referred to the Indenture and the Act for a statement of those terms.
The Securities are secured obligations of the Company limited
to with respect to the First Priority Initial Notes, $600,475,000 aggregate
Principal Amount at Maturity, and with respect to the Second Priority Initial
Notes, $131,560,000 aggregate Principal Amount at Maturity (each subject to
Section 2.07 of the Indenture). This Security is one of the First Priority
Exchange Notes referred to in the Indenture. The Securities include the First
Priority Initial Notes, the Second Priority Initial Notes and any Exchange Notes
issued in exchange for the Initial Notes pursuant to the Indenture. The First
Priority Initial Notes, the Second Priority Initial Notes and the Exchange Notes
are treated as a single class of securities under the Indenture except as
expressly provided therein. The Indenture imposes certain limitations on, among
other things, the issuance of debt and redeemable stock by the Company, the
issuance of debt and preferred stock by Holdings, Worldwide, Coleman and its
Subsidiaries, the payment of dividends and other distributions on, and
acquisitions or retirements of, the Company's Capital Stock, the creation of
liens on assets of the Company, the sale or transfer of assets and Subsidiary
stock and transactions with Affiliates.
5. Optional Redemption
Except as set forth below, the Securities may not be redeemed
by the Company prior to May 15, 2000. On and after such date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
redemption prices listed below (expressed as percentages of Accreted Value as of
the redemption date) for the periods indicated plus accrued and unpaid interest,
if any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due, if any, on the relevant interest
payment date):
Period Redemption Price
------ ----------------
From May 15, 2000 through
May 14, 2001 102.781%
Thereafter, the Company may redeem the Securities in whole at any time or in
part from time to time at a redemption price of 100% of the Principal Amount at
Maturity of the Securities to be redeemed, plus accrued and unpaid interest, if
any, to the redemption date.
<PAGE>
3
The Securities may be redeemed at the option of the Company at
any time as a whole at a redemption price equal to the sum of (i) the Accreted
Value thereof at the date of redemption, plus (ii) the Applicable Premium at the
date of redemption.
6. Mandatory Redemption
In the event a Triggering Event occurs at any time when any
amount of the Escrowed Funds shall remain subject to the escrow of the Escrow
Agreement, the Company shall redeem the Securities (or a portion thereof, if the
proviso to this sentence is applicable), at a redemption price in cash equal to
100% of the Accreted Value thereof at the redemption date, plus accrued and
unpaid interest, if any, to the redemption date on the 45th day (or if such day
is not a Business Day, the next following Business Day) following the occurrence
of a Triggering Event; provided, however, that if the amount of Escrowed Funds
remaining subject to the escrow of the Escrow Agreement at the redemption date
(the "Available Funds") is less than the aggregate Accreted Value of all the
Securities at the redemption date, then the Company shall be obligated to redeem
pursuant to this paragraph only a portion of the Securities having an aggregate
Accreted Value at the redemption date equal to the amount of Available Funds.
7. Notice of Redemption
Notice of redemption will pursuant to paragraph 5 be mailed at
least 30 days but not more than 60 days before the redemption date and notice of
redemption pursuant to paragraph 6 will be mailed promptly following the
occurrence of a Triggering Event but at least 30 days before the redemption date
to each Holder of Securities to be redeemed at his registered address.
Securities in denominations larger than $1,000 Principal Amount at Maturity may
be redeemed in part but only in whole multiples of $1,000 Principal Amount at
Maturity. If money sufficient to pay the redemption price of all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date Accreted Value ceases to increase, and
interest, if any, ceases to accrue, on such Securities (or such portions
thereof) called for redemption.
8. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such
<PAGE>
4
Holder at a repurchase price equal to the Put Amount of the Securities to be
repurchased plus accrued and unpaid interest, if any, to the date of repurchase,
in each case as provided in, and subject to the terms of, the Indenture.
9. Guarantee; Security; Priority
To secure the due and punctual payment of the Principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, (i) Coleman Worldwide Corporation
("Guarantor") has guaranteed the Obligations on a non-recourse basis pursuant to
the terms of the Indenture and (ii) each of the Company and the Guarantor has
granted a security interest in the Collateral provided by it to the Trustee for
the benefit of the Holders of Securities pursuant to the Indenture. The
Collateral is subject to release from the Lien of the Indenture to the extent
provided therein. Proceeds of Collateral will be applied first to pay all First
Priority Initial Notes and First Priority Exchange Notes in full before any
payments are made on the Second Priority Initial Notes or the Second Priority
Exchange Notes.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of Principal Amount at Maturity of $1,000 and whole multiples of
$1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
<PAGE>
5
12. Unclaimed Money
If money for the payment of Principal or interest, if any,
remains unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its request unless an abandoned property law designates
another person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
13. Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of Principal and interest, if any, on the Securities to
redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in Principal Amount at Maturity outstanding of
the Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in Principal Amount
at Maturity outstanding of the Securities. Subject to certain exceptions set
forth in the Indenture, without the consent of any Securityholder, the Company
and the Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article V of the Indenture,
or to provide for uncertificated Securities in addition to or in place of
certificated Securities, or to add guarantees with respect to the Securities or
to secure (or provide additional security for) the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company, or
to comply with any request of the SEC in connection with qualifying the
Indenture under the Act or to otherwise comply with the Act, or to make any
change that does not adversely affect the rights of any Securityholder. A
consent to any amendment or waiver of any provision in the Indenture or in the
Securities by any Holder given in connection with a tender of such Holder's
Securities shall not be rendered invalid by such tender.
<PAGE>
6
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest, if any, on the Securities; (ii) default in
payment of Principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 or paragraph 6 of the Securities, upon declaration or otherwise, or
failure by the Company to redeem or purchase Securities when required; (iii)
failure by the Company to comply with other agreements in the Indenture or the
Securities or the Escrow Agreement, in certain cases subject to notice and lapse
of time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other Debt of the Company or any Significant
Subsidiary if the total principal amount on the portion of such Debt that is
accelerated (or so unpaid) exceeds $25,000,000 and continues for 5 days after
the required notice to the Company or such Significant Subsidiary; (v) certain
events of bankruptcy or insolvency with respect to the Company or any
Significant Subsidiary; (vi) certain judgments or decrees for the payment of
money in excess of $25,000,000; and (vii) failure by the Guarantor to purchase
LYONS when required and the aggregate purchase price of such LYONS not so
purchased exceeds $25 million. If an Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in Principal Amount at Maturity of
the Securities may declare the Default Amount of all the Securities to be due
and payable immediately. Certain events of bankruptcy or insolvency are Events
of Default which will result in the Default Amount of the Securities being due
and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in Principal
Amount of Maturity of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of any
continuing Default (except a Default in payment of Principal or interest) if it
determines that withholding notice is in their interest.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
<PAGE>
7
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company, the Guarantor or the Trustee shall not have any liability for any
obligations of the Company, the Guarantor or the Trustee under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request and without
charge to the Securityholder a copy of the Indenture which has in it the text of
this Security in larger type. Requests may be made to: Coleman Escrow Corp.,
5900 North Andrews Avenue, Suite 700, Fort Lauderdale, Florida 33309-7098,
Attention: Secretary.
<PAGE>
- --------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of the Company. The agent may substitute another to
act for him.
Date: Your Signature:
-------------------------- ---------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
------------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.08 of the Indenture, check the box:
$
/ /
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.08 of the Indenture, state the
Principal Amount at Maturity: $
Date: Your Signature:
------------------ ---------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Your Signature:
---------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
------------------------------------------------------------
(Signature must be guaranteed)
<PAGE>
EXHIBIT D
[FORM OF SECOND PRIORITY EXCHANGE NOTE]
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), THIS SECURITY HAS ORIGINAL ISSUE DISCOUNT. FOR
PURPOSES OF SECTION 1273 OF THE CODE, THE ISSUE PRICE IS $608.12 AND THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT IS $391.88, IN EACH CASE PER $1,000 PRINCIPAL AMOUNT
AT MATURITY OF THIS SECURITY. FOR PURPOSES OF SECTION 1275 OF THE CODE, THE
ISSUE DATE OF THIS SECURITY IS MAY 20, 1997. FOR PURPOSES OF SECTION 1272 OF THE
CODE, THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS 12 7/8%. IN ADDITION,
THERE MAY BE CONTINGENT INTEREST PAYABLE ON THIS SECURITY.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF
DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTIONS 2.12 AND 2.13 OF THE INDENTURE.](5)
- --------
(5) Bracketed language is the Global Note Legend to be included only in the
Global Notes.
<PAGE>
No. CUSIP
COLEMAN ESCROW CORP.
Senior Secured First Priority Discount Note due 2001
Principal Amount at Maturity $
--------------
Coleman Escrow Corp., a Delaware corporation, promises to pay
to , or registered assigns, the
principal sum of Dollars on May 15,
2001.
Additional provisions of this Security are set forth on the
other side of this Security.
COLEMAN ESCROW CORP.
by
------------------------
Vice President
------------------------
Assistant Secretary
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
FIRST TRUST NATIONAL [Seal]
ASSOCIATION
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF SECOND PRIORITY EXCHANGE NOTE]
COLEMAN ESCROW CORP.
Senior Secured Second Priority Discount Exchange Note due 2001
1. Interest
There will be no periodic payments of interest. Coleman Escrow
Corp., a Delaware corporation (such corporation, and its successors and assigns
under the Indenture hereinafter referred to, being called the "Company"), shall
pay interest on overdue Principal at the rate of 13 7/8% per annum, and it shall
pay interest on overdue installments of interest at the same rate to the extent
lawful.
2. Method of Payment
Holders must surrender Securities to a Paying Agent to collect
Principal payments. The Company will pay Principal in money of the United States
that at the time of payment is legal tender for payment of public and private
debts. However, the Company may pay Principal and interest, if any, by check
payable in such money; provided, that all payments with respect to U.S. Global
Notes and Physical Notes the holders of which have given wire transfer
instructions to the Company, will be required to be made by wire transfer of
immediately available funds to the accounts specified by the holders thereof.
3. Paying Agent and Registrar
Initially, First Trust National Association ("Trustee"), will
act as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated Wholly Owned Recourse Subsidiaries may act as Paying
Agent, Registrar, co-registrar or transfer agent.
4. Indenture
The Company issued the Securities under an Indenture dated as
of May 20, 1997 ("Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized
terms used herein and not defined herein have the
<PAGE>
2
meanings ascribed thereto in the Indenture. The Securities are subject to all
such terms, and Securityholders are referred to the Indenture and the Act for a
statement of those terms.
The Securities are secured obligations of the Company limited
to with respect to the First Priority Initial Notes, $600,475,000 aggregate
Principal Amount at Maturity, and with respect to the Second Priority Initial
Notes, $131,560,000 aggregate Principal Amount at Maturity (each subject to
Section 2.07 of the Indenture). This Security is one of the Second Priority
Exchange Notes referred to in the Indenture. The Securities include the First
Priority Initial Notes, the Second Priority Initial Notes and any Exchange Notes
issued in exchange for the Initial Notes pursuant to the Indenture. The First
Priority Initial Notes, the Second Priority Initial Notes and the Exchange Notes
are treated as a single class of securities under the Indenture except as
expressly provided therein. The Indenture imposes certain limitations on, among
other things, the issuance of debt and redeemable stock by the Company, the
issuance of debt and preferred stock by Holdings, Worldwide, Coleman and its
Subsidiaries, the payment of dividends and other distributions on, and
acquisitions or retirements of, the Company's Capital Stock, the creation of
liens on assets of the Company, the sale or transfer of assets and Subsidiary
stock and transactions with Affiliates.
5. Optional Redemption
Except as set forth below, the Securities may not be redeemed
by the Company prior to May 15, 2000. On and after such date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
redemption prices listed below (expressed as percentages of Accreted Value as of
the redemption date) for the periods indicated plus accrued and unpaid interest,
if any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due, if any, on the relevant interest
payment date):
Period Redemption Price
------ ----------------
From May 15, 2000 through
May 14, 2001 103.219%
Thereafter, the Company may redeem the Securities in whole at any time or in
part from time to time at a redemption price of 100% of the Principal Amount at
Maturity of the Securities to be redeemed, plus accrued and unpaid interest, if
any, to the redemption date.
The Securities may be redeemed at the option of the Company at
any time as a whole at a redemption price equal to the sum of (i) the Accreted
Value thereof at the date of redemption, plus (ii) the Applicable Premium at the
date of redemption.
<PAGE>
3
6. Mandatory Redemption
In the event a Triggering Event occurs at any time when any
amount of the Escrowed Funds shall remain subject to the escrow of the Escrow
Agreement, the Company shall redeem the Securities (or a portion thereof, if the
proviso to this sentence is applicable), at a redemption price in cash equal to
100% of the Accreted Value thereof at the redemption date, plus accrued and
unpaid interest, if any, to the redemption date on the 45th day (or if such day
is not a Business Day, the next following Business Day) following the occurrence
of a Triggering Event; provided, however, that if the amount of Escrowed Funds
remaining subject to the escrow of the Escrow Agreement at the redemption date
(the "Available Funds") is less than the aggregate Accreted Value of all the
Securities at the redemption date, then the Company shall be obligated to redeem
pursuant to this paragraph only a portion of the Securities having an aggregate
Accreted Value at the redemption date equal to the amount of Available Funds.
7. Notice of Redemption
Notice of redemption pursuant to paragraph 5 will be mailed at
least 30 days but not more than 60 days before the redemption date and notice of
redemption pursuant to paragraph 6 will be mailed promptly following the
occurrence of a Triggering Event but at least 30 days before the redemption date
to each Holder of Securities to be redeemed at his registered address.
Securities in denominations larger than $1,000 Principal Amount at Maturity may
be redeemed in part but only in whole multiples of $1,000 Principal Amount at
Maturity. If money sufficient to pay the redemption price of all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date Accreted Value ceases to increase, and
interest, if any, ceases to accrue, on such Securities (or such portions
thereof) called for redemption.
8. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to the Put Amount of the Securities
to be repurchased plus accrued and unpaid interest, if any, to the date of
repurchase, in each case as provided in, and subject to the terms of, the
Indenture.
<PAGE>
4
9. Guarantee; Security; Priority
To secure the due and punctual payment of the Principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, (i) Coleman Worldwide Corporation
("Guarantor") has guaranteed the Obligations on a non-recourse basis pursuant to
the terms of the Indenture and (ii) each of the Company and the Guarantor has
granted a security interest in the Collateral provided by it to the Trustee for
the benefit of the Holders of Securities pursuant to the Indenture. The
Collateral is subject to release from the Lien of the Indenture to the extent
provided therein. Proceeds of Collateral will be applied first to pay all First
Priority Initial Notes and First Priority Exchange Notes in full before any
payments are made on the Second Priority Initial Notes or the Second Priority
Exchange Notes.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of Principal Amount at Maturity of $1,000 and whole multiples of
$1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of Principal or interest, if any,
remains unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its request unless an abandoned property law designates
another person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
<PAGE>
5
13. Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of Principal and interest, if any, on the Securities to
redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in Principal Amount at Maturity outstanding of
the Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in Principal Amount
at Maturity outstanding of the Securities. Subject to certain exceptions set
forth in the Indenture, without the consent of any Securityholder, the Company
and the Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article V of the Indenture,
or to provide for uncertificated Securities in addition to or in place of
certificated Securities, or to add guarantees with respect to the Securities or
to secure (or provide additional security for) the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company, or
to comply with any request of the SEC in connection with qualifying the
Indenture under the Act or to otherwise comply with the Act, or to make any
change that does not adversely affect the rights of any Securityholder. A
consent to any amendment or waiver of any provision in the Indenture or in the
Securities by any Holder given in connection with a tender of such Holder's
Securities shall not be rendered invalid by such tender.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest, if any, on the Securities; (ii) default in
payment of Principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 or paragraph 6 of the Securities, upon declaration or otherwise, or
failure by the Company to redeem or purchase Securities when required; (iii)
failure by the Company to comply with other agreements in the Indenture or the
Securities or the Escrow Agreement, in certain cases subject to notice and lapse
of time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other Debt of the Company or any Significant
Subsidiary if the total principal amount on the portion of such Debt that is
accelerated (or so unpaid) exceeds $25,000,000 and continues for 5 days after
the required notice to the Company or such
<PAGE>
6
Significant Subsidiary; (v) certain events of bankruptcy or insolvency with
respect to the Company or any Significant Subsidiary; (vi) certain judgments or
decrees for the payment of money in excess of $25,000,000; and (vii) failure by
the Guarantor to purchase LYONS when required and the aggregate purchase price
of such LYONS not so purchased exceeds $25 million. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
Principal Amount at Maturity of the Securities may declare the Default Amount of
all the Securities to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result in the Default
Amount of the Securities being due and payable immediately upon the occurrence
of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securi ties unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in Principal
Amount of Maturity of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of any
continuing Default (except a Default in payment of Principal or interest) if it
determines that withholding notice is in their interest.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company, the Guarantor or the Trustee shall not have any liability for any
obligations of the Company, the Guarantor or the Trustee under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
<PAGE>
7
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request and without
charge to the Securityholder a copy of the Indenture which has in it the text of
this Security in larger type. Requests may be made to: Coleman Escrow Corp.,
5900 North Andrews Avenue, Suite 700, Fort Lauderdale, Florida 33309-7098,
Attention: Secretary.
<PAGE>
- --------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of the Company. The agent may substitute another to
act for him.
Date: Your Signature:
-------------------------- ---------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
------------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.08 of the Indenture, check the box:
$
/ /
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.08 of the Indenture, state the
Principal Amount at Maturity: $
Date: Your Signature:
------------------ ---------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Your Signature:
---------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
------------------------------------------------------------
(Signature must be guaranteed)
<PAGE>
EXHIBIT E
[FORM OF CERTIFICATE TO BE DELIVERED
UPON TERMINATION OF RESTRICTED PERIOD]
On or after June 29, 1997
First Trust National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, IL 60601
Re: COLEMAN ESCROW CORP. (the "Company")
Senior Secured First Priority Discount Notes due 2001
(the "First Priority Initial Notes") and Senior Secured
Second Priority Discount Notes due 2001
(the "Second Priority Initial Notes" and, together with
the First Priority Initial Notes, the "Initial Notes") and
Senior Secured First Priority Discount Exchange Notes
due 2001 (the "First Priority Exchange Notes") and
the Senior Secured Second Priority Discount Exchange
Notes due 2001 (the "Second Priority
Exchange Notes" and, together with the First Priority
Exchange Notes, the "Exchange Notes" and,
together with the Initial Notes, the "Notes")
---------------------------------------------
Ladies and Gentlemen:
This letter relates to Initial Notes represented by temporary
global note certificates (the "Temporary Certificates"). Pursuant to Section
2.01 of the Indenture dated as of May 20, 1997 relating to the Notes (the
"Indenture"), we hereby certify that (1) we are the beneficial owner of
$[_____________] principal amount of First Priority Initial Notes represented by
a Temporary Certificate and $[_____________] principal amount of Second Priority
Initial Notes represented by a Temporary Certificate and (2) we are a person
outside the United States to whom the Initial Notes could be transferred in
accordance with Rule 904 of Regulation S promulgated under the Securities Act of
1933, as amended. Accordingly, you are hereby requested to issue Certificated
Notes representing the undersigned's interest in the principal amount of Initial
Notes represented by the Temporary Certificates, all in the manner provided by
the Indenture.
<PAGE>
2
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By: ______________________________
Authorized Signature
<PAGE>
EXHIBIT F
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS TO
NON-QIB INSTITUTIONAL ACCREDITED INVESTORS]
[date]
Coleman Escrow Corp.
c/o First Trust National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, IL 60601
Attention: Corporate Trust Department
Dear Sirs:
This certificate is delivered to request a transfer of $
aggregate principal amount at maturity of Senior Secured First Priority Discount
Notes due 2001 (the "First Priority Initial Notes") and $______ aggregate
principal amount at maturity of Senior Secured Second Priority Discount Notes
due 2001 (the "Second Priority Initial Notes" and, together with the First
Priority Initial Notes, the "Notes") of Coleman Escrow Corp. (the "Company").
