-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EHV1ctQQhlR4Fqcucpgrctf6a6RBN+TK1hlXURPQqWx1JERHiVcidHvILUdFAvZR mgGz5biArJpckTeF+c+tHg== 0000912057-97-027916.txt : 19970815 0000912057-97-027916.hdr.sgml : 19970815 ACCESSION NUMBER: 0000912057-97-027916 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLEMAN CO INC CENTRAL INDEX KEY: 0000021627 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 133639257 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00988 FILM NUMBER: 97661662 BUSINESS ADDRESS: STREET 1: 1767 DENVER WEST BLVD STREET 2: SUITE 300 CITY: GOLDEN STATE: CO ZIP: 80401 BUSINESS PHONE: 3032022400 MAIL ADDRESS: STREET 1: 1526 COLE BLVD STREET 2: SUITE 300 CITY: GOLDEN STATE: CO ZIP: 80401 10-Q 1 10-Q Page 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended JUNE 30, 1997 ------------- or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 1-988 ----- THE COLEMAN COMPANY, INC. ------------------------- (Exact name of registrant as specified in its charter) DELAWARE 13-3639257 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2111 E. 37TH STREET NORTH, WICHITA, KANSAS 67219 ------------------------------------------ ----- (Address of principal executive offices) (Zip Code) 1767 DENVER WEST BLVD., GOLDEN, COLORADO 80401 ----------------------------------------- ----- (Former address of principal executive offices) (Zip Code) 316-832-2700 ------------ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirement for the past 90 days. /X/ Yes No ----- ----- The number of shares outstanding of the registrant's par value $.01 common stock was 53,368,726 shares as of August 4, 1997 of which 44,067,520 shares were held by an indirect wholly-owned subsidiary of Mafco Holdings Inc. Exhibit Index on Page 13. Page 2 THE COLEMAN COMPANY, INC. AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION Page ---- Item 1. Condensed Consolidated Financial Statements: Condensed Consolidated Statements of Earnings Three months ended June 30, 1997 and 1996 and Six months ended June 30, 1997 and 1996 3 Condensed Consolidated Balance Sheets June 30, 1997 and December 31, 1996 4 Condensed Consolidated Statements of Cash Flows Six months ended June 30, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 Page 3 THE COLEMAN COMPANY, INC. AND SUBSIDIARIES ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited)
Three Months Six Months Ended June 30, Ended June 30, ----------------------- ----------------------- 1997 1996 1997 1996 --------- --------- --------- --------- Net revenues $ 383,514 $ 452,654 $ 678,978 $ 726,214 Cost of sales 281,601 315,116 496,023 507,710 --------- --------- --------- --------- Gross profit 101,913 137,538 182,955 218,504 Selling, general and administrative expenses 70,111 78,916 135,984 125,653 Interest expense, net 11,027 10,732 21,739 18,813 Amortization of goodwill and deferred charges 2,762 2,897 5,627 5,144 Other expense, net 526 627 797 657 --------- --------- --------- --------- Earnings before income taxes, minority interest and extraordinary item 17,487 44,366 18,808 68,237 Income tax expense 6,637 14,369 7,147 23,201 Minority interest in earnings of Camping Gaz 731 1,951 843 1,951 --------- --------- --------- --------- Earnings before extraordinary item 10,119 28,046 10,818 43,085 Extraordinary loss on early extinguishment of debt, net of income tax benefit -- (647) -- (647) --------- --------- --------- --------- Net earnings $ 10,119 $ 27,399 $ 10,818 $ 42,438 --------- --------- --------- --------- Earnings per share: Earnings before extraordinary item $ 0.19 $ 0.53 $ 0.20 $ 0.81 Extraordinary item -- (0.01) -- (0.01) --------- --------- --------- --------- Net earnings $ 0.19 $ 0.52 $ 0.20 $ 0.80 --------- --------- --------- --------- Weighted average common shares outstanding 53,338 53,190 53,285 53,178 --------- --------- --------- ---------
See Notes to Condensed Consolidated Financial Statements Page 4 THE COLEMAN COMPANY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
June 30, December 31, 1997 1996 ---------- ----------- ASSETS Current assets: Cash and cash equivalents $ 17,047 $ 17,299 Accounts and notes receivable, less allowance of $9,262 in 1997 and $11,512 in 1996 312,238 231,603 Inventories 252,880 287,502 Deferred tax assets 40,040 40,466 Prepaid assets and other 15,734 14,767 ---------- ----------- Total current assets 637,939 591,637 Property, plant and equipment, net 180,161 199,182 Intangible assets related to businesses acquired, net 326,683 341,715 Deferred tax assets and other 31,275 27,552 ---------- ----------- $1,176,058 $1,160,086 ---------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts and notes payable $ 202,559 $ 132,841 Other current liabilities 126,789 113,653 ---------- ----------- Total current liabilities 329,348 246,494 Long-term debt 522,819 582,866 Other liabilities 62,299 76,173 Minority interest 1,904 1,608 Contingencies Stockholders' equity: Common stock 534 532 Additional paid-in capital 170,739 166,690 Retained earnings 93,650 82,832 Currency translation adjustment (4,614) 3,176 Minimum pension liability adjustment (621) (285) ---------- ----------- Total stockholders' equity 259,688 252,945 ---------- ----------- $1,176,058 $1,160,086 ---------- -----------
See Notes to Condensed Consolidated Financial Statements Page 5 THE COLEMAN COMPANY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Six Months Ended June 30, -------------------------- 1997 1996 ----------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 10,818 $ 42,438 ----------- ---------- Adjustments to reconcile net earnings to net cash flows from operating activities: Depreciation and amortization 19,393 17,112 Non-cash restructuring and other charges 9,897 -- Extraordinary loss on early extinguishment of debt -- 1,078 Minority interest in earnings of Camping Gaz 843 1,951 Change in assets and liabilities: Increase in receivables (83,057) (141,964) Decrease (increase) in inventories 27,526 (14,318) Increase in accounts payable 19,992 24,298 Other, net 3,272 23,055 ----------- ---------- (2,134) (88,788) ----------- ---------- Net cash provided (used) by operating activities 8,684 (46,350) ----------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (12,660) (18,803) Purchases of businesses, net of cash acquired -- (158,228) Proceeds from sale of fixed assets 2,815 433 ----------- ---------- Net cash used by investing activities (9,845) (176,598) ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Net payments of revolving credit agreement borrowings (49,959) (31,996) Net change in short-term borrowings 51,594 24,068 Proceeds from issuance of long-term debt -- 235,000 Repayment of long-term debt (2,376) (5,917) Debt issuance and refinancing costs (766) (1,765) Purchases of Company common stock -- (2,329) Proceeds from stock options exercised 1,443 1,655 ----------- ---------- Net cash (used) provided by financing activities (64) 218,716 ----------- ---------- Effect of exchange rate changes on cash 973 3,531 ----------- ---------- Net decrease in cash and cash equivalents (252) (701) Cash and cash equivalents at beginning of the period 17,299 12,065 ----------- ---------- Cash and cash equivalents at end of the period $ 17,047 $ 11,364 ----------- ----------
See Notes to Condensed Consolidated Financial Statements Page 6 1. BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying unaudited condensed consolidated financial statements of The Coleman Company, Inc. ("Coleman" or the "Company") include the accounts of the Company and its subsidiaries after elimination of all material intercompany accounts and transactions, and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 1997 are not necessarily indicative of the results that may be expected in future periods. The balance sheet at December 31, 1996 has been derived from the audited financial statements for that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1996. 2. INVENTORIES The components of inventories consist of the following: June 30, December 31, 1997 1996 --------- ------------ Raw material and supplies $ 67,937 $ 82,399 Work-in-process 11,569 12,878 Finished goods 173,374 192,225 -------- -------- $252,880 $287,502 -------- -------- 3. RESTRUCTURING AND OTHER CHARGES During the six months ended June 30, 1997, the Company recorded restructuring and other charges totaling $22,551 and related tax benefits of $8,569. The second quarter pre-tax restructuring charge of $18,623 related primarily to (i) exiting various low margin products, including pressure washers, (ii) closing and relocating certain administrative and sales offices, and (iii) closing several manufacturing facilities. These restructuring initiatives are expected to be substantially completed within one year. Pre-tax restructuring and other costs totaling $3,928 were recorded, primarily selling, general and administrative ("SG&A") expenses, in the first quarter of 1997 and related primarily to executive severance costs. The costs associated with the second quarter restructuring charge included pre-tax charges of $12,919 related to exiting certain products and facilities of which $10,261 was reflected in cost of sales and $2,658 in SG&A expenses. Included in this restructuring charge was $8,632 of pre-tax charges related primarily to the write down of inventory and fixed assets to estimated net realizable value, and $4,287 of liabilities for other exit costs, including carrying costs of idle facilities and relocation costs, of which $1,134 was paid as of June 30, 1997. Page 7 The costs associated with the second quarter restructuring charge also included $5,704 of termination costs for 389 factory and administrative employees of which $1,141 was reflected in cost of sales and $4,563 in SG&A expenses. As of June 30, 1997, $1,763 of these termination benefits were paid to the 234 employees who were terminated as of that date. During 1996, the Company recorded restructuring charges primarily to (i) integrate the Camping Gaz and Coleman operations, and (ii) exit certain products. Activities associated with the implementation of those plans are substantially completed or are in process at June 30, 1997. Remaining liabilities of approximately $8,500 at June 30, 1997, relate primarily to anticipated returns of discontinued products and to closing certain factory, warehouse and office facilities. 4. RELATED PARTY TRANSACTION As of March 31, 1997, the Company purchased 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 estimated realizable tax benefits acquired over the purchase price has been accounted for as a capital contribution. 5. 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. Page 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS As part of its strategy to improve profitability, the Company has developed a restructuring program including plans to (i) close its executive offices in Golden, Colorado, with most of its administrative functions relocating to its Wichita, Kansas facility, (ii) reduce its work force by approximately 10% or 700 employees, (iii) close or relocate several of its factories, (iv) close its Geneva, Switzerland international headquarters, (v) rationalize its product lines, including a significant reduction in SKUs, and (vi) exit its pressure washer business. In addition, the Company continues to evaluate the various components of its business operations and may, as a result of those ongoing evaluations, decide to sell certain businesses or assets if suitable opportunities arise. Several of the initiatives involved in the Company's restructuring plan, including closing and relocating certain administrative and manufacturing facilities, were substantially completed as of June 30, 1997. The remaining initiatives are expected to be substantially completed within one year. THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE THREE MONTHS ENDED JUNE 30, 1996 Net revenues of $383.5 million in 1997 were $69.1 million or 15.3% less than in 1996 with outdoor recreation products decreasing $48.6 million or 13.7% and hardware products decreasing $20.5 million or 21.2%. The outdoor recreation products revenues decrease primarily reflects reduced sales in Japan due to weak market conditions and a program to reduce wholesaler inventories and the inclusion of Camping Gaz revenues from the date of acquisition in 1996. The hardware products revenues decrease is primarily due to a decline in pressure washer sales as a result of the Company's decision to exit the pressure washer business. Geographically, United States and Canadian revenues decreased 0.3% while international revenues decreased 38.6% reflecting the decline in outdoor recreation products revenues outside the United States as described above. Gross margins of 29.5%, excluding the impact of restructuring and other charges which are more fully described below, decreased as a percent of sales by 0.9 percentage points from 30.4% in 1996. The decrease is primarily the result of the effect of lower sales of high margin products in Japan. Closing several of the Company's factories as part of the Company's restructuring initiatives is intended to reduce manufacturing costs in future periods. SG&A expenses, excluding the impact of restructuring and other charges which are more fully described below, were $62.9 million or 16.4% of sales in 1997 compared to $78.9 million or 17.4% of sales in 1996. The decrease in SG&A expenses reflects reduced promotional and advertising spending, cost reductions from the integration of the Camping Gaz business and timing of the acquisition in 1996, and the restructuring initiatives implemented in 1997. During the second quarter of 1997, the Company recorded restructuring charges totaling $18.6 million of which $11.4 million was reflected in cost of sales and $7.2 million in SG&A expenses. These charges relate to the Company's restructuring initiatives designed to improve profitability. Tax benefits of $7.1 million associated with these charges are reflected in income tax expense. Interest expense was $11.0 million in 1997 compared with $10.7 million in 1996, an Page 9 increase of $0.3 million. This increase was primarily the result of higher interest rates. Minority interest in the second quarter of 1997 reflects the minority interests held by other shareholders in certain subsidiary operations acquired with the Camping Gaz business. On March 1, 1996, the Company acquired control of approximately 70% of Camping Gaz and in July 1996 obtained control of the remaining 30% of Camping Gaz and, accordingly, in the second quarter of 1996, minority interest reflected the approximately 30% share of Camping Gaz held by other shareholders and also the minority interests in certain subsidiary operations acquired with the Camping Gaz business. The Company recorded a provision for income tax expense of $6.6 million or 38.0% of pre-tax earnings in 1997 compared to a provision for income tax expense of $14.4 million or 32.4% of pre-tax earnings in 1996. The increase in the effective tax rate in 1997 as compared to 1996 is primarily due to reduced tax benefits associated with certain of the Company's offshore operations. During the second quarter of 1996, in connection with the renegotiation of its then existing credit agreement, the Company recorded an extraordinary loss of $1.1 million ($0.6 million net of tax) which represented a write-off of the related unamortized financing costs associated with its then existing credit agreement. SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1996 Net revenues of $679.0 million in 1997 were $47.2 million or 6.5% less than in 1996 with outdoor recreation products decreasing $19.4 million or 3.6% and hardware products decreasing $27.8 million or 15.3%. The outdoor recreation products revenues decrease is largely attributable to lower sales in Japan due to weak market conditions and a program to reduce wholesaler inventories. The hardware products revenues decrease is primarily due to a decline in pressure washer sales as a result of the Company's decision to exit the pressure washer business. Geographically, United States and Canadian revenues decreased 3.3% while international revenues decreased 13.1% primarily related to lower sales in Japan. Results in the 1996 period include the Camping Gaz operations from the date of acquisition. Gross margins of 28.6%, excluding the impact of restructuring and other charges which are more fully described below, decreased as a percent of sales by 1.5 percentage points from 30.1% in 1996. The decrease is primarily the result of the effect of lower sales of high margin products in Japan. The closing of several of the Company's factories as part of the Company's restructuring initiatives is intended to reduce manufacturing costs in future periods. SG&A expenses, excluding the impact of restructuring and other charges which are more fully described below, were $124.4 million in 1997 compared to $125.7 million in 1996, a decrease of 1.0%. The inclusion of a full six months of Camping Gaz SG&A costs in the 1997 period increased SG&A expenses, however these increases were more than offset by reduced costs in the Company's various promotional programs and benefits resulting from the integration of Camping Gaz operations and the restructuring initiatives. During the 1997 period, the Company recorded restructuring charges totaling $22.6 million of which $11.0 million was reflected in cost of sales and $11.6 million in SG&A expenses. These charges relate to the Company's restructuring initiatives designed to improve profitability. Tax benefits of $8.6 million associated with these charges are reflected in income tax expense. Interest expense was $21.7 million in 1997 compared with $18.8 million in 1996, an increase of $2.9 million. This increase was primarily the result of higher interest rates and increased borrowings related to the Camping Gaz acquisition. Page 10 Minority interest in the 1997 period reflects the minority interests held by other shareholders in certain subsidiary operations acquired with the Camping Gaz business. On March 1, 1996, the Company acquired control of approximately 70% of Camping Gaz and in July 1996 obtained control of the remaining 30% of Camping Gaz and, accordingly, in the 1996 period, minority interest reflected the approximately 30% share of Camping Gaz held by other shareholders and also the minority interests in certain subsidiary operations acquired with the Camping Gaz business. The Company recorded a provision for income tax expense of $7.1 million or 38.0% of pre-tax earnings in 1997 compared to a provision for income tax expense of $23.2 million or 34.0% of pre-tax earnings in 1996. The increase in the effective tax rate in 1997 as compared to 1996 is primarily due to reduced tax benefits associated with certain of the Company's offshore operations. During the second quarter of 1996, in connection with the renegotiation of its then existing credit agreement, the Company recorded an extraordinary loss of $1.1 million ($0.6 million net of tax) which represented a write-off of the related unamortized financing costs associated with its then existing credit agreement. LIQUIDITY AND CAPITAL RESOURCES The Company's operating activities provided $8.7 million of cash during the six months ended June 30, 1997 and used $46.4 million of cash in the same period a year ago. Net cash provided by operating activities during the 1997 period reflects an increase in receivables and a decrease in inventories as a result of the seasonality of the Company's sales and was also favorably impacted by improved management of receivables and inventories. The Company's net cash used for investing activities was $9.8 million and $176.6 million for the six months ended June 30, 1997 and 1996, respectively. The Company used $158.2 million of cash in the 1996 period for the Camping Gaz and Seatt business acquisitions. The Company's capital expenditures were $12.7 million in the six months ended June 30, 1997. As part of its strategy to improve profitability, the Company has announced several restructuring initiatives. The Company has recognized year-to-date pre-tax charges of $22.6 million associated with these actions and expects to record additional pre-tax charges of approximately $7.0 million during the remaining periods of 1997. These restructuring initiatives are expected to generate cost savings in the future from reductions in personnel, production facilities and administrative overhead. There can be no assurance as to the Company's success in implementing its planned initiatives or the results therefrom, the amount of future charges, or against any adverse impact of the Company's restructuring initiatives. The Company's working capital requirements are currently funded by cash flow from operations and domestic and foreign bank lines of credit. The Company's Amended and Restated Credit Agreement, dated as of August 3, 1995, as amended (the "Company Credit Agreement"), consists of a $275.0 million unsecured revolving credit facility (the "Revolving Credit Facility") and a term loan facility of approximately 385.0 million French Francs (approximately $66.1 million at June 30, 1997 exchange rates). Availability under the Revolving Credit Agreement is reduced by any commercial paper borrowings outstanding. The Company Credit Agreement is available to the Company until April 30, 2001. At June 30, 1997, $173.5 million was available for borrowings under the Company Credit Agreement. The outstanding loans under the Company Credit Agreement bear interest at either of the following rates, as selected by the Company from time to time: (i) the higher of the agent's base lending rate or the federal funds rate plus .50% or (ii) the London Inter-Bank Offered Rate Page 11 ("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 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. For purposes of determining the Company's compliance with certain of such covenants, the Company Credit