REGISTRATION NO. 1-15401
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of
the Securities Exchange Act of 1934
ENERGIZER HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSOURI 43-1863181
(STATE OF INCORPORATION) (I.R.S.EMPLOYER
IDENTIFICATION NO.)
800 CHOUTEAU
ST. LOUIS, MISSOURI 63102
(ADDRESS OF PRINCIPAL OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (314) 982-2970
Securities to be registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON WHICH EACH CLASS IS TO BE
TITLE OF EACH CLASS TO BE SO REGISTERED REGISTERED
------------------------------------------ -------------------
Common Stock, $.01 par value New York Stock Exchange, Inc.
Common Stock Purchase Rights New York Stock Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the Act: None
<PAGE>
ENERGIZER HOLDINGS, INC.
I. INFORMATION INCLUDED IN INFORMATION STATEMENT
AND INCORPORATED IN FORM 10 BY REFERENCE
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10
<TABLE>
<CAPTION>
<S> <C> <C>
ITEM
NO. ITEM CAPTION LOCATION IN INFORMATION STATEMENT
- ---- -------------- ---------------------------------
1. Business BUSINESS AND PROPERTIES
2. Financial Information SUMMARY SELECTED HISTORICAL
FINANCIAL INFORMATION;
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATION
AND FINANCIAL CONDITION
3. Properties BUSINESS AND PROPERTIES--Properties
4. . Security Ownership of Certain Beneficial
Owners and Management STOCK OWNERSHIP INFORMATION
5. Directors and Executive Officers MANAGEMENT
6. Executive Compensation EXECUTIVE COMPENSATION; ENERGIZER
COMPENSATION AND BENEFIT PLANS
7. Certain Relationships and Related Transactions AGREEMENTS BETWEEN RALSTON AND
ENERGIZER; CERTAIN TRANSACTIONS
8. Legal Proceedings BUSINESS AND PROPERTIES-Legal
Proceedings
9. . Market Price of and Dividends on the
Registrant's Common Equity and Related
Stockholder Matters THE DISTRIBUTION--Listing and Trading of
Energizer Stock
11.. Description of Registrant's Securities to be DESCRIPTION OF ENERGIZER CAPITAL
Registered STOCK; ANTI-TAKEOVER EFFECTS OF
CERTAIN PROVISIONS
12. Indemnification of Directors and Officers INDEMNIFICATION OF DIRECTORS,
OFFICERS AND EMPLOYEES
OF ENERGIZER
13. Financial Statements and Supplementary Data INDEX TO FINANCIAL INFORMATION OF
ENERGIZER HOLDINGS, INC.
</TABLE>
II. INFORMATION NOT INCLUDED IN INFORMATION STATEMENT
Item 10. Recent Sales of Unregistered Securities.
Energizer Holdings, Inc. was incorporated as a Missouri corporation on
September 23, 1999. It issued 1000 shares of its $1.00 par value common stock
to Eveready Battery Company, Inc. on that date in consideration of a capital
contribution of $1,000. The issuance was exempt from registration under the
Securities Act of 1933, pursuant to Section 4(2) of the Act, because the
issuance did not involve any public offering of securities.
.
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
Item 15. Financial Statements and Exhibits.
(a) Financial Statements--See Index to Financial Information
(b) Exhibits:
EXHIBIT NO. DESCRIPTION
- ------------ -----------
2.1 Form of Agreement and Plan of Reorganization
2.2 Form of Tax Sharing Agreement
2.3 Form of Bridging Agreement
2.4 Form of Aircraft Agreement (to be provided)
2.5 Form of Lease Agreement
2.6 Form of Intellectual Property Agreement
3.1 Articles of Incorporation of Energizer Holdings, Inc.
3.2 Bylaws of Energizer Holdings, Inc.
4.1 Form of Rights Agreement between Energizer Holdings, Inc. and
Continental Stock Transfer & Trust Company, as Rights Agent
10.1 Form of Energizer Holdings, Inc. Incentive Stock Plan
10.2 Form of Energizer Holdings, Inc. Non-Qualified Deferred
Compensation Plan
10.3 Form of Management Continuity Agreements (to be provided)
10.4 Form of Indemnification Agreements with Executive Officers
and Directors
10.5 Form of Executive Savings Investment Plan
10.6 Form of Executive Health Insurance Plan
10.7 Form of Executive Long Term Disability Plan
10.8 Form of Financial Planning Plan
10.9 Form of Executive Group Personal Excess Liability Insurance Plan
10.10 Form of Executive Retiree Life Plan
10.11 Form of Supplemental Executive Retirement Plan
10.12 Financing Term Sheet
21 List of Energizer Subsidiaries
27 Financial Data Schedule
ENERGIZER HOLDINGS, INC.
800 Chouteau Avenue
St. Louis, Missouri 63102
April 1, 2000
Dear Shareholder:
I am pleased to welcome you as a shareholder of Energizer Holdings, Inc.,
the world's largest manufacturer of primary batteries and flashlights.
Although Energizer is a new public company, its business is well
established. Our "Eveready" brand has been synonymous with batteries and
flashlights for almost 100 years, and today our world-class "Energizer" brand
products are known globally for long-lasting service and dependability. Our
"Energizer" and "Eveready" brand products are distributed in more than 160
countries. We carry forward a reputation for providing products of the highest
quality and value, and a tradition of innovation and continuously improved
batteries and lighting products.
I welcome your participation as an Energizer shareholder and look forward
to continuing our tradition of working on your behalf.
Sincerely,
J. Patrick Mulcahy
Chief Executive Officer
Energizer Holdings, Inc.
<PAGE>
RALSTON PURINA COMPANY
April 1, 2000
Dear Ralston Purina Shareholder:
I am pleased to inform you that on March 16, 2000, the Board of Directors
of Ralston Purina Company declared a distribution to Ralston's stockholders of
shares of the common stock and related common stock purchase rights of Energizer
Holdings, Inc., currently a wholly owned subsidiary of Ralston. The
distribution will occur as of 12:01 a.m. CST on April 1, 2000.
Energizer and its subsidiaries will continue to operate their worldwide
battery business. Following the distribution, Energizer will conduct that
business as a separate, publicly-owned company.
If you are a shareholder of record of Ralston Stock as of 12:01 a.m. CST
on April 1, 2000, the record date for the distribution, you will receive one
share of Energizer Stock for every three shares of Ralston Stock you own (and a
cash payment instead of any fractional share of Energizer Stock). No action is
required on your part in order to receive your distribution. The distribution
of Energizer Stock will generally be tax-free to you for federal income tax
purposes, but any cash that you receive instead of fractional shares will be
taxable to you. A book entry system is being used to distribute shares of
Energizer Stock. In a book entry system, ownership of stock is recorded in the
records maintained by Energizer's Transfer Agent (Continental Stock Transfer &
Trust Company), but physical certificates will not be issued to you unless you
request them. You will receive a statement of the shares of Energizer Stock
credited to your account (and any cash payment for fractional shares) in a
separate mailing shortly after April 1, 2000. If you request physical
certificates instead of participating in the book entry system, certificates
will be issued to you as soon as possible following April 1.
The attached Information Statement describes the distribution in detail and
contains important information about Energizer, including financial statements
and other financial information. The Information Statement is being provided to
all Ralston stockholders in connection with the distribution of Energizer
Stock.
Energizer Stock will be listed and traded on the New York Stock Exchange,
and its stock symbol will be "ENR".
Your Board of Directors has carefully considered the spin-off of the
Energizer business. The Board and I believe that the spin-off is in the best
interests of the shareholders of Ralston, and will result in changes that should
benefit both Energizer and Ralston. After the spin-off, Ralston and Energizer
will each be an independent company with its own board of directors and
management group. We believe that each group will be able to be more focused on
the challenges and competition facing their businesses.
Sincerely,
W. Patrick McGinnis
Chief Executive Officer and President
Ralston Purina Company
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this Amendment No. 2 to Form 10
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized.
ENERGIZER HOLDINGS, INC.
By: /s/ Daniel E. Corbin, Jr.
Daniel E. Corbin, Jr.
Executive Vice President,
Finance and Control
Energizer Holdings, Inc.
February 23, 2000
<PAGE>
INFORMATION STATEMENT
ENERGIZER HOLDINGS, INC.
COMMON STOCK
($.01 par value)
Ralston Purina Company is furnishing you with this Information Statement in
connection with its distribution to its stockholders of 100% of the shares of
the common stock of its subsidiary, Energizer Holdings, Inc. (as well as related
common stock purchase rights). Following the distribution, Ralston will not own
any Energizer Stock and Energizer will be an independent public company.
Ralston's common stock is referred to as "Ralston Stock", Energizer's common
stock is referred to as "Energizer Stock", and the distribution of the Energizer
Stock is referred to as the "distribution", throughout the rest of this
document.
The distribution will be made on April 1, 2000. You will receive one share
of Energizer Stock for every three shares of Ralston Stock which you hold at
12:01 a.m. CST on that date.
No stockholder action is necessary to receive the shares of Energizer Stock
in the distribution. This means that:
- - You do not need to pay any consideration to Ralston or to Energizer.
- - You do not need to surrender or exchange any shares of Ralston Stock to
receive your shares of Energizer Stock in the distribution.
In addition, a stockholder vote is not required for the distribution to occur.
Ralston is not asking you for a proxy, and requests that you do not send a
proxy. Neither Ralston nor Energizer will receive any cash or other proceeds
from the distribution.
Energizer Stock will be listed and traded on the New York Stock Exchange,
Inc. ("NYSE") under the symbol "ENR". There has been no trading market for
Energizer Stock. However, we expect that a limited market for the Energizer
Stock will develop on or shortly before April 1, 2000, the record date for the
distribution.
As you review this Information Statement, you should carefully consider the
matters described under the caption "THE DISTRIBUTION -- Risk Factors."
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities, or determined if this
Information Statement is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this Information Statement is March 20, 2000
INFORMATION STATEMENT
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE
DISTRIBUTION OF ENERGIZER STOCK 4
INTRODUCTION 7
SUMMARY 8
SUMMARY OF SELECTED HISTORICAL
FINANCIAL INFORMATION 11
UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION 12
FORWARD-LOOKING STATEMENTS 15
THE DISTRIBUTION 15
Background and Reasons for the
Distribution 15
Advice Provided by Financial Advisor 18
Risk Factors 19
Manner of Effecting the Distribution 27
Federal Income Tax
Consequences of the Distribution 28
Listing and Trading of Energizer Stock 29
Energizer Stock Received by
Benefit Plans 30
REGULATORY APPROVALS 31
AGREEMENTS BETWEEN RALSTON AND
ENERGIZER 31
Agreement and Plan of
Reorganization 31
Tax Sharing Agreement 37
Bridging Agreement 37
Lease Agreement 37
Foreign Distribution Agreements 38
Joint Aircraft Ownership Agreement 38
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION 39
BUSINESS AND PROPERTIES . 52
Background 52
Patents, Technology and Trademarks 54
Energizer's Objectives and Strategy 54
Sales and Distribution 57
Competition 57
Employees 60
Raw Materials 60
Governmental Regulation; Environmental
Matters 60
Legal Proceedings 61
Properties 63
MANAGEMENT 64
Directors of Energizer 64
Directors' Meetings and
Committees 65
Director Compensation 66
Compensation Committee Interlocks
and Insider Participation 67
Executive Officers of Energizer 67
EXECUTIVE COMPENSATION 69
ENERGIZER COMPENSATION AND
BENEFIT PLANS 71
Energizer Incentive Stock Plan 71
Savings Investment Plan 76
Deferred Compensation Plan 78
Management Continuity Agreements 79
CERTAIN TRANSACTIONS 79
STOCK OWNERSHIP INFORMATION 80
DESCRIPTION OF ENERGIZER CAPITAL
STOCK 82
Authorized Capital Stock 82
Energizer Common Stock 82
Preferred Stock 83
Common Stock Purchase Rights 84
Transfer Agent 86
ANTI-TAKEOVER EFFECTS OF CERTAIN
PROVISIONS 87
Classified Board of Directors;
Removal 87
Shareholder Action by Written
Consent; Special Meetings 88
Advance Notice Provisions 88
Preferred and Common Stock 88
Business Combinations 89
Amendment of Certain Provisions of the
Energizer Articles and Bylaws 90
Rights 90
Management Continuity Agreements;
Other Severance Arrangements 90
Missouri General and
Business Corporations Law 90
INDEMNIFICATION OF DIRECTORS, OFFICERS AND
EMPLOYEES OF ENERGIZER 92
SHAREHOLDER PROPOSALS 93
INDEPENDENT ACCOUNTANTS 93
WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION 93
INDEX TO FINANCIAL INFORMATION
OF ENERGIZER HOLDINGS, INC. 95
ANNEX A - ENERGIZER INCENTIVE
STOCK PLAN A-1
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION OF ENERGIZER STOCK
---------------------------------------------------------------
The following questions and answers highlight important information about the
- --------------------------------------------------------------------------------
distribution of Energizer Stock. Because this is a summary, it does not contain
- --------------------------------------------------------------------------------
all the information that may be important to you. You should read the entire
- --------------------------------------------------------------------------------
Information Statement for more complete information.
- ---------------------------------------------------------
Q. WHAT WILL HAPPEN IN THE DISTRIBUTION?
A. Ralston Purina Company is separating its battery business, from
Ralston's pet products business. It will accomplish this by distributing all of
the outstanding shares of Energizer Stock to the Ralston stockholders. Ralston
will not retain any shares of Energizer Stock following the distribution. This
type of distribution is often referred to as a spin-off. If you are a Ralston
stockholder as of 12:01 a.m. on April 1, 2000 you will be entitled to receive
shares of Energizer Stock in the distribution.
Upon completion of the distribution, you will own shares in two separately
traded public companies, Ralston Purina Company and Energizer Holdings, Inc.
Ralston will remain the world's largest producer of dry dog food and dry and
soft-moist cat foods, and a leading manufacturer of cat box filler in the United
States and Canada. Energizer will be the world's largest manufacturer of
primary batteries and flashlights, including Energizer and Eveready brand
products. This document refers to Ralston Purina Company as Ralston and to
Energizer Holdings, Inc. as Energizer.
Q. WHAT DO I HAVE TO DO TO PARTICIPATE IN THE DISTRIBUTION?
A. Nothing. No proxy or vote is necessary for the distribution to occur.
You do not need to, and should not, mail in any certificates of Ralston Stock to
receive shares of Energizer Stock in the distribution.
Q. WHAT WILL I RECEIVE IN THE DISTRIBUTION?
A. You will receive one share of Energizer Stock for every three shares of
Ralston Stock you own, with a cash payment instead of any fractional share of
Energizer Stock. All fractional shares which would otherwise be distributed to
you will be combined with those of all other Ralston stockholders and will be
sold by Continental Stock Transfer & Trust Company, the distribution agent, in
the open market at then-current prices. You will receive your pro-rata portion
of the sale proceeds shortly after the distribution.
A book entry system is being used to distribute the shares of Energizer
Stock. In a book entry system, your ownership of the Energizer Stock
distributed to you will be recorded in records maintained by Continental Stock
Transfer & Trust Company, the transfer agent for the Energizer Stock. (This
document refers to Continental as the Transfer Agent).
You will receive a statement of the shares of Energizer Stock credited to
your account with the Transfer Agent in a separate mailing shortly after April
1, 2000.
You will not receive a physical certificate for the shares of Energizer
Stock which you own unless you request it from the Transfer Agent. If you
request a physical certificate, it will be delivered to you shortly after April
1.
The shares of Energizer Stock will also include an associated common stock
purchase right similar to those you have with your existing Ralston Stock.
These rights are designed to encourage a potential acquirer of at least 20% of
the outstanding Energizer Stock to negotiate with the Energizer Board of
Directors rather than proceed unilaterally. The rights are also designed to
protect stockholders in the event that someone acquires a large percentage of
the outstanding Energizer Stock and the Energizer Board of Directors concludes
that the acquisition is not in the best interests of Energizer and its
stockholders. For more information about the common stock purchase rights, see
"THE DISTRIBUTION - Common Stock Purchase Rights."
Q. HOW DO I REQUEST CERTIFICATES FOR MY SHARES?
A. Following the distribution, you may obtain a certificate for all or a
portion of your book-entry shares by completing the applicable portion of the
statement you receive from the Transfer Agent regarding the shares of Energizer
Stock credited to your account, and returning it to the Transfer Agent. A
certificate will be mailed to you within approximately forty-eight hours of the
Transfer Agent's receipt of your request. The ownership name on your
certificate will be identical to that shown on your statement.
Q. HOW DO I TRANSFER MY ENERGIZER STOCK?
A. You may transfer shares by completing the applicable portion of the
statement you receive from the Transfer Agent regarding the shares of Energizer
Stock credited to your account, and returning it to the Transfer Agent.
Additional documents may be required for transfers by corporations,
partnerships, trusts, IRA's, and other similar entities. Information about the
additional documents required may be obtained by calling the Transfer Agent at
(888) 509 - 5580 and asking for the transfer department. All transfer requests
must contain a Medallion signature guarantee. This guarantee can be obtained
through your stock broker or a participating financial institution.
Q. DO I HAVE TO PAY TAXES ON THE RECEIPT OF ENERGIZER STOCK?
A. Ralston has received a ruling from the IRS that the distribution of
Energizer Stock will be tax-free to Ralston stockholders for Federal income tax
purposes. However, any cash that you receive instead of fractional shares of
Energizer Stock will be taxable to you. In addition, if you are an employee of
Ralston or Energizer and hold any restricted shares of Ralston Stock, the shares
of Energizer Stock which you receive with respect to those shares will be
taxable at the time that the restrictions lapse. To review the tax consequences
of the distribution in greater detail, see "THE DISTRIBUTION - Federal Income
Tax Consequences of the Distribution."
Q. WILL ENERGIZER STOCK BE LISTED ON ANY EXCHANGE?
A. Yes, the Energizer Stock has been approved for listing on the New York
Stock Exchange and will trade under the symbol "ENR".
Q. WHAT WILL HAPPEN TO THE TRADING OF RALSTON AND ENERGIZER STOCK?
A. Beginning on or about March 29, 2000, and continuing through April 3,
2000, you will only be able to sell your Ralston Stock with due bills for
Energizer Stock. This means that you will give up your right to receive
Energizer Stock if you sell your Ralston Stock during this time. The shares of
Energizer Stock you would have received must be delivered by you to the buyer by
electronically transferring ownership with the Transfer Agent as soon as you
receive the statement from the Transfer Agent regarding the shares of Energizer
Stock credited to your account by reason of the distribution.
Beginning on or about March 29, 2000, we expect that investors will be able
to buy and sell Energizer Stock on a when-issued basis until the statements from
the Transfer Agent are actually issued.
You should consult your own broker if you intend to sell your Ralston Stock
after March 29, 2000 and before you receive your statement from the Transfer
Agent. Make sure that your broker understands your intentions with respect to
such sales.
Q. HOW CAN I OBTAIN MORE INFORMATION ABOUT THE DISTRIBUTION?
A. If you have questions about the distribution, please contact:
Ralston Purina Company
Investor Relations Department
Checkerboard Square, 7T
St. Louis, Missouri 63164
(314) 982-2161
If, following the distribution, you have questions about the shares of
Energizer Stock which will be credited to your book entry account with the
Transfer Agent, please contact:
Continental Stock Transfer & Trust Company
2 Broadway
New York, NY 10004
(888) 509-5580
INTRODUCTION
During the past several years, Ralston's board of directors and management have
comprehensively reviewed Ralston's management, organization and businesses. The
primary goal of this review was to generate maximum value for Ralston's
stockholders and to focus the resources of the organization on its key strategic
businesses. Most recently, this review has focused on improving and sustaining
the performance of its remaining businesses - pet products and batteries.
After much consideration of the issues involved, as well as the views of the
management of both Ralston and Energizer, and financial advice provided by
Wasserstein Perella and Co., Inc., the board of directors determined that a
separation of the pet products business of Ralston from the battery business of
Energizer would serve the goal of improved business performance and would be in
the best interests of both businesses as well as the stockholders of Ralston.
The pet products and battery businesses are large, complex businesses with
different challenges, strategies and means of doing business and it is expected
that the separation will permit the management of each business to focus solely
on the opportunities and challenges specific to that business. It will also
allow Energizer to design more effective compensation programs, including an
employee stock ownership plan, linked to the performance of the battery
business, as reflected in the trading value of the Energizer Stock. In
approving the separation, the board considered that:
- - having two separate public companies may improve the ability of each
business to respond to the opportunities and challenges in its industry and
achieve its maximum value;
- - the separation will allow Energizer to establish an employee stock
ownership plan offering investment in Energizer Stock, which will give employees
a strong financial interest in the success of Energizer; and
- - having two separate public companies will enable the financial markets to
evaluate each company more effectively, which should maximize shareholder value
over the long-term for both Ralston and Energizer.
To review the reasons for the separation of Ralston and Energizer in greater
detail, see "THE DISTRIBUTION - Background and Reasons for the Distribution."
To accomplish the separation, on March 16, 2000, the board of directors of
Ralston declared a distribution by means of a dividend payable to holders of
record of Ralston Stock as of 12:01 a.m. CST on April 1, 2000, of one share of
Energizer Stock (and a related common stock purchase right) for every three
shares of Ralston Stock owned on that date. Following the distribution,
Energizer will be an independent publicly-owned company.
The following summary highlights selected information from this document
regarding Energizer and the distribution. It may not contain all of the
information that is important to you. To better understand the distribution and
the challenges and opportunities facing Energizer, you should read carefully the
entire Information Statement, including the historical and pro forma
consolidated financial statements of Energizer and the notes to those financial
statements, all of which are included in this Information Statement.
<PAGE>
SUMMARY
THE ENERGIZER BUSINESS. Following the distribution, Energizer will be the
world's largest manufacturer of primary batteries and flashlights and a global
leader in the dynamic business of providing portable power. Energizer's
subsidiaries manufacture and market a complete line of primary
(non-rechargeable) alkaline and carbon zinc batteries under the brands
"Eveready" and "Energizer", as well as miniature batteries and flashlights and
other lighting products. They also market a line of rechargeable batteries.
Energizer and its subsidiaries operate 23 manufacturing facilities in 16
countries on 4 continents. Energizer's worldwide work force of approximately
11,000 employees is responsible for the production of approximately 6 billion
battery cells annually.
Energizer has a long-standing reputation for providing consumers with
batteries and lighting products that deliver long-lasting, dependable
performance. Global demand for alkaline batteries continues to grow and
Energizer is well-positioned to capitalize on that growth:
- - the "Energizer" alkaline brand franchise has worldwide recognition;
- - Energizer's alkaline battery manufacturing facilities have sufficient
capacity for expected increases in demand, and offer broad geographic
distribution;
- - Energizer has a significant market position in most of the geographic
markets in which it competes;
- - Energizer's well-trained workforce, experienced management and innovative
research and product development teams enable it to create growth opportunities;
- - Energizer's focus on continuous innovation and research on alkaline and
future technologies enable it to provide the highest quality products in
response to constantly changing market demands.
For more information about Energizer's business, see "BUSINESS AND PROPERTIES -
Background" and " - Competition".
BUSINESS STRATEGY. Energizer's goal is to increase its revenue growth and
profitability by:
- - forging new cooperative relationships with its major retail customers;
- - introducing more effective workforce incentives;
- - delivering premium-quality battery and lighting products and increasing
consumer perceptions of the advantages of Energizer's products;
- - maintaining its strong market positions in North America, Europe and Asia
and expanding its presence in battery markets with opportunities for significant
growth; and
- - managing manufacturing, sales and marketing efforts in the most
cost-efficient manner possible.
Energizer plans to achieve its objectives by:
- - providing its major retail customers with significant retail support;
- - redesigning its compensation programs to create more effective incentives
directly linked to the value of Energizer Stock, including an employee stock
ownership plan with a significant company match for employee investments in
Energizer Stock;
- - maintaining its strong research and development orientation but focusing
on more effective advertising and promotional efforts;
- - aggressively pricing and promoting its products to establish strong
market share in new and growing markets, and favorably positioning the
"Energizer" brand as consumers continue to shift from carbon zinc to alkaline
batteries; and
- - maintaining effective cost control programs, and developing and
implementing methods for more efficient manufacturing and distribution
operations.
For more information, see "BUSINESS AND PROPERTIES - Energizer's Objectives and
Strategy".
RISK FACTORS. An investment in Energizer Stock is subject to a number of
risks, among which are:
- - Energizer's lack of an operating history as a separate independent
company;
- - the potential of a decrease in value, or wide fluctuations in the market
price, of Energizer Stock;
- - the need for Energizer to service its approximately $615 million of debt
and the effect of that debt on Energizer's debt rating and its ability to invest
in research and development, make acquisitions or pay dividends;
- - the potential that Energizer's market share in the United States and other
key areas will continue to decline;
- - the potential negative effect on the Energizer business from competition,
retailer consolidation, technological advances, or increases in the price of
commodities and raw materials;
- - the potential negative effect on the Energizer business of government
intervention or regulation, currency fluctuations, foreign and U.S. tax laws,
tariffs or quotas, and restrictions on the flow of capital;
- - political and economic instability in countries or regions where the
Energizer business is conducted; and
- - the potential anti-takeover effects of certain terms of Energizer's
Articles of Incorporation, Bylaws and Rights Agreement.
For more information about these risk factors, see "THE DISTRIBUTION - Risk
Factors".
RELATIONSHIP BETWEEN ENERGIZER
AND RALSTON AFTER THE DISTRIBUTION. After the distribution, Energizer will
be a separate company from Ralston. Energizer and Ralston will enter into
agreements to assist in the separation of the Energizer business, and its
operation as a public corporation. The agreements deal with many issues,
including:
- - the orderly separation of Energizer and Ralston;
- - services to be provided by Ralston and Energizer to each other on a
transitional basis following the distribution;
- - the allocation between Energizer and Ralston of assets that are not
specifically identified with the business of either company; and
- - the allocation of certain tax and other liabilities between Energizer and
Ralston.
Under these agreements, Energizer and Ralston agree to compensate each
other after the distribution for certain losses, damages, claims and liabilities
that may result from the operation of their respective businesses, as well as
for other allocated liabilities. For more information about these agreements,
see the Section titled "AGREEMENTS BETWEEN RALSTON AND ENERGIZER."
SUMMARY OF SELECTED HISTORICAL FINANCIAL INFORMATION
The following table sets forth Summary Selected Historical Financial
Information for Energizer Holdings, Inc. (Energizer). The historical
financial information presented below may not necessarily be indicative
of the results of operations or financial position that would have been
obtained if Energizer had been an independent company during the periods
shown or of Energizer's future performance as an independent company. The
financial data set forth below should be read in conjunction with
Energizer's Combined Financial Statements and the notes thereto found
elsewhere in this Information Statement. See "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and
"INDEX TO FINANCIAL INFORMATION. Earnings per share data is presented
elsewhere in this Information Statement on a pro forma basis only (see
"UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION").
<TABLE>
<CAPTION>
ENERGIZER HOLDINGS, INC.
SUMMARY SELECTED HISTORICAL FINANCIAL INFORMATION
(IN MILLIONS)
FOR THE THREE MONTHS
ENDED DECEMBER 31, FOR THE YEAR ENDED SEPTEMBER 30,
------------------ --------------------------------
STATEMENT OF EARNINGS DATA
<S> <C> <C> <C> <C> <C> <C> <C>
1999 1998 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
Net Sales . . . . . . 673.6 $ 582.4 $1,872.3 $1,921.8 $2,005.8 $2,023.5 $1,991.8
Depreciation and Amortization . 21.9 24.6 94.9 101.2 112.3 122.6 125.8
Earnings from Continuing
Operations before Income
Taxes (a) . . . . . . . . . 173.7 97.4 248.2 262.5 203.9 271.4 141.9
Income Taxes. . . . . 69.0 42.6 88.4 54.3 44.6 106.3 76.3
Earnings from Continuing
Operations (b).. . . . . 104.7 54.8 159.8 208.2 159.3 165.1 65.6
Net Earnings. . . . . . . 104.7 52.0 80.0 164.7 159.8 169.1 78.1
DECEMBER 31,. . . . . . . . SEPTEMBER 30,
BALANCE SHEET DATA. . . . . . . . 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ----
Working Capital . . . . . . . . . $ 513.7 $ 478.1 $ 478.5 $ 489.6 $ 532.3 $ 434.4
Property at Cost, Net . . . . . . 465.6 472.8 476.9 494.2 543.2 545.3
Additions (during the period) . 11.0 69.2 102.8 98.8 95.7 73.3
Depreciation (during the period) 15.8 68.4 74.1 79.5 81.4 82.4
Total Assets. . . . . . . . . . . 1,850.8 1,833.7 2,077.6 2,113.6 2,146.9 2,106.7
Long-term Debt. . . . . . . . . . 1.4 1.9 1.3 21.3 43.1 57.3
</TABLE>
(a) Includes restructuring provisions of $6.1 for the three months ended
December 31, 1998, $9.9, $21.3, $83.7, $3.4, and $90.8 for the years ended
September 30, 1999, 1998, 1997, 1996 and 1995, respectively.
(b) Earnings from continuing operations were reduced due to after-tax
restructuring provisions and increaseddue to income tax benefits as follows:
<TABLE>
<CAPTION>
For the three months
ended December 31, For the year ended September 30,
------------------ --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 1998 1999 1998 1997 1996 1995
----- ------ ------- -------- ------- ------ -------
After-tax restructuring provisions $ - ($6.2) ($8.3) ($12.8) ($72.0) ($2.2) ($70.0)
Capital loss tax benefits. . . . . - - 16.6 48.4 35.9 - -
Foreign tax credit refunds.. . . . - - - - 20.5 - -
----- ------ ------- -------- ------- ------ -------
Total . . $ - ($6.2) $ 8.3 $ 35.6 ($15.6) ($2.2) ($70.0)
===== ====== ======= ======== ======= ====== =======
</TABLE>
ENERGIZER HOLDINGS, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Ralston will transfer its global battery products business to a wholly owned
subsidiary of Ralston, Energizer Holdings, Inc. The stock of Energizer
Holdings, Inc. will be spun-off to the Ralston shareholders in a tax-free
distribution. The historical combined financial statements of Energizer reflect
periods during which the various spun-off businesses operated as divisions or
subsidiaries of Ralston.
The pro forma combined statement of earnings for the year ended September 30,
1999 presents the combined results of Energizer's operations assuming that the
distribution had occurred as of October 1, 1998. Such statement of earnings has
been prepared by adjusting the historical statement of earnings to indicate the
effect of estimated costs and expenses and the recapitalization associated with
the distribution.
The pro forma combined statement of earnings for the three months ended December
31, 1999 presents the combined results of Energizer's operations assuming that
the distribution had occurred as of October 1, 1999. Such statement of earnings
has been prepared by adjusting the historical statement of earnings to indicate
the effect of estimated costs and expenses and the recapitalization associated
with the distribution.
The pro forma combined balance sheet at December 31, 1999, presents the combined
financial position of Energizer, assuming the distribution had occurred at that
date. Such balance sheet has been prepared by adjusting the historical balance
sheet for the effect of changes in assets, liabilities, and capital structure
associated with the distribution.
The pro forma financial statements may not necessarily reflect the combined
results of operations or financial position that would have existed had the
distribution been effected on the dates specified nor are they necessarily
indicative of future results.
<PAGE>
ENERGIZER HOLDINGS, INC.
------------------------
Pro Forma Combined Statement of Earnings
----------------------------------------
Year Ended September 30, 1999
-----------------------------
(In millions except per share data - unaudited)
------------------------------------------------------
<TABLE>
<CAPTION>
ADJUSTMENTS
RELATED TO
<S> <C> <C> <C>
HISTORICAL DISTRIBUTION PRO FORMA
------------ -------------- -----------
Net Sales . . . . . . . . . . . . . . . . . . . . $ 1,872.3 $ 1,872.3
Costs and Expenses
Cost of products sold . . . . . . . . . . 997.9 997.9
Selling, general and administrative . . . 398.0 8.0(a) 400.9
(3.3)(b)
(1.8)(c)
(d)
Advertising and promotion . . . . . . . . 164.3 164.3
Research and development. . . . . . . . . 48.5 48.5
Provisions for restructuring. . . . . . . 7.8 7.8
Interest. . . . . . . . . . . . . . . . . 7.6 36.9(e) 44.5
------------ -------------- -----------
1,624.1 39.8 1,663.9
------------ -------------- -----------
Earnings from continuing operations . . . . . . .
before Income Taxes . . . . . . . . . . . 248.2 (39.8) 208.4
Income Taxes. . . . . . . . . . . . . . . . . . . (88.4) (11.2)(f) (91.5)
8.1 (g)
------------ -------------- -----------
Earnings from continuing operations . . . . . . . $ 159.8 $ (42.9) $ 116.9
============ ============== ===========
Earnings per share from continuing operations (h) - - $ 1.14
===========
Weighted average shares of common stock (h) . . . - - 102.6
===========
<FN>
(a) To reflect the incremental costs associated with becoming a stand-alone company including
board of director costs, stock exchange registration fees, shareholder record keeping
services, external financial reporting, treasury services, tax planning and compliance,
certain legal expenses and compensation planning and administration.
(b) To reflect pension income on plan assets to be transferred to Energizer plans upon the
distribution.
(c) To eliminate expense of certain post retirement benefits to be retained by Ralston.
(d) In addition to costs described above, compensation for certain executive officers will be
higher than the costs included in the historical financial statements. The amount of the
increase cannot be determined at this time.
(e) To reflect the increase in interest expense associated with debt levels to be assumed at
Distribution Date. The adjustment reflects an average interest rate of 7.0% for $150.0 of
incremental notes payable and 7.7% for $343.9 of incremental long-term debt. Approximately
$343.9 of the incremental debt will have a variable interest rate. A 1/8% variation in the
interest rate would change interest expense by $.4.
(f) To reflect taxes as if Energizer was a single, stand-alone U.S. taxpayer.
(g) To reflect tax effect of the above pro forma adjustments.
(h) The number of shares used to compute earnings per share is based on the weighted average
number of basic shares of Ralston stock outstanding during the twelve months ended
September 30, 1999, adjusted for the anticipated distribution of one share of Energizer stock
for each three shares of Ralston stock.
</TABLE>
ENERGIZER HOLDINGS, INC.
------------------------
Pro Forma Combined Statement of Earnings
----------------------------------------
Three Months Ended December 31, 1999
------------------------------------
(In millions except per share data - unaudited)
------------------------------------------------
<TABLE>
<CAPTION>
ADJUSTMENTS
RELATED TO
<S> <C> <C> <C>
HISTORICAL DISTRIBUTION PRO FORMA
------------ -------------- -----------
Net Sales . . . . . . . . . . . . . . . . . . . . $ 673.6 $ - $ 673.6
Costs and Expenses
Cost of products sold . . . . . . . . . . 322.2 - 322.2
Selling, general and administrative . . . 95.6 2.0(a) 97.6
0.4(b)
(0.4)(c)
(d)
Advertising and promotion . . . . . . . . 67.6 - 67.6
Research and development. . . . . . . . . 11.9 - 11.9
Provisions for restructuring. . . . . . . - - -
Interest. . . . . . . . . . . . . . . . . 2.6 8.9(e) 11.5
------------ -------------- -----------
499.9 10.9 510.8
------------ -------------- -----------
Earnings from continuing operations
before Income Taxes. . . . . . . . . . . . 173.7 (10.9) 162.8
Income Taxes. . . . . . . . . . . . . . . . . . . (69.0) 3.3(f) (63.6)
- 2.1(g)
------------ -------------- -----------
Earnings from continuing operations . . . . . . . $ 104.7 $ (5.5) $ 99.2
============ ============== ===========
Earnings per share from continuing operations (h) - - $ 1.02
===========
Weighted average shares of common stock (h) . . . - - 97.4
===========
<FN>
(a) To reflect the incremental costs associated with becoming a stand-alone company including
board of director costs, stock exchange registration fees, shareholder record keeping
services, external financial reporting, treasury services, tax planning and compliance, certain
legal expenses and compensation planning and administration.
(b) To adjust pension income on plan assets to be transferred to Energizer plans upon the
distribution.
(c) To eliminate expense of certain post retirement benefits to be retained by Ralston.
(d) In addition to costs described above, compensation for certain executive officers will be
higher than the costs included in the historical financial statements. The amount of the
increase cannot be determined at this time.
(e) To reflect the increase in interest expense associated with debt levels to be assumed at
Distribution Date. The adjustment reflects an average interest rate of 7.0% for $150.0 of
incremental notes payable and 7.7% for $324.1of incremental long-term debt. Approximately
$324.1 of the incremental debt will have a variable interest rate. A 1/8% variation in the
interest rate would change interest expense by $.1.
(f) To reflect taxes as if Energizer was a single, stand-alone U.S. taxpayer.
(g) To reflect tax effect of the above pro forma adjustments.
(h) The number of shares used to compute earnings per share is based on the weighted average
number of basic shares of Ralston stock outstanding during the three months ended
December 31, 1999, adjusted for the anticipated distribution of one share of Energizer stock
for each three shares of Ralston stock.
</TABLE>
ENERGIZER HOLDINGS, INC.
------------------------
Pro Forma Combined Balance Sheet
--------------------------------
As of December 31, 1999
-----------------------
(Dollars in millions - unaudited)
-------------------------------------
<TABLE>
<CAPTION>
ADJUSTMENTS
RELATED TO
<S> <C> <C> <C>
HISTORICAL DISTRIBUTION PRO FORMA
----------- -------------- -----------
ASSETS
Current Assets
Cash and cash equivalents . . . . . . . $ 19.9 $ - $ 19.9
Trade receivables, net. . . . . . . . . 605.5 - 605.5
Inventories . . . . . . . . . . . . . . 345.6 - 345.6
Other current assets. . . . . . . . . . 104.2 - 104.2
----------- -------------- -----------
Total Current Assets . . . . . . . . 1,075.2 - 1,075.2
----------- -------------- -----------
Investments and Other Assets . . . . . . . . 310.0 91.8(a) 408.4
- 6.6(b)
Net Investment in Discontinued Operations. . - - -
Property at Cost . . . . . . . . . . . . . . 1,004.0 12.9(c) 1,016.9
Accumulated Depreciation . . . . . . . . . . 538.4 9.3(c) 547.7
----------- -------------- ---------
465.6 3.6 469.2
----------- -------------- ---------
Total. . . . . . . . . . . . . . . . $ 1,850.8 $ 102.0 $ 1,952.8
=========== ============== ===========
LIABILITIES AND NET INVESTMENT
IN ENERGIZER
Current Liabilites
Current maturities of long-term debt 0.3 - 0.3
Notes payable. . . . . . . . . . . . 130.9 150.0(d) 280.9
Accounts payable . . . . . . . . . . 121.3 - 121.3
Other current liabilities. . . . . . 309.0 1.4(e) 310.4
----------- -------------- -------
Total Current Liabilities. . . . . . 561.5 151.4 712.9
----------- -------------- --------
Long-Term Debt . . . . . . . . . . . . . . . 1.4 324.1(d) 325.5
Other Liabilities. . . . . . . . . . . . . . 22.7 104.2(f) 126.9
Net Investment in Energizer. . . . . . . . . 1,265.2 (1,265.2)(g) -
Shareholders Equity. . . . . . . . . . . . . 787.5(g) 787.5
----------- -------------- --------
Total. . . . . . . . . . . . . . . . $ 1,850.8 $ 102.0 $ 1,952.8
=========== ============== ===========
<FN>
(a) To reflect net pension asset to be included in Energizer Pension Plans at Distribution
Date.
(b) To reflect deferred tax effect of other pro forma adjustments.
(c) To reflect assets to be assumed by Energizer at the Distribution Date.
(d) To reflect debt levels to be assumed by Energizer at the Distribution Date.
(e) To reflect medical benefit liabilities of Energizer at the Distribution Date.
(f) To reflect post-retirement benefit and deferred compensation liabilities of Energizer at
the Distribution Date.
(g) To reflect the elimination of Ralston's investment in Energizer and the issuance of
Energizer stock.
</TABLE>
FORWARD-LOOKING STATEMENTS
This document contains certain statements about Energizer that may be
"forward-looking statements." "Forward-looking statements" are statements that
are not historical facts, but instead are expectations, projections or
assumptions which involve a degree of risk and uncertainty. You may find these
statements under the captions "THE DISTRIBUTION", "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and "BUSINESS AND
PROPERTIES" in this Information Statement, or they may be preceded by the words
"anticipates", "believes", "expects", "intends", "projects", "forecasts" and
similar expressions. In making any of these forward-looking statements,
Energizer believes that the expectations are based on reasonable assumptions.
However, they are still only predictions. Because predictions involve risk and
uncertainty, there are many factors which could cause actual events or results
to differ significantly from what Energizer is currently expressing or implying.
The most significant of these factors are discussed under the caption "THE
DISTRIBUTION -- Risk Factors." Additional risks and uncertainties not presently
known to Energizer, or that it currently believes to be immaterial, may also
adversely affect Energizer's business.
THE DISTRIBUTION
BACKGROUND AND REASONS FOR THE DISTRIBUTION
Energizer Holdings, Inc. is a Missouri corporation which was incorporated
in September of 1999 as an indirect wholly owned subsidiary of Ralston.
Ralston's battery operations in the United States are conducted by Eveready
Battery Company, Inc., and international battery operations are conducted by a
number of foreign subsidiaries. Prior to the distribution, the capital stock of
Eveready Battery Company, Inc. will be contributed to Energizer and the capital
stock of Energizer International, Inc., which owns the capital stock of the
various foreign battery subsidiaries, will be contributed to Eveready Battery
Company, Inc. At the time of the distribution, Energizer will directly or
indirectly own all of the worldwide battery operations currently conducted by
Ralston.
Energizer is the successor to over 100 years' expertise in the battery and
flashlight business. During Ralston's ownership of the battery business, it has
expanded the "Eveready" and "Energizer" franchises to new, growing markets, and
it has made technological advances which have set the pace for the battery
industry.
Ralston was incorporated in 1894 and began its operations as a supplier of
animal feeds in the midwestern United States. By the 1980's, however, it had
grown to become a large multi-national corporation with a number of significant
businesses. Its primary business was pet food and other pet products, but it
also operated restaurant operations, a canned tuna business, a worldwide cereal
products business, a baby food business, ski resorts, a soy protein products
business, an international animal feeds business and a fresh bakery products
business. As part of its expansion into diverse, internationally known
businesses, Ralston acquired the worldwide "Eveready" battery and lighting
products business from Union Carbide Corporation in 1986.
By the mid-1990's, however, in light of changing business environments, Ralston
reassessed its investment in such a diverse group of businesses. During the
past several years, Ralston's board of directors and management have
comprehensively reviewed Ralston's management, organization and businesses. The
primary goal of this review was to generate maximum value for Ralston
stockholders and to focus the resources of the organization on its key strategic
businesses. Ralston's management has sought to gain competitive advantage by
serving world-wide markets through globally coordinated production, purchasing,
distribution and marketing initiatives. Ralston's board of directors concluded
that Ralston's stockholders were better served by having management focus on
specific, core businesses than attempt to manage a number of global businesses
with limited opportunities for coordination. To date, Ralston has taken a
number of actions towards this goal:
- - In 1994, Ralston spun-off Ralcorp Holdings, Inc., a subsidiary to which
Ralston had contributed its breakfast cereal, baby food, cracker and cookie,
coupon redemption and ski resort businesses.
- - In 1995, Ralston sold its fresh bakery products business, and acquired the
assets of Golden Cat Corporation, a large cat litter business.
- - In 1997, Ralston sold its international soy protein technologies business.
- - In 1998, Ralston spun-off Agribrands International, Inc., a subsidiary to
which Ralston had contributed its international animal feeds and agricultural
products business.
Most recently, Ralston's review has focused on improving and sustaining the
performance of Ralston's remaining businesses - pet products and batteries.
Although the pet products business has done well since 1995, market share for
the battery business in the United States and other key markets declined during
that period, and operating profits failed to grow at a satisfactory rate. Since
1995, Ralston's board has approved a number of measures to address these
problems, including capital expenditures for improved battery technology, the
sale or termination of unprofitable battery operations, and the closing of
plants and other reductions in battery manufacturing capacity. However, such
measures alone were not sufficient to reverse the trend in operating results.
Furthermore, the trading price of the Ralston Stock began to decline in 1998 and
has remained at a level which the board does not believe properly reflects
Ralston's value and prospects, due, in large part, in the board's opinion, to
investor concerns about operating difficulties in the battery business. The
board was also advised that there has been confusion in the investment community
regarding Ralston's valuation as a food company or as an international consumer
products company. Following a significant decline in sales during the key first
quarter of 1999, the board undertook an intensive look at ongoing problems in
the operation of the battery business.
After much consideration of the issues involved, including consideration of the
recommendations of the management of both Ralston and Energizer, and financial
advice provided by Wasserstein Perella and Co., Inc., the board of directors
determined that a separation of the pet products business of Ralston from the
battery business of Energizer would serve the goal of improved business
performance for both businesses and would be in the best interests of Ralston,
Energizer and the stockholders of Ralston. That decision was based on the
following factors:
- - The pet food and battery businesses are large, complex businesses with
different challenges, strategies and means of doing business. The opportunities
for coordination of production, purchasing, distribution or marketing between
the two businesses are extremely limited.
- - It is expected that the separation will permit the management of each
business to focus solely on the opportunities and challenges specific to that
business, and to be responsive to changes in their business environments.
- - As an independent publicly held company, Energizer will be able to design
more effective stock-based incentive compensation programs for its management
and employees by linking their compensation much more directly to the
performance of the Energizer business, as reflected in the stock market's
evaluation of the Energizer Stock. These stock-based programs should provide
great motivation to Energizer's employees. It is anticipated that an Energizer
employee stock ownership plan with a significant company match, as well as
Energizer grants of stock options and other equity-based compensation, will
place a meaningful number of shares of Energizer Stock in the hands of Energizer
employees.
- - The separation will permit investors to choose whether to invest in the
pet products business, the battery business, or both. It will also enable the
investment community to better understand and evaluate the two businesses.
Ralston's board considered a number of alternatives to a spin-off of the
battery business, including sale of the business, a partial public offering of
battery stock, and a Ralston "letter stock" targeting the battery business, but
the board ultimately concluded that none of these alternatives would benefit the
stockholders of Ralston as much as a spin-off. The board also considered
negative factors regarding the spin-off, including:
- - the additional expenses associated with Energizer's becoming a stand-alone
public company;
- - the fact that Energizer will no longer benefit from its association with
Ralston for financial support, favorable credit or the purchase of goods or
services; and
- - the potential loss to Ralston of tax benefits associated with Energizer
capital losses.
However, the board concluded that these factors were not likely to be
significant enough to outweigh the benefits of separation.
On June 10, 1999, the Board of Directors of Ralston approved in principle a plan
to spin-off its battery business to the Ralston stockholders. On February 4,
2000, Ralston received a tax ruling from the U.S. Internal Revenue Service to
the effect that the distribution would be tax-free to both Ralston and its
stockholders for Federal income tax purposes.
On March 16, 2000, the Ralston Board formally approved the distribution and
declared a distribution in the form of a dividend of one share of Energizer
Stock (and an associated common stock purchase right) for every three shares of
Ralston Stock held. The dividend will be payable on April 1, 2000 (the
"Distribution Date"), to each holder of record of Ralston Stock as of 12:01 a.m.
CST on that date.
Prior to the distribution, Ralston will borrow approximately $490 million
and assign the repayment obligation to Energizer. Ralston will use the proceeds
for repayment of debt, for working capital requirements and for other corporate
purposes.
The Ralston board of directors believes that cash generated by Energizer's
operations should be sufficient to fund Energizer's presently anticipated
operating and capital expenditures, as well as its debt service obligations.
Under the terms of the debt facilities, Energizer will be subject to a number of
restrictions, including:
- - the ratio of Energizer's total indebtedness to its EBITDA (earnings before
interest, taxes, depreciation and amortization) cannot exceed 3:1, the ratio of
its EBIT (earnings before interest and taxes) to its total interest expense
cannot exceed 3:1, and the ratio of its consolidated indebtedness to its
consolidated total capitalization cannot exceed 65%;
- - during the term of the debt facilities, Energizer will be restricted from
making business acquisitions if it is not in compliance with the above financial
covenants or if it is otherwise in default under the terms of the facilities; it
cannot make hostile acquisitions; and it cannot make acquisitions outside of the
consumer products industry or otherwise unrelated to Energizer's businesses,
unless the acquisition would involve less than 5% of Energizer's net
consolidated assets; and
- - customary negative covenants, including restrictions on liens,
sale/leaseback transactions, mergers and non-arm's length transactions.
For more information about the effect of Energizer's debt, you should review
"Risk Factors" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATlON -- Financial Condition".
Debt is being allocated between Ralston and Energizer in connection with the
distribution in a manner which is intended to create a capital structure for
each company that is reasonable in relation to each of their businesses, assets
and current and presently anticipated operating earnings. For more information
about the capital structure of Energizer, you should review "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION -
Liquidity and Capital Resources."
ADVICE PROVIDED BY FINANCIAL ADVISOR
As described above, Ralston's board of directors received financial advice
from Wasserstein Perella and Co., Inc., regarding the benefits of separation of
the pet products and battery businesses. The points described above under "THE
DISTRIBUTION - Background and Reasons for the Distribution" include the factors
discussed by Wasserstein. Wasserstein also advised the board regarding the
benefits and disadvantages of various alternatives to a spin-off of Energizer,
including sale of the business, a partial public offering of battery stock, and
a Ralston "letter stock" targeting the battery business. Wasserstein's
financial advice was based on its analysis of various spin-offs and the
financial benefits that resulted, as well as on an analysis of Ralston's trading
price and trading multiples and the trading price and trading multiples of
approximately 25 of the largest food companies and consumer products companies
which Wasserstein believed provided relevant comparisons. Wasserstein also
analyzed the various alternatives to a spin-off of Energizer from the standpoint
of the likely market reaction to those alternatives, but noted that the universe
of potential buyers and the significant taxes due could negatively affect the
potential of a sale of the business, that Energizer's weak performance in recent
years might hinder a public offering, and that a letter stock could potentially
trade at a discount. Wasserstein has also provided financial advice to
Ralston's board with respect to potential distribution ratios and debt levels
for Energizer.
Subsequent to the time that the advice described above was provided to
Ralston's board, Mr. Robert Pruzan, the president of Wasserstein Perella and
Co., Inc., was named a member of the board of directors of Energizer. For more
information regarding the background of Mr. Pruzan see "MANAGEMENT - Directors
of Energizer".
<PAGE>
RISK FACTORS
In addition to the other information in this document, you should carefully
review the following factors which may affect Energizer's financial condition or
results of operations and/or the value of the Energizer Stock.
RISK FACTORS RELATING TO SEPARATING ENERGIZER FROM RALSTON
Energizer faces a number of risks in connection with its separation from
Ralston which could affect the value of your investment in both the Energizer
Stock and the Ralston Stock.
BECAUSE ENERGIZER WILL NO LONGER BENEFIT FROM THE BUSINESS RELATIONSHIPS THAT
RALSTON EXTENDS TO IT OR THE SERVICES THAT RALSTON PROVIDES TO IT, IT MAY INCUR
GREATER EXPENSES IN OPERATING AND FINANCING ITS BUSINESSES.
Before the distribution, Energizer operated as a wholly owned subsidiary of
Ralston and it was not an independent public company. Following the
distribution, Energizer will no longer be able to rely on Ralston for financial
support, or benefit from its relationship with Ralston to obtain credit or
receive favorable terms for the purchase of certain goods and services. In
addition, except for certain transitional services, Energizer will be
responsible for obtaining its own sources of financing and for its own corporate
administrative services such as tax, treasury, accounting, information systems,
benefits administration and human resources. Energizer's future operating
results as an independent company cannot be guaranteed.
THE PRICE OF ENERGIZER STOCK MAY FLUCTUATE SIGNIFICANTLY AFTER THE DISTRIBUTION,
AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT AS A RESULT.
There has been no prior trading market for Energizer Stock, and there can
be no guarantee as to the prices at which the Energizer Stock will trade before
or after the distribution on April 1, 2000. The shares of Energizer Stock have
been approved for listing on the New York Stock Exchange under the symbol "ENR."
Until the Energizer Stock is fully distributed and an orderly market develops,
the prices at which the Energizer Stock trades may fluctuate significantly.
Prices for the Energizer Stock will be determined in the trading markets, and
may be influenced by many factors, including:
- - the depth and liquidity of the market for Energizer Stock,
- - investor perceptions of Energizer and the battery business,
- - Energizer's dividend policy, and
- - general economic and market conditions throughout the world.
In addition, the stock market often experiences significant price fluctuations
that are unrelated to the operating performance of the specific companies whose
stock is traded. Such fluctuations have affected the share prices of many newly
public issuers. Market fluctuations, as well as economic conditions, may
adversely affect the market price of the shares of Energizer Stock.
THE COMBINED PRICES OF THE RALSTON STOCK AND THE ENERGIZER STOCK, TRADING
SEPARATELY, MAY BE LESS THAN THE CURRENT PRICE OF RALSTON STOCK.
After the distribution, Ralston Stock will continue to be listed and traded
on the New York Stock Exchange and certain other stock exchanges. As a result
of the distribution, the trading price of Ralston Stock is expected to be lower
than the trading price of Ralston Stock immediately prior to the distribution.
The combined trading prices of Ralston Stock and Energizer Stock after the
distribution may be less than, equal to or greater than the trading price of
Ralston Stock prior to the distribution.
IF LARGE NUMBERS OF STOCKHOLDERS SELL THEIR ENERGIZER STOCK, THE PRICE OF THE
ENERGIZER STOCK COULD DECLINE SIGNIFICANTLY.
Approximately 100 million shares of Energizer Stock will be distributed to
the Ralston stockholders, representing all of the outstanding shares of
Energizer Stock. Substantially all of the shares of Energizer Stock will be
eligible for immediate resale in the public market. Possible reasons for an
increase in sale activity of Energizer Stock following the distribution include:
- - Investment criteria of certain investment funds and other large holders of
Ralston Stock may dictate the immediate sale of the Energizer Stock received by
them in the distribution. Certain investment funds use total market
capitalization, industry sector, dividend yield and other financial measures as
criteria upon which they select or hold stocks. S&P 500 Index Funds only hold
shares of companies added to the S&P 500 Index. To the extent that Energizer
Stock does not meet these criteria, the investment funds would be required to
dispose of any shares received in the distribution. Such sales, however, could
be countered by purchases by a different investor base.
- - Fractional shares which would otherwise be issued in the distribution will
be aggregated by the Distribution Agent and sold on the open market as soon as
practicable after April 1, 2000.
Neither Ralston nor Energizer is able to predict whether substantial amounts of
Energizer Stock will be sold in the open market following the distribution, or
when the sales may occur. Substantial sales of Energizer Stock, whether as a
result of the distribution or otherwise, could adversely affect its market
price.
ENERGIZER WILL INCUR A SIGNIFICANT AMOUNT OF DEBT WHICH IT MAY NOT BE ABLE TO
SERVICE.
Prior to the distribution, Ralston will borrow approximately $490 million
in bank debt and assign the repayment obligations to Energizer, which will
assume and become obligated to repay such debt. It is expected that Energizer
will bear approximately $615 million in indebtedness following the distribution,
consisting of this new, assumed bank debt, and pre-existing obligations of
certain foreign operations. Energizer's level of indebtedness could have
significant consequences, including:
- - limiting cash flow available for working capital, capital expenditures,
research and development and other corporate purposes because a significant
portion of Energizer's cash flow from operations must be dedicated to servicing
its debt;
- - limiting Energizer's ability to obtain additional financing in the future
for working capital or other purposes; and
- - limiting Energizer's flexibility to react to competitive and other changes
in the battery industry, and economic conditions generally.
Energizer's ability to pay or to refinance its indebtedness will depend upon its
future operating performance, which will be affected by general economic,
financial, competitive, legislative, regulatory, business and other factors
beyond its control.
In addition, the debt covenants which Energizer will assume restrict
Energizer's ability to make certain acquisitions and require Energizer to
maintain certain debt and interest coverage ratios. See "THE DISTRIBUTION -
Background and Reasons for the Distribution." These restrictions could have
significant consequences, including:
- - Required interest and debt coverage ratios, and restrictions on certain
acquisitions, may limit Energizer's flexibility to make strategic business
investments, as well as its ability to pay dividends to shareholders.
- - Failure to maintain debt and interest coverage ratios could limit
Energizer's ability to obtain additional advances under its credit facilities,
or could result in a default allowing the lenders to accelerate the maturity of
Energizer's debt.
Energizer anticipates that its operating cash flow, together with monies
available under its credit facilities will be sufficient to meet its anticipated
future operating expenses, to fund capital expenditures and to service its debt
as it becomes due. Energizer cannot guarantee, however, that it will be able to
maintain compliance with its debt covenants, that its business will generate
sufficient cash flow, or that future borrowings will be available to enable it
to fund its cash needs. If Energizer needs to refinance all or a portion of its
debt on or before maturity, it cannot guarantee that it will be able to do so on
commercially reasonable terms, or at all.
IF ENERGIZER AND RALSTON DO NOT COMPLY WITH THE IRS RULINGS, THE DISTRIBUTION OF
THE ENERGIZER STOCK COULD BE TAXABLE TO YOU.
Ralston has received rulings from the IRS that, for Federal income tax
purposes, the transfer of certain assets and liabilities of the battery
business to Energizer, and other internal restructurings necessary to effect the
distribution, will be tax-free to Ralston and Energizer. It has also received a
ruling that the distribution will be tax-free to the Ralston stockholders.
These rulings are subject to the continuing validity of certain factual
representations made to the IRS and assumptions set out in the ruling request.
In order to assure that the distribution will continue to qualify as tax-free,
Energizer and Ralston have also agreed to certain restrictions on their future
actions for a period of time following the distribution.
If, however, the viability of the IRS rulings were challenged on audit and
the distribution of the Energizer Stock were ultimately determined to be
taxable, then:
- - corporate level income taxes would be payable by Ralston (as the common
parent of a consolidated group), based upon the amount by which the fair market
value of the Energizer Stock distributed to Ralston stockholders exceeds
Ralston's net tax basis in the battery business, and corporate level taxes could
also be payable with respect to the subsidiary restructurings necessary to
effect the distribution; and
- - the fair market value of the shares of Energizer Stock which you receive
in the distribution would be subject to tax as a dividend.
Energizer has agreed to indemnify Ralston and the Ralston stockholders if its
actions or the actions of any of its affiliates result in such tax liability.
Ralston has agreed to indemnify Energizer for any losses which it may incur in
the event that Ralston or any of its affiliates take any action which adversely
impacts the tax-free nature of the distribution. For more information regarding
the tax consequences of the distribution, see "-- Federal Income Tax
Consequences of the Distribution" and "AGREEMENTS BETWEEN RALSTON AND ENERGIZER
- -- Tax Sharing Agreement".
RISK FACTORS RELATING TO ENERGIZER'S BUSINESS
Energizer's business faces a number of risks, which include risks relating
to the industry in which it operates. Ralston also faces a number of these same
risks.
BECAUSE OF THE IMPORTANCE OF ENERGIZER'S FOREIGN OPERATIONS, POLITICAL OR
ECONOMIC TURMOIL IN OTHER COUNTRIES MAY CAUSE ENERGIZER'S PROFITS TO DECLINE OR
PUT ITS ASSETS AT RISK.
The Energizer business is currently conducted on a worldwide basis.
Consequently, Energizer is subject to a number of significant risks associated
with its subsidiaries doing business in foreign countries. The operating
profits of Energizer may decline because of changes in the value of local
currencies, or because of hyperinflationary conditions in developing economies.
Other risks and considerations include:
- - the effect of foreign income and withholding taxes and the U.S. tax
implications of foreign source income and losses;
- - the possibility of expropriation, confiscatory taxation or price controls;
- - adverse changes in local investment or exchange control regulations;
- - difficulties inherent in operating in countries with less developed legal
systems;
- - political instability, government nationalization of business or
industries, government corruption and civil unrest; and
- - restrictions on the flow of capital between countries.
While these risks can affect any business with foreign operations, they assume
special importance for Energizer because of the nature of Energizer's business
and the significance of its foreign operations to Energizer. Approximately half
of Energizer's sales and a third of its profits arise out of foreign operations,
and a significant portion of its production capacity is located overseas.
Negative economic conditions in Asian and Latin American countries in the past
several years have significantly decreased Energizer's operating profits, and
although those conditions appear to be improving, Energizer's operations in
those countries may not be able to regain their former levels of profitability.
Energizer's subsidiaries have manufacturing facilities in several Asian
countries that have undergone or are currently undergoing political unrest, and
any ongoing instability in those countries could affect Energizer's production
levels.
Because the manufacture of batteries involves the use of industrial
materials, chemicals and other potentially hazardous substances, Energizer's
facilities in the U.S. and other developed nations are subject to a broad range
of laws and regulations relating to the environment. In many developing
countries in which the Energizer business is operated there has not been
significant governmental regulation relating to the environment, occupational
safety, employment practices or other business matters routinely regulated in
the United States. As such economies develop, it is possible that new
regulations may increase the expense and risk of doing business in such
countries. In addition, social legislation in many countries in which the
Energizer business operates may result in significantly higher expenses
associated with terminating employees, distributors, or joint ventures and with
closing manufacturing facilities.
CHANGES IN TECHNOLOGY MAY CAUSE ENERGIZER'S SALES AND PROFITS TO DECLINE IF THE
PRIMARY BATTERIES WHICH ENERGIZER PRODUCES CANNOT COMPETE, ON A PRICE OR
PERFORMANCE BASIS, WITH NEW BATTERY TECHNOLOGIES OR OTHER SOURCES OF PORTABLE
POWER.
The battery industry has been notable for the pace of innovations in
product life, product design and applied technology. Energizer and its
competitors have made and continue to make significant investments in research
and development with the goal of further innovation. If competitors introduce
new or enhanced products that significantly outperform Energizer's, or if they
develop or apply manufacturing technology which permits them to manufacture
batteries at a significantly lower cost relative to Energizer's, Energizer may
be unable to compete successfully in the market segments affected by these
changes. For example, new battery technologies that are currently being
investigated, but are not yet commercially viable, may make currently marketed
alkaline batteries obsolete. Pre-emptive patent rights, restrictions on
Energizer's ability to expand or modify manufacturing capacity or constraints on
Energizer's research and development activity may limit Energizer's ability to
introduce products that are competitive on a performance basis. Technological
or design changes in portable electronic and other devices that utilize
batteries as a power source may significantly affect the demand for batteries.
Continuing improvements in the service life of primary (non-rechargeable)
batteries, improvements in rechargeable battery performance (including
improvements in size, the time required for recharge, and the duration of each
discharge) and increasing consumer acceptance of rechargeable batteries, may
also negatively affect the number of primary batteries sold by Energizer. As of
September 30, 1999, approximately 65% of Energizer's sales were attributable to
alkaline batteries, 19% to carbon zinc batteries, and 2% to rechargeable
batteries for retail outlets.
ENERGIZER MAY CONTINUE TO LOSE SALES AND HAVE ITS PROFITS DECLINE IF IT IS NOT
ABLE TO COMPETE SUCCESSFULLY IN ITS INDUSTRY.
The battery industry is highly competitive, both in the United States and
on a global basis, as a number of large battery manufacturers compete for
consumer acceptance and, increasingly, limited retail shelf space. Competition
is based upon brand perceptions, product performance, customer service and
price. Energizer's ability to compete effectively may be affected by a number
of factors:
- - Energizer's primary competitor, Duracell International, Inc., a subsidiary
of The Gillette Company, has substantially greater financial, marketing and
other resources, and greater market share, than Energizer does. Because of its
ownership by Gillette, it also has significant advantages in distribution, sales
and negotiating leverage with retailers.
- - Energizer's competitors may have lower production, sales and distribution
costs, and higher profit margins, than Energizer, which may enable them to
compete more aggressively in offering retail discounts and other promotional
incentives.
- - The offering of private-label batteries by retail chains may create
significant pricing pressure and may also increase consumer perceptions that
batteries are a commodity product.
- - Loss of key retail customers to competitors, or significant penetration of
the U.S. market by foreign battery manufacturers, may further erode Energizer's
market share.
- - Product improvements or effective advertising campaigns by competitors, or
increased demand for rechargeable batteries, may weaken consumer demand for
Energizer's products.
- - Changes in consumer preferences from carbon zinc to alkaline batteries in
developing countries may benefit Energizer's competitors and erode Energizer's
market share in those countries.
CONSOLIDATION OF THE RETAIL TRADE MAY PUT ENERGIZER AT A DISADVANTAGE IN ITS
DEALINGS WITH RETAILERS AND CAUSE ENERGIZER'S PROFITS TO DECLINE.
During the past decade, retail sales of consumer products, including
battery and lighting products, have been increasingly consolidated in a small
number of regional and national mass merchandisers and warehouse clubs. This
trend towards consolidation is occurring on a worldwide basis as well as in the
United States. As a result of this consolidation, a significant percentage of
Energizer's sales are attributable to a very limited group of customers. In the
United States, 35 customers account for approximately 75% of Energizer's sales.
For the fiscal year ended September 30, 1999, Wal-Mart Stores, Inc. and its
subsidiaries accounted for, in the aggregate, approximately 13.5% of Energizer's
sales. This consolidation gives Energizer's customers great leverage in
demanding price and promotional concessions. Because of the importance of these
key customers to Energizer, price or promotional demands by such customers, or
reductions in purchases or loss of their accounts, could have a significant
adverse impact on Energizer's operating profits.
ENERGIZER'S BUSINESS STRATEGIES MAY NOT BE SUCCESSFUL IN REVERSING ITS LOSS OF
MARKET SHARE.
Energizer's share of the U.S. primary battery market on both a dollar and a
unit sales basis has declined significantly from 1995 levels. According to A.C.
Nielsen, Energizer's share of the U.S. primary battery market declined from
37.7% in 1995 to 34.4% in 1998 and to 31.6% in 1999. Energizer estimates that
market share for primary batteries has also declined in Europe from 27% to 21%
from 1995 to 1998. Worldwide, primary battery revenues declined approximately
7% from 1995 to 1999. Energizer's market share in foreign markets could
continue to decline as the demand for primary batteries in developing countries
shifts from carbon zinc batteries to alkaline, and its decline in the United
States and other developed countries could continue because of competitive
pressure. Energizer has identified its strategies for reversing this decline,
but if those strategies prove ineffective and if the decline in market share, in
the U.S. and/or globally, continues, it could have a significant adverse effect
on Energizer's sales volumes, operating profit and financial condition.
INCREASES IN THE PRICE OF RAW MATERIALS MAY CAUSE THE COST OF MANUFACTURING TO
INCREASE AND CONSEQUENTLY CAUSE ENERGIZER'S PROFITS TO DECLINE.
The principal raw materials used in the Energizer business - manganese
dioxide, zinc, acetylene black and potassium hydroxide -- are sourced on a
regional or global basis, and the prices of those raw materials are susceptible
to currency fluctuations and price fluctuations due to transportation,
government regulations, price controls, economic climate, or other unforeseen
circumstances. Energizer manages exposure to changes in the prices of its raw
materials by hedging certain of its requirements and by making forward
purchases, but there is no guarantee that those efforts will be effective, and
operating profits may decline if raw material price increases are not able to be
passed on to customers. Energizer believes that adequate supplies of the raw
materials required for its operations are available at the present time, but
cannot predict the future availability or prices of such materials.
ENVIRONMENTAL LIABILITIES AND COMPLIANCE WITH ENVIRONMENTAL LAWS MAY INCREASE
ENERGIZER'S EXPENSES OF DOING BUSINESS AND CONSEQUENTLY CAUSE ENERGIZER'S
PROFITS TO DECLINE.
Because the manufacture of batteries involves the use of industrial
materials, chemicals and other potentially hazardous substances, Energizer's
facilities are subject to a broad range of federal, state, local and foreign
laws and regulations relating to the environment. While Energizer has not
experienced any material adverse impact on its operations as a result of such
laws and regulations, Energizer cannot guarantee that current or future
regulations might not have such an impact on its business, financial condition
or results of operations.
Energizer has been and is subject to a number of proceedings related to its
disposal of industrial and hazardous material at off-site disposal locations.
These proceedings have been brought under federal and state statutes requiring
clean-up of such locations, regardless of fault or the lawfulness of the
original disposal. Liability under these statutes is typically joint and
several, meaning that a liable party may be responsible for all of the costs
incurred in investigating and cleaning up contamination at a site. As a
practical matter, however, liability is generally shared by all of the
financially viable responsible parties. Although Energizer does not currently
anticipate that its liability under these proceedings, individually or as a
whole, will have a materially adverse impact on its business, financial
condition or results of operation, it cannot guarantee that such will be the
case. Energizer also cannot estimate the impact of environmental regulations or
proceedings which may be enacted or brought in the future. For more information
regarding environmental matters, see "BUSINESS AND PROPERTIES - Governmental
Regulation; Environmental Matters."
RISK FACTORS RELATING TO YOUR OWNERSHIP OF ENERGIZER STOCK
In connection with your ownership of Energizer Stock, you should consider
the following risks relating to Energizer's payment of dividends and its
anti-takeover protections.
THE ENERGIZER BOARD MAY DECIDE THAT ENERGIZER WILL NOT PAY DIVIDENDS ON THE
ENERGIZER STOCK.
The payment and level of cash dividends, if any, by Energizer after the
distribution will be at the discretion of the Energizer board of directors. It
is expected that this decision will be based primarily upon the earnings, cash
flow and financial requirements of the Energizer business. Restrictions on the
flow of international capital may restrict the amount of funds available in the
United States for the payment of dividends. In addition, although its credit
facilities do not prohibit the payment of dividends by Energizer, restrictions
in those facilities may significantly limit the amount of funds available for
the payment of dividends. The Energizer board of directors will determine
whether or not cash dividends will be paid on Energizer Stock in order to make
funds available for working capital, repayment of debt, possible future
acquisitions, capital expenditures, and possible repurchases of Energizer Stock.
If the Energizer board of directors elects to pay cash dividends on the
Energizer Stock, the board may still decide to change that policy at any time.
ENERGIZER'S ANTI-TAKEOVER PROTECTIONS COULD DELAY OR PREVENT A CHANGE IN
CONTROL, WHICH COULD ADVERSELY AFFECT THE PRICE OF THE ENERGIZER STOCK.
The Energizer Articles of Incorporation and Bylaws, the Missouri General
and Business Corporations Law, the common stock purchase rights which are being
distributed with the Energizer Stock, and the agreements that Ralston and
Energizer will enter into as part of the distribution, contain provisions that
could prevent or delay a change of control of Energizer in a transaction that is
not approved by its board of directors. These include provisions:
- - creating a classified board;
- - limiting the power of stockholders to increase the size of the board,
remove directors and fill vacancies on the board;
- - requiring stockholder approval for certain business combinations; and
- - requiring advance notice for director nominations or other proposals by
stockholders.
In addition, Energizer's board has the authority, without further action by
Energizer's stockholders, to set the terms of, and to issue, preferred stock,
which could adversely affect the common stockholders' voting power.
Additionally, the common stock purchase rights will cause substantial dilution
to a person or group of persons that acquires 20% or more of the outstanding
Energizer Stock without the rights having been redeemed. The Reorganization
Agreement that Ralston and Energizer will enter into in connection with the
distribution also includes restrictions on the ability of Energizer to make
share repurchases and engage in specified transactions in certain circumstances.
The credit facilities which will be assumed by Energizer provide that debt
obligations will be accelerated upon a change in control of Energizer. These
provisions could deter or prevent an acquirer that is interested in acquiring
Energizer on a leveraged basis from doing so. For more information regarding
provisions which could hinder a takeover of Energizer, see "ANTI-TAKEOVER
EFFECTS OF CERTAIN PROVISIONS."
MANNER OF EFFECTING THE DISTRIBUTION
The distribution will be made as of 12:01 a.m. CST on April 1, 2000 (the
"Distribution Date") on a pro-rata basis to holders of record of the issued and
outstanding Ralston Stock at 12:01 a.m. CST on that date. A book entry system
will be used to implement the distribution of Energizer Stock in the
distribution. You will not receive physical certificates representing shares of
Energizer Stock unless you request them.
On the Distribution Date, one certificate representing all issued and
outstanding shares of Energizer Stock, other than fractional shares, will be
delivered by Ralston to the Distribution Agent. As soon as practicable
thereafter, an account statement will be mailed to you stating the number of
shares of Energizer Stock which you received in the distribution. Following the
distribution, you may request physical certificates for your shares of Energizer
Stock. You will receive shares of Energizer Stock on the basis of one share of
Energizer Stock for every three shares of Ralston Stock you hold. No fractional
shares of Energizer Stock will be issued to you.
The Distribution Agent will aggregate fractional shares into whole shares and
sell them in the open market at then prevailing prices on behalf of everyone who
otherwise would be entitled to receive fractional share interests. You will
receive a cash payment in the amount of your pro-rata share of the total sale
proceeds. Proceeds from sales of fractional shares will be paid by the
Distribution Agent based upon the average gross selling price per share of all
such sales. For more information about the tax consequences of the cash payment
for fractional shares, see "- Federal Income Tax Consequences of the
Distribution." Ralston will bear the cost of commissions incurred in connection
with these sales. It is expected that the sales will be made as soon as
practicable after the Distribution Date. NEITHER RALSTON, ENERGIZER NOR THE
DISTRIBUTION AGENT GUARANTEES THAT YOU WILL RECEIVE ANY MINIMUM SALE PRICE FOR
YOUR FRACTIONAL SHARES OF ENERGIZER STOCK, AND NO INTEREST WILL BE PAID TO YOU
ON THE PROCEEDS OF THE SALE.
Based on the number of shares of Ralston Stock issued and outstanding at March
1, 2000, approximately 100 million shares of Energizer Stock will be issued in
the distribution. All of the shares of Energizer Stock will be fully paid,
nonassessable and free of preemptive rights.
The board of directors of Energizer has also declared a distribution of one
common stock purchase right for every outstanding share of Energizer Stock.
These rights will be indicated on your account statement from the Transfer Agent
reflecting your ownership of Energizer Stock. If you request a physical
certificate for your Energizer Stock, the rights will also be represented by and
indicated on the certificate. For more information about the common stock
purchase rights, see "DESCRIPTION OF ENERGIZER STOCK--Common Stock Purchase
Rights".
Shares of Energizer Stock distributed with respect to any shares of Ralston
Stock you hold in the Ralston Purina Dividend Reinvestment Plan will be
registered with the Transfer Agent in your name, and an account statement will
be issued to you, indicating your stock ownership. You may thereafter request a
physical certificate for the shares so registered. Any cash payable instead of
fractional shares of Energizer Stock will be distributed to you. The number of
whole shares and fractional share interests, if any, of Energizer Stock which
you are entitled to receive in the distribution will be determined by adding the
number of shares of Ralston Stock that you hold of record to the number of
shares of Ralston Stock held for your account in the Ralston Purina Dividend
Reinvestment Plan, and dividing the total by three.
Following the distribution, approximately 200 million shares of Energizer
Stock will remain authorized but unissued, of which approximately 15 million
will be reserved for issuance under the Energizer Incentive Stock Plan.
No action is necessary on your part in order to receive the shares of
Energizer Stock in the distribution. This means that:
- - You do not need to pay any consideration to Ralston or to Energizer.
- - You do not need to surrender or exchange any shares of Ralston Stock to
receive your shares of Energizer Stock in the distribution.
The distribution will not affect the number of outstanding shares of Ralston
Stock, or the number of shares of Ralston Stock that you own.
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
As indicated above, Ralston has received tax rulings from the IRS providing
that the transfer of certain assets and liabilities of the battery business to
Energizer in connection with the distribution, and certain internal
restructurings, will be tax-free to Ralston under Sections 368(a)(1)(D), 332,
367 and 351 of the Internal Revenue Code of 1986, as amended (the "Code"). The
tax rulings also provide that the distribution of the Energizer Stock to
stockholders of Ralston will qualify as a tax-free transaction under Section 355
of the Code. The rulings provide, among other things, that for Federal income
tax purposes:
- - No gain or loss will be recognized by you, or be includable in your
income, solely as a result of your receipt of Energizer Stock in the
distribution;
- - No gain or loss will be recognized by Ralston upon the distribution;
- - If you hold your Ralston Stock as a capital asset, your holding period for
the Energizer Stock which you receive in the distribution will include the
period during which you have held the Ralston Stock;
- - Your tax basis in your Ralston Stock immediately prior to the distribution
will be apportioned (based upon relative market values at the time of the
distribution) between the Ralston Stock which you hold and the Energizer Stock
which you receive in the distribution; and
- - Any cash which you receive instead of fractional shares of Energizer Stock
will be taxable to you as a sale or exchange of the fractional shares.