The undersigned represents and warrants to you that:
(1) We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act")) purchasing for our own
account or for the account of such an institutional "accredited
investor," and we are acquiring the Notes not with a view to, or for
offer or sale in connection with, any distribution in violation of the
Securities Act or the securities laws of any State of the United States
or any other applicable jurisdiction. We have such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Notes and
invest in or purchase securities similar to the Notes in the normal
course of our business. We and any accounts for which we are acting are
each able to bear the economic risk of our or its investment. In the
event that we purchase any Notes, we will acquire Notes having a
minimum purchase price at least $250,000 for our own account and for
each separate account for which we are acting.
(2) We understand and acknowledge that the Notes have not been
registered under the Securities Act, or any other applicable securities
law and unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Notes to offer, sell or
otherwise transfer such Notes prior to the date which is two
<PAGE>
2
years after the later of the date of original issue and the last date
on which the Company or any affiliate of the Company was the owner of
such Notes (or any predecessor thereto) (the "Resale Restriction
Termination Date") only (i) to the Company, (ii) pursuant to a
registration statement which has been declared effective under the
Securities Act, (iii) in a transaction complying with the requirements
of Rule 144A under the Securities Act, to a person we reasonably
believe is a "Qualified Institutional Buyer" within the meaning of Rule
l44A (a "QIB") that purchases for its own account or for the account of
a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (iv) pursuant to offers and sales that occur
outside the United States within the meaning of Regulation S under the
Securities Act, or (v) pursuant to an exemption from registration under
the Securities Act provided by Rule 144 thereunder (if available), in
each case, in a transaction involving a minimum purchase price of
$250,000 for such Notes, subject in each of the foregoing cases to any
requirement of law that the disposition of our property or the property
of such investor account or accounts be at all times within our or
their control and in compliance with any applicable state securities
laws. The foregoing restrictions on resale will not apply subsequent to
the Resale Restriction Termination Date. Each purchaser acknowledges
that the Company and the Trustee reserve the right prior to any offer,
sale or other transfer prior to the Resale Restriction Termination Date
of the Notes pursuant to clauses (iv) or (v) above to require the
delivery of an opinion of counsel, certifications and/or other
information satisfactory to the Company and the Trustee. We understand
that the registrar and transfer agent for the Notes will not be
required to accept for registration or transfer any Notes acquired by
us, except upon presentation of evidence satisfactory to the Company
and the transfer agent that the foregoing restrictions on transfer have
been complied with. We further understand that any Notes acquired by us
will bear a legend reflecting the substance of this paragraph.
(3) We are acquiring the Notes purchased by us for our own
account or for one or more accounts as to each of which we exercise
sole investment discretion.
(4) We acknowledge that you, the Company and others will rely
upon our confirmation, acknowledgments and agreements set forth herein,
and we agree to notify you promptly if any of our representations or
warranties herein ceases to be accurate and complete.
(5) We have received a copy of the Offering Memorandum dated
May 15, 1997 relating to the offering of the Notes and acknowledge that
we have had access to such financial and other information, and have
been afforded the opportunity to ask such questions of representatives
of the Company and its affiliates and receive answers thereto, as we
deem necessary in connection with our decision to purchase the Notes.
You are entitled to rely upon this letter and you are irrevocably
authorized to produce
<PAGE>
3
this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to
the matters covered hereby.
Very truly yours,
By: (Name of Purchaser)
(Address of Purchaser)
Date:
Upon transfer the Notes would be registered in the name of the new beneficial
owner as follows:
TAXPAYER ID
NAME ADDRESS NUMBER:
- ---- ------- -------
<PAGE>
EXHIBIT G
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S]
[date]
First Trust National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, IL 60601
Re: Coleman Escrow Corp. (the "Company") Senior Secured
First Priority Discount Notes due 2001 (the "First
Priority Initial Notes") and Senior Secured Second
Priority Discount Notes due 2001 (the "Second
Priority Initial Notes" and, together with the First
Priority Initial Notes, the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate
principal amount of the First Priority Initial Notes and $________ aggregate
principal amount of the Second Priority Initial Notes, we confirm that such sale
has been effected pursuant to and in accordance with Regulation S under the
United States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we
nor any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
<PAGE>
2
In addition, if the sale is made during a restricted period
and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may
be.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________
Authorized Signature
<PAGE>
EXHIBIT H
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS PURSUANT TO RULE 144A]
First Trust National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, IL 60601
[date]
Re: Coleman Escrow Corp. (the "Company") Senior Secured
First Priority Discount Notes due 2001 (the "First
Priority Initial Notes") and Senior Secured Second
Priority Discount Notes due 2001 (the "Second
Priority Initial Notes" and, together with the First
Priority Initial Notes, the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $_______ aggregate
principal amount at maturity of the First Priority Initial Notes and $__________
aggregate principal amount at maturity of the Second Priority Initial Notes, we
hereby certify that such transfer is being effected pursuant to and in
accordance with Rule 144A under the United States Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we hereby further certify that
the Notes are being transferred to a person that we reasonably believe is
purchasing the Notes for its own account, or for one or more accounts with
respect to which such person exercises sole investment discretion, and such
person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Notes are being transferred in compliance with any applicable blue sky
securities laws of any state of the United States.
<PAGE>
2
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
------------------------------
[Name of Transferor]
By:
---------------------------
Authorized Signature
</TABLE>
<PAGE>
EXHIBIT 99.(g)
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
Coleman Worldwide Corporation
We have audited the accompanying consolidated balance sheets of Coleman
Worldwide Corporation and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholder's equity, and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The Coleman Company, Inc. and subsidiaries at December 31, 1996 and 1995, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Denver, Colorado
March 10, 1997
1
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................................. $ 17,299 $ 12,065
Accounts receivable, less allowance of $11,512 in 1996 and $3,115 in 1995............. 182,418 148,765
Notes receivable...................................................................... 27,524 16,544
Inventories........................................................................... 287,502 216,236
Deferred tax assets................................................................... 40,466 20,481
Prepaid assets and other.............................................................. 14,885 22,420
---------- --------
Total current assets............................................................... 570,094 436,511
Property, plant and equipment, net...................................................... 199,182 162,691
Intangible assets related to businesses acquired, net................................... 349,761 225,247
Note receivable--affiliate.............................................................. 54,739 50,685
Deferred tax assets and other........................................................... 32,673 31,255
---------- --------
$1,206,449 $906,389
---------- --------
---------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt..................................................... $ 747 $ 1,051
Short-term borrowings................................................................. 33,935 19,302
Accounts payable...................................................................... 98,906 71,377
Accrued expenses...................................................................... 112,944 58,162
---------- --------
Total current liabilities.......................................................... 246,532 149,892
Long-term debt.......................................................................... 757,460 519,640
Income taxes payable--affiliate......................................................... 18,528 37,846
Other liabilities....................................................................... 76,173 48,072
Minority interest....................................................................... 45,088 49,266
Commitments and contingencies...........................................................
Stockholder's equity:
Common stock, par value $1.00 per share;
1,000 shares issued and outstanding................................................ 1 1
Additional paid-in capital............................................................ 23,687 23,496
Retained earnings..................................................................... 36,360 77,823
Currency translation adjustment....................................................... 2,856 353
Minimum pension liability adjustment.................................................. (236) --
---------- --------
Total stockholder's equity......................................................... 62,668 101,673
---------- --------
$1,206,449 $906,389
---------- --------
---------- --------
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net revenues............................................................... $1,220,216 $933,574 $751,580
Cost of sales.............................................................. 928,497 649,427 535,710
---------- -------- --------
Gross profit............................................................... 291,719 284,147 215,870
Selling, general and administrative expenses............................... 291,862 174,870 128,561
Asset impairment charge.................................................... -- 12,289 --
Restructuring expense...................................................... -- -- 18,456
Interest expense, net...................................................... 50,767 35,930 24,031
Amortization of goodwill and deferred charges.............................. 11,056 8,309 6,667
Other (income) expense, net................................................ (1,604) 283 1,138
---------- -------- --------
(Loss) earnings before income taxes, minority interest and extraordinary
item.................................................................. (60,362) 52,466 37,017
Income tax (benefit) expense............................................... (14,753) 19,861 10,437
Minority interest in earnings of Camping Gaz............................... 1,872 -- --
Minority interest in (loss) earnings of Coleman............................ (7,262) 6,696 5,734
---------- -------- --------
(Loss) earnings before extraordinary item................................ (40,219) 25,909 20,846
Extraordinary loss on early extinguishment of debt, net of income tax
benefit of $846 in 1996, $503 in 1995, and $435 in 1994.................. (1,244) (787) (677)
---------- -------- --------
Net (loss) earnings...................................................... $ (41,463) $ 25,122 $ 20,169
---------- -------- --------
---------- -------- --------
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
------------------- ADDITIONAL CURRENCY MINIMUM
NUMBER PAID-IN RETAINED TRANSLATION PENSION
OF SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT LIABILITY
--------- ------ ---------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993................. 1,000 $ 1 $ 22,902 $ 32,532 $ (215) $ --
Net earnings............................... -- -- -- 20,169 -- --
Currency translation adjustment............ -- -- -- -- 1,185 --
Contributions.............................. -- -- 208 -- -- --
--------- ------ ---------- -------- ----------- -------
Balance at December 31, 1994................. 1,000 1 23,110 52,701 970 --
Net earnings............................... -- -- -- 25,122 -- --
Currency translation adjustment............ -- -- -- -- (617) --
Contributions.............................. -- -- 386 -- --
--------- ------ ---------- -------- ----------- -------
Balance at December 31, 1995................. 1,000 1 23,496 77,823 353 --
Net loss................................... -- -- -- (41,463) -- --
Currency translation adjustment............ -- -- -- -- 2,503 --
Minimum pension liability adjustment, net
of tax.................................. -- -- -- -- -- (236)
Contributions.............................. -- -- 191 -- -- --
--------- ------ ---------- -------- ----------- -------
Balance at December 31, 1996................. 1,000 $ 1 $ 23,687 $ 36,360 $ 2,856 $(236)
--------- ------ ---------- -------- ----------- -------
--------- ------ ---------- -------- ----------- -------
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
--------- -------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings....................................................... $ (41,463) $ 25,122 $ 20,169
Adjustments to reconcile net (loss) earnings to net cash flows from
operating activities:
Depreciation and amortization........................................ 36,941 27,087 23,213
Non-cash tax sharing agreement provision............................. 4,637 15,722 3,668
Minority interest in (loss) earnings of Coleman...................... (7,262) 6,696 5,734
Minority interest in earnings of Camping Gaz......................... 1,872 -- --
Interest accretion................................................... 12,051 11,388 10,657
Non-cash gain on LYONs conversion.................................... (2,755) -- --
Non-cash restructuring and other charges............................. 48,269 12,289 10,950
Extraordinary loss on early extinguishment of debt................... 2,090 1,290 1,112
Change in assets and liabilities:
Decrease (increase) in receivables................................... 976 (37,833) (22,122)
Increase in inventories.............................................. (42,402) (49,396) (10,852)
(Decrease) increase in accounts payable.............................. (12,308) 13,825 (1,403)
Other, net........................................................... (5,982) (16,747) 5,659
--------- -------- ---------
36,127 (15,679) 26,616
--------- -------- ---------
Net cash (used) provided by operating activities............................ (5,336) 9,443 46,785
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................................... (41,334) (29,053) (34,915)
Purchases of businesses, net of cash acquired............................. (161,875) (33,385) (99,587)
Increase in note receivable--affiliate.................................... (4,054) (6,742) (27,052)
Proceeds from sale of fixed assets........................................ 2,924 928 4,471
--------- -------- ---------
Net cash used by investing activities....................................... (204,339) (68,252) (157,083)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in short-term borrowings....................................... (11,043) 3,106 6,867
Net (payments of) proceeds from revolving credit agreement borrowings..... (2,779) (61,289) 129,274
Proceeds from issuance of long-term debt.................................. 235,000 200,000 --
Repayment of long-term debt............................................... (6,778) (74,782) (10,796)
Debt issuance and refinancing costs....................................... (3,902) (3,569) (1,955)
Purchases of Company common stock......................................... (2,329) (4,086) (9,571)
Proceeds from stock options exercised including tax benefits.............. 2,192 4,520 584
Contributions from parent................................................. 191 386 208
--------- -------- ---------
Net cash provided by financing activities................................... 210,552 64,286 114,611
--------- -------- ---------
Effect of exchange rate changes on cash..................................... 4,357 (1,731) (1,587)
--------- -------- ---------
Net increase in cash and cash equivalents................................... 5,234 3,746 2,726
Cash and cash equivalents at beginning of the year.......................... 12,065 8,319 5,593
--------- -------- ---------
Cash and cash equivalents at end of the year................................ $ 17,299 $ 12,065 $ 8,319
--------- -------- ---------
--------- -------- ---------
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES
Background:
Coleman Worldwide Corporation ('Coleman Worldwide') was formed in March
1993 in connection with the offering of Liquid Yield Option(TM) Notes due 2013
(the 'LYONs'(TM)). Coleman Worldwide also holds 44,067,520 shares of the common
stock of The Coleman Company, Inc. ('Coleman' or the 'Company') which represents
approximately 83% of the outstanding Coleman common stock as of December 31,
1996. Coleman was formed in December 1991 to succeed to the assets and
liabilities of the outdoor products business of New Coleman Holdings Inc.
('Holdings') an indirect wholly-owned subsidiary of Mafco Holdings Inc.
('Mafco'). Holdings (then named The Coleman Company, Inc.) was acquired in 1989
by MacAndrews & Forbes Holdings Inc. ('MacAndrews Holdings', and, together with
Mafco, 'MacAndrews & Forbes'), a corporation wholly owned through Mafco by
Ronald O. Perelman. Coleman is a subsidiary of Coleman Worldwide Corporation
('Coleman Worldwide'), which is an indirect wholly-owned subsidiary of Holdings.
In March 1992, the Company completed an initial public offering of its common
stock.
Principles of Consolidation:
The consolidated financial statements include the accounts of Coleman
Worldwide and its subsidiaries after elimination of all material intercompany
accounts and transactions.
Cash Equivalents:
Cash equivalents (primarily investments in money market funds and
commercial paper which are purchased with original maturities of three months or
less) are carried at cost, which approximates fair value.
Inventories:
Inventories are valued at the lower of cost or market. Cost is principally
determined by the first-in, first-out ('FIFO') method.
Property, Plant and Equipment:
Property, plant and equipment is recorded at cost and depreciated on a
straight-line basis over the estimated useful lives of such assets as follows:
land improvements, 5 to 25 years; buildings and building improvements, 7 to 45
years; and machinery and equipment, 3 to 15 years. Leasehold improvements are
amortized over their estimated useful lives or the terms of the leases,
whichever is shorter. Repairs and maintenance are charged to operations as
incurred, and significant expenditures for additions and improvements are
capitalized.
Intangible Assets:
Intangible assets represent goodwill which is being amortized on a
straight-line basis over periods not in excess of 40 years. Accumulated
amortization aggregated $39,520 and $29,664 at December 31, 1996 and 1995,
respectively. The carrying amount of goodwill is reviewed if facts and
circumstances suggest it may be impaired. If this review indicates goodwill will
not be recoverable over the remaining amortization period, as determined based
on the estimated undiscounted cash flows of the entity acquired, the carrying
amount of the goodwill is reduced to estimated fair value based on market value
or discounted cash flows, as appropriate.
6
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Deferred Charges:
Expenses associated with borrowings, such as for underwriting, legal fees
and printing costs, are amortized over the term of the related debt.
Revenue Recognition:
The Company recognizes net revenues upon shipment of merchandise. Net
revenues comprise gross revenues less customer returns and allowances.
Advertising and Promotion Expense:
Production costs of future media advertising are deferred until the
advertising occurs. All other advertising and promotion costs are expensed when
incurred. The amounts charged against operations for the years ended December
31, 1996, 1995 and 1994 were $58,823, $37,544 and $30,831, respectively.
Research and Development:
Research and development expenditures are expensed as incurred. The amounts
charged against operations for the years ended December 31, 1996, 1995 and 1994
were $11,082, $6,548, and $5,230, respectively.
Self Insurance:
Coleman Worldwide participates in insurance programs maintained by
Holdings. Coleman Worldwide estimates its liability for the self-insured
portions of the risks covered by such programs and accrues appropriate reserves.
(See Note 11.)
Foreign Currency Translation:
The Company's international operations, other than its Brazilian and
Mexican operations, are conducted in economic environments which the Company
does not consider to be highly inflationary. Assets and liabilities of
international operations generally are translated into U.S. dollars at the rates
of exchange in effect at the balance sheet date, and income and expense items
generally are translated at the average exchange rates prevailing during the
period presented. Gains and losses resulting from the translation of these
financial statements are recorded as a component of stockholder's equity. Gains
and losses resulting from foreign currency transactions and translation of the
financial statements of the Company's Brazilian and Mexican operations are
included in the results of operations and have not been significant for the
years ended December 31, 1996, 1995 and 1994.
Financial Instruments with Off-Balance-Sheet Risk:
The Company periodically enters into a variety of foreign currency exchange
agreements in the management of foreign currency exposure related primarily to
firm commitments, intercompany foreign sales transactions expected to occur
within the next twelve months and intercompany accounts receivables and
payables.
At December 31, 1996, the Company did not have any outstanding foreign
currency exchange agreements related to firm commitments. At December 31, 1995,
the Company had a forward exchange contract to buy $15,000 of Italian lira
maturing on May 31, 1996 and had an unrecognized gain of $93. The gains and
losses from this contract are accounted for under the deferral method and are
recognized and included in income in the same period as a component of the
related hedged transactions. In the event it is no longer probable the
transactions will be consummated, the gains and losses are recognized
immediately in income under the fair value method. At December 31, 1995, the
Company had outstanding option contracts for the purchase or sale of Italian
lira totaling $10,500, which contracts expired during 1996.
During the fourth quarter of 1995, the Company elected to adopt the
provisions of the Emerging Issues Task Force Issue No. 95-2, 'Determination of
What Constitutes a Firm Commitment for Foreign Currency
7
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Transactions Not Involving a Third Party' ('EITF 95-2') which narrowed the scope
of intercompany foreign currency commitments eligible to be hedged for financial
reporting purposes. Under EITF 95-2, the Company reflects the carrying value of
its forward currency contract positions relating to intercompany foreign sales
transactions on a mark-to-market basis and accounts for the resulting
unrecognized gains or losses in income as a component of cost of sales. As a
result of this change, the Company increased net income by $3,796 in the fourth
quarter of 1995. Prior to the adoption of EITF 95-2, the gains and losses
associated with these contracts were accounted for under the deferral method. At
December 31,1996, the Company had forward exchange contracts to sell $8,500 in
Canadian dollars maturing on February 28, 1997, for which the Company has
recognized a net gain of $40 as a component of cost of sales. At December
31,1995, the Company had forward exchange contracts to sell $22,969 in foreign
currencies, which contracts matured at various dates in 1996 and for which the
Company has recognized a net gain of $7,599 as a component of cost of sales.
The Company also enters into option contracts to hedge intercompany foreign
sales transactions. Gains and losses on these contracts are deferred and
recognized as an adjustment to cost of sales upon the sale of the related
inventory. At December 31, 1996 and 1995, the Company had outstanding option
contracts for the sale of Japanese yen at fixed exchange rates totaling $20,038
and $24,926 for specified periods of time which expire during 1997 and 1996,
respectively. Net unrealized gains deferred at December 31, 1996 and 1995 were
$653 and $125, respectively.
With respect to intercompany accounts receivable and payables, at December
31, 1996, the Company had forward exchange contracts to sell $26,623 and to buy
$3,898 in foreign currencies, which contracts matured at various dates in 1997,
and had deferred a net gain of $185. At December 31, 1995, the Company had
forward exchange contracts to sell $31,152 and to buy $1,712 in foreign
currencies, which contracts matured at various dates in 1996 and had deferred a
net gain of $56. The gains and losses from these contracts are accounted for
under the deferral method and are recognized and included in income in the same
period as a component of the related hedged transactions.
