-----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, UYu3cY/HIP1Hy4B7hFsn0a4nALTgRTwnahHKjnlUpoZpDMgEfQ2Z6O8tw6WMTKm3 Fq3NIPfOd3fN1kv6cFkkgw== 0000950170-97-000353.txt : 19970401 0000950170-97-000353.hdr.sgml : 19970401 ACCESSION NUMBER: 0000950170-97-000353 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19961229 FILED AS OF DATE: 19970331 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNBEAM CORP/FL/ CENTRAL INDEX KEY: 0000003662 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] IRS NUMBER: 251638266 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-00052 FILM NUMBER: 97571247 BUSINESS ADDRESS: STREET 1: 1615 SOUTH CONGRESS AVENUE STREET 2: SUITE 200 CITY: DELRAY BEACH STATE: FL ZIP: 33445 BUSINESS PHONE: 3057672100 MAIL ADDRESS: STREET 1: 1615 SOUTH CONGRESS AVENUE STREET 2: SUITE 200 CITY: DELRAY BEACH STATE: FL ZIP: 33445 FORMER COMPANY: FORMER CONFORMED NAME: SUNBEAM OSTER COMPANY INC /DE/ DATE OF NAME CHANGE: 19931210 10-K 1 - -------------------------------------------------------------------- - -------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 29, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD FROM _________ TO _________. COMMISSION FILE NUMBER 1-52 [SUNBEAM LOGO] SUNBEAM CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 25-1638266 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER) INCORPORATION OR ORGANIZATION) 1615 S. CONGRESS AVENUE, SUITE 200 DELRAY BEACH, FLORIDA 33445 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (561) 243-2100 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: TITLE OF EACH CLASS: NAME OF EACH EXCHANGE ON WHICH REGISTERED: COMMON STOCK, $0.01 PAR VALUE NEW YORK STOCK EXCHANGE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of all classes of the registrant's voting stock held by non-affiliates as of March 21, 1997 was approximately $2,151,896,208. On March 21, 1997, there were 84,497,304 shares of the registrant's Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement for the 1997 Annual Meeting of Shareholders are incorporated by reference in Part III hereof. - -------------------------------------------------------------------- - -------------------------------------------------------------------- SUNBEAM CORPORATION AND SUBSIDIARIES ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS PAGE ------ PART I ITEM 1. BUSINESS General. ................................................... 1 Restructuring and Growth Plan .............................. 1 Products ................................................ 2 Competitive Strengths .................................... 3 Customers ................................................ 4 Patents and Trademarks .................................... 5 Employees ................................................ 5 Seasonality ............................................. 5 Raw Materials ............................................. 5 Environmental Matters .................................... 5 ITEM 2. PROPERTIES ................................................ 9 ITEM 3. LEGAL PROCEEDINGS ....................................... 9 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ...... 10 EXECUTIVE OFFICERS OF THE REGISTRANT ..................... 10 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ....................................... 12 ITEM 6. SELECTED FINANCIAL DATA ................................. 13 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ..................... 14 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ............... 18 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ..................... 18 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ...... 18 ITEM 11. EXECUTIVE COMPENSATION .................................... 18 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ................................................ 19 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ............ 19 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K ............................................. 19 SIGNATURES ............................................................ 22 PART I ITEM 1. BUSINESS GENERAL Sunbeam Corporation (collectively with its subsidiaries, the "Company" or "Sunbeam") is a leading designer, manufacturer and marketer of branded consumer products. The Company's primary business is the manufacture, marketing and distribution of durable household consumer goods through mass market and other distributors in the United States and internationally. The Company also sells its products to commercial end users such as hotels and other institutions (the "Away From Home" category of the business). The Company's product categories are: (1) Appliances (mixers, blenders, food steamers, bread makers, rice cookers, coffee makers, toasters, irons and garment steamers) (2) Health Care (vaporizers, humidifiers, air cleaners, massagers, hot and cold packs, blood pressure monitors and scales) (3) Personal Care and Comfort (shower massagers, hair clipper and trimmers, electric warming blankets and throws) (4) Outdoor Cooking (electric, gas and charcoal grills and grill accessories) and (5) Away From Home (clippers and related products for the professional and veterinarian trade and sales of products to commercial and institutional channels). The International Group is responsible for sales (primarily of small appliances, personal care and comfort products, professional clippers and related products and grills) in all countries other than the United States. Sunbeam products enjoy a long-standing reputation for quality, and a majority of the Company's sales are from products which hold the number one or two market share in their respective product categories. The Company was organized in 1989 (as Sunbeam-Oster Company, Inc.) and in September 1990, Sunbeam acquired the assets and assumed certain liabilities, through a reorganization, of Allegheny International, Inc. (the "Predecessor"), an entity operating as a debtor-in-possession under Chapter 11 of the United States Bankruptcy Code since 1988. In August 1992, the Company completed a public offering of 20,000,000 shares of its common stock. In May 1995, the Company changed its name from Sunbeam-Oster Company, Inc. to Sunbeam Corporation. RESTRUCTURING AND GROWTH PLAN In the Fall of 1996, under newly elected Chairman, Albert J. Dunlap, the Company announced a major restructuring and growth plan. The restructuring portion of the plan has been substantially completed, resulting in a significant reduction in employees, facilities and costs, all of which is anticipated to generate approximately $225 million in annual savings for the Company. As a part of the restructuring plan, the Company also announced that it would divest certain lines of business. The Company has completed the sales of its furniture, time and temperature and decorative bedding businesses and anticipates the completion of the divestiture of its textile mill in Biddeford, Maine and its Counselor/Registered trademark/ and Borg/Registered trademark/ scale business in the first half of 1997. The Company's restructuring plan includes the closure of 18 factories and 6 office facilities, resulting in the consolidation of all corporate offices into a single headquarters office located in Delray Beach, Florida and an administrative facility at its Hattiesburg manufacturing and distribution facility. The number of manufacturing facilities will be reduced from twenty-six to eight (four in the US and four international). See "Properties" below. The Company has also consolidated all purchasing functions, substantially reduced the number of stock keeping units maintained by the Company and outsourced certain back-office administrative activities. 1 The Company has also developed a comprehensive three year growth plan for its core businesses. Sunbeam's goal is for revenues to double, reaching $2 billion, by 1999, with operating margins improving to 20% of sales. This revenue growth is anticipated to be derived, in large part, by the development of new innovative products and the globalization of the Company. Domestically, the goal is to introduce at least 30 new products each year. On the international side, the Company has a goal to triple international sales to $600 million by 1999. The Company expects to sign fifteen new international distributor and licensing agreements by April 1997 and many more throughout the remainder of the year. The Company has already launched 42 new 220 volt products for international markets. The Company has also identified new channels of distribution as sales growth opportunities, including commercial organizations and "direct to the consumer" channels such as catalogs, the Internet and Sunbeam/Registered trademark/ factory outlet stores. Both international expansion and new product introductions will be supported by a significant investment in a major new advertising program that is geared to rebuilding SUNBEAM/Registered trademark/ and OSTER/Registered trademark/ brand awareness in the marketplace. The Company is well on its way to accomplishing its brand repositioning strategy, in large part due to a $12.0 million advertising campaign in the fourth quarter of 1996 which has already increased Sunbeam's brand relevance with consumers by 25%, as tabulated by a leading independent market research organization. PRODUCTS In connection with the Company's 1996 restructuring, the Company redefined its core product categories as specified below: APPLIANCES Small kitchen appliances including Mixmaster/Registered trademark/ stand mixers, hand mixers, Osterizer/Registered trademark/ blenders, food processors, toasters, can openers, coffee makers, breadmakers, waffle makers, and culinary accessories, are sold primarily under the Sunbeam/Registered trademark/, Oster/Registered trademark/ and Oster Designer/Registered trademark/ brand names. The Company holds the number one or two market positions in blenders, mixers, and breadmakers. This product category also encompasses garment care appliances consisting of irons and steamers. Sales of appliances accounted for approximately 29% of the Company's domestic net sales in 1996. HEALTH CARE The Company markets its home health products under the trademark Health at Home/Registered trademark/. These products include heating pads, bath scales, blood pressure and other health-monitoring instruments, massagers, vaporizers, humidifiers and dental care products. Sales of health care products accounted for approximately 11% of the Company's domestic net sales in 1996. PERSONAL CARE AND COMFORT The Company's personal care products include shower massagers, consumer hair clippers and trimmers and a broad line of electric blankets, comforters and Cuddle-Up/Registered trademark/ heated throws. The Company holds the number one market position in electric blankets and heated throws. Sales of personal care and comfort products accounted for approximately 21% of the Company's domestic net sales in 1996. OUTDOOR COOKING Sunbeam is a leading supplier of outdoor barbecue grills. Sunbeam has the leading market share position in the gas grill industry. Barbecue grills consist of propane, natural gas, electric and charcoal models sold primarily under the Sunbeam/Registered trademark/ and Grillmaster/Registered trademark/ brand names. Sales of outdoor cooking products accounted for approximately 29% of the Company's domestic net sales in 1996. AWAY FROM HOME The Company markets a line of professional barber and beauty equipment, including electric and battery clippers, replacement blades and other grooming accessories sold to both conventional retailers and through professional distributors. In addition, the Company is expanding the marketing of its appliances and personal care and comfort products to institutional and commercial channels. Sales of away from home products described above accounted for approximately 5% of the Company's domestic net sales in 1996. 2 INTERNATIONAL The Company markets a variety of products (primarily small kitchen appliances, personal care and comfort products, professional clippers and related products and grills) outside the U.S. While the Company sells many of the same products domestically and internationally, it also sells products designed specifically to appeal to foreign markets. The Company, through its foreign subsidiaries, has a manufacturing facility in Venezuela, and sales offices in the United Kingdom and Hong Kong. The Company's international products are sourced from the Company's United States, Mexican or Venezuelan manufacturing operations or from vendors primarily located in Asia. International sales accounted for approximately 19% of the Company's total net sales in 1996. To date, the Company's activities outside the United States have been primarily focused in Mexico, South and Central America and Canada. The Company enjoys a strong market position in a number of product categories in Latin America. The Oster- brand has the leading market share in small appliances in a number of Latin American countries.The Company intends to focus on expanding its business in South and Central America by introducing broader product offerings, achieving increased market penetration and expanding geographically into South American countries where the Company has historically not been represented by introducing new 220 volt products. The Company has introduced 42 such products in the last year and continues to develop such products at an increasing rate. The Company also intends to expand its product offerings in the Far East and Europe. The Company may choose to approach these markets directly through its own operations, by acquisition, or through international joint ventures or other types of strategic alliances. The Company has recently entered into new distribution or licensing arrangements providing for the distribution of Sunbeam and/or Oster goods into additional countries in South America, Africa and the Far East. COMPETITIVE STRENGTHS Worldwide, Sunbeam competes in markets with a number of well-established United States and foreign companies on the basis of various strengths, depending on the country, product category and distribution channels. The Company believes that it is well-positioned to pursue continued growth as a result of several competitive strengths, which include the following. DISTRIBUTION NETWORK. The Company has one of the premier mass merchant distribution networks serving large national retailers in the United States. The Company also has a strong network of well-established distributors and service organizations in Latin America. The Company supports its customers needs with strong warehousing and distribution capabilities, a broad, high-quality product portfolio and electronic data interchange ("EDI") and just in time product delivery capabilities. The Company markets its products through virtually every category of retailer including mass merchandisers, catalog showrooms, warehouse clubs, department stores, catalogues, Company-owned outlet stores, television shopping channels, hardware stores, home centers, drug and grocery stores, and pet supply retailers, as well as independent distributors and military post exchange outlets. 3 STRONG POSITION IN CONSOLIDATING RETAIL ENVIRONMENT. The consolidation trend in the retail industry has resulted in the emergence and global expansion of large mass merchandisers that demand financially strong, efficient suppliers which offer a broad range of innovative, quality products with the ability to make timely shipments in large volumes and provide strong promotional and merchandising support. The Company has benefited from this trend and believes it has the opportunity to further expand distribution with a number of retailers and increase its penetration of existing accounts. In 1996, the Company sold products to virtually all of the top 100 U.S. retailers, including Wal-Mart, Target Stores, Kmart, Sears, Roebuck & Co., Service Merchandise, Home Depot, Lowes, Costco, Sam's Club, Walgreens, Eckerd and Bed Bath & Beyond. BRAND NAME RECOGNITION. The Sunbeam/Registered trademark/ and Oster/Registered trademark/ brands have been household names for generations. The Company believes that these brands, along with its other well-known secondary names such as Mixmaster/Registered trademark/ and Osterizer/Registered trademark/ draw customers into retail stores specifically to purchase products bearing these brand names. During the past year, the Company has spent over $75 million for advertising and sales promotion to support brand recognition. MARKET LEADERSHIP. The majority of Sunbeam sales are from products in which the Company holds the number one or two market share position. The Company believes that this combination of leading brand-name products and breadth of product offerings makes Sunbeam an attractive vendor to retailers who are consolidating their suppliers. CUSTOMERS The rapid growth of large mass merchandisers and warehouse clubs and changes in consumer shopping patterns have contributed to a significant consolidation of the U.S. retail industry and the formation of dominant multi-category retailers. Sunbeam has positioned itself to respond to the challenges of this changing retail environment by pursuing strategic relationships with large, high-volume merchandisers. The Company markets its products through virtually every category of retailer including mass merchandisers, catalog showrooms, warehouse clubs, department stores, hardware stores, catalogues, television shopping channels, home centers, drug and grocery stores, and pet supply retailers, as well as independent distributors and the military post exchange services. The Company's largest customer, Wal-Mart Stores, Inc., accounted for approximately 19% of sales in 1996. Retailers are pursuing a number of strategies in their competition to deliver the highest-quality, lowest-cost brand name products. A growing trend among retailers is to purchase on a "just-in-time" basis in order to reduce inventory costs and increase returns on investment. This trend has required increased working capital investments for manufacturers and requires manufacturers to more closely 4 monitor consumer buying patterns as retailers shorten their lead times for orders. Currently, most Sunbeam products sold to U.S. retailers are manufactured at the Company's own facilities in North America. This enables the Company to provide rapid, reliable delivery in order to maximize customers' inventory turns. The Company intends to support its retail partners' "just-in-time" inventory strategies through investments in, among other things, improved forecasting systems, more responsive manufacturing and distribution capabilities and electronic communications. Currently, Sunbeam has approximately 75% of its U.S. customer sales on electronic data interchange (EDI) systems. The amount of backlog orders at any point in time is not a significant factor in the Company's business. PATENTS AND TRADEMARKS Sunbeam believes that an integral part of its strength is its ability to capitalize on the Sunbeam/Registered trademark/ and Oster/Registered trademark/ trademarks which are registered in the United States and in numerous foreign countries. Widely recognized throughout North America, South and Central America and Europe, these registered trademarks, along with Osterizer/Registered trademark/, Mixmaster/Registered trademark/, Toast Logic/ Trademark/, Steammaster/Registered trademark/, Oskar/Registered trademark/, Grillmaster/Registered trademark/ and "Blanket with a Brain/ Trademark/" brands are important to the success of the Company's products. Other important trademarks within Sunbeam include Oster Designer /Registered trademark/ line and Cuddle-Up/Registered trademark/. Sunbeam holds several patents covering a wide variety of products, the loss of any one of which would not have a material adverse effect on the Company's business taken as a whole. EMPLOYEES The Company currently has approximately 6,000 employees; as of December 29, 1996, the Company had approximately 9,000 employees. As a result of the Company's restructuring plan, employment was reduced from approximately 12,000 people to approximately 6,000 people. Other than at two facilities (both of which are expected to be sold or closed by fall of 1997), none of the Company's full-time workforce has domestic union representation. Sunbeam has had no labor-related work stoppages and, in the opinion of management, relations with its employees are generally good. SEASONALITY On a consolidated basis, Sunbeam sales do not exhibit substantial seasonality. However, sales of outdoor cooking products are strongest in the first half of the year, while sales of appliances and personal care and comfort products are strongest in the second half of the year. In addition, sales of a number of the Company's products, including warming blankets, vaporizers, humidifiers and grills may be impacted by weather conditions. RAW MATERIALS The raw materials used in the manufacture of the Company's products are available from numerous suppliers in quantities sufficient to meet normal requirements. The Company's primary raw materials include aluminum, steel, resin, copper, and corrugated cardboard for cartons. ENVIRONMENTAL MATTERS The Company's operations, like those of comparable businesses, are subject to certain federal, state, local and foreign environmental laws and regulations in addition to laws and regulations regarding labeling and packaging of products and the sale of products containing certain environmentally sensitive materials ("Environmental Laws"). The Company believes it is in substantial compliance with all 5 Environmental Laws which are applicable to its operations. Compliance with Environmental Laws involves certain continuing costs; however, such costs of ongoing compliance have not resulted, and are not anticipated to result, in a material increase in the Company's capital expenditures or to have a material adverse effect on the Company's results of operations, financial condition or competitive position. In addition to ongoing environmental compliance at its operations, the Company also is actively engaged in certain environmental remediation activities relating primarily to divested operations. As of December 31, 1996, the Company had been identified by the United States Environmental Protection Agency ("EPA") as a potentially responsible party ("PRP") in connection with seven (7) sites subject to the federal Superfund law and two (2) sites subject to state Superfund laws comparable to the federal law (collectively the "Environmental Sites"), exclusive of sites at which the Company has been designated (or expects to be designated) as a de minimis (less than 1%) participant . The Superfund Act, and related state environmental remediation laws, generally authorize governmental authorities to remediate a Superfund site and to assess the costs against the PRPs or to order the PRPs to remediate the site at their expense. Liability under the Superfund Law is joint and several and is imposed on a strict basis, without regard to degree of negligence or culpability. As a result, the Company recognizes its responsibility to determine whether other PRPs at a Superfund site are financially capable of paying their respective shares of the ultimate cost of remediation of the site. Whenever the Company has determined that a particular PRP is not financially responsible, it has assumed for purposes of establishing reserve amounts that such PRP will not pay its respective share of the costs of remediation. To minimize the Company's potential liability with respect to the Environmental Sites, the Company has actively participated in steering committees and other groups of PRPs established with respect to such sites. The Company currently is engaged in active remediation activities at seven (7) sites, four (4) of which are among the Environmental Sites referred to above, and three (3) of which have not been designated as Superfund sites under federal or state law. In addition, the Company is engaged in environmental remediation activities at 2 sites in Newburgh Heights, Ohio, where a subsidiary formerly conducted operations. The Company has been actively cooperating with the United States Nuclear Regulatory Commission and state regulatory authorities in developing a plan for remediation of those sites. Remediation of one of the sites, the Harvard Avenue Site, is nearly complete. Active remediation is underway at the other site-the Bert Avenue Site and is anticipated to be completed in 1997. The Company's costs for environmental remediation activities have not had a material adverse effect on the Company's results of operations, financial condition or competitive position. The Company has established reserves to cover the anticipated probable costs of remediation, based upon periodic reviews of all sites for which the Company has, or may have, remediation responsibility. As of December 29, 1996, the amount of such reserves was approximately five percent of the Company's total liabilities as set forth in the consolidated financial statements. Such environmental reserves do not consider offsets for potential insurance recoveries from certain of the Company's liability insurance carriers which the Company continues to pursue. Due to uncertainty over the remedial measures to be adopted at some sites, the possibility of changes in the Environmental Laws, and the fact that joint and several liability with the right of contribution is possible at federal and state Superfund sites, the Company's ultimate future liability with respect to sites at which remediation has not been completed may vary from the amounts reserved as of December 31, 1996. However, the Company believes, based on existing information, that the costs of completing the environmental remediation of all sites for which the Company has a remediation responsibility have been adequately reserved and that the ultimate resolution of these matters will not have a material adverse effect upon the Company's financial condition. In December 1996, the Company reached a negotiated settlement with the EPA with regard to a notice of violation concerning the construction and operation of two paint lines at the Company's 6 Neosho, MO facility prior to obtaining the necessary permits for construction and operation. The original penalty proposed by the EPA was in the amount of approximately $2 million, but the Company and the EPA have negotiated a settlement of the EPA's lawsuit against the Company for a lesser amount. The settlement amount of $829,825 recognizes the benefits of a "supplemental environmental project" which consisted of the Company's installation of nominal emission powder coating lines to replace solvent paint lines. The Company is awaiting proposed settlement documentation from the EPA and anticipates formal resolution of this matter by the second quarter of 1997. In December 1996, the Company paid a negotiated penalty to the EPA in the amount of $110,138 to settle violations arising from the Company's failure to file certain mandatory Form R reports for 1990 through 1994. The originally proposed penalties had been in the amount of $946,596, and the Company was able to negotiate a reduced penalty amount due to the fact that the EPA agreed to apply its self-policing/self-disclosure policy. The Company voluntarily notified the EPA of its deficiencies in filing the Form R reports promptly upon learning of the reporting deficiencies. The Company is not a party to any other administrative or judicial proceeding to which a governmental authority is a party and which involves potential monetary sanctions, exclusive of interest and costs, of $100,000 or more. CAUTIONARY STATEMENTS Certain of the information contained herein (including Management's Discussion and Analysis of Financial Condition and Results of Operations) contains "forward-looking" information, as that term is defined in the Private Securities Litigation Reform Act of 1995, as the same may be amended (herein the "Act") and in releases made by the Securities and Exchange Commission ("SEC") from time to time. These Cautionary Statements are being made pursuant to the Act, with the intention of obtaining the benefits of the "Safe Harbor" provisions of the Act. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and that actual results may differ materially from those in the forward-looking statements as a result of various factors. /bullet/ The Company's performance should be expected to be affected by the strength of the retail economy, primarily in the United States, but also in Canada and Latin America. Weakness in consumer confidence and retail outlets (including the financial weakness or bankruptcy of retail outlets, especially mass merchants) should be expected to adversely impact the Company's future financial results. /bullet/ The Company operates in a highly competitive environment with numerous competitors which are financially strong and capable of competing effectively with the Company in the marketplace. Such competitors may take actions to meet the Company's new product introductions and other initiatives. Some competitors may be willing to accept lower margins and to reduce prices to compete with the Company. As a result, the Company could fail to achieve anticipated sales increases, to realize anticipated price increases, or otherwise fail to meet its anticipated results. Any of such circumstances would likely have an adverse effect on future financial performance, which effect could be material. /bullet/ The Company manufactures most of its products, although it also sources some products from third parties. The Company's ability to realize operating profits is dependent upon its ability to timely manufacture, source and deliver products which may be sold for a profit. Labor difficulties, delays in delivery or pricing of raw materials and/or sourced products, scheduling and transportation difficulties, management dislocations and delays in development and manufacture of new products can negatively affect operating profits. /bullet/ As a consumer goods distributor, the Company's results of operations can be negatively impacted by product liability lawsuits and/or by higher than anticipated rates of warranty returns or other returns of goods. 7 /bullet/ The Company expects to substantially increase the amount of business conducted by it outside North America. If the Company fails to achieve anticipated market penetration in areas of the world into which the Company currently expects to expand its sales, such event is likely to have an adverse effect on the Company's future financial performance, which effect could be material. Expansion of the Company's sales in foreign markets depends upon many factors, including the states of economies in foreign countries, the strength of consumer demand in those countries for products which the Company sells (or expects to sell in those markets), the strength of competition from other global consumer products companies and other factors which may negatively affect the Company's anticipated performance in those markets. /bullet/ The Company currently manufactures some products and has sales in such economies as those of Mexico and Venezuela, both of which economies have been unstable or hyperinflationary in recent years. The economies of other foreign countries important to the Company's expansion plans, including other countries in Latin America and developing countries throughout the world, could suffer similar instability in the future. Such factors as currency devaluations, new tariffs, changes in monetary policies, inflation, governmental instability and similar matters could negatively affect the Company's anticipated performance in foreign markets. The occurrence of any of these circumstances could have an adverse effect on future financial performance, which effect could be material. /bullet/ A significant portion of the cost of goods manufactured by the Company in North America is raw material cost. The Company has implemented changes in its purchasing function which the Company anticipates will enable it to purchase raw materials more efficiently and economically than it has in the past. The success of the Company's purchasing initiatives may be affected by many factors beyond the Company's control, such as commodity pricing generally and higher prices for the specific raw materials required by the Company. In addition, the Company's initiatives to reduce the cost of raw materials simply may not achieve savings in amounts which the Company anticipates. A material failure by the Company to achieve the anticipated reductions in raw material costs would likely have an adverse effect on anticipated future financial performance, which effect could be material. /bullet/ The Company anticipates realizing price increases for certain of its products. The Company operates in a highly competitive industry, and its ability to realize price increases may be limited due to competitive pressures. If there is a material failure to realize anticipated price increases, margins likely will be lower than anticipated by the Company, and this will likely have an adverse effect on future financial performance, which effect could be material. /bullet/ The Company anticipates that it will be able to more rapidly develop and introduce a substantial number of new and innovative products in the future. However, the Company may prove unable to meet its more aggressive schedules for future product development. Failure to develop and manufacture new products in the amounts and with the quality anticipated or a failure to reduce the cycle time for new product introductions would likely have an adverse effect on future financial performance, which effect could be material. /bullet/ Sales of certain of the Company's products can be negatively impacted by abnormal weather conditions during different seasons and quarters of the year. /bullet/ The Company has entered into various arrangements with third parties for the provision of back-office administrative services previously provided with internal resources, including provision of all necessary computer systems. Failure of any of these third party service providers to perform in accordance with their respective agreements with the Company could result in disruptions of the Company's normal business operations with a consequent impact on sales, collections, cash flow and/or profitability. /bullet/ The Company's profitability may be negatively impacted by underabsorption of manufacturing costs resulting from underutilization of manufacturing capacity if the Company's sales growth is less than anticipated. 8 /bullet/ The Company's ability to realize the cost savings anticipated from the restructuring plan will be affected by, among other items, the Company's ability to complete facility rationalization initiatives in a timely manner without negatively impacting production during such transition. ITEM 2. PROPERTIES In conjunction with the Company's formal restructuring plan and divestiture activities, Sunbeam has reduced the total square footage of active manufacturing, administrative, distribution and warehouse floorspace to 3.6 million square feet from 7.2 million square feet at the same time last year. Active United States manufacturing, warehouse, and office locations (upon completion of the restructuring plan) are set forth below. In addition to the facilities set forth below, the Company leases warehouse space on a short-term basis when needed and leases space in various malls for its Sunbeam outlet stores. Except as otherwise noted, each location is used for manufacturing, warehousing and related administrative office space. UNITED STATES SQUARE FEET TITLE - ------------- ----------- ----- Brownsville, Texas ............ 48,000 Leased(1) Delray Beach, Florida ......... 51,073 Leased(2) Del Rio, Texas ............... 10,560 Leased(1) Hattiesburg, Mississippi ...... 725,000 Owned Hattiesburg, Mississippi ...... 300,000 Leased(1) McMinnville, Tennessee ......... 169,400 Leased Neosho, Missouri ............... 853,714 Owned/Leased Waynesboro, Mississippi ...... 887,200 Leased ---------- Total ........................ 3,044,947 ========== Active properties outside the United States are as follows: INTERNATIONAL SQUARE FEET TITLE - ------------- ----------- ----- Acuna, Mexico ............... 110,000 Owned Barquisimeto, Venezuela ...... 75,686 Owned Caracas, Venezuela ............ 9,867 Leased(3) Kowloon, Hong Kong ............ 10,076 Leased(3) Matamoros, Mexico ............ 91,542 Owned Milton Kaynes, England ........ 5,928 Leased(3) Tlalnepantla, Mexico ......... 297,927 Owned --------- Total ..................... 601,026 ========= - ---------------- (1) Warehouse only (2) Corporate headquarters (3) Administration (4) Warehouse and administration The Company believes that its existing facilities will adequately provide sufficient suitable capacity to implement its operating plans. ITEM 3. LEGAL PROCEEDINGS The Company and its subsidiaries are involved in various lawsuits arising from time to time which the Company considers to be ordinary routine litigation incidental to its business. In the opinion of the Company, the resolution of these matters, and of certain matters relating to prior operations of the Predecessor, individually or in the aggregate, will not have a material adverse effect upon the financial position or results of operations of the Company. The Company has established reserves for pending litigation which the Company considers to be adequate to cover loss contingencies determined by the Company associated with such proceedings. 9 See "Environmental Matters" under Item 1 for a description of certain legal proceedings related to environmental matters, which provision is incorporated herein by reference. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the quarter ended December 29, 1996, there were no matters submitted to a vote of the Company's security holders. EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers of the Company are as follows:
NAME AGE TITLE - ---- --- ----- Albert J. Dunlap ...... 59 Chairman, Chief Executive Officer and Director Russell A. Kersh ...... 43 Executive Vice President, Finance and Administration David C. Fannin ...... 51 Executive Vice President, General Counsel and Secretary Donald R. Uzzi ......... 44 Executive Vice President, Consumer Products Worldwide Jack Dailey ............ 57 Vice President, Corporate Purchasing and Logistics Edwin T. Derecho ...... 39 Vice President, Treasurer Robert J. Gluck ...... 39 Vice President, Controller Lee Griffith ......... 56 Vice President, Sales Janet G. Kelley ...... 43 Vice President, Associate General Counsel Gary Mask ............ 48 Vice President, Human Resources Kevin McBride ......... 42 Vice President, Marketing and Product Development Ronald L. Newcomb ...... 53 Vice President, Manufacturing R. Dixon Thayer ...... 45 Vice President, International Robert P. Totte ...... 43 Vice President, Taxes
ALBERT J. DUNLAP has been Chairman and Chief Executive Officer of Sunbeam Corporation since July 18, 1996. From April 1994 to December 1995 he was Chairman and Chief Executive Officer of Scott Paper Company. From 1991 to 1993, Mr. Dunlap was the Managing Director and Chief Executive Officer of Consolidated Press Holdings Limited (an Australian media, chemicals and agricultural operation). Mr. Dunlap is a Director of General Oriental Investments Limited. DAVID C. FANNIN has been Executive Vice President, General Counsel and Secretary since January 1994. From 1979 until 1993, he was a partner in the law firm of Wyatt, Tarrant and Combs. RUSSELL A. KERSH has been Executive Vice President, Finance and Administration of Sunbeam Corporation since July 22, 1996. From June 1994 to December 1995 he was Executive Vice President, Finance and Administration of Scott Paper Company. Mr. Kersh served as the Chief Operating Officer of Addidas America from January 1993 to May 1994. He is a Director of Basic Petroleum International, Ltd. (a Guatemalan petroleum company). DONALD R. UZZI has been Executive Vice President, Consumer Products Worldwide since January, 1997. From November 1996 to January 1997, he held the position of Senior Vice President, Global Marketing. Mr. Uzzi joined the Company in September 1996 as Vice President, Marketing and Product Development. From January 1993 to July 1996, Mr. Uzzi served as President of the Beverage Division of Quaker Oats. During 1990 to 1992, Mr. Uzzi was employed by Pepsi Cola as Senior Vice President for North America (1992) and Vice President and General Manager of the Mid-Atlantic Division (1990-1991). JACK DAILEY has been Vice President, Corporate Purchasing and Logistics since July 1996. He was Vice President, Purchasing at Scott Paper Company from April 1994 to December 1995. Prior to that time, he was Vice President and General Manager of North American Operation for Inmac (a business computer products direct response company) from August 1988 to February 1994. 10 EDWIN T. DERECHO joined the Company as Vice President and Treasurer in October 1994. Prior to joining the Company, Mr. Derecho held the position of Director of Capital Markets at PepsiCo, Inc. from March 1992. From 1986 to 1992 he was employed at Citibank, N.A., most recently as a Vice President. ROBERT J. GLUCK has been a Vice President of the Company since December 1992 and was named Vice President, Controller in February 1995. Mr. Gluck was employed by the public accounting firm of Ernst & Young from 1981 until 1992. LEE GRIFFITH has been Vice President, Sales since September 1996. He was previously with Scott Paper Company where he served as President and Chief Executive Officer of Scott Paper Limited of Canada since January 1995. Prior to that date, Mr. Griffith was employed by Scott Paper Company as Vice President, Consumer Sales for North America (from 1994 to 1995) and Vice President, U.S. Consumer Business (from 1988 to 1994). JANET G. KELLEY has been Vice President since February 1996 and Associate General Counsel since July 1995. She was Group Counsel from March 1994. From 1984 to 1994, Ms. Kelley was a partner in the law firm of Wyatt, Tarrant & Combs. GARY MASK joined the Company in March 1997 as Vice President, Human Resources. He was employed as Vice President, Human Resources of Cavenham Forest Industries (the successor to Crown Zellerbach Corporation) from 1984 through February 1997. KEVIN MCBRIDE has been Vice President, Marketing and Product Development since January 1997. From January 1994 to June 1996, he was Vice President, Marketing of Circle K Stores, Inc. From September 1991 to December 1993, he was a Managing Director of Cambridge Group East, a management consulting company. RONALD L. NEWCOMB has been Vice President, Manufacturing since September 1996. Prior to his employment with Sunbeam, Mr. Newcomb was Vice President, Operations, Worldwide Household Products Group for Black & Decker from August 1994 to August 1996. From August 1989 to August 1994, he was Vice President of Operations and Manufacturing for Textron Lycoming. R. DIXON THAYER has been Vice President, International since September 1996. Prior to joining Sunbeam, Mr. Thayer was Vice President, Global Research, Development Engineering and Global Growth for Kimberly Clark from December 1995. Prior to that date, Mr. Thayer held various positions with Scott Paper Company, including Vice President, New Product Development (from April to December 1995), Vice President and General Manager of Europe ASH from January 1991 to April 1995. ROBERT P. TOTTE has been Vice President, Taxes since May 1993. He was National Tax Director for Domino's Pizza, Inc. from 1985 until 1993. 11 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Common Stock is listed and traded on the New York Stock Exchange under the symbol "SOC". The Company has paid quarterly cash dividends of $.01 per share since December 15, 1992. The Company presently intends to continue to pay cash dividends at a quarterly rate of $.01 per share; however, future payments of cash dividends will be at the discretion of the Company's Board of Directors and dependent upon the Company's results of operations, financial condition and other relevant factors. The following table sets forth the high and low sale prices for the Common Stock for the calendar quarters indicated as reported by the New York Stock Exchange Composite Tape: MARKET PRICE -------------------- HIGH LOW --------- -------- 1996: Fourth Quarter ...... $29 1/2 $22 3/4 Third Quarter ...... $24 3/4 $12 1/4 Second Quarter ...... $17 1/8 $13 1/2 First Quarter ...... $19 3/4 $15 1/8 1995: Fourth Quarter ...... $16 3/8 $13 1/2 Third Quarter ......... $17 1/8 $14 Second Quarter ...... $23 5/8 $12 1/2 First Quarter ......... $25 1/2 $22 3/8 On March 21, 1997 there were approximately 1,509 record holders of the Company's Common Stock. During the fourth quarter of 1996, the Company sold 2,000 shares of Common Stock (from the Treasury account) to Director Faith Whittlesey for $27.63 per share (the market value at the date of sale on December 5, 1996) in connection with her appointment to the Board of Directors. This transaction was made pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933. 12 ITEM 6. SELECTED FINANCIAL DATA The following is a summary of certain financial information relating to the Company. The summary should be read in conjunction with the Consolidated Financial Statements of the Company included in this report. All amounts in the table are expressed in millions, except per share data.
FISCAL YEARS ENDED ------------------------------------------------------------------------ JANUARY 3, JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 29, 1993(1) 1994 1995 1995 1996(2) ------------- ------------- ------------- --------------- -------------- STATEMENT OF OPERATIONS DATA: Net sales ....................................... $ 839.8 $927.5 $1,044.3 $1,016.9 $ 984.2 Cost of goods sold .............................. 615.5 674.2 764.4 809.1 900.6 Selling, general and administrative expense ......................................... 121.5 119.3 128.9 137.5 216.1 Restructuring, impairment and other costs ...... - - - - 154.8 -------- ------- --------- --------- ------- Operating earnings (loss) ........................ $ 102.8 $134.0 $ 151.0 $ 70.3 $(287.3) ======== ======= ========= ========= ======= Earnings (loss) from continuing operations before cumulative effect of accounting change ......................................... $ 53.5 $ 76.9 $ 85.3 $ 37.6 $(196.7) Earnings from discontinued operations, net of taxes(3) ................................ 12.1 11.9 21.7 12.9 0.8 Estimated loss on sale of discontinued operations, net of taxes(3) .................... - - - - (32.4) Earnings (loss) before cumulative effect of accounting change ............................. $ 65.6 $ 88.8 $ 107.0 $ 50.5 $(228.3) Net earnings(loss) .............................. $ 48.3 $ 88.8 $ 107.0 $ 50.5 $(228.3) FULLY DILUTED EARNINGS PER SHARE Average common and equivalent shares outstanding ................................... 84.8 88.2 82.6 82.8 82.9 Earnings (loss) per share from continuing operations before cumulative effect of accounting change .............................. $ 0.63 $ 0.87 $ 1.03 $ 0.45 $ (2.37) Earnings (loss) per share before cumulative effect of accounting change ..................... $ 0.77 $ 1.01 $ 1.30 $ 0.61 $ (2.75) Earnings (loss) per share of Common Stock ...... $ 0.57 $ 1.01 $ 1.30 $ 0.61 $ (2.75) Cash dividends declared per share .............. $ 0.01 $ 0.04 $ 0.04 $ 0.04 $ 0.04 BALANCE SHEET DATA (AT PERIOD END): Working capital ................................. $ 400.2 $261.4 $ 294.8 $ 411.7 $ 352.6 Total assets ................................. 1,043.8 928.8 1,008.9 1,158.7 1,072.7 Long-term debt ................................. 133.5 133.4 124.0 161.6 201.1 Shareholder's equity ............................ 477.2 370.0 454.7 601.0 395.3 - ---------------- (1) Net earnings for the fiscal year ended January 3, 1993 included a $17.3 million after-tax charge attributable to the adoption of Statement of Financial Accounting Standards No. 106, EMPLOYERS ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. (2) Includes special charges of $337.6 million before taxes. See Notes 2 and 3 to Notes to Consolidated Financial Statements. (3) Represents earnings from the Company's furniture business, net of income taxes and the estimated loss on disposal. See Note 3 to Notes to Consolidated Financial Statements.
