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Exhibit to Coleman 10-K
Exhibit # 10.81

                                                             EXECUTION COPY


                            THE COLEMAN COMPANY, INC.



February 28, 1997


Mr. Michael N. Hammes
2720 Castle Glen Court
Castle Rock, Colorado  80104


Dear Mr. Hammes:

      This letter is intended to fully settle all of our differences arising
out of or relating to your employment with The Coleman Company, Inc. ("Coleman")
and the "Company" (as hereinafter defined) and your separation from such
employment.

      You will continue to serve the Company until your "Severance Date,"
which means February 28, 1997.  On your Severance Date you will, by our mutual
agreement and consent, cease to be an employee and director of the Company.
Certain amounts will become payable to or in respect of you, and you will be
entitled to certain rights and benefits, on account of your separation from the
Company's employ, as described below.

      The term "Severance Period" as used in this Agreement means the period
from the Severance Date through February 28, 1999, or if earlier, the end of the
month in which your death occurs.

      1.   SALARY, SEVERANCE, UNEMPLOYMENT COMPENSATION:

           (a)     Through the Severance Date, you will be paid a monthly
                   salary at your current annual rate of $700,000 and you will
                   be entitled to continue to participate in all retirement,
                   health and other fringe benefit plans in which you currently
                   participate on a basis equivalent to Company executives of
                   similar stature.

           (b)     During the Severance Period, Coleman will make severance
                   payments to you at the rate of $700,000 per year, payable
                   monthly in arrears, beginning March, 1997 and ending with
                   the payment for the last month of the Severance Period.
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                                                                            2

           (c)     If you apply for, and are awarded, unemployment compensation
                   benefits during the Severance Period, your compensation
                   specified in Section 1(b) will be reduced by the amount of
                   unemployment compensation you receive.  The decision to
                   apply for state unemployment compensation is your own.

      2.   SPECIAL PAYMENTS:

           (a)     Coleman will pay you $450,000 eight days after the execution
                   of this Agreement, and an additional $450,000 on the last
                   day of the Severance Period, subject to applicable
                   withholding, provided that you have not exercised your right
                   to revoke the ADEA Release (as defined herein) as provided
                   in Section 16(b).  It is understood that any payment made
                   under this Section 2(a) shall be a special inducement to you
                   not to revoke such release.

           (b)     Coleman will transfer to you title, free and clear of all
                   liens and encumbrances, to the Porsche Carrera which is
                   currently in your possession as soon as practicable after
                   the execution of this Agreement.  After the Severance Date
                   you will be responsible for all future payments and expenses
                   incurred in connection with such automobile, including
                   insurance.

           (c)     Coleman agrees to assign to you its rights and obligations
                   under the Lease, effective January 1, 1995, between Coleman
                   and William N. Johnson, as amended, and you agree to accept
                   such assignment.  You acknowledge that you will be
                   responsible for all future payments, expenses and
                   liabilities in connection therewith from and after the
                   Severance Date, including but not limited to the annual
                   rental payments due and payable after the Severance Date.

           (d)     After the Severance Date, you agree to be responsible for
                   payment of any future dues and membership fees with respect
                   to any clubs of which you are a member, including but not
                   limited to Maroon Creek Club, Castle Pines, Stillroven Farms
                   and Wichita Country Club.  Coleman will use its best efforts
                   to transfer, as soon as practicable and at your expense, any
                   corporate club membership to an individual membership in
                   your name.

           (e)     Eight days after execution of this Agreement, Coleman shall
                   pay to Butzel Long P.C. the sum of $25,000 in
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                                                                            3

                   partial reimbursement of your legal fees incurred in the
                   negotiation and preparation of this Agreement provided that
                   you have not exercised your right to revoke the ADEA Release
                   (as defined herein) as provided in Section 16(b).  It is
                   understood that any payment made under this Section 2(e)
                   shall be a special inducement to you not to revoke such
                   release.

      3.   PENSION BENEFITS:

           (a)     THE NEW COLEMAN COMPANY, INC. RETIREMENT PLAN FOR SALARIED
                   EMPLOYEES (THE "PENSION PLAN")/THE COLEMAN TAX-QUALIFIED
                   401(K) PLAN (THE "401(K) PLAN") (COLLECTIVELY, THE
                   "QUALIFIED PLANS").