The Company periodically enters into interest rate swap and cap agreements
as a hedge against interest rate exposure of variable rate debt. At December 31,
1996, $25,000 of the Company's outstanding long-term debt was subject to an
interest rate swap agreement and $25,000 of the Company's outstanding long-term
debt was subject to an interest rate cap. Under the interest rate swap
agreement, the Company pays the counterparty interest at a fixed rate of 6.115%,
and the counterparty pays the Company interest at a variable rate equal to the
three month LIBOR for a seven year period commencing January 2, 1996. The
agreement is with a major financial institution which is expected to fully
perform under the terms of the agreement, thereby mitigating the credit risk
from the transaction. The differences to be paid or received on interest rate
swap agreements designated as hedges are included in interest expense as
payments are made or received. The interest rate cap agreement entitles the
Company to receive from a major financial institution the amount, if any, by
which the Company's interest payments on $25,000 of its variable rate debt
exceed 7.35%. The $509 premium paid for this interest rate cap agreement is
included in other assets and is amortized to interest expense over the
three-year term of the cap, which commenced January 3, 1995. Payments received
as a result of the cap are accrued as a reduction of interest expense on the
variable rate debt. In the event the interest rate swap or cap agreements are
terminated early and the related debt remains outstanding, the amounts paid or
received upon the early termination, along with any unamortized premium, will
continue to be amortized over the terms of the original interest rate swap and
cap agreements.
Credit Risk:
Financial instruments which potentially subject Coleman Worldwide to
concentrations of credit risk consist primarily of trade receivables and
derivative financial instruments. Credit risk on trade receivables is minimized
as a result of the large and diversified nature of the Company's worldwide
customer base. Although the Company
8
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
has one significant customer (see Note 14), there have been no credit losses
related to this customer. With respect to its derivative contracts, the Company
is also subject to credit risk of non performance by counterparties and its
maximum potential loss may exceed the amount recognized in the financial
statements. The Company controls its exposure to credit risk through credit
approvals, credit limits and monitoring procedures. Collateral is generally not
required for the Company's financial instruments.
Fair Value of Financial Instruments:
The following methods and assumptions were used by Coleman Worldwide in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
Long- and short-term debt: The carrying amounts of Coleman Worldwide's
borrowings under its foreign bank lines of credit, revolving credit
agreement and other variable rate debt approximate their fair value. The
fair value of the Company's senior notes issues (see Note 9) are estimated
using discounted cash flow analysis based on the Company's estimated
current borrowing rate for similar types of borrowing arrangements. The
fair value of the publicly traded LYONs debt is based on quoted market
prices.
Foreign currency exchange agreements: The fair values of Coleman
Worldwide's foreign currency agreements are estimated based on quoted
market prices of comparable agreements, adjusted through interpolation
where necessary for maturity differences.
Interest rate swap and cap agreements: The fair values of interest
rate swap and cap agreements are the amounts at which they could be
terminated, based on estimates obtained from dealers.
The carrying amounts and fair values of Coleman Worldwide's financial
instruments at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------- --------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
OF ASSET/ OF ASSET/ OF ASSET/ OF ASSET/
(LIABILITY) (LIABILITY) (LIABILITY) (LIABILITY)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents..................................... $ 17,299 $ 17,299 $ 12,065 $ 12,065
Short-term debt............................................... (33,935) (33,935) (19,302) (19,302)
Long-term debt excluding capital leases....................... (757,613) (738,964) (519,914) (541,732)
Foreign currency exchange agreements.......................... 940 1,629 8,026 8,287
Interest rate swap agreements................................. -- 296 -- (635)
Interest rate cap agreement................................... 170 1 340 18
</TABLE>
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Reclassifications:
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year presentation.
9
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Accounting for Stock-Based Compensation:
The Company accounts for its stock compensation arrangements under the
provisions of Accounting Principles Board Opinion No. 25, 'Accounting for Stock
Issued to Employees' ('APB 25') and related pronouncements. Under the provisions
of APB 25, no compensation expense is recognized when stock options are granted
with exercise prices equal to or greater than market value on the date of grant.
Impairment of Long-Lived Assets:
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, 'Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of' ('FAS 121'),
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. FAS 121 also addresses the accounting for long-lived assets
expected to be disposed of. The Company adopted FAS 121 in the fourth quarter of
1995. The effect of the adoption of FAS 121 is described in Note 3.
2. ACQUISITIONS
During April 1994, the Company purchased substantially all the assets of
Sanborn Manufacturing Company ('Sanborn') in Eden Prairie, Minnesota, a
manufacturer of a broad line of portable and stationary air compressors for
consumer and commercial markets distributed primarily through warehouse clubs,
home centers and mass merchants in North America, and substantially all the
assets and business of Metal Yanes, Ltda. ('Yanes') in Sao Paulo, Brazil, a
manufacturer of camping products, including propane and butane fueled lanterns,
camp stoves, tents, lantern mantles and fuel. The Sanborn and Yanes
acquisitions, which were accounted for under the purchase method of accounting,
were completed for the following consideration: (a) approximately $41,066 in
cash financed through borrowings under the Company Credit Agreement (as defined
in Note 9), (b) assumption of liabilities in the amount of $22,193, and (c) a
note payable of $2,999. During 1995, in connection with the Sanborn acquisition,
the Company entered into a settlement agreement with the predecessor owners
which resolved certain disputes between the parties as well as fulfilled certain
obligations owed and anticipated to be owed by the Company to the predecessor
owners. These anticipated obligations related to a requirement to make
additional payments of up to $4,000 based upon the achievement of certain annual
sales levels during the five year period ending December 31, 1998 by Coleman
Powermate Compressors, Inc. ('Compressors'), the Company's subsidiary that
acquired the Sanborn assets (the 'Sales Agreement'). As a result of the
settlement, goodwill was increased by $3,282. For 1994, approximately $671 was
earned under the terms of the Sales Agreement based on the 1994 sales levels of
Compressors, and this amount was recorded as additional goodwill in 1994. The
results of operations of these businesses have been included in the consolidated
financial statements from the dates of acquisitions.
On November 2, 1994, the Company purchased substantially all the assets of
Eastpak, Inc. and all of the capital stock of M.G. Industries, Inc.
(collectively, 'Eastpak'), a leading designer, manufacturer and distributor of
branded daypacks, sports bags and related products. The Eastpak acquisition,
which was accounted for under the purchase method, was completed for
approximately $57,850 in cash financed through borrowings under the Company
Credit Agreement, and assumption of certain liabilities in the amount of $4,130.
The Company also entered into an agreement with the predecessor owner of Eastpak
to make additional payments based upon the achievement of certain annual sales
levels of Eastpak products and other products substantially similar to the
Eastpak products during the years ended December 31, 1995, 1996, and 1997. For
1995 and 1996, a total of approximately $11,000 was recorded under the terms of
this agreement. An additional amount of up to $12,000 may be earned during the
year ended December 31, 1997. These amounts are recorded as additional goodwill.
10
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS--(CONTINUED)
The results of operations of Eastpak have been included in the consolidated
financial statements from the date of acquisition.
In connection with the final purchase price allocations of the Sanborn and
Eastpak acquisitions, the Company recorded goodwill of approximately $53,000.
The Company is amortizing these amounts over 40 years. The goodwill of
approximately $7,700 associated with the Yanes acquisition was included in the
1995 asset impairment charge of $12,289 related to the Company's operations in
Brazil, which is further discussed in Note 3.
During 1995, the Company purchased all of the outstanding shares of capital
stock of Sierra Corporation of Fort Smith, Inc. ('Sierra'), a manufacturer of
portable outdoor and recreational folding furniture and accessories, and
substantially all of the assets of Active Technologies, Inc. ('ATI'), a
manufacturer of technologically advanced lightweight generators and battery
charging equipment. The aggregate purchase price for these acquisitions was
$19,516 including fees and expenses. These acquisitions were accounted for using
the purchase method of accounting. The purchase price and expenses associated
with these acquisitions exceeded the fair value of net assets acquired by
$11,186 and the excess has been assigned to goodwill and is being amortized over
20 to 30 years on the straight-line basis. In connection with the ATI purchase,
the Company may also be required to record an additional amount of up to $18,750
based on the Company's sales of ATI related products and royalties received by
the Company for licensing arrangements related to ATI patents. For 1995 and
1996, the amounts earned under the terms of this agreement were immaterial.
Amounts earned under the terms of the agreement are recorded as additional
goodwill. The results of operations of these companies on a pro forma basis as
if their acquisitions had occurred at the beginning of 1995 and 1994,
respectively, individually and in the aggregate were not significant to Coleman
Worldwide.
On January 2, 1996, the Company purchased substantially all the assets and
assumed certain liabilities of Seatt Corporation ('Seatt'), a leading designer,
manufacturer and distributor of safety and security related electronic products
for residential and commercial applications. The Seatt acquisition, which was
accounted for under the purchase method, was completed for approximately $65,300
including fees and expenses. The results of operations of Seatt have been
included in the consolidated financial statements from the date of acquisition.
In connection with the purchase price allocation of the Seatt acquisition, the
Company recorded goodwill of approximately $38,800. The Company is amortizing
this amount over 40 years on the straight-line method.
On February 28, 1996, the Company and Butagaz S.N.C. ('Butagaz'), a
subsidiary of Societe de Petroles Shell S.A., jointly announced they had entered
into an agreement (the 'Share Purchase Agreement') in connection with the sale
to Coleman of approximately 70% of the outstanding shares of Application des
Gaz, S.A. ('ADG' or 'Camping Gaz'). Camping Gaz is a leading manufacturer and
distributor of camping appliances in Europe. On June 24, 1996, Coleman commenced
a public tender offer for the purchase of all the publicly traded outstanding
shares of ADG, or approximately 30% of the outstanding shares. The tender offer
period expired in July 1996 with approximately 94% of the outstanding publicly
traded shares of ADG tendered for purchase. The Company completed the necessary
steps to acquire the remaining publicly held stock during the third quarter of
1996. The cost of acquiring all the shares of ADG was approximately $100,000
including fees and expenses.
The acquisition of Camping Gaz is being accounted for under the purchase
method. In connection with the allocation of purchase price to the fair values
of assets acquired and liabilities assumed, the Company recorded goodwill of
approximately $84,200, which is being amortized over 40 years on the
straight-line method. The Company also recognized liabilities in the amount of
$21,898 representing severance and other termination benefits for production and
administrative employees of Camping Gaz who will be terminated. The Company paid
termination costs of approximately $4,385 during 1996 and anticipates all
remaining termination costs will be paid during 1997.
11
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS--(CONTINUED)
The Company has included the results of operations of Camping Gaz in the
consolidated financial statements from March 1, 1996, the date on which the
Company obtained control of Camping Gaz, and has recognized minority interest
related to the publicly traded shares for the period March 1, 1996 through June
30, 1996.
The following summarized, unaudited pro forma results of operations of
Coleman Worldwide for the years ended December 31, 1996 and 1995 assume the
acquisition of Seatt and the acquisition of all the outstanding shares of
Camping Gaz occurred as of the beginning of the respective periods. The pro
forma results include certain adjustments, primarily reflecting increased
amortization and interest expense and a lower income tax provision, and are not
necessarily indicative of what the results of operations would have been had the
Seatt and Camping Gaz acquisitions occurred at the beginning of the respective
periods. Moreover, the pro forma information is not intended to be indicative of
future results of operations.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Net revenues...................................................... $1,246,370 $1,193,295
(Loss) earnings before extraordinary item......................... (40,353) 25,151
Net (loss) earnings............................................... (41,597) 24,364
</TABLE>
3. RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CHARGES
During 1996, the Company recorded restructuring and certain other charges
totaling $52,516, net of tax. The restructuring charges total $45,086, net of
tax, and consist of charges to a) integrate the Camping Gaz and Coleman
operations into a single global recreation products business, b) exit the low
end electric pressure washer business, c) exit a portion of the Company's
battery powered light business and settle certain litigation with respect to
this business, and d) increase the valuation reserve for certain foreign
deferred income tax assets. Other charges of $7,430, net of tax, relate to
certain asset write-offs and other tax matters. These other charges were
incurred in the Company's normal course of business, although the amounts
involved are higher than similar charges the Company has recorded in prior
periods. Cost of sales includes a pre-tax charge of $44,005, selling, general
and administrative expenses includes a pre-tax charge of $30,195, and the
provision for income tax expense includes $21,684 of tax benefits resulting from
these charges, net of the effect of an increase in the valuation reserve related
to certain foreign deferred tax assets and other foreign tax charges.
During 1995, in connection with the adoption of FAS 121, the Company
recognized an asset impairment charge of $12,289 related to its Brazilian
operations. The Brazilian operations had not performed to the Company's
expectations since acquisition of this business in April of 1994, and in the
fourth quarter of 1995, the Company initiated actions to reduce the operating
losses in Brazil. These actions included replacing management, increasing
prices, downsizing the manufacturing operations and reducing SG&A and other
expenses. Because of these actions, the Company performed an impairment review
pursuant to the guidelines set forth in FAS 121 and concluded recognition of an
asset impairment charge was appropriate. The basis of the fair values used in
the computation of the charge were appraisals for property and equipment and
estimated discounted cash flows for goodwill. The charge has been included in
the statement of operations under the caption 'Asset Impairment Charge'.
12
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
3. RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CHARGES--(CONTINUED)
During September 1994, the Company restructured its German manufacturing
operations. The German Restructuring included the sale of the low margin plastic
cooler business located in Inheiden, Germany and Loucka, Czech Republic,
including inventory, to a management group. The German Restructuring resulted in
a one-time charge of approximately $17,956 before tax and included severance
costs of $1,541, commitments to third parties of approximately $5,465 and
write-downs of leasehold improvements and other assets to estimated realizable
values aggregating $10,950. As a result of the restructuring, the German work
force was reduced by about 150 employees from a pre-restructuring level of
approximately 250 employees. The restructuring was substantially completed in
1994. In connection with the restructuring, the Company recognized tax benefits
of approximately $10,900 relating to the write-off of the Company's investment
in its German operations. The Company also announced a plan to change from
manufacturing to sourcing for certain textile product lines and to exit the
market for personal flotation devices. This plan resulted in a $500 pre-tax
charge.
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Raw material and supplies....................................................... $ 82,399 $ 57,653
Work-in-process................................................................. 12,878 5,389
Finished goods.................................................................. 192,225 153,194
-------- --------
$287,502 $216,236
-------- --------
-------- --------
</TABLE>
Generally, inventory costs are determined by the FIFO method; however,
approximately 13% and 10% of total inventories at December 31, 1996 and 1995,
respectively, are determined using the last-in, first-out ('LIFO') method. If
such inventories were stated using the FIFO method, such amounts would
approximate the LIFO carrying values.
5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Land and land improvements...................................................... $ 8,772 $ 6,318
Buildings and building improvements............................................. 78,760 67,989
Machinery and equipment......................................................... 194,714 142,941
Construction-in-progress........................................................ 15,519 13,105
-------- --------
297,765 230,353
Accumulated depreciation........................................................ (98,583) (67,662)
-------- --------
$199,182 $162,691
-------- --------
-------- --------
</TABLE>
Depreciation expense was $25,770, $19,142, and $16,793 for the years ended
December 31, 1996, 1995 and 1994, respectively.
13
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
6. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
-------- -------
<S> <C> <C>
Compensation and related benefits................................................ $ 29,331 $14,201
Other............................................................................ 83,613 43,961
-------- -------
$112,944 $58,162
-------- -------
-------- -------
</TABLE>
7. OTHER LIABILITIES
Other liabilities consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Pensions and other postretirement benefits........................................ $52,229 $40,240
Other............................................................................. 23,944 7,832
------- -------
$76,173 $48,072
------- -------
------- -------
</TABLE>
8. SHORT-TERM BORROWINGS
The Company maintained foreign bank lines of credit aggregating $119,101,
and $64,375, of which $33,935 and $19,302 were outstanding at December 31, 1996
and 1995, respectively. The weighted average interest rate on amounts borrowed
was approximately 2.4% and 7.1% at December 31, 1996 and 1995, respectively.
Outstanding letters of credit aggregated approximately $32,897 and $40,036
at December 31, 1996 and 1995, respectively.
9. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
7.26% Senior Notes due 2007 (a)................................................. $200,000 $200,000
7.10% Senior Notes due 2006 (b)................................................. 85,000 --
7.25% Senior Notes due 2008 (c)................................................. 75,000 --
Revolving credit facility (d)................................................... 146,350 150,150
Term loan (d)................................................................... 73,478 --
Liquid Yield Option(TM) Notes due 2013 (e)...................................... 174,594 165,434
Other........................................................................... 3,785 5,107
-------- --------
758,207 520,691
Less current portion............................................................ 747 1,051
-------- --------
$757,460 $519,640
-------- --------
-------- --------
</TABLE>
- ------------------
(a) On August 8, 1995, the Company completed a private placement issuance and
sale of $200,000 aggregate principal amount of 7.26% Senior Notes due 2007
(the '2007 Notes'). Interest on the 2007 Notes is payable semiannually, and
the principal is payable in annual installments of $40,000 each commencing
August 8, 2003, with a final installment payment of $40,000 due on August
8, 2007. If there is a default, the interest rate will be the greater of
(i) 9.26% or (ii) 2.0% above the prime interest rate.
14
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
9. LONG-TERM DEBT--(CONTINUED)
The 2007 Notes are unsecured and are subject to various restrictive
covenants including, without limitation, requirements for the maintenance
of specified financial ratios and levels of consolidated net worth and
certain other provisions limiting the incurrence of additional debt and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2007 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(b) On June 13, 1996, the Company completed a private placement issuance and
sale of $85,000 aggregate principal amount of 7.10% Senior Notes due 2006
(the '2006 Notes'). Interest on the 2006 Notes is payable semiannually, and
the principal is payable in annual installments of $12,143 each commencing
June 13, 2000, with a final installment payment of $12,143 due on June 13,
2006. If there is a default, the interest rate will be the greater of (i)
9.10% or (ii) 2.0% above the prime interest rate.
The 2006 Notes are unsecured and are subject to various restrictive
covenants including, without limitation, requirements for the maintenance
of specified financial ratios and levels of consolidated net worth and
certain other provisions limiting the incurrence of additional debt and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2006 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(c) On June 13, 1996, the Company completed a private placement issuance and
sale of $75,000 aggregate principal amount of 7.25% Senior Notes due 2008
(the '2008 Notes'). Interest on the 2008 Notes is payable semiannually, and
the principal is payable in annual installments of $15,000 each commencing
June 13, 2004, with a final installment payment of $15,000 due on June 13,
2008. If there is a default, the interest rate will be the greater of (i)
9.25% or (ii) 2.0% above the prime interest rate.
The 2008 Notes are unsecured and are subject to various restrictive
covenants including, without limitation, requirements for the maintenance
of specified financial ratios and levels of consolidated net worth and
certain other provisions limiting the incurrence of additional debt and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2008 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(d) In April 1996, the Company amended its credit agreement to: a) provide a
term loan of French Franc 385,125 ($73,478 at current exchange rates), b)
provide an unsecured revolving credit facility in an amount of $275,000, c)
allow for the Camping Gaz acquisition and d) extend the maturity of the
credit agreement (as amended, the 'Company Credit Agreement'). In
connection with the Company recording the restructuring and other charges
as discussed in Note 3 and lower than expected operating results, the
Company further amended the Company Credit Agreement in October 1996 and
again in March 1997.
The Company Credit Agreement is available to the Company until April 30,
2001. The outstanding loans under the Company Credit Agreement bear
interest at either of the following rates, as selected by the Company from
time to time: (i) the higher of the agent's base lending rate or the
federal funds rate plus .50% or (ii) the London Inter-Bank Offered Rate
('LIBOR') plus a margin ranging from .25% to 2.125% based on the Company's
financial performance. If there is a default, the interest rate otherwise
in effect will be increased by 2% per annum. The Company Credit Agreement
also bears an overall facility fee ranging from .15% to .375% based on the
Company's financial performance.
The Company Credit Agreement contains various restrictive covenants
including, without limitation, requirements for the maintenance of
specified financial ratios, levels of consolidated net worth and profits,
and certain other provisions limiting the incurrence of additional debt,
purchase or redemption of the Company's common stock, issuance of preferred
stock of the Company, and also prohibits the Company from paying any
dividends until on or after January 1, 1999 and limits the amount of
dividends the Company may pay thereafter. The Company Credit Agreement also
provides for a specific requirement relating to the
15
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
9. LONG-TERM DEBT--(CONTINUED)
Company's financial leverage at December 31, 1997 which, if not achieved,
will result in the Company Credit Agreement becoming secured by the
Company's assets. In addition, substantially all of the shares of the
Company's common stock owned by Coleman Worldwide are pledged to secure
indebtedness of Coleman Worldwide and of its parent, Coleman Holdings Inc.