13 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION YEAR ENDED DECEMBER 29, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995 On November 12, 1996 the Company announced a major restructuring and growth plan designed to massively reduce its cost structure and grow the business in order to restore higher levels of profitability for the Company. The cost reduction portion of the restructuring and growth plan is expected to result in anticipated annual savings estimated to be $225.0 million with 75% realization of these savings in 1997 and the remaining 25% in 1998. These cost savings will result primarily from the consolidation of administrative functions within the Company, the rationalization of manufacturing and warehouse facilities (including the reduction in the number of production facilities from 26 to 8 and warehouses utilized from 61 to 18), the elimination of over 6,000 positions (including 3,300 from the divestiture of non-core businesses described below and the elimination of approximately 2,800 other positions), the centralization of the Company's procurement function and the reduction of the Company's product offerings and stock keeping units ("SKU's"). The restructuring and growth plan also included a redefinition of the Company's core product categories and the elimination of those businesses and product lines that do not fit the core categories. Sunbeam's new core product categories are Appliances, Health Care, Personal Care and Comfort, Outdoor Cooking and Away From Home. Product categories and businesses which were determined to be non-core and have already been divested include the Company's furniture business and time and the temperature product line, both of which were sold in March 1997, and its decorative bedding product line, sold in December 1996. The remaining non-core product categories, which are planned for divestiture in the first half of 1997, are Counselor/Registered trademark/ and Borg/Registered trademark/ scales and the Company's textile mill in Biddeford, Maine. The Company's operating results for 1996 include the effects of a pre-tax special charge of $337.6 million recorded in conjunction with the implementation of the restructuring and growth plan. Approximately 20% of the charge is for cash items of which $63.8 million is accrued at December 29, 1996, primarily for severance costs and lease and other facility exit costs that will be substantially expended during 1997. The special charge to earnings is included in the following categories on the consolidated statement of operations (in millions):
PRE-TAX DOLLAR AFTER-TAX AMOUNT PER SHARE AMOUNT ----------------- ------------------ Restructuring, impairment and other costs ......... $154.9 $ (1.21) Cost of sales .................................... 92.3 (0.72) Selling, general and administrative ............... 42.5 (0.33) Estimated loss from discontinued operations ...... 47.9 (0.39) ------- -------- Total ............................................. $337.6 $ (2.65) ======= ========
As further described in Note 3, the sale of the Company's furniture business assets (primarily inventory, property, plant and equipment) was completed on March 17, 1997. The Company received $62.1 million in cash at closing and expects to receive approximately $10.0 million by June 30, 1997. The Company retained accounts receivable related to the furniture business of approximately $50.0 million as of the closing date. The final purchase price for the furniture business is subject to post-closing adjustment based on the terms of the Asset Purchase Agreement. The Company will finalize its accounting for the loss on disposal of the furniture business in the first quarter of 1997 and could record an additional after-tax loss from discontinued operations. See discussion of Restructuring, Impairment and Other Costs in Note 2 and Discontinued Operations and Assets Held For Sale in Note 3 to the Company's consolidated financial statements for further information regarding the individual components of the special charge. Net sales from continuing operations of $984.2 million for 1996 represents a decrease of $32.7 million, or 3.2%, from 1995. The Company experienced a loss from continuing operations of $196.7 million or $2.37 per share for 1996 versus earnings from continuing operations of $37.6 million or $.45 14 per share in 1995 primarily as a result of the restructuring activities discussed above. The net loss for 1996 was $228.3 million, or $2.75 per share, compared to net earnings of $50.5 million, or $0.61 per share, for 1995. Excluding the impact of special charge items for 1996, earnings from continuing operations before income taxes decreased from $60.6 million in 1995 to a loss of $12.9 million in 1996. Domestic sales represented approximately 80% of total sales of the Company in 1996 and decreased $28.5 million or 3.4% from 1995. This sales decline was driven by lower sales of outdoor cooking products, which declined 7.3% and lower sales of bedding products which declined 9.0% from 1995, primarily as result of lower decorative bedding sales (divested in December 1996). Domestic sales of appliance products were flat with sales increases from new products such as vegetable steamers and toaster ovens being offset by reduced pricing on breadmakers. Sales of other product categories such as health and personal care products and time and temperature products (divested in March 1997) were either flat or declined slightly from 1995 levels. International sales decreased $4.2 million or 2.2% from 1995 primarily as a result of lower sales in Latin America due to political and/or economic instability in several countries such as Ecuador, Peru, Columbia and Venezuela (which suffered a bolivar devaluation in April 1996), a sales decline of 11.2% in Canada as a result of the bankruptcy filing of the Company's then largest Canadian customer offset by a 55.0% increase in sales in Mexico as a result of a more stable economic environment in 1996. The Company's gross margin percentage, excluding the impact of special charges, was 17.9% of sales in 1996, down from 20.4% in 1995, primarily from the underabsorption of higher manufacturing costs and excess manufacturing capacity that has now been realigned for 1997 and beyond by the Company's restructuring and growth plan cost reduction initiatives. Selling, general and administrative ("SG&A") expenses, excluding the impact of special charges described above, were 17.6% of sales in 1996 primarily as a result of an inflated cost structure that has now been realigned for 1997 and beyond. In addition, a $12.0 million fourth quarter 1997 media advertising campaign and one-time expenditures for market research, new packaging, and other growth plan initiatives resulted in higher than normal SG&A spending in 1996. Also included in 1996 SG&A costs were $7.7 million of compensation expense resulting from restricted stock awards made in connection with the employment of a new senior management team. Interest expense for 1996 increased from $9.4 million in 1995 to $13.6 million as a result of increased indebtedness of the Company for working capital requirements and non-recurring capitalized interest in 1995 related to the construction of the Hattiesburg manufacturing and distribution center. The effective income tax rate for 1996 decreased 3 percentage points from 1995 to 35.0% as a result of certain foreign and state operating losses for which no tax benefits were recorded and the non-deductibility of compensation expense related to restricted stock awards. The Company's discontinued furniture operations had revenues of $227.5 million in 1996, up 22.6% from $185.6 million in 1995. This revenue growth was the result of the acquisition of the Samsonite/Registered trademark/ furniture business in November 1995. Excluding the impact of this acquisition, furniture business sales declined 2.1%. Earnings from the discontinued furniture operations, net of taxes, declined from $12.9 million in 1995 to $.8 million in 1996 primarily as a result of lower gross margins from reduced pricing, underabsorption of higher manufacturing costs and higher raw material costs. In addition, SG&A costs increased due to the inclusion of the Samsonite- furniture business, higher distribution and warehousing costs, particularly with resin furniture products, and higher bad debt expenses. YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED JANUARY 1, 1995 Net sales from continuing operations of $1,016.9 million for 1995 decreased $27.4 million, or 2.6%, from 1994. Earnings from continuing operations were $37.6 million or $.45 per share in 1995 compared to $85.3 million in 1994 or $1.03 per share. 15 Domestic sales represented approximately 82% of total Company sales for 1995 and decreased $23.4 million or 2.7% below 1994 levels due to an 8.6% decline in sales of outdoor cooking products offset by a 5.4% increase in appliance sales from new product introductions in late 1994 and 1995 and an 11.5% increase in sales of warming blankets and heated throws. Sales of other product categories, including health and personal care products, and time and temperature products (divested in March 1997), declined 6.1% in 1995. International sales decreased by $4.0 million or 2.1% below 1994 levels primarily as a result of a 53.8% decrease in sales in Mexico as a result of the peso devaluation in late 1994 and the 1995 recession offset by increased sales from expanded distribution in South and Central America, higher sales in Venezuela resulting from consumer anticipation of the devaluation of the bolivar and higher gas grill sales in Europe. For 1995, the gross margin percentage decreased from 26.8% to 20.4%. The decline in margin was due primarily to (1) manufacturing inefficiencies arising from lower than planned production rates, (2) increased promotional expenses, (3) certain inventory writedowns, primarily related to outdoor products unsold from the 1995 season, (4) increased appliance warranty expenses, (5) increases in raw material prices not fully recovered by selling price increases and (6) a higher level of close-out sales of household products in connection with the transition to the Hattiesburg facility and in anticipation of new product launches planned for 1996. Operating earnings for 1995 were $70.2 million, a decrease of $80.8 million from 1994. As a percentage of sales, operating earnings decreased 7.6 percentage points to 6.9% which is primarily attributable to the gross margin percentage decline. SG&A increased from 12.3% to 13.5% of net sales in 1995. SG&A in dollar terms increased $8.7 million in 1995 to $137.5 million primarily from (1) increased provisions for bad debts and customer deductions associated with the bankruptcy filings of certain of the Company's retail customers, (2) non-recurring costs associated with the start-up of the Hattiesburg distribution center (which caused the Company to incur additional costs for temporary distribution labor, overtime costs and costs of outside distribution services as well as delaying closure of a former warehouse), (3) costs associated with International expansion activities in the Far East and Europe, (4) increased depreciation expense related to investments in information systems and the Hattiesburg distribution center and (5) increased investments in product design engineering resources. Interest expense for the year ended December 31, 1995 increased $2.5 million, or 35.3%, over 1994 due primarily to increased indebtedness of the Company in support of working capital and capital spending requirements. The effective income tax rate decreased from 41.1% to 38.0%, or 3.1 percentage points, from 1994. The reduced effective tax rate was a result of (1) increased earnings of certain foreign operations and dividend payments from the Company's Venezuelan subsidiary, which allowed for the utilization of net operating loss carryforwards and foreign tax credits for which no tax benefits were recorded, and (2) state income tax benefits associated with the Hattiesburg facility. The Company's discontinued furniture operations had revenues of $186.5 million in 1995, up 20.9% from $154.2 million in 1994. This revenue growth was the result of the acquisition of the Rubbermaid- resin furniture business in September 1994. Excluding the impact of this acquisition, furniture business sales increased 3.9% primarily from additional sales of wrought iron furniture. Earnings from the discontinued furniture operations, net of taxes, declined from $21.7 million in 1994 to $12.9 million in 1995 primarily as a result of lower gross margins from higher raw material costs, particularly resin. In addition, SG&A costs increased due to the inclusion of the resin furniture business and from higher distribution and warehousing costs associated with the resin facility. In addition, the bankruptcy filing of one large customer adversely impacted the discontinued furniture business operating results in 1995. FOREIGN OPERATIONS During 1996 almost 90% of the Company's business was conducted in U.S. dollars (including both domestic sales and U.S. dollar denominated export sales primarily to certain Latin American markets). 16 The Company's non-U.S. dollar denominated sales are made principally by subsidiaries in Mexico, Venezuela, Canada and Europe. Venezuela is considered a hyperinflationary economy for accounting purposes; therefore, translation adjustments related to Venezuelan net monetary assets are included as a component of net earnings. Such translation adjustments were not material to 1995 and 1996 operating results. As a result of continued inflation, Mexico will be considered a hyperinflationary economy for accounting purposes beginning in 1997. LIQUIDITY AND CAPITAL RESOURCES As of December 29, 1996, the Company had cash and cash equivalents of $11.5 million and total debt of $202.0 million. Cash provided by operating activities during 1996 was $14.2 million compared to $81.5 million in 1995. This decrease is primarily attributable to the reduction in earnings (loss) before non-cash charges (depreciation, restructuring and other non-cash special charges, loss on discontinued operations and deferred taxes). Capital spending, inclusive of a $5.0 million warehouse expansion financed with a capital lease, totaled $75.3 million in 1996 (including $14.5 million related to the discontinued furniture operations) and was primarily attributable to new product development, cost reduction initiatives and warehouse expansions. Capital spending in 1995 reflected approximately $59.4 million associated with the Hattiesburg facility, $27.4 million related to new product development and $10.8 million attributable to the discontinued furniture business. The remaining 1995 spending was primarily attributable to cost reduction projects, productivity initiatives and environmental compliance including $14.4 million for a powder coat paint system for outdoor cooking products. The Company anticipates 1997 capital spending to be approximately 75% of 1996 levels and primarily related to new product introductions and certain facility rationalization initiatives. Cash used in investing activities for 1995 and 1994 also includes the purchase of certain furniture businesses, both of which were included in the divestiture of the Company's furniture business completed in March 1997. Cash used in investing activities in 1994 is net of $23.5 million received from the surrender of certain life insurance policies on former employees of the Company. Cash provided by financing activities in 1996 includes $30.0 million in net borrowings under the Company's $500.0 million revolving credit facility, $11.5 million in new issuances of long-term debt and $4.6 million in proceeds from the sale of treasury shares to certain executives of the Company. Cash used in financing activities in 1995 reflects $13.1 million used for the purchase of treasury stock in connection with a stock repurchase program the Company had authorized in 1995 and which it discontinued in late 1996. The Company is a party to various environmental matters, substantially all related to previously divested operations. In connection with the Company's restructuring plan a comprehensive review of environmental exposures was undertaken and the Company accelerated its strategy for the resolution and settlement of certain environmental claims. This review and change in strategy resulted in additional environmental reserves being recorded in 1996 as more fully described in Note 12 to the consolidated financial statements. In management's opinion, the ultimate resolution of these environmental matters will not have a material adverse effect upon the Company's financial condition. On a limited basis, the Company selectively uses derivatives (interest rate swaps and foreign exchange option and forward contracts) to manage interest rate and foreign exchange exposures that arise in the normal course of business. No derivative contracts are entered into for trading or speculative purposes. The use of derivatives did not have a material impact on the Company's financial results in 1996 and 1995. See Note 6 to the Company's consolidated financial statements. The Company believes its cash flow from operations, existing cash and cash equivalent balances as well as its revolving credit facility will be sufficient to finance its requirements to support working capital needs, remaining cash expenditures required to implement its restructuring and growth plan, 17 capital expenditures and debt service in the foreseeable future. NEW ACCOUNTING STANDARDS In December 1995, Statement of Financial Accounting Standard ("SFAS") No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, was issued. SFAS No. 123 allows either adoption of a fair value method for accounting for stock-based compensation plans or continuation of accounting under APB No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related interpretations with supplemental disclosures. The Company has chosen to account for its stock options and employee stock purchase plans using the intrinsic value based method prescribed in APB Opinion No. 25 and, accordingly, does not recognize compensation expense for stock option grants made at an exercise price equal to or in excess of the fair market value of the stock at the date of grant. Pro forma net income and earnings per share amounts as if the fair value method had been adopted are presented in Note 7 to the consolidated financial statements. The adoption of SFAS No. 123 will not impact the Company's results of operations, financial position or cash flows. CAUTIONARY STATEMENTS The Company's Cautionary Statements set forth in Part I, Item 1 of this report, under the heading "Cautionary Statements," are incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The response to this item appears in Item 14(a) of this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding the Company's directors is incorporated by reference to the information set forth under the caption "Election of Directors" in the Company's Proxy Statement for the 1997 Annual Meeting of Shareholders (the "Proxy Statement"), which Proxy Statement will be filed with the Securities and Exchange Commission (the "SEC") not later than 120 days after the end of the Company's fiscal year pursuant to Regulation 14A. Information regarding executive officers of the Registrant is included under a separate caption in Part I hereof. Information regarding compliance with Section 16(a) of the Exchange Act is incorporated by references to the information included under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's Proxy Statement. ITEM 11. EXECUTIVE COMPENSATION Information regarding this item is incorporated by reference to the information included under the captions "Executive Compensation", "Compensation Committee Interlocks and Insider Participation" and "Directors' Compensation" in the Company's Proxy Statement, which will be filed with the SEC not later than 120 days after the end of the Company's fiscal year pursuant to Regulation 14A. 18 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information regarding this item is incorporated by reference to the information included under the captions "Security Ownership of Certain Shareholders" and "Security Ownership by Management" in the Company's Proxy Statement, which will be filed with the SEC not later than 120 days after the end of the Company's fiscal year pursuant to Regulation 14A. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information regarding this item is incorporated by reference to the information included under the caption "Certain Relationships and Related Transactions" in the Company's Proxy Statement, which will be filed with the SEC not later than 120 days after the end of the Company's fiscal year pursuant to Regulation 14A. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) The consolidated financial statements, related notes thereto and the report of independent certified public accountants required by Item 8 are listed on page F-1 herein. (2) The listing of financial statement schedules appears on page F-1 herein. (3)(a) Exhibits required by Item 601 are set forth below, including the management contracts or compensatory plans or arrangements required pursuant to Item 601 which are designated as Exhibits 10a to 10i and 10s to 10cc.
EXHIBIT NO. DESCRIPTION - --------- ----------- 2a. Asset Purchase Agreement dated February 10, 1997, among Sunbeam Products, Inc., Sunbeam Furniture Company, OP II, Inc., Jacuzzi Outdoor Products, Inc., Sunbeam Corporation and U.S. Industries, Inc. 2b. Amendment to Asset Purchase Agreement dated as of March 17, 1997, among Sunbeam Products, Inc., Sunbeam Furniture Company, OP II, Inc., Sunlite Casual Furniture, Inc., Sunbeam Corporation and U.S. Industries, Inc. 3a. Amended and Restated Certificate of Incorporation of Sunbeam.(10) 3b. By-laws of Sunbeam, as amended(11) 10a. Employment Agreement dated as of July 18, 1996, by and between Sunbeam and Albert J.Dunlap.(10) 10b. Employment Agreement dated as of July 22, 1996, by and between Sunbeam and Russell A. Kersh.(11) 10c. Employment Agreement dated as of July 29, 1996, by and between Sunbeam and David C. Fannin.(11) 10d. Employment Agreement dated as of January 1, 1997, by and between Sunbeam and Donald Uzzi. 10e. Sunbeam Executive Benefit Replacement Plan.(7) 10f. Amended and Restated Sunbeam Equity Team Plan. 10g. Performance Based Compensation Plan. 10h. Sunbeam Deferred Compensation Plan for Outside Directors dated as of December 15, 1993.(2)
19
EXHIBIT NO. DESCRIPTION - --------- ----------- 10i. Employment Agreement dated as of June 24, 1996, by and between the Company and Charles J. Thayer.(10) 10j. Tax Sharing Agreement dated as of October 31, 1990 by and among Sunbeam, SAIL, SOHO, Montey and the subsidiaries of Sunbeam listed therein.(1) 10k. Guarantee Agreement, dated as of June 1, 1994, between Sunbeam and Continental Bank, N.A., as Trustee.(4) 10l. Trust Indenture, dated as of June 1, 1994, between Mississippi Business Finance Corporation ("MBFC"), and Continental Bank, N.A., as Trustee.(4) 10m. Loan Agreement, dated as of June 1, 1994, between MBFC and Sunbeam.(4) 10n. $75 million Sunbeam promissory note, dated as of June 21,1994, payable to MBFC.(4) 10o. Leasehold Deed of Trust and Security Agreement, dated as of June 1, 1994, among Sunbeam, Jim B. Tohill, as Trustee, and MBFC.(4) 10p. Credit Agreement dated as of September 16, 1996, among the Company, The Chase Manhattan Bank and the Lenders named therein.(11) 10q. First Amendment dated as of November 21, 1996 to the Credit Agreement dated as of September 16, 1996, among the Company, The Chase Manhattan Bank and the Lenders named therein. 10r. Second Amendment dated as of January 31, 1997 to the Credit Agreement dated as of September 16, 1996, among the Company, The Chase Manhattan Bank and the Lenders named therein. 10s. Employment Agreement dated as of August 1, 1993, by and between Sunbeam and Roger W. Schipke.(3) 10t. First Amendment to Employment Agreement between the Company and Roger W. Schipke dated as of June 1, 1994.(5) 10u. Equity Award Agreement dated as of August 1, 1993, by and between Sunbeam and Roger W. Schipke.(3) 10v. Amendment to Equity Award Agreement and Stock Pledge Agreement dated September 1, 1994, by and between the Company and Roger W. Schipke.(5) 10w. Employment Agreement made and effective as of January 1, 1994, by and between the Company and James J. Clegg.(6) 10x. Employment Agreement made and effective as of January 1, 1994, by and between the Company and Paul M. O'Hara.(7) 10y. Agreement between the Company and Roger W. Schipke dated as of December 12, 1995.(9) 10z. Agreement and Release between Roger W. Schipke and the Company dated May 22, 1996.(10) 10aa. Agreement and Release between James J. Clegg and the Company dated July 23, 1996(10). 10bb. Agreement and Release between Paul M. O'Hara and the Company dated August 7, 1996.(11) 10cc. Agreement, Release, Covenant Not to Sue and Confidentiality Agreement between James D. Wilson and the Company dated March 15, 1997. 11. Calculations of Earnings Per Share of Common Stock. 21. Subsidiaries of the Registrant. 23. Consent of Arthur Andersen LLP. 27. Financial Data Schedule, submitted electronically to the Securities and Exchange Commission for information only and not filed. - ---------------- (1) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1990. (2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended July 4, 1993. 20 (3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended October 3, 1993. (4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended July 3, 1994. (5) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended October 2, 1994. (6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 1994. (7) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1995. (8) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended July 2, 1995. (9) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 21, 1995. (10) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996. (11) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 29, 1996.
(b) Reports on Form 8-K. The registrant filed a report on Form 8-K on November 12, 1996. (c) Exhibits The exhibits required by Item 601 are filed herewith. (d) Financial Statement Schedules The Financial Statement Schedules required by Regulation S-X are filed herewith. 21 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SUNBEAM CORPORATION BY: /s/ RUSSELL A. KERSH -------------------------------- RUSSELL A. KERSH Executive Vice President, Finance and Administration (Principal Financial Officer) Dated: March 31, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
NAME AND SIGNATURE TITLE DATE ------------------ ----- ---- /s/ ALBERT J. DUNLAP Chairman, Chief Executive March 31, 1997 - ------------------------------ Officer and Director Albert J. Dunlap (Principal Executive Officer) /s/ CHARLES M. ELSON Director March 31, 1997 - ------------------------------ Charles M. Elson /s/ RUSSELL A. KERSH Executive Vice President, March 31, 1997 - ------------------------------ Finance and Administration Russell A. Kersh and Director /s/ HOWARD G. KRISTOL Director March 31, 1997 - ------------------------------ Howard G. Kristol /s/ PETER A. LANGERMAN Director March 31, 1997 - ------------------------------ Peter A. Langerman /s/ CHARLES J. THAYER Director March 31, 1997 - ------------------------------ Charles J. Thayer /s/ FAITH WHITTLESEY Director March 31, 1997 - ------------------------------ Faith Whittlesey /s/ ROBERT J. GLUCK Vice President, Controller March 31, 1997 - ------------------------------ (Principal Accounting Officer) Robert J. Gluck
22 SUNBEAM CORPORATION AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
PAGE ------ FINANCIAL STATEMENTS: Report of Independent Certified Public Accountants ................................. F-2 Consolidated Statements of Operations for the Fiscal Years Ended January 1, 1995, December 31, 1995 and December 29, 1996 F-3 Consolidated Balance Sheets as of December 31, 1995 and December 29, 1996 ............ F-4 Consolidated Statements of Shareholders' Equity for the Fiscal Years Ended January 1, 1995, December 31, 1995 and December 29, 1996 F-5 Consolidated Statements of Cash Flows for the Fiscal Years Ended January 1, 1995, December 31, 1995 and December 29, 1996 F-6 Notes to Consolidated Financial Statements .......................................... F-7 FINANCIAL STATEMENT SCHEDULE:* II. Valuation and Qualifying Accounts ................................................ F-27 - ---------------- * All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore not included herein.
F-1 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of Sunbeam Corporation: We have audited the accompanying consolidated balance sheets of Sunbeam Corporation (a Delaware corporation) and subsidiaries as of December 31, 1995 and December 29, 1996 and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three fiscal years in the period ended December 29, 1996. These consolidated financial statements and the schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sunbeam Corporation and subsidiaries as of December 31, 1995 and December 29, 1996, and the results of their operations and their cash flows for each of the three fiscal years in the period ended December 29, 1996 in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the accompanying index to the financial statements and financial statement schedule is presented for purposes of complying with the Securities and Exchange Commission's rules and is not a required part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Fort Lauderdale, Florida, January 29, 1997, except with respect to the matters discussed in Note 3, as to which the date is March 17, 1997. F-2 SUNBEAM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FISCAL YEARS ENDED ------------------------------------------------ JANUARY 1, DECEMBER 31, DECEMBER 29, 1995 1995 1996 ------------- --------------- -------------- Net sales ................................................ $1,044,247 $1,016,883 $ 984,236 Cost of goods sold ....................................... 764,355 809,130 900,573 Selling, general and administrative expense ............... 128,836 137,508 216,129 Restructuring, impairment and other costs ............... - - 154,869 ---------- ---------- --------- Operating earnings (loss) ................................. 151,056 70,245 (287,335) Interest expense .......................................... 6,974 9,437 13,588 Other (income) expense, net .............................. (712) 173 1,638 ---------- ---------- --------- Earnings (loss) from continuing operations before income taxes ............................................. 144,794 60,635 (302,561) Income taxes (benefit): Current ................................................ 33,227 (2,105) (28,062) Deferred ................................................ 26,283 25,146 (77,828) ---------- ---------- --------- 59,510 23,041 (105,890) ---------- ---------- --------- Earnings (loss) from continuing operations ............... 85,284 37,594 (196,671) Earnings from discontinued operations, net of taxes ...... 21,727 12,917 839 Estimated loss on sale of discontinued operations, net of taxes ............................................. - - (32,430) ---------- ---------- --------- Net earnings (loss) ....................................... $ 107,011 $ 50,511 $(228,262) ========== ========== ========= Earnings (loss) per share of common stock from continuing operations .................................... $ 1.03 $ 0.45 $ (2.37) ========== ========== ========= Net earnings (loss) per share of common stock ............ $ 1.30 $ 0.61 $ (2.75) ========== ========== ========= Weighted average common shares outstanding ............... 82,553 82,819 82,925 ========== ========== =========
See Notes to Consolidated Financial Statements. F-3 SUNBEAM CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
DECEMBER 31, DECEMBER 29, 1995 1996 --------------- -------------- ASSETS Current assets: Cash and cash equivalents .......................................... $ 28,273 $ 11,526 Receivables, net ................................................... 216,195 213,438 Inventories ......................................................... 209,106 162,252 Net assets of discontinued operations and other assets held for sale ...................................................... 101,632 102,847 Deferred income taxes ................................................ 26,333 93,689 Prepaid expenses and other current assets ........................... 19,543 40,411 --------- --------- Total current assets ............................................. 601,082 624,163 Property, plant and equipment, net .................................... 287,080 220,088 Trademarks and trade names, net ....................................... 214,006 200,262 Other assets ......................................................... 56,516 28,196 --------- --------- $1,158,684 $1,072,709 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt and current portion of long-term debt ............... $ 1,166 $ 921 Accounts payable ................................................... 94,191 107,319 Restructuring accrual ................................................ 13,770 63,834 Other current liabilities .......................................... 80,204 99,509 --------- --------- Total current liabilities ....................................... 189,331 271,583 Long-term debt ...................................................... 161,133 201,115 Other long-term liabilities .......................................... 50,088 64,376 Non-operating liabilities ............................................. 80,167 88,075 Deferred income taxes ................................................ 76,932 52,308 Commitments and contingencies (Notes 12 and 13) Shareholders' equity: Preferred stock (2,000,000 shares authorized, none outstanding) ...... - - Common stock (issued 87,802,667 and 88,441,479 shares) ............... 878 884 Paid-in capital ...................................................... 441,786 447,948 Retained earnings ................................................... 266,698 35,118 Other ............................................................... (24,880) (25,310) --------- --------- 684,482 458,640 Treasury stock, at cost (5,905,600 and 4,478,814 shares) ............ (83,449) (63,388) --------- --------- Total shareholders' equity ........................................ 601,033 395,252 --------- --------- $1,158,684 $1,072,709 ========= =========
See Notes to Consolidated Financial Statements. F-4 SUNBEAM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
COMMON PAID-IN RETAINED OTHER TREASURY STOCK CAPITAL WARRANTS EARNINGS (NOTE 4) STOCK --------- ----------- ----------- ------------ ------------ ------------ Balance at January 1, 1994 ......... $876 $440,012 $ 2,368 $ 182,148 $ (14,043) $ (174,070) Net earnings ..................... - - - 107,011 - - Common dividends ($.04 per share) .................. - - - (3,169) - - Exercise of stock options and warrants ....................... 56 21,864 (2,368) - - - Issuance of restricted stock ...... - - - - (108) - Amortization of unearned compensation ..................... - - - - 1,269 - Minimum pension liability ......... - - - - (561) - Translation adjustments ............ - - - - (6,675) - ---- -------- ------- --------- --------- ---------- Balance at January 1, 1995 ......... 932 461,876 - 285,990 (20,118) (174,070) ---- -------- ------- --------- --------- ---------- Net earnings ..................... - - - 50,511 - - Common dividends ($.04 per share) .................. - - - (3,268) - - Exercise of stock options ......... 20 17,013 - - - - Amortization of unearned compensation ..................... - - - - 582 - Retirement of treasury shares ...... (74) (37,103) - (66,535) - 103,712 Purchase of common stock for treasury ..................... - - - - - (13,091) Minimum pension liability ......... - - - - (199) - Translation adjustments ............ - - - - (5,145) - ---- -------- ------- --------- --------- ---------- Balance at December 31, 1995 ...... 878 441,786 - 266,698 (24,880) (83,449) ---- -------- ------- --------- --------- ---------- Net loss ........................... - - - (228,262) - - Common dividends ($.04 per share) .................. - - - (3,318) - - Exercise of stock options ......... 6 7,313 - - - - Grant of restricted stock ......... - (1,120) - - (14,346) 15,466 Amortization of unearned compensation ..................... - - - - 7,707 - Minimum pension liability ......... - - - - 4,963 - Retirement and sale of treasury shares .................. - (31) - - - 4,595 Translation adjustments ............ - - - - 1,246 - ---- -------- ------- --------- --------- ---------- Balance at December 29, 1996 ...... $884 $447,948 $ - $ 35,118 $ (25,310) $ (63,388) ==== ======== ======= ========= ========= ==========
See Notes to Consolidated Financial Statements. F-5 SUNBEAM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
FISCAL YEARS ENDED ------------------------------------------------ JANUARY 1, DECEMBER 31, DECEMBER 29, 1995 1995 1996 ------------- --------------- -------------- OPERATING ACTIVITIES: Net earnings (loss) .......................................... $ 107,011 $ 50,511 $ (228,262) Adjustments to reconcile net earnings to net cash provided by operating activities: ...................................... Depreciation and amortization .............................. 35,766 44,174 47,429 Restructuring, impairment and other costs .................. - - 154,869 Other non-cash special charges .............................. - - 128,800 Estimated loss on sale of discontinued operations, net of taxes ................................................ - - 32,430 Deferred income taxes ....................................... 26,283 25,146 (77,828) Increase (decrease) in cash from changes in working capital: Receivables, net ............................................. (48,228) (4,499) (13,829) Inventories ................................................ (36,760) (4,874) (11,651) Prepaid expenses and other current assets .................. 792 (2,498) 4,288 Accounts payable ............................................. 5,567 9,245 14,735 Income taxes payable ....................................... 16,818 (18,452) (21,942) Payment of other long-term and non-operating liabilities ...... (17,310) (21,719) (27,089) Other, net ................................................... (9,104) 4,482 12,213 --------- --------- ---------- Net cash provided by operating activities .................. 80,835 81,516 14,163 --------- --------- ---------- INVESTING ACTIVITIES: Capital expenditures .......................................... (90,929) (140,053) (75,336) Decrease (increase) in investments restricted for plant construction ............................................. (46,362) 45,755 - Purchase of businesses ....................................... (19,284) (13,053) - Cash surrender value of life insurance policies ............... 23,549 - - Sale of marketable securities, net ........................... 14,708 - - Other, net ................................................... 200 - (860) --------- --------- ---------- Net cash used in investing activities ..................... (118,118) (107,351) (76,196) --------- --------- ---------- FINANCING ACTIVITIES: Net borrowings under revolving credit facility ............... 35,000 40,000 30,000 Issuance of long-term debt .................................... 78,013 - 11,500 Payments of debt obligations ................................. (127,446) (5,417) (1,794) Proceeds from exercise of stock options and warrants ......... 19,151 9,818 4,684 Purchase of common stock for treasury ........................ - (13,091) - Sale of treasury stock ....................................... - - 4,578 Payments of dividends on common stock ........................ (3,169) (3,268) (3,318) Other financing activities .................................... 2,606 (264) (364) --------- --------- ---------- Net cash provided by financing activities .................. 4,155 27,778 45,286 --------- --------- ---------- Net increase (decrease) in cash and cash equivalents ........................................ (33,128) 1,943 (16,747) Cash and cash equivalents at beginning of year .................. 59,458 26,330 28,273 --------- --------- ---------- Cash and cash equivalents at end of year ........................ $ 26,330 $ 28,273 $ 11,526 ========= ========= ==========