                   You will continue to accrue service credit as an active
                   employee through the Severance Date for all applicable
                   purposes under the Qualified Plans and you will continue to
                   be eligible to make contributions and have contributions
                   made on your behalf as an active employee pursuant to the
                   terms of the Qualified Plans.

                   After the Severance Date you will no longer be an employee
                   of the Company and you will no longer accrue service credit
                   or have contributions made on your behalf under the
                   Qualified Plans.  You will be entitled to all benefits
                   accrued, to the extent vested, under the Qualified Plans in
                   accordance with the terms of the Qualified Plans.

           (b)  OTHER RETIREMENT PLANS.

                   You are a participant in certain "nonqualified" retirement
                   plans including, but not necessarily limited to, the New
                   Coleman Holdings, Inc. Excess Benefit Plan and the Coleman
                   Company, Inc. Consolidated Supplemental Retirement Plan (the
                   "Nonqualified Plans").  In lieu of any benefits to which
                   you, your spouse or beneficiary may be entitled under the
                   Nonqualified Plans, Coleman agrees to pay you a pension of
                   $14,583.33 per month, beginning on March 1, 1999 and ending
                   with the payment for the month in which your death occurs.
                   Alternatively, you may elect in a separate notice to Coleman
                   in accordance with the notice provisions set forth herein,
                   on or before December 31, 1998, to receive this benefit in
                   the form of an actuarially equivalent 100% joint and
                   survivor annuity rather than as a lifetime annuity.  If you
                   elect the 100% joint and survivor annuity:  (a) your
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                   monthly benefit will be $12,565 and after your death, if your
                   current wife survives you, she will be paid a pension
                   beginning in the month following your death for the rest of
                   her life in a monthly amount equal to 100% of the monthly
                   amount you were receiving prior to your death; and (b) if
                   your spouse dies after March 1, 1999, no adjustment shall be
                   made to the amount of pension you were receiving.  If (x)
                   you die before March 1, 1999, (y) your current wife survives
                   you, and (z) she was still married to you immediately before
                   your death, in lieu of the foregoing, Coleman will pay her a
                   pension of $87,500 per annum, to be paid in equal monthly
                   amounts beginning on the first of the month after the month
                   of your death and ending with the payment for the month
                   which includes her death.  Whether you elect to receive
                   payments in the form of a life annuity or a 100% joint and
                   survivor annuity shall be your decision and shall not
                   require notice to, or the consent of, any other person
                   (including your spouse).

      4.   VACATION:

      As soon as practicable after your Severance Date, you will be paid for
any unused accrued vacation in accordance with the Company's regular policies.

      5.   MEDICAL AND WELFARE BENEFITS:

           (a)     Through the last day of the Severance Period, you will
                   continue to be eligible to participate in Coleman's medical
                   program available to Coleman's senior-most executives.  You
                   and the Company acknowledge that, after the end of the
                   Severance Period you will be eligible to participate in
                   Coleman's "Basic" Retiree Medical Program (available to
                   employees who retire at or after age 55 with one year of
                   service) until you reach age 65, at which time you will be
                   eligible to participate in Coleman's Retiree Medical Program
                   applicable to employees after age 65.  You acknowledge that
                   you will not at any time be eligible to participate in
                   Coleman's "Special" Retiree Medical Program (available to
                   employees who retire at or after age 55 with ten years of
                   service).  Notwithstanding the foregoing, or any other
                   provision of this Agreement, Coleman shall not be required
                   to continue to provide any of its Retiree Medical Programs,
                   at their current rate of benefits or otherwise; you
                   acknowledge that you shall be entitled only to such
                   coverage, if any, as is provided to similarly situated
                   retired employees from time to time.
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                                                                            5

                   Through the Severance Date, you will continue to be eligible
                   to participate in the Company's other welfare programs
                   (including group life insurance) available to Coleman's
                   senior-most executives.

                   If you engage in regular employment after the Severance Date
                   (whether as an executive or as a self-employed person), any
                   employee welfare benefits received by you or your spouse in
                   consideration of such employment which are similar in nature
                   to the employee welfare benefits provided by Coleman will
                   relieve Coleman of its obligation under this Section 5 to
                   provide comparable medical or other welfare benefits to the
                   extent of the benefits so received.  You will promptly
                   notify Coleman of your receipt of any such benefits.