The indentures governing this indebtedness contain various covenants
including a covenant placing certain limitations on the Company's
indebtedness.
(e) On May 27, 1993, Coleman Worldwide issued and sold $500,000 principal
amount at maturity of LYONs in an underwritten public offering. On June 7,
1993, an additional $75,000 principal amount at maturity of LYONs was sold
upon exercise of the underwriter's overallotment option.
The LYONs mature on May 27, 2013 and are secured by 16,394,810 shares of
common stock of Coleman. There are no periodic payments of interest on the
LYONs. The aggregate principal amount of the LYONs represents a yield to
maturity of 7.25% per annum (computed on a semiannual bond equivalent
basis) calculated from May 27, 1993.
Each LYON has a principal amount at maturity of $1 and is exchangeable, at
the option of the holder, at any time on or prior to maturity (unless
previously redeemed or otherwise purchased) for shares of common stock of
Coleman securing the LYONs at an exchange rate of 15.706 shares of common
stock of Coleman per LYON, subject to Coleman Worldwide's right to pay cash
equal to the then market value (as defined) of such shares in lieu, in
whole or in part, of delivering such shares. The exchange rate will not be
adjusted for original issue discount ('OID') but will be subject to
adjustment upon the occurrence of certain events affecting the common stock
of Coleman.
The LYONs are redeemable by Coleman Worldwide on or after May 27, 1998, at
the option of Coleman Worldwide, in whole or in part, at redemption prices
equal to the issue price plus accrued OID through but excluding the date of
redemption, payable solely in cash. Coleman Worldwide will purchase any
LYON, at the option of the holder, on May 27, 1998, May 27, 2003 and May
27, 2008 (each, a 'Purchase Date') for a purchase price per LYON equal to
the issue price plus accrued OID through but excluding each such Purchase
Date, representing a yield per annum to the holder on each such date of
7.25% computed on a semiannual bond equivalent basis. Coleman Worldwide
may, at its option, elect to pay the purchase price on any Purchase Date
either in cash or shares of common stock of Coleman or any combination
thereof.
The Indenture governing the LYONs provides the holders of LYONs with the
option to require Coleman Worldwide to purchase the LYONs after the
occurrence of certain events ('Additional Purchase Right Events').
Additional Purchase Right Events occur, among other things, upon the
Company's Consolidated Debt Ratio (as defined) exceeding 0.75 to 1.0 or the
Consolidated Net Worth (as defined) of Coleman Worldwide as of the end of
any fiscal quarter being less than a specified amount which is $60,000 at
March 31, 1997 and increases to $70,000 at June 30, 1997.
The aggregate scheduled amounts of long-term debt maturities in the years
1997 through 2001 are $747, $500, $2,357, $12,207, and $232,005,
respectively.
10. INCOME TAXES
Coleman Worldwide is included in the consolidated federal income tax return
of Mafco Holdings Inc. ('Mafco') and certain state tax returns of Mafco or its
affiliates. Coleman Worldwide and Mafco are parties to a tax sharing agreement
(the 'Tax Sharing Agreement'), pursuant to which Coleman Worldwide is required
to pay to Mafco amounts equal to the taxes that Coleman Worldwide would
otherwise have to pay if it were to file separate consolidated federal, state or
local income tax returns including only itself and its domestic subsidiaries.
Pursuant to the LYONs indenture agreement, at any time that the LYONs are
outstanding, the amounts that Coleman Worldwide would be required to pay to
Mafco under the Tax Sharing Agreement, together with any
16
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
10. INCOME TAXES--(CONTINUED)
remaining funds paid to Coleman Worldwide by the Company under the tax sharing
agreement between Coleman Worldwide and the Company, may not be paid as tax
sharing payments, but Coleman Worldwide may advance such funds to Mafco as long
as the aggregate amount of such advances at any time does not exceed the issue
price plus accrued OID of the LYONs. Such advances are evidenced by noninterest
bearing unsecured demand promissory notes from Mafco in the amount of $54,739 at
December 31, 1996. As a result of the restriction on the payment of the tax
sharing amounts, income taxes provided pursuant to the Tax Sharing Agreement are
reflected as a non-cash charge. For all periods presented, federal and state
income taxes are provided as if Coleman Worldwide filed its own income tax
returns. The accompanying consolidated balance sheet includes approximately
$18,528 and $37,846 of federal and state income taxes payable to Mafco pursuant
to the Tax Sharing Agreement at December 31, 1996 and 1995, respectively.
For financial reporting purposes, (loss) earnings before income taxes,
minority interest and extraordinary item include the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Earnings (loss) earnings before income taxes, minority interest and
extraordinary item:
Domestic........................................................... $(39,593) $ 66,900 $ 59,392
Foreign............................................................ (20,769) (14,434) (22,375)
-------- -------- --------
$(60,362) $ 52,466 $ 37,017
-------- -------- --------
-------- -------- --------
</TABLE>
Significant components of the provision for income tax (benefit) expense
were as follow:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Current:
Federal............................................................. $ (3,932) $14,520 $ 3,147
State............................................................... (937) 3,102 899
Foreign............................................................. 3,454 3,853 2,248
-------- ------- -------
Total current.................................................. (1,415) 21,475 6,294
-------- ------- -------
Deferred:
Federal............................................................. (10,686) (3,104) 6,069
State............................................................... (2,178) (725) 1,114
Foreign............................................................. (474) 2,215 (3,040)
-------- ------- -------
Total deferred................................................. (13,338) (1,614) 4,143
-------- ------- -------
$(14,753) $19,861 $10,437
-------- ------- -------
-------- ------- -------
</TABLE>
17
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
10. INCOME TAXES--(CONTINUED)
The effective tax rate on (loss) earnings before income taxes, minority
interest and extraordinary item varies from the current statutory federal income
tax rate as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1996 1995
----------------------- -----------------------
<S> <C> <C>
(Benefit) provision at statutory rate................................... (35.0)% 35.0%
State taxes, net........................................................ (4.5) 2.2
Recognition of permanent basis differences related to loss on
restructuring of foreign investment................................... -- --
Nondeductible amortization.............................................. 4.3 3.8
Foreign operations...................................................... 3.6 (0.2)
Valuation allowance..................................................... 5.8 --
Puerto Rico operations.................................................. 0.3 (3.1)
Other, net.............................................................. 1.1 0.2
------ -----
Effective tax rate (benefit) provision.................................. (24.4)% 37.9%
------ -----
------ -----
<CAPTION>
1994
-----------------------
<S> <C>
(Benefit) provision at statutory rate................................... 35.0%
State taxes, net........................................................ 3.5
Recognition of permanent basis differences related to loss on
restructuring of foreign investment................................... (13.4)
Nondeductible amortization.............................................. 4.4
Foreign operations...................................................... (3.4)
Valuation allowance..................................................... --
Puerto Rico operations.................................................. --
Other, net.............................................................. 2.1
------
Effective tax rate (benefit) provision.................................. 28.2%
------
------
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
Coleman Worldwide's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits other than pensions..................................... $12,370 $11,986
Reserves for self-insurance and warranty costs.................................. 6,678 4,777
Pension liabilities............................................................. 8,828 4,942
Inventory....................................................................... 8,245 5,579
Net operating loss carryforwards................................................ 14,875 3,103
Impaired assets................................................................. -- 10,068
Other, net...................................................................... 24,026 5,555
------- -------
Total deferred tax assets.................................................. 75,022 46,010
Valuation allowance............................................................... (7,501) --
------- -------
Net deferred tax assets.................................................... 67,521 46,010
------- -------
Deferred tax liabilities:
Depreciation.................................................................... 18,248 17,611
Other, net...................................................................... 7,675 5,125
------- -------
Total deferred tax liabilities............................................. 25,923 22,736
------- -------
Net deferred tax assets................................................. $41,598 $23,274
------- -------
------- -------
</TABLE>
During 1996, Coleman Worldwide increased the valuation allowance related to
certain foreign deferred tax assets due to uncertainties over realization. At
December 31, 1996, Coleman Worldwide had net operating loss carryforwards
('NOL's') of approximately $42,677 for certain foreign income tax purposes.
These NOL's expire beginning in 1999.
Coleman Worldwide has not provided for taxes on undistributed foreign
earnings of approximately $16,904 at December 31, 1996 as Coleman Worldwide
intends to permanently reinvest these earnings in the future growth of the
business. Determination of the amount of unrecognized deferred U.S. income tax
liability is not practicable because of the complexities associated with its
hypothetical calculation.
18
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
11. RELATED PARTY TRANSACTIONS
In 1996, the Company entered into an agreement with an affiliate in which
the Company realized approximately $1,800 of net tax benefits associated with
certain foreign tax net operating loss carry forwards that had not previously
been recognized.
The Company provided management services to certain affiliates pursuant to
a management agreement through June 30, 1995. The consolidated financial
statements reflect the management fees as a reduction in selling, general and
administration expenses. For the years ended December 31, 1995 and 1994,
management fees earned by the Company were $2,400 and $4,800, respectively.
MacAndrews & Forbes provides Coleman Worldwide, at Coleman Worldwide's
request, with certain allocated services, pursuant to a services agreement.
These allocated services are purchased by MacAndrews & Forbes from third party
providers on behalf of Coleman Worldwide. Such services include professional
services, such as legal and accounting, insurance coverage and other services.
Coleman Worldwide reimburses MacAndrews & Forbes for that portion of amounts due
to third party providers as is allocable to the services purchased for and
provided to Coleman Worldwide and reimburses MacAndrews & Forbes for their other
out-of-pocket expenses incurred in connection with providing such services.
Coleman Worldwide participates in certain of Holdings' insurance programs,
including health and life insurance, workers' compensation, and liability
insurance. Coleman Worldwide's expense represents its expected costs for
self-insured retentions and premiums for excess coverage insurance. The expense
was $13,923, $9,874, and $10,586 for the years ended December 31, 1996, 1995 and
1994, respectively.
The Company purchases and sells products from and to certain affiliates.
These amounts are not, in the aggregate, material.
12. EMPLOYEE BENEFIT PLANS
Pension Plans:
Holdings maintains pension and other retirement plans in various forms
covering employees of the Company who meet eligibility requirements. The U.S.
salaried retirement plan is a non-contributory defined benefit plan and provides
benefits based on a formula of each participant's final average pay and years of
service. The U.S. hourly pension plan is a non-contributory defined benefit plan
and contains a flat benefit formula. The salaried and hourly plans provide
reduced benefits for early retirement and the salaried plan takes into account
offsets for Social Security benefits. The Company's policy is to contribute
annually the minimum amount required pursuant to the Employee Retirement Income
Security Act, as amended.
Holdings also has an unfunded excess benefit plan covering certain of the
Company's U.S. employees whose benefits under the plans described above are
limited by provisions of the Internal Revenue Code. The
19
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
following table reconciles the funded status of the pension plans with the
amount recognized in Coleman Worldwide's consolidated balance sheets as of the
dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligation:
Accumulated benefit obligation, including vested benefits of $18,686 and
$15,282..................................................................... $(21,933) $(17,588)
-------- --------
-------- --------
Projected benefit obligation for service rendered to date........................ $(37,092) $(32,284)
Plan assets at fair value........................................................ 16,197 9,696
-------- --------
Projected benefit obligation in excess of plan assets............................ (20,895) (22,588)
Unrecognized prior service cost.................................................. 50 57
Unrecognized net loss............................................................ 7,999 8,869
-------- --------
Accrued pension cost............................................................. (12,846) (13,662)
Amount reflected as an intangible asset.......................................... (288) --
Amount reflected as minimum pension liability adjustment......................... (470) --
-------- --------
Amount reflected as pension liability............................................ $(13,604) $(13,662)
-------- --------
-------- --------
</TABLE>
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.5% and 7.25% as of
December 31, 1996 and 1995, respectively. The rate of increase in future
compensation levels reflected in such determination was 5% as of December 31,
1996 and 1995. The expected long-term rate of return on assets was 9% as of
December 31, 1996, 1995 and 1994. Plan assets consist primarily of common stock,
mutual funds and fixed income securities stated at fair market value, and cash
equivalents stated at cost, which approximates fair market value. Unrecognized
items are being recognized over the estimated remaining service lives of active
employees.
Net pension expense includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost-benefits attributed to service during the year................ $3,098 $2,125 $2,051
Interest cost on projected benefit obligation.............................. 2,442 2,004 1,554
Actual return on plan assets............................................... (1,490) (1,347) 391
Net amortization and deferrals............................................. 844 834 (750)
------ ------ ------
Net pension expense........................................................ $4,894 $3,616 $3,246
------ ------ ------
------ ------ ------
</TABLE>
Savings Plan:
In January 1990, Holdings initiated an employee savings plan under Section
401(k) of the Internal Revenue Code. This plan covers substantially all of the
Company's full-time U.S. employees and allows employees to contribute up to 10%
of their salary to the plan. The Company matches, at a 33 1/3% rate, employee
contributions of up to 6% of their salary. Amounts charged to expense for
matching contributions were $1,314, $1,165, and $927 for the years ended
December 31, 1996, 1995 and 1994, respectively.
Retiree Health Care and Life Insurance:
The Company, through Holdings, provides certain unfunded health and life
insurance benefits for certain retired employees. Approximately 53 percent of
the Company's U.S. employees may become eligible for these benefits if they
reach retirement age while working for the Company.
20
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The following table reconciles the funded status of the Company's allocable
portion of Holdings' postretirement benefit plans with the amount recognized in
Coleman Worldwide's consolidated balance sheets as of the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees....................................................................... $ (6,682) $ (6,660)
Fully eligible active plan participants........................................ (3,015) (2,991)
Other active plan participants................................................. (10,664) (10,904)
-------- --------
Total accumulated postretirement benefit obligation.............................. (20,361) (20,555)
Unrecognized transition benefit.................................................. (3,973) (4,239)
Unrecognized prior service cost.................................................. (492) (580)
Unrecognized net (gain) loss..................................................... (976) 936
-------- --------
Net postretirement benefit liability............................................. $(25,802) $(24,438)
-------- --------
-------- --------
</TABLE>
Net periodic postretirement benefit expense includes the following
components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost-benefits attributed to service during the year................ $1,044 $ 756 $ 901
Interest cost on accumulated postretirement benefit obligation............. 1,454 1,352 1,268
Amortization of transition benefit and other net gains..................... (354) (455) (354)
------ ------ ------
Net periodic postretirement benefit expense................................ $2,144 $1,653 $1,815
------ ------ ------
------ ------ ------
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation ('APBO') was 7.5% and 7.25% as of December 31, 1996 and 1995,
respectively. The assumed health care cost trend rate used in measuring the APBO
at December 31, 1996 was 8% starting in 1997, then gradually decreasing to 5% by
the year 2003 and remaining at that level thereafter. The health care cost trend
rate assumption has a significant effect on the amount of the obligation and
periodic benefit expense reported. An increase in the assumed health care cost
trend rates by 1% in each year would increase the APBO as of December 31, 1996
by approximately 18% and the service and interest cost components of net
periodic postretirement benefit expense by approximately 23%.
Stock Option Plan:
The Company adopted The Coleman Company, Inc. 1992 Stock Option Plan (the
'1992 Stock Option Plan') prior to the effective date of the IPO. During 1993,
the shareholders approved the 1993 Stock Option Plan (the '1993 Stock Option
Plan') and during 1996, the shareholders approved The Coleman Company, Inc. 1996
Stock Option Plan (the '1996 Stock Option Plan'). Under the terms of the 1992
Stock Option Plan, the 1993 Stock Option Plan and the 1996 Stock Option Plan
(collectively the 'Stock Option Plans'), incentive stock options ('ISOs'),
non-qualified stock options ('NQSOs') and stock appreciation rights ('SARs') may
be granted to key employees of the Company and any of its affiliates from time
to time. Stock options have been granted under the Stock Option Plans with
vesting terms and maximum terms of approximately five years and ten years,
respectively. The aggregate number of shares of common stock as to which options
and rights may be granted under the Stock Option Plans may not exceed 4,700,000.
21
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The following table summarizes the stock option transactions under the
Stock Option Plans:
<TABLE>
<CAPTION>
1996 1995 1994
---------------------- ---------------------- ----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding--January 1,................. 2,572,930 $ 15.25 2,310,888 $ 14.03 1,256,540 $ 12.61
Granted:
at market price.................... 294,000 19.73 637,000 17.89 1,272,450 15.13
above market price................. 381,000 15.00 -- -- -- --
Exercised............................. (154,890) 12.17 (325,748) 12.09 (53,362) 10.12
Forfeited............................. (75,410) 14.19 (49,210) 13.14 (164,740) 12.98
--------- --------- ---------
Outstanding--December 31,............... 3,017,630 15.84 2,572,930 15.25 2,310,888 14.03
--------- --------- ---------
--------- --------- ---------
Exercisable--December 31,............... 513,440 13.25 413,526 12.84 488,488 12.15
--------- --------- ---------
--------- --------- ---------
Weighted-average fair value of options
granted during the year:
at market price.................... $6.62 $7.13
-----
-----
above market price................. $3.21 --
-----
-----
</TABLE>
The following table summarizes information concerning currently outstanding
and exercisable options at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ---------------------------------------------------------------------------- -----------------------------
WEIGHTED-AVERAGE WEIGHTED- WEIGHTED-
RANGE OF NUMBER REMAINING AVERAGE NUMBER AVERAGE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- ------------------------ ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 9.75-$14.32 770,630 1.59 years $13.05 393,440 $12.71
$14.33-$15.13 606,000 7.32 14.98 120,000 15.06
$15.14-$16.30 755,000 7.92 16.06 -- --
$16.31-$23.13 886,000 8.86 18.65 -- --
----------- -----------
$ 9.75-$23.13 3,017,630 6.46 513,440
----------- -----------
----------- -----------
</TABLE>
As described in Note 1, the Company follows APB 25 in accounting for its
stock compensation arrangements. Pro forma financial information regarding net
income is required by FASB Statement No. 123, 'Accounting for Stock-Based
Compensation' ('FAS 123'), and has been determined as if the Company had
accounted for its employee stock options under the fair value method of FAS 123.
The fair value of ISOs and NQSOs granted during 1996 and 1995 were estimated at
the date of grant using the Black-Scholes option pricing model with the
following weighted-average assumptions: risk-free interest rates of 6.11% and
5.91% for 1996 and 1995, respectively, dividend yield of 0.0%, volatility of the
expected market price of the Company's common stock of 20.2% and 30.8% for 1996
and 1995, respectively, and a weighted-average expected life of the option of
5.5 years.
22
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
FAS 123 requires the use of option valuation models, one of which is the
Black-Scholes model, that were not developed for use valuing ISOs or NQSOs.
Further, these option valuation models require the input of highly subjective
assumptions, including the expected stock price volatility. In management's
opinion, based on the above, the existing models do not necessarily provide a
reliable single measure of the fair value of its ISOs or NQSOs.
The following summarized, unaudited pro forma results of operations assume
the estimated fair value of the ISOs and NQSOs granted in 1996 and 1995 is
amortized to expense over the ISOs' and NQSOs' vesting period. FAS 123 does not
require disclosure of the effect of any grants of stock based compensation prior
to 1995 and, therefore, the pro forma effect on net earnings of FAS 123 is not
representative of the pro forma effect on net earnings in future years.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
---------------------
1996 1995
-------- -------
<S> <C> <C>
Pro forma net (loss) earnings....................................... $(42,180) $24,897
</TABLE>
13. COMMITMENTS AND CONTINGENCIES
Leases:
The Company leases manufacturing, administrative and sales facilities and
various types of equipment under operating lease agreements expiring through
2007. Rental expense was $14,164, $11,526, and $9,520 for the years ended
December 31, 1996, 1995 and 1994, respectively. Minimum rental commitments under
all noncancellable operating leases with remaining lease terms in excess of one
year from December 31, 1996, aggregated $43,573; such commitments for each of
the five years subsequent to December 31, 1996 are $12,379, $11,135, $6,189,
$4,296, and $2,619, respectively, and $6,955 thereafter.