See Notes to Consolidated Financial Statements. F-6 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Sunbeam Corporation ("Sunbeam" or the "Company") is a leading designer, manufacturer and marketer of branded consumer products. The Sunbeam/Registered trademark/ and Oster/Registered trademark/ brands have been household names for generations, and the Company is a market share leader in many of its product categories. The Company markets its products through virtually every category of retailer including mass merchandisers, catalog showrooms, warehouse clubs, department stores, catalogues, Company-owned outlet stores, television shopping channels, hardware stores, home centers, drug and grocery stores, pet supply retailers, as well as independent distributors and the military. The Company also sells its products to commercial end users such as hotels and other institutions. Approximately 80% of total Company sales are generated in the United States. The remaining sales are generated primarily in Latin America, Mexico, Canada and Europe. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries that it controls. All material intercompany balances and transactions have been eliminated. PRESENTATION OF FISCAL PERIODS The Company's fiscal year ends on the Sunday nearest December 31. Fiscal years 1994, 1995 and 1996 ended on January 1, 1995, December 31, 1995 and December 29, 1996, respectively, which encompassed a 52-week period. USE OF ESTIMATES The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant accounting estimates include the establishment of the allowance for doubtful accounts, reserves for product warranty, product liability, excess and obsolete inventory, litigation and environmental exposures and the estimated loss on the sale of discontinued operations. CONCENTRATIONS OF CREDIT RISK Substantially all of the Company's trade receivables are due from retailers and distributors located throughout the United States, Latin America and Canada. Approximately 35% of the Company's sales in 1996 were to its five largest customers. The Company establishes its credit policies based on an ongoing evaluation of its customers creditworthiness and competitive market conditions and establishes its allowance for doubtful accounts based on an assessment of exposures to credit losses at each balance sheet date. The Company believes its allowance for doubtful accounts is sufficient based on the credit exposures outstanding at December 29, 1996. However, several retailers filed for bankruptcy protection and/or reported lower sales and earnings in 1996 and if retail softness occurs in 1997, it is possible that additional credit losses could be incurred. F-7 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED) INVENTORIES Inventories are stated at the lower of cost or market with cost being determined principally by the first-in, first-out method. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is stated at cost. The Company provides for depreciation using primarily the straight-line method in amounts that allocate the cost of property, plant and equipment over the following useful lives: Buildings and improvements ............ 20 to 40 years Machinery, equipment and tooling ...... 3 to 15 years Furniture and fixtures ............... 3 to 10 years Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvement or the term of the lease. LONG-LIVED ASSETS During 1996, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. See Notes 2 and 3 for a discussion of asset impairment charges as a result of the implementation of the Company's restructuring and growth plan. CAPITALIZED INTEREST Interest costs for the construction of certain long-term assets are capitalized and amortized over the related assets' estimated useful lives. Total interest costs during 1995 and 1996 amounted to $12.7 million and $14.0 million, respectively, of which $3.3 million and $.4 million, respectively, was capitalized into the construction cost of the long-term assets. AMORTIZATION PERIODS Trademarks and trade names are being amortized on a straight-line basis over 40 years. REVENUE RECOGNITION The Company recognizes revenue from product sales at the time of shipment. Net sales is comprised of gross sales less provisions for expected customer returns, discounts, promotional allowances and co-operative advertising. WARRANTY COSTS The Company provides for warranty costs in amounts it estimates will be needed to cover future warranty obligations for products sold during the year. Estimates of warranty costs are periodically reviewed and adjusted, when necessary, to consider actual experience. F-8 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED) ADVERTISING COSTS Advertising costs, included in "Selling, General and Administrative Expense," are expensed as incurred. Co-operative advertising costs are expensed ratably over the year in relation to revenues. FOREIGN CURRENCY TRANSLATION The assets and liabilities of subsidiaries, other than those operating in highly inflationary environments, are translated into U.S. dollars at year-end exchange rates, with resulting translation gains and losses accumulated in a separate component of shareholders' equity. Income and expense items are converted into U.S. dollars at average rates of exchange prevailing during the year. For subsidiaries operating in highly inflationary environments, specifically Venezuela, inventories and property, plant and equipment are translated at the rate of exchange on the date the assets were acquired, while other assets and liabilities are translated at year-end exchange rates. Translation adjustments for those operations are included in results of operations. STOCK-BASED COMPENSATION PLANS In 1995, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION. SFAS No. 123 allows either adoption of a fair value method for accounting for stock-based compensation plans or continuation of accounting under Accounting Principles Board ("APB") Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related interpretations with supplemental disclosures. The Company has chosen to account for its stock options using the intrinsic value based method prescribed in APB Opinion No. 25 and, accordingly, does not recognize compensation expense for stock option grants made at an exercise price equal to or in excess of the fair market value of the stock at the date of grant. Pro-forma net income and earnings per share amounts as if the fair value method had been adopted are presented in Note 7 herein. The adoption of SFAS No. 123 will not impact the Company's results of operations, financial position or cash flows. EARNINGS PER SHARE OF COMMON STOCK Earnings per common share calculations are determined by dividing earnings (loss) available to common shareholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Primary and fully diluted earnings per share are equivalent for each of the fiscal years presented. RECLASSIFICATIONS Certain prior year amounts have been reclassified to reflect discontinued operations as described in Note 3. 2. RESTRUCTURING, IMPAIRMENT AND OTHER COSTS On November 12, 1996, the Company announced the details of its restructuring and growth plan for the future. The cost reduction phase of the plan includes the consolidation of administrative F-9 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 2. RESTRUCTURING, IMPAIRMENT AND OTHER COSTS-(CONTINUED) functions within the Company, the rationalization of manufacturing and warehouse facilities, the centralization of the Company's procurement function, and reduction of the Company's product offerings and stock keeping units ("SKU's"). The Company also announced plans to divest several lines of business which it determined are not core for Sunbeam (see Note 3). Since the restructuring plan was announced, the Company has consolidated six divisional and regional headquarters functions into a single worldwide corporate headquarters in Delray Beach, Florida and outsourced certain back office activities resulting in a 50% reduction in total back-office/ administrative headcount. Overall, the restructuring plan calls for a reduction in the number of production facilities from 26 to 8 and warehouses from 61 to 18. The restructuring plan will result in the elimination of over 6,000 positions from the Company's workforce, including 3,300 from the disposition of non-core business operations and the elimination of approximately 2,800 other positions. The Company completed the major phases of the restructuring plan by January 1997. In conjunction with the implementation of the restructuring and growth plan, the Company recorded a pre-tax special charge to earnings of approximately $337.6 million in the fourth quarter of 1996. This amount is allocated as follows in the accompanying Consolidated Statement of Operations: $154.9 million to Restructuring, Impairment and Other Costs as further described below; $92.3 million to Cost of Goods Sold related principally to inventory write-downs from the reduction in SKU's and costs of inventory liquidation programs; $42.5 million to Selling, General and Administrative expenses principally for increases in environmental and litigation reserves (see Notes 12 and 13) and other reserve categories; and the estimated pre-tax loss on the divestiture of the Company's furniture business of approximately $47.9 million. Amounts included in Restructuring, Impairment and Other Costs in the accompanying Consolidated Statement of Operations include cash items such as severance and other employee costs of $43.0 million, lease obligations and other exit costs associated with facility closures of $12.6 million, $7.5 million of start-up costs on back office outsourcing initiatives and other costs related to the implementation of the restructuring and growth plan. Expenditures for the cash restructuring items will be substantially completed in 1997. Non-cash Restructuring, Impairment and Other Costs include $91.8 million related to asset write-downs to net realizable value for disposals of excess facilities and equipment and non-core product lines, write-offs of redundant computer systems from the administrative back-office consolidations and outsourcing initiatives and intangible, packaging and other asset write-downs related to exited product lines and SKU reductions. 3. DISCONTINUED OPERATIONS AND OTHER ASSETS HELD FOR SALE As part of the restructuring plan and redefinition of its core businesses, the Company also announced the divestiture of the furniture business, by a sale of assets. On February 10, 1997, the Company entered into an agreement to sell the business to U.S. Industries, Inc. which was completed on March 17, 1997. In connection with the sale of these assets (primarily inventory, property, plant and equipment), the Company received approximately $62.1 million in cash at closing and, in addition, expects to receive approximately $10.0 million by June 30, 1997. The Company retained accounts receivable related to the furniture business of approximately $50.0 million as of the closing date. The final purchase price is subject to post-closing adjustments based on the terms of the Asset Purchase Agreement. In connection with the furniture divestiture, the Company recorded a provision for estimated losses to be incurred on the sale of $32.4 million, net of applicable income tax benefits. The Company will F-10 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 3. DISCONTINUED OPERATIONS AND OTHER ASSETS HELD FOR SALE-(CONTINUED) finalize its accounting for the loss on disposal of the furniture business in the first quarter of 1997 and could record an additional after-tax loss from discontinued operations. Earnings from the discontinued furniture business were $21.7 million in 1994, $12.9 million in 1995 and $.8 million in 1996, net of applicable income taxes of $15.2 million, $7.9 million and $.5 million, respectively. Revenues for the discontinued furniture business were $154.2 million in 1994, $185.6 million in 1995 and $227.5 million in 1996. These revenues are not included in sales as reported in the accompanying Consolidated Statement of Operations. In addition to the furniture business divestiture, the Company also announced its intent to sell other non-core product lines and assets as part of its restructuring plan, including time and temperature products, Counselor/Registered trademark/ and Borg/Registered trademark/ scales, decorative bedding products and a textile facility. Anticipated losses to be incurred on the disposal of these assets, which consist primarily of write-downs of assets to net realizable value, are included in Restructuring, Impairment and Other Costs in the Consolidated Statement of Operations as described in Note 2. The Company completed the sale of its decorative bedding product line in December 1996 and its time and temperature product line in March 1997. The remaining asset divestitures are expected to be completed in the first half of 1997. 4. SHAREHOLDERS' EQUITY The Company has 200,000,000 shares of $.01 par value common stock authorized. At December 29, 1996 there were 9,021,837 shares of common stock reserved for issuance upon the exercise of outstanding stock options. In June 1995, the Company retired 7,376,395 shares of common stock held in treasury, and such shares were returned to the status of authorized but unissued shares. As a result, $103.7 million assigned to treasury stock has been eliminated with a corresponding decrease to common stock, paid-in capital and retained earnings. In 1995, the Company repurchased 905,600 shares of its common stock at a total cost of $13.1 million. In July 1996, the Company sold 321,786 shares of common stock for total proceeds of approximately $4.4 million, and granted 1,100,000 shares of restricted stock in connection with the employment of a new Chairman and Chief Executive Officer and certain other officers of the Company. Compensation expense attributable to the restricted stock awards is being amortized to expense beginning in 1996 over the periods in which the restrictions lapse (which in the case of 333,333 shares, was immediately upon the date of grant, in the case of 666,667 shares, is equally over two years from the date of grant and in the case of the remaining restricted shares, is equally over three years from the dates of grant). Total compensation expense recognized for restricted stock grants in 1996 was $7.7 million. F-11 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 4. SHAREHOLDERS' EQUITY-(CONTINUED) Information regarding other changes in shareholders' equity is summarized below (in thousands):
CURRENCY MINIMUM TRANSLATION PENSION UNEARNED ADJUSTMENTS LIABILITY COMPENSATION TOTAL -------------- ------------ --------------- ------------------ Balance at January 2, 1994 .................. $ (1,537) $ (10,366) $ (2,140) $ (14,043) Issuance of restricted stock ............... - - (108) (108) Amortization of unearned compensation ...... - - 1,269 1,269 Increase in minimum pension liability (net of tax of $357) ........................ - (561) - (561) Translation adjustments ..................... (6,675) - - (6,675) -------- --------- -------- ---------- Balance at January 1, 1995 .................. (8,212) (10,927) (979) (20,118) Amortization of unearned compensation ...... - - 582 582 Increase in minimum pension liability (net of tax of $127) ........................ - (199) - (199) Translation adjustments ..................... (5,145) - - (5,145) -------- --------- -------- ---------- Balance at December 31, 1995 ............... (13,357) (11,126) (397) (24,880) Grant of restricted stock .................. - - (14,346) (14,346) Amortization of unearned compensation ...... - - 7,707 7,707 Decrease in minimum pension liability (net of tax of $2,672) ...................... - 4,963 - 4,963 Translation adjustments ..................... 1,246 - - 1,246 -------- --------- -------- ---------- Balance at December 29, 1996 ............... $(12,111) $ (6,163) $ (7,036) $ (25,310) ======== ========= ======== ==========
5. CREDIT FACILITIES AND LONG-TERM DEBT In June 1994, the Mississippi Business Finance Corporation ("MBFC") issued $75 million of 7.85% Industrial Development Revenue Notes (the "Notes") maturing serially in eleven equal annual installments beginning June 1999 to certain institutional investors through a private placement. The MBFC loaned the proceeds of the Notes to a subsidiary of the Company under a non-recourse loan agreement (the "Hattiesburg Loan") restricting the use of such funds to the acquisition, design, construction and equipping of the Hattiesburg, Mississippi manufacturing and distribution center. The Notes are guaranteed by the Company and the Hattiesburg Loan is secured by the Hattiesburg facility. In September 1996, the Company entered into a $500 million syndicated unsecured five year revolving credit facility (the "Credit Agreement") which replaced a previous credit facility of $500 million. The Credit Agreement was amended in November 1996 and January 1997. Under the Credit Agreement, the Company can borrow under a competitive bid option, or at a spread above LIBOR (currently .50%) or at a bank base rate. In addition, the Company pays an annual facility fee (currently .25%). The Credit Agreement contains certain financial covenants. The aggregate annual principal payments on long-term debt, excluding amounts outstanding under the Credit Agreement, due in each of the years 1997-2001, are $.9 million, $.7 million, $7.7 million, $7.9 million and $7.9 million, respectively. F-12 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 5. CREDIT FACILITIES AND LONG-TERM DEBT-(CONTINUED) Long-term debt at the end of each fiscal year consists of the following (in thousands):
1995 1996 ----------- ---------- Revolving credit facility, weighted average interest rate of 5.99% and 5.68% at December 31, 1995, and December 29, 1996, respectively ...... $75,000 $105,000 Hattiesburg industrial revenue bond due 2009, fixed interest rate of 7.85% ............................................................ 75,000 75,000 Other long-term borrowings, due through 2012, weighted average interest rate of 6.84% and 4.95%, at December 31, 1995 and December 29, 1996, respectively .................................... 11,609 22,036 -------- --------- $161,609 $202,036 ======== =========
6. FINANCIAL INSTRUMENTS FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of the Company's financial instruments as of December 29, 1996 approximate market based upon the following methods and assumptions: CASH AND CASH EQUIVALENTS-The carrying amount of cash and cash equivalents is assumed to approximate fair value as cash equivalents include all highly liquid, short-term investments with original maturities of three months or less. SHORT AND LONG-TERM DEBT-The carrying value of the Company's various debt outstanding as of December 29, 1996 approximates market. The fair value of the Company's fixed rate debt is estimated using discounted cash flow analysis, based upon the market yield of public debt securities of comparable credit quality and maturity. The carrying value of the Company's variable rate debt is assumed to approximate market based upon periodic adjustments of the interest rate to the current market rate in accordance with the terms of the debt agreements. LETTERS OF CREDIT-The Company utilizes stand-by letters of credit to back certain financing instruments and insurance policies and commercial letters of credit guaranteeing various international trade activities. The contract amounts of the letters of credit approximate their fair value. DERIVATIVE FINANCIAL INSTRUMENTS The Company selectively uses derivatives to manage interest rate and foreign exchange exposures that arise in the normal course of business. The use of derivatives did not have a material impact on the Company's results of operations in either 1995 and 1996. No derivatives are entered into for trading or speculative purposes. Interest rate swaps are used to achieve or maintain a desired mix of fixed and floating rate debt in the Company's debt portfolio. Foreign exchange option and forward contracts are used to hedge a portion of the Company's underlying exposures denominated in foreign currency. Although the market value of derivative contracts at any single point in time will vary with changes in interest and/or foreign exchange rates, the difference between the carrying value and fair value of such contracts at December 31, 1995 and December 29, 1996 is not considered to be material, either individually or in the aggregate. The Company enters into derivative contracts with counterparties that it believes to be creditworthy. The Company does not enter into any leveraged derivative transactions. F-13 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 6. FINANCIAL INSTRUMENTS-(CONTINUED) As of December 29, 1996, $10.0 million of the Company's outstanding floating rate debt was subject to interest rate swap agreements. Under the terms of the contract, the Company receives a floating interest rate and pays a fixed interest rate. The differential to be paid or received is accrued as interest rates change and recognized as an adjustment to interest expense. In order to mitigate the transaction exposures that may arise from changes in foreign exchange rates, the Company purchases foreign currency option contracts to hedge anticipated transactions. The option contracts typically expire within one year. Any realized gains on options are not deferred but are recognized in income in the period when the hedged exposure is recognized. The Company purchased options with a notional value of $11.7 million in 1995 and $18.2 million in 1996. Options with notional value of $3.2 million and $25.4 million expired in 1995 and 1996, respectively. The Company held purchased option contracts with a notional value of $8.6 million and $1.4 million at December 31, 1995 and December 29, 1996, respectively. The Company has intercompany balances that are denominated in foreign currency. A portion of these balances are hedged using forward exchange contracts, and gains and losses on these contracts are included in the accompanying Consolidated Statement of Operations. The Company had forward exchange contracts with a notional value of $2.2 million December 31, 1995 and none outstanding at December 29, 1996. 7. EMPLOYEE STOCK OPTIONS AND AWARDS At December 29, 1996, the Company had one stock-based compensation plan, the Amended and Restated Sunbeam Corporation Equity Team Plan (the "Plan"). Under the Plan, all domestic employees are eligible for grants of options to purchase up to an aggregate of 11,300,000 shares of the Company's common stock at an exercise price equal to or in excess of the fair market value of the stock on the date of grant. The term of each option generally commences on the date of grant and expires on the tenth anniversary of the date of grant. Options generally become exercisable over a three to five year period. The Plan also provides for the grant of restricted stock awards of up to 200,000 shares, in the aggregate, to selected executives, employees and non-employee directors. Restrictions lapse ratably over a three to seven year period from the date of grant. In 1994, 5,000 shares of restricted stock were granted under the Plan and in 1996, 25,574 shares were granted under the Plan. In July 1996, options to purchase an aggregate of 3,000,000 shares were granted outside of the Plan (of which 2,750,000 options are outstanding at December 29, 1996) at exercise prices equal to the fair market value of the Company's common stock on the dates of grant in connection with the employment of a new Chairman and Chief Executive Officer and certain other executive officers of the Company. These outstanding options have terms of ten years and, with respect to options for 2,500,000 shares, are excercisable in three annual installments beginning July 17, 1996. Options for the remaining 250,000 shares still outstanding are excercisable in three annual installments beginning on the first anniversary of the July 22, 1996 grant date. See Note 4 for a discussion of restricted stock awards made outside of the Plan. The Company applies APB Opinion No. 25 and related Interpretations in accounting for its stock options. Accordingly, no compensation cost has been recognized for outstanding stock options. Had F-14 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 7. EMPLOYEE STOCK OPTIONS AND AWARDS-(CONTINUED) compensation cost for the Company's outstanding stock options been determined based on the fair value at the grant dates for those options consistent with SFAS No. 123, the Company's net earnings (loss) and earnings (loss) per share would have been reduced to the pro forma amounts indicated below (in thousands except per share amounts): 1995 1996 ---------- ------------ Net earnings (loss) As reported ............ $50,511 $ (228,262) Pro forma ............ $47,377 $ (248,890) Earnings (loss) per share As reported ............ $ 0.61 $ (2.75) Pro forma ............ $ 0.57 $ (3.00) The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 1995 and 1996: expected volatility of 36.78%, a risk-free interest rate of 6.34 %, a dividend yield of .1%; and an expected life of 5 years. A summary of the status of the Company's outstanding stock options as of December 31, 1995 and December 29, 1996, and changes during the years ending on those dates is presented below:
1995 1996 ------------------------------------- -------------------------------- WEIGHTED WEIGHTED AVERAGE AVERAGE SHARES EXERCISE PRICE SHARES EXERCISE PRICE --------------- ----------------- ------------- ---------------- PLAN OPTIONS Outstanding at beginning of year ...... 5,230,221 $14.85 4,610,387 $ 16.67 Granted .............................. 1,928,500 18.61 4,061,450 20.39 Exercised .............................. (1,142,348) 6.32 (622,994) 7.51 Canceled .............................. (1,405,986) 21.06 (1,777,006) 18.64 ----------- ----------- Outstanding at end of year ............ 4,610,387 16.67 6,271,837 19.43 =========== =========== Options exercisable at year-end ...... 1,539,836 $11.47 1,655,450 $ 16.13 Weighted-average fair value of options granted during the year ....... $ 8.28 $ 14.76 OPTIONS OUTSIDE PLAN Outstanding at beginning of year ...... 750,000 $16.70 692,500 $ 16.70 Granted .............................. - - 3,000,000 12.65 Exercised .............................. (57,500) 16.70 - - Canceled .............................. - - (942,500) 16.27 ----------- ----------- Outstanding at end of year ............ 692,500 16.70 2,750,000 12.43 =========== =========== Options exercisable at year-end ...... 505,000 $16.70 833,333 $ 12.25 Weighted-average fair value of options granted during the year ....... - $ 5.99
F-15 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 7. EMPLOYEE STOCK OPTIONS AND AWARDS-(CONTINUED) The following table summarizes information about stock options outstanding at December 29, 1996:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ------------------------------------------------------------ ----------------------------------- NUMBER WEIGHTED-AVERAGE NUMBER RANGE OF OUTSTANDING REMAINING WEIGHTED-AVERAGE EXERCISABLE WEIGHTED-AVERAGE EXERCISE PRICES AT 12/29/96 CONTRACTUAL LIFE EXERCISE PRICE AT 12/29/96 EXERCISE PRICE - --------------- -------------- ------------------- ------------------- -------------- ------------------ $5.00 to $14.99 ...... 1,378,417 7.6 years $11.61 596,316 $7.80 $15.00 to $19.99 ...... 824,037 8.1 years 16.50 245,240 17.31 $20.00 to $24.99 ...... 3,657,583 8.9 years 22.24 811,894 21.86 Over $25.00 ......... 411,800 10.0 years 26.49 2,000 25.16 ----------- ---------- $5.00 to $27.38 ...... 6,271,837 8.6 years $19.43 1,655,450 $16.13 =========== ==========
8. EMPLOYEE BENEFIT PLANS RETIREMENT PLANS The Company sponsors several defined benefit pension plans covering eligible U.S. salaried and hourly employees. Benefit accruals under such plans covering all U.S. salaried employees were frozen, effective December 31, 1990. Therefore no credit in the pension formula is given for service or compensation after that date. However, employees continue to earn service toward vesting in their interest in the frozen plans as of December 31, 1990. Employees of non-U.S. subsidiaries generally receive retirement benefits from Company sponsored plans or from statutory plans administered by governmental agencies in their countries. The funded status of the Company's U.S. defined benefit pension plans at the end of each fiscal year follows (in thousands):
1995 1996 ----------- ---------- Actuarial present value of benefit obligations: Vested ......................................................... $132,765 $122,379 Non-vested ...................................................... 558 375 -------- -------- Accumulated benefit obligations ................................. 133,323 122,754 Plan assets at fair value ....................................... 122,162 116,522 -------- -------- Accumulated benefit obligations in excess of plan assets ......... 11,161 6,232 Unrecognized net loss ............................................. (17,891) (19,537) Additional minimum liability .................................... 17,891 10,255 -------- -------- Pension liability (prepaid) recognized on the balance sheet ...... $ 11,161 $ (3,050) ======== ========
F-16 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 8. EMPLOYEE BENEFIT PLANS-(CONTINUED) Net periodic pension cost for the Company's U.S. defined benefit pension plans for each fiscal year includes the following components (in thousands):
1994 1995 1996 ------------ ------------ --------- Service cost-benefits earned during the period ...... $ 396 $ 331 $ 411 Interest cost-accumulated benefit obligations ...... 10,325 10,620 9,071 Actual return on plan assets ........................ 3,581 (20,985) (816) Net amortization and deferral ........................ (13,416) 11,332 (7,518) -------- -------- ------- Net periodic pension cost ........................... $ 886 $ 1,298 $ 1,148 ======== ======== ======= Assumptions: Discount rate ....................................... 8.75% 7.25% 7.75% Long-term rate of return on assets .................. 9.00% 9.50% 7.75%
The Company funds its pension plans in amounts consistent with applicable laws and regulations. Pension plan assets include corporate and U.S. government bonds and cash equivalents. The assets, liabilities and pension costs of the Company's non-U.S. defined benefit retirement plans are not material to the consolidated financial statements. OTHER POSTRETIREMENT BENEFITS The Company provides health care and life insurance benefits to certain former employees who retired from the Company prior to March 31, 1991. The Company has consistently followed a policy of funding the cost of postretirement health care and life insurance benefits on a pay-as-you-go basis. Effective July 1, 1993, various amendments to the Company's postretirement benefits program were adopted. The amendments included increases in retiree contribution levels for certain retiree groups and the discontinuation of medical and/or life insurance coverage for certain retirees who qualify for Medicare. These amendments resulted in an unrecognized reduction in prior service cost which is being amortized over future years. The following table presents the funded status reconciled with the amounts recognized in the Company's Consolidated Balance Sheet at the end of each fiscal year (in thousands):
1995 1996 ---------- --------- Accumulated postretirement benefit obligation ......... $15,127 $14,555 Plan assets .......................................... - - -------- -------- Accumulated postretirement benefit obligation in excess of plan assets ....................................... 15,127 14,555 Unrecognized reduction in prior service cost ......... 21,820 18,877 Unrecognized net gain ................................. 95 95 -------- -------- Accrued postretirement benefit obligation recognized on the balance sheet ................................. $37,042 $33,527 ======== ========
F-17 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 8. EMPLOYEE BENEFIT PLANS-(CONTINUED) Net periodic postretirement benefit cost for each fiscal year includes the following components (in thousands):
1995 1996 ---------- ----------- Interest cost ....................................... $ 1,353 $ 1,042 Amortization of reduction in prior service cost ...... (2,943) (2,943) ------- ------- Net periodic postretirement benefit credit ............ $(1,590) $(1,901) ======= =======
The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation is 9.5% for 1997 and is assumed to decrease gradually to 6% by 2003 and remain at that level thereafter. A one percentage point increase in the assumed health care cost trend rate for each year would increase the accumulated postretirement benefit obligation as of December 29, 1996 and the net periodic postretirement benefit cost for 1996 by approximately 8%. The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 7.25% at December 31, 1995 and December 29, 1996. DEFINED CONTRIBUTION PLANS The Company sponsors defined contribution profit sharing plans covering eligible employees. Company contributions to these plans include employer matching contributions as well as discretionary profit sharing contributions depending on both the performance of the Company, in an amount up to 10% of eligible compensation. The Company provided $5.8 million in 1994, $4.1 million in 1995 and $1.7 million in 1996 for its defined contribution plans. F-18 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 9. SUPPLEMENTARY FINANCIAL STATEMENT DATA Supplementary Balance Sheet data at the end of each fiscal year is as follows (in thousands):
1995 1996 ------------ ----------- Receivables: Trade .......................................... $ 224,201 $ 227,043 Sundry .......................................... 4,320 2,412 --------- --------- 228,521 229,455 Valuations allowances ........................... (12,326) (16,017) --------- --------- $ 216,195 $ 213,438 ========= ========= Inventories: Finished goods ................................. $ 120,018 $ 85,213 Work in process ................................. 25,609 25,167 Raw materials and supplies ..................... 63,479 52,272 --------- --------- $ 209,106 $ 162,252 ========= ========= Property, plant and equipment: Land .......................................... $ 2,783 $ 2,524 Buildings and improvements ..................... 90,898 95,619 Machinery and equipment ........................ 293,985 258,199 --------- --------- 387,666 356,342 Accumulated depreciation and amortization ...... (100,586) (136,254) --------- --------- $ 287,080 $ 220,088 ========= ========= Trademarks and trade names: Gross .......................................... $ 245,307 $ 245,307 Accumulated amortization ........................ (31,301) (45,045) --------- --------- $ 214,006 $ 200,262 ========= =========
Inventory and property, plant and equipment exclude assets of discontinued operations and other assets held for sale.
1995 1996 ----------- ---------- Other current liabilities: Payrolls, commissions and employee benefits ...... $ 23,550 $18,536 Advertising and sales promotion .................. 16,543 21,794 Product warranty ................................. 15,592 23,883 Other ............................................. 24,519 35,296 --------- --------- $ 80,204 $ 99,509 ========= ========= Non-operating liabilities: Accrued postretirement benefit obligation ......... $ 37,042 $ 33,527 Accrued pension ................................. 11,161 - Other ............................................. 31,964 54,548 --------- --------- $ 80,167 $ 88,075 ========= =========
F-19 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 9. SUPPLEMENTARY FINANCIAL STATEMENT DATA-(CONTINUED) Supplementary Statements of Operations and Cash Flows data for each fiscal year are summarized as follows (in thousands):
1994 1995 1996 ------------ ------------ ------------ Other (income) expense, net: Interest income ........................ $ (3,911) $ (3,657) $ (1,255) Other .................................... 3,199 3,830 2,893 -------- -------- -------- $ (712) $ 173 $ 1,638 ======== ======== ======== Advertising and sales promotion ......... $ 56,104 $ 62,299 $ 78,733 ======== ======== ======== Cash paid (received) during the period for: Interest (net of capitalization) ......... $ 7,461 $ 12,555 $ 13,397 ======== ======== ======== Income taxes (net of refunds) ............ $ 23,595 $ 13,936 $ (540) ======== ======== ========
Non-Cash Transactions: In connection with the acquisition of the outdoor resin furniture business from Rubbermaid Incorporated in 1994, the Company assumed certain long-term debt in the amount of $5 million. In connection with a warehouse expansion related to the electric blanket business, the Company entered into a $5 million capital lease obligation in 1996. 10. INCOME TAXES Earnings (loss) from continuing operations before income taxes for each fiscal year is summarized as follows (in thousands): 1994 1995 1996 ----------- ---------- ---------- Domestic ...... $134,720 $54,646 $(285,011) Foreign ...... 10,074 5,989 (17,550) --------- -------- ---------- $144,794 $60,635 $(302,561) ========= ======== ========== F-20 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 10. INCOME TAXES-(CONTINUED) Income tax provisions include current and deferred taxes (tax benefits) for each fiscal year as follows (in thousands): 1994 1995 1996 ---------- ------------ ------------- Current: Federal ...... $28,769 $ (1,329) $ (28,567) State ......... 3,289 (1,402) (202) Foreign ...... 1,169 626 707 -------- -------- --------- 33,227 (2,105) (28,062) -------- -------- --------- Deferred: Federal ...... 21,850 23,127 (65,833) State ......... 1,901 1,962 (11,050) Foreign ...... 2,532 57 (945) -------- -------- --------- 26,283 25,146 (77,828) -------- -------- --------- $59,510 $ 23,041 $(105,890) ======== ======== ========= A reconciliation of income tax expense with the expected income tax computed by applying the federal statutory income tax rate to earnings (loss) from continuing operations before income taxes for each fiscal year is as follows (in thousands):
1994 1995 1996 ---------- ---------- ---------- Income tax computed at the federal statutory tax rate ................................................ $50,678 $21,222 $ (105,896) State and local taxes (net of federal benefit) ............ 3,373 364 (7,313) Foreign earnings and dividends taxed at other rates ...... 2,011 419 5,967 Non-deductible expenses ................................. 2,062 872 3,373 Other, net ................................................ 1,386 164 (2,021) -------- -------- ----------- $59,510 $23,041 $ (105,890) ======== ======== ===========
F-21 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 10. INCOME TAXES-(CONTINUED) The major components of the Company's net current deferred tax asset and net long-term deferred tax liability at the end of each fiscal year are as follows (in thousands):
1995 1996 ----------------------------------- -------------------------------- CURRENT LONG-TERM CURRENT LONG-TERM DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX ASSET LIABILITY ASSET LIABILITY --------------- --------------- --------------- -------------- Operating reserves and accruals ...... $16,389 $ 23,562 $60,307 $ 28,447 Book/tax basis difference in trademarks and trade names ......... - (73,172) - (72,587) Book/tax basis difference in other assets ........................ 2,036 (27,957) 19,276 (13,406) Reserves for non-operating assets and non-operating liabilities ...... 3,616 25,484 8,905 24,043 Other .............................. 4,292 (24,849) 5,201 (18,805) -------- -------- -------- -------- $26,333 $(76,932) $93,689 $(52,308) ======== ======== ======== ========
As of December 29, 1996, the Company is in a net deferred tax asset position of approximately $41.4 million. Management believes that it is more likely than not that the net deferred tax asset will be realized based on a combination of refund of taxes paid in prior years and available in the carryback period, reversals of existing taxable temporary differences and the generation of future taxable income. Deferred U.S. income taxes are not provided on the undistributed earnings of foreign subsidiaries, since such earnings are considered to be permanently reinvested. At December 29, 1996, the cumulative amount of undistributed earnings of foreign subsidiaries on which U.S. federal income taxes have not been provided was approximately $25.7 million. It is not practicable to calculate the amount of unrecognized deferred U.S. income tax liability on such undistributed foreign earnings because of the complexities associated with its hypothetical calculation. 11. CUSTOMER AND GEOGRAPHIC DATA Classes of products which contributed more than 10% to consolidated sales were outdoor home use durable products and indoor home use durable products. Sales of outdoor home use durable products amounted to $294.2 million in 1994, $269.0 million in 1995 and $256.9 million in 1996. Sales of indoor home use durable products were $698.8 million in 1994, $688.3 million in 1995 and $680.7 million in 1996. The Company's largest customer accounted for approximately 17% of consolidated sales in 1994, 19% in 1995 and 19% in 1996. F-22 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 11. CUSTOMER AND GEOGRAPHIC DATA-(CONTINUED) The Company's operations are conducted in the United States and international markets, principally in Latin America, Canada and Mexico. Information about the Company's domestic and international operations for each fiscal year is as follows (in thousands):
1994 1995 1996 ------------- ------------- ------------- Net sales: Domestic ....................................... $ 852,796 $ 829,423 $ 800,969 International (includes U.S. export sales) ...... 191,451 187,460 183,267 --------- --------- --------- $1,044,247 $1,016,883 $ 984,236 ========= ========= ========= Operating earnings (loss): Domestic .......................................... $ 148,254 $ 70,423 $(246,577) International (includes U.S. export sales) ...... 29,336 24,301 (5,022) --------- --------- --------- 177,590 94,724 (251,599) Unallocated expenses and eliminations ............ (26,534) (24,479) (35,736) --------- --------- --------- $ 151,056 $ 70,245 $(287,335) ========= ========= ========= Identifiable assets: Domestic .......................................... $ 969,964 $1,040,591 $ 781,788 International .................................... 68,301 67,563 73,430 --------- --------- --------- 1,038,265 1,108,154 855,218 Corporate assets ................................. 74,664 50,530 217,491 --------- --------- --------- $1,112,929 $1,158,684 $1,072,709 ========= ========= =========
Unallocated expenses and eliminations include corporate administrative expenses, intangible amortization, certain pension and postretirement benefit costs or credits, and eliminations of intercompany income and expense. Identifiable assets are those used directly in the operations, and exclude non-operating, corporate and deferred tax assets. Sales between geographic areas are not material and are made primarily at cost plus a markup. 12. ENVIRONMENTAL MATTERS The Company's operations, like those of comparable businesses, are subject to certain federal, state, local and foreign environmental laws and regulations. As of December 29, 1996, the Company had been identified as a potentially responsible party ("PRP") in connection with seven sites subject to the federal Superfund law and two sites subject to state Superfund laws comparable to the federal law (collectively the "Environmental Sites"), exclusive of sites at which the Company has been designated (or expects to be designated) as a DE MINIMIS (less than 1%) participant. Substantially all of these sites relate to divested operations of the Company. The Company currently is engaged in active remediation activities at seven sites, four of which are among the Environmental Sites referred to above, and three of which have not been designated as Superfund sites under federal or state law. In addition, the Company is engaged in environmental remediation activities at two sites in Newburgh Heights, Ohio, where a subsidiary formerly conducted operations. The Company has been actively cooperating with the United States Nuclear Regulatory Commission and state regulatory authorities in developing a plan for remediation of those sites. F-23 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 12. ENVIRONMENTAL MATTERS-(CONTINUED) Remediation at one of the two sites is essentially complete and remediation of the other site is expected to be substantially complete during 1997. The Company has established reserves, in accordance with SFAS No. 5, ACCOUNTING FOR CONTINGENCIES, to cover the anticipated probable costs of remediation, based upon periodic reviews of all sites for which the Company has, or may have remediation responsibility. As of December 29, 1996, the amount of such reserves was approximately 5% of the Company's total liabilities as set forth in the consolidated financial statements. Liability under the Superfund law is joint and several and is imposed on a strict basis, without regard to degree of negligence or culpability. As a result, the Company recognizes its responsibility to determine whether other PRP's at a Superfund site are financially capable of paying their respective shares of the ultimate cost of remediation of the site. Whenever the Company has determined that a particular PRP is not financially responsible, it has assumed for purposes of establishing reserve amounts that such PRP will not pay its respective share of the costs of remediation. To minimize the Company's potential liability with respect to the Environmental Sites, the Company has actively participated in steering committees and other groups of PRP's established with respect to such sites. The Company continues to pursue the recovery of some environmental remediation costs from certain of its liability insurance carriers; however, such potential recoveries have not been offset against potential liabilities and have not been considered in determining the Company's environmental reserves. Due to uncertainty over remedial measures to be adopted at some sites, the possibility of changes in environmental laws and regulations and the fact that joint and several liability with the right of contribution is possible at federal and state Superfund sites, the Company's ultimate future liability with respect to sites at which remediation has not been completed may vary from the amounts reserved as of December 29, 1996. In connection with the Company's restructuring plan, in the fourth quarter of 1996 a comprehensive review of all environmental exposures was performed and the Company accelerated its strategy for the resolution and settlement of certain environmental claims. As a result, the Company recorded additional environmental reserves of approximately $9.0 million. The Company believes, based on existing information, that the costs of completing environmental remediation of all sites for which the Company has a remediation responsibility have been adequately reserved, and that the ultimate resolution of these matters will not have a material adverse effect upon the Company's financial condition. 13. OTHER COMMITMENTS AND CONTINGENCIES LEASES The Company rents certain facilities and equipment under operating leases. Rental expense for operating leases amounted to $8.8 million for 1994, $8.6 million for 1995 and $8.0 million for 1996. The minimum future rentals due under noncancelable operating leases as of December 29, 1996 aggregated $11.9 million. The amounts payable in each of the years 1997-2001 and thereafter are $1.4 million, $1.4 million, $1.3 million, $1.3 million, $1.3 million and $5.2 million, respectively. CERTAIN DEBT OBLIGATIONS Responsibility for servicing certain debt obligations of the Company's predecessor were assumed by third parties in connection with the acquisition of former businesses, although the Company's F-24 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 13. OTHER COMMITMENTS AND CONTINGENCIES-(CONTINUED) predecessor remained the primary obligor in accordance with the respective loan documents. Such obligations, which amounted to approximately $20.6 million at December 29, 1996, and the corresponding receivables from the third parties, are not included in the consolidated balance sheets since these transactions occurred prior to the issuance of SFAS No. 76, EXTINGUISHMENT OF DEBT. Management believes that the third parties will continue to meet their obligations pursuant to the assumption agreements. Letters of credit aggregating $29.2 million were outstanding as of December 29, 1996. LITIGATION The Company is involved in various lawsuits arising from time to time in the ordinary course of business and related to divested operations of the Company. The Company has established reserves, in accordance with SFAS No. 5, ACCOUNTING FOR CONTINGENCIES, to cover the anticipated probable costs of litigation matters, based upon periodic reviews of all cases. In the fourth quarter of 1996, the Company increased litigation reserves by approximately $17.7 million based on adverse developments in the status of certain claims, primarily related to divested operations of the Company. The Company believes, based on existing information, that anticipated probable costs of litigation matters have been adequately reserved, and that the ultimate resolution of these matters will not have a material adverse effect upon the Company's financial condition. PRODUCT LIABILITY MATTERS The Company is party to various personal injury and property damage lawsuits relating to its products and incidental to its business. Annually, the Company sets its product liability insurance program based on the Company's current and historical claims experience and the availability and cost of insurance. The Company's program for 1996 was comprised of a self-insurance retention of $1 million per occurrence. Cumulative amounts estimated to be payable by the Company with respect to pending and potential claims for all years in which the Company is liable under its self-insurance retention have been accrued as liabilities. Such accrued liabilities are necessarily based on estimates (which include actuarial determinations made by independent actuarial consultants as to liability exposure, taking into account prior experience, numbers of claims and other relevant factors); thus, the Company's ultimate liability may exceed or be less than the amounts accrued. The methods of making such estimates and establishing the resulting liability are reviewed continually and any adjustments resulting therefrom are reflected in current operating results. Historically, product liability awards have rarely exceeded the Company's individual per occurrence self-insured retention. There can be no assurance, however, that the Company's future product liability experience will be consistent with its past experience. Based on existing information, the Company believes that the ultimate conclusion of the various pending product liability claims and lawsuits of the Company, individually or in the aggregate, will not have a materially adverse effect on the financial position or results of operations of the Company. F-25 SUNBEAM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) 14. UNAUDITED QUARTERLY FINANCIAL DATA FISCAL 1996(a)
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER ---------- ---------- ---------- ------------ (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) Net sales ....................................... $229.7 $253.9 $231.8 $ 268.8 Gross profit (loss) .............................. 48.1 47.2 28.8 (40.4) Operating earnings (loss) ........................ 15.5 9.2 (20.7) (291.3)(c) Earnings (loss) from continuing operations ...... 6.7 2.8 (15.8) (190.4) Earnings (loss) per share from continuing operations .................................... .08 .03 (.19) (2.29) Earnings (loss) from discontinued operations, net of taxes .................................... 10.7 4.4 (2.3) (11.9) Estimated loss on sale of discontinued operations, net of taxes .................................... - - - (32.4) Net earnings (loss) .............................. 17.4 7.2 (18.1) (234.8) Net earnings (loss) per share(b) ............... .21 .09 (.22) (2.83)
FISCAL 1995(a) FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER ---------- ---------- ---------- ------------ (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) Net sales ....................................... $244.6 $241.9 $246.3 $284.1 Gross profit .................................... 58.9 49.3 53.6 46.0 Operating earnings .............................. 32.3 15.1 19.1 3.7 (d) Earnings from continuing operations ............ 17.9 8.1 9.9 1.7 Earnings per share from continuing operations ... .22 .10 .12 .01 Earnings (loss) from discontinued operations, net of taxes .................................... 12.1 3.3 (0.9) (1.6) Net earnings .................................... 30.0 11.4 9.0 0.1 Net earnings per share(b) ........................ .36 .14 .11 -- - ---------------- (a) Each quarter consists of a 13-week period. (b) Primary and fully diluted earnings per share amounts are equivalent. (c) Refer to Note 2 and 3 regarding the Company's 1996 restructuring and growth plan. (d) Operating earnings for the Fourth Quarter of 1995 include charges related to the Company's inventory reduction initiatives which resulted in approximately $12.0 million of excess capacity costs attibutable to lower production levels.
F-26 SUNBEAM CORPORATION AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS FISCAL YEARS 1996, 1995 AND 1994 (DOLLARS IN THOUSANDS)
BALANCE AT CHARGED TO BALANCE AT BEGINNING COSTS AND END OF DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD - ----------- ---------- ---------- ---------------- ------------ Allowance for doubtful accounts and cash discounts: $ (233)(a) Fiscal year ended 19,911 (b) December 29, 1996 .............................. $12,326 $23,369 - (c) $16,017 ======== ======== =============== ======== $ 715 (a) Fiscal year ended 6,988 (b) December 31, 1995 .............................. $ 9,416 $10,651 38 (c) $12,326 ======== ======== =============== ======== $ 700 (a) Fiscal year ended 3,487 (b) January 1, 1995 ................................. $10,795 $ 2,996 188 (c) $ 9,416 ======== ======== =============== ======== - ---------------- Notes: (a) Reclassified to accrued liabilities for customer deductions. (b) Accounts written off as uncollectible. (c) Foreign currency translation adjustment.