Agreement excludes, among other things, up to $30.0 million of pre-tax charges in connection with the Company's restructuring initiatives. In addition to the Company Credit Agreement, the Company has private placement notes outstanding totaling $360.0 million (the "Private Placement Notes") which, among other provisions, provide for the Private Placement Notes to become secured if the Company Credit Agreement becomes secured. The Company believes that cash flow from operations and borrowings under the Company Credit Agreement will be sufficient for the Company to meet its current cash operating requirements, including projected capital expenditures, tax sharing payments and other obligations. The Company's ability to borrow under the terms of the Company Credit Agreement is subject to the Company's continuing requirement to meet the various covenants, including without limitation, those described above, and the various covenants in the Private Placement Notes. If the Company fails to meet the various restrictive covenants of the Company Credit Agreement, the Company will need to seek a waiver of such provisions, renegotiate its current Company Credit Agreement, and/or enter into alternative financing arrangements. There is no assurance that the Company would be able to obtain such waiver or that terms and conditions of such renegotiated or alternative agreements, if any, would be as favorable as those now contained in the Company Credit Agreement. All of the shares of the Company's common stock owned by Coleman Worldwide Corporation ("Coleman Worldwide") are pledged to secure indebtedness of Coleman Worldwide and Coleman Escrow Corp. ("Coleman Escrow"). On May 20, 1997, Coleman Escrow issued approximately $732.0 million in principal amount at maturity of Senior Secured Discount Notes due 2001 (the "Escrow Notes"). A portion of the net proceeds from the issuance of the Escrow Notes was contributed to Coleman Holdings Inc. ("Coleman Holdings") and used by it to redeem, on July 15, 1997, its Senior Secured Discount Notes due 1998 (the "Holdings Notes"). A portion of the net proceeds from the issuance of the Escrow Notes was contributed to Coleman Worldwide and used by it to accept for exchange on June 20, 1997, $545.1 million aggregate principal amount at maturity of Liquid Yield Option Notes-TM- due 2013 (the "LYONs"-TM-). Coleman Worldwide plans to redeem the remaining $16.5 million aggregate principal amount at maturity of LYONs on May 27, 1998 with the remaining proceeds from the issuance of the Escrow Notes. Following the redemption of the Holdings Notes, Coleman Holdings was merged into Coleman Escrow and the name of Coleman Escrow was changed to "Coleman Holdings Inc." The LYONs and the Escrow Notes, to which the Company is not a Page 12 party, provide that it is a put right or an event of default, respectively, under these debt instruments if, among other things, the amount of debt incurred by the Company exceeds certain limitations. The Company periodically uses a variety of derivative financial instruments to manage its foreign currency and interest rate exposures. The Company does not speculate on interest rates or foreign currency rates. Instead it uses derivatives when implementing its risk management strategies to reduce the possible effects of these exposures. With respect to foreign currency exposures, the Company principally uses forward and option contracts to reduce risks arising from firm commitments, anticipated intercompany sales transactions and intercompany receivable and payable balances. The Company generally uses interest rate swaps and interest rate caps to fix certain of its variable rate debt. The Company manages credit risk related to these derivative contracts through credit approvals, exposure limits and other monitoring procedures. SEASONALITY The Company's sales generally are highest in the second quarter of the year and lowest in the fourth quarter. As a result of this seasonality, the Company has generally incurred a loss in the fourth quarter. The Company's sales may be affected by weather conditions, especially during the second and third quarters of the year. The Company's annual results are generally dependent on its results during the second quarter. Page 13 FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The forward-looking statements contained in this Form 10-Q are subject to certain risks and uncertainties. Actual results could differ materially from current expectations. Among the factors which could affect the Company's actual results and could cause results to differ from those contained in the forward-looking statements contained herein are (i) difficulties or delays in the reduction of wholesaler inventories in Japan, (ii) unanticipated costs or delays in eliminating low or unprofitable products or businesses or closing facilities or consummating the Company's other restructuring activities, (iii) unanticipated costs or delays in developing new products, (iv) the possibility the Company fails to meet the various restrictive covenants of the Company Credit Agreement, (v) a decrease in the public's interest in camping and related activities, and (vi) adverse weather, market or economic conditions which negatively affect demand for the Company's products. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The 1997 annual meeting of shareholders was held on May 13, 1997. Directors elected at the meeting were Ronald O. Perelman, Donald G. Drapkin, Lawrence M. Jones, Robert J. Lanigan, Jerry W. Levin, Robert S. Miller, John A. Moran, Bruce Slovin, and William H. Spoor, constituting the entire board of directors. All of the directors were elected without opposition. There were no broker nonvotes. Other matters voted on were proposals to (i) ratify the appointment of Ernst & Young LLP as the independent certified public accountants for the Company for 1997, (ii) ratify and adopt The Coleman Company, Inc. Executive Annual Incentive Plan, and (iii) consider a proposal to amend The Coleman Company, Inc. 1993 Stock Option Plan. The tabulation of votes for each matter is as follows: 1. ELECTION OF DIRECTORS Nominees for Against or Directors For Withheld Abstained --------- --- -------- --------- Ronald O. Perelman 51,286,138 60,864 -- Donald G. Drapkin 51,288,398 58,604 -- Lawrence M. Jones 51,286,418 60,584 -- Robert J. Lanigan 51,288,698 58,304 -- Jerry W. Levin 51,288,598 58,404 -- Robert S. Miller 51,288,098 58,904 -- John A. Moran 51,288,698 58,304 -- Bruce Slovin 51,288,698 58,304 -- William H. Spoor 51,288,098 58,904 -- Page 14 Subsequent to being elected by the shareholders, Robert J. Lanigan and Robert S. Miller resigned as directors. Ann D. Jordan and James D. Robinson III were appointed by the remaining directors to fill these vacancies. 2. RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 51,320,591 13,626 12,785 3. RATIFICATION AND ADOPTION OF THE EXECUTIVE ANNUAL INCENTIVE PLAN 49,165,945 185,345 37,616 4. PROPOSAL TO AMEND THE 1993 STOCK OPTION PLAN 51,115,400 190,610 40,992 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit Index Description ------------- ----------- 3.1+ By-Laws of The Coleman Company, Inc., as amended. 10.1*+ The Coleman Company, Inc. 1993 Stock Option Plan, as amended. 10.2* The Coleman Company, Inc. Executive Annual Incentive Plan, incorporated by reference to Exhibit A, pp. 30 to 34, of the Company's 1997 Proxy Statement. 10.3*+ The Coleman Company, Inc. 1992 Stock Option Plan, as amended. 10.4*+ The Coleman Company, Inc. 1996 Stock Option Plan, as amended. 10.5*+ Letter agreement dated as of June 30, 1997 between the Company and Frederick van den Bergh. 27 + Financial Data Schedule --------------- * Management Contracts and Compensatory Plans + Filed herewith (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended June 30, 1997. Page 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE COLEMAN COMPANY, INC. (Registrant) Date: August 13, 1997 By: /s/ Steven F. Kaplan -------------------- ------------------------------- Steven F. Kaplan Executive Vice President and Chief Financial Officer EX-3.1 2 EXH 3.1 BY-LAWS - ------------------------------------------------------------------------------- By-laws THE COLEMAN COMPANY, INC. (A Delaware Corporation) As adopted December 18, 1991 As amended May 13, 1997 - ------------------------------------------------------------------------------- Page 2 TABLE OF CONTENTS ARTICLE I 5 Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 1.1. Offices. . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 2.1. ANNUAL MEETINGS. . . . . . . . . . . . . . . . . . 5 SECTION 2.2. SPECIAL MEETINGS.. . . . . . . . . . . . . . . . . 5 SECTION 2.3. NOTICE OF MEETINGS.. . . . . . . . . . . . . . . . 5 SECTION 2.4. ADJOURNMENTS.. . . . . . . . . . . . . . . . . . . 6 SECTION 2.5. QUORUM AND MANNER OF ACTING. . . . . . . . . . . . 6 SECTION 2.6. ORGANIZATION OF MEETINGS.. . . . . . . . . . . . . 6 SECTION 2.7. ORDER OF BUSINESS. . . . . . . . . . . . . . . . . 6 SECTION 2.8. VOTING.. . . . . . . . . . . . . . . . . . . . . . 7 SECTION 2.9. CONSENT IN LIEU OF MEETING.. . . . . . . . . . . . 7 SECTION 2.10. LIST OF STOCKHOLDERS. . . . . . . . . . . . . . . 8 SECTION 2.11. INSPECTORS. . . . . . . . . . . . . . . . . . . . 8 ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 3.1. GENERAL POWERS.. . . . . . . . . . . . . . . . . . 8 SECTION 3.2. NUMBER AND TERM OF OFFICE. . . . . . . . . . . . . 9 SECTION 3.3. ELECTION.. . . . . . . . . . . . . . . . . . . . . 9 SECTION 3.4. MEETINGS.. . . . . . . . . . . . . . . . . . . . . 9 SECTION 3.5. COMPENSATION . . . . . . . . . . . . . . . . . . .11 SECTION 3.6. RESIGNATION, REMOVAL AND VACANCIES . . . . . . . .11 ARTICLE IV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 SECTION 4.1. NUMBER, APPOINTMENT, TERM OF OFFICE, ETC.. . . . .11 SECTION 4.2. FUNCTIONS AND POWERS.. . . . . . . . . . . . . . .12 SECTION 4.3. RULES. . . . . . . . . . . . . . . . . . . . . . .12 ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 SECTION 5.1. ELECTION AND APPOINTMENT AND TERM OF OFFICE. . . .12 SECTION 5.2. RESIGNATION, REMOVAL AND VACANCIES.. . . . . . . .12 SECTION 5.3. DUTIES AND FUNCTIONS.. . . . . . . . . . . . . . .13 ARTICLE VI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Page 3 Waiver of Notices; Place of Meetings . . . . . . . . . . . . . . . .15 SECTION 6.1. WAIVER OF NOTICES. . . . . . . . . . . . . . . . .15 SECTION 6.2. PLACE OF MEETINGS. . . . . . . . . . . . . . . . .15 ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Execution and Delivery of Documents; Deposits; Proxies; Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 SECTION 7.1. EXECUTION AND DELIVERY OF DOCUMENTS; DELEGATION. .15 SECTION 7.2. DEPOSITS.. . . . . . . . . . . . . . . . . . . . .15 SECTION 7.3. PROXIES IN RESPECT OF STOCK OR OTHER SECURITIES OF OTHER CORPORATIONS. . . . . . . . . . . . . . . . . . .15 SECTION 7.4. BOOKS AND RECORDS. . . . . . . . . . . . . . . . .16 ARTICLE VIII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Certificates; Stock Record; Transfer and Registration; New Certificates; Record Date, etc.. . . . . . . . . . . . . . . . . . .16 SECTION 8.1. CERTIFICATES FOR STOCK.. . . . . . . . . . . . . .16 SECTION 8.2. STOCK RECORD.. . . . . . . . . . . . . . . . . . .16 SECTION 8.3. TRANSFER AND REGISTRATION OF STOCK . . . . . . . .17 SECTION 8.4. NEW CERTIFICATES. . . . . . . . . . . . . . . . .17 SECTION 8.5. REGULATIONS. . . . . . . . . . . . . . . . . . . .17 SECTION 8.6. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD . . . . . . . . . . . . . . . . . . . . . . . . . .17 ARTICLE IX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 SECTION 9.1. SEAL. . . . . . . . . . . . . . . . . . . . . . .18 ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 SECTION 10.1. FISCAL YEAR.. . . . . . . . . . . . . . . . . . .18 ARTICLE XI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 SECTION 11.1. AMENDMENTS. . . . . . . . . . . . . . . . . . . .18 ARTICLE XIII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . .19 SECTION 13.1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. . . . . . . . . . . . . . . . . . . . . . . .19 SECTION 13.2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION. . . . .19 SECTION 13.3. AUTHORIZATION OF INDEMNIFICATION. . . . . . . . .20 SECTION 13.4. GOOD FAITH DEFINED. . . . . . . . . . . . . . . .20 SECTION 13.5. INDEMNIFICATION BY A COURT. . . . . . . . . . . .20 SECTION 13.6. EXPENSES PAYABLE IN ADVANCE.. . . . . . . . . . .21 Page 4 SECTION 13.7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. . . . . . . . . . . . . . . . . . . . . . . .21 SECTION 13.8. INSURANCE.. . . . . . . . . . . . . . . . . . . .21 SECTION 13.9. CERTAIN DEFINITIONS.. . . . . . . . . . . . . . .22 SECTION 13.10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . .22 SECTION 13.11. LIMITATION ON INDEMNIFICATION. . . . . . . . . .22 SECTION 13.12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. . . . .23 ARTICLE XIV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Interested Directors . . . . . . . . . . . . . . . . . . . . . . . .23 SECTION 14.1. INTERESTED DIRECTORS; OUORUM. . . . . . . . . . .23 Page 5 BY-LAWS of THE COLEMAN COMPANY, INC. ARTICLE I OFFICES SECTION 1.1. OFFICES. The Coleman Company, Inc. (the "Corporation") may have offices either within or without the State of Delaware. The registered office of the Corporation and the name of the registered agent of the Corporation are as is set forth in the Certificate of Incorporation of the Corporation, or as may subsequently be or have been changed by resolution of the Board of Directors (the "Board"). ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 2.1. ANNUAL MEETINGS. An annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on such date as the Board may from time to time determine, and at such place and hour as shall be designated by the Board in the notice thereof. SECTION 2.2. SPECIAL MEETINGS. A special meeting of the stockholders for any purpose or purposes may be called at any time by the Board and such meeting shall be held on such date and at such place and hour as shall be designated in the notice thereof. SECTION 2.3. NOTICE OF MEETINGS. Notice of each meeting of the stockholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder of record entitled to notice of, or to vote at, such meeting by delivering a typewritten or printed notice thereof to such stockholder personally or by depositing such notice in the United States mail, postage prepaid, directed to such stockholder at his address as it appears on the stock record of the Corporation. Every such notice shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Page 6 SECTION 2.4. ADJOURNMENTS. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. SECTION 2.5. QUORUM AND MANNER OF ACTING. The presence in person or by proxy of stockholders holding of record a majority of the shares of stock of the Corporation entitled to be voted shall constitute a quorum for the transaction of business at any meeting of the stockholders. In the absence of a quorum at any such meeting or any adjournment or adjournments thereof, a majority in voting interest of those present in person or by proxy and entitled to vote thereat, or, in the absence therefrom of all the stockholders, any officer entitled to preside at, or to act as secretary of, such meeting, may adjourn such meeting from time to time in the manner provided in Section 2.4 until stockholders holding the amount of stock requisite for a quorum shall be present in person or by proxy. The absence from any meeting in person or by proxy of stockholders holding the number of shares of stock of the Corporation required for action upon any given matter, shall not prevent action at such meeting upon any other matter which may properly come before the meeting if there shall be present thereat, in person or by proxy, stockholders holding the number of shares of stock of the Corporation required in respect of such other matter. SECTION 2.6. ORGANIZATION OF MEETINGS. At each meeting of the stockholders, one of the following shall act as chairman of the meeting and preside thereat, in the following order of precedence: (a) the Chairman of the Board, or, if he is not present or if no person holds such office, any officer of the Corporation designated by the Board; or (b) any officer of the Corporation designated by a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat. The person whom the chairman of the meeting shall appoint, shall act as Page 7 secretary of the meeting and keep the minutes thereof. SECTION 2.7. ORDER OF BUSINESS. The order of business at each meeting of the stockholders shall be determined by the chairman of the meeting, but such order of business may be changed by a majority in voting interest of those present in person or by proxy at such meeting and entitled to vote thereat. SECTION 2.8. VOTING. Each stockholder shall, at each meeting of the stockholders, be entitled to one vote in person or by proxy for each share of stock of the Corporation which has voting power on the matter in question held by him and registered in his name on the stock record of the Corporation: (a) on the date fixed pursuant to the provisions of Section 8.6 of Article VIII of these By-laws as the record date for the determination of stockholders who shall be entitled to receive notice of and to vote at such meeting; or (b) if no record date shall have been so fixed! then at the close of business on the day next preceding the day on which notice of the meeting shall be given or, if notice of the meeting shall be waived, at the close of business on the day next preceding the day on which the meeting shall be held, or if no record date for determining stockholders entitled to express consent to corporate action in writing without a meeting shall have been fixed, the day on which the first written consent is expressed. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes. Any vote of stock of the Corporation may be given at any meeting of the stockholders by the person entitled to vote the same in person or by proxy appointed by an instrument in writing delivered to the secretary of the meeting; PROVIDED, however, that no proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. The attendance at any meeting of a stockholder who may theretofore have given a proxy shall not have the effect of revoking the same unless he shall in writing so notify the secretary of the meeting prior to voting of the proxy. At all meetings of stockholders for the election of directors a plurality of the votes cast shall be sufficient to elect. All other elections and questions shall, unless otherwise provided by these bylaws, be decided by the vote of the holders of shares of stock having a majority of the votes which could be cast by the holders of all shares of stock entitled to vote thereon which are present in person or represented by proxy at the meeting. Unless otherwise directed by the chairman of the Page 8 meeting, the vote at any meeting of the stockholders on any question need not be by ballot. on a vote by ballot, each ballot shall be signed by the stockholder voting, or by his proxy if there be such proxy, and shall state the number of shares voted. SECTION 2.9. CONSENT IN LIEU OF MEETING. Anything herein to the contrary notwithstanding, any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken at any annual or special meeting of such stockholders or may be taken without a meeting, without prior notice and without a vote if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and any certificate filed with respect to such matter shall state that such written notice has been given. SECTION 2.10. LIST OF STOCKHOLDERS. It shall be the duty of the officer of the Corporation who shall have charge of the stock ledger of record, either directly or through another officer of the Corporation or agent thereof, to prepare and make, at least 10 days before every meeting of the stockholders, a complete list of the stockholders entitled to vote thereat, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least 10 days prior to the meeting, either at the place where the meeting is to be held or at such other place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting. Such list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. The stock record shall be the only evidence as to who are the stockholders entitled to examine the stock record, such list or the books of the Corporation or to vote in person or by proxy at any meeting of the stockholders. SECTION 2.11. INSPECTORS. Either the Board or, in the absence of a designation of inspectors by the Board, the chairman of the meeting may, in its or his discretion, appoint two or more inspectors, who need not be stockholders, who shall receive and take charge of ballots and proxies and decide all questions relating to the qualification of those asserting the right to vote and the validity of ballots and proxies. In the event of the failure or refusal to serve of any inspector designated by the Board, the chairman of the meeting shall appoint an inspector to act in place of each such inspector designated by the Board. In the absence of a designation of inspectors by the Board Page 9 and the chairman of the meeting, the secretary of the meeting shall perform the duties which would otherwise have been performed by the inspectors. ARTICLE III BOARD OF DIRECTORS SECTION 3.1. GENERAL POWERS. The property, business, affairs and policies of the Corporation shall be managed by or under the direction of the Board. SECTION 3.2. NUMBER AND TERM OF OFFICE. The number of directors which shall constitute the Board shall be one or more persons as such number shall be fixed from time to time by a vote of a majority of the Board. Each of the directors of the Corporation shall hold office until the annual meeting after his election and until his successor shall be elected and shall qualify or until his earlier death or resignation or removal in the manner hereinafter provided. SECTION 3.3. Election. Except as provided in Section 3.6 of this Article III, directors shall be elected by a plurality of the votes cast at annual meetings of stockholders, and each director so elected shall hold office until the next annual meeting and until his successor is duly elected and qualified, or until his earlier death, resignation or removal. Directors need not be stockholders of the Corporation or residents of the State of Delaware. SECTION 3.4. MEETINGS. (a) REGULAR MEETINGS. Regular meetings of the Board or any committee thereof shall be held as the Board or such committee thereof shall from time to time determine. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day, shall be postponed until the next succeeding business day. (b) SPECIAL MEETINGS. Special meetings of the Board, at which any and all business may be transacted, shall be held whenever called by President, Chairman or any two directors. (c) NOTICE OF MEETINGS. No notice of regular meetings of the Board or of any committee thereof or of any adjourned meeting thereof need be Page 10 given. Notice shall be given to each director of each special meeting of the Board or adjournment thereof, including the time and place thereof. Notice of each such meeting shall be mailed to each director, addressed to him at his residence or usual place of business, at least two days before the day on which such meeting is to be held, or shall be sent to him at such place by facsimile, telegraph, cable, wireless or other form of recorded communication, or be delivered personally or by telephone not later than the day before the day on which such meeting is to be held, but notice need not be given to any director who shall attend such meeting. A written waiver of notice, signed by the person entitled thereto, whether before or after the time of the meeting stated therein, shall be deemed equivalent to notice. The purposes of a meeting of the Board or any committee thereof need not be specified in the notice thereof. (d) TIME AND PLACE OF MEETINGS. Regular meetings of the Board or any committee thereof shall be held at such time or times and place or places as the Board or such committee may from time to time determine. Each special meeting of the Board or any committee thereof shall be held at such time and place as the caller or callers thereof may determine. In the absence of such a determination, each regular meeting or special meeting of the Board or any committee thereof shall be held at such time and place as shall be designated in the notices or waiver of notices thereof. (e) QUORUM AND MANNER OF ACTING. A majority of the directors then in office and a majority of the members of any committee shall be present in person at any meeting thereof in order to constitute a quorum for the transaction of business at such meeting and the vote of a majority of the directors present at any such meeting at which a quorum is present shall be necessary for the passage of any resolution or for an act to be the act of the Board or such committee. In the absence of a quorum, a majority of the directors present thereat may adjourn such meeting from time to time until a quorum shall be present thereat. Notice of any adjourned meeting need not be given. (f) ORGANIZATION OF MEETINGS. At each meeting of the Board, the Chairman of the Board or, if he is not present or if no person holds such office, any director chosen by a majority of the directors present thereat shall act as chairman of the meeting and preside thereat. The person whom the chairman of the meeting shall appoint shall act as secretary of such meeting and keep the minutes thereof. The order of business at each meeting of the Board shall be determined by the chairman of such Page 11 meeting. (g) CONSENT IN LIEU OF MEETINGS. Anything herein to the contrary notwithstanding, any action required or permitted to be taken at any meeting of the Board or any committee thereof, may be taken without a meeting if all members of the Board or such committee, as the case may be, consent thereto in a writing or writings and such writing or writings are filed with the minutes of the proceedings of the Board or such committee. (h) ACTION BY COMMUNICATIONS EQUIPMENT. The directors may participate in a meeting of the Board or any committee thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and such participation shall constitute presence in person at such meeting. SECTION 3.5. COMPENSATION Each director, in consideration of his serving as such, shall be entitled to receive from the Corporation such amount per annum and such fees for attendance at meetings of the Board or of any committee, or both, as the Board shall from to time determine. The Board may likewise provide that the Corporation shall reimburse each director or member of a committee for any expenses incurred by him on account of his attendance at any such meeting. Nothing contained in this Section shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 3.6. RESIGNATION, REMOVAL AND VACANCIES. Any director may resign at any time by giving written notice of his resignation to the Board. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, when accepted by the Board. Except as aforesaid, the acceptance of such resignation shall not be necessary to make it effective. Any director may be removed at any time for cause or without cause by vote of the holders of a majority in voting interest of shares then entitled to vote at an election of directors. The vacancy in the Board caused by any such removal may be filled by the stockholders at such meeting or as provided in the next paragraph of these By-laws. Any director may also be removed at any time for cause by vote of a majority of the Board. In the case of any vacancy on the Board or in the case of any newly created Page 12 directorship, a director to fill the vacancy or the newly created directorship for the unexpired portion of the term being filled may be elected by a majority of the directors of the Corporation then in office, though less than a quorum, or by a sole remaining director. The director elected to fill such vacancy shall hold office for the unexpired term in respect of which such vacancy occurred and until his successor shall be elected and shall qualify or until his earlier death or resignation or removal in the manner herein provided. ARTICLE IV COMMITTEES SECTION 4.1. NUMBER, APPOINTMENT, TERM OF OFFICE, ETC. The Board, by resolution or resolutions passed by a majority of the Board, may designate one or more committees, each committee to consist of one or more directors then in office. Each member of any such committee shall continue as such only so long as he remains a director and may be removed at any time, with or without cause, by a majority of the Board. Any vacancy on any committee may be filled at any time by the vote of a majority of the Board. In the absence or in case of the disqualification of a member or members of any such committee, the member or members of such committee present and not disqualified from voting at a meeting of such committee, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at such meeting in place of any absent or disqualified member. SECTION 4.2. FUNCTIONS AND POWERS. Each committee shall have such functions and powers as the Board shall deem advisable and, subject to any limitations or restrictions which may be prescribed by resolution of the Board, if an Executive Committee is designated, it shall have and may exercise all the powers and authority of the Board in the management of the property, business, affairs and policies of the Corporation, including the power and authority to declare dividends and to authorize the issuance of stock of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. SECTION 4.3. RULES. Subject to the provisions of these By-laws, each committee by resolution adopted by a majority of all the members thereof shall fix its rules of procedure. Page 13 ARTICLE V OFFICERS SECTION 5.1. ELECTION AND APPOINTMENT AND TERM OF OFFICE. The Corporation shall have such officers with such titles as shall be stated in a resolution of the Board, and with such duties as shall be given them as hereinafter provided or as may otherwise be specifically given them by the Board, but such officers shall include at least (a) a Chairman of the Board or one or more Vice-Chairmen of the Board or a President or one or more Vice Presidents, or any or all the foregoing, and (b) a Secretary or one or more Assistant Secretaries or a Treasurer or one or more Assistant Treasurers, or any or all of the foregoing. One of such officers shall have the duty to record the proceedings of the meetings of stockholders and directors in a book to be kept for that purpose. Any number of offices may be held by the same person except that at least one person who holds an office referred to in clause (a) of the second preceding sentence shall not be the same as at least one person who holds any office referred to in clause (b) of the second preceding sentence. SECTION 5.2. RESIGNATION, REMOVAL AND VACANCIES. Any officer may resign at any time by giving written notice of his resignation to the Board. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, when accepted by the Board. Except as aforesaid, the acceptance of such resignation shall not be necessary to make it effective. Any officer, agent or employee elected or appointed by the Board may be removed, with or without cause, at any time by the Board. Any agent or employee appointed by an officer may be removed, with or without cause, at any time by such officer. A vacancy in any office may be filled for the unexpired portion of the term in the same manner as provided in these By-laws for election or appointment to such office. SECTION 5.3. DUTIES AND FUNCTIONS. If any of the following offices is created and a person appointed or elected thereto, and unless the Board otherwise provides, such offices and persons shall have the following duties and functions: (a) CHAIRMAN. If a Chairman of the Board is appointed or elected, he shall be a member of the Board; shall preside at meetings of the Board and of the stockholders at which he shall be present; shall perform such duties as are incident to the office of the Chairman of the Board; and shall Page 14 perform such other duties as may from time to time be prescribed by the Board. (b) VICE-CHAIRMAN. If any Vice-Chairman or Vice-Chairmen of the Board are appointed or elected, they shall be members of the Board; shall preside at meetings of the Board and of the stockholders, unless a Chairman of the Board is appointed or elected and is present; shall perform such duties as are incident to the office of the Vice-Chairman of the Board; and shall perform such other duties as may from time to time be prescribed by the Board. (c) CHAIRMAN OF THE EXECUTIVE COMMITTEE. If a Chairman of the Executive Committee is appointed or elected, he shall preside at meetings of the Executive Committee; shall when requested consult with and advise the other officers of the Corporation; and shall perform such other duties as may be agreed upon with them or as the Board or the Executive Committee may from time to time determine. (d) PRESIDENT. If a President is appointed or elected, he shall, subject to the control of the Board, have general charge and management of the property, business and affairs of the Corporation and shall have the direction of and may assign duties to all other officers (other than the Chairman and any Vice-Chairman, if either or both is appointed or elected), agents and employees. He shall preside at meetings of the Board and the stockholders unless a Chairman or a Vice-Chairman of the Board is appointed or elected and is present. (e) VICE PRESIDENTS. If any Vice President or Vice Presidents are appointed or elected, they shall have such powers and duties as shall be prescribed by the President, if one is appointed or elected, or the Board. Vice Presidents for this purpose shall include Senior, Executive, Assistant and all other categories or types of Vice Presidents. (f) SECRETARY. If a Secretary is appointed or elected, he shall attend and keep the records of all meetings of the stockholders and the Board in one or more books kept for that purpose; shall give or cause to be given due notice of all meetings in accordance with these By-laws and as required by law; shall notify the several officers of the Corporation of all action taken by the Board concerning matters relating to their duties; shall transmit to the proper officers copies of all contracts and resolutions approved by the Board or any committees of the Board; shall be custodian of the seal of the Corporation and of all contracts, deeds, documents and other corporate papers, records (except accounting records) and indicia of title to properties owned by the Corporation as shall not be committed to Page 15 the custody of another officer by the President, if one is appointed or elected, or the Board; shall affix or cause to be affixed the seal of the Corporation to instruments requiring the same when the same have been signed on behalf of the Corporation by a duly authorized officer; shall perform all duties and have all powers incident to the office of Secretary; and shall perform such other duties as shall be assigned to him by the President, if one is appointed or elected, or the Board. One or more Assistant Secretaries may be appointed or elected, who shall perform all the duties and have all the powers of the Secretary in the absence of or in case of a failure to appoint or elect or when so delegated by the Secretary, and as the President, if one is appointed or elected, or the Board may direct. (g) TREASURER. If a Treasurer is appointed or elected, he shall perform all duties incident to the office of Treasurer and such other duties as shall be assigned to him by the President, if one is appointed or elected, or the Board. One or more Assistant Treasurers may be appointed or elected who shall perform all the duties and have all the powers of the Treasurer in the absence of or in the case of a failure to appoint or elect or when so delegated by the Treasurer, and as the President, if one is appointed or elected, or the Board may direct. (h) CONTROLLER. If a Controller is appointed or elected, he shall perform all the duties incident to the office of Controller and such other duties as may be assigned to him by the President, if one is appointed or elected, or the Board. One or more Assistant Controllers may be appointed or elected who shall perform all the duties and have all the powers of the Controller in the absence of or in the case of a failure to appoint or elect or when so delegated by the Controller, and as the President, if one is appointed or elected, or the Board may direct. Page 16 ARTICLE VI WAIVER OF NOTICES; PLACE OF MEETINGS SECTION 6.1. WAIVER OF NOTICES. Anything herein to the contrary notwithstanding, whenever notice is required to be given to any director or member of a committee or stockholder, a waiver thereof in writing, signed by the person entitled to such notice shall be deemed equivalent to notice, whether given before or after the time specified therein and, in the case of a waiver of notice of a meeting, whether or not such waiver specifies the purpose of or business to be transacted at such meeting. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, and does so object. SECTION 6.2. PLACE OF MEETINGS. Any meeting of the stockholders, the Board or any committee may be held within or without the State of Delaware. ARTICLE VII EXECUTION AND DELIVERY OF DOCUMENTS; DEPOSITS; PROXIES; BOOKS AND RECORDS SECTION 7.1. EXECUTION AND DELIVERY OF DOCUMENTS; DELEGATION. The Board shall designate the officers, employees and agents of the Corporation who shall have power to execute and deliver deeds, contracts, mortgages, bonds, debentures, checks, drafts and other orders for the payment of money and other documents for and in the name of the Corporation and may authorize such officers, employees and agents to delegate such power (including authority to redelegate) by written instrument to other officers, employees or agents of the Corporation. Such delegation may be by resolution or otherwise and the authority granted shall be general or confirmed to specific matters, all as the Board may determine. In the absence of such designation referred to in the first sentence of this Section, the officers of the Corporation shall have such power so referred to, to the extent incident to the normal performance of their duties. SECTION 7.2. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation or otherwise as the Board or any officer of the Corporation to whom power in that respect shall have been delegated by the Board shall select. Page 17 SECTION 7.3. PROXIES IN RESPECT OF STOCK OR OTHER SECURITIES OF OTHER CORPORATIONS. Unless otherwise provided by the Board, any officer of the Corporation shall have the authority from time to time to appoint an agent or agents of the Corporation to exercise in the name and on behalf of the Corporation the powers and rights which the Corporation may have as the holder of stock or other securities in any other corporation, to vote or consent in respect of such stock or securities and to execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, such written proxies, powers of attorney or other instruments as he may deem necessary or proper in order that the Corporation may exercise such powers and rights. Such officer may instruct any person or persons appointed as aforesaid as to the manner of exercising such powers and rights. SECTION 7.4. BOOKS AND RECORDS. The books and records of the Corporation may be kept at such places within or without the State of Delaware as the proper officers of the Corporation may from time to time determine. ARTICLE VIII CERTIFICATES; STOCK RECORD; TRANSFER AND REGISTRATION; NEW CERTIFICATES; RECORD DATE, ETC. SECTION 8.1. CERTIFICATES FOR STOCK. Every holder of stock of the Corporation shall be entitled to have a certificate certifying the number of shares owned by him in the Corporation and designating the class of stock to which such shares belong, which shall otherwise be in such form as the Board shall prescribe. Each such certificate shall be signed by, or in the name of the Corporation by, the Chairman, a Vice-Chairman, the President or a Vice President of the Corporation and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Corporation. Any of or all such signatures may be facsimiles. In case any officer or authorized agent who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer or authorized agent before such certificate is issued, it may nevertheless be issued by the Corporation with the same effect as if he were such officer or authorized agent at the date of issue. Every certificate surrendered to the Corporation for exchange or transfer shall be canceled and a new certificate or certificates shall not be issued in exchange for any existing certificate until such existing certificate shall have been so canceled, except in cases provided for in Section 8.4 of this Article. SECTION 8.2. STOCK RECORD. A stock record in one or more counterparts shall be kept of the name of the person, firm or corporation owning the stock represented Page 18 by each certificate for stock of the Corporation issued, the number of shares represented by each such certificate, the date thereof and, in the case of cancellation, the date of cancellation. The person in whose name shares of stock stand on the stock record of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation. SECTION 8.3. TRANSFER AND REGISTRATION OF STOCK. (a) TRANSFER. The transfer of stock and certificates of stock which represent the stock of the Corporation shall be governed by Article 8 of Subtitle I of Title 6 of the Delaware Code (as amended from time to time, the "Uniform Commercial Code"). (b) REGISTRATION. Registration of transfers of shares of the Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with an officer of the Corporation, and on the surrender of the certificate or certificates for such shares properly endorsed or accompanied by a stock power duly executed. SECTION 8.4. NEW CERTIFICATES. (a) LOST, STOLEN OR DESTROYED CERTIFICATES. Where a stock certificate has been lost, apparently destroyed or wrongfully taken, the issuance of a new stock certificate or the claims based on such certificate shall be governed by the Uniform Commercial Code. (b) MUTILATED CERTIFICATES. Where the holder of any certificate for stock of the Corporation notifies the Corporation of the mutilation of such certificate within a reasonable time after he has notice of it, the Corporation will issue a new certificate for stock in exchange for such mutilated certificate theretofore issued by it. (c) BOND. The Board may, in its discretion, require the owner of the lost, stolen, destroyed or mutilated certificate to give the Corporation a bond in such sum, limited or unlimited, in such form and with such surety or sureties sufficient to indemnify the Corporation against any claim that may be made against it on account of the loss, theft, destruction or mutilation of any such certificate or the issuance of any such new certificate. SECTION 8.5. REGULATIONS. The Board may make such rules and regulations as it may deem expedient, concerning the issue, transfer and registration of certificates for stock of the Corporation. Page 19 SECTION 8.6. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. A determination of stockholders entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; PROVIDED, HOWEVER, that the Board may fix a new record date for the adjourned meeting. ARTICLE IX SEAL SECTION 9.1. SEAL. The Board shall provide a corporate seal which shall be in the form of a circle and shall bear the full name of the Corporation and the word "Delaware". ARTICLE X FISCAL YEAR SECTION 10.1. FISCAL YEAR. The fiscal year of the Corporation shall end on the last day of December in each year, or such other date as the Board may determine. ARTICLE XI AMENDMENTS SECTION 11.1. AMENDMENTS. These By-laws may be amended, altered or repealed by the vote of a majority of the Board, subject to the power of the holders of a majority of the outstanding stock of the Corporation entitled to vote in respect thereof, by their vote given at an annual meeting or at any special meeting, to amend, alter or repeal any By-law made by the Board. ARTICLE XII SUBJECT TO LAW Page 20 SECTION 12.1. SUBJECT TO LAW. All provisions of these By-laws are subject to requirements of applicable law and the Certificate of Incorporation of the Corporation. Page 21 ARTICLE XIII INDEMNIFICATION SECTION 13.1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 13.3 of this Article XIII, the Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law, any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERS or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. SECTION 13.2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 13.3 of this Article XIII, the Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law, any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or Page 22 such other court shall deem proper. SECTION 13.3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under this Article XIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 13.1 or Section 13.2 of this Article XIII, as the case may be. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. To the extent, however, that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith, without the necessity of authorization in the specific case. SECTION 13.4. GOOD FAITH DEFINED. For purposes of any determination under Section 13.3 of this Article XIII, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is taken in reliance on the records or books of account of the Corporation or another enterprise, or on information supplied to him by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term "another enterprise" as used in this Section 13.4 shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 13.4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 13.1 or 13.2 of this Article XIII, as the case may be. SECTION 13.5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary determination in the specific case under Section 13.3 of this Article XIII, and notwithstanding the absence of any determination thereunder, any director, officer, employee or agent may apply to any court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 13.1 and 13.2 of this Article XIII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director, officer, employee or Page 23 agent is proper in the circumstances because he has met the applicable standards of conduct set forth in Sections 13.1 or 13.2 of this Article XIII, as the case may be. Neither a contrary determination in the specific case under Section 13.3 of this Article XIII nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director, officer, employee or agent seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 13.5 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director, officer, employee or agent seeking person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is taken in reliance on the records or books of account of the Corporation or another enterprise, or on information supplied to him by the officers of the corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term "another enterprise" as used in this Section 13.4 shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 13.4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 13.1 or 13.2 of this Article XIII, as the case may be. SECTION 13.6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a director or officer in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article XIII. SECTION 13.7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The indemnification and advancement of expenses provided by or granted pursuant to this Article XIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any By-Law, agreement, contract, vote of stockholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Section 13.1 and 13.2 of this Article XIII shall be made to the Page 24 fullest extent permitted by law. The provisions of this Article XIII shall not be deemed to preclude the indemnification of any person who is not specified in Section 13.1 or 13.2 of this Article XIII but whom the Corporation has the power or obligation to indemnify under the provisions of the DGCL, or otherwise. SECTION 13.8. INSURANCE. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power or the obligation to indemnify him against such liability under the provisions of this Article XIII. SECTION 13.9. CERTAIN DEFINITIONS. For purposes of this Article XIII references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article XIII with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued and shall include any Corporation (whether or not its separate existence continues) that transfers all or substantially all its assets to the Corporation. For purposes of this Article XIII, references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article XIII. SECTION 13.10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The indemnification and advancement of expenses provided by, or granted pursuant to, Page 25 this Article XIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 13.11. LIMITATION ON INDEMNIFICATION. Notwithstanding anything contained in this Article XIII to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 13.5 hereof), the Corporation shall not be obligated to indemnify any director, officer, employee or agent in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors. SECTION 13.12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article XIII to directors and officers of the Corporation. ARTICLE XIV INTERESTED DIRECTORS SECTION 14.1. INTERESTED DIRECTORS; OUORUM. No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which Page 26 authorizes the contract or transaction. EX-10.1 3 EXHIBIT 10.1 Page 1 FOR STOCK OPTIONS GRANTED AFTER 7/22/93 THE COLEMAN COMPANY, INC. 1993 STOCK OPTION PLAN ------------------------- (As Amended) 1. PURPOSE. This 1993 Stock Option Plan ("Plan") is intended to encourage stock ownership by employees of The Coleman Company, Inc. (the "Company") and employees of Affiliated Corporations (as defined in Section 2(a) hereof), so that they may acquire or increase their proprietary interest in the Company, and to encourage such employees to remain in the employ of the Company and to put forth maximum efforts for the success of the business. It is further intended that options granted by the Committee (as defined herein) pursuant to Section 6 of this Plan shall constitute "incentive stock options" ("Incentive Stock Options") within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder (the "Code"), and options granted by the Committee pursuant to Section 7 of this Plan shall constitute "nonqualified stock options" ("Nonqualified Stock Options"). Options granted under the Plan ("Options") may be accompanied by stock appreciation rights ("Rights"), as hereinafter set forth. Rights may also be granted alone. 2. DEFINITIONS. As used in this Plan, the following words and phrases shall have the meanings indicated: (a) "Affiliate Corporation" or "Affiliate" shall mean any corporation, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Company. (b) "Disability" shall mean an inability of an Optionee (as defined herein) to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve months. (c) "Fair Market Value" per share as of a particular date shall mean (i) the closing sales price per share of Common Stock (as defined herein) on a national securities exchange on the date on which a resolution is adopted to expressly grant an Option, or (ii) if the shares of Common Stock are then traded on an over-the-counter market, the average of the closing bid and asked prices for the shares of Common Stock in such over-the-counter market for the last preceding date on which there was a sale of such common Stock in such market, or (iii) if the shares of Common Stock are Page 2 not then listed on a national securities exchange or traded in an over-the-counter market, such value as the Committee in its discretion may determine. (d) "Parent Corporation" shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of granting an Option, each of such corporations (other than the Company) owns stock possessing fifty percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. (e) "Subsidiary Corporation" shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of granting an Option, each of such corporations other than the last corporation in an unbroken chain owns stock possessing fifty percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. (f) "Ten Percent Stockholder" shall mean an Optionee who, at the time an Incentive Stock Option is granted, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or of its Parent Corporations or Subsidiary Corporations. 3. ADMINISTRATION. The Plan shall be administered by the Management Compensation and Stock Option Committee (the "Committee"), consisting of at least two members of the Board of Directors of the Company (the "Board"), none of whom is or shall have been for at least one year prior to such appointment granted or awarded equity securities pursuant to the Plan or any other plan of the Company or any of its Affiliates entitling the participants therein to acquire stock, stock options or stock appreciation rights of the Company or any of its Affiliates. The Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, the authority to grant Options; to determine which Options shall constitute Incentive Stock Options and which Options shall constitute Nonqualified Stock Options; to determine which Options (if any) shall be accompanied by Rights; to determine the purchase price of the shares of Common Stock covered by each Option (the "Option Price"); to determine the persons to whom, and the time or times at which, Options shall be granted; to determine the number of shares to be covered by each Option; to interpret the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions relating to the Plan; to determine the terms and provisions of the Option Agreements (which need not be identical) entered into in connection with Options granted under the Plan; and to make all other determinations Page 3 deemed necessary or advisable for the administration of the Plan. The Committee may delegate to one or more of its members or to one or more agents such administrative duties as it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. No member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Option or Right granted hereunder. 4. ELIGIBILITY. Options or Rights, or both, may be granted to key employees (including, without limitation, officers, and directors who are employees) of the Company or its present or future Affiliate Corporations, except that Incentive Stock Options shall be granted only to individuals who, on the date of such grant, are employees of the Company or a Parent Corporation or a Subsidiary Corporation. In determining the persons to whom Options and Rights shall be granted and the number of shares to be covered by each Option and any Rights, the Committee shall take into account the duties of the respective persons, their present and potential contributions to the success of the Company and such other factors as the Committee shall deem relevant in connection with accomplishing the purpose of the Plan. A person to whom an Option has been granted hereunder is sometimes referred to herein as an "Optionee." An Optionee shall be eligible to receive more than one grant of an Option during the term of the Plan, but only on the terms and subject to the restrictions hereinafter set forth. 5. STOCK. The stock subject to Options and Rights hereunder shall be shares of the Company's common stock, par value $0.01 per share ("common Stock"). Such shares may, in whole or in part, be authorized but unissued shares or shares that shall have been or that may be reacquired by the Company. The aggregate number of shares of Common Stock as to which Options and Rights may be granted from time to time under the Plan shall not exceed 850,000. The limitation established by the preceding sentence shall be subject to adjustment as provided in Section 8(h) hereof. In the event that any outstanding Option under the Plan for any reason expires or is terminated without having been exercised in full or without having been surrendered in full in connection with the exercise of a Right, the shares of Common Stock allocable to the unexercised portion of such Option shall (unless the Plan shall have been terminated) become available for subsequent grants of Options and Rights under the Plan. Page 4 6. INCENTIVE STOCK OPTIONS. Options granted pursuant to this Section 6 are intended to constitute Incentive Stock Options and shall be subject to the following special terms and conditions, in addition to the general terms and conditions specified in Section 8 hereof. (a) VALUE OF SHARES. The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the shares of Common stock with respect to which Options granted under this Plan and all other option plans of the Company, any Parent Corporation and any Subsidiary Corporation become exercisable for the first time by an Optionee during any calendar year shall not exceed $100,000. (b) TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock Option granted to a Ten Percent Stockholder, (i) the Option Price shall not be less than one hundred ten percent of the Fair Market Value of a share of Common Stock of the Company on the date of grant of such Incentive Stock Option, and (ii) the exercise period shall not exceed five years from the date of grant of such Incentive Stock Options. 7. NONQUALIFIED STOCK OPTIONS. Options granted pursuant to this Section 7 are intended to constitute Nonqualified Stock Options and shall be subject only to the general terms and conditions specified in Section 8 hereof. 8. TERMS AND CONDITIONS OF OPTIONS. Each Option granted pursuant to the Plan shall be evidenced by a written Option Agreement between the company and the Optionee, which agreement shall comply with and be subject to the following terms and conditions: (a) NUMBER OF SHARES. Each Option Agreement shall state the number of shares of Common Stock to which the Option relates. (b) OPTION PRICE. Each Option Agreement shall state the Option Price per share of Common Stock, which, in the case of Incentive Stock Options, shall be not less than one hundred percent of the Fair Market Value of a share of Common Stock of the Company on the date of grant of the Option. The Option Price shall be subject to adjustment as provided in Section 8(h) hereof. The date on which the Committee adopts a resolution expressly granting an Option shall be considered the day on which such Option is granted. (c) MEDIUM AND TIME OF PAYMENT. The Option Price shall be paid in full, at Page 5 the time of exercise, in cash or in shares of Common Stock having a Fair Market Value equal to such Option Price or in a combination of cash and such shares, and may be effected in whole or in part (i) with monies borrowed from the Company pursuant to repayment terms and conditions as shall be determined from time to time by the Committee, in its discretion, separately with respect to each exercise of Options and each Optionee; provided, however, that each such method and time for payment and each such borrowing and terms and conditions of security, if any, and repayment shall be permitted by and be in compliance with applicable law. (d) TERM AND EXERCISE OF OPTIONS. Options shall be exercisable over the exercise period as and at the times and upon the conditions that the Committee may determine, as reflected in the Option Agreement; provided, however, that the Committee shall have the authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as it, in its sole discretion, deems appropriate. The exercise period shall be determined by the Committee; provided, however, that in the case of an Incentive Stock Option, such exercise period shall not exceed ten years from the date of grant of such Incentive Stock Option. The exercise period shall be subject to earlier termination as provided in Section 8(e) and 8(f) hereof. An Option may be exercised, as to any or all full shares of Common Stock as to which the Option has become exercisable, by giving written notice of such exercise to the Committee; provided, however, that an Option may not be exercised at any time as to fewer than one hundred shares (or such number of shares as to which the Option is then exercisable if such number of shares is less than one hundred). (e) TERMINATION OF EMPLOYMENT. Except as provided in this Section 8(e) and in Section 8(f) hereof, an Option may not be exercised unless the Optionee is then in the employ of (1) the Company, (2) an Affiliate Corporation or (3) a corporation issuing or assuming the Option in a transaction to which Section 424(a) of the Code applies or a parent corporation or subsidiary corporation of the corporation described in this Clause 3, and unless the Optionee has the remained continuously so employed since the date of grant of the Option. In the event that the employment of an Optionee shall terminate (other than by reason of death, Disability or retirement), all Options of such Optionee that are exercisable at the time of such termination may, unless earlier terminated in accordance with their terms, be exercised within three months after such termination. Nothing in the Plan or in any Option or Right granted pursuant hereto shall confer upon an individual any right to continue in the employ of the Company or any of its Affiliate Corporations or interfere in any way with the right of the Company or any such Affiliate Corporation to terminate such employment at any time. (f) DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If an Optionee shall die while employed by the Company or an Affiliate Corporation, or within three months after the termination of such Optionee's employment, or if the Optionee's employment shall terminate by reason of Disability or retirement, all Options theretofore granted to such Optionee (to the extent otherwise exercisable) may, unless earlier terminated in Page 6 accordance with their terms, be exercised by the Optionee or by the Optionee's estate or by a person who acquired the right to exercise such Option by bequest or inheritance or otherwise by reason of the death or Disability of the Optionee, at any time within one year after the date of death, Disability or retirement of the Optionee. (g) NONTRANSFERABILITY OF OPTIONS. The Options are nontransferable except (1) by will or by laws of descent and distribution, or (2) as specifically provided below. The Optionee may transfer Nonqualified Stock Options to members of his or her Immediate Family (as defined below) (any such transferee, "Permitted Transferee") if the Optionee does not receive any consideration for the transfer. "Immediate Family" refers to children, grandchildren, and spouse of the Optionee or one or more trusts solely for the benefit of such family members, or partnerships in which such family members, or partnerships in which such family members are the only partners. "Affiliate" refers to any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Optionee. Options may be exercised during the lifetime of the Optionee. Options may be exercised during the lifetime of the Optionee, only by the Optionee, or by the guardian or legal representative of the Optionee or the Permitted Transferee as described in this Section 8(h). The Optionee shall give notice to the Company of any transfer hereunder as soon as practicable following the date of such transfer. Any such Permitted Transferee must agree in writing to be bound by all the provisions of the Option Agreement relating to such transferred option, and the Company must be given a copy of such instrument. (h) EFFECT OF CERTAIN CHANGES. (1) If there is any change in the number of shares of Common Stock through the declaration of stock dividends, or through recapitalization resulting in stock splits, or combinations or exchanges of such shares, the number of shares of Common Stock available for Options and Rights, the number of such shares covered by outstanding Options and Rights, and the price per share of such Options or the applicable market value of Rights, shall be proportionately adjusted by the Committee to reflect any increase or decrease in the number of issued shares of Common Stock; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. (2) In the event of a change in the Common Stock of the Company as presently constituted, which is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any such change shall be deemed to be the Common stock within the meaning of the Plan. (3) To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive, provided that each Incentive Stock Option granted pursuant to this Plan shall not be adjusted Page 7 in a manner that causes such option to fail to continue to qualify as an Incentive Stock Option within the meaning of Section 422 of the Code. (i) RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an Option shall have no rights as a stockholder with respect to any shares covered by the Option until the date of the issuance of a stock certificate to him for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distribution of other rights for which the record date is prior to the date such stock certificate is issued, except as provided in Section 8(h) hereof. (j) OTHER PROVISIONS. The Option Agreements authorized under the Plan shall contain such other provisions, including, without limitations, (i) the granting of Rights, (ii) the imposition of restrictions upon the exercise of an Option, and (iii) in the case of an Incentive Stock Option, the inclusion of any condition not inconsistent with such Options qualifying as an Incentive Stock Option, as the Committee shall deem advisable. 