The Company leases its Hastings, Nebraska facility and the corporate office
building in Denver, Colorado under agreements which give the Company the right,
subject to certain qualifications, to renew, terminate, or purchase the
properties. Upon termination, the Company has guaranteed the lessor certain
residual values.
Environmental Matters:
The Company is subject to various environmental regulations and has adopted
an environmental policy designed to ensure the Company operates in full
compliance with applicable environmental regulations and, where appropriate, the
Company's own internal standards. Coleman has also undertaken an environmental
compliance audit program. The Company makes expenditures it believes are
necessary to comply with environmental management practices. Environmental
expenditures that relate to current operations are expensed or capitalized as
appropriate, were not significant in 1996, and are not expected to be
significant in the foreseeable future. Coleman has established reserves for
various environmental matters to cover the estimated costs of the
investigations, remedial activities and litigation.
Non-Recourse Guaranty:
On July 22, 1993, Coleman Worldwide's parent, Coleman Holdings Inc.,
('Coleman Holdings') issued and sold $281,281 principal amount at maturity of
Senior Secured Discount Notes due 1998 (the 'Old Notes') in a private placement
offering. Subsequent to the private placement offering, a registration statement
on Form S-1 was filed to exchange the Old Notes for Series B Senior Secured
Discount Notes (the 'Notes'). The net proceeds of approximately $162,299 were
distributed to Coleman Holdings' parent.
23
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
13. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
The Notes will mature on May 27, 1998 and are secured by all the shares of
Coleman Worldwide. In connection with Coleman Holdings' Notes issuance, Coleman
Worldwide has provided a non-recourse guaranty, which is secured by its pledge
of 26,000,000 shares of Coleman Common Stock. There will be no periodic payment
of interest on the Notes. The aggregate principal amount of the Notes represents
a yield to maturity of 10.875% per annum (computed on a semiannual bond
equivalent basis) calculated from July 22, 1993.
Other:
The Company and Holdings are involved in various claims and legal actions
arising in the ordinary course of business. The Company believes the ultimate
disposition of these matters is not expected to have a material adverse effect
on Coleman Worldwide's consolidated financial condition or results of
operations. Coleman Worldwide and the Company have entered into a
cross-indemnification agreement with Holdings pursuant to which Coleman will
indemnify Holdings against all liabilities related to businesses transferred to
the Company, and Holdings will indemnify the Company against all liabilities of
Holdings other than liabilities related to the businesses transferred to the
Company.
The Company is also party to a license agreement which requires payments of
minimum guaranteed royalties aggregating to $8,225 at December 31, 1996; such
commitments for each of the four years remaining under the agreement subsequent
to December 31, 1996 are $933, $1,768, $2,454, and $3,070, respectively.
14. SIGNIFICANT CUSTOMERS
The Company's U.S. and Canadian operations have one significant customer
which accounted for approximately 15%, 19%, and 21% of net revenues in the years
ended December 31, 1996, 1995 and 1994, respectively.
15. CASH FLOW REPORTING
Coleman Worldwide uses the indirect method to report cash flows from
operating activities. Interest paid was $37,608, $23,976, and $11,933 and income
taxes paid were $2,857, $4,606, and $359 for the years ended December 31, 1996,
1995 and 1994, respectively. Certain non-cash transactions relating to
acquisitions and the issuance of long-term debt have been reported in Notes 2
and 9.
16. GEOGRAPHIC SEGMENTS
Coleman Worldwide designs, manufactures and markets a wide variety of
multiuse products and accessories, which are primarily marketed through
independent retail markets, for the outdoor recreation and hardware consumers.
Coleman Worldwide is a leading manufacturer and marketer of brand name consumer
products for the camping and related outdoor recreation markets in the United
States, Canada, Europe, and Japan.
Operating profit, as indicated below, represents net revenues less
operating expenses and amortization of goodwill. Generally, sales between
geographic areas are made at cost plus a share of operating profit. Identifiable
assets are those used by each geographic segment. Corporate assets are
principally cash, certain property and equipment, income tax refunds
receivable--affiliate, and deferred charges. The geographic segment presentation
has been restated for the years ended December 31, 1995 and 1994 to reflect the
European segment which became a significant segment for the year ended December
31, 1996, primarily due to the impact of the Camping Gaz operations.
24
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
16. GEOGRAPHIC SEGMENTS--(CONTINUED)
Information related to Coleman Worldwide's geographic segments is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net revenues:
Domestic--U.S.................................................. $ 916,260 $716,018 $566,098
--Export............................................... 91,125 90,434 93,917
Europe......................................................... 168,780 52,233 52,461
Other foreign.................................................. 219,350 169,836 121,545
Eliminations................................................... (175,299) (94,947) (82,441)
---------- -------- --------
$1,220,216 $933,574 $751,580
---------- -------- --------
---------- -------- --------
Operating profit:
Domestic (a)................................................... $ 19,915 $120,915 $ 94,773
Europe (b)..................................................... (17,505) (3,241) (23,203)
Other foreign (c).............................................. 4,027 (10,540) 2,222
---------- -------- --------
6,437 107,134 73,792
Corporate expenses............................................... (16,032) (18,738) (12,744)
Interest expense................................................. (50,767) (35,930) (24,031)
---------- -------- --------
(Loss) earnings before income taxes, minority interest and
extraordinary item............................................. $ (60,362) $ 52,466 $ 37,017
---------- -------- --------
---------- -------- --------
Identifiable assets:
Domestic....................................................... $ 782,373 $696,681 $559,599
Europe......................................................... 247,412 70,478 72,908
Other foreign.................................................. 83,033 59,107 54,573
Corporate...................................................... 93,631 80,123 67,946
---------- -------- --------
$1,206,449 $906,389 $755,026
---------- -------- --------
---------- -------- --------
</TABLE>
- ------------------
(a) Includes $49,257 of restructuring and other charges in 1996.
(b) Includes $20,002 of restructuring and other charges in 1996 and $17,956
related to the German Restructuring in 1994.
(c) Includes $4,941 of restructuring and other charges in 1996 and $12,289 of
asset impairment charges in 1995.
25
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
(IN THOUSANDS, EXCEPT SHARE DATA)
17. QUARTERLY FINANCIAL SUMMARIES (UNAUDITED)
Summarized quarterly financial data for 1996 and 1995 are as follow:
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30,(A) DECEMBER 31,(B)(C)
--------- -------- ---------------- ------------------
<S> <C> <C> <C> <C>
1996
Net revenues...................................... $ 273,560 $452,654 $269,607 $224,395
Gross profit...................................... 80,966 137,538 39,894 33,321
Earnings (loss) before extraordinary item......... 12,236 21,437 (42,047) (31,845)
Net earnings (loss)............................... 11,654 20,780 (42,052) (31,845)
1995
Net revenues...................................... $ 224,024 $311,281 $211,817 $186,452
Gross profit...................................... 68,496 99,575 65,932 50,144
Earnings (loss) before extraordinary item......... 9,285 21,085 5,831 (10,292)
Net earnings (loss)............................... 9,285 21,085 5,044 (10,292)
</TABLE>
- ------------------
(a) For the third quarter of 1996, the gross profit amount includes $33,567 of
restructuring and other charges. The loss before extraordinary item and net
loss amounts include an after tax charge of $44,495 related to restructuring
and other charges.
(b) For the fourth quarter of 1996, the gross profit amount includes $10,438 of
restructuring and other charges. The loss before extraordinary item and net
loss amounts include an after tax charge of $8,021 related to restructuring
and other charges.
(c) For the fourth quarter of 1995, the gross profit amount includes $7,599 of
income as a result of adopting the provisions of EITF 95-2. The loss before
extraordinary item and net loss amounts include an after tax asset
impairment charge of $9,856 as a result of adopting FAS 121 and an after tax
credit of $3,796 as a result of adopting the provisions of EITF 95-2.
26
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1997
------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................................................... $ 12,866
Accounts and notes receivable, less allowance of $9,934........................................... 271,617
Inventories....................................................................................... 288,166
Deferred tax assets............................................................................... 39,895
Prepaid assets and other.......................................................................... 16,611
------------
Total current assets........................................................................... 629,155
Property, plant and equipment, net.................................................................. 194,739
Intangible assets related to businesses acquired, net............................................... 341,907
Note receivable--affiliate.......................................................................... 47,739
Deferred tax assets and other....................................................................... 39,892
------------
$ 1,253,432
------------
------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts and notes payable........................................................................ $ 194,462
Other current liabilites.......................................................................... 115,902
------------
Total current liabilites....................................................................... 310,364
Long-term debt.................................................................................... 745,770
Income taxes payable--affiliate..................................................................... 16,681
Other liabilities................................................................................... 75,711
Minority interest................................................................................... 44,598
Commitments and contingencies.......................................................................
Stockholder's equity:
Common stock...................................................................................... 1
Additional paid-in capital........................................................................ 28,159
Retained earnings................................................................................. 34,887
Currency translation adjustment................................................................... (2,364)
Minimum pension liability adjustment.............................................................. (375)
------------
Total stockholder's equity..................................................................... 60,308
------------
$ 1,253,432
------------
------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
27
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Net revenues.............................................................................. $295,464 $273,560
Cost of sales............................................................................. 214,422 192,594
-------- --------
Gross profit.............................................................................. 81,042 80,966
Selling, general and administrative expenses.............................................. 65,923 46,776
Interest expense, net..................................................................... 13,854 11,056
Amortization of goodwill and deferred charges............................................. 3,010 2,392
Other expense (income), net............................................................... 271 (2,721)
-------- --------
(Loss) earnings before income taxes, minority interest and extraordinary item............. (2,016) 23,463
Income tax (benefit) expense.............................................................. (775) 8,692
Minority interest in earnings of Camping Gaz.............................................. 112 --
Minority interest in earnings of Coleman.................................................. 120 2,535
-------- --------
(Loss) earnings before extraordinary item................................................. (1,473) 12,236
Extraordinary loss on early extinguishment of debt, net of income tax benefit............. -- (582)
-------- --------
Net (loss) earnings....................................................................... $ (1,473) $ 11,654
-------- --------
-------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
28
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------
1997 1996
-------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss) earnings.................................................................... $ (1,473) $ 11,654
-------- ---------
Adjustments to reconcile net (loss) earnings to net cash
used by operating activities:
Depreciation and amortization..................................................... 9,735 7,733
Non-cash tax sharing agreement (benefit) provision................................ (1,847) 5,682
Minority interest in earnings of Coleman.......................................... 120 2,535
Minority interest in earnings of Camping Gaz...................................... 112 --
Interest accretion................................................................ 3,142 2,976
Non-cash gain on LYONs conversion................................................. -- (2,751)
Extraordinary loss on early extinguishment of debt................................ -- 986
Change in assets and liabilities:
Increase in receivables........................................................ (67,454) (84,659)
Increase in inventories........................................................ (5,258) (28,420)
Increase in accounts payable................................................... 18,655 8,741
Other, net..................................................................... (3,812) (17,323)
-------- ---------
(46,607) (104,500)
-------- ---------
Net cash used by operating activities.................................................... (48,080) (92,846)
-------- ---------
Cash Flows from Investing Activities:
Capital expenditures................................................................... (6,313) (6,866)
Purchases of businesses, net of cash acquired.......................................... -- (60,132)
Decrease in note receivable--affiliate................................................. 7,000 --
Proceeds from sale of fixed assets..................................................... 2,126 186
-------- ---------
Net cash provided by (used by) investing activities...................................... 2,813 (66,812)
-------- ---------
Cash Flows from Financing Activities:
Net (payments of) proceeds from revolving credit agreement borrowings.................. (8,959) 125,713
Net change in short-term borrowings.................................................... 48,996 29,611
Repayment of long-term debt............................................................ (64) (172)
Debt issuance and refinancing costs.................................................... (718) --
Purchases of Company common stock...................................................... -- (2,329)
Proceeds from stock options exercised.................................................. 197 967
Contributions from (distributions to) parents.......................................... 41 (10)
-------- ---------
Net cash provided by financing activities................................................ 39,493 153,780
-------- ---------
Effect of exchange rate changes on cash.................................................. 1,341 629
-------- ---------
Net decrease in cash and cash equivalents................................................ (4,433) (5,249)
Cash and cash equivalents at beginning of the period..................................... 17,299 12,065
-------- ---------
Cash and cash equivalents at end of the period........................................... $ 12,866 $ 6,816
-------- ---------
-------- ---------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
29
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Coleman Worldwide Corporation ('Coleman Worldwide') have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 1997 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Coleman Worldwide
annual report on Form 10-K for the year ended December 31, 1996.
2. INVENTORIES
The components of inventories consist of the following:
<TABLE>
<CAPTION>
MARCH 31,
1997
---------
<S> <C>
Raw material and supplies ........................................................ $ 83,710
Work-in-process .................................................................. 16,036
Finished goods ................................................................... 188,420
---------
$ 288,166
---------
---------
</TABLE>
3. OTHER CHARGES
During the three months ended March 31, 1997, the Company recorded certain
other charges totaling $2,435, net of tax, primarily related to severance costs
associated with recent executive changes.
4. RELATED PARTY TRANSACTIONS
During the three months ended March 31, 1997, the Company agreed to
purchase an inactive subsidiary from an affiliate for $1,000. The Company
expects to realize certain foreign tax benefits from this transaction in future
years. The Company has accounted for this transaction in a manner similar to a
pooling-of-interests due to the Mafco Holdings Inc. common control over each of
the parties involved in the transaction. The $2,608 excess value of tax benefits
acquired over the purchase price has been accounted for as a capital
contribution.
On March 31, 1997, MacAndrews & Forbes Holdings Inc., an indirect parent,
assumed a liability of Coleman Worldwide in the amount of $2,271. The assumption
was accounted for as a capital contribution.
5. CONTINGENCIES
On July 22, 1993, Coleman Worldwide's parent, Coleman Holdings Inc.
('Coleman Holdings'), issued and sold $281,281 principal amount at maturity of
Senior Secured Discount Notes due 1998 (the 'Old Notes') in a private placement
offering. Subsequent to the private placement offering, a registration statement
on Form S-1 was filed to exchange the Old Notes for Series B Senior Secured
Discount Notes (the 'Holdings Notes'). The net proceeds of approximately
$162,299 were distributed to Coleman Holdings' parent.
The Holdings Notes will mature on May 27, 1998, and are secured by all the
shares of Coleman Worldwide. In connection with the Holdings Notes issuance,
Coleman Worldwide has provided a non-recourse guaranty, which is secured by its
pledge of 26,000,000 shares of Coleman Common Stock. There will be no periodic
payment of interest on the Holdings Notes. The aggregate principal amount of the
Holdings Notes represents a yield to maturity of 10.875% per annum (computed on
a semi-annual bond equivalent basis) calculated from July 22, 1993.
30
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
6. SUBSEQUENT EVENTS
In April 1997, the Company announced its intentions to (i) close its
corporate headquarters in Golden, Colorado, (ii) close its Geneva, Switzerland
international headquarters, (iii) reduce the Company's workforce by
approximately 10% and (iv) close or relocate three domestic factories and close
one international factory. Most of the costs associated with these actions will
be reflected in the results of operations for the quarter ended June 30, 1997.
On May 6, 1997, Coleman Worldwide and Coleman Holdings jointly announced
that Coleman Holdings intends to redeem the Holdings Notes on or about July 15,
1997, and that Coleman Worldwide intends to retire its Liquid Yield Option(TM)
Notes due 2013 (the 'LYONs'(TM)). Coleman Worldwide will make an offer to pay
cash for the LYONs in excess of the market value of the shares of the Company's
common stock for which the LYONs may be exchanged. Coleman Worldwide expects to
commence the offer as soon as reasonably practicable and to redeem any remaining
LYONs on May 27, 1998. Redemption of the Holdings Notes and retirement of the
LYONs will be made with the proceeds from the issuance of debt securities (the
'Notes') by a newly formed holding company. Upon the redemption of the Holdings
Notes and retirement of the LYONs, the Notes are expected to be secured by the
shares of the Company's common stock owned by Coleman Worldwide.
31
<PAGE>
EXHIBIT 99.(h)
REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors
The Coleman Company, Inc.
We have audited the accompanying consolidated balance sheets of The Coleman
Company, Inc. and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The Coleman Company, Inc. and subsidiaries at December 31, 1996 and 1995, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Denver, Colorado
March 10, 1997
1
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................................. $ 17,299 $ 12,065
Accounts receivable, less allowance of $11,512 in 1996 and $3,115 in 1995............. 182,418 148,765
Notes receivable...................................................................... 27,524 16,544
Inventories........................................................................... 287,502 216,236
Income tax refunds receivable--affiliate.............................................. 21,661 2,400
Deferred tax assets................................................................... 40,466 20,481
Prepaid assets and other.............................................................. 14,767 22,308
---------- --------
Total current assets.................................................................... 591,637 438,799
Property, plant and equipment, net...................................................... 199,182 162,691
Intangible assets related to businesses acquired, net................................... 341,715 217,289
Deferred tax assets and other........................................................... 27,552 25,708
---------- --------
$1,160,086 $844,487
---------- --------
---------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt..................................................... $ 747 $ 1,051
Short-term borrowings................................................................. 33,935 19,302
Accounts payable...................................................................... 98,906 71,377
Accrued expenses...................................................................... 112,906 58,137
---------- --------
Total current liabilities.......................................................... 246,494 149,867
Long-term debt.......................................................................... 582,866 354,206
Other liabilities....................................................................... 76,173 48,072
Minority interest....................................................................... 1,608 --
Commitments and contingencies...........................................................