As soon as practicable following the distribution, Ralston will provide
information to you regarding the allocation of tax basis between your Ralston
Stock and your Energizer Stock.
If you are an employee of Ralston and you receive shares of Energizer Stock
in the distribution on restricted shares of Ralston Stock which were previously
awarded to you as compensation, Ralston will treat the Energizer Stock which you
receive as additional compensation. As compensation, these shares of Energizer
Stock will not qualify for tax-free treatment under Section 355 of the Code.
Rather, pursuant to Section 83 of the Code and the underlying Treasury
regulations, the shares distributed to you will be taxable as ordinary
compensation income. If the shares of Energizer Stock distributed to you are
restricted, they will be taxed as compensation when they become unrestricted.
For a description of the agreements under which Ralston and Energizer have
provided for various tax matters, see "AGREEMENTS BETWEEN RALSTON AND ENERGIZER
- --Agreement and Plan of Reorganization" and "AGREEMENTS BETWEEN RALSTON AND
ENERGIZER -- Tax Sharing Agreement".
<PAGE>
THE ABOVE INFORMATION IS ONLY A SUMMARY OF MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE DISTRIBUTION UNDER CURRENT LAW AND IS INTENDED FOR YOUR
GENERAL INFORMATION ONLY. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE
PARTICULAR CONSEQUENCES OF THE DISTRIBUTION TO YOU, INCLUDING THE APPLICATION OF
FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
<PAGE>
LISTING AND TRADING OF ENERGIZER STOCK
There is currently no public trading market for Energizer Stock, and
Energizer cannot predict the prices at which Energizer Stock may trade either
prior to the distribution on a "when-issued" basis, or after the distribution.
In particular, until the Energizer Stock is fully distributed and an orderly
market develops, the trading prices may fluctuate significantly. The trading
prices for the Energizer Stock will be determined in the securities trading
markets and may be influenced by many factors, including:
- - the depth and liquidity of the market for Energizer Stock,
- - investor perceptions of Energizer and its business prospects,
- - Energizer's dividend policy, and
- - general economic and market conditions.
The trading prices may also be affected by certain provisions of Energizer's
Articles of Incorporation, Bylaws and the common stock purchase rights which may
discourage a potential takeover of Energizer. For more information about these
provisions, see "ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS".
The shares of Energizer Stock have been approved for listing on the NYSE under
the symbol "ENR". As of the Distribution Date, Energizer initially is expected
to have approximately 24,000 shareholders of record, based upon the number of
holders of record of Ralston Stock as of March 1, 2000. The Transfer Agent and
Registrar for the Energizer Stock will be Continental Stock Transfer & Trust
Company, located at 2 Broadway, New York, New York 10004.
The shares of Energizer Stock distributed to you in the distribution will be
freely transferable by you, unless after the distribution you are deemed to be
an "affiliate" of Energizer under the Securities Act of 1933. Affiliates of
Energizer would include individuals or entities that control, are controlled by,
or are under common control with, Energizer. This may include certain officers
and directors of Energizer as well as principal shareholders of Energizer.
Persons who are affiliates of Energizer will be permitted to sell their shares
of Energizer Stock only if:
- - the shares are sold under an effective registration statement filed under
the Securities Act, or
- - the shares are sold in reliance upon an exemption from the registration
requirements of the Securities Act, such as the exemptions afforded by Section
4(2) of the Securities Act and Rule 144 which was issued under that Section.
<PAGE>
ENERGIZER STOCK RECEIVED BY BENEFIT PLANS
Energizer Stock distributed with respect to the shares of Ralston Stock
held in the Ralston Purina Master Collective Trust for the Ralston Purina
Retirement Plan will either be
- - sold over time;
- - retained in the trust; or
- - transferred to the trust for the Energizer defined benefit pension plan,
as part of the transfer of assets and liabilities described in "AGREEMENTS
BETWEEN RALSTON AND ENERGIZER -Agreement and Plan of Reorganization-Retirement
Plans".
The decision will be at the discretion of the Ralston Retirement Plan trustees,
J.R. Elsesser, L.L. Fraley, C.S. Sommer and A.M. Wray, all of whom are employees
of Ralston. Shares of Energizer Stock distributed with respect to the shares of
Ralston Stock held by the trustee for the Ralston Purina Company Savings
Investment Plan ("Ralston SIP"), Vanguard Fiduciary Trust Company, will be
maintained in the Ralston SIP or sold as directed by the individual participants
who are credited with such shares.
If you are a Ralston employee and a participant in the Ralston SIP, you will not
be permitted to invest additional monies in Energizer Stock, and after a period
of time all of your shares of Energizer Stock in the Ralston SIP must be sold
and the proceeds invested, according to your election, in other funds offered by
the Plan.
If you are an Energizer employee and you participate in the Ralston SIP
immediately prior to the distribution, the shares of Energizer Stock credited to
you at the time of the distribution will be transferred, along with your other
account balances (including balances in the Ralston ESOP Common Stock Fund), to
a defined contribution plan to be established by Energizer - the "Energizer
SIP". Following the distribution, you will not be able to invest additional
monies in Ralston Stock and after a period of time, the shares of Ralston Stock
credited to you in the Energizer SIP must be sold and the proceeds invested,
according to your election, in other funds offered by the Energizer SIP,
including the Energizer ESOP Common Stock Fund.
<PAGE>
REGULATORY APPROVALS
All material federal, state or foreign regulatory approvals required in
connection with the distribution have been obtained.
AGREEMENTS BETWEEN RALSTON AND ENERGIZER
This section describes the primary agreements between Ralston and Energizer
that will define the ongoing relationship between them after the distribution
and will provide for an orderly separation of the battery business from
Ralston's pet products business. The following description summarizes the
material terms of these agreements. The agreements have been filed as exhibits
to Energizer's Registration Statement on Form 10 which has been filed with the
Securities and Exchange Commission, and are available for public review. The
following description is only a summary; for the full text of the agreements,
you should review the exhibits which have been filed with the Securities and
Exchange Commission.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Ralston and Energizer will, prior to the distribution, enter into an
Agreement and Plan of Reorganization (the "Reorganization Agreement") providing
for the principal corporate transactions required to effect the distribution.
The Reorganization Agreement addresses a number of other issues between Ralston
and Energizer as a result of the distribution, including indemnification
arrangements, restrictions on Energizer's ability to engage in specified
transactions, and employee benefit arrangements.
Effecting the Distribution.
Certain transactions described in the Reorganization Agreement will be
required to separate the battery business from Ralston's pet products business.
The U.S. battery business is currently conducted by Eveready Battery Company,
Inc., a Delaware subsidiary of Ralston, and the
international battery business is currently conducted principally through
foreign subsidiaries of Energizer International, Inc. ("Energizer
International"), a holding company subsidiary of Ralston. The Reorganization
Agreement provides that, prior to the distribution:
- - Eveready Battery Company, Inc., the initial holder of all outstanding
Energizer Stock, will transfer the Energizer Stock to VCS Holdings, Inc., its
parent which is a directly wholly owned subsidiary of Ralston. VCS will then
merge into Ralston, leaving Ralston as the direct parent of both Energizer and
Eveready.
- - in Canada and Argentina, pet products and battery operations will be
effectively split into separate subsidiaries of Energizer International and
Ralston.
- - in Chile, the assets and liabilities of the pet products business will be
purchased by a newly formed subsidiary of Ralston, and in Spain, the capital
stock of the local subsidiary engaged in the pet products business will be
purchased by an existing subsidiary of Ralston.
- - in Mexico, the capital stock of the local battery subsidiary will be
transferred to Energizer International prior to the distribution in exchange for
Energizer International's interest in a Mexican holding company subsidiary of
Ralston;
- - in the United Kingdom and Brazil, assets of the battery business, as well
as, in the United Kingdom, stock of local battery subsidiaries, will be
purchased by newly formed subsidiaries of Energizer International;
- - the outstanding capital stock of Energizer International will be
contributed to Eveready Battery Company, Inc.;
- - the capital stock of the Japanese subsidiary engaged in the battery
business will be contributed to Energizer International; and
- - Ralston will transfer to Energizer the outstanding capital stock of
Eveready Battery Company, Inc. immediately prior to the distribution.
The effect of all of these transactions will be to place direct or indirect
ownership of all U.S. and foreign battery operations under Energizer prior to
the distribution.
In addition, the Reorganization Agreement provides that Energizer will
assume the obligation to repay approximately $ 490 million which will be
borrowed by Ralston prior to the distribution, as well as approximately $125
million of pre-existing debt of the international battery subsidiaries. The
actual amount which Ralston will borrow is subject to change based upon the
actual amount of cash in excess of $15 million held by Energizer at the time of
the distribution. Ralston itself will retain or assume certain liabilities
associated with the Energizer business, including certain employee benefit plan
liabilities associated with U.S. employees or former employees of the Energizer
business.
Indemnification. Subject to certain exceptions, the Reorganization
Agreement provides for indemnification by the parties as follows:
Ralston has agreed to indemnify Energizer against any liabilities assumed
or retained by Ralston in the Reorganization Agreement, and liabilities relating
to:
- - any breach by Ralston of any covenant made in the Reorganization Agreement
or any other agreement summarized in this section (the "Ancillary Agreements");
- - any third party claim primarily relating to the actions of the Ralston
board of directors in authorizing the distribution; and
the operation of the businesses conducted, or to be conducted, by Ralston and
its subsidiaries or the ownership of its assets (other than the operation or
assets of the battery business) both prior to and following the distribution.
Energizer has agreed to indemnify Ralston against any liabilities assumed
or retained by Energizer in the Reorganization Agreement, including the
approximately $615 million of debt for which Energizer will assume the
obligation to repay, and liabilities relating to:
- - any breach by Energizer of any covenant made in the Reorganization
Agreement or any Ancillary Agreement;
- - the operation of the Energizer business and former battery operations
controlled by Energizer, or the ownership of the assets used in those
businesses, except to the extent those liabilities are assumed or retained by
Ralston in the Reorganization Agreement or any Ancillary Agreement; and
- - all liabilities arising out of Ralston's continuing guarantee of any
obligation of Energizer or any subsidiary of Energizer.
The indemnification payments described above will be limited to the amount of
the loss, less insurance proceeds (net of any deductibles or allocated paid-loss
retro-premiums) which may be received for the loss by the party seeking
indemnification.
Neither Ralston nor Energizer will have any liability to the other for taxes
except as provided in the Tax Sharing Agreement, described below.
Certain Post-Distribution Covenants. The Reorganization Agreement also
provides that, in order to avoid adversely affecting the intended favorable tax
consequences of the distribution, neither Energizer nor any of its subsidiaries
will engage in certain transactions for a period of time following the
Distribution Date unless, in the sole discretion of Ralston, either:
- - a legal opinion satisfactory to Ralston is obtained from counsel selected
by Energizer and approved by Ralston, or
- - a supplemental ruling is obtained from the IRS,
and such opinion or ruling provides that the transactions would not adversely
affect the Federal income tax consequences of the distribution, as set forth in
the private letter rulings which have already been obtained from the IRS by
Ralston.
Energizer does not expect that these limitations will significantly inhibit
its activities or its ability to respond to business developments. The
transactions subject to this provision, and the periods such transactions will
be limited, are:
- - material sales, exchanges or distributions to shareholders by Energizer,
or other material dispositions of any of Energizer's assets, except in the
ordinary course of business - 30 months;
- - repurchases of Energizer Stock, unless the repurchase satisfies certain
IRS Ruling criteria - 24 months;
- - issuances or dispositions of Energizer Stock that represent in the
aggregate 50% or more of the issued and outstanding Energizer Stock - 30
months;
- - the liquidation of Energizer or its merger with any other corporation
(including a subsidiary) - 30 months; or
- - the cessation by Energizer of the active conduct of the battery business,
within the meaning of Section 355(b) of the Code - 30 months.
In addition, the Reorganization Agreement provides that, if Energizer
engages in any of these transactions, and if the distribution becomes taxable
under the provisions of the Code because of its actions, Energizer will
indemnify Ralston (and its stockholders receiving shares of Energizer Stock in
the distribution) against all tax liabilities, including interest and penalties,
which are incurred. Ralston has agreed to indemnify Energizer against losses
which it may incur in the event that Ralston or any of its subsidiaries take any
action which adversely impacts the tax-free nature of the distribution.
Additional Covenants. The Reorganization Agreement also provides that:
- - Ralston will pay all expenses associated with the transactions that are
required to effect the distribution;
- - by the Distribution Date, Energizer's Articles of Incorporation and Bylaws
will be in the forms filed as exhibits to the Registration Statement;
- - the parties will take all actions that may be required to elect or
otherwise appoint as directors of Energizer the eight persons identified in this
Information Statement. See "MANAGEMENT -- Directors of Energizer";
- - Ralston and Energizer will each be granted access to certain records and
information in the possession of the other party and will each retain their
records for a period of seven years following the distribution; and
- - Energizer will comply with the terms of the non-compete provisions
applicable to Ralston and its affiliates under an agreement with E.I. Du Pont de
Nemours and Company relating to Ralston's sale of its protein technologies
business, and an agreement with Agribrands International, Inc. relating to
Ralston's spin-off of that business.
Employee Benefit Arrangements. The Reorganization Agreement contains certain
agreements relating to employee benefit and compensation matters in connection
with the distribution. Generally, following the distribution, Ralston will
cease to have any liability or obligation to Energizer employees and their
beneficiaries under any Ralston benefit plans, programs or practices.
Energizer will assume and be solely responsible for liabilities and obligations
to those employees under benefit plans, programs and practices which it adopts.
Energizer employees will be credited with the term of service they possessed
before the distribution for purposes of all benefit plans, programs and
practices which Energizer may adopt.
Severance Pay. Subject to local laws or regulations, Ralston and Energizer
have agreed that individuals who cease to be employees of Ralston or one of its
subsidiaries and become employees of Energizer or one of its subsidiaries (or
vice versa), will not be considered to have severed their employment for
purposes of any severance or salary continuation plan. Following the
distribution, Ralston and Energizer will each be responsible for any severance
payable to their employees.
Retirement Plans. Energizer has agreed that it will establish and
administer a defined benefit pension plan which will provide benefits to
employees of Energizer who, immediately prior to the distribution, participated
in the Ralston Retirement Plan. Ralston has agreed to transfer certain assets
and liabilities, based on formulas set forth in the Reorganization Agreement,
from the Trust for the Ralston Retirement Plan to the trust for the Energizer
defined benefit pension plan. Each employee of Energizer will, for all purposes
under the Energizer defined benefit pension plan, be credited with the term of
service and any accrued benefit credited to him or her under the terms of the
Ralston Retirement Plan as of the distribution.
With respect to other foreign funded pension plans, Energizer and Ralston
have agreed that assets and liabilities related to current and former employees
of their businesses will be transferred to, or retained in, the Energizer or
Ralston plan which will cover each of those current and former employees. All
of the current and former employees will remain credited with the term of
service and any accrued benefit credited to them under the terms of those Plans
as of the distribution. Upon retirement they will receive pension benefits from
the Plans in accordance with the Plan terms.
Savings Plan. Energizer has agreed to establish the Energizer Holdings,
Inc. Savings Investment Plan (the "Energizer SIP"), a defined contribution plan
which is intended to be a qualified plan subject to Sections 401(a) and 401(k)
of the Code. The Energizer SIP will include all Energizer employees who
immediately prior to the Distribution Date were participants in the Ralston SIP.
Each employee who participates in the Energizer SIP will be credited with the
term of service and the account balance credited to him or her as of the
distribution under the terms of the Ralston SIP. Ralston will transfer an
amount equal to those account balances from the Ralston SIP to the Energizer
SIP. Energizer has agreed that the Energizer SIP will qualify as an employee
stock ownership plan and will contain an "Energizer ESOP Common Stock Fund" in
which matching contributions must be invested. The Energizer SIP will provide a
50% matching contribution to the Energizer ESOP Common Stock Fund for the first
6% of participant pre-tax deferrals into the Energizer SIP. The matching
contribution must remain invested in that Fund. Energizer will also make a 325%
matching contribution to each employee's PensionPlus Match Account in the
Energizer pension plan for the first 1% of after-tax contributions by the
employee to the Energizer SIP.
Welfare Plans. Energizer has agreed that it will adopt appropriate welfare
benefit plans to provide welfare benefits to its employees. Employees will be
credited with the terms of service with Ralston under similar Ralston plans for
purposes of eligibility and benefits under the Energizer plans. Energizer will
assume and be responsible for all welfare benefit claims of its employees which
are incurred either before or following the distribution. Energizer will also
assume and be responsible for all benefits, including retiree medical and life
insurance benefits, payable to employees of the Energizer business who retired
or became disabled prior to the Distribution Date.
Ralston Stock Options and Restricted Stock. As of the distribution:
- - options to acquire Ralston Stock held by Energizer employees will, by
their terms, accelerate and become exercisable and will continue to be
exercisable for a period of time after the distribution in accordance with the
terms of the options,
- - options to acquire Ralston Stock held by Ralston employees will be
adjusted to reflect the distribution,
- - restricted shares of Ralston Stock granted under a Ralston incentive
compensation plan and held by Energizer employees will, by their terms,
immediately vest and thereafter the holders will receive shares of Energizer
Stock in the distribution on the same basis as all other shareholders of Ralston
Stock, and
- - all other employees of Ralston who immediately prior to the distribution
are the holders of any restricted shares of Ralston Stock will receive shares of
Energizer Stock in the distribution on the same basis as all other shareholders
of Ralston Stock, and the shares of Energizer Stock received will be distributed
directly to those employees free of restrictions.
Incentive Stock Plan. Energizer has agreed that it will establish and
administer an Incentive Stock Plan ("Energizer ISP") under which the Nominating
and Compensation Committee of the Energizer Board of Directors (the "Energizer
Committee") will make stock awards and grant stock options to key employees and
directors of Energizer.
Deferred Compensation Plans. Energizer has agreed that it will establish
and administer one or more non-qualified deferred compensation plans which will
provide benefits to Energizer employees. Account balances of Energizer
employees under the Ralston Purina Deferred Compensation Plan for Key Employees
(other than balances under the Fixed Benefit Option), the Ralston Purina
Executive Supplemental Retirement Plan, and the Ralston Purina Company Executive
Savings Investment Plan will be credited to them under the Energizer deferred
compensation plans, and Energizer will thereafter be solely responsible for such
obligations. Energizer will indemnify Ralston against any further liability
with respect to any transferred accounts. Ralston will retain liability for
obligations under the Fixed Benefit Option of the Ralston Purina Deferred
Compensation Plan for Key Employees.
TAX SHARING AGREEMENT
Through the distribution Energizer's business operations will continue to
be included in the consolidated Federal income tax returns of Ralston. As part
of the distribution, Ralston and Energizer will enter into a Tax Sharing
Agreement providing, among other things, for the allocation between the parties
of Federal, state, local and foreign tax liabilities for all periods through
12:01 a.m. on the Distribution Date, and reimbursement by each party for any of
its taxes which may have been or will be paid or advanced by the other. The Tax
Sharing Agreement provides that:
- - Ralston will be liable for certain tax liabilities up to the Distribution
Date, including such liabilities resulting from audits or other adjustments to
previously filed tax returns;
- - Energizer will be liable for certain foreign tax liabilities attributable
to the operation of the Energizer business prior to the Distribution Date; and
- - Energizer will be responsible for all Federal, state, local and foreign
taxes attributable to the Energizer business on and after the Distribution Date.
Though valid as between Ralston and Energizer, the Tax Sharing Agreement is not
binding on the IRS or foreign tax authorities. It will not affect the joint and
several liability of Ralston and Energizer, and their respective subsidiaries,
to the IRS or to foreign tax authorities for taxes of the Ralston consolidated
group relating to periods prior to the distribution.
BRIDGING AGREEMENT
Ralston and Energizer (or one of its subsidiaries) will enter into a
Bridging Agreement under which Ralston will continue to provide certain
administrative services for a limited period of time following the distribution.
It is also currently contemplated that employees of Ralston will administer
insurance plans and programs for Energizer on an ongoing basis following the
distribution, and that Ralston's offshore insurance subsidiary will provide
certain reinsurance coverage for assets and operations of Energizer. Charges
for such services will be on a fully allocated cost basis.
LEASE AGREEMENT
Ralston and Energizer will enter into a lease under which Energizer will
lease office space for its headquarters operations for a period of time
following the distribution at a negotiated rental rate reflecting the market
rate for comparable space in the area.
FOREIGN DISTRIBUTION AGREEMENTS
Ralston and Energizer will enter into agreements providing for the
continued distribution in certain foreign countries by Energizer or its
subsidiaries of pet products manufactured by Ralston. All payments and other
terms and conditions for these distribution arrangements will be determined
through arm's length bargaining on a fair market value basis.
JOINT AIRCRAFT OWNERSHIP AGREEMENT
Following the distribution, Ralston and Energizer will share ownership
of the two corporate aircraft of Ralston. Responsibilities for the operation
and maintenance of the aircraft, and associated expenditures, will be determined
through arm's length bargaining on a fair market basis.
<PAGE>
ENERGIZER HOLDINGS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(DOLLARS IN MILLIONS)
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
The following discussion is a summary of the key factors management considers
necessary in reviewing Energizer Holding Inc.'s (Energizer) results of
operations, operating segment results, liquidity and capital resources. This
discussion should be read in conjunction with the Combined Financial Statements
and related notes and Segment Information found elsewhere in this Information
Statement.
The audited Combined Financial Statements included herein do not include certain
expenses and adjustments that would have been incurred had Energizer been a
separate, independent company, and may not necessarily be indicative of the
results of operations, financial position and cash flows of Energizer had it
operated as a separate, independent company during the periods presented or in
the future. The audited Combined Financial Statements included herein do not
reflect any changes that may occur in the financing and operations of Energizer
as a result of the distribution.
BUSINESS OVERVIEW
Energizer is the world's largest manufacturer of primary batteries and
flashlights and a global leader in the dynamic business of providing portable
power. Energizer manufactures and markets a complete line of primary alkaline
and carbon zinc batteries under the brands Energizer and Eveready, as well as
miniature and rechargeable batteries and flashlights and other lighting
products. Energizer and its subsidiaries operate 23 manufacturing facilities in
16 countries on 4 continents. Its products are marketed and sold in more than
160 countries primarily through a direct sales force, and also through
distributors, to mass merchandisers, wholesalers and other customers.
There has been a shift within primary battery products from carbon zinc
batteries to alkaline batteries. As such, Energizer has recorded provisions
related to restructuring its worldwide battery production capacity and certain
administrative functions in each of the last three years. Alkaline batteries
are now the dominant primary battery in all world areas with the exception of
Asia and Africa. Energizer continues to review its battery production capacity
and its business structure in light of pervasive global trends, including the
evolution of technology.
Energizer's operations are managed via four major geographic areas - North
America, Asia Pacific, Europe and South and Central America. Segment profit and
sales are concentrated in the North America and Asia Pacific areas which
together account for 97% and 76%, respectively, of 1999 segment profit and
sales.
The battery business is highly competitive, both in the United States and on a
global basis, as a number of large battery manufacturers compete for consumer
acceptance and, increasingly, limited retail shelf space. Although the alkaline
battery segment is the fastest growing segment of the primary battery market in
the United States and worldwide, Energizer's share of the United States and
Europe primary battery market on both a dollar and a unit basis declined
significantly in recent years. According to A.C. Nielsen, Energizer's share of
the U.S. primary battery market declined from 41% in 1995 to 34% in 1998 and to
31.6% in 1999. Market share for primary batteries has also declined in Europe
from 27% to 21% from 1995 to 1998.
The Asia Pacific area, which accounts for 23% of segment profit in 1999, has
experienced significant currency devaluations and economic contraction in recent
years. Changes in the value of local currencies or economic contractions in
this area may continue to impact segment profitability.
OPERATING RESULTS
HIGHLIGHTS
Net earnings were $80.0 for the year ended September 30, 1999, compared to
$164.7 in 1998. Included in net earnings are earnings from continuing
operations of $159.8 and $208.2 in 1999 and 1998, respectively; net loss from
discontinued operations of $5.6 in 1999 and $43.5 in 1998; and a net loss on the
disposition of discontinued operations of $74.2 in 1999.
Earnings from continuing operations decreased $48.4 in 1999. Included in both
periods are provisions for restructuring and capital loss tax benefits.
Excluding these items, earnings from continuing operations decreased $21.1.
This decrease is primarily attributable to declines in the Europe and Asia
Pacific areas partially offset by increases in North America.
Net earnings for the year ended September 30, 1997 were $150.1 and included
earnings from continuing operations of $149.6 and earnings from discontinued
operations of $.5. In 1998, earnings from continuing operations increased
$56.6, primarily as a result of lower restructuring charges. Excluding
restructuring charges and capital loss tax benefits in both years, and excluding
foreign tax credit refunds in 1997, earnings from continuing operations
decreased $2.3. Increases in North America segment profitability were more than
offset by declines in the Asia Pacific region. In addition, higher general
corporate expense and research and development expenses were nearly offset by
lower amortization and interest and other financial items expense.
Discontinued operations consists of Energizer's worldwide rechargeable Original
Equipment Manufacturers' (OEM) battery business. In March 1999, the Board of
Directors of Ralston Purina Company (Ralston) announced its intention to exit
this business to allow Energizer to focus on its primary battery business. On
November 1, 1999, this business was sold to Moltech Corporation for
approximately $20.0.
INCOME TAXES
Income taxes, which include federal, state and foreign taxes, were 35.6%, 20.7%
and 21.9% of earnings from continuing operations before income taxes in 1999,
1998 and 1997, respectively. Income taxes include certain unusual items in all
years, the most significant of which are described below:
- - Capital loss tax benefits of $16.6, $48.4 and $35.9 were recognized in
1999, 1998 and 1997, respectively, and were primarily related to prior years'
restructuring actions.
- - In 1997, a tax benefit of $20.5 was recorded related to tax refund claims
for 1993 through 1996 as a result of a change in Ralston's method of computing
foreign tax credits.
- - In 1999 and 1997, the income tax percentage was unfavorably impacted by
pre-tax restructuring provisions that did not result in tax benefits due to tax
loss situations or particular statutes of a country.
Excluding unusual items, the income tax percentage was 41.3% in 1999 and 39.2%
in 1998 and 1997.
SEGMENT RESULTS
Energizer's operations are managed via four major geographic areas - North
America, which includes the US and Canada, Asia Pacific, Europe and South and
Central America. This structure is the basis for Energizer's reportable
operating segment information presented in the Financial Information section of
this Information Statement. Energizer evaluates segment profitability based on
operating profit before general corporate expenses, research and development
expenses, restructuring charges and amortization of goodwill and intangibles.
NORTH AMERICA
Net sales increased $30.5 or 3.0% in 1999 and $31.4 or 3.2% in 1998. In 1999,
volume contributed $55.2 of sales increase, partially offset by unfavorable
pricing and product mix. Alkaline volumes increased 7.5% in 1999 and 2.7% in
1998. Carbon zinc volume declined 16.0% in 1999 and 6.4% in 1998 reflecting the
aforementioned continuing market shift to alkaline batteries from carbon zinc
batteries. Additionally, 1998 sales were favorably impacted by improved
pricing and product mix.
Segment Profit for North America increased $11.6 or 4.1% in 1999 as a result of
the higher gross margin associated with the increase in sales. Increased
marketing and distribution costs of $5.0, commensurate with the higher sales
level, and increased general and administrative expenses of $4.4 were largely
offset by an $8.4, or 8.2%, decrease in advertising and promotion expenditures.
In 1998, segment profit increased $18.7 or 7.2%. This increase was primarily
attributable to a $34.3 gross margin improvement driven primarily by the
favorable product mix and sales increase. Partially offsetting these increases
were an increase in marketing and distribution costs of $6.0, or 7.6%, and an
increase in advertising expenditures of $6.5, or 6.7%, in support of the
Energizer Advanced Formula product launch.
<PAGE>
ASIA PACIFIC
Net sales decreased $12.1 or 3.0% in 1999. Currency devaluations accounted for
$12.0 of the sales decline. Carbon zinc volume decreases of 5.4% were offset by
a 4.2% increase in alkaline volume.
Segment profit for Asia Pacific decreased $11.1, or 11.1% in 1999. Gross margin
declined $21.3 due to higher production costs and lower sales. Partially
offsetting these declines were a $6.2 decrease in exchange losses and a $4.0
decrease in advertising and promotion.
In 1998, sales decreased $78.2 or 16.5% with currency devaluations accounting
for $68 of the decline. To mitigate the impact of the currency devaluations,
price increases were implemented in a number of Asian markets. Pricing and
product mix increased sales by $10. Decreased volumes also had a negative
impact on sales of $20 as carbon zinc volume declined 10% and alkaline volume
declined 1.1%.
Segment profit decreased $21.2, or 17.4% in 1998. Gross margin declined $32.7
on lower sales, partially offset by lower costs due to currency devaluation.
Similarly, currency devaluation was the primary factor in declines in Marketing
and Distribution and General and Administrative costs of $5.6 and $3.2,
respectively. Advertising and Promotion decreased $8.9 on currency devaluation
and reduced spending.
EUROPE
Net sales to customers for Europe decreased $48.7 or 13.3% in 1999 and $39 or
9.6% in 1998. The 1999 decreased alkaline and carbon zinc volumes, of 4.8% and
18.7%, respectively accounted for $33.3 of the decline. Pricing and product mix
negatively impacted sales by $17 in 1999. The majority of the pricing and
product mix decline, $9.8, was driven by the company's move from a sales force
to a distributor model in several countries during 1999. The remainder of the
decline reflects competitive and retail pressures.
The sales decline in 1998 was primarily due to currency devaluation. Excluding
the impact of foreign exchange rates, sales decreased $9.1 or 2.2% in 1998.
Alkaline volumes increases of 8.1% were virtually offset by a 5.8% carbon zinc
volume decline.
Segment profit for Europe declined by $12.5 to a loss of $1.2 in 1999.
Production inefficiencies related to a plant closing and other costs associated
with restructuring activities accounted for $6.5 of the decline. Excluding
these costs, segment profit declined $6 as sales declines of $48.7 were
partially offset by a $28.3 decrease in cost of products sold associated with
the lower sales and a $15.1 decrease in overhead reflecting results of the
continuing restructuring of the European business operations, including the move
to the distributor sales model in several countries.
In 1998, segment profit declined $3.9, as sales declines of $39 were nearly
offset by a $22.4 decrease in cost of products sold associated with the lower
sales and a $12.1 decrease in overhead reflecting restructuring of the European
business operations coupled with favorable currency impacts.
SOUTH AND CENTRAL AMERICA
Net sales decreased $19.2 or 12.5% in 1999. Of this decline, $19 was due to
currency devaluation in the region. In addition, sales increased $16 on
increased selling prices and a favorable product mix but were offset by volume
declines of 10.0% for alkaline and 16.9% for carbon zinc batteries.
In 1998, sales increased $1.8 or 1.2%. Foreign currency devaluation decreased
sales by $12. Offsetting this decline were overall volume improvements of $4
with alkaline volumes up 6.3% and carbon zinc down 4.2%. In addition, increased
selling prices and a favorable product mix improved sales by $10.
Intersegment sales for 1998 increased $19.6 reflecting the impact of additional
sourcing of carbon zinc batteries from this segment to North America as carbon
zinc production capacity was eliminated in North America during 1998. This
sourcing continued into 1999, to a lesser extent.
Segment profit for South and Central America decreased $2.4 or 14.2% in 1999.
Gross margin declined $13, much of which was attributable to lower usage of
productive capacity in the Mexican plant. Lower other operating costs and a
decrease of $2.1 in exchange losses partially offset the earnings decline.
Operating cost reductions included decreased advertising and promotion expenses
of $4.7 and lower general and administrative expenses of $2.4 resulting from
actions taken to offset lower plant utilization and from planned reorganization
and restructuring in Brazil.
In 1998, segment profit increased $5.4 or 47.0% primarily on the additional
margin of approximately $8.0 on intersegment sales to source carbon zinc product
to North America. This increase was partially offset by increased exchange
losses of $2.0.
DISCONTINUED RECHARGEABLE OEM BATTERY BUSINESS
Net earnings/(loss) from discontinued operations represents the operating
results of this business through March 31, 1999. Results for this business
continued to decline in 1999 on lower sales volume and decreased margins. In
1998, results of discontinued operations include an after-tax restructuring
charge of $42.7, primarily representing an impairment write-down of lithium ion
rechargeable battery assets. Excluding this charge, results declined $1.3 in
1998 on lower sales.
GENERAL CORPORATE EXPENSES
General corporate expenses of $54.0 in 1999 increased 16.9% in 1999 and
increased 32.4% in 1998. The increase in 1999 was primarily attributable to
strategic studies performed and headquarters' reorganization in anticipation of
the spin-off and increases in various other corporate costs. The increase in
1998 was primarily attributable to increased profit in inventory eliminations
and increases in various other corporate costs. These increases were partially
offset by increased pension income. As a percent of sales, general corporate
expenses were 2.9% in 1999, compared to 2.4% in 1998 and 1.7% in 1997.
RESEARCH AND DEVELOPMENT EXPENSE
Research and development expense of $48.5 in 1999 increased 4.1% in 1999 and
increased 11.2% in 1998. These increases are attributable to Energizer's
ongoing effort to maintain technological leadership in the primary battery
business. As a percent of sales, research and development expense was 2.6% in
1999, compared to 2.4% in 1998 and 2.1% in 1997.
RESTRUCTURING CHARGES
Competition in the primary battery business has intensified over the past
several years, and there continues to be a migration of demand from carbon zinc
to alkaline batteries. In response to these changes, Energizer has recorded
restructuring charges each year since 1994. These charges include a reduction
in carbon zinc plant capacity as demand for this type of battery continues to
decline, plant closures for the movement and consolidation of alkaline
production to new or more efficient locations in an effort to achieve lower
product costs, and staffing reorganizations and reductions in various world
areas to enhance management effectiveness and reduce overhead costs. A detailed
discussion of these and other charges taken since 1994 follows.
During 1999, Energizer recorded net provisions for restructuring of $8.3,
after-tax, or $9.9, pre-tax, $2.1 of which represented inventory write-downs and
is classified as Cost of Products Sold in the combined statement of earnings.
Of the net pre-tax charge, $7.4 relates to current year restructuring plans for
the elimination of certain production capacity in North America and in Asia.
The pre-tax charge of $7.4 for current year plans consisted of termination
benefits of $3.2, other cash costs of $0.2 and fixed asset impairments of $4.0.
The fixed asset impairments primarily relate to assets used for the production
of lithium coin cells in North America. These assets were idled and scrapped in
1999.
The 1999 restructuring plan provided for the termination of approximately 170
production and administrative employees and the closure of one plant in Asia.
This plant closure was precipitated by the financial problems in the Asian
market, which resulted in contractions in battery markets in this area. As of
September 30, 1999, approximately 160 employees had been terminated and the
plant was closed in connection with these charges. Substantially all actions
associated with these charges will be completed by the end of the first quarter
of fiscal 2000.
The remaining $2.5 represents additional net provisions related to prior years'
restructuring plans. Additional termination benefits of $5.5 related to the
1997 restructuring plan primarily represent enhanced severance related to a
European plant closing. Additional provisions for other cash costs of $1.8 were
recorded for fixed asset disposition costs for previously held for use assets
related to the 1997 restructuring plan that were idled and held for disposal.
Other non-cash charges of $2.1 relate to inventory write-offs which were more
than offset by a reclassification of $4.5 from other comprehensive income to net
income of cumulative translation adjustment for a subsidiary sold in connection
with the 1997 plan. Also recorded in 1999 were asset proceeds greater than
anticipated of $5.4 related to 1994, 1995 and 1997 restructuring plans.
The 1999 restructuring plans are expected to generate annual pre-tax cost
savings of $0.3 in 2000 and $1.4 beginning in 2001.
During 1998, Energizer recorded net after-tax provisions for restructuring of
$12.8, or $21.3 on a pre-tax basis, of which $.3 represents inventory
write-downs and is classified as Cost of Products Sold in the combined statement
of earnings. Of the net pre-tax charge, $36.5 related to 1998 restructuring
plans, including a voluntary early retirement option offered to most U.S.
Energizer employees meeting certain age and service requirements and European
business operations restructuring, primarily a reorganization of European sales
forces and related employee reductions.
The total 1998 pre-tax charge of $36.5 consisted of termination benefits of
$29.3, which provided for the termination or early retirement of approximately
420 sales and administrative employees, other cash costs of $4.6, fixed asset
impairments of $1.1 and a non-cash investment write-off of $1.5. The other cash
costs of $4.6 consisted of demolition costs of $1.5 and environmental exit costs
of $0.8, both relating to assets held for disposal, lease termination costs of
$1.6, and other exit costs of $.7. As of September 30, 1999, approximately 340
employees had been terminated in connection with these charges. Except for
disposition of certain assets held for disposal, substantially all actions
associated with the 1998 charges will be completed by the end of fiscal 2000.
In addition, net reversals of $15.2 related to prior years' restructuring plans
were recorded in 1998, comprised of $3.7 of additional charges offset by $18.9
of reversals of prior years' charges. The additional charges primarily related
to asset disposition costs of $2.6 for previously held for use assets that were
idled and held for disposal. The reversals included $9.4 of greater than
anticipated proceeds from asset sales related to the 1994, 1995 and 1996
restructuring plans. In addition, $8.5 of termination benefits recorded in 1997
were reversed in 1998 due primarily to the modification of a European plant
closing plan, driven by the changing business environment in Europe. The
modifications resulted in the termination of approximately 200 fewer employees
than originally anticipated.
Pre-tax cost savings from the 1998 restructuring plans have been or are expected
to be as follows: 1999 - $12; and ultimate annual reduction - $13.
During 1997, Energizer recorded net provisions for restructuring of $72.0,
after-tax, or $83.7, pre-tax, of which $5.2 represented inventory write-downs
and is classified as Cost of Products Sold in the combined statement of
earnings. Of the total pre-tax charge, $81.8 related to 1997 plans for the
restructuring of Energizer's carbon zinc and alkaline production capacity,
primarily in Europe and North America, and for staffing reorganization and
reductions.
The total 1997 pre-tax charge of $81.8 consisted of termination benefits of
$43.8, other cash costs of $2.4, fixed asset impairments of $29.6 and non-cash
charges of $6.0. The other cash costs of $2.4 consisted of legal,
environmental and other exit costs. The non-cash charges of $6.0 consisted of
inventory write-offs of $3.0 and an investment write-off of $3.0.
Fixed asset impairments of $29.6 were computed using discounted cash flows to
determine the fair value of the impaired plants and production assets. The net
book value of these assets prior to the impairment write-down was $40.0. These
assets relate to three production plants located in the United States, Canada
and France, which were idled in March 1998, November 1997 and April 1999,
respectively. Depreciation continued on these assets subsequent to the
impairment write-down until those assets were idled.
The 1997 charges provided for the termination of approximately 1,180 employees
in production, sales and administrative capacities. As previously mentioned,
the plan was modified in 1998 to terminate approximately 200 fewer employees.
As of September 30, 1999, approximately 890 employees had been terminated in
connection with these charges. Except for disposition of certain assets held
for disposal, substantially all actions associated with the 1997 charges will be
completed by the end of the first quarter of fiscal 2000, with payments
extending through the end of fiscal 2000.
The remaining $1.9 of the net 1997 provision represents additional provisions
for prior years' restructuring plans of $2.5 and $2.9 for additional cash and
non-cash charges, respectively, net of reversals of cash and non-cash provisions
taken in prior years of $.7 and $2.8, respectively. The non-cash reversal was
primarily due to fixed asset proceeds greater than originally anticipated.
Pre-tax cost savings from the 1997 restructuring plans have been or are expected
to be as follows: 1998 - $9; 1999 - $19; 2000 - $25; and ultimate annual
reduction - $26.
As of September 30, 1999, except for the disposition of certain assets held for
disposal, substantially all activities associated with 1994, 1995 and 1996
restructuring plans are complete. The remaining accrual related to these plans
was $1.6 at September 30, 1999 and primarily represents costs under a
noncancellable lease and asset disposition costs. The 1994, 1995 and 1996
restructuring plans resulted in pre-tax cost reductions of $47 in 1997 and $51
in 1998, representing the ultimate annual reduction.
The carrying value of assets held for disposal at September 30, 1999 was $6.7.
Energizer expects to fund the remaining costs of these restructuring actions
with funds generated from operations.
See the Notes to Financial Statements for a table which presents, by major cost
component and by year of provision, activity related to the restructuring
charges discussed above during fiscal years 1999, 1998 and 1997, including any
adjustments to the original charges.
FINANCIAL CONDITION
Cash flows from continuing operations totaled $337.2 in 1999, $232.6 in 1998 and
$285.7 in 1997. The 45.0% increase in cash flows from continuing operations in
1999 resulted primarily from higher cash earnings and also from favorable
changes in working capital items. In 1998, the 18.6% decrease in cash flows
from continuing operations was attributable to changes in working capital items,
partially offset by higher cash earnings. The impact of increased accounts
receivable and decreased other current liabilities was partially offset by
increased accounts payable.
Working capital was $478.1 and $478.5 at September 30, 1999 and 1998,
respectively.
Capital expenditures totaled $69.2, $102.8 and $98.8 in 1999, 1998 and 1997,
respectively. These expenditures were primarily funded by cash flow from
operations. Capital expenditures of approximately $90.0 are anticipated in 2000
and are expected to be financed with funds generated from operations.
Net transactions with Ralston resulted in cash usage of $293.7, $154.7 and $98.6
in 1999, 1998 and 1997.
It is currently expected that Energizer will have approximately $615 in debt
immediately after the spin off. Energizer anticipates that its operating cash
flow, together with funds available under its credit facilities, will be
sufficient to meet its anticipated future operating expenses, to fund capital
expenditures and to service its debt as it becomes due.
INFLATION
Management recognizes that inflationary pressures may have an adverse effect on
Energizer through higher asset replacement costs and related depreciation and
higher material costs. Energizer tries to minimize these effects through cost
reductions and productivity improvements as well as price increases to maintain
reasonable profit margins. It is management's view, however, that inflation has
not had a significant impact on operations in the three years ended September
30, 1999.
SEASONAL FACTORS
Energizer's results are significantly impacted in the first quarter of the
fiscal year by the additional sales volume associated with the Christmas holiday
season, particularly in North America. First quarter sales accounted for 31.1%,
33.2% and 32.1% of total net sales in 1999, 1998 and 1997, respectively.
ENVIRONMENTAL MATTERS
The operations of Energizer, like those of other companies engaged in the
battery business, are subject to various federal, state, foreign and local laws
and regulations intended to protect the public health and the environment.
These regulations primarily relate to worker safety, air and water quality,
underground fuel storage tanks and waste handling and disposal.
Energizer has received notices from the U.S. Environmental Protection Agency,
state agencies, and/or private parties seeking contribution, that it has been
identified as a "potentially responsible party" (PRP) under the Comprehensive
Environmental Response, Compensation and Liability Act, and may be required to
share in the cost of cleanup with respect to 9 federal "Superfund" sites. It
may also be required to share in the cost of cleanup with respect to a
state-designated site. Liability under the applicable federal and state
statutes which mandate cleanup is joint and several, meaning that a liable party
may be responsible for all of the costs incurred in investigating and cleaning
up contamination at a site. However, liability in such matters is typically
shared by all of the financially viable responsible parties.
Energizer's ultimate liability in connection with those sites may depend on many
factors, including the volume of material contributed to the site, the number of
other PRP's and their financial viability, and the remediation methods and
technology to be used.
In addition, Energizer has undertaken certain programs to reduce or eliminate
the environmental contamination at the rechargeable battery facility in
Gainesville, Florida, which has recently been divested. In the event that the
buyer would become unable to continue such programs, Energizer could be required
to bear financial responsibility for such programs as well as for other known
and unknown environmental conditions at the site.
Many European countries, as well as the European Union, have been very active in
adopting and enforcing environmental regulations. In many developing countries
in which the Energizer business operates, there has not been significant
governmental regulation relating to the environment, occupational safety,
employment practices or other business matters routinely regulated in the United
States. As such economies develop, it is possible that new regulations may
increase the risk and expense of doing business in such countries.
It is difficult to quantify with certainty the potential financial impact of
actions regarding expenditures for environmental matters, particularly
remediation, and future capital expenditures for environmental control
equipment. Nevertheless, based upon the information currently available,
Energizer believes that its ultimate liability arising from such environmental
matters, taking into account established accruals of $5.8 million for estimated
liabilities, should not be material to its financial position. Such liability
could, however, be material to results of operations or cash flows for a
particular quarter or annual period.
MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS
The market risk inherent in Energizer's financial instruments and positions
represents the potential loss arising from adverse changes in interest rates and
foreign currency exchange rates. The following risk management discussion and
the estimated amounts generated from the sensitivity analyses are
forward-looking statements of market risk assuming certain adverse market
conditions occur.
INTEREST RATES
Energizer has interest rate risk with respect to interest expense on variable
rate debt. At September 30, 1999 and 1998, Energizer had $120.7 and $128.9
variable rate debt outstanding. A hypothetical 10% adverse change in all
interest rates would have had an annual unfavorable impact of $0.9 and $1.3 in
1999 and 1998, respectively, on Energizer's earnings and cash flows based upon
these year-end debt levels. The primary interest rate exposures on variable
rate debt are with respect to short-term local currency rates in certain Asian
and South American countries.
FOREIGN CURRENCY EXCHANGE RATES
Energizer employs a foreign currency hedging strategy which focuses on
mitigating potential losses in earnings or cash flows on foreign currency
transactions, primarily anticipated intercompany purchase transactions and
intercompany borrowings. External purchase transactions and intercompany
dividends and service fees with foreign currency risk are also hedged from time
to time. The primary currencies to which Energizer's foreign affiliates are
exposed include the U.S. dollar, the euro and the British pound, while domestic
affiliates are primarily exposed to the Swiss franc.
Energizer's hedging strategy involves the use of natural hedging techniques,
where possible, such as the offsetting or netting of like foreign currency cash
flows. Where natural hedging techniques are not possible, foreign currency
derivatives with durations of generally one year or less may be used, including
forward exchange contracts, purchased put and call options, and zero-cost option
collars. Energizer policy allows foreign currency derivatives to be used only
for identifiable foreign currency exposures and, therefore, Energizer does not
enter into foreign currency contracts for trading purposes where the sole
objective is to generate profits.
Market risk of foreign currency derivatives is the potential loss in fair value
of net currency positions for outstanding foreign currency contracts at fiscal
year end, resulting from a hypothetical 10% adverse change in all foreign
currency exchange rates. Market risk does not include foreign currency
derivatives that hedge existing balance sheet exposures, as any losses on these
contracts would be fully offset by exchange gains on the underlying exposures
for which the contracts are designated as hedges. Accordingly, the market risk
of Energizer's foreign currency derivatives at September 30, 1999 and 1998
amounts to $1.5 and $3.7, respectively.
Energizer generally views as long-term its investments in foreign subsidiaries
with a functional currency other than the U.S. dollar. As a result, Energizer
does not generally hedge these net investments. Capital structuring techniques
are used to manage the net investment in foreign currencies as considered
necessary. Additionally, Energizer attempts to limit its U.S. dollar net
monetary liabilities in currencies of hyperinflationary countries, primarily in
Latin America. In terms of foreign currency translation risk, Energizer is
exposed to the Swiss franc and other European currencies; the Mexican peso and
other Latin American currencies; and the Singapore dollar, Chinese yuan,
Australian and Hong Kong dollars, and other Asian currencies. Energizer's net
foreign currency investment in foreign subsidiaries and affiliates translated
into U.S. dollars using year-end exchange rates was $545.1 and $600.3 at
September 30, 1999 and 1998, respectively. The potential loss in value of
Energizer's net foreign currency investment in foreign subsidiaries resulting
from a hypothetical 10% adverse change in quoted foreign currency exchange rates
at September 30, 1999 and 1998 amounts to $54.5 and $60.0.
RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 133 "Accounting for Derivative Instruments and
Hedging Activities" in June 1998. This statement provides standards on
accounting and disclosure for derivative instruments, and requires that all
derivatives be measured at fair value and reported as either assets or
liabilities in the balance sheet. Subsequent to the issuance of SFAS No. 133,
the FASB issued SFAS No. 137 which defers the effective date of SFAS No. 133 by
one year. Accordingly, Energizer will be required to adopt the provisions of
SFAS No. 133 no later than the beginning of fiscal year 2001. Energizer has not
completed its evaluation to determine the impact of this statement on its
financial statements.
YEAR 2000 READINESS
Energizer uses both purchased and internally developed computer software. Like
many other organizations, certain programs within Energizer's purchased and
internally developed software process dates based on two digits for the year of
a transaction rather than a full four digits. If left uncorrected, these
programs would be unable to properly process dates in the year 2000. As such,
incomplete or untimely resolution of the Year 2000 issue by Energizer or its
critical suppliers and customers or government agencies could have an adverse
impact on Energizer's business, operations and financial condition.
Energizer has had active projects in place since 1996 targeted to achieve Year
2000 readiness in its key application systems software, computer hardware and
operating systems software, and various other systems containing embedded chip
technology (such as manufacturing equipment controllers and facility controllers
which include elevators, alarm systems and heating and cooling systems) before
the year 2000. Energizer completed its plans and active projects to achieve
Year 2000 readiness prior to calendar year end.
The estimated total cost for Energizer to achieve Year 2000 readiness is
approximately $16.4, of which $16.1 had been expended through September 30,
1999.
Energizer has developed a base contingency plan to address Year 2000 risks;
however, contingency planning efforts are ongoing and will continue to evolve as
new information becomes available. Contingency plans to address specifically
identified Year 2000 risks include increasing raw material, packaging material
and inventory levels in key manufacturing locations, securing alternate sources
of supply, distribution and warehousing, developing manual workarounds and other
appropriate measures. Energizer's critical suppliers and major customers have
been contacted regarding Year 2000 issues. Because of the uncertainties
associated with assessing the ability of major suppliers and customers to
complete the remediation of their systems in time to prevent operational
difficulties, Energizer will continue to contact and/or visit these business
partners to gain assurances that no significant adverse consequences will result
due to failure to complete remediation of their systems. As of early January,
no significant issues have arisen. Because of the uncertainties involved,
Energizer will continue to monitor the situation.
<PAGE>
ENERGIZER HOLDINGS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Dollars in millions)
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
BUSINESS OVERVIEW
Primary battery category sales increased significantly in the three months ended
December 31, 1999, particularly in the U.S., as consumers purchased batteries in
preparation for potential Y2K disruptions. A.C. Nielsen measured the U.S.
primary battery market dollar sales for the 13 weeks ended December 25, 1999 at
18% higher than the same period a year ago. Other world areas experienced less
dramatic sales increases in the primary battery category.
As there were no widespread power outages or other disruptions as a result of
the Y2K date change, it is possible that future sales for the primary battery
category will be negatively impacted due to consumer stockpiling prior to the
year's end. It is not possible at this point to quantify the magnitude or
duration of any declines in category sales. For the four weeks ended February
5, 2000, the primary battery category in the U.S. increased 5% compared to the
same four-week period last year, according to A.C. Nielsen.
OPERATING RESULTS
HIGHLIGHTS
Net earnings and earnings from continuing operations were $104.7 for the three
months ended December 31, 1999, compared to $52.0 and $54.8, respectively, for
the same period a year ago.
Earnings from continuing operations increased $49.9, or 91%, for the quarter.
Included in the prior year are after-tax provisions for restructuring of $6.2.
Excluding this item, earnings from continuing operations increased $43.7 or 72%.
The increase is primarily attributable to increased segment profit.
SEGMENT RESULTS
Operations are managed via four major geographic areas - North America (which
includes the U.S. and Canada), Asia Pacific, Europe, and South and Central
America (including Mexico). This structure is the basis for the Company's
reportable operating segment information, as included in the tables in Note 4 to
the Combined Financial Statements for the period ended December 31, 1999.
NORTH AMERICA
Net sales to customers for North America increased $90.5, or 27%, in the current
quarter compared to the same period last year. Significant volume increases
accounted for $100.8 of sales increase, partially offset by unfavorable pricing
and product mix. The overall primary battery market in the U.S. increased 18%
on a dollar basis compared to the same period last year while Energizer's share
increased 1.2 share points, as measured by A.C. Nielsen. Alkaline volumes
increased 38% in the quarter, partially offset by a 21% decrease in carbon zinc.
Segment profit increased $45.0 or 45%. Gross margin increased $57.0, benefiting
from the higher sales and leveraging of fixed costs. Advertising and promotion
and marketing and distribution costs each increased 22%, in line with the sales
increase, while other costs were relatively flat.
ASIA PACIFIC
Net sales to customers for Asia Pacific increased $13.5, or 13%, in the current
quarter compared to the same period last year on higher alkaline volume.
Segment profit increased $12.1, or 47%, primarily on higher sales. In addition,
the prior year quarter was unfavorably impacted by production start-up costs
associated with Energizer's new plant in China.
EUROPE
Net sales to customers for Europe decreased $14.3, or 13%, for the current
quarter compared to the same period last year. Currency devaluation accounted
for $7.4 of the decline. The remainder of the decrease resulted from lower
alkaline and carbon zinc volumes of 4% and 18%, respectively.
Segment profit improved $5.8 or 276%. Gross margins increased $2.1 in spite of
sales declines reflecting improvements related to a plant closing during 1999.
Lower overhead costs also contributed to the profit improvement.
SOUTH AND CENTRAL AMERICA
Net sales to customers for South and Central America increased $1.5, or 4%, for
the current quarter compared to the same period last year on higher volumes.
Improved pricing and product mix offset the impacts of currency devaluation.
Alkaline volume increased 10% while carbon zinc was nearly flat.
Segment profit was flat as higher sales contribution was offset by unfavorable
currency impact and higher management costs.
CORPORATE EXPENSES
Corporate expenses decreased $7.4 on higher pension income, favorable
mark-to-market adjustments on liabilities denominated in share equivalents, and
lower information systems spending.
INCOME TAXES
Income taxes, which include federal, state and foreign taxes, were 39.7% and
43.7% of earnings from continuing operations before income taxes for the three
months ended December 31, 1999 and 1998, respectively. The prior year provision
was unfavorably impacted by restructuring charges with no corresponding tax
benefit in certain countries. Excluding the impact of restructuring provisions,
the prior year tax rate was 41.1%. The decrease in the tax rate results
primarily from a lower overall foreign tax rate.
DISCONTINUED RECHARGEABLE OEM BATTERY BUSINESS
Discontinued operations consist of Energizer's worldwide rechargeable Original
Equipment Manufacturers' (OEM) battery business. In March 1999, the Board of
Directors of Ralston Purina Company announced its intention to exit this
business to allow Energizer to focus on its primary battery business. On
November 1, 1999, this business was sold to Moltech Corporation for
approximately $20.0. Actual pretax operating losses during the divestment
period through the sale date totaled $15.9.
RESTRUCTURING CHARGES
During the three-month period ended December 31, 1998, Energizer recorded net
after-tax and pre-tax provisions for restructuring of $6.2 and $6.1,
respectively. The charges were primarily termination benefits associated with a
1997 alkaline and carbon zinc production restructuring plan for Europe.
During the current quarter, approximately 120 employees were terminated in
connection with restructuring accruals established in prior years. Activities
impacting the restructuring reserve during the quarter are presented in Note 2
in the footnotes to the Combined Financial Statements.
FINANCIAL CONDITION
Cash flow from continuing operations was $60.6 for the three months ended
December 31, 1999 compared to $33.0 for the same period in fiscal 1999. The
increase in cash flows is attributable to higher cash earnings partially offset
by unfavorable changes in working capital items. Working capital changes
included increases in accounts receivable and decreases in other current
liabilities, which were partially offset by decreases in other current assets
and increases in accounts payable. Working capital was $513.7 at December 31,
1999 compared to $478.1 at September 30, 1999.
Capital expenditures totaled $11.0 and $13.4 for the first quarter of fiscal
2000 and fiscal 1999, respectively.
Energizer had a net increase in borrowings of $11.9 for the three months ended
December 31, 1999 and a net increase in borrowings of $6.7 for the same period
in fiscal 1999. Net transactions with Ralston resulted in cash usage of $143.6
and $28.2 in the first quarter of fiscal 2000 and fiscal 1999, respectively.
It is currently expected that Energizer will have approximately $615 in debt
immediately after the spin-off. The debt is expected to include $335 of
long-term and $280 of short-term notes payable. Energizer anticipates that its
operating cash flow, together with funds available under its credit facilities,
will be sufficient to meet its anticipated future operating expenses, to fund
capital expenditures and to service its debt as it becomes due.
YEAR 2000 READINESS
No significant system issues have arisen related to Y2K.
<PAGE>
BUSINESS AND PROPERTIES
BACKGROUND
Energizer Holdings, Inc. is the world's largest manufacturer of primary
batteries and flashlights and a global leader in the dynamic business of
providing portable power. It is the successor to over 100 years of expertise in
the battery and lighting products industry. Its brand names "Eveready" and
"Energizer" have worldwide recognition for quality and dependability, and are
marketed and sold in more than 160 countries. Energizer's subsidiaries
manufacture and market a complete line of primary alkaline and carbon zinc
batteries, miniature batteries and flashlights and other lighting products.
Although Energizer, in November of 1999, sold its rechargeable battery
manufacturing and assembly business, which produced rechargeable batteries for
sale to manufacturers of rechargeable equipment, Energizer continues to market a
line of rechargeable batteries for retail sale to consumers. Energizer believes
it has one of the industry's most extensive product lines.
"Energizer" brand alkaline batteries are the most popular and widely used in the
array of Energizer products. The batteries are offered in 1.5 volt, 4.5 volt, 6
volt and 9 volt configurations, and are available in the standard selection of
sizes, including AA, AAA, AAAA, C, D and 9 volt sizes. In 1997, Energizer
introduced newly designed alkaline AA and AAA batteries offering significantly
improved performance in most demanding high-drain devices. Energizer has
recently announced plans to introduce a super-premium alkaline battery under the
brand name "Energizer e2" in the summer of 2000. Energizer also produces or
distributes:
- - "Energizer Industrial" batteries in three models targeted for non-consumer
industrial applications;
- - lithium batteries, available in AA, miniature and cylindrical sizes, for
use in high-performance applications such as cameras, camcorders, memory backup,
CD players and portable computers;
- - a line of miniature batteries, available in several chemistries, including
silver oxide, zinc-air and manganese dioxide systems, for use in electronic
watches, calculators, hearing aids, cameras, miniature radios, remote controls
and electronic thermometers;
- - the "Eveready" brand "Super Heavy Duty" and "Classic" lines of carbon zinc
batteries for economy applications; and
- - a line of rechargeable batteries and battery packs under the "Energizer"
brand name.
Energizer is also the world's largest manufacturer of portable lighting devices,
offering more than 60 different lighting products for consumer and industrial
use.
Energizer's subsidiaries operate 23 manufacturing facilities in 16 countries on
4 continents, and its worldwide workforce of over 11,000 employees produce
approximately 6 billion battery cells annually.
Both in the United States and worldwide, the proliferation of portable
electronic devices, including radios, cellphones, cameras, compact disc players,
pagers, remote controls and electronic games and battery-powered toys, continues
at an accelerated pace. The sheer numbers of these devices, as well as their
high power drain characteristics, have created a strong and growing demand for
primary batteries, particularly alkaline cells which have substantially greater
service life than the less expensive carbon zinc cells. Smaller alkaline sizes
utilized in small and miniature portable devices are particularly in demand.
Driven by growth in devices as well as increased power requirements, global
demand for primary batteries has grown an average of 7% annually over the last
five years, and global demand for alkaline primary batteries has grown an
average of 10-11%. Industry studies project that demand for alkaline batteries
will continue to grow by 10-11% through 2002 on a global basis. Demand in the
United States and western Europe, where alkaline batteries account for 50% or
more of primary batteries sold, is expected to continue growing at 7-8%. In
other regions where the majority of primary batteries sold are still carbon
zinc, alkaline battery demand is expected to grow at double digit rates as
consumer preference continues to shift from carbon zinc to alkaline.
In response to the power demands of portable electronic devices, the
battery industry has focused on increasing the service life of batteries as well
as the quality of their performance under high-drain conditions. The battery
industry has been notable for the pace of innovations in product life, product
design and applied technology. Energizer and its competitors have made, and
continue to make, significant investments in research and development with the
goal of further commercially successful innovations. This competition, as well
as technological advances, have led to constantly higher standards of product
performance for alkaline primary batteries. However, the research and
development efforts associated with constant innovation in the industry have
been expensive, and may have contributed to the blurring of consumer perceptions
about relative brand performance.
The battery business is relatively capital intensive, and capital needs can
fluctuate widely from year to year as technologies change. Contributing factors
to these capital needs are:
- - the constantly higher standards for product performance required to
maintain competitiveness in the alkaline battery segment;
- - the requirement of absolute precision in the physical and chemical
characteristics of batteries produced which mandates frequent capital
expenditures to guarantee such precision; and
- - manufacturing volume in the billions of units, which volume continues to
grow in most segments at a rate of 5 to 10% per year.
As noted, despite the fact that carbon zinc primary batteries are substantially
less expensive on a per unit basis than alkaline primary batteries, there has
been a worldwide shift in consumer preference from carbon zinc to alkaline.
Alkaline batteries are now the dominant primary battery in North America,
Australia, and Europe, and the shift from carbon zinc to alkaline is
accelerating in Asia and Latin America. Reflecting the shift in preference,
Energizer has closed or consolidated a number of its carbon zinc manufacturing
facilities, and has reserved funds related to restructuring its world-wide
battery production capacity and certain administrative functions in each of the
last four years. Energizer continues to review its worldwide manufacturing
capacity for both carbon zinc and alkaline batteries. See "BUSINESS AND
PROPERTIES -- Properties" for more information on Energizer's manufacturing
capacity.
The battery business, particularly in North America, tends to be seasonal, with
large purchases of batteries by consumers during the Christmas holiday season,
and increases in retailer inventories during late summer and autumn.
PATENTS, TECHNOLOGY AND TRADEMARKS
Energizer's operating subsidiaries own a number of trademarks which Energizer
considers of substantial importance and which are used individually or in
conjunction with other Energizer trademarks. These include "Eveready",
"Energizer", "Energizer Advanced Formula", "Energizer e2" the Energizer Bunny
and the Energizer Man character.
Energizer's ability to compete effectively in the battery industry depends
in part on its ability to maintain the proprietary nature of its technology and
manufacturing processes through a combination of patent and trade secret
protection, non-disclosure agreements, licensing, and cross-licensing
agreements. Energizer's subsidiaries own or license from third parties a
considerable number of patents, patent applications and other technology which
Energizer believes are extremely significant to its business. These primarily
relate to battery product and lighting device improvements, additional battery
product features, and manufacturing processes.
As of November 30, 1999, Eveready Battery Company, Inc., a subsidiary of
Energizer, held 190 United States patents which have a range of expiration dates
from September, 2000 to November, 2016, and had 132 patent applications pending.
It routinely prepares additional patent applications for filing in the United
States. Eveready also actively pursues foreign patent protection in a number of
foreign countries. As of November 30, 1999, Eveready had been granted
approximately 540 foreign patents and had approximately 480 patent applications
pending in foreign countries.
Patent applications in the United States are maintained in secrecy until
patents issue, and since publications of discoveries in the scientific or patent
literature tends to lag behind actual discoveries by several months, Eveready
cannot be certain that it was the first creator of inventions covered by pending
patent applications or the first to file patent applications on such inventions.
ENERGIZER'S OBJECTIVES AND STRATEGY
Energizer's objective is to enhance its revenue growth and profitability
by:
- - forging new cooperative relationships with its major retail customers;
- - designing more effective workforce incentives;
- - delivering premium-quality battery and lighting products and increasing
consumer perceptions of their advantages;
- - maintaining its strong market positions in North America, Europe and Asia
and expanding into new battery markets with significant opportunities for
growth; and
- - managing manufacturing, sales and marketing efforts in the most
cost-efficient manner possible.
Energizer plans to achieve its objective through the following key strategies:
- - Provide World-Class Retailer Support. Energizer intends to forge mutually
profitable relationships with its major retail customers based on cooperative
strategic planning and creative solutions to retailer concerns. It believes
that enhancing retailer margins and reinforcing customer loyalty to retail
stores will fuel continued Energizer growth. Energizer intends to offer a
higher degree of customer support, including business-building consultations,
joint promotional and advertising efforts, in-store merchandising, inventory
management, improved category management and strategically positioned and
integrated private-label, and "Energizer" and "Eveready" branded products.
Energizer will focus on more effective marketing initiatives, the positioning of
its products and effective responses to customer needs.
- - Design More Effective Compensation Programs Directly Linked to the Value
of the Energizer Stock. Energizer is redesigning its compensation programs to
motivate its workforce to achieve Energizer's strategic goals. In connection
with its request for the tax rulings, Ralston has represented to the IRS that
Energizer will establish an employee stock ownership plan, with a significant
company match, which will provide Energizer Stock ownership accounts for
approximately 3,200 union and non-union employees. It is anticipated that
within one year of the distribution, employees will own, under the plan, over 4%
of the outstanding Energizer Stock, and over 5% within five years. In addition,
the Energizer Incentive Stock Plan authorizes the grant of stock options and
other Energizer Stock-based awards to directors, officers and other key
management personnel. By providing its workforce with compensation programs
that contain a significant equity component, Energizer intends to align
employees' personal interests with those of Energizer's stockholders, motivating
them to enhance the long-term value of the Energizer Stock.
- - Build Brand Franchise Through Research and Development Efforts and
Effective Consumer Communication. Because of its innovative and intensive
research and development efforts, and its insistence on the reliability, quality
and long-life of its products, Energizer believes that its batteries and
lighting products are among the best available to consumers worldwide. However,
as the battery products industry is so highly competitive, there have been
ever-escalating advances in alkaline battery technology. As a result, consumer
perceptions about relative brand performance are often blurred and confused.
Energizer plans to maintain its strong research and development orientation,
but, as the ability to leverage innovative advancements with consumers has
become more and more limited, it will focus its efforts on advances which will
be readily appreciated by consumers. It will also explore joint research and
investment ventures which are likely to result in more effective or efficient
research efforts. Finally, it will improve its advertising and promotional
efforts so that consumers are more attuned to the advantages of Energizer
products. Energizer participates in all retail segments (primary, watch,
hearing aid, photo, rechargeable and lighting products) and will continue to
leverage its sales and category expertise across all product lines to increase
their value to consumers and to Energizer's retailer customers.
- - Maintain Strong Market Share and Continue to Expand Geographically.
Energizer intends to increase sales through further penetration of existing
markets in North America, Europe and Southeast Asia and expansion into broader
markets with significant opportunities for growth. Energizer may expand its
portfolio of products to target all major price segments in its various markets.
As consumers in Asia, Africa and Latin America increasingly choose alkaline
batteries over carbon zinc, Energizer will aggressively price and promote its
"Energizer" brand alkaline products in those regions. Substantially all
advertising and promotional funds in those regions will be devoted to building a
strong position in the alkaline sector. Energizer believes these efforts should
be strengthened by its continuing ability to offer a broad portfolio of products
(including carbon zinc batteries) to its retailer customers in those markets.
Energizer also will continue to pursue acquisitions and joint venture
opportunities to expand or complement its current market areas, technology and
product lines.
- - Maintain Effective Cost-Control Programs, and Develop More Efficient
Manufacturing and Distribution Operations. Energizer intends to embark on a
number of cost-saving and productivity programs as part of its strategy to
maximize operating efficiencies. Since 1995, the Energizer business has
restructured its worldwide battery production capacity as a result of the
consumer shift from carbon zinc to alkaline batteries, and closed a number of
manufacturing facilities. Energizer will continue to review its battery
production capacity and its business structure to determine if additional
savings can be realized. Energizer intends to improve the quality and
effectiveness of its promotional spending, and is investigating ways to create
more effective sales and distribution methods through partnerships with other
non-battery manufacturers. It has created a Global Account Management Team
consisting of sales, marketing, manufacturing and finance experts dedicated to
servicing the needs of multi-national accounts, and has reorganized its United
States sales team into a new Customer Management Team to focus on key accounts
in leading retail categories. Energizer also intends to take other steps which
will reduce its selling and distribution expenses, including reducing
administrative and operating costs.
The Management Strategy and Finance Committee, consisting of Mr. Daniel
Corbin, Mr. Patrick Mulcahy and Mr. William Stiritz, as chairman, will be
responsible for determining the strategic direction of Energizer's
businesses, subject to oversight and approval of the board of directors, and
for monitoring Energizer's financial performance, industry activity, and
worldwide economic developments which are likely to affect ongoing strategic
plans. The Committee will also be responsible for Energizer's investment
and financing policies and will make recommendations to the board regarding
acquisitions, reduction or increase of debt levels and other uses for
Energizer cash not needed for ongoing operations. For more information
regarding the individuals comprising the Committee, see "MANAGEMENT -
Executive Officers of Energizer".
SALES AND DISTRIBUTION
Energizer's battery and lighting products are marketed primarily through a
direct sales force to mass merchandisers, wholesalers and other customers, but
also through exclusive and non-exclusive distributors and rack jobbers of
consumer packaged goods products. Third party food brokers may be used to make
headquarters contacts in the retail food industry and to merchandise Energizer's
products at retail locations. In the United States, the direct sales team has
been reorganized into a new Customer Management Team focused on key business
accounts in several categories, including food, mass merchandise and specialty.
Energizer distributes its products to consumers through numerous retail
locations worldwide, including mass merchandisers and warehouse clubs, food,
drug and convenience stores, electronics specialty stores and department stores,
hardware and automotive centers and military stores.
Although a large percentage of Energizer's sales are attributable to a
relatively small number of retail customers, only Wal-Mart Stores, Inc. and its
subsidiaries, Sam's West, Inc., Sam's East, Inc., and McLane Company, Inc., all
of which are under common control, as a group account for more than ten percent
of Energizer's sales and revenue. For the fiscal year ended September 30, 1999,
those customers accounted for, in the aggregate, approximately 13.5% of
Energizer's sales
COMPETITION
The battery business is highly competitive, both in the United States and
on a global basis, as a number of large battery manufacturers compete for
consumer acceptance and, increasingly, limited retail shelf space. Competition
is based upon brand perceptions, product performance, customer service and
price.
Energizer competes in a high-growth domestic and global market. The
alkaline battery segment, both in the United States and worldwide, is the
fastest growing segment of the primary battery market. Despite category growth,
however, in 1998, Energizer's share of the U.S. primary battery market on both a
dollar and a unit sales basis declined substantially from 1995 levels. For the
first three quarters of 1999, the decline continued, although in the October to
December, 1999 period, Energizer's share, as measured by A.C. Nielsen, increased
1.2 points compared to the same period of 1998. Market share has also declined
in certain key global markets, and could decline even more as the demand for
primary batteries in developing countries shifts from carbon zinc batteries to
alkaline. Energizer's primary competitor, Duracell International, Inc., a
subsidiary of The Gillette Company, has substantially greater financial,
marketing and other resources, and greater market share, than Energizer does.
Because of its ownership by Gillette, it also has significant advantages in
distribution, sales and negotiating leverage with retailers. Duracell has
attempted to segment primary battery sales by positioning its "Duracell Ultra"
brand as a high-drain oriented, super premium product, and has priced that brand
at a significant premium to the competition as well as to its other brands.
In the past year, Energizer has also lost market share in the United States
to Rayovac Corporation, a low-price competitor which has exerted downward
pricing pressure by being very aggressive in offering retail discounts and other
promotional incentives. It has positioned itself as offering substantially
similar battery life as the market leading brands, but at a discounted price.
Private-label sales by large retailers have also been growing in significance.
Private-label offerings by major retailers and aggressive cost-cutting by
battery competitors may be accelerating U.S. consumer perceptions that primary
batteries are a commodity and that battery brands are indistinguishable. On the
other hand, Duracell's segmentation of the market may create a perception of
premium quality for its brands. Energizer has attempted to differentiate its
products through product innovation and improvement and through extensive
advertising, while at the same time offering attractive pricing to its retail
customers. In order to more effectively address competitive issues in the U.S.,
Energizer has announced that it will compete in the super-premium category with
the introduction of its "Energizer e2" brand of super-premium alkaline batteries
in the summer of 2000.
Japanese battery manufacturers have yet to make significant inroads into
the United States battery market, but they provide significant competition
throughout Asia. Local and regional battery manufacturers in Asia and Europe
also compete for battery sales. There are, however, significant technological
and capital constraints on entry into the battery products business, and
Energizer and its primary competitors enjoy significant advantages in having
established brand recognition and distribution channels. Full implementation of
the Euro currency in 2001 will heighten awareness of price discrepancies between
the various European markets for Energizer's products, and may increase
retailer, government and consumer group pressure for uniform pricing across
borders.
During the past decade, retail sales of consumer products, including
battery and lighting products, have been increasingly consolidated in a small
number of regional and national mass merchandisers and warehouse clubs. This
trend towards consolidation is occurring on a worldwide basis as well as in the
United States. The consolidation of retailers has led to tremendous competition
for shelf space and promotional support by all consumer packaged goods
manufacturers across all categories - including primary batteries. As a result,
retailers have been able to exercise great leverage in demanding price and
promotional concessions, and have avoided long-term purchase agreements.
Energizer and its major competitors have focused sales efforts more and more
exclusively on these key accounts, and have increased advertising and
promotional spending in an effort to maintain their positions with these large
retailers. Ultimately, Energizer's success will hinge upon consumers' demand
for its products, but collaboration with these key accounts is a critical factor
in generating positive results.
In comparison to competitors that do not compete on a global basis,
Energizer generally bears higher costs associated with its global manufacturing
facilities, its extensive product line, its research and development facility,
and tax and financing obligations imposed by its international and
multi-currency structure. These higher costs may restrict its ability to
compete in particular markets on the basis of price. However, Energizer
believes that brand perceptions, product performance and customer service are
also significant competitive factors.
Energizer believes it has significant competitive advantages.
- - It has very strong global brands - "Eveready" and "Energizer" - which
consumers worldwide recognize and equate with long-life and reliability. The
Energizer Bunny has become a cultural icon representing long-lasting quality.
Energizer's full portfolio of products and brands allow its retail customers to
supply the battery needs of all significant consumer segments.
- - Energizer's global production complex and broad-based geographic
distribution provide it with more than enough manufacturing capacity for its
reasonably foreseeable needs, and enable it to offer its battery and lighting
products to consumers in more than 160 countries throughout the world.
- - Energizer has a significant market position in most geographic markets in
which it competes. According to A.C. Nielsen, Energizer's primary battery
market share in the United States for the 52 weeks ended December 25, 1999 was
31.6%, and Energizer estimates that it has a primary battery share position of
20% or more in 22 of the 30 countries with the largest primary battery sales.
- - Energizer's well-trained workforce, experienced management and innovative
research and product development teams enable it to create opportunities for
business growth.
- - Finally, Energizer's intensive research and development efforts and its
focus on continuous innovation enable it to provide the highest quality products
in response to constantly changing market demands. Its research efforts have
given Energizer technology advancements which should keep pace with industry
innovations well into the future.
The battery business is expected to remain highly competitive in the
foreseeable future. Future growth opportunities for Energizer are expected to
depend on its ability to
- - implement its strategies for competing effectively in its markets,
- - maintain effective cost control programs,
- - continue its research and development efforts, and
- - develop and implement methods for more efficient manufacturing and
distribution operations,
while at the same time maintaining aggressive pricing and promotion of its
products.
EMPLOYEES
After the distribution, Energizer will employ approximately 11,000 production,
sales, marketing and administrative employees throughout the world. Energizer
believes it has good relations with its union and non-union employees.
RAW MATERIALS
The principal raw materials used in the Energizer business - electrolytic
manganese dioxide, zinc, acetylene black, graphite, steel cans, nylon, brass
wire, separator paper, and potassium hydroxide -- are sourced on a regional or
global basis. Energizer believes that adequate supplies of the raw materials
required for its operations are available at the present time, but cannot
predict the future availability or prices of such materials. These raw
materials are generally available from a number of different sources, and the
prices of those raw materials are susceptible to currency fluctuations and price
fluctuations due to transportation, government regulations, price controls,
economic climate, or other unforeseen circumstances. In the past, Energizer has
not experienced any significant interruption in availability of raw materials.