F-27 EX-2.A 2 EXHIBIT 2.a ASSET PURCHASE AGREEMENT among SUNBEAM PRODUCTS, INC. SUNBEAM FURNITURE COMPANY OP II, INC. and JACUZZI OUTDOOR PRODUCTS, INC. And Joined In By SUNBEAM CORPORATION and U.S. INDUSTRIES, INC. Dated February 10, 1997 TABLE OF CONTENTS Page 1. Purchase and Sale of Assets.......................................................... 2 2. Excluded Liabilities................................................................. 6 3. Assumed Liabilities.................................................................. 6 4. Closing, Purchase Price, Adjustment, Etc. ........................................... 7 A. Closing........................................................................ 7 B. Purchase Price; Allocation..................................................... 8 C. Payment of Estimated Purchase Price to the Sunbeam Transferors on Date of Closing................................................. 8 D. Payment of Purchase Price...................................................... 9 E. Determination of Purchase Price................................................ 9 5. Representations and Warranties of the Sunbeam Transferors............................ 11 A. Corporate Standing............................................................. 11 B. Power and Authority of the Sunbeam Transferors; Authorization.................................................................. 11 C. Binding Effect................................................................. 12 D. No Conflict.................................................................... 12 E. Consents....................................................................... 12 F. Financial Information.......................................................... 12 G. Ordinary Course................................................................ 13 H. Taxes.......................................................................... 13 I. Governmental Matters........................................................... 14 J. Title and Survey Matters....................................................... 14 L. Legal Proceedings.............................................................. 15 M. Licenses and Permits; Compliance with Laws..................................... 15 N. Collective Bargaining Agreements; Labor Con- troversies; Etc................................................................ 16 O. Contracts...................................................................... 17 P. Employee Benefit Plans......................................................... 18 Q. Intellectual Property.......................................................... 18 R. Environmental Matters.......................................................... 18 S. IRB Agreements................................................................. 20 T. Licenses of Intangible Personal Property....................................... 21 U. Brokers and Finders' Fees...................................................... 21 V. Entire Business; Condition of Assets........................................... 21 W. Knowledge...................................................................... 22 X. No Warranties.................................................................. 22 i Page 6. Representations and Warranties of Buyer.............................................. 22 A. Corporate Standing............................................................. 22 B. Power and Authority of Buyer; Authorization.................................... 22 C. Binding Effect................................................................. 23 D. No Conflict.................................................................... 23 E. Brokers' and Finders' Fees..................................................... 23 F. No Warranties.................................................................. 23 7. Matters Prior to Closing............................................................. 24 A. Ancillary Agreements........................................................... 24 B. Obligations of Seller Prior to Closing......................................... 25 C. Obligations of Buyer Prior to Closing.......................................... 28 D. Conditions Precedent to Obligations of Buyer................................... 28 E. Conditions Precedent to Obligations of the Sunbeam Transferors.................................................................... 30 8. Document Deliveries.................................................................. 31 A. Deliveries of the Sunbeam Transferors.......................................... 31 B. Buyer's Deliveries............................................................. 32 9. Tax Returns; Bulk Transfer Laws...................................................... 32 10. Survival of Representations and Warranties........................................... 33 11. Indemnification...................................................................... 33 A. Remedies....................................................................... 33 B. Third-Party Claims............................................................. 36 C. Exclusivity.................................................................... 37 D. Limitations on Indemnity....................................................... 37 E. ERISA Indemnification.......................................................... 38 12. Public Announcements................................................................. 39 13. Prorations and Adjustments........................................................... 40 A. Expenses....................................................................... 40 B. Time of Prorations and Adjustments............................................. 40 14. Records; Access to Information....................................................... 40 15. Notices.............................................................................. 42 16. Third Party Rights................................................................... 43 17. Parties in Interest; Assignment...................................................... 43 18. Construction; Governing Law.......................................................... 43 19. Entire Agreement; Amendment and Waiver............................................... 43 ii Page 20. Severability......................................................................... 44 21. Counterparts......................................................................... 44 22. Expenses............................................................................. 44 23. Further Assurances................................................................... 44 24. Schedules............................................................................ 44 25. Guaranty by Sunbeam.................................................................. 45 26. Guaranty by USI...................................................................... 45 27. Post-Closing Matters................................................................. 46 A. Employment..................................................................... 46 B. Vacations, Sick Days and Holidays.............................................. 47 C. No Third Party Beneficiaries................................................... 48 D. Certain Tax Matters............................................................ 48 E. Accounts; Product Returns...................................................... 49 F. Confidentiality and No-Hire.................................................... 51 G. Non-Competition................................................................ 51 H. Product Marking; Burden of Proof............................................... 53 I. Sunbeam Guaranties............................................................. 53 28. Termination.......................................................................... 53 A. Terms of Termination........................................................... 53 B. Effect of Termination.......................................................... 54
iii Exhibits Exhibit A -- Transition Services Agreement Term Sheet Exhibit B -- Manufacturing Services Agreement Term Sheet Exhibit C -- Form of Opinion of General Counsel of Sunbeam Exhibit D -- Form of Opinion of General Counsel of USI iv List of Schedules ASSETS: - ------- Schedule 1.A Permits Schedule 1.C(1) Assumed Contracts Schedule 1.C(2) IRB Agreements Schedule 1.E Warranties Schedule 1.F Intellectual Property Schedule 1.G Leased Premises Schedule 1.H Real Property EXCLUDED ASSETS: - ---------------- Schedule 1.M(1) Computer Hardware, Software, Etc. Schedule 1.M(4) Intellectual Property Schedule 1.M(12) Assets Utilized in Other Businesses Schedule 1.M(13) Other Assets REPRESENTATIONS AND WARRANTIES OF SELLERS: - ------------------------------------------ Schedule 5.E Consents Schedule 5.F(1) Assets and Assumed Liabilities Schedule 5.F(2) Accounting Principles Schedule 5.G Ordinary Course Schedule 5.H(1) Taxes Schedule 5.I Governmental Matters Schedule 5.L Legal Proceedings Schedule 5.M(1) Licenses and Permits Schedule 5.M(2) Compliance with Laws Schedule 5.N(1) Collective Bargaining Agreements Schedule 5.N(2) Labor Controversies (strikes, work stoppages, etc.) Schedule 5.N(3) Labor Controversies (complaints with governmental authorities, etc.) Schedule 5.N(5) Labor Controversies (mass layoffs or plant closings) Schedule 5.O(1) Omitted Material Assumed Contracts Schedule 5.O(2) Defaults on Material Contracts Schedule 5.P Employee Benefit Plans Schedule 5.Q(1) Intellectual Property Claims Schedule 5.Q(2) Maintenance of Intellectual Property Schedule 5.R Environmental Matters Disclosure Schedule Schedule 5.T Licenses of Intangible Personal Property Schedule 5.V(1) Retained Material Assets Schedule 5.V(2) Outsourced Services Schedule 5.W Individuals Charged with "Knowledge" v MATTERS PRIOR TO CLOSING: - ------------------------- Schedule 7.B(1)(e) Compensation and Incentive Arrangements Schedule 7.B(1)(f) Employee Benefit Plans Schedule 7.D(5) Assignments of Assumed Contracts DOCUMENT DELIVERIES: - -------------------- Schedule 14.A Record Retention Policy POST-CLOSING MATTERS: - --------------------- Schedule 27.A(1) Employment Schedule 27.A(2) Key Employees Schedule 27.E(4) Seller's Promotional Programs Schedule 27.E(7) Seller's Warranty Return Policies Schedule 27.F Employees of Buyer, No Hire Schedule 27.I Guaranty Arrangements vi ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT ("AGREEMENT") is made February 10, 1997, by and among SUNBEAM PRODUCTS, INC., a Delaware corporation ("SUNBEAM PRODUCTS"), SUNBEAM FURNITURE COMPANY, a Delaware corporation ("SUNBEAM FURNITURE"; and together with Sunbeam Products, "SELLERS") OP II, Inc., a Florida corporation ("SUNBEAM OP"; and together with the Sellers, the "SUNBEAM TRANSFERORS") and Jacuzzi Outdoor Products, Inc., a Delaware corporation ("BUYER"). This Agreement is joined in by Sunbeam Corporation, a Delaware corporation and the indirect parent corporation of the Sunbeam Transferors ("SUNBEAM") and U.S. Industries, Inc., a Delaware corporation and the indirect parent corporation of Buyer ("USI"). W I T N E S S E T H: WHEREAS, the Sellers are engaged in the business (the "BUSINESS") of designing, manufacturing and distributing furniture products, including aluminum style furniture, aluminum folding furniture, wrought iron furniture, cushions and pads and accessories, resin furniture, casual indoor furniture, commercial and folding furniture, and high-end patio furniture (collectively, the "PRODUCTS"); WHEREAS, the Sunbeam Transferors desire to sell, and Buyer desires to purchase, all of the assets and rights, except those assets and rights which are expressly excluded herein, employed by the Sunbeam Transferors in the operation of the Business, in accordance with and subject to the terms and provisions of this Agreement; and WHEREAS, the Sunbeam Transferors and Buyer desire to enter into certain agreements regarding transitional matters, including the license of the Sunbeam(R) trademark owned by Sunbeam OP, in connection with Buyer's purchase of assets pursuant to this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties herein contained, intending to be legally bound, and subject to and on the terms and conditions herein set forth, the Sunbeam Transferors and Buyer agree as follows: 1. PURCHASE AND SALE OF ASSETS. On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase from the Sunbeam Transferors, and the Sunbeam Transferors agree to sell, convey, transfer, assign and deliver to Buyer, at the Closing (as defined in Section 4.A), all of the Sunbeam Transferors' direct or indirect right, title and interest in and to all of the assets relating to the Business, of every kind and description, wherever located, whether tangible or intangible, real, personal or mixed, as the same shall exist as of the Closing Date (as defined in Section 4.A), including without limitation those certain assets set forth below, but excluding the Excluded Assets (as defined in Section 1.M)(collectively, the "ASSETS"), free and clear of all liens, restrictions and encumbrances, subject only to Permitted Liens (as defined in Section 5.J(2)): A. To the extent transferable, the government permits and licenses which are listed on SCHEDULE 1.A; B. All robotics, equipment (including construction in progress), tools, inspection equipment and other equipment, furnishings and machinery, spare parts, furniture, office furnishings, fixtures, computer equipment, systems and software, and all other personal property and tangible property related to the Business or located at the Leased Premises or the Real Property and all such items located at the Murfreesboro, Tennessee and Portland, Tennessee facilities of Sellers and all administrative and office furnishings and equipment located at the Nashville, Tennessee facility of Sellers and those items to be listed on a schedule dated as of February 3, 1997, which Sellers shall provide to Buyer no later than February 12, 1997, and which shall be updated as of the Closing Date (collectively, the "EQUIPMENT"); C. All rights of Sellers under those contracts, licenses, leases and agreements relating to the Business that will be assigned to and assumed by Buyer at the Closing and which are listed on SCHEDULE 1.C(1) (collectively, the "ASSUMED CONTRACTS"), including, without limitation, all rights of Sellers under the loan agreements, promissory notes, guaranty agreements and reimbursement agreements listed on SCHEDULE 1.C(2) (the "IRB AGREEMENTS") entered into by Sunbeam Products in connection with the issuance of the Paragould, Arkansas and Waynesboro, Georgia industrial revenue bonds, subject, however, to the provisions of Section 1.O hereof; 2 D. All rights of Sellers in and to the product lines and inventory, including raw materials, packaging supplies, work-in-process and finished goods of the Business including, without limitation, those items to be listed on a schedule dated as of February 3, 1997, which Sellers shall provide to Buyer no later than February 12, 1997, and which shall be updated as of the Closing Date (collectively, the "INVENTORY"); E. The vendors', suppliers', manufacturers' and contractors' warranties, representations and guaranties in respect of any Asset, including, without limitation, those which are listed on SCHEDULE 1.E; F. All patents, copyrights, trademarks, registrations, trade secrets, technology, processes, inventions, designs, drawings, blueprints, specifications, patterns, royalties, privileges, know-how, rights in research, development, and commercially practiced processes (including all such items with respect to which any Sunbeam Transferor is a sublicensee, in such case only insofar as permitted under the applicable sublicense agreement), and all other similar intangible personal property owned or licensed by any Sunbeam Transferor, in each case, relating to the Business (collectively, the "INTELLECTUAL PROPERTY"), including, without limitation, that listed on SCHEDULE 1.F, subject, however, to the provisions of Section 1.0 hereof; G. All rights of Sellers, including any prepaid rent, security deposits and options to renew or purchase in connection therewith, in the leased real property listed on SCHEDULE 1.G, together with, to the extent owned or leased by Sellers, all buildings, fixtures and improvements erected thereon (collectively, the "LEASED PREMISES"); H. All right, title and interest of Sellers in the real property listed on SCHEDULE 1.H, together with all buildings, fixtures and improvements erected thereon, and all easements and rights-of-way and other appurtenances thereto (collectively, the "REAL PROPERTY"); I. All papers, documents, instruments, books and records, files, agreements, books of account and other records pertaining solely to the Assets or the Business, including all customer and vendor lists, and all files and documents (including credit information) to the extent pertaining solely to such customers and vendors, and other business and financial records, files, books and documents (whether in hard copy or computer format) to the extent pertaining solely to the Assets or the 3 Business, including manuals and data, sales and advertising materials, sales, distribution and purchase correspondence, all personnel and employment records relating to the Transferred Employees (as defined in Section 27.A), and any information relating to taxes imposed on the Assets; J. All of the rights, claims, credits, causes of action or rights of set-off of the Sunbeam Transferors against third parties to the extent relating to or affecting the Assets or the Assumed Liabilities (as defined in Section 3); K. Subject to the limitations provided for by the Trademark License Agreement (as defined in Section 7.A) all goodwill associated with the Business; and L. All other assets and rights of every kind and nature, real or personal, tangible or intangible, that are owned and used by Sellers in connection with the Business, except for assets and rights specifically excluded pursuant to Section 1.M below. M. The Assets shall EXCLUDE, HOWEVER, the following items (collectively, the "EXCLUDED ASSETS"): (1) Subject to the rights to be granted pursuant to the Transition Services Agreement (as defined in Section 7.A), any computer hardware, software, supplies or other materials which are used in Sellers' other businesses and identified on SCHEDULE 1.M(1); (2) Sellers' minute books, stock transfer records, qualifications to conduct business as a foreign corporation, and other documents relating to the organization, maintenance, and existence of each Seller as a corporation; (3) Each Sunbeam Transferor's rights under or in connection with this Agreement; (4) The intellectual property relating to the Business described on SCHEDULE 1.M(4); (5) Unless otherwise mutually agreed by Sellers and Buyer prior to the Closing Date, all accounts receivable accrued on the books of Sellers resulting from the operations of the Business prior to the Closing Date, including, without limitation, all accounts receivable representing obligations of any Seller or any of its 4 subsidiaries, divisions or affiliates (I.E., intercompany or interdivisional accounts receivable); (6) Cash on hand on the Closing Date, including bank accounts, cash equivalents and temporary cash investments (including petty cash) pertaining to the Business; (7) Claims or rights of any Sunbeam Transferor against third parties relating to liabilities or obligations that do not relate to the Assets and are not Assumed Liabilities; (8) Claims of any Seller for refunds of taxes and other governmental charges for any period, or any portion of any period, ending on or prior to the Closing Date, whether or not such Seller has filed a claim for any such refund before the Closing Date; (9) All assets and rights of every kind and nature, real or personal, tangible or intangible, that are owned and used by Sellers in connection with their wooden outdoor furniture business; (10) All assets and rights of every kind and nature, real or personal, tangible or intangible, relating to the Portland, Tennessee, Nashville, Tennessee and Murfreesboro, Tennessee facilities of Sellers, except (a) Equipment and Inventory located at the Portland facility, (b) administrative and office furnishings and equipment located at the Nashville facility, (c) rights under the Portland Lease (as defined in Section 7.A), (d) Equipment and Inventory located at the Murfreesboro facility and (e) rights under the Manufacturing Services Agreement (as defined in Section 7.A); (11) All assets and rights of every kind and nature relating to the Plans (as defined in Section 5.P); (12) Those assets utilized both in the Business and in Sellers' other businesses and identified on SCHEDULE 1.M(12); and (13) Those assets identified on SCHEDULE 1.M(13). N. To the extent the Assets include licenses, permits, agreements or other rights that cannot be assigned or the assignment of which requires consents which have not been obtained as of the Closing Date, Sellers will use commercially reasonable efforts to obtain such consents (with respect to any 5 assignable rights) and shall provide Buyer with the practical benefit of such Assets, by operating agreements, leases, or otherwise, on terms and conditions mutually acceptable to Sellers and Buyer. If and when such consent(s) have been obtained, the applicable Seller(s) will promptly assign and convey such Asset(s) to Buyer for no additional consideration. O. Nothing in this Agreement shall be construed as an attempt or agreement to assign any contract, agreement, license, lease or other commitment that is nonassignable without the consent of the other party or parties thereto unless such consent shall have been given, subject, however, to the covenant of Sellers in Section 1.N hereof. 2. EXCLUDED LIABILITIES. Buyer shall not assume any liabilities or obligations of the Sunbeam Transferors (whether known or unknown and whether absolute, accrued, contingent, liquidated or unliquidated or otherwise and whether arising out of the Business or the other businesses or operations of the Sunbeam Transferors, the ownership or operation of any of the Assets or any facilities, or the manufacture or sale of any product, the consummation of the transactions under this Agreement or otherwise), except such liabilities and obligations as Buyer shall expressly assume and agree to perform pursuant to Section 3. 3. ASSUMED LIABILITIES. On and subject to the terms and conditions of this Agreement, at the Closing, Buyer shall assume and become responsible for the following liabilities of Sellers, but only to the extent specifically set forth below and subject to any defenses or rights of offset to which any Seller is entitled or that are or may be asserted in good faith against the obligee to whom such obligations are owed (collectively, the "ASSUMED LIABILITIES"): A. All obligations of Sellers arising under the Assumed Contracts after the Closing Date, provided, however, that Buyer does not assume any such liability or obligation arising, coming due or to be performed after the Closing Date which is attributable to any action or failure to act by the applicable Seller under any Assumed Contract prior to the Closing Date, unless and to the extent such liability or obligation is reflected on the Schedule of Assets and Liabilities (as defined in Section 5.F); 6 B. Purchase orders for the repair of Equipment in the ordinary course of business that shall be listed on a schedule dated as of February 3, 1997, which Sellers shall provide to Buyer no later than February 12, 1997 and which shall be updated as of the Closing Date; C. Purchase orders for raw materials and supplies used in the Business in the ordinary course of business that shall be listed on a schedule dated as of February 3, 1997, which Sellers shall provide to Buyer no later than February 12, 1997 and which shall be updated as of the Closing Date, or with respect to raw materials and supplies which are scheduled to be or are delivered after Closing in the ordinary course of business in accordance with past practices; D. Vacation and other benefits accrued as of the Closing Date in accordance with the Plans as reflected on the Schedule of Assets and Liabilities for the Transferred Employees (as defined in Section 27.A) and the other obligations pertaining to such employees that are expressly set forth in Section 27.A hereof (the "EMPLOYEE OBLIGATIONS"); E. All obligations relating to any return of Products by a customer of the Business after the Closing, other than in connection with a warranty claim, to the extent expressly provided in Section 27.E(5); F. All obligations of Sellers arising out of warranty claims asserted after the Closing Date, other than personal injury claims, subject to the limited obligation of Sellers to indemnify Buyer pursuant to Section 11.A(1)(f) of this Agreement; and G. To the extent not included in and subject to any limitations contained in Sections 3.A through 3.F, liabilities arising out of the ongoing and ordinary operation of the Business by Buyer after the Closing Date. 4. CLOSING, PURCHASE PRICE, ADJUSTMENT, ETC. A. CLOSING. Subject to the terms and conditions of this Agreement, the sale and purchase of the Assets and the assumption of the Assumed Liabilities contemplated hereby shall take place at a closing (the "CLOSING") at the offices of Weil, Gotshal & Manges LLP, in New York, New York, on the later of (i) March 3, 1997 as of 12:01 a.m. (such time being the "EFFECTIVE TIME") and (ii) the date that is two business days following the satisfaction or waiver of all conditions to the 7 Closing set forth in Sections 7.D and 7.E, or at such other date and location as Buyer and Sellers may mutually agree (such date and time of closing being herein called the "CLOSING DATE"). B. PURCHASE PRICE; ALLOCATION. The aggregate purchase price for the Assets shall be a sum equal to the net result of the addition and subtraction of the following amounts derived from the Final Statement (as defined in Section 4.E): (1) the sum of (a) the net book value of the property, plant and equipment included in the Assets plus (b) the net book value of the Inventory and (c) the amount of any security or cash deposits or accounts, including prepaid rent, if any, transferred to Buyer from Sellers, MINUS (2) the sum of (a) $21 million dollars and, to the extent reflected on the Schedule of Assets and Liabilities, (b) indebtedness assumed by Buyer pursuant to the IRB Agreements, (c) the Employee Obligations and (d) liabilities relating to the Assumed Contracts (collectively, the "PURCHASE PRICE"). The parties agree to allocate the Purchase Price (together with the Assumed Liabilities) among the Assets, the license granted in connection with the Trademark License Agreement and the agreement of Sellers contained in Section 27.G hereof as agreed by Buyer and Seller prior to Closing in a manner consistent with Treasury Regulation ss. 1.1060-IT(f). Buyer shall prepare in a timely manner and present to Sellers for their review a Form 8594 Asset Acquisition Statement of Allocation consistent with such allocation. Buyer and the Sunbeam Transferors shall promptly confer and reach agreement regarding such form and each shall timely file such agreed-upon form and shall file a copy of such form with its federal income tax return for the period that includes the date of the Closing. Each of Buyer and the Sunbeam Transferors further agrees not to take any position inconsistent with such allocation for any tax purpose. C. PAYMENT OF ESTIMATED PURCHASE PRICE TO THE SUNBEAM TRANSFERORS ON DATE OF CLOSING. On and at the Closing, in consideration for the sale, conveyance, transfer, assignment and delivery to Buyer of the Assets, subject to the assumption of the Assumed Liabilities, Buyer shall pay to the Sunbeam Transferors, as directed, an amount equal to $78,385,000 (the "ESTIMATED PURCHASE PRICE"), by wire transfer of immediately available funds to an account designated in writing by the Sunbeam Transferors not less than two business days prior to the Closing. 8 D. PAYMENT OF PURCHASE PRICE. (1) The difference between the Estimated Purchase Price and the Purchase Price shall be paid, after determination of the Purchase Price pursuant to Section 4.E hereof, as follows: (a) Buyer shall pay to the Sunbeam Transferors the amount by which the Purchase Price shall exceed the Estimated Purchase Price; or (b) the Sunbeam Transferors shall pay to Buyer the amount by which the Purchase Price shall be less than the Estimated Purchase Price. (2) Any payment required under Section 4.D(1) shall be made within ten (10) days after the determination of the Purchase Price, by payment of such amount by wire transfer of immediately available funds to an account designated in writing by the party to receive such payment not less than two business days prior to such payment. Any payment required under paragraph (1) above shall bear interest at the index rate of Chase Manhattan Bank, N.A. as of the Closing Date, from the Closing Date through the date of payment. E. DETERMINATION OF PURCHASE PRICE. (1) As promptly as practicable after Closing, and no later than fifteen (15) business days after the Closing Date, Sellers shall, at their expense, prepare, or cause to be prepared, and shall deliver to Buyer a statement certified by Sellers' independent auditors utilizing generally accepted auditing standards setting forth, as of the Effective Time, the Purchase Price, based upon the accounting records of the Business and supported in reasonable detail, determined on a basis consistent with the preparation of the Statement of Assets and Liabilities, subject to and in accordance with the Accounting Principles (the "FINAL STATEMENT"). Buyer and its accountants shall have the opportunity to observe the physical count of the Inventory and Equipment (which may begin prior to the Closing Date) in connection with the preparation of the Final Statement and shall have full access to all information used by Sellers in preparing the Final Statement, including the work papers of their accountants. 9 (2) Promptly following receipt of the Final Statement, Buyer shall review the same and, within twenty (20) business days after such receipt, Buyer shall deliver to Sellers a certificate setting forth its acceptance of, or objections to, the Final Statement, together with a summary of the reasons therefor (which shall be limited to the mathematical accuracy of the Final Statement and any assertion that the Purchase Price as derived from the Final Statement has not been determined on the basis set forth in paragraph (1) above) and adjustments which, in its view, are necessary to eliminate such objections. (3) If Buyer accepts the Final Statement (or does not so object within such twenty (20) business day period), the determination of the Purchase Price by Sellers shall be deemed final and binding as of such twentieth (20th) business day. (4) To the extent Buyer objects within such twenty (20) business day period to the Final Statement, Buyer and Sellers shall use reasonable efforts during the following fifteen (15) business day period to resolve any such objections. If Buyer and Sellers resolve all such differences and each signs a certificate to that effect, the Final Statement, as so adjusted, shall be deemed final and binding for purposes of this Agreement. If Buyer and Sellers resolve some of such differences, the items as to which the parties have agreed shall be final and binding for purposes of this Agreement and the remaining items shall be determined as provided below. Notwithstanding any dispute between Buyer and Sellers described in this Section 4.E(4), Buyer or Sellers, as applicable, shall pay, in accordance with Section 4.D above, the amount of the Purchase Price that is not being disputed under this Section 4.E(4). (5) To resolve any objections raised by Buyer that are not resolved as provided above, the parties shall refer their remaining differences to a nationally recognized firm of independent public accountants, as to which Sellers and Buyer shall mutually agree (the "CPA FIRM"), who shall, acting as experts and not as arbitrators, determine on the basis of the Accounting Principles and the formula set forth in Section 4.B hereof, and only with respect to the remaining differences so submitted, whether and to what extent, if any, the Purchase Price as derived from the Final Statement requires adjustment. Sellers and Buyer shall direct the CPA Firm to use its best efforts to render its determination as soon as practicable, but in no event later 10 than 45 days following the referral of differences to such CPA Firm. The decision of the CPA Firm will be final, conclusive, and binding on the parties, and no party will institute any suit with regard to the dispute or controversy except to enforce the decision. Sellers and Buyer shall make readily available to the CPA Firm all relevant books and records and any work papers (including those of the parties' respective accountants) relating to the Statement of Assets and Liabilities and the Final Statement and all other items reasonably requested by the CPA Firm. Each party will pay an equal share of the costs, expenses and fees of the CPA Firm, and each will separately pay its own attorneys' and accountants' fees and expenses; PROVIDED, in any action to enforce the decisions of the CPA Firm, the successful party shall recover its reasonable attorney's fees from the unsuccessful party. 5. REPRESENTATIONS AND WARRANTIES OF THE SUNBEAM TRANSFERORS. The Sunbeam Transferors represent and warrant to Buyer as follows, except that Sunbeam OP represents and warrants only as set forth in Sections A, B, C, D, E, J(2), Q, T, W and X: A. CORPORATE STANDING. Each of the Sunbeam Transferors is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has full corporate power to carry on its business and to own, lease and operate its Assets, and to carry on the Business as now conducted. To the knowledge of the Sunbeam Transferors, each of the Sunbeam Transferors is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership or operation of its Assets or the conduct of the Business requires such qualification. B. POWER AND AUTHORITY OF THE SUNBEAM TRANSFERORS; AUTHORIZATION. Each of the Sunbeam Transferors has all requisite corporate power and authority to execute and deliver this Agreement and each of the Ancillary Agreements (as defined in Section 7.A(5)) to which it will be a party and to perform its obligations hereunder and thereunder. The execution, delivery and performance by each Sunbeam Transferor of this Agreement and each of the Ancillary Agreements to which it will be a party have been duly and validly authorized by all necessary corporate action on the part of each Sunbeam 11 Transferor and no additional corporate authorization or consent is required in connection with the execution, delivery and performance by each Sunbeam Transferor of this Agreement and each of the Ancillary Agreements to which it will be a party. C. BINDING EFFECT. This Agreement has been duly executed and delivered by each Sunbeam Transferor. This Agreement constitutes, and each of the Ancillary Agreements, when executed and delivered by the parties thereto, will constitute the legal, valid and binding obligation of the Sunbeam Transferor(s) party thereto, enforceable against such Sunbeam Transferor(s) in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). D. NO CONFLICT. The execution, delivery and performance by each Sunbeam Transferor of this Agreement and each of the Ancillary Agreements to which it will be a party does not, and the consummation of the transactions contemplated hereby and thereby, does not and will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or acceleration of any obligation under, or the creation of a lien, security interest or other encumbrance on any of the Assets (any such conflict, violation, default, right of termination or acceleration, loss or creation, a "VIOLATION") pursuant to, any provision of the Certificate of Incorporation or Bylaws of any Sunbeam Transferor or result in any Violation pursuant to any mortgage, indenture, contract, agreement, permit, license, judgment, decree, order, law or regulation applicable to any Sunbeam Transferor, the Business or the Assets. E. CONSENTS. Except for the consents and filings listed on SCHEDULE 5.E, and the approval required by the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), if any, no consent, approval, waiver, or authorization of, or registration, notice, or filing with, any court, administrative agency or other governmental authority or other person is required by or with respect to any Sunbeam Transferor in connection with the execution, delivery and performance of this Agreement and the Ancillary Agreements. F. FINANCIAL INFORMATION. Sellers have furnished to Buyer a schedule of the Assets of the Business and the Assumed Liabilities as of December 29, 1996, as set forth on SCHEDULE 5.F(1), which, at Buyer's sole option, shall be updated prior to the Closing Date to reflect the Assets of the Business and the 12 Assumed Liabilities as of February 3, 1997 (the "SCHEDULE OF ASSETS AND LIABILITIES"). The values of the Assets reflected on the Schedule of Assets and Liabilities are the carrying values of such Assets on Sellers' books and records and such Schedule of Assets and Liabilities has been prepared in accordance with accounting principles, methods and procedures which are in all respects in accordance with the accounting principles, methods and procedures set forth on SCHEDULE 5.F(2) (the "ACCOUNTING PRINCIPLES") and the Schedule of Assets and Liabilities was prepared from the same books and records used by Sunbeam in preparing its publicly reported year-end accounts. G. ORDINARY COURSE. Since the date of the Schedule of Assets and Liabilities, except as set forth on SCHEDULE 5.G, the Business has been operated in the ordinary course of business consistent with past practice and there has been no material (i) change in the Business, the Assets or the manner of conducting the Business, (ii) transaction relating to the Assets or the Business outside of the ordinary course of business consistent with past practice or (iii) lien created or assumed with respect to any of the Assets, except Permitted Liens. H. TAXES. Sellers have filed or will file on a timely basis all tax returns, reports and declarations required to be filed with respect to taxes pertaining to the Assets or the Business, and have paid or, will pay all taxes due and owing as of or before the Closing Date, except for such taxes, if any, that are being contested in good faith. There are no liens for unpaid taxes upon the Assets and there exist no facts which could give rise to such a lien. Except as set forth on SCHEDULE 5.H, there is no action, suit, proceeding, investigation, audit or claim now pending against or with respect to the Business or any of the Assets with regard to any tax or assessment, nor is any claim for any additional tax or assessment asserted by any governmental authority, and Sellers have not received from any governmental authority any written notice of a proposed adjustment, deficiency or underpayment of any taxes pertaining to the Assets or the Business, the non-payment of which could result in (i) a lien or other encumbrance of any type on any of the Assets, or (ii) a liability which could be asserted against Buyer or Buyer's assets as a result of the acquisition of the Assets, and which notice has not been satisfied by payment or been withdrawn. None of the Assets is property which Buyer or an affiliate of Buyer will be required to treat as "tax-exempt use property" (within the meaning of Section 168(h)(1) of the Code). Except for the IRB Agreements in connection with the Paragould, Arkansas facility, no "industrial development bonds" (within the meaning of Section 103 of the Internal Revenue Code of 1954, as amended 13 and in effect immediately prior to the enactment of the Tax Reform Act of 1986), "private activity bonds" (within the meaning of Section 141 of the Code), or other tax-exempt financings are outstanding which have been used to finance the Assets. I. GOVERNMENTAL MATTERS. Sellers are not, on the date hereof, required to make any material capital improvements or other expenditures to comply with any Environmental Laws (as defined in Section 5.R hereof) or any law or rules, regulations, orders, or citations presently in effect of any governmental agency having jurisdiction. Except as disclosed on SCHEDULE 5.I, no unpaid fines or penalties have been assessed or notices or citations issued against Sellers pursuant to any Environmental Laws or any other rules, regulations or orders of EEOC or any other federal, state or local department or agency. To Seller's knowledge, no facts, circumstances or conditions exist which might reasonably give rise to any such material claims, investigations, orders, demands, proceedings or litigation associated with Sellers' compliance with any Environmental Laws or other laws, rules, regulations or requirements of any governmental entity with jurisdiction. J. TITLE AND SURVEY MATTERS (1) Sellers have delivered to Buyer each survey on the Real Property that is in the possession of Sellers. (2) Sellers have, and will transfer to Buyer at Closing, good, valid and marketable title to the Inventory and Equipment and each Sunbeam Transferor owns its respective Assets free and clear of all liens, restrictions, claims, charges, security interests, or other encumbrances (collectively "Liens"), except for liens for taxes not yet due or being contested in good faith, other similar statutory liens for amounts not yet due, and liens securing Assumed Liabilities (collectively "PERMITTED LIENS"). (3) Sellers have good and marketable fee simple title to each Real Property, free and clear of any and all Liens other than Permitted Liens. No right of redemption or similar right exists or remains in effect with respect to any Real Property. On the Closing Date, Sellers will convey to Buyer good, marketable and indefeasible title to the Real Property, subject only to Permitted Liens. Subject to any consent identified as required herein, Sellers shall convey their interest to each Leased Premises. In each case, the legal descriptions of the Real Property and the Leased Premises (identified in Schedules 14 1.G & 1.H respectively) describe Sellers' entire interest at each facility. (4) There are no parties that have any right of use or occupancy derived from or granted by Sellers to all or any portion of the Real Property or Leased Premises. K. INVENTORY. Subject to any reserve or allowance shown on the Schedule of Assets and Liabilities in accordance with the Accounting Principles, the Inventory is good and useable on a normal basis in the existing product lines of the Business and is merchantable and fit for the particular purpose for which it is intended. The net book value of all inventory of Product which is located in Canada (which is not owned by Sellers or otherwise included in the Inventory) is less than $100,000. The Inventory does not include any items manufactured or sold using any RubbermaidTM trademark. L. LEGAL PROCEEDINGS. Except as set forth on SCHEDULE 5.L, (i) there are no claims of any kind or any actions, suits, orders, notices of violation, directives, proceedings, arbitrations or investigations pending or, to the knowledge of Sellers, threatened against or affecting the Business or any of the Assets which would (a) impair or delay the ability of the Sunbeam Transferors to perform their obligations pursuant to this Agreement or the Ancillary Agreements or (b) have an effect that is, or could reasonably be expected to be, materially adverse to the value of the Assets taken as a whole, or materially adverse to the business, financial condition or results of operations of the Business taken as a whole and (ii) neither any Seller (with respect to its operation of the Business or its ownership of its Assets), the Business nor any of the Assets is subject to any order, writ, judgment, award, injunction or decree of any court or governmental or regulatory authority of competent jurisdiction or any arbitrator. This Section 5.L does not apply to legal proceedings arising under Environmental Laws. M. LICENSES AND PERMITS; COMPLIANCE WITH LAWS. Sellers hold all permits, licenses and authorizations of all governmental entities which are material to the operation of the Business and the Assets and each Seller, the Business and the Assets is fully in compliance with the terms thereof. A correct and complete list of such material licenses, permits and authorizations is set forth on SCHEDULE 5.M(1). Except as set forth on SCHEDULE 5.M(2), neither Seller is in violation of any applicable law, regulation, ordinance, permit, license, order, or any other applicable requirement of any governmental body or court with respect to the operation of the Business or any of the 15 Assets and no written notice has been received by any Seller or the Business alleging any such violations, which could result in a material liability. N. COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES; ETC. (1) The applicable Seller is a party to the collective bargaining agreements listed on SCHEDULE 5.N(1) with respect to certain employees of such Seller engaged in the operations of the Business and there are no other labor or collective bargaining agreements which pertain to any other employees of Sellers engaged in the operations of the Business. No labor organization or group of employees of Sellers engaged in the operations of the Business has made a pending demand for recognition or certification, there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened in writing to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority and there are no organizing activities involving the Company or any Company Subsidiary pending with any labor organization or group of employees of Sellers engaged in the operations of the Business. (2) Except as set forth on SCHEDULE 5.N(2), there are no strikes, work stoppages, slowdowns, lockouts, material arbitrations or material grievances or other material labor disputes pending or threatened in writing against or involving the Sellers with respect to employees engaged in the operations of the Business, and there are no unfair labor practice charges, grievances or complaints pending or threatened in writing by or on behalf of any employee or group of employees of Sellers engaged in the operations of the Business which, if individually or collectively resolved against the Sellers, could result in a material liability. (3) Except as set forth on SCHEDULE 5.N(3), with respect to employees of Sellers engaged in the operations of the Business, there are no complaints, charges or claims against the Sellers pending or threatened with any public or governmental authority, arbitrator or court based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by any Seller of any individual which, if individually or collectively resolved against the Sellers, could result in a material liability. 