Stockholders' equity:
Preferred stock, par value $.01 per share; 20,000,000 shares authorized, no shares
issued or outstanding.............................................................. -- --
Common stock, par value $.01 per share; 80,000,000 shares authorized; 53,222,420
shares issued and outstanding in 1996; and 53,177,280 shares issued and outstanding
in 1995............................................................................ 532 532
Additional paid-in capital............................................................ 166,690 165,466
Retained earnings..................................................................... 82,832 126,179
Currency translation adjustment....................................................... 3,176 165
Minimum pension liability adjustment.................................................. (285) --
---------- --------
Total stockholders' equity......................................................... 252,945 292,342
---------- --------
$1,160,086 $844,487
---------- --------
---------- --------
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net revenues............................................................... $1,220,216 $933,574 $751,580
Cost of sales.............................................................. 928,497 649,427 535,710
---------- -------- --------
Gross profit............................................................... 291,719 284,147 215,870
Selling, general and administrative expenses............................... 291,669 174,688 128,466
Asset impairment charge.................................................... -- 12,289 --
Restructuring expense...................................................... -- -- 18,456
Interest expense, net...................................................... 38,727 24,545 13,374
Amortization of goodwill and deferred charges.............................. 10,473 7,745 6,209
Other expense, net......................................................... 1,151 334 1,138
---------- -------- --------
(Loss) earnings before income taxes, minority interest and extraordinary
item.................................................................. (50,301) 64,546 48,227
Income tax (benefit) expense............................................... (10,927) 24,479 14,747
Minority interest in earnings of Camping Gaz............................... 1,872 -- --
---------- -------- --------
(Loss) earnings before extraordinary item................................ (41,246) 40,067 33,480
Extraordinary loss on early extinguishment of debt, net of income tax
benefit of $431 in 1996, $503 in 1995, and $435 in 1994.................. (647) (787) (677)
---------- -------- --------
Net (loss) earnings........................................................ $ (41,893) $ 39,280 $ 32,803
---------- -------- --------
---------- -------- --------
(Loss) earnings per share:
(Loss) earnings before extraordinary item................................ $ (0.78) $ 0.75 $ 0.62
Extraordinary item......................................................... (0.01) (0.01) (0.01)
---------- -------- --------
---------- -------- --------
Net (loss) earnings...................................................... $ (0.79) $ 0.74 $ 0.61
---------- -------- --------
---------- -------- --------
Weighted average common shares outstanding................................. 53,197 53,226 53,436
---------- -------- --------
---------- -------- --------
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
-------------------- ADDITIONAL CURRENCY MINIMUM
NUMBER PAID-IN RETAINED TRANSLATION PENSION
OF SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT LIABILITY
---------- ------ ---------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993.............. 53,615,770 $536 $ 167,514 $ 60,597 $ (543) $ --
Purchases of common stock............... (597,600) (6) (5,224) (4,341) -- --
Stock issued under stock option plan.... 53,362 1 538 -- -- --
Stock option tax benefits............... -- -- 45 -- -- --
Net earnings............................ -- -- -- 32,803 -- --
Currency translation adjustment......... -- -- -- -- 1,443 --
---------- ------ ---------- -------- -----------
Balance at December 31, 1994.............. 53,071,532 531 162,873 89,059 900 --
Purchases of common stock............... (220,000) (2) (1,924) (2,160) -- --
Stock issued under stock option plan.... 325,748 3 3,935 -- -- --
Stock option tax benefits............... -- -- 582 -- -- --
Net earnings............................ -- -- -- 39,280 -- --
Currency translation adjustment......... -- -- -- -- (735) --
---------- ------ ---------- -------- ----------- -------
Balance at December 31, 1995.............. 53,177,280 532 165,466 126,179 165 --
Purchases of common stock............... (100,000) (1) (874) (1,454) -- --
Stock split issuance costs.............. -- -- (93) -- -- --
Stock issued under stock option plan.... 145,140 1 1,737 -- -- --
Stock option tax benefits............... -- -- 454 -- -- --
Net loss................................ -- -- -- (41,893) -- --
Currency translation adjustment......... -- -- -- -- 3,011 --
Minimum pension liability adjustment,
net of tax........................... -- -- -- -- -- (285)
---------- ------ ---------- -------- ----------- -------
Balance at December 31, 1996.............. 53,222,420 $532 $ 166,690 $ 82,832 $ 3,176 $(285)
---------- ------ ---------- -------- ----------- -------
---------- ------ ---------- -------- ----------- -------
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
--------- -------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) earnings....................................................... $ (41,893) $ 39,280 $ 32,803
--------- -------- ---------
Adjustments to reconcile net (loss) earnings to net cash flows from
operating activities:
Depreciation and amortization........................................ 36,358 26,523 22,755
Non-cash restructuring and other charges............................. 48,269 12,289 10,950
Extraordinary loss on early extinguishment of debt................... 1,078 1,290 1,112
Minority interest in earnings of Camping Gaz......................... 1,872 -- --
Change in assets and liabilities:
Decrease (increase) in receivables................................... 976 (37,833) (22,122)
Increase in inventories.............................................. (42,402) (49,396) (10,852)
(Decrease) increase in accounts payable.............................. (12,308) 13,825 (1,403)
Other, net........................................................... (1,279) (3,789) (13,302)
--------- -------- ---------
32,564 (37,091) (12,862)
--------- -------- ---------
Net cash (used) provided by operating activities............................ (9,329) 2,189 19,941
--------- -------- ---------
Cash flows from investing activities:
Capital expenditures...................................................... (41,334) (29,053) (34,915)
Purchases of businesses, net of cash acquired............................. (161,875) (33,385) (99,587)
Proceeds from sale of fixed assets........................................ 2,924 928 4,471
--------- -------- ---------
Net cash used by investing activities....................................... (200,285) (61,510) (130,031)
Cash flows from financing activities:
Net change in short-term borrowings....................................... (11,043) 3,106 6,867
Net (payments of) proceeds from revolving credit agreement borrowings..... (2,779) (61,289) 129,274
Proceeds from issuance of long-term debt.................................. 235,000 200,000 --
Repayment of long-term debt............................................... (6,648) (73,884) (10,796)
Debt issuance and refinancing costs....................................... (3,902) (3,569) (1,955)
Purchases of Company common stock......................................... (2,329) (4,086) (9,571)
Proceeds from stock options exercised including tax benefits.............. 2,192 4,520 584
--------- -------- ---------
Net cash provided by financing activities................................... 210,491 64,798 114,403
--------- -------- ---------
Effect of exchange rate changes on cash..................................... 4,357 (1,731) (1,587)
--------- -------- ---------
Net increase in cash and cash equivalents................................... 5,234 3,746 2,726
Cash and cash equivalents at beginning of the year.......................... 12,065 8,319 5,593
--------- -------- ---------
Cash and cash equivalents at end of the year................................ $ 17,299 $ 12,065 $ 8,319
--------- -------- ---------
--------- -------- ---------
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES
Background:
The Coleman Company, Inc. ('Coleman' or the 'Company') was formed in
December 1991 to succeed to the assets and liabilities of the outdoor products
business of New Coleman Holdings Inc. ('Holdings') an indirect wholly-owned
subsidiary of Mafco Holdings Inc. ('Mafco'). Holdings (then named The Coleman
Company, Inc.) was acquired in 1989 by MacAndrews & Forbes Holdings Inc.
('MacAndrews Holdings', and, together with Mafco, 'MacAndrews & Forbes'), a
corporation wholly owned through Mafco by Ronald O. Perelman. Coleman is a
subsidiary of Coleman Worldwide Corporation ('Coleman Worldwide'), which is an
indirect wholly-owned subsidiary of Holdings. In March 1992, the Company
completed an initial public offering of its common stock. MacAndrews & Forbes
indirectly holds 44,067,520 shares of the common stock of Coleman, which
represents approximately 83% of the outstanding Coleman common stock as of
December 31, 1996.
Principles of Consolidation:
The consolidated financial statements include the accounts of the Company
and its subsidiaries after elimination of all material intercompany accounts and
transactions.
Cash Equivalents:
Cash equivalents (primarily investments in money market funds and
commercial paper which are purchased with original maturities of three months or
less) are carried at cost, which approximates fair value.
Inventories:
Inventories are valued at the lower of cost or market. Cost is principally
determined by the first-in, first-out ('FIFO') method.
Property, Plant and Equipment:
Property, plant and equipment is recorded at cost and depreciated on a
straight-line basis over the estimated useful lives of such assets as follows:
land improvements, 5 to 25 years; buildings and building improvements, 7 to 45
years; and machinery and equipment, 3 to 15 years. Leasehold improvements are
amortized over their estimated useful lives or the terms of the leases,
whichever is shorter. Repairs and maintenance are charged to operations as
incurred, and significant expenditures for additions and improvements are
capitalized.
Intangible Assets:
Intangible assets represent goodwill which is being amortized on a
straight-line basis over periods not in excess of 40 years. Accumulated
amortization aggregated $38,851 and $29,261 at December 31, 1996 and 1995,
respectively. The carrying amount of goodwill is reviewed if facts and
circumstances suggest it may be impaired. If this review indicates goodwill will
not be recoverable over the remaining amortization period, as determined based
on the estimated undiscounted cash flows of the entity acquired, the carrying
amount of the goodwill is reduced to estimated fair value based on market value
or discounted cash flows, as appropriate.
6
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Revenue Recognition:
The Company recognizes net revenues upon shipment of merchandise. Net
revenues comprise gross revenues less customer returns and allowances.
Advertising and Promotion Expense:
Production costs of future media advertising are deferred until the
advertising occurs. All other advertising and promotion costs are expensed when
incurred. The amounts charged against operations for the years ended December
31, 1996, 1995 and 1994 were $58,823, $37,544 and $30,831, respectively.
Research and Development:
Research and development expenditures are expensed as incurred. The amounts
charged against operations for the years ended December 31, 1996, 1995 and 1994
were $11,082, $6,548, and $5,230, respectively.
Self Insurance:
The Company participates in insurance programs maintained by Holdings. The
Company estimates its liability for the self-insured portions of the risks
covered by such programs and accrues appropriate reserves. (See Note 11.)
Foreign Currency Translation:
The Company's international operations, other than its Brazilian and
Mexican operations, are conducted in economic environments which the Company
does not consider to be highly inflationary. Assets and liabilities of
international operations generally are translated into U.S. dollars at the rates
of exchange in effect at the balance sheet date, and income and expense items
generally are translated at the average exchange rates prevailing during the
period presented. Gains and losses resulting from the translation of these
financial statements are recorded as a component of stockholders' equity. Gains
and losses resulting from foreign currency transactions and translation of the
financial statements of the Company's Brazilian and Mexican operations are
included in the results of operations and have not been significant for the
years ended December 31, 1996, 1995 and 1994.
Financial Instruments with Off-Balance-Sheet Risk:
The Company periodically enters into a variety of foreign currency exchange
agreements in the management of foreign currency exposure related primarily to
firm commitments, intercompany foreign sales transactions expected to occur
within the next twelve months and intercompany accounts receivables and
payables.
At December 31, 1996, the Company did not have any outstanding foreign
currency exchange agreements related to firm commitments. At December 31, 1995,
the Company had a forward exchange contract to buy $15,000 of Italian lira
maturing on May 31, 1996 and had an unrecognized gain of $93. The gains and
losses from this contract are accounted for under the deferral method and are
recognized and included in income in the same period as a component of the
related hedged transactions. In the event it is no longer probable the
transactions will be consummated, the gains and losses are recognized
immediately in income under the fair value method. At December 31, 1995, the
Company had outstanding option contracts for the purchase or sale of Italian
lira totaling $10,500, which contracts expired during 1996.
During the fourth quarter of 1995, the Company elected to adopt the
provisions of the Emerging Issues Task Force Issue No. 95-2, 'Determination of
What Constitutes a Firm Commitment for Foreign Currency Transactions Not
Involving a Third Party' ('EITF 95-2') which narrowed the scope of intercompany
foreign currency commitments eligible to be hedged for financial reporting
purposes. Under EITF 95-2, the Company
7
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
reflects the carrying value of its forward currency contract positions relating
to intercompany foreign sales transactions on a mark-to-market basis and
accounts for the resulting unrecognized gains or losses in income as a component
of cost of sales. As a result of this change, the Company increased net income
by $3,796 in the fourth quarter of 1995. Prior to the adoption of EITF 95-2, the
gains and losses associated with these contracts were accounted for under the
deferral method. At December 31, 1996, the Company had forward exchange
contracts to sell $8,500 in Canadian dollars maturing on February 28, 1997, for
which the Company has recognized a net gain of $40 as a component of cost of
sales. At December 31, 1995, the Company had forward exchange contracts to sell
$22,969 in foreign currencies, which contracts matured at various dates in 1996
and for which the Company has recognized a net gain of $7,599 as a component of
cost of sales.
The Company also enters into option contracts to hedge intercompany foreign
sales transactions. Gains and losses on these contracts are deferred and
recognized as an adjustment to cost of sales upon the sale of the related
inventory. At December 31, 1996 and 1995, the Company had outstanding option
contracts for the sale of Japanese yen at fixed exchange rates totaling $20,038
and $24,926 for specified periods of time which expire during 1997 and 1996,
respectively. Net unrealized gains deferred at December 31, 1996 and 1995 were
$653 and $125, respectively.
With respect to intercompany accounts receivable and payables, at December
31, 1996, the Company had forward exchange contracts to sell $26,623 and to buy
$3,898 in foreign currencies, which contracts matured at various dates in 1997,
and had deferred a net gain of $185. At December 31, 1995, the Company had
forward exchange contracts to sell $31,152 and to buy $1,712 in foreign
currencies, which contracts matured at various dates in 1996 and had deferred a
net gain of $56. The gains and losses from these contracts are accounted for
under the deferral method and are recognized and included in income in the same
period as a component of the related hedged transactions.
The Company periodically enters into interest rate swap and cap agreements
as a hedge against interest rate exposure of variable rate debt. At December 31,
1996, $25,000 of the Company's outstanding long-term debt was subject to an
interest rate swap agreement and $25,000 of the Company's outstanding long-term
debt was subject to an interest rate cap. Under the interest rate swap
agreement, the Company pays the counterparty interest at a fixed rate of 6.115%,
and the counterparty pays the Company interest at a variable rate equal to the
three month LIBOR for a seven year period commencing January 2, 1996. The
agreement is with a major financial institution which is expected to fully
perform under the terms of the agreement, thereby mitigating the credit risk
from the transaction. The differences to be paid or received on interest rate
swap agreements designated as hedges are included in interest expense as
payments are made or received. The interest rate cap agreement entitles the
Company to receive from a major financial institution the amount, if any, by
which the Company's interest payments on $25,000 of its variable rate debt
exceed 7.35%. The $509 premium paid for this interest rate cap agreement is
included in other assets and is amortized to interest expense over the
three-year term of the cap, which commenced January 3, 1995. Payments received
as a result of the cap are accrued as a reduction of interest expense on the
variable rate debt. In the event the interest rate swap or cap agreements are
terminated early and the related debt remains outstanding, the amounts paid or
received upon the early termination, along with any unamortized premium, will
continue to be amortized over the terms of the original interest rate swap and
cap agreements.
Credit Risk:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of trade receivables and
derivative financial instruments. Credit risk on trade receivables is minimized
as a result of the large and diversified nature of the Company's worldwide
customer base. Although the Company has one significant customer (See Note 14),
there have been no credit losses related to this customer. With respect to its
derivative contracts, the Company is also subject to credit risk of non
performance by counterparties
8
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
and its maximum potential loss may exceed the amount recognized in the financial
statements. The Company controls its exposure to credit risk through credit
approvals, credit limits and monitoring procedures. Collateral is generally not
required for the Company's financial instruments.
Fair Value of Financial Instruments:
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the
balance sheet for cash and cash equivalents approximates its fair value.
Long- and short-term debt: The carrying amounts of the Company's
borrowings under its foreign bank lines of credit, revolving credit
agreement and other variable rate debt approximate their fair value. The
fair value of the Company's senior notes issues (see Note 9) are estimated
using discounted cash flow analysis based on the Company's estimated
current borrowing rate for similar types of borrowing arrangements.
Foreign currency exchange agreements: The fair values of the
Company's foreign currency agreements are estimated based on quoted market
prices of comparable agreements, adjusted through interpolation where
necessary for maturity differences.
Interest rate swap and cap agreements: The fair values of interest
rate swap and cap agreements are the amounts at which they could be
terminated, based on estimates obtained from dealers.
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------- --------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
OF ASSET/ OF ASSET/ OF ASSET/ OF ASSET/
(LIABILITY) (LIABILITY) (LIABILITY) (LIABILITY)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents..................................... $ 17,299 $ 17,299 $ 12,065 $ 12,065
Short-term debt............................................... (33,935) (33,935) (19,302) (19,302)
Long-term debt excluding capital leases....................... (583,019) (578,921) (354,480) (370,322)
Foreign currency exchange agreements.......................... 940 1,629 8,026 8,287
Interest rate swap agreements................................. -- 296 -- (635)
Interest rate cap agreement................................... 170 1 340 18
</TABLE>
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Reclassifications:
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year presentation.
9
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Accounting for Stock-Based Compensation:
The Company accounts for its stock compensation arrangements under the
provisions of Accounting Principles Board Opinion No. 25, 'Accounting for Stock
Issued to Employees' ('APB 25') and related pronouncements. Under the provisions
of APB 25, no compensation expense is recognized when stock options are granted
with exercise prices equal to or greater than market value on the date of grant.
Impairment of Long-Lived Assets:
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, 'Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of' ('FAS 121'),
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. FAS 121 also addresses the accounting for long-lived assets
expected to be disposed of. The Company adopted FAS 121 in the fourth quarter of
1995. The effect of the adoption of FAS 121 is described in Note 3.
2. ACQUISITIONS
During April 1994, the Company purchased substantially all the assets of
Sanborn Manufacturing Company ('Sanborn') in Eden Prairie, Minnesota, a
manufacturer of a broad line of portable and stationary air compressors for
consumer and commercial markets distributed primarily through warehouse clubs,
home centers and mass merchants in North America, and substantially all the
assets and business of Metal Yanes, Ltda. ('Yanes') in Sao Paulo, Brazil, a
manufacturer of camping products, including propane and butane fueled lanterns,
camp stoves, tents, lantern mantles and fuel. The Sanborn and Yanes
acquisitions, which were accounted for under the purchase method of accounting,
were completed for the following consideration: (a) approximately $41,066 in
cash financed through borrowings under the Company Credit Agreement (as defined
in Note 9), (b) assumption of liabilities in the amount of $22,193, and (c) a
note payable of $2,999. During 1995, in connection with the Sanborn acquisition,
the Company entered into a settlement agreement with the predecessor owners
which resolved certain disputes between the parties as well as fulfilled certain
obligations owed and anticipated to be owed by the Company to the predecessor
owners. These anticipated obligations related to a requirement to make
additional payments of up to $4,000 based upon the achievement of certain annual
sales levels during the five year period ending December 31, 1998 by Coleman
Powermate Compressors, Inc. ('Compressors'), the Company's subsidiary that
acquired the Sanborn assets (the 'Sales Agreement'). As a result of the
settlement, goodwill was increased by $3,282. For 1994, approximately $671 was
earned under the terms of the Sales Agreement based on the 1994 sales levels of
Compressors, and this amount was recorded as additional goodwill in 1994. The
results of operations of these businesses have been included in the consolidated
financial statements from the dates of acquisitions.
On November 2, 1994, the Company purchased substantially all the assets of
Eastpak, Inc. and all of the capital stock of M.G. Industries, Inc.
(collectively, 'Eastpak'), a leading designer, manufacturer and distributor of
branded daypacks, sports bags and related products. The Eastpak acquisition,
which was accounted for under the purchase method, was completed for
approximately $57,850 in cash financed through borrowings under the Company
Credit Agreement, and assumption of certain liabilities in the amount of $4,130.
The Company also entered into an agreement with the predecessor owner of Eastpak
to make additional payments based upon the achievement of certain annual sales
levels of Eastpak products and other products substantially similar to the
Eastpak products during the years ended December 31, 1995, 1996, and 1997. For
1995 and 1996, a total of approximately $11,000 was recorded under the terms of
this agreement. An additional amount of up to $12,000 may be earned during the
year ended December 31, 1997. These amounts are recorded as additional goodwill.
10
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS--(CONTINUED)
The results of operations of Eastpak have been included in the consolidated
financial statements from the date of acquisition.
In connection with the final purchase price allocations of the Sanborn and
Eastpak acquisitions, the Company recorded goodwill of approximately $53,000.
The Company is amortizing these amounts over 40 years. The goodwill of
approximately $7,700 associated with the Yanes acquisition was included in the
1995 asset impairment charge of $12,289 related to the Company's operations in
Brazil, which is further discussed in Note 3.
During 1995, the Company purchased all of the outstanding shares of capital
stock of Sierra Corporation of Fort Smith, Inc. ('Sierra'), a manufacturer of
portable outdoor and recreational folding furniture and accessories, and
substantially all of the assets of Active Technologies, Inc. ('ATI'), a
manufacturer of technologically advanced lightweight generators and battery
charging equipment. The aggregate purchase price for these acquisitions was
$19,516 including fees and expenses. These acquisitions were accounted for using
the purchase method of accounting. The purchase price and expenses associated
with these acquisitions exceeded the fair value of net assets acquired by
$11,186 and the excess has been assigned to goodwill and is being amortized over
20 to 30 years on the straight-line basis. In connection with the ATI purchase,
the Company may also be required to record an additional amount of up to $18,750
based on the Company's sales of ATI related products and royalties received by
the Company for licensing arrangements related to ATI patents. For 1995 and
1996, the amounts earned under the terms of this agreement were immaterial.
Amounts earned under the terms of the agreement are recorded as additional
goodwill. The results of operations of these companies on a pro forma basis as
if their acquisitions had occurred at the beginning of 1995 and 1994,
respectively, individually and in the aggregate were not significant to the
Company.
On January 2, 1996, the Company purchased substantially all the assets and
assumed certain liabilities of Seatt Corporation ('Seatt'), a leading designer,
manufacturer and distributor of safety and security related electronic products
for residential and commercial applications. The Seatt acquisition, which was
accounted for under the purchase method, was completed for approximately $65,300
including fees and expenses. The results of operations of Seatt have been
included in the consolidated financial statements from the date of acquisition.
In connection with the purchase price allocation of the Seatt acquisition, the
Company recorded goodwill of approximately $38,800. The Company is amortizing
this amount over 40 years on the straight-line method.
On February 28, 1996, the Company and Butagaz S.N.C. ('Butagaz'), a
subsidiary of Societe de Petroles Shell S.A., jointly announced they had entered
into an agreement (the 'Share Purchase Agreement') in connection with the sale
to Coleman of approximately 70% of the outstanding shares of Application des
Gaz, S.A. ('ADG' or 'Camping Gaz'). Camping Gaz is a leading manufacturer and
distributor of camping appliances in Europe. On June 24, 1996, Coleman commenced
a public tender offer for the purchase of all the publicly traded outstanding
shares of ADG, or approximately 30% of the outstanding shares. The tender offer
period expired in July 1996 with approximately 94% of the outstanding publicly
traded shares of ADG tendered for purchase. The Company completed the necessary
steps to acquire the remaining publicly held stock during the third quarter of
1996. The cost of acquiring all the shares of ADG was approximately $100,000
including fees and expenses.