9. STOCK APPRECIATION RIGHTS. (a) GRANT AND EXERCISE. Rights may be granted either alone ("Free Standing Rights") or in conjunction with all or part of any Stock Option granted under the Plan ("Related Rights"). In the case of a Nonqualified Stock Option, Related Rights may be granted either at or after the time of the grant of such Stock Option. In the case of an Incentive Stock Option, Related Rights may be granted only at the time of the grant of the Incentive Stock Option. A Related Right or applicable portion thereof granted with respect to a given Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the related Stock Option, except that, unless otherwise provided by the Committee at the time of grant, a Related Right granted with respect to less than the full number of shares covered by a related Stock Option shall only be reduced if and to the extent that the number of shares covered by the exercise of termination of the related Stock Option exceeds the number of shares not covered by the Right. A Related Right may be exercised by an Optionee, in accordance with paragraph (b) of this Section 9, by surrendering the applicable portion of the related Stock Option. Upon such exercise and surrender, the Optionee shall be entitled to receive an amount determined in the manner prescribed in paragraph (b) of this Section 9. Stock Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the Related Rights have been exercised. (b) TERMS AND CONDITIONS. Rights shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, including the following: Page 8 (1) Rights which are Related Rights shall be exercisable only at such time or times and to the extent that the Options to which they relate shall be exercisable in accordance with the provisions of Sections 6, 7, 8 and this Section 9 of the Plan; provided, however, that any Related Right shall not be exercisable during the first six months of the term of the Related Right, except that this additional limitation shall not apply in the event of death or Disability of the Optionee prior to the expiration of the six- month period. (2) Upon the exercise of a Related Right, an Optionee shall be entitled to receive up to, but not more than, an amount in cash or shares of Common Stock equal in value to the excess of the Fair Market Value as of the date of exercise of one share of Common Stock over the option price per share specified in the related Option multiplied by the number of shares in respect of which the Related Right shall have been exercised, with the Committee having the right to determine the form of payment. (3) Related Rights shall be transferable only when and to the extent that the underlying Option would be transferable under paragraph (g) of Section 8 of the Plan. (4) Upon the exercise of a Related Right, the Option or part thereof to which such Related Right is related shall be deemed to have been exercised for the purpose of the limitation set forth in Section 5 of the Plan on the number of shares of Common Stock to be issued under the Plan, but only to the extent of the number of shares issued under the Related Right. (5) [Not used] (6) Rights which are Free Standing Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at or after grant; provided, however, that Free Standing Rights shall not be exercisable during the first six months of the term of the Free Standing Right, except that this limitation shall not apply in the event of death or Disability of the recipient of the Free Standing Right prior to the expiration of the six-month period. (7) The term of each Free Standing Right shall be fixed by the Committee, but no Free Standing Right shall be exercisable more than ten years after the date such right is granted. (8) Upon the exercise of a Free Standing Right, a recipient shall be entitled to receive up to, but not more than, an amount in cash or shares of Common Stock equal in value to the excess of the Fair Market Value as of the date of exercise Page 9 of one share of Common Stock over the price per share specified in the Free Standing Right (which shall be no less than one hundred percent of the Fair Market Value of the Common Stock on the date of grant) multiplied by the number of shares in respect to which the Right is being exercised, with the Committee having the right to determine the form of payment. (9) Free Standing Rights shall be transferable to the same extent and subject to the same conditions as set forth in Section 8(g) of the Plan. (10) In the event of the termination of employment of a recipient of a Free Standing Right, such Right shall be exercisable to the same extent that an Option would have been exercisable in the event of the termination of employment of an Optionee. 10. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES. If the Committee shall so require, as a condition of exercise, each Optionee shall agree that (a) no later than the date of exercise of any Option or Right granted hereunder, the Optionee will pay to the Company or make arrangements satisfactory to the Committee regarding payment of any Federal, state or local taxes of any kind required by law to be withheld upon the exercise of such Option or Right; and (b) the Company shall, to the extent permitted or required by law, have the right to deduct from any payment of any kind otherwise due to the Optionee, Federal, state and local taxes of any kind required by law to be withheld upon the exercise of such Option or Right. 11. TERM OF PLAN. Options and Rights may be granted pursuant to the Plan from time to time within a period of ten years from the date the Plan is adopted by the Board. 12. AMENDMENT AND TERMINATION OF THE PLAN. The Board at any time and from time to time may suspend, terminate, modify or amend the Plan. Except as provided in Section 8 hereof, no suspension, termination, modification or amendment of the Plan may adversely affect any Option or Right previously granted, unless the written consent of the Optionee is obtained. 13. APPROVAL OF STOCKHOLDERS. The Plan shall take effect upon its adoption by the Board of Directors but shall Page 10 be subject to the approval of the holders of a majority of the issued and outstanding shares of Common Stock of the Company, which approval must occur within twelve months after the date the Plan is adopted by the Board. 14. EFFECT OF HEADINGS. The section and subsection headings contained herein are for convenience only and shall not affect the construction hereof. August 8, 1997 EX-10.3 4 EXHIBIT 10.3 Page 1 THE COLEMAN COMPANY, INC. 1992 STOCK OPTION PLAN AS AMENDED ---------- 1. PURPOSE. This 1992 Stock Option Plan ("Plan") is intended to encourage stock ownership by employees of The Coleman Company, Inc. (the "Company") and employees of Affiliated Corporations (as defined in Section 2(a) hereof), so that they may acquire or increase their proprietary interest in the Company, and to encourage such employees to remain in the employ of the Company and to put forth maximum efforts for the success of the business. It is further intended that options granted by the Committee (as defined herein) pursuant to Section 6 of this Plan shall constitute "incentive stock options" ("Incentive Stock Options") within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder (the "Code"), and options granted by the Committee pursuant to Section 7 of this Plan shall constitute "nonqualified stock options" ("Nonqualified Stock Options"). Options granted under the Plan ("Options") may be accompanied by stock appreciation rights ("Rights"), as hereinafter set forth. Rights may also be granted alone. 2. DEFINITIONS. As used in this Plan, the following words and phrases shall have the meanings indicated: (a) "Affiliate Corporation" or "Affiliate" shall mean any corporation, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Company. (b) "Disability" shall mean an inability of an Optionee (as defined herein) to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve months. (c) "Fair Market Value" per share as of a particular date shall mean (i) the closing sales price per share of Common Stock (as defined herein) on a national securities exchange for the last preceding date on which there was a sale of such Common Stock on such exchange, or (ii) if the shares of Common Stock are then traded on an over-the-counter market, the average of the closing bid and asked prices for the shares of Common Stock in such over-the-counter market for the last preceding date on which there was a sale of such Common Stock in such market, or (iii) if the shares of Common Stock are not then listed on a national securities exchange or traded in an over-the-counter market, such value as the Committee in its discretion may Page 2 determine. (d) "Parent Corporation" shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of granting an Option, each of such corporations (other than the Company) owns stock possessing fifty percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. (e) "Subsidiary Corporation" shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of granting an Option, each of such corporations other than the last corporation in an unbroken chain owns stock possessing fifty percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. (f) "Ten Percent Stockholder" shall mean an Optionee who, at the time an Incentive Stock Option is granted, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or of its Parent Corporations or Subsidiary Corporations. 3. ADMINISTRATION. The Plan shall be administered by the Management Compensation and Stock Option Committee (the "Committee"), consisting of at least two members of the Board of Directors of the Company (the "Board"), none of whom is or shall have been for at least one year prior to such appointment granted or awarded equity securities pursuant to the Plan or any other plan of the Company or any of its Affiliates entitling the participants therein to acquire stock, stock options or stock appreciation rights of the Company or any of its Affiliates. The Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, the authority to grant Options; to determine which Options shall constitute Incentive Stock Options and which Options shall constitute Nonqualified Stock Options; to determine which Options (if any) shall be accompanied by Rights; to determine the purchase price of the shares of Common Stock covered by each Option (the "Option Price"); to determine the persons to whom, and the time or times at which, Options shall be granted; to determine the number of shares to be covered by each Option; to interpret the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the Option Agreements (which need not be identical) entered into in connection with Options granted under the Plan; and to make all other determinations deemed necessary or advisable for the administration of the Plan. The Committee may delegate to one or more of its members or to one or Page 3 more agents such administrative duties as it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. No member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Option or Right granted hereunder. 4. ELIGIBILITY. Options or Rights, or both, may be granted to key employees (including, without limitation, officers, and directors who are employees) of the Company or its present or future Affiliate Corporations, except that Incentive Stock Options shall be granted only to individuals who, on the date of such grant, are employees of the Company or a Parent Corporation or a Subsidiary Corporation. In determining the persons to whom Options and Rights shall be granted and the number of shares to be covered by each Option and any Rights, the Committee shall take into account the duties of the respective persons, their present and potential contributions to the success of the Company and such other factors as the Committee shall deem relevant in connection with accomplishing the purpose of the Plan. A person to whom an Option has been granted hereunder is sometimes referred to herein as an "Optionee." An Optionee shall be eligible to receive more than one grant of an Option during the term of the Plan, but only on the terms and subject to the restrictions hereinafter set forth. 5. STOCK. The stock subject to Options and Rights hereunder shall be shares of the Company's common stock, par value $0.01 per share ("Common Stock"). Such shares may, in whole or in part, be authorized but unissued shares or shares that shall have been or that may be reacquired by the Company. The aggregate number of shares of Common Stock as to which Options and Rights may be granted from time to time under the Plan shall not exceed 500,000. The limitation established by the preceding sentence shall be subject to adjustment as provided in Section 8(h) hereof. In the event that any outstanding Option under the Plan for any reason expires or is terminated without having been exercised in full or without having been surrendered in full in connection with the exercise of a Right, the shares of Common Stock allocable to the unexercised portion of such Options shall (unless the Plan shall have been terminated) become available for subsequent grants of Options and Rights under the Plan. Page 4 6. INCENTIVE STOCK OPTIONS. Options granted pursuant to this Section 6 are intended to constitute Incentive Stock Options and shall be subject to the following special terms and conditions, in addition to the general terms and conditions specified in Section 8 hereof. (a) VALUE OF SHARES. The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the shares of Common Stock with respect to which Options granted under this Plan and all other option plans of the Company, any Parent Corporation and any Subsidiary Corporation become exercisable for the first time by an Optionee during any calendar year shall not exceed $100,000. (b) TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock Option granted to a Ten Percent Stockholder, (i) the Option Price shall not be less than one hundred ten percent of the Fair Market Value of a share of Common Stock of the Company on the date of grant of such Incentive Stock Option, and (ii) the exercise period shall not exceed five years from the date of grant of such Incentive Stock Options. 7. NONQUALIFIED STOCK OPTIONS. Options granted pursuant to this Section 7 are intended to constitute Nonqualified Stock Options and shall be subject only to the general terms and conditions specified in Section 8 hereof. 8. TERMS AND CONDITIONS OF OPTIONS. Each Option granted pursuant to the Plan shall be evidenced by a written Option Agreement between the Company and the Optionee, which agreement shall comply with and be subject to the following terms and conditions: (a) NUMBER OF SHARES. Each Option Agreement shall state the number of shares of Common Stock to which the Option relates. (b) OPTION PRICE. Each Option Agreement shall state the Option Price per share of Common Stock, which, in the case of Incentive Stock Options, shall be not less than one hundred percent of the Fair Market Value of a share of Common Stock of the Company on the date of grant of the Option. The Option Price shall be subject to adjustment as provided in Section 8(h) hereof. The date on which the Committee adopts a resolution expressly granting an Option shall be considered the day on which such Option is granted. (c) MEDIUM AND TIME OF PAYMENT. The Option Price shall be paid in full, at the time of exercise, in case or in shares of Common Stock having a Fair Market Value Page 5 equal to such Option Price or in a combination of cash and such shares, and may be effected in whole or in part (i) with monies borrowed from the Company pursuant to repayment terms and conditions as shall be determined from time to time by the Committee, in its discretion, separately with respect to each exercise of Options and each Optionee; provided, however that each such method and time for payment and each such borrowing and terms and conditions of security, if any, and repayment shall be permitted by and be in compliance with applicable law. (d) TERM AND EXERCISE OF OPTIONS. Options shall be exercisable over the exercise period as and at the times and upon the conditions that the Committee may determine, as reflected in the Option Agreement; provided, however, that the Committee shall have the authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as it, in its sole discretion, deems appropriate. The exercise period shall be determined by the Committee; provided, however, that in the case of an Incentive Stock Option, such exercise period shall not exceed ten years from the date of grant of such Incentive Stock Option. The exercise period shall be subject to earlier termination as provided in Section 8(e) and 8(f) hereof. An Option may be exercised, as to any or all full shares of Common Stock as to which the Option has become exercisable, by giving written notice of such exercise to the Committee; provided, however, that an Option may not be exercised at any time as to fewer than one hundred shares (or such number of shares as to which the Option is then exercisable if such number of shares is less than one hundred). (e) TERMINATION OF EMPLOYMENT. Except as provided in this Section 8(e) and in Section 8(f) hereof, an Option may not be exercised unless the Optionee is then in the employ of (1) the Company, (2) an Affiliate Corporation or (3) a corporation issuing or assuming the Option in a transaction to which Section 424(a) of the Code applies or a parent corporation or subsidiary corporation of the corporation described in this Clause 3, and unless the Optionee has remained continuously so employed since the date of grant of the Option. In the event that the employment of an Optionee shall terminate (other than by reason of death, disability or retirement), all Options of such Optionee that are exercisable at the time of such termination may, unless earlier terminated in accordance with their terms be exercised within three months after such termination. Nothing in the Plan or in any Option or Right granted pursuant hereto shall confer upon an individual any right to continue in the employ of the Company or any of its Affiliate Corporations or interfere in any way with the right of the Company or any such Affiliate Corporation to terminate such employment at any time. (f) DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If an Optionee shall die while employed by the Company or an Affiliate Corporation, or within three months after the termination of such Optionee's employment, or if the Optionee's employment shall terminate by reason of disability or retirement, all Options theretofore granted to such Optionee (to the extent otherwise exercisable) may, unless earlier terminated in accordance with their terms, be exercised by the Optionee or by the Optionee's estate Page 6 or by a person who acquired the right to exercise such Option by bequest or inheritance or otherwise by reason of the death or disability of the Optionee, at any time within one year after the date of death, disability or retirement of the Optionee. (g) NONTRANSFERABILITY OF OPTIONS. The Options are nontransferable except (1) by will or by laws of descent and distribution, or (2) as specifically provided below. The Optionee may transfer Nonqualified Stock Options to members of his or her Immediate Family (as defined below) (any such transferee, "Permitted Transferee") if the Optionee does not receive any consideration for the transfer. "Immediate Family" refers to children, grandchildren, and spouse of the Optionee or one or more trusts solely for the benefit of such family members, or partnerships in which such family members are the only partners. "Affiliate" refers to any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Optionee. Options may be exercised during the lifetime of the Optionee, only by the Optionee, or by the guardian or legal representative of the Optionee or the Permitted Transferee as described in this Section 8(h). The Optionee shall give notice to the Company of any transfer hereunder as soon as practicable following the date of such transfer. Any such Permitted Transferee must agree in writing to be bound by all the provisions of the Option Agreement relating to such transferred option, and the Company must be given a copy of such instrument. (h) EFFECT OF CERTAIN CHANGES. (1) If there is any change in the number of shares of Common Stock through the declaration of stock dividends, or through recapitalization resulting in stock splits, or combinations or exchanges of such shares, the number of shares of Common Stock available for Options and Rights, the number of such shares covered by outstanding Options and Rights, and the price per share of such Options or the applicable market value of Rights, shall be proportionately adjusted by the Committee to reflect any increase or decrease in the number of issued shares of Common Stock; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. (2) In the event of a change in the Common Stock of the Company as presently constituted, which is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any such change shall be deemed to be the Common Stock within the meaning of the Plan. (3) To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive, provided that each Incentive Stock Option granted pursuant to this Plan shall not be adjusted in a manner that causes such option to fail to continue to qualify as Page 7 an Incentive Stock Option within the meaning of Section 422 of the Code. (i) RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an Option shall have no rights as a stockholder with respect to any shares covered by the Option until the date of the issuance of a stock certificate to him for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distribution of other rights for which the record date is prior to the date such stock certificate is issued, except as provided in Section 8(h) hereof. (j) OTHER PROVISIONS. The Option Agreements authorized under the Plan shall contain such other provisions, including, without limitation, (i) the granting of Rights, (ii) the imposition of restrictions upon the exercise of an Option, and (iii) in the case of an Incentive Stock Option, the inclusion of any condition not inconsistent with such Options qualifying as an Incentive Stock Option, as the Committee shall deem advisable. 