16 (4) With respect to employees of Sellers engaged in the operations of the Business, Seller is in material compliance with all laws, regulations and orders relating to the employment of labor, including all such laws, regulations and orders relating to wages, hours, the Workers Adjustment and Retraining Notification Act ("WARN"), collective bargaining, discrimination, civil rights, safety and health, workers' compensation and the collection and payment of withholding and/or social security taxes and similar taxes. (5) Except as set forth on SCHEDULE 5.N(5), with respect to the operations of the Business, there has been no "mass layoff" or "plant closing" as defined by WARN within the six (6) months prior to Closing. O. CONTRACTS. Except as set forth on SCHEDULE 5.O(1), the Assumed Contracts do not omit any lease, contract, agreement or understanding that is material to the operation of the Business or the Assets. Each of the Assumed Contracts is a valid and binding agreement of the applicable Seller and, to the knowledge of Sellers, is in full force and effect. No event or condition has occurred or exists, or, to the knowledge of Sellers, is alleged by any of the other parties thereto to have occurred or existed, which constitutes, or with lapse of time or giving of notice or both might constitute a material default or breach by the applicable Seller or any other party under any of the Assumed Contracts or, with respect to the Assumed Contracts listed on SCHEDULE 5.O(2), any default or breach by the applicable Seller or any other party thereto. The applicable Seller enjoys peaceful and undisturbed possession under all leases or licenses with respect to any of the Assets or under which any portion of the Business is operating. No Seller is party to and the Business and the Assets are not bound by, any contract, agreement, instrument, lease, license, arrangement or understanding, or subject to any other restriction, which has had, or could reasonably be expected to have, a materially adverse effect on the operations or financial condition of the Business or the Assets. With respect to the guaranty agreements entered into or contemplated to be entered into by Sellers with certain customers (the "SUNBEAM GUARANTIES"), SCHEDULE 5.0(3) lists the following categories of matters (by category): (a) all Sunbeam Guaranties which have been signed by customers and returned to Sellers, (b) all customers to which Sellers have sent, but not yet received, a signed Sunbeam Guaranty, and (c) to Sellers' knowledge, all customers with whom Sellers have had discussions relating to the Sunbeam Guaranties. Except for items 1.A and 1.B on Schedule 1.C(1), which have minimum purchase 17 requirements, and items 1.C, 1.D, 1.G and 1.H, which are for a term extending beyond the 1997 selling season (but have no minimum purchase requirements), the raw materials/commodities contracts listed on Schedule 1.C(1) do not include any minimum purchase commitments and such contracts only relate to the 1997 selling season. The purchase orders referenced in Sections 3.B and 3.C expire no later than August 31, 1997. P. EMPLOYEE BENEFIT PLANS. SCHEDULE 5.P sets forth all "employee benefit plans," as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and all other employee benefit arrangements or payroll practices, including, without limitation, severance pay, sick leave, vacation pay, salary continuation for disability, consulting or other compensation agreements, retirement, deferred compensation, bonus, stock purchase, hospitalization, medical insurance, life insurance and scholarship programs maintained by Sellers or any of their affiliates or to which Sellers or any of their affiliates contributed or is obligated to contribute thereunder with respect to which any Employee participates (the "PLANS"). True, correct and complete copies of each of the Plans and related trust documents, any amendments thereto and any summary plan descriptions thereto have been made available or delivered to Buyer by Sellers. Q. INTELLECTUAL PROPERTY. Except as set forth on SCHEDULE 5.Q(1), (i) no person has made or, to the knowledge of the Sunbeam Transferors, threatened to make, any claims that the operations of the Business are in violation of or infringe upon any patents, trade secrets, trademarks or trade names, trademark or trade name registrations, service marks or service mark registrations, copyrights or copyright registrations or any other proprietary or trade rights of any third party and (ii) there are no actions or proceedings pending or, to the knowledge of the Sunbeam Transferors, threatened, which challenge the right of any Seller to make, use or sell products or services embodying, and, to the knowledge of the Sunbeam Transferors, no person is infringing or otherwise violating, the Intellectual Property. As of the Closing Date, all taxes, royalties, fees and other payments due and payable and necessary to maintain the ownership and license to use, as the case may be, the Intellectual Property shall have been made, except as set forth on SCHEDULE 5.Q(2) or as Buyer shall consent in connection with the consultation contemplated by Section 7.B(1)(d)(ii). R. ENVIRONMENTAL MATTERS. The following definitions shall apply to the terms listed below when used in this Agreement: 18 "ENVIRONMENTAL LAWS" shall mean any and all prevailing and applicable federal, state and local statutes, codes, rules, regulations, permits, ordinances and orders of any governmental entity as of the Closing Date relating to the storage, handling, disposal, treatment, investigation, Release, potential Release, threatened Release, remediation or other regulation of Hazardous Substances in any media, including but not limited to air, groundwater, building interior, water or soil, including, by way of example and not limitation, CERCLA, RCRA, TSCA, and the Clean Water Act. "HAZARDOUS SUBSTANCE" shall mean any substance, combination of substances, material, waste, gas or particulate matter which has been determined to be a health danger, soil, water or air contaminant or which is regulated under any prevailing and applicable Environmental Law, including, but not limited to, any material or substance which is (i) defined in any Environmental Law as a 'hazardous waste,' 'hazardous material,' 'hazardous substance,' 'extremely hazardous waste,' or 'restricted hazardous waste'; (ii) composed of petroleum or has a petroleum base; (iii) composed of asbestos or material containing asbestos in a friable form; (iv) a polychlorinated biphenyl; (v) a radioactive material; (vi) designated as a pollutant pursuant to federal law including Section 311 of the Clean Water Act, 33 U.S.C. ss. 1251 (33 U.S.C. ss. 1317); (vii) defined as a 'hazardous waste' pursuant to the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq. (42 U.S.C. ss. 6903); or (viii) defined as a 'hazardous substance' pursuant to Section 101 of CERCLA. "RELEASE" shall mean any dumping, pouring, pumping, emitting, leaching, spilling, disposal, spreading, leaking or discharging of any Hazardous Substance into any media, whether soil, surface water, building interior, groundwater, air or any combination of the foregoing. Except as set forth on the Disclosure Schedule (as defined in Section 8.A): (1) Sellers conduct and have conducted the operations of the Business, including, without limitation, with respect to the ownership, use and maintenance of the Real Property and the Leased Premises, in material compliance with all applicable Environmental Laws. (2) To Seller's knowledge, the Real Property and the Leased Premises and their respective existing and prior uses comply in all material respects with all Environmental Laws. 19 (3) To Seller's knowledge, all Hazardous Substances that have been removed from or disposed of by Seller or its agents off the Real Estate or the Leased Premises have been handled, transported, stored, treated and disposed of in compliance in all material respects with all Environmental Laws. Neither the Business, the Real Property nor the Leased Premises is subject to any liabilities, claims, judgments, orders, notices of violation, settlements, permits, licenses, liens, writs, injunctions or decrees relating to the manufacturing, processing, use, generation, treatment, handling, storage, disposal, transportation, presence, Release, potential Release or threatened Release of any Hazardous Substance (collectively, an "ENVIRONMENTAL EVENT"). (4) Sellers and their agents have no knowledge of any claim, potential claim, action, suit, proceeding, hearing or investigation, based on or related to any Environmental Event relating to the Business, the Real Property or the Leased Premises. To the knowledge of Sellers, no notice of any Environmental Event was given to any person or entity that occupied the Leased Premises or the Real Property prior to the date said locations were occupied by or used in the Business. (5) All permits, licenses, consents and authorizations necessary for full compliance in all material respects with Environmental Law have been obtained and are valid and in full force and effect for the Real Property and the Leased Premises. To Seller's knowledge, no application, report or other document or information filed with or furnished to any federal, state or local governmental body, authority or agency contains any material inaccuracies or false or materially misleading statements. (6) Seller and its agents have no knowledge of the Release, potential Release or threatened Release of any Hazardous Substance on, in, under, within or around the Real Property or Leased Premises which is not in compliance in all material respects with all applicable Environmental Laws. S. IRB AGREEMENTS. No event or condition has occurred or exists, or, to the knowledge of Sellers, is alleged by any of the other parties thereto to have occurred or existed, which constitutes, or with the lapse of time or giving of notice or both would reasonably be expected to constitute, a default or breach under any of the IRB Agreements and all other agreements, 20 instruments, certificates and other documents entered into or delivered by Sellers in connection with the IRB Agreements. The applicable Sellers have paid all amounts currently due and have performed all current obligations under the IRB Agreements and all other agreements, instruments, certificates and other documents entered into or delivered by Sellers in connection with the IRB Agreements. The amounts receivable relating to the bond issued by the Development Authority of Burke County in 1996, which constitutes an Asset to be transferred to Buyer, in the aggregate, will defease the amounts payable pursuant to the lease pertaining to the Waynesboro, Georgia facility, which obligation constitutes an Assumed Liability. On and after the Effective Time, no liability or obligation will exist relating to the Gaston County Flexible Rate Demand Industrial Revenue Bonds (Allibert Inc. Project), Series 1987A (the "STANLEY IRBS") which could (i) be asserted against Buyer or Buyer's assets as a result of the acquisition of the Assets or (ii) result in a lien or other encumbrance of any type on any of the Assets. T. LICENSES OF INTANGIBLE PERSONAL PROPERTY. There are listed on SCHEDULE 5.T all material licenses or similar agreements or arrangements relating to the Business, to which any Seller is a party either as licensee or licensor, for any intangible personal property (collectively, "INTANGIBLE PERSONAL PROPERTY"). Except as set forth on SCHEDULE 5.T (i) no proceedings are pending or, to the knowledge of Sellers, threatened, that challenge the rights of Sellers in any material respect in and to or the right to make, use or sell products or processes embodying, any such Intangible Personal Property or any license thereof and (ii) there are no pending or, to the knowledge of Sellers, threatened claims, demands or proceedings, restricting the right of the applicable Sellers to use, charging Sellers with infringement of, or making any other claim with respect to, any of such Intangible Personal Property or any license thereof. U. BROKERS AND FINDERS' FEES. Except as to the engagement by Sellers of Chase Securities, Inc. (whose fees and expenses shall be borne exclusively by Sellers), neither Sellers nor any of their officers, directors or employees have employed any broker, finder or financial advisor or incurred any liability for fees or commissions payable to any broker, finder or financial advisor in connection with the negotiations relating to or the transactions contemplated by this Agreement. V. ENTIRE BUSINESS; CONDITION OF ASSETS. The Assets and the Ancillary Agreements constitute all of the assets, properties and rights, together with the services of the 21 Transferred Employees, necessary to conduct the Business in all respects as currently conducted and, except as set forth on SCHEDULE 5.V(1), there are no material Assets of the Business that Sellers will retain following the Closing. All services provided to the Business by (i) Sellers and Sunbeam (which are the only entities within the Sunbeam Corporate Structure which provide services to the Business) or (ii) third parties who provide services to support the operation of the Business, are described on SCHEDULE 5.V(2). To the knowledge of Sellers, there are no (i) material structural defects in any of the buildings or other improvements situated on the Leased Premises or the Real Property or (ii) building systems, structures, improvements, fixed assets or equipment owned, leased or used by Seller and required for the conduct of the Business as currently conducted that are not in all material respects in good condition and working order, normal wear and tear excepted, and adequate in quality and quantity for the current normal operation of the Business. W. KNOWLEDGE. Whenever used in this Section 5, "to the knowledge of Sellers" shall mean the actual knowledge of those persons listed on SCHEDULE 5.W. X. NO WARRANTIES. Other than as explicitly provided in this Section 5, neither Sellers nor any of their respective affiliates, in this Agreement or any other agreement, instrument or document contemplated by this Agreement, makes any other express or implied representation or warranty with respect to the Assets or the use thereof in the Business. 6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and warrants to Sellers as follows: A. CORPORATE STANDING. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has full corporate power to own, lease and operate its assets and to carry on its business as currently conducted. To the knowledge of Buyer, Buyer is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership of its properties or the conduct of its business requires such qualification. B. POWER AND AUTHORITY OF BUYER; AUTHORIZATION. Buyer has all requisite corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements and to 22 perform its obligations hereunder and thereunder. The execution, delivery and performance by Buyer of this Agreement and the Ancillary Agreements have been duly and validly authorized by all necessary corporate action on the part of Buyer and no additional corporate authorization or consent is required in connection with the execution, delivery and performance by Buyer of this Agreement and each of the Ancillary Agreements. C. BINDING EFFECT. This Agreement has been duly executed and delivered by Buyer. This Agreement constitutes, and each of the Ancillary Agreements, when executed and delivered by the parties thereto, will constitute the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with their respective terms, subject to bankruptcy, insolvency, reor- ganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). D. NO CONFLICT. The execution, delivery and performance by Buyer of this Agreement and the Ancillary Agreements does not, and the consummation of the transactions contemplated hereby and thereby, does not and will not, violate or conflict with any of the provisions of any charter instrument or bylaw of Buyer or violate or conflict with or constitute a default under any mortgage, indenture, contract, agreement, permit, license, instrument or trust or any order or ruling of any governmental authority to which Buyer is a party or by which Buyer is bound, or violate any provision of law, statute, rule or regulation to which Buyer is subject. E. BROKERS' AND FINDERS' FEES. Except as to the engagement by Buyer of CS First Boston Corporation (whose fees and expenses shall be borne exclusively by Buyer), neither Buyer nor any of its officers, directors or employees has employed any broker, finder or financial advisor or incurred any liability for fees or commissions payable to any broker, finder or financial advisor in connection with the negotiations relating to or the transactions contemplated by this Agreement. F. NO WARRANTIES. Other than as explicitly provided in this Section 6, neither Buyer nor any of its respective affiliates, in this Agreement or any other agreement, instrument or document contemplated by this Agreement, makes any other express or implied representation or warranty on behalf of Buyer. 23 7. MATTERS PRIOR TO CLOSING. A. ANCILLARY AGREEMENTS. (1) On the Closing Date, Buyer (or a different wholly-owned subsidiary of USI designated by Buyer) and Sunbeam OP, shall execute and deliver an agreement (the "TRADEMARK LICENSE AGREEMENT") which provides for Sunbeam OP to grant to Buyer (or such other subsidiary) the exclusive right to use the Sunbeam(R) trademark in North America for indoor and outdoor furniture product categories for products sold by Buyer for a term of five (5) years following the Closing Date on a royalty-free basis. The Trademark License Agreement shall contain standard terms and conditions for a third-party intellectual property license, shall not contain any minimum sales requirements, and shall allow Buyer to utilize the Sunbeam(R) trademark in connection with line extensions which are within this Agreement's definition of "Product." In addition, the Trademark License Agreement shall provide for an option for Buyer to extend such Agreement in accordance with the terms of the Agreement, for an additional five (5) year term (with no option payment), at a then-current market royalty rate (as defined in the Agreement), subject to a minimum rate of 3% of net sales and a maximum royalty rate of 8% of net sales. (2) On the Closing Date, Buyer and Sunbeam Products shall execute and deliver an agreement (the "TRANSITION SERVICES AGREEMENT"), including the terms set forth in EXHIBIT A hereto, pursuant to which (a) Seller will (directly or through third parties) provide administrative services to Buyer as described in Exhibit A, for fees in an amount estimated to cover the costs of providing such services by Sunbeam Products, and escalating over the term of the Transition Services Agreement, for a term as described in Exhibit A, after which Sellers will provide reasonable accommodation to Buyer to the extent necessary for Buyer to establish alternative services using its best efforts, and during which extension Buyer will cover all cost of Sellers, PROVIDED, that in no event shall such extension cause such services to be provided for a period of more than twelve (12) months following the Closing Date. Buyer will provide access and transitional services to be mutually agreed to Sellers with respect to inventory and other matters relating to items retained by Sellers which are located at facilities controlled by Buyer post-Closing. 24 (3) On the Closing Date, Buyer and Sunbeam Products shall execute and deliver a lease with respect to the Portland, Tennessee free-standing office facility (the "PORTLAND LEASE") of a term of three (3) months, with month-to-month tenancy thereafter which shall be terminable, after the first three (3) months of occupancy, by either party on thirty (30) days' written notice, at a market rate rental cost to be agreed by the parties. (4) On the Closing Date, Buyer and Sunbeam Products shall execute and deliver an agreement (the "MANUFACTURING SERVICES AGREEMENT"), including the terms set forth on EXHIBIT B hereto, pursuant to which Seller, through its Murfreesboro, Tennessee facility, shall manufacture and provide Product to Buyer's requirements through June 30, 1997. The Manufacturing Services Agreement shall also provide for maintenance in the ordinary course of, and the removal by Buyer of the fixed assets, including information systems hardware and software located at the Murfreesboro facility upon the expiration of such Agreement at Buyer's cost. (5) On the Closing Date, Buyer and Sunbeam Products shall execute and deliver an agreement (the "STANLEY DISTRIBUTION AGREEMENT"; and together with the Trademark License Agreement, the Transition Services Agreement, the Portland Lease and the Manufacturing Services Agreement, the "ANCILLARY AGREEMENTS"), pursuant to which Buyer, through the Stanley, North Carolina facility, shall provide distribution services for grills located at the Stanley North Carolina facility through September 30, 1997, for fees in an amount estimated to cover the costs of providing such services by Buyer. B. OBLIGATIONS OF SELLERS PRIOR TO CLOSING. From the date of this Agreement until the Closing Date, Sellers shall: (1) Conduct the Business only in the usual, regular and ordinary course consistent with past practice, and preserve intact for Buyer the goodwill of the Business and the present relationship between the Business and the employees, suppliers, clients, customers and others having business relations with Sellers with respect to the Business. During the period from the date hereof to the Closing Date, except as otherwise provided for in this 25 Agreement or as Buyer shall otherwise consent, Sellers shall not, with respect to the Business: (a) enter into commitments for new capital expenditures in excess of $500,000 in the aggregate; (b) dispose of or incur, create or assume any lien, restriction or encumbrance on any material Asset or Assets which, in the aggregate, are material to the Business, it being agreed by Buyer that Sellers may sell obsolete or excess inventory (including raw materials and work in progress) of the Business to consolidators, liquidators or others in non-ordinary course transactions; (c) enter into any material transaction outside of the ordinary course of business consistent with past practice; (d) amend any term of, waive any right under or allow to lapse or expire, (i) any contract, permit, lease, arrangement or understanding which constitutes an Assumed Contract or which is material to the Business or (ii) any item of Intellectual Property, unless Buyer otherwise consents in connection with Sellers' consultation with Buyer regarding any filing or other action necessary to maintain such Intellectual Property from the date of this Agreement until the Closing Date; (e) make any change to, or amend in any way, the contracts, salaries, wages, or other compensation of any officer, director, employee, agent, or other similar representative of Seller engaged in the operations of the Business other than changes, amendments that (i) are made in the ordinary course of business and consistent with past practice, (ii) do not and will not result in increases of more than 5% in the salary, wages or other compensation of any such Person, and (iii) do not and will not exceed, in the aggregate, 5% of the total salaries, wages, and other compensation of all employees of the Division, except that Sellers may pay or perform employee compensation and other incentive arrangements intended to facilitate the consummation of the transactions contemplated hereby, all of such compensation and incentive arrangements being described on SCHEDULE 7.B(1)(E); 26 (f) except as described in SCHEDULE 7.B(1)(F), adopt, enter into, amend, alter or terminate, partially or completely, any Plan; (g) assume, enter into, amend, alter or terminate any labor or collective bargaining agreement to which the operations of the Business is affected thereby; (h) offer any additional Sunbeam Guaranty that has not been extended to a customer prior to the Closing Date; or (i) agree, in writing or otherwise, to do any of the foregoing. (2) Use their best efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements; (3) Afford Buyer, its accountants, counsel, technical advisors, and other representatives free and reasonable access during normal business hours to the offices, equipment, personnel, facilities, records, files, contracts and agreements of Sellers relating to the Assets and the Business and furnish Buyer with all material information concerning the Assets and the Business; (4) Not take any action or omit to take any action which will result in the material violation by Sellers of any law applicable to the transactions contemplated by this Agreement or the Ancillary Agreements or cause a material breach by Sellers of any of the representations and warranties of Sellers set forth in this Agreement or the Ancillary Agreements or any lease, agreement, contract or commitment to which any Seller is a party; (5) Use their best efforts to obtain prior to Closing all consents by third parties required to be obtained by Sellers with respect to its performance of this Agreement and the Ancillary Agreements and cooperate fully with Buyer in connection with Buyer's requests and applications for the governmental authorizations, approvals and consents which are necessary for the ownership and operation of the Business following the Closing Date; 27 (6) Provide to Buyer a supplemental Schedule in the event of any changes taking place after the date of this Agreement which would have been reflected in any Schedule to this Agreement had such changes taken place before the preparation of the Schedule (it being understood that such supplemental Schedules shall constitute an amendment to this Agreement, except to the limited extent provided in Section 24); and (7) Remove all Inventory from the Portland, Tennessee facility and deliver such Inventory to a facility to be transferred to Buyer (it being understood that the Murfreesboro, Tennessee facility is not being transferred to Buyer) by no later than February 28, 1997. C. OBLIGATIONS OF BUYER PRIOR TO CLOSING. From the date of this Agreement until the Closing Date, Buyer shall: (1) Use its best efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements; (2) Not take any action or omit to take any action which will result in the material violation by Buyer of any law applicable to the transactions contemplated by this Agreement or the Ancillary Agreements or cause a material breach by Buyer of any of the representations and warranties of Buyer set forth in this Agreement or the Ancillary Agreements; and (3) Use its best efforts to obtain prior to Closing all consents by third parties and all governmental authorizations which are necessary for Buyer's performance of this Agreement and the Ancillary Agreements. D. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations of Buyer under this Agreement are subject, at the option of Buyer, to the satisfaction at or prior to the Closing Date of each of the following conditions: (1) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of Sellers contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date as though made at and as of that date, and Sellers shall have delivered to Buyer a 28 certificate to that effect dated the Closing Date and executed by a duly authorized officer of each Seller. (2) COMPLIANCE WITH COVENANTS. Seller shall have performed and complied in all material respects with all terms, agreements, covenants and conditions of this Agreement to be performed or complied with by it at or prior to the Closing Date, and Sellers shall have delivered to Buyer a certificate to that effect dated the Closing Date and executed by a duly authorized officers of each Seller. (3) HSR ACT. The applicable waiting period (and any extension thereof) under the HSR Act, if any, shall have expired or been terminated. (4) LEGAL ACTIONS OR PROCEEDINGS. No court or governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order which is in effect on the Closing Date and prohibits the consummation of the Closing. No legal action or proceeding shall have been instituted or threatened seeking to restrain, prohibit, invalidate or otherwise affect the consummation of the transactions contemplated hereby or pursuant to the Ancillary Agreements or which would, if adversely decided, have a material adverse effect on the operations or financial condition of the Business. (5) ASSIGNMENTS OF ASSUMED CONTRACTS. Sellers shall have obtained all the authorizations, consents, waivers and approvals required in connection with the assignment of the Assumed Contracts that are set forth on SCHEDULE 7.D(5). (6) CONSENTS. Buyer shall have been furnished with written consents and permits in forms acceptable to Buyer of any and all persons, including without limitation government agencies, authorities and third parties, required to be obtained prior to the consummation of the transactions contemplated hereby or pursuant to the Ancillary Agreements. (7) SUPPLEMENTAL SCHEDULES. Sellers shall have furnished to Buyer all supplemental Schedules, if any, required by Section 7.B(6). (8) ANCILLARY AGREEMENTS. The applicable Sunbeam Transferors shall have duly executed and delivered to Buyer 29 the Ancillary Agreements and the other documents referred to in Section 8.A. (9) REAL ESTATE MATTERS. Buyer shall have received at or prior to Closing an irrevocable commitment for title insurance covering the Real Property and Leased Premises in which Seller has an insurable interest from a title insurance company reasonably acceptable to Buyer to issue an American Land Title Association (Extended) Owner's Policy of Title Insurance in amounts to be determined by Buyer, at Buyer's expense. The commitment shall show to the reasonable satisfaction of Buyer that immediately prior to the Closing Date the appropriate Seller had good and marketable title in fee simple absolute to the Real Property, free and clear of all liens, mortgages, security interests, pledges, charges, encumbrances, covenants, conditions, restrictions and other matters of record, except for Permitted Liens. Such commitment shall not contain the standard preprinted exceptions. (10) PARAGOULD IRB DILIGENCE. Sellers shall have provided to Buyer all documentation relating to the City of Paragould, Arkansas ARKLA Industries Project, Series 1979 Industrial Revenue Bonds. Buyer shall have completed its due diligence relating to such bonds to its reasonable satisfaction. (11) NO MATERIAL ADVERSE CHANGE. Since the date of the Statement of Assets and Liabilities, neither the Assets nor the Business shall have suffered a change or series of related changes that individually or in the aggregate is, or could reasonably be expected to be, materially adverse to the value of the Assets taken as a whole, or materially adverse to the business, financial condition, results of operations or prospects of the Business taken as a whole, except any such change or series of related changes resulting from any substantial national or international calamity or emergency or general economic factors which are outside the control of Sellers and also affect other participants in the outdoor furniture industry. E. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SUNBEAM TRANSFERORS. The obligations of the Sunbeam Transferors under this Agreement are subject, at the option of the Sunbeam Transferors, to the satisfaction at or prior to the Closing Date of each of the following conditions: 30 (1) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date as though made at and as of that date, and Buyer shall have delivered to Sellers a certificate to that effect dated the Closing Date and executed by a duly authorized officer of Buyer. (2) COMPLIANCE WITH COVENANTS. Buyer shall have performed and complied in all material respects with all terms, agreements, covenants and conditions of this Agreement to be performed or complied with by it at or prior to the Closing Date, and Buyer shall have delivered to Sellers a certificate to that effect. (3) HSR ACT. The applicable waiting period (and any extension thereof) under the HSR Act, if any, shall have expired or been terminated. (4) LEGAL ACTIONS OR PROCEEDINGS. No court or governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order which is in effect on the Closing Date and prohibits the consummation of the Closing. No legal action or proceeding shall have been instituted or threatened seeking to restrain, prohibit, invalidate or otherwise affect the consummation of the transactions contemplated hereby or pursuant to the Ancillary Agreements. (5) CONSENTS. Sellers shall have been furnished with written consents and permits in forms acceptable to Sellers of any and all persons, including without limitation government agencies, authorities and third parties, required to be obtained prior to the consummation of the transactions contemplated hereby or pursuant to the Ancillary Agreements. (6) ANCILLARY AGREEMENTS. Buyer shall have duly executed and delivered to Sellers the Ancillary Agreements and the other documents referred to in Section 8.B. 8. DOCUMENT DELIVERIES. A. DELIVERIES OF THE SUNBEAM TRANSFERORS. At the Closing, the Sunbeam Transferors shall deliver to Buyer the following: 31 (1) A bill of sale, assignments to accomplish the transfer of the Assumed Contracts and the Intellectual Property and deeds to accomplish the transfer of the Real Property, each signed on behalf of the applicable Sunbeam Transferor(s), and such other documents as Buyer may reasonably request in order to accomplish the sale of the Assets to Buyer; (2) Each of the Ancillary Agreements, in a form reasonably acceptable to Buyer and signed on behalf of the applicable Sunbeam Transferor(s); (3) A disclosure schedule relating to the representations and warranties of Sellers contained in Section 5.R (the "DISCLOSURE SCHEDULE"); (4) The consent of Samsonite Corporation to the assignment (and, if necessary to transfer as a matter of law, amendment) of that certain Trademark License Agreement dated November 20, 1995; (5) A renewal of the lease pertaining to the Nacogdoches, Texas facility which is for a term of one year; (6) All consents required pursuant to the terms of the IRB Agreements; (7) The opinion of the General Counsel of Sunbeam, dated as of the Closing Date, addressed to USI and Buyer substantially to the effect set forth in Exhibit C hereto; (8) The certificates described in Section 7.D(l) and (2); and (9) Such other documents as are reasonably requested by counsel for Buyer. B. BUYER'S DELIVERIES. At the Closing, Buyer shall deliver to Sellers the following: (1) The Estimated Purchase Price; (2) An assumption agreement with respect to the Assumed Liabilities signed on behalf of Buyer; (3) Each of the Ancillary Agreements, signed on behalf of Buyer; 32 (4) The opinion of the General Counsel of USI, dated as of the Closing Date, addressed to Sunbeam and Sellers substantially to the effect set forth in Exhibit C hereto; (5) The certificates described in Section 7.E(l) and (2); and (6) Such other documents as are reasonably requested by counsel for Sellers. 9. TAX RETURNS; BULK TRANSFER LAWS. Buyer agrees to waive compliance by Sellers with the requirements of any applicable Bulk Sales Act or Bulk Transfers Act. 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except with respect to Section 11.E herein, and notwithstanding any investigation made by or on behalf of Buyer, all representations and warranties contained in this Agreement by any party to this Agreement and in any contract, certificate or other instrument delivered by or on behalf of any party pursuant to this Agreement shall survive the Closing for a period of eighteen (18) months following the Closing Date, and any claims relating thereto must be asserted in writing prior to the expiration of such eighteen (18) month period; in the event that notice of any claim for indemnification is given within such eighteen (18) month period, the representations and warranties that are subject of such indemnification claim shall survive until such time as such claim is finally resolved. 11. INDEMNIFICATION. A. REMEDIES. (1) Subject to the limitations set forth in Section 11.D, Sellers shall defend and indemnify Buyer and its directors, officers, shareholders and other affiliates, and attorneys and agents ("BUYER INDEMNIFIED PARTIES"), and hold the Buyer Indemnified Parties harmless and reimburse the Buyer Indemnified Parties for any and all claims, suits, actions, losses, liabilities, damages, demands, orders or directives of an administrative agency, regulatory authority or court having jurisdiction over such matters (an "ENVIRONMENTAL AUTHORITY"), judgments, settlements (including, without limitation, fines, penalties, and 33 criminal or civil judgements and settlements), costs (including, without limitation, costs of investigation or remediation of Hazardous Substances, damage to natural resources and court costs) and expenses (including, without limitation, attorneys' and accountants' fees) (hereinafter "LOSS" or "LOSSES") suffered or incurred by the Buyer Indemnified Parties, and successors or assigns thereto as a result of, or with respect to: (a) Subject to Section 10, any breach or inaccuracy of any representation or warranty of Sellers set forth in Section 5 or in any other agreement or certificate executed by Sellers in connection herewith, including the Ancillary Agreements; (b) Any breach of or noncompliance by Sellers with any covenant or agreement of Sellers contained in this Agreement or in any agreement executed by Sellers in connection herewith, including the Ancillary Agreements; (c) Any liability arising out of the operation of the Business before the Closing Date other than the Assumed Liabilities, whether or not relating to the Business or the Assets including, without limitation, all liabilities for damage or injury to person or property arising on account of any products identifiable (determined as provided in Section 27.H) as manufactured by Sellers before the Closing Date, regardless of when sold and based on any theory of liability, including product warranty, and any liability relating to the Sunbeam Guaranties; (d) Operation of the Business or use of the Real Property or Leased Premises prior to Closing pertaining to (i) the investigation, remediation or cleanup of any Hazardous Material(s) required by any Environmental Law as of the Closing Date and located at, on, in or under the Real Property, the Leased Premises or property affected by the migration of Hazardous Material(s) from the Real Property or Leased Premises ("REAL ESTATE MATTER"), (ii) fines, penalties or corrective action required to bring operations at the Real Property or Leased Premises into compliance, in all material respects, with any Environmental Law as of the Closing Date ("COMPLIANCE MATTER") and (iii) the transportation treatment and handling, recycling, sale or offsite disposal, of Hazardous Materials generated 34 or otherwise used (A) by Seller with respect to the Business, or (B) by Seller at the Real Property or Leased Premises; (e) Correction, investigation or remediation of material violations of any Environmental Laws which are identified as a consequence of any environmental regulatory audits performed by Buyer prior to the Closing Date at the Real Property and Leased Premises (the "ENVIRONMENTAL AUDITS"); (f) Any liability arising out of warranty claims (other than personal injury claims) asserted prior to the fourth anniversary of the Closing Date with respect to Products manufactured by Seller prior to the Closing Date, regardless of when sold; (g) Any bulk sales provision contained in the Uniform Commercial Code applicable to the transactions contemplated hereby; and (h) Any and all actions, suits, directives, orders or notices of violation issued by any Environmental Authority, proceedings, claims, demands, assessments or judgments incident to any of the foregoing. (2) Subject to the limitations set forth in Section 11.D, Buyer shall defend and indemnify Sellers and their directors, officers, shareholders and other affiliates, and attorneys and agents ("SELLER INDEMNIFIED PARTIES"), and hold the Seller Indemnified Parties harmless and reimburse the Seller Indemnified Parties for any and all Losses suffered or incurred by the Seller Indemnified Parties or any successors or assigns thereto as a result of, or with respect to: (a) Subject to Section 10, any breach or material inaccuracy of any representation or warranty of Buyer set forth in Section 6 or in any other agreement or certificate executed by Buyer in connection herewith, including the Ancillary Agreements; 35 (b) Any breach of or material noncompliance by Buyer with any covenant or agreement of Buyer contained in this Agreement or in any other agreement executed by Buyer in connection herewith, including the Ancillary Agreements; (c) The Assumed Liabilities; (d) The liabilities described in Exhibit B with respect to the closure of the Murfreesboro, Tennessee facility by Sellers; (e) Except to the extent Sellers are obligated to indemnify the Buyer Indemnified Parties pursuant to Section 11.A(1), the operation of the Business by Buyer after the Closing Date; and (f) Any and all actions, suits, proceedings, claims, demands, assessments and judgments incident to any of the foregoing. B. THIRD-PARTY CLAIMS. (1) Any party entitled to indemnification hereunder ("INDEMNITEE") receiving notice of any third-party claim upon which indemnification may be sought hereunder shall promptly give written notice of the same to the party who is required to pay indemnification ("INDEMNITOR"), including a brief description of the claim and, where practicable, an estimate of the amount thereof. The Indemnitor shall, within ten (10) days after receipt of such notice, notify the Indemnitee as to whether the Indemnitor desires to contest the same. If the Indemnitor shall decline to contest the claim or shall fail to respond to such notice, the Indemnitee shall have the right to undertake the defense, compromise or settlement of the same (in its sole discretion) on behalf of and for the account and risk of the Indemnitor. If the Indemnitor (a) so notifies the Indemnitee that the claim is to be contested, (b) agrees in writing to be responsible for all judgments, damages, settlements, awards and other liabilities that may arise therefrom, regardless of any limitation that may apply to the obligations of the Indemnitor herein or otherwise, or any time limits that may apply to the Indemnitee's right to obtain indemnity, and (c) provides the Indemnitee with adequate security and assurance of the Indemnitor's ability to satisfy the same, then the Indemnitor shall be entitled to control the defense thereof by counsel of its own selection and at its own expense. Each party shall give the other party all information and assistance which the latter may reasonably request in defending any matter hereunder. 36 (2) Response to any Loss or potential Loss which pertains to those matters identified as a material violation of an Environmental Law which requires corrective action as set forth in the Environmental Audits, a Real Estate Matter or Compliance Matter, shall be managed by the Buyer Indemnified Parties who shall be obligated to (i) provide Sellers with prompt written notice ("ENVIRONMENTAL CLAIM NOTICE") of each such loss for which an indemnification is claimed hereunder, (ii) provide Sellers with copies of any documents transmitted to or from any governmental entities regarding each such Loss, (iii) use commercially reasonable and cost-effective methods of satisfying the requirements of any applicable Environmental Laws, and (iv) provide Seller with true copies of invoices or other charges associated with each such Loss, which invoices shall be promptly paid by Seller in accordance with Paragraph B(3) of this Section 11. Within ten (10) days following receipt of any Environmental Claim Notice, Seller shall notify Buyer of its intent, if any, to participate in the selection of the manner, scope or detail of any remedial actions, investigations or related response actions (collectively "Environmental Response Actions"). Buyer intends to undertake in order to address any Real Estate Matter, Compliance Matter or those matters identified as a material violation of any Environmental Law which requires correction in any Environmental Audits. If Seller chooses to participate in any such Environmental Response Action, Buyer will allow Seller to consult in, contribute to or otherwise provide meaningful input to the actions required to be undertaken by Buyer. Buyer, however, will have final control over the method, scope, nature and detail of all Environmental Response Actions, PROVIDED, HOWEVER, that such actions shall be commercially reasonable and cost-effective, and PROVIDED FURTHER, that with respect to any matter identified as a material violation of an Environmental Law which requires corrective action identified in the Environmental Audits, Seller shall be given the opportunity to correct such matters prior to the Closing Date. (3) All invoices or other costs associated with any Environmental Response Action shall be paid by Buyer, who will be reimbursed by Seller for 85% of the full amount of each such invoice or cost within thirty days of Seller's receipt of same. 37 C. EXCLUSIVITY. The provisions of this Section 11 shall provide the sole and exclusive remedy with respect to any of the matters referred to herein or in any certificate or document delivered pursuant hereto. D. LIMITATIONS ON INDEMNITY. Notwithstanding anything to the contrary in this Section 11 and other than with respect to Section 11.E hereof, Seller and Buyer agree as follows: (1) Payments by the Indemnitor pursuant to this Section 11 shall be limited to the amount of any Losses that remain after deducting therefrom any tax benefit to the Indemnitee and any insurance proceeds received by Indemnitee. A tax benefit will be considered to be recognized by the Indemnitee for purposes of this Section 11.D in the tax period in which the indemnity payment occurs; (2) With respect to any indemnification pursuant to paragraph A(1)(a) or A(2)(a) of this Section 11, no Indemnitor will have any obligation to indemnify any Indemnitee pursuant to this Section 11 unless and until the aggregate of all Losses of the Indemnitee on account of such breaches exceeds $1 million, in which case the Indemnitor will then be obligated to indemnify the Indemnitee for all such Losses except the first $250,000, and (ii) the total obligation of either Sellers or Buyer under this Section 11 with respect to such matters shall not exceed $32.5 million, PROVIDED, that the limitations contained in this Section 11.D(2) shall not apply to Sellers' obligation to indemnify Buyer for any breach or inaccuracy of any representation or warranty of Seller set forth in Section 5.H, 5.P or 5.R. (3) As conditions precedent to the obligation of the Seller to defend and indemnify the Buyer Indemnified Parties with respect to any Loss which pertains to those matters identified as a material violation of an Environmental Law which requires corrective action identified in the Environmental Audits, a Real Estate Matter or Compliance Matter, the Buyer Indemnified Parties shall not, other than as required by applicable law and upon as much prior written notice to the Sellers as may be practicable in the circumstances, communicate, directly or indirectly, orally or in writing, with any Environmental Authority. The foregoing shall not be construed to require prior Notice to Seller of regular communications with 38 Environmental Authorities required to operate the Business pursuant to applicable Environmental Laws. (4) With respect to the Environmental Audits referred to in Section 11.A(1)(e) above, such Environmental Audits shall be conducted pursuant to a License Agreement to be executed by the parties. (5) The indemnification obligations set forth in this Section 11, as it pertains to environmental matters, including but not limited to those arising under Section 11.A(1)(a), (d) or (e), shall expire on the tenth (10th) anniversary of the Closing Date. E. ERISA INDEMNIFICATION. Sellers shall indemnify and hold harmless Buyer in respect of any and all Losses resulting from or relating to each of the following: (1) any Plan and any other "employee benefit plan" within the meaning of Section 3(3) of ERISA maintained by Sellers or any trade or business (whether or not incorporated) under control or treated as a single employer with Sellers under Section 414(b), (c), (m) or (o) of the Code ("ERISA AFFILIATE") or to which Sellers or any ERISA Affiliate contributed or is obligated to contribute thereunder, including any multiemployer plan, including any liability (i) to the PBGC under Title IV of ERISA; (ii) relating to a multiemployer plan; (iii) with respect to non-compliance with the notice and benefit continuation requirements of COBRA; (iv) with respect to any non-compliance with ERISA or any other applicable laws; or (v) with respect to any suit, proceeding or claim which is brought against Buyer; (2) the employment, termination of employment, including a constructive termination, or failure to employ by Sellers of any individual (including, but not limited to, any employee of Sellers engaged in the operations of the Business) attributable to any actions or inactions prior to the Closing Date, including, without limitation, with respect to any liabilities arising under WARN; and (3) any claims by any employee of Sellers engaged in the operations of the Business for workers compensation and medical benefits relating to such workers compensation incurred after the Closing to the extent the same relate to an injury or illness originating prior to the Closing. 39 Indemnification under this Section 11.E shall not be subject to any deductible or cap, and this indemnification provision shall survive until the period in which it is no longer possible for an employee or a third party to bring a claim relating to the matters covered in this Section 11.E under the applicable statute of limitations period. 12. PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, neither Sunbeam or any Seller nor USI or Buyer shall, without the prior written approval of the other party, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except (1) Sunbeam and USI shall prepare mutually agreeable press releases after the signing of this Agreement, and each of Sunbeam and USI shall issue its respective press release at a mutually agreeable time, (2) Sunbeam and USI shall prepare a mutually agreeable notice to the employees of the Business concerning this Agreement, and Sunbeam and USI shall deliver the notice to the employees at a mutually agreeable time, and (3) to the extent that either party shall be so obligated by law as advised in writing by counsel, in which case the other party shall be so advised and the parties shall use their best efforts to cause a mutually agreeable release or announcement to be issued. Except as provided in this Section 12, prior to the Closing Date, Sunbeam or any Seller and USI or Buyer may disclose information with respect to the transaction contemplated hereby to their respective employees, agents, consultants and third parties only to the extent such persons have a need to know such information. 13. PRORATIONS AND ADJUSTMENTS. A. EXPENSES. To the extent, if any, that wages, current rents, security deposits, contract deposits, or advance payments, property and payroll taxes, assessments, utility charges, insurance premiums, employee benefits constituting Assumed Liabilities and any other prepaid or deferred expenses relate to the Assets purchased hereunder, they shall be prorated or reimbursed, as the case may be, as of the Closing Date, subject in the case of taxes to the provisions of Section 27.D. Sellers shall receive all revenues and shall be responsible for all expenses and liabilities, including any and all tax payments, allocable to the period prior to such date (except for the Assumed Liabilities), including payments due prior to such date under such prorated contracts, and Buyer shall receive all revenues and shall, to the extent agreed hereunder, be responsible for all expenses and liabilities, including any and all tax payments, allocable to the period subsequent to such date. 40 B. TIME OF PRORATIONS AND ADJUSTMENTS. The prorations and adjustments contemplated by this Section, to the extent practicable, shall be made on and as of the Closing Date. As to those prorations and adjustments not capable of being ascertained on such date, any adjustment and proration shall be made within ninety (90) calendar days of the Closing Date, subject in the case of taxes to the provisions of Section 27.D. 14. RECORDS; ACCESS TO INFORMATION. A. Sellers shall grant access to Buyer during normal business hours on reasonable prior request, any books and records not transferred to Buyer pursuant to this Agreement that in any manner relate to the Business, the Assets or Assumed Liabilities, and permit Buyer to make copies of the same. All books and records relating to the Business shall be retained for the applicable periods stated in the record retention policy attached as SCHEDULE 14.A hereto; provided, however, that upon the written request of the other party, the party in possession of such books and records shall retain any books and records specified in such request for any reasonable period specified in such request that is longer than the applicable period stated in SCHEDULE 14.A. B. In order to facilitate the resolution of any governmental investigation or inquiry or of any claims made by or against or incurred by Sellers prior to or after the Closing, or for other legitimate business reasons, upon reasonable notice, Buyer shall, after the Closing: (i) afford the officers, employees and authorized agents and representatives of Sellers reasonable access, during normal business hours, to the offices, properties, books and records of Buyer with respect to the Business or the Assets, (ii) furnish to the officers, employees and authorized agents and representatives of Sellers such additional financial and other information regarding the Business or the Assets as Sellers may from time to time reasonably request and (iii) make available to Sellers, the employees of Buyer whose assistance, testimony or presence is necessary to assist Sellers in evaluating any such claims and in defending such claims, including the presence of such persons as witnesses in hearings or trials for such purposes; PROVIDED, HOWEVER, that such investigation shall not unreasonably interfere with the businesses or operations of Buyer or any of its affiliates or subsidiaries; PROVIDED FURTHER, HOWEVER, that Buyer shall not be obligated to disclose any information which it holds under a legally binding obligation of confidentiality or which is protected by any privilege. 