The acquisition of Camping Gaz is being accounted for under the purchase
method. In connection with the allocation of purchase price to the fair values
of assets acquired and liabilities assumed, the Company recorded goodwill of
approximately $84,200, which is being amortized over 40 years on the
straight-line method. The Company also recognized liabilities in the amount of
$21,898 representing severance and other termination benefits for production and
administrative employees of Camping Gaz who will be terminated. The Company paid
termination costs of approximately $4,385 during 1996 and anticipates all
remaining termination costs will be paid during 1997.
11
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS--(CONTINUED)
The Company has included the results of operations of Camping Gaz in the
consolidated financial statements from March 1, 1996, the date on which the
Company obtained control of Camping Gaz, and has recognized minority interest
related to the publicly traded shares for the period March 1, 1996 through June
30, 1996.
The following summarized, unaudited pro forma results of operations for the
years ended December 31, 1996 and 1995 assume the acquisition of Seatt and the
acquisition of all the outstanding shares of Camping Gaz occurred as of the
beginning of the respective periods. The pro forma results include certain
adjustments, primarily reflecting increased amortization and interest expense
and a lower income tax provision, and are not necessarily indicative of what the
results of operations would have been had the Seatt and Camping Gaz acquisitions
occurred at the beginning of the respective periods. Moreover, the pro forma
information is not intended to be indicative of future results of operations.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Net revenues................................................................ $1,246,370 $1,193,295
(Loss) earnings before extraordinary item................................... (41,407) 39,153
Net (loss) earnings......................................................... (42,054) 38,366
(Loss) earnings per common share:
(Loss) earnings before extraordinary item................................. $ (0.78) $ 0.73
Net (loss) earnings......................................................... (0.79) 0.72
</TABLE>
3. RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CHARGES
During 1996, the Company recorded restructuring and certain other charges
totaling $52,516, net of tax. The restructuring charges total $45,086, net of
tax, and consist of charges to a) integrate the Camping Gaz and Coleman
operations into a single global recreation products business, b) exit the low
end electric pressure washer business, c) exit a portion of the Company's
battery powered light business and settle certain litigation with respect to
this business, and d) increase the valuation reserve for certain foreign
deferred income tax assets. Other charges of $7,430, net of tax, relate to
certain asset write-offs and other tax matters. These other charges were
incurred in the Company's normal course of business, although the amounts
involved are higher than similar charges the Company has recorded in prior
periods. Cost of sales includes a pre-tax charge of $44,005, selling, general
and administrative expenses includes a pre-tax charge of $30,195, and the
provision for income tax expense includes $21,684 of tax benefits resulting from
these charges, net of the effect of an increase in the valuation reserve related
to certain foreign deferred tax assets and other foreign tax charges.
During 1995, in connection with the adoption of FAS 121, the Company
recognized an asset impairment charge of $12,289 related to its Brazilian
operations. The Brazilian operations had not performed to the Company's
expectations since acquisition of this business in April of 1994, and in the
fourth quarter of 1995, the Company initiated actions to reduce the operating
losses in Brazil. These actions included replacing management, increasing
prices, downsizing the manufacturing operations and reducing SG&A and other
expenses. Because of these actions, the Company performed an impairment review
pursuant to the guidelines set forth in FAS 121 and concluded recognition of an
asset impairment charge was appropriate. The basis of the fair values used in
the computation of the charge were appraisals for property and equipment and
estimated discounted cash flows for goodwill. The charge has been included in
the statement of operations under the caption 'Asset Impairment Charge'.
12
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
3. RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CHARGES--(CONTINUED)
During September 1994, the Company restructured its German manufacturing
operations. The German Restructuring included the sale of the low margin plastic
cooler business located in Inheiden, Germany and Loucka, Czech Republic,
including inventory, to a management group. The German Restructuring resulted in
a one-time charge of approximately $17,956 before tax and included severance
costs of $1,541, commitments to third parties of approximately $5,465 and
write-downs of leasehold improvements and other assets to estimated realizable
values aggregating $10,950. As a result of the restructuring, the German work
force was reduced by about 150 employees from a pre-restructuring level of
approximately 250 employees. The restructuring was substantially completed in
1994. In connection with the restructuring, the Company recognized tax benefits
of approximately $10,900 relating to the write-off of the Company's investment
in its German operations. The Company also announced a plan to change from
manufacturing to sourcing for certain textile product lines and to exit the
market for personal flotation devices. This plan resulted in a $500 pre-tax
charge.
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Raw material and supplies....................................................... $ 82,399 $ 57,653
Work-in-process................................................................. 12,878 5,389
Finished goods.................................................................. 192,225 153,194
-------- --------
$287,502 $216,236
-------- --------
-------- --------
</TABLE>
Generally, inventory costs are determined by the FIFO method; however,
approximately 13% and 10% of total inventories at December 31, 1996 and 1995,
respectively, are determined using the last-in, first-out ('LIFO') method. If
such inventories were stated using the FIFO method, such amounts would
approximate the LIFO carrying values.
5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Land and land improvements...................................................... $ 8,772 $ 6,318
Buildings and building improvements............................................. 78,760 67,989
Machinery and equipment......................................................... 194,714 142,941
Construction-in-progress........................................................ 15,519 13,105
-------- --------
297,765 230,353
Accumulated depreciation........................................................ (98,583) (67,662)
-------- --------
$199,182 $162,691
-------- --------
-------- --------
</TABLE>
Depreciation expense was $25,770, $19,142, and $16,793 for the years ended
December 31, 1996, 1995 and 1994, respectively.
13
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
6. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Compensation and related benefits............................................... $ 29,331 $ 14,201
Other........................................................................... 83,575 43,936
-------- --------
$112,906 $ 58,137
-------- --------
-------- --------
</TABLE>
7. OTHER LIABILITIES
Other liabilities consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Pensions and other postretirement benefits........................................ $52,229 $40,240
Other............................................................................. 23,944 7,832
------- -------
$76,173 $48,072
------- -------
------- -------
</TABLE>
8. SHORT-TERM BORROWINGS
The Company maintained foreign bank lines of credit aggregating $119,101,
and $64,375, of which $33,935 and $19,302 were outstanding at December 31, 1996
and 1995, respectively. The weighted average interest rate on amounts borrowed
was approximately 2.4% and 7.1% at December 31, 1996 and 1995, respectively.
Outstanding letters of credit aggregated approximately $32,897 and $40,036
at December 31, 1996 and 1995, respectively.
9. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
7.26% Senior Notes due 2007 (a)................................................. $200,000 $200,000
7.10% Senior Notes due 2006 (b)................................................. 85,000 --
7.25% Senior Notes due 2008 (c)................................................. 75,000 --
Revolving credit facility (d)................................................... 146,350 150,150
Term loan (d)................................................................... 73,478 --
Other........................................................................... 3,785 5,107
-------- --------
583,613 355,257
Less current portion............................................................ 747 1,051
-------- --------
$582,866 $354,206
-------- --------
-------- --------
</TABLE>
- ------------------
(a) On August 8, 1995, the Company completed a private placement issuance and
sale of $200,000 aggregate principal amount of 7.26% Senior Notes due 2007
(the '2007 Notes'). Interest on the 2007 Notes is payable semiannually, and
the principal is payable in annual installments of $40,000 each commencing
August 8, 2003, with a final installment payment of $40,000 due on August
8, 2007. If there is a default, the interest rate will be the greater of
(i) 9.26% or (ii) 2.0% above the prime interest rate.
14
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
9. LONG-TERM DEBT--(CONTINUED)
The 2007 Notes are unsecured and are subject to various restrictive
covenants including, without limitation, requirements for the maintenance
of specified financial ratios and levels of consolidated net worth and
certain other provisions limiting the incurrence of additional debt and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2007 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(b) On June 13, 1996, the Company completed a private placement issuance and
sale of $85,000 aggregate principal amount of 7.10% Senior Notes due 2006
(the '2006 Notes'). Interest on the 2006 Notes is payable semiannually, and
the principal is payable in annual installments of $12,143 each commencing
June 13, 2000, with a final installment payment of $12,143 due on June 13,
2006. If there is a default, the interest rate will be the greater of (i)
9.10% or (ii) 2.0% above the prime interest rate.
The 2006 Notes are unsecured and are subject to various restrictive
covenants including, without limitation, requirements for the maintenance
of specified financial ratios and levels of consolidated net worth and
certain other provisions limiting the incurrence of additional debt and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2006 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(c) On June 13, 1996, the Company completed a private placement issuance and
sale of $75,000 aggregate principal amount of 7.25% Senior Notes due 2008
(the '2008 Notes'). Interest on the 2008 Notes is payable semiannually, and
the principal is payable in annual installments of $15,000 each commencing
June 13, 2004, with a final installment payment of $15,000 due on June 13,
2008. If there is a default, the interest rate will be the greater of (i)
9.25% or (ii) 2.0% above the prime interest rate.
The 2008 Notes are unsecured and are subject to various restrictive
covenants including, without limitation, requirements for the maintenance
of specified financial ratios and levels of consolidated net worth and
certain other provisions limiting the incurrence of additional debt and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2008 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(d) In April 1996, the Company amended its credit agreement to: a) provide a
term loan of French Franc 385,125 ($73,478 at current exchange rates), b)
provide an unsecured revolving credit facility in an amount of $275,000, c)
allow for the Camping Gaz acquisition and d) extend the maturity of the
credit agreement (as amended, the 'Company Credit Agreement'). In
connection with the Company recording the restructuring and other charges
as discussed in Note 3 and lower than expected operating results, the
Company further amended the Company Credit Agreement in October 1996 and
again in March 1997.
The Company Credit Agreement is available to the Company until April 30,
2001. The outstanding loans under the Company Credit Agreement bear
interest at either of the following rates, as selected by the Company from
time to time: (i) the higher of the agent's base lending rate or the
federal funds rate plus .50% or (ii) the London Inter-Bank Offered Rate
('LIBOR') plus a margin ranging from .25% to 2.125% based on the Company's
financial performance. If there is a default, the interest rate otherwise
in effect will be increased by 2% per annum. The Company Credit Agreement
also bears an overall facility fee ranging from .15% to .375% based on the
Company's financial performance.
The Company Credit Agreement contains various restrictive covenants
including, without limitation, requirements for the maintenance of
specified financial ratios, levels of consolidated net worth and profits,
and certain other provisions limiting the incurrence of additional debt,
purchase or redemption of the Company's common stock, issuance of preferred
stock of the Company, and also prohibits the Company from paying any
dividends until on or after January 1, 1999 and limits the amount of
dividends the Company
15
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
9. LONG-TERM DEBT--(CONTINUED)
may pay thereafter. The Company Credit Agreement also provides for a
specific requirement relating to the Company's financial leverage at
December 31, 1997 which, if not achieved, will result in the Company Credit
Agreement becoming secured by the Company's assets. In addition,
substantially all of the shares of the Company's common stock owned by
Coleman Worldwide are pledged to secure indebtedness of Coleman Worldwide
and of its parent, Coleman Holdings Inc. The indentures governing this
indebtedness contain various covenants including a covenant placing certain
limitations on the Company's indebtedness.
The aggregate scheduled amounts of long-term debt maturities in the years
1997 through 2001 are $747, $500, $2,357, $12,207, and $232,005, respectively.
10. INCOME TAXES
The Company is included in the consolidated federal income tax return of
Mafco and certain state tax returns of Mafco or its affiliates. For all periods
presented, federal and state income taxes are provided as if the Company filed
its own income tax returns. The accompanying consolidated balance sheet includes
approximately $21,661 and $2,400 of federal and state income taxes receivable
from affiliate at December 31, 1996 and 1995, respectively.
For financial reporting purposes, (loss) earnings before income taxes,
minority interest and extraordinary item include the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
(Loss) earnings before income taxes, minority interest and
extraordinary item:
Domestic........................................................... $(29,532) $ 78,980 $ 70,602
Foreign............................................................ (20,769) (14,434) (22,375)
-------- -------- --------
$(50,301) $ 64,546 $ 48,227
-------- -------- --------
-------- -------- --------
</TABLE>
Significant components of the provision for income tax (benefit) expense
were as follow:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal............................................................ $ (709) $ 18,415 $ 6,782
State.............................................................. (334) 3,825 1,574
Foreign............................................................ 3,454 3,853 2,248
-------- -------- --------
Total current................................................. 2,411 26,093 10,604
-------- -------- --------
Deferred:
Federal............................................................ (10,686) (3,104) 6,069
State.............................................................. (2,178) (725) 1,114
Foreign............................................................ (474) 2,215 (3,040)
-------- -------- --------
Total deferred................................................ (13,338) (1,614) 4,143
-------- -------- --------
$(10,927) $ 24,479 $ 14,747
-------- -------- --------
-------- -------- --------
</TABLE>
16
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
10. INCOME TAXES--(CONTINUED)
The effective tax rate on (loss) earnings before income taxes, minority
interest and extraordinary item varies from the current statutory federal income
tax rate as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1996 1995
----------------------- -----------------------
<S> <C> <C>
(Benefit) provision at statutory rate................................... (35.0)% 35.0%
State taxes, net........................................................ (4.6) 2.5
Recognition of permanent basis differences related to loss on
restructuring of foreign investment................................... -- --
Nondeductible amortization.............................................. 5.0 2.9
Foreign operations...................................................... 4.3 (0.1)
Valuation allowance..................................................... 7.0 --
Puerto Rico operations.................................................. 0.4 (2.6)
Other, net.............................................................. 1.2 0.2
------ -----
Effective tax rate (benefit) provision.................................. (21.7)% 37.9%
------ -----
------ -----
<CAPTION>
1994
-----------------------
<S> <C>
(Benefit) provision at statutory rate................................... 35.0%
State taxes, net........................................................ 3.6
Recognition of permanent basis differences related to loss on
restructuring of foreign investment................................... (10.3)
Nondeductible amortization.............................................. 3.4
Foreign operations...................................................... (2.5)
Valuation allowance..................................................... --
Puerto Rico operations.................................................. --
Other, net.............................................................. 1.4
------
Effective tax rate (benefit) provision.................................. 30.6%
------
------
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits other than pensions..................................... $12,370 $11,986
Reserves for self-insurance and warranty costs.................................. 6,678 4,777
Pension liabilities............................................................. 8,828 4,942
Inventory....................................................................... 8,245 5,579
Net operating loss carryforwards................................................ 14,875 3,103
Impaired assets................................................................. -- 10,068
Other, net...................................................................... 24,026 5,555
------- -------
Total deferred tax assets.................................................. 75,022 46,010
Valuation allowance............................................................... (7,501) --
------- -------
Net deferred tax assets.................................................... 67,521 46,010
------- -------
Deferred tax liabilities:
Depreciation.................................................................... 18,248 17,611
Other, net...................................................................... 7,675 5,125
------- -------
Total deferred tax liabilities............................................. 25,923 22,736
------- -------
Net deferred tax assets................................................. $41,598 $23,274
------- -------
------- -------
</TABLE>
During 1996, the Company increased the valuation allowance related to
certain foreign deferred tax assets due to uncertainties over realization. At
December 31, 1996, the Company had net operating loss carryforwards ('NOL's') of
approximately $42,677 for certain foreign income tax purposes. These NOL's
expire beginning in 1999.
The Company has not provided for taxes on undistributed foreign earnings of
approximately $16,904 at December 31, 1996 as the Company intends to permanently
reinvest these earnings in the future growth of the business. Determination of
the amount of unrecognized deferred U.S. income tax liability is not practicable
because of the complexities associated with its hypothetical calculation.
17
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
11. RELATED PARTY TRANSACTIONS
In 1996, the Company entered into an agreement with an affiliate in which
the Company realized approximately $1,800 of net tax benefits associated with
certain foreign tax net operating loss carry forwards that had not previously
been recognized.
The Company provided management services to certain affiliates pursuant to
a management agreement through June 30, 1995. The consolidated financial
statements reflect the management fees as a reduction in selling, general and
administration expenses. For the years ended December 31, 1995 and 1994,
management fees earned by the Company were $2,400 and $4,800, respectively.
MacAndrews & Forbes provides the Company, at the Company's request, with
certain allocated services, pursuant to a services agreement. These allocated
services are purchased by MacAndrews & Forbes from third party providers on
behalf of the Company. Such services include professional services, such as
legal and accounting, insurance coverage and other services. The Company
reimburses MacAndrews & Forbes for that portion of amounts due to third party
providers as is allocable to the services purchased for and provided to the
Company and reimburses MacAndrews & Forbes for their other out-of-pocket
expenses incurred in connection with providing such services. The Company
participates in certain of Holdings' insurance programs, including health and
life insurance, workers' compensation, and liability insurance. The Company's
expense represents its expected costs for self-insured retentions and premiums
for excess coverage insurance. The expense was $13,923, $9,874, and $10,586 for
the years ended December 31, 1996, 1995 and 1994, respectively.
The Company purchases and sells products from and to certain affiliates.
These amounts are not, in the aggregate, material.
12. EMPLOYEE BENEFIT PLANS
Pension Plans:
Holdings maintains pension and other retirement plans in various forms
covering employees of the Company who meet eligibility requirements. The U.S.
salaried retirement plan is a non-contributory defined benefit plan and provides
benefits based on a formula of each participant's final average pay and years of
service. The U.S. hourly pension plan is a non-contributory defined benefit plan
and contains a flat benefit formula. The salaried and hourly plans provide
reduced benefits for early retirement and the salaried plan takes into account
offsets for Social Security benefits. The Company's policy is to contribute
annually the minimum amount required pursuant to the Employee Retirement Income
Security Act, as amended.
Holdings also has an unfunded excess benefit plan covering certain of the
Company's U.S. employees whose benefits under the plans described above are
limited by provisions of the Internal Revenue Code. The following table
reconciles the funded status of the pension plans with the amount recognized in
the Company's consolidated balance sheets as of the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligation:
Accumulated benefit obligation, including vested benefits of $18,686 and
$15,282..................................................................... $(21,933) $(17,588)
-------- --------
-------- --------
Projected benefit obligation for service rendered to date........................ $(37,092) $(32,284)
Plan assets at fair value........................................................ 16,197 9,696
-------- --------
Projected benefit obligation in excess of plan assets............................ (20,895) (22,588)
Unrecognized prior service cost.................................................. 50 57
Unrecognized net loss............................................................ 7,999 8,869
-------- --------
Accrued pension cost............................................................. (12,846) (13,662)
-------- --------
Amount reflected as an intangible asset.......................................... (288) --
Amount reflected as minimum pension liability adjustment......................... (470) --
-------- --------
Amount reflected as pension liability............................................ $(13,604) $(13,662)
-------- --------
-------- --------
</TABLE>
18
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.5% and 7.25% as of
December 31, 1996 and 1995, respectively. The rate of increase in future
compensation levels reflected in such determination was 5% as of December 31,
1996 and 1995. The expected long-term rate of return on assets was 9% as of
December 31, 1996, 1995 and 1994. Plan assets consist primarily of common stock,
mutual funds and fixed income securities stated at fair market value, and cash
equivalents stated at cost, which approximates fair market value. Unrecognized
items are being recognized over the estimated remaining service lives of active
employees.
Net pension expense includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost-benefits attributed to service during the year................ $3,098 $2,125 $2,051
Interest cost on projected benefit obligation.............................. 2,442 2,004 1,554
Actual return on plan assets............................................... (1,490) (1,347) 391
Net amortization and deferrals............................................. 844 834 (750)
------ ------ ------
Net pension expense........................................................ $4,894 $3,616 $3,246
------ ------ ------
------ ------ ------
</TABLE>
Savings Plan:
In January 1990, Holdings initiated an employee savings plan under Section
401(k) of the Internal Revenue Code. This plan covers substantially all of the
Company's full-time U.S. employees and allows employees to contribute up to 10%
of their salary to the plan. The Company matches, at a 33 1/3% rate, employee
contributions of up to 6% of their salary. Amounts charged to expense for
matching contributions were $1,314, $1,165, and $927 for the years ended
December 31, 1996, 1995 and 1994, respectively.