9. STOCK APPRECIATION RIGHTS. (a) GRANT AND EXERCISE. Rights may be granted either alone ("Free Standing Rights") or in conjunction with all or part of any Stock Option granted under the Plan ("Related Rights"). In the case of a Nonqualified Stock Option, Related Rights may be granted either at or after the time of the grant of such Stock Option. In the case of an Incentive Stock Option, Related Rights may be granted only at the time of the grant of the Incentive Stock Option. A Related Right or applicable portion thereof granted with respect to a given Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the related Stock Option, except that, unless otherwise provided by the Committee at the time of grant, a Related Right granted with respect to less than the full number of shares covered by a related Stock Option shall only be reduced if an to the extent that the number of shares covered by the exercise of termination of the related Stock Option exceeds the number of shares not covered by the Right. A Related Right may be exercised by an Optionee, in accordance with paragraph (b) of this Section 9, by surrendering the applicable portion of the related Stock Option. Upon such exercise and surrender, the Optionee shall be entitled to receive an amount determined in the manner prescribed in paragraph (b) of this Section 9. Stock Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the Related Rights have been exercised. (b) TERMS AND CONDITIONS. Rights shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, including the following: (1) Rights which are Related Rights shall be exercisable only at such Page 8 time or times and to the extent that the Options to which they relate shall be exercisable in accordance with the provisions of Sections 6, 7, 8 and this Section 9 of the Plan; provided, however, that any Related Right shall not be exercisable during the first six months of the term of the Related Right, except that this additional limitation shall not apply in the event of death or disability of the Optionee prior to the expiration of the six- month period. (2) Upon the exercise of a Related Right, an Optionee shall be entitled to receive up to, but not more than, an amount in cash or shares of Common Stock equal in value to the excess of the Fair Market Value as of the date of exercise of one share of Common Stock over the option price per share specified in the related Option multiplied by the number of shares in respect of which the Related Right shall have been exercised, with the Committee having the right to determine the form of payment. (3) Related Rights shall be transferable only when and to the extent that the underlying Option would be transferable under paragraph (g) of Section 8 of the Plan. (4) Upon the exercise of a Related Right, the Option or part thereof to which such Related Right is related shall be deemed to have been exercised for the purpose of the limitation set forth in Section 5 of the Plan on the number of shares of Common Stock to be issued under the Plan, but only to the extent of the number of shares issued under the Related Right. (5) [not used] (6) Rights which are Free Standing Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at or after grant; provided, however, that Free Standing Rights shall not be exercisable during the first six months of the term of the Free Standing Right, except that this limitation shall not apply in the event of death or disability of the recipient of the Free Standing Right prior to the expiration of the six-month period. (7) The term of each Free Standing Right shall be fixed by the Committee, but no Free Standing Right shall be exercisable more than ten years after the date such right is granted. (8) Upon the exercise of a Free Standing Right, a recipient shall be entitled to receive up to, but not more than, an amount in cash or shares of Common Stock equal in value to the excess of the Fair Market Value as of the date of exercise of one share of Common Stock over the price per share specified in the Free Standing Right (which shall be no less than one hundred percent of the Fair Market Value of the Common Stock on the date of grant) Page 9 multiplied by the number of shares in respect to which the Right is being exercised, with the committee having the right to determine the for of payment. (9) Free Standing Rights shall be transferable to the same extent and subject to the same conditions as set forth in Section 8(g) of the Plan. (10) In the event of the termination of employment of a recipient of a Free Standing Right, such Right shall be exercisable to the same extent that an Option would have been exercisable in the event of the termination of employment of an Optionee. 10. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES. If the Committee shall so require, as a condition of exercise, each Optionee shall agree that (a) no later than the date of exercise of any Option or Right granted hereunder, the Optionee will pay to the Company or make arrangements satisfactory to the Committee regarding payment of any Federal, state or local taxes of any kind required by law to be withheld upon the exercise of such Option or Right; and (b) the Company shall, to the extent permitted or required by law, have the right to deduct from any payment of any kind otherwise due to the Optionee, Federal, state and local taxes of any kind required by law to be withheld upon the exercise of such Option or Right. 11. TERM OF PLAN. Options and Rights may be granted pursuant to the Plan from time to time within a period of ten years from the date the Plan is adopted by the Board. 12. AMENDMENT AND TERMINATION OF THE PLAN. The Board at any time and from time to time may suspend, terminate, modify or amend the Plan. Except as provided in Section 8 hereof, no suspension, termination, modification or amendment of the Plan may adversely affect any Option or Right previously granted, unless the written consent of the Optionee is obtained. 13. APPROVAL OF STOCKHOLDERS. The Plan shall take effect upon its adoption by the Board of Directors but shall be subject to the approval of the holders of a majority of the issued and outstanding shares of Common Stock of the Company, which approval must occur within twelve months after the date the Plan is adopted by the Board. Page 10 14. EFFECT OF HEADINGS. The section and subsection headings contained herein are for convenience only and shall not affect the construction hereof. August 8, 1997 EX-10.4 5 EXHIBIT 10.4 Page 1 THE COLEMAN COMPANY, INC. 1996 STOCK OPTION PLAN ---------------------- (As Amended) 1. PURPOSE. This 1996 Stock Option Plan (the "Plan") is intended to encourage stock ownership by employees of The Coleman Company, Inc. (the "Company") and employees of Affiliated Corporations (as defined in Section 2(a) hereof), so that they may acquire or increase their proprietary interest in the Company, and to encourage such employees to remain in the employ of the Company and to put forth maximum efforts for the success of the business. It is further intended that options granted by the Committee (as defined herein) pursuant to Section 6 of this Plan shall constitute "incentive stock options" ("Incentive Stock Options") within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder (the "Code"), and options granted by the Committee pursuant to Section 7 of this Plan shall constitute "nonqualified stock options" ("Nonqualified Stock Options"). Options granted under the Plan ("Options") may be accompanied by stock appreciation rights ("Rights"), as hereinafter set forth. Rights may also be granted alone. 2. DEFINITIONS. As used in this Plan, the following words and phrases shall have the meanings indicated: (a) "Affiliate Corporation" or "Affiliate" shall mean any corporation, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Company. (b) "Disability" shall mean an inability of an Optionee (as defined herein) to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve months. (c) "Change of Control" shall mean that any of the following events will be deemed to have taken place: (i) any "person" (as defined in Section 3(a)(9) of the Securities Page 2 Exchange Act of 1934, as amended (the "Exchange Act"), and as modified in Sections 13(d) and 14(d) of the Exchange Act) other than (A) the Corporation or any of its subsidiaries, (B) any employee benefit plan of the Corporation or one of its subsidiaries, or (C) MacAndrews & Forbes Holdings Inc. or any affiliate thereof (collectively, "MAFCO"), (D) a corporation owned, directly or indirectly, by shareholders of the Corporation in substantially the same proportions as their ownership of the Corporation, or (E) an underwriter temporarily holding securities pursuant to an offering of such securities (a "Person"), becomes a "beneficial owner" (as defined in Rule 13(d)(3) of the Exchange Act), directly or indirectly, of securities of the Corporation representing 20% or more of the shares of common stock of the Corporation then outstanding, and such Person's beneficial ownership level then exceeds the percentage of the Corporation's outstanding shares beneficially owned by MAFCO; (ii) the consummation of any merger or consolidation of the Corporation or one of its subsidiaries with or into another corporation, other than a merger or consolidation which would result in the holders of the voting securities of the Corporation outstanding immediately prior thereto holding securities which represent immediately after such merger or consolidation more than 80% of the combined voting power of the voting securities of the Corporation or the surviving corporation or the parent of such surviving corporation; (iii) the shareholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation's assets; or (iv) a majority of the Board of Directors votes in favor of a decision that a Change of Control has occurred. (d (c) "Fair Market Value" per share as of a particular date shall mean (i) the closing sales price per share of Common Stock (as defined herein) on a specified date which is on or after the date on which a resolution is adopted to expressly grant an Option, or (ii) if the shares of Common Stock are then traded on an over- the-counter market, the average of the closing bid and asked prices for the shares of Common Stock in such over-the-counter market for the last preceding date on which there was a sale of such Common Stock in such market, or (iii) if the shares of Common Stock are not Page 3 then listed on a national securities exchange or traded in an over-the-counter market, such value as the Committee in its discretion may determine. (e) "Parent Corporation" shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of granting an Option, each of such corporations (other than the Company) owns stock possessing fifty percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. (f) "Subsidiary Corporation" shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of granting an Option, each of such corporations other than the last corporation in an unbroken chain owns stock possessing fifty percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. (g) "Ten Percent Stockholder" shall mean an Optionee who, at the time an Incentive Stock Option is granted, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or of its Parent Corporations or Subsidiary Corporations. 3. ADMINISTRATION. The Plan shall be administered by the Management Compensation and Stock Option Committee (the "Committee"), consisting of at least two members of the Board of Directors of the Company (the "Board"), none of whom is or shall have been for at least one year prior to such appointment granted or awarded equity securities pursuant to the Plan or any other plan of the Company or any of its Affiliates entitling the participants therein to acquire stock, stock options or stock appreciation rights of the Company or any of its Affiliates. The Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, the authority to grant Options; to determine which Options shall constitute Incentive Stock Options and which Options shall constitute Nonqualified Stock Options; to determine which Options (if any) shall be accompanied by Rights; to determine the purchase price of the shares of Common Stock covered by each Option (the "Option Price"); to determine the persons to whom, and the time or Page 4 times at which, Options shall be granted; to determine the number of shares to be covered by each Option; to interpret the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions relating to the Plan; to determine the terms and provisions of the Option Agreements (which need not be identical) entered into in connection with Options granted under the Plan; and to make all other determinations deemed necessary or advisable for the administration of the Plan. The Committee may delegate to one or more of its members or to one or more agents such administrative duties as it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. No member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Option or Right granted hereunder. Page 5 4.4 ELIGIBILITY. Options or Rights, or both, may be granted to key employees (including, without limitation, officers and directors who are employees) of the Company or its present or future Affiliate Corporations, except that Incentive Stock Options shall be granted only to individuals who, on the date of such grant, are employees of the Company or a Parent Corporation or a Subsidiary Corporation. In determining the persons to whom Options and Rights shall be granted and the number of shares to be covered by each Option and any Rights, the Committee shall take into account the duties of the respective persons, their present and potential contributions to the success of the Company and such other factors as the Committee shall deem relevant in connection with accomplishing the purpose of the Plan. A person to whom an Option has been granted hereunder is sometimes referred to herein as an "Optionee." An Optionee shall be eligible to receive more than one grant of an Option during the term of the Plan, but only on the terms and subject to the restrictions hereinafter set forth. 5. STOCK. The stock subject to Options and Rights hereunder shall be shares of the Company's common stock, par value $0.01 per share ("Common Stock"). Such shares may, in whole or in part, be authorized but unissued shares or shares that shall have been or that may be reacquired by the Company. The aggregate number of shares of Common Stock as to which Options and Rights may be granted from time to time under the Plan shall not exceed 1,000,000. The limitation established by the preceding sentence shall be subject to adjustment as provided in Section 8(h) hereof. In the event that any outstanding Option under the Plan for any reason expires or is terminated without having been exercised in full or without having been surrendered in full in connection with the exercise of a Right, the shares of Common Stock allocable to the unexercised portion of such Option shall (unless the Plan shall have been terminated) become available for subsequent grants of Options and Rights under the Plan. 6. INCENTIVE STOCK OPTIONS. Options granted pursuant to this Section 6 are intended to constitute Incentive Stock Options and shall be subject to the following special terms and conditions, in addition to the general terms and conditions specified in Section 8 hereof. Page 6 (a) VALUE OF SHARES. The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the shares of Common stock with respect to which Options granted under this Plan and all other option plans of the Company, any Parent Corporation and any Subsidiary Corporation become exercisable for the first time by an Optionee during any calendar year shall not exceed $100,000. (b) TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock Option granted to a Ten Percent Stockholder, (i) the Option Price shall not be less than one hundred ten percent of the Fair Market Value of a share of Common Stock of the Company on the date of grant of such Incentive Stock Option, and (ii) the exercise period shall not exceed five years from the date of grant of such Incentive Stock Options. 7. NONQUALIFIED STOCK OPTIONS. Options granted pursuant to this Section 7 are intended to constitute Nonqualified Stock Options and shall be subject only to the general terms and conditions specified in Section 8 hereof. 8. TERMS AND CONDITIONS OF OPTIONS. Each Option granted pursuant to the Plan shall be evidenced by a written Option Agreement between the company and the Optionee, which agreement shall comply with and be subject to the following terms and conditions: (a) NUMBER OF SHARES. Each Option Agreement shall state the number of shares of Common Stock to which the Option relates. The maximum number of shares that can be granted to an Optionee in a particular calendar year is 150,000 shares. (b) OPTION PRICE. Each Option Agreement shall state the Option Price per share of Common Stock, which, in the case of Incentive Stock Options, shall be not less than one hundred percent of the Fair Market Value of a share of Common Stock of the Company on the date of grant of the Option. The Option Price shall be subject to adjustment as provided in Section 8(h) hereof. The date on which the Committee adopts a resolution expressly granting an Option shall be considered the day on which such Option is granted, unless a subsequent date is specified in such resolution. (c) MEDIUM AND TIME OF PAYMENT. The Option Price shall be paid in full, at the time of exercise, in cash or in shares of Common Stock having a Fair Market Value equal to such Option Price or in a combination of cash and Page 7 such shares, and may be effected in whole or in part (i) with monies borrowed from the Company pursuant to repayment terms and conditions as shall be determined from time to time by the Committee, in its discretion, separately with respect to each exercise of Options and each Optionee; provided, however, that each such method and time for payment and each such borrowing and terms and conditions of security, if any, and repayment shall be permitted by and be in compliance with applicable law. Page 8 (d) TERM AND EXERCISE OF OPTIONS. Options shall be exercisable over the exercise period as and at the times and upon the conditions that the Committee may determine, as reflected in the Option Agreement; provided, however, that the Committee shall have the authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as it, in its sole discretion, deems appropriate. The exercise period shall be determined by the Committee; provided, however, that in the case of an Incentive Stock Option, such exercise period shall not exceed ten years from the date of grant of such Incentive Stock Option. The exercise period shall be subject to earlier termination as provided in Section 8(e) and 8(f) hereof. An Option may be exercised, as to any or all full shares of Common Stock as to which the Option has become exercisable, by giving written notice of such exercise to the Committee; provided, however, that an Option may not be exercised at any time as to fewer than one hundred shares (or such number of shares as to which the Option is then exercisable if such number of shares is less than one hundred). (e) TERMINATION OF EMPLOYMENT. Except as provided in this Section 8(e) and in Section 8(f) hereof, an Option may not be exercised unless the Optionee is then in the employ of (1) the Company, (2) an Affiliate Corporation or (3) a corporation issuing or assuming the Option in a transaction to which Section 424(a) of the Code applies or a parent corporation or subsidiary corporation of the corporation described in this Clause 3, and unless the Optionee has remained continuously so employed since the date of grant of the Option. In the event that the employment of an Optionee shall terminate (other than by reason of death, Disability or retirement), all Options of such Optionee that are exercisable at the time of such termination may, unless earlier terminated in accordance with their terms, be exercised within three months after such termination. Nothing in the Plan or in any Option or Right granted pursuant hereto shall confer upon an individual any right to continue in the employ of the Company or any of its Affiliate Corporations or interfere in any way with the right of the Company or any such Affiliate Corporation to terminate such employment at any time. (f) DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If an Optionee shall die while employed by the Company or an Affiliate Corporation, or within three months after the termination of such Optionee's employment, or if the Optionee's employment shall terminate by reason of Disability or retirement, all Options previously granted to such Optionee, except those that have previously terminated, or those that have been exercised, may be exercised by the Optionee or by the person or persons to whom the Optionee's rights pass, at any time within one year after the date of death, Page 9 Disability or retirement of the Optionee. (g) NONTRANSFERABILITY OF OPTIONS. The Options are nontransferable except (1) by will or by laws of descent and distribution, or (2) as specifically provided below. The Optionee may transfer Nonqualified Stock Options to