INDEMNITY AGREEMENT, dated as of May 20,
1997, between COLEMAN ESCROW CORP. (the "Company")
and BEAR, STEARNS & CO. INC. ("Bear Stearns").
WHEREAS, Bear Stearns has been requested by the Company to
provide a certificate dated the date hereof (the "Certificate") to First Trust
National Association, as trustee (the "Trustee"), under the Indenture dated as
of May 20, 1997, between the Company and the Trustee relating to the Company's
Senior Secured First Priority Discount Notes due 2001 and Senior Secured Second
Priority Notes due 2001 (collectively, the "Notes");
WHEREAS, the Certificate, which is being supplied to the
Trustee in compliance with Section 314(d) of the Trust Indenture Act of 1939, as
amended, sets forth a fair value of shares of capital stock of Coleman Holdings
Inc. and The Coleman Company, Inc. being pledged on the date hereof to the
Trustee as security for the Notes;
WHEREAS, in order to induce Bear Stearns to provide the
Certificate, the Company has agreed to grant the indemnities herein provided.
NOW, THEREFORE, in consideration of the premises and for good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Indemnification. The Company agrees to indemnify Bear
Stearns and its affiliates and their respective directors, officers, employees,
agents and controlling persons (Bear Stearns and each such person being an
"Indemnified Party") from and against any and all loses, claims, damages and
liabilities, joint or several, to which such Indemnified Party may become
subject under any applicable federal or state law, or otherwise, arising out of
the delivery of the Certificate by Bear Stearns to the Trustee and will
reimburse any Indemnified Party for all expenses (including reasonable counsel
fees and expenses) reasonably incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim or any action or
proceeding arising therefrom, whether or not such Indemnified Party is a party
and whether or not such claim, action or proceeding is initiated by or on behalf
of the
Company. The Company will not be liable under the foregoing indemnification
provision to the extent that any loss, claim, damage, liability or expense is
found in a final judgment by a court to have resulted from Bear Stearns' bad
faith or gross negligence. The Company also agrees that no Indemnified Party
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company or its security holders or creditors related to or
arising out of the delivery of the Certificate, except to the extent that any
loss, claim, damage or liability is found in a final judgment by a court to have
resulted from Bear Stearns' bad faith or gross negligence.
If the Indemnification of an Indemnified Party provided for in
this letter agreement is for any reason held unenforceable, the Company agrees
to contribute to the losses, claims, damages and liabilities for which such
indemnification is held unenforceable in such proportion as is appropriate to
reflect the relative fault of the Company, on the one hand, and Bear Stearns, on
the other hand, as well as any other relevant equitable considerations. In no
event, shall an Indemnified Party be obligated to contribute any amount
hereunder that exceeds the amount of fees previously received by Bear Stearns
pursuant to the Purchase Agreement.
Each Indemnified Party shall give notice as promptly as
reasonably practical to the Company of any suit commenced against it in respect
of which indemnity may be sought hereunder, but failure to so notify the Company
shall not relieve the Company from any liability which it may have otherwise
than on account of this indemnity agreement. The Company may participate at its
own expense in the defense of any such action. In no event shall the Company be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all Indemnified Parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
The Company agrees that, without Bear Stearns' prior written
consent, it will not settle, compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding in respect of
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which indemnification could be sought under this Indemnity Agreement (whether or
not Bear Stearns or any other Indemnified Party is an actual or potential party
to such claim, action or proceeding), unless such settlement, compromise or
consent includes an unconditional release of each Indemnified Party from all
liability arising out of such claim, action or proceeding. The Company shall not
be liable for any settlement effected without its written consent of any claim
or action.
In the event that an Indemnified Party is requested or
required to appear as a witness in any action brought by or on behalf of or
against the Company in which such Indemnified Party is not named as a defendant,
the Company agrees to reimburse Bear Stearns for all out-of-pocket expenses
incurred by it in connection with such Indemnified Party's appearing and
preparing to appear as such a witness, including, without limitation, the
reasonable fees and disbursements of its legal counsel, and to compensate Bear
Stearns in an amount to be mutually agreed upon.
2. Governing Law. This agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State.
3. Waivers, Amendment, etc. No waiver, amendment or other
modification of this letter agreement shall be effective unless in writing and
signed by each party to be bound thereby.
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IN WITNESS WHEREOF, each of the Company and Bear Stearns, by
their respective officers thereunto duly authorized, has executed and delivered
this Agreement as of the date first written above.
COLEMAN ESCROW CORP.,
by
/s/ Glenn P. Dickes
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Name: Glenn P. Dickes
Title: Vice President and Secretary
BEAR, STEARNS & CO. INC.,
by
/s/ Robert Bicknese
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Name: Robert Bicknese
Title: Senior Managing Director