           (b)     After the Severance Date, neither you nor your spouse will
                   be eligible to participate in any Company medical or welfare
                   plans except as provided above, and such coverage shall be
                   in lieu of coverage otherwise available to either you or
                   your spouse under the Consolidated Omnibus Budget
                   Reconciliation Act of 1985 ("COBRA") or any other applicable
                   continuation of coverage laws.  The benefits provided by
                   this Section 5 shall be contingent on the execution by you
                   and your spouse of such acknowledgments of the foregoing,
                   including any waivers of your and your spouse's rights under
                   COBRA, as the Company may reasonably request, including a
                   waiver in the form of Attachment B.

      6.   DISABILITY, AD&D AND LIFE INSURANCE COVERAGE:

      Short-term disability, long-term disability and Accidental Death and
Dismemberment coverage ("AD&D"), will be provided by Coleman as currently in
effect and will end on the Severance Date, except with respect to the so-called
GRIP life insurance policy provided to you, for which no additional premiums
shall be paid by Coleman after the Severance Date but with respect to which you
may continue to maintain.  You will not be required to reimburse Coleman for any
premiums heretofore paid by Coleman with respect to such policy.  You
acknowledge that you are the owner of such policy with a current coverage amount
of $3,100,000 and that the coverage amount of such policy will be reduced to
$2,700,000 unless you take and satisfactorily pass a physical examination in
accordance with the requirements of such policy.  You may determine to keep or
to cancel such policy, in your discretion.
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      7.   STOCK OPTIONS:

      With respect to the options to purchase shares of Coleman ("Stock
Options") previously granted to you: the Stock Options granted to you in
December 1996 shall expire immediately on the Severance Date, one half of the
Stock Options granted to you in December 1994 shall be immediately exercisable
on the Severance Date and one half of the Stock Options granted to you in
December 1994 shall expire immediately on the Severance Date and all of the
Stock Options granted to you in 1993 and 1995 shall be immediately 100%
exercisable on the Severance Date.  All Stock Options that have not expired on
the Severance Date in accordance with the preceding sentence shall expire 90
days after the Severance Date or, if earlier, the otherwise scheduled expiration
date of such Stock Options.

      Notwithstanding anything to the contrary in the agreements governing
the Stock Options, you agree that: if you wish to exercise a Stock Option, you
will provide Coleman with written advance notice (in the manner described in
Section 23 of this Agreement) stating your intention and identifying an option
exercise date at least seven days after the date that such advance notice is
received by Coleman; within three days after the receipt by Coleman of any such
advance notice, Coleman may in its sole discretion determine to pay you cash in
lieu of allowing you to exercise some or all of the Stock Options with respect
to which you have provided such advance notice of intention to exercise; if
Coleman determines to exercise its rights under this Section 7, Coleman shall
provide to you, within such three day period, a written notice identifying the
Stock Options as to which Coleman has determined to so exercise its rights and
the number of shares under each such Stock Option as to which Coleman has so
determined to exercise its rights; any such cash payment shall be paid to you
within five days after the option exercise date set forth in your advance
notice; and the amount of such cash payment shall (on an option-by-option basis)
equal (i) the number of shares to which you would otherwise would have become
entitled (the "Shares") on exercise of the Stock Option in respect of which
Coleman has determined to exercise its rights under this Section 7, multiplied
by (ii) the closing price of a Share on the New York Stock Exchange on the date
on which you would have exercised your Stock Option (but for Coleman's exercise
of its rights under this Section 7) minus the per share exercise price of such
Stock Option.

      8.   OFFSET:

      If there shall ever be any amount due to the Company on account of
claims which are not covered by the release provided herein, the Company shall
be entitled to offset against any amount payable to or in respect of you
hereunder, any sums owed by you to the Company; provided that any such offset
shall be made only at the direction of an arbitrator conducting an arbitration
pursuant to Section 27 of this Agreement.
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      9.   WAIVER, MUTUAL RELEASE, ETC.:

           (a)     You release and discharge the Company from any and all
                   charges, claims and causes of action of any kind, whether
                   known or unknown and whenever arising, including, but not
                   limited to, all claims arising at any time, directly or
                   indirectly, out of your employment or the termination of
                   your employment with the Company, PROVIDED, HOWEVER, that
                   you do not waive, and such released claims shall not
                   include, any of your rights to receive payments and benefits
                   under this Agreement or otherwise enforce this Agreement.