members of his or her Immediate Family (as defined below) (any such transferee, "Permitted Transferee") if the Optionee does not receive any consideration for the transfer. "Immediate Family" refers to children, grandchildren, and spouse of the Optionee or one or more trusts solely for the benefit of such family members, or partnerships in which such family members are the only partners. "Affiliate" refers to any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Optionee. Options may be exercised during the lifetime of the Optionee, only by the Optionee, or by the guardian or legal representative of the Optionee or the Permitted Transferee as described in this Section 8(h). The Optionee shall give notice to the Company of any transfer hereunder as soon as practicable following the date of such transfer. Any such Permitted Transferee must agree in writing to be bound by all the provisions of the Option Agreement relating to such transferred option, and the Company must be given a copy of such instrument. (h) EFFECT OF CERTAIN CHANGES. (1) If there is any change in the number of shares of Common Stock through the declaration of stock dividends, or through recapitalization resulting in stock splits, or combinations or exchanges of such shares, the number of shares of Common Stock available for Options and Rights, the number of shares covered by outstanding Options and Rights, THE MAXIMUM NUMBER OF SHARES THAT CAN BE GRANTED TO AN OPTIONEE IN A PARTICULAR CALENDAR YEAR, and the price per share of such Options or the applicable market value of Rights, shall be proportionately adjusted by the Committee to reflect any increase or decrease in the number of issued shares of Common Stock. (2) In the event of a change in the Common Stock of the Company as presently constituted, which is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any such change shall be deemed to be the Common Stock within the meaning of the Plan. (3) To the extent that the foregoing adjustments relate to stock or Page 10 securities of the Company, such adjustments shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive, provided that each Incentive Stock Option granted pursuant to this Plan shall not be adjusted in a manner that causes such option to fail to continue to qualify as an Incentive Stock Option within the meaning of Section 422 of the Code. (4) In the event of a Change of Control (as defined in Section 2(c) above), all previously granted options, except those that have been previously terminated or exercised, become immediately exercisable by an Optionee or an Optionee's transferee. (i) RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an Option shall have no rights as a stockholder with respect to any shares covered by the Option until the date of the issuance of a stock certificate to him for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distribution of other rights for which the record date is prior to the date such stock certificate is issued, except as provided in Section 8(h) hereof. (j) OTHER PROVISIONS. The Option Agreements authorized under the Plan shall contain such other provisions, including, without limitations, (i) the granting of Rights, (ii) the imposition of restrictions upon the exercise of an Option, and (iii) in the case of an Incentive Stock Option, the inclusion of any condition not inconsistent with such Options qualifying as Incentive Stock Options, as the Committee shall deem advisable. 9. STOCK APPRECIATION RIGHTS. (a) GRANT AND EXERCISE. Rights may be granted either alone ("Free Standing Rights") or in conjunction with all or part of any Stock Option granted under the Plan ("Related Rights"). In the case of a Nonqualified Stock Option, Related Rights may be granted either at or after the time of the grant of such Stock Option. In the case of an Incentive Stock Option, Related Rights may be granted only at the time of the grant of the Incentive Stock Option. A Related Right or applicable portion thereof granted with respect to a given Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the related Stock Option, except that, unless otherwise provided by the Committee at the time of grant, a Related Right granted with respect to less than the full number of shares covered by a related Stock Option shall only be reduced if and to the extent that the number of shares covered by the exercise of termination of the related Page 11 Stock Option exceeds the number of shares not covered by the Right. A Related Right may be exercised by an Optionee, in accordance with paragraph (b) of this Section 9, by surrendering the applicable portion of the related Stock Option. Upon such exercise and surrender, the Optionee shall be entitled to receive an amount determined in the manner prescribed in paragraph (b) of this Section 9. Stock Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the Related Rights have been exercised. (b) TERMS AND CONDITIONS. Rights shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, including the following: (1) Rights which are Related Rights shall be exercisable only at such time or times and to the extent that the Options to which they relate shall be exercisable in accordance with the provisions of Sections 6, 7, 8 and this Section 9 of the Plan; provided, however, that any Related Right shall not be exercisable during the first six months of the term of the Related Right, except that this additional limitation shall not apply in the event of death or Disability of the Optionee prior to the expiration of the six-month period. (2) Upon the exercise of a Related Right, an Optionee shall be entitled to receive up to, but not more than, an amount in cash or shares of Common Stock equal in value to the excess of the Fair Market Value as of the date of exercise of one share of Common Stock over the option price per share specified in the related Option multiplied by the number of shares 'in respect of which the Related Right shall have been exercised, with the Committee having the right to determine the form of payment. (3) Related Rights shall be transferable only when and to the extent that the underlying Option would be transferable under paragraph (g) of Section 8 of the Plan. (4) Upon the exercise of a Related Right, the Option or part thereof to which such Related Right is related shall be deemed to have been exercised for the purpose of the limitation set forth in Section 5 of the Plan on the number of shares of Common Stock to be issued under the Plan, but only to the extent of the number of shares issued under the Related Right. (5) [Not used] (6) Rights which are Free Standing Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at or after grant; provided, however, that Free Standing Rights shall not be exercisable during the first Page 12 six months of the term of the Free Standing Right, except that this limitation shall not apply in the event of death or Disability of the recipient of the Free Standing Right prior to the expiration of the six-month period. (7) The term of each Free Standing Right shall be fixed by the Committee, but no Free Standing Right shall be exercisable more than ten years after the date such right is granted. (8) Upon the exercise of a Free Standing Right, a recipient shall be entitled to receive up to, but not more than, an amount in cash or shares of Common Stock equal in value to the excess of the Fair Market Value as of the date of exercise of one share of Common Stock over the price per share specified in the Free Standing Right (which shall be no less than one hundred percent of the Fair Market Value of the Common Stock on the date of grant) multiplied by the number of shares in respect to which the Right is being exercised, with the Committee having the right to determine the form of payment. (9) Free Standing Rights shall be transferable to the same extent and subject to the same conditions as set forth in Section 8(g) of the Plan. (10) In the event of the termination of employment of a recipient of a Free Standing Right, such Right shall be exercisable to the same extent that an Option would have been exercisable in the event of the termination of employment of an Optionee. Page 13 10. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES. If the Committee shall so require, as a condition of exercise, each Optionee shall agree that (a) no later than the date of exercise of any Option or Right granted hereunder, the Optionee will pay to the Company or make arrangements satisfactory to the Committee regarding payment of any Federal, state or local taxes of any kind required by law to be withheld upon the exercise of such Option or Right; and (b) the Company shall, to the extent permitted or required by law, have the right to deduct from any payment of any kind otherwise due to the Optionee, Federal, state and local taxes of any kind required by law to be withheld upon the exercise of such Option or Right. 11. TERM OF PLAN. Options and Rights may be granted pursuant to the Plan from time to time within a period of ten years from the date the Plan is adopted by the Board. 12. AMENDMENT AND TERMINATION OF THE PLAN. The Board at any time and from time to time may suspend, terminate, modify or amend the Plan. Except as provided in Section 8 hereof, no suspension, termination, modification or amendment of the Plan may adversely affect any Option or Right previously granted, unless the written consent of the Optionee is obtained. 13. APPROVAL OF STOCKHOLDERS. The Plan shall take effect upon its adoption by the Board of Directors but shall be subject to the approval of the holders of a majority of the issued and outstanding shares of Common Stock of the Company, which approval must occur within twelve months after the date the Plan is adopted by the Board. 14. EFFECT OF HEADINGS. The section and subsection headings contained herein are for convenience only and shall not affect the construction hereof. August 8, 1997 EX-10.5 6 EXH 10.5 - ------------------------------------------------------------------------------- Page 1 - ------------------------------------------------------------------------------- EXHIBIT 10.5 THE COLEMAN COMPANY, INC. June 11, 1997 Mr. Frederik van den Bergh "Le Biolet" F-74140 - Loisin France Dear Mr. van den Bergh: This letter is intended to fully settle all of our differences arising out of or relating to your employment with The Coleman Company, Inc. ("Coleman") and the "Company" (as hereinafter defined) and your separation from such employment. You will continue to serve the Company until your "Severance Date," which means June 30, 1997. On your Severance Date you will, by our mutual agreement and consent, cease to be an employee, officer and director of the Company and all affiliated companies. Certain amounts will become payable to or in respect of you, and you will be entitled to certain rights and benefits, on account of your separation from the Company's employ, as described below. The term "Severance Period" as used in this Agreement means the period from July 1, 1997 through June 30, 1998, or if earlier, the end of the month in which your death occurs. 1. SALARY, SEVERANCE, UNEMPLOYMENT COMPENSATION: (a) Through the Severance Date, you will be paid a monthly salary at your current annual rate of $500,000, and you will be entitled to continue to participate in all retirement, health and other fringe benefit plans in which you currently participate on a - ------------------------------------------------------------------------------- Page 2 - ------------------------------------------------------------------------------- basis equivalent to Company executives of similar stature. (b) You will be paid two severance payments, as follows: a lump sum payment of $450,000 on July 3, 1997 and a lump sum payment of $100,000 on October 3, 1997. (c) You acknowledge and agree that any bonus to which you might be entitled on account of services after 1996 are adequately reflected in the payments provided for herein and that no bonuses or other incentive or extra compensation is presently owed to you. (d) If you apply for, and are awarded, unemployment compensation benefits during the Severance Period, your compensation specified in Section 1(b) will be reduced by the amount of unemployment compensation you receive. The decision to apply for state unemployment compensation is your own. 2. SPECIAL PAYMENT: (a) Coleman will pay you an additional $66,667 on July 3, 1997 if you have not exercised your right to revoke the ADEA Release (as defined herein) as provided in Section 15(b). (b) It is understood that any payment made under Section 2(a) shall be a special inducement to you not to revoke the ADEA release. 3. PENSION BENEFITS: You agree and acknowledge that you are not entitled to any benefits under any employee benefit plan of the Company, including but not limited to any supplemental executive retirement plan or any other pension plan, except as specifically provided for herein. 4. VACATION: As soon as practicable after the Severance Date, you will be paid for two weeks of unused accrued vacation in accordance with the Company's regular policies. Except as provided in the preceding sentence, you shall cease to have any right to any unused accrued vacation and no payment shall be made to you on account of any such vacation time. - ------------------------------------------------------------------------------- Page 3 - ------------------------------------------------------------------------------- 5. MEDICAL BENEFITS: (a) Through the last day of the Severance Period, you will continue to be eligible to participate in Coleman's medical program available to Coleman's senior-most executives or in a substantially comparable program to be selected by the Company. You and the Company acknowledge that, after the end of the Severance Period, you will not be eligible to participate in any of Coleman's medical programs, including Coleman's retiree medical programs. If you engage in regular employment after the Severance Date (whether as an executive or as a self-employed person), and you or your spouse are eligible to receive or receive any medical benefits in consideration of such employment, Coleman will be relieved of its obligation under this Section 5 to provide medical benefits. You will promptly notify Coleman of your employment and eligibility for, or receipt of, medical benefits. (b) After the Severance Date, neither you nor your spouse will be eligible to participate in any Company welfare plans except as provided above, and such coverage shall be in lieu of coverage otherwise available to either you or your spouse under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") or any other applicable continuation of coverage laws. The benefits provided by this Section 5 shall be contingent on the execution by you and your spouse of such acknowledgments of the foregoing, including any waivers of your and your spouse's rights under COBRA, as the Company may reasonably request, including a waiver in the form of Attachment B. 6. EQUITY: (a) STOCK OPTIONS. You will be eligible to exercise the following stock options for 90 days after the Severance Date: ------------------------------------------------------- # Vested @ 6/30/97 as per Employment Grant Date Agreement Option Price ------------------------------------------------------- 5-1-96 23,380 $23.125 ------------------------------------------------------- 12-27-96 3,507 $ 15.00 ------------------------------------------------------- - ------------------------------------------------------------------------------- Page 4 - ------------------------------------------------------------------------------- ------------------------------------------------------- 4-15-97 501 $ 14.00 ------------------------------------------------------- Such options, if not exercised within such 90 day period, shall terminate and expire at the end of such 90 day period. You acknowledge and agree that all other stock options held by you are not presently exercisable and are not scheduled to become exercisable before the Severance Date and accordingly will not be exercisable after the date hereof. Notwithstanding anything to the contrary in the agreements governing the stock options, you agree that: if you wish to exercise a stock option, you will provide Coleman with written advance notice (in the manner described in Section 20 of this Agreement) stating your intention and identifying an option exercise date at least seven days after the date that such advance notice is received by Coleman; within three days after the receipt by Coleman of any such advance notice, Coleman may in its sole discretion determine to pay you cash in lieu of allowing you to exercise some or all of the stock options with respect to which you have provided such advance notice of intention to exercise; if Coleman determines to exercise its rights under this Section 6, Coleman shall provide to you, within such three day period, a written notice identifying the stock options as to which Coleman has determined to so exercise its rights and the number of shares under each such stock option as to which Coleman has so determined to exercise its rights; any such cash payment shall be paid to you within five days after the option exercise date set forth in your advance notice; and the amount of such cash payment shall (on an option-by- option basis) equal the number of shares to which you would otherwise would have become entitled (the "Shares") on exercise of the stock option in respect of which Coleman has determined to exercise its rights under this Section 6, multiplied by the difference between (A) the closing price of a Share on the New York Stock Exchange on the date on which you would have exercised your stock option (but for Coleman's exercise of its rights under this Section 6) minus (B) the per share exercise price of such stock option. (b) QUALIFYING SHARES All shares of any subsidiary of the Company which you hold on the date of this Agreement shall be returned to such subsidiary or its designee prior to the Severance Date. You shall receive no - ------------------------------------------------------------------------------- Page 5 - ------------------------------------------------------------------------------- consideration for such shares. 7. OFFSET: If there shall ever be any amount due to the Company on account of claims which are not covered by the release provided herein, the Company shall be entitled to offset against any amount payable to or in respect of you hereunder, any sums owed by you to the Company provided that any such offset shall be made only at the direction of an arbitrator conducting an arbitration pursuant to Section 24 of this Agreement. 8. WAIVER, MUTUAL RELEASE, ETC.: (a) You release and discharge the Company from any and all charges, claims and causes of action of any kind, whether known or unknown and whenever arising, including, but not limited to, all claims arising at any time, directly or indirectly, out of your employment or the termination of your employment with the Company, PROVIDED, HOWEVER, that you do not waive, and such released claims shall not include, any of your rights to receive payments and benefits under this Agreement or otherwise enforce this Agreement. (b) You realize there are many laws and regulations prohibiting employment discrimination pursuant to which you may have rights or claims. These include, without limitation, the Age Discrimination in Employment Act of 1967, as amended; the National Labor Relations Act, as amended; the Civil Rights Act of 1991; 42 U.S.C. 1981, as amended; the Americans With Disabilities Act of 1990; Title VII of the Civil Rights Act of 1964, as amended; the Employee Retirement Income Security Act of 1974, as amended; and various other foreign and U.S. federal, state and local human rights laws. You also understand there may be other statutes and laws of contract and tort, otherwise relating to your employment. By signing this Agreement you acknowledge that you intend to waive and release any rights known or unknown you may have under these laws, as provided in paragraph 8(a) (subject to your limited rights under Section 15(b)). (c) You have not filed, nor will you initiate or cause to be initiated on your behalf, any complaint, charge, claim or proceeding against the Company before any local, state federal or foreign agency, court or other body relating to your employment or the resignation thereof (each individually a "Proceeding"), nor - ------------------------------------------------------------------------------- Page 6 - ------------------------------------------------------------------------------- will you participate in any Proceeding, in each case, except as required by law. You represent that you are not aware of any basis on whichsuch a Proceeding could reasonably be instituted. You waive any right you may have to benefit in any manner from any relief (whether monetary or otherwise) arising out of any Proceeding, including any Proceeding conducted by the Equal Employment Opportunity Commission ("EEOC"). You understand that by entering into this Agreement, you will be limiting the availability of certain remedies that you may have against the Company and limiting also your ability to pursue certain claims against the Company. (d) The Company forever releases you, your family, your estate, your agents, successors and assigns from any and all claims, demands, causes of action, controversies, agreements, promises and remedies, in connection with or in relationship to your capacity as an employee or officer or director of the Company, whenever arising, whether known or unknown, PROVIDED, HOWEVER, that the Company does not release any of its rights arising under this Agreement. (e) As referred to in this Agreement, the Company includes any or all of Coleman, its subsidiaries and other affiliates, divisions, respective successors and assigns, the directors, officers, representatives, shareholders, agents, employees of any of them and, in the case of individuals, their respective heirs and personal representatives. References in this Agreement to a person's employment include not only common law employment but also service as a director or other service as an independent contractor. 