With respect to raw materials, Energizer has used the futures markets, options
and other risk management tools designed to protect its margins on firm purchase
price sales contracts with customers. Energizer's management has extensive
experience in purchasing raw materials in the commodity markets. From time to
time, management has taken positions in various ingredients to assure supply and
to protect margins on anticipated sales volume. Although Energizer intends to
continue to use these risk management tools to hedge or protect against such
risks, it does not intend to speculate in the commodity markets, and intends to
maintain a relatively low dollar level of risk related to open market positions.
GOVERNMENTAL REGULATION; ENVIRONMENTAL MATTERS
The operations of Energizer, like those of other companies engaged in the
battery business, are subject to various federal, state, foreign and local laws
and regulations intended to protect the public health and the environment.
These regulations primarily relate to worker safety, air and water quality,
underground fuel storage tanks and waste handling and disposal.
Energizer has received notices from the U.S. Environmental Protection
Agency, state agencies, and/or private parties seeking contribution, that it has
been identified as a "potentially responsible party" (PRP) under the
Comprehensive Environmental Response, Compensation and Liability Act, and may be
required to share in the cost of cleanup with respect to 9 federal "Superfund"
sites. It may also be required to share in the cost of cleanup with respect to
a state-designated site. Of these 10 sites, Energizer has reached negotiated
agreement as to its liability with respect to 4 of the sites. Negotiations with
the U.S. Environmental Protection Agency, the state agency that is involved on
the state-designated site, and other PRP's are at various stages with respect to
the remaining sites. Negotiations involve determinations of
- - the actual responsibility of Energizer and the other PRP's at the site,
- - appropriate investigatory and/or remedial actions, and
- - allocation of the costs of such activities among the PRP's and other site
users.
Energizer's ultimate liability in connection with those sites may depend on many
factors, including
- - the volume of material contributed to the site,
- - the number of other PRP's and their financial viability, and
- - the remediation methods and technology to be used.
In addition, Energizer has undertaken certain programs to reduce or eliminate
the environmental contamination at the rechargeable battery facility in
Gainesville, Florida, which has recently been divested. In the event that the
buyer would become unable to continue such programs, Energizer could be required
to bear financial responsibility for such programs as well as for other known
and unknown environmental conditions at the site.
Many European countries, as well as the European Union, have been very active in
adopting and enforcing environmental regulations. In many developing countries
in which the Energizer business operates, there has not been significant
governmental regulation relating to the environment, occupational safety,
employment practices or other business matters routinely regulated in the United
States. As such economies develop, it is possible that new regulations may
increase the risk and expense of doing business in such countries.
It is difficult to quantify with certainty the potential financial impact
of actions regarding expenditures for environmental matters, particularly
remediation, and future capital expenditures for environmental control
equipment. Nevertheless, based upon the information currently available,
Energizer believes that its ultimate liability arising from such environmental
matters, taking into account established accruals of $5.8 million for estimated
liabilities, should not be material to its financial position. Such liability
could, however, be material to results of operations or cash flows for a
particular quarter or annual period.
LEGAL PROCEEDINGS
- - On April 8, 1998, Zinc Products Company, a division of Alltrista Corp., a
supplier of zinc cans used in the manufacture of batteries, filed suit in
federal district court for the Eastern District of Tennessee against Energizer,
claiming breach of contract when Energizer closed its Fremont, Ohio plant. The
plaintiff claims lost profits and other damages of approximately $2.8 million.
The case has been set for trial in February, 2000, but it is anticipated that
the trial will be continued to a later date.
- - The U.S. Patent Office has awarded priority to Strategic Electronics
(Energizer's exclusive licensor) over Duracell in the patent interference
relating to the on-label battery tester. Duracell is expected to appeal. An
earlier decision, which denied Energizer's separate patent claims and those of
Eastman Kodak Company (which are licensed to Duracell) has been appealed to the
federal district court for Washington, D.C. on February 2, 1998. Kodak filed a
similar appeal, naming Energizer as a defendant on January 29, 1998. In a
related matter, Strategic Electronics filed a declaratory judgment suit on
September 9, 1999 in the federal district court for the Central District of
California seeking additional payments of approximately $1 million under the
license. Energizer has filed a motion to dismiss and expects a ruling in the
near future.
Energizer or Ralston's other subsidiaries engaged in the Energizer business
are parties to a number of other legal proceedings in various jurisdictions
arising out of the operations of the Energizer business. Liability for all
matters related to the Energizer business will be assumed by Energizer except to
the extent liability is retained by Ralston in the Reorganization Agreement.
Many of the foregoing legal matters are in preliminary stages, involve complex
issues of law and fact and may proceed for protracted periods of time. The
amount of alleged liability, if any, from these proceedings cannot be determined
with certainty. However, based upon present information, Energizer believes
that its ultimate liability, if any, arising from
- - pending legal proceedings,
- - asserted legal claims and
- - known potential legal claims which are likely to be asserted,
should not be material to Energizer's financial position, taking into account
established accruals for estimated liabilities. These liabilities, however,
could be material to results of operations or cash flows for a particular
quarter or annual period.
PROPERTIES
Energizer's principal properties are its battery and lighting products
manufacturing locations. Shown below are the locations of the principal
properties of Energizer. All of these facilities are owned by Energizer's wholly
owned subsidiaries, except as indicated. Energizer will lease the office space
in St. Louis, Missouri where its principal executive offices are located.
Energizer believes these facilities are adequately maintained and are suitable
and adequate for the purposes for which they are used. During the fiscal year
ended September 30, 1999, Energizer's alkaline manufacturing facilities were
utilized, on average, at approximately 77% of capacity, and its carbon zinc
facilities were utilized, on average, at approximately 56% of capacity.
Energizer believes that the existing capacity should be sufficient for its
current business plans.
<TABLE>
<CAPTION>
<S> <C>
NORTH AMERICA. . . . . . . . . . . . . EUROPE
Asheboro, NC (2) . . . . . . . . . . . Caudebec Les Elbeuf, France (1)(6)
Bennington, VT . . . . . . . . . . . . La Chaux-de-Fonds, Switzerland
Garretsville, OH . . . . . . . . . . . Slany, Czech Republic (1)
Tanfield Lea, U.K. (3)
Marietta, OH
Maryville, MO. . . . . . . . . . . . . AFRICA
St. Albans, VT . . . . . . . . . . . . Alexandria, Egypt
Tecamec, Mexico. . . . . . . . . . . . Nakuru, Kenya (5)
Walkerton, Ontario, Canada (6)
Westlake, OH (4) . . . . . . . . . . . ADMINISTRATIVE AND
EXECUTIVE OFFICES
ASIA . . . . . . . . . . . . . . . . . St. Louis, Missouri (1)
Bogang, People's Republic of China (1) Chesterfield, Missouri (1)
Mandaue Cebu, Philippines
Ekala, Sri Lanka
Cimanggis, Indonesia
Johor, Malaysia
Jurong, Singapore (2)(7)
Tianjin, People's Republic of China
</TABLE>
In addition to the properties identified above, Energizer and its subsidiaries
own and/or operate sales offices, regional offices, storage facilities,
distribution centers and terminals and related properties.
(1) Leased (2) Two plants (3) To Be Divested (4)Research facility
(5) Less than 20% owned interest (6) Bulk packaging, labeling or distribution
(7) One plant will be closed and the site returned to the Singapore govt. in
early 2000.
MANAGEMENT
DIRECTORS OF ENERGIZER
Under the terms of the Energizer Articles of Incorporation and Bylaws, the
board of directors of Energizer (the "Energizer Board") will consist of not less
than 6 and no more than 10 individuals. The board will be divided into three
approximately equal classes, with each class serving a three year term. The
exact number of directors will be set from time to time by resolution of the
board. Initially following the distribution, the Energizer Board will consist of
eight individuals, only 2 of whom will be employees of Energizer and 4 of whom
will be directors of Ralston. The following table sets forth information as to
the persons who will serve as directors of Energizer following the distribution,
their class membership, and their original terms (the directors' ages are as of
December 31, 1999). It is presently intended that Mr. Stiritz will serve as
Chairman of the board of directors.
<TABLE>
<CAPTION>
INITIAL
TERM
NAME AGE EXPIRES INFORMATION
- ---- --- ------- -----------
<S> <C> <C> <C>
William H. Danforth 73 2001 Trustee and former Chancellor,
Washington University
F.S. Garrison 65 2001 Chairman of the Board, American
Freightways, Inc.(trucking).
R. David Hoover 54 2001 President, Vice Chairman and Chief
Financial Officer, Ball Corporation
(aerospace products, grocery
products). Also a director of Datum,
Inc., Maxon Corporation and ANB
Corporation.
Richard A. Liddy 64 2002 Chairman, President and CEO,
Metropolitan Life Insurance Company
(insurance), Chairman of the Board of
the Reinsurance Group of America,
Incorporated (insurance), and of
General American Capital Company,
a registered investment company
(investments). Also a director of
Brown Shoe Company, Inc., Ameren
Corporation and Ralston Purina
Company.
Joe R. Micheletto 63 2002 Chief Executive Officer and
President, Ralcorp Holdings, Inc.
(grocery products). Also a director of
Agribrands International, Inc. and Vail
Resorts, Inc.
Robert Pruzan 36 2002 President of Wasserstein Perella &
Co., Inc. (investment banking).
J. Patrick Mulcahy 55 2003 Chief Executive Officer, Energizer
Holdings, Inc. Also a director of
Ralston Purina Company and Solutia,
Inc.
William P. Stiritz 65 2003 Chairman of the Board and Chairman
of the Energizer Holdings, Inc.
Management Strategy and Finance
Committee. Also Chief Executive Officer
and President of Agribrands International,
Inc. (international animal feeds) and a
director of Ralston Purina Company,
Agribrands International, Inc., Angelica
Corporation, Ball Corporation, The
May Department Stores Company,
Ralcorp Holdings, Inc., Reinsurance
Group of America, Inc. and Vail
Resorts, Inc.
</TABLE>
DIRECTORS' MEETINGS AND COMMITTEES
The Energizer board expects to have five regularly scheduled meetings per
year, but may also hold special meetings, to review significant matters
affecting Energizer and to act upon matters requiring board approval. Prior to
the distribution, the Energizer Board is expected to establish and delegate
specific functions and areas of oversight to a Nominating and Executive
Compensation Committee, a Finance Committee an Audit Committee and an
Executive Committee. Directors who are also employees or officers of Energizer
will not be permitted to serve on either the Nominating and Executive
Compensation or the Audit Committees. A description of these standing
committees and the identity of their expected members follows:
<TABLE>
<CAPTION>
Nominating
And
Executive
Compen-
Audit Finance sation Executive
Board Member Board Committee Committee Committee Committee
<S> <C> <C> <C> <C> <C>
William H. Danforth X
- --------------------------------------------------------------------
F.S. Garrison . . . X
- --------------------------------------------------------------------
R. David Hoover . . X
- --------------------------------------------------------------------
Richard A. Liddy. . X
- --------------------------------------------------------------------
Joe R. Micheletto . X
- --------------------------------------------------------------------
Robert Pruzan . . . X
- --------------------------------------------------------------------
J. Patrick Mulcahy. X
- --------------------------------------------------------------------
William P. Stiritz. X*
- --------------------------------------------------------------------
</TABLE>
90
*Chairperson
AUDIT: Reviews auditing, accounting, financial reporting and internal control
functions. Recommends Energizer's independent accountant and reviews their
services. All members are non-employee directors.
FINANCE: Reviews Energizer's financial condition, objectives and strategies and
makes recommendations to the Board concerning financing requirements, dividend
policy, foreign currency management and pension fund performance.
NOMINATING AND EXECUTIVE COMPENSATION: Sets compensation of executive officers,
approves deferrals under the Energizer Deferred Compensation Plan, administers
the Energizer Incentive Stock Plan and grants stock options and other awards
under that plan. Monitors management compensation and benefit programs, and
reviews principal employee relations policies. Recommends nominees for election
as directors or executive officers to the board. Also recommends committee
memberships and compensation and benefits for directors. All members are
non-employee directors.
EXECUTIVE: May exercise the authority of the Board in the intervals between
Board meetings.
DIRECTOR COMPENSATION
Employee directors will receive no compensation other than their normal salary
for serving on the Board or its Committees.
Non-employee directors will receive the following fees for their service on the
Board:
Annual Retainer $30,000
Fee for Each Board Meeting $1,000
Fee for Each Committee Meeting $1,000
The chairpersons of the Committees will also receive an additional annual
retainer of $2,000 for each Committee that they chair. Directors may elect to
have these amounts paid quarterly in cash, or defer payment until their
retirement under the terms of the Energizer Deferred Compensation Plan.
Under the Deferred Compensation Plan, directors may elect to invest their
deferrals, at the time of their annual deferral elections, in investment options
which mirror the investment funds offered by the Energizer SIP. Each director's
account will be increased or decreased to reflect the gain or loss on the
investment funds elected. The Deferred Compensation Plan is an unfunded
executive benefit plan; if Energizer elects to set aside assets to satisfy its
obligations under that Plan, those assets will remain subject to the general
creditors of Energizer.
Non-employee directors may also be granted non-qualified stock options to
acquire shares of Energizer Stock and other Energizer Stock awards under the
Energizer Incentive Stock Plan. At the present time, no awards have been made
or are planned to be made to non-employee directors under the Incentive Stock
Plan. For more information about the Energizer Deferred Compensation Plan and
the Incentive Stock Plan, see "ENERGIZER COMPENSATION AND BENEFIT PLANS."
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Stiritz, Chairman of the Management Strategy and Finance Committee and
Chairman of the Board of Energizer, is Chairman of the Nominating and
Compensation Committee of the Board of Directors of Ralcorp Holdings, Inc. and
also serves on the Human Resources Committee of the Board of Directors of Ball
Corporation. Mr. Micheletto, a director of Energizer, is the Chief Executive
Officer and President of Ralcorp Holdings, Inc. Mr. Hoover, also a director of
Energizer, is the President, Vice Chairman and Chief Financial Officer of Ball
Corporation.
EXECUTIVE OFFICERS OF ENERGIZER
Energizer's senior management team will consist primarily of individuals
currently responsible for the management of Ralston's battery business, as well
as several individuals that are new to the battery business but have critical
strategic experience. All of these individuals are referred to as "Executive
Officers" in this document. Ages shown are as of December 31, 1999.
J. Patrick Mulcahy will be Chief Executive Officer of Energizer. Mr.
Mulcahy joined Ralston in 1968 and has served as Chairman of the Board and Chief
Executive Officer of Eveready Battery Company, Inc. since 1987. Mr. Mulcahy
served as co-Chief Executive Officer and co-President of Ralston from October,
1997 to June, 1999. He served as Ralston's Vice President and Director,
Corporate Strategic Planning and Administration 1984-86; Division Vice
President, Strategic Planning 1981-84; and Division Vice President, Director of
Marketing, Grocery Products Group, 1980-81. Age: 55.
William P. Stiritz will be Chairman of the Board of Directors of Energizer
and Chairman of the Management Strategy and Finance Committee. Mr. Stiritz
joined Ralston in 1963 and served as Chief Executive Officer and President of
Ralston from 1982 until his retirement in 1997. He has served since 1982 as
Chairman of the Board of Directors of Ralston. Since 1998, he has also served
as Chief Executive Officer, President and Chairman of the Board of Agribrands
International, Inc., and will continue to do so following the distribution.
Age: 65.
Patrick C. Mannix will be President of Energizer. Mr. Mannix joined the
Eveready Battery Division of Union Carbide Corporation in 1963, and has served
as President of Eveready Battery Company, Inc. since 1998. Mr. Mannix served as
President of Eveready Battery Company, Inc., Specialty Business from 1995-98.
He served as Executive Vice President, Eveready Battery Company, International
from 1991-95, and Area Chairman, Asia Pacific operations, Eveready Battery
Company from 1985-91. He has served as a Corporate Vice President of Ralston
since 1992. Age: 54.
Daniel E. Corbin, Jr. will be Executive Vice President, Finance and Control
of Energizer. Mr. Corbin joined Ralston Purina Company in 1984 and has served
as Executive Vice President and Chief Financial Officer of Eveready Battery
Company, Inc. since 1986. Age: 54.
Harry L. Strachan will be Vice President and General Counsel of Energizer.
Mr. Strachan joined Eveready Battery Company, Inc. in 1987, and has served as
Vice President, General Counsel and Secretary of that subsidiary since 1987.
Age: 58.
Randy Rose will be Executive Vice President, Worldwide Sales and Marketing
of Energizer. Mr. Rose joined Ralston in 1986 and served as Executive Vice
President, Gold Products Division of Ralston from 1997 until April 1998, then
served as Vice President, Worldwide Sales and Asia Pacific Operating Officer of
the Pet Products International Division of Ralston until May, 1999 when he
joined Eveready Battery Company, Inc., serving as Executive Vice President,
Sales and Marketing for that subsidiary.
Mr. Rose served as Vice President and Director of the Customer Development Group
of Ralston's Pet Products Group from 1993-97. Age: 45.
Peter Conrad will be Vice President, Human Resources of Energizer. Mr.
Conrad joined Eveready Battery Company, Inc. in 1997 and has served as Vice
President, Human Resources of that subsidiary since 1997. Mr. Conrad served as
Vice President, Human Resources for Protein Technologies International, Inc., a
former subsidiary of Ralston Purina Company, from 1995-97. Age: 39.
Joseph McClanathan will be Vice President, North America of Energizer. Mr.
McClanathan joined the Eveready Battery division of Union Carbide Corporation in
1974 and has served as Vice President and Chairman, North America of Eveready
Battery Company, Inc. since June, 1999. He served as Vice President, Chief
Technology Officer for Eveready Battery Company, Inc. from 1996 to 1999, and as
Vice President, General Manager, Energizer Power Systems division from 1993 to
1996. Age: 47.
Ward Klein will be Vice President, Asia Pacific of Energizer. Mr. Klein
joined Ralston Purina Company in 1979 and has served as Vice President and Area
Chairman, Asia Pacific, Africa and Middle East since 1998. Mr. Klein served as
Area Chairman, Latin America from 1996-98, Vice President, General Manager
Clobal Lighting Products, 1994-96 and Vice President of Marketing, 1992-94.
Age: 44.
Kapila Gunawardana will be Vice President, Pan Am of Energizer. Mr.
Gunawardana joined the Eveready Battery division of Union Carbide Corporation in
1968 and has served as Vice President and Area Chairman, Pan Am since 1998. Mr.
Gunawardana served as Managing Director, Eveready de Mexico from 1996-98, and as
Area Finance Director, Pan Am Division of Eveready Battery Company from 1993-96.
Age: 58.
Luis Plana will be Vice President, Europe of Energizer. Mr. Plana joined
Eveready Battery Company, Inc. in 1985 and has served as Vice President and Area
Chairman, Europe since 1997. Mr. Plana served as Vice Chairman, Europe for
Eveready Battery Company from 1996-97, and as Managing Director from 1993-96.
Age: 55.
Steven Sanborn will be Vice President, Technology, Research and
Development. Mr. Sanborn joined Eveready Battery Company, Inc. in 1993 and has
served as Vice President and Chief Technology Officer for Eveready since 1999.
Mr. Sanborn served as Vice President of Technology and Engineering for
Eveready's Energizer Power Systems division from 1993 to 1997 and as Vice
President, Technology, for Eveready itself from 1997 to 1999. Age: 54.
Joseph J. Tisone will be Vice President, Global Manufacturing. Mr. Tisone
joined the Eveready Battery division of Union Carbide Corporation in 1976, and
has served as Vice President, Global Manufacturing of Eveready Battery Company,
Inc. since 1998. He served as Vice President/General Manager of Eveready's
Energizer Power Systems division from 1997 to 1998, and as Vice President,
Production of that division from 1993 to 1997. Age: 46.
Mark Schafale will be Vice President and Controller of Energizer. Mr.
Schafale joined Ralston Purina Company in 1992 and has served as Vice President
and Director, Internal Audit for Ralston since 1996. Mr. Schafale served as
Director, Financial Accounting from 1994-96. Age: 39.
William Fox will be Vice President and Treasurer of Energizer. Mr. Fox
joined Ralston Purina Company in 1989 and has served as Director, Global Finance
since 1995. Since joining Ralston, Mr. Fox has had positions of increasing
responsibility in the areas of cash management, risk management and
international finance. Age: 37.
Timothy L. Grosch will be Secretary of Energizer. Mr. Grosch joined
Ralston Purina Company in 1985 and has served as Deputy General Counsel since
1996. Mr. Grosch served as Senior Counsel - Securities from 1994 - 96. Age:
45.
<PAGE>
EXECUTIVE COMPENSATION
<PAGE>
The compensation of the executive officers will be approved by the
Nominating and Executive Compensation Committee of the Energizer board (the
"Energizer Committee"). The Energizer Committee consists entirely of
non-employee directors. It is expected that compensation for the executive
officers and for other executives will consist principally of base salary,
annual cash bonus and long-term stock-based incentive awards.
Salaries will be based, among other factors, on the Energizer Committee's
assessment of the executive's responsibilities, experience and performance;
compensation data of other companies; and the competitive environment for
attracting and retaining executives.
It is anticipated that cash bonuses will be set each year at or following
the end of Energizer's fiscal year. Factors, among others, which may be
considered in determining the amount of cash bonuses will be:
- - the officer's individual performance (including the quality of strategic
plans, organizational and management development, special project leadership and
similar indicators of individual performance);
- - the financial performance of the officer's business unit relative to the
business plan (including such areas as sales volume, revenues, costs, cash flow
and operating profit); and
- - Energizer financial performance (including the measures of business unit
performance listed above and, in addition, earnings per share, return on equity
and total return to the shareholders in the form of stock price appreciation and
dividends, if paid).
Energizer Stock-based awards will consist principally of stock options and
restricted stock awards which will be granted from time to time under the
Energizer Incentive Stock Plan. The Energizer Committee will base its decisions
on the granting of stock-based awards on various factors, among which are:
- - the number of shares of Energizer Stock outstanding,
- - the number of shares of Energizer Stock authorized under the Energizer
Incentive Stock Plan,
- - the number of options and shares of restricted stock held by the executive
for whom an award is being considered, and
- - the other elements of the executive's compensation.
Certain of the individuals who will be serving as executive officers of
Energizer, although employed in the battery business during the last fiscal
year, or employed by Ralston, were not dedicated exclusively to the Energizer
business and, in fact, devoted substantial time and effort to other Ralston
businesses. Other individuals did not serve as employees of either Ralston or
Energizer during the last fiscal year. Accordingly, no historical information
on the compensation of Energizer's executive officers is reported. Energizer's
proxy statement for its 2001 Annual Meeting of Shareholders will contain
information on compensation paid to the executive officers in fiscal year 2000.
<PAGE>
ENERGIZER COMPENSATION AND BENEFIT PLANS
The following is a description of the compensation and benefit plans which
will be adopted by Energizer, which are substantially similar to plans in effect
at Ralston. The compensation and benefit plans of Energizer are intended to
attract and retain employees and to reward those employees through emphasis on
performance and incentive criteria. It is anticipated that the executive
officers and other key employees of Energizer will participate in those plans.
After the distribution, none of the officers of Energizer will participate in
any of the employee benefit plans of Ralston. However, they may be entitled to
accrued benefits under Ralston plans.
ENERGIZER INCENTIVE STOCK PLAN
Prior to the distribution, Ralston, as sole shareholder of the outstanding
capital stock of Energizer, will approve the Energizer Incentive Stock Plan.
The following is a summary of the Plan. Please refer to Exhibit A to this
Information Statement for the full text of the Plan.
<PAGE>
Purpose. The purpose of the Plan is to promote the interests of Energizer and
its stockholders by:
- - attracting and retaining key employees,
- - tying the compensation of key employees to the performance of Energizer,
and
- - providing an opportunity for participants to increase their holdings of
Energizer Stock.
The Plan would also permit the board of directors of Energizer to grant stock
options and other stock awards to individual directors, if the Board decides to
do so.
Administration. The Plan is administered by the Energizer Committee, which has
the authority to select employees to receive awards, to determine the types of
awards and the number of shares of Energizer Stock covered by awards, and to set
the terms and conditions of awards. The Energizer Committee may delegate its
authority to select employees other than corporate officers to receive awards.
However, the full board of directors will determine the amount, terms and
conditions of stock options or other stock awards granted to directors. The
Energizer Committee has the authority to establish rules for the administration
of the Plan, and its determinations and interpretations are binding.
Eligible Participants
- - Any employee or officer (including corporate officers) of Energizer or any
of its subsidiaries will be eligible for any award under the Plan if selected by
the Energizer Committee. There are about 11,000 employees of Energizer and its
subsidiaries that would be eligible for awards under the Plan.
- - Any of the non-employee directors of Energizer will also be eligible to
receive stock options or other stock awards under the Plan if authorized by the
full board of directors.
Neither the Energizer Committee nor the board has made any decisions with
respect to the individuals who may receive awards under the Plan or the amount
or nature of future awards.
Shares Authorized. The number of shares of the Energizer Stock which may be
issued as awards under the Plan is 15,000,000. (The number of shares authorized
is subject to certain adjustments to reflect, for example, stock splits or other
corporate restructurings.)
In addition, if any award is forfeited or expires, all shares which were not
issued under the award will become available for additional awards under the
Plan. If a restoration option is granted when shares of Energizer Stock are
tendered for the exercise of any options granted under the Plan, the number of
shares available for awards under the Plan will be increased by the number of
shares tendered.
Any awards that may be payable in cash will not be counted against the reserve
unless the actual payment is made in shares of Energizer Stock instead of cash.
Maximum Number of Shares. The maximum number of shares of the Energizer Stock
that may be the subject of performance-based awards (including stock options and
stock appreciation rights, but not restoration options) granted under the Plan
to an employee or director during any one fiscal year is 1,900,000. The maximum
number of shares that may be the subject of restoration options granted to an
employee or director in any one fiscal year is 950,000. Any stock-related
deferred compensation will not be applied against this limit.
Types of Awards. The Plan permits the grant of a variety of different types of
awards:
- - Stock options and restoration options;
- - Stock appreciation rights ("SARs") (also called phantom stock options);
- - Restricted stock awards;
- - Stock equivalents; and
- - Other awards valued by reference to the Energizer Stock.
Awards may be granted for any amount of cash consideration or for no cash
consideration as long as legal requirements are met.
Stock Options: The Energizer Committee may grant stock options that qualify as
"Incentive Stock Options" under Section 422 of the Internal Revenue Code
("ISOs") or options that do not so qualify ("Non-Qualifieds"). The Energizer
Committee or board may also grant restoration options which are designed to
replace shares of Energizer Stock used to exercise an option. The restoration
options will be granted at fair market value, the shares subject to the
restoration option will equal no more than the number of shares tendered, and
the option will be exercisable for the remaining period of the original option
grant.
All options granted will be subject to the following:
- - Options are not exercisable (unless accelerated) for at least one year
after they are granted, and they cannot be exercised more than ten years after
grant.
- - The exercise price must be paid at the time the option is exercised in
either cash or in other shares of Energizer Stock.
- - The exercise price cannot be less than the fair market value of the
Energizer Stock on the grant date.
- - The Energizer Committee or board will determine the vesting schedules of
options granted under the Plan and may also impose additional conditions on
exercise, including performance goals.
Stock Appreciation Rights: The holder of an SAR or phantom stock option is
entitled to receive the excess of the fair market value of a specific number of
shares on the date of exercise over the value of those shares on the date the
award was granted. Payment of the excess will be in cash unless the Energizer
Committee or board elects to make payment in shares of Energizer Stock. The
Energizer Committee or board will determine the vesting schedule of SARs granted
under the Plan and may also impose additional conditions on exercise.
Restricted Stock Awards: Shares of restricted stock may be awarded subject to
such restrictions and other terms and conditions as the Energizer Committee or
board may impose. Restricted stock may not be transferred by the holder until
the restrictions lapse.
Stock Related Deferred Compensation: The Energizer Committee may permit the
deferral of payment of an employee's cash bonus or other cash compensation in
the form of Energizer Stock equivalents, subject to such terms and conditions as
the Energizer Committee may impose. Stock equivalents track the value of the
Energizer Stock, and are credited with dividend equivalents as dividends are
paid on the Energizer Stock. Distribution of deferred amounts is made at the
employee's retirement or other termination of employment, or at such other time
elected by the employee, under conditions established by the Energizer
Committee.
Federal Income Tax Consequences. If you are a recipient of awards under the
Plan, the following is a summary of the principal U.S. federal income tax
consequences that are generally applicable:
Options and SARs.
- ------------------
If you are a recipient of options or SARs under the Plan:
- - The grant of an option or SAR is not expected to result in any taxable
income for you.
- - If you hold an ISO, you generally will have no taxable income upon
exercising the ISO if certain requirements are met (except that a liability may
arise for alternative minimum tax), and Energizer will not be entitled to a tax
deduction when an ISO is exercised.
- - If you exercise a Non-Qualified Option, you will recognize ordinary income
equal to the difference between the fair market value of the shares of Energizer
Stock acquired and the exercise price. Energizer will be entitled to a tax
deduction for the same amount.
- - If you exercise an SAR, or if the SAR vests without exercise, the amount
of any cash received will be taxable to you as ordinary income and will be
deductible by Energizer.
- - The tax consequences upon a sale of your shares acquired in an exercise of
an option will depend on how long you held the shares prior to sale, and upon
whether the shares were acquired in the exercise of an ISO or in the exercise of
a Non-Qualified Option or SAR.
- - If you hold shares acquired upon exercise of an ISO for at least one year
after exercise and two years from the date that the ISO was granted, you will
recognize long-term capital gain or loss in an amount equal to the difference
between the option exercise price and the sale price of the shares. If you do
not hold the shares held for that period, gain on the sale of the shares will be
treated as ordinary income.
- - Any gain which you realize upon the sale of shares acquired in the
exercise of a Non-Qualified Option or SAR for an amount greater than their fair
market value on the date of exercise, will be capital gain and any loss will be
capital loss. Generally there will be no tax consequences to Energizer in
connection with your disposition of shares acquired in the exercise of an option
or SAR, except that Energizer may be entitled to a tax deduction in the case of
a sale of ISO shares before the holding periods described above have been
satisfied.
Restricted Stock and Other Awards. Generally, restricted stock awards will not
- ----------------------------------
be taxed to you until restrictions lapse on all, or any portion, of the award.
- - When any portion of an award is released from restrictions, the fair
market value of those shares on the date the restrictions lapse will be included
in your income for that year and will be taxed at ordinary income tax rates.
Your basis in the stock received will be equal to the fair market value at the
time that restrictions lapse, and the holding period will begin on that date.
- - You may elect to have the restricted stock award treated as taxable income
in the year granted. You will be taxed at ordinary income tax rates on the fair
market value of the award on the date of grant. Any future appreciation in
value of those shares at the time they are sold will be taxed as capital gain,
and any decline will be treated as a capital loss.
- - If you elect to be taxed in the year the award is granted, and the award
is later forfeited before restrictions lapse, the income taxes paid will not be
recoverable.
- - Energizer will have deductible expense equal to the fair market value of
the restricted shares in whatever year you recognize ordinary income as a result
of the award.
Amounts deferred in the form of stock equivalents, as well as dividend
equivalents earned on such amounts, will be taxed as ordinary income for the
year in which the amounts are actually distributed to you. If the distribution
is made in shares of Energizer Stock, the taxable income will be equal to the
fair market value of the shares on the date distributed, which will also be your
basis in those shares. Energizer will have deductible expense equal to the
amount distributed.
Adjustments. Certain corporate transactions or events such as stock splits,
recapitalizations, spin-offs, mergers, etc. may directly affect the number of
outstanding shares and/or the value of the outstanding Energizer Stock. If such
transactions occur, the Energizer Committee may adjust the number of shares
which may be granted under the Plan, as well as the limits on individual awards.
The Energizer Committee or the board may adjust the number of shares and the
exercise price under outstanding options, and the performance goals of any
options or awards, and may make other adjustments which are thought appropriate
to protect the value of the award to the recipient.
Transferability. Awards granted under the Plan may not be transferred except:
- - by beneficiary designation;
- - by will or the laws of descent and distribution; or
- - if permitted by the Energizer Committee, to an immediate family member,
family trust or family partnership.
Amendments. The board of directors may amend, suspend or terminate the Plan at
any time. Except for permitted adjustments, no amendment, however, may
- - increase the number of shares reserved for awards;
- - withdraw the authority of the Energizer Committee to administer the Plan;
- - increase the limit on the number of shares which are the subject of awards
granted to any individual; or
- - change the terms of any awards granted before the amendment in an adverse
manner without the consent of the recipient.
Term. The Plan will continue until December 31, 2009, unless replaced or
terminated at an earlier time.
<PAGE>
<PAGE>
SAVINGS INVESTMENT PLAN
Energizer also intends to adopt the Energizer SIP, a defined contribution
plan which is intended to be a 401(k) Plan and an employee stock ownership plan.
<PAGE>
Purpose. The purpose of the Plan is to:
- - permit deferrals of compensation by eligible employees of Energizer and
its designated subsidiaries,
- - enable employees to share in the performance of Energizer through
participation in the Energizer Stock fund, and
- - provide employees with an attractive, convenient way to accumulate savings
for their future economic security.
Eligible Participants.
- - Any regular non-union employee of Energizer's designated subsidiaries who
receives regular compensation from a payroll in the United States subject to
F.I.C.A.; and
- - Any union employee, to the extent permitted by his or her collective
bargaining agreement.
Contributions Under the Plan.
If you are an eligible employee:
- - you may elect to have Energizer contribute to the Energizer SIP, on your
behalf, contributions of up to 12% of your compensation, in 1% increments,
rather than receive such amounts in cash. These contributions may not exceed
$10,500. These before-tax contributions will not be subject to federal income
tax in the year contributed.
- - Energizer will contribute a matching contribution equal to 50% of your
first 6% of before-tax contributions.
- - You may also make after-tax contributions of 1% to 10% of your
compensation.
- - Energizer will make an additional matching contribution to a PensionPlus
Match Account established in your name under the Energizer pension plan. The
matching contribution will be equal to 325% of the first 1% of your after-tax
contributions to the Energizer SIP. These matching contributions will also not
be subject to federal income tax until distributed.
The total contributions made on your behalf will be subject to limitation as
required by Sections 401(k) and 415 of the Internal Revenue Code.
Investment of Contributions
Amounts contributed to the Energizer SIP will be invested by the trustee in one
or more funds as directed by the employee. It is contemplated that initially
there will be approximately 12 such funds offering a variety of investment
options. Energizer's matching contributions will be required to be invested in
the Energizer ESOP Common Stock Fund. Dividends paid on shares of Energizer
Stock held by the Energizer ESOP Common Stock Fund will be passed through to
participants or they may, at the discretion of Energizer, be used by the Fund to
acquire additional shares of Energizer Stock, which will be allocated to
participant accounts to reflect dividends paid. Account balances of Energizer
employees participating in the Ralston Savings Investment Plan, including shares
of Ralston Stock allocated to accounts in the Ralston ESOP Common Stock Fund,
will be transferred to the Energizer SIP. Energizer employees may then transfer
all, or any portion, of their account balances to other funds offered by the
Energizer Plan. However, participants in the Energizer SIP will not be
permitted to invest additional monies in Ralston Stock following the
distribution, and after a period of time all shares of Ralston Stock still
retained by the Energizer SIP will be sold and the proceeds invested, according
to participants' elections, in other funds offered by the Plan.
Vesting.
An employee's before-tax and after-tax contributions will be vested from
the time made. Energizer's matching contributions will vest at the rate of 25%
per year, commencing in their second year of service. Employees will receive
credit for periods of employment with Ralston. Matching contributions are also
fully vested upon attainment of age 65 or death, or in the event the Energizer
SIP is terminated. Vested account balances in the Plan will be paid out to the
participant, or his or her beneficiary, upon termination of employment,
retirement, disability or death.
Excess Contributions.
The Internal Revenue Code imposes limits on deferrals permitted in
tax-qualified plans such as the Energizer SIP . Energizer will establish a
nonqualified supplemental SIP under which compensation of executive officers and
certain other key management employees will be deferred to the extent that their
deferrals exceed the qualified plan limits in the Energizer SIP or are otherwise
ineligible to be deferred into the Energizer SIP. The nonqualified supplemental
SIP will offer investment options which mirror the funds offered by the
Energizer SIP. To the extent that Energizer would otherwise make matching
contributions to an employee's Energizer SIP account or PensionPlus Match
Account but for limitations imposed by the Internal Revenue Code, Energizer will
instead credit the employee's account under the supplemental SIP with an amount
equal to those matching contributions. At the time of the distribution, the
liabilities of Ralston under the Ralston Purina Company Executive Savings
Investment Plan to Energizer employees will be transferred to, and assumed by,
Energizer, and those employees will have their account balances in the Ralston
plan credited to them under the supplemental SIP, into investment options
elected by them.
<PAGE>
<PAGE>
DEFERRED COMPENSATION PLAN
<PAGE>
Energizer also intends to adopt the Energizer Deferred Compensation Plan.
The purpose of the Energizer Deferred Compensation Plan is to afford certain key
employees (including the executive officers), and non-employee directors, the
opportunity to save a portion of their earnings in a tax-deferred investment and
to create post-retirement benefits. Under the Energizer Deferred Compensation
Plan, all or any part of an eligible employee's salary and bonus may be deferred
by the participant until retirement or other termination of employment.
Shorter-term deferrals may also be elected. Non-employee directors may defer
all or a portion of their retainers and meeting fees until their service on the
board ends.
The Energizer Deferred Compensation Plan initially will provide that all or any
part of the participant's compensation may be deferred in various investment
options which will mirror the performance of the investment funds offered by the
Energizer SIP. The Deferred Compensation Plan will be a non-qualified, unfunded
plan. All payments from the Plan, at termination of employment or otherwise,
will be in the form of cash.
At the time of the distribution, Energizer employees who are participants in the
Ralston Purina Company Deferred Compensation Plan for Key Employees, will have
their account balances in that plan (other than balances under the Fixed Benefit
Option of that plan) credited to them under the Energizer Deferred Compensation
Plan into investment options elected by them.
<PAGE>
<PAGE>
MANAGEMENT CONTINUITY AGREEMENTS
<PAGE>
Energizer intends to enter into management continuity agreements with certain
executive officers . The agreements provide that the executives will receive
severance compensation in the event of their involuntary termination after a
change in control of Energizer. A change of control is generally defined as the
acquisition of 50% or more of the outstanding shares of Energizer Stock. A
change of control will also occur if the initial directors of Energizer, or
their recommended or appointed successors, fail to constitute a majority of the
board.
The terms of these agreements will reflect normal industry standards for
management continuity agreements and will require the approval of the Nominating
and Executive Compensation Committee of Energizer's board of directors.
<PAGE>
OTHER EXECUTIVE BENEFIT PLANS
Energizer also intends to adopt certain non-qualified executive benefit
plans which will be available for participation by the executive officers and
certain other key employees. A Financial Planning Plan will offer reimbursement
for 80% of certain financial planning expenses, including tax and estate
planning and preparation of wills and trusts. An Executive Health Plan will
provide, at no cost to participants, reimbursement for up to $50,000 per year of
medical, dental and vision expenses not covered by Energizer's
other health and welfare plans. An Executive Group Personal Excess Liability
Insurance Plan will provide, at no cost to participants, excess liability
coverage in the amount of $5 million per occurrence provided that required
primary insurance coverages are maintained by the participant at his or her
expense. An Executive Retiree Life Plan will provide, at no cost to
participants, an unfunded supplemental life insurance benefit. The Plan
provides a death benefit, after retirement of the participant, to his or her
named beneficiary in an amount equal, on an after-tax basis, to 50% of the
participant's last full year's salary and bonus prior to retirement. An
Executive Long Term Disability Plan will provide, in the event of the
participant's disability, and at no additional cost, a monthly disability
payment equal to the amount which would otherwise be paid to the participant
under Energizer's long-term disability plan but for certain limitations of that
plan. Finally, a Supplemental Executive Retirement Plan will provide a
retirement benefit equal to the amount that would have been paid under
Energizer's Retirement Plan but for limitations on that plan imposed by the
I.R.S. Code.
<PAGE>
CERTAIN TRANSACTIONS
Energizer's subsidiaries have in the past engaged in numerous transactions
with other Ralston divisions and subsidiaries. (See "ENERGIZER HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS - RELATED PARTY ACTIVITY".) Such transactions have
included, among other things,
- - intercompany loans,
- - other types of financial support by or to Ralston, and
- - sharing of services and administration and the related costs.
In addition, affiliates of Ralston or of Energizer have distributed products
manufactured by the other in certain countries.
Following the distribution, Energizer and Ralston may enter into local
agreements concerning the continued distribution by Energizer subsidiaries of
pet food products produced by Ralston and its affiliates. Employees of Ralston
will administer insurance plans and programs for Energizer on an ongoing basis
following the distribution, and Ralston's offshore insurance subsidiary will
provide certain reinsurance coverage for assets and operations of Energizer.
Terms and conditions of these agreements will be similar to those negotiated by
unrelated parties at arm's length.
Except as provided in these agreements and the Bridging Agreement,
administrative services provided by Ralston to Energizer and its subsidiaries
will be discontinued. All other administrative services currently provided by
Ralston will be either assumed by Energizer or obtained by it from third
parties.
W. P. Stiritz, the Chairman of the Board of Energizer, is also Chairman of the
Board of Ralston; William H. Danforth, Richard A. Liddy, and J. Patrick Mulcahy,
directors of Energizer, are also directors of Ralston.
For more information about ongoing relationships between Ralston and Energizer,
see "AGREEMENTS BETWEEN RALSTON AND ENERGIZER".
Robert Pruzan, a member of the board of directors of Energizer, is the president
of the investment banking firm of Wasserstein Perella and Co., Inc., which in
the past has performed various investment banking services for Ralston,
including providing advice to the Ralston board of directors regarding the
spin-off of Energizer. See "THE DISTRIBUTION - Advice Provided by Financial
Advisor".
<PAGE>
STOCK OWNERSHIP INFORMATION
All of the outstanding Energizer Stock is currently held by Ralston. The
following table sets forth projected Energizer Stock ownership information for
the persons expected to own more than 5% of the Energizer Stock following the
distribution. It also sets forth projected ownership information for each of
the Energizer directors and all of the directors and executive officers as a
group. These projections are based on a distribution of one share of Energizer
Stock for every three shares of Ralston Stock beneficially owned by the listed
persons on January 1, 2000 (including shares of Ralston Stock held in the
Ralston SIP for the accounts of the executive officers and shares of Ralston
Stock which could be acquired upon exercise of options prior to April 1, 2000).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address . . . . . . Amount and Nature of % Of Shares Explanatory
Of Beneficial Owner. . . . . Beneficial Ownership (H) Outstanding(A) Notes
- ---------------------------- ------------------------ -------------- ------------
Bank of America Corporation. 5639846 5.61% (B)
Global Corporate &
Investment Banking
Compliance,
100 North Tryon Street
Charlotte, NC 28255
William H. Danforth. . . . . 888,165 * (C)(D)(E)
F.S. Garrison. . . . . . . . 0 *
R. David Hoover. . . . . . . 0 *
Richard A. Liddy . . . . . . 1,000 *
Joe R. Micheletto. . . . . . 8 *
Robert Pruzan. . . . . . . . 0 *
J. Patrick Mulcahy . . . . . 340,416 * (F)
William P. Stiritz . . . . . 423,536 * (G)
All Directors and Executive
Officers as a Group (22
persons) . . . . . . . . . . 1,936,061 1.92%
</TABLE>
(A) Shares Outstanding are based on the anticipated distribution of
Energizer Stock in respect of shares of Ralston Stock which were actually
outstanding on January 1, 2000. An asterisk in this column indicates the person
would own less than 1% of the Energizer Stock.
(B) Based on a written statement from the shareholder as of January 31,
2000, this amount includes shares of Energizer Stock which would be owned by
various subsidiaries, including Bank of America, N.AOf these shares,
BankAmerica would have voting and investment powers as follows: sole voting -
1,382,804 shares; shared voting - 3,936,302 shares; sole investment - 905,368
shares; and shared investment - 4,577,460 shares.
(C) Excludes 2,715,667 shares held by the Danforth Foundation. Dr. Danforth
is one of the ten trustees of the Foundation and disclaims beneficial ownership
of its shares.
(D) Excludes 1,347,221 shares held by Washington University, St. Louis, Mo.
Dr. Danforth serves on the University's Board of Trustees, which consists of 49
members. He disclaims beneficial ownership of those shares.
(E) Dr. Danforth has sole voting and investment powers respecting 57,086
shares. He shares voting and investment powers with respect to 878,805 shares,
and disclaims beneficial ownership of 47,726 of those shares held in a trust.
(F) Mr. Mulcahy disclaims beneficial ownership of 12,610 shares owned by his
wife.
(G) Mr. Stiritz disclaims beneficial ownership of 34,159 shares owned by his
wife.
(H) In general, "beneficial ownership" includes those shares a director or
executive officer has the power to vote or transfer, as well as shares owned by
immediate family members that reside with the director or officer. The table
includes the most recent approximation of the number of shares of stock as to
which participants in the Ralston Purina Company Savings Investment Plan have
voting and transfer rights. Shares which are held in the Plan are not directly
allocated to individual participants but instead are held in separate funds in
which participants acquire units. Such funds also hold varying amounts of cash
and short-term investments. The number of shares allocable to a participant
will vary on a daily basis based upon the cash position of the funds and the
market price of the stock.
DESCRIPTION OF ENERGIZER CAPITAL STOCK
The following information summarizes terms and provisions of Energizer's
Articles of Incorporation and the Rights Agreement. Those documents have been
filed as exhibits to Energizer's Registration Statement on Form 10 which has
been filed with the Securities and Exchange Commission, and are available for
public review. Because this description is a summary, it may not contain all of
the information that may be important to you, and you should read the filed
documents.
<PAGE>
AUTHORIZED CAPITAL STOCK
Under the terms of Energizer's Articles of Incorporation, the board of
directors of Energizer will have authority to issue 310 million shares of all
classes of stock, of which 10 million will be shares of $.01 par value preferred
stock, and 300 million will be shares of $.01 par value Energizer Stock. No
shares of preferred stock are outstanding and none will be issued in connection
with the distribution. Based on the number of shares of Ralston Stock
outstanding at March 1, 2000, approximately 100 million shares of Energizer
Stock will be issued to Ralston stockholders in the distribution.
ENERGIZER COMMON STOCK
Voting Rights.
The holders of Energizer Stock will be entitled to one vote per share on all
matters to be voted on by stockholders. The holders will not be entitled to
cumulate their votes in the election of directors. Generally, all matters on
which stockholders will vote must be approved by a majority of the votes
entitled to be cast by all shares of Energizer Stock present in person or
represented by proxy, subject to any voting rights granted to holders of any
preferred stock. However, Energizer's Articles of Incorporation include some
supermajority requirements, including:
- - a requirement that the holders of at least 2/3 of the outstanding
Energizer Stock (and any other voting shares that may be outstanding), and a
majority of the shares not owned by the stockholder benefiting from the
transaction, must approve a merger or consolidation with persons or entities
that beneficially own at least 20% of the Energizer Stock, a sale of all or
substantially all of Energizer's assets to those persons or entities, or certain
other transactions, unless the proposed transaction is approved by a majority of
the directors who were in office immediately before the time when such ownership
was acquired, or by their approved successors;
- - a requirement that the vote of 2/3 of the outstanding Energizer Stock (and
any other voting shares that may be outstanding) is required to remove a
director for cause; and
- - a requirement that any amendment or repeal of specified provisions of
Energizer's Articles (including these supermajority requirements) must be
approved by at least 2/3 of the outstanding Energizer Stock (and any other
voting shares that may be outstanding).
Dividends
The payment and level of cash dividends, if any, by Energizer after the
distribution will be at the discretion of the Energizer board of directors. It
is expected that this decision will be based primarily upon the earnings, cash
flow and financial requirements of the Energizer business. Restrictions on the
flow of international capital may restrict the amount of funds available in the
United States for the payment of dividends. In addition, although its credit
facilities do not prohibit the payment of dividends by Energizer, restrictions
in those facilities may significantly limit the amount of funds available for
the payment of dividends. The Energizer board of directors may determine that
initially no cash dividends will be paid on Energizer Stock in order to make
funds available for working capital, repayment of debt, possible future
acquisitions, capital expenditures, and possible repurchases of Energizer Stock.
The Energizer board of directors may change its policy on dividends at any time.
Other Rights
If Energizer is liquidated or dissolved, any amounts required to be distributed
to any holders of Energizer preferred stock must be paid before any payments are
made to holders of the Energizer Stock. All holders of shares of Energizer Stock
are entitled to share ratably in any assets available for distribution, after
all other creditors have been satisfied.
No shares of Energizer Stock carry redemption rights. Holders of shares of
Energizer Stock do not have any preemptive rights to purchase additional shares
of Energizer Stock.
Immediately after the distribution, all of the outstanding shares of Energizer
Stock will be validly issued, fully paid and nonassessable.
PREFERRED STOCK
Energizer may issue preferred stock from time to time in one or more series and
with the terms of each series stated in the resolutions providing for the
designation and issue of the series that the board of directors adopts. The
Articles of Incorporation authorize the board to determine the dividend, voting,
conversion, redemption and liquidation preferences, rights, privileges and
limitations pertaining to each series of preferred stock that may be issued.
Without seeking any stockholder approval, the board may issue preferred stock
with voting and other rights that could adversely affect the voting power of the
holders of the Energizer Stock and could have anti-takeover effects.
COMMON STOCK PURCHASE RIGHTS
The Energizer board has declared a dividend distribution of one common
stock purchase right for each outstanding share of Energizer Stock to be
distributed to Ralston stockholders. Each right entitles the registered holder
to purchase, under certain circumstances, one share of Energizer Stock from
Energizer at an initial exercise price of $150 per share, subject to adjustment
in some circumstances.
The rights are attached to all shares of Energizer Stock which will be
distributed, and to all shares issued after the distribution, but before the
date on which the rights separate from the Energizer Stock with which they are
associated, as described below. No separate certificates or book-entries
evidencing the rights have been distributed or made. The terms of the rights
are set forth in a Rights Agreement (the "Rights Agreement") between Energizer
and Continental Stock Transfer & Trust Company, as Rights Agent.
Until the rights separate from the shares of Energizer Stock,
- - the rights will be evidenced by the stockholder's most recent account
statement issued by the Transfer Agent with respect to book entry shares, or by
the stockholder's physical stock certificates, and
- - the transfer of shares of Energizer Stock will also be a transfer of the
associated rights.
As soon as practicable after the rights separate from the shares of Energizer
Stock, separate certificates ("Rights Certificates") evidencing the rights will
be mailed or other documents or book-entries evidencing the rights will be
entered and, thereafter, the separate Rights Certificate, or separate account
statement from the Transfer Agent, as applicable, alone will evidence the
rights.
The rights will separate from the shares of Energizer Stock upon the
earlier to occur of
- - 10 days following a public announcement that a person or group of persons
has acquired ownership of 20% or more of the outstanding Energizer Stock, or
- - 10 business days following the launch of a tender or exchange offer that
would result in a person or group owning more than 20% of the outstanding
Energizer Stock. (The board may extend this period if the actual acquisition of
20% or more of the Energizer Stock has not yet occurred.)
However, the rights will not separate in the event of acquisitions of Energizer
Stock by any of the following:
- - Energizer or any of its subsidiaries, or
- - any employee benefit plan of Energizer or any of its subsidiaries.
The rights are not exercisable until after they have separated from the shares
of Energizer Stock with which they are associated. They will expire at the
close of business on April 1, 2010, unless they are redeemed at an earlier time
by the board.
If a third party triggers a separation of the rights from the shares of
Energizer Stock by acquiring beneficial ownership of 20% or more of the
outstanding stock, each holder of a right (other than the party triggering the
separation) will then be able to exercise the right to acquire a share of
Energizer Stock at one-third of its then-current market price. Alternatively,
the board may elect, if the third party has not acquired over 50% of the
outstanding Energizer Stock, to exchange each outstanding right (other than
those held by the third party) for a share of Energizer Stock without any other
payment of the exercise price.
If, at any time after the separation of the rights is triggered,
- - Energizer is acquired in a merger, statutory share exchange or other
business combination in which Energizer is not the surviving corporation, or
- - 50% or more of Energizer's assets or earning power is sold or transferred,
each holder of a right will have the right to receive, upon exercise and payment
of the exercise price, common stock of the acquiring company having a value
equal to twice the exercise price.
The exercise price payable, and the number of shares of Energizer Stock or
other securities which will be issued, upon the exercise of the rights are
subject to adjustment from time to time to prevent dilution
- - in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Energizer Stock,
- - upon the grant to holders of the Energizer Stock of certain rights or
warrants to subscribe for or purchase Energizer Stock at a price, or securities
convertible into Energizer Stock with a conversion price, less than the then
current market price of the Energizer Stock, or
- - upon the distribution to holders of the Energizer Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Energizer Stock) or of
subscription rights or warrants (other than those referred to above).
No adjustments in the exercise price will be required unless, cumulatively, they
would result in an adjustment of at least 1% to the exercise price.
The Energizer board of directors may redeem the rights in whole, but not in
part, at a price of $.01 per right, at any time prior to the time that the
rights separate from the shares of Energizer Stock. Upon redemption, the right
to exercise the rights will terminate.
Until a right is exercised, the holder will have no rights as a stockholder of
Energizer, including the right to vote or to receive dividends.
All of the terms of the Rights Agreement may be amended by the Energizer board
of directors prior to the time that the rights separate from the shares of
Energizer Stock, for any reason the board deems appropriate. Prior to that
time, the Energizer Board is also authorized, if it deems appropriate, to lower
the threshold for causing the rights to separate, as long as the threshold is
not lowered to less than:
- - 10% of the outstanding Energizer Stock, or
- - any percentage of the outstanding Energizer Stock then held by any
stockholder.
After the rights separate, the terms of the Rights Agreement may be amended by
the board in order to:
- - cure any ambiguity, defect or inconsistency,
- - make changes which do not adversely affect the interests of holders of the
rights (other than the interests of any person triggering the separation), or,
- - subject to certain limitations, shorten or lengthen any time period under
the Rights Agreement.
The rights may have certain anti-takeover effects. The rights will cause
substantial dilution to a person or group that attempts to acquire Energizer on
terms not approved by the Energizer board of directors. The rights should not
interfere with any merger or other business combination approved by the board
since the rights may be redeemed by Energizer prior to the time that the rights
become exercisable.
TRANSFER AGENT
The transfer agent and registrar for the Energizer Stock is Continental
Stock Transfer & Trust Company. Information about Continental may be obtained
at (888) 509-5580.
<PAGE>
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS
The Articles of Incorporation and bylaws of Energizer, as well as the
Rights Agreement and Missouri General and Business Corporations Law contain
certain terms and provisions which could delay, defer or prevent a tender offer
or takeover attempt that a stockholder might consider in his or her best
interest, including attempts that might result in a premium over the market
price of the Energizer Stock. These provisions are designed to enable the
Energizer board of directors to develop Energizer's business in a manner that
will foster its long-term growth. They are meant to avoid the potential
disruption that might be entailed by the threat of a takeover which the board
believes is not in the best interests of Energizer and its shareholders. You
should also review "AGREEMENTS BETWEEN RALSTON AND ENERGIZER--Agreement and Plan
of Reorganization---Certain Post-Distribution Covenants" for a discussion of
certain agreements between Energizer and Ralston that could also deter a
takeover proposal.
The following information summarizes terms and provisions of Energizer's
Articles of Incorporation, bylaws and the Rights Agreement. Those documents
have been filed as exhibits to Energizer's Registration Statement on Form 10
which has been filed with the Securities and Exchange Commission, and are
available for public review. Because this description is a summary, it may not
contain all of the information that may be important to you, and you should read
the filed documents.
<PAGE>
CLASSIFIED BOARD OF DIRECTORS; REMOVAL
The Energizer bylaws provide that the number of directors will be fixed
from time to time exclusively by the Energizer board of directors, but shall
consist of not less than 6 and no more than 10 directors. Initially the
Energizer board will be comprised of eight directors. The Energizer Articles of
Incorporation provide for the board to be divided into three classes of
directors, as nearly equal in size as possible, serving staggered terms. The
terms of three of the initial directors of Energizer will expire at the 2001
annual meeting of Energizer's stockholders, the terms of three of the initial
directors will expire at the 2002 annual meeting, and the terms of the final two
initial directors will expire at the 2003 annual meeting. Starting with the 2001
annual meeting of Energizer's stockholders, one class of directors will be
elected each year for a three year term. See "MANAGEMENT--Directors of
Energizer". Moreover, the Articles provide that directors may be removed only
for cause, upon the vote of 2/3 of the outstanding Energizer Stock. The
Energizer Articles also provide that, subject to any rights of holders of
Energizer preferred stock, vacancies may be filled only by a majority of the
remaining directors. As a result, at least two annual meetings of shareholders
may be required for stockholders to change a majority of the directors, whether
or not a majority of Energizer's stockholders believes that such a change would
be desirable.
SHAREHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS
Energizer's bylaws and Missouri law require that any action taken by
written consent instead of at an annual or special meeting requires the written
consent of all stockholders. The bylaws provide that special meetings of the
stockholders may only be called by the board or the chairman of the board or the
President. These terms may make it more difficult for stockholders to take an
action that the board opposes.
ADVANCE NOTICE PROVISIONS
Energizer's bylaws establish an advance written notice procedure for
stockholders seeking:
- - to nominate candidates for election as directors at any annual meeting of
stockholders, or
- - to bring other business before an annual meeting of stockholders.
The bylaws provide that only persons who are nominated by the board, or by a
stockholder who has given timely written notice to Energizer's Secretary at
least 90 and no more than 120 days prior to the meeting to elect directors, will
be eligible for election as Energizer's directors. The bylaws also provide that
business to be conducted at any meeting of stockholders must be brought either
by the board or by a stockholder who has given timely written notice to
Energizer's Secretary at least 90 and no more than 120 days prior to the
meeting. The stockholder's written notice, for both nominations and matters to
be considered at an annual meeting, must contain additional information
specified in the bylaws. See "SHAREHOLDER PROPOSALS". The advance notice
provisions may preclude or deter some stockholders from bringing matters before
an annual meeting or from making nominations for directors.
PREFERRED AND COMMON STOCK
Energizer's Articles of Incorporation authorize the board of directors:
- - to create one or more series of preferred stock,
- - to issue shares of preferred stock in a series up to the maximum number of
shares of preferred stock authorized, and
- - to determine the preferences, rights, privileges, qualifications,
limitations and restriction of any series, including the dividend rights, voting
rights, conversion privileges, rights and terms of redemption, liquidation
preferences, the number of shares constituting any series and the designation of
any series.
In addition, the Articles authorize the board to issue up to approximately 200
million additional shares of Energizer Stock after the distribution (which
includes shares reserved for grants of stock under the Energizer benefit plans)
and up to 10 million shares of preferred stock. The number of authorized but
unissued shares will provide Energizer with the ability to meet future capital
needs and to provide shares for possible acquisitions and stock dividends or
stock splits.
Energizer believes that the preferred stock will provide Energizer with
increased flexibility in structuring possible future financings and
acquisitions, and in meeting other corporate needs which might arise. Energizer
will be able to issue shares of preferred stock without the expense and delay of
a special stockholders' meeting. The authorized and unissued shares of preferred
stock, as well as the authorized and unissued shares of Energizer Stock, will be
available for issuance without further action by stockholders, unless such
action is otherwise required by Missouri law.
However, although the board of directors has no intention at the present time of
doing so, it could issue a series of preferred stock having terms which could
discourage an acquisition attempt or other transaction that some, or a majority,
of the stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their Energizer Stock over its market
price. The board will make any decision to issue such shares based on its
judgment as to the best interests of Energizer and its stockholders at the time
of the issuance.
BUSINESS COMBINATIONS
In order to ensure Energizer stockholders receive a fair price for their
shares of Energizer Stock if there are significant changes in the ownership of
Energizer, Article Four of Energizer's Articles contains a restriction on
certain business combinations. Business combinations covered by Article Four
include:
- - a merger or consolidation, sale or other disposition of a substantial
amount of Energizer assets,
- - a plan of liquidation or dissolution of Energizer, or
- - other transactions involving the transfer, issuance, reclassification or
recapitalization of Energizer securities,
if these combinations benefit an individual or entity owning more than 20% of
the outstanding Energizer Stock. Article Four prohibits these business
combinations unless they are approved by the affirmative vote of not less than
2/3 of the outstanding Energizer Stock, and a majority of the shares not owned
by the stockholder benefiting from the combination.
In certain circumstances, the board of directors may approve any of the
above business combinations without the requirement of the described
super-majority shareholder approval provision.
AMENDMENT OF CERTAIN PROVISIONS OF THE ENERGIZER ARTICLES AND BYLAWS
Energizer's Articles of Incorporation provide that the bylaws may only be
amended or repealed by a majority of the board of directors. Except as otherwise
provided, any amendment of the Articles requires a vote of a majority of the
outstanding Energizer Stock. Amendments of the terms of the Articles relating
to:
- - the business combinations provisions,
- - the directors of the corporation,
- - the by-laws of the corporation,
- - the indemnification of directors, officers and employees, and
- - amendment of the Articles of Incorporation,
require the vote of 2/3 of the outstanding shares of the Energizer Stock.
RIGHTS
As described above, the common stock purchase rights will permit Energizer
stockholders to acquire shares of Energizer Stock or common stock of an
acquiring company at a substantial discount in the event of certain described
acquisitions of Energizer Stock and other changes in control. See "DESCRIPTION
OF ENERGIZER CAPITAL STOCK--Common Stock Purchase Rights".
MANAGEMENT CONTINUITY AGREEMENTS; OTHER SEVERANCE ARRANGEMENTS
Energizer will enter into management continuity agreements with certain
executive officers providing severance compensation and continuation of benefits
in the event of termination following a change of control of Energizer. See
"ENERGIZER COMPENSATION AND BENEFIT PLANS--Management Continuity Agreements".
MISSOURI GENERAL AND BUSINESS CORPORATIONS LAW
Energizer is incorporated under the laws of the State of Missouri. Section
351.459 of the Missouri General and Business Corporations Law, which applies to
Energizer, restricts "business combinations" between a corporation and its
"interested shareholders". A business combination includes a merger,
consolidation, asset sale or other transaction resulting in a financial benefit
to an interested shareholder. An interested shareholder is a person or entity
which owns, directly or indirectly, 20% or more of a corporation's outstanding
voting stock. Section 351.459 provides that a corporation cannot engage in a
business combination with an interested shareholder for a five-year period after
the date that the shareholder acquires its 20% interest, unless the board of
directors approves in advance either the business combination or the
shareholder's acquisition of its 20% interest.
After five years, the corporation still cannot engage in a business
combination with the interested shareholder unless:
- - the business combination is approved by the holders of a majority of the
corporation's outstanding stock, other than shares owned by the interested
shareholder; or
- - the business combination meets a number of conditions regarding the
consideration to be paid to the other shareholders for their shares of the
corporation's stock.
A Missouri corporation may elect to opt out of Section 351.459 by so providing
in its articles of incorporation or bylaws. Energizer has not elected to opt
out of Section 351.459.
Missouri has also adopted Section 351.407 which provides that a person acquiring
more than one-fifth of the outstanding shares of stock of a Missouri corporation
will not be able to vote those shares unless a majority of the shares held by
all other stockholders approves granting voting rights. A Missouri corporation
may elect to opt out of Section 351.407 by so providing in its articles of
incorporation or bylaws. Energizer has not elected to opt out of Section
351.407.
Finally, Missouri has adopted Section 351.347 which provides that a board of
directors of a Missouri corporation, in considering any acquisition proposals
for the corporation, may consider a number of factors besides the consideration
offered, including,
- - the future value of the corporation as an independent entity;
- - political, economic and other factors bearing on the current market price
of the corporation's securities;
- - the effects of the acquisition on employees, suppliers, customers and the
communities in which the corporation conducts its business;
- - the financial condition, prospects and ability to service its debts of the
person making the proposal; and
- - the competence, experience and integrity of the person making the
proposal.
These provisions of the Missouri General and Business Corporations Law may
make it more difficult for there to be a change in control of Energizer, or for
Energizer to enter into business combinations with persons acquiring large
percentages of the Energizer Stock.
<PAGE>
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES OF ENERGIZER
Under the terms of its Articles, Energizer must indemnify its directors,
officers and employees against any and all
- - expenses (including attorneys' fees),
- - judgments,
- - fines, and
- - amounts paid in settlement,
which are incurred in any legal proceeding because of their service to
Energizer. Energizer must also indemnify persons serving at its request as
directors, officers and employees of its subsidiaries or other corporations.
However, Energizer is not required to indemnify anyone if their conduct is
determined by a court to have been knowingly fraudulent, deliberately dishonest
or willful misconduct.
Energizer will also enter into indemnification agreements with its
directors and certain executive officers. Under those agreements, Energizer
will be required to indemnify them to the same extent authorized by the Articles
and, furthermore, to the fullest extent authorized or permitted by Missouri law.
At this time, the indemnification permitted by Missouri law is not more
extensive than that required by Energizer's Articles. No indemnification will
be paid under the indemnification agreements, however,
- - if it is finally determined by a court that the indemnification would be
unlawful,
- - on account of any lawsuit to recover shot-swing profits made by any
officer or director in violation of Section 16(b) of the Securities Exchange
Act, or
- - if the conduct of the officer or director is determined by a court to have
been knowingly fraudulent, deliberately dishonest or willful misconduct.
The agreements also provide that Energizer will advance the officer or director
his or her expenses in defending against any lawsuit, and that the officer or
director must reimburse Energizer for those expenses if a court ultimately
decides that he or she was not entitled to indemnification.
Energizer will also have directors' and officers' insurance which will
protect each officer and director from liability for actions taken in their
capacity as officers and directors. This insurance may provide broader coverage
than the protections afforded to the officers and directors by Energizer's
Articles and indemnification agreements. An officer or director will not be
entitled to indemnification from Energizer unless this insurance coverage does
not cover all of their expenses and liabilities.
Energizer's Articles of Incorporation and the form of indemnification
agreement which will be entered into with the officers and directors have been
filed as exhibits to Energizer's Registration Statement on Form 10 which has
been filed with the Securities and Exchange Commission, and those documents are
available for public review. The above description was only a summary; for the
full text of the Articles and that agreement, you should review the exhibits
which have been filed with the Securities and Exchange Commission.
SHAREHOLDER PROPOSALS
Article I of Energizer's Bylaws provides that stockholders desiring to
nominate candidates for directors or to present a proposal or bring other
business before an Energizer stockholders meeting must give advanced written
notice not less than 90 nor more than 120 days prior to the meeting. In each
case the notice must be given to the Secretary of Energizer, whose address is
800 Chouteau, St. Louis, Missouri 63102. The 2001 Annual Meeting of Energizer
stockholders is expected to be held on January 22, 2001. To be considered,
notice of any such nomination or proposal must be received no earlier than
September 22, 2000, and no later than October 24, 2000. To be included in
Energizer's proxy statement and form of proxy for that meeting, any proposal
must also comply in all respects with the rules and regulations of the
Securities and Exchange Commission.
INDEPENDENT ACCOUNTANTS
The Energizer Board has appointed PricewaterhouseCoopers LLP as Energizer's
independent accountants to audit Energizer's financial statements for the fiscal
year ending September 30, 2000. PricewaterhouseCoopers LLP has audited the
financial statements of Ralston since 1955.
WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION
Energizer has filed with the Securities and Exchange Commission a Form 10
Registration Statement with respect to the shares of Energizer Stock which
stockholders of Ralston will receive in the distribution. This Information
Statement does not contain all of the information contained in the Form 10 and
the exhibits and schedules to the Form 10. For additional information relating
to Energizer and the distribution, reference is made to the Form 10 and the
exhibits to the Form 10, which are on file at the offices of the Securities and
Exchange Commission. Statements contained in this Information Statement as to
the contents of any agreement or other document referred to are not necessarily
complete and in each instance, if the agreement or document is filed as an
exhibit, reference is made to the copy of the agreement or other document filed
as an exhibit to the Form 10. Each statement is qualified in all respects by
that reference.
You may inspect and copy the Form 10 and the exhibits to the Form 10 that
Energizer has filed with the Securities and Exchange Commission at the Public
Reference Room of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C., 20549, as well as at the public reference
facilities maintained at the Regional Offices of the Commission at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
information may be obtained at prescribed rates from the Public Reference Room
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Information about the operation of the Public Reference Room may be obtained by
calling the Commission at 1-800-SEC-0330. The Commission also maintains an
Internet site on the World Wide Web at http://www.sec.gov that contains reports,
proxy statements and other information regarding public companies. Shares of
Ralston Stock are listed, and shares of Energizer Stock have been approved for
listing, on the NYSE and reports, proxy statements and other information
concerning Ralston and Energizer can also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.
Energizer intends to furnish holders of Energizer Stock with annual reports
following its first fiscal year which ends September 30, 2000. These reports
will contain consolidated financial statements audited by an independent public
accounting firm.
The principal office of Energizer is located at 800 Chouteau Avenue, St.
Louis, Missouri 63102 (telephone: 314/982-1888).
Questions concerning the distribution should be directed to Ralston's
Investor Relations Department, Ralston Purina Company, Checkerboard Square, 7T,
St. Louis, Missouri 63164 (telephone: 314/982-2161). After the distribution, if
you have questions related to your investment in Energizer Stock, you should
contact Continental Stock Transfer & Trust Company, 2 Broadway, New York, New
York 10004 (Telephone: (888) 509-5580).
<PAGE>
INDEX TO FINANCIAL INFORMATION
OF ENERGIZER HOLDINGS, INC.
Page
----
Report of Independent Accountants 96
Combined Statement of Earnings and 97
Comprehensive Income
Combined Balance Sheet 98
Combined Statement of Cash Flows 99
Notes to Combined Financial Statements 101
Quarterly Financial Information 121
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Ralston Purina Company
In our opinion, the accompanying combined balance sheet and the related combined
statements of earnings and comprehensive income and of cash flows present
fairly, in all material respects, the financial position of Energizer Holdings,
Inc., comprised of businesses of Ralston Purina Company as described in the
Basis of Presentation note to the combined financial statements, at September
30, 1999 and 1998, and the results of their operations and their cash flows for
each of the three years in the period ended September 30,1999, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of Energizer's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
St. Louis, Missouri
February 17, 2000
<TABLE>
<CAPTION>
ENERGIZER HOLDINGS, INC.
COMBINED STATEMENT OF EARNINGS AND COMPREHENSIVE INCOME
YEAR ENDED SEPTEMBER 30,
(DOLLARS IN MILLIONS)
STATEMENT OF EARNINGS:
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net Sales . . . . . . . . . . . . . . . . . . . . . . . $1,872.3 $1,921.8 $2,005.8
--------- --------- ---------
Costs and Expenses
Cost of products sold . . . . . . . . . . . . . . . . 997.9 1,004.4 1,085.7
Selling, general and administrative . . . . . . . . . 398.0 392.6 396.9
Advertising and promotion . . . . . . . . . . . . . . 164.3 183.6 185.1
Research and development. . . . . . . . . . . . . . . 48.5 46.6 41.9
Provisions for restructuring. . . . . . . . . . . . . 7.8 21.0 78.5
Interest expense. . . . . . . . . . . . . . . . . . . 7.6 11.1 13.8
--------- --------- ---------
1,624.1 1,659.3 1,801.9
--------- --------- ---------
Earnings from Continuing Operations before Income Taxes 248.2 262.5 203.9
Income Taxes. . . . . . . . . . . . . . . . . . . . . . (88.4) (54.3) (44.6)
--------- --------- ---------
Earnings from Continuing Operations . . . . . . . . . . 159.8 208.2 159.3
Net Earnings/(Loss) from Discontinued Operations. . . . (5.6) (43.5) 0.5
Net Loss on Disposition of Discontinued Operations. . . (74.2) - -
--------- --------- ---------
NET EARNINGS. . . . . . . . . . . . . . . . . . . . . . $ 80.0 $ 164.7 $ 159.8
========= ========= =========
STATEMENT OF COMPREHENSIVE INCOME:
1999 1998 1997
--------- --------- ---------
Net Earnings. . . . . . . . . . . . . . . . . . . . . . $ 80.0 $ 164.7 $ 159.8
Other Comprehensive Income, Net of Tax
Foreign currency translation adjustments. . . . . . 7.8 (30.4) (17.5)
Reclassification Adjustments. . . . . . . . . . . . (4.5) - -
--------- --------- ---------
Comprehensive Income. . . . . . . . . . . . . . . . . . $ 83.3 $ 134.3 $ 142.3
========= ========= =========
<FN>
See accompanying Notes to Combined Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
ENERGIZER HOLDINGS, INC.
COMBINED BALANCE SHEET
SEPTEMBER 30,
(DOLLARS IN MILLIONS)
1999 1998
---- ----
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents . . . . . . . . $ 27.8 $ 49.1
Trade receivables, net. . . . . . . . . . 441.9 440.4
Inventories . . . . . . . . . . . . . . . 383.0 404.4
Other current assets. . . . . . . . . . . 121.3 103.3
-------- --------
Total Current Assets. . . . . . . . . . 974.0 997.2
-------- --------
Investments and Other Assets. . . . . . . . 319.7 446.9
Net Investment in Discontinued Operations . 67.2 156.6
Property at Cost
Land. . . . . . . . . . . . . . . . . . . 16.9 17.2
Buildings . . . . . . . . . . . . . . . . 143.0 125.9
Machinery and equipment . . . . . . . . . 816.7 797.5
Construction in progress. . . . . . . . . 33.5 71.6
-------- --------
1,010.1 1,012.2
Accumulated depreciation. . . . . . . . . 537.3 535.3
-------- --------
472.8 476.9
-------- --------
Total . . . . . . . . . . . . . . . . $1,833.7 $2,077.6
======== ========
LIABILITIES AND NET INVESTMENT IN ENERGIZER
Current Liabilities
Current maturities of long-term debt. . . $ 0.3 $ 13.2
Notes payable . . . . . . . . . . . . . . 118.5 114.4
Accounts payable. . . . . . . . . . . . . 128.6 149.0
Other current liabilities . . . . . . . . 248.5 242.1
-------- --------
Total Current Liabilities . . . . . . . 495.9 518.7
Long-Term Debt. . . . . . . . . . . . . . . 1.9 1.3
Other Liabilities . . . . . . . . . . . . . 23.0 26.3
Net Investment in Energizer . . . . . . . . 1,312.9 1,531.3
-------- --------
Total . . . . . . . . . . . . . . . . $1,833.7 $2,077.6
======== ========
<FN>
See accompanying Notes to Combined Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
ENERGIZER HOLDINGS, INC.
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30,
(DOLLARS IN MILLIONS)
1999 1998 1997
---- ---- ----
CASH FLOW FROM OPERATIONS
<S> <C> <C> <C>
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . $ 80.0 $ 164.7 $ 159.8
Adjustments to reconcile net earnings to net cash
flow from operations:
Depreciation and amortization. . . . . . . . . . . . . . . . . 94.9 101.2 112.3
Translation and exchange loss. . . . . . . . . . . . . . . . . 9.0 10.4 5.2
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . 70.4 (36.6) (43.0)
Non-cash restructuring charges (reversals) . . . . . . . . . . (2.2) (6.5) 35.7
Net (earnings) loss from discontinued operations . . . . . . . 79.8 43.5 (0.5)
Changes in assets and liabilities used in operations:
(Increase) decrease in accounts receivable, net. . . . . . . (6.4) (34.2) (8.5)
(Increase) decrease in inventories . . . . . . . . . . . . . 22.1 (2.8) 6.2
(Increase) decrease in other current assets. . . . . . . . . (13.9) 3.6 (8.2)
Increase (decrease) in accounts payable. . . . . . . . . . . (21.3) 0.2 (22.5)
Increase (decrease) in other current liabilities . . . . . . 16.2 1.5 64.9
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 (12.4) (15.7)
-------- -------- --------
Cash flow from continuing operations . . . . . . . . . . . . 337.2 232.6 285.7
Cash flow from discontinued operations . . . . . . . . . . . 15.1 8.7 (3.5)
-------- -------- --------
Net cash flow from operations. . . . . . . . . . . . . . . 352.3 241.3 282.2
-------- -------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Property additions . . . . . . . . . . . . . . . . . . . . . . (69.2) (102.8) (98.8)
Proceeds from sale of property . . . . . . . . . . . . . . . . 1.4 14.1 9.8
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . (0.5) 4.6 0.7
-------- -------- --------
Cash used by investing activities - continuing operations. . (68.3) (84.1) (88.3)
Cash used by investing activities - discontinued operations. (3.7) (13.2) (43.9)
-------- -------- --------
Net cash used by investing activities. . . . . . . . . . . (72.0) (97.3) (132.2)
-------- -------- --------
CASH FLOW FROM FINANCING ACTIVITIES
Net cash proceeds from issuance of long-term debt. . . . . . 1.0 13.8 10.2
Principal payments on long-term debt (including current
maturities). . . . . . . . . . . . . . . . . . . . . . . . (13.3) (35.1) (28.5)
Cash proceeds from issuance of notes payables with
maturities greater than 90 days. . . . . . . . . . . . . . 14.7 10.2 1.8
Cash payments on notes payables with
maturities greater than 90 days. . . . . . . . . . . . . . (0.1) - -
Net increase (decrease) in notes payable with
maturities of 90 days or less. . . . . . . . . . . . . . . (12.0) 32.8 (12.7)
Net transactions with Ralston. . . . . . . . . . . . . . . . (293.7) (154.7) (98.6)
-------- -------- --------
Net cash used by financing activities. . . . . . . . . . . (303.4) (133.0) (127.8)
-------- -------- --------
Effect of Exchange Rate Changes on Cash. . . . . . . . . . . . . 1.8 (4.6) (1.8)
-------- -------- --------
Net Increase (Decrease) in Cash and Cash Equivalents . . . . . . (21.3) 6.4 20.4
Cash and Cash Equivalents, Beginning of Period . . . . . . . . . 49.1 42.7 22.3
-------- -------- --------
Cash and Cash Equivalents, End of Period . . . . . . . . . . . . $ 27.8 $ 49.1 $ 42.7
======== ======== ========
<FN>
See accompanying Notes to Combined Financial Statements.