41 In order to facilitate the resolution of any claims made by or against or incurred by Buyer after the Closing or for other legitimate business reasons, upon reasonable notice, Sellers shall, after the Closing: (i) afford the officers, employees and authorized agents and representatives of Buyer reasonable access, during normal business hours, to the offices, properties, books and records of Sellers with respect to the Business or the Assets for the period prior to the Closing Date, (ii) furnish to the officers, employees and authorized agents and representatives of Buyer such additional financial and other information regarding the Business and the Assets for the period prior to the Closing Date as Buyer may from time to time reasonably request and (iii) make available to Buyer, the employees of Buyer whose assistance, testimony or presence is necessary to assist Buyer in evaluating any such claims and in defending such claims, including the presence of such persons as witnesses in hearings or trials for such purposes; PROVIDED, HOWEVER, that such investigation shall not unreasonably interfere with the businesses or operations of Sellers or any of their affiliates or subsidiaries; PROVIDED FURTHER, HOWEVER, that Sellers shall not be obligated to disclose any information that it holds under a legally binding obligation of confidentiality or which is protected by any privilege. C. Notwithstanding anything to the contrary in Section 14.A, Sellers and Buyer shall (i) each provide the other with such assistance as may reasonably be requested by either of them in connection with the preparation of any tax return ("RETURN"), audit or other examination by any taxing authority or judicial or administration proceedings relating to liability for any federal, state, local or foreign taxes, and in connection with the compliance by either of them with the IRS record retention program, (ii) each retain and provide the other, and Sellers shall retain and provide Buyer, with any pre-Closing records or other information which may be relevant to such Return, audit or examination, proceeding or determination, and (iii) each provide the other with any final determination of any such audit or examination, proceeding or determination that affects any amount required to be shown on any Return of the other for any period. Without limiting the generality of the foregoing, Buyer and Sellers shall retain, until the applicable statute of limitations (including any extensions) have expired, copies of all Returns, supporting work schedules and other records or information which may be relevant to such returns for all tax periods or portions thereof ending before or including the Closing Date and shall not destroy or otherwise dispose of any such records without first providing the other party with a reasonable opportunity to review and copy the same. 42 15. NOTICES. All notices, requests, consents, and other communications under this Agreement shall be in writing and shall be mailed by first class, registered, or certified mail, postage prepaid, or sent via overnight courier service, or sent by confirmed facsimile, or delivered personally: If to Buyer, to: U.S. Industries, Inc. 101 Wood Avenue South Iselin, New Jersey 08830 Attention: General Counsel Facsimile: 908-767-2208 If to Sellers, to: Sunbeam Products, Inc. Suite 200 1615 South Congress Avenue Delray Beach, Florida 33445 Attention: Janet G. Kelley Facsimile: 561-243-2105 or to such other address of which the addressee shall have notified the sender in writing. Notices mailed in accordance with this section shall be deemed given when mailed, and notices sent by overnight courier service shall be deemed given when placed in the hands of a representative of such service. 16. THIRD PARTY RIGHTS. It is the intention of the parties that nothing in this Agreement shall be deemed to create any right with respect to any person or entity not a party to this Agreement. 17. PARTIES IN INTEREST; ASSIGNMENT. All covenants and agreements contained in this Agreement by or on behalf of either of the parties to this Agreement shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not. No party to this Agreement may assign its rights or delegate its obligations under this Agreement to any other person or entity without the express prior written consent of the other party, except that Buyer may assign its rights and delegate its obligations to a subsidiary or affiliated corporation of Buyer, provided that such assignment 43 and delegation shall not relieve Buyer of its obligations under this Agreement. 18. CONSTRUCTION; GOVERNING LAW. The section headings contained in this Agreement are inserted as a matter of convenience and shall not affect in any way the construction of the terms of this Agreement. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware. 19. ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement, including the Schedules hereto, constitutes and contains the entire Agreement between the parties hereto with respect to the transactions contemplated hereby and supersedes any prior writing by the parties. The parties may, by mutual agreement in writing, amend this Agreement in any respect, and any party, as to such party, may in writing (1) extend the time for the performance of any obligations of any other party; (2) waive any inaccuracies in representations and warranties by any other party, or; (3) waive performance of any obligations by any other party; and (4) waive the fulfillment of any condition that is precedent to the performance by such party of any of its obligations hereunder. No such waiver shall be deemed to constitute the waiver of any other breach of the same or of any other term or condition of this Agreement. Any such amendment or waiver must be signed by an officer of the parties or party to such amendment or waiver. 20. SEVERABILITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the remaining provisions. 21. COUNTERPARTS. This Agreement may be executed in one or more counterparts, any one of which need not contain the signatures of more than one party but all of which taken together shall constitute one and the same Agreement. 44 22. EXPENSES. Each party to this Agreement shall pay any and all fees and expenses that such party may incur in connection with the transactions contemplated by this Agreement except as otherwise provided pursuant to that certain letter agreement, dated January 23, 1997, between Sunbeam Products, Inc. and Buyer. 23. FURTHER ASSURANCES. At and after the date hereof, Buyer and the Sunbeam Transferors will, without further consideration, promptly execute and deliver such other instruments and documents and do all other acts and things as the other party or parties may reasonably request in order to effect or confirm the transactions or obtain the benefits contemplated by this Agreement. Buyer shall allow Sellers access to, and otherwise cooperate with Sellers with respect to, the assets retained by Sellers following the Closing Date. Buyer shall use its reasonable commercial efforts to arrange for release or replacement of guarantees of Sellers relating to the Assumed Liabilities which are in effect on the Closing Date. In the event Buyer is unable to cause such guarantees to be released or replaced, Buyer shall reimburse Sellers for all amounts, costs and expenses reasonably paid or incurred by Sellers with respect thereto. 24. SCHEDULES. The Schedules attached to this Agreement, including and any supplements to such Schedules made by Sellers after the date of this Agreement as provided in Section 7.B(6), and the Disclosure Schedule delivered by Sellers, including any supplements to such Disclosure Schedule constitute a part of this Agreement and are incorporated herein by reference in their entirety as if fully set forth in this Agreement at the point where first mentioned. Notwithstanding the foregoing, any supplements to such Schedules made by Sellers after the date of this Agreement shall not be deemed to modify any representation or warranty set forth herein for purposes of Section 7.E(1) (it being understood that such supplements shall modify the representations and warranties set forth herein for all purposes following the Closing Date). The disclosure of any matter in any schedule to this Agreement shall expressly not be deemed to constitute an admission by any Sunbeam Transferor or to otherwise create a presumption that any such matter is material for the purposes of this Agreement or any other purpose. 45 25. GUARANTY BY SUNBEAM. By joining in this Agreement, Sunbeam guarantees to Buyer the full and prompt payment and performance by Sellers of all of Sellers' covenants and obligations under this Agreement and the Ancillary Agreements, including payment of any indemnification. If Sellers do not perform a covenant or obligation under this Agreement or any Ancillary Agreement, Sunbeam shall promptly perform the covenant or obligation. This guaranty is an absolute, irrevocable, primary, continuing, unconditional, and unlimited guaranty of performance and payment, and is not a guaranty of collection. This guaranty shall remain in full force and effect (and shall remain in effect notwithstanding any amendment to this Agreement) until all of Sellers' obligations under this Agreement and all Ancillary Agreements have been paid, observed, performed or discharged in full. Sunbeam has full capacity, power and authority to enter into this Agreement and to carry out the covenants and agreements specifically made by Sellers in this Agreement, and this Agreement is binding on Sunbeam and enforceable against Sunbeam in accordance with the terms of this Agreement. 26. GUARANTY BY USI. By joining in this Agreement, USI guarantees to Sellers the full and prompt payment and performance by Buyer of all of Buyer's covenants and obligations under this Agreement and the Ancillary Agreements, including payment of any indemnification. If Buyer does not perform a covenant or obligation under this Agreement or any Ancillary Agreement, USI shall promptly perform the covenant or obligation. This guaranty is an absolute, irrevocable, primary, continuing, unconditional, and unlimited guaranty of performance and payment, and is not a guaranty of collection. This guaranty shall remain in full force and effect (and shall remain in effect notwithstanding any amendment to this Agreement) until all of Buyer's obligations under this Agreement and all Ancillary Agreements have been paid, observed, performed or discharged in full. USI has full capacity, power and authority to enter into this Agreement and to carry out the covenants and agreements specifically made by Buyer in this Agreement, and this Agreement is binding on USI and enforceable against USI in accordance with the terms of this Agreement. 46 27. POST-CLOSING MATTERS. A. EMPLOYMENT. (1) Buyer shall offer employment, effective upon the Closing Date, to all the persons actively employed by Sellers and engaged in the Business as of the Closing Date, except those engaged in the Business at the Murfreesboro, Tennessee facility (other than those Murfreesboro employees described on Exhibit B hereto, who shall be offered employment). In addition, Buyer shall offer employment to those persons employed by Sellers and engaged in the Business, except those engaged in the Business at the Murfreesboro, Tennessee facility (other than those Murfreesboro employees described on Exhibit B hereto, who shall be offered employment) who are inactive as of the Closing Date (collectively with the active employees referred to above, the "EMPLOYEES") in accordance with its standard hiring procedures, subject to the following conditions: (i) if on medical leave, such individual is released by his or her physician to return to active employment, (ii) such individual actually reports for active employment with Buyer immediately upon (a) the end of the approved leave of absence pursuant to the Family Medical and Leave Act or (b) such medical release and (iii) the facility of the Business such person is employed with is then operating; and PROVIDED, HOWEVER, no individual shall be offered employment under this provision after six (6) months from the Closing Date or after the expiration of any applicable federal or state law period, if later. Sellers shall retain liability and responsibility for any benefits in accordance with the Plans with respect to such inactive employees until, and if, any such employee shall be employed by Buyer. Those Employees who accept such offer of employment by Buyer are herein referred to as "TRANSFERRED EMPLOYEES." With respect to Employees, Buyer agrees to make such offers of employment, which shall include compensation rates that are no less than those provided by Sellers, as of the Closing Date, and Buyer shall provide to the Transferred Employees as of the Closing Date (a) employee benefit plans, programs or arrangements, including, but not limited to, a severance plan, reasonably equivalent in the aggregate to those maintained by Sellers with respect to the Business on the date of Closing for the benefit of Employees, as listed on SCHEDULE 27.A(1) hereto, or (b) at Buyer's option, a benefit plan consisting of plans, programs and arrangements, including but not limited to, a severance plan, of equal or greater total benefit in the aggregate for all Employees, it 47 being understood that Buyer shall have the right to amend or terminate any and all such plans, programs and arrangements. With respect to the Employees named on SCHEDULE 27.A(2), Buyer shall not terminate the employment of such Employees for a term of six (6) months following the Closing Date, except for cause (it being understood that any cessation of employment following a diminution in or a relocation of duties shall not be deemed to be a constructive termination not for cause by Buyer). (2) Buyer shall indemnify and hold harmless Sellers from any and all claims by such Employees for damages resulting from an employment decision made by Buyer with respect to such Employees, including, without limitation, with respect to any liabilities arising under WARN or the Family Medical and Leave Act, and from any and all costs (including counsel fees) associated with defending same. (3) Sellers and Buyer agree that Buyer has purchased substantially all the property used in Sellers' trade or business, and in connection therewith, Buyer shall employ individuals who immediately before the Closing Date were employed in such trade or business by Sellers. Accordingly, pursuant to Rev. Proc. 84-77, provided that Sellers provide Buyer with all necessary payroll records for the calendar year which includes the Closing Date, Buyer shall furnish a Form W-2 to each employee employed by Buyer who had been employed by Sellers disclosing all wages and other compensation paid for such calendar year, and taxes withheld therefrom, and Sellers shall be relieved of the responsibility to do so. B. VACATIONS, SICK DAYS AND HOLIDAYS. As of the Closing Date, Buyer shall adopt, at its expense, vacation, sick day and holiday plans for Transferred Employees to succeed Sellers' vacation, sick day and holiday plans. For the remainder of the calendar year in which the Closing occurs, such plans shall be equal to and in place of what Sellers would have provided to such Transferred Employees. Thereafter, such plans shall be equal to the plans that Buyer generally provides for its employees except that such plans shall provide vacation, sick day and holidays to each eligible Transferred Employee on the basis of his or her continuous service with Sellers and Buyer. As of the Closing Date, Sellers shall provide Buyer with a list of their employees engaged in the Business and their vacations and sick days for the remainder of the year in which the Closing occurs. 48 C. NO THIRD PARTY BENEFICIARIES. No provision contained in Sections 27.A or 27.B above shall create any third party beneficiary or other rights in any employee or former employee of Sellers (or any beneficiary or dependent thereof) in respect of continued employment or resumed employment with either Buyer or the Business and no provision of said Sections 27.A or 27.B shall create any such rights in any such persons in respect of any benefits that may be provided under any employee benefit plan or arrangement that may be established by Buyer. D. CERTAIN TAX MATTERS. (1) All transfer, sales, use, recording, stamp and other similar transaction taxes ("TRANSACTION TAXES") imposed upon or incurred by either of the parties hereto in connection with this Agreement and the transactions contemplated hereby shall be shared equally by the Sunbeam Transferors, on the one hand, and the Buyer, on the other hand. Sellers and Buyer shall jointly prepare and file, or cause to be prepared and filed, all necessary Transaction Tax returns and other documents with respect to all Transaction Taxes, and each party shall bear its own expense in a connection therewith. Sellers and Buyer agree to cooperate in any endeavor to effect a reduction in any such Transaction Taxes, and shall provide each other with all applicable exemption certificates associated with any Transaction Taxes on or prior to the Closing Date. (2) Notwithstanding anything contained herein to the contrary, all property taxes, personal property taxes and similar ad valorem obligations (including, without limitation, any such taxes which Sellers are contractually obligated to pay under any lease agreement) in respect of the Assets that relate to periods beginning prior to the Closing Date and ending after the Closing Date ("STRADDLE PERIODS") shall be prorated in accordance with the rules provided in Section 164(d) of the Code. Sellers shall prepare and file, or shall cause to be prepared and filed, on a timely basis, all Straddle Period tax returns, to the extent a return is required. Sellers shall provide each such Straddle Period tax return to Buyer for its review and consent not less than ten (10) business days in advance of the due date thereof, or shall give written notice to Buyer of the amount due if a return is not required, and, upon Buyer's review and consent to the amount thereof, Buyer shall pay to Sellers its prorated portion of the tax shown to be due on each such return or in such notice not less 49 than five (5) business days before the due date of such payment. (3) Except as provided in Sections 27.D(1) and (2) above, (x) Sellers shall be responsible for and shall pay any and all taxes with respect to the Business related to all periods prior to (and up to and including) the close of business on the Closing Date, and (y) Buyer shall be responsible for and shall pay any and all taxes with respect to the Business relating to all periods after the close of business on the Closing Date. E. ACCOUNTS; PRODUCT RETURNS. (1) (a) In the event that accounts receivable of the Business which are Excluded Assets are collected by the Business or Buyer, Buyer shall pay, within ten (10) days following the end of each calendar month with respect to amounts received and identified, any and all such accounts receivable to Sellers. (b) In the event that accounts receivable of the Business which are not Excluded Assets are collected by Sellers, Sellers shall pay, within ten (10) days following the end of each calendar month with respect to amounts received and identified, any and all such accounts receivable to Buyer. In the event that accounts payable of the Business which are not Assumed Liabilities are paid by Buyer, Sellers shall reimburse, within ten (10) days following the end of each calendar month, any and all such amounts paid to Buyer. (2) With respect to accounts receivable of the Business which are Excluded Assets, Sellers will utilize collection practices and procedures which are consistent with those utilized in the other businesses of Sellers in the ordinary course of such businesses with respect to accounts of the same status. (3) All offsets or charges (including without limitation those relating to volume rebates and cooperative advertising) against any accounts receivable of the Business by customers, which are allocable to sales of the Business from January 1, 1997 until September 30, 1997, except any such offsets or charges relating to the Sunbeam Guaranties, shall be borne two-thirds by Buyer (up to a maximum of $2.5 million) and one-third by Sellers. Notwithstanding the foregoing, offsets or charges directly attributable to sales 50 made by Sellers or Buyer, respectively, shall be borne by Sellers or Buyer, respectively. All offsets or charges relating to the Sunbeam Guaranties shall be fully directly attributable to sales made by Sellers for purposes of this Agreement. Sellers or Buyer, respectively, shall reimburse to the other party, by October 10, 1997, the amount attributable to Sellers or Buyer, respectively, pursuant to this Section 27.E(3). Until September 30, 1997, Buyer shall offer programs involving volume rebates and cooperative advertising substantially in accordance with the past practices of Sellers, which practices are described on SCHEDULE 27.E(3), unless Sellers otherwise consent. (4) In the event that non-defective Products manufactured and sold prior to the Closing Date are returned to the Business or Buyer for any reason whatsoever (such Products being "SELLER NDRS"), Buyer agrees to process return authorizations for such Seller NDRs in accordance with Sellers' ordinary course practices as in effect prior to the Closing Date. Buyer shall pay to Sunbeam Products sixty percent (60%) of the standard cost, as of the Closing Date, of such Seller NDRs to the extent Sellers have a related offset to their accounts receivable. Promptly upon their receipt of such payment, Sellers shall release the entire claim relating to such Seller NDRs against the appropriate account debtor. In the event that Buyer has an offset to its accounts receivable relating to Seller NDRs, Sellers shall pay to Buyer the amount of such offset minus sixty percent (60%) of the standard cost, as of the Closing Date, of such Seller NDRs. Buyer shall present Sunbeam Products with a statement of charges and related reimbursement obligations on a monthly basis (when applicable). Sellers shall have the right of reasonable access, with prior notice, to Buyer's books and records relating to the calculation of reimbursements for the Seller NDRs. (5) (a) In the event that Products manufactured and sold by the Business after the Closing Date are returned to any Seller, Sellers agree to promptly forward all such returned Products to Buyer, at Buyer's expense. (b) In the event that any item not constituting a Product included in the Assets is returned to Buyer, Buyer agrees to promptly forward all such returned items to Seller, at Seller's expense. 51 (6) For a period of four (4) years following the Closing Date, Buyer shall process warranty return authorizations in accordance with the past practices of Sellers, which practices are described on SCHEDULE 27.E(6), unless Sellers otherwise consent. Sellers shall have the right of reasonable access, with prior notice, to Buyer's books and records relating to the processing of warranty return authorizations during such four (4) year period. F. CONFIDENTIALITY AND NO-HIRE. The terms of the letter agreement dated as of November 12, 1996 (the "CONFIDENTIALITY AGREEMENT") between Sunbeam Products and USI are hereby incorporated by reference and shall continue in full force and effect until the Closing. Sellers shall not, and shall not permit any of their affiliates to, knowingly provide or make available, directly or indirectly, any confidential or proprietary information used primarily in the Business to any third party. Sellers shall cooperate with Buyer in any efforts by Buyer to enforce any non-disclosure or confidentiality agreements included in the Assumed Contracts, including without limitation any confidentiality agreements with employees or agents of Sellers and with any prospective purchasers of the Business. If any confidentiality or nondisclosure agreements of Sellers relating to the Business are, by their terms, non-assignable, Seller shall, at the request of Buyer, take all actions reasonably requested by Buyer to enforce such agreement. Buyer hereby agrees that for a period of two (2) years from the Closing Date, Buyer will (i) keep confidential and not disclose to others any information provided to it by Sellers and not related to the Business, and (ii) except as provided in Section 27.A(1), not hire any of the management or other employees of Seller without obtaining prior written consent of Sellers, which consent may be withheld in the sole discretion of Sellers. Sellers shall not, and shall not permit any of their affiliates to, hire, offer to hire, or solicit for employment any person who has been an employee of Buyer engaged in the Business and is listed on SCHEDULE 27.F, without the consent of Buyer, until such person has been separated from employment by Buyer for at least one (1) year, except in the event that such person's employment was terminated at the sole election of Buyer or a different subsidiary of USI. G. NON-COMPETITION. For a period of five (5) years from the Closing Date, neither Sellers nor any of their affiliates will directly or indirectly engage in any Competitive Activities (as hereinafter defined). The term "COMPETITIVE ACTIVITIES" shall mean: 52 (i) engage in, continue in or carry on any business which competes with the Business or is substantially similar thereto, including owning or controlling any financial interest in any corporation, partnership, firm or other form of business organization which is so engaged; PROVIDED, HOWEVER, that nothing herein shall prohibit (i) the acquisition by any Seller or any of its affiliates of a diversified company having not more than 30% of its sales (based on its most recent annual financial statements) attributable to the marketing, production or sale of products which compete directly with those sold by the Business, PROVIDED, that if the annual sales so attributable exceed $35 million, Buyer will cause such sales to not exceed $35 million within 18 months; or (ii) the acquisition of any Seller or any of its affiliates by a company (A) having not more than 20% of its sales (based on its most recent annual financial statements) attributable to the marketing, production or sale of products which compete directly with those sold by the Business or (B) with respect to which such competing business units are divested within 18 months so that such Seller or affiliate could comply with clause (ii)(A) hereof; and PROVIDED FURTHER that ownership by any Seller or any affiliate of securities having no more than 5% of the outstanding voting power of a company listed on any national securities exchange or traded actively in the national over the counter market shall not be deemed a violation of this Section 27.G. (ii) consult with, advise or assist, whether or not for consideration, any corporation, partnership, firm or other business organization which is now or becomes a competitor of Buyer in any aspect with respect to the Business if such advice, consultation or assistance relates to such competitor's activities in relation to the Business, including, but not limited to, promoting or otherwise endorsing the products of any such competitor; soliciting customers or otherwise serving as an intermediary for any such competitor; lending money or rendering any other form of financial assistance to or engaging in any form of business transaction on other than an arm's length basis with any such competitor; or 53 (iii) engage in any practice, the purpose of which is to evade the provisions of this covenant not to compete. The parties agree that the geographic scope of this covenant not to compete shall extend throughout North America. In the event a court of competent jurisdiction determines that the provisions of this covenant not to compete are excessively broad as to duration, geographical scope or activity, it is expressly agreed that this covenant not to compete shall be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such over-broad provision shall be deemed, without further action on the part of any person, to be modified, amended and/or limited, but only to the extent necessary to render the same valid and enforceable in such jurisdiction. H. PRODUCT MARKING; BURDEN OF PROOF. Buyer shall stamp or otherwise mark all Products manufactured by Buyer after the Closing Date so as to enable such Products to be distinguished from Products manufactured by or for Sellers prior to the Closing Date. After Closing, Buyer shall promptly provide an officer's certificate to Sellers certifying that Buyer has complied with this Section 27.H, which certificate shall be accompanied by an example or examples of the stamps or other marks applied to such Products by Buyer. Buyer shall mark such Products in accordance with the methods set forth on SCHEDULE 27.H, or such other methods to which Sellers consent in writing, such consent not to be unreasonably withheld. I. SUNBEAM GUARANTIES. Buyer shall use its commercially reasonable efforts to comply with the terms of delivery set forth in the purchase orders of customers of the Business which are covered by the Sunbeam Guaranties. Buyer shall treat the purchase orders of customers which are covered by the Sunbeam Guaranties no less favorably than the purchase orders of customers which are not covered by the Sunbeam Guaranties. J. PAYMENTS ON ACCOUNTS. Sellers shall pay, in accordance with their terms, all accounts payable outstanding on the Closing Date, except those which constitute Assumed Liabilities or payables being disputed by Sellers in good faith. K. PARAGOULD GRILL PRESS. Sellers shall remove the press used in manufacturing outdoor grills from the Paragould, Arkansas facility in compliance with the terms of the lease (including, without limitation, restoration provisions thereof) pertaining to such facility, by May 31, 1997. 54 L. REMOVAL OF TRANSFERRED EQUIPMENT. Buyer shall remove (1) all Equipment from the Portland, Tennessee manufacturing facility and the Nashville, Tennessee facility by March 31, 1997 and (2) all administrative and office furnishings and equipment located at the Portland free-standing office facility promptly following the termination of the Portland Lease. 28. TERMINATION. A. TERMS OF TERMINATION. This Agreement may be terminated at any time prior to the Closing Date: (1) by Buyer, if the conditions set forth in Section 7.D shall not have been complied with or performed in any material respect and such noncompliance or nonperformance shall not have been waived, cured or eliminated (or by its nature cannot be cured or eliminated) by Sellers on or before March 15, 1997; (2) by Sellers, if the conditions set forth in Section 7.E shall not have been complied with or performed in any material respect and such noncompliance or nonperformance shall not have been waived, cured or eliminated (or by its nature cannot be cured or eliminated) by Buyer on or before March 15, 1997; or (3) by Buyer or Sellers, in the event the Closing Date has not occurred on or prior to the close of business on March 15, 1997 or such later date as the parties hereto may agree in writing (unless such event has been caused by the breach of this Agreement by the party seeking such termination). B. EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 28.A hereof, this Agreement shall thereafter become void and have no effect, and no party hereto shall have any liability to any other party hereto or its stockholders or directors or officers in respect thereof, except as provided in Section 22 hereof and except that 55 nothing herein shall relieve any party from liability for any breach hereof. (SIGNATURES BEGIN ON NEXT PAGE) 56 IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement to be executed by their duly authorized officers as of the day and year first written above. SUNBEAM PRODUCTS, INC. By: /s/ DAVID C. FANNIN ------------------------------------ Name: David C. Fannin Title: Executive Vice President SUNBEAM FURNITURE COMPANY By: /s/ JANET KELLEY ------------------------------------ Name: Janet Kelley Title: Vice President OP II, INC. By: /s/ JANET KELLEY ------------------------------------ Name: Janet Kelley Title: Vice President JACUZZI OUTDOOR PRODUCTS, INC. By: /s/ GEORGE H. MACLEAN ------------------------------------ Name: George H. MacLean Title: Vice President Agreed and Acknowledged SUNBEAM CORPORATION By: /s/ DAVID. C. FANNIN ----------------------------------- Name: David C. Fannin Title: Executive Vice President U.S. INDUSTRIES, INC. By: /s/ JOHN A. MISTRETTA - -------------------------------------- Name: John A. Mistretta Title: Group Vice President EX-2.B 3 EXHIBIT 2.b AMENDMENT TO ASSET PURCHASE AGREEMENT AMENDMENT (this "Amendment"), dated as of March 17, 1997, to the Asset Purchase Agreement (the "Agreement"), dated February 10, 1997, among SUNBEAM PRODUCTS, INC., a Delaware corporation ("Sunbeam Products"), SUNBEAM FURNITURE COMPANY, a Delaware corporation ("Sunbeam Furniture"), OP II, INC., a Florida corporation ("Sunbeam OP"; and, together with Sunbeam Products and Sunbeam Furniture, the "Sunbeam Transferors"), and SUNLITE CASUAL FURNITURE, INC. (as assignee of Jacuzzi Outdoor Products, Inc.), a Delaware corporation (the "Buyer"), and joined in by Sunbeam Corporation, a Delaware corporation and the indirect parent corporation of the Sunbeam Transferors and U.S. Industries, Inc., a Delaware corporation and the indirect parent corporation of Buyer. W I T N E S S E T H: WHEREAS, the parties hereto desire to amend the Agreement; and WHEREAS, Section 19 of the Agreement permits amendments to the Agreement by written instrument signed by the parties to such amendment. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties hereto agree as follows: ARTICLE I. AMENDMENTS TO THE AGREEMENT 1.1. PURCHASE AND SALE OF ASSETS. (a) Section 1.B of the Agreement is hereby amended by (i) inserting the clause "(except for the Murfreesboro Assets, as defined in the Manufacturing Services Agreement (as defined in Section 7.A), subject, however, to the rights to purchase the Murfreesboro Assets pursuant to the Manufacturing Services Agreement)" after "Business", (ii) deleting the words "Murfreesboro, Tennessee and", (iii) changing the word "facilities" on the eighth line to "facility" therein and (iv) adding the words "provided to Buyer within five business days after the Closing Date" and after the words "Closing Date". (b) Section 1.C of the Agreement is hereby amended by deleting the words "Paragould, Arkansas and" from such Section. (c) Section 1.D of the Agreement is hereby amended by (i) inserting the clause "(except such inventory located at the Murfreesboro facility, subject, however, to the rights granted pursuant to the Manufacturing Services Agreement)" after "Business" and (ii) adding the words "and provided to Buyer within five business days after the Closing Date" after the words "Closing Date". (d) Section 1.M(10) of the Agreement is hereby amended by replacing subsection 1.M(10)(d) therein with the following: "(d) rights to purchase Equipment and Inventory included in the Murfreesboro Assets pursuant to the Manufacturing Services Agreement". 1.2. ASSUMED LIABILITIES. (a) Section 3.B is hereby amended by inserting the clause "(except such purchase orders relating to Equipment located at the Murfreesboro facility)" after "in the ordinary course of business" therein. (b) Section 3.C of the Agreement is hereby amended by inserting the clause "(except such purchase orders relating to raw materials and supplies to be delivered to the Murfreesboro facility)" after "Business" and after "in accordance with past practices" therein. (c) Sections 3.B and 3.C of the Agreement are amended by adding the words "and provided to Buyer within five business days after the Closing Date" (i) at the end of Section 3.B and (ii) after the words "Closing Date" in the fifth line of Section 3.C. 1.3. CLOSING. Section 4.A of the Agreement is hereby amended by substituting "March 17, 1997" in place of "March 3, 1997." 1.4. PURCHASE PRICE. The first sentence in Section 4.B(2) of the Agreement is hereby amended by (i) substituting "$31" in place of "$21" (ii) deleting clause (b) in its entirety, (iii) renumbering clauses (c) and (d) therein as (b) and (c). 1.5. ESTIMATED PURCHASE PRICE. (a) Section 4.C of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following: "On and at the Closing, in consideration for the sale, conveyance, transfer, assignment and delivery to Buyer of the Assets, subject to the assumption of the Assumed Liabilities, Buyer shall pay $62,137,000 (the "ESTIMATED PURCHASE PRICE", which has been calculated based on ANNEX A hereto) in the manner set forth below: (i) If Sellers have satisfied the closing condition set forth in Section 7.D(10) hereof, Buyer shall 2 pay to the Sunbeam Transferors, as directed, an amount equal to $62,137,000 by wire transfer of immediately available funds to an account designated in writing by the Sunbeam Transferors no less than two business days prior to the Closing; or (ii) If Buyer has waived the closing condition set forth in Section 7.D(10), Buyer shall pay: (a) to the Sunbeam Transferors, as directed, an amount equal to $42,137,000 by wire transfer of immediately available funds to an account designated in writing by the Sunbeam Transferors no less than two business days prior to the Closing and (b) to the Escrow Agent (as defined in Section 8.A(9)), an amount equal to $20,000,000 (the "Escrow Amount") by wire transfer of immediately available funds to an account designated in writing by the Escrow Agent." (b) Section 4.E(1) of the Agreement is hereby amended by (i) substituting "thirty (30)" in place of "fifteen (15)" and (ii) deleting the parenthetical in the last sentence thereof and replacing it with "(which has occurred prior to the Closing Date)". 1.6. FINANCIAL INFORMATION. Section 5.F of the Agreement is hereby amended by inserting "(1)" before "Sellers have furnished" at the beginning therein and by adding the following subsection (2) at the end thereof: (2) Sellers have furnished to Buyer Statements of Operations for the Business (including separate Statements of Operations relating to the Sunbeam Furniture Business and the Samsonite Business) for the two months ended March 2, 1997, as set forth on SCHEDULE 5.F(3). Such Statements of Operations were derived from Sellers' books and records and are true and correct in all material respects as to the matters presented therein. Such Statements of Operations have been prepared on a basis which is consistent with the past practices of Sellers. 1.7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. Section 7.D of the Agreement is hereby amended by (a) adding the following language to the end of the first sentence thereof: "PROVIDED, that Buyer agrees that it shall waive the closing condition set forth in Section 7.D(10) if Sellers fail to deliver the documents referenced in 3 Section 8.A(9)(i) through (iv) despite the exercise of best efforts by Sellers; and (b) deleting subsection (10) in its entirety and replacing it with the following: (10) Sellers shall have provided to Buyer evidence of the defeasance of all obligations relating to the City of Paragould, Arkansas ARKLA Industries Project, Series 1979 Industrial Revenue Bonds (the "PARAGOULD IRBS"). The City of Paragould shall have delivered to Buyer a warranty deed sufficient to deliver marketable title to the Paragould, Arkansas facility formerly subject to lease in connection with the Paragould IRBs. 1.8. DOCUMENT DELIVERIES. Section 8.A of the Agreement is hereby amended by (a) amending subsection (5) thereto to add the following language at the end thereof: "at an annual rental rate of $512,500" and (b) adding the following subsections thereto immediately following subsection (8) and prior to subsection (9), which is renumbered (11): (9) Copies of the following items relating to the Paragould IRBs: (i) documents evidencing the defeasance of the Paragould IRBs, (ii) the redemption notice to be sent to holders of the Paragould IRBs, (iii) a warranty deed to accomplish the transfer of the Paragould facility formerly subject to lease to Buyer signed by the City of Paragould, (iv) such other documents as Buyer may reasonably request in order to accomplish the delivery of the Paragould facility to Buyer free and clear of all Liens; PROVIDED, if Sellers despite the exercise of their best efforts are unable to deliver the documents referenced in clauses (i) through (iv) above by the close of business on the Closing Date, then in lieu of the foregoing Sellers shall instead deliver at the Closing copies of the following items relating to the Paragould IRBs: (i) an escrow agreement (the "Escrow Agreement") in form mutually agreeable to Sellers, Buyer and Friday, Eldredge & Clark (the "Escrow Agent") providing for the payment of the Escrow Amount to Sellers upon (x) the defeasance of the Paragould IRBs and (y) the transfer to Buyer of all real property in Paragould, Arkansas currently leased and owned by Sunbeam Products (it being understood that title to the owned parcel shall not be transferred to Buyer until such time as title to the leased parcel may be transferred), (ii) a sublease in form mutually agreeable to 4 Sunbeam Products and Buyer of the parcel at the Paragould Facility currently leased by Sunbeam Products and a lease in form mutually agreeable to Sunbeam Products and Buyer of the parcel at the Paragould facility currently owned by Sunbeam Products, each for a term equal to the term of the Escrow Agreement with an alternative term of six months, with an option to renew at Buyer's sole discretion for an additional term of one year if Sunbeam Products fails to deliver good marketable title by March 31, 1997 and (iii) forms of all documents and certificates necessary to accomplish the defeasance of the Paragould IRBs and delivery of title after the Closing Date. (10) Copies of an irrevocable redemption notice given by Sunbeam Products in relation to the Stanley IRBs; and 1.9. INDEMNIFICATION. Section 11.A(1) of the Agreement is hereby amended by adding the following subsection (i) thereto: (i) Any matter or thing or action or failure to act by Sunbeam Products, Arkla Industries, Arkla, Arkla Products, Preway, Alibert, Inc., any guarantor of the Paragould IRBs, any transferee of any of the foregoing, or any other person or entity, whether in suit or not, arising out of, under, or in connection in any way with the Paragould IRBs or the Stanley IRBS, or any of the documents, instruments or agreements executed in connection therewith (collectively, the "BOND DOCUMENTS") whenever arising or accruing or resulting in any way from any action or failure to act by Sunbeam Products, Arkla Industries, Arkla, Arkla Products, Preway, Alibert, Inc., any guarantor of the Paragould IRBs, any transferee of any of the foregoing, or any other person or entity, including, without limitation, any and all losses, claims, demands, damages, liabilities or expenses whatsoever caused by any breach or alleged breach by Sunbeam Products, Arkla Industries, Arkla, Arkla Products, Preway, Alibert, Inc., any guarantor of the Paragould IRBs, or any such person or entity or any agent thereof under any of the respective Bond Documents or resulting from any claim against any Indemnified Party by the bond trustee under the indenture relating to the Paragould IRBs or the Stanley IRBs, the holders of any Paragould IRBs or Stanley IRBs, or any other party to or beneficiary of any of the other Bond Documents with respect thereto. 5 1.10. LIMITATIONS ON INDEMNITY. Section 11.D(2) of the Agreement is hereby amended by inserting "5.F(2)," before "5.H" therein and by adding the following clause at the end thereof: or for any liabilities arising out of the matters referenced on SCHEDULE 11.D(2). 1.11. FURTHER ASSURANCES. Section 23 of the Agreement is hereby amended by inserting the following sentence after the first sentence therein: Sellers shall cooperate with, and use their commercially reasonable efforts to assist, Buyers in obtaining substitute hazardous waste generator E.P.A. identification numbers, solid waste registration numbers and other permits and licenses listed on Schedule 1.M(13). 1.12. POST-CLOSING MATTERS. Section 27 of the Agreement is hereby amended by adding the following Sections M and N at the end thereof: M. REDEMPTION OF THE STANLEY IRBS. On the Closing Date, Sunbeam Products shall deliver irrevocable notice to the bond trustee for the Stanley IRBs exercising its right to call the Stanley IRBs for redemption on the earliest practicable date for which notice can be given in accordance with the terms of the indenture, which in any event shall not be more than 15 business days after the Closing Date. Sunbeam Products shall take all necessary action to insure that the Stanley IRBs are redeemed, in whole, within 15 business days after the Closing Date. N. JOINT USE OF SPACE IN THE MCCORMICK CENTER. Seller has leased or entered into a license agreement for space at the McCormick Place in Chicago, Illinois for the 1997 National Hardware Show (running from August 10, 1997 to August 13, 1997). Subject to Seller obtaining any necessary consents, Sellers and Purchasers agree that they will share the space on the third floor so leased on an equal square footage basis for the 1997 show. Sellers and Purchasers further agree that the respective portions of the space will be separated by a ten foot aisle taken equally from each party's space. Purchasers agree to reimburse Sellers for Sellers actual cost on a per foot basis, to lease or license the space in amount proportionate to the space used by Purchaser plus one-half of the aisle. Each party shall be responsible for the cost of its respective display at the show. 6 ARTICLE II. MISCELLANEOUS 2.1. INTENT OF THE PARTIES WITH RESPECT TO CERTAIN MATTERS. (a) Sellers and Buyer agree that it is their intent (notwithstanding any failure to amend any provisions of the Agreement herein to express such intent) that the Paragould IRBs are not included in the Assets, and the obligations of Sellers under the Paragould IRBs are not included in the Assumed Liabilities, and any provision in the Agreement that is not so amended herein shall be deemed amended to express such intent. (b) Sellers and Buyer agree that it is their intent (notwithstanding any failure to amend any provisions of the Agreement herein to express such intent) that the Murfreesboro Assets (as defined in the Manufacturing Services Agreement) are not included in the Assets, and shall not be purchased and sold under the Agreement on the Closing Date; that the Murfreesboro Assets shall instead be purchased and sold at the times and for the consideration described in the Manufacturing Services Agreement; and that any provision in the Agreement that is not so amended herein shall be deemed amended to express such intent. 2.2. DEFINITIONS. Capitalized terms used in this Amendment and not defined herein shall have the meanings ascribed thereto in the Agreement. 2.3. EFFECT OF AMENDMENT; RESTATEMENT. Except as amended by this Amendment, the Agreement shall be unamended and remain in full force and effect. The Agreement, as amended by this Amendment, is hereinafter referred to as the "Agreement", and the parties hereto hereby agree that the Agreement may be restated to reflect the amendments provided for in this Amendment. 2.4. GOVERNING LAW. This amendment shall be governed by and interpreted in accordance with the laws of the State of Delaware. 2.5. COUNTERPARTS. This Amendment may be executed in counterparts, each of which shall be an original and all of which shall together constitute one and the same instrument. (SIGNATURES BEGIN ON NEXT PAGE) 7 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers as of the date first written above. SUNBEAM PRODUCTS, INC. By: /s/ DAVID C. FANNIN ---------------------------- Name: David C. Fannin Title: Executive Vice President SUNBEAM FURNITURE COMPANY By: /s/ DAVID C. FANNIN ----------------------------- Name: David C. Fannin Title: Vice President OP II, INC. By: /s/ JANET KELLEY ----------------------------- Name: Janet Kelley Title: Vice President SUNLITE CASUAL FURNITURE, INC. By: /s/ JOHN A. MISTRETTA ----------------------------- Name: John A. Mistretta Title: Vice President Agreed and Acknowledged SUNBEAM CORPORATION By: /S/ DAVID C. FANIN ------------------------------ Name: David C. Fannin Title: Executive Vice President U.S. INDUSTRIES, INC. By: /s/ JOHN A. MISTRETTA ------------------------------ Name: John A. Mistretta Title: Vice President 8 ANNEX A SUNBEAM FURNITURE PURCHASE PRICE ADJUSTMENT WORKSHEET The Outdoor, Samsonite, and Consolidated information is derived from Schedule 5.F(1), "Statements of Assets and Liabilities", as provided in the executed purchase agreement dated February 10, 1997, as amended as of March 17, 1997. This statement is adjusted to exclude inventory and fixed asset values associated with the Murfreesboro facility not being immediately transferred to the purchasers, and the additional discount. NOTE THAT PURCHASER REALIZES THE BENEFIT OF THE EXCESS AND OBSOLETE RESERVE AT MURFREESBORO AT TIME OF SALE.