Retiree Health Care and Life Insurance:
The Company, through Holdings, provides certain unfunded health and life
insurance benefits for certain retired employees. Approximately 53 percent of
the Company's U.S. employees may become eligible for these benefits if they
reach retirement age while working for the Company.
The following table reconciles the funded status of the Company's allocable
portion of Holdings' postretirement benefit plans with the amount recognized in
the Company's consolidated balance sheets as of the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees....................................................................... $ (6,682) $ (6,660)
Fully eligible active plan participants........................................ (3,015) (2,991)
Other active plan participants................................................. (10,664) (10,904)
-------- --------
Total accumulated postretirement benefit obligation.............................. (20,361) (20,555)
Unrecognized transition benefit.................................................. (3,973) (4,239)
Unrecognized prior service cost.................................................. (492) (580)
Unrecognized net (gain) loss..................................................... (976) 936
-------- --------
Net postretirement benefit liability............................................. $(25,802) $(24,438)
-------- --------
-------- --------
</TABLE>
19
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
Net periodic postretirement benefit expense includes the following
components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost-benefits attributed to service during the year................ $1,044 $ 756 $ 901
Interest cost on accumulated postretirement benefit obligation............. 1,454 1,352 1,268
Amortization of transition benefit and other net gains..................... (354) (455) (354)
------ ------ ------
Net periodic postretirement benefit expense................................ $2,144 $1,653 $1,815
------ ------ ------
------ ------ ------
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation ('APBO') was 7.5% and 7.25% as of December 31, 1996 and 1995,
respectively. The assumed health care cost trend rate used in measuring the APBO
at December 31, 1996 was 8% starting in 1997, then gradually decreasing to 5% by
the year 2003 and remaining at that level thereafter. The health care cost trend
rate assumption has a significant effect on the amount of the obligation and
periodic benefit expense reported. An increase in the assumed health care cost
trend rates by 1% in each year would increase the APBO as of December 31, 1996
by approximately 18% and the service and interest cost components of net
periodic postretirement benefit expense by approximately 23%.
Stock Option Plan:
The Company adopted The Coleman Company, Inc. 1992 Stock Option Plan (the
'1992 Stock Option Plan') prior to the effective date of the IPO. During 1993,
the shareholders approved the 1993 Stock Option Plan (the '1993 Stock Option
Plan') and during 1996, the shareholders approved The Coleman Company, Inc. 1996
Stock Option Plan (the '1996 Stock Option Plan'). Under the terms of the 1992
Stock Option Plan, the 1993 Stock Option Plan and the 1996 Stock Option Plan
(collectively the 'Stock Option Plans'), incentive stock options ('ISOs'),
non-qualified stock options ('NQSOs') and stock appreciation rights ('SARs') may
be granted to key employees of the Company and any of its affiliates from time
to time. Stock options have been granted under the Stock Option Plans with
vesting terms and maximum terms of approximately five years and ten years,
respectively. The aggregate number of shares of common stock as to which options
and rights may be granted under the Stock Option Plans may not exceed 4,700,000.
The following table summarizes the stock option transactions under the
Stock Option Plans:
<TABLE>
<CAPTION>
1996 1995 1994
---------------------- ---------------------- ----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding--January 1,................. 2,572,930 $ 15.25 2,310,888 $ 14.03 1,256,540 $ 12.61
Granted:
at market price.................... 294,000 19.73 637,000 17.89 1,272,450 15.13
above market price................. 381,000 15.00 -- -- -- --
Exercised............................. (154,890) 12.17 (325,748) 12.09 (53,362) 10.12
Forfeited............................. (75,410) 14.19 (49,210) 13.14 (164,740) 12.98
--------- --------- ---------
Outstanding--December 31,............... 3,017,630 15.84 2,572,930 15.25 2,310,888 14.03
--------- --------- ---------
--------- --------- ---------
Exercisable--December 31,............... 513,440 13.25 413,526 12.84 488,488 12.15
--------- --------- ---------
--------- --------- ---------
Weighted-average fair value of options
granted during the year:
at market price.................... $ 6.62 $ 7.13
--------- ---------
--------- ---------
above market price................. $ 3.21 --
--------- ---------
--------- ---------
</TABLE>
20
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The following table summarizes information concerning currently outstanding
and exercisable options at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
- ------------------------------------------------------------ OPTIONS EXERCISABLE
WEIGHTED- -------------------------
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- --------------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$9.75-$14.32 770,630 1.59 years $ 13.05 393,440 $ 12.71
$14.33-$15.13 606,000 7.32 14.98 120,000 15.06
$15.14-$16.30 755,000 7.92 16.06 -- --
$16.31-$23.13 886,000 8.86 18.65 -- --
----------- -----------
$9.75-$23.13 3,017,630 6.46 513,440
----------- -----------
----------- -----------
</TABLE>
As described in Note 1, the Company follows APB 25 in accounting for its
stock compensation arrangements. Pro forma financial information regarding net
income and earnings per share is required by FASB Statement No. 123, 'Accounting
for Stock-Based Compensation' ('FAS 123'), and has been determined as if the
Company had accounted for its employee stock options under the fair value method
of FAS 123. The fair value of ISOs and NQSOs granted during 1996 and 1995 were
estimated at the date of grant using the Black-Scholes option pricing model with
the following weighted-average assumptions: risk-free interest rates of 6.11%
and 5.91 % for 1996 and 1995, respectively, dividend yield of 0.0%, volatility
of the expected market price of the Company's common stock of 20.2% and 30.8%
for 1996 and 1995, respectively, and a weighted-average expected life of the
option of 5.5 years.
FAS 123 requires the use of option valuation models, one of which is the
Black-Scholes model, that were not developed for use valuing ISOs or NQSOs.
Further, these option valuation models require the input of highly subjective
assumptions, including the expected stock price volatility. In management's
opinion, based on the above, the existing models do not necessarily provide a
reliable single measure of the fair value of its ISOs or NQSOs.
The following summarized, unaudited pro forma results of operations assume
the estimated fair value of the ISOs and NQSOs granted in 1996 and 1995 is
amortized to expense over the ISOs' and NQSOs' vesting period. FAS 123 does not
require disclosure of the effect of any grants of stock based compensation prior
to 1995 and, therefore, the pro forma effect on net earnings of FAS 123 is not
representative of the pro forma effect on net earnings in future years.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1996 1995
-------- --------
<S> <C> <C>
Pro forma net (loss) earnings................................................. $(42,760) $ 39,009
Pro forma net (loss) earnings per common share................................ $ (0.80) $ 0.73
</TABLE>
13. COMMITMENTS AND CONTINGENCIES
Leases:
The Company leases manufacturing, administrative and sales facilities and
various types of equipment under operating lease agreements expiring through
2007. Rental expense was $14,164, $11,526, and $9,520 for the years ended
December 31, 1996, 1995 and 1994, respectively. Minimum rental commitments under
all noncancellable operating leases with remaining lease terms in excess of one
year from December 31, 1996, aggregated $43,573; such commitments for each of
the five years subsequent to December 31, 1996 are $12,379, $11,135, $6,189,
$4,296, and $2,619, respectively, and $6,955 thereafter.
21
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
13. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
The Company leases its Hastings, Nebraska facility and the corporate office
building in Denver, Colorado under agreements which give the Company the right,
subject to certain qualifications, to renew, terminate, or purchase the
properties. Upon termination, the Company has guaranteed the lessor certain
residual values.
Environmental Matters:
The Company is subject to various environmental regulations and has adopted
an environmental policy designed to ensure the Company operates in full
compliance with applicable environmental regulations and, where appropriate, the
Company's own internal standards. Coleman has also undertaken an environmental
compliance audit program. The Company makes expenditures it believes are
necessary to comply with environmental management practices. Environmental
expenditures that relate to current operations are expensed or capitalized as
appropriate, were not significant in 1996, and are not expected to be
significant in the foreseeable future. Coleman has established reserves for
various environmental matters to cover the estimated costs of the
investigations, remedial activities and litigation.
Other:
The Company and Holdings are involved in various claims and legal actions
arising in the ordinary course of business. The Company believes the ultimate
disposition of these matters is not expected to have a material adverse effect
on the Company's consolidated financial condition or results of operations. The
Company has entered into a cross-indemnification agreement with Holdings
pursuant to which it will indemnify Holdings against all liabilities related to
businesses transferred to the Company, and Holdings will indemnify the Company
against all liabilities of Holdings other than liabilities related to the
businesses transferred to the Company.
The Company is also party to a license agreement which requires payments of
minimum guaranteed royalties aggregating to $8,225 at December 31, 1996; such
commitments for each of the four years remaining under the agreement subsequent
to December 31, 1996 are $933, $1,768, $2,454, and $3,070, respectively.
14. SIGNIFICANT CUSTOMERS
The Company's U.S. and Canadian operations have one significant customer
which accounted for approximately 15%, 19%, and 21% of net revenues in the years
ended December 31, 1996, 1995 and 1994, respectively.
15. CASH FLOW REPORTING
The Company uses the indirect method to report cash flows from operating
activities. Interest paid was $37,608, $23,976, and $11,933 and income taxes
paid were $7,041, $12,246, and $27,411 for the years ended December 31, 1996,
1995 and 1994, respectively. Certain non-cash transactions relating to
acquisitions and the issuance of long-term debt have been reported in Notes 2
and 9.
16. PREFERRED STOCK
The Company has authorized 20,000,000 shares of preferred stock, par value
$0.01 per share. The Company's Certificate of Incorporation authorizes the Board
of Directors to provide for the issuance of a series of preferred stock, to
establish the number of shares of each such series and to fix the designation,
powers, preferences and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof.
22
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
17. GEOGRAPHIC SEGMENTS
The Company designs, manufactures and markets a wide variety of multiuse
products and accessories, which are primarily marketed through independent
retail markets, for the outdoor recreation and hardware consumers. The Company
is a leading manufacturer and marketer of brand name consumer products for the
camping and related outdoor recreation markets in the United States, Canada,
Europe, and Japan.
Operating profit, as indicated below, represents net revenues less
operating expenses and amortization of goodwill. Generally, sales between
geographic areas are made at cost plus a share of operating profit. Identifiable
assets are those used by each geographic segment. Corporate assets are
principally cash, certain property and equipment, income tax refunds
receivable--affiliate, and deferred charges. The geographic segment presentation
has been restated for the years ended December 31, 1995 and 1994 to reflect the
European segment which became a significant segment for the year ended December
31, 1996, primarily due to the impact of the Camping Gaz operations.
Information related to the Company's geographic segments is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net revenues:
Domestic--U.S.................................................. $ 916,260 $716,018 $566,098
--Export............................................... 91,125 90,434 93,917
Europe......................................................... 168,780 52,233 52,461
Other foreign.................................................. 219,350 169,836 121,545
Eliminations................................................... (175,299) (94,947) (82,441)
---------- -------- --------
$1,220,216 $933,574 $751,580
---------- -------- --------
---------- -------- --------
Operating profit:
Domestic (a)................................................... $ 19,915 $120,915 $ 94,773
Europe (b)..................................................... (17,505) (3,241) (23,203)
Other foreign (c).............................................. 4,027 (10,540) 2,222
---------- -------- --------
6,437 107,134 73,792
Corporate expenses............................................... (18,011) (18,043) (12,191)
Interest expense................................................. (38,727) (24,545) (13,374)
---------- -------- --------
(Loss) earnings before income taxes, minority interest and
extraordinary item............................................. $ (50,301) $ 64,546 $ 48,227
---------- -------- --------
---------- -------- --------
Identifiable assets:
Domestic....................................................... $ 782,373 $696,681 $559,599
Europe......................................................... 247,412 70,478 72,908
Other foreign.................................................. 83,033 59,107 54,573
Corporate........................................................ 47,268 18,221 25,185
---------- -------- --------
$1,160,086 $844,487 $712,265
---------- -------- --------
---------- -------- --------
</TABLE>
- ------------------
(a) Includes $49,257 of restructuring and other charges in 1996.
(b) Includes $20,002 of restructuring and other charges in 1996 and $17,956
related to the German Restructuring in 1994.
(c) Includes $4,941 of restructuring and other charges in 1996 and $12,289 of
asset impairment charges in 1995.
23
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
(IN THOUSANDS, EXCEPT SHARE DATA)
18. QUARTERLY FINANCIAL SUMMARIES (UNAUDITED)
Summarized quarterly financial data for 1996 and 1995 are as follow:
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30,(A) DECEMBER 31,(B)(C)
--------- -------- ---------------- ------------------
<S> <C> <C> <C> <C>
1996
Net revenues...................................... $ 273,560 $452,654 $269,607 $224,395
Gross profit...................................... 80,966 137,538 39,894 33,321
Earnings (loss) before extraordinary item......... 15,039 28,046 (48,458) (35,873)
Net earnings (loss)............................... 15,039 27,399 (48,458) (35,873)
Earnings (loss) per share:
Earnings (loss) before extraordinary item...... $ 0.28 $ 0.53 $ (0.91) $ (0.67)
Net earnings (loss)............................... 0.28 0.52 (0.91) (0.67)
1995
Net revenues...................................... $ 224,024 $311,281 $211,817 $186,452
Gross profit...................................... 68,496 99,575 65,932 50,144
Earnings (loss) before extraordinary item......... 13,247 27,594 9,056 (9,830)
Net earnings (loss)............................... 13,247 27,594 8,269 (9,830)
Earnings (loss) per share:
Earnings (loss) before extraordinary item...... $ 0.25 $ 0.52 $ 0.17 $ (0.18)
Net earnings (loss)............................... 0.25 0.52 0.16 (0.18)
</TABLE>
- ------------------
(a) For the third quarter of 1996, the gross profit amount includes $33,567 of
restructuring and other charges. The loss before extraordinary item and net
loss amounts include an after tax charge of $44,495 related to restructuring
and other charges.
(b) For the fourth quarter of 1996, the gross profit amount includes $10,438 of
restructuring and other charges. The loss before extraordinary item and net
loss amounts include an after tax charge of $8,021 related to restructuring
and other charges.
(c) For the fourth quarter of 1995, the gross profit amount includes $7,599 of
income as a result of adopting the provisions of EITF 95-2. The loss before
extraordinary item and net loss amounts include an after tax asset
impairment charge of $9,856 as a result of adopting FAS 121 and an after tax
credit of $3,796 as a result of adopting the provisions of EITF 95-2.
24
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1997
----------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................................................... $ 12,866
Accounts and notes receivable, less allowance of $9,934........................................... 286,278
Inventories....................................................................................... 288,166
Deferred tax assets............................................................................... 39,895
Prepaid assets and other.......................................................................... 16,529
----------
Total current assets........................................................................... 643,734
Property, plant and equipment, net.................................................................. 194,739
Intangible assets related to businesses acquired, net............................................... 334,012
Deferred tax assets and other....................................................................... 32,577
----------
$1,205,062
----------
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and notes payable........................................................................ $ 194,462
Other current liabilities......................................................................... 115,329
----------
Total current liabilities...................................................................... 309,791
Long-term debt...................................................................................... 568,034
Other liabilities................................................................................... 75,711
Minority interest................................................................................... 1,549
Commitments and Contingencies.......................................................................
Stockholders' equity:
Common stock...................................................................................... 532
Additional paid-in capital........................................................................ 169,495
Retained earnings................................................................................. 83,531
Currency translation adjustment................................................................... (3,128)
Minimum pension liability adjustment.............................................................. (453)
----------
Total stockholders' equity..................................................................... 249,977
----------
$1,205,062
----------
----------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
25
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
----------------------
1997 1996
---------- --------
<S> <C> <C>
Net revenues............................................................................ $ 295,464 $273,560
Cost of sales........................................................................... 214,422 192,594
---------- --------
Gross profit............................................................................ 81,042 80,966
Selling, general and administrative expenses............................................ 65,873 46,737
Interest expense, net................................................................... 10,712 8,081
Amortization of goodwill and deferred charges........................................... 2,865 2,247
Other expense, net...................................................................... 271 30
---------- --------
Earnings before income taxes and minority interest...................................... 1,321 23,871
Income tax expense...................................................................... 510 8,832
Minority interest in earnings of Camping Gaz............................................ 112 --
---------- --------
Net earnings............................................................................ $ 699 $ 15,039
---------- --------
---------- --------
Earnings per common share............................................................... $ .01 $ .28
---------- --------
---------- --------
Weighted average common shares outstanding.............................................. 53,231 53,165
---------- --------
---------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
26
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------
1997 1996
-------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings............................................................................. $ 699 $ 15,039
-------- ---------
Adjustments to reconcile net earnings to net cash
used by operating activities:
Depreciation and amortization....................................................... 9,590 7,588
Minority interest in earnings of Camping Gaz........................................ 112 --
Change in assets and liabilities:
Increase in receivables........................................................... (60,454) (84,659)
Increase in inventories........................................................... (5,258) (28,420)
Increase in accounts payable...................................................... 18,655 8,741
Other, net........................................................................ (4,383) (11,145)
-------- ---------
(41,738) (107,895)
-------- ---------
Net cash used by operating activities.................................................... (41,039) (92,856)
-------- ---------
Cash Flows from Investing Activities:
Capital expenditures................................................................... (6,313) (6,866)
Purchases of businesses, net of cash acquired.......................................... -- (60,132)
Proceeds from sale of fixed assets..................................................... 2,126 186
-------- ---------
Net cash used by investing activities.................................................... (4,187) (66,812)
-------- ---------
Cash Flows from Financing Activities:
Net (payments of) proceeds from revolving
credit agreement borrowings......................................................... (8,959) 125,713
Net change in short-term borrowings.................................................... 48,996 29,611
Repayment of long-term debt............................................................ (64) (172)
Debt issuance and refinancing costs.................................................... (718) --
Purchases of Company common stock...................................................... -- (2,329)
Proceeds from stock options exercised.................................................. 197 967
-------- ---------
Net cash provided by financing activities................................................ 39,452 153,790
-------- ---------
Effect of exchange rate changes on cash.................................................. 1,341 629
-------- ---------
Net decrease in cash and cash equivalents................................................ (4,433) (5,249)
Cash and cash equivalents at beginning of the period..................................... 17,299 12,065
-------- ---------
Cash and cash equivalents at end of the period........................................... $ 12,866 $ 6,816
-------- ---------
-------- ---------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
27
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months ended
March 31, 1997 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1996.
2. INVENTORIES
The components of inventories consist of the following:
<TABLE>
<CAPTION>
MARCH 31,
1997
---------
<S> <C>
Raw material and supplies......................................................... $ 83,710
Work-in-process................................................................... 16,036
Finished goods.................................................................... 188,420
---------
$ 288,166
---------
---------
</TABLE>
3. OTHER CHARGES
During the three months ended March 31, 1997, the Company recorded certain
other charges totaling $2,435, net of tax, primarily related to severance costs
associated with recent executive changes.
4. RELATED PARTY TRANSACTION
During the three months ended March 31, 1997, the Company agreed to
purchase an inactive subsidiary from an affiliate for $1,000. The Company
expects to realize certain foreign tax benefits from this transaction in future
years. The Company has accounted for this transaction in a manner similar to a
pooling-of-interests due to the Mafco Holdings Inc. common control over each of
the parties involved in the transaction. The $2,608 excess value of tax benefits
acquired over the purchase price has been accounted for as a capital
contribution.
5. SUBSEQUENT EVENTS
In April 1997, the Company announced its intentions to (i) close its
corporate headquarters in Golden, Colorado, (ii) close its Geneva, Switzerland
international headquarters, (iii) reduce the Company's workforce by
approximately 10% and (iv) close or relocate three domestic factories and close
one international factory. Most of the costs associated with these actions will
be reflected in the results of operations for the quarter ended June 30, 1997.
6. RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, 'Earnings per Share' ('FAS 128'),
which specifies the computation, presentation, and disclosure requirements for
earnings per share with the objective to simplify the computation of earnings
per share. FAS 128 is effective for financial statements for periods ending
after December 15, 1997 and earlier application is not permitted. After the
effective date, all prior period earnings per share data shall be restated to
conform with the provisions of FAS 128. The adoption of FAS 128 is not expected
to have a material impact on the Company's earnings per share data.
28