           (b)     You realize there are many laws and regulations prohibiting
                   employment discrimination pursuant to which you may have
                   rights or claims.  These include, without limitation, the
                   Age Discrimination in Employment Act of 1967, as amended;
                   the National Labor Relations Act, as amended; the Civil
                   Rights Act of 1991; 42 U.S.C. 1981, as amended; the
                   Americans With Disabilities Act of 1990; Title VII of the
                   Civil Rights Act of 1964, as amended; the Employee
                   Retirement Income Security Act of 1974, as amended; and
                   various other federal, state and local human rights laws.
                   You also understand there may be other statutes and laws of
                   contract and tort, otherwise relating to your employment.
                   By signing this Agreement you acknowledge that you intend to
                   waive and release any rights known or unknown you may have
                   under these laws, as provided in paragraph 9(a) (subject to
                   your limited rights under Section 16(b)).

           (c)     You have not filed, nor will you initiate or cause to be
                   initiated on your behalf, any complaint, charge, claim or
                   proceeding against the Company before any local, state or
                   federal agency, court or other body relating to your
                   employment or the resignation thereof (each individually a
                   "Proceeding"), nor will you participate in any Proceeding,
                   in each case, except as required by law.  You represent that
                   you are not aware of any basis on which such a Proceeding
                   could reasonably be instituted. You waive any right you may
                   have to benefit in any manner from any relief (whether
                   monetary or otherwise) arising out of any Proceeding,
                   including any Proceeding conducted by the Equal Employment
                   Opportunity Commission ("EEOC").  You understand that by
                   entering into this Agreement, you will be limiting the
                   availability of certain remedies that
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                                                                           8


                   you may have against the Company and limiting also your
                   ability to pursue certain claims against the Company.

           (d)     The Company forever releases you, your family, your estate,
                   your agents, successors and assigns from any and all claims,
                   demands, causes of action, controversies, agreements,
                   promises and remedies, in connection with or in relationship
                   to your capacity as an employee or officer or director of
                   the Company, whenever arising, whether known or unknown,
                   PROVIDED, HOWEVER, that the Company does not release any of
                   its rights arising under  this Agreement.

           (e)     As referred to in this Agreement, the Company includes any
                   or all of Coleman, its subsidiaries and other affiliates,
                   divisions, respective successors and assigns, the directors,
                   officers, representatives, shareholders, agents, employees
                   of any of them and, in the case of individuals, their
                   respective heirs and personal representatives.  References
                   in this Agreement to a person's employment include not only
                   common law employment but also service as a director or
                   other service as an independent contractor.

      10.  COOPERATION; NO RE-EMPLOYMENT:

           (a)     In consideration of the payments to be made under Section
                   1(b) and the other provisions of this Agreement, during the
                   Severance Period you agree to make reasonable efforts to
                   cooperate with the Company, if requested by Coleman, in the
                   handling or investigation of any administrative charges,
                   government inquiries or lawsuits involving the Company that
                   relate to matters that arose while you were an employee or
                   director of the Company and to consult with the Company and
                   its advisors, as reasonably requested, on business inquiries
                   related to any such matters.  The Company will reimburse you
                   for any reasonable out-of-pocket expenses you incur by
                   reason of such cooperation.

           (b)     You agree that you will not, at any time, reapply for
                   employment with the Company in any capacity.  You expressly
                   waive any right or claim you may have for employment or
                   reemployment with the Company.  You covenant that you will
                   not bring any suit or claim against the Company should you
                   seek to obtain employment with the Company in the future and
                   are denied such employment and you agree that this release
                   shall be a
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                                                                            9


                   complete bar to your entitlement to any legal, equitable,
                   or administrative relief based upon any such denial of
                   employment.