9. COOPERATION; NO RE-EMPLOYMENT: (a) In consideration of the payments to be made under Section 1(b) and the other provisions of this Agreement, during the two year period following the Severance Date you agree to make reasonable efforts to cooperate with the Company, if requested by Coleman, in the handling or investigation of any administrative charges, government inquiries or lawsuits involving the Company that relate to matters that arose while you were an employee or director of the Company and to consult with the Company and its advisors, as reasonably requested, on business inquiries related to any such matters. The Company will reimburse you for any reasonable out-of-pocket expenses you incur by reason of such cooperation. - ------------------------------------------------------------------------------- Page 7 - ------------------------------------------------------------------------------- (b) You agree that you will not, at any time, reapply for employment with the Company in any capacity. You expressly waive any right or claim you may have for employment or reemployment with the Company. You covenant that you will not bring any suit or claim against the Company should you seek to obtain employment with the Company in the future and are denied such employment and you agree that this release shall be a complete bar to your entitlement to any legal, equitable, or administrative relief based upon any such denial of employment. 10. DOCUMENTS, NON-SOLICITATION, CONFIDENTIALITY AND NON-COMPETITION: (a) Promptly following the Severance Date, you agree to return to the Company all originals and copies of papers, notes, and documents (in any medium, including computer disks), whether Company property or not, prepared, received or obtained by you or your counsel during the course of your employment with the Company, and all equipment and property of the Company which may be in your possession or under your control, whether or not relating to the claims released hereby, including all such papers, work papers, notes, documents and equipment in the possession of your family and counsel. You agree that you, your family and counsel shall not retain copies of any such papers, work papers, notes and documents. Notwithstanding the foregoing, you may keep copies of any employment or benefits agreements between you and the Company, this Agreement, any publicly filed materials and any employee benefit plan and stock option plan materials distributed generally to participants in any such plan by the Company. (b) You also agree that for a period of two years from the Severance Date you will not solicit, entice or encourage any employee or officer of the Company, or any independent contractor, to terminate his or her relationship with the Company or to initiate or to threaten to initiate any legal process against the Company, and you shall not approach any such person for such purposes or authorize or knowingly approve the taking of such actions by any third party. (c) As a senior executive of the Company, you acknowledge that you have had access to proprietary information of the Company and confidential information regarding the Company, its - ------------------------------------------------------------------------------- Page 8 - ------------------------------------------------------------------------------- personnel policies and its personnel. You agree that you and your spouse will hold, and that you will use your best efforts to cause your family and counsel to hold, all such information in a fiduciary capacity for the benefit of the Company and you will not disclose to any third party or use for your or their benefit or that of any third party, any such information except to the extent required by law or agreed to by the Company. Without limiting the foregoing, you agree that you will not at any time divulge to any other entity or person any confidential information acquired by you concerning the Company's financial affairs or business processes or methods or their research, development or marketing programs or plans, any other of its or their trade secrets, any confidential information regarding customers or customer lists, any confidential information regarding personal matters of any shareholders, directors, officers, employees or agents of the Company or their respective family members, any confidential information concerning this Agreement or the terms thereof, or any confidential information concerning the circumstances of your employment with and the termination of your employment from the Company, or any confidential information regarding discussions related to any of the foregoing or make, write, publish, produce or in any way participate in placing into the public domain any statement, opinion or information with respect to any of the foregoing or which reflects adversely upon or would reasonably impair the reputation or best interests of the Company or any of its shareholders, directors, officers, employees or agents or their respective family members, except in each case information which is required to be disclosed by court order, subpoena or other judicial or governmental administrative process. The foregoing prohibitions shall include, without limitation, directly or indirectly publishing (or causing, participating in, assisting or providing any statement, opinion or information in connection with the publication of) any diary, memoir, letter, story, photograph, interview, article, essay, account or description (whether fictionalized or not) concerning any of the foregoing, publication being deemed to include any presentation or reproduction of any written, verbal or visual material in any communication medium, including any book, magazine, newspaper, theatrical production or movie, or television or radio programming or commercial. In addition to any and all other remedies available to the Company for any violation of this Section 10(c), you agree to immediately remit and disgorge to the Company any and all payments paid or payable to you in connection with or as a result of engaging in - ------------------------------------------------------------------------------- Page 9 - ------------------------------------------------------------------------------- any of the above acts. In the event that you are required to make disclosure under any court order, subpoena or other judicial or governmental administrative process, you will promptly notify the Company, take all reasonable steps (at the Company's expense) requested by the Company to defend against the compulsory disclosure and permit the Company to participate with counsel of its choice and at its expense in any proceeding relating to the compulsory disclosure. You acknowledge that all information the disclosure of which is prohibited by this Section is of a confidential and proprietary character and of great value to the Company. (d) Nothing in this Agreement is intended to prevent you from (x) using on your behalf your general knowledge or experience in any area of professional activity, whether or not involving your service with the Company; (y) referring to and describing your performance of services for the Company as descriptive of your abilities and qualifications for employment or engagement by any other person; or (z) disclosing (on a confidential basis) information concerning the financial terms of this Agreement to your legal or tax advisors, or members of your immediate family. (e) Coleman agrees that it will not, and it will use its best efforts to cause the senior executive officers and directors of Coleman to not, at any time denigrate you, in connection with your employment or otherwise, through adverse or disparaging communication, written or oral, whether true or not, including without limitation, the expression of personal views, opinions or judgments. The preceding sentence shall not apply to any communication or disclosure which is required to be made by court order, subpoena or other judicial or governmental administrative process. (f) You agree that for a period of two years from the Severance Date (the "Non-Compete Period"), you will not serve as an officer, director or employee or in any other way assist the efforts of any Significant Competitor. As used herein, the term "Significant Competitor" shall mean any corporation, partnership or entity (i) that competes directly against the Company in one or more product lines with such product lines representing at least 10% of the total sales of such competitor, and (ii) where such competing products offered by the Company constitute at least 10% of the total sales of any organization unit of the Company (e.g. division or corporate) that you have been employed at - ------------------------------------------------------------------------------- Page 10 - ------------------------------------------------------------------------------- during the previous 24 months. Coleman acknowledges that you expect to shortly engage in employment as the President of Black & Decker's European Power Tool Division and we agree that, given the present scope of those operations and the present levels of competition, you will not at this time be engaging in employment with a Significant Competitor as above defined. Notwithstanding anything above, this section shall not prohibit you from owning not more than 5% of any publicly traded company. 11. INVENTIONS All inventions, whether or not patentable, conceived or developed by you, alone or with others, during your employment by the Company are the property of the Company and have been or will be promptly and fully disclosed by you to the Company. You will perform all necessary acts to vest title fully to any such invention in the Company and to enable the Company, at its expense, to secure and maintain domestic and/or foreign patents or any other rights for such inventions. 12. REMEDIES: (a) You and the Company agree that disgorgement is not a complete or adequate remedy at law and that you and the Company will be entitled, in addition to any other right and remedy you or it may have at law or in equity related to breaches of this Agreement, including, without limitation, disgorgement, to an injunction, without the posting of any bond or other security, enjoining or restraining you or the Company from any violation or threatened violation thereof. (b) Without denigrating the importance or materiality of the other provisions of this Agreement, you acknowledge and agree that the provisions of Sections 9, 10 and 11 are material and any breach of them would be a material breach of this Agreement and shall, in addition to claims for damages and any other remedy available under this Agreement, cause a recoupment and/or forfeiture of past and future payments under Section 1(b), all without abrogating the release granted herein. 13. NO ADMISSIONS: Neither this Agreement nor any actions taken pursuant to them shall in any event be construed as or deemed to be evidence of an admission or concession by any - ------------------------------------------------------------------------------- Page 11 - ------------------------------------------------------------------------------- party on any matter leading up to this Agreement. In addition, neither the fact of this Agreement nor any of its provisions shall be offered or received in evidence in any action or proceeding as an admission or concession of liability or wrongdoing by any party or for any other purpose. 14. NON-WAIVER OF VESTED OR LEGAL RIGHTS; NON-RETALIATION: In the event you do not sign this Agreement, you should understand that you will still receive the benefits to which you are legally entitled under the Company's benefit plans and/or applicable law (like COBRA). 15. ADDITIONAL ACKNOWLEDGMENTS; LIMITED REVOCATION: (a) You acknowledge that you have been given twenty-one (21) days from the date of receipt of this Agreement to consider this Agreement. You acknowledge that you have read this Agreement carefully, have been advised to consult an attorney and any other advisors of your choice, and fully understand that by signing below you are giving up certain rights which you may have to sue or assert a claim against the Company. You acknowledge that you have not been forced or pressured in any manner whatsoever to sign this Agreement and you agree to all of its terms voluntarily. (b) You shall have seven days from the date of this Agreement to revoke the release (the "ADEA Release") you are giving in Section 9(a) and (b), but only to the extent it relates to any claim you may have arising under the Age Discrimination in Employment Act of 1967, as amended ("ADEA"). If you revoke such release, you will be deemed not to have released any claim arising under ADEA, you shall not be entitled to the payments described in Section 2(a). 16. ENFORCEABILITY: In the event that any provision of this Agreement is determined to be invalid or unenforceable, the remaining terms and conditions of this Agreement shall be unaffected and shall remain in full force and effect. In addition, if any provision is determined to be invalid or unenforceable due to its duration and/or scope, the duration and/or scope of such provision, as the case may be, shall be reduced, such reduction to be to the smallest extent necessary to comply with applicable law, and such provision shall be enforceable, in its reduced form, to the fullest extent permitted by applicable law. - ------------------------------------------------------------------------------- Page 12 - ------------------------------------------------------------------------------- 17. INDEMNIFICATION: Except as provided otherwise in this Agreement, Coleman shall indemnify you to the fullest extent permitted by applicable law and the existing By-Laws and Certificate of Incorporation of Coleman, against all costs, charges and expenses whatsoever ("Losses") incurred or sustained by you in connection with any action, suit or proceeding to which you may be made a party by reason of your having been a director, officer or employee of the Company. If any greater indemnification rights shall be provided under any change in Coleman's By-Laws or Certificate of Incorporation, you shall be entitled to such greater rights to the same extent as other directors, officers or employees who had terminated their relationship with Coleman on or before June 30, 1997. You shall hold the Company harmless against all Losses which arise out of any claims by your spouse or any beneficiary relating to payment or benefit obligations released or waived pursuant to this Agreement. 18. TAXATION: You shall be responsible for the payment of any and all required federal, state, local and foreign taxes incurred, or to be incurred, in connection with any amounts payable to you under this Agreement. All payment amounts specified herein are gross amounts prior to the application of any legally required withholdings for taxes or otherwise. 19. FURTHER ACKNOWLEDGMENTS: You agree to execute such further documents evidencing the termination of your employment by, and directorships of, the Company as may be reasonably requested by the Company, including a letter substantially in the form of Attachment A. 20. NOTICES: Any notice required or desired to be delivered under this Agreement shall be in writing and shall be delivered personally, by courier service or by registered mail, return receipt requested, and shall be effective upon actual receipt by the party to which such notice shall be directed, and shall be addressed as follows (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof): If to the Company, to: The Coleman Company, Inc. 625 Madison Avenue New York, NY 10022 - ------------------------------------------------------------------------------- Page 13 - ------------------------------------------------------------------------------- Attention: Mr. Terry C. Bridges And if to you, to the address set forth on the first page of this Agreement. If Coleman gives notice to you that the provisions of this paragraph shall apply: you agree that you will not communicate with the Company for any reason, directly or indirectly, including, if necessary, any notice of stock option exercise, except by notice to the Company, Attention: Mr. Terry C. Bridges and all such notices shall be sent marked "Confidential", and a telefacsimile copy thereof shall be sent the same date to Robert C. Fleder, Esq., Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York, 10019, (212) 757-3000. 21. ENTIRE AGREEMENT: This Agreement supersedes any and all other agreements between you and the Company and/or any other persons relating to your employment by the Company, including, but not limited to, the Employment Agreement effective as of May 1, 1996 between you and Coleman, including the First and Second Amendments thereto each dated August 1, 1996, whether written or oral, between the parties with respect to the subject matter hereof and contains all of the agreements between the parties with respect thereto. You, your spouse and beneficiaries are not eligible for any benefits from the Company including, but not limited to, severance benefits, except as specifically provided for herein. 22. NO ORAL MODIFICATION: This Agreement may not be modified or changed orally and may be modified and changed only by a written instrument executed by you and Coleman. 23. STATE LAW: This Agreement will be construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws. 24. RESOLUTIONS OF DISPUTES: Any disputes arising under or in connection with your employment with the Company, or this Agreement shall be resolved by binding, confidential arbitration to be held in Wichita, Kansas in a confidential, closed session in accordance with the rules and procedures of the American Arbitration Association. The arbitrators may assess expenses, including reasonable attorneys' fees, to either or both parties, taking into account the circumstances of the case. Except as assessed by the arbitrator pursuant to the previous - ------------------------------------------------------------------------------- Page 14 - ------------------------------------------------------------------------------- sentence, each party shall bear its own expenses, including attorneys' fees, in connection with any such dispute. 25. COUNTERPARTS; FACSIMILE SIGNATURES: This Agreement may be executed in counterparts, each of which shall be considered part of the same Agreement. Signatures to this Agreement may be supplied by telefacsimile signature, which shall be considered an original signature for purposes hereof. Very truly yours, THE COLEMAN COMPANY, INC. By: Jerry W. Levin ------------------------------------ Jerry W. Levin, Its Duly Authorized Chief Executive Officer Encl. - ------------------------------------------------------------------------------- Page 15 - ------------------------------------------------------------------------------- I have read this letter Agreement and I understand all of its terms. I enter into and sign this AGREEMENT knowingly and voluntarily, with full knowledge of what it means. Frederik van den Bergh ------------------------------------------- Mr. Frederik van den Bergh I have read this letter Agreement and I understand all of its terms, including without limitation my waiver of COBRA rights under Section 5 and my nondisclosure obligations under Section 10(c). Erica van den Bergh ------------------------------------------- [Spouse] - ------------------------------------------------------------------------------- Page 16 - ------------------------------------------------------------------------------- Attachment A June 11, 1997 CONFIDENTIAL Jerry W. Levin The Coleman Company, Inc. 1526 Cole Boulevard, Suite 300 Golden, Colorado 80401 Dear Jerry: Effective as of June 30, 1997, I hereby resign from all of my positions as director, officer and/or employee of The Coleman Company, Inc., and all of their subsidiaries and affiliates. Sincerely, Frederik van den Bergh -------------------------------- Frederik van den Bergh - ------------------------------------------------------------------------------- Page 17 - ------------------------------------------------------------------------------- Attachment B June 11, 1997 CONFIDENTIAL Jerry W. Levin The Coleman Company, Inc. 1526 Cole Boulevard, Suite 300 Golden, Colorado 80401 Dear Jerry: The undersigned hereby acknowledge that (i) we have been provided with notice of our rights to continue medical coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and any similar state law ("COBRA"), (ii) we understand these rights, (iii) we have consulted our legal and tax advisors to the extent we have desired to do so and (iv) we voluntarily waive our rights under COBRA. We understand that by making this election our coverage under Coleman's group medical program applicable to active executive employees will cease, except as provided in Section 5 of the Agreement dated as of June __, 1997, between Frederik van den Bergh and The Coleman Company, Inc. and that after such coverage ceases, we will not have any continuation coverage rights under COBRA. Sincerely, Frederik van den Bergh ---------------------------------- Frederik van den Bergh Erica van den Bergh ---------------------------------- (Spouse) EX-27 7 EXHIBIT 27 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS FILED IN THE COMPANY'S FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 17,047 0 319,183 9,262 252,880 637,939 283,619 103,458 1,176,058 329,348 522,819 0 0 534 259,154 1,176,058 675,952 678,978 496,023 496,023 0 1,155 21,739 18,808 7,147 10,818 0 0 0 10,818 .20 .20
-----END PRIVACY-ENHANCED MESSAGE-----