</TABLE>
ENERGIZER HOLDINGS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
BASIS OF PRESENTATION
On June 10, 1999, the Board of Directors of Ralston Purina Company
(Ralston) approved in principle a plan to spin off its battery business to the
Ralston stockholders. In September 1999, Energizer Holdings, Inc. (Energizer)
was incorporated in Missouri as an indirect subsidiary of Ralston. At the time
of the spin-off, Energizer will directly or indirectly control all of the
worldwide battery operations currently conducted by Ralston. To effect the
spin-off, Ralston will distribute all of the outstanding shares of Energizer
$.01 par value common stock to the Ralston stockholders (the distribution).
Ralston has requested a ruling from the Internal Revenue Service as to whether
the distribution will qualify as a tax-free spin-off.
Energizer is the world's largest manufacturer of primary batteries and
flashlights and a global leader in the dynamic business of providing portable
power. Energizer manufactures and markets a complete line of primary alkaline
and carbon zinc batteries under the brands Eveready and Energizer, as well as
miniature and rechargeable batteries and flashlights and other lighting
products. Energizer and its subsidiaries operate 23 manufacturing facilities
in 16 countries on 4 continents. Its products are marketed and sold in more
than 160 countries primarily through a direct sales force, and also through
distributors, to mass merchandisers, wholesalers and other customers.
The financial statements of Energizer include the financial position,
results of operations and cash flows of Energizer. Ralston's historical cost
basis of assets and liabilities has been reflected in these financial
statements. The financial information in these financial statements does not
include certain expenses and adjustments that would have been incurred had
Energizer been a separate, independent company, and may not necessarily be
indicative of results that would have occurred had Energizer been a separate,
independent company during the periods presented or of future results of
Energizer.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
SUMMARY OF ACCOUNTING POLICIES
Energizer's significant accounting policies, which conform to generally
accepted accounting principles and are applied on a consistent basis among all
years presented, except as indicated, are described below.
PRINCIPLES OF COMBINATION - These financial statements of Energizer include
certain wholly owned subsidiaries of Ralston and its subsidiaries. All
significant intercompany transactions are eliminated. A one-month lag is
utilized in reporting all international subsidiaries in Energizer's combined
financial statements.
FOREIGN CURRENCY TRANSLATION - Financial statements of foreign operations
where the local currency is the functional currency are translated using
end-of-period exchange rates for assets and liabilities and average exchange
rates during the period for results of operations. Related translation
adjustments are reported as a separate component of Net Investment in Energizer
(see Net Investment in Energizer note).
For foreign operations where the U.S. dollar is the functional currency and
for countries which are considered highly inflationary, translation practices
differ in that inventories, properties, accumulated depreciation and
depreciation expense are translated at historical rates of exchange, and related
translation adjustments are included in earnings.
ENVIRONMENTAL REMEDIATION LIABILITIES - Accruals for environmental
remediation are recorded when it is probable that a liability has been incurred
and the amount of the liability can be reasonably estimated, based on current
law and existing technologies. These accruals are adjusted periodically as
assessments take place and remediation efforts progress, or as additional
technical or legal information becomes available.
Accruals for environmental remediation are included in Other current
liabilities or Other liabilities, depending on their nature, in the Combined
Balance Sheet and are recorded at undiscounted amounts.
FINANCIAL INSTRUMENTS - Energizer uses financial derivatives in the
management of foreign currency and interest rate risks that are inherent to its
business operations. Such instruments are not held or issued for trading
purposes.
Foreign exchange (F/X) instruments, including currency forwards, purchased
options and zero-cost option collars, are used primarily to reduce transaction
exposures associated with anticipated intercompany purchases and intercompany
borrowings and, to a lesser extent, to manage other transaction and translation
exposures. F/X instruments used are selected based on their risk reduction
attributes and the related market conditions. The terms of such instruments are
generally twelve months or less.
Realized and unrealized gains and losses from F/X instruments that hedge firm
commitments are deferred as part of the cost basis of the asset or liability
being hedged and are recognized in the Combined Statement of Earnings in the
same period as the underlying transaction. Realized and unrealized gains or
losses from F/X instruments used as hedges of existing balance sheet exposures
or anticipated transactions that are not firmly committed are recognized
currently in Selling, general and administrative expenses in the Combined
Statement of Earnings. However, gains or losses from F/X instruments that
hedge existing balance sheet exposures are offset in the Combined Statement of
Earnings by gains or losses recorded on these hedged exposures. Premiums or
discounts on foreign exchange forward contracts are recognized, and premiums
paid for purchased options are amortized, over the life of the related F/X
instrument in Selling, general and administrative expenses in the Combined
Statement of Earnings. Unrealized gains and losses, if any, on zero-cost option
collars are deferred as part of the cost basis of the asset or liability being
hedged. F/X instruments are generally not disposed of prior to settlement date;
however, if an F/X instrument and the underlying hedged transaction were
disposed of prior to the settlement date, any deferred gain or loss would be
recognized immediately in the Combined Statement of Earnings.
CASH EQUIVALENTS - For purposes of the Combined Statement of Cash Flows,
cash equivalents are considered to be all highly liquid investments with a
maturity of three months or less when purchased.
INVENTORIES - Generally inventories are valued at the lower of cost or
market, with cost being determined using average cost or the first-in, first-out
(FIFO) method.
CAPITALIZED SOFTWARE COSTS - In March 1998, the American Institute of
Certified Public Accountants (AICPA) issued Statement of Position (SOP) No.
98-1, "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." This statement requires that certain internal and external costs
associated with the purchase and/or development of internal use software be
capitalized rather than expensed. Energizer adopted this statement as of the
beginning of fiscal year 1998.
Capitalized software costs are included in Investments and Other Assets.
These costs are amortized using the straight-line method over periods of related
benefit ranging from 3 to 7 years.
PROPERTY AT COST - Expenditures for new facilities and expenditures that
substantially increase the useful life of property, including interest during
construction, are capitalized. Maintenance, repairs and minor renewals are
expensed as incurred. When property is retired or otherwise disposed of, the
related cost and accumulated depreciation are removed from the accounts and
gains or losses on the disposition are reflected in earnings.
REVENUE RECOGNITION - Revenue is recognized upon shipment of product to
customers. Sales discounts, returns and allowances are included in Net sales,
and the provision for doubtful accounts is included in Selling, general and
administrative expenses in the Combined Statement of Earnings.
DEPRECIATION - Depreciation is generally provided on the straight-line
basis by charges to costs or expenses at rates based on the estimated useful
lives of the properties. Estimated useful lives range from 3 to 25 years for
machinery and equipment and 10 to 50 years for buildings. Depreciation expense
was $68.4, $74.1, and $79.5 in 1999, 1998 and 1997, respectively.
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization of goodwill,
representing the excess of cost over the net tangible assets of acquired
businesses, is recorded on a straight-line basis primarily over a period of 25
years, with some amounts being amortized over 40 years. The cost to purchase
or develop other intangible assets, which consist primarily of patents,
tradenames and trademarks, is amortized on a straight-line basis over estimated
periods of related benefit ranging from seven to 40 years.
IMPAIRMENT OF LONG-LIVED ASSETS - Energizer reviews long-lived assets,
including goodwill and other intangible assets, for impairment whenever events
or changes in business circumstances indicate that the remaining useful life may
warrant revision or that the carrying amount of the long-lived asset may not be
fully recoverable. Energizer performs undiscounted cash flow analyses to
determine if an impairment exists. If an impairment is determined to exist, any
related impairment loss is calculated based on fair value. Impairment losses on
assets to be disposed of, if any, are based on the estimated proceeds to be
received, less costs of disposal.
ADVERTISING AND PROMOTION COSTS - Energizer advertises and promotes its
products through national and regional media. Products are also advertised and
promoted through cooperative programs with retailers. Energizer expenses
advertising and promotion costs as incurred. Due to the seasonality of the
business, with typically higher sales and volume during the holidays in the
first quarter, advertising and promotion costs incurred during interim periods
are generally expensed ratably in relation to revenues.
RESEARCH AND DEVELOPMENT COSTS - Research and development costs are
expensed as incurred.
INCOME TAXES - Energizer is included in the consolidated federal income tax
return filed by Ralston. U.S. income tax payments, refunds, credits, provision
and deferred tax components have been allocated to Energizer in accordance with
Ralston's tax allocation policy. Such policy allocates tax components included
in the consolidated income tax return of Ralston to Energizer to the extent such
components were generated by or related to Energizer.
Energizer follows the liability method of accounting for income taxes.
Deferred income taxes are recognized for the effect of temporary differences
between financial and tax reporting. No additional U.S. taxes have been
provided on earnings of foreign subsidiaries expected to be reinvested
indefinitely. Additional income taxes are provided, however, on planned
repatriation of foreign earnings after taking into account tax-exempt earnings
and applicable foreign tax credits.
EARNINGS PER SHARE - The combined financial statements of Energizer include
wholly owned subsidiaries of Ralston and its subsidiaries. As such, earnings
per share data does not provide meaningful information about the results of
operations of Energizer.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - The Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 133 "Accounting for Derivative Instruments and Hedging Activities" in June
1998. This statement provides standards on accounting and disclosure for
derivative instruments, and requires that all derivatives be measured at fair
value and reported as either assets or liabilities in the balance sheet.
Subsequent to the issuance of SFAS No. 133, the FASB issued SFAS No. 137 which
defers the effective date of SFAS No. 133 by one year. Accordingly, Energizer
will be required to adopt the provisions of SFAS No. 133 no later than the
beginning of fiscal year 2001. Energizer has not completed its evaluation to
determine the impact of this statement on its financial statements.
RELATED PARTY ACTIVITY
CASH MANAGEMENT - In the U.S., Ralston uses a centralized cash management
system. Cash deposits from Energizer are transferred to Ralston on a daily
basis, and Ralston funds Energizer's disbursement bank accounts as required.
Unpaid balances of checks are included in accounts payable. No interest has
been charged or credited on transactions with Ralston.
SHARED SERVICES - Ralston provides certain general and administrative
services to Energizer including finance, legal, systems, benefits, advertising
and facilities. The costs of these shared services are included in Energizer's
Combined Statement of Earnings generally based on utilization, which management
believes to be reasonable. Costs of these shared services charged to Energizer
were $20.0, $20.9, and $18.0 for 1999, 1998 and 1997, respectively.
DISCONTINUED OPERATIONS
In March, 1999, the Board of Directors of Ralston Purina Company announced
its intention to exit Energizer's worldwide rechargeable Original Equipment
Manufacturers' (OEM) battery business to allow Energizer to focus on its primary
battery business. On November 1, 1999, the OEM business was sold to Moltech
Corporation for approximately $20.0. This segment is accounted for as a
discontinued operation in Energizer's combined financial statements.
Included in the Net Loss on Disposition of Discontinued Operations are
estimated operating losses during the divestment period of $15.0, pre-tax, or
$9.6, after-tax, and a loss on disposition of $95.6, pre-tax or $64.6,
after-tax. Actual pre-tax operating losses during the divestment period
through September 30, 1999, totaled $12.5.
The net loss for 1998 includes an after-tax provision of $42.7, primarily
representing an impairment write-down of lithium ion rechargeable battery assets
of the OEM business. Fair value of those assets was primarily determined based
upon estimates of recovery value for unique manufacturing equipment. Due to
rapid changes in the business environment since the beginning of the lithium ion
project in 1996, it became more economical to source lithium ion cells from
other manufacturers.
The Investment in Discontinued Operations at September 30, 1999 and 1998 is
primarily comprised of fixed assets, inventory and accounts receivable and
payable. Results for discontinued
operations are presented in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
------- -------- ------
Net sales. . . . . . . . . . . . . . . . . . . . $ 64.2 $ 149.4 $172.1
======= ======== ======
Earnings/(loss) before income taxes. . . . . . . ($9.0) ($70.6) $ .3
Income taxes benefit/(provision) . . . . . . . . 3.4 27.1 .2
------- -------- ------
Net earnings/(loss) from discontinued operations ($5.6) ($43.5) $ 0.5
======= ======== ======
</TABLE>
RESTRUCTURING ACTIVITIES
Competition in the primary battery business has intensified over the past
several years, and there continues to be a migration of demand from carbon zinc
to alkaline batteries. In response to these changes, Energizer has recorded
restructuring charges each year since 1994. These charges include a reduction
in carbon zinc plant capacity as demand for this type of battery continues to
decline, plant closures for the movement and consolidation of alkaline
production to new or more efficient locations in an effort to achieve lower
product costs, and staffing reorganizations and reductions in various world
areas to enhance management effectiveness and reduce overhead costs. A detailed
discussion of these and other charges taken since 1994 follows.
During 1999, Energizer recorded net provisions for restructuring of $8.3,
after-tax, or $9.9, pre-tax, $2.1 of which represented inventory write-downs and
is classified as Cost of Products Sold in the combined statement of earnings.
Of the net pre-tax charge, $7.4 relates to current year restructuring plans for
the elimination of certain production capacity in North America and in Asia.
The pre-tax charge of $7.4 for current year plans consisted of termination
benefits of $3.2, other cash costs of $0.2 and fixed asset impairments of $4.0.
The fixed asset impairments primarily relate to assets used for the production
of lithium coin cells in North America. These assets were idled and scrapped in
1999.
The 1999 restructuring plan provided for the termination of approximately 170
production and administrative employees and the closure of one plant in Asia.
This plant closure was precipitated by the financial problems in the Asian
market, which resulted in contractions in battery markets in this area. As of
September 30, 1999, approximately 160 employees had been terminated and the
plant was closed in connection with these charges. Substantially all actions
associated with these charges will be completed by the end of the first quarter
of fiscal 2000.
The remaining $2.5 represents additional net provisions related to prior
years' restructuring plans. Additional termination benefits of $5.5 related to
the 1997 restructuring plan primarily represent enhanced severance related to a
European plant closing. Additional provisions for other cash costs of $1.8 were
recorded for fixed asset disposition costs for previously held for use assets
related to the 1997 restructuring plan that were idled and held for disposal.
Other non-cash charges of $2.1 relate to inventory write-offs which were more
than offset by a reclassification of $4.5 from other comprehensive income to net
income of cumulative translation adjustment for a subsidiary sold in connection
with the 1997 plan. Also recorded in 1999 were asset proceeds greater than
anticipated of $5.4 related to 1994, 1995 and 1997 restructuring plans.
During 1998, Energizer recorded net after-tax provisions for restructuring
of $12.8, or $21.3 on a pre-tax basis, of which $.3 represents inventory
write-downs and is classified as Cost of Products Sold in the combined statement
of earnings. Of the net pre-tax charge, $36.5 related to 1998 restructuring
plans, including a voluntary early retirement option offered to most U.S.
Energizer employees meeting certain age and service requirements and European
business operations restructuring, primarily a reorganization of European sales
forces and related employee reductions.
The total 1998 pre-tax charge of $36.5 consisted of termination benefits of
$29.3, which provided for the termination or early retirement of approximately
420 sales and administrative employees, other cash costs of $4.6, fixed asset
impairments of $1.1 and a non-cash investment write-off of $1.5. The other cash
costs of $4.6 consisted of demolition costs of $1.5 and environmental exit costs
of $0.8, both relating to assets held for disposal, lease termination costs of
$1.6, and other exit costs of $.7. As of September 30, 1999, approximately 340
employees had been terminated in connection with these charges. Except for
disposition of certain assets held for disposal, substantially all actions
associated with the 1998 charges will be completed by the end of fiscal 2000.
In addition, net reversals of $15.2 related to prior years' restructuring
plans were recorded in 1998, comprised of $3.7 of additional charges offset by
$18.9 of reversals of prior years' charges. The additional charges primarily
related to asset disposition costs of $2.6 for previously held for use assets
that were idled and held for disposal. The reversals included $9.4 of greater
than anticipated proceeds from asset sales related to the 1994, 1995 and 1996
restructuring plans. In addition, $8.5 of termination benefits recorded in 1997
were reversed in 1998 due primarily to the modification of a European plant
closing plan, driven by the changing business environment in Europe. The
modifications resulted in the termination of approximately 200 fewer employees
than originally anticipated.
During 1997, Energizer recorded net provisions for restructuring of $72.0,
after-tax, or $83.7, pre-tax, of which $5.2 represented inventory write-downs
and is classified as Cost of Products Sold in the combined statement of
earnings. Of the total pre-tax charge, $81.8 related to 1997 plans for the
restructuring of Energizer's carbon zinc and alkaline production capacity,
primarily in Europe and North America, and for staffing reorganization and
reductions.
The total 1997 pre-tax charge of $81.8 consisted of termination benefits of
$43.8, other cash costs of $2.4, fixed asset impairments of $29.6 and non-cash
charges of $6.0. The other cash costs of $2.4 consisted of legal,
environmental and other exit costs. The non-cash charges of $6.0 consisted of
inventory write-offs of $3.0 and an investment write-off of $3.0.
Fixed asset impairments of $29.6 were computed using discounted cash flows
to determine the fair value of the impaired plants and production assets. The
net book value of these assets prior to the impairment write-down was $40.0.
These assets relate to three production plants located in the United States,
Canada and France, which were idled in March 1998, November 1997 and April 1999,
respectively. Depreciation continued on these assets subsequent to the
impairment write-down until those assets were idled.
The 1997 charges provided for the termination of approximately 1,180
employees in production, sales and administrative capacities. As previously
mentioned, the plan was modified in 1998 to terminate approximately 200 fewer
employees. As of September 30, 1999, approximately 890 employees had been
terminated in connection with these charges. Except for disposition of certain
assets held for disposal, substantially all actions associated with the 1997
charges will be completed by the end of the first quarter of fiscal 2000, with
payments extending through the end of fiscal 2000.
The remaining $1.9 of the net 1997 provision represents additional
provisions for prior years' restructuring plans of $2.5 and $2.9 for additional
cash and non-cash charges, respectively, net of reversals of cash and non-cash
provisions taken in prior years of $.7 and $2.8, respectively. The non-cash
reversal was primarily due to fixed asset proceeds greater than originally
anticipated.
As of September 30, 1999, except for the disposition of certain assets held
for disposal, substantially all activities associated with 1994, 1995 and 1996
restructuring plans are complete. The remaining accrual related to these plans
was $1.6 at September 30, 1999 and primarily represents costs under a
noncancellable lease and asset disposition costs.
The carrying value of assets held for disposal at September 30, 1999 was
$6.7.
The following table presents, by major cost component and by year of
provision, activity related to the restructuring charges discussed above during
fiscal years 1999, 1998 and 1997, including any adjustments to the original
charges.
<TABLE>
<CAPTION>
1997 ROLLFORWARD 1998 ROLLFORWARD 1999 ROLLFORWARD
---------------- ---------------- ----------------
PRO- PRO- PRO-
BEGIN- VISION/ BEGIN VISION/ BEGIN VISION/
NING REVERS- ACTI- NING REVERS- ACTI- NING REVERS- ACTI-
BALANCE ALS VITY BALANCE BALANCE ALS VITY BALANCE BALANCE ALS VITY BALANCE
1994 PLAN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Termination benefits. . 2.2 1.2 (3.2) 0.2 0.2 - (0.2) 0.0 0.0 - - 0.0
Other cash costs. . . . 2.5 - (1.3) 1.2 1.2 - (1.2) - - - - -
Fixed asset impairments - (1.2) 1.2 - - (5.8) 5.8 - - (2.0) 2.0 -
Other noncash charges . - - - - - - - - - - - -
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
Total . . . . . . . . . 4.7 - (3.3) 1.4 1.4 (5.8) 4.4 0.0 0.0 (2.0) 2.0 0.0
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
1995 PLAN
Termination benefits. . 8.6 (0.7) (5.8) 2.1 2.1 0.3 (1.5) 0.9 0.9 0.1 (1.0) -
Other cash costs. . . . 2.3 1.1 (1.5) 1.9 1.9 0.5 (1.2) 1.2 1.2 - (0.4) 0.8
Fixed asset impairments - (1.6) 1.6 - - (2.2) 2.2 - - (1.5) 1.5 -
Other noncash charges . - 2.2 (2.2) - - (0.4) 0.4 - - - - -
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
Total . . . . . . . . . 10.9 1.0 (7.9) 4.0 4.0 (1.8) (0.1) 2.1 2.1 (1.4) 0.1 0.8
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
1996 PLAN
Termination benefits. . 3.9 - (2.8) 1.1 1.1 (0.6) (0.5) - - - - -
Other cash costs. . . . 1.8 0.2 (0.3) 1.7 1.7 - (0.7) 1.0 1.0 - (0.2) 0.8
Fixed asset impairments - 0.7 (0.7) - - (1.4) 1.4 - - - - -
Other noncash charges . - - - - - - - - - - - -
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
Total . . . . . . . . . 5.7 0.9 (3.8) 2.8 2.8 (2.0) 0.2 1.0 1.0 - (0.2) 0.8
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
1997 PLAN
Termination benefits. . - 43.8 (1.2) 42.6 42.6 (8.5) (15.4) 18.7 18.7 5.5 (20.1) 4.1
Other cash costs. . . . - 2.4 (0.2) 2.2 2.2 2.3 (2.3) 2.2 2.2 1.8 (2.7) 1.3
Fixed asset impairments - 29.6 (29.6) - - - - - - (1.9) 1.9 -
Other noncash charges . - 6.0 (6.0) - - 0.6 (0.6) - - (2.4) 2.4 -
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
Total . . . . . . . . . - 81.8 (37.0) 44.8 44.8 (5.6) (18.3) 20.9 20.9 3.0 (18.5) 5.4
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
1998 PLAN
Termination benefits. . - - - - - 29.3 (15.0) 14.3 14.3 0.8 (13.5) 1.6
Other cash costs. . . . - - - - - 4.6 (1.9) 2.7 2.7 0.5 (1.2) 2.0
Fixed asset impairments - - - - - 1.1 (1.1) - - - - -
Other noncash charges . - - - - - 1.5 (1.5) - - 1.6 (1.6) -
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
Total . . . . . . . . . - - - - - 36.5 (19.5) 17.0 17.0 2.9 (16.3) 3.6
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
1999 PLAN
Termination benefits. . - - - - - - - - - 3.2 (2.5) 0.7
Other cash costs. . . . - - - - - - - - - 0.2 (0.2) -
Fixed asset impairments - - - - - - - - - 4.0 (4.0) -
Other noncash charges . - - - - - - - - - - - -
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
Total . . . . . . . . . - - - - - - - - - 7.4 (6.7) 0.7
----- ------ ------- ----- ----- ------ ------- ----- ----- ------ ------- -----
GRAND TOTAL . $21.3 $83.7 $(52.0) $53.0 $53.0 $21.3 $(33.3) $41.0 $41.0 $ 9.9 $(39.6) $11.3
===== ====== ======= ===== ===== ====== ======= ===== ===== ====== ======= =====
</TABLE>
INCOME TAXES
U.S. income tax payments, refunds, credits, provision and deferred tax
components have been allocated to Energizer in accordance with Ralston's tax
allocation policy. Such policy allocates tax components included in the
consolidated income tax return of Ralston to Energizer to the extent such
components were generated by or related to Energizer.
Had the Energizer tax provision been calculated as if Energizer was a
separate, independent U.S. taxpayer, the income tax provision would have been
higher by approximately $11.2 in 1999. The higher provision is due primarily to
the $16.6 of capital loss benefits that would not be realized on a stand-alone
basis.
The provisions for income taxes consisted of the following for the years
ended September 30:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------------------------------------------
CONTINUING CONTINUING CONTINUING
OPERATIONS COMBINED OPERATIONS COMBINED OPERATIONS COMBINED
---------- -------- ---------- -------- --------- --------
Currently payable:
<S> <C> <C> <C> <C> <C> <C>
United States . . . . . . . $(17.5) $(27.0) $ 47.5 $ 41.2 $ 48.6 $ 44.8
State .. . . . . . . . . 7.9 8.6 6.5 6.2 6.5 5.9
Foreign . . . . . . . . . . 27.6 27.8 36.9 37.0 32.5 32.6
------ ------- ------- ------- ------- ------
Total Current. . . . . 18.0 9.4 90.9 84.4 87.6 83.3
------ ------- ------- ------- ------- ------
Deferred:
United States . . . . . . . 68.6 39.1 (39.0) (57.1) (50.4) (46.8)
State .. . . . . . . . . (0.5) (2.2) (0.3) (2.8) (2.0) (1.5)
Foreign . . . . . . . . . . 2.3 2.3 2.7 2.7 9.4 9.4
------- ------ ------- ------- ------- -------
Total Deferred . . . . 70.4 39.2 (36.6) (57.2) (43.0) (38.9)
------- ------ ------- ------- ------- -------
Provision for Income $ 88.4 $ 48.6 $ 54.3 $ 27.2 $ 44.6 $ 44.4
Taxes . . . . . . . . . . . ======= ======= ======= ======= ======= =======
</TABLE>
The source of pretax earnings was:
<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------------------------
CONTINUING CONTINUING CONTINUING
OPERATIONS COMBINED OPERATIONS COMBINED OPERATIONS COMBINED
---------- -------- ---------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
United States. $197.2 $ 75.4 $172.1 $102.4 $153.9 $153.1
Foreign 51.0 53.3 90.4 89.5 50.0 51.1
------ ------ ------ ------ ------ ------
Pre-tax earnings $248.2 $128.7 $262.5 $191.9 $203.9 $204.2
====== ====== ====== ====== ====== ======
</TABLE>
A reconciliation of income taxes with the amounts computed at the statutory
federal rate follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Computed tax at federal statutory rate . . . . $ 86.9 35.0% $ 91.9 35.0% $ 71.4 35.0%
State income taxes, net of federal tax benefit 4.8 1.9 4.0 1.5 2.9 1.4
Foreign tax in excess of domestic rate.. . . . 8.4 3.4 4.8 1.8 20.2(a) 9.9
Taxes on repatriation of foreign earnings. . . 7.8 3.1 7.5 2.9 10.4 5.1
U.S. foreign tax credit refunds. . . . . . . . - - - - (20.5) (10.0)
Recognition of U.S. capital losses . . . . . . (16.6) (6.6) (48.4) (18.4) (35.9) (17.6)
Other, net. . . . . . . . . . . . . . . . . . (2.9) (1.2) (5.5) (2.1) (3.9) (1.9)
------- ----- ------- ------ --------- ------
$ 88.4 35.6% $ 54.3 20.7% $ 44.6 21.9%
======= ===== ======= ====== ========= ======
</TABLE>
(a) The increased level of foreign tax in excess of the domestic rate is due
to restructuring reserves for which no tax benefits were provided.
Energizer recognized capital loss tax benefits of $16.6, $48.4 and $35.9 in
1999, 1998 and 1997, respectively, primarily related to past restructuring
actions. In 1997, Ralston changed its method of computing foreign tax credits.
Tax benefits of $20.5 have been allocated to Energizer related to foreign tax
credit refund claims for 1993 through 1996.
The effective tax rate for discontinued operations is higher than the
federal statutory rate in 1999 and 1998 due to a higher state income tax rate.
The deferred tax assets and deferred tax liabilities recorded on the
balance sheet as of September 30 are as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
Deferred Tax Liabilities:
<S> <C> <C>
Depreciation and property differences $(64.7) $(72.6)
------- -------
Gross deferred tax liabilities . (64.7) (72.6)
======= =======
Deferred Tax Assets:
Accrued liabilities . . . . . . . . . 64.3 64.0
Tax loss carryforwards. . . . . . . . 46.4 40.7
Capital losses. . . . . . . . . . . . - 71.8
Intangible assets . . . . . . . . . . 37.6 37.4
Inventory differences . . 3.5 5.7
Other tax assets, non-current . . . . 12.1 21.6
------- -------
Gross deferred tax assets. . . . 163.9 241.2
------- -------
Valuation allowance . . . . . . . . . (66.8) (65.7)
------- -------
Net deferred tax assets. . . . . . . . . . $ 32.4 $102.9
======= =======
</TABLE>
Total deferred tax assets/liabilities shown above include current and
non-current amounts.
Tax loss carryforwards of $2.0 expired in 1999. Future expiration of tax
loss carryforwards and tax credits, if not utilized, are as follows: 2000,
$3.0; 2001, $3.0; 2002, $4.4; 2003, $3.0; 2004, $2.9; thereafter or no
expiration, $30.1. The valuation allowance is primarily attributed to deferred
tax assets related to certain accrued liabilities, tax loss carryforwards and
tax credits outside the United States.
At September 30, 1999, approximately $72.1 of foreign subsidiary net
earnings were considered permanently invested in those businesses. Accordingly,
U.S. income taxes have not been provided for such earnings. It is not
practicable to determine the amount of unrecognized deferred tax liabilities
associated with such earnings.
PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
Energizer participates in Ralston's noncontributory defined benefit pension
plans (Plans) covering substantially all regular employees in the United States
and certain employees in other countries. The Plans provide retirement benefits
based on years of service and earnings. In fiscal 1999, Ralston amended the
qualified U.S. Pension Plan to allow employees to make an irrevocable election
effective January 1, 1999 between two pension benefit formulas. Prior to this
time, one benefit formula was used. Also effective January 1, 1999, assets of
the Plan provide employee benefits in addition to normal retirement benefits.
The additional benefit is equal to a 300 percent match on participants'
after-tax contributions of 1 or 1.75 percent to the Savings Investment Plan.
The cost of the Plans is allocated to Energizer based on Energizer's percentage
of the total liability of the Plans, as shown in the table below.
Certain other foreign pension arrangements, which include various
retirement and termination benefit plans, some of which are required by local
law or coordinated with government-sponsored plans, are not material in the
aggregate.
Substantially all regular Energizer employees in the United States were
eligible to participate in the Ralston-sponsored defined contribution plans. In
fiscal 1999, Ralston amended the contribution structure of the plans. Prior to
January 1, 1999 Ralston generally matched 100% of participants' before-tax
contributions up to 6 percent of compensation for employees hired prior to July
1, 1993. For employees hired on or after July 1, 1993, Ralston matched
before-tax participant contributions in increasing 20 percent increments for
each year of service. On January 1, 1999 and thereafter, Ralston matches 25
percent of participants' before-tax contributions up to 4 percent of
compensation. In addition, participants can make after-tax contributions of 1
percent or 1.75 percent of compensation into the savings plan. This participant
after-tax contribution is matched within the pension plan at 300 percent.
Amounts charged to expense are shown in the table below.
Ralston currently provides health care and life insurance benefits for
certain groups of retired Energizer employees who meet specified age and years
of service requirements. The cost of these benefits is allocated to Energizer
based on Energizer's percentage of the total liability related to these
benefits. Ralston also sponsors plans whereby certain management employees may
defer compensation for cash benefits after retirement. The cost of these
postretirement benefits is shown in the table below.
The costs of defined benefit and contribution plans and other
postretirement benefits allocated to Energizer are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
----- ----- -----
Defined benefit plans . . . . . . $ 5.2 $ .3 $ 6.7
Defined contribution plan . . . . 3.0 8.2 7.5
Postretirement benefits . 5.8 4.3 5.0
</TABLE>
NOTES PAYABLE
Notes payable at September 30, 1999 and 1998 consisted of notes payable to
financial institutions of $118.5 and $114.4, respectively, and had a weighted
average interest rate of 7.3% and 10.5%, respectively.
At September 30, 1999, total unused lines of credit were zero.
LONG-TERM DEBT
The detail of long-term debt at September 30 is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
------ -------
Singapore subsidiary, interest rate of 5.9% at 8-31-98,
due 1999 . . . . . . . . . . . . . . . . . . . . . . . $ - $ 12.9
Other, interest rates ranging from 7.6% to 18.9% at
9-30-99 and from 11.5% to 18.3% at 9-30-98, due 1999
to 2002. . . . . . . . . . . . . . . . . . . . . . . . 2.2 1.6
------ -------
2.2 14.5
Less current portion. . . . . . . . . . . . . . . . . . (.3) (13.2)
------ -------
$ 1.9 $ 1.3
====== =======
</TABLE>
Aggregate maturities of long-term debt outstanding at September 30, 1999
are $1.6 and $0.3 for the years ending September 30, 2001 and 2002,
respectively.
NET INVESTMENT IN ENERGIZER
The following analyzes Ralston's Net Investment in Energizer for the years
ended September 30:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
--------- --------- ---------
Balance at beginning of year . . . $1,531.3 $1,548.2 $1,534.5
Net earnings .. . . . . . . . 80.0 164.7 159.8
Change in cumulative translation adjustment 3.3 (30.4) (17.5)
Net transactions with Ralston . . . . . . . (301.7) (151.2) (128.6)
--------- --------- ---------
Balance at end of year. . . . . . . . . . . $1,312.9 $1,531.3 $1,548.2
========= ========= =========
</TABLE>
Included in Net Investment in Energizer are cumulative translation adjustments
for non-hyperinflationary countries of $83.3, $86.6, and $56.2 at September 30,
1999, 1998 and 1997, respectively, representing net devaluation of currencies
relative to the U.S. dollar over the period of investment.
Also included in Net Investment in Energizer are accounts payable and
receivable between Energizer and Ralston.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
FOREIGN CURRENCY CONTRACTS - Energizer enters into foreign exchange forward
contracts and, to a lesser extent, purchases options and enters into zero-cost
option collars, to mitigate potential losses in earnings or cash flows on
foreign currency transactions. Foreign currency exposures are primarily related
to anticipated intercompany purchase transactions and intercompany borrowings.
Other foreign currency transactions to which Energizer is exposed include
external purchase transactions and intercompany receivables, dividends and
service fees.
The table below summarizes, by instrument and by major currency, the
contractual amounts of Energizer's forward exchange contracts and purchased
currency options in U.S. dollar equivalents at year end. These contractual
amounts represent transaction volume outstanding, and do not represent the
amount of Energizer's exposure to credit or market loss. Foreign currency
contracts are generally for one year or less.
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
------ ------
INSTRUMENT
Forwards. . . . . . . . $133.4 $245.7
Options .. . 17.7 6.6
CURRENCY
Swiss franc . . . . . . 124.2 143.9
French franc . - 73.8
Canadian dollar . . . . 17.7 19.5
British pound . . . . . - 6.6
Other currencies. . . . 9.2 8.5
</TABLE>
CONCENTRATION OF CREDIT RISK - The counterparties to foreign currency
contracts consist of a number of major international financial institutions and
are generally institutions with which Energizer or Ralston maintains lines of
credit. Energizer does not enter into foreign exchange contracts through
brokers nor does it trade foreign exchange contracts on any other exchange or
over the counter markets. Risk of currency positions and mark-to-market
valuation of positions are strictly monitored at all times.
Ralston and Energizer continually monitor positions with and credit ratings
of counterparties both internally and by using outside rating agencies.
Energizer has implemented policies which limit the amount of agreements it
enters into with any one party. While nonperformance by these counterparties
exposes Energizer to potential credit losses, such losses are not anticipated
due to the control features mentioned.
Energizer sells to a large number of customers primarily in the retail trade,
including those in the mass merchandiser, drug store, supermarket and other
channels of distribution throughout the world. Energizer performs ongoing
evaluations of its customers' financial condition and creditworthiness, but does
not generally require collateral. While the competitiveness of the retail
industry presents an inherent uncertainty, Energizer does not believe a
significant risk of loss from a concentration of credit risk exists with respect
to accounts receivable.
FAIR VALUE OF FINANCIAL INSTRUMENTS - Energizer's financial instruments
include cash and cash equivalents, short-term and long-term debt, foreign
currency contracts and interest rate swap agreements. Due to the nature
of cash and cash equivalents and short-term borrowings, including notes
payable, carrying amounts on the balance sheet approximate fair value.
Energizer's long-term debt represents borrowings in foreign countries under
various credit facilities that provide for periodic interest rate resets, at
least annually. Therefore, the fair market value of Energizer's long-term debt
is deemed to approximate its book value at September 30, 1999 and 1998.
The fair value of foreign currency contracts is the amount that Energizer
would receive or pay to terminate the contracts, considering first, quoted
market prices of comparable agreements, or in the absence of quoted market
prices, such factors as interest rates, currency exchange rates and remaining
maturities. Based on these considerations, Energizer would be required to make
a total net payment of $2.7 and $13.3 to counterparties for outstanding foreign
currency contracts at September 30, 1999 and 1998, respectively. However, these
payments are unlikely due to the fact that Energizer enters into foreign
currency contracts to hedge identifiable foreign currency exposures, and as such
would generally not terminate such contracts.
ENVIRONMENTAL AND LEGAL MATTERS
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS - The operations of
Energizer, like those of other companies engaged in the battery business, are
subject to various federal, state, foreign and local laws and regulations
intended to protect the public health and the environment. These regulations
primarily relate to worker safety, air and water quality, underground fuel
storage tanks and waste handling and disposal.
Energizer has received notices from the U.S. Environmental Protection
Agency, state agencies, and/or private parties seeking contribution, that it has
been identified as a "potentially responsible party" (PRP) under the
Comprehensive Environmental Response, Compensation and Liability Act, and may be
required to share in the cost of cleanup with respect to 9 federal "Superfund"
sites. It may also be required to share in the cost of cleanup with respect to
a state-designated site. Liability under the applicable federal and state
statutes which mandate cleanup is joint and several, meaning that a liable party
may be responsible for all of the costs incurred in investigating and cleaning
up contamination at a site. However, liability in such matters is typically
shared by all of the financially viable responsible parties.
Energizer's ultimate liability in connection with those sites may depend on
many factors, including the volume of material contributed to the site, the
number of other PRP's and their financial viability, and the remediation methods
and technology to be used.
In addition, Energizer has undertaken certain programs to reduce or
eliminate the environmental contamination at the rechargeable battery facility
in Gainesville, Florida, which has recently been divested. In the event that
the buyer would become unable to continue such programs, Energizer could be
required to bear financial responsibility for such programs as well as for other
known and unknown environmental conditions at the site.
Many European countries, as well as the European Union, have been very
active in adopting and enforcing environmental regulations. In many developing
countries in which the Energizer business operates, there has not been
significant governmental regulation relating to the environment, occupational
safety, employment practices or other business matters routinely regulated in
the United States. As such economies develop, it is possible that new
regulations may increase the risk and expense of doing business in such
countries.
It is difficult to quantify with certainty the potential financial impact
of actions regarding expenditures for environmental matters, particularly
remediation, and future capital expenditures for environmental control
equipment. Nevertheless, based upon the information currently available,
Energizer believes that its ultimate liability arising from such environmental
matters, taking into account established accruals of $5.8 million for estimated
liabilities, should not be material to its financial position. Such liability
could, however, be material to results of operations or cash flows for a
particular quarter or annual period.
LEGAL PROCEEDINGS - On April 8, 1998, Zinc Products Company, a division of
Alltrista Corp., a supplier of zinc cans used in the manufacture of batteries,
filed suit in federal district court for the Eastern District of Tennessee
against Energizer, claiming breach of contract when Energizer closed its
Fremont, Ohio plant. The plaintiff claims lost profits and other damages of
approximately $2.8 million. The case is in discovery and no trial date has been
set.
The U.S. Patent Office continues to review the interference claims between
Strategic Electronics (Energizer's licensor) and Duracell relating to use of the
on-battery tester. A decision is not expected for several years. An earlier
decision, which denied Energizer's separate patent claims and those of Eastman
Kodak Company (which are licensed to Duracell) has been appealed to the federal
district court for Washington, D.C. on February 2, 1998. Kodak filed a similar
appeal, naming Energizer as a defendant on January 29, 1998. In a related
matter, Strategic Electronics filed a declaratory judgment suit on September 9,
1999 in the federal district court for the Central District of California
seeking additional payments of approximately $1 million under the license.
Energizer has filed a motion to dismiss and expects a ruling in the near future.
Energizer or Ralston's other subsidiaries engaged in the Energizer business
are parties to a number of other legal proceedings in various jurisdictions
arising out of the operations of the Energizer business.
Many of the foregoing legal matters are in preliminary stages, and involve
complex issues of law and fact and may proceed for protracted periods of time.
The amount of alleged liability, if any, from these proceedings cannot be
determined with certainty. However, based upon present information, Energizer
believes that its ultimate liability, if any, arising from pending legal
proceedings, asserted legal claims, and known potential legal claims which are
likely to be asserted, should not be material to Energizer's financial position,
taking into account established accruals for estimated liabilities. These
liabilities, however, could be material to results of operations or cash flows
for a particular quarter or annual period.
OTHER COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS - Future minimum rental commitments under noncancellable
operating leases in effect as of September 30, 1999, were: 2000 - $3.7, 2001 -
$3.5, 2002 - $2.8, 2003 - $2.3, 2004 - $1.9 and thereafter - $9.0.
Total rental expense for all operating leases was $21.5, $19.7, and $21.2
in 1999, 1998 and 1997, respectively.
SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
1999 1998
---- ----
INVENTORIES -
<S> <C> <C>
Raw materials and supplies . . . . . . . . $ 74.0 $ 66.2
Work in process. . . . . . . . . . . . . . . . . 80.5 79.8
Finished products. . . . . . . . . . . . . . . . . 228.5 258.4
------- ------
$ 383.0 $404.4
====== ======
OTHER CURRENT ASSETS -
Miscellaneous receivables. . . . . . . . . . . . $ 52.7 $ 39.7
Deferred income tax benefits . . . . . . . . . . . 34.6 31.3
Prepaid expenses . . . . . . . . . . . . . . . . . 32.4 29.7
Other . . . . . . . . . . . . . . . . . . . 1.6 2.6
------- ------
$ 121.3 $103.3
====== ======
INVESTMENTS AND OTHER ASSETS -
Goodwill (net of accumulated amortization:
1999 - $120.2, 1998 - $106.1) $ 205.0 $ 235.2
Other intangible assets (net of accumulated
amortization: 1999 - $343.3, 1998 - $331.0). . . 94.4 105.5
Deferred income tax benefits . . . . . . . . . . . -- 72.5
Deferred charges and other assets. . . . . . . . . 20.3 33.7
------- ------
$ 319.7 $ 446.9
====== ======
OTHER CURRENT LIABILITIES -
Accrued advertising, promotion and allowances. . $ 110.0 $ 91.4
Restructuring reserves . . . . . . . . . . . . . 11.3 41.0
Salaries, vacations and incentive compensation .. 48.9 47.6
Other. . . . . . . . . . . . . . . . . 78.3 62.1
------- ------
$ 248.5 $ 242.1
====== ======
</TABLE>
SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
------ ------ ------
Interest paid . $11.7 $14.9 $15.7
Income taxes paid. . . . . . . . . 44.0 81.2 78.7
ALLOWANCE FOR DOUBTFUL ACCOUNTS
1999 1998 1997
------ ------ ------
Balance at beginning of year . . . $19.6 $19.6 $22.2
Provision charged to expense . . . 6.7 3.4 1.7
Write-offs, less recoveries. . . . (7.0) (3.4) (4.3)
------ ------ ------
Balance at end of year . . . . . . $19.3 $19.6 $19.6
====== ====== ======
</TABLE>
SEGMENT INFORMATION
Energizer manufactures and markets dry cell batteries including alkaline, carbon
zinc, miniature and specialty batteries, and flashlights and other lighting
products throughout the world. Operations are managed via four major geographic
areas - North America, which includes the U.S. and Canada, Asia Pacific, Europe,
and South and Central America. This structure is the basis for the Company's
reportable operating segment information disclosed below. Segment performance
is evaluated based on operating profit, exclusive of general corporate expenses,
restructuring charges and amortization of goodwill and intangibles. Financial
items, such as interest income and expense, are managed on a global basis at the
corporate level.
Intersegment sales are generally valued at market-based prices and represent the
difference between total sales and external sales as presented in the table
below. Segment profitability includes profit on these intersegment sales. One
single mass merchandiser accounted for 13.5% of total net sales in fiscal year
1999, primarily in North America.
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
TOTAL EXTERNAL TOTAL EXTERNAL TOTAL EXTERNAL
NET SALES. . . . . . . . . . . SALES SALES SALES SALES SALES SALES
-------- --------- -------- --------- -------- ---------
North America . . . . . . $1,135.9 $ 1,035.9 $1,104.3 $ 1,005.4 $1,060.5 $ 974.0
Asia Pacific. . . . . . . 430.0 384.8 448.6 396.9 525.2 475.1
Europe. . . . . . . . . . 320.3 317.0 369.5 365.7 409.5 404.7
South and Central America 151.2 134.6 179.9 153.8 158.5 152.0
--------- --------- ---------
Total Net Sales $1,872.3 $ 1,921.8 $2,005.8
======== ========= ========
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
OPERATING PROFIT BEFORE RESTRUCTURING CHARGES
AND AMORTIZATION
<S> <C> <C> <C>
North America. . . . . . . . . . . . . . . . . . . . . $ 291.4 $ 279.8 $ 261.1
Asia Pacific . . . . . . . . . . . . . . . . . . . . . 89.2 100.3 121.5
Europe . . . . . . . . . . . . . . . . . . . . . . . . (1.2) 11.3 15.2
South and Central America. . . . . . . . . . . . . . . 14.5 16.9 11.5
--------- --------- ---------
TOTAL SEGMENT PROFITABILITY . . . . . . . . . . . 393.9 408.3 409.3
General Corporate Expenses . . . . . . . . . . . . . . (54.0) (46.2) (34.9)
Research and Development Expense . . . . . . . . . . . (48.5) (46.6) (41.9)
--------- --------- ---------
Operating Profit before Restructuring Charges and
Amortization. . . . . . . . . . . . . . . . . 291.4 315.5 332.5
Restructuring Charges. . . . . . . . . . . . . . . . . (9.9) (21.3) (83.7)
Amortization . . . . . . . . . . . . . . . . . . . . . (25.0) (25.9) (32.8)
Interest and Other Financial Items . . . . . . . . . . (8.3) (5.8) (12.1)
--------- --------- ---------
Total Earnings from Continuing Operations Before
Income Taxes . . . . . . . . . . . . . . . . $ 248.2 $ 262.5 $ 203.9
========= ========= =========
<PAGE>
1999 1998 1997
--------- --------- ---------
DEPRECIATION
North America. . . . . . . . . . . . . . . . . . . . . $ 45.0 $ 50.1 $ 51.2
Asia Pacific . . . . . . . . . . . . . . . . . . . . . 11.1 10.0 13.2
Europe . . . . . . . . . . . . . . . . . . . . . . . . 10.3 12.4 13.0
South and Central America. . . . . . . . . . . . . . . 2.0 1.6 2.1
--------- --------- ---------
Total Depreciation Expense. . . . . . . . . . . . $ 68.4 $ 74.1 $ 79.5
========= ========= =========
1999 1998 1997
--------- --------- ---------
ASSETS AT YEAR END
North America. . . . . . . . . . . . . . . . . . . . . $ 815.5 $ 888.0 $ 830.4
Asia Pacific . . . . . . . . . . . . . . . . . . . . . 271.4 265.0 317.4
Europe . . . . . . . . . . . . . . . . . . . . . . . . 282.2 334.6 312.3
South and Central America. . . . . . . . . . . . . . . 98.0 92.7 92.7
--------- --------- ---------
Subtotal. . . . . . . . . . . . . . . . . . . . . 1,467.1 1,580.3 1,552.8
Goodwill and Other Intangible Assets . . . . . . . . . 299.4 340.7 367.6
Investment in Discontinued Operations. . . . . . . . . 67.2 156.6 193.2
--------- --------- ---------
Total Assets. . . . . . . . . . . . . . . . . . . $1,833.7 $2,077.6 $2,113.6
========= ========= =========
1999 1998 1997
--------- --------- ---------
CAPITAL EXPENDITURES
North America. . . . . . . . . . . . . . . . . . . . . $ 39.6 $ 53.7 $ 44.7
Asia Pacific . . . . . . . . . . . . . . . . . . . . . 18.4 32.6 30.4
Europe . . . . . . . . . . . . . . . . . . . . . . . . 8.9 8.1 11.1
South and Central America. . . . . . . . . . . . . . . 2.3 8.4 12.6
--------- --------- ---------
Total Capital Expenditures. . . . . . . . . . . . $ 69.2 $ 102.8 $ 98.8
========= ========= =========
</TABLE>
Supplemental product information is presented below for revenues from external
customers.
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
NET SALES
<S> <C> <C> <C>
Alkaline Batteries . . . . . $1,211.0 $1,189.4 $1,185.4
Carbon Zinc Batteries. . . . 358.8 419.7 500.4
Lighting Products. . . . . . 128.6 131.0 127.6
Miniature Batteries. . . . . 65.2 65.7 69.9
Other. . . . . . . . . . . . 108.7 116.0 122.5
-------- -------- --------
Total Net Sales . . . . $1,872.3 $1,921.8 $2,005.8
======== ======== ========
GEOGRAPHIC SEGMENT INFORMATION
- ---------------------------------
1999 1998 1997
-------- -------- --------
NET SALES
United States. . . . . . . . $ 977.6 $ 950.0 $ 920.8
International. . . . . . . . 894.7 971.8 1,085.0
-------- -------- --------
Total Net Sales . . . . $1,872.3 $1,921.8 $2,005.8
======== ======== ========
1999 1998 1997
-------- -------- --------
LONG LIVED ASSETS
United States. . . . . . . . $ 404.6 $ 426.3 $ 431.5
International. . . . . . . . 387.9 410.7 437.4
-------- -------- --------
Total Long Lived Assets $ 792.5 $ 837.0 $ 868.9
======== ======== ========
</TABLE>
QUARTERLY FINANCIAL INFORMATION - UNAUDITED
The results of any single quarter are not necessarily indicative of
Energizer's results for the full year. Net earnings of Energizer are
significantly impacted in the first quarter by the additional sales volume
associated with the Christmas holiday season.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
------- -------- ------- --------
FISCAL 1999
- -----------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . $582.4 $ 405.7 $399.2 $ 485.0
Gross profit . . . . . . . . . . 277.3 184.0 183.1 230.0
Earnings from continuing operations (a) 54.8 22.0 21.7 61.3
Earnings/(loss) from discontinued
operations. . . . . . . . . . . . . (2.8) (2.8) - -
Loss on disposition of discontinued
operations .. . . . . . . . . - (74.2) - -
Net earnings. . . . . . . . . . . . . . 52.0 (55.0) 21.7 61.3
FISCAL 1998
- -----------
Net sales . . . . . . . . . . . . . . . $638.2 $ 410.6 $410.8 $ 462.2
Gross profit .. . . . . . . . . 307.5 195.7 200.4 213.8
Earnings from continuing operations (a) 80.9 75.4 13.1 38.8
Earnings/(loss) from discontinued
operations (b). . . . . . . . . . . 3.4 (40.8) (2.2) (3.9)
Net earnings. . . . . . . . . . . . . . 84.3 34.6 10.9 34.9
</TABLE>
(a) Earnings from continuing operations were reduced due to provisions for
restructuring and increased due to income tax benefits by the following amounts:
<TABLE>
<CAPTION>
1999 1998
------ -------
First quarter
<S> <C> <C>
Restructuring . . . . . . $(6.2) $ .1
Second quarter
Restructuring . . . . . . .1 2.0
Capital loss tax benefits 48.4
Third quarter
Restructuring . . . . . . (8.5) (15.7)
Capital loss tax benefits 3.3
Fourth quarter
Restructuring . . . . . . 6.3 .8
Capital loss tax benefits 13.3
</TABLE>
(b) Earnings/(loss) from discontinued operations were reduced due to
provisions for restructuring in the second quarter of fiscal 1998 by $42.7.
<TABLE>
<CAPTION>
ENERGIZER HOLDINGS, INC.
COMBINED STATEMENT OF EARNINGS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(CONDENSED)
(DOLLARS IN MILLIONS--UNAUDITED)
THREE MONTHS ENDED DECEMBER 31,
<S> <C> <C>
1999 1998
------- -------
Net Sales . . . . . . . . . . . . . . . . . . . . . . . $673.6 $582.4
------- -------
Costs and Expenses
Cost of products sold . . . . . . . . . . . . . . . . 322.2 305.1
Selling, general and administrative . . . . . . . . . 95.6 101.0
Advertising and promotion . . . . . . . . . . . . . . 67.6 59.0
Research and development. . . . . . . . . . . . . . . 11.9 11.0
Provisions for restructuring. . . . . . . . . . . . . - 6.1
Interest expense. . . . . . . . . . . . . . . . . . . 2.6 2.8
------- -------
499.9 485.0
------- -------
Earnings from Continuing Operations before Income Taxes 173.7 97.4
Income Taxes. . . . . . . . . . . . . . . . . . . . . . (69.0) (42.6)
------- -------
Earnings from Continuing Operations . . . . . . . . . . 104.7 54.8
Net Loss from Discontinued Operations . . . . . . . . . - (2.8)
------- -------
Net Earnings. . . . . . . . . . . . . . . . . . . . . . $104.7 $ 52.0
======= =======
<FN>
See accompanying Notes to Condensed Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
ENERGIZER HOLDINGS, INC.
COMBINED BALANCE SHEET
(CONDENSED)
(DOLLARS IN MILLIONS - UNAUDITED)
DECEMBER 31, SEPTEMBER 30,
1999 1999
---- ----
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents. . . . . . . . . . . $ 19.9 $ 27.8
Trade receivables, less allowance for doubtful
accounts of $20.4 and $19.3, respectively. . 605.5 441.9
Inventories
Raw materials and supplies . . . . . . . . . 57.5 74.0
Work in process. . . . . . . . . . . . . . . 76.6 80.5
Finished products. . . . . . . . . . . . . . 211.5 228.5
-------- --------
Total Inventory. . . . . . . . . . . . . . 345.6 383.0
Other current assets . . . . . . . . . . . . . 104.2 121.3
-------- --------
Total Current Assets . . . . . . . . . . . . 1,075.2 974.0
-------- --------
Investments and Other Assets . . . . . . . . . . 310.0 319.7
Net Investment in Discontinued Operations. . . . - 67.2
Property at Cost . . . . . . . . . . . . . . . . 1,004.0 1,010.1
Accumulated depreciation . . . . . . . . . . . 538.4 537.3
-------- --------
465.6 472.8
-------- --------
Total. . . . . . . . . . . . . . . . . . . $1,850.8 $1,833.7
======== ========
LIABILITIES AND NET INVESTMENT IN ENERGIZER
Current Liabilities
Current maturities of long-term debt . . . . . $ 0.3 $ 0.3
Notes payable. . . . . . . . . . . . . . . . . 130.9 118.5
Accounts payable . . . . . . . . . . . . . . . 121.3 128.6
Other current liabilities. . . . . . . . . . . 309.0 248.5
-------- --------
Total Current Liabilities. . . . . . . . . . 561.5 495.9
Long-Term Debt . . . . . . . . . . . . . . . . . 1.4 1.9
Other Liabilities. . . . . . . . . . . . . . . . 22.7 23.0
Net Investment in Energizer. . . . . . . . . . . 1,265.2 1,312.9
-------- --------
Total. . . . . . . . . . . . . . . . . . . $1,850.8 $1,833.7
======== ========
<FN>
See accompanying Notes to Condensed Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
ENERGIZER HOLDINGS, INC.
COMBINED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(CONDENSED)
(DOLLARS IN MILLIONS - UNAUDITED)
THREE MONTHS ENDED DECEMBER 31,
<S> <C> <C>
1999 1998
-------- -------
CASH FLOW FROM OPERATIONS
Net earnings. . . . . . . . . . . . . . . . . . . . . $ 104.7 $ 52.0
Net loss from discontinued operations . . . . . . . . - 2.8
Non-cash items included in income . . . . . . . . . . 23.3 25.0
Changes in assets and liabilities used in operations. (65.8) (49.1)
Other, net. . . . . . . . . . . . . . . . . . . . . . (1.6) 2.3
-------- -------
Cash flow from continuing operations. . . . . . . . 60.6 33.0
Cash flow from discontinued operations. . . . . . . 53.5 (3.3)
-------- -------
Net cash flow from operations . . . . . . . . . . 114.1 29.7
-------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Property additions. . . . . . . . . . . . . . . . . . (11.0) (13.4)
Proceeds from sale of OEM business. . . . . . . . . . 20.0 -
Proceeds from sale of property. . . . . . . . . . . . 1.1 0.8
Other, net. . . . . . . . . . . . . . . . . . . . . . 0.5 1.4
-------- -------
Cash used by investing activities
- continuing operations . . . . . . . . . . . 10.6 (11.2)
-------- -------
Cash used by investing activities
- discontinued operations . . . . . . . . . (0.7) (1.4)
-------- -------
Net cash used by investing activities . . . . . . 9.9 (12.6)
-------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Net cash proceeds from issuance of long-term debt . - 1.0
Principal payments on long-term debt
(including current maturities). . . . . . . . . . (0.5) (12.9)
Net increase in notes payable . . . . . . . . . . . 12.4 18.6
Net transactions with Ralston . . . . . . . . . . . (143.6) (28.2)
-------- -------
Net cash used by financing activities . . . . . . (131.7) (21.5)
-------- -------
Effect of Exchange Rate Changes on Cash . . . . . . . . (0.2) 4.2
-------- -------
Net Decrease in Cash and Cash Equivalents . . . . . . . (7.9) (0.2)
Cash and Cash Equivalents, Beginning of Period. . . . . 27.8 49.1
-------- -------
Cash and Cash Equivalents, End of Period. . . . . . . . $ 19.9 $ 48.9
======== =======
<FN>
See accompanying Notes to Condensed Financial Statements.
</TABLE>
ENERGIZER HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(DOLLARS IN MILLIONS - UNAUDITED)
NOTE 1 - The accompanying unaudited financial statements have been prepared in
accordance with Article 10 of Regulation S-X and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included.
These statements should be read in conjunction with the financial statements and
notes thereto for Energizer Holdings, Inc. (Energizer) for the year ended
September 30, 1999, included elsewhere in this registration statement.
NOTE 2 - During the three-month period ended December 31, 1998, Energizer
recorded net after-tax and pre-tax provisions for restructuring of $6.2 and
$6.1, respectively. The charges were primarily termination benefits associated
with a 1997 alkaline and carbon zinc production restructuring plan for Europe.
During the current quarter, approximately 120 employees were terminated in
connection with restructuring accruals established in prior years. Activities
impacting the restructuring reserve during the current quarter are presented in
the following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Provision/ Ending
Beginning Balance Reversals Activity Balance
------------------ ---------- ---------- --------
1995 PLAN
Other Cash Costs . . $ .8 $ - $ - $ .8
------------------ ---------- ---------- --------
Total. . . . . . . . .8 - - .8
------------------ ---------- ---------- --------
1996 PLAN
Other Cash Costs . . .8 - - .8
------------------ ---------- ---------- --------
Total. . . . . . . . .8 - - .8
------------------ ---------- ---------- --------
1997 PLAN
Termination Benefits 4.1 - (1.6) 2.5
Other Cash Costs . . 1.3 - - 1.3
------------------ ---------- ---------- --------
Total. . . . . . . . 5.4 - (1.6) 3.8
------------------ ---------- ---------- --------
1998 PLAN
Termination Benefits 1.6 - (0.7) 0.9
Other Cash Costs . . 2.0 - (0.2) 1.8
------------------ ---------- ---------- --------
Total. . . . . . . . 3.6 - (0.9) 2.7
------------------ ---------- ---------- --------
1999 PLAN
Termination Benefits .7 - (0.2) .5
------------------ ---------- ---------- --------
Total. . . . . . . . .7 - (0.2) .5
------------------ ---------- ---------- --------
Grand Total . . $ 11.3 $ - $ (2.7) $ 8.6
================== ========== ========== ========
</TABLE>
NOTE 3 - On November 1, 1999 Energizer's worldwide rechargeable Original
Equipment Manufacturers' (OEM) business was sold to Moltech Corporation for
approximately $20.0. The OEM business is accounted for as a discontinued
operation in Energizer's combined financial statements. Actual pretax operating
losses during the divestment period through the sale date totaled $15.9.
Note 4 - Energizer's operations are managed via four major geographic areas -
North America (which includes the U.S. and Canada), Asia Pacific, Europe, and
South and Central America (including Mexico). This structure is the basis for
the Company's reportable operating segment information disclosed below. Segment
performance is evaluated based on operating profit, exclusive of general
corporate expenses, research and development expenses, restructuring charges and
amortization of goodwill and intangibles. Financial items, such as interest
income and expense, are managed on a global basis at the corporate level.
Intersegment sales are generally valued at market-based prices and represent the
difference between total sales and external sales as presented in the table
below. Segment profitability includes profit on these intersegment sales.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED DECEMBER 31,
<S> <C> <C> <C> <C>
1999 1998
------ ------
TOTAL. . . . . . . . . . . . TOTAL
NET SALES. . . . . . . . . . . SALES EXTERNAL SALES SALES EXTERNAL SALES
------ ------------- ----- --------------
North America $ 448.9 $ 420.4 $358.2 $329.9
Asia Pacific 138.4 119.1 118.5 105.6
Europe 92.5 92.0 106.9 106.3
South and Central America 46.7 42.1 47.9 40.6
------ ------ ----- ------
Total Net Sales $ 673.6 $582.4
====== ======
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED DECEMBER 31,
1999 1998
-------- -------
<S> <C> <C>
OPERATING PROFIT BEFORE RESTRUCTURING
CHARGES AND AMORTIZATION
North America $145.5 $100.5
Asia Pacific 38.0 25.9
Europe 7.9 2.1
South and Central America 6.7 6.8
-------- -------
TOTAL SEGMENT PROFITABILITY 198.1 135.3
General Corporate Expenses (5.4) (12.8)
Research and Development Expense (11.9) (11.0)
-------- -------
Operating Profit before Restructuring Charges
and Amortization 180.8 111.5
Restructuring Charges - (6.1)
Amortization (6.1) (6.3)
Interest and Other Financial Items (1.0) (1.7)
-------- -------
Total Earnings from Continuing Operations Before
Income Taxes $173.7 $97.4
======== =======
</TABLE>
NOTE 5 - In 1999, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income". Accumulated other
comprehensive income is included in Net Investment in Energizer in the combined
balance sheet. The components of total comprehensive income for the three
months ended December 31, 1999 and 1998 are shown in the following table:
<TABLE>
<CAPTION>
Three Months Ended December 31,
<S> <C> <C>
1999 1998
------- -----
Net earnings . . . . . . . . . . . . . . $104.7 $52.0
Foreign currency translation adjustments (3.0) 15.5
------- -----
Total comprehensive income . . . . . . . $101.7 $67.5
======= =====
</TABLE>
ENERGIZER HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(DOLLARS IN MILLIONS - UNAUDITED)
NOTE 6 - Investments and Other Assets consist of the following:
<TABLE>
<CAPTION>
December 31, September 30,
<S> <C> <C>
1999 1999
------ ------
Goodwill. . . . . . . . . . . . . $198.4 $205.0
Other intangible assets . . . . . 91.9 94.4
Deferred charges and other assets 19.7 20.3
------ ------
$310.0 $319.7
====== ======
</TABLE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
April 1, 2000, by and among Ralston Purina Company, a Missouri corporation
("Ralston") and Energizer Holdings, Inc. ("Energizer"), a Missouri corporation
and wholly owned subsidiary of Ralston.
WITNESSETH:
WHEREAS, Ralston's businesses principally consist of the manufacture,
distribution and sale of pet products and battery and lighting products both
domestically and internationally; and
WHEREAS, the Board of Directors of Ralston (the "Ralston Board") has
determined that it is in the best interests of the Ralston shareholders to
separate Ralston's battery and lighting products business from its pet products
business by creating a new independent publicly held battery and lighting
products company, and to distribute the $.01 par value Energizer Stock
("Energizer Stock") to shareholders of its $.10 par value Ralston Purina Common
Stock ("Ralston Stock"); and
WHEREAS, in order to effect such separation, the Ralston Board has
determined that it is necessary and advisable to restructure the worldwide
battery and lighting products business and to transfer to Energizer the direct
stock ownership of those Subsidiaries that are engaged in the operation of the
battery and lighting products business, as well as other assets of Ralston used
in the battery and lighting products businesses, as more fully set forth below;
and
WHEREAS, in connection with such consolidation, Ralston caused Eveready
Battery Company, Inc. ("Eveready"), a Delaware corporation and indirectly wholly
owned subsidiary of Ralston, to form Energizer effective September 23, 1999; and
effected the reincorporation of Eveready Battery International, Inc. ("EBII"), a
wholly owned subsidiary of Eveready, from Delaware to Missouri by causing EBII
to be merged into Energizer, in connection with which Eveready, the sole
shareholder of EBII, surrendered all shares of capital stock in EBII in a
constructive exchange for all of the issued and outstanding shares of capital
stock of Energizer;
WHEREAS, in order to effect such distribution of the ownership of Energizer
to the holders of Ralston Stock, the Ralston Board has determined that it is
necessary and desirable to distribute all outstanding shares of Energizer Stock
on a pro rata basis to the holders of Ralston Stock, such distribution being
hereinafter referred to as the "Distribution"; and
WHEREAS, the mergers and liquidations of certain affected subsidiaries are
intended to qualify as nontaxable under Sections 368(a)(1)(A) and 332 of the
Internal Revenue Code of 1986, as amended (the "Code"), the transfer of assets
is intended to qualify as nontaxable under Code Section 368(a)(1)(D) and 351,
and the distribution of Energizer Stock is intended to qualify as nontaxable
under Code Section 355; and
WHEREAS, the parties hereto have determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
the Distribution and to set forth other agreements that will govern certain
other matters prior to and following the Distribution;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound thereby, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.01 General. As used in this Agreement, the following terms shall
-------
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
Action: any action, claim, suit, arbitration, inquiry, proceeding or
------
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any arbitration or other tribunal.
Affiliate: with respect to any specified Person, an "affiliate" as defined
---------
in Rule 405 promulgated pursuant to the Securities Act; provided, however, that
for purposes of this Agreement (i) Affiliates of Energizer shall not be deemed
to include Ralston or any corporation which will be a subsidiary or affiliate of
Ralston following the Distribution; and (ii) Affiliates of Ralston shall not be
deemed to include Affiliates of Energizer.
Aircraft Agreement: as defined in Section 5.04 of this Agreement.
-------------------
Ancillary Agreements: the Tax Sharing Agreement, the Bridging Services
---------------------
Agreement, the Intellectual Property Agreement and the Aircraft Agreement.
Asset: any and all assets and properties, tangible or intangible,
-----
including, but not limited to, the following: (i) cash, notes and trade
---
receivable accounts (whether current or non-current and including all rights
---
with respect thereto); (ii) certificates of deposit, bankers' acceptances,
stock, debentures, evidences of indebtedness, certificates of interest or
participation in profit-sharing agreements, collateral-trust certificates,
preorganization certificates, investment contracts, voting-trust certificates;
(iii) trade secrets and confidential information; statutory, common law and
registered trademarks, trade styles, service marks, service names, trade names,
trade dress, copyrights, moral rights, rights of privacy and publicity, Internet
or other electronic communication addresses (e.g., "energizer.com" and
1-800-982-ENRS), business addresses of a proprietary nature (e.g., "Ever Ready
House"), issued and unissued patents, and other property commonly considered
intellectual property, and the goodwill of the business to the extent associated
with any and all of the foregoing.; (iv) rights under leases, contracts,
licenses, permits, and sales and purchase agreements; (v) real estate and
buildings and other improvements thereon and timber and mineral rights of every
kind; (vi) leasehold improvements, fixtures, trade fixtures, machinery,
equipment (including transportation and office equipment), tools, dies and
furniture; (vii) office supplies, production supplies, spare parts, other
miscellaneous supplies and other tangible property of any kind; (viii) raw
materials, work-in-process, finished goods, consigned goods and other
inventories; (ix) prepayments or prepaid expenses; (x) claims, causes of action,
choses in action, rights of recovery and rights of set-off of any kind; (xi) the
right to receive mail and other communications; (xii) lists of advertisers,
records pertaining to advertisers and accounts, lists and records pertaining to
suppliers, customers and agents, and books, ledgers, files and business records
of every kind; (xiii) advertising materials and other recorded, printed or
written materials; (xiv) goodwill as a going concern and other intangible
properties; (xv) personnel records and employee contracts, including any rights
thereunder to restrict an employee from competing in certain respects; and (xvi)
licenses and authorizations issued by any governmental authority.
Battery Business: Ralston's direct or indirect ownership of (i) the
-----------------
worldwide business of the manufacture, distribution and sale of primary
-
alkaline, carbon zinc, miniature, rechargeable and other types of batteries; and
-
flashlights and other lighting products; and (ii) all joint ventures involving
or associated with the businesses described in (i) next above.
Bridging Services Agreement: as defined in Section 5.04 of this Agreement.
---------------------------
Business: the Battery Business or the Ralston Business.
--------
Business Day: any day other than a Saturday, a Sunday or a day on which
-------------
banking institutions located in the State of Missouri are obligated by law or
executive order to close.
Cash: cash, marketable securities, compensating balances used to secure
----
debt financing, amounts held in margin accounts, and such other items as have
been or would be classified as cash consistent with accounting policies of
Ralston.
Code: the Internal Revenue Code of 1986, as amended, or any successor
----
legislation.
Current Plan Year: the plan year or fiscal year, to the extent applicable
------------------
with respect to any Plan, during which the Distribution Date occurs.
Distribution: as defined in the recitals to this Agreement.
------------
Distribution Date: April 1, 2000.
------------------
DuPont Agreement: an Agreement and Plan of Merger and Exchange dated as of
----------------
December 2, 1997, by and among E. I. du Pont de Nemours and Company, Ralston and
certain of their affiliates.
Energizer: as defined in the recitals to this Agreement.
---------
Energizer Assets: except to the extent provided in, and subject to the
-----------------
provisions of, any of the Ancillary Agreements, (i) all of the Assets used or
held by or on behalf of any member of the Energizer Group or the Ralston Group
immediately prior to the Distribution which are or were used or held for use
exclusively in the Battery Business or a Former Battery Business, and which
neither are nor were used or held for use in the Ralston Business; including,
but not limited to, the Assets set forth on Schedule 1.01(a) but excluding the
Assets set forth on Schedule 1.01(b); and (ii) any office equipment and
furniture used immediately prior to the Distribution exclusively by Energizer
Employees.
Energizer Board: the Board of Directors of Energizer Holdings, Inc. and
----------------
their duly elected or appointed successors.
Energizer Deferred Compensation Plan: as defined in Section 7.09 of this
--------------------------------------
Agreement.
Energizer Employee: any individual who (i) is on the Distribution Date, or
------------------
immediately following the Distribution will be, an employee of any member of the
Energizer Group, (ii) is on the Distribution Date employed by a member of the
Ralston Group but who, pending transfer of employment to a member of the
Energizer Group, performs duties primarily for the Battery Business other than
pursuant to the Bridging Services Agreement; or (ii) is on leave (including, but
not limited to, leave for sickness or disability) or layoff from active
employment on the Distribution Date but who, immediately prior to commencement
of such leave or layoff, was primarily employed in the Battery Business.
Notwithstanding the foregoing, an Energizer Employee shall not include any
individual who, as of the Distribution Date, is employed by a member of the
Energizer Group but performs duties primarily for a Ralston Business, pending
subsequent transfer of employment to a member of the Ralston Group or
termination of employment.
Energizer Obligations: as defined in Article X of this Agreement.
----------------------
Energizer Group: Energizer and its Affiliates at the Distribution.
----------------
Energizer Individual: any individual who is an Energizer Employee, a
---------------------
Former Energizer Employee, or a beneficiary or alternate payee of an Energizer
Employee or of a Former Energizer Employee.
Energizer Retirement Plan: the Energizer Holdings, Inc. Retirement Plan, a
-------------------------
defined benefit pension plan.
Energizer Stock: Energizer common stock, par value $.01 per share.
----------------
ERISA: the Employee Retirement Income Security Act of 1974, as amended, or
-----
any successor legislation.
Exchange Act: the Securities Exchange Act of 1934, as amended, together
--------------
with the rules and regulations promulgated thereunder.
Executive Life Plan: the Ralston Purina Executive Life Plan.
---------------------
Executive SIP: the Ralston Purina Executive Savings Investment Plan.
--------------
Form 10: as defined in Section 2.06 of this Agreement.
--------
Former Battery Businesses: all of the following businesses which, as of
---------------------------
the Distribution Date, were no longer owned and/or conducted, directly or
indirectly, by Ralston, Energizer or their Subsidiaries, Affiliates or any
predecessors to the foregoing:
(i) former businesses and operations relating to the manufacture, sale and
distribution of battery and lighting products conducted by Ralston and/or its
Subsidiaries after June 30, 1986, including, but not limited to, the worldwide
rechargeable Original Equipment Manufacturers' battery business;
(ii) former businesses and operations relating to the manufacture, sale and
distribution of battery and lighting products conducted by Union Carbide
Corporation and/or its Subsidiaries and Affiliates through June 30, 1986, to the
extent assets and liabilities related to such businesses and operations were
acquired and assumed by Ralston and its Subsidiaries and Affiliates effective
June 30, 1986 pursuant to, or arising out of the transactions contemplated by,
the Omnibus Purchase and Sale Agreement by and between Union Carbide Corporation
and Ralston Purina Company, made April 7, 1986; and
(iii) all former joint ventures involving or associated with the businesses
described in (i) or (ii) above or the Battery Business.
Former Energizer Employee: an individual who was employed by a member of
---------------------------
the Energizer Group or a Former Battery Business at the time of his or her
termination or retirement on or prior to the Distribution Date and who was not
subsequently, prior to the Distribution Date, employed by a member of the
Ralston Group or a Former Ralston Business.
Former Businesses: The Former Ralston Businesses and the Former Battery
------------------
Businesses.
Former Ralston Businesses: all of the businesses and operations directly
---------------------------
or indirectly owned and conducted by Ralston prior to, but not as of, the
Distribution Date, other than a Former Battery Business; and all former joint
ventures involving or associated with such businesses and operations.
Former Ralston Employee: an individual who was employed by a member of the
-----------------------
Ralston Group or a Former Ralston Business at the time of his or her termination
or retirement and who was not subsequently, prior to the Distribution Date,
employed by a member of the Energizer Group or a Former Battery Business.
Group: the Ralston Group or the Energizer Group.
-----
Indebtedness of the Energizer Group: external obligations of a member or
-------------------------------------
members of the Energizer Group in the form of money that is borrowed from third
party banks and/or financial institutions, to the extent that such indebtedness
(i) is incurred in connection with, or arising out of the operations of, the
Battery Business or is assigned to Energizer or a member of its Group as set
forth in Section 2.01(j)(iv); and (ii) is or should be reflected and booked on
the balance sheet statements of the Battery Business in accordance with
accounting policies of Ralston; and in no event shall intercompany or
intracompany accounts between the Battery Business and the Ralston Business be
deemed to be Indebtedness of the Energizer Group.
Indemnifiable Loss: with respect to any claim by an Indemnitee for
-------------------
indemnification hereunder, any and all losses, liabilities, claims, damages,
--
obligations, payments, costs and expenses (including, without limitation, the
costs and expenses of any and all Actions, demands, claims and assessments, and
any and all judgments, settlements and compromises related thereto and
reasonable attorney's fees and expenses in connection therewith) incurred or
suffered by such Indemnitee with respect to such claim except as may arise in
connection with the performance of any of the Ancillary Agreements, which shall,
in each such case, be governed by the terms of such Ancillary Agreement.
Indemnitee: as defined in Section 4.02 of this Agreement.