      11.  DOCUMENTS, NON-SOLICITATION AND CONFIDENTIALITY:

           (a)     Promptly following the Severance Date, you agree to return
                   to the Company all originals and copies of papers, notes,
                   and documents (in any medium, including computer disks),
                   whether Company property or not, prepared, received or
                   obtained by you or your counsel during the course of your
                   employment with the Company, and all equipment and property
                   of the Company which may be in your possession or under your
                   control, whether or not relating to the claims released
                   hereby, including all such papers, work papers, notes,
                   documents and equipment in the possession of your family and
                   counsel.  You agree that you, your family and counsel shall
                   not retain copies of any such papers, work papers, notes and
                   documents.  Notwithstanding the foregoing, you may keep
                   copies of any employment or benefits agreements between you
                   and the Company, this Agreement, any publicly filed
                   materials and any employee benefit plan and stock option
                   plan materials distributed generally to participants in any
                   such plan by the Company.

           (b)     You also agree that during the Severance Period you will not
                   solicit, entice or encourage any employee or officer of the
                   Company, or any independent contractor, to terminate his or
                   her relationship with the Company or to initiate or to
                   threaten to initiate any legal process against the Company,
                   and you shall not approach any such person for such purposes
                   or authorize or knowingly approve the taking of such actions
                   by any third party.

           (c)     As a senior executive of the Company, you acknowledge that
                   you have had access to proprietary information of the
                   Company and confidential information regarding the Company,
                   its personnel policies and its personnel.  You agree that
                   you and your spouse will hold, and that you will use your
                   best efforts to cause your family and counsel to hold, all
                   such information in a fiduciary capacity for the benefit of
                   the Company and you will not disclose to any third party or
                   use for your or their benefit or that of any third party,
                   any such information except to the extent
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                                                                            10

                   required by law or agreed to by the Company.  Without
                   limiting the foregoing, you agree that you will not at
                   any time divulge to any other entity or person any
                   confidential information acquired by you concerning the
                   Company's financial affairs or business processes or
                   methods or their research, development or marketing
                   programs or plans, any other of its or their trade
                   secrets, any information regarding customers or customer
                   lists, any information regarding personal matters of any
                   shareholders, directors, officers, employees or agents of
                   the Company or their respective family members, any
                   information concerning this Agreement or the terms
                   thereof, or any information concerning the circumstances
                   of your employment with and the termination of your
                   employment from the Company, or any information regarding
                   discussions related to any of the foregoing or make,
                   write, publish, produce or in any way participate in
                   placing into the public domain any statement, opinion or
                   information with respect to any of the foregoing or which
                   reflects adversely upon or would reasonably impair the
                   reputation or best interests of the Company or any of its
                   shareholders, directors, officers, employees or agents or
                   their respective family members, except in each case
                   information which is required to be disclosed by court
                   order, subpoena or other judicial or governmental
                   administrative process.  The foregoing prohibitions shall
                   include, without limitation, directly or indirectly
                   publishing (or causing, participating in, assisting or
                   providing any statement, opinion or information in
                   connection with the publication of) any diary, memoir,
                   letter, story, photograph, interview, article, essay,
                   account or description (whether fictionalized or not)
                   concerning any of the foregoing, publication being deemed
                   to include any presentation or reproduction of any
                   written, verbal or visual material in any communication
                   medium, including any book, magazine, newspaper,
                   theatrical production or movie, or television or radio
                   programming or commercial.  In addition to any and all
                   other remedies available to the Company for any violation
                   of this Section 11(c), you agree to immediately remit and
                   disgorge to the Company any and all payments paid or
                   payable to you in connection with or as a result of
                   engaging in any of the above acts.  In the event that you
                   are required to make disclosure under any court order,
                   subpoena or other judicial or governmental administrative
                   process, you will promptly notify the Company, take all
                   reasonable steps (at the Company's expense) requested by
                   the Company to defend
<PAGE>

                                                                           11


                   against the compulsory disclosure and permit the Company to
                   participate with counsel of its choice and at its expense in
                   any proceeding relating to the compulsory disclosure.  You
                   acknowledge that all information the disclosure of which is
                   prohibited by this Section is of a confidential and
                   proprietary character and of great value to the Company.

           (d)     Nothing in this Agreement is intended to prevent you from
                   (x) using on your behalf your general knowledge or
                   experience in any area of professional activity, whether or
                   not involving your service with the Company; (y) referring
                   to your performance of services for the Company as
                   descriptive of your abilities and qualifications for
                   employment or engagement by any other person; or (z)
                   disclosing (on a confidential basis) information concerning
                   the financial terms of this Agreement to your legal or tax
                   advisors, or members of your immediate family.