$Thousands - ------------------------------------------------------------------------------------------------------------------------------------ Amended Purchase Less: Less: Less: Agreement Murfreesboro Additional Revised Outdoor Samsonite Consolidated Discount Total Inventory/FA Discount Total - ------------------------------------------------------------------------------------------------------------------------------------ Petty Cash 2 2 4 Inventory: Raw Materials 8,621 4,924 13,545 (3,739) Work in Process 5,989 3,596 9,585 (2,719) Finished Goods 30,266 1,806 32,072 (1,706) Other (a) 562 - 562 - Seasonal Variance 7,282 - 7,282 - Excess and Obsolete (7,300) (1,068) (8,368) - Shrink/BTP (500) (145) (645) - Standards Revaluation (3,042) 55 (2,987) (55) Net Inventory 41,878 9,168 51,046 (8,219) Prepaid Expenses Rents 213 118 331 Deposits 15 - 15 Other (b) 47 97 144 Net PP&E 51,070 2,870 53,940 (2,529) Total Assets 93,225 12,255 105,480 (10,748) Accrued Payroll & Vacation 1,209 386 1,595 IRB (c) - - - Total Liabilities 1,209 386 1,595 Net Amount $ 92,016 $11,869 $103,885 $ (21,000) $ 82,885 $(10,748) $ (10,000) $62,137 - ------------------------------------------------------------------------------------------------------------------------------------
(a) Includes raw materials in transit ($559K) and repack parts ($3K) (b) Includes prepaid royalty, holiday, and other (c) To be paid by Sunbeam outside of closing 9 EX-10.D 4 EXHIBIT 10.d EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT, effective as of January 1, 1997 (the "Effective Date"), by and between DONALD R. UZZI (the "Executive") and SUNBEAM CORPORATION, a Delaware corporation (the "Company"). RECITALS WHEREAS, the Executive is currently employed by the Company; and WHEREAS, Company desires to retain the Executive and the Executive desires to furnish services to the Company on the terms and conditions hereinafter set forth; and WHEREAS, the parties desire to enter into this Agreement setting forth the revised terms and conditions of the employment relationship of the Executive with the Company; NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth below, the parties hereby agree as follows: 1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and the Executive hereby accepts such employment, on the terms and conditions hereinafter set forth. 2. EMPLOYMENT PERIOD. The period of employment of the Executive by the Company hereunder (the "Employment Period") shall commence on the Effective Date and shall end on December 31, 1999 (or the Date of Termination (as defined in Section 6 below), if earlier). 3. POSITION AND DUTIES. The Executive shall serve as Executive Vice President, Worldwide Consumer Products, and shall have such responsibilities, duties and authority as are consistent with such position and such other duties as may from time to time be assigned to him by the Chief Executive Officer. The Executive agrees to devote substantially all his working time, attention and energies to the performance of his duties for the Company. 4. PLACE OF PERFORMANCE. The principal place of employment of the Executive shall be at the Company's principal executive offices in Palm Beach County, Florida, or such other location as may be agreed to by the Board. In the event that the Company's principal executive offices are moved from Palm Beach County, Florida, the Company shall promptly pay, or reimburse the Executive for, all reasonable expenses incurred by the Executive relating to any change of the Executive's residence from Palm Beach County, Florida, in connection with his employment hereunder, including, without limitation, reasonable expenses for himself and his family of travel, moving, storage and suitable lodging and maintenance, and the Company shall reimburse the Executive on a grossed up basis in the event that any tax is assessed upon him in relation to any such expenses. The Company shall pay or reimburse the Executive for all reasonable costs and expenses of residential relocation incurred by him in connection with each and every additional change, if any, in the location of the principal executive offices of the Company, and the Executive shall be reimbursed by the Company on a grossed up basis in the event that any tax is assessed upon him in relation to any such costs or expenses. 5. COMPENSATION AND RELATED MATTERS. (a) BASE SALARY. As compensation for the performance by the Executive of his duties hereunder, during the Employment Period the Company shall pay the Executive a base salary at an annual rate of $400,000 (the "Base Salary"), which Base Salary shall be payable in substantially equal semi-monthly installments. It is agreed that there shall be no increase or decrease in the Base Salary during the Employment Period. The parties agree that the Executive shall not be entitled to participate in any other bonus or incentive compensation programs of the Company. (b) STOCK OPTION GRANTS. Effective as of the Effective Date, by action of the Executive Development and Compensation Committee of the Board of Directors, the Executive has been granted (in addition to options previously granted to him) a stock option (the "Option Award") to purchase 100,000 shares of Common Stock pursuant to the Company's Equity Team Plan ("Option Plan"), which options are granted upon the terms and conditions as set forth in the Option Plan (at an exercise price of $25.73 per share). Such Option Award shall vest in equal increments on the first, second and third anniversaries of the grant date and shall be subject to and modified by all other terms and provisions of this Agreement, as expressly set forth herein. In the event of any conflict between any terms of the Option Plan and the terms and provisions of this Agreement, the terms and provisions of this Agreement shall take precedence and shall be controlling as between such documents. (c) EXPENSES. During the Employment Period, the Company shall reimburse the Executive for all reasonable business expenses in accordance with applicable policies and procedures then in force. (d) VACATION AND OTHER ABSENCES. The Executive shall be entitled to paid vacation and other paid absences, whether for holidays, illness, personal time or any similar purposes, during the Employment Period in accordance with policies applicable generally to other Executive Vice Presidents of the Company; provided, however, that the Executive shall always be entitled to at least six weeks of paid vacation in each calendar year and pro rata for part of a year. Up to four weeks per year of unused vacation may be maintained by the Executive on a cumulative basis and may be subsequently used in any year or if not so used, the Executive shall be compensated for any unused vacation days upon the termination of this Agreement for any reason. (e) TAX PLANNING SERVICES. During the Employment Period, the Company shall provide the Executive with tax-related advice and services without cost or expense to him and shall reimburse the Executive on a grossed up basis in the event that any tax is assessed upon him in relation to such services. (f) OTHER BENEFITS. During the Employment Period, the Executive shall be eligible to participate at no cost or expense to him in welfare plans and programs (including any tax-deferred savings plan, group life insurance plan, medical and dental insurance plan, and accident and disability insurance plan) ("Benefit Plans") applicable generally to employees and/or senior executives of the Company. The Company will waive, or obtain the waiver of, any waiting periods for eligibility under the Benefit Plans or will provide comparable benefits to the Executive without cost to him during the waiting period. 6. TERMINATION. The Executive's employment hereunder may be terminated as follows: (a) DEATH. The Executive's employment shall terminate upon his death, and the date of his death shall be the Date of Termination. 2 (b) DISABILITY. If, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from his duties hereunder on a full-time basis for one hundred and twenty (120) consecutive days and, within thirty (30) days after written Notice of Termination (as defined in Section 6(g) hereof), shall not have returned to the performance of his duties hereunder on a full-time basis ("Disability"), the Company may terminate the Executive's employment hereunder. In this event, the Date of Termination shall be thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the performance of his duties on a full-time basis during such thirty (30) day period). (c) CAUSE. The Company may terminate the Executive's employment hereunder for Cause. For purposes of this Agreement, the Company shall have "Cause" to terminate the Executive's employment hereunder: (i) upon the Executive's conviction for the commission of a felony (or a plea of nolo contendere thereto); (ii) willful failure by the Executive substantially to perform his duties hereunder (other than any such failure resulting from the Executive's incapacity due to Disability). For purposes hereof, no act or failure to act by the Executive shall be considered "willful" unless done or omitted to be done by him not in good faith or without reasonable belief that his action or omission was in the best interests of the Company or contrary to written instructions of the Chief Executive Officer or the Board of Directors; or (iii) failure of the Executive to meet the performance objectives prescribed for him by the Company's Chief Executive Officer, in good faith, from time to time. In event termination for Cause is premised on this subsection (c)(iii), the Executive shall be given written notice of his performance deficiencies and a thirty (30) day period within which to correct or overcome those deficiencies. If the Executive shall be unable or unwilling to correct such deficiencies in performance during such thirty (30) day period, then his Date of Termination shall be the date following such thirty (30) period on which the Company's Chief Executive Officer advises the Executive in writing (in a Notice of Termination) that he has failed to correct the deficiencies in performance, providing in reasonable detail the reasons for such determination by the Chief Executive Officer. The Date of Termination shall be the date specified in the Notice of Termination; provided, however, that, in the case of a termination for Cause under clause (ii) above, the Date of Termination shall not be earlier than 30 days after delivery of the Notice of Termination. Anything herein to the contrary notwithstanding, if, following a termination of the Executive's employment by the Company for Cause based upon the conviction of the Executive for a felony, such conviction is overturned in a final determination on appeal, the Executive shall be entitled to the payments and the economic equivalent of the benefits the Executive would have received if his employment had been terminated by the Company without Cause. (d) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive may terminate his employment hereunder for Good Reason, provided that the Executive shall have delivered a Notice of Termination (as defined in Section 6(g) hereof) within ninety (90) days after the occurrence of the event of Good Reason giving rise to such termination. For purposes of this 3 Agreement, "Good Reason" shall mean the occurrence of one or more of the following circumstances, without the Executive's express written consent, which are not remedied by the Company within thirty (30) days of receipt of the Executive's Notice of Termination: (i) an assignment to the Executive of any duties materially inconsistent with his positions, duties, responsibilities and status with the Company or any material limitation of the powers of the Executive not consistent with the powers of the Executive contemplated by Section 3 hereof; or (ii) any removal of the Executive from, or any failure to re-elect the Executive to, the executive officer position specified in Section 3 of this Agreement (or to another senior executive position with the Company at no decrease in compensation); or (iii) any other material breach by the Company of this Agreement. In the event of a termination for Good Reason, the Date of Termination shall be the date specified in the Notice of Termination, which shall be no more than thirty (30) days after the Notice of Termination. (e) OTHER TERMINATIONS. The Company may terminate the Executive's employment hereunder at any time, subject to the provisions of Section 7(e) hereof. The Executive may terminate his employment at any time subject to the provisions of Section 7(d) hereof. If the Executive's employment is terminated hereunder for any reason other than as set forth in Sections 6(a) through 6(d) hereof, the date on which a Notice of Termination is given or any later date (within 30 days) set forth in such Notice of Termination shall be the Date of Termination. (f) TERMINATION BY THE EXECUTIVE UPON CHANGE IN CONTROL. Upon a Change in Control (as defined below), the Executive shall have the right, upon delivery to the Company of a Notice of Termination (which shall specify a Date of Termination not less than 30 days after such Notice of Termination), to terminate his employment under this Agreement and to receive the payments provided pursuant to Section 7(f) below. If the Executive shall elect to terminate his employment with the Company other than upon a Change in Control, he shall receive only the compensation referred to in Section 7(d) below. For purposes of this Agreement, a Change in Control shall mean the occurrence of any one of the following events: (i) any "person" as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended, becomes a "beneficial owner," as such term is used in Rule 3d-3 promulgated under that Act, of 25% or more of the voting stock of the Company (other than a person that is currently the beneficial owner of such percentage of the Company's voting stock); (ii) the majority of the Board consists of individuals other than Incumbent Directors, which term means the members of the Board on the date of this Agreement and the individuals designated as directors by the Chief Executive Officer of the Company; provided that any person becoming a director subsequent to such date whose election or nomination for election was supported by two-thirds of the directors who then comprised the Incumbent Directors shall be considered to be an Incumbent Director; (iii) the Company, without the Executive's consent, adopts any 4 plan of liquidation providing for the distribution of all or substantially all of its assets; or (iv) all or substantially all of the assets or business of the Company are disposed of pursuant to a merger, consolidation or other transaction (unless the shareholders of the Company immediately prior to such merger, consolidation or other transaction beneficially own, directly or indirectly, in substantially the same proportion as they owned the voting stock of the Company, all of the voting stock or other ownership interests of the entity or entities, if any, that succeed to the business of the Company). (g) NOTICE OF TERMINATION. Any termination of the Executive's employment hereunder by the Company or by the Executive (other than termination pursuant to Section 6(a) hereof) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 13 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. If any dispute concerning a Notice of Termination of the Executive's employment under Section 6(b), 6(c) or 6(d) hereof results in a determination that a proper basis for such termination did not exist under such section, the Executive's employment under this Agreement shall be treated, with respect to a Notice of Termination pursuant to Section 6(b) or 6(c) hereof, as having been terminated pursuant to Section 6(e) hereof or, with respect to a Notice of Termination pursuant to Section 6(d) hereof, as having not been terminated. 7. COMPENSATION UPON TERMINATION OR DURING DISABILITY. (a) DISABILITY PERIOD. During any period during the Employment Period that the Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness ("Disability Period"), the Executive shall continue to (i) receive his full Base Salary and (ii) participate in the Benefit Plans. Such payments made to the Executive during the Disability Period shall be reduced by the sum of the amounts, if any, payable to the Executive at or prior to the time of any such payment under disability benefit plans of the Company or under the Social Security disability insurance program, and which amounts were not previously applied to reduce any such payment. (b) DEATH. If the Executive's employment hereunder is terminated as a result of death, then: (i) the Company shall pay the Executive's estate or designated beneficiary, as soon as practicable after the Date of Termination, any Base Salary installments due in the month of death and any reimbursable expenses, accrued or owing the Executive hereunder as of the Date of Termination; and (ii) the Options granted to the Executive pursuant to the Option Award shall become vested and exercisable, as of the Date of Termination, to the extent such Option Award would have otherwise become vested on or before the first anniversary of the Date of Termination, and all vested Options shall remain exercisable for a period of one year following such Date of Termination and shall thereafter be completely forfeited and canceled; any Options that would not have become vested and exercisable on or before the first anniversary of the Date of Termination shall terminate and be forfeited as of the 5 Date of Termination. (c) DISABILITY. If the Executive's employment hereunder is terminated as a result of Disability, then: (i) the Company shall pay the Executive, as soon as practicable after the Date of Termination, any Base Salary and any reimbursable expenses, accrued or owing the Executive hereunder for services as of the Date of Termination; and (ii) the Options granted to the Executive pursuant to the Option Award shall become vested and exercisable, as of the Date of Termination, to the extent such Option Award would have otherwise become vested on or before the first anniversary of the Date of Termination, and all vested Options shall remain exercisable for a period of three years following such Date of Termination and shall thereafter be completely forfeited and canceled; any Options that would not have become vested and exercisable on or before the first anniversary of the Date of Termination shall terminate and be forfeited as of the Date of Termination. (d) CAUSE OR BY EXECUTIVE OTHER THAN FOR GOOD REASON. If the Executive's employment hereunder is terminated by the Company for Cause or by the Executive other than for Good Reason, then: (i) the Company shall pay the Executive, as soon as practicable after the Date of Termination, any Base Salary and any reimbursable expenses accrued or owing the Executive hereunder for services as of the Date of Termination; and (ii) the Executive shall immediately forfeit any unvested portion of the Option Award. In the event of termination by the Company for Cause, the Executive shall have the right to exercise the vested unexercised portion of the Option Award for a period of ninety (90) days after the Date of Termination, and the unexercised portion of such Option Award shall be forfeited thereafter. In the event of termination by the Executive other than for Good Reason the Executive shall have the right to exercise the vested unexercised portion of the Option Award for a period of one year following the Date of Termination and the unexercised portion of such Option Award shall be forfeited thereafter. (e) TERMINATION BY COMPANY WITHOUT CAUSE OR BY THE EXECUTIVE WITH GOOD REASON. If the Executive's employment hereunder is terminated by the Company (other than for Cause or Disability) or by the Executive for Good Reason, then: (i) the Company shall pay the Executive, as soon as practicable after the Date of Termination, any Base Salary and any reimbursable expenses, accrued or owing the Executive hereunder for services as of the Date of Termination; (ii) the Company shall immediately pay to the Executive as liquidated damages and not as a penalty a lump sum amount equal to the total Base Salary that would have otherwise been payable to the Executive with respect to the period commencing immediately following the Date of Termination and ending on July 29, 1999, at the annualized rate in effect at the time Notice of Termination is given; 6 (iii) the Options granted to the Executive pursuant to the Option Award shall become fully vested and exercisable, as of the Date of Termination, and the Option Award shall remain exercisable for the balance of its original 10-year term; and (iv) the Executive shall continue to participate in all employee benefit plans and programs in which the Executive was entitled to participate immediately prior to the Date of Termination, in accordance with the terms of such plans and programs as in effect from time to time, through December 31, 1999; provided that the Executive's continued participation is permitted under the general terms and provisions of such plans and programs. In the event that the Executive's participation in any such plan or program is barred, the Company shall arrange to provide the Executive and his dependents with benefits substantially the same as those which the Executive and his dependents would otherwise have been entitled to receive under such plans and programs from which their continued participation is barred or provide their economic equivalent. (f) TERMINATION UPON CHANGE IN CONTROL. If the Executive shall elect to terminate his employment under this Agreement upon a Change in Control, the Company shall pay to the Executive the payments described in Sections 7(e)(i), (ii), (iii) and (iv) above. 8. GROSS-UP FOR EXCISE TAX. In the event that the Executive receives any payment or benefit (including but not limited to the payments or benefits pursuant to Section 7 of this Agreement) (a "Payment") that is subject to the excise tax (the "Excise Tax") under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay to the Executive, as soon thereafter as practicable, an additional amount (a "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax imposed upon the Payment and any federal, state and local income tax and Excise Tax imposed upon the Gross-Up Payment shall be equal to the Payment. The determination of whether an Excise Tax is due in respect of any payment or benefit, the amount of the Excise Tax and the amount of the Gross-Up Payment shall be made by an independent auditor (the "Auditor") jointly selected by the Company and the Executive and paid by the Company. If the Executive and the Company cannot agree on the firm to serve as the Auditor, then the Executive and the Company shall each select one nationally recognized accounting firm and those two firms shall jointly select the nationally recognized accounting firm to serve as the Auditor. Notwithstanding the foregoing, for purposes of determining the Gross-Up Payment in respect of any Payment, (i) any other payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a Change in Control or any person affiliated with the Company or such person) shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G of the Code shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Auditor, such other payments or benefits (in whole or in part) do not constitute parachute payments, or are otherwise not subject to the Excise Tax, and (ii) the Executive shall be deemed to pay federal income tax at the highest marginal rate applicable in the calendar year in which the Gross-Up Payment is made, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event the actual Excise Tax or such income tax is more or less than the amount used to calculate the Gross-Up Payment, the 7 Executive or the Company, as the case may be, shall pay to the other an amount reflecting the actual Excise Tax or such income tax0 , plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. 9. MITIGATION. The Executive shall not be required to mitigate amounts payable pursuant to Section 7 hereof by seeking other employment or otherwise, nor shall there be any offset against such payments on account of (a) any remuneration attributable to any subsequent employment that he may obtain or (b) any claims the Company may have against the Executive. 10. CONFIDENTIAL INFORMATION, REMOVAL OF DOCUMENTS, NON-COMPETITION. (a) CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary capacity for the benefit of the Company and its subsidiaries (the "Sunbeam Entities") all trade secrets, confidential information, and knowledge or data relating to the Sunbeam Entities and the businesses and investments of the Sunbeam Entities, which shall have been obtained by the Executive during the Executive's employment by the Company, including such information with respect to any products, improvements, formulas, designs or styles, processes, services, customers, suppliers, marketing techniques, methods, future plans or operating practices ("Confidential Information"); PROVIDED, HOWEVER, that Confidential Information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Executive) or any specific information or type of information generally not considered confidential by persons engaged in the same business as the Company, or information disclosed by the Company or any officer thereof to a third party without restrictions on the disclosure of such information. Except as may be required or appropriate in connection with his carrying out his duties under this Agreement, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such Confidential Information to anyone other than the Company and those designated by the Company. (b) REMOVAL OF DOCUMENTS. All records, files, drawings, documents, models, and the like relating to the business of the Sunbeam Entities, which the Executive prepares, uses or comes into contact with and which contain Confidential Information shall not be removed by the Executive from the premises of any Sunbeam Entity (without the written consent of the Company) during or after the Employment Period unless such removal shall be required or appropriate in connection with his carrying out his duties under this Agreement, and, if so removed by the Executive, shall be returned to such Sunbeam Entity immediately upon termination of the Executive's employment hereunder. (c) NON-COMPETITION. During (i) the Executive's employment with the Company and (ii) the two (2) year period immediately following the Executive's Date of Termination, the Executive (A) shall not engage, anywhere within the geographical areas in which any Sunbeam Entity is then conducting its business operations, directly or indirectly, alone, in association with or as a shareholder, principal, agent, partner, officer, director, employee or consultant of any other organization, in any business (a "Competitive Business") which competes with any business then being conducted by such Sunbeam Entity; (B) shall not solicit or encourage any officer, employee or consultant of any of the Sunbeam Entities to leave the employ of any of the Sunbeam Entities for employment by or with any Competitive Business; and (C) shall not solicit, divert or take away, or attempt to divert or to take away, the business or patronage of any of the customers or accounts, or prospective customers or accounts, of any Sunbeam Entity, which were contacted, solicited or served by the Executive while employed by the Company; provided, however, 9 that nothing herein shall prohibit the Executive from owning a maximum of two percent (2%) of the outstanding stock of any publicly traded corporation. Following the Date of Termination, ownership by the Executive of not more than five percent (5%) of any publicly traded corporation shall not constitute a violation hereof. If, at any time, the provisions of this Section 10(c) shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this Section 10(c) shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Executive agrees that this Section 10(c) as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein. For purposes of this Section 10(c), the design, manufacture and marketing of outdoor barbecue grills, casual outdoor and indoor furniture and small kitchen appliances shall be construed to be a Competitive Business; provided, however, that the gross revenues derived from sales of such products by such competitor are greater than the lesser of (i) 10% of its total revenues and (ii) $500,000,000. (d) REMEDIES. In the event of a breach or threatened breach of this Section 10, the Executive agrees that the Company shall be entitled to apply for injunctive relief in a court of appropriate jurisdiction to remedy any such breach or threatened breach, the Executive acknowledging that damages would be inadequate and insufficient. (e) CONTINUING OPERATION. Any termination of the Executive's employment or of this Agreement shall have no effect on the continuing operation of this Section 10. 11. INDEMNIFICATION. The Company shall indemnify the Executive to the full extent permitted by law and the By-laws of the Company for all expenses, costs, liabilities and legal fees which the Executive may incur in the discharge of all his duties hereunder, including, without limitation, the right to be paid in advance by the Company for his expenses in defending a civil or criminal action, proceeding or investigation prior to the final disposition thereof. The Executive shall be insured under the Company's Directors' and Officers' Liability Insurance Policy as in effect from time to time. Notwithstanding any other provision of this Agreement to the contrary, any termination of the Executive's employment or of this Agreement shall have no effect on the continuing operation of this Section 11. 9 12. SUCCESSORS; BINDING AGREEMENT. (a) COMPANY'S SUCCESSORS. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the business and/or assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the business and/or assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Company will require any such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement (except in the definition of Change in Control), "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 12 or which otherwise becomes bound by all the terms and provisions of this Agreement or by operation of law. (b) EXECUTIVE'S SUCCESSORS. This Agreement shall not be assignable by the Executive. This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. Upon the Executive's death, all amounts to which he is entitled hereunder, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate. 10 13. NOTICE. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or (unless otherwise specified) mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: Donald R. Uzzi ----------------------- ----------------------- If to the Company: Sunbeam Corporation 1615 South Congress Avenue Suite 200 Delray Beach, FL 33445 Attn: General Counsel or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 14. MISCELLANEOUS. No provisions of this Agreement may be modified unless such modification is agreed to in writing signed by the Executive and an authorized officer of the Company. Any waiver or discharge must be in writing and signed by the Executive or such an authorized officer of the Company, as the case may be. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware without regard to its conflicts of law principles. 15. WITHHOLDING. Any payments provided for in this Agreement shall be paid net of any applicable withholding of taxes required under federal, state or local law. 16. ARBITRATION. (a) Except as otherwise provided herein, all controversies, claims or disputes arising out of or related to this Agreement shall be settled under the rules of the American Arbitration Association then in effect in the State of Florida, as the sole and exclusive remedy of either party, and judgment upon such award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction. The costs of the arbitration shall be borne as determined by the arbitrators PROVIDED, HOWEVER, that if the Company's position is not substantially upheld, as determined by the arbitrators, the expenses of the Executive (including, without limitation, fees and expenses payable to the AAA and the arbitrators, fees and expenses payable to witnesses, including expert witnesses, fees and expenses payable to attorneys and other professionals, expenses of the Executive in attending the hearings, costs in connection with obtaining and presenting evidence and 11 costs of transcription of the proceedings), as determined by the arbitrators, shall be reimbursed to him by the Company. (b) Notwithstanding the provisions of Section 16(a) above, the parties agree that nothing contained herein shall preclude the Company from bringing an action in a court of competent jurisdiction (whether prior to or during any arbitration proceeding) seeking to specifically enforce the provisions of Section 10 hereof by means of seeking an injunction or other equitable relief. 17. ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the terms of the Option Plan set forth the entire agreement of the parties hereto in respect of the subject matter contained herein, supersede all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto or thereto in respect of the subject matter contained herein or therein, including but not limited to that certain Employment Agreement between the Company and the Executive dated January 1, 1995, is hereby terminated and canceled. This Agreement may be signed in counterparts. 18. CONFLICT WITH OPTION PLAN. To the extent, if any, of any inconsistency or conflict between the terms and provisions of this Agreement and the Option Plan, this Agreement shall control in all matters. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on August 7, 1996 to be effective as of the Effective Date. SUNBEAM CORPORATION By:___________________ Name: ALBERT J. DUNLAP Title: CHAIRMAN & CEO ______________________ Donald R. Uzzi 12 EX-10.F 5 e EXHIBIT 10.f AMENDED AND RESTATED SUNBEAM CORPORATION EQUITY TEAM PLAN (Amended as of December 5, 1996) 1. PURPOSE. The purpose of the Sunbeam Corporation Equity Team Plan is to provide incentives for selected executives, key employees, Outside Directors and Designated Others to promote the financial success and progress of Sunbeam Corporation. Capitalized terms used throughout this Plan shall have the meanings ascribed to them in Section 16 hereof. 2. STOCK SUBJECT TO THE PLAN. (a) Subject to the provisions of this Section and Section 9, the maximum number of shares of Stock that may be issued under the Plan is 11,500,000 shares, to be allocated as follows: (i) 11,300,000 shares may be issued in connection with the grant of Options pursuant to Section 3; and (ii) 200,000 shares may be issued in connection with the grant of Restricted Stock Awards pursuant to Section 3. Such shares may be either authorized but unissued shares or treasury shares. (b) The number of shares subject to an Option or a Restricted Stock Award that has been granted under the Plan shall no longer be charged against the limitation provided in Section 2(a), and may again be made subject to Options or Restricted Stock Awards, as the case may be, to the extent that Options expire unexercised or are terminated, surrendered or canceled before exercise or Restricted Stock Awards are forfeited, terminated, surrendered or canceled due to a Participant's termination of employment or service as an Outside Director or for any other reason. 3. GRANTS OF OPTIONS AND RESTRICTED STOCK AWARDS. (a) Subject to the provisions of the Plan, the Committee may at any time, or from time to time, grant Options to officers, key employees, Outside Directors of the Company (or its subsidiaries) and Designated Others. (b) Subject to the provisions of the Plan, the Committee may at any time, or from time to time, grant shares of Stock which are subject to the Restrictions set forth in Section 4(b) ("Restricted Stock") to officers, key employees and Outside Directors of the Company (or its subsidiaries) and Designated Others. (c) The Committee shall cause shares of Restricted Stock to be issued to each Outside Director immediately and automatically upon his or her election, re-election or appointment as a Director of the Company. If such Outside Director is elected at an Annual Meeting of the Shareholders of the Company (the "Annual Meeting"), the number of shares of Restricted Stock to be issued shall be 1,500. The number of shares of Restricted Stock to be issued to an Outside Director who is elected or appointed at any time other than at an Annual Meeting shall be 1,500 multiplied by a fraction, the numerator of which shall be the number of days after the date of such election to and including the date of the next Annual Meeting (which for such purpose shall be assumed to be the next May 15) and the denominator of which shall be 365; provided, however, (i) that in the case of an Outside Director elected to the Board for the first time during the period beginning August 1, 1996 and ending December 31, 1996, the number of such shares shall not be prorated, and each such Outside Director shall receive 1,500 shares for the period of his service between the date of his election and the date of the next Annual Meeting (assumed to be May 15, 1997); and (ii) that each incumbent Outside Director, elected prior to August 1, 1996, shall receive that number of shares of Restricted Stock which results from applying to 1,500 such shares the proration formula provided above, using for such calculation the period from August 6, 1996 until and including the date of the next Annual Meeting (assumed to be May 15, 1997). (d) Deleted. (e) Each Option shall be evidenced by a Stock Option Agreement, and each Restricted Stock Award shall be evidenced by a Restricted Stock Award Agreement, each in a form approved by the Committee or by a Company officer designated by the Committee. (f) Notwithstanding any other provision of the Plan, no person shall be granted Options for more than 250,000 shares of Stock or Restricted Stock Awards for more than 25,000 shares of Stock in any single fiscal year of the Company. 4. TERMS AND CONDITIONS. (a) OPTIONS. (i) An Option shall entitle the Participant who holds it to exercise the Option on and subject to the terms, conditions and restrictions of the Plan (as the Plan may be amended from time to time) and such additional terms, conditions and restrictions as may be imposed by the Committee at the time of grant. (ii) Unless otherwise specified by the Committee, the term of each Option granted prior to May 15, 1996 (herein the "1996 Amendment Date") and which is In-the-Money as of the 1996 Amendment Date shall commence on the date of grant of the Option and shall expire at the close of business on the earlier of (A) the tenth anniversary of the date of grant or (B) the 45th day following the termination of the Participant's employment with, or service as director of, the Company (or a subsidiary). Unless otherwise specified by the Committee, the term of each Option granted on or after the 1996 Amendment Date and the term of each Option granted prior to the 1996 Amendment Date which is Out- of-the- Money as of the 1996 Amendment Date, shall commence on the Grant Date of the Option and shall expire at the close of business on the earliest of (A) the tenth anniversary of the Grant Date; or (B) the third anniversary of the date of termination of the Participant's employment with, or service as a director of, the Company (or a subsidiary), in the case of retirement or termination by the Company without Cause; or (C) 90 days after the date of termination of employment in the case of resignation, voluntary departure or 2 termination by the Company with Cause; or (D) in the case of a Designated Other, the date specified in the Stock Option Agreement. Notwithstanding the foregoing sentence, Participants who are subject to Section 16(b) of the Exchange Act shall have until the earlier of (A) the tenth anniversary of the Grant Date; or (B) the third anniversary of the date of termination of their employment with, or service as a director of the Company, regardless of the cause, within which to exercise Options which are granted on or after the 1996 Amendment Date and Options which are Out-of-the-Money as of the 1996 Amendment Date; provided, however, that no such Option may be exercised by any such person during the period beginning on the date of termination and ending on the six month anniversary of the date of termination. (iii) All Restrictions shall lapse with respect to the Restricted Stock subject to a Restricted Stock Award made to an Outside Director pursuant to Section 3(c) hereof immediately and automatically upon the Director's acceptance of election or appointment as a Director of the Company, as evidenced in such manner as may be established by the Committee. Unless otherwise specified by the Committee (which is empowered to provide different vesting schedules with respect to any grant of Options or Restricted Stock), all other Options granted under the Plan shall become exercisable with respect to 20% of the shares subject to the Option beginning on the first anniversary of the Grant Date and as to an additional 20% on each of the second, third, fourth and fifth anniversaries of the Grant Date (each twelve month period ending on an anniversary of a Grant Date being referred to herein as an "Option Year"), provided in each case that the Participant shall have remained an employee or a director of the Company (or a subsidiary), or in the case of a Designated Other, shall have remained in the position set forth in the Stock Option Agreement, continuously since the Grant Date. Notwithstanding the foregoing, during the remaining term of any options (if not already so exercisable) : (A) if a Participant's employment or service as a director, or in the case of a Designated Other, the period of service as defined in the Stock Option Agreement, terminates due to death, all Options held by the Participant at death shall become immediately exercisable in full; (B) upon a Change in Control, coupled with a Change in Status of a Participant, all Options held by such Participant who is then an employee or director of the Company (or a subsidiary) shall become immediately exercisable in full; and (C) in the event that the exercisability of an Option accelerates due to a Change in Control and a Change in Status, Participants who are subject to Section 16(b) of the Exchange Act may not sell the shares acquired upon such accelerated exercise within six months of the Grant Date of such Option. (iv) Except to the extent permitted by Rule 16b-3 or its successor, Options shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of, except by will or the laws of descent and distribution, pursuant to a qualified domestic relations order ("QDRO") as defined in the Code or ERISA (or the rules thereunder) or as otherwise set forth in this Section 4(a)(iv). Each Option shall be exercisable during the lifetime of a Participant only by the Participant to whom it was granted, and after the Participant's death only by the Participant's estate or legal representative. To the extent exercisable, an Option may be exercised in whole at any time, or in part from time to time, during the term of the Option. (v) Any Option may be converted, modified, forfeited or canceled, prospectively or retroactively, in whole or in part, by the Committee in its sole discretion; provided, 3 however, that no such action shall adversely affect the rights of any Participant under any Option granted prior to such action without his consent. Except as may be otherwise provided in an Agreement, the Committee may, in its sole discretion, in whole or in part, waive any restrictions or conditions applicable to, or accelerate the vesting of, any Option. (b) STOCK AWARDS. (i) Upon the grant of a Restricted Stock Award, a stock certificate representing a number of shares of Stock equal to the number of shares of Restricted Stock granted to a Participant shall be registered in the Participant's name but shall be held in custody by the Company for the Participant's account. The Participant shall generally have the rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock, except that the following restrictions (the "Restrictions") shall apply: (A) the Participant shall not be entitled to delivery of the certificate until the Restricted Period (set forth in paragraph (iii) below) applicable to such Restricted Stock has expired or terminated and until any other conditions prescribed by the Committee are satisfied; (B) none of the Restricted Stock may be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of during the Restricted Period applicable to such Restricted Stock and prior to the satisfaction of any other conditions prescribed by the Committee; and (C) shares of Restricted Stock shall be forfeited and all rights of the Participant to such Restricted Stock shall terminate without further obligation on the part of the Company unless the Participant has (1) remained an employee or a director of the Company (or a subsidiary) until the expiration or termination of the Restricted Period applicable to such Restricted Stock (or in the case of a Designated Other, the duration specified in the Restricted Stock Award Agreement) and (2) satisfied any other conditions prescribed by the Committee applicable to such Restricted Stock. At the discretion of the Committee, cash and stock dividends with respect to the Restricted Stock may be either currently paid or withheld by the Company for the Participant's account. Cash dividends so withheld by the Committee shall not be subject to forfeiture. Upon the forfeiture of any shares of Restricted Stock, such forfeited Restricted Stock shall be transferred to the Company without further action by the Participant. The Participant shall have the same rights and privileges, and be subject to the Restrictions, with respect to any shares or other property received pursuant to Section 9. (ii) Upon the expiration or termination of the Restricted Period with respect to shares of Restricted Stock and the satisfaction of any other conditions prescribed by the Committee, the Restrictions applicable to such Restricted Stock shall lapse and a stock certificate for the number of shares of Stock with respect to which the Restricted Period has lapsed shall be delivered, free of all restrictions, except any that may be imposed by law, to the Participant or the Participant's beneficiary or estate, as the case may be. The Company shall not be required to deliver any fractional share of Stock but will pay, in lieu thereof, the Fair Market Value (determined as of the date the Restricted Period expires or terminates) of such fractional share to the Participant or the Participant's beneficiary or estate, as the case may be. No payment will be required from the Participant upon the issuance or delivery of any shares of Stock under this paragraph, except that any amount necessary to satisfy applicable federal, state or local tax requirements shall be withheld or paid promptly upon notification of the amount due and prior to or concurrently with the issuance or delivery of a certificate representing such shares. 4 (iii) Unless otherwise specified by the Committee at the time of the award and included in the Restricted Stock Award Agreement, the Restrictions shall also lapse with respect to one-fifth of the Restricted Stock subject to all other Restricted Stock Awards on each of the first through the fifth anniversaries of the Grant Date, provided in each case that the Participant shall have remained an employee or a director of the Company (or a subsidiary) continuously since the date of grant (or in the case of a Designated Other, shall have complied with the terms and conditions of the Restricted Stock Award Agreement). Notwithstanding the foregoing: (A) if a Participant's employment or service as a director, or in the case of a Designated Other, the period defined in the Restricted Stock Award Agreement, terminates due to death, the Restrictions shall lapse with respect to all Restricted Stock Awards held by the Participant at death (if not already so lapsed); (B) upon a Change in Control, coupled with a Change in Status of a Participant, the Restrictions shall lapse with respect to all Restricted Stock Awards held by such Participant who is an employee or director of the Company (or a subsidiary) (if not already so lapsed); and (C) in the event of an accelerated lapse of Restrictions due to a Change in Control and a Change in Status, Participants who are subject to Section 16(b) of the Exchange Act may not sell the shares of Stock whose Restrictions have so lapsed within six months of the Grant Date of the Restricted Stock Award pursuant to which such Stock was received. The "Restricted Period" as to any shares constituting part of a Restricted Stock Award shall be the period of time commencing with the Grant Date of a Restricted Stock Award and ending with the date on which the Restrictions lapse with respect to any such shares, or any portion thereof. (c) In the event that the acceleration of (i) the exercisability of an Option or (ii) the lapse of Restrictions relating to Restricted Stock upon a Change in Control and a Change in Status results in excise tax pursuant to Section 4999 of the Code, or any successor or similar provision thereto, or comparable state or local tax laws, the Company shall pay to the Participant such additional compensation as is necessary (after taking into account all Federal, state and local income and excise taxes payable by the Participant as a result of the receipt of such compensation ) to place the Participant in the same after-tax position he would have been in had no such excise tax (or any interest or penalties thereon) been paid or incurred. The amount of such payment shall be determined by the independent accounting firm serving as the Company's outside auditor immediately prior to the Change in Control. 5. EXERCISE OF OPTIONS. (a) The Exercise Price of the shares purchasable under an Option shall be the Fair Market Value per share on the Grant Date of such Option, subject to subsequent adjustment pursuant to the provisions of Section 9. (b) Options shall be considered exercised (herein the "Exercise Date") on the date written notice, in such form as the Committee may prescribe, is received by the Option Plan Administrator of the Company, advising of the exercise of an Option and either transmitting payment of the total Exercise Price for the number of shares of Stock involved or electing one of the alternative payment procedures set forth in Section 5(c) below. 