----------
Indemnitor: as defined in Section 4.02 of this Agreement.
----------
Information: as defined in Section 6.02 of this Agreement.
-----------
Information Statement: the information statement sent to holders of
----------------------
Ralston Stock in connection with the Distribution, which sets forth appropriate
-
disclosures concerning the Battery Business, Energizer, the Distribution and
other related matters.
IP Agreement: as defined in Section 5.04 of this Agreement.
-------------
IRS: the Internal Revenue Service.
---
ISP: the Ralston Purina 1988, 1996 and 1999 Incentive Stock Plans.
---
Liabilities: all claims, debts, liabilities, royalties, license fees,
-----------
losses, costs, expenses, deficiencies, litigation proceedings, taxes, levies,
imposts, duties, deficiencies, assessments, attorneys' fees, charges,
allegations, demands, damages, judgments, guaranties, indemnities, or
obligations, whether absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown and whether or not the same
would properly be reflected on a balance sheet, including all costs and expenses
relating thereto.
LIBOR: London Interbank Offer Rate.
-----
Notice of Claim: as defined in Section 4.02 of this Agreement.
-----------------
NYSE: the New York Stock Exchange.
----
Operating Agreement: An agreement as described in Section 2.04(f) in
--------------------
effect during a period of beneficial ownership of the Energizer Assets or the
Ralston Assets.
Person: an individual, a partnership, a joint venture, a corporation, a
------
trust or other entity, an unincorporated organization or a government or any
department or agency thereof.
Plan: any plan, policy, arrangement, contract or agreement providing
----
benefits (including salary, bonuses, deferred compensation, incentive
compensation, savings, stock purchases, pensions, profit sharing, welfare
benefits or retirement or other retiree benefits, including retiree medical
benefits) for any group of employees or former employees or individual employee
or former employee, or the beneficiary or beneficiaries of any such employee or
former employee, whether formal or informal or written or unwritten and whether
or not legally binding, and including any means, whether or not legally
required, pursuant to which any benefit is provided by an employer to any
employee or former employee or the beneficiary or beneficiaries of any such
employee or former employee.
Qualified Plan: a Plan which is an employee pension benefit plan (within
---------------
the meaning of Section 3(2) of ERISA) and which constitutes or is intended in
good faith to constitute a qualified plan under Section 401(a) of the Code.
Ralston: as defined in the recitals to this Agreement.
-------
Ralston Assets: except to the extent provided in, and subject to the
---------------
provisions of, any of the Ancillary Agreements, all of the Assets, other than
the Energizer Assets, used or held immediately prior to the Distribution Date by
or on behalf of any member of either Group, including, but not limited to, the
Assets set forth on Schedule 1.01(c).
Ralston Board: the Board of Directors of Ralston Purina Company and their
--------------
duly elected or appointed successors.
Ralston Business: all of the businesses owned, directly or indirectly, by
-----------------
Ralston immediately prior to the Distribution Date, other than the Battery
Business.
Ralston Chilean Asset Purchase Price: Cash paid, after the Distribution,
---------------------------------------
to Energizer or its Affiliates by Ralston or its Affiliates to effect the
purchase, as set forth in Section 2.01(e), of the Assets and Liabilities of the
Ralston Business conducted by Eveready de Chile S.A.,
Ralston Deferred Compensation Plan: the Ralston Purina Deferred
-------------------------------------
Compensation Plan for Key Employees.
-----
Ralston Employee: any individual who, as of the day prior to the
-----------------
Distribution Date, is an employee of any member of either Group, other than an
----
Energizer Employee, including, but not limited to, individuals set forth on
Schedule 1.01(c).
Ralston Group: Ralston and its Subsidiaries and Affiliates, other than
--------------
members of the Energizer Group.
Ralston Individual: any individual who is a Ralston Employee, a Former
-------------------
Ralston Employee, or a beneficiary or alternate payee of a Ralston Employee or
of a Former Ralston Employee.
Ralston Option: the option defined in Section 7.08(b) of this Agreement.
---------------
Ralston Retirement Plan: the Ralston Purina Retirement Plan, a defined
-------------------------
benefit pension plan.
Ralston Stock: Ralston Purina Company common stock, $.10 par value.
--------------
Record Date: the date to be determined by the Board of Directors of
------------
Ralston, or the Executive Committee thereof, as the record date for determining
-
shareholders of Ralston Stock entitled to receive the Distribution.
Rights: the rights to be issued by Energizer pursuant to the Energizer
------
Rights Agreement.
SEC: the Securities and Exchange Commission.
---
Securities Act: the Securities Act of 1933, as amended, together with the
---------------
rules and regulations promulgated thereunder.
Shared Liability: a Liability arising out of, or associated with, the
-----------------
ownership of both the Energizer Assets and the Ralston Assets; or the operation
of the Battery Business or a Former Battery Business, on the one hand, and the
Ralston Business or a Former Ralston Business, on the other hand, prior to the
Distribution.
SIP: a Savings Investment Plan.
---
Subsidiary: with respect to any specified Person, any corporation or other
----------
legal entity of which such Person or any of its Subsidiaries controls or owns,
directly or indirectly, 50% or more of the stock or other equity interest
entitled to vote on the election of members to the board of directors or similar
governing body of such corporation or other legal entity.
Tax Sharing Agreement: as defined in Section 5.04 of this Agreement.
-----------------------
Third-Party Claim: any Action or claim by a third party against or
------------------
otherwise involving an Indemnitee for which indemnification may be sought
--
pursuant to Article IV hereof.
-
Welfare Plan: any Plan which is not a Qualified Plan and which provides
-------------
medical, health, disability, accident, life insurance, death, dental or other
welfare benefits, including any post-employment benefits or retiree medical
benefits.
1.02 References to Time. All references to times of the day in this
--------------------
Agreement shall refer to St. Louis, Missouri time unless otherwise specifically
indicated.
ARTICLE II
CERTAIN RESTRUCTURING TRANSACTIONS
2.01 Restructuring Transactions. Prior to the Distribution Date or, as
--------------------------
indicated, as soon as practicable thereafter, the following shall have been or
shall be effected:
(a) Reincorporation Merger. Eveready, the sole shareholder of
-----------------------
Energizer and EBII, shall surrender all of the issued and outstanding shares of
capital stock of EBII in a constructive exchange for all of the issued and
outstanding shares of capital stock of Energizer, pursuant to the General and
Business Corporation Law of Missouri and Delaware General Corporation Law, in
connection with EBII's reincorporation from Delaware to Missouri and merger into
Energizer.
(b) United Kingdom Restructuring. Energizer International, Inc.
------------------------------
("EII"), a Delaware corporation and wholly owned subsidiary of Ralston, and
Energizer shall form a new United Kingdom unlimited company ("Newco 1").
Energizer UK Company ("Energizer UK"), a United Kingdom unlimited company, shall
sell all the stock of the following Subsidiaries to Newco 1: Ever Ready Ltd;
Ralston Energy Systems U.K. Ltd.; Berec Components Ltd; Berec Overseas
Investments Ltd., Energizer (Ireland) Ltd., WER (mvl) 1998 Ltd. and Ralston
Trust Limited. Newco 1 shall form a new wholly owned subsidiary, Newco 1A, a
United Kingdom limited company, which shall purchase from Energizer UK the
Assets, and assume the Liabilities, of that portion of the Battery Business
directly conducted by Energizer UK. The purchase price shall be determined by
an independent appraisal. The cash proceeds of the sales, together with cash
provided by borrowing from Ralston, shall be applied by Energizer UK to pay down
existing debt and to wholly redeem EII's partnership interest in Energizer UK
Prior to such redemption, Ralston shall contribute to Energizer UK cash in
exchange for a 1% interest in the partnership, with the remaining 99% interest
being retained by Tower Holding Company, Inc. ("Tower Holding"), a Delaware
corporation.
(c) Mexican Restructuring. Ralston Purina Holdings Mexico S.A. de C.V.
---------------------
("RP Holdings Mexico"), a Mexican corporation, shall capitalize a portion of the
intercompany debt owed to it by its wholly owned subsidiary, Eveready de Mexico
S.A. de C.V. ("Eveready Mexico"),such that the resulting value of Eveready de
Mexico will equal EII's interest in RPHM. Eveready de Mexico shall borrow from
outside parties an amount necessary to pay off its remaining intercompany debt
to RPHM prior to the Distribution. RP Holdings Mexico shall then distribute all
of the capital stock of Eveready Mexico to EII in complete redemption of EII's
entire stock interest in RP Holdings Mexico.
(d) Brazilian Restructuring. EII shall form a new, wholly owned
------------------------
subsidiary, Newco 2, a Brazilian corporation. Ralston Purina do Brasil
Ltda.("RP do Brasil"), a Brazilian corporation, shall sell to Newco 2 all of the
Assets and Liabilities associated with its ownership and operation of the
Battery Business in Brazil, other than a portion of external debt which RP do
Brasil shall retain. The purchase price shall be equal to the statutory net
book value of such Business as of March 31, 2000, excluding that portion of
external debt which is retained by RP do Brasil. Prior to the Distribution
Date, EII shall distribute to Ralston in the form of a dividend all of its stock
interest in RP do Brasil. Prior to the Distribution, EII will also assign to
Checkerboard Holding an intercompany note evidencing debt owed from RP do Brasil
to EII.
(e) Argentinean/Chilean Restructuring. Prior to the Distribution Date
----------------------------------
or as soon as practicable thereafter, Checkerboard Holding Company
("Checkerboard Holding"), a Delaware corporation, shall form a new wholly owned
subsidiary, Newco 3, a Chilean corporation. Eveready de Chile S.A. ("Eveready
Chile"), a Chilean corporation, will sell the Assets and Liabilities of the
Ralston Business conducted by it to Newco 3. The purchase price shall be
determined by an independent appraisal. Prior to the Distribution Date, EII
will transfer to Checkerboard Holding, and Eveready Battery Company will
transfer to Tower Holding, that portion of the stock of Ralston Purina Argentina
S.A. ("RP Argentina"), an Argentinean corporation, held by each transferor
company reflecting the relative value of their respective interests in the
Ralston Business conducted by RP Argentina. Prior to the Distribution Date or
as soon as practicable thereafter, in accordance with Argentinean law, RP
Argentina will divide into two Argentinean corporations, one conducting the
Battery Business and the other conducting the Ralston Business, as follows: (i)
RP Argentina will transfer all of its stock interest in Eveready Chile, and the
Assets and Liabilities of the Battery Business conducted by RP Argentina to
Newco 4, a newly created Argentinean corporation resulting from the division of
RP Argentina, having the same shareholders, with identical share ownership
proportions, as RP Argentina; and (ii) Checkerboard Holding and Tower Holding
will then each exchange their shares of Newco 4 for the shares of RP Argentina
held, respectively, by EII and Eveready. EII and Eveready will then be sole
shareholders of Newco 4, which will conduct the Battery Business in Argentina
and will be the parent company of Eveready Chile; and Checkerboard Holding and
Tower Holding will then be sole shareholders of RP Argentina, which will conduct
the Ralston Business in Argentina.
(f) Spanish Restructuring. Ralston Energy Systems Iberica S.A.
----------------------
("RESIB"), a Spanish corporation, which indirectly conducts the Battery Business
in Spain through its 91% owned subsidiary Energizer Iberia S.A., also a Spanish
corporation, will sell all of the issued and outstanding stock of its wholly
owned subsidiary Ralston Purina Europe S.A ("RPE"), which directly conducts the
Ralston Business, to Checkerboard Holding for an amount determined by an
independent appraisal
(g) Distribution of Energizer Stock to VCS Holding. Following those of
-----------------------------------------------
the transactions described in paragraphs (b) through (f) which have been
completed prior to the Distribution Date, Eveready will distribute all the stock
of Energizer to VCS Holding Company ("VCS"), a Delaware corporation and wholly
owned subsidiary of Ralston.
(h) Merger of VCS Holding into Ralston. Ralston and VCS shall enter
--------------------------------------
into an Agreement and Plan of Merger and Complete Liquidation pursuant to which
VCS shall be merged with and into Ralston pursuant to the General and Business
Corporation Law of Missouri and Delaware General Corporation Law, and in
accordance with the terms and conditions of such merger agreement. Prior to
such merger, VCS shall transfer to Tower Holding, as a contribution to capital,
all shares of capital stock of Interstate Bakeries Corporation held by VCS as
well as all receivables reflecting intercompany loans by VCS to Ralston.
Following the merger, VCS will cease to exist, and Ralston shall become the
direct owner of Energizer and all other stock interests and Assets owned by VCS
at the time of the merger, including, but not limited to, notes reflecting
intercompany loans by VCS to Eveready ("the Eveready Notes"). The intercompany
account owed by Ralston to VCS shall be extinguished incident to the merger of
VCS into Ralston.
(i) Canadian Restructuring. Ralston shall contribute a portion of its
-----------------------
capital stock in Ralston Purina Canada Inc. ("RP Canada") to Energizer so that
the number of shares of RP Canada stock owned by Energizer, when combined with
the number of shares of RP Canada stock owned by EII, will reflect, on a
combined stock ownership basis, an interest in RP Canada equal to the appraised
value of the Battery Business conducted by RP Canada. EII and Energizer will
form a new Canadian corporation, Newco 5, and will each transfer all of their
stock in RP Canada to Newco 5 in exchange for Newco 5 common stock of
proportionate value. RP Canada will transfer the Assets and Liabilities of the
Battery Business conducted by it to Newco 5 in exchange for all of the issued
and outstanding preferred stock in Newco 5. RP Canada will then issue a note to
Newco 5 in complete redemption of the RP Canada common stock held by Newco 5,
and Newco 5 will issue to RP Canada a note of equal value in redemption of the
Newco 5 preferred stock held by RP Canada. The two notes will then be offset
against one another and each cancelled. Ralston will thereupon own all of the
stock of RP Canada, which will conduct only the Ralston Business, and EII and
Energizer will in the aggregate own all of the stock of Newco 5, which will
conduct only the Battery Business.
(j) Other Post-Merger Transfers/Debt Assumption. Following the merger
--------------------------------------------
described in Section 2.01(h) and the restructuring described in Section 2.01(i),
the following transactions will take place prior to the Distribution Date:
(i) Ralston will transfer the Eveready Notes to EII.
(ii) Ralston will transfer to Energizer all of the stock of Eveready; will
cause the transfer to Eveready of all of the stock of EII; and will cause the
transfer to EII of all of the stock of Energizer Japan, Inc., a Delaware
corporation.
(iii) Ralston will enter into certain credit facility agreements to borrow
funds from third party banks and/or financial institutions and will assign to
Energizer all obligations, including, but not limited to, the repayment
obligation, arising out of or in connection with such credit facility
agreements, other than for certain fees set forth in Section 12.04. The sum of
such debt assumed by Energizer, plus other Indebtedness of the Energizer Group,
is intended to equal total Indebtedness of the Energizer Group, net of Cash, of
US$586.8 million as of the close of business on March 31, 2000.
2.02 Issuance of Stock. Prior to the Distribution Date, the parties
-------------------
hereto shall take all steps necessary so that immediately prior to the
Distribution Date, the number of shares of Energizer Stock outstanding and held
by Ralston shall equal the number of shares necessary to effect the
Distribution. The Distribution shall be effected by distributing, on a pro rata
basis to every holder of Ralston Stock, one share of Energizer Stock for every
three shares of Ralston Stock held as of the Record Date.
2.03 Share Purchase Rights Agreement; Articles of Incorporation;
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Bylaws. Prior to the Distribution Date, Energizer shall adopt an Energizer
Rights Agreement in substantially the form filed with the SEC as an exhibit to
the Form 10, and the Board of Directors of Energizer shall authorize a
distribution of one Right to every share of outstanding Energizer Stock, such
distribution to occur prior to the Distribution. Ralston and Energizer shall
take all action necessary so that, at the Distribution Date, the Articles of
Incorporation and Bylaws of Energizer shall be substantially in the forms filed
with the SEC as exhibits to the Form 10.
2.04 Transfer of Assets; Assumption of Liabilities.
--------------------------------------------------
(a) Prior to the Distribution Date, the parties hereto shall cooperate in
taking all action necessary to convey, assign and transfer to Energizer,
effective no later than the Distribution Date, all of the right, title and
interest in the Energizer Assets held by any member of the Ralston Group, and to
convey, assign and transfer to Ralston or its Affiliates all of the right, title
and interest in the Ralston Assets held by any member of the Energizer Group.
Effective as of the Distribution Date, Energizer and its Affiliates shall become
the beneficial owners of all of the Battery Business Assets, and Ralston and its
Affiliates shall remain the beneficial owners of all of the Ralston Assets. The
parties acknowledge that formal actions to effect fully the legal transfers of
such Assets may not be completed by the Distribution Date, but that the entire
beneficial title and interest in and to each Asset shall pass to Energizer or
remain with Ralston, as the case may be, as of the Distribution Date. The
parties shall take such action as is necessary in their reasonable discretion,
whether before or after the Distribution Date, to complete the transfer of the
Energizer Assets to the Energizer Group and the Ralston Assets to the Ralston
Group, as the case may be, and each party shall cooperate fully with the other
in such regard.
Ralston and Energizer shall cooperate in estimating the appropriate amount of
Cash to be transferred to or from members of the Energizer Group on or before
March 31, 2000 to cause the Energizer Group to hold, as of the close of business
on March 31, 2000, Cash in such an amount that would cause the Indebtedness of
the Energizer Group, at the close of business on such date, to equal US$586.8
million, net of such Cash. The parties shall use reasonable efforts cause the
transfer of Cash to or from Energizer to effect this provision.
(b) As of the Distribution Date, Energizer and Ralston and, as
appropriate, other members of their respective Groups, shall assume or retain
all of the Liabilities, with respect to Energizer, of the Battery Business and
Former Battery Businesses and, with respect to Ralston, of the Ralston Business
and Former Ralston Businesses, of whatsoever type or nature, arising exclusively
out of or associated exclusively with the ownership of the Assets of such
Businesses or Former Businesses or the operation of such Businesses or Former
Businesses prior to the Distribution, whether such Liabilities become known
prior to or after, or are asserted prior to or after, the Distribution.
Energizer and its Affiliates and Ralston and its Affiliates shall assume (or
retain, as the case may be) a share of any Shared Liability in proportion, as
applicable, to their respective ownership of the relevant Assets, control of
affected operations or employment of affected individuals. Notwithstanding the
foregoing, effective as of the Distribution Date, Energizer or another member of
the Energizer Group shall assume or retain Liabilities specifically described in
any other provision of this Agreement or any Ancillary Agreement, and
Liabilities described on Schedule 2.04(b)(1) to this Agreement. Ralston and
members of the Ralston Group shall, except as qualified hereinabove, assume or
retain the Liabilities specifically described in this Agreement or any Ancillary
Agreement, and the Liabilities specifically described on Schedule 2.04(b)(2) to
this Agreement.
(c) The parties agree and acknowledge that the assumption or retention by
Energizer or other members of the Energizer Group or Ralston or other members of
the Ralston Group, as the case may be, of all such Liabilities described herein
is part of a single plan to transfer the Battery Business and the Energizer
Assets to Energizer as of the Distribution Date. With regard to that plan, the
parties further agree that (i) the entire beneficial title and interest in and
to each and all of the Energizer Assets shall, regardless of when legal title to
any such asset is in fact transferred to Energizer or its Subsidiaries, remain
in Ralston until the Distribution Date at which time all beneficial title and
interest in all of the Energizer Assets will pass to Energizer, and all title
and interest in and to each and all of the Ralston Assets which is owned by a
member of the Energizer Group prior to the Distribution Date shall, regardless
of when legal title to any such asset is in fact transferred to Ralston or its
Subsidiaries after the Distribution Date, be beneficially owned by Ralston; (ii)
the economic burden of the assumption or retention by the members of the
Energizer Group or the Ralston Group, as the case may be, of each and all of the
Liabilities described herein shall pass to the Energizer Group or the Ralston
Group, as the case may be, as of the Distribution Date, regardless of when
Energizer or any other member of the Energizer Group or Ralston or any other
member of the Ralston Group, as the case may be, in fact assumes or becomes
legally obligated to the obligee of any one or more of such Liabilities; and
(iii) all operations of the Battery Business shall be for the account of Ralston
through 12:01 a.m. on the Distribution Date and shall be for the account of
Energizer thereafter.
(d) Ralston and Energizer shall, and shall cause their Affiliates to,
execute prior to, or as soon as practicable following, the Distribution Date,
such additional agreements and arrangements as may be necessary or appropriate
(i) to effect the restructuring transactions set forth in Section 2.01; (ii) to
transfer to the appropriate member of the Energizer Group or Ralston Group such
local product registrations, franchises, licenses, and any other governmental
authorizations or other rights owned or held by Ralston, Energizer or their
respective Groups that are necessary to the conduct of their Businesses in such
jurisdiction; (iii) to make all such further assignments and do all such other
acts as are necessary or desirable to carry out the intent of the parties that
each of the Businesses, as a going concern, be fully vested in the appropriate
party as of the Distribution Date and operated for its benefit and burden as of
12:01 a.m.; and (iv) to provide for, and negotiate in good faith, such other
agreements and arrangements relating to the foregoing as the parties deem
appropriate, including, but not limited to, any such agreements or arrangements
relating to the treatment of employees, benefit plans, intellectual property and
taxes.
(e) If any Energizer Asset or Ralston Asset is not owned, respectively,
by a member of the Energizer Group or Ralston Group or leased from a third party
or governmental entity by a member of the appropriate Group, as of the
Distribution Date, Ralston and Energizer shall use their reasonable best efforts
to transfer, assign and deliver such assets or leases to the appropriate member
of the other Group as soon as practicable thereafter.
Prior to such transfer or assignment, Ralston or Energizer, as the case may be,
shall use its reasonable best efforts to give the benefits of ownership of such
Assets to the appropriate member of the other Group. The entire economic
beneficial interest in and to, and the risk of loss with respect to, such Assets
shall, regardless of when legal title thereto shall be transferred to the
appropriate member of the Energizer or Ralston Group, pass to those entities as
of the Distribution. Ralston and Energizer shall, or shall cause their
Affiliates to, hold such Assets for the benefit and risk of the other and shall
cooperate with the other in any lawful and reasonable arrangements designed to
provide the benefits of ownership of the Assets to it, including, but not
limited to, properly recording evidence of such beneficial ownership and risk of
loss with appropriate governmental entities as required by applicable law.
In the event that the legal interest in such Assets or any claim, right or
benefit arising thereunder or resulting therefrom, is not capable of being sold,
assigned, transferred or conveyed hereunder as a result of the failure to
receive any consents or approvals required for such transfer, then the legal
interest in such Assets shall not be sold, assigned, transferred or conveyed
unless and until approval, consent or waiver thereof is obtained. Ralston and
Energizer shall, or shall cause their Affiliates, at their expense, to use
reasonable best efforts to cooperate in obtaining such consents or approvals as
may be necessary to complete such transfers and to obtain satisfaction of
conditions to transfer as soon as practicable.
Nothing in this Agreement shall be construed as an attempt to assign to a member
of the Energizer Group or the Ralston Group any legal interest in such Assets
which, as a matter of law or by the terms of any legally binding contract,
engagement or commitment to which the legal owner is subject, is not assignable
without the consent of any other Person, unless such consent shall have been
given.
(f) After the Distribution Date, Ralston and Energizer shall cause such
Assets (including the capital stock of any Affiliates) which are beneficially
owned by the other party to be managed at the direction of the beneficial owner
pursuant to one or more Operating Agreements, substantially in the form attached
to this Agreement as Exhibit 2.04(f), until such Assets are actually legally
transferred and conveyed. Without limiting the foregoing, all revenues,
earnings and cash flows associated with the Assets following the Distribution
Date shall be for the account of the beneficial owner but shall be retained by
the respective legal owner until the transfers are legally effected. Following
the Distribution Date, neither Ralston nor Energizer shall be required to lend,
advance, contribute or use any of its own funds in connection with the
operations of such Assets except to the extent contemplated by the Operating
Agreements.
(g) Ralston and Energizer shall cooperate after the Distribution Date
in determining the actual Indebtedness of the Energizer Group and Cash held by
members of the Energizer Group as of the close of business on March 31, 2000 in
order to determine if a further transfer of Cash is required between the
parties. A preliminary determination of the actual Cash and Indebtedness of the
Energizer Group shall be made no later than 60 days after the Distribution Date
in order to make a preliminary adjustment of Cash from Ralston to Energizer or
vice versa (or, if the parties mutually agree, from any member of one Group to
any member of the other Group), as the findings warrant.
In addition, the parties shall determine the value of checks, written by
Energizer or its Affiliates on their U.S. bank accounts, which are outstanding
and have not cleared as of March 31, 2000. If the aggregate value of such
outstanding checks was less than $10 million, then the target Indebtedness of
Energizer, net of Cash, shall remain $586.8 million. If the aggregate value of
such checks was greater than $10 million, then the target Indebtedness of
Energizer, net of Cash, shall be reduced dollar for dollar by an amount equal to
the value of such outstanding checks in excess of $10 million.
If it is determined that actual Indebtedness of the Energizer Group, net of
Cash, exceeded US$586.8 million (adjusted, if applicable, pursuant to the
preceding paragraph) as of the close of business on March 31, 2000, Ralston
shall pay an amount equal to such excess to Energizer in US dollars.
Conversely, if it is determined that actual Indebtedness of the Energizer Group,
net of Cash, fell short of US$586.8 million (adjusted, if applicable, pursuant
to the preceding paragraph) as of the close of business on March 31, 2000,
Energizer shall pay an amount equal to such shortfall to Ralston in US dollars.
Alternatively, the parties may, by mutual consent, cause such amounts to be paid
by any member of one Group to any member of the other Group in local currency.
Any Cash paid to Ralston by Energizer pursuant to this Section 2.04(g) shall be
used to repay third party debt of Ralston.
Ralston shall have the opportunity to review, to its satisfaction, the books and
records of Energizer and its Affiliates, bank records, loan documentation and
other relevant materials in order to enable Ralston to verify any amounts to be
transferred, and Energizer shall cooperate in Ralston's review.
Payment of such preliminary adjustment shall be made within fifteen (15)
Business Days of such determination. In addition, such amounts shall be
increased by an amount equal to interest accrued on such unpaid excess (or
shortfall, as applicable) at LIBOR plus 50 basis points for the period from the
Distribution Date until the date such preliminary adjustment is paid to the
party to which it is owed.
No later than July 31, 2000, upon final review of the books and records of
Energizer and its Affiliates to verify the calculations of Indebtedness of the
Energizer Group and Cash holdings, Ralston and Energizer shall make, if
necessary, a second and final adjustment with respect to this matter. The final
adjustment payment shall be increased by an amount equal to simple interest
accrued on such adjustment at 7% per annum for the period from the date of the
initial adjustment payment until the date such final payment is made.
(h) Ralston shall pay to Energizer in US dollars, at the time of
payment of the Ralston Chilean Asset Purchase Price to a member of the Energizer
Group, an additional lump sum equal to interest on such purchase price,
denominated in US dollars at the time of payment to Energizer, accrued at the
simple interest rate of 7% per annum, for the period beginning on the
Distribution Date to the date such purchase price is paid to the Energizer
Affiliate.
(i) Calculations of equivalent values of US and foreign currencies
shall, for purposes of this Agreement, be based on foreign exchange rates for
the relevant date or dates as reflected in accordance with accounting practices
historically employed by Ralston.
2.05 Conduct of Business Pending the Distribution Date. Prior to the
---------------------------------------------------
Distribution Date, the Battery Business shall be operated for the sole benefit
of Ralston.
2.06 Registration and Listing. Prior to the Distribution Date:
--------------------------
(a) Ralston and Energizer shall prepare, and Energizer shall file with the
SEC, a Registration Statement on Form 10 pursuant to Section 12(b) of the
Exchange Act with respect to the Energizer Stock and associated Rights. Ralston
and Energizer shall use reasonable efforts to cause the Form 10 to become
effective under the Exchange Act, and, following such effectiveness, Ralston
shall mail the Information Statement to the holders of record of Ralston Stock
as of the close of business on the Record Date.
(b) The parties hereto shall take all such actions as may be necessary or
appropriate under state securities and Blue Sky laws in connection with the
Distribution.
(c) Ralston and Energizer shall prepare, and Energizer shall file and seek
to make effective, an application for the listing of the Energizer Stock and
associated Rights on the NYSE.
ARTICLE III
THE DISTRIBUTION
3.01 Record Date and Distribution Date. Subject to the satisfaction of
---------------------------------
the conditions set forth in Section 12.01, the Ralston Board shall establish the
Record Date and the Distribution Date and any appropriate procedures in
connection with the Distribution. The determination of record holders of
Ralston Stock on the Record Date shall be as of 12:01 a.m. on the Distribution
Date, and the Distribution shall also be effective as of 12:01 a.m. on the
Distribution Date.
3.02 Distribution. Ralston shall distribute all of the outstanding
------------
shares of Energizer Stock to holders of record of Ralston Stock on the Record
Date on the basis of one share of Energizer Stock for each three shares of
Ralston Stock outstanding as of 12:01 a.m. on the Record Date, subject to the
treatment of fractional shares set forth in Section 3.03. All shares of
Energizer Stock issued in the Distribution shall be duly authorized, validly
issued, fully paid and nonassessable.
3.03 Payment in Lieu of Fractional Shares. No fractional shares of
----------------------------------------
Energizer Stock shall be issued in the Distribution. In lieu thereof, a
distribution agent will aggregate fractional shares into whole shares and sell
them in the open market at then prevailing prices on behalf of holders who
otherwise would be entitled to receive fractional share interests, and such
distribution agent shall remit to each holder of Ralston Stock who would
otherwise be entitled to receive such fractional shares a cash payment equal to
such holder's pro rata share of the total gross sale proceeds (after making
appropriate deductions of the amount required to satisfy legal requirements).
Ralston shall bear the cost of commissions incurred in connection with such
sales.
ARTICLE IV
INDEMNIFICATION
4.01 Indemnification.
---------------
(a) From and after the Distribution Date, Ralston agrees to indemnify and
hold harmless Energizer against and in respect of any and all Liabilities
assumed or retained by Ralston pursuant to Section 2.04(b) of this Agreement
and/or related to, arising from, or associated with:
(i) any breach or violation of any covenant made in this Agreement or
any Ancillary Agreement by Ralston or any of its Subsidiaries;
(ii) any Third-Party Claim relating to the actions of the Ralston Board
in authorizing the Distribution;
(iii) the ownership, use or possession of the Ralston Assets or the
operation of the Ralston Business or Former Ralston Businesses, whether relating
to or arising out of occurrences prior to or after the Distribution, except to
the extent liability therefor is specifically assumed or retained by Energizer
or another member of the Energizer Group pursuant to Section 2.04(b) of this
Agreement; and all operations conducted by Ralston, its successors and their
Affiliates following the Distribution.
(iv) with respect to the operation or administration of Plans by
Ralston Employees, Former Ralston Employees or agents of Ralston or the Ralston
Business, Ralston's failure to comply with the provisions of a Plan or
applicable laws and regulations prior to or after the Distribution;
(v) any violations of the Code, or of federal or state securities laws,
in connection with the Distribution, the Information Statement and Form 10 or
any filings made with governmental agencies with respect thereto, except to the
extent that such violations, or allegations of violations, result from or are
related to the disclosure to Ralston's corporate staff of information, or
failure to disclose information, by officers, directors, employees, agents,
consultants or representatives of the Battery Business.
Any indemnification provided for under this Section shall, to the extent legally
permissible, also be deemed to extend to other members of the Energizer Group,
Affiliates, Energizer Employees, directors, Plan fiduciaries, shareholders,
agents, consultants, representatives, successors, transferees and assigns of
Energizer or members of the Energizer Group.
(b) From and after the Distribution Date, Energizer agrees to indemnify
and hold harmless Ralston against and in respect of all Liabilities assumed or
retained by Energizer or another member of the Energizer Group pursuant to
Section 2.04(b) of this Agreement and/or related to, arising from, or associated
with:
(i) any breach or violation of any covenant made in this Agreement or
any Ancillary Agreement by Energizer or any of its Subsidiaries or Affiliates;
(ii) the ownership, use or possession of the Energizer Assets or the
operation of the Battery Business or Former Battery Businesses, whether relating
to or arising out of occurrences prior to or after the Distribution, except to
the extent liability therefor is specifically assumed or retained by Ralston or
another member of the Ralston Group pursuant to Section 2.04(b) of this
Agreement; and all operations conducted by Energizer, its successors and their
Affiliates following the Distribution.
(iii) with respect to the operation or administration of Plans by
Energizer Employees, Former Energizer Employees or agents of Energizer or the
Battery Business, Energizer's failure to comply with the provisions of a Plan or
applicable laws and regulations prior to or after the Distribution; and
(iv) any violation or allegations of violations of federal or state
securities laws in connection with the Distribution, the Information Statement
and Form 10 or any filings made with governmental agencies with respect thereto,
to the extent that such violations, or allegations of violations, result from or
are related to, the disclosure to Ralston's corporate staff of information, or
failure to disclose information, by officers, directors, employees, agents,
consultants or representatives of the Battery Business; and
(v) any and all obligations of Ralston related to, or arising in
connection with, the borrowing of funds and assignment of such debt to
Energizer, as set forth in Section 2.01(j)(iii).
Any indemnification provided for under this Section shall, to the extent legally
permissible, also be deemed to extend to other members of the Ralston Group,
Affiliates, Ralston Employees, directors, Plan fiduciaries, shareholders,
agents, consultants, representatives, successors, transferees and assigns of
Ralston or members of the Ralston Group.
Notwithstanding the foregoing, a party shall have no right to indemnification
under this Article IV until the cumulative aggregate dollar amount of all
Liabilities to which this Article applies equals or exceeds US$250,000 with
respect to such party. Liabilities of any amount shall be included in the
computation of the cumulative aggregate dollar amount of Liabilities, but
neither party shall be entitled to indemnification for any single Liability of
less than US$25,000.
4.02 Actions and Claims Other Than Third-Party Claims; Notice and
------------------------------------------------------------------
Payment. Upon obtaining knowledge of any Action, Liability or claim, other than
--
Third-Party Claims, which any Person entitled to indemnification (the
"Indemnitee") believes may give rise to any Indemnifiable Loss, the Indemnitee
shall promptly notify the party liable for such indemnification (the
"Indemnitor") in writing of such Action or claim (such written notice being
hereinafter referred to as a "Notice of Claim"); provided, however, that failure
of an Indemnitee timely to give a Notice of Claim to the Indemnitor shall not
release the Indemnitor from its indemnity obligations set forth in this Article
IV except to the extent that such failure increases the amount of
indemnification which the Indemnitor is obligated to pay hereunder, in which
event the amount of indemnification which the Indemnitee shall be entitled to
receive shall be reduced to an amount which the Indemnitee would have been
entitled to receive had such Notice of Claim been timely given. A Notice of
Claim shall specify in reasonable detail the nature and estimated amount of any
such Action, Liability or claim giving rise to a right of indemnification. The
Indemnitor shall have ninety (90) Business Days after receipt of a Notice of
Claim to notify the Indemnitee whether or not it disputes its liability to the
Indemnitee with respect to such Action, Liability or claim or the amount
thereof, and setting forth the basis for such objection. If the Indemnitor
fails to respond to the Indemnitee within such ninety (90) Business Day period,
the Indemnitor shall be deemed to have acknowledged its responsibility for such
Indemnifiable Loss. If such Indemnifiable Loss is not contested, the Indemnitor
shall pay and discharge any such Indemnifiable Loss within one hundred twenty
(120) Business Days after its receipt of a Notice of Claim.
4.03 Insurance and Third-Party Obligations. Any indemnification
----------------------------------------
otherwise payable pursuant to Section 4.01 shall be reduced by the amount of any
insurance or other amounts (net of deductibles and allocated paid loss
retro-premiums) that would be payable by any third party to the Indemnitee or on
the Indemnitee's behalf in the absence of this Agreement. It is expressly
agreed that no insurer or any other third party shall be (i) entitled to a
benefit it would not be entitled to receive in the absence of the foregoing
indemnification provisions, (ii) relieved of the responsibility to pay any
claims for which it is obligated, or (iii) entitled to any subrogation rights
with respect to any obligation hereunder.
4.04 Third-Party Claims; Notice, Defense and Payment. Promptly
----------------------------------------------------
following the earlier of (i) receipt of notice of the commencement of a
Third-Party Claim or (ii) receipt of information from a third party alleging the
existence of a Third-Party Claim, any Indemnitee who believes that it is or may
be entitled to indemnification by any Indemnitor under Section 4.01 with respect
to such Third-Party Claim shall deliver a Notice of Claim to the Indemnitor.
Failure of an Indemnitee timely to give a Notice of Claim to the Indemnitor
shall not release the Indemnitor from its indemnity obligations set forth in
this Section 4.04 except to the extent that such failure adversely affects the
ability of the Indemnitor to defend such Action, Liabilities or claim or
increases the amount of indemnification which the Indemnitor is obligated to pay
hereunder, in which event the amount of indemnification which the Indemnitee
shall be entitled to receive shall be reduced to an amount which the Indemnitee
would have been entitled to receive had such Notice of Claim been timely given.
Indemnitee shall not settle or compromise any Third-Party Claim in an amount in
excess of US$25,000 prior to giving a Notice of Claim to Indemnitor at least
twenty (20) Business Days in advance of such settlement. In addition, if an
Indemnitee settles or compromises any Third-Party Claims prior to giving such
Notice of Claim to an Indemnitor, the Indemnitor shall be released from its
indemnity obligations to the extent that the Indemnitor can sustain the burden
of proving that such settlement or compromise was not made in good faith and was
not commercially reasonable. Within ninety (90) days after receipt of such
Notice of Claim (or sooner if the nature of such Third-Party Claim so requires),
the Indemnitor may (A) by giving written notice thereof to the Indemnitee,
acknowledge liability for, and at its option elect to assume, the defense of
such Third-Party Claim at its sole cost and expense or (B) object to the claim
of indemnification set forth in the Notice of Claim delivered by the Indemnitee;
provided that if the Indemnitor does not within the same ninety (90) day period
give the Indemnitee written notice either objecting to such claim and setting
forth the grounds therefor or electing to assume the defense, the Indemnitor
shall be deemed to have acknowledged its responsibility to accept the defense
and its ultimate liability, if any, for such Third-Party Claim. Any contest of
a Third-Party Claim as to which the Indemnitor has elected to assume the defense
shall be conducted by attorneys employed by the Indemnitor and reasonably
satisfactory to the Indemnitee; provided that the Indemnitee shall have the
right to participate in such proceedings and to be represented by attorneys of
its own choosing at the Indemnitee's sole cost and expense. If the Indemnitor
assumes the defense of a Third-Party Claim, the Indemnitor may settle or
compromise the Third-Party Claim without the prior written consent of
Indemnitee; provided that the Indemnitor may not agree to any such settlement
pursuant to which any such remedy or relief, other than monetary damages for
which the Indemnitor shall be responsible hereunder, shall be applied to or
against the Indemnitee, without the prior written consent of the Indemnitee,
which consent shall not be unreasonably withheld. If the Indemnitor does not
assume the defense of a Third-Party Claim for which it has acknowledged
liability for indemnification under Section 4.01, the Indemnitee may require the
Indemnitor to reimburse it on a current basis for its reasonable expenses of
investigation, reasonable attorney's fees and reasonable out-of-pocket expenses
incurred in defending against such Third-Party Claim and the Indemnitor shall be
bound by the result obtained with respect thereto by the Indemnitee, provided
that the Indemnitor shall not be liable for any settlement effected without its
consent, which consent shall not be unreasonably withheld. The Indemnitor shall
pay to the Indemnitee in cash the amount for which the Indemnitee is entitled to
be indemnified (if any) within thirty (30) days after the final resolution of
such Third-Party Claim (whether by settlement, a final nonappealable judgment of
a court of competent jurisdiction or otherwise) or, in the case of any
Third-Party Claim as to which the Indemnitor has not acknowledged liability,
within thirty (30) days after such Indemnitor's objection has been resolved by
settlement, compromise or arbitration pursuant to the provisions of Article XI
of this Agreement.
4.05 Remedies Cumulative; Survival of Indemnities. The remedies
------------------------------------------------
provided in this Article IV shall be cumulative and shall not preclude assertion
by any Indemnitee of any other rights or the seeking of any and all other
remedies against any Indemnitor. The obligations of each of the Ralston Group
and the Energizer Group under this Article IV shall survive the sale or other
transfer by it of any assets or businesses or the assignment by it of any
Liabilities, with respect to any claim of the other for any Indemnifiable Losses
related to such assets, businesses or Liabilities.
ARTICLE V
CERTAIN ADDITIONAL COVENANTS
5.01 Non-Competition.
---------------
Neither Energizer, nor any of its Affiliates, nor any of their successors
or successive successors shall, directly or indirectly, in any manner
whatsoever, engage in any activities which are prohibited, limited or proscribed
in any manner to Ralston or any of its Affiliates under the terms of either (i)
Section 6.10 of the DuPont Agreement, or (ii) Section 5.01 of the Agreement and
Plan of Reorganization dated as of April 1, 1998, by and between Ralston and
Agribrands International, Inc., both of which Agreements are hereby acknowledged
to be binding upon Energizer.
If any provision of this Section 5.01 is held by a court or governmental
authority of competent jurisdiction to be unenforceable as written, then such
provision shall be deemed automatically amended so that it is enforceable to the
maximum extent permissible under the laws and public policy of such jurisdiction
or authority. The provisions of this Section 5.01 are severable, and this
Section 5.01 shall be interpreted and enforced as if all completely invalid or
unenforceable provisions were not contained in this Section 5.01, and partially
valid or enforceable provisions shall be valid or enforceable to the extent they
are valid or enforceable.
5.02 Further Assurances. Each party hereto shall cooperate with the
-------------------
other parties, and execute and deliver, or use its best efforts to cause to be
executed and delivered, all instruments, including instruments of conveyance,
assignment and transfer, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any governmental or regulatory
authority or any other Person under any permit, license, agreement, indenture or
other instrument, and take all such other actions as such party may reasonably
be requested to take by any other party hereto from time to time, consistent
with the terms of this Agreement, in order to effectuate the provisions and
purposes of this Agreement and the transfers of Assets and Liabilities and the
other transactions contemplated hereby or in any of the Ancillary Agreements.
If any such transfer of Assets or Liabilities is not consummated prior to or on
the Distribution Date, then the party hereto retaining such Asset or Liability
shall thereafter hold such Asset in trust for the use and benefit of the party
entitled thereto (at the expense of the party entitled thereto), or shall retain
such Liability for the account of the party by whom such Liability is to be
assumed pursuant hereto, as the case may be, and shall take such other action as
may be reasonably requested by the party to whom such Asset is to be
transferred, or by whom such Liability is to be assumed, as the case may be, in
order to place such party, insofar as reasonably possible, in the same position
as if such Asset or Liability had been transferred as contemplated hereby. If
and when any such Asset or Liability becomes transferable, such transfer shall
be effected forthwith. The parties hereto agree that, as of the Distribution
Date, each party hereto shall be deemed to have acquired complete and sole
beneficial ownership of all of the Energizer Assets, or Ralston Assets, as the
case may be, together with all rights, powers and privileges incident thereto,
and shall be deemed to have assumed in accordance with the terms of this
Agreement all of the Liabilities, and all duties, obligations and
responsibilities incident thereto, that such party is entitled to acquire or
required to assume pursuant to the terms of this Agreement.
5.03 Energizer Board. Prior to the Distribution Date, Energizer shall
----------------
take such actions as are necessary so that its Board of Directors is comprised
of those individuals named as directors in the Form 10.
5.04 Contractual Arrangements.
-------------------------
(a) Effective as of the Distribution Date, Ralston and Energizer shall
enter into a tax sharing agreement, substantially in the form attached to this
Agreement as Exhibit A ("Tax Sharing Agreement").
(b) Effective as of the Distribution Date, Ralston and Energizer shall
enter into a bridging services agreement, substantially in the form attached to
this Agreement as Exhibit B ("Bridging Services Agreement").
(c) Effective as of the Distribution Date, Ralston and Energizer shall
enter into an intellectual property agreement, substantially in the form
attached to this Agreement as Exhibit C ("IP Agreement").
(d) Effective as of the Distribution Date, Ralston and Energizer shall
enter into an Aircraft Agreement, substantially in the form attached to this
Agreement as Exhibit D.
5.05 Cash Management and Intercompany Accounts.
----------------------------------------------
(a) Through and including 12:01 a.m. local time on the Distribution
Date, Ralston and Energizer shall continue to employ cash management and other
business practices with respect to the Battery Business that are consistent with
those practices historically employed.
(b) Except as otherwise provided on Schedule 5.05(b)(1), all bank
accounts used exclusively in the Battery Business, and the balances therein
existing as of 12:01 a.m. local time on the Distribution Date, shall be
transferred to, or retained by, Energizer or its Subsidiaries or Affiliates
effective as of the Distribution Date. All bank accounts used exclusively in
the Ralston Business, and the balances therein existing as of 12:01 a.m. local
time on the Distribution Date, shall be transferred to, or retained by, Ralston
or its Subsidiaries or Affiliates effective as of the Distribution Date. Other
bank accounts, and the balances therein existing as of 12:01 a.m. local time on
the Distribution Date, shall be handled as set forth on Schedule 5.05(b)(2).
Each party shall promptly pay to the other any amounts collected by it following
the Distribution through any of its accounts, to the extent any of such amounts
collected relate exclusively to the Business of the other party.
(c) All intercompany services provided by the Ralston Group to the
Energizer Group, and vice versa, shall terminate as of the Distribution Date
unless otherwise provided in the Bridging Agreement or any other Ancillary
Agreement. Effective as of the close of business on March 31, 2000, all
intercompany receivables or payables and loans then existing between any member
of one Group and any member of the other Group shall be settled or forgiven as
set forth on Schedule 5.05(c), except that, unless otherwise provided on
Schedule 5.05(c), trade receivables or payables arising out of intercompany
sales of inventories or other tangible goods shall be settled in the normal
course of business.
ARTICLE VI
ACCESS TO INFORMATION
6.01 Provision of Corporate Records. Subject to the terms of the
---------------------------------
Ancillary Agreements, prior to, or as promptly as practicable after, the
Distribution Date, Ralston shall deliver to Energizer, and Energizer shall
deliver to Ralston, all corporate books and records pertaining to the other
party's Business that each has in its possessionThe parties shall also make
available for copying or, to the extent not detrimental, in the reasonable
opinion of the party in possession of the materials, to such party's interests,
originals of all books, records and data reasonably related to the Assets, the
Battery Business, and the Liabilities assumed or retained by the party
requesting such materials, including, but not limited to, all books, records and
data relating to the purchase of materials, supplies and services, financial
results, sale of products, records of the applicable Energizer or Ralston
Individuals, commercial data, catalogues, brochures, training and other manuals,
sales literature, advertising and other sales and promotional materials,
maintenance records and drawings, all active agreements, active litigation files
and government filings. To the extent that originals of such books, records and
data are provided to Energizer by Ralston or vice versa, the party to which the
originals are given shall provide to the other party copies thereof as
reasonably requested in writing.
Each party shall provide such copies of all books, records and data only to the
extent that such action is not prohibited by the terms of any agreements
pertaining to such information or is not prohibited by law. From and after the
Distribution Date, all books, records and copies so delivered shall be the
property of the party to which they were given. Notwithstanding the above,
neither party shall be required to make copies, other than pursuant to Section
6.02 of this Agreement, of any books, records and data which are more than seven
years old or which relate to events occurring more than seven (7) years prior to
the Distribution Date.
6.02 Access to Information. From and after the Distribution Date,
-----------------------
Ralston and Energizer shall afford, to the other and to the other's agents,
employees, accountants, counsel and other designated representatives, reasonable
access and duplicating rights during normal business hours to all records,
books, contracts, instruments, computer data and other data and information
("Information") within such party's possession relating to such other party's
businesses, assets or liabilities, insofar as such access is reasonably required
by such other party. Without limiting the foregoing, such Information may be
requested under this Section 6.02 for audit, accounting, claims, litigation and
tax purposes, as well as for purposes of fulfilling disclosure and reporting
obligations.
6.03 Retention of Records. Except as otherwise required by law or
----------------------
agreed in writing, or as otherwise provided in the Tax Sharing Agreement,
Ralston and Energizer shall retain, for a period of at least seven (7) years
following the Distribution Date, all significant Information in such party's
possession or under its control relating to the Business, Assets or Liabilities
of the other party and, after the expiration of such seven-year period, prior to
destroying or disposing of any of such Information, (i) the party proposing to
dispose of or destroy any such Information shall provide no less than 30 days'
prior written notice to the other party, specifying the Information proposed to
be destroyed or disposed of, and (ii) if, prior to the scheduled date for such
destruction or disposal, the other party requests in writing that any of the
Information proposed to be destroyed or disposed of be delivered to such other
party, the party proposing to dispose of or destroy such Information promptly
shall arrange for the delivery of the requested Information to a location
specified by, and at the expense of, the requesting party.
6.04 Confidentiality. From and after the Distribution Date, each Group
---------------
shall hold, in strict confidence, all Information obtained from the other Group
prior to the Distribution Date or furnished to it pursuant to this Agreement or
any other agreement referred to herein which relates to or concerns the business
conducted by such other Group, and such Information shall not be used by it to
the detriment of the other Group, or disclosed by it or its agents, officers,
employees or directors without the prior written consent of such other Group
unless and to the extent that:
(a) disclosure is compelled by judicial or administrative process or, in
the opinion of such Group's counsel, by other requirements of law; or
(b) such Group can show that such Information was
(i) available to such Group on a nonconfidential basis prior to its disclosure
by the other Group,
(ii) in the public domain through no fault of such Group,
(iii) lawfully acquired by such Group from other sources after the time that it
was furnished to such Group pursuant to this Agreement or any other agreement
referred to herein, or
(iv) independently developed by such Group.
Notwithstanding the foregoing, each Group shall be deemed to have satisfied its
obligations of confidentiality under this Section 6.04 with respect to any
Information concerning or supplied by the other Group if it exercises
substantially the same care with regard to such Information as it takes to
preserve confidentiality for its own similar Information.
6.05 Reimbursement. Each member of any Group providing Information
-------------
pursuant to Sections 6.02 or 6.03 to any member of the other Group shall be
entitled to receive from the recipient, upon presentation of an invoice
therefor, payment in U. S. dollars of all out-of-pocket costs and expenses as
may reasonably be incurred in providing such Information.
ARTICLE VII
EMPLOYEE MATTERS
7.01 Employee Liabilities; Continuation of Employment.
-----------------------------------------------------
After the Distribution, except as otherwise specifically provided for in
this Agreement and Plan of Reorganization, the Energizer Group shall be
responsible for all employment and benefit liabilities related to the Energizer
Individuals, and the Ralston Group shall be responsible for all employment and
benefit liabilities related to the Ralston Individuals, whether arising before,
coincident with or after the Distribution. Ralston and Energizer shall cause
each member of their respective Groups to cooperate with the members of the
other's Group to effect, as soon as practicable in a cost-effective manner, the
transfer of employment, where applicable, of Energizer Employees and Ralston
Employees to the appropriate Affiliate of either Group.
7.02 Ralston Purina Retirement Plan.
---------------------------------
(a) Effective as of the Distribution Date, Ralston shall cause all of
the Energizer Employees who are participants in the Ralston Retirement Plan to
cease to accrue benefits under such Plan, and Energizer shall establish an
Energizer Retirement Plan and trust intended to qualify under Sections 401(a)
and 501(a) of the Code, respectively. All liabilities for benefits accrued for
Energizer Individuals shall be transferred to the Energizer Retirement Plan, and
such Plan shall give the Energizer Employees credit, for purposes of
eligibility, vesting and benefit accrual, for service on or prior to the
Distribution Date, to the extent such service was recognized under the Ralston
Retirement Plan. As soon as practicable after the Distribution Date, Ralston
shall cause the trustee of the Ralston Retirement Plan to transfer, in one or
more installments, to the trustee of the Energizer Retirement Plan, in
accordance with 7.02(c) and (d) below, an amount in cash and other investment
assets held in the trust equal to the following, adjusted as applicable pursuant
to Section 7.02(d) below (the "Transfer Amount"):
(i) the Projected Benefit Obligation ("PBO"), as defined in Financial Accounting
Standards 87, attributable to pension benefits (other than PensionPlus Match
Accounts) accrued as of the Distribution Date with respect to the Energizer
Individuals under the Ralston Retirement Plan; plus
(ii) amounts credited to the PensionPlus Match Accounts for Energizer
Individuals as of the Distribution Date; plus
(iii) a pro rata share of the assets, with a market value determined as of March
31, 2000, of the Ralston Retirement Plan in excess of the assets required to
fund the PBO and PensionPlus Match Accounts for all participants and
beneficiaries in the Ralston Retirement Plan (the "Surplus Assets"), such share
of the Surplus Assets to be apportioned and transferred to the Energizer
Retirement Plan in the same proportion as the PBO liabilities for Energizer
Individuals, determined as of March 31, 2000, bear to the PBO liabilities for
all participants in the Ralston Retirement Plan as of March 31, 2000; plus
(iv) interest with respect to each installment of the Transfer Amount based on
the investment rate of return of the assets of the Ralston Retirement Plan from
the Distribution Date to the actual transfer date, net of investment fees and
expenses;
less (v) the amount of benefits paid by the Ralston Retirement Plan to Energizer
Individuals between the Distribution Date and the date Plan assets are
transferred.
Calculations of PBO shall be made in accordance with terms of the Ralston
Retirement Plan, established administrative procedures and the assumptions used
by Ralston as of September 30, 1999 under FAS 87 and as set forth in Schedule B
to the 1999 Form 5500 for the Ralston Retirement Plan. In no event will the
Transfer Amount, as calculated pursuant to this Section 7.02(a) and, if
applicable, adjusted pursuant to Section 7.02(d), be less than the present
value, determined in accordance with Section 401(a)(17) of the Code, of benefits
of the Energizer Individuals accrued as of the Distribution Date, as determined
based on the actuarial assumptions of the Ralston Retirement Plan and in
compliance with Section 414(l) of the Code.
(b) No changes in the status of any Energizer Individual between the
Distribution Date and the date or dates funds are actually transferred pursuant
to this Section 7.02 shall affect the Transfer Amount to be calculated
hereunder.
(c) An initial portion of the Transfer Amount (the "Initial Transfer
Amount") shall be transferred to the trustee of the Energizer Retirement Plan no
later than ten business days after the expiration of the thirty-day waiting
period required by section 6058(b) of the Code. The transfer shall be
conditioned upon completion of the following items:
(i) Ralston's receipt of an opinion of Energizer's counsel, reasonably
acceptable to Ralston, stating that the Energizer Retirement Plan is intended to
qualify under Section 401(a) of the Code and that the trust established under
such Plan is intended to be exempt from taxation under Section 501(a) of the
Code;
(ii) each party's filing with the Internal Revenue Service the notice required
by Section 6058(b) of the Code.
(d) Notwithstanding the foregoing Section 7.02(a), if an apportionment
of pension assets, including pension surplus, is not made with respect to the
Ralston Canadian Pension Plan and/or the Energizer/Ralston UK Pension Plan in a
manner similar to that described with respect to the Ralston Retirement Plan,
then the Transfer Amount shall be increased or decreased, as applicable, in an
amount equal to the value of such excess or shortfall in allocation of surplus
assets in those Plans effective as of the date the parties mutually agree on the
amount of such excess or shortfall. The equivalent value of US and applicable
Canadian or United Kingdom currencies shall be determined in accordance with
Section 2.04(i).
(e) The parties shall cooperate in transferring the final installment
or installments of the Transfer Amount as soon as practicable. The final
installment of the Transfer Amount shall be made when it has been determined to
the reasonable satisfaction of both parties.
(f) Upon completion of the transfers of such assets and liabilities,
the Ralston Retirement Plan and the Ralston Group shall have no further
liability therefor with respect to the Energizer Individuals.
7.03 Certain International Pension Plans.
--------------------------------------
(a) Canadian Pension Plans. Effective as of the Distribution Date, the
Energizer Individuals participating in the registered pension plan sponsored by
Ralston Purina Canada Inc. (the "Ralston Canadian Pension Plan") shall cease to
accrue benefits under such Plan, and all liabilities for benefits accrued by
such Individuals as of such Distribution Date shall be transferred to a new
pension plan (the "Energizer Canadian Pension Plan") established by Newco
Canada, an Affiliate of Energizer, the terms of which will be substantially the
same as those of the Ralston Canadian Pension Plan in respect of the Energizer
Individuals. The Energizer Canadian Pension Plan shall give the Energizer
Employees credit, for purposes of eligibility, vesting and benefit accrual, for
service on or prior to the Distribution Date, to the extent such service was
recognized under the Ralston Canadian Pension Plan.
Ralston shall, as soon as practicable after the Distribution Date, cause Ralston
Purina Canada Inc. to transfer from the Ralston Canadian Pension Plan to the
Energizer Canadian Pension Plan an amount (the " Canadian Transfer Amount")
equal to the following:
(i) the present value of defined benefits accrued by the Energizer Individuals
under the Ralston Canadian Pension Plan as of March 31, 2000 and determined as
the greater of the going concern or solvency liabilities in accordance with Plan
documents, Plan interpretations specified therein and actuarial assumptions used
in the last filed actuarial report adjusted as necessary to comply with
legislation and regulatory authorities ("Canadian Energizer Defined Benefit
Liabilities"); plus
(ii) a pro rata share, valued as of March 31, 2000, of the difference between
the Ralston Canadian Pension Plan defined benefit assets and the "Total Canadian
Defined Benefit Plan Liabilities", (defined as the present value of defined
benefits accrued under the Ralston Canadian Pension Plan by all members as of
the Distribution and determined on the same basis as the Canadian Energizer
Defined Benefit Liabilities, which is the greater of going concern or solvency
liabilities in accordance with Plan documents, Plan interpretations specified
therein and actuarial assumptions used in the last filed actuarial report
adjusted as necessary to comply with legislation and regulatory authorities);
such share to be determined by applying the ratio of the Canadian Energizer
Defined Benefit Liabilities to the Total Canadian Defined Benefit Liabilities;;
plus
(iii) interest on the Canadian Transfer Amount based on the investment rate of
return of the assets of the Ralston Canadian Pension Plan from the Distribution
Date to the actual transfer date, net of investment fees and expenses;
less (iv) the amount of benefits paid by the Ralston Canadian Pension Plan to
Energizer Individuals between the Distribution Date and the date the Canadian
Transfer Amount is transferred.
Such transfer shall be conditioned upon receipt of, and subject to, all
requisite governmental and other approvals and consents and if a different
Canadian Transfer Amount is required by applicable regulatory authorities, an
adjustment to the Canadian Transfer Amount will be made. Upon completion of the
transfer of such assets and liabilities, the Ralston Canadian Pension Plan and
the Ralston Group shall have no further liability for pension benefits for the
Energizer Individuals.
(b) United Kingdom Pension Plans. Effective as of March 31, 2000, the
------------------------------
Ralston Individuals participating in the pension plan offered by Ralston Trust
Limited (the "Energizer/Ralston UK Pension Plan") shall cease to accrue benefits
under such Plan, and all liabilities for benefits accrued by such Individuals as
of such date shall be transferred to a new pension plan (the "New Ralston UK
Pension Plan") established by Newco Trust Limited, an Affiliate of Ralston, the
terms of which are substantially the same as those currently enjoyed by such
Individuals under the Energizer/Ralston UK Pension Plan. The New Ralston UK
Pension Plan shall give the Ralston Employees credit, for purposes of
eligibility, vesting and benefit accrual, for service on or prior to the
Distribution Date, to the extent such service was recognized under the
Energizer/Ralston UK Pension Plan.
Newco Trust Limited shall seek a transfer from the Energizer/Ralston UK Pension
Plan to the New Ralston UK Pension Plan, as soon as practicable after the
Distribution Date, of an amount (the "UK Transfer Amount") equal to the
following:
(i) the projected benefit obligation ("PBO") of benefits accrued by the Ralston
Individuals as of March 31, 2000 (determined on the greater of an ongoing
concern or solvency basis in accordance with Plan documents, Plan
interpretations specified therein and actuarial assumptions as agreed with the
Scheme actuary, adjusted as necessary to comply with legislation and regulatory
authorities), plus
(ii) a pro rata share of the assets, with a market value determined as of March
31, 2000, of the Energizer/Ralston UK Pension Plan that are in excess of the
assets required to fund the PBO for all participants and beneficiaries in the
Energizer/Ralston UK Pension Plan (the "UK Surplus Assets"), such share of the
UK Surplus Assets to be apportioned and transferred to the New Ralston UK
Pension Plan in the same proportion as the PBO for Ralston Individuals,
determined as March 31, 2000 bears to the PBO for all participants in the
Energizer/Ralston UK Retirement Plan as of March 31, 2000; plus
(iii) interest on the UK Transfer Amount based on the investment rate of return
of the assets of the Energizer/Ralston UK Pension Plan from the Distribution
Date to the actual transfer date, net of investment fees and expenses;
less (iv) the amount of benefits paid by the Energizer/Ralston UK Pension Plan
to Ralston Individuals between the Distribution Date and the date the UK
Transfer Amount is transferred.
Such transfer shall be conditioned upon receipt of, and subject to, all
requisite trustee, governmental and other approvals and consents and, if a
different UK Transfer Amount is required by applicable regulatory authorities,
an adjustment to the UK Transfer Amount will be made. Upon completion of the
transfer of such assets and liabilities, the Eveready/Ralston UK Pension Plan
and the Energizer Group shall have no further liability for pension benefits for
the Ralston Individuals.
(c) Other Foreign Funded Retirement Plans. With respect to other
foreign funded retirement Plans in which the sole participants are either
Energizer Individuals or Ralston Individuals, Energizer and Ralston shall
cooperate in taking such actions as are necessary or desirable to ensure that
each such Plan in which assets funding pension benefits for such Energizer or
Ralston Individuals are held is transferred to, or retained by, a member of the
Energizer Group or Ralston Group, as appropriate, and that the members of the
other Group shall have no liability related to such pension Plan.
7.04 Savings Investment Plan.
-------------------------
(a) Effective as of the Distribution Date, Energizer and its Affiliates
shall cease to be co-sponsors of the Ralston Purina Company Savings Investment
Plan ("Ralston SIP"). Energizer shall take, or cause to be taken, all necessary
and appropriate actions to establish, effective as of the Distribution Date, and
administer a defined contribution Plan which will be a Qualified Plan and which
will also be subject to Section 401(k) of the Code ("Energizer SIP"), and to
provide benefits thereunder for all Energizer Individuals who, immediately prior
to the Distribution Date, were participants in the Ralston SIP. Energizer
agrees that each such Energizer Individual shall be, to the extent applicable,
entitled, for all purposes under the Energizer SIP, to be credited with the term
of service and any account balance credited to such Energizer Individual as of
the Distribution Date under the terms of the Ralston SIP as if such service had
been rendered to the Energizer Group and as if such account balance had
originally been credited to such Energizer Individual under the Energizer SIP.
Ralston agrees to provide Energizer, as soon as practicable after the
Distribution Date (with the cooperation of Energizer to the extent that relevant
information is in the possession of the Energizer Group), with a list of the
Energizer Individuals who were, to the best knowledge of Ralston, participants
in the Ralston SIP immediately prior to the Distribution Date, together with a
listing, if requested by Energizer, of each such Energizer Individual's term of
service for eligibility and vesting purposes under such Plan and a listing of
each such Energizer Individual's account balance thereunder. Ralston shall, as
soon as practicable after the Distribution Date, provide Energizer with such
additional information (in the possession of the Ralston Group and not already
in the possession of the Energizer Group) as may be reasonably requested by
Energizer and necessary in order for Energizer to establish and administer
effectively the Energizer SIP.
The Energizer SIP receiving transfers of accounts from the Ralston SIP shall
contain an "Energizer Stock Fund", and Energizer Individuals for whom a portion
of the account balances are to be transferred to the Energizer SIP from the
Ralston SIP in the form of Energizer Stock, as described below, shall be
permitted to elect to retain their investment of that portion of their account
in the Energizer Stock Fund.
(b) Ralston shall, as soon as practicable following the Distribution
Date, direct the trustee of the Ralston Purina Company Savings Investment Trust
to transfer to the trustee of the Energizer SIP an amount (in cash, securities
and notes evidencing participant loans) equal to the account balances credited
to the Energizer Individuals as of the date of transfer. Such transfer shall be
adjusted, if and to the extent necessary, to comply with Section 414(l) of the
Code and the regulations promulgated thereunder. Shares of Energizer Stock
distributed with respect to shares of Ralston Stock held in the Ralston SIP as
of the Distribution, to the extent allocated to accounts of Energizer
Individuals, shall be transferred to respective participant accounts in the
Energizer Stock Fund of the Energizer SIP.
(c) In connection with the transfers described in Section 7.04(b),
Ralston and Energizer shall cooperate in making any and all appropriate filings
required under the Code or ERISA, and the regulations thereunder, and any
applicable securities laws and take all such action as may be necessary and
appropriate to cause such transfers to take place as soon as practicable after
the Distribution Date; provided, however, that each such transfer shall not take
place until as soon as practicable after the earlier of (i) the receipt of a
favorable IRS determination letter with respect to the qualification of the
Energizer SIP under Section 401(a) of the Code or (ii) the receipt by Ralston of
an opinion of counsel retained by Energizer and reasonably satisfactory in form
and substance to Ralston to the effect that the Plan is intended to qualify
under Section 401(a) of the Code and that the trust established thereunder is
intended to be exempt from federal income tax under Section 501(a) of the Code.
Ralston and Energizer agree to provide to such counsel such information in the
possession of the Ralston Group and the Energizer Group, respectively, as may be
reasonably requested by such counsel in connection with the issuance of such
opinion.
(d) Except as specifically set forth in this Section 7.04, upon
completion of the transfers of assets and liabilities from the Ralston SIP to
the Energizer SIP, the Ralston SIP and the Ralston Group shall have no further
liability therefor with respect to the Energizer Individuals.
7.05 U.S. Welfare Plans
--------------------
(a) Except as otherwise specifically provided herein, Energizer shall
take, or cause to be taken, all actions necessary and appropriate on behalf of
itself and the Energizer Group to adopt such Welfare Plans ("Energizer Welfare
Plans") as necessary to provide, effective as of the Distribution Date, welfare
benefits to the Energizer Individuals substantially similar to those offered to
them prior to the Distribution Date. In connection with the foregoing, Ralston
agrees to provide Energizer or its designated representative with such
information (in the possession of the Ralston Group and not already in the
possession of the Energizer Group) as may be reasonably requested by Energizer
and necessary for the Energizer Group to establish any such Welfare Plan.
(b) Except as otherwise noted in this Section 7.05, Energizer shall
cause the Energizer Welfare Plans to assume, or cause one or more members of the
Energizer Group to assume, and be solely responsible for, all welfare benefit
claims paid to Energizer Individuals on or after 12:01 a.m. on the Distribution
Date. The Ralston Welfare Plans shall retain liability for welfare benefit
claims paid to Energizer Individuals under the Ralston Welfare Plans before
12:01 a.m. on the Distribution Date.
As of 12:01 a.m. on the Distribution Date, Energizer shall cease to be a
sponsoring employer of the Welfare Plans sponsored by Ralston. Energizer
Individuals will cease participating in Welfare Plans maintained by any member
of the Ralston Group, except to the extent they elect continued coverage under
Ralston's health benefit plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act or they elect to continue coverage under the Partnership Life
Plan as a terminated employee.
(c) Subject to paragraph (b) above, Energizer and the Energizer Group
shall retain all liabilities for retiree medical and retiree life insurance
benefits with respect to Energizer Individuals, and no Energizer Individuals
shall be entitled to retiree medical and life insurance benefits from Welfare
Plans sponsored by Ralston and the Ralston Group after the Distribution Date.
For purposes of this Section 7.05, the distribution of ownership of the
Energizer Group to shareholders of Ralston Stock shall not be deemed a
termination of employment of Energizer Employees. As of the Distribution Date,
Energizer shall adopt an Energizer Executive Health Plan and an Energizer
Executive Life Plan, and Ralston shall transfer to Energizer, and Energizer
shall assume, all liabilities for retiree benefits for Energizer Individuals who
are eligible for retiree health and life coverage under such Plans. Claims for
retiree health and life benefits paid prior to the Distribution Date with
respect to Energizer Individuals shall be treated in the manner set forth in
paragraph (b) above.
(d) Ralston and Energizer shall cooperate in causing the transfer, as
soon as practicable after the Distribution Date, of certain plan assets from the
Ralston Group Life Plan and the Purina Long Term Disability Plan to the
Energizer Group Life Plan and the Energizer Long Term Disability Plan,
respectively. Ralston shall cause each Ralston Plan to transfer to the
corresponding Energizer Plan a pro rata share of the Ralston Plan assets, with a
market value determined as of March 31, 2000, such share of assets to be
calculated in the same proportion as the present value of liabilities relating
to Energizer Individuals under each Plan bears to the present value of
liabilities relating to all Energizer and Ralston Individuals under each such
Plan.
7.06 International Welfare Plans
-----------------------------
Ralston and Energizer shall each retain all liabilities related to
international welfare plans in which only Ralston Individuals or Energizer
Individuals, respectively, are enrolled. With respect to welfare plans in which
both Ralston Individuals and Energizer Individuals are participants, Ralston and
Energizer shall cause each member of their respective Groups to cooperate with
members of the other Group to establish additional separate welfare plans as
soon as practicable after the Distribution Date in order to enroll the Energizer
Individuals and Ralston Individuals in separate plans. During the period after
the Distribution that an Energizer Individual continues to participate in a
welfare plan sponsored by a member of the Ralston Group, or vice versa, the
sponsor (or sponsor's plan, as appropriate) shall be reimbursed for the costs of
providing such coverage in excess of premiums paid by the covered Energizer or
Ralston Individual. Ralston and Energizer, or their respective Welfare Plans as
applicable, shall share proportionately in any refunds of contributions or
stabilization reserves payable on account of experience prior to the
Distribution.
7.07 Internationalist Retirement Plan.
----------------------------------
As of the Distribution Date, Energizer shall assume, and be solely
responsible for, all benefits accrued with respect to Energizer Individuals
based on participation by Energizer Employees and Former Energizer Employees in
the unfunded Internationalist Retirement Plan. No Ralston Individuals are
participants in such Plan as of the Distribution Date, and Ralston shall have
no liability for payment of benefits under such Plan after the Distribution.
Energizer agrees to cause benefits accrued with respect to the Energizer
Individuals to be paid in a manner and amount consistent with the terms of the
Internationalist Retirement Plan.
7.08 Stock Options and Restricted Stock; Stock Purchase Plan.
--------------------------------------------------------------
(a) The stock options held by Energizer Individuals as of the
Distribution Date shall be administered in accordance with the terms of such
agreements and the ISP under which they were granted. For purposes of
restricted stock awards and stock options granted under the ISPs, the
Distribution shall be deemed to constitute an involuntary termination, other
than for cause, of employment of Energizer Employees.
(b) Effective immediately after the Distribution Date, the number of
shares of Ralston Stock subject to, and the exercise price of, each
non-qualified option to acquire Ralston Stock granted pursuant to the terms of
an ISP ("Ralston Option") which immediately prior to the Record Date is
outstanding and not exercised shall be adjusted by the Human Resources Committee
of the Ralston Board in order to reflect the difference in the fair market value
of the Ralston Stock attributable to the Distribution, in accordance with the
requirements of Section 424 of the Code and the regulations promulgated
thereunder, based upon (i) the average of the closing prices on the NYSE
Composite Index for the Ralston Stock, trading regular way with due bills for
the Energizer Stock, for the [10] trading day period prior to the Distribution
Date and (ii) the average of the closing prices on the NYSE Composite Index for
the Ralston Stock, trading regular way, for the [10] trading day period
following the Distribution Date.
(c) Ralston and Energizer agree that Ralston, as sole shareholder of
the outstanding capital stock of Energizer, will approve the adoption by the
Board of Energizer, prior to the Distribution, of a Plan to be administered by
the Nominating and Compensation Committee of the Energizer Board, under which
the Committee shall have authority to grant stock options, restricted stock
awards and other awards payable in Energizer Stock, to directors of Energizer
and eligible Energizer Employees, including executive officers.
(d) Effective as of the Distribution Date, Energizer Employees shall
cease to be eligible to participate in the Ralston Purina Company Stock Purchase
Plan. All benefit obligations arising under the Plan prior to such date shall
be paid in accordance with the terms of the Plan.
7.09 Unfunded Executive Deferred Compensation and Retirement Plans.
-----------------------------------------------------------------
(a) Ralston shall retain liability for all unpaid benefits, obligations
and liabilities with respect to benefits for Energizer Individuals arising from
deferrals of compensation by Energizer Employees and Former Energizer Employees
under the Fixed Benefit Option of the Ralston Purina Company Deferred
Compensation Plan for Key Employees ("Ralston Deferred Compensation Plan").
(b) As of the Distribution Date, Energizer will establish a Deferred
Compensation Plan, which shall be a non-qualified unfunded deferred compensation
plan ("Energizer Deferred Compensation Plan"). Effective as of the
Distribution, Ralston shall amend the Ralston Deferred Compensation Plan to
permit the transfer to the Energizer Deferred Compensation Plan of that portion
of the Ralston Deferred Compensation Plan liabilities accrued as of March 31,
2000 with respect to Energizer Individuals under all investment Options of such
Plan other than the Fixed Benefit Option (including the Company Matching
Accruals based on deferrals under the Equity Option), and Energizer shall cause
the Energizer Deferred Compensation Plan to accept such liabilities. In
connection therewith, Ralston shall assign to Energizer all its right, title and
obligations under the deferred compensation agreements associated with such
accrued benefits.
(c) As of the Distribution Date, Energizer will establish an Executive
Savings Investment Plan, which shall be a non-qualified unfunded deferred
compensation plan ("Energizer Executive SIP"). Ralston shall amend the Ralston
Purina Executive SIP ("Ralston Executive SIP") to cause the transfer to the
Energizer Executive SIP of that portion of the liabilities of the Ralston
Executive SIP relating to the benefits accrued as of March 31, 2000 by the
Energizer Individuals, and Energizer shall cause the Energizer Executive SIP to
accept such liabilities.
(d) As of the Distribution Date, Energizer will establish a Supplemental
Retirement Plan, which shall be a non-qualified unfunded supplemental retirement
plan ("Energizer SERP"). Ralston shall amend the Ralston Purina Supplemental
Retirement Plan ("Ralston SERP") to cause the transfer to the Energizer SERP of
that portion of the liabilities of the Ralston SERP relating to the benefits
accrued as of March 31, 2000 by the Energizer Individuals, and Energizer shall
cause the Energizer SERP to accept such liabilities. Accrued liabilities under
the Ralston SERP shall be deemed to include, but not be limited to, liabilities
arising out of Supplemental Retirement Awards given to Energizer Employees and
Former Energizer Employees.
(e) After the Distribution Date, Energizer shall be solely responsible
for the payment of all liabilities and obligations for benefits with respect to
Energizer Individuals under the Energizer Deferred Compensation Plan, the
Energizer Executive SIP and the Energizer SERP, which shall include all
liabilities and obligations transferred pursuant to 7.09(b), (c) and (d) above,
and Ralston shall have no liability with respect thereto.
7.10 Partnership Life Insurance Plan. Energizer Employees or Former
-------------------------------
Energizer Employees who, immediately prior to the Distribution Date, were
participants in or otherwise entitled to benefits under the Partnership Life
Insurance Plan, will, as of the Distribution Date, be treated as terminated
employees for purposes of such Partnership Life Insurance Plan, and will be
afforded all rights and benefits to which all terminated employees are entitled
under the terms of such Plan. Ralston will retain ownership of any individual
life insurance contracts then insuring the life of any Energizer Employee or
Former Energizer Employee in accordance with the terms of the Partnership Life
Insurance Plan.
7.11 Vacation Pay/Paid Time Off. Energizer and the Energizer Group
-----------------------------
will assume (or, as applicable, retain) all liability for unpaid vacation pay
and other paid time off accrued by Energizer Employees and Former Energizer
Employees prior to the Distribution Date. On and after the Distribution Date,
Ralston and the Ralston Group will have no liability for vacation pay or other
paid time off for Energizer Employees and Former Energizer Employees. Ralston
and the Ralston Group will retain (or, as applicable, assume) all liability for
unpaid vacation pay and other paid time off accrued by Ralston Employees and
Former Ralston Employees prior to the Distribution Date. After the Distribution
Date, Energizer and the Energizer Group will have no liability for vacation pay
or other paid time off for Ralston Employees and Former Ralston Employees.