           (e)     Coleman agrees that it will not, and it will use reasonable
                   efforts to cause the senior executive officers and directors
                   of Coleman and New Coleman Holdings, Inc. to not, at any
                   time denigrate you, in connection with your employment or
                   otherwise, through adverse or disparaging communication,
                   written or oral, whether true or not, including without
                   limitation, the expression of personal views, opinions or
                   judgments.  The preceding sentence shall not apply to any
                   communication or disclosure which is required to be made by
                   court order, subpoena or other judicial or governmental
                   administrative process.

      12.  INVENTIONS; NONCOMPETITION:

           (a)     All inventions, whether or not patentable, conceived or
                   developed by you, alone or with others, during your
                   employment by the Company are the property of the Company
                   and have been or will be promptly and fully disclosed by you
                   to the Company.  You will perform all necessary acts to vest
                   title fully to any such invention in the Company and to
                   enable the Company, at its expense, to secure and maintain
                   domestic and/or foreign patents or any other rights for such
                   inventions.

           (b)     For a period of six months following the Severance Date, you
                   will not serve as officer, director or employee or be
                   associated in any other capacity with any corporation,
<PAGE>

                                                                           12

                   partnership or other entity or person which is a competitor
                   of the Company, its subsidiaries, or affiliated corporations
                   or entities.  During such period you will have no financial
                   interest in any corporation, partnership or other entity
                   which is a competitor of the Company, its subsidiaries, or
                   affiliated corporations or entities, except participation
                   solely as a stockholder owning not more than 5% of the
                   outstanding shares of a publicly owned business.

      13.  REMEDIES:

           (a)     You agree that disgorgement is not a complete or adequate
                   remedy at law and the Company will be entitled, in addition
                   to any other right and remedy it may have at law or in
                   equity related to breaches of this Agreement, including,
                   without limitation, disgorgement, to an injunction, without
                   the posting of any bond or other security, enjoining or
                   restraining you from any violation or threatened violation
                   thereof.

           (b)     Without denigrating the importance or materiality of the
                   other provisions of this Agreement, you acknowledge and
                   agree that the provisions of Sections 10(b) and 11(c) are
                   material and any breach of them would be a material breach
                   of this Agreement and shall, in addition to claims for
                   damages and any other remedy available under this Agreement,
                   cause a recoupment and/or forfeiture of $1 million of past
                   and future payments under Section 1(b), all without
                   abrogating the release granted herein.

      14.  NO ADMISSIONS:

      Neither this Agreement nor any actions taken pursuant to them shall in
any event be construed as or deemed to be evidence of an admission or concession
by any party on any matter leading up to this Agreement.  In addition, neither
the fact of this Agreement nor any of its provisions shall be offered or
received in evidence in any action or proceeding as an admission or concession
of liability or wrongdoing by any party or for any other purpose.

      15.  NON-WAIVER OF VESTED OR LEGAL RIGHTS; NON-RETALIATION:

      In the event you do not sign this Agreement, you should understand
that you will still receive the benefits to which you are legally entitled under
the Company's benefit plans and/or applicable law (like COBRA).
<PAGE>

                                                                           13


      16.  ADDITIONAL ACKNOWLEDGMENTS; LIMITED REVOCATION:

           (a)     You acknowledge that you have been given twenty-one (21)
                   days from the date of receipt of this Agreement to consider
                   this Agreement.  You acknowledge that you have read this
                   Agreement carefully, have been advised to consult an
                   attorney and any other advisors of your choice, and fully
                   understand that by signing below you are giving up certain
                   rights which you may have to sue or assert a claim against
                   the Company.  You acknowledge that you have not been forced
                   or pressured in any manner whatsoever to sign this Agreement
                   and you agree to all of its terms voluntarily.

           (b)     You shall have seven days from the date of this Agreement to
                   revoke the release (the "ADEA Release") you are giving in
                   Section 9(a) and (b), but only to the extent it relates to
                   any claim you may have arising under the Age Discrimination
                   in Employment Act of 1967, as amended ("ADEA").  If you
                   revoke such release, you will be deemed not to have released
                   any claim arising under ADEA, you shall not be entitled to
                   the payments described in Sections 2(a) and 2(e) and you
                   shall not be entitled to any payment otherwise required
                   hereunder after February 28, 1999.