5 (c) The Exercise Price shall be paid in cash (including cash obtained through a margin loan on the shares as to which the Option is being exercised) or (and provided (x) the use of the following procedure by a Participant would comply with safeguards established by the Committee designed to avoid "short-swing" profits to the Participant under Section 16(b) of the Exchange Act, and (y) does not otherwise violate any applicable laws) through (i) a broker-assisted cashless exercise program established by the Committee, based on the actual proceeds from the sale of share of Stock; or (ii) in shares of Stock, valued on the basis of the closing market price of the Stock on the Exercise Date. (d) Subject to the provisions of Section 6 and the other provisions of the Plan, the Stock Option Agreement and the Option, the Company shall issue shares of Stock in the Participant's name as soon as practicable (but in no event later than 30 days) after the Exercise Date. The Participant shall not be deemed to be a holder of any shares pursuant to an Option, and shall not have any rights as a stockholder in connection with such shares, until the date of transfer of shares of Stock to the Participant. The Company shall have no liability of any nature whatsoever to any Participant by reason of any change in the market price of the Stock during the period of time between the Exercise Date and the date on which any shares of Stock resulting from the exercise are issued or sold. 6. RESTRICTIONS. (a) Notwithstanding any other provision of the Plan, an Option or Restricted Stock Award to the contrary, no Option shall be exercised, and the Company shall not be obligated to issue or transfer shares of Stock under any Option or Restricted Stock Award, until the Company shall have received such assurances as the Company may reasonably request from its counsel that the exercise of the Option and the issuance and transfer of shares pursuant to the Option or Restricted Stock Award will not violate the Securities Act of 1933, as amended, or any other applicable Federal or state laws. In connection with any such issuance or transfer, the Participant shall, if requested by the Company, give assurances satisfactory to counsel to the Company, in respect of the Participant's investment intent or such other matters as counsel to the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. (b) No provisions of the Plan or any Option or Restricted Stock Award shall be interpreted or construed to obligate the Company to register any Stock under Federal or state law. (c) The Company and the Committee reserve the right to investigate at any time the circumstances surrounding any exercise of Options, including any investigation regarding whether a Participant is in compliance with the provisions of Section 13 hereof (or has threatened or is reasonably believed to intend to violate the provisions of Section 13 hereof), and the Company and the Committee shall have no liability or responsibility to any Participant for any alleged damage sustained by the Participant by reason of any delay in the implementation of an Option exercise during the pendency of any such investigation, whether by reason of any change in the market price of the Stock or otherwise. (d) Notwithstanding any other provision hereof, the Committee shall have the right at any time to deny or delay a Participant's exercise Options if such Participant is reasonably believed by the Committee (i) to be engaged in material conduct adversely affecting the Company or (ii) to be 6 contemplating such conduct, unless and until the Committee shall have received reasonable assurance that the Participant is not engaged in, and is not contemplating, such material conduct adverse to the interests of the Company. (e) Participants are and at all times shall remain subject to the trading window policies adopted by the Company from time to time throughout the period of time during which they may exercise Options or sell Restricted Stock granted pursuant to the Plan. Participants may request at any time a copy of any calendar of scheduled open windows by contacting the Option Plan Administrator. 7. FAIR MARKET VALUE. (a) During any period that the Company's Stock is Actively Traded, Fair Market Value shall equal the arithmetic average of the closing prices of a share of Stock on the exchange or national market system on which the Stock is traded, for the last twenty market trading days prior to the date of determination of Fair Market Value, or pursuant to such other method as the Committee may reasonably specify for determining the Stock's Fair Market Value. (b) During any period during which the Company's Stock is not Actively Traded, Fair Market Value shall be determined by the Committee. 8. TERM. This Amended and Restated Plan shall be effective as of the date set forth on the first page hereof. No Option or Restricted Stock Award shall be granted under the Plan after February 12, 2006, but the Plan shall continue in effect thereafter with respect to any previously granted Options and Restricted Stock Awards that remain outstanding and the duration of any such grant or award shall not be affected by the expiration of the Plan. 9. ADJUSTMENTS. In the event that any recapitalization, or reclassification, split-up or consolidation of shares of Stock shall be effected, or the outstanding shares of Stock shall, in connection with a merger or consolidation of the Company or a transaction or series of related transactions that results in the sale of all or substantially all of the Company's assets, be exchanged for a different number or class of shares of stock or other securities or property of the Company or any other Person, or a record date or dates for determination of holders of Stock entitled to receive a dividend payable in stock or a liquidating dividend (or series of dividends) shall occur, equitable and proportional adjustments aimed at preventing the inequitable enlargement or dilution of any rights hereunder shall be made to (i) the number and class of shares or other securities or property that may be issued or transferred pursuant to the Plan and any outstanding Options and Restricted Stock Awards and (ii) the Exercise Price to be paid per share under any outstanding Options; PROVIDED, HOWEVER, that in the event of a merger or consolidation of the Company, or similar transaction pursuant to which the outstanding Stock is exchanged for cash or other property, the unexercised Options shall thereafter be exercisable for, and the Restricted Stock Awards shall entitle the Participant to receive, the cash or other property which an Option or Restricted Stock Award holder, as the case may be, would have been entitled to receive had the Options been exercised, or the Restrictions relating to the Restricted Stock Award lapsed, immediately prior to the record date for such merger, consolidation or similar transaction except to the extent that provision is made in writing in connection with such transaction for (1) the assumption of the Options by, or the substitution for the Options of new options covering the stock of, a successor acquiring 7 corporation, in each case providing terms no less favorable to the holder of such Options than would an assumption or substitution described in Treasury Regulation ss.1.425-1(a) that would not constitute a "modification" for purposes of Code ss.424(a), and (2) the substitution for Restricted Stock Awards of stock of a successor or acquiring corporation having terms no less favorable to the holder thereof than the terms of the Restricted Stock Award in effect before such transaction. 10. ADMINISTRATION. (a) The Plan shall be administered by the Committee. The Committee shall, subject to the provisions of the Plan, have full power and authority to administer the Plan, to select the Participants in the Plan, and, except for grants and awards which are automatically made to Outside Directors as provided pursuant to Section 3 of the Plan, to determine the number of shares to be made subject to each Option and Restricted Stock Award and all terms and conditions of each Option and Restricted Stock Award. The Committee shall have the power to interpret the Plan and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon all Participants, the Company and all other interested persons, absent a determination by a court of competent jurisdiction that the Committee has acted in bad faith or has engaged in reckless or willful misconduct. (b) Members of the Committee and the Board and officers administering this Plan shall be fully protected in taking actions under the Plan or in relying upon the advice of counsel and shall incur no liability except for bad faith, recklessness or willful misconduct in the performance of their duties. (c) Except as required by Rule 16b-3 with respect to grants of Options to individuals who are subject to Section 16 of the Exchange Act, or as otherwise required for compliance with Rule 16b-3 or other applicable law, the Committee may delegate all or any part of its authority under the Plan to an employee, employees or committee of employees. (d) To the extent the Committee deems it necessary, appropriate or desirable to comply with foreign law or practices and to further the purpose of the Plan, the Committee may, without amending this Plan, establish special rules applicable to Options granted to Participants who are foreign nationals, are employed outside the United States, or both, including rules that differ from those set forth in the Plan, and grant Options to such Participants in accordance with those rules. (e) Determinations by the Committee under the Plan relating to the form, amount and terms and conditions of grants and awards need not be uniform, and may be made selectively among persons who receive or are eligible to receive grants and awards under the Plan, whether or not such persons are similarly situated. 11. GENERAL PROVISIONS. (a) Nothing in this Plan or in any instrument executed pursuant hereto shall confer upon any Person any right to continue in the employment or other service of the Company (or any subsidiary), or shall affect the right of the Company (or any subsidiary) to terminate the employment or other service of any person at any time with or without Cause. 8 (b) The Company may make appropriate provisions for the withholding of any taxes which the Company determines it is required to withhold in connection with any Option or Restricted Stock Award including, at the request of a Participant and provided that it does not violate any applicable laws, the payment of such withholding taxes through a broker-assisted sale of a sufficient number of shares underlying the Option or subject to the Restricted Stock Award or by delivery to the Company of shares of Stock previously owned by the Participant, in either case having an actual sale price equal to the amount of such taxes. Notwithstanding the foregoing, a Participant whose transactions in Stock are subject to Section 16(b) of the Exchange Act may make a share withholding election only if it complies with safeguards established by the Committee designed to avoid "short swing" profits to the Participant under Section 16(b) of the Exchange Act. The certificates evidencing a Restricted Stock Award made to an Outside Director pursuant to Section 3(c) hereof shall be automatically reduced by 28% to provide for the estimated Federal income tax payment obligation of the Outside Director, or by such other higher percentage as may be required by law to be withheld, with the Company remitting to the appropriate tax authorities the fair market value of the Restricted Stock Award for which the certificates are not so delivered. (c) By accepting any benefits under the Plan, each Participant, and each Person claiming under or through the Participant, shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, all provisions of the Plan. Each Participant hereby further agrees that amendments and modifications to the Plan, which may be adopted from time to time by the Committee and/or the Board of the Corporation (as set forth in Section 12 hereof), shall be binding upon such Participant and upon all Options or Restricted Stock which the Participant may hold, including (with retroactive effect) Options or Restricted Stock previously granted to the Participant, except to the extent set forth in Section 12 hereof. (d) With respect to Participants subject to Section 16 of the Exchange Act, transactions under the Plan are intended to comply with all applicable provisions of Rule 16b-3 or its successor. To the extent any provision the Plan or action by the Plan administrators fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. (e) A Participant shall have no rights as a stockholder of the Company with respect to any Shares to be issued upon exercise of an Option until such Participant has exercised such Option and becomes a holder of such Shares. 12. AMENDMENTS; MODIFICATION AND TERMINATION. This Plan may be amended or modified by the Committee, with ratification by the Board, or terminated by the Board, at any time and in any respect, except that no amendment shall be made without the approval of the shareholders of the Company if shareholder approval would be required by Rule 16b-3 under the Exchange Act or any other law or rule of any governmental authority, stock exchange or other self-regulatory organization to which the Company is subject. No such amendment, modification or termination shall have effect to reduce the number of shares as to which any Option or Restricted Stock Award previously has been granted to a Participant; to extend the vesting schedule with respect to any Option or Restricted Stock Award or to extend the period of non-competition or confidentiality as set forth in Section 13 hereof. In the event of the passage of any law, rule or regulation or a determination by any regulatory agency or court, requiring an adverse change in the Company's accounting or tax treatment relating to the 9 Plan, the Committee shall have the right to modify the terms of outstanding Options and Restricted Stock Awards to the extent necessary to avoid the adverse consequences of such change. 13. CONFIDENTIALITY AND NON-COMPETITION; CONDUCT NOT IN THE INTEREST OF THE CORPORATION. By accepting Options or Restricted Stock Awards under the Plan and as a condition to the exercise of Options and the enjoyment of any of the benefits of the Plan, each Participant agrees as follows: (a) CONFIDENTIALITY -- During the period of each Participant's employment or service as a director with the Company (or the Participant's engaging in any other activity with or for the Company) and for a two year period thereafter, each Participant shall treat and safeguard as confidential and secret all Confidential Information received by such Participant at any time. Without the prior written consent of the Company, except as required by law, such Participant will not disclose or reveal any Confidential Information to any third party whatsoever or use the same in any manner except in connection with the businesses of the Company and its subsidiaries. In the event that a Participant is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or other process) to disclose (i) any Confidential Information or (ii) any information relating to his opinion, judgment or recommendations concerning the Company or its subsidiaries as developed from the Confidential Information, Participant will provide the Company with prompt written notice of any such request or requirement so that the Company may seek an appropriate protective order or waive compliance with the provisions contained herein. If, failing the entry of a protective order or the receipt of a waiver hereunder, Participant is, in the reasonable opinion of his counsel, compelled to disclose Confidential Information, Participant shall disclose only that portion of the Confidential Information which his counsel advises that he is compelled to disclose and will exercise best efforts to obtain assurances that confidential treatment will be accorded such Confidential Information. (b) NON-COMPETITION -- During the period of employment with the Company or its subsidiaries of any Participant (other than a director) compensated at a rate (including bonuses) in excess of $75,000 per year in cash compensation from his employment with the Company or any of its subsidiaries (determined as of the most recently completed fiscal year of the Company), and, for a two-year period thereafter (the "Non-Compete Period"), each such Participant shall not, without prior written consent of the Committee, do, directly or indirectly, any of the following: (1) own, manage, control or participate in the ownership, management, or control of, or be employed or engaged by or otherwise affiliated or associated with, any other corporation, partnership, proprietorship, firm, association or other business entity, or otherwise engage in any business which competes with the business of the Company or any of its subsidiaries (as such business is conducted during the term of such Participant's employment with the Company or its subsidiaries) in the geographical regions in which such business is conducted; PROVIDED, HOWEVER, that the ownership of a maximum of one percent of the outstanding stock of any publicly traded corporation shall not violate this covenant; or (2) employ, solicit for employment or assist in employing or soliciting for employment any present, former or future employee, officer or agent of the Company or any of its subsidiaries. 10 In the event any court of competent jurisdiction should determine that the foregoing covenant of non-competition is not enforceable because of the extent of the geographical area or the duration thereof, then the Company and the affected Participant hereby petition such court to modify the foregoing covenant to the extent, but only to the extent, necessary to create a covenant which is enforceable in the opinion of such court, with the intention of the parties that the Company shall be afforded the maximum enforceable covenant of non-competition which may be available under the circumstances and applicable law. (c) Each Participant acknowledges that remedies at law for any breach by him of this section 13 may be inadequate and that the damages resulting from any such breach are not readily susceptible to being measured in monetary terms. Accordingly, each Participant acknowledges that upon his violation of any provision of this Section 13, the Company will be entitled to immediate injunctive relief and may obtain an order restraining any threatened or future breach. Each Participant further agrees, subject to the proviso at the end of this sentence, that if he violates any provision of this Section 13, he shall immediately forfeit any rights and benefits under this Plan and shall return to the Company any unexercised Options and forfeit the rights under any Restricted Stock Awards and shall return any shares of Stock held by such Participant received upon exercise of any Option or the lapse of the Restrictions relating to Restricted Stock Awards granted hereunder, together with any proceeds from sales of any shares of Stock received upon exercise of such Options or the lapse of Restrictions of such Restricted Stock Awards; PROVIDED, HOWEVER, that upon violation of subsection (b) of this Section, the forfeiture and return provisions contained in this sentence shall apply only to Options which have become exercisable, and Restricted Stock, the Restrictions with respect to which have lapsed, and in any such case the proceeds of sales therefrom, during the two year period immediately prior to termination of the Participant's employment. Nothing in this Section 13 will be deemed to limit, in any way, the remedies at law or in equity of the Company, for a breach by Participant of any of the provisions of this Section 13. (d) Each Participant agrees to provide written notice of the provisions of this Section 13 to any future employer of Participant, and the Company expressly reserves the right to provide such notice to the Participant's future employer(s). (e) If any provision or part of any provision of this Section 13 is held for any reason to be unenforceable, (i) the remainder of this Section 13 shall nevertheless remain in full force and effect and (ii) such provision or part shall be deemed to be amended in such manner as to render such provision enforceable. 14. GOVERNING LAW. The validity, construction and effect of the Plan and any rules relating to the Plan shall be determined in accordance with the laws of the State of Delaware and applicable Federal law. 15. ARBITRATION. The Company and each Participant hereby agree that in the event of any dispute or controversy arising with respect to the Plan, any Stock Option Agreement, the exercise of any Option (or the disallowance of any exercise at any time, for any reason) or any other matter relating to Options or Restricted Stock Awards, then such dispute or controversy shall be submitted by the parties to mandatory and binding arbitration 11 before a panel of arbitrators appointed by the American Arbitration Association ("AAA"), each of whom shall be knowledgeable in matters of securities in general and, if possible, the administration of stock option programs similar to the Plan. The arbitration proceedings shall be conducted in whichever of the following cities is closest to the work location of the affected Participant: Fort Lauderdale, Florida; Chicago, Illinois; New York, New York; Kansas City, Missouri; Jackson, Mississippi; Nashville, Tennessee or Atlanta, Georgia. The decision of the Company as to which city is closest to the work location of the Participant shall be conclusive and binding, except for manifest error. The decision of the arbitrators shall be rendered in writing, shall be promptly rendered after a hearing on the matter and shall be final, conclusive and binding and may be incorporated in a final judgment rendered by any court of competent jurisdiction. Notwithstanding the foregoing, nothing contained herein shall preclude the Company from seeking injunctive or other relief from any court of competent jurisdiction to enforce the provisions of Section 13 hereof. 16. DEFINITIONS. The following terms, when used in the Plan, shall have the meanings set forth below: ACTIVELY TRADED: Trading of Company Stock on the New York Stock Exchange, the American Stock Exchange or the NASDAQ National Market System in an average weekly volume that equals at least 0.20% of the then outstanding Company Stock for each of at least four weeks in a row. BENEFICIAL OWNER: With respect to any securities of the Company, any Person who is a beneficial owner of such securities as defined in rule 13d-3 under the Exchange Act. The Committee may from time to time adopt interpretations or pronouncements as to who shall be deemed to be Beneficial Owners of the Company's outstanding voting securities as of a given date, which interpretation shall be final and binding on all Participants, the Company and all other interested Persons. BOARD: The Board of Directors of the Company. CAUSE: Any cause stated in an employment agreement between the Company and the Participant and/or material violations of employment agreements or the terms of this Plan, acts of dishonesty with respect to the Company, insubordination, divulging confidential information about the Company, interference with the relationship between the Company and any supplier, client, customer, similar person, or performance of any act or omission which the Committee, in its sole discretion, deems to be sufficiently injurious to the interest of the Company to constitute cause. CHANGE IN CONTROL: The occurrence of any of the following: (i) a merger or consolidation to which the Company is a party if the individuals and entities who were stockholders of the Company immediately prior to the effective date of such merger or consolidation are Beneficial Owners of less than 50% of the total combined voting power for election of directors of the surviving corporation following the effective date of such merger or consolidation; or (ii) any Person becomes the Beneficial Owner in the aggregate of securities of the Company representing 50% or more of the total combined voting power of the Company's then issued and outstanding securities unless such Person (or a Person owned directly or indirectly by such Person) was the Beneficial Owner, directly or indirectly, as of the Grant Date applicable to the affected Participant, of more than 50% of the Company's voting securities outstanding as of such Grant Date; or (iii) 12 the sale of all or substantially all of the assets of the Company to any person or entity that is not a wholly-owned subsidiary of the Company; or (iv) the stockholders of the Company approve any plan or proposal for the liquidation of the Company. CHANGE IN STATUS: The occurrence with respect to a Participant, of any of the following (but only if such event occurs within two (2) years following a Change in Control): (i) any reduction in the aggregate annual compensation paid or payable to a Participant, or any material reduction in the aggregate benefit coverages provided to such Participant under the Company's standard benefit package for all employees; (ii) the assignment to the Participant of any duties inconsistent in any material respect with the Participant's position (including status, offices, titles and reporting responsibilities), authorities, duties or responsibilities as in effect immediately prior to the date of the Change in Control; (iii) the Company's requiring the Participant to be based at any office, facility or location other than the office, facility or location at which the Participant was based immediately prior to the date of the Change in Control; (iv) if the Participant is a party to any employment agreement with the Company, any material breach by the Company of such agreement, or any purported termination by the Company of the Participant's employment otherwise than as permitted by such employment agreement; or (v) in the case of a director, the removal of a director or the failure to nominate the director for reelection. CODE: Internal Revenue Code of 1986, as amended. COMMITTEE: A committee designated by the Board consisting of not less than two members of the Board who are "disinterested persons," as defined in Rule 16b-3 under the Exchange Act, to administer the Plan. COMPANY: Sunbeam Corporation (formerly known as Sunbeam-Oster Company, Inc.) CONFIDENTIAL INFORMATION: Any information not generally known to the public, including, without limiting the generality of the foregoing, any customer lists, supplier lists, trade secrets, invention, formulas, methods or processes, whether or not patented or patentable, channels of distribution, business plans, pricing policies and records, financial information of any sort and inventory records of the Company or any affiliate (and such other information normally understood to be confidential or otherwise designated as such in writing by the Company or its subsidiaries). It is not necessary, however, that any information be formally designated as "confidential" if it falls within any of the foregoing categories and is not generally known to the public. DESIGNATED OTHER: Any consultant, advisor, contractor or agent of the Company or its subsidiaries, who is not an employee, officer or Outside Director of the Company and who is granted Options or a Restricted Stock Award pursuant to this Plan. EFFECTIVE DATE: January 1, 1991; Amended and Restated as of May 15, 1996. ERISA: Titles I and IV of the Employee Retirement Income Security Act of 1974, as amended. EXCHANGE ACT: The Securities Exchange Act of 1934, as amended. EXERCISE PRICE: The Exercise Price of shares purchasable upon exercise of an Option, as 13 determined pursuant to the terms of Section 5(a). FAIR MARKET VALUE: The fair market value of a share of Stock, as determined pursuant to the terms of Section 7. GRANT DATE: The date as of which the Committee (or such other committee of the Board of Directors of the Company as shall be empowered to grant Options or to make awards of Restricted Stock) shall grant Options or Restricted Stock, as the case may be, to a Participant under the Plan, as so designated by such Committee. IN-THE-MONEY: Options to acquire Stock are considered to be "in-the-money" if the exercise price of the Option is less than the current market price of the Stock. NEXT OPTION INCREMENT: This term shall have the meaning ascribed to it in Section 4(a)(iii). OPTION: An option, granted under the Plan, to purchase shares of Stock at the Exercise Price. Options granted under the Plan shall not be incentive stock options pursuant to Section 422 of the Code. OPTION YEAR: This term shall have the meaning ascribed to it in Section 4(a)(iii). OUT-OF-THE-MONEY: Options to acquire Stock are considered to be "out-of-the-money" if the exercise price is equal to or greater than the current market price of the Stock. OUTSIDE DIRECTOR: A director of the Company who is not either: (i) an officer or employee of the Company, or (ii) a Beneficial Owner of, or an officer or employee of any Person which is a direct or indirect Beneficial Owner of, more than 10% of the outstanding Stock. PARTICIPANT: An officer, employee, Outside Director of the Company (or a subsidiary of the Company) or Designated Other who is granted an Option or a Restricted Stock Award under the Plan by the Committee. Upon the death of a Participant, the "Participant" shall be deemed to mean the Participant's estate or legal representative. PERSON: Any individual, corporation, partnership, association, company, trust, joint venture or other organization or entity or group of associated persons or entities acting in concert. As used herein, references to the male gender shall include the female gender or the neuter, as applicable. PLAN: The Equity Team Plan herein set forth, as it may be amended from time to time. RESTRICTED PERIOD: This term shall have the meaning ascribed to it in Section 4(b)(iii). RESTRICTED STOCK: Shares of Stock granted pursuant to Section 3(b) or (c) of the Plan. RESTRICTED STOCK AWARD: The grant of Shares of Restricted Stock to a Participant pursuant to Section 3(b) or 3(c) of the Plan. RESTRICTED STOCK AWARD AGREEMENT: The agreement described in Section 3(e). 14 RESTRICTIONS: The restrictions described in Section 4(b) relating to Restricted Stock. "SHARES" or "STOCK": The Common Stock, $0.01 par value per share, of the Company, or such other class of securities as may be applicable pursuant to the provisions of Section 9. STOCK OPTION AGREEMENT: The agreement described in Section 3(e). 15 EX-10.G 6 EXHIBIT 10.g SUNBEAM BONUS PLAN ELIGIBILITY: All exempt and non-exempt employees. Note: "hourly" production workers, Operating Committee members and certain other executives are not eligible to participate. PLAN DESIGN: 1. Each fiscal year, the Operating Committee will establish a minimum level of acceptable performance, below which the Bonus Pool will be zero. Performance of the corporation will be expressed in terms of Earnings Per Share (EPS). 2. All payouts under the Plan are discretionary and any payments under the Plan must be authorized by the Operating Committee. 3. All payments will be in cash, paid during the first quarter following the end of the fiscal year. TARGET BONUS POOL: The target bonus pool will be the sum total of each participants target bonus amount. The actual earned bonus pool will be determined at fiscal year end by comparing actual financial performance to targeted performance as determined by the Corporate Business Plan. No bonuses will be paid if the Company fails to reach its minimum objectives. TARGET PAYOUTS: EXEMPT - a percentage of base earnings NON-EXEMPT - a flat dollar amount PAYOUT PARAMETERS: 1. below minimum performance standard = 0 payout 2. minimum payout threshold = 75% of target 3. maximum payout limit = 200% of target Individual Payouts 1. four (4) quantitative objectives established for each employee 2. objectives reviewed by supervisor 3. payouts will be determined by a combination of Company EPS performance and individual performance against mutually agreed upon goals & objectives 1997 SUNBEAM BONUS PLAN Self Funding Structure =============================================================================== EPS* Available % of Target Bonus - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- $1.39 or less 0% - ------------------------------------------------------------------------------- $1.40 - $1.49 75% - ------------------------------------------------------------------------------- $1.50 - $1.59 85% - ------------------------------------------------------------------------------- $1.60 - $1.69 100% - ------------------------------------------------------------------------------- $1.70 - $1.79 120% - ------------------------------------------------------------------------------- $1.80 - $1.89 140% - ------------------------------------------------------------------------------- $1.90 - $1.99 160% - ------------------------------------------------------------------------------- $2.00 - $2.09 180% - ------------------------------------------------------------------------------- $2.10 or more 200% =============================================================================== * Earnings per share (EPS): Basically, net sales minus total cost of doing business (overhead, materials, direct labor) equals operating profit. operating profit minus taxes and debt expense equals net earnings. Net earnings divided by outstanding shares of stock equals EPS. What does this mean to me? If our sales go up and/or if our expenses and debt are reduced, then earnings per share (and the value of Sunbeam stock) goes up. EXAMPLES: At the end of 1997, the EPS is $1.65. 100% of the target bonus is available for payout. If the EPS is $1.37, then our minimum threshold was not reached and therefore, there will be no bonuses. If the EPS is $2.58, then the maximum 200% of target bonus will be available for payout. Remember, once the Company performance has established the available bonus amount (e.g., 100% of target in our first example and 200% of target in our third example), your INDIVIDUAL bonus will be determined by your performance on your four (4) objectives. EX-10.Q 7 EXHIBIT 10.q FIRST AMENDMENT dated as of November 21, 1996 (this "AMENDMENT") to the Credit Agreement dated as of September 16, 1996 (the "AGREEMENT"), among SUNBEAM CORPORATION (the "Company"), the Borrowing Subsidiaries (as such term is defined therein; together with the Company, the "Borrowers"), the Lenders listed in Schedule 2.01 thereof (the "Lenders") and THE CHASE MANHATTAN BANK, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"). Capitalized terms used herein and defined in the Agreement have the meanings set forth in the Agreement. WHEREAS the Borrowers have requested and the Administrative Agent and the Lenders are willing to amend a certain provision of the Agreement as set forth herein. NOW, THEREFORE, for and in consideration of the premises and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, on the terms and subject to the conditions set forth herein, as follows: SECTION 1. AMENDMENT. Section 6.06 of the Agreement is hereby amended by deleting therefrom the reference to "$250,000,000" and replacing it with a reference to "$300,000,000". SECTION 2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to each of the Lenders and the Administrative Agent that as of the date hereof: (a) The representations and warranties set forth in Article III of the Agreement are true and correct in all material respects with the same effect as if made on the date hereof, except to the extent such representations and warranties expressly relate to an earlier date. (b) No Event of Default or Default has occurred and is continuing. SECTION 3. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective on the date that the Administrative Agent shall have received duly executed counterparts of this Amendment that, when taken together, bear the signatures of the Company and the Required Lenders. SECTION 4. AGREEMENT. Except as specifically stated herein, the provisions of the Agreement are and shall remain in full force and 2 effect. As used therein, the terms "Agreement", "herein", "hereunder", "hereinafter", "hereto", "hereof" and words of similar import shall, unless the context otherwise requires, refer to the Agreement as amended hereby. SECTION 5. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 6. COUNTERPARTS. This Amendment may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. SECTION 7. EXPENSES. The Company agrees to reimburse the Administrative Agent for its reasonable out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the date first written above. SUNBEAM CORPORATION, by /S/ EDWIN T. DERECHO ----------------------------- Name: Edwin T. Derecho Title: Vice President Treasurer THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by /S/ ELLEN GERTZOG ---------------------------- Name: Ellen Gertzog Title: Vice President 3 BANK OF AMERICA ILLINOIS, by /S/ LAURENS F. SCHAAD, JR. ------------------------------ Name: Laurens F. Schaad, Jr. Title: Vice President THE BANK OF NEW YORK, by /S/ DAVID C. SIEGEL ------------------------------ Name: David C. Siegel Title: Assistant Vice President THE BANK OF NOVA SCOTIA, by /S/ FRANK F. SANDLER ------------------------------- Name: Frank F. Sandler Title: Relationship Manager NORTHERN TRUST COMPANY, by /S/ JAMES F. T. MONHART ------------------------------- Name: James F. T. Monhart Title: Vice President PNC BANK, KENTUCKY, INC., by /S/ JIM NEIL ------------------------------ Name: Jim Neil Title: Jim Neil THE FUJI BANK LIMITED, by /S/ MASANOBU KOBAYASHI ------------------------------ Name: Masanobu Kobayashi Title: Vice President & Manager 4 CREDIT SUISSE, by /S/ JAN KOFOL ------------------------------ Name: Jan Kofol Title: Jan Kofol by /S/ KRISTINN R. KRISTINSSON ------------------------------ Name: Kristinn R. Kristinsson Title: Associate CREDIT LYONNAIS, NEW YORK BRANCH, by /S/ JACQUES-YVES MULLIEZ ------------------------------ Name: Jacques-Yves Mulliez Title: Senior Vice President NATIONSBANK, by /S/ RICHARD M. STARKE ------------------------------ Name: Richard M. Starke Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO, by /S/ ROBERT H. WOLOHAN ------------------------------ Name: Robert H. Wolohan Title: Corporate Banking Officer WACHOVIA BANK OF GEORGIA, N.A., by /S/ PATRICK A. PHELAN ------------------------------ Name: Patrick A. Phelan Title: Assistant Vice President 5 FIRST UNION NATIONAL BANK OF FLORIDA, by /S/ MARY A. MORGAN ------------------------------ Name: Mary A. Morgan Title: Vice President and Senior Portfolio Manager THE BANK OF TOKYO-MITSUBISHI TRUST LTD., by /S/ RANDY L. GLASS ------------------------------ Name: Randy L. Glass Title: Vice President SAKURA BANK, LIMITED, by /S/ HIROYASU IMANISHI ------------------------------ Name: Hiroyasu Imanishi Title: V.P. & Senior Manager EX-10.R 8 EXHIBIT 10.r SECOND AMENDMENT dated as of January 31, 1997 (this "Amendment") to the Credit Agreement dated as of September 16, 1996 (as amended, the "Credit Agreement"), among SUNBEAM CORPORATION (the "Company"), the BORROWING SUBSIDIARIES (as defined therein), the LENDERS (as defined therein), and THE CHASE MANHATTAN BANK, as Administrative Agent.) A. Pursuant to the Credit Agreement, the Lenders have agreed to extend credit to the Borrowers, in each case pursuant to the terms and subject to the conditions set forth therein. B. The Company has requested that certain provisions contained in the Credit Agreement be waived and amended as set forth herein. C. The Lenders are willing to so waive and amend the Credit Agreement pursuant to the terms and subject to the conditions set forth herein. D. Capitalized terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement. In consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto hereby agree, on the terms and subject to the conditions set forth herein, as follows: SECTION 1. WAIVER OF SECTION 6.05 OF THE CREDIT AGREEMENT. The Required Lenders hereby waive compliance with Section 6.05(b) of the Credit Agreement for the quarter ended December 29, 1996. SECTION 2. AMENDMENT TO DEFINITION OF CONSOLIDATED INTEREST COVERAGE RATIO. The Definition of "Consolidated Interest Coverage Ratio" is hereby amended and restated as follows: "CONSOLIDATED INTEREST COVERAGE RATIO" means, as of the last day of any fiscal quarter, for the four fiscal quarters then ended (or such fewer number of full quarters as have elapsed since December 30, 1996 to the date of determination), the ratio of (a) Consolidated EBIT to 2 (b) Consolidated Interest Expense, in each case for such period. SECTION 3. AMENDMENT TO SECTION 6.05(B) OF THE CREDIT AGREEMENT. Section 6.05(b) of the Credit Agreement is hereby amended and restated as follows: (b) The Consolidated Interest Coverage Ratio as of the last day of any fiscal quarter, commencing with the fiscal quarter ending on March 30, 1997, will not be less than 2.0 to 1.0. SECTION 4. ACKNOWLEDGEMENT OF INCURRENCE OF SPECIAL CHARGES. The Company acknowledges and agrees that, as of the last day of the fiscal quarter ended December 29, 1996, the Company had incurred special charges in excess of $300,000,000, and that any special charges incurred after such date shall be included in determining compliance with the covenants set forth in Article VI of the Credit Agreement. SECTION 5. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to each of the Lenders and the Agent that: (a) Before and after giving effect to this Amendment, the representations and warranties set forth in Section 3 of the Credit Agreement are true and correct in all material respects with the same effect as if made on the date hereof, except to the extent such representations and warranties expressly relate to an earlier date (specifically excluding herefrom representations and warranties required to be made only as of the date of the Credit Agreement). (b) After giving effect to this Amendment, no Event of Default or Default has occurred and is continuing. SECTION 6. CONDITION TO EFFECTIVENESS. This Amendment shall become effective as of the date when the Agent shall have received counterparts of this Amendment that, when taken together, bear the signatures of the Company and the Required Lenders. SECTION 7. CREDIT AGREEMENT. Except as specifically stated herein, the provisions of the Credit Agreement are and shall remain in full force and effect. As 3 used therein, the terms "Agreement", "herein", "hereunder", "hereinafter", "hereto", "hereof" and words of similar import shall, unless the context otherwise requires, refer to the Credit Agreement as amended hereby. SECTION 8. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 9. COUNTERPARTS. This Amendment may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. SECTION 10. EXPENSES. The Company agrees to reimburse the Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Agent. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first written above. SUNBEAM CORPORATION, by /S/ EDWIN T. DERECHO -------------------------------- Name: Edwin T. Derecho Title: Vice President and Treasurer THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by /S/ ELLEN GERTZOG -------------------------------- Name: Ellen Gertzog Title: Vice President 4 BANK OF AMERICA ILLINOIS, by /S/ LAURENS F. SCHAAD, JR. ----------------------------------- Name: Laurens F. Schaad, Jr. Title: Vice President NATIONSBANK, by /S/ RICHARD M. STARKE ----------------------------------- Name: Richard M. Starke Title: Vice President THE BANK OF NEW YORK, by /S/ DAVID C. SIEGEL ----------------------------------- Name: David C. Siegel Title: Assistant Vice President THE BANK OF NOVA SCOTIA, by /S/ FRANK F. SANDLER ----------------------------------- Name: Frank F. Sandler Title: Relationship Manager CREDIT LYONNAIS, NEW YORK BRANCH, by /S/ ALAIN PAPIASSE ----------------------------------- Name: Alain Papiasse Title: Executive Vice President 5 THE FIRST NATIONAL BANK OF CHICAGO, by /S/ ROBERT H. WOLOHAN -------------------------- Name: Robert H. Wolohan Title: Corporate Banking Officer FIRST UNION NATIONAL BANK OF FLORIDA, by /S/ MARY A. MORGAN ----------------------------------- Name: Mary A. Morgan Title: Vice President and Senior Portfolio Manager NORTHERN TRUST COMPANY, by /S/ JOHN J. CONWAY ----------------------------------- Name: John J. Conway Title: Vice President WACHOVIA BANK OF GEORGIA, N.A., by /S/ PATRICK A. PHELAN ----------------------------------- Name: Patrick A. Phelan Title: Assistant Vice President THE BANK OF TOKYO-MITSUBISHI TRUST LTD., by /S/ RANDY L. GLASS ----------------------------------- Name: Randy L. Glass Title: Vice President 6 CREDIT SUISSE, by /S/ C. ELDIN ----------------------------------- Name: C. Eldin Title: Director by /S/ T. MUOIO ----------------------------------- Name: T. Muoio Title: Associate THE FUJI BANK LIMITED, by /S/ MASANOBU KOBAYASHI ----------------------------------- Name: Masanobu Kobayashi Title: Vice President and Manager PNC BANK, KENTUCKY, INC., by /S/ JAMES D. NEIL ----------------------------------- Name: James D. Neil Title: Vice President SAKURA BANK, LIMITED, by /S/ HIROYASU IMANISHI ------------------------------------ Name: Hiroyasu Imanishi Title: Vice President and Senior Manager THE YASUDA TRUST AND BANKING COMPANY, LIMITED, NEW YORK BRANCH, by /S/ MORIKAZU KIMURA ----------------------------------- Name: Morikazu Kimura Title: Chief Representative EX-10.CC 9 EXHIBIT 10.cc AGREEMENT, RELEASE, COVENANT NOT TO SUE AND CONFIDENTIALITY AGREEMENT The undersigned employee ("Employee") of Sunbeam Corporation (the "Company") has been advised that Employee's employment is being terminated, as of March 15, 1997. For the sole consideration of (i) twelve (12) months continuation of base salary, less required deductions (the "Severance Payment"), payable in a lump sum, and (ii) the continuation of the Company's current level of contribution to medical and dental insurance coverages for a period of twelve (12) months (provided Employee elects to continue coverage under the provisions of COBRA and continues to make the Employee's required contribution towards the cost of such coverages) [(i) and (ii) herein are collectively the "Benefits"], Employee (including all successors and assigns) hereby: RELEASES, FOREVER DISCHARGES and COVENANTS NOT TO SUE the Company and any affiliated company, their predecessors, past and present officers, directors, shareholders, agents, employees, attorneys, successors and assigns (individually and collectively "SUNBEAM"), of and from (and does hereby WAIVE), any and all rights, contracts, claims (including claims sounding in tort), damages, attorney fees, causes of action, rights to future employment or reinstatement and suits (collectively "Claims") (whether or not presently known, suspected or claimed), relating to, directly or indirectly, Employee's hiring, employment with or separation from employment by SUNBEAM, under any federal, state or local law, ordinance, regulation or rule, or under any court decree. Employee also WAIVES ANY AND ALL RIGHTS under the laws of any jurisdictions in the United States that would limit the foregoing Release, Waiver and Covenant. Employee is releasing SUNBEAM from any and all Claims for pain and suffering, emotional distress, compensatory and punitive damages, attorney fees and for employment discrimination based on age (including claims under the federal Age Discrimination in Employment Act ("ADEA") and any comparable state or local laws), sex, national origin, race or color, mental or physical handicap or disability, sexual orientation or religious belief. Employee agrees that SUNBEAM, by offering the Severance Payment and this Agreement, does not hereby admit that it violated any of Employee's rights in any way. THIS RELEASE BY EMPLOYEE DOES NOT SERVE TO RELEASE OR WAIVE ANY RIGHTS OF EMPLOYEE TO INDEMNIFICATION AS A FORMER OFFICER OF SUNBEAM, AND ALL OF SUCH RIGHTS TO INDEMNIFICATION SHALL CONTINUE IN FORCE AND EFFECT. EMPLOYEE ALSO UNDERSTANDS AND AGREES: 1) THIS IS OUR ENTIRE AGREEMENT, AND I HAVE UP TO 45 DAYS TO REVIEW AND CONSIDER IT. I HAVE BEEN TOLD TO CONSULT A LAWYER BEFORE SIGNING THIS AGREEMENT. I ENTER INTO THIS AGREEMENT FREELY AND VOLUNTARILY; 2) I HAVE 7 DAYS FOLLOWING SIGNING THIS AGREEMENT TO REVOKE OR CANCEL IT (BUT ONLY WITH RESPECT TO CLAIMS UNDER ADEA); 3) THIS AGREEMENT DOES NOT RELEASE OR WAIVE ANY RIGHTS OR CLAIMS THAT MAY ARISE AFTER THIS DOCUMENT IS SIGNED BY ME; 4) THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL AFTER THE 7 DAY PERIOD DURING WHICH I CAN REVOKE OR CANCEL IT; AND 5) I AM SUBJECT TO THE CONFIDENTIALITY AND NON-DUPLICATION OF BENEFITS PROVISIONS SET FORTH BELOW AS A FURTHER CONDITION TO THE RECEIPT OF BENEFITS UNDER THIS AGREEMENT. SUBJECT TO FURTHER TERMS ON THE SECOND PAGE OF THIS DOCUMENT (ADDITIONAL TERMS) 1. CONFIDENTIALITY - As a participant in the SUNBEAM CORPORATION EQUITY TEAM PLAN (Option Plan), the confidentiality and non-competition provisions of that Plan are incorporated by reference herein, and I acknowledge my obligation to abide by the terms thereof. If I am a party to any other specific undertaking of confidentiality and/or non-competition in connection with my employment by SUNBEAM, I hereby acknowledge my obligation to abide by the terms thereof and agree that such agreement or undertaking is not superseded in any manner by this Agreement. In all events, whether I am a party to any such other agreement or not, I hereby agree as follows: That from and after the date hereof, I shall treat as confidential all "Confidential Information" in my possession or to which I have been provided access during my employment by SUNBEAM. I will not reveal or disclose any such Confidential Information to any party without the prior written consent of SUNBEAM, except as required by law. If I am required by legal process, subpoena or otherwise legally required to disclose any Confidential Information, I will immediately contact SUNBEAM and advise it of such requirement and will cooperate with SUNBEAM in protecting its Confidential Information. I understand that a breach of this Confidentiality Agreement shall be grounds for forfeiting any Benefits provided by this Agreement or any other benefit which SUNBEAM may provide to me. As used herein, the term CONFIDENTIAL INFORMATION means: any information about SUNBEAM, its products or business, which is not generally known to the public, including without limitation any customer lists, supplier lists, trade secrets, inventions, formulas, methods or processes, whether or not patented or patentable, channels of distribution, business plans, pricing policies and records, financial information of any sort and inventory records of SUNBEAM or any affiliate (and such other information normally understood to be confidential or otherwise designated as such in writing by SUNBEAM). It is not necessary, however, that any information be formally designated as "confidential" if it falls within any of the foregoing categories and is not generally known to the public, in order to be covered by this Confidentiality Agreement. 2. NON-DUPLICATION OF BENEFITS - The amount of Severance Payment hereunder shall be reduced on a dollar for dollar basis by any disability, severance, separation or termination pay benefits that the Company pays or is required to pay to Employee through insurance or otherwise under any plan or contract or under any federal or state law, or by any amount Employee owes the Company; provided, however, that the Severance Payment shall never be less than two (2) weeks' base salary, and such amount is acknowledged to be full and adequate consideration for this Agreement. EMPLOYEE SUNBEAM CORPORATION /s/ James Wilson /s/ David C. Fannin - ---------------------- ------------------------------ Name: James D. Wilson Title:Executive Vice President Date: March 17, 1997 Name:David C. Fannin Date: March 19, 1997 WITNESSED AS TO EMPLOYEE BY: /s Karl Schinn - --------------------------------- By: Karl Schinn Date: March 17, 1997 EX-11 10 EXHIBIT 11. SUNBEAM CORPORATION AND SUBSIDIARIES CALCULATION OF EARNINGS (LOSS) PER SHARE OF COMMON STOCK (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FISCAL YEARS ENDED ----------------------------------------------- JANUARY 1 DECEMBER 31, DECEMBER 29, 1995 1995 1996 ------------ --------------- -------------- Net earnings (loss) applicable to common shareholders ...... $107,011 $50,511 $ (228,262) ========= ======== ========== Weighted average number of common shares outstanding ...... 79,180 81,626 82,925 Add: Common shares issuable for exercise of warrants and options, net of shares assumed to have been acquired with proceeds therefrom .................................... 3,373 1,193 - --------- -------- ---------- Number of shares applicable to earnings per share calculation ................................................ 82,553 82,819 82,925 ========= ======== ========== Earnings (loss) per share of Common Stock .................. $ 1.30 $ .61 $ (2.75) ========= ======== ==========
EX-21 11 EXHIBIT 21. SUNBEAM CORPORATION AND SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT
JURISDICTION OF COMPANY NAME INCORPORATION DOING BUSINESS AS - ------------ ---------------- ------------------ Sunbeam Americas Holdings, Ltd. ...... Delaware - Goose Holdings, Inc. .................. Delaware - Sunbeam Products, Inc. ............... Delaware Sunbeam Consumer Products Worldwide OP II, Inc. ........................... Florida - Duck Holdings, Inc. .................. Delaware -
EX-23 12 EXHIBIT 23. CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS As independent certified public accountants, we hereby consent to the incorporation of our report included in this Form 10-K, into the Company's previously filed Registration Statement File Nos. 33-61610, 33-87950 and 333-21413. ARTHUR ANDERSEN LLP Fort Lauderdale, Florida, March 27, 1997 EX-27 13
5 1,000 12-MOS DEC-29-1996 JAN-01-1996 DEC-29-1996 11,526 0 229,455 16,017 162,252 624,163 356,342 136,254 1,072,709 271,583 201,115 0 0 884 394,368 1,072,709 984,236 984,236 900,573 900,573 0 0 13,588 (302,561) (105,890) (196,671) (31,591) 0 0 (228,262) (2.75) (2.75)
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