7.12 U. S. Severance Pay.
----------------------
(a) Ralston and Energizer agree that, with respect to individuals who,
in connection with the Distribution, cease to be employees of the Ralston Group
and become employees of the Energizer Group, such cessation shall not be deemed
a severance of employment from either Group for purposes of any Plan that
provides for the payment of severance, salary continuation or similar benefits
and shall, in connection with the Distribution, if and to the extent
appropriate, obtain waivers from individuals against any such assertion.
(b) The Ralston Group shall assume and be solely responsible for all
liabilities and obligations whatsoever in connection with claims made by or on
behalf of Ralston Individuals and the Energizer Group shall assume and be solely
responsible for all liabilities and obligations whatsoever in connection with
claims made by or on behalf of Energizer Individuals in respect of severance
pay, salary continuation and similar obligations relating to the termination or
alleged termination of any such person's employment either before, to the extent
unpaid, or on or after the Distribution Date. On or prior to the Distribution
Date, Energizer shall amend its Plans relating to severance and other
termination benefits to incorporate the terms of the special severance payment
schedule in effect in Ralston's Severance Pay Plan with respect to employees of
the Corporate Division of Ralston who transfer to Energizer and who are
involuntarily terminated without cause by Energizer on or prior to September 30,
2000.
7.13 International Severance Pay.
-----------------------------
(a) Ralston and Energizer agree that, with respect to individuals who,
in connection with the Distribution, cease to be employees of the Ralston Group
and become employees of the Energizer Group or vice versa, such cessation shall
not be deemed a severance of employment from either Group except to the extent
so required by the terms of any benefit plan, labor agreement, applicable law or
governmental regulation that provides for the payment of severance pay, salary
continuation, termination indemnity or similar benefits. The parties agree, if
and to the extent appropriate, to obtain waivers from individuals against any
such assertion.
(b) To the extent severance pay, salary continuation or termination
indemnity is payable with respect to an Energizer Individual or Ralston
Individual, the respective Group shall assume and be solely responsible for all
liabilities and obligations whatsoever in connection with claims for such
benefits made by or on behalf of such Individuals relating to the termination or
alleged termination of any such person's employment either before, to the extent
unpaid, or on or after the Distribution Date.
In the event that the individual to whom the benefits are due was an employee of
both the Battery Business and the Ralston Business, then the termination
expenses shall be shared pro rata on the basis of service with each Group.
7.14 Bonus Plans. Energizer and its Affiliates shall be responsible
------------
for all liabilities with respect to Energizer Employees arising under bonus
plans, programs or policies applicable to such Employees, including liabilities
related to service prior to the Distribution Date. Notwithstanding the
foregoing, Ralston shall retain liability for amounts payable to Energizer
Employees who are participants in the 1998 Leveraged Incentive Plan.
7.15 Other Balance Sheet Adjustments. To the extent not otherwise
----------------------------------
provided in this Agreement, Ralston and Energizer shall take such action as is
necessary to effect an adjustment to the books of the members of the Ralston
Group and the Energizer Group so that, as of the Distribution Date, the prepaid
expense balances and accrued employee liabilities with respect to any employee
liability or obligation assumed or retained as of the Distribution Date by the
Ralston Group or the Energizer Group are appropriately reflected on the
consolidated balance sheets as of the Distribution Date of Ralston and
Energizer, respectively.
7.16 Preservation of Rights to Amend or Terminate Plans. Subject to
-----------------------------------------------------
the provisions of this Article VII, no provision of this Agreement, including
the agreement of Ralston or Energizer that it, or any member of the Ralston
Group or the Energizer Group, will make a contribution or payment to or under
any Plan herein referred to for any period, shall be construed as a limitation
on the right of Ralston or Energizer or any member of the Ralston Group or the
Energizer Group to amend such Plan or terminate its participation therein which
Ralston or Energizer or any member of the Ralston Group or the Energizer Group
would otherwise have under the terms of such Plan or otherwise, and no provision
of this Agreement shall be construed to create a right in any Ralston Individual
or Energizer Individual under a Plan which such Individual would not otherwise
have under the terms of the Plan itself.
7.17 Reimbursement; Indemnification. Each of the parties hereto
-------------------------------
acknowledges that the Ralston Group, on the one hand, and the Energizer Group,
on the other hand, may incur costs and expenses (including contributions to
Plans and the payment of insurance premiums) arising from or related to any of
the Plans which are, as set forth in this Agreement, the responsibility of the
other party hereto. Ralston and Energizer agree that they, or the appropriate
members of their respective Groups, shall reimburse the appropriate members of
the other's Group, as soon as practicable but in any event within 30 days of
receipt from the other party of appropriate verification, for all such costs and
expenses.
7.18 Further Transfers. For a period of six months following the
------------------
Distribution Date, no member of either Group shall, directly or indirectly,
without the prior written consent of a corporate officer of the other Group,
solicit or attempt to solicit any employee or officer of such other Group for
the purpose of obtaining his or her services for hire, or otherwise causing such
employee to leave employment with such other Group, and no member of either
Group, without the prior written consent of a corporate officer of the other
Group, will, for such period of six months, hire such employee or officer;
provided, however, if the employment of any officer or employee of one Group is
terminated by that Group at any time following the Distribution, a member of the
other Group may employ such person without the consent of the other Group.
7.19 Other Liabilities. Subject to the provisions of Article Four, as
------------------
of the Distribution Date, Energizer and Ralston shall each assume and be solely
responsible for all Liabilities whatsoever of the other's Group with respect to
claims made by, in the case of Energizer, Energizer Individuals and, in the case
of Ralston, Ralston Individuals, relating to any Liability not otherwise
expressly provided for in this Agreement, including, but not limited to, earned
salaries, wages, severance payments, bonus accruals or other compensation,
regardless of whether such Liability was incurred before or after the
Distribution Date.
7.20 Compliance. Notwithstanding anything to the contrary in this
----------
Article VII, to the extent any actions of the parties contemplated in this
Article are determined prior to the Distribution to violate law or result in
unintended tax liability for Ralston Individuals or Energizer Individuals, such
action may be modified to avoid such violation of law or unintended tax
liability.
7.21 Agreement of Parties. Notwithstanding anything herein to the
----------------------
contrary, the agreements contained in this Article VII shall be binding only as
between the parties to this Agreement, no Ralston Individual or Energizer
Individual or other Person shall have any right with respect to any such
agreement, and no Person other than the parties to this Agreement shall have any
rights to enforce any provision hereof.
ARTICLE VIII
POST-DISTRIBUTION OBLIGATIONS
8.01 Energizer's Post-Distribution Obligations.
-------------------------------------------
(a) Energizer shall, and shall cause each member of the Energizer Group
to, comply with each representation and statement made, or to be made, to the
IRS in connection with any ruling obtained, or to be obtained, by Ralston from
the IRS with respect to any transaction contemplated by this Agreement. Neither
Energizer nor any member of the Energizer Group shall, for a period, following
the Distribution Date, of thirty months with respect to transactions described
in subparagraphs (b)(i), (iii), (iv), (v) and (vi) below; and of twenty-four
months with respect to the transaction described in subparagraph (b)(ii) below,
, engage in any of the following transactions, unless, in the sole discretion of
Ralston, either
(i) an opinion in form and substance satisfactory to Ralston is obtained from
counsel to Energizer, the selection of which counsel is agreed to by Ralston; or
(ii) a supplemental ruling is obtained from the IRS;
in either case to the effect that such transactions would not adversely affect
the tax consequences of the transactions described in Articles II and III of
this Agreement to Ralston or any member of the Ralston Group; Energizer or any
member of the Energizer Group; or the Ralston shareholders.
(b) The transactions subject to this provision are:
(i) making a material disposition (including transfers from one member of the
Energizer Group to another member of the Energizer Group), by means of a sale or
exchange of assets or capital stock, a distribution to shareholders, or
otherwise, of any of its assets (other than the transactions contemplated by
this Agreement) except in the ordinary course of business;
(ii) repurchasing any Energizer Stock, unless such repurchase satisfies the
requirements of Section 4.05(1)(b) of Revenue Procedure 96-30 or any successor
Revenue Procedure;
(iii) issuing capital stock of Energizer (or a successor to Energizer), whether
incident to a stock offering, an acquisition transaction or otherwise, or
participating in a transaction in which shareholders of Energizer (or a
successor to Energizer) exchange or otherwise dispose of their stock in
Energizer (or a successor to Energizer), if the aggregate amount of shares
issued or disposed of in any such transactions represents a "fifty percent (50%)
or greater interest" in the total issued and outstanding stock of Energizer (or
a successor to Energizer) within the meaning of Section 355(d)(4) of the Code;
provided that Energizer further agrees to notify Ralston in advance of any such
transactions that would result in the issuance or disposition of an aggregate
amount of shares representing a ten percent (10%) or greater interest in the
total issued and outstanding stock of Energizer;
(iv) liquidating or merging with any other corporation (including a member of
the Energizer Group);
(v) ceasing to engage in the active conduct of a trade or business within the
meaning of Section 355(b)(2) of the Code; or
(vi) any other transaction, action or event, as set forth on Schedule
8.01(b)(vi), which is, in any material respect, inconsistent with any of the
representations or statements made to the IRS in connection with the request for
any ruling obtained, or to be obtained, with respect to any transaction
contemplated by this Agreement.
Energizer hereby represents that neither Energizer nor any member of the
Energizer Group has any present intention to undertake any of the transactions
set forth above, except as set forth in the ruling request submitted to the IRS
with respect to the Distribution.
8.02 Ralston's Post-Distribution Obligations. Ralston shall, and shall
----------------------------------------
cause each member of the Ralston Group to, refrain from taking any action which
would adversely impact any ruling obtained, or to be obtained, by Ralston from
the IRS with respect to any transaction contemplated by this Agreement.
8.03 Indemnification of Shareholders. In the event that Ralston or
---------------------------------
Energizer breaches or violates any covenant made in this Article VIII, the
breaching party shall indemnify and hold harmless (i) all shareholders of
Ralston as of the Record Date, and (ii) if the breaching party is Energizer,
Ralston, against and in respect of any and all costs, expenses, deficiencies,
litigation, proceedings, taxes, levies, assessments, attorneys' fees, damages or
judgments of any kind or nature whatsoever, related to, arising from, or
associated with such breach or violation.
ARTICLE IX
NO REPRESENTATIONS OR WARRANTIES; EXCEPTIONS
Energizer understands and agrees that, except as set forth in Article VIII,
no member of the Ralston Group is, in this Agreement or in any Ancillary
Agreement or other agreement or document, implicitly or explicitly representing
or warranting to Energizer in any way as to the Energizer Assets, the Battery
Business or the Liabilities of the Energizer Group or as to any consents or
approvals required in connection with the consummation of the transactions
contemplated by this Agreement, it being agreed and understood that the
Energizer Group shall take all of the Energizer Assets "as is, where is" and
that, except as provided in Section 2.04, the Energizer Group shall bear the
economic and legal risk that conveyances of the Energizer Assets shall prove to
be insufficient or that the title of any member of the Energizer Group to any
Energizer Assets shall be other than good and marketable and free from
encumbrances.
ARTICLE X
GUARANTEES AND SURETY BONDS OF RALSTON
Energizer agrees that, as soon as practicable following the Distribution
Date, it will substitute surety bonds obtained by it for each of the surety
bonds of any member of the Ralston Group, if any, relating to any Energizer
Asset, the Battery Business or any Liability assumed by Energizer or its
Subsidiaries of Affiliates hereunder. Energizer agrees that it shall enter
indemnification agreements in its name with each provider of a surety bond
obtained with respect to the Energizer Assets, the Battery Business or any
Liability assumed by Energizer. Except as set forth on Schedule 10, Energizer
shall use its best efforts to obtain the complete release and discharge of any
member of the Ralston Group from all obligations (including any obligations upon
any renewal or extension) related to the Energizer Assets, the Battery Business
or any Liability assumed by Energizer on which any member of the Ralston Group
is directly or contingently obligated as a guarantor or assignor or otherwise
contingently liable (including, without limitation, any letter of credit) (the "
Energizer Obligations").
In the event that Energizer is unable to obtain any such release, Energizer
agrees that
(a) it shall not extend the term or otherwise modify any such Energizer
Obligation in a manner which would expand Ralston's financial exposure under
such Energizer Obligation,
(b) it shall use its best efforts to substitute itself or another member of
the Energizer Group as primary guarantor of such Energizer Obligations, and
(c) Energizer or any member of the Energizer Group shall not assign any such
Energizer Obligation or directly or indirectly transfer, sell or assign any
assets securing such Energizer Obligation or comprising all or any substantial
portion of a project, the financing of which gave rise to such Energizer
Obligation, including, but not limited to, the transfer, sale or assignment of
the capital stock of any Affiliate holding title to such assets, unless Ralston
or the appropriate member of the Ralston Group, as the case may be, is released
and discharged of all liabilities with respect to such Energizer Obligation.
Without limiting any other obligation of indemnification under this Agreement or
any agreement described herein, Energizer shall defend, indemnify and hold
harmless each member of the Ralston Group and their respective Affiliates,
Subsidiaries, directors, officers and employees against any and all Liabilities
whatsoever incurred or suffered by any of them as a result of any Energizer
Obligation.
ARTICLE XI
NEGOTIATION
If any question shall arise in regard to (i) the interpretation of any
provision of this Agreement or, except to the extent provided otherwise therein,
any Ancillary Agreement, or (ii) the rights or obligations of either Group
hereunder or thereunder, each Group shall designate a senior executive within
its organization who shall, within thirty days after such question arises, meet
with the designated executive of the other Group to negotiate and attempt to
resolve such question in good faith. Such senior executives may, if they so
desire, consult outside advisors for assistance in arriving at such a
resolution. In the event that a resolution is not achieved within sixty days
following such initial meeting, then the parties may seek other legal means of
resolving such question, including but not limited to mediation or binding or
non-binding arbitration.
ARTICLE XII
MISCELLANEOUS
12.01 Conditions to the Distribution.
---------------------------------
(a) The obligation of Ralston to make the Distribution is subject to
the satisfaction of each of the following conditions:
(i) The transactions contemplated by Article II shall have been
consummated in all material respects;
(ii) Ralston shall have received rulings from the IRS, in form and
substance satisfactory to Ralston's tax counsel and independent auditors, that
the contributions, transfers, assumptions, mergers and Distribution described in
Articles II and III of this Agreement will not be subject to federal income
taxation at the corporate or shareholder level;
(iii) The Energizer Stock and associated Rights shall have been approved
for listing on the NYSE, subject to official notice of issuance;
(iv) The Form 10 shall have been filed with the SEC and shall have become
effective, and no stop order with respect thereto shall be in effect;
(v) All authorizations, consents, approvals and clearances of all federal,
state, local and foreign governmental agencies required to permit the valid
consummation by the parties hereto of the transactions contemplated by this
Agreement shall have been obtained; and no such authorization, consent, approval
or clearance shall contain any conditions which would have a material adverse
effect on (A) the Ralston Business or the Battery Business, (B) the Assets,
results of operations or financial condition of the Ralston Group or the
Energizer Group, in each case taken as a whole, or (C) the ability of Ralston or
Energizer to perform its obligations under this Agreement; and all statutory
requirements for such valid consummation shall have been fulfilled;
(vi) Ralston shall have provided the NYSE with the prior written notice of
the Record Date required by Rule 10b-17 of the Exchange Act and the rules and
regulations of the NYSE;
(vii) No preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a government,
regulatory or administrative agency or commission, and no statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, shall be in effect preventing the payment of the Distribution;
(viii) The Distribution shall be payable in accordance with applicable
law;
(ix) All necessary consents, waivers or amendments to each bank credit
agreement, debt security or other financing facility to which any member of the
Ralston Group or the Energizer Group is a party or by which any such member is
bound shall have been obtained, or each such agreement, security or facility
shall have been refinanced, in each case on terms satisfactory to Ralston and
Energizer and to the extent necessary to permit the Distribution to be
consummated without any material breach of the terms of such agreement, security
or facility; and
(x) One or more members of the Energizer Group shall have been
substituted, as of the Distribution Date in respect of all Ralston Group debt
obligations assumed by Energizer or another member of the Energizer Group
pursuant to this Agreement.
(b) Any determination made by the Ralston Board in good faith
concerning the satisfaction or waiver of any or all of the conditions set forth
in Section 12.01(a) shall be conclusive.
12.02 Survival of Agreements. All covenants and agreements of the
------------------------
parties hereto contained in this Agreement shall survive the Distribution Date.
12.03 Entire Agreement. This Agreement, the Exhibits and Schedules
-----------------
hereto and the Ancillary Agreements shall constitute the entire agreement
between the parties hereto with respect to the subject matter hereof superseding
all previous negotiations, commitments and writings with respect to such subject
matter. To the extent that the provisions of this Agreement are inconsistent
with the provisions of any Ancillary Agreement, the provisions of such Ancillary
Agreement shall prevail.
12.04 Expenses of the Distribution. Except as otherwise provided in
-------------------------------
this Agreement and the other agreements referred to herein, after the
Distribution, Ralston shall pay the costs and expenses (including attorneys'
and accountants' fees, legal costs and expenses) that were necessarily incurred
to effect the Distribution. For purposes of this Section 12.04, costs and
expenses incurred in connection with the establishment of the Energizer SIP and
the registration of Energizer Stock to be offered under the Energizer SIP shall
be deemed expenses necessary to effect the Distribution, but other costs and
expenses related to the design, establishment, administration, qualification and
registration of employee benefit Plans for Energizer and its Affiliates shall
not be deemed to be expenses necessary to effect the Distribution.
Notwithstanding the foregoing, after the Distribution Date, Ralston shall remain
obligated to pay all reasonable fees and expenses (including attorneys' and
accountants' fees, legal costs, underwriting fees and expenses) related to
Energizer's establishment of a $450 million credit facility.
12.05 GOVERNING LAW; JURISDICTION AND VENUE. THIS AGREEMENT IS MADE
----------------------------------------
AND ENTERED INTO IN, AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF, THE STATE OF MISSOURI, UNITED STATES OF AMERICA,
WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES, AS TO ALL MATTERS, INCLUDING
MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES UNDER THIS
AGREEMENT. ALL MATTERS RELATING TO THIS AGREEMENT SHALL, SUBJECT TO THE
PROVISIONS OF ARTICLE XI OF THIS AGREEMENT, BE ADJUDICATED EXCLUSIVELY IN THE
COURTS OF THE STATE OF MISSOURI LOCATED IN ST. LOUIS, MISSOURI, OR WITHIN THE
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI; AND EACH
PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS FOR
ALL SUCH MATTERS.
12.06 Notices. All notices, requests, claims, demands and other
-------
communications hereunder (collectively, "Notices") shall be in writing and shall
be given (and shall be deemed to have been duly given upon receipt) by delivery
in person, by cable, telegram, telex, facsimile or other standard form of
telecommunications, or by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to a member of the Ralston Group:
Ralston Purina Company
Checkerboard Square
St. Louis, Missouri 63164
Attention: General Counsel
If to a member of the Energizer Group:
Energizer Holdings, Inc.
800 Chouteau Avenue
St. Louis, Missouri 63102
Attention: General Counsel
or to such other address as either Group may have furnished to the other Group
by a notice in writing in accordance with this Section 12.06.
12.07 Amendment and Modification; Non-Waiver. This Agreement may be
-----------------------------------------
amended, modified or supplemented, or rights, powers or options hereunder waived
or impaired, only by a written agreement signed by a corporate officer of
Ralston and Energizer and attested by their respective corporate secretaries.
Neither party shall be deemed to have waived or impaired any right, power or
option created or reserved by this Agreement (including without limitation, each
party's right to demand compliance with every term herein, or to declare any
breach a default and exercise its rights in accordance with the terms hereof) by
virtue of:
(a) any custom or practice of the parties at variance with the terms
hereof;
(b) any failure, refusal or neglect to exercise any right hereunder, or
to insist upon compliance with any term;
(c) any waiver, forbearance, delay, failure or omission to exercise any
right or option, whether of the same, similar or different natures, under this
Agreement or in any other circumstances; or
(d) the acceptance by either party of any payment or other
consideration from the other following any breach of this Agreement.
The rights and remedies set forth in this Agreement are in addition to any other
rights or remedies which may be granted by law.
12.8 Successors and Assigns; No Third-Party Beneficiaries. This Agreement
- ---- ------------------------------------------------------
and all of the provisions hereof shall be binding upon and inure to the benefit
of each Group and their respective successors and permitted assigns, but neither
this Agreement nor any of the rights, interests and obligations hereunder
shall be assigned by either Group without the prior written consent of the other
Group (which consent shall not be unreasonably withheld). Except for the
provisions of Sections 4.02 and 4.03 relating to Indemnities, which are also for
the benefit of the Indemnitees, this Agreement is solely for the benefit of each
Group and is not intended to confer upon any other Person any rights or remedies
hereunder.
12.09 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Interpretation.
--------------
(a) The Article and Section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties hereto and shall not in any way affect the meaning or interpretation of
this Agreement.
(b) The parties hereto intend that, for federal income tax purposes,
the contributions, transfers, assumptions, Distribution and Merger contemplated
hereby shall qualify for non-recognition treatment under Sections 332, 336, 337,
355, 357(a), 361, 368(a)(1)(D) and 1032 of the Code.
12.11 Legal Enforceability. Any provision of this Agreement or any of
---------------------
the Ancillary Agreements which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. Each party acknowledges that money damages would be an inadequate
remedy for any breach of the provisions of this Agreement or any of the
Ancillary Agreements and agrees that the obligations of the parties hereunder
and thereunder shall be specifically enforceable.
12.12 References; Construction. References to any "Article",
-------------------------
"Exhibit", "Schedule" or "Section", without more, are to Articles, Exhibits,
Schedules and Sections to or of this Agreement. Unless otherwise expressly
stated, clauses beginning with the term "including" set forth examples only and
in no way limit the generality of the matters thus exemplified.
12.13 Termination. Notwithstanding any provision hereof, this
-----------
Agreement may be terminated and the Distribution abandoned at any time prior to
the Distribution Date by and in the sole discretion of the Ralston Board without
the approval of any other party hereto or of Ralston's shareholders. In the
event of such termination, no party hereto shall have any Liability to any
Person by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ENERGIZER HOLDINGS, INC. RALSTON PURINA COMPANY
By: By:
TAX SHARING AGREEMENT
---------------------
BETWEEN
-------
RALSTON PURINA COMPANY
----------------------
AND
---
ENERGIZER HOLDINGS, INC.
------------------------
THIS AGREEMENT (the "Agreement") dated as of April 1, 2000 is made by and
between RALSTON PURINA COMPANY ("Ralston"), a corporation organized under the
laws of the State of Missouri, and ENERGIZER HOLDINGS, INC. ("Energizer"), a
corporation organized under the laws of the State of Missouri.
WHEREAS, Ralston is the common parent of an affiliated group of domestic
corporations within the meaning of Section 1504(a) of the U. S. Internal Revenue
Code of 1986, as amended (the "Code"), which group includes Energizer (such
corporations hereinafter referred to collectively as the "Ralston Domestic
Subsidiaries" and individually as a "Ralston Domestic Subsidiary", and such
affiliated group shall be referred to as the "Ralston Group");
WHEREAS, Ralston is also the parent of certain directly or indirectly owned
foreign corporations (such corporations hereinafter referred to collectively as
the "Ralston Foreign Affiliates", and individually as a "Ralston Foreign
Affiliate"), as more specifically defined below.
WHEREAS, on or before April 1, 2000, Energizer will become the common
parent of an affiliated group of domestic corporations within the meaning of
Code Section 1504(a) (such corporations hereinafter referred to collectively as
the "Energizer Domestic Subsidiaries" and individually as a "Energizer Domestic
Subsidiary", and such affiliated group shall be referred to as the "Energizer
Group");
WHEREAS, on or before April 1, 2000, Energizer will also become the parent
of certain directly or indirectly owned foreign corporations (such corporations
hereinafter referred to collectively as the "Energizer Foreign Affiliates" and
individually as the "Energizer Foreign Affiliate"), as more specifically defined
below.
WHEREAS, Ralston intends to distribute to its shareholders all of its stock
in Energizer (the "Distribution") in accordance with the terms and conditions of
the Agreement and Plan of Reorganization between Ralston and Energizer dated as
of April 1, 2000 (the "Plan of Reorganization") on April 1, 2000 (the
"Distribution Date") in accordance with a favorable ruling from the Internal
Revenue Service ("IRS") dated February 4, 2000 that the Distribution qualifies
as a nontaxable distribution of stock of a controlled corporation under Code
Section 355; and that certain ancillary transactions also qualify as nontaxable
under Code Section 355, 368(a)(1)(D), 332, 351and 367; and,
WHEREAS, Ralston and Energizer believe that it is in their mutual best
interests to set forth in this Agreement the rights, obligations and duties of
each party with respect to various tax matters relating to the Energizer Group
and the Energizer Foreign Affiliates which may arise as a result of the
Distribution.
NOW, THEREFORE, in consideration of the premises and of the agreements
herein set forth, Ralston, (on its own behalf and on behalf of the Ralston
Domestic Subsidiaries and the Ralston Foreign Affiliates) and Energizer (on its
own behalf and on behalf of the Energizer Domestic Subsidiaries and the
Energizer Foreign Affiliates), hereby agree as follows:
ARTICLE I. DEFINITIONS
For purposes of the provisions set forth in this Agreement,
(a) The term "Audit(s)" shall mean any audit or examination undertaken
by a Tax authority with respect to Taxes.
(b) The term "Battery Business" shall have the same meaning as the term
is given in the Plan of Reorganization.
(c) The term "Controversy(ies)" shall mean any action involving a Tax
authority before any administrative or judicial body which results from a
disagreed Tax adjustment proposed during the course of an Audit.
(d) The term "Domestic" as used herein to modify the terms "Tax",
"Taxes" or "Return", shall mean with respect to any U.S. federal, territorial,
state or local government.
(e) The terms "Energizer Employee" or "Former Energizer Employee" shall have
the same meaning as such term is given in the Plan of Reorganization.
(f) The term "Energizer Foreign Affiliate" shall mean any entity which on
the Distribution Date is owned directly or indirectly by Energizer, and is
formed under the laws of a government other than the United States, its states
or territories.
(g) The term "Foreign" as used herein to modify the terms "Tax", "Taxes" or
"Return", shall mean with respect to any government which is not an U.S.
federal, territorial, state or local government.
(h) The term "Former Battery Business" shall have the same meaning as
the term is given in the Plan of Reorganization.
(i) The term "Former Ralston Business" shall have the same meaning as
the term is given in the Plan of Reorganization.
(j) The term "Ralston Business" shall have the same meaning as the term
is given in the Plan of Reorganization.
(k) The term "Ralston Employee" shall have the same meaning as the term
is given in the Plan of Reorganization.
(l) The term "Ralston Foreign Affiliate" shall mean any entity which on
the Distribution Date is owned directly or indirectly by Ralston, is formed
under the laws of a government other than the United States, its states or
territories, and is not an Energizer Foreign Affiliate.
(m) Tax or Taxes. As used herein, "Tax" or "Taxes" shall mean any and
-------------
all taxes, charges, fees, levies or other assessments, however denominated,
including any interest, penalties, fines, or other additions that may become
payable in respect thereof, that are imposed, by any governmental entity,
whether foreign or domestic, federal, territorial, state or local, or any agency
or political subdivision of any such governmental entity; including, but not
limited to, all income, profits, gross receipts, earnings, net worth, payroll,
withholding, unemployment insurance, Social Security, Medicare Hi,, sales, use,
ad valorem, excise, franchise, license, occupation, real or personal property,
stamp, transfer, value-added, recording, other governmental charges, and other
government obligations of the same or of a similar nature to any of the
foregoing, which any member of the Ralston Group or Energizer Group, or any
Ralston Foreign Affiliate or Energizer Foreign Affiliate, is required to pay,
withhold or collect. With respect to Foreign Taxes allocated between or among
the Ralston Business, the Battery Business, any Former Ralston Business, or any
Former Battery Business currently or formerly conducted by a single Foreign
Affiliate, Taxes shall mean the Taxes that would have been imposed had the
Battery Business or Former Battery Business been the sole business of a single
Foreign Affiliate, in accordance with Article III 1(b)(i) hereof.
(n) The term "Tax Return" or "Return" shall mean any return, filing,
questionnaire, information report or other document required to be filed,
including without limitation any amended returns, any documents with respect to
or accompanying payments of estimated Taxes, that may be filed, for any Tax
period with any Tax authority (domestic or foreign) in connection with any Tax
or Taxes (whether or not payment is required to be made with respect to such
filing). As used herein, "Consolidated Tax Return" shall mean a U.S. federal
income Tax Return described in Code Section 1501.
ARTICLE II. DOMESTIC TAXES
1. DOMESTIC TAXES - PREPARATION AND FILING OF TAX RETURNS, PAYMENT OF TAXES,
-------------------------------------------------------------------------
ADJUSTMENTS, AUDITS AND CONTROVERSIES.
- ----------------------------------------
(a) Preparation and Filing of Domestic Returns.
- --- -----------------------------------------------
(i) The preparation and filing of any Domestic Tax Return for Energizer or
the Energizer Domestic Subsidiaries for any Tax period ending prior to the
Distribution Date shall be the responsibility of Ralston. Ralston shall
consistently prepare and file such Domestic Tax Returns in accordance with its
historical practices.
(ii) Energizer hereby designates and Energizer agrees to cause each of the
Energizer Domestic Subsidiaries to designate Ralston irrevocably as its agent
for the purpose of taking any and all action necessary or incidental to the
filing of any Consolidated Return or any other Domestic Tax Return, as necessary
for any Tax period ending prior to the Distribution Date.
(iii) The preparation and filing of any Domestic Tax Return for Energizer or
the Energizer Domestic Subsidiaries for any Tax period beginning on or
after the Distribution Date shall be the responsibility of Energizer. In
addition, Energizer shall be responsible for the preparation and filing of any
Energizer Domestic Subsidiary Domestic Tax Return for Tax periods beginning
before and ending after the Distribution Date.
(b) Liability for Domestic Taxes.
- --- -------------------------------
(i) Pre-Distribution Date. Ralston shall be liable for, shall hold the
- --- ----------------------
Energizer Group harmless against, and shall make payment of any Domestic Tax
- ---
which is attributable to the Energizer Group, for any and all Tax periods (or
- ---
portions of periods) ending prior to the Distribution Date, including any such
- --
liabilities resulting from the Audit or other adjustment to previously filed
Domestic Tax Returns with respect to any such Tax period. Subject to
subparagraph (iii) hereof, Ralston shall be entitled to any and all refunds of
such Domestic Taxes for any such Tax period, including but not limited to
refunds described in subparagraph (iv) hereof. For purposes of this
subparagraph (b), Ralston will be credited for any estimated Domestic Tax
payments made for such Tax periods.
(ii) Post-Distribution Date. Energizer shall be liable for, shall hold the
- ---- -----------------------
Ralston Group harmless against, and make payment of any Domestic Tax due which
is attributable to the Energizer Group for all Tax periods beginning on or after
the Distribution Date and shall be entitled to any and all refunds of such
Domestic Taxes for any such Tax period.
(iii) Proration of Taxes. To the extent permitted by law or administrative
- ----- -------------------
practice, the Tax periods of the Energizer group and each Energizer Domestic
Subsidiary shall end on the day immediately preceding the Distribution Date.
For purposes of determining the liability for Domestic Taxes of an Energizer
Subsidiary for a portion of a taxable year or period that begins before and ends
after the Distribution Date, as necessary under applicable law, the
determination of the Domestic Taxes for the portion of the year or period ending
immediately prior to, and the portion of the year or period beginning on or
after, the Distribution Date shall be determined by assuming that the taxable
year or period ended on the day immediately preceding the Distribution Date,
except that exemptions, allowances or deductions that are calculated on an
annual basis and annual property Taxes shall be prorated on the basis of the
number of days in the annual period elapsed through the day immediately
preceding the Distribution Date.
(iv) Energizer's Carryback of Post-Distribution Deductions, Losses or
- ---- ----------------------------------------------------------------------
Credits. If (A) Energizer or any Energizer Domestic Subsidiary, shall be
- ---- -
entitled to carry back any net operating loss, capital loss, or other similar
- ---- -
losses, deductions or credits derived with respect to any period beginning on or
- --
after the Distribution Date to any Tax period commencing prior to the
Distribution Date, and (B) any such carry back results in a decrease in Domestic
Taxes paid by Ralston or any Ralston Domestic Subsidiary (as compared to the
Taxes Ralston or such member of the Ralston Group would otherwise have paid
solely without giving effect to such carry back), any Tax refunds (plus
interest) received by Ralston or the Ralston Domestic Subsidiaries as a result
of such carrybacks shall be promptly remitted to Energizer. The Ralston Group
agrees to cooperate with Energizer to obtain such refunds and Energizer agrees
to reimburse the Ralston Group for any reasonable out-of-pocket expenses related
thereto.
(v) Energizer's Claiming, Receiving or Using Refunds and Overpayments. If
- --- -------------------------------------------------------------------
on or after the Distribution Date, the Energizer Group receives any refund or
utilizes the benefit of any overpayment of Domestic Taxes which, in either case,
relates to Domestic Taxes paid by the Ralston Group with respect to a
taxable period or portion thereof ending on or prior to the Distribution Date,
then Energizer shall promptly transfer, or cause to be transferred to Ralston
the entire amount of the refund or overpayment (including interest) received or
utilized by the Energizer Group. Energizer agrees to notify Ralston within
thirty (30) days after the discovery of a right to claim any such refund or
overpayment and the receipt of any such refund or utilization of any such
overpayment. Energizer agrees to claim any such refund or to utilize any such
overpayment as soon as possible and to furnish to Ralston all information,
records and assistance necessary to verify the amount of the refund or
overpayment.
(vi) Tax Liabilities/Benefits Resulting from Post Distribution Stock Option
- ---- -----------------------------------------------------------------------
Exercises by Energizer Employees or Former Energizer Employees. Energizer shall
- --------------------------------------------------------------
be liable for any and all Taxes, including but not limited to, payroll,
Social Security, and Medicare Hi Taxes, imposed on an employer (the "Employer
Taxes") with respect to compensation resulting from the exercise of Ralston
stock options on or after the Distribution Date by any Energizer Employee or
Former Energizer Employee, if at the time of the grant of the stock option the
recipient was an Energizer Employee. In the event that Ralston, acting on
behalf of Energizer, pays and deposits such Employer Taxes with respect to such
compensation, then Ralston shall be entitled to reimbursement from Energizer of
such Employer Taxes. If as a result of such exercise of a Ralston stock option,
Energizer shall be entitled to claim on the appropriate Tax Return a
corresponding income tax deduction for the compensation expense, resulting in an
actual diminution of any Domestic Taxes, then Energizer shall pay Ralston the
amount of such diminution of Domestic Taxes within thirty (30) days of written
notice by Ralston to Energizer of such option exercise.
(vii) Tax Liabilities Resulting from Post Distribution Stock Option
- ----- --------------------------------------------------------------------
Exercises by all Other Employees. Ralston shall be liable for all Employer
- ----- ----------------------------
Taxes with respect to compensation resulting from the exercise of Ralston stock
- ----
options on or after the Distribution Date by any Energizer Employee or Former
Energizer Employee, if at the time of the grant of the stock option the
recipient was a Ralston Employee. Ralston shall be entitled to claim on the
appropriate Tax Return a corresponding income tax deduction for the compensation
expense and related Employer Taxes paid.
(viii) Reimbursement of Other Tax Benefits. Energizer shall reimburse
- ------ ---------------------------------------
Ralston to the extent of Domestic Tax benefits derived by any member of the
- -----
Energizer Group, for payments made by Ralston on or after the Distribution Date,
- ----
which result in a tax deduction to Energizer or an Energizer Domestic
Subsidiary ("Ralston Payments"), provided such Ralston Payments (a) are not
claimed as a deduction by Ralston for Domestic Tax purposes, (b) are deductible
on a Domestic Tax Return of the Energizer Group, and (c) result in a reduction
of Domestic Taxes of Energizer, the Energizer Group, or any Energizer Domestic
Subsidiary. The amount of the payment required hereunder for any taxable period
of Energizer shall be equal to (i) the lesser of (A) Energizer's applicable
Domestic taxable income for such taxable period, or (B) the amount of the
Ralston Payments with respect to which Energizer is entitled to claim, on a
Domestic Tax Return, a deduction during such taxable period (reduced by the
amount of income, if any, required to be recognized by Energizer during such
taxable period with respect to the Ralston Payments), multiplied by (ii) the
applicable marginal Domestic Tax rate to which income of the Energizer Group is
subject in such taxable period. Provided, however, if for any taxable period,
(X) Energizer files an amended Domestic Tax Return (or files a carryback or
carryforward claim relating to a net operating loss), or (Y) the IRS adjusts any
item on any Energizer Domestic Tax Return, the amount of the payment required
under this paragraph shall be recomputed (either at the time of the filing of
the amended return, or carryover or carryback claim, or at the time of the final
determination of the IRS adjustment) to reflect such amended return, claim, or
IRS adjustment, and, at such time, either (I) Ralston shall repay any
overpayment to Energizer, or (II) Energizer shall pay any underpayment to
Ralston.
Ralston will provide, in a timely manner, such information as is reasonably
necessary to substantiate the deduction for a Ralston Payment so as to permit
inclusion of such deduction on the appropriate Domestic Tax Return of Energizer,
the Energizer Group, or any Energizer Domestic Subsidiary. At Ralston's written
request, Energizer (a) shall claim the deduction for (and shall not report
income with respect to) a Ralston Payment on the appropriate federal or state
income tax return, and (b) shall contest any claim by a taxing authority
relating to the Ralston Payment, provided Ralston has agreed to indemnify
Energizer in a manner reasonably satisfactory to Energizer for any liability or
loss (including (i) interest and penalties on Taxes, and (ii) any reasonable
out-of-pocket expenses) incurred by Energizer as a result of taking such return
position or pursuing such contest.
(c) Domestic Audits and Controversies.
------------------------------------
(i) Ralston shall exclusively control and direct any Tax Audit or
Controversy with respect to any Domestic Taxes for any Tax period ending prior
to the Distribution Date. Energizer, however, shall have the right to
participate in any such Audit or Controversy to the extent such Audit or
Controversy would impact the Domestic Taxes for which Energizer is liable in
accordance with this Agreement, as determined by Energizer, and Ralston shall
not consent to any resolution, compromise or conclusion of such Audit or
Controversy without the written approval of Energizer, which approval shall not
be unreasonably withheld. Notwithstanding the foregoing, in the event Ralston
shall compromise or settle any such deficiency of Domestic Tax without the prior
consent of Energizer, Ralston shall hold Energizer and any Energizer Domestic
Subsidiary harmless against any losses, costs, or damages, including Taxes
resulting from such compromise or settlement.
(ii) Energizer shall exclusively control and direct any Audit or
Controversy with respect to any Domestic Taxes attributable to the Energizer
Group for a Tax period which begins on or after the Distribution Date. Ralston,
however, shall have the right to participate in any such Audit or Controversy to
the extent such Audit or Controversy would impact the Domestic Taxes for which
Ralston is liable in accordance with this Agreement, as determined by Ralston,
and Energizer shall not consent to any resolution, compromise or conclusion of
such Audit or Controversy without the written approval of Ralston, which
approval shall not be unreasonably withheld. Notwithstanding the foregoing, in
the event Energizer shall compromise or settle any such deficiency of Domestic
Tax without the prior consent of Ralston, Energizer shall hold Ralston and any
Ralston Domestic Subsidiary harmless against any losses, costs, or damages,
including Taxes resulting from such compromise or settlement.
(d) Domestic Tax Adjustments.
--------------------------
(i) If the IRS, or any state or local taxing authority, shall make
an adjustment to any Domestic Tax Return of (A) the Ralston Group, (B) any
Ralston Domestic Subsidiary, (C) Energizer, or (D) any Energizer Domestic
Subsidiary for any Tax period ending prior to the Distribution Date, and such
adjustment (including but not limited to adjustments to tax basis determination,
a tax accounting method with respect to its property and accounts included in
and carried forward from Ralston or the Ralston Domestic Subsidiaries prior to
the Distribution Date), consistently applied would require Energizer or the
Energizer Domestic Subsidiaries to make a corresponding adjustment to their
Domestic Tax Returns for periods beginning on or after the Distribution Date,
then,
(A) if such corresponding adjustment in a Domestic Tax Return
of Energizer or any Energizer Domestic Subsidiary results in an actual
diminution of any Domestic Taxes for such period, whether or not an actual
amended return is filed, Energizer shall pay Ralston the amount of such Domestic
Tax either (I) when such refund and related interest are received and required
to be remitted within the period provided in Article VI 3 hereof, or (II) within
thirty (30) days of written notice by Ralston to Energizer of such corresponding
adjustment, if an amended return is not filed.
(B) if such corresponding adjustment in a Domestic Tax Return of Energizer
or any Energizer Domestic Subsidiary results in an increase of any Domestic Tax
for Energizer for such period, and an actual diminution of any Domestic Tax for
Ralston, Ralston shall pay Energizer the amount of such Domestic Tax, either due
(I) when such refund and related interest are received and required to be
remitted within the period provided in Article VI 3 hereof, or (II) within
thirty (30) days of written notice by Energizer to Ralston of such corresponding
adjustment, if an amended return is not filed.
(e) Domestic Transfer Taxes. Ralston shall pay any and all Domestic
-------------------------
Taxes required upon, or by virtue of, any transfer of property contemplated
under the Plan of Reorganization including the transfer of shares of stock of
Energizer Domestic Subsidiaries in connection with the Distribution.
(f) Domestic Tax Attributes.
-------------------------
(i) Any Domestic Tax attribute generated by Ralston or Energizer
shall, to the extent permitted by the applicable law of the Tax jurisdiction in
question, remain with Ralston or Energizer, respectively, or the appropriate
entity. In any case where the applicable law of the Tax jurisdiction in
question requires such Tax attribute to be allocated between Ralston and
Energizer, such allocation shall be made as provided by the law of such
jurisdiction.
Notwithstanding the foregoing, any state or local net operating
losses or Tax credits generated by a member of the Energizer Group for any Tax
period beginning "prior to" rather than "ending prior to" shall be for the
benefit of Ralston. As permitted by the applicable law of the appropriate Tax
jurisdiction, such net operating losses or Tax credits shall be first carried
back to prior Tax periods. In the event that (i) the applicable law of the Tax
jurisdiction does not permit the carryback of such losses or Tax credits, or
(ii) such losses or Tax credits cannot be fully utilized in an allowable
carryback, then Energizer shall pay Ralston the amount of the actual diminution
of any state or local Taxes resulting from the utilization by any member of the
Energizer Group of such losses or credits within thirty (30) days of the filing
of the Tax Return reflecting the utilization of such loss or Tax credit, in
accordance with Article VI, 3 hereof.
(ii) Any excess Foreign Tax credits of the Ralston Group, as of
the Distribution Date, as finally determined by Ralston in accordance with Code
Section 904, shall be allocated between the Ralston Group and the Energizer
Group, in accordance with Reg. 1.1502-22T.
(iii) Any earnings and profits of the Ralston Group as of the
Distribution Date, as finally determined by Ralston, shall be allocated between
the Ralston Group and the Energizer Group in accordance with Reg. 1.312-10(a).
(iv) Any Capital Loss Carryovers of the Ralston Group, as of the
end of the fiscal year that includes the Distribution Date, as finally
determined by Ralston, shall be allocated between the Ralston Group and the
Energizer Group in accordance with
Reg. 1.1502-22T.
(g) Dual Resident Corporations. Energizer shall timely enter into any
---------------------------
closing agreement with Ralston and the IRS in accordance with Regs Section
1503-2(g)(2)(iv)(B)(2), to the extent necessary to avoid recapture of any "dual
consolidated loss", within the meaning of Regs. Section 1.1503-2(c)(5) generated
by any Energizer Domestic Subsidiary, which constitutes a "dual resident
corporation" within the meaning of Regs. Section 1.1503-2(c)(2). To the extent
Energizer causes the recapture of any "dual consolidated loss" created prior to
the Distribution Date, Energizer shall pay or reimburse Ralston for any taxes
and interest due as a result of the recapture.
(h) Gain Recognition Agreements. Energizer shall timely file any annual
-----------------------------
certifications required by any Agreements to Recognize Gain pursuant to Reg.
1.367(a)-3T(g) entered into by Ralston to defer gain on a transaction including
an Energizer Foreign Affiliate. To the extent Energizer causes the recognition
of any such deferred gain after the Distribution Date, Energizer shall pay or
reimburse Ralston for any Domestic aqTaxes and interest due as a result of the
recognition of such gain.
ARTICLE III. FOREIGN TAXES
1. PREPARATION AND FILING OF TAX RETURNS, PAYMENT OF TAXES, ADJUSTMENTS,
-------------------------------------------------------------------------
AUDITS AND CONTROVERSIES.
-----------------------
(a) Preparation and Filing of Foreign Returns.
----------------------------------------------
(i) Energizer shall be responsible for the preparation and filing
of any Foreign Tax Return of any Energizer Foreign Affiliate for all Tax
Periods.
(ii) Ralston shall be responsible for the preparation and filing
of any Foreign Tax Return of any Ralston Foreign Affiliate for all Tax Periods.
(b) Liability for Foreign Taxes.
------------------------------
(i) Subject to (A) the Foreign Transfer Taxes described in
subparagraph (c) below, and (B) any Foreign Taxes with respect to the (I) U.K.
Restructuring, (II) Brazilian Restructuring, (III) Mexican Restructuring, (IV)
Argentinean/Chilean Restructuring, or (V) Canadian Restructuring, as described
in Article II of the Plan of Reorganization, or (VI) any other sale,
liquidation, transfer, exchange, merger, or other similar restructuring
transaction initiated by Ralston, which resulted in the diminution of any
Domestic Taxes for any Tax periods ending prior to the Distribution Date (the
"Restructurings"), Energizer shall be liable for, shall hold the Ralston Group
and the Ralston Foreign Affiliates harmless against, and shall make payment of
all Foreign Taxes attributable to the Battery Business and any Former Battery
Business, for any and all Tax periods commencing before, on, or after the
Distribution Date, including any such liabilities resulting from an Audit or
other adjustment to previously filed Tax Returns. Other than refunds of the
Foreign Transfer Taxes and Foreign Taxes with respect to the Restructurings,
described in (A) and (B) above, Energizer shall be entitled to any refund of
Foreign Taxes attributable to the Battery Business and any Former Battery
Business for any such Tax periods. The allocation of any such Foreign Taxes
between or among the Ralston Business, the Battery Business, the Former Ralston
Business or any Former Battery Business, currently or formerly conducted by a
single Ralston Foreign Affiliate, shall be determined in accordance with the
books and records of Ralston and the Ralston Foreign Affiliate, as though the
Battery Business or Former Battery Business were deemed to have been conducted
as the sole business of a single Foreign Affiliate, and the Ralston Business or
Former Ralston Business were deemed to have been conducted as the sole business
of a single Foreign Affiliate.
(ii) Ralston shall be liable for, shall hold the Energizer Group
and the Energizer Foreign Affiliates harmless against, and shall make payments
of, all (A) Foreign Taxes owed by any Ralston Businesses and Former Ralston
Business, for any and all Tax periods commencing before, on, or after the
Distribution Date, including any such liabilities resulting from an Audit or
other adjustment to previously filed Tax Returns and (B) any Foreign Taxes with
respect to the Restructurings. Ralston shall be entitled to any refund of such
Foreign Taxes for any Tax period. The allocation of any such Foreign Taxes
between or among the Ralston Businesses and the Battery Business, the Former
Ralston Business, or any Former Battery Business conducted by a single Ralston
Foreign Affiliate shall be in accordance with the books and records of Ralston
and the Ralston Foreign Affiliate, as though the Battery Business or Former
Battery Business were deemed to have been conducted as the sole business of a
single Foreign Affiliate.
(iii) If, in accordance with this Article III 1(b), either Ralston
or Energizer is liable for any portion of the Foreign Taxes payable in
connection with any Foreign Tax Return to be filed by the other, the party
responsible for filing such Return (the "Preparer") shall prepare and deliver to
the other party (the "Payor") a copy of such return and any schedules, work
papers and other documentation then available that are relevant to the
preparation of the portion of such return for which the Payor is or may be
liable hereunder not later than the earlier of (A) twenty (20) days prior to the
due date for such Tax Return (including applicable extensions) (the "Due Date"),
or (B) the date the information is available in the normal course of business.
The Preparer shall not file such return until the earlier of either the receipt
of written notice from the Payor indicating the Payor's consent thereto, or five
(5) days prior to the Due Date to ensure timely receipt of the return by the
taxing jurisdiction.
The Payor shall have the option of providing to the Preparer, at
any time at least ten (10) days prior to the Due Date, written instructions as
to how the Payor wants any, or all, of the items for which it may be liable in
full reflected on such Tax Return. Failure by the Payor to give written
instructions at least ten (10) days prior to the Due Date shall constitute a
waiver by the Payor of its right to provide instructions, to the extent such
failure is prejudicial to the Preparer.
The Preparer shall, in preparing such Return, cause the items for
which the Payor is liable hereunder to be reflected in accordance with the
Payor's instructions unless the Preparer determines that such manner of
reporting is in contravention of applicable law. In the absence of having
received instructions from Payor, such items shall be reported in the manner
determined by the Preparer, which is not in contravention of applicable law, and
consistent with historic business practices, as applicable. The Payor shall
timely pay the Preparer an amount equal to the Foreign Taxes for which it is
liable consistent with the Return, and in accordance with Article VI 3 hereof.
(c) Foreign Transfer Taxes. Ralston shall pay or shall reimburse
------------------------
Energizer or an Energizer Foreign Affiliate as appropriate, for payment of any
and all Foreign Taxes upon, or by virtue of, any transfer of property
contemplated under the Plan of Reorganization, including the transfer of shares
of stock of Energizer Foreign Affiliates to Energizer in connection with the
Distribution. Foreign Tax Returns required to be prepared and filed by
Energizer relating to the transfer of shares of stock of Energizer Foreign
Affiliates to Energizer, must be provided to Ralston by Energizer at least ten
(10) days prior to the due date for such Tax Returns so that Ralston may timely
make any payment of Foreign Transfer Taxes due with respect to such Foreign Tax
Return. Ralston shall reimburse Energizer, or an Energizer Foreign Affiliate,
as appropriate, for any such Foreign Transfer Taxes paid, within thirty (30)
days of presentation of a receipt evidencing payment of such Taxes by the
Foreign Affiliate.
(d) Foreign Audits and Controversies.
-----------------------------------
(i) Energizer shall exclusively control and direct any Audit or
Controversy with respect to any Energizer Foreign Affiliate. Ralston, however,
shall have the right to participate in any such Audit or Controversy to the
extent such Audit or Controversy would impact the Foreign Taxes or Domestic
Taxes for which Ralston is liable in accordance with this Agreement. Energizer
shall not consent to any resolution, compromise or conclusion of such Audit or
Controversy without the written approval of Ralston, which approval shall not be
unreasonably withheld. Notwithstanding the foregoing, in the event Energizer
shall compromise or settle any such deficiency of Foreign Tax without the prior
consent of Ralston, Energizer shall hold Ralston and any Ralston Foreign
Affiliate harmless against any losses, costs, or damages, including Taxes
resulting from such compromise or settlement.
(ii) Ralston shall exclusively control and direct any Tax Audit or
Controversy as to any Foreign Tax with respect to any Ralston Foreign Affiliate.
Energizer, however, shall have the right to participate in any such Audit or
Controversy to the extent such Audit or Controversy would impact the Foreign
Taxes for which Energizer is liable in accordance with this Agreement. Ralston
shall not consent to any resolution, compromise or conclusion of such Audit or
Controversy without the written approval of Energizer, which approval shall not
be unreasonably withheld. Notwithstanding the foregoing, in the event Ralston
shall compromise or settle any such deficiency of Foreign Tax without the prior
consent of Energizer, Ralston shall hold Energizer and any Energizer Foreign
Affiliate harmless against any losses, costs, or damages, including Taxes
resulting from such compromise or settlement.
(e) Foreign Tax Attributes.
------------------------
Subject to subparagraph (c) above regarding Foreign Transfer Taxes,
any Foreign Tax attribute generated by Ralston or Energizer shall, to the extent
permitted by the applicable law of the Tax jurisdiction in question, remain with
Ralston or Energizer, respectively, or the appropriate entity. In any case
where the applicable law of the Tax jurisdiction in question requires such Tax
attribute to be allocated between Ralston and Energizer, such allocation shall
be made as provided by the law of such jurisdiction. In the event the
applicable law of the Tax jurisdiction requires that such Tax Attribute be
allocated between the parties based on a method of allocation agreed to by the
parties, Ralston and Energizer shall apply an allocation method reasonably
agreed to by both parties.
ARTICLE IV. ARBITRATION
For the purposes of this Agreement, all computations or recomputations of
Tax liability, and all computations or recomputations of any amount or any
payment (including, but not limited to, computations of the amount of the tax
liability, any loss or credit or deduction, statutory tax rate for a year,
interest payments, and adjustments) and all determinations of payments or
repayments, or determination of any other nature required to be made pursuant to
this Agreement, shall be based on the assumptions and conclusions of the party
making the computations. If either Ralston or Energizer objects thereto in
writing, addressed to the other party, the provisions of Article [_____] the
Plan of Reorganization shall be applicable to resolve any issues under this Tax
Sharing Agreement.
ARTICLE V. ENERGIZER POST-DISTRIBUTION TRANSACTIONS
1. Energizer shall, and shall cause each member of the Energizer Group and
each Energizer Foreign Affiliate to comply with each representation and
statement made, or to be made, to the IRS in connection with any ruling
obtained, or to be obtained, by Ralston from the IRS with respect to any
transaction contemplated by the Plan of Reorganization. Neither Energizer nor
any member of the Energizer Group shall for a period of thirty (30) months, with
respect to transactions described in subparagraphs I, III, IV, V, and VI, below;
and twenty-four months with respect to the transaction described in subparagraph
II below, following the Distribution Date engage in any of the following
transactions, unless, in the sole discretion of Ralston, either (a) an opinion
in form and substance satisfactory to Ralston is obtained from counsel to
Energizer, the selection of which counsel is agreed to by Ralston or (b) a
supplemental ruling is obtained from the IRS, in either case to the effect that
such transactions would not adversely affect the tax consequences of the
transactions contemplated by the Plan of Reorganization to (i) Ralston or any
member of the Ralston Group, (ii) Energizer or any member of the Energizer
Group, or (iii) the Ralston shareholders. The transactions subject to this
provision include: (I) making a material disposition (including transfers from
one member of the Energizer Group to another member of the Energizer Group), by
means of a sale or exchange of assets or shares of stock, a distribution to
shareholders, or otherwise, of any of its assets (other than the transactions
contemplated by the Plan of Reorganization) except in the ordinary course of
business; (II) repurchasing any Energizer Shares, unless such repurchase
satisfies the requirements of Section 4.05(1)(b) of Revenue Procedure 96-30;
(III) issuing capital stock of Energizer (or a successor to Energizer), whether
incident to a stock offering, an acquisition transaction, or otherwise, or
participating in a transaction in which shareholders of Energizer (or a
successor to Energizer) exchange or otherwise dispose of their stock in
Energizer (or a successor to Energizer), if the aggregate amount of shares
issued or disposed of in any such transactions represents a "fifty percent (50%)
or greater interest" in the total issued and outstanding stock of Energizer (or
a successor to Energizer) within the meaning of section 355(d)(4) of the Code;
provided that Energizer further agrees to notify Ralston in advance of any such
transactions that would result in the issuance or disposition of an aggregate
amount of shares representing a ten percent (10%) or greater interest in the
total issued and outstanding stock of Energizer; (IV) liquidating or merging
with any other corporation (including a member of the Energizer Group); (V)
ceasing to engage in the active conduct of a trade or business within the
meaning of Section 355(b)(2) of the Code; or (VI) any other transaction, action,
or event which is, in any material respect, inconsistent with any of the
representations or statements made to the IRS in connection with the request for
any ruling obtained, or to be obtained, with respect to any transaction
contemplated by the Plan of Reorganization. Energizer hereby represents that
neither Energizer nor any member of the Energizer Group has any present
intention to undertake any of the transactions set forth above, except as set
forth in the ruling request submitted to the IRS with respect to the
Distribution.
2. Ralston shall, and shall cause each member of the Ralston Group and each
Ralston Foreign Affiliate to refrain from taking any action which would
adversely impact any ruling obtained, or to be obtained, by Ralston from the IRS
with respect to any transaction contemplated by the Agreement of Reorganization.
ARTICLE VI. MISCELLANEOUS PROVISIONS
1. Mutual Cooperation. Ralston and Energizer shall, and shall cause each of
------------------
their Domestic Subsidiaries and Foreign Affiliates to, cooperate with each other
in filing any Tax Returns or consents contemplated by this Agreement and to take
such actions as the other party may reasonably request, including but not
limited to the following: (a) provide data for the preparation of Tax Returns,
including schedules, and make elections that may be required by the other party;
(b) provide required documents and data and cooperate in Audits or
investigations of Tax Returns and execute appropriate powers of attorney in
favor of the other party and/or its agents; (c) file protests or otherwise
contest proposed or asserted tax deficiencies, including filing petitions for
redetermination or prosecuting actions for refund in court, and pursuing the
appeal of such actions; (d) take any of the actions of the type described in
Regulation Section 1.1502-77(a) of the Code (describing the scope of the agency
of the common parent of a group of affiliated corporations); and (v) file
requests for the extension of time within which to file Tax Returns.
2. Maintenance of Books and Records. Until the applicable statute of
------------------------------------
limitations (including periods of waiver), or statute of similar import, has
expired in accordance with laws governing Domestic or Foreign Taxes and Tax
Returns, Ralston and Energizer shall, and shall cause each Domestic Subsidiary
and Foreign Affiliate to, retain all Tax workpapers and related materials
including applicable financial reports in its possession and under its control
used in the preparation of any Tax Return for Tax periods commencing prior to or
on the Distribution Date. Ralston and Energizer will notify the other party
sixty (60) days prior to disposing of any of the aforementioned records and will
deliver to the other party, at the other party's expense, any such records
requested by the other party. In addition, Energizer shall generate and retain
for IRS audit use (i) all necessary electronic data processing ("EDP") records
in accordance with existing agreements with the IRS, and (ii) any necessary
computer hardware needed to process EDP records for the IRS.
3. Payment. Failure to make any payment required under this Agreement will
-------
result in the accrual of interest on such amount due. Any interest payment
required hereunder shall be calculated from the same date and at the rate used
by the IRS, any foreign, state, or local tax authority, as applicable, in
computing the interest payable by it or to it. Unless otherwise provided, all
payments required to be made under this Agreement from one party to another
shall be made within thirty (30) days after the event which gives rise to the
requirement for payment occurs. Any payments made pursuant to this Agreement
are to be adjusted in the event that future events or new information would, had
they occurred or been known at the time of a payment, have altered the amount of
such payment, so that at the time of such future events or knowledge of such
information, appropriate adjustments shall be made retroactively to include the
consequences of such event or information in the original computation.
4. Energizer Domestic Tax Accruals. Prior to the Distribution Date,
----------------------------------
Energizer will transfer to the books of Ralston any Domestic Tax accrual
balances (credits) recorded on any books of Energizer Domestic Subsidiary as of
the Distribution Date.
5. Governing Law. This Agreement shall be governed and construed in
--------------
accordance with the laws of the State of Missouri and shall be binding on the
successors and assigns of the parties hereto.
6. Entire Agreement. Unless otherwise specified, this Agreement contains
-----------------
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior written agreements, memoranda,
negotiations and oral understandings, if any, and may not be amended,
supplemented or discharged except by performance or by an instrument in writing
signed by all of the parties hereto.
7. Controlling Agreement. In the case of a conflict between the Plan of
----------------------
Reorganization and this Agreement, this Agreement shall control.
8. Counterpart. This Agreement may be executed simultaneously in two or
-----------
more counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
RALSTON PURINA COMPANY
BY ___________________________________
ENERGIZER HOLDINGS, INC.
BY ___________________________________
BRIDGING SERVICES AGREEMENT
---------------------------
This Bridging Services Agreement (the "Agreement") is made as of this ___
day of ___________, ____, (the "Effective Date") by and between Ralston Purina
Company, a Missouri Corporation ("Ralston"), and Eveready Battery Company, Inc.,
a Delaware corporation ("Eveready").
WHEREAS, Ralston has consolidated its battery and lighting products
business into Energizer Holdings, Inc., a holding company parent, and Eveready,
an operating company subsidiary, and intends to distribute the outstanding
common stock of Energizer Holdings, Inc. on a prorata basis to the holders of
Ralston Purina common stock (the "Distribution");
WHEREAS, Ralston and Eveready have executed a lease agreement dated
______________ pursuant to which Eveready will lease certain office space from
Ralston (the "Lease");
WHEREAS, Ralston desires to provide to Eveready, and Eveready desires to
receive from Ralston, certain services, as more fully described on Schedules 1A
through 1_ attached hereto, (collectively, the "Eveready Services") in
connection with the Eveready business on an interim basis following the
Distribution;
WHEREAS, Eveready desires to provide Ralston, and Ralston desires to
receive from Eveready, certain services, as more fully described on Schedules 2A
through 2_ attached hereto, (collectively, the "Ralston Services"), in
connection with Ralston's businesses (other than the Eveready business) on an
interim basis following the Distribution; and
WHEREAS, Ralston and Eveready desire to enter into this Agreement to
confirm the terms and conditions pursuant to which each party will provide to
the other party, for a limited time from and after the Effective Date, the
Eveready Services or the Ralston Services as the case may be.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. SERVICES. Subject to the terms of this Agreement, from and after the
---------
Effective Date, the party providing particular Ralston Services or Eveready
Services, as the case may be, (the "Provider") shall make such Services
available to the party receiving such Services (the "Recipient") in accordance
with the practices in effect as of the Effective Date or as specifically set
forth in the Schedules. In consideration for the Services, the Recipient shall
pay to the Provider the fee or other charge set forth opposite each such Service
on the applicable Schedule and each Service provided will be separately invoiced
to Recipient in accordance with the billing provisions set forth in the Schedule
with respect to such Service. The Recipient shall give the Provider written
notice of its intent to terminate any one or more of the Services at least
thirty (30) days prior to the termination of the Service unless any Schedules
hereto provide for a different notice period in which case such different notice
period shall apply to the applicable Services. This Agreement shall continue in
full force and effect with respect to any Services not terminated by any such
notices.
2. LIABILITY; INDEMNIFICATION. The Provider shall have no liability to the
- -- ----------------------------
Recipient with respect to its furnishing any of the Services hereunder except
for its willful misconduct. By agreeing to provide the Services as an
accommodation to the Recipient, the Provider is making no representations or
warranties as to the quality, suitability or adequacy of the Services for any
purpose or use. In providing the Services, the Provider shall not be obligated
to (i) hire any additional employees; (ii) maintain the employment of any
specific employee; (iii) purchase, lease or license any additional equipment or
software; or (iv) pay any costs related to the transfer or conversion of the
Recipient's data to the Recipient or any alternate supplier of administrative
services. The sole remedy of the Recipient in the event data owned by it is
lost or damaged in any way during processing by the Provider is the refund to it
of any charges paid for the processing of the damaged data. The Provider agrees
to exercise reasonable diligence to correct errors or deficiencies in the
Services but the Recipient shall have no other remedy against the Provider
regardless of any loss suffered by the Recipient or any other person or entity.
The Provider shall not be liable to any third party in any way for any
obligation or commitment pursuant to this Agreement or for any act or omission
and the Recipient shall be solely liable and responsible for any and all claims,
liabilities, obligations, losses, costs, expenses, litigation, proceedings,
taxes, levies, imposts, duties, deficiencies, assessments, charges, allegations,
demands, damages or judgments of any kind or nature whatsoever ("Liabilities")
related to, arising from, asserted against or associated with the Provider
furnishing or failing to furnish to the Recipient any of the Services described
herein. Upon the termination of any of the Services, the Recipient shall be
obligated to return to the Provider, as soon as practicable, any equipment or
other property of the Provider relating to the Services which is owned or leased
by it and is or was in the Recipient's possession or control. Effective as of
the date of this Agreement, the Recipient shall indemnify and hold the Provider
and its affiliates and their respective directors, shareholders, officers,
employees, agents, consultants, representatives, successors, transferees and
assigns harmless from and against any and all Liabilities (including, without
limitation, reasonable fees and expenses of counsel) of whatever kind and nature
related to, arising from, asserted against or associated with the Provider's
furnishing or failing to furnish the Services provided for in this Agreement,
other than Liabilities arising out of the willful misconduct of the Provider or
its affiliates or their respective directors, shareholders, officers, employees,
agents, consultants, representatives, successors, transferees or assigns.
Nothing herein, however, shall be deemed to affect the right of the Recipient to
seek damages or other rights of redress against the Provider for breach of the
provisions of this Agreement.
3. CLAIMS. Recipient's receipt of any Service performed hereunder shall be
- -- -------
an unqualified acceptance of, and a waiver by it of any and all claims with
respect to such Service unless it gives the Provider notice of claim within
thirty (30) days after such receipt; no claim by the Recipient against the
Provider of any kind, whether as to service performed or for delayed performance
or non-performance and whether or not based on negligence, shall be greater in
amount than the fee for the Service in respect of which such claim is made; and
in no event will the Provider be liable to the Recipient for any incidental or
consequential damages, whether or not caused by or resulting from negligence or
breach of obligations hereunder.
4. ADDITIONAL SERVICES. If a party to this Agreement wants the other to
- -- ---------------------
provide any service other than the Services provided for in the Schedules, such
- --
party shall notify the other in writing, and within thirty (30) days following
the giving of such notice, such other party shall decide, in its sole
discretion, whether to provide such service. If such other party agrees to be a
Provider with respect to such additional service, the Recipient and Provider
shall agree on the fee for such service. The provision by Provider of any such
additional Services shall be subject to all other provisions of this Agreement,
as if those Services had originally been part of the Schedules to this
Agreement.
5. CONFIDENTIALITY. Any and all information which is not generally known to
- -- ----------------
the public which is exchanged between the parties in connection with this
Agreement, whether of a technical or business nature, shall be considered to be
confidential. The parties agree that confidential information shall not be
disclosed to any third party or parties without the written consent of the other
party. Each party shall take reasonable measures to protect against
nondisclosure of confidential information by its officers and employees.
Confidential information shall not include any information (i) which is or
becomes part of the public domain; (ii) which is obtained from third parties who
are not bound by confidentiality obligations; or (iii) which is required to be
disclosed by law, regulation, legal process or the rules of any state or federal
regulatory agency or the New York Stock Exchange. The provisions of this
section shall survive the termination of this Agreement.
6. ASSIGNMENT. Notwithstanding anything to the contrary in this Agreement,
- -- -----------
this Agreement shall not be assignable by either party hereto, to any other
person, firm or entity without the prior written consent of the other party;
provided, however, that the Agreement in its entirety, or any portion of the
rights and obligations established hereunder, may be assigned by either party
hereto to one of its directly or indirectly wholly-owned subsidiaries without
the written consent of the other party. Except as expressly provided herein,
nothing herein shall create or be deemed to create any third party beneficiary
rights in any person or entity not a party to this Agreement.
7. WAIVER, AMENDMENT OR MODIFICATION. No waiver, amendment or modification
- -- -----------------------------------
of this Agreement shall be valid unless in writing and duly executed by the
party to be charged therewith.
8. ENTIRE AGREEMENT.This Agreement and the Schedules hereto constitutes the
- -- ------------------
entire agreement of the parties concerning the subject matter hereof and
supersedes all previous agreements between the parties, whether written or oral,
with respect to such subject matter.
9. GOVERNING LAW.Despite any different result required by any conflicts of
- -- ---------------
law provisions, this Agreement shall be governed by the laws of the State of
Missouri.
10. NOTICES.All notices, requests, demands, waivers and other communications
- --- --------
(hereinafter "Notices') required or permitted to be given pursuant to this
Agreement shall be in writing and shall be deemed to have been duly given (i) at
the time of delivery, if delivered by hand; (ii) on the date of transmission, if
sent by facsimile, telegram or other standard form of telecommunications; or
(iii) three (3) business days after mailing, if mailed registered or certified
first-class mail, postage prepaid, return receipt requested. Notices shall be
delivered or sent, as the case may be, to the following addresses or to such
other addresses as the parties may hereinafter designate by like notice
similarly provided:
IF TO EVEREADY: Eveready Battery Company, Inc.
- -----------------
Checkerboard Square
St. Louis, MO 63164
Attn: General Counsel
IF TO RALSTON: Ralston Purina Company
- ----------------
Checkerboard Square
St. Louis, MO 63164
Attn: General Counsel
11. FORCE MAJEURE. Anything else in this Agreement notwithstanding, the
- --- ---------------
Provider shall be excused from providing Services hereunder while, and to the
extent that, its performance is prevented by fire, drought, explosion, flood,
invasion, rebellion, earthquake, civil commotion, strike or labor disturbance,
governmental or military authority, act of God, mechanical failure or any other
event or casualty beyond the reasonable control of the Provider, whether similar
or dissimilar to those enumerated in this paragraph (hereinafter a "Casualty").
In the event of a Casualty, the Recipient shall be responsible for making its
own alternative arrangements with respect to the interrupted Services.
12. INDEPENDENT CONTRACTOR. The relationship of Provider and Recipient
- --- ------------------------
which is created hereunder is that of an independent contractor. This Agreement
- ---
is not intended to create and shall not be construed as creating between
Eveready and Ralston the relationship of affiliate, principal and agent, joint
venture, partnership, or any other similar relationship, the existence of which
is hereby expressly denied.
13. BILLING AND PAYMENT. The Provider shall bill the Recipient on a monthly
- --- --------------------
basis for the amounts due to the Provider for Services provided pursuant to the
term of this Agreement. All such bills shall contain reasonable detail and
shall be due thirty (30) days after receipt unless any Schedules hereto provide
for a different payment period in which case such different payment period shall
apply to the applicable Services. The failure of the Recipient to pay any bill
on time shall result in the Recipient owing the Provider an additional handling
charge equal to one percent (1%) per month of the amount due from the date due
to the payment date.
14. TERM. It is intended that the Services be provided by each party hereto
- --- -----
as a temporary accommodation to the other. Each party shall arrange for the
relevant Services to be provided by its own employees or by third-party
providers as soon as is practicable even if such arrangements result in greater
cost to it than it would incur if the Services were provided by the other party.
In no event, however, shall either be obliged to provide any Services after
_____________, _____. Notwithstanding the foregoing, if any Schedules hereto
provide for the provision of Services for a longer period, such longer period
shall govern the provision of such Services.
15. WAIVER. The failure of either party at any time or times to enforce or
- --- -------
require performance of any provision hereof shall in no way operate as a waiver
or affect the right of such party at a later time to enforce the same.
16. SEVERABILITY. If any provision of this Agreement shall hereafter be
- --- -------------
held to be invalid or unenforceable for any reason, that provision shall be
reformed to the maximum extent permitted to preserve the parties' original
intent, failing which it shall be severed from this Agreement with the balance
of the Agreement continuing in full force and effect. Such occurrence shall not
have the effect of rendering the provision in question invalid in any other
jurisdiction or in any other case or circumstances or of rendering invalid any
other provisions contained herein to the extent that such other provisions are
not themselves actually in conflict with any applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first above written.
RALSTON PURINA COMPANY EVEREADY BATTERY COMPANY, INC.
By:_______________________ By:____________________
Name:_____________________ Name:__________________
Title:______________________ Title:___________________
Witness:____________________ Witness:_________________
Name:______________________ Name:__________________
LEASE AGREEMENT
This lease made this 15th day of February, 2000, by and between Ralston
Purina Company hereinafter called Lessor, whose address is:
c/o Howard T. Nelson
Legal Department - 9T
Checkerboard Square
St. Louis, Missouri 63164
and Eveready Battery Company, Inc. hereinafter called Lessee, whose address is:
c/o
Checkerboard Square
St. Louis, Missouri 63164
1. The following premises are hereby leased by Lessor to Lessee to have and
to hold for the term, the uses and the rent specified below and subject to the
options, if any, hereinafter provided.
A. PREMISES: Situated in the City of St. Louis, State of Missouri
being more particularly described as:
Per Exhibits A and E attached hereto and made a part hereof, and
also including common areas and common and reserved parking areas
B. USES: Lessee may use the premises for only: Business office
C. TERM: Beginning April 1, 2000, and ending March 31, 2001 or a total
term of one (1) year.
D. OPTIONS: Lessee shall have and is hereby given one option to extend
this lease for up to 5 years in 6 months increments to follow consecutively upon
the initial term of this lease. Such option shall be exercisable by Lessee upon
giving written notice to Lessor of Lessee's intention to exercise the same not
less than sixty (60) days prior to the expiration date of the existing term. If
this lease is extended persuant hereto, all its terms and conditions shall
remain the same, excepting rent, which shall be adjusted on October 1 of each
year.
During the option period, Lessee may terminate this Lease at any time
upon giving Lessor six (6) months written notice.
D. RENT: Per Rent Schedule attached hereto and made a part hereof
Exhibit B, per month payable in advance commencing on the 1st day of April, 2000
and on the same day of each succeeding month for the term of this lease. For
subsequent years, Lessor represents that Lessee shall pay monthly no more than
the prevailing rent being charged all occupants of the building for office space
in the building in which the premises are located. Rent shall be paid to Lessor
at address designated by Lessor.
Lessee shall pay a penalty of $250.00 for all delinquent rent
payments. Rent shall be deemed delinquent if not paid by the fifth working day
of each month. Lessee shall be given written notice of delinquency, and 10 days
to cure.
2. Subject to modifications hereinafter appearing, if any, the parties agree
as follows:
A. COVENANTS OF LESSOR: Lessor hereby covenants that: Lessor has good
and merchantable title in fee simple to the premises and improvements; Lessor is
and shall be in possession on the date this lease commences; Lessor has good
right to make this lease for the full term hereby granted, including any period
for which the Lessee has the right to effect the extension hereunder. Lessee
shall have access to all common areas and adequate rights-of-way from the
premises to all streets and alleys upon, adjacent to or serving the property of
Lessor on which the premises are situated. Lessor, shall maintain, repair and
replace all exterior areas, including but not limited to foundation, exterior
walls, structural members and roof, general building systems including HVAC
equipment, plumbing, sewer, and electrical systems, and also grounds, sidewalks,
driveways, and parking areas. Lessee shall have the duty of notifying Lessor
in writing whenever Lessee becomes aware that such repairs are necessary.
Lessor shall use its best efforts to initiate any repairs within forty-eight
(48) hours after receiving written notice from Lessee. Lessor shall be
responsible for ADA and city code compliance.
B. DAMAGE BY ELEMENTS, ETC.: If by fire, lightning, explosion, wind,
earthquake, water, ice, hail, snow, termites, settling or impact, the premises
are so damaged that their utility for the Lessee's purposes is substantially
impaired, Lessor shall have the option to repair such damage. If Lessor can not
repair such damage within one hundred eighty (180) days of the date of damage,
Lessee may cancel this lease at any time. In case of such damage, the rent
shall abate in a just proportion to the resulting unfitness of the premises so
long as such unfitness shall continue; and if the lease is canceled as
aforesaid, the rent shall be payable ratably to the date of cancellation.
Lessee's rights to abatement of rent shall not be applicable if such damage is
caused by Lessee's negligence.
C. MAINTENANCE, ETC.: Lessee shall not permit the existence of any
nuisance on the said premises and shall keep and maintain the same in a proper,
clean, safe condition in compliance with federal, state, and local regulations,
free and clear of any explosive, inflammable, or combustible material which
would increase or tend to increase the risk of fire or explosion. Lessee shall
commit no waste, damage or injury to the premises or any part thereof and shall
take all reasonable precautions to prevent others from doing so; Lessee shall
keep, observe and comply with all federal, state and municipal regulations,
ordinances and laws, and with the regulations of any duly constituted legal
authority having jurisdiction over the premises, and Lessee at its sole cost
shall make any and all improvements, alterations, repairs and additions and
install all appliances required as a result of Lessee's use of said premises by
or under any such regulations, ordinances or laws; the Lessee shall, at Lessee's
sole cost and expense, keep the premises hereby demised in good condition, and
shall make all repairs, renewals and replacements that from time to time may be
necessary to keep the premises in good condition and ready and fit for
occupancy, and for the operations for which they are intended; and on
termination of said leasehold, either by expiration of the terms hereof or by
cancellation, Lessee shall surrender said premises in the same condition as when
Lessee took possession hereunder, ordinary wear and tear excepted. If Lessee
fails to fulfill these obligations, Lessor may do any work required hereunder,
and Lessee shall reimburse Lessor for the cost and expense thereof.