      17.  NO MITIGATION:

      You are under no obligation to seek other employment during the
Severance Period.  In the event that you do become employed during the Severance
Period (including self-employment), payments under this Agreement shall not be
reduced by any compensation payable to you as a result of such other employment.


      18.  ENFORCEABILITY:

      In the event that any provision of this Agreement is determined to be
invalid or unenforceable, the remaining terms and conditions of this Agreement
shall be unaffected and shall remain in full force and effect.  In addition, if
any provision is determined to be invalid or unenforceable due to its duration
and/or scope, the duration and/or scope of such provision, as the case may be,
shall be reduced, such reduction to be to the smallest extent necessary to
comply with applicable law, and such provision shall be enforceable, in its
reduced form, to the fullest extent permitted by applicable law.

      19.  INDEMNIFICATION:
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                                                                           14


      Except as provided otherwise in this Agreement, Coleman shall indemnify
you to the fullest extent permitted by applicable law and the existing
By-Laws and Certificate of Incorporation of Coleman, against all costs,
charges and expenses whatsoever ("Losses") incurred or sustained by you in
connection with any action, suit or proceeding to which you may be made a
party by reason of your having been a director, officer or employee of the
Company.  If any greater indemnification rights shall be provided under any
change in Coleman's By-Laws or Certificate of Incorporation, you shall be
entitled to such greater rights to the same extent as other directors,
officers or employees who had terminated their relationship with Coleman on
or before February 28, 1997.  You shall hold the Company harmless against all
Losses which arise out of any claims by your spouse or any beneficiary
relating to payment or benefit obligations released or waived pursuant to
this Agreement.

      20.  TAXATION:

      You shall be responsible for the payment of any and all required
federal, state, local and foreign taxes incurred, or to be incurred, in
connection with any amounts payable to you under this Agreement.
Notwithstanding any other provision of this Agreement, the Company may withhold
from amounts payable under this Agreement all federal, state, local and foreign
taxes that are required to withheld by applicable laws and regulations.

      21.  FURTHER ACKNOWLEDGMENTS:

      You agree to execute such further documents evidencing the termination
of your employment by, and directorships of, the Company as may be reasonably
requested by the Company, including a letter substantially in the form of
Attachment A.

      22.  EXCISE TAX:

      (a)  In the event that any payment or benefit received or to be
received by you in connection with the termination of your employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with Coleman) (all such payments and benefits being hereinafter called
"Total Payments") will be subject (in whole or part) to the excise tax (the
"Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"), then, subject to the provisions of Section 22(b)
hereof, Coleman will pay to you an additional amount (the "Gross-Up Payment")
such that the net amount retained by you, after deduction of any Excise Tax on
the Total Payments and any federal, state and local income tax and Excise Tax
upon the payment provided for by this Section 22, will be equal to the Total
Payments.  For purposes of determining the amount of the Gross-Up Payment, you
will be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of your residence on such date, net of the
maximum
<PAGE>

                                                                           15

reduction in federal income taxes which could be obtained from deduction of
such state and local taxes.

      (b)  In the event that, after giving effect to any redeterminations
described in Section 22(d) hereof, a reduction in the Total Payments to the
largest amount that would result in no portion of the Total Payments being
subject to the Excise Tax (after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in such other plan,
arrangement or agreement) would produce a net amount (after deduction of the net
amount of federal, state and local income tax on such reduced Total Payments)
that would be greater than the net amount of unreduced Total Payments (after
deduction of the net amount of federal, state and local income tax and the
amount of Excise Tax to which you would be subject in respect of such Total
Payments), then Section 22(a) hereof will not apply and the Total Payments will
be so reduced.