D. ALTERATION AND RESTORATION BY LESSEE: Lessee shall have the right,
after Lessor's prior written approval, which approval shall not be unreasonably
- -----
withheld, at its own expense, to advertise upon and to paint and decorate the
premises inside and out, and to make such alterations, installations or
improvements in and upon the same as Lessee may desire. Lessor's approval shall
be contingent upon receipt and evaluation of the following:
1) Specifications
2) Contract or estimate of cost
Lessee's failure to obtain Lessor's prior written approval shall be an
act of default. Lessee shall maintain and repair (at Lessee's expense) all said
alterations, installations or improvements.
If, at any time during the term of this Lease, any liens or claims of
mechanics, laborers, or material men shall be filed against the Premises for any
work, labor, or materials furnished or alleged to have been furnished pursuant
to the written agreement by Lessee or any person holding thereunder, Lessee
within thirty (30) days (or lesser time if the Premises are threatened with sale
or foreclosure) after the date Lessee receives actual notice (as distinguished
from constructive notice), the filing or recording of any such lien from Lessor
shall cause the same to be discharged by payment, bond, or otherwise. In the
event Lessee contests any lien or claim, Lessee shall prosecute the contest with
reasonable diligence, and LESSEE shall at all time effectually stay or prevent
any official or judicial sale of the Premises.
E. TERMINATION: Upon the termination of this lease in any manner
herein provided, Lessee shall forthwith surrender to Lessor possession of the
premises and shall remove all improvements added by Lessee after the effective
date hereof and restore the premises to the same state which they were in prior
to the addition of such improvements, ordinary wear and tear excepted, and in
case Lessee shall fail, within sixty (60) days after the date of such
termination to make such removal or restoration, then Lessor may, at its
election, to be exercised within thirty (30) days thereafter, either take and
hold such improvements as its sole property; or remove such improvements and
restore the premises for the account of Lessee, and in such latter event Lessee
shall, within thirty (30) days after the rendition of a bill therefor, reimburse
Lessor for the cost so incurred. If Lessee defaults in any of the covenants and
agreements to be performed by Lessee as required herein, Lessor, at Lessor's
option, may take and hold such improvements as its sole property, or require
removal as provided above.
F. INSURANCE: Lessee shall maintain and pay for the following
insurance with an insurer satisfactory to the Lessor and shall furnish Lessor
with a certificate from each such insurer which shall reflect the coverage set
forth herein and in which the insurer shall agree that there shall be no
cancellation or change in the policy until Lessor shall have been given ten (10)
days' written notice thereof:
1) Workers' Compensation Insurance
2) Comprehensive General Liability Insurance including contractual
coverage and Automobile Liability Insurance, each with minimum coverage of
$1,000,000 for bodily injury and $1,000,000 for property damage.
Lessee shall not be entitled to possession of the premises herein
until the above insurance certificates as specified are obtained and are
furnished to Lessor.
G. LESSOR shall maintain and pay for standard form fire and extended
coverage insurance on the premises (including replacements and improvements) for
the full replacement value thereof.
H. INDEMNIFICATION AND HOLD HARMLESS AGREEMENT: Lessee agrees to
indemnify, protect, defend and hold Lessor harmless from and against any and all
claims, actions, demands, liabilities and costs, including attorney's fees,
arising from loss, damage or injury, including death, actual or claimed, of
whatsoever kind or character, to any property or persons whatsoever or
whomsoever, occurring or allegedly occurring in, on or about the premises or
arising out of the use of said premises or common areas or resulting from the
negligence of Lessee, during the term of the lease or any extension, or holding
over period hereof, and upon notice from Lessor, Lessee shall defend Lessor in
any action or proceeding brought therein.
Lessor agrees to indemnity, protect, defend, and hold Lessee harmless
from and against any and all claims, actions, demands, liabilities, and costs,
including attorney's fees, arising from loss, damage, or injury, including
death, actual or claimed, of whatsoever kind or character, to any property or
person whatsoever or whomsoever, occurring or allegedly occurring in, on, or
about the Premises or common areas resulting from the negligence of Lessor,
during the term of the Lease, or holding over period hereof, and upon notice
from Lessee, Lessor shall defend Lessee in any action or proceeding brought
therein.
I. TAXES: Lessor shall pay all taxes and special assessments levied
upon the premises or the use thereof.
J. UTILITIES: Lessor shall provide the premises with water, heat, gas,
and electricity. Lessee shall pay Lessor a monthly electric utility surcharge
of $1,606.00 for Lessee's computer room.
K. ASSIGNING, SUBLETTING: Lessee may not assign this lease or sublet
the premises, other than to an affiliate or subsidiary of Lessee or EVEREADY
BATTERY COMPANY, INC. If Lessee assigns or sublets without consent of Lessor,
Lessor may terminate this lease immediately.
L. RE-ENTRY UPON DEFAULT:
Act of Default. The term "act of default" shall mean and include any
---------------
one or more of the following events:
1) A petition in bankruptcy, reorganization, composition,
arrangement or for the appointment of a receiver is filed by or against Lessee
under the federal bankruptcy laws or any other state or federal bankruptcy or
insolvency laws or any laws relating to the relief of debtors, which is not
discharged within thirty (30) days from the date of filing; or
2) Lessee commits an act of bankruptcy; or
3) The making of any assignment for the benefit of creditors by
Lessee or the acquiescence by Lessee to the filing by another of a petition in
bankruptcy against Lessee; or
4) The failure by Lessee to use the premises in the ordinary
course or permitting the premises to remain vacant for a period of sixty (60)
consecutive days during the term hereof; or
5) Lessee's default in any monthly payments or rent or other
payments required to be made by Lessee hereunder when due as herein provided and
such default continues for ten (10) days after notice thereof in writing to
Lessee; or
6) Lessee's default in any of the other covenants and agreements
herein contained to be kept, observed and performed by Lessee, and such default
continues for sixty (60) days after notice thereof in writing to Lessee;
provided, however, if such default cannot with due diligence be cured within a
period of sixty (60) days, and if Lessee prior to the expiration of sixty (60)
days from the giving of such notice, commences to cure such default and proceeds
diligently and with reasonable dispatch to cure such default and does so cure
such default, then Lessor shall not be entitled to exercise its rights as to
such act of default.
Lessor's Remedies: In addition to all other rights and elections
------------------
provided in this lease and all other legal or equitable remedies or damages
provided by law, in the event of an act of default Lessor may elect by thirty
(30) days' prior written notice to Lessee to:
1) Perform any of the covenants and agreements to be performed by
Lessee as required herein, and any sums expended including but not limited to
reasonable attorneys fees shall be due and payable on demand.
2) Terminate this lease and re-enter and retake possession by
summary proceedings and Lessee shall thereupon be obligated to pay to Lessor as
damages, a sum of money equal to the cost of recovering the premises, including
but not limited to attorneys fees.
3) Terminate Lessee's right of possession without terminating this
lease and re-enter and retake possession by summary proceedings, and relet the
premises for the Lessee's account and receive the rent therefrom. Lessor shall
make reasonable efforts to relet the premises at such rent and other terms as
Lessor may deem advisable. Lessor may, on behalf of Lessee, perform any of the
covenants and agreements to be performed by Lessee as required herein, and any
sums so expended shall become due and payable on demand. Lessee shall be
obligated to pay to Lessor all sums due as aforesaid, the costs of reletting
(including but not limited to attorneys fees) and the minimum rental provided
for herein, less any sums received by Lessor upon reletting of the premises.
M. LESSOR'S EXPENSES: Lessee shall reimburse Lessor for any
out-of-pocket expenses (including but not limited to reasonable attorneys' fees
and court costs) incurred by Lessor in enforcing Lessee's covenants and
agreements under this lease.
LESSEE'S EXPENSES: Lessor shall reimburse Lessee for any expenses
(including but not limited to attorney's fees and court costs) incurred by
Lessee in enforcing Lessor's covenants and agreements under this Lease.
N. CONDEMNATION: If a part of the premises are taken by any public or
quasipublic authority, rent shall abate in proportion to the extent to which
Lessee's utilization of the premises is adversely affected. If the premises are
rendered unusable for the purposes set forth herein as a result of such
condemnation, Lessee shall have the right to terminate this lease, which right
must be exercised within sixty (60) days from the date the property becomes
unusable, but Lessee shall have no other rights or claims to the condemnation
award or against the Lessor due to the termination or abatement of this lease
due to the aforesaid condemnation.
O. HOLDING OVER: If Lessee should continue to occupy the premises
following expiration of the term hereunder or any final term for which this
lease may by express agreement be extended, and rent is thereafter accepted by
Lessor, Lessee shall be deemed a month-to-month tenant, and all the terms hereof
shall be applicable.
P. LANDLORD'S LIEN: Any sum which Lessee is obligated to pay under the
provisions of this agreement shall constitute, when due and unpaid, a lien
enforceable at law by Lessor upon any building, improvements or other property
of Lessee located on the said premises.
Q. RE-ENTRY, WAIVER: Lessor upon twenty-four (24) hours prior notice
shall have the right to re-enter the premises at any reasonable time for the
purpose of showing said premises, such showings to be carried out in a manner
designed not to unreasonably interfere with the use and enjoyment of the
premises by Lessee. A waiver by Lessor of a default under any covenant of this
lease shall not be deemed a waiver of any subsequent default of the Lessee.
R. NOTICES, REPRESENTATIVES: All notices and payments under this lease
shall be directed to the address hereto appearing of the party for whom the same
are intended or of such party's representative, if any, herein named, and any
such representative shall have authority to receive said notices and payments,
except as otherwise provided in this lease or in the written instructions to the
sender. Notices under this lease shall be given by first class mail and shall
be deemed given when properly addressed with sufficient postage affixed, and
deposited in the U.S. mails. Postmark on the envelope transmitting notice shall
determine date of notice.
3. This lease shall bind and inure to the benefit of the respective
permitted assigns and successors of all parties hereto.
4. No party hereto shall be chargeable with any agreement or representation,
either past, present or future, enlarging the obligations or modifying or
annulling the rights of such party as Lessee or Lessor, unless such agreement or
representation be expressed in a subsequent writing signed by the parties
hereto.
5. Lessee shall have access to the following Lessor facilities on the same
basis as the same are available to Lessor and its employees, officers, agents,
affiliates, and subsidiaries:
a. Cafeterias
b. Store
c. Fitness Center
d. Day Care
Lessee shall pay monthly to the Lessor the prevailing assessment per
employee. Rate as of April 1, 2000 is $56.00 per employee per month.
Lessee shall also pay monthly to Lessor the prevailing assessment per
contractor. Rate as of April 1, 2000 is $52.00 per contractor per month.
6. Lessee's visitors may use Lessor's visitor parking spaces and common area
parking spaces. Lessee's employees may put their names on a waiting list for a
reserved parking space. All reserved parking spaces will be numbered and color
coded. Lessee's employees will pay monthly to Lessor the prevailing charge for
reserved parking. Lessor shall provide adequate unreserved parking for 50
employees of Lessee.
7. Lessee shall have access to Lessor's conference rooms, meeting rooms, and
library, on an as-used basis, at prevailing rates.
8. Lessor shall provide mail service. Current rate is $2,761.00 per month.
Lessee shall also pay Lessor monthly postage and surcharge as used.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement as
of the date above written.
LESSOR: Ralston Purina Company
By____________________________________
Title:
LESSEE: Eveready Battery Company, Inc.
By_____________________________________
Title:
INTELLECTUAL PROPERTY AGREEMENT
-------------------------------
THIS INTELLECTUAL PROPERTY AGREEMENT dated as of the first day of April, 2000 is
by and between RALSTON PURINA COMPANY, a corporation organized under the laws of
the State of Missouri, having its principal office at Checkerboard Square, St.
Louis, Missouri 63164 (hereinafter "Ralston") and ENERGIZER HOLDINGS, INC. a
corporation organized under the laws of the State of Missouri, having its
principal office at St. Louis, Missouri 63102 (hereinafter "Energizer").
WITNESSETH
WHEREAS, the parties have entered into an Agreement and Plan of Reorganization
of even date herewith; and
WHEREAS, pursuant to said Agreement and Plan of Reorganization, the parties have
agreed to divide certain intellectual property heretofore used in the business
of Ralston, Energizer, and/or its/their Affiliates;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
for other good and valuable consideration, the parties agree as follows:
1. Definitions
-----------
(a) Affiliates
Hereunder, an "Affiliate" of, or persons "Affiliated" with, a
specified person, is a person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with the
person specified.
(b) Battery Business
Hereunder, "Battery Business" shall mean a business or portion of a
business devoted to batteries and/or lighting products, including components
therefor and collateral goods related thereto.
(c) Closing
Hereunder "Closing" shall have the same meaning as "Distribution Date"
in the Agreement and Plan of Reorganization.
(d) Intellectual Property
Hereunder, "Intellectual Property" shall include, but not be limited
to, trade secrets, confidential information, registered and unregistered
trademarks, patents, trademarks, and service marks, service names, trade styles
and trade names, trade dress, statutory, common law and registered copyrights,
moral rights, rights of privacy and publicity, Internet or other electronic
communication addresses (e.g., "energizer.com"), 800 numbers (e.g.,
1-800-982-ENRS), business addresses (e.g., "Ever Ready House") of a proprietary
nature, other property commonly considered intellectual property, and the
goodwill of the business to the extent associated with any and all of the
foregoing.
(e) Newco
Hereunder, except as limited hereinbelow, "Newco" shall mean Energizer
and any and all subsidiaries and Affiliates of Energizer. "Newco" shall not,
however, include Ralston and any of its Affiliates whose shares will be owned,
whether directly or indirectly, by Ralston following Closing.
(f) Oldco
Hereunder, "Oldco" shall mean Ralston and any and all of its
Affiliates whose shares it will directly or indirectly own following Closing.
(g) Trademark
Hereinafter "Trademark" shall mean a word, symbol or device
registrable as a trademark or service mark.
(h) Trade Name
Hereinafter "Trade Name" shall mean corporate name and/or other
business name including, but not limited to, names of corporations, partnerships
and joint ventures, and domain names.
2. Intellectual Property
----------------------
(a) Assignments
(i) At Closing, or at such date or dates as Newco may elect, Oldco
will assign to Newco, all of Oldco's rights, if any, in Intellectual Property
Oldco owns which is exclusively associated with Oldco's and/or Newco's Battery
Business. Registrations and applications to register Trademarks to be so
assigned are listed on Schedule 2 (a)(i).
(ii) Anything in this Intellectual Property Agreement to the
contrary notwithstanding, Oldco will not assign to Newco any Intellectual
Property consisting of or containing the words, RALSTON, PURINA, CHOW,
CHECKERBOARD, or other word meaning "Checkerboard," the 9-Square or other
Checkerboard or Checkerband designs, any Intellectual Property consisting of or
containing any Intellectual Property now owned by any exclusively
non-Battery-Business Affiliate of Ralston, any Intellectual Property not
exclusively associated with Oldco's and/or Newco's Battery Business, or any
Intellectual Property confusingly similar to any of the Intellectual Property
comprehended by this Subparagraph 2(a)(ii). To the extent any such Intellectual
Property is currently owned by Newco, it will be assigned to Oldco or canceled
on or before Closing or at such date or dates thereafter as Oldco may elect.
(iii) All assignments contemplated by this Intellectual Property
Agreement will be on a quit claim basis. The assignee will assume all
limitations, undertakings and liabilities related to such assigned Intellectual
Property, including, but not limited to, limitations in contracts relating to
such Intellectual Property entered into by the assignor and binding upon its
successors and/or assigns and liability for any charge that any such
Intellectual Property infringes rights of any third party, without regard to
whether any such charge arises before or after Closing.
(iv) With respect to Intellectual Property to be assigned pursuant
to this Intellectual Property Agreement in cases where such property exists in
the name of a single owner in more than one country, the assignor will deliver
to the assignee at or before Closing a beneficial, multi-country assignment of
such Intellectual Property. The assignor shall thereafter promptly execute and
return to the assignee one or more country-specific assignments of such
Intellectual Property prepared by the assignee and delivered to the assignor for
such purpose.
(v) With respect to Intellectual Property to be assigned pursuant
to this Intellectual Property Agreement in cases where such property exists in
the name of a single owner in a single country, the assignor will deliver to the
assignee at or before Closing a country-specific assignment of such property in
recordable form.
(vi) Intellectual Property which is to be assigned hereunder, but
which is not assigned at Closing, will be maintained by its putative assignor
for a reasonable period of time for the benefit of the person to whom it is to
be assigned; however, the putative assignee shall reimburse the putative
assignor for all out-of-pocket expenses incurred for such maintenance.
(vii) Battery Business-related Intellectual Property whether or
not assigned hereunder remains the responsibility of Newco; and Newco retains
such Intellectual Property subject to all limitations, undertakings and
liabilities related to such retained Intellectual Property, including, but not
limited to, undertakings in contracts relating to such Intellectual Property and
liability for any charge that any such Intellectual Property infringes rights of
any third party, without regard to whether such charge arises before the
Closing.
(viii) Non-Battery Business-related Intellectual Property whether
or not assigned hereunder remains the responsibility of Oldco; and Oldco retains
such Intellectual Property subject to all limitations, undertakings and
liabilities related to such retained Intellectual Property, including, but not
limited to, undertakings in contracts relating to such Intellectual Property and
liability for any charge that any such Intellectual Property infringes the
rights of any third party, without regard to whether such charge arises before
the Closing.
(b) Cost of Recordation
Ralston shall pay the cost of preparing and recording country-specific
assignments contemplated by Subparagraph 2(a)(v) above. Ralston shall pay the
cost of preparing and recording country-specific assignments contemplated by
Subparagraph 2(a)(iv) above to the extent such cost relates to marks for which
the Oldco assignor is record owner at Closing. Otherwise, such costs shall be
borne by the assignee.
3. RALSTON and PURINA Trademarks
--------------------------------
(a) Name Changes
Anything in this Intellectual Property Agreement to the contrary
notwithstanding, and without limitation as to duration or territory, Newco
agrees not to use or register any Trademark, Trade Name, or other Intellectual
Property consisting of or containing the word RALSTON, PURINA, "Checkerboard,"
"Checkerboard Square," or any word, phrase, symbol or device confusingly similar
thereto in connection with any product, service or activity. To the extent a
Newco trade name consists of or contains the word "Ralston" or other word,
phrase, symbol, or device proscribed by this Subparagraph 3(a), Newco will
change such trade name on or before Closing to a name which does not include
such word, phrase symbol, or device.
(b) Cost of Name Changes
Ralston agrees to pay the cost of name changes required by Paragraph
3(a) above, including the cost of recording the name change against trademarks
for which the company whose name is changed is record owner.
4. Third-Party Agreements
-----------------------
(a) To the extent assignable without third-party consent, and, if not,
to the extent such consent is obtained, at Closing, license agreements and other
contracts between Oldco and unaffiliated third parties, to the extent related to
the rights in Intellectual Property to be owned by Newco at Closing, will be
assigned from Oldco to Newco. Newco agrees to assume Oldco's obligations under
such agreements and to indemnify Oldco with respect to any of Newco's breaches
or failures to perform thereunder.
(b) To the extent assignable without third-party consent, and, if not,
to the extent such consent is obtained, at Closing, license agreements and other
contracts between Newco and unaffiliated third parties, to the extent related to
rights in Intellectual Property to be owned by Oldco at Closing, will be
assigned from Newco to Oldco. Oldco agrees to assume Newco's obligations under
such agreements and to indemnify Newco with respect to any of Oldco's breaches
or failures to perform thereunder.
5. Newco Phase-Out of Retained Marks
-------------------------------------
Newco agrees to remove all Oldco Intellectual Property not assigned to
Newco as well as Intellectual Property assigned from Newco to Oldco, from
Newco's labels, packaging, advertising, signs, letterhead, business cards, and
other materials within six (6) months following Closing. Oldco agrees to remove
all Intellectual Property assigned to Newco from Oldco's labels, packaging,
advertising, signs, letterhead, business cards, and other materials within the
same six (6) month period.
6. Heritage
--------
Oldco, Newco and their successors and assigns, will each be allowed to
refer to its or their pre-spin-off heritage in good faith in truthful articles,
histories and the like to the extent such references do not express or imply a
continuing relationship between Oldco and Newco.
7. Good Faith
-----------
The parties agree not to do indirectly, through subsidiaries, Affiliates or
otherwise, what they could not do directly under this Intellectual Property
Agreement.
8. Scope and Modification
------------------------
This Intellectual Property Agreement, including its schedules, sets forth
the entire agreement between the parties relating to the subject matter hereof
and it supersedes all prior agreements and understandings relating to such
subject matter. None of the terms of this Intellectual Property Agreement may
be waived or modified except as expressly agreed to, in writing, by both
parties.
9. Successors and Assigns
------------------------
This Intellectual Property Agreement shall be binding upon and inure to the
benefit of the parties and each of their successors and assigns.
10. Interpretation
--------------
The section headings in this Intellectual Property Agreement are solely for
the purpose of reference, are not part of the agreement of the parties hereto,
and shall not in any way affect the meaning or interpretation of this
Intellectual Property Agreement.
<PAGE>
11. Counterparts
------------
This Intellectual Property Agreement may be executed in two or more
counterparts, each of which may be deemed an original, but all of which together
shall constitute one and the same instrument.
12. Governing Law
--------------
This Intellectual Property Agreement is made and entered into, and shall be
governed by and construed and interpreted in accordance with the laws of the
State of Missouri, United States of America, without regard to its conflicts of
laws principles, as to all matters, including those relating to validity,
construction, performance, effect and remedies under this Intellectual Property
Agreement. All matters relating to this Intellectual Property Agreement shall
be adjudicated exclusively in the courts of the State of Missouri located in St.
Louis, Missouri, or in the United States District Court for the Eastern District
of Missouri; and each party hereto consents to the exclusive jurisdiction and
venue of such courts for all such matters.
13. Amendment and Modification; Non-Waiver
-----------------------------------------
This Intellectual Property Agreement may be amended, modified or
supplemented, or rights, powers or options thereunder waived or impaired, only
by a written agreement signed by an officer of Ralston and Energizer. Neither
party shall be deemed to have waived or impaired any right, power or option
created or reserved by this Intellectual Property Agreement (including without
limitation, each party's right to demand compliance with every term herein, or
to declare any breach a default and exercise its rights in accordance with the
terms hereof) by virtue of: (i) any custom or practice of the parties at
variance with the terms hereof; (ii) any failure, refusal or neglect to exercise
any right hereunder, or to insist upon compliance with any term; (iii) any
waiver, forbearance, delay, failure or omission to exercise any right or option,
whether of the same, similar, or different natures, under this Intellectual
Property Agreement or in any other circumstances; or (iv) the acceptance by
either party of any payment or other consideration from the other following any
breach of this Intellectual Property Agreement. The rights and remedies set
forth in this Intellectual Property Agreement are in addition to any other
rights or remedies which may be granted by law.
<PAGE>
14. Additional Documents
---------------------
The parties agree to execute such additional documents as may be reasonably
required to give effect to their undertakings in this Intellectual Property
Agreement.
IN WITNESS WHEREOF, the parties have executed this Intellectual Property
Agreement as of the date first above written.
RALSTON PURINA COMPANY ENERGIZER HOLDINGS, INC.
By:__________________________________ By:__________________________________
Title:_________________________________
Title:_________________________________
14
RESTATED
ARTICLES OF INCORPORATION
OF
ENERGIZER HOLDINGS, INC.
ARTICLE ONE - NAME
The name of the corporation (the "Corporation") is "Energizer Holdings,
Inc.".
ARTICLE TWO - REGISTERED OFFICE
The address of the Corporation's registered office in the State of Missouri
is 221 Bolivar Street, Jefferson City, Missouri 65101 and the name of the
registered agent at such address isCSC The United States Corporation.
ARTICLE THREE - AUTHORIZED SHARES
A. CLASSES AND NUMBER OF SHARES
The aggregate number, class and par value of shares of capital stock which
the Corporation shall have authority to issue is Three Hundred and Ten Million
(310,000,000) shares of stock, consisting of:
1. Three hundred million (300,000,000) shares of common stock, par
value $.10 per share ("Common Stock"); and
2. Ten million (10,000,000) shares of preferred stock, par value $.10
per share ("Preferred Stock").
All preemptive rights of shareholders are hereby denied, so that no stock
or other security of the Corporation shall carry with it and no holder or owner
of any share or shares of stock or other security or securities of the
Corporation shall have any preferential or preemptive right to acquire
additional shares of stock or of any other security of the Corporation. All
cumulative voting rights are hereby denied, so that no stock or other security
of the Corporation shall carry with it and no holder or owner of any share or
shares of such stock or security shall have any right to cumulative voting in
the election of directors or for any other purpose. The foregoing provisions
within this paragraph are not intended to modify or prohibit any provisions of
any voting trust or agreement between or among holders or owners of shares of
stock or other securities of the Corporation.
In addition to those general qualifications, limitations and
restrictions applicable to each and every class and series of capital stock of
the Corporation as a matter of law or as stated in the immediately preceding
paragraph, the preferences, qualifications, limitations, restrictions, and the
special or relative rights, including convertible rights, if any, in respect of
the shares of each class are as follows:
B. TERMS OF PREFERRED STOCK
1. Subject to the requirements of the General and Business Corporation
Law of Missouri, as amended from time to time (the "GBCL"), and to the
provisions of these Articles of Incorporation, Preferred Stock may be issued
from time to time by the Board of Directors as shares of one or more series.
The description of shares of each series of Preferred Stock, including any
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption shall be as set forth in these Articles of Incorporation or any
amendment hereto, or in a resolution or resolutions duly adopted by the Board of
Directors and, to the extent set forth in any such resolution or resolutions,
such information shall be certified to the Secretary of State of Missouri and
filed as required by law from time to time, prior to the issuance of any shares
of such series.
2. The Board of Directors is expressly authorized, prior to issuance,
by adopting resolutions providing for the issuance of, or providing for a change
in the number of, shares of any particular series of Preferred Stock and, if and
to the extent from time to time required by law, by filing certification thereto
with the Secretary of State of Missouri, to set or change the number of shares
to be included in each series of Preferred Stock and to set or change (in any
one or more respects) the designations, preferences, conversion, relative,
participating, optional or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms and conditions of
redemption relating to the shares of each such series. The authority of the
Board of Directors with respect to each series of Preferred Stock shall include,
but not be limited to, setting or changing the following:
(a) the distinctive serial designation of such series and the number of
shares constituting such series (provided that the aggregate number of shares
constituting all series of Preferred Stock shall not exceed the aggregate number
of authorized shares set out in Section A(ii) of this Article Three);
(b) the dividend rate, if any, on shares of such series, whether and
the extent to which dividends shall be cumulative or non-cumulative, the
relative rights of priority, if any, of payment of any dividends, and the time
at which, and the terms and conditions on which, any dividends shall be paid;
(c) whether the shares of such series shall be redeemable or
purchasable and, if so, the terms and conditions of such redemption or purchase,
including the date or dates upon and after which such shares shall be redeemable
or purchasable, and the amount per share payable in case of redemption or
purchase, which amount may vary under different conditions and at different
redemption or purchase dates;
(d) the obligation, if any, of the Corporation to retire shares of such
series pursuant to a sinking fund and the terms and conditions of any such
sinking fund;
(e) whether shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other series, class or classes, now or
hereafter authorized, and, if so, the terms and conditions of such conversion or
exchange, including the price or prices or the rate or rates of conversion or
exchange and the terms of adjustment, if any;
(f) whether the shares of such series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights;
(g) the rights of the holders of shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of such holders with
respect thereto; and
(h) any other relative rights, powers, preferences, qualifications,
limitations or restrictions thereof relating to such series.
C. TERMS OF COMMON STOCK
1. Voting Rights. Subject to the provisions of Article Four hereof or
--------------
as otherwise provided by the GBCL, each holder of the Common Stock shall be
entitled to one vote per share of Common Stock held by such holder on all
matters to be voted on by the shareholders.
2. Dividend Rights. Subject to the express terms of any outstanding
----------------
series of Preferred Stock, dividends may be declared and paid upon the Common
Stock out of funds of the Corporation legally available therefor, in such
amounts and at such times as the Board of Directors may determine. Funds
otherwise legally available for the payment of dividends on the Common Stock
shall not be restricted or reduced by reason of there being any excess of the
aggregate preferential amount of any series of Preferred Stock outstanding over
the aggregate par value thereof.
ARTICLE FOUR- RESTRICTIONS ON VOTING STOCK,
CERTAIN BUSINESS COMBINATIONS
A. CERTAIN DEFINITIONS
For purposes of this Article Four, the following words have the meanings
indicated:
1. "Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by or is under common control with, such Person. The term "control"
(including the terms "controlling," "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
2. "Associate" means, with respect to any Person, (i) any other Person
(other than the Corporation or a Subsidiary of which a majority of each class of
equity securities is owned by the Corporation) of which such Person is an
officer, director, trustee or partner or is directly or indirectly the
beneficial owner of ten percent (10%) or more of any class of equity securities;
(ii) any trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as a trustee or in a similar
fiduciary capacity; (iii) any relative or spouse of such Person, or any relative
of such spouse, who has the same home as such Person or who is a director or
officer of the Corporation or any of its Affiliates or Subsidiaries; or (iv) any
investment company registered under the Investment Company Act of 1940, as
amended, for which such Person or any Affiliate of such Person serves as
investment adviser.
3. "Business Combination" means:
(a) any merger or consolidation of the Corporation or any
Subsidiary with (i) any Substantial Shareholder or (ii) any other Person which,
after such merger or consolidation, would be a Substantial Shareholder,
regardless of which entity survives;
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or in a series of transactions) to or with any
Substantial Shareholder, of any assets of the Corporation or any Subsidiary, or
both, that have an aggregate Fair Market Value of more than twenty percent of
the book value of the total assets of the Corporation as shown on its
consolidated balance sheet as of the end of the calendar quarter immediately
preceding any such transaction;
(c) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of a Substantial
Shareholder;
(d) the acquisition by the Corporation or any Subsidiary of any
securities of any Substantial Shareholder;
(e) any transaction involving the Corporation or any Subsidiary,
including the issuance or transfer of any securities of, any reclassification of
securities of, or any recapitalization of, the Corporation or any Subsidiary, or
any merger or consolidation of the Corporation with any Subsidiary (whether or
not involving a Substantial Shareholder), if the transaction would have the
effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of the
Corporation or any Subsidiary of which shares a Substantial Shareholder is the
beneficial owner; or
(f) any agreement, contract or other arrangement entered into by
the Corporation providing for any of the transactions described in this
definition of Business Combination.
4. "Continuing Director" shall mean any member of the Board of
Directors of the Corporation who is not an Affiliate or an Associate of a
Substantial Shareholder and who was a member of the Board of Directors prior to
the time that any Substantial Shareholder became a Substantial Shareholder, and
any successor of a Continuing Director if such successor is not an Affiliate or
an Associate of any Substantial Shareholder and is designated as a Continuing
Director by a majority of the then Continuing Directors.
5. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute thereto.
6. "Fair Market Value" shall mean:
(a) in the case of stock, the highest closing sale price per share
of a share of such stock during the 30-day period immediately preceding the
approval of the Business Combination by the Board of Directors as reported by
any United States securities exchange registered under the Exchange Act on which
such shares are listed, or, if such shares are not listed on any exchange, then
the highest closing bid quotation for any of such shares, as reported on the
National Association of Securities Dealers, Inc. Automated Quotations System or
any such system then in use, or if no such closing sales price or bid quotation
is reported, the fair market value as determined on the date in question by a
majority of Continuing Directors; or
(b) in the case of property or securities other than cash or
stock, the fair market value of such property or securities on the date in
question as determined by a majority of the Continuing Directors.
7. "Group", with respect to any Person, shall include:
(a) such Person;
(b) any Affiliates and Associates of such Person; and
(c) those additional Persons that, together with such Person,
jointly file, or would be required to jointly file (notwithstanding whether such
Persons have ever actually filed), or would be mentioned as a holder of shares
with either sole or shared voting power and/or sole or shared dispositive power
in an individual filing of, a statement of beneficial ownership with respect to
securities of the Corporation pursuant to Section 13(d) of the Exchange Act or
any rules and regulations promulgated thereunder, as in effect from time to
time, or any similar successor provisions, irrespective of any disclaimers
of beneficial ownership.
8. A Person shall be deemed to "own" any shares of Voting Stock:
(a) that such Person beneficially owns directly or indirectly,
whether or not of record; or
(b) that such Person has the right to acquire pursuant to any
agreement, arrangement or understanding or upon exercise of conversion rights,
exchange rights, warrants or options or otherwise, whether or not conditional;
or
(c) that are beneficially owned, directly or indirectly
(including shares deemed to be owned through application of clause (b) above),
whether or not of record, by an Affiliate or Associate of such Person; or
(d) that are beneficially owned, directly or indirectly, whether
or not of record, by any other Person (including any shares which such other
Person has the right to acquire pursuant to any agreement, arrangement or
understanding or upon exercise of conversion rights, warrants or options or
otherwise, whether or not conditional) with whom such Person has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of Voting Stock; provided, however, that (i) directors, officers and
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employees of the Corporation shall not be deemed to have any such agreement,
arrangement or understanding solely on the basis of their status, or actions
taken in their capacities, as directors, officers or employees of the
Corporation or any Affiliates of the Corporation, and (ii) a Person shall not be
deemed the owner of or to own any shares of Voting Stock solely because (A) such
shares of Voting Stock have been tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates until such
tendered shares of Voting Stock are accepted for payment or exchange or (B) such
Person or any of such Person's Affiliates or Associates has or shares the power
to vote or direct the voting of such shares of Voting Stock pursuant to a
revocable proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, applicable rules and regulations under the
Exchange Act, except if such power (or arrangements relating thereto) is then
reportable under Item 6 of Schedule 13D under the Exchange Act (or any similar
provision of a comparable or successor report).
The outstanding shares of capital stock of the Corporation shall
include those shares deemed owned through the application of clauses (b) and (c)
above, but shall not include any other shares that may be issuable pursuant to
any agreement, arrangement or understanding or upon exercise of conversion
rights, warrants, options or otherwise, whether or not conditional.
For all purposes hereof "beneficial" ownership, with respect to
any securities, shall include, without limitation, (i) the power to vote, or
direct the voting of, such securities or (ii) the power to exercise investment
discretion over such securities, including the power to dispose, or to direct
the disposition, of such securities. Furthermore, a Person shall be deemed to
own "beneficially" any securities that such Person owns beneficially for
purposes of Sections 13(d) of the Exchange Act or any rules and regulations
promulgated thereunder, as in effect from time to time (or any similar successor
provisions of law).
9. "Person" means any individual, corporation, association,
partnership, joint venture, trust, organization, business, government or any
government agency or political subdivision thereof or any other entity.
10. "Subsidiary" means any Person of which a majority of any class of
equity security is owned, directly or indirectly, by the Corporation; provided,
--------
however, that for the purposes of Section D of this Article Four, the term
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"Subsidiary" shall mean only a Person of which a majority of each class of
- -----
equity security is owned, directly or indirectly, by the Corporation.
- -----
11. "Substantial Shareholder" shall mean and include any Person which,
together with its Affiliates and Associates, is the Beneficial Owner of shares
of Voting Stock constituting in the aggregate twenty percent (20%) or more of
the outstanding Voting Stock.
12. "Voting Stock" means all outstanding shares of capital stock of the
Corporation entitled to vote in the election of Directors; and each reference to
a portion of shares of Voting Stock shall refer to such proportion of the votes
entitled to be cast by such shares.
B. RIGHT OF INQUIRY OF THE CORPORATION
The Corporation shall have the right but not the obligation to inquire of
any Person whom the Corporation believes may be a Substantial Shareholder or any
other Person who purports to exercise similar voting rights with respect to any
Voting Stock, and each such Person shall have the obligation to provide such
information to the Corporation as the Corporation may reasonably request, with
respect to any matters pertinent to the operation or implementation of this
Article Four, including, without limitation, (a) the number of shares owned by
such Person, (b) whether shares owned of record by such Person are owned by
other Persons and the identity of such other Persons and the nature of their
ownership interest, (c) whether any Affiliates or Associates of such Person own
any Voting Stock, (d) whether such Person is a member of a Group of Persons
owning Voting Stock, or (e) whether such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding with
any other Person with respect to any Voting Stock. Any determinations made by
the Board of Directors pursuant to this Article Four in good faith, and on the
basis of such information as was actually known by the Board of Directors and
such advice as was then actually provided to the Board of Directors for such
purpose, shall be conclusive and binding upon the Corporation and its
shareholders.
C. ADDITIONAL SHAREHOLDER VOTE REQUIRED FOR CERTAIN BUSINESS
COMBINATIONS
The approval of any Business Combination shall, in addition to any
affirmative vote required by the GBCL or otherwise, require the affirmative vote
of the holders of not less than two-thirds of the aggregate voting power of the
outstanding shares of the Voting Stock entitled to vote, at a meeting of
shareholders called for such purpose, and of a majority of the voting power of
all such shares of which a Substantial Shareholder is not a Beneficial Owner;
provided, however, that any such Business Combination may be approved upon any
affirmative vote required by the GBCL if:
1. there are one or more Continuing Directors, and the Business
Combination shall have been approved by a majority of them; or
2. the cash, or Fair Market Value of the property, securities or other
consideration, to be received per share by the shareholders of each class of
stock of the Corporation in the Business Combination is not less than the higher
of:
(a) the highest per share price paid by the Substantial
Shareholder for the acquisition of any shares of such class, with appropriate
adjustments for stock splits, stock dividends and like distributions; or
(b) the Fair Market Value of such shares, on the date the Business
Combination is approved by the Board of Directors.
D. PERSONS TO WHOM THIS ARTICLE DOES NOT APPLY
The provisions of Section C of this Article Four shall not apply to (1) any
savings, profit-sharing, stock bonus or employee stock ownership plan or plans
established by the Corporation or a Subsidiary and qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended, or any successor
provision, which holds shares of Voting Stock on behalf of participating
employees and their beneficiaries with the right to instruct the trustee how to
vote such shares of Voting Stock with respect to all matters submitted to
shareholders for voting or (2) participating employees and beneficiaries under
the plans referred to in the immediately preceding clause (1) because of their
participation in such savings, profit-sharing, stock bonus or employee ownership
plans.
E. AMENDMENT
In addition to such other vote or consent as shall then be required by the
GBCL, and by Article Eleven hereof, this Article shall be amended or repealed
only upon the affirmative vote of not less than two-thirds (2/3) of the voting
power of all shares of Voting Stock not owned by a Substantial Shareholder;
provided however, that this Article may be amended or repealed upon any
affirmative vote otherwise required by the GBCL, and by Article Eleven hererof,
(i) if there is not a Substantial Shareholder, such amendment has been approved
by a majority of the Board of Directors, or (ii) if there is a Substantial
Shareholder, such amendment has been approved by a majority of the Continuing
Directors.
ARTICLE FIVE - INCORPORATOR
The name and place of residence of each incorporator is as follows:
Timothy L. Grosch
1046 Huthmaker Ave.
Kirkwood, Missouri 63122
ARTICLE SIX - DIRECTORS
A. NUMBER AND CLASSIFICATION
The number of Directors to constitute the initial Board of Directors of the
Corporation is three. Thereafter, the number of Directors shall be fixed by or
in the manner provided in the Bylaws of the Corporation. Any changes in the
number of Directors shall be reported to the Missouri Secretary of State to the
extent and within the time periods required by the GBCL. The Directors shall be
divided into three classes, as nearly equal in number as reasonably possible,
with the mode of such classification to be provided for in the Bylaws of the
Corporation. Directors other than Directors constituting the initial Board of
Directors shall be elected to hold office for a term of three (3) years, with
the term of office of one class expiring each year. Notwithstanding the
foregoing, whenever the holders of any one or more classes or series of stock of
the Corporation, other than shares of Common Stock, shall have the right, voting
separately by class or series, to elect Directors, then the election, term of
office, filling of vacancies and other features of such directorship shall be
governed by the terms of the Articles of Incorporation of the Corporation or any
certificate of designation thereunder applicable thereto; and such directors so
elected shall not be divided into classes pursuant to this Article Six unless
expressly provided by such terms. As used in these Articles of Incorporation,
the term "entire Board of Directors" or the "entire Board" means the total
number fixed by, or in accordance with, these Articles of Incorporation and the
Bylaws of the Corporation.
B. REMOVAL OF DIRECTORS
Subject to, and in addition to, the rights, if any, of the holders of any
class of capital stock of the Corporation (other than the Common Stock) then
outstanding or any limitation imposed by law, any Director, or the entire Board
of Directors, may be removed from office at any time prior to the expiration of
his, her or their term of office only for cause and only by the affirmative vote
of the holders of record of outstanding shares representing not less than
two-thirds of all of the then outstanding shares of capital stock of the
Corporation then entitled to vote generally in the election of Directors, voting
together as a single class, at a special meeting of shareholders called
expressly for that purpose (such vote being in addition to any required class or
other vote).
C. VACANCIES
Subject to the rights, if any, of the holders of any class of capital stock
of the Corporation (other than the Common Stock) then outstanding, any vacancies
in the Board of Directors which occur for any reason prior to the expiration of
the respective term of office of the class in which the vacancy occurs,
including vacancies which occur by reason of an increase in the number of
Directors or the removal of a Director, shall be filled only by the Board of
Directors, acting by the affirmative vote of a majority of the remaining
Directors then in office (although less than a quorum). Any replacement
Director so elected shall hold office only for so long as the respective term of
office of the class in which the vacancy occurs has not expired, unless removed
prior to the expiration of such term, pursuant to Section B hereof.
ARTICLE SEVEN - DURATION
The duration of the Corporation is perpetual.
ARTICLE EIGHT - PURPOSES
The Corporation is formed to engage in the manufacture, distribution,
marketing and sale of batteries and power supply systems and products, the
services and products related thereto, and to engage in any lawful act or
activity for which a corporation now or hereafter may be organized under the
laws of the State of Missouri.
ARTICLE NINE - BYLAWS
Only a majority of the entire Board of Directors may make, amend, alter,
change or repeal any provision or provisions of the Bylaws of the Corporation;
provided, however, that in no event shall the Bylaws be inconsistent with law
or, in substance to a material degree, with any of the terms, conditions or
provisions of these Articles of Incorporation.
ARTICLE TEN - INDEMNIFICATION
A. ACTIONS INVOLVING DIRECTORS, OFFICERS AND EMPLOYEES
The Corporation shall indemnify each person (other than a party plaintiff
suing on his or her own behalf or in the right of the Corporation) who at any
time is serving or has served as a Director, officer or employee of the
Corporation against any claim, liability or expense incurred as a result of such
service, or as a result of any other service on behalf of the Corporation, or
service at the request of the Corporation (which request need not be in writing)
as a director, officer, employee, member, or agent of another corporation,
partnership, joint venture, trust, trade or industry association, or other
enterprise (whether incorporated or unincorporated, for-profit or
not-for-profit), to the maximum extent permitted by law. Without limiting the
generality of the foregoing, the Corporation shall indemnify any such person
(other than a party plaintiff suing on his or her behalf or in the right of the
Corporation), who was or is a party or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including, but not limited to, an
action by or in the right of the Corporation) by reason of such service against
expenses (including, without limitation, costs of investigation and attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding.
B. ACTIONS INVOLVING AGENTS
1. Permissive Indemnification. The Corporation may, if it deems
---------------------------
appropriate and as may be permitted by this Article Ten, indemnify any person
(other than a party plaintiff suing on his or her own behalf or in the right of
the Corporation) who at any time is serving or has served as an agent of the
Corporation against any claim, liability or expense incurred as a result of such
service, or as a result of any other service on behalf of the Corporation, or
service at the request of the Corporation as a director, officer, employee,
member or agent of another corporation, partnership, joint venture, trust, trade
or industry association, or other enterprise (whether incorporated or
unincorporated, for-profit or not-for-profit), to the maximum extent permitted
by law or to such lesser extent as the Corporation, in its discretion, may deem
appropriate. Without limiting the generality of the foregoing, the Corporation
may indemnify any such person (other than a party plaintiff suing on his or her
own behalf or in the right of the Corporation), who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, but not limited to, an action by or in the right of the Corporation)
by reason of such service, against expenses (including, without limitation,
costs of investigation and attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding.
2. Mandatory Indemnification. To the extent that an agent of the
--------------------------
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section B.1 of this Article Ten, or in
defense of any claim, issue or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him or her in connection with the action, suit or proceeding.
C. DETERMINATION OF RIGHT TO INDEMNIFICATION IN CERTAIN
CIRCUMSTANCES
Any indemnification required under Section A of this Article Ten or
authorized by the Corporation in a specific case pursuant to Section B of this
Article Ten (unless ordered by a court) shall be made by the Corporation unless
a determination is made reasonably and promptly that indemnification of the
Director, officer, employee or agent is not proper under the circumstances
because he or she has not met the applicable standard of conduct set forth in or
established pursuant to this Article Ten. Such determination shall be made (1)
by the Board of Directors by a majority vote of a quorum consisting of Directors
who were not parties to such action, suit or proceeding, or (2) if such a quorum
is not obtainable, or even if obtainable a quorum of disinterested Directors so
directs, by independent legal counsel in a written opinion, or (3) by majority
vote of the shareholders; provided, however, that no such determination shall
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preclude an action brought in an appropriate court to challenge such
determination, and provided further that there shall be no presumption that the
----------------
Corporation is released from any obligation under Sections A or B of this
Article Ten unless a written instrument, subscribed by an appropriate officer of
the Corporation, expressly so provides by making reference to this Subsection C
of this Article Ten.
D. ARTICLE TEN PROVISIONS NOT EXCLUSIVE RIGHT
The indemnification provided by this Article Ten shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled, whether under the Bylaws of the Corporation or any statute, agreement,
vote of shareholders or disinterested Directors or otherwise, both as to action
in an official capacity and as to action in another capacity while holding such
office
E. INDEMNIFICATION AGREEMENTS AUTHORIZED
Without limiting the other provisions of this Article Ten, the Corporation
is authorized from time to time, without further action by the shareholders of
the Corporation, to enter into agreements with any Director, officer, employee
or agent of the Corporation providing such rights of indemnification as the
Corporation may deem appropriate, up to the maximum extent permitted by law.
Any agreement entered into by the Corporation with a Director may be authorized
by the other Directors, and such authorization shall not be invalid on the basis
that different or similar agreements may have been or may thereafter be entered
into with other Directors.
F. STANDARD OF CONDUCT
Except as may otherwise be permitted by law, no person shall be indemnified
pursuant to this Article Ten (including without limitation pursuant to any
agreement entered into pursuant to Section F of this Article Ten) from or on
account of such person's conduct which is finally adjudged to have been
knowingly fraudulent, deliberately dishonest or willful misconduct. The
Corporation may (but need not) adopt a more restrictive standard of conduct with
respect to the indemnification of any agent of the Corporation.
G. INSURANCE
The Corporation may purchase and maintain insurance on behalf of any person
who is or was a Director, officer, employee or agent of the Corporation, or who
is or was otherwise serving on behalf or at the request of the Corporation in
any capacity against any claim, liability or expense asserted against him or her
and incurred by him or her in any such capacity, or arising out of his or her
status as such, whether or not the Corporation would have the power to indemnify
him or her against such liability under the provisions of this Article Ten.
H. CERTAIN DEFINITIONS
For the purposes of this Article Ten:
1. Service in Representative Capacity. Any Director, officer or
-------------------------------------
employee of the Corporation who shall serve as a director, officer or employee
of any other corporation, partnership, joint venture, trust or other enterprise
of which the Corporation, directly or indirectly, is or was the owner of 20% or
more of either the outstanding equity interests or the outstanding voting stock
(or comparable interests), shall be deemed to be so serving at the request of
the Corporation, unless the Board of Directors of the Corporation shall
determine otherwise. In all other instances where any person shall serve as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise of which the Corporation is or was a
stockholder or creditor, or in which it is or was otherwise interested, if it is
not otherwise established that such person is or was serving as a director,
officer, employee or agent at the request of the Corporation, the Board of
Directors of the Corporation may determine whether such service is or was at the
request of the Corporation, and it shall not be necessary to show any actual or
prior request for such service.
2. Predecessor Corporations. References to a corporation include all
-------------------------
constituent corporations absorbed in a consolidation or merger as well as the
resulting or surviving corporation so that any person who is or was a director,
officer, employee or agent of a constituent corporation or is or was serving at
the request of a constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under the provisions of this Article
Ten with respect to the resulting or surviving corporation as he or she would if
he or she had served the resulting or surviving corporation in the same
capacity.
3. Service for Employee Benefit Plan. The term "other enterprise"
-------------------------------------
shall include, without limitation, employee benefit plans and voting or taking
action with respect to stock or other assets therein; the term "serving at the
request of the Corporation" shall include, without limitation, any service as a
director, officer, employee or agent of a corporation which imposes duties on,
or involves services by, a director, officer, employee or agent with respect
to any employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner he or she reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have satisfied any standard of care required by or pursuant
to this Article Ten in connection with such plan; the term "fines" shall
include, without limitation, any excise taxes assessed on a person with respect
to an employee benefit plan and shall also include any damages (including treble
damages) and any other civil penalties.
I. SURVIVAL
Each person who was or is a Director, officer or employee of the
Corporation is a third party beneficiary to this Article Ten and shall be
entitled to enforce against the Corporation all indemnification rights provided
or contemplated by this Article Ten. Such indemnification rights shall continue
as to a person who has ceased to be a Director, officer or employee, and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
This Article Ten may be hereafter amended or repealed as provided in
Article Eleven hereof; provided however, no such amendment or repeal shall
reduce, terminate or otherwise adversely affect the right of any person who was
or is a Director, officer or employee to obtain indemnification or an advance of
expenses with respect to a proceeding that pertains to or arises out of actions
or omissions that occurred prior to the Deadline Indemnification Date. For
purposes of this Section J of this Article Ten, the term "Deadline
Indemnification Date" shall mean the later of: (1) the effective date of any
amendment or repeal of this Article Ten which reduces, terminates or otherwise
adversely affects the rights hereunder of any person who was or is a Director,
officer [or employee]; (2) the expiration of such person's then current term of
office with, or service for, the Corporation (provided such person has a stated
term of office or service and completes such term); or (3) the effective date
such person resigns his office or terminates his service (provided such person
has a stated term of officer or service but resigns prior to the expiration of
such term).
K. LIABILITY OF THE DIRECTORS, [OFFICERS AND EMPLOYEES]
It is the intention of the Corporation to limit the personal liability of
the Directors, officers and employees of the Corporation, in their capacity as
such, whether to the Corporation, its shareholders or otherwise, to the fullest
extent permitted by law. Consequently, should the GBCL or any other applicable
law be amended or adopted hereafter so as to permit the elimination or
limitation of such liability, the liability of the Directors and/or officers
and/or employees of the Corporation shall be so eliminated or limited without
the need for amendment of these Articles or for further action on the part of
the shareholders of the Corporation.
ARTICLE ELEVEN - AMENDMENT OF THE
ARTICLES OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation in the manner now or
hereafter prescribed by law, and all rights and powers conferred herein on the
shareholders, Directors, officers, employees or agents of the Corporation are
subject to this reserved power; provided, that (in addition to any required
class or other vote, including, without limitation, the vote required by Article
Four, Section E hereof) the affirmative vote of the holders of record of
outstanding shares representing not less than two-thirds of all of the
outstanding shares of capital stock of the Corporation then entitled to vote
generally in the election of Directors, voting together as a single class, shall
be required to amend, alter, change or repeal, or adopt any provision or
provisions inconsistent with, Articles Four, Six, Nine, or this Article Eleven
of these Articles of Incorporation, notwithstanding the fact that a lesser
percentage may be specified by the laws of Missouri.
BYLAWS
OF
ENERGIZER HOLDINGS, INC.
* * *
ARTICLE I - SHAREHOLDERS
SECTION 1. ANNUAL MEETING: The annual meeting of shareholders shall be
held at the principal office of the Company, or at such other place either
within or without the State of Missouri as the Directors may from time to time
determine, at 2:00 P.M. on the fourth Monday in January in each year, or such
other time as may be determined by the Chairman of the Board, or if such day be
a legal holiday then on the next succeeding business day, to elect Directors and
transact such other business as may properly come before the meeting.
SECTION 2. SPECIAL MEETINGS: Special meetings of shareholders may be
called only by the affirmative vote of a majority of the entire Board of
Directors or by the Chairman of the Board or the President by request for such a
meeting in writing. Such request shall be delivered to the Secretary of the
Company and shall state the purpose or purposes of the proposed meeting. Upon
such direction or request, subject to any requirements or limitations imposed by
the Company's Articles of Incorporation, by these Bylaws, or by law, it shall be
the duty of the Secretary to call a special meeting of the shareholders to be
held at such time as is specified in the request. Only such business shall be
conducted, and only such proposals shall be acted upon, as are specified in the
call of any special meeting of shareholders, and each such meeting shall be held
at such time, and at such place either within or without the State of Missouri,
as may be specified in the notice thereof. As used in these Bylaws, the terms
"entire Board of Directors" means the total number of Directors fixed by, or in
accordance with, these Bylaws.
SECTION 3. NOTICE: Notice of each annual or special meeting of
shareholders, stating the place, day and hour of the meeting and, in case of a
special meeting, the purpose or purposes thereof, shall be sent to each
shareholder of record entitled to vote at such meeting at least ten days but not
more than seventy days prior to the meeting. Such other or additional notice
shall be given as may be required by law. Attendance of a shareholder at any
meeting shall constitute a waiver of notice of such meeting except where such
shareholder attends the meeting for the sole and express purpose of objecting to
the transaction of any business because the meeting is not lawfully called or
convened.
SECTION 4. QUORUM; VOTING: At any meeting of shareholders, the shareholders
having the right to vote shall be entitled to vote in person, by a telephonic
voting system (including one established by a proxy solicitation firm, proxy
support service organization or like agent), or by proxy appointed by a proper
instrument in writing and subscribed by the shareholder or by his or her duly
appointed attorney-in-fact. A shareholder may authorize another person or
persons to act for him as proxy by transmitting or authorizing the transmission
of a telegram, cablegram, or other means of electronic transmission to the
person who will be the holder of the proxy or to a proxy solicitation firm,
proxy support service organization or like agent duly authorized by the person
who will be the holder of the proxy to receive such transmission, provided that
any such telegram, cablegram or other means of electronic transmission must
either set forth or be submitted with information from which it can be
determined that the telegram, cablegram or other electronic transmission was
authorized by the shareholder. Each shareholder shall have such voting power as
is prescribed by the Articles of Incorporation with respect to the shares
registered in his or her name on the books of the Company. At any meeting of
shareholders, the holders of shares having a majority of the voting power
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum for all purposes. If, however, such quorum shall not be
present or represented at any meeting of shareholders, the holders of shares
having a majority of the outstanding voting power present and entitled to vote
at any meeting may adjourn the same from time to time for successive periods of
not more than ninety days after such adjournment, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the original
meeting. If a quorum is present, the affirmative vote of the holders of shares
constituting a majority of the voting power represented at the meeting shall be
the act of the shareholders unless the vote of a greater number of shares is
required by the Company's Articles of Incorporation, by these Bylaws or by law.
SECTION 5. BUSINESS TO BE CONDUCTED; ADVANCE NOTICE: At any meeting of
shareholders, only such business shall be conducted, and only such proposals
shall be acted upon, as shall have been properly brought before the meeting. At
any special meeting of shareholders, only such business or proposals as are
specified in the notice of the meeting may be properly brought before the
meeting. At any annual meeting of shareholders, in addition to any other
requirements imposed by or pursuant to law, the Articles of Incorporation or
these Bylaws, each item of business or proposal to be properly brought before a
meeting must (a) be specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board; (b) be otherwise properly
brought before the meeting by or at the direction of the Board; or (c) be
otherwise properly brought before the meeting by a shareholder of record. For
business to be properly brought before a meeting by a shareholder of record, the
shareholder must have given timely notice thereof in writing to the Secretary of
the Company. To be timely, a shareholder's notice must be delivered to or
mailed to and received by the Secretary of the Company at the principal
executive offices of the Company not less than 90 nor more than 120 days prior
to the meeting; provided, however, that in the event that less than 90 days'
notice or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so received not
later than the seventh day following the day on which such notice of the date of
the meeting was mailed or on which such public notice was given. A
shareholder's notice to the Secretary shall set forth as to each matter he or
she proposes to bring before the meeting (i) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at the meeting; (ii) the name and address, as they appear in the
Company's shareholder records, of the shareholder(s) proposing such business;
(iii) the class and number of shares of the Company's capital stock which are
beneficially owned by the proposing shareholder(s), and (iv) any material
interest of the proposing shareholder(s) in such business. Public notice shall
be deemed to have been given if a public announcement is made by press release
reported by a national news service or in a publicly available document filed
with the United States Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (or any
successor of such statute or regulation promulgated thereunder).
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at a meeting except in accordance with the requirements and procedures
set forth in this section. The Chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of this section,
and if he or she should so determine, shall so declare to the meeting, and any
such business not properly brought before the meeting shall not be transacted.
The Chairman of the meeting shall have absolute authority to decide questions of
compliance with the foregoing procedures, and his or her ruling thereon shall be
final and conclusive.
SECTION 6. WRITTEN CONSENT OF SHAREHOLDERS: Any action which may be
taken at any meeting of the shareholders, except the annual meeting of the
shareholders, may be taken without a meeting if consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof. Such consent may be
executed in counterparts, each of which shall be deemed an original but all of
which together shall constitute but one and the same instrument.
SECTION 7. ORGANIZATION: Each meeting of shareholders shall be
convened by the Chairman of the Board, President, Secretary or other officer or
person calling the meeting by notice given in accordance with these Bylaws. The
Chairman of the Board, or any person appointed by the Chairman of the Board
prior to any meeting of shareholders, shall act as Chairman of each such meeting
of shareholders. In the absence of the Chairman of the Board, or a person
appointed by the Chairman of the Board to act as Chairman of the meeting, the
shareholders present at the meeting shall designate a Chairman of the meeting.
The Secretary of the Company, or a person designated by the Chairman of the
meeting, shall act as Secretary of each meeting of shareholders. Whenever the
Secretary shall act as Chairman of the meeting, or shall be absent, the Chairman
of the meeting shall appoint a person present to act as Secretary of the
meeting.
ARTICLE II - BOARD OF DIRECTORS
SECTION 1. ELECTION; TENURE; QUALIFICATIONS:
(a) The Board of Directors shall consist of not less than [six (6)] nor
more than ten (10) members, such Directors to be classified in respect of the
time for which they shall severally hold office by dividing them into three
classes of approximately equal size, each class to be elected for a term of
three years; and the number of Directors shall be fixed by a resolution of the
Board of Directors adopted from time to time.
(b) Directors shall be elected at each annual meeting of shareholders,
to hold office until the expiration of the term of their respective class, or
until their respective successors shall be elected and shall qualify. Directors
need not be shareholders unless the Articles of Incorporation at any time so
require.
(c) Nominations of persons for election to the Board of Directors of the
Company may be made at a meeting of shareholders called for such purpose by or
at the direction of the Board or any committee thereof designated by the Board,
or by any shareholder of record of the Company entitled to vote for the election
of Directors at the meeting who complies with the procedures set forth herein.
In order for persons nominated to the Board, other than those persons nominated
by or at the direction of the Board or any committee thereof designated by the
Board, to be qualified to serve on the Board, such nominations shall be made
pursuant to timely notice in writing to the Secretary of the Company. To be
timely, a shareholder's notice shall be delivered to or mailed and received by
the Secretary of the Company not less than 90 nor more than 120 days prior to
the meeting; provided, however, that in the event that less than 90 days' notice
or prior public disclosure of the date of the meeting is given or made to
shareholders by the Company, notice by the shareholder to be timely must be so
received not later than the close of business on the seventh day following the
day on which such notice of the date of the meeting was mailed or on which such
public notice was given. Such shareholder's notice shall set forth (i) as to
each person whom the shareholder proposes to nominate for election or
re-election as a Director, (A) the name, age, business address and residence
address of such person, (B) the principal occupation or employment of such
person for the previous five years, (C) the class and number of shares of the
Company's capital stock which are beneficially owned by such person, (D) such
person's written consent to being named as a nominee and to serving as a
Director if elected, and (E) any other information relating to such person that
is required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Exchange Act (or any successor of such regulation or statute), and
(ii) as to the shareholder(s) making the nomination (A) the name and address, as
they appear in the Company's shareholder records, of such shareholder(s) and (B)
the class and number of shares of the Company's capital stock which are
beneficially owned by such shareholder(s). "Public notice" shall be deemed to
have been given if a public announcement is made by press release reported by a
national news service or in a publicly available document filed with the United
States Securities and Exchange Commission pursuant to the Exchange Act (or any
successor of such statute or regulation promulgated thereunder). No person
shall be qualified for election as a Director of the Company unless nominated in
accordance with the requirements and procedures set forth in this section. The
Chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that a nomination was not made in accordance with the provisions of
these Bylaws, and if he or she should so determine, shall so declare to the
meeting, and the defective nomination shall be disregarded. The Chairman of a
meeting shall have absolute authority to decide questions of compliance with the
foregoing procedures, and his or her ruling thereon shall be final and
conclusive.
SECTION 2. POWERS: The Board of Directors shall have power to direct
the management and control the property and affairs of the Company, and to do
all such lawful acts and things which, in their absolute judgment and
discretion, they may deem necessary and appropriate for the expedient conduct
and furtherance of the Company's business.
SECTION 3. CHAIRMAN: The Directors shall elect one of their number to be
Chairman of the Board. The Chairman shall preside at all meetings of the Board,
unless absent from such meeting, in which case, if there is a quorum, the
Directors present may elect another Director to preside at such meeting.
SECTION 4. MEETINGS:
(a) Regular meetings of the Board, or of any committee designated by the
Board, may be held without notice at such time and place either within or
without the State of Missouri as shall from time to time be determined by the
Chairman of the Board. Special meetings of the Board, or of any committee
designated by the Board, may be held at any time and place upon the call of the
Chairman of the Board, President or Secretary of the Company by oral, written,
telefax, telegraphic or other electronic notice duly given, sent or mailed to
each Director, at such Director's last known address, not less than twenty-four
hours before such meeting; provided, however, that any Director may, at any
time, in writing or by telefax, telegram, or other electronic transmission waive
notice of any meeting at which he or she may not be or may not have been
present. Attendance of a Director at any meeting shall constitute a waiver of
notice of the meeting except where a Director attends a meeting for the sole and
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Rules of procedures for the conduct
of such meetings may be adopted by resolution of the Board of Directors.
(b) Members of the Board, or of any committee designated by the Board, may
participate in a meeting of the Board or committee by means of a conference
telephone or similar communication equipment whereby all persons participating
in the meeting can hear each other, and participants in a meeting in this manner
shall constitute presence in person at the meeting.
SECTION 5. QUORUM: A majority of the entire Board of Directors shall
constitute a quorum at all meetings of the Board, and the act of the majority of
the Directors present at any meeting at which a quorum is present shall be the
act of the Board of Directors unless a greater number of Directors is required
by the Articles of Incorporation, by these Bylaws or by law. At any meeting of
Directors, whether or not a quorum is present, the Directors present thereat may
adjourn the same from time to time without notice other than announcement at the
meeting.
SECTION 6. WRITTEN CONSENT OF DIRECTORS: Any action which may be taken at
any meeting of Directors, or of any committee of the Board, may be taken without
a meeting if consents in writing, setting forth the action so taken, shall be
signed by all of the members of the Board or committee. Such consents may be
executed in counterparts, each of which shall be deemed an original but all of
which together shall constitute but one and the same instrument.
SECTION 7. RESIGNATION OF DIRECTORS: Any Director of the Company may resign at
any time by giving written notice of such resignation to the Board of Directors,
the Chairman of the Board, the President, or the Secretary of the Company. Any
such resignation shall take effect at the time specified therein or, if no time
is specified, upon receipt thereof by the Board of Directors or one of the
above-named officers of the Company; and, unless specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 8. VACANCIES: Vacancies on the Board and newly created
directorships resulting from any increase in the number of Directors to
constitute the Board of Directors may be filled by a majority of the Directors
then in office, although less than a quorum, or by a sole remaining Director.
SECTION 9. COMPENSATION OF DIRECTORS: The Board of Directors may, by
resolution passed by a majority of the entire Board, fix the terms and amount of
compensation payable to any person for his or her services as Director, if he or
she is not otherwise compensated for services rendered as an officer or employee
of the Company; provided, however, that any Director may be reimbursed for
reasonable and necessary expenses of attending meetings of the Board, or
otherwise incurred for any Company purpose; and provided, further, that members
of special or standing committees may also be allowed compensation and expenses
similarly incurred. Nothing herein contained shall be construed to preclude any
Director from serving the Company in any other capacity and receiving
compensation therefor.
SECTION 10. COMMITTEES OF THE BOARD OF DIRECTORS: The Board of Directors
may, by resolution passed by a majority of the entire Board, designate two or
more Directors to constitute an Executive Committee of the Board which shall
have and shall exercise all of the authority of the Board of Directors in the
management of the Company, in the intervals between meetings of the Board of
Directors. In addition, the Board may appoint any other committee or
committees, with such members, functions, and powers as the Board may designate.
The Board shall have the power at any time to fill vacancies in, to change the
size or membership of, or to dissolve any one or more of such committees. Each
such committee shall have such name as may be determined by the Board, and shall
keep regular minutes of its proceedings and report the same to the Board of
Directors for approval as required. At all meetings of a committee, a majority
of the committee members then in office shall constitute a quorum for the
purpose of transacting business, and the acts of a majority of the committee
members present at any meeting at which there is a quorum shall be the acts of
the committee. A Director who may be disqualified, by reason of personal
interest, from voting on any particular matter before a meeting of a committee
may nevertheless be counted for the purpose of constituting a quorum of the
committee. Any action which is required to be or may be taken at a meeting of a
committee of Directors may be taken without a meeting if consents in writing,
setting forth the action so taken, are signed by all the members of the
committee.
ARTICLE III - OFFICERS
SECTION 1. OFFICERS; ELECTION: The officers of the Company shall be a
Chairman of the Board, a Chief Executive Officer, a President, and a Secretary,
and may also include, as the Board may from time to time designate, one or more
Vice Chairmen of the Board, one or more Executive Vice Presidents, one or more
Senior Vice Presidents, one or more Group Vice Presidents, one or more Vice
Presidents, a General Counsel, a Treasurer, a Controller, and one or more
Assistant Secretaries, Assistant Treasurers and Assistant Controllers. The
Board of Directors shall elect all officers of the Company, except that
Assistant Secretaries, Assistant Treasurers and Assistant Controllers may be
appointed by the Chairman of the Board or the Chief Executive Officer. The
Board of Directors may appoint such other officers and agents as it shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as the Board of Directors shall from time to time
determine. Any two or more offices may be held by the same person except the
offices of Chairman of the Board and Secretary.
SECTION 2. TERMS; COMPENSATION: All officers of the Company shall hold
office at the pleasure of the Board of Directors. The compensation each officer
is to receive from the Company shall be determined in such manner as the Board
of Directors shall from time to time prescribe.
SECTION 3. POWERS; DUTIES: Each officer of the Company shall have such
powers and duties as may be prescribed by resolution of the Board of Directors
or as may be assigned by the Board of Directors or the Chief Executive Officer.
SECTION 4. REMOVAL: Any officer elected by the Board of Directors may be
removed by the Board of Directors whenever in its judgment the best interest of
the Company will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the officer so removed. The Chairman of the
Board may suspend any officer until the Board of Directors shall next convene.
ARTICLE IV - CAPITAL STOCK
SECTION 1. STOCK CERTIFICATES:
(a) All certificates representing shares of stock of the Company shall be
numbered appropriately and shall be entered in the books of the Company as they
are issued. They shall be signed by the Chairman of the Board or the President
or a Vice President and by the Secretary, an Assistant Secretary, the Treasurer
or an Assistant Treasurer of the Company, and shall bear the corporate seal of
the Company. To the extent permitted by law, the signatures of such officers,
and the corporate seal, appearing on certificates of stock, may be facsimiles,
engraved or printed. In case any such officer who signed or whose facsimile
signature appears on any such certificate shall have ceased to be such officer
before the certificate is issued, such certificate may nevertheless be issued by
the Company with the same effect as if such officer had not ceased to be such
officer at the date of its issue.
(b) The Company shall not issue a certificate for a fractional share;
however, the Board of Directors may issue, in lieu of any fractional share,
scrip or other evidence of ownership upon such terms and conditions as it may
deem advisable.
(c) Notwithstanding any other provision of this Article IV, the Board of
Directors may by resolution determine to issue certificateless shares, for
registration in book entry accounts for shares of stock in such form as the
appropriate officers of the Company may from time to time prescribe, in addition
to or in place of shares of the Company represented by certificates, to the
extent authorized by applicable law.
SECTION 2. RECORD OWNERSHIP: The Company shall maintain a record of the
name and address of the holder of each certificate, the number of shares
represented thereby, and the date of issue and the number thereof. The Company
shall be entitled to treat the holder of record of any share of stock as the
holder in fact thereof, and accordingly it will not be bound to recognize any
equitable or other claim of interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Missouri.
SECTION 3. TRANSFERS: Transfers of stock shall be made on the books of the
Company only by direction of the person named in the certificate, or by such
person's duly appointed attorney-in-fact, lawfully constituted in writing, and
upon the surrender of the certificate therefor or by appropriate book-entry
procedures.
SECTION 4. TRANSFER AGENTS; REGISTRARS: The Board of Directors shall, by
resolution, from time to time appoint one or more Transfer Agents, that may be
officers or employees of the Company, to make transfers of shares of stock of
the Company, and one or more Registrars to register shares of stock issued by or
on behalf of the Company. The Board of Directors may adopt such rules as it may
deem expedient concerning the issue, transfer and registration of stock
certificates of the Company.
SECTION 5. LOST CERTIFICATES: Each person whose certificate of stock has
been lost, stolen or destroyed shall be entitled to have a replacement
certificate issued in the same name and for the same number of shares as the
original certificate, provided that such person has first filed with such
officers of the Company, Transfer Agents and Registrars, as the Board of
Directors may designate, an affidavit stating that such certificate was lost,
stolen or destroyed and a bond of indemnity, each in the form and with such
provisions as such officers, Transfer Agents and Registrars may reasonably deem
satisfactory.
SECTION 6. TRANSFER BOOKS; RECORD DATES: The Board of Directors shall have
power to close the stock transfer books of the Company as permitted by law;
provided, however, that in lieu of closing the said books, the Board of
Directors may fix in advance a date, not exceeding seventy days preceding the
date of any meeting of shareholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of shares shall go into effect, as a record date to
allow for the determination of shareholders entitled to receive notice of, and
to vote at, any such meeting, and any adjournment thereof, or entitled to
receive payment of any such dividend, or to receive any such allotment of rights
or to exercise the rights in respect of any such change, conversion or exchange
of shares, and in such case such shareholders, and only such shareholders, as
shall be shareholders of record on the date of closing the transfer books or on
the record date so fixed shall be entitled to receive notice of, and to vote at,
such meeting, and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
Company after such date of closing of the transfer books or such record date
fixed as aforesaid. If the Board of Directors does not close the transfer books
or set a record date for the determination of the shareholders entitled to
notice of and to vote at any meeting of shareholders, only the shareholders who
are shareholders of record at the close of business on the twentieth day
preceding the date of the meeting shall be entitled to notice of and to vote at
the meeting and upon any adjournment of the meeting, except that if prior to the
meeting written waivers of notice of the meeting are signed and delivered to the
Company by all of the shareholders of record at the time the meeting is
convened, only the shareholders who are shareholders of record at the time the
meeting is convened shall be entitled to vote at the meeting and any adjournment
of the meeting.
SECTION 7. DIVIDENDS: Dividends upon the outstanding shares of the Company
may be declared by the Board of Directors at any regular or special meeting
pursuant to law. Before payment of any dividend, there may be set aside out of
any funds of the Company available for dividends such sum or sums as the
Directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Company, or for such other purpose
as the Directors shall think conducive to the interest of the Company, and the
Directors may modify or abolish any such reserve in the manner in which it was
created.
ARTICLE V - OFFICES, SEAL, BOOKS, NOTICE, CHECKS, FISCAL YEAR
SECTION 1. OFFICES: The principal office of the Company shall be
located at800 Chouteau, St. Louis, Missouri 63102.
SECTION 2. SEAL: The corporate seal of the Company shall be a circular
seal; the words "ENERGIZER HOLDINGS, INC." shall be embossed in the outer
margin; and the words "Corporate Seal" shall be embossed in the interior; and
impression of the same is set forth hereon.
SECTION 3. PLACE FOR KEEPING BOOKS AND SEAL: The books of the Company, and
its corporate minutes and corporate seal, shall be kept in the custody of or
under the direction of the Secretary at the principal office of the Company, or
at such other place or places and in the custody of such other person or persons
as the Board of Directors may from time to time determine.
SECTION 4. NOTICES:
(a) Whenever, under the provisions of applicable law, the Articles of
Incorporation or these Bylaws, written notice is required to be given to any
Director or shareholder, it shall not be construed to require personal notice,
but such notice may be given by mail, by depositing the same in the post office
or in a letter box, in a post-paid sealed wrapper, addressed to such Director or
shareholder at such address as appears on the books of the Company, and such
notice shall be deemed to be given at the time when the same shall be thus
mailed, or may be given by telefax, telegraphic or other electronic transmission
to the extent authorized or allowed by law.
(b) Whenever any notice is required to be given a waiver thereof in writing
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto.
SECTION 5. FISCAL YEAR: The fiscal year of the Company shall commence
with the first day of October in each year.
<PAGE>
ARTICLE VI - ALTERATION, AMENDMENT OR REPEAL OF BYLAWS
These Bylaws may be altered, amended or repealed at any regular meeting of the
Board of Directors, or at any special meeting of the Board of Directors if a
description of the proposed alteration, amendment or repeal is provided in the
materials presented at such regular or special meeting, by the affirmative vote
of a majority of the entire Board of Directors, provided that such authority has
been delegated to the Board of Directors by the Articles of Incorporation and
further provided that in no event shall the Bylaws be inconsistent with law or,
in substance to a material degree, with any of the terms, conditions or
provisions of the Articles of Incorporation of the Company.
RIGHTS AGREEMENT
This Rights Agreement (the "Rights Agreement"), effective as of March 16,
2000 between Energizer Holdings, Inc., a Missouri corporation (the "Company"),
and Continental Stock Transfer & Trust Company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on March 16, 2000, the Board of Directors of the Company
authorized and declared a dividend of one common share purchase right for each
share of the Company's common stock outstanding at the close of business on
March 31, 2000, (the "Record Date"), each such right representing the right to
purchase one share of the Company's common stock upon the terms and subject to
the conditions therein set forth. At that time the Board further authorized and
directed the issuance of one common share purchase right with respect to each
share of the Company's common stock that becomes outstanding between the Record
Date and the Distribution Date (as hereinafter defined);
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1
CERTAIN DEFINITIONS
For purposes of this Rights Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall become, at any time after the
date of this Rights Agreement (whether or not such status continues for any
period), the Beneficial Owner of Common Shares representing 20% or more of the
Common Shares then outstanding, other than as a result of a Permitted Offer.
Notwithstanding the foregoing, (A) the term "Acquiring Person" shall not include
(i) the Company, any Subsidiary of the Company, any employee benefit plan or
compensation arrangement of the Company or any Subsidiary of the Company, or any
entity holding Common Shares for or pursuant to the terms of any such plan or
compensation arrangement, or (ii) any Person, who or which together with all
Affiliates and Associates of such Person becomes the Beneficial Owner of 20% or
more of the then outstanding Common Shares as a result of the acquisition of
Common Shares directly from the Company (provided, however, that if, after such
acquisition, such Person, or an Affiliate or Associate of such Person, becomes
the Beneficial Owner of any additional Common Shares in an acquisition not made
directly from the Company, then such Person shall be deemed an Acquiring
Person), and (B) no Person shall be deemed to be an "Acquiring Person" either
(X) as a result of the acquisition of Common Shares by the Company which, by
reducing the number of Common Shares outstanding, increases the proportionate
number of Common Shares beneficially owned by such Person together with all
Affiliates and Associates of such Person to 20% or more of the Common Shares
then outstanding; except that if (i) a Person would become an Acquiring Person
(but for the operation of this subclause (X)) as a result of the acquisition of
Common Shares by the Company, and (ii) after such share acquisition by the
Company, such Person, or an Affiliate or Associate of such Person, becomes the
Beneficial Owner of any additional Common Shares, then such Person shall be
deemed an Acquiring Person, or (Y) if (i) such Person, or an Affiliate or
Associate of such Person, inadvertently becomes the Beneficial Owner of 20% or
more of the outstanding Common Shares, (ii) within 8 days thereafter such Person
notifies the Board of Directors that such Person did so inadvertently and (iii)
promptly after such notification, such Person is the Beneficial Owner of less
than 20% of the outstanding Common Shares.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to have acquired "beneficial ownership" of, or to "beneficially own", any
securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act in effect as of the
date hereof;
(ii) which such Person or any of such Person's Affiliates or Associates
has (A) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security for purposes of this clause (ii) if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D or Schedule 13G under the Exchange Act
(or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section 1(c)(ii)(B))
or disposing of any securities of the Company.