      (c)  For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of
the Total Payments will be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, unless in the opinion of tax counsel selected by
Coleman's independent auditors and reasonably acceptable to you ("Tax Counsel"),
such other payments or benefits (in whole or in part) do not constitute
parachute payments, including by reason of Section 280G(b)(4)(A) of the Code,
(ii) all "excess parachute payments" within the meaning of Section 280G(b)(1) of
the Code will be treated as subject to the Excise Tax, unless in the opinion of
Tax Counsel such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered, within the meaning of
Section 280G(b)(4)(B) of the Code, in excess of the base amount (as defined in
Section 280G(b)(3) of the Code) allocable to such reasonable compensation, or
are otherwise not subject to the Excise Tax, and (iii) the value of any noncash
benefits or any deferred payment or benefit will be determined by Coleman's
independent auditors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code.  Coleman will provide you with its calculation of the
amounts referred to in this Section 22 and such supporting materials as are
reasonably necessary for you to evaluate Coleman's calculations.  If you dispute
Coleman's calculations (in whole or in part), the reasonable opinion of Tax
Counsel with respect to the matter in dispute will prevail.

      (d)  In the event that (i) the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder at the time of payment
of the Total Payments and (ii) after giving effect to such redetermination, the
Total Payments are reduced pursuant to Section 22(b) hereof, you will repay to
Coleman, at the time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such reduction
(plus that portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the Gross-Up Payment being repaid
by you to the extent that such repayment results in a reduction in the Excise
Tax and/or a federal, state or local income tax deduction) plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code.  In the event, that (x) the Excise Tax is determined to
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                                                                           16

exceed the amount taken into account hereunder at the time of the termination
of your employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment) and
(y) after giving effect to such redetermination, the Total Payments are not
reduced pursuant to Section 22(b) hereof, Coleman will make an additional
Gross-Up Payment in respect of such excess and in respect of any portion of
the Excise Tax with respect to which Coleman had not previously made a
Gross-Up Payment (plus any interest, penalties or additions payable by you
with respect to such excess and such portion) at the time that the amount of
such excess is finally determined.

      23.  NOTICES:

      You agree that you will not communicate with the Company for any
reason, directly or indirectly, including, if necessary, any notice of stock
option exercise, except by notice to the Company, Attention: General Counsel and
all such notices shall be sent marked "Confidential", and a telefacsimile copy
thereof shall be sent the same date to Robert C. Fleder, Esq., Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York,
10019, (212) 757-3000.

      24.  ENTIRE AGREEMENT:

      This Agreement supersedes any and all other agreements between you and
the Company and/or any other persons relating to your employment by the Company,
including, but not limited to, the Employment Agreement dated as of January 1,
1996 between you and Coleman, including the First Amendment thereto dated July
1, 1996, whether written or oral, between the parties with respect to the
subject matter hereof and contains all of the agreements between the parties
with respect thereto.  You, your spouse and beneficiaries are not eligible for
any benefits from the Company including, but not limited to, severance benefits,
except as specifically provided for herein.

      25.  NO ORAL MODIFICATION:

      This Agreement may not be modified or changed orally and may be
modified and changed only by a written instrument executed by you and Coleman.

      26.  STATE LAW:

      This Agreement will be construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflict of laws.
<PAGE>

                                                                           17

      27.  RESOLUTION OF DISPUTES:

      Any disputes arising under or in connection with your employment with
the Company, or this Agreement shall be resolved by binding, confidential
arbitration to be held in Denver, Colorado in a confidential, closed session in
accordance with the rules and procedures of the American Arbitration
Association.  The arbitrators may assess expenses, including reasonable
attorneys' fees, to either or both parties, taking into account the
circumstances of the case.  Except as assessed by the arbitrator pursuant to the
previous sentence, each party shall bear its own expenses, including attorneys'
fees, in connection with any such dispute.

      28.  COUNTERPARTS; FACSIMILE SIGNATURES:

      This Agreement may be executed in counterparts, each of which shall be
considered part of the same Agreement.  Signatures to this Agreement may be
supplied by telefacsimile signature, which shall be considered an original
signature for purposes hereof.


                                    Very truly yours,

                                    THE COLEMAN COMPANY, INC.


                                    By:   /s/ JERRY W. LEVIN
                                          -----------------------------------
                                          Jerry W. Levin, Its Duly Authorized
                                          Acting Chief Executive Officer


Encl.
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                                                                           18


      I have read this letter Agreement and I understand all of its terms.
I enter into and sign this AGREEMENT knowingly and voluntarily, with full
knowledge of what it means.


                                           /s/ MICHAEL N. HAMMES
                                           ---------------------------------
                                           Michael N. Hammes