Notwithstanding anything in this definition of "Beneficial Owner" to the
contrary, the phrase "then outstanding", when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., New York
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall mean
shares of the Company's common stock, par value $.01 per share, and any other
class or classes or series of common stock of the Company resulting from any
subdivision, combination, recapitalization or reclassification of shares of such
common stock. "Common Shares" when used with reference to any Person other than
the Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of
another Person, of the Person or Persons which ultimately control such
first-mentioned Person.
(g) "Company" shall have the meaning set forth in the recitals to this
Rights Agreement.
(h) "Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Exchange Ratio" shall have the meaning set forth in Section 24 hereof.
(k) "Final Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(l) "NASDAQ" shall have the meaning set forth in Section 11(d) hereof.
(m) "Permitted Offer" shall mean a tender or exchange offer which is for all
outstanding Common Shares at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by at least a majority
of the members of the Board of Directors who are not officers of the Company and
who are not (or would not be, if the offer were consummated) Acquiring Persons
or Affiliates, Associates, nominees or representatives of an Acquiring Person,
to be adequate and otherwise in the best interests of the Company and its
stockholders (other than the Person or any Affiliate or Associate thereof on
whose basis the offer is being made). In determining whether an offer is
adequate or in the best interests of the Company and its shareholders, the Board
may take into account all factors that it deems relevant including, without
limitation, (1) the consideration being offered in the proposal in relation to
the Board's estimate of: (i) the current value of the Company in a freely
negotiated sale of either the Company by merger, consolidation or otherwise, or
all or substantially all of the Company's assets, (ii) the current value of the
Company if orderly liquidated, and (iii) the future value of the Company over a
period of years as an independent entity discounted to current value; (2) then
existing political, economic and other factors bearing on security prices
generally or the current market value of the Company's securities in particular;
(3) whether the proposal might violate federal, state or local laws; (4) social,
legal and economic effects on employees, suppliers, customers and others having
similar relationships with the Company, and the communities in which the Company
conducts its businesses; (5) the financial condition and earnings prospects of
the person making the proposal including the person's ability to service its
debt and other existing or likely financial obligations; and (6) the competence,
experience and integrity of the person making the acquisition proposal.
(n) "Person" shall mean any individual, firm, partnership, corporation,
trust, association, joint venture or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(o) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(p) "Purchase Price" shall have the meaning set forth in Section 7(a)
hereof.
(q) "Record Date" shall have the meaning set forth in the recitals to this
Rights Agreement.
(r) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
(s) "Redemption Price" shall have the meaning set forth in Section 23
hereof.
(t) "Rights" shall mean the rights to purchase Common Shares authorized by
the Board of Directors of the Company after the Record Date.
(u) "Rights Agent" shall have the meaning set forth in the recitals to this
Rights Agreement.
(v) "Rights Agreement" shall have the meaning set forth in the recitals to
this Rights Agreement.
(w) "Rights Certificates" shall have the meaning set forth in Section 3(a)
hereof.
(x) "Securities Act" shall mean the Securities Act of 1933, as amended.
(y) "Shares Acquisition Date" shall mean the first date of a public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such, or
the date onn which the Company first has notice that an Acquiring Person has
become such; provided, that, if such Person is determined not to have become an
Acquiring Person pursuant to Section 1(a) hereof, then no Shares Acquisition
Date shall be deemed to have occurred.
(z) "Subsidiary" of any Person shall mean any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
(aa) "Summary of Rights" shall have the meaning set forth in Section 3(b)
hereof.
(bb) "Trading Day" shall have the meaning set forth in Section 11(d) hereof.
(cc) "Voting Securities" shall have the meaning set forth in Section 13(a)
hereof.
SECTION 2
APPOINTMENT OF RIGHTS AGENT
The Company hereby appoints the Rights Agent to act as agent for the Company and
the holders of the Rights (who, in accordance with Section 3 hereof, shall prior
to the Distribution Date also be the holders of the Common Shares) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable. In the event that the Company appoints one
or more Co-Rights Agents, the respective duties of the Rights Agent and any
Co-Rights Agents shall be as the Company shall determine.
SECTION 3
ISSUE OF RIGHTS CERTIFICATES
(a) Until the earlier of (i) the Close of Business on the tenth day after
the Shares Acquisition Date or (ii) the Close of Business on the tenth Business
Day (or such later date as may be determined by action of the Board of Directors
of the Company prior to such time as any Person becomes an Acquiring Person)
after the date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan or
compensation arrangement of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the terms of any such plan
or compensation arrangement is first published or sent or given within the
meaning of Rule 14d-2 of the General Rules and Regulations under the Exchange
Act, if upon consummation thereof, such Person would be the Beneficial Owner of
20% or more of the shares of Common Stock then outstanding; the earlier of such
dates being herein referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for the Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be certificates for Rights)
and not by separate certificates, and (y) the Rights (and the right to receive
separate certificates ("Rights Certificates")) will be transferable only in
connection with the transfer of the underlying Common Shares (including a
transfer to the Company) as more fully set out below. As soon as practicable
after the Distribution Date, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class, postage-prepaid mail, to
each record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Rights Certificate, which shall be in substantially the form of
Exhibit A hereto (the "Rights Certificate"), evidencing one Right for each
Common Share so held. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Common Shares, in substantially
the form of Exhibit B hereto (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company. Until the Distribution Date (or the earlier of the Redemption
Date or the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding, with or without a copy of the Summary
of Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares.
(c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired shares which are subsequently disposed of by the
Company) after the Record Date but prior to the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them the following legend (or one
substantially similar):
"This certificate also evidences and entitles the holder hereof to certain
rights as set forth in a Rights Agreement, as it may from time to time be
supplemented or amended, between Energizer Holdings, Inc. and Continental Stock
Transfer & Trust Company, (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file at the
principal executive offices of Energizer Holdings, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such rights may be redeemed
or exchanged, may expire, or may be evidenced by separate certificates and no
longer be evidenced by this certificate. Energizer Holdings, Inc. will mail to
the holder of this certificate a copy of the Rights Agreement without charge
within five days after receipt of a written request therefor. Under certain
circumstances, rights issued to or held by Acquiring Persons or their Affiliates
or Associates (as defined in the Rights Agreement) and any subsequent holder of
such rights may become null and void."
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Redemption Date or the Expiration Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated
therewith. In the event that the Company purchases or acquires any Common
Shares prior to the Distribution Date, any Rights associated with such Common
Shares shall be deemed canceled and retired unless and until such Common Shares
are subsequently issued by the Company so that the Company shall not be entitled
to exercise any Rights associated with the Common Shares which are no longer
outstanding.
SECTION 4
FORM OF RIGHT CERTIFICATES
(a) The Right Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall be substantially the same
as provided for in Section 3(a) hereof and may have such marks of identification
or designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the provisions
of this Rights Agreement, or as may be required to comply with any applicable
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to customary usage. Subject to the provisions of Section
22 hereof, the Right Certificates, whenever issued, shall be dated as of the
Record Date and shall entitle the holders thereof to purchase such number and
kind of Common Shares as shall be set forth therein at the price per share set
forth therein, but the number and kind of such Common Shares and the price per
share shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights which are null and void pursuant to the second
paragraph of Section 11(a)(ii) of this Rights Agreement and any Right
Certificate issued pursuant to Section 6, Section 11 or Section 22 hereof upon
transfer, exchange, replacement or adjustment of any other Right Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
"The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Right Certificate and the Rights represented
hereby are null and void."
Notwithstanding the above provision, failure to place such legend on any Rights
Certificate representing Rights which are otherwise null and void pursuant to
the terms of this Rights Agreement, shall not affect the null and void status of
such Rights.
SECTION 5
COUNTERSIGNATURE AND REGISTRATION
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its President, any of
its Vice Presidents, or its Treasurer, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office or offices designated as the appropriate place
for surrender of such Right Certificate or transfer, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
SECTION 6
TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED,
DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES
(a) Subject to the provisions of Sections 4(b), 7(c) and 14 hereof, at any
time after the Close of Business on the Distribution Date, and at or prior to
the Close of Business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates (other than Right
Certificates representing Rights that have become void pursuant to the second
paragraph of Section 11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered holder
to purchase a like number and kind of Common Shares as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such purpose. Thereupon,
the Rights Agent shall countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
SECTION 7
EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS
(a) Subject to the second paragraph of Section 11(a)(ii) hereof, the
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the price per share (rounded up to
the nearest cent) provided for in paragraph (b) below (the "Purchase Price") for
each Common Share as to which the Rights are exercised, at or prior to the
earliest of (i) the close of business on March 31, 2010 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each Common Share pursuant to the exercise of a
Right shall initially be $150, subject to adjustment from time to time as
provided in Sections 11 and 13 hereof, and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the Common Shares to be purchased and an amount equal to
any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Common Shares
certificates for the number and kind of Common Shares to be purchased (or
depository receipts when appropriate) and the Company hereby irrevocably
authorizes its transfer agents to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (iv) when appropriate,
after receipt, deliver such cash to or upon the order of the registered holder
of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) So long as the Common Shares issuable upon the exercise of Rights may
be listed on any national securities exchange or national quotation system, the
Company shall use its best efforts to cause all such shares which will be issued
upon exercise to be listed on such exchange upon official notice of issuance
upon such exercise.
(f) Notwithstanding anything in this Agreement ot the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless the certificate contained in the appropriate
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise shall have been properly completed and
duly executed by the registered holder thereof and the Company shall have been
provided with such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
SECTION 8
CANCELLATION AND DESTRUCTION OF
RIGHT CERTIFICATES
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9
AVAILABILITY OF COMMON SHARES
(a) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Common Shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable Common Shares.
(b) The Company covenants and agrees that it will pay when due and payable
any and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any Common
Shares upon the exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a person other than, or the issuance or
delivery of certificates or depository receipts for the Common Shares in a name
other than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or to issue or to deliver any certificates for
Common Shares upon the exercise of any Rights until any such tax shall have been
paid (any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
SECTION 10
RECORD HOLDERS OF COMMON SHARES
ISSUED UPON EXERCISE OF RIGHTS
Each person in whose name any certificate for Common Shares is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Common Shares represented thereby on, and such certificate shall
be dated, the date upon which the Right Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Company's transfer books for the Common Shares
are closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which such transfer books are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a holder of Common Shares for which the Rights evidenced thereby
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
SECTION 11
ADJUSTMENT OF PURCHASE PRICE,
NUMBER AND KIND OF COMMON
SHARES OR NUMBER OF RIGHTS
The Purchase Price, the number of Common Shares or other securities covered by
each Right, and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the Record Date
(A) declare a dividend on the Common Shares payable in Common Shares, (B)
subdivide the outstanding Common Shares into a greater number of such shares,
(C) combine the outstanding Common Shares into a smaller number of such shares,
or (D) issue any shares of its capital stock in a reclassification of Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
for Rights at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of capital stock (including Common Shares) issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall, upon payment of the Purchase Price then in effect, be
entitled to receive the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to such date and at a
time when the Common Shares transfer books of the Company were open, he would
have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one such
Right be less than the per share par value of the Common Shares. If an event
occurs which would require an adjustment under both Section 11(a)(i) and the
second paragraph of Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to the second paragraph of Section 11(a)(ii).
(ii) Subject to Section 24 of this Rights Agreement, in the event any
Person becomes an Acquiring Person, then the Purchase Price for each Common
Share issuable upon exercise of Rights shall be reduced to an amount equal to
33-1/3% of the then current market price per share of such Common Share
(determined pursuant to Section 11(d)) on the Shares Acquisition Date.
Notwithstanding the above, if the transaction that would otherwise give rise to
the foregoing adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii).
From and after the occurrence of the event described above, any Rights that
are or were acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void and any holder of
such Rights shall thereafter have no right to exercise such Rights under any
provision of this Rights Agreement. No Right Certificate shall be issued
pursuant to Section 3 that represents Rights beneficially owned by an Acquiring
Person whose Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof; no Right Certificate shall be issued at any time
upon the transfer of any Rights to or from an Acquiring Person whose Rights
would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof or to or from any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer
to or from an Acquiring Person (or any Associate, Affiliate or nominee of such
Acquiring Person) whose Rights would be void pursuant to the preceding sentence
shall be canceled.
(iii) In the event that there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued to permit the exercise in full of
the Rights in accordance with the foregoing subparagraphs (i) and (ii), and the
Rights become exercisable, notwithstanding any other provisions of this
Agreement, the Company shall, to the extent permitted by applicable law and
agreements in effect on the date hereof to which the Company is a party, take
all such action as may be necessary to authorize additional Common Shares for
issuance upon exercise of the Rights, including the calling of a meeting of
shareholders; provided, however, if the Company is unable to cause the
-------- -------
authorization of additional Common Shares then the Company, to the extent
necessary and permitted by applicable law and any agreements or instruments in
effect on the date thereof to which it is a party, shall, at its option (A) pay
cash equal to twice the applicable Purchase Price (as adjusted pursuant to this
Section 11) in lieu of issuing any such Common Shares and requiring payment
therefor, or (B) issue equity securities having a value equal to the market
price of Common Shares which otherwise would have been issuable pursuant to the
foregoing subparagraphs (i) and (ii), which value shall be determined by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent,
or (C) distribute a combination of Common Shares, cash and/or other equity
securities having a value equal to the market price of the shares of the Common
Shares which otherwise would have been issuable pursuant to the foregoing
subparagraphs (i) and (ii), determined in accordance with the preceding clause
(B), upon exercise of the related Rights.
(b) In case the Company shall fix a record date for the issuance of rights
(other than the Rights), options or warrants to all holders of Common Shares
entitling them (for a period expiring within 90 calendar days after such record
date) to subscribe for or purchase Common Shares (or securities having the same
or more favorable rights, privileges and preferences as the Common Shares
("equivalent common shares")), or securities convertible into Common Shares at a
price per share (or having a conversion price per share, if a security
convertible into Common Shares) less than the then current per share market
price (as defined in Section 11(d)) of the Common Shares on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Common Shares
outstanding on such record date plus the number of Common Shares which the
aggregate offering price of the total number of Common Shares or equivalent
common shares so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of Common Shares
outstanding on such record date plus the number of additional Common Shares
and/or equivalent common shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the per share par value of the
shares of capital stock of the Company issuable upon exercise of one Right. In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent. Common Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Common Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), of evidences of indebtedness or assets
(other than a regular quarterly cash dividend, a dividend payable in Common
Shares or other distribution referred to in Section 11(a) hereof) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current per
share market price of the Common Shares on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent) of the portion of such
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Common Share and the denominator of which
shall be such current per share market price of the Common Shares; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the per share par value of the shares of capital stock
of the Company to be issued upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) For the purpose of any computation hereunder, the "current per share
market price" of a Common Share on any date shall be deemed to be the average of
the daily closing prices per share of a Common Share for the 30 consecutive
Trading Days immediately prior to such date; provided, however, that in the
event that the current per share market price of a Common Share is determined
during a period following the announcement by the Company of (A) a dividend or
distribution on the Common Shares, payable in Common Shares or securities
convertible into Common Shares, or (B) any subdivision, combination or
reclassification of the Common Shares, and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share of a Common Share. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Shares are not listed
or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Shares
are listed or admitted to trading or, if Common Shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then
in use, or, if on any such date Common Shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in Common Shares, selected by the
Board of Directors of the Company. If on any such date no market-maker is
making a market in Common Shares, the fair value of Common Shares on such date
as determined in good faith by the Board of Directors of the Company shall be
used, whose determination shall be described in a statement filed with the
Rights Agent. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which Common Shares are listed or admitted to
trading is open for the transaction of business or, if Common Shares are not
listed or admitted to trading on any national securities exchange or included in
the Nasdaq National Market, a Business Day. If Common Shares are not publicly
held or so listed or traded, "current per share market price" shall mean the
fair value per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one ten-thousandth of a share as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment or (ii)
the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Common Shares, thereafter
the number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Shares
contained in Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Common Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made hereunder to the Purchase Price applicable thereto shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
Common Shares or other capital stock purchasable from time to time hereunder
upon exercise of such Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each related Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, the number of Common Shares
(calculated to the nearest one ten-thousandth of a share) obtained by (i)
multiplying (x) the number of Common Shares covered by such Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately prior
to such Purchase Price adjustment and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such Purchase Price adjustment.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights in substitution for any adjustment
in the number of Common Shares purchasable upon the exercise of a Right. Each
of such Rights outstanding after such adjustment of the number of such Rights
shall be exercisable for the number of Common Shares for which such Right was
exercisable immediately prior to such adjustment. Each such Right held of
record prior to such adjustment of the number of Rights shall become that number
of such Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of such
Purchase Price by the Purchase Price in effect immediately after such
adjustment. The Company shall make a public announcement of its election to
adjust the number of Rights indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of such Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of such Right Certificates on such record date
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for such Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of Common Shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of Common Shares which were expressed in such
Right Certificates theretofore issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Common Shares issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Common Shares at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any related Right exercised after such record date of
the Common Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Common Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that (i) any consolidation or subdivision of the Common Shares, (ii)
issuance wholly for cash of any Common Shares at less than the current market
price, (iii) issuance wholly for cash of Common Shares or securities which by
their terms are convertible into or exchangeable for Common Shares, (iv)
dividends on Common Shares payable in Common Shares or (v) issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of Common Shares, shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Sections 23 or 27 hereof, take (or permit any
Subsidiary to take) any action the purpose of which is to, or if at the time
such action is taken it is reasonably foreseeable that the effect of such action
is to, materially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
SECTION 12
CERTIFICATE OF ADJUSTMENT
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Shares a
copy of such certificate and, (c) include a brief summary thereof in the next
quarterly or current report filed pursuant to the Exchange Act by the Company,
and, following the Distribution Date, mail such summary to each holder of a
Right Certificate in accordance with Section 25 hereof.
SECTION 13
CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER
(a) In the event that, on or following the Distribution Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into any
other Person, (y) the Company shall consolidate with, or merge with, any other
Person, and the Company shall be the continuing or surviving corporation of such
consolidation or merger (other than, in a case of any transaction described in
(x) or (y), a merger or consolidation which would result in the voting power
represented by all of the securities generally entitled to vote in the election
of directors ("voting securities") of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation and the holders of such securities not having changed as
a result of such merger or consolidation), or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person (other than the Company or
any Subsidiary of the Company in one or more transactions each of which does not
violate Section 11(n) hereof), then, and in each such case (except as provided
in Section 13(d) hereof), proper provision shall be made so that (i) each holder
of a Right, except as provided in the second paragraph of Section 11(a)(ii)
hereof, shall thereafter have the right to receive, upon the exercise thereof at
a price equal to the then current Purchase Price (without giving effect to any
adjustment to such Purchase Price pursuant to Section 11(a)(ii)) multiplied by
the number of Common Shares for which such Right is then exercisable, in
accordance with the terms of this Rights Agreement, such number of freely
tradable Common Shares of the Principal Party, not subject to any liens,
encumbrances, rights of call or first refusal or other adverse claims, as shall
equal the result obtained by (A) multiplying the then current Purchase Price
(without giving effect to any adjustment to such Purchase Price pursuant to
Section 11(a(ii)) by the number of Common Shares for which such Right is then
exercisable and dividing that product by (B) 50% of the then current per share
market price of the Common Shares of such Principal Party (determined pursuant
to Section 11(d) hereof) on the date of consummation of such consolidation,
merger, sale or transfer; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this Rights
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 hereof shall apply only to such Principal Party following the first
occurrence of an event described in this Section 13; and (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Company are converted in such merger
or consolidation, and if no securities are so issued, the Person that is the
other party to such merger or consolidation (including, if applicable, the
Company if it is the surviving corporation); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earnings power transferred pursuant to such
transaction or transactions; provided, however, that in any of the foregoing
cases, (1) if the Common Shares of such Person are not at such time and have not
been continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary or Affiliate of another Person the Common Shares of which are and
have been so registered, "Principal Party" shall refer to such other Person; (2)
in case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Shares of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the common shares having the greatest aggregate market value; and (3)
in case such Person is, or is owned, directly or indirectly, by a partnership or
joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1) and (2) above shall
apply to each of the chains of ownership having an interest in such joint
venturers as if such party were a "Subsidiary" of both or all of such joint
ventures and the Principal Parties in each such chain shall bear the obligations
set forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of its
authorized Common Shares which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such Principal Party and each other Person
who may become a Principal Party as a result of such consolidation, merger, sale
or transfer shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the date of
any consolidation, merger, sale or transfer mentioned in paragraph (a) of this
Section 13, the Principal Party at its own expense shall:
(i) prepare and file a registration statement under the Securities Act of
1933, as amended, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of such Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the blue sky laws of
such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial statements for
the Principal Party which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that the
events described in this Section 13 shall occur at any time after the occurrence
of the events described in the second paragraph of Section 11(a)(ii), the Rights
which have not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (I) such transaction is consummated with a Person or Persons
who acquired Common Shares pursuant to a Permitted Offer (or a wholly owned
subsidiary of any such Person or Persons), (ii) the price per share of the
Common Shares offered in such transaction is not less than the price per share
of Common Shares whose shares were purchased pursuant to such tender offer or
exchange offer and (iii) the form of consideration being offered to the
remaining holders of shares of Common Shares pursuant to such transaction is the
same as the form of consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
SECTION 14
FRACTIONAL RIGHTS AND
FRACTIONAL SHARES
a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of such Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if such Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such Rights selected by the Board
of Directors of the Company. If on any such date no such market maker is
making a market in the Rights, the fair value of such Rights on such date as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent,
shall be used and shall be conclusive for all purposes.
(b) The Company shall not be required to issue fractions of Common Shares
upon (i) exercise of the Rights or exchange of the Rights for Common Shares
pursuant to Section 24 of this Rights Agreement, or to distribute certificates
which evidence fractional shares of Common Shares. Fractions of Common Shares
may, at the election of the Company, be evidenced by depository receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided that such agreement shall provide that the holders of
such depositary receipts shall have the rights, privileges and preferences to
which they are entitled as beneficial owners of the Common Shares represented by
such depositary receipts. In lieu of fractional Common Shares or depositary
receipts, the Company may pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Common Share. For the
purposes of this Section 14(b), the current market value of a Common Share shall
be the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d) hereof) for the Trading Day immediately prior to the
date of such exercise.
(c) The holder of a Right by the acceptance of such Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided in this Section 14).
SECTION 15
RIGHTS OF ACTION
All rights of action in respect of this Rights Agreement, excepting the
rights of action given to the Rights Agent under Sections 18 or 20 hereof, are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this Rights
Agreement. Holders of Rights shall be entitled to recover the reasonable costs
and expenses, including attorneys' fees, incurred by them in any action to
enforce the provisions of this Agreement.
SECTION 16
AGREEMENT OF RIGHT HOLDERS
Every holder of a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent, duly endorsed or accompanied by a proper instrument
of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in whose
name the Right Certificate (or, prior to the Distribution Date, the associated
certificates for Common Shares) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated certificates for Common
Shares made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Rights Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or a beneficial interest in a Right or other Person as a result of
its inability to perform any of its obligations under this Rights Agreement by
reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
SECTION 17
RIGHT CERTIFICATE HOLDER NOT
DEEMED A STOCKHOLDER
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
SECTION 18
CONCERNING THE RIGHTS AGENT
The Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Rights Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this Rights
Agreement, including the costs and expenses of defending against any claim of
liability in the premises. The indemnity provided for herein shall survive the
expiration of the Rights and the termination of this Rights Agreement.
The Rights Agent shall be protected and shall incur no liability for, or in
respect of any action taken, suffered or omitted by it in connection with, its
administration of this Rights Agreement in reliance upon any Right Certificate
or certificate for the Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
SECTION 19
MERGER OR CONSOLIDATION OR
CHANGE OF NAME OF RIGHTS AGENT
(a) Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the stock transfer,
shareholder services or all or substantially all of the corporate trust business
of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Rights Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Rights Agreement any of
the Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
SECTION 20
DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this Rights
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Right Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company or its own in-house counsel), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this Rights Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except its countersignature on such Rights Certificates) or
be required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to the second paragraph
of Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections 3, 11,
13, 23 or 24, or the ascertaining of the existence of facts that would require
any such change or adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Common
Shares to be issued pursuant to this Rights Agreement or any Right Certificate
or as to whether any Common Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Rights Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
SECTION 21
CHANGE OF RIGHTS AGENT
The Rights Agent or any successor Rights Agent may resign and be discharged from
its duties under this Rights Agreement upon 30 days' notice in writing mailed to
the Company and to each transfer agent of the Common Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail or, prior to the Distribution Date, through any filing made by
the Company pursuant to the Securities Exchange Act of 1934, as amended. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation or other
entity organized and doing business under the laws of the United States or of
any state of the United States, in good standing, which is authorized under such
laws to exercise corporate trust, shareholder services or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $25 million, or (b) an affiliate of a corporation or other
entity described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and mail a notice thereof in
writing to the registered holders of the Right Certificates or, prior to the
Distribution Date, through any filing made by the Company pursuant to the
Securities Exchange Act of 1934, as amended. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22
ISSUANCE OF NEW RIGHT CERTIFICATES
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Rights Agreement.
In addition, in connection with the issuance or sale of Common Shares
following the Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date, the Company (a) shall with respect to Common
Shares so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Company, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Right Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) the
Company shall not be obligated to issue any such Right Certificates if, and to
the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificate would be issued, and (ii)
no Right Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
SECTION 23
REDEMPTION
(a) The Board of Directors of the Company may, at its option, at any time
prior to such time as any Person becomes an Acquiring Person, redeem all but not
less than all of the then outstanding Rights at an initial redemption price of
$.01 per Right ("Redemption Price"). The Redemption Price shall be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof. The redemption of the Rights by
the Board of Directors may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23, evidence of which shall be promptly filed with the Rights Agent, or, when
approprate, immediately upon the time or satisfaction of such conditions as the
Board of Directors may have established, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. The Company shall promptly give public disclosure of any such
redemption; provided, however, that the failure to give, or any defect in, any
such disclosure shall not affect the validity of such redemption. Within 10
days after such action of the Board of Directors ordering the redemption of the
Rights, the Company shall mail a notice of redemption to all the holders of the
then outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 24 hereof, and other than in connection with the
purchase of Common Shares prior to the Distribution Date.
SECTION 24
EXCHANGE
(a) The Board of Directors of the Company may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of the second paragraph of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan or compensation arrangement of the Company or
any such Subsidiary, or any entity holding Common Shares for or pursuant to the
terms of any such plan or any trust agreement entered into by the Company to
secure benefits payable under any employee benefit plan or compensation
arrangement of the Company or any Subsidiary of the Company), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of Common
Shares representing 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company shall promptly mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of exchange will state the method by which the
exchange of the Common Shares for Rights will be effected and, in the event of
any partial exchange, the number and kind of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
being exchanged (other than Rights which have become void pursuant to the
provisions of the second paragraph of Section 11(a)(ii) hereof) held by each
holder of such Rights.
(c) In the event that there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued to permit any exchange of Rights
as contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights.
SECTION 25
NOTICE OF CERTAIN EVENTS
(a) In case the Company, following the Distribution Date, shall propose (i)
to pay any dividend payable in stock of any class or series to holders of Common
Shares or to make any other distribution to holders of Common Shares (other than
a regular quarterly cash dividend) or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), (ii) to offer to holders of Common
Shares rights or warrants to subscribe for or to purchase any additional Common
Shares or any other securities, rights or options, (iii) to effect any
reclassification of Common Shares (other than a reclassification involving only
the subdivision of outstanding Common Shares), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
does not violate Section 11(n) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action to the extent feasible, which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by holders of Common
Shares if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least 10 days prior to
the record date for determining holders of Common Shares for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by holders of Common Shares, whichever shall be the earlier. The failure to
give notice required by this Section 25 or any defect therein shall not affect
the legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case any of the events set forth in Section 11(a)(ii) (except for an
event described in the second paragraph of that Section) hereof shall occur,
then the Company shall as soon as practicable thereafter give to each holder of
a Right Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under the second paragraph of
Section 11(a)(ii) hereof.
SECTION 26
NOTICES
Notices or demands authorized by this Rights Agreement to be given or made by
the Rights Agent or by the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Energizer Holdings, Inc.
800 Chouteau Avenue
St. Louis, Missouri 63102
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
any Right Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Attn: Compliance Department
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
SECTION 27
SUPPLEMENTS AND AMENDMENTS
Prior to the Distribution Date, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Rights Agreement
without the approval of any holders of certificates representing Common Shares.
From and after the Distribution Date, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this Rights Agreement without the
approval of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder (including, without limitation, to
extend the Final Expiration Date) or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); provided, however, that this Rights Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at such time as
the Rights are not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights; provided further that the
Company shall have the right to make unilaterally any changes necessary to
facilitate the appointment of a successor Rights Agent, which such changes shall
be set forth in a writing by the Company or by the Company and such successor
Rights Agent. Without limiting the foregoing, the Company may at any time prior
to such time as any Person becomes an Acquiring Person amend this Rights
Agreement to lower the thresholds set forth in Sections 1(a) and 3(a) hereof
from 20% to not less than the greater of (i) any percentage greater than the
largest percentage of the then outstanding Common Shares then known by the
Company to be beneficially owned by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan or compensation arrangement
of the Company or any Subsidiary of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan or compensation
arrangement) together with all Affiliates or Associates of such Person, or (ii)
10%. Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment, provided that such supplement or amendment does not
adversely affect the rights or obligations of the Rights Agent under Section 18
or Section 20 of this Rights Agreement. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Shares.
SECTION 28
SUCCESSORS
All the covenants and provisions of this Rights Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 29
DETERMINATIONS AND ACTIONS BY
THE BOARD OF DIRECTORS
For all purposes of this Rights Agreement, any calculation of the number of
Common Shares outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company shall have the exclusive
power and authority to administer this Rights Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Rights Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Rights Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Rights Agreement
(including a determination to redeem or not redeem the Rights or to amend the
Rights Agreement or a determination that an adjustment to the Redemption Price
or Exchange Ratio is or is not appropriate). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board to any liability to the holders of the Rights.
SECTION 30
BENEFITS OF THIS RIGHTS AGREEMENT
Nothing in this Rights Agreement shall be construed to give to any person
or corporation other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim under this Rights
Agreement; but this Rights Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
SECTION 31
SEVERABILITY
If any term, provision, covenant or restriction of this Rights Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Rights Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. It is the intent of the
parties hereto to enforce the remainder of the terms, provisions, covenants and
restrictions of this Agreement to the maximum extent permitted by law.
SECTION 32
GOVERNING LAW
This Rights Agreement and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Missouri and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
SECTION 33
COUNTERPARTS
This Rights Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
SECTION 34
DESCRIPTIVE HEADINGS
Descriptive headings of the several Sections of this Rights Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be
duly executed and attested, all as of the day and year first above written.
ENERGIZER HOLDINGS, INC.
Attest:
By: By:
Title: Title:
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
Attest:
By: By:
Title: Title:
<PAGE>
EXHIBIT A
FORM OF RIGHT CERTIFICATE
Certificate No. R- Rights
NOT EXERCISABLE AFTER MARCH 31, 2010 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS
RIGHT CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON. THIS RIGHT CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY ARE VOID IN THE CIRCUMSTANCES SPECIFIED IN THE
SECOND PARAGRAPH OF SECTION 11(a)(ii) OF THE RIGHTS AGREEMENT.]
Right Certificate
ENERGIZER HOLDINGS, INC.
This certifies that or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of April 1, 2000 (the " Rights Agreement"), between
Energizer Holdings, Inc., a Missouri corporation (the "Company") and Continental
Stock Transfer & Trust Company (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., St. Louis time, on March 31, 2010, at
the principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one fully paid non-assessable share of Energizer Holdings, Inc.
common stock, par value $.01 per share (the "Common Shares"), at a purchase
price of $___ per Common Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of Common Shares which may be purchased upon exercise hereof) set forth
above, and the Purchase Price set forth above, are the number and Purchase Price
as of _________________ based on the outstanding Common Shares at such date. As
provided in the Rights Agreement, the Purchase Price and the number of Common
Shares which may be purchased upon the exercise of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon the happening
of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent (and are available
upon the written request of the Company).
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate number of Common Shares
as the Rights evidenced by the Right Certificate or Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Right Certificate (i) may be redeemed by the Company at its option at a
redemption price of $.01 per Right or (ii) may be exchanged in whole or in part
by the Company, at its option, for one Common Share per Right, following the
Stock Acquisition Date and prior to the time an Acquiring Person, as that term
is defined in the Rights Agreement, owns 50% or more of the outstanding Common
Shares, as that term is defined in the Rights Agreement, of the Company.
No fractional shares will be issued upon the exercise of any Right or
Rights evidenced hereby, but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Common Shares or of any
other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
<PAGE>
Witness the facsimile signature of the proper officers of the Company and
its corporate seal. Dated: ______________________.
ATTEST: ENERGIZER HOLDINGS, INC.
By:
Countersigned:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By:
Authorized Officer
EXHIBIT A - FORM OF REVERSE SIDE OF RIGHT
CERTIFICATE
FORM OF ASSIGNMENT
- --------------------
(To be executed by the registered holder if such holder desires to transfer the
Right Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and transfers
unto
(Please print name and address of transferee)
- - - - - - - - - - - - - - - - - - - - - - - - -
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ,
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: , 20
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ______________________
__________________________________
Signature
(Signature must conform in all respects to name of holder as specified on
the face of this Right Certificate.)
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To [NAME OF COMPANY]:
The undersigned hereby irrevocably elects to exercise _____________ Rights
represented by this Right Certificate to purchase the Common Shares issuable
upon the exercise of such Rights and requests that certificates for such shares
be issued in the name of:
Name: _________________________________
Address: _______________________________
Social Security
or taxpayer identification
number: ______________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Name: ______________________________
Address:_____________________________
Social Security
or taxpayer identification
number: _____________________________
Dated: ______________________________
_______________________________
Signature
(Signature must conform in all respect to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) this Right Certificate [ ] is [ ] not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:____________________________
_________________________________
Signature
(Signature must conform in all respects to name of holder as specified on the
face of this Right Certificate)
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the form of Assignment or
the form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored as described in the second paragraph of
Section 11(a)(ii) of the Rights Agreement.
EXHIBIT B
SUMMARY OF RIGHTS TO
PURCHASE COMMON SHARES
Effective as of March 16, 2000, the Board of Directors of Energizer
Holdings, Inc. (the "Company") adopted a Rights Agreement (the "Rights
Agreement") and authorized and declared a dividend of one common share purchase
right (a "Right") for each outstanding share of common stock, par value $.01 per
share of the Company (the "Common Shares"). The dividend was payable as of the
close of business on March 31, 2000, to the shareholders of record on that date
(the "Record Date"), and with respect to Common Shares issued thereafter until
the Distribution Date (as hereinafter defined) or the expiration or earlier
redemption or exchange of the Rights. Except as set forth below, each Right
entitles the registered holder to purchase from the Company, at any time after
the Distribution Date one Common Share at a price per share of $150, subject to
adjustment (the "Purchase Price"). The description and terms of the Rights are
as set forth in the Rights Agreement.
Initially the Rights will be evidenced by all certificates representing
Common Shares then outstanding, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares upon the earlier to
occur of (i) 10 business days after the public announcement of a person's or
group of affiliated or associated persons' having acquired in a transaction that
is not a Permitted Offer (as defined below) beneficial ownership of 20% or more
of the outstanding Common Shares (such person or group being hereinafter
referred to as an "Acquiring Person"); or (ii) 10 business days (or such later
date as the Board may determine) following the commencement of, or announcement
of an intention to make, a tender offer or exchange offer, the consummation of
which would result in a person or group's becoming an Acquiring Person (the
earlier of such dates being called the "Distribution Date"). A Permitted Offer
is a tender or exchange offer which is for all outstanding Common Shares at a
price and on terms which a majority of certain members of the Board of Directors
determines to be adequate and in the best interests of the Company, its
shareholders and other relevant constituencies, other than such Acquiring
Person, its affiliates and associates.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with,
and only with, the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights,
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date, and such separate Right
Certificates alone will then evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on March 31, 2010 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
In the event that any person becomes an Acquiring Person, each holder of a
Right will thereafter have the right (the "Flip-In Right") to acquire a Common
Share for a purchase price equal to 33 1/3% of the then current market price of
a Common Share. Notwithstanding the foregoing, all Rights that are, or were,
beneficially owned by any Acquiring Person or any affiliate or associate thereof
will be null and void and not exercisable.
In the event that, at any time following the Distribution Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the holders of all of the outstanding Common Shares immediately prior to
the consummation of the transaction are not the holders of all of the surviving
corporation's voting securities, or (ii) more than 50% of the Company's assets
or earning power is sold or transferred, then each holder of a Right (except
Rights which have been voided as set forth above) shall thereafter have the
right (the "Flip-Over Right") to receive, upon exercise and payment of the
Purchase Price, common shares of the acquiring company having a value equal to
two times the Purchase Price. If a transaction would otherwise result in a
holder's having a Flip-In as well as a Flip-Over Right, then only the Flip-Over
Right will be exercisable; if a transaction results in a holder's having a
Flip-Over Right subsequent to a transaction resulting in a holder's having a
Flip-In Right, a holder will have Flip-Over Rights only to the extent such
holder's Flip-In Rights have not been exercised.
The Purchase Price payable, and the number of Common Shares or other
securities or property issuable, upon exercise of Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of Common Shares,
(ii) upon the grant to holders of Common Shares of certain rights or warrants to
subscribe for or purchase Common Shares at a price, or securities convertible
into Common Shares with a conversion price, less than the then current market
price of Common Shares, or (iii) upon the distribution to holders of Common
Shares of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings or dividends payable in
Common Shares) or of subscription rights or warrants (other than those referred
to above). However, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1%.
No fractional Common Shares will be issued and in lieu thereof, an
adjustment in cash will be made based on the market price of Common Shares on
the last trading day prior to the date of exercise.
At any time prior to the time a person becomes an Acquiring Person, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
At any time after any person becomes an Acquiring Person and prior to the
acquisition by such person or group of Common Shares representing 50% or more of
the then outstanding Common Shares, the Board of Directors of the Company may
exchange the Rights (other than Rights which have become null and void), in
whole or in part, at an exchange ratio of one Common Share per Right.
All of the provisions of the Rights Agreement may be amended prior to the
Distribution Date by the Board of Directors of the Company for any reason it
deems appropriate. Prior to the Distribution Date, the Board is also
authorized, as it deems appropriate, to lower the thresholds for distribution
and Flip-In Rights to not less than the greater of (i) any percentage greater
than the largest percentage then held by any shareholder, or (ii) 10%. After
the Distribution Date, the provisions of the Rights Agreement may be amended by
the Board in order to cure any ambiguity, defect or inconsistency, but such
changes may not adversely affect the interests of holders of Rights (excluding
the interests of any Acquiring Person).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders of the Company, shareholders may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to the Company's Registration Statement on
Form 10 filed with the Securities and Exchange Commission (Commission File No.
1-15401). A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
The portions of the legend in brackets shall be inserted only if applicable.
ENERGIZER HOLDINGS, INC.
2000 INCENTIVE STOCK PLAN
Section I. General Provisions
A. Purpose of Plan
The purpose of the Energizer Holdings, Inc. Incentive Stock Plan (the "Plan") is
to enhance the profitability and value of the Company for the benefit of its
shareholders by providing for stock options and other stock awards to attract,
retain and motivate officers and other key employees who make important
contributions to the success of the Company, and to provide equity-linked
compensation for directors.
B. Definitions of Terms as Used in the Plan
"Affiliate" shall mean any entity fifty percent or more of whose outstanding
voting securities, or beneficial ownership for entities other than corporations,
is owned, directly or indirectly, by the Company, or which otherwise controls,
is controlled by, or is under common control with, the Company.
"Award" shall mean an Option, including a Restoration Option, or any Other Stock
Award, granted under the terms of the Plan.
"Award Agreement" shall mean the document or documents evidencing an Award
granted under the Plan.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Committee" shall mean the Nominating and Executive Compensation Committee of
the Board, or any successor committee the Board may designate to administer the
Plan. Each member of the Committee shall be (i) an "outside director" within
the meaning of Section 162(m) of the Code, subject to any transitional rules
applicable to the definition of outside director, and (ii) a "Non-Employee
Director" within the meaning of Rule 16b-3 under the Exchange Act, or otherwise
qualified to administer the Plan as contemplated by that Rule or any successor
Rule under the Exchange Act.
"Common Stock" shall mean Energizer Holdings, Inc. $.01 par value Common Stock,
and, at the discretion of the Board, may also mean any other authorized class or
series of common stock of an Affiliate or common stock of the Company
outstanding upon the reclassification of the Common Stock or any other class or
series of common stock, including, without limitation, by means of any stock
split, stock dividend, creation of targeted stock, or other distributions of
stock in respect of stock, or any reverse stock split, or by reason of any
recapitalization, merger or consolidation of the Company.
"Company" shall mean Energizer Holdings, Inc.
"Corporate Officer" shall mean any President, Chief Executive Officer, Corporate
Vice President, Controller, Secretary or Treasurer of the Company, and any other
officers designated as corporate officers by the Board.
"Director" shall mean any member of the Board.
"Employee" shall mean any person who is employed by the Company or an Affiliate,
including Corporate Officers.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" of the Common Stock shall mean the closing price as reported
on the Composite Tape of the New York Stock Exchange, Inc. on the date that such
Fair Market Value is to be determined, or if no shares were traded on the
determination date, the immediately preceding day on which the Common Stock was
traded, or the fair market value as determined by any other method adopted by
the Committee (or with respect to Awards granted to Directors, by the Board)
which the Committee or the Board, as the case may be, may deem appropriate under
the circumstances, or as may be required in order to comply with or to conform
to the requirements of applicable laws or regulations.
"Incentive Stock Options" shall mean Options that qualify as such under Section
422 of the Code.
"Non-Qualified Stock Options" shall mean Options that do not qualify as
Incentive Stock Options.
"Option" shall mean the right, granted under the Plan, to purchase a specified
number of shares of Common Stock, at a fixed price for a specified period of
time.
"Other Stock Award" shall mean any Award granted under Section III of the Plan.
"Phantom Stock Option" shall mean an Option, granted under the Plan, which
provides that in lieu of receiving shares of Common Stock upon exercise, the
recipient will receive an amount equal to the excess of the Fair Market Value of
the Common Stock at exercise over the exercise price set forth in the Award
Agreement for the Phantom Stock Option.
"Restoration Option" shall mean an Option granted upon exercise of an
outstanding Option, provided that the exercise price is paid by tendering
previously owned shares of Common Stock by the Employee or Director.
"Restricted Stock Award" shall mean an Award of shares of Common Stock on which
are imposed restrictions on transferability or other shareholder rights,
including, but not limited to, restrictions which subject such Award to a
"substantial risk of forfeiture" as defined in Section 83 of the Code.
"Stock Appreciation Right" shall mean a right granted under the terms of the
Plan to receive an amount equal to the excess of the Fair Market Value of one
share of Common Stock as of the date of exercise of the Stock Appreciation Right
over the price per share of Common Stock specified in the Award Agreement of
which it is a part.
"Termination for Cause" shall mean an Employee's termination of employment with
the Company or an Affiliate because of the Employee's willful engaging in gross
misconduct, provided, however, that a Termination for Cause shall not include
termination attributable to (i) poor work performance, bad judgment or
negligence on the part of the Employee, (ii) an act or omission believed by the
Employee in good faith to have been in or not opposed to the best interests of
the Company and reasonably believed by the Employee to be lawful, or (iii) the
good faith conduct of the Employee in connection with a change of control of the
Company (including opposition to or support of such change of control).
C. Scope of Plan and Eligibility
Any Employee selected by the Committee, and any member of the Board, shall be
eligible for any Award contemplated under the Plan.
D. Authorization and Reservation
The Company shall establish a reserve of authorized shares of Common Stock in
the amount of 15,000,000 shares. This reserve shall represent the total number
of shares of Common Stock that may be presently issued pursuant to Awards,
including Restoration Options, subject to increase as described below. The
reserves may consist of authorized but unissued shares of Common Stock or of
reacquired shares, or both. Upon the forfeiture or expiration of an Award, all
shares of Common Stock not issued thereunder shall become available for the
granting of additional Awards. In addition, when a Restoration Option is
granted upon the tendering of shares of Common Stock in payment of the exercise
price of any Options, the reserve shall be increased in an amount equal to the
number of shares so tendered, and such additional reserved shares shall become
available for the granting of additional Awards. Awards under the Plan which
are payable in cash will not be counted against the reserve unless actual
payment is made in shares of Common Stock instead of cash.
E. Grant of Awards and Administration of the Plan
1. The Committee shall determine those Employees eligible to receive Awards and
the amount, type and terms of each Award, subject to the provisions of the Plan,
and it shall have the power to delegate responsibility to others to select
Employees other than Corporate Officers eligible to receive Awards and the
amount of each such Award, on terms determined by the Committee. The Board
shall determine the amount, type and terms of each Award to a Director, subject
to the provisions of the Plan. In making any determinations under the Plan, the
Committee or the Board, as the case may be, shall be entitled to rely on
reports, opinions or statements of officers or employees of the Company, as well
as those of counsel, public accountants and other professional or expert
persons. All determinations, interpretations and other decisions under or with
respect to the Plan or any Award by the Committee or the Board, as the case may
be, shall be final, conclusive and binding upon all parties, including without
limitation, the Company, any Employee or Director, and any other person with
rights to any Award under the Plan, and no member of the Board or the Committee
shall be subject to individual liability with respect to the Plan.
2. The Committee shall administer the Plan and, in connection therewith, it
shall have full power to construe and interpret the Plan, establish rules and
regulations and perform all other acts it believes reasonable and proper,
including the power to delegate responsibility to others to assist it in
administering the Plan. To the extent, however, that such construction and
interpretation or establishment of rules and regulations relates to or affects
any Awards granted to Directors, the Board must ratify such construction,
interpretation or establishment.
3. During the term of the Plan, the aggregate number of shares of Common Stock
that may be the subject of performance-based Awards (as defined in Section
162(m) of the Code), excluding Restoration Options, that may be granted to an
Employee or Director during any one fiscal year may not exceed 1,900,000. The
aggregate number of shares of Common Stock that may be the subject of
Restoration Options that may be granted to an Employee or Director during any
one fiscal year may not exceed 950,000. These amounts are subject to adjustment
as provided in Section VI. F. below. The maximum number of shares with regard
to which Options and Stock Appreciation Rights may be granted to any individual
during any one fiscal year is 1,900,000. Any stock-related deferred
compensation will not be applied against this limit. Awards granted in a fiscal
year but cancelled during that same year will continue to be applied against the
annual limit for that year, despite cancellation.
4. Awards granted under the Plan shall be evidenced in the manner prescribed by
the Committee from time to time in accordance with the terms of the Plan. The
terms of each Award shall be set forth in an Award Agreement, and the Committee
may require that a recipient execute and deliver the Award Agreement to the
Company in order to evidence his or her acceptance of the Award.
Section II. Stock Options
A. Description
The Committee or, in the case of Awards granted to Directors, the Board, may
grant Incentive Stock Options and it may grant Non-Qualified Stock Options. At
the discretion of the Committee or the Board, in the case of Options granted to
Directors, an Employee or Director may also be eligible to receive a Restoration
Option in connection with an Option exercise, as more particularly set forth
below.
B. Terms and Conditions
1. Each Option shall be set forth in a written Award Agreement containing such
terms and conditions as the Committee, or in the case of Awards granted to
Directors, the Board, may determine, subject to the provisions of the Plan.
2. The option price of shares of Common Stock subject to any Option shall not
be less than the Fair Market Value of the Common Stock at the time that the
Option is granted.
3. The Committee, or in the case of Awards granted to Directors, the Board,
shall determine the vesting schedules and the terms, conditions and limitations
governing exercisability of Options granted under the Plan. Unless accelerated
in accordance with its terms, an Option may not be exercised until a period of
at least one year has elapsed from the date of grant, and the term of any Option
granted hereunder shall not exceed ten years.
4. The purchase price of any shares of Common Stock pursuant to exercise of any
Option must be paid in full upon such exercise. The payment shall be made in
cash, in United States dollars, or by tendering shares of Common Stock owned by
the Employee or Director (or the person exercising the Option). If shares of
Common Stock are tendered, they must have been owned at least six months prior
to the date of tender (or such other time period as may be determined by the
Committee).
5. The terms and conditions of any Incentive Stock Options granted hereunder
shall be subject to and shall be designed to comply with, the provisions of
Section 422 of the Code, and any other administrative procedures adopted by the
Committee from time to time. Incentive Stock Options may not be granted to any
person who is not an Employee at the time of grant.
C. Restoration Options
The Committee, or, in the case of Awards granted to Directors, the Board, may
provide either at the time of grant or subsequently that an option include the
right to acquire a Restoration Option. An option which provides for the grant
of a Restoration Option shall entitle the Employee or Director, upon exercise of
the option (in whole or in part) prior to termination of employment or
retirement or resignation as a Director, and payment of the exercise price in
shares of Common Stock, to receive a Restoration Option. In addition to any
other terms and conditions set forth in the Award Agreement, the Restoration
Option shall be subject to the following terms: (i) the number of shares of
Common Stock which are the subject of the Restoration Option shall not exceed
the number of shares used to satisfy the option price of the original option
(which shares must have been owned for the time period described in B.4. above),
(ii) the grant date of the Restoration Option will be the date of exercise of
the original option, (iii) the exercise price per share shall be the Fair Market
Value on the Restoration Option grant date, (iv) the Restoration Option, unless
accelerated, in accordance with its terms, shall be exercisable no earlier than
one year after its grant date, (v) the term of the Restoration Option shall not
extend beyond the term of the original option, and (vi) the Restoration Option
will comply with all other provisions of the Plan. The Committee, or in the
case of Awards granted to Directors, the Board, shall, in addition to all other
powers granted to it under the Plan, have the power to designate any limitations
on the frequency of the grants of Restoration Options to any Employee or
Director, and may require, as a condition to the grant of Restoration Options,
that the recipient agree not to resell shares received upon exercise of the
original option (which original option may be a Restoration Option) for a
specific period.
Section III. Other Stock Awards
In addition to Options, the Committee or, in the case of Awards granted to
Directors, the Board may grant Other Stock Awards payable in Common Stock or
cash, upon such terms and conditions as the Committee or Board may determine,
subject to the provisions of the Plan. Other Stock Awards may include, but are
not limited to, the following types of Awards:
A. Restricted Stock Awards
The Committee or, in the case of Awards granted to Directors, the Board may
grant Restricted Stock Awards, each of which consists of a grant of shares of
Common Stock, subject to terms and conditions determined by the Committee or
Board in its sole discretion as well as to the provisions of the Plan. Such
terms and conditions shall be set forth in a written Award Agreement. The
shares of Common Stock granted will be restricted and may not be sold, pledged,
transferred or otherwise disposed of until the lapse or release of restrictions
in accordance with the terms of the Award Agreement and the Plan. Prior to the
lapse or release of restrictions, all shares of Common Stock which are the
subject of a Restricted Stock Award are subject to forfeiture in accordance with
Section IV of the Plan. Shares of Common Stock issued pursuant to a Restricted
Stock Award will be issued for no monetary consideration.
B. Stock Related Deferred Compensation
The Committee may, in its discretion, permit the deferral of payment of an
Employee's cash bonus or other cash compensation in the form of either Common
Stock or Common Stock equivalents (with each such equivalent corresponding to a
share of Common Stock), under such terms and conditions as the Committee may
prescribe in the Award Agreement relating thereto, including the terms of any
deferred compensation plan under which such Common Stock equivalents may be
granted. In addition, the Committee may, in any fiscal year, provide for an
additional matching deferral to be credited to an Employee's account under such
deferred compensation plans. The Committee may also permit account balances of
other cash or mutual fund accounts maintained pursuant to such deferred
compensation plans to be converted, at the discretion of the participant, into
the form of Common Stock equivalents, or to permit Common Stock equivalents to
be converted into account balances of such other cash or mutual fund accounts,
upon the terms set forth in such plans as well as such other terms and
conditions as the Committee may, in its discretion, determine. The Committee
may, in its discretion, determine whether any deferral in the form of Common
Stock equivalents, including deferrals under the terms of any deferred
compensation plans of the Company, shall be paid on distribution in the form of
cash or in shares of Common Stock.
C. Stock Appreciation Rights and Phantom Stock Options
The Committee or in the case of Awards granted to Directors, the Board, may, in
its discretion, grant Stock Appreciation Rights or Phantom Stock Options to
Employees or Directors, subject to terms and conditions determined by the
Committee or Board in its sole discretion. Such terms and conditions shall be
set forth in a written Award Agreement. Each Stock Appreciation Right or
Phantom Stock Option shall entitle the holder thereof to elect, prior to its
cancellation or termination, to exercise such unit or option and receive either
cash or shares of Common Stock, or both, as the Committee or Board may
determine, in an aggregate amount equal in value to the excess of the Fair
Market Value of the Common Stock on the date of such election over the Fair
Market Value on the date of grant of the Stock Appreciation Right or Phantom
Stock Option; except that if an option is amended to include Stock Appreciation
Rights, the designated Fair Market Value in the applicable Award Agreement may
be the Fair Market Value on the date that the Option was granted. The Committee
or Board may provide that a Stock Appreciation Right shall be automatically
exercised on one or more specified dates. Stock Appreciation Rights may be
granted on a "free-standing" basis or in conjunction with all or a portion of
the shares of Common Stock covered by an Option, either at the time of grant of
the Option or at any time thereafter during the term of the Option. In addition
to any other terms and conditions set forth in the Award Agreement, Stock
Appreciation Rights and Phantom Stock Options shall be subject to the following
terms: (i) Stock Appreciation Rights and Phantom Stock Options, unless
accelerated in accordance with their terms, may not be exercised within the
first year after the date of grant, (ii) the Committee or Board, as the case may
be, may, in its sole discretion, disapprove an election to surrender any Stock
Appreciation Right or Phantom Stock Option for cash in full or partial
settlement thereof, provided that such disapproval shall not affect the
recipient's right to surrender the Stock Appreciation Right or Phantom Stock
Option at a later date for shares of Common Stock or cash, and (iii) no Stock
Appreciation Right or Phantom Stock Option may be exercised unless the holder
thereof is at the time of exercise an Employee or Director and has been
continuously since the date the Stock Appreciation Right or Phantom Stock Option
was granted, except that the Committee or Board may permit the exercise of any
Stock Appreciation Right or Phantom Stock Option for any period following the
recipient's termination of employment or retirement or resignation from the
Board, not in excess of the original term of the Award, on such terms and
conditions as it shall deem appropriate and specify in the related Award
Agreement.
D. Performance-Based Other Stock Awards
The payment under any Other Stock Award that may be the subject of a
performance-based Award (as defined in Section 162(m) of the Code) (hereinafter
"Target Award") shall be contingent upon the attainment of one or more
pre-established performance goals established by the Committee in writing within
ninety (90) days of the commencement of the Target Award performance period (or
in the case of a newly hired Employee, before 25% of such Employee's service for
such Target Award performance period has lapsed). Such performance goals will
be based upon one or more of the following performance-based criteria: (a)
earnings per share; (b) income or net income; (c) return measures (including,
but not limited to, return on assets, capital, equity or sales); (d) cash flow
return on investments which equals net cash flows divided by owners equity; (e)
controllable earnings (a division's operating profit, excluding the amortization
of goodwill and intangible assets, less a charge for the interest cost for the
average working capital investment by the division); (f) operating earnings or
net operation earnings; (g) cost control; (h) share price (including, but not
limited to, growth measures); (i) total shareholder return (stock price
appreciation plus dividends); (j) economic value added; (k) EBITDA; (l)
operating margin (m) market share and (n) cash flow from operations.
Performance may be measured on an individual, corporate group, business unit, or
consolidated basis and may be measured absolutely or relatively to the Company's
peers. In establishing the Performance Goals, the Committee may account for the
effects of acquisitions, divestitures, extraordinary dividends, stock split-ups,
stock dividends or distributions, issuances of any targeted stock,
recapitalizations, warrants or rights issuances or combinations, exchanges or
reclassifications with respect to any outstanding class or series of Stock, or a
corporate transaction, such as any merger of the Company with another
corporation, any consolidation of the Company and another corporation into
another corporation, any separation of the Company or its business units
(including a spinoff or other distribution of stock or property by the Company),
any reorganization of the Company (whether or not such reorganization comes
within the definition of such term in Code Section 368) or any partial or
complete liquidation by the Company, or sale of all or substantially all of the
assets of the Company, or other extraordinary items.
The Committee, in its discretion, may cancel or decrease an earned Target Award,
but, except as otherwise permitted by Treasury Regulation Section
1.162-27(e)(2)(iii)(C), may not, under any circumstances, increase such award.
Before payments are made under a Target Award, the Committee shall certify in
writing that the performance goals justifying the payment under Target Award
have been met.
Section IV. Forfeiture of Awards
A. Unless the Committee, or in the case of a Director, the Board, shall have
determined otherwise, the recipient of any Award pursuant to the Plan shall
forfeit the Award, to the extent not then payable or exercisable, upon the
occurrence of any of the following events:
1. The recipient is Terminated for Cause.
2. The recipient voluntarily terminates his or her employment other than by
retirement after attainment of age 62, or such other age as may be provided for
in the Award Agreement.
3. The recipient engages in competition with the Company or any Affiliate.
4. The recipient engages in any activity or conduct contrary to the best
interests of the Company or any Affiliate, including, but not limited to,
conduct that breaches the recipient's duty of loyalty to the Company or an
Affiliate or that is materially injurious to the Company or an Affiliate,
monetarily or otherwise. Such activity or conduct may include: (i) disclosing
or misusing any confidential information pertaining to the Company or an
Affiliate; (ii) any attempt, directly or indirectly, to induce any Employee of
the Company or any Affiliate to be employed or perform services elsewhere, or
(iii) any direct or indirect attempt to solicit, or assist another employer in
soliciting, the trade of any customer or supplier or prospective customer of the
Company or any Affiliate.
B. The Committee or the Board, as the case may be, may include in any Award
Agreement any additional or different conditions of forfeiture it may deem
appropriate, and may waive any condition of forfeiture stated above or in the
Award Agreement.
C. In the event of forfeiture, the recipient shall lose all rights in and to
portions of the Award which are not vested or which are not exercisable. Except
in the case of Restricted Stock Awards as to which restrictions have not lapsed,
this provision, however, shall not be invoked to require any recipient to
transfer to the Company any Common Stock already received under an Award.
D. Such determinations as may be necessary for application of this Section,
including any grant of authority to others to make determinations under this
Section, shall be at the sole discretion of the Committee, or in the case of
Awards granted to Directors, of the Board, and such determinations shall be
conclusive and binding.
Section V. Beneficiary Designation; Death of Awardee
A. An Award recipient may file with the Committee a written designation of a
beneficiary or beneficiaries (subject to such limitations as to the classes and
number of beneficiaries and contingent beneficiaries as the Committee may from
time to time prescribe) to exercise, in the event of the death of the recipient,
an Option, Stock Appreciation Right or Phantom Stock Option, or to receive, in
such event, any Other Stock Awards. The Committee reserves the right to review
and approve beneficiary designations. A recipient may from time to time revoke
or change any such designation or beneficiary and any designation of beneficiary
under the Plan shall be controlling over any other disposition, testamentary or
otherwise. However, if the Committee shall be in doubt as to the right of any
such beneficiary to exercise any Option, Stock Appreciation Right or Phantom
Stock Option, or to receive any Other Stock Award, the Committee may determine
to recognize only an exercise by, or right to receive of, the legal
representative of the recipient, in which case the Company, the Committee and
the members thereof shall not be under any further liability to anyone.
B. Upon the death of an Award recipient, the following rules shall apply:
1. An Option, to the extent exercisable on the date of the recipient's death,
may be exercised at any time within three years after the recipient's death, but
not after the expiration of the term of the Option. The Option may be exercised
by the recipient's designated beneficiary or personal representative or the
person or persons entitled thereto by will or in accordance with the laws of
descent and distribution, or by the transferee of the Option in accordance with
the provisions of Section VI.A.
2. In the case of any Other Stock Award, any shares of Common Stock or cash
payable shall be determined as of the date of the recipient's death, in
accordance with the terms of the Award Agreement, and the Company shall issue
such shares of Common Stock or pay such cash to the recipient's designated
beneficiary or personal representative or the person or persons entitled thereto
by will or in accordance with the laws of descent and distribution.
Section VI. Other Governing Provisions
A. Transferability
Except as otherwise provided herein, no Award shall be transferable other than
by beneficiary designation, will or the laws of descent and distribution, and
any right granted under an Award may be exercised during the lifetime of the
holder thereof only by Award Recipient or by his/her guardian or legal
representative; provided, however, that an Award recipient may be permitted, in
the sole discretion of the Committee or its delegee, to transfer to a member of
such recipient's immediate family, family trust or family partnership as defined
by the Committee or its delegee, an Option granted pursuant to Section II
hereof, other than an Incentive Stock Option, subject to such terms and
conditions as the Committee or its delegee, in their sole discretion, shall
determine.
B. Rights as a Shareholder
A recipient of an Award shall, unless the terms of the Award Agreement provide
otherwise, have no rights as a shareholder, with respect to any Options or
shares of Common Stock which may be issued in connection with an Award, until
the issuance of a Common Stock certificate for such shares, and no adjustment
other than as stated herein shall be made for dividends or other rights for
which the record date is prior to the issuance of such Common Stock certificate.
In addition, with respect to Restricted Stock Awards, recipients shall have only
such rights as a shareholder as may be set forth in the terms of the Award
Agreement.
C. General Conditions of Awards
No Employee, Director or other person shall have any rights with respect to the
Plan, the shares of Common Stock reserved or in any Award, contingent or
otherwise, until an Award Agreement shall have been delivered to the recipient
and all of the terms, conditions and provisions of the Plan applicable to such
recipient shall have been met.
D. Reservation of Rights of Company
Neither the establishment of the Plan nor the granting of an Award shall confer
upon any Employee any right to continue in the employ of the Company or any
Affiliate or interfere in any way with the right of the Company or any Affiliate
to terminate such employment at any time. No Award shall be deemed to be salary
or compensation for the purpose of computing benefits under any employee
benefit, pension or retirement plans of the Company or any Affiliate, unless the
Committee shall determine otherwise.
E. Acceleration
The Committee, or, with respect to any Awards granted to Directors, the Board,
may, in its sole discretion, accelerate the vesting or date of exercise of any
Awards.
F. Effect of Certain Changes
In the event of any extraordinary dividend, stock split-up, stock dividend,
issuance of targeted stock, recapitalization, warrant or rights issuance, or
combination, exchange or reclassification with respect to the Common Stock or
any other class or series of common stock of the Company, or consolidation,
merger or sale of all, or substantially all, of the assets of the Company, the
Committee or its delegee shall cause such equitable adjustments as it deems
appropriate to be made to the shares reserved under Section I.D of the Plan and
the limits on Awards set forth in Section I.E.3 of the Plan, and the Committee
or Board shall cause such adjustments to be made to the terms of outstanding
Awards to reflect such event and preserve the value of such Awards. In the
event that the Committee or Board determines that any such event has a minimal
effect on the value of Awards, they may elect not to cause any such adjustments
to be made. In all events, the determination of the Committee or Board or their
delegee shall be conclusive. If any such adjustment would result in a
fractional share of Common Stock being issued or awarded under this Plan, such
fractional share shall be disregarded.
G. Withholding of Taxes
The Company shall deduct from any payment, or otherwise collect from the
recipient, any taxes required to be withheld by federal, state or local
governments in connection with any Award. The recipient may elect, subject to
approval by the Committee, to have shares of Common Stock withheld by the
Company in satisfaction of such taxes, or to deliver other shares of Common
Stock owned by the recipient in satisfaction of such taxes. With respect to
Corporate Officers, Directors or other recipients subject to Section 16(b) of
the Exchange Act, the Committee or, with respect to Awards granted to Directors,
the Board, may impose such other conditions on the recipient's election as it
deems necessary or appropriate in order to exempt such withholding from the
penalties set forth in said Section. The number of shares to be withheld or
delivered shall be calculated by reference to the Fair Market Value of the
Common Stock on the date that such taxes are determined.
H. No Warranty of Tax Effect
Except as may be contained in the terms of any Award Agreement, no opinion is
expressed nor warranties made as to the tax effects under federal, foreign,
state or local laws or regulations of any Award granted under the Plan.
I. Amendment of Plan
The Board may, from time to time, amend, suspend or terminate the Plan in whole
or in part, and if terminated, may reinstate any or all of the provisions of the
Plan, except that (i) no amendment, suspension or termination may apply to the
terms of any Award (contingent or otherwise) granted prior to the effective date
of such amendment, suspension or termination, in a manner which would reasonably
be considered to be adverse to the recipient, without the recipient's consent;
(ii) except as provided in Section VI.F., no amendment may be made to increase
the number of shares of Common Stock reserved under Section I.D of the Plan;
(iii) except as provided in Section VI.F., no amendment may be made to increase
the limitations set forth in Section 1.E.3 of the Plan, and (iv) no amendment
may withdraw the authority of the Committee to administer the Plan.
J. Construction of Plan
The place of administration of the Plan shall be in the State of Missouri and
the validity, construction, interpretation, administration and effect of the
Plan and of its rules and regulations, and rights relating to the Plan, shall be
determined solely in accordance with the laws of the State of Missouri, without
giving regard to the conflict of laws provisions thereof.
K. Unfunded Nature of Plan
The Plan, insofar as it provides for cash payments, shall be unfunded, and the
Company shall not be required to segregate any assets which may at any time be
awarded under the Plan. Any liability of the Company to any person with respect
to any Award under the Plan shall be based solely upon any contractual
obligations which may be created by the terms of any Award Agreement entered
into pursuant to the Plan. No such obligation of the Company shall be deemed to
be secured by any pledge of, or other encumbrance on, any property of the
Company.
L. Successors
All obligations of the Company under the Plan, with respect to any Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.
Section VII. Effective Date and Term
The Plan shall be effective April 1, 2000 and shall continue in effect until
December 31, 2009, when it shall terminate. Upon termination, any balances in
the reserve established under Section I.D shall be cancelled, and no Awards
shall be granted under the Plan thereafter. The Plan shall continue in effect,
however, insofar as is necessary, to complete all of the Company's obligations
under outstanding Awards or to conclude the administration of the Plan.
ENERGIZER HOLDINGS, INC.
------------------------
DEFERRED COMPENSATION PLAN
--------------------------
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
ARTICLE I
INTRODUCTION 1
1.1 NAME OF PLAN/PURPOSE. 1
1.2 "TOP HAT" RETIREMENT BENEFIT PLAN. 1
1.3 EFFECTIVE DATE. 1
1.4 ADMINISTRATION. 1
1.5 APPENDICES. 1
ARTICLE II
DEFINITIONS AND CONSTRUCTION 1
2.1 DEFINITIONS. 1
2.2 NUMBER AND GENDER. 5
2.3 HEADINGS. 5
ARTICLE III
PARTICIPATION AND ELIGIBILITY 6
3.1 ELIGIBILITY. 6
3.2 PARTICIPATION. 6
3.3 DURATION OF PARTICIPATION. 6
ARTICLE IV
DEFERRAL AND MATCHING CONTRIBUTIONS 7
4.1 DEFERRALS BY PARTICIPANTS. 7
4.2 EFFECTIVE DATE OF DEFERRED COMPENSATION AGREEMENT. 7
4.3 MODIFICATION OR REVOCATION OF ELECTION OF PARTICIPANT. 7
4.4 MATCHING CONTRIBUTIONS. 8
4.5 MANDATED DEFERRALS. 8
ARTICLE V
VESTING 9
5.1 VESTING IN BASE SALARY DEFERRALS AND BONUS DEFERRALS. 9
5.2 VESTING IN MATCHING CONTRIBUTIONS. 9
5.3 DEFERRAL PERIODS. 9
ARTICLE VI
ACCOUNTS 10
6.1 ESTABLISHMENT OF BOOKKEEPING ACCOUNTS. 10
6.2 SUBACCOUNTS. 10
6.3 INVESTMENT OF ACCOUNTS. 10
6.4 HYPOTHETICAL NATURE OF ACCOUNTS. 11
ARTICLE VII
PAYMENT OF ACCOUNT 12
7.1 TIMING OF DISTRIBUTION OF BENEFITS. 12
7.2 ADJUSTMENT FOR INVESTMENT GAINS AND LOSSES UPON A DISTRIBUTION 12
7.3 FORM OF PAYMENT OR PAYMENTS. 12
7.4 DEATH BENEFITS 13
7.5 DESIGNATION OF BENEFICIARIES. 13
7.6 UNCLAIMED BENEFITS. 13
7.7 WITHDRAWAL. 13
ARTICLE VIII
ADMINISTRATION 14
ARTICLE IX
AMENDMENT AND TERMINATION 15
ARTICLE X
GENERAL PROVISIONS 16
10.1 NON-ALIENATION OF BENEFITS. 16
10.2 CONTRACTUAL RIGHT TO BENEFITS FUNDING. 16
10.3 INDEMNIFICATION AND EXCULPATION. 16
10.4 NO EMPLOYMENT AGREEMENT. 16
10.5 CLAIMS FOR BENEFITS. 17
10.6 SUCCESSOR TO COMPANY. 17
10.7 SEVERABILITY. 17
10.8 ENTIRE PLAN. 17
10.9 PAYEE NOT COMPETENT. 18
10.10 TAX WITHHOLDING. 18
10.11 GOVERNING LAW. 18
<PAGE>
ENERGIZER HOLDINGS, INC.
DEFERRED COMPENSATION PLAN
ARTICLE I
INTRODUCTION
1.1 NAME OF PLAN/PURPOSE.
ENERGIZER HOLDINGS, INC. ("Company") hereby establishes the ENERGIZER
HOLDINGS, INC. DEFERRED COMPENSATION PLAN ("Plan") which Plan is an unfunded
deferred compensation plan for the benefit of certain designated management or
highly compensated employees and Directors of the Company and its Subsidiaries.
This Plan is intended to provide, in part, certain eligible employees and
Directors of the Company and its Subsidiaries the opportunity to defer elements
of their compensation or fees and to receive the benefit of additions to their
deferrals.
1.2 "TOP HAT" RETIREMENT BENEFIT PLAN.
The Plan is intended to be a nonqualified unfunded deferred
compensation plan. The Plan is maintained for Directors and for a select group
of management or highly compensated employees and, therefore, it is intended
that the Plan will be exempt from Parts 2, 3 and 4 of Title I of ERISA. The
Plan is not intended to qualify under Code section 401(a).
1.3 EFFECTIVE DATE.
The Plan is effective as of April 1, 2000.
1.4 ADMINISTRATION.
The Plan shall be administered by the Committee described in Article
VIII.
1.5 APPENDICES.
The Plan may be amplified or modified from time to time by Appendices.
Each Appendix forms a part of the Plan and its provisions shall supersede Plan
provisions as necessary to eliminate any inconsistencies.
<PAGE>
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS.
For purposes of the Plan, the following words and phrases, whether or
not capitalized, shall have the respective meanings set forth below, unless the
context clearly requires a different meaning:
(a) "ACCOUNT" means the bookkeeping account maintained on behalf
of each Participant pursuant to Article VI that is credited with Base Salary
Deferrals, Bonus Deferrals, Matching Contributions, and Director Fee Deferrals
pursuant to Article IV, amounts credited to the Ralston Plan Account, and the
earnings and losses on such amounts as determined in accordance with Article VI.
Account also shall include the amounts credited as of March 31, 2000 (including
amounts attributable to services performed on or before March 31, 2000 and not
paid until after such date but that are subject to a deferral election pursuant
to the Ralston Plan) under the Ralston Plan.
(b) "ACQUIRING PERSON" means any person or group of Affiliates or
Associates who is or becomes the beneficial owner, directly or indirectly, of
shares representing 20% or more of the total votes of the outstanding stock
entitled to vote at a meeting of shareholders.
(c) "AFFILIATE" or "ASSOCIATE" shall have the meanings set forth
in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended.
(d) "AFFILIATED COMPANY" means any corporation or business
organization during any period during which it is a member of a controlled group
of corporations or trades or businesses within the meaning of Code sections
414(b) and 414(c), which controlled group includes the Company, or it is a
member of an affiliated service group within the meaning of Code section 414(m),
which affiliated service group includes the Company.
(e) "BASE SALARY" means, with respect to an Employee, the annual
cash compensation relating to services performed during any calendar year,
whether or not actually paid in such calendar year or included on the Federal
Income Tax Form W-2 for such calendar year, excluding bonuses, commissions,
overtime, fringe benefits, stock options, relocation expenses, incentive
payments, non-monetary awards, and other fees, automobile and other allowances
paid to a Participant for employment services rendered (whether or not such
allowances are included in the Employee's gross income). Base Salary shall be
calculated before reduction for compensation voluntarily or mandatorily deferred
or contributed by the Participant pursuant to all qualified or non-qualified
plans of the Company and any Subsidiary and shall be calculated to include
amounts not otherwise included in the Participant's gross income under Code
Sections 125, 402(e)(3), 402(h) or 403(b) pursuant to plans established by the
Company; provided however, that all such amounts will be included in
compensation only to the extent that, had there been no such plan, the amount
would have been payable in cash to the Employee.
(f) "BASE SALARY DEFERRAL" means the amount of a Participant's
Base Salary which the Participant elects to have withheld on a pre-tax basis
from his Base Salary and credited to his Account pursuant to Section 4.1.
(g) "BENEFICIAL OWNER" shall mean a person who shall be deemed to
have acquired "beneficial ownership" of, or to "beneficially own," any
securities:
(i) which such person or any of such persons Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such person or any of such person's Affiliates or
Associates has (a) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of currently exercisable
conversion or exchange rights, warrants or options, or otherwise; provided,
however, that a person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such person or any of such person's Affiliates or
Associates until such tendered securities are accepted for purchase or exchange;
or (b) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other person with which such person or any of such person's Affiliates or
Associates has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting or disposing of any securities of Company.
Notwithstanding anything in this definition of "Beneficial Owner" to
the contrary, the phrase "then outstanding," when used with reference to a
person's beneficial ownership of securities of Company, shall mean the number of
such securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such person would be
deemed to own beneficially hereunder.
(h) "BENEFICIARY" means the person or entity designated by the
Participant to receive benefits which may be payable on or after the
Participant's death in accordance with Section 7.4.
(i) "BOARD" means the Board of Directors of the Company.
(j) "BONUS COMPENSATION" means the amount awarded to a Participant
for a Plan Year under any bonus plan maintained by the Company and/or a
Subsidiary which the Committee permits to be deferred under the Plan.
(k) "BONUS DEFERRAL" means the amount of a Participant's Bonus
Compensation which the Participant elects to have withheld on a pre-tax basis
from his Bonus Compensation and credited to his Account pursuant to Section 4.1.
(l) "CHANGE OF CONTROL" shall mean the time when (a) any Acquiring
person, either individually or together with such person's Affiliates or
Associates, shall have become the Beneficial Owner, director or indirectly, of
more than 20% of the total votes of the outstanding stock of Energizer Holdings,
Inc.; (b) individuals who shall qualify as Continuing Directors shall have
ceased for any reason to constitute at least a majority of the Board; or (c) a
majority of the individuals who shall qualify as Continuing Directors shall
approve a declaration that a Change of Control has occurred.
(m) "CODE" means the Internal Revenue Code of 1986, as amended,
and all valid regulations thereunder.
(n) "COMMITTEE" means the Committee appointed by the President of
the Company which administers the Plan in accordance with Article VIII.
(o) "COMPANY" means Energizer Holdings, Inc. and any successor
thereto.
(p) "CONTINUING DIRECTOR" means any member of the Board, while
such person is a member of such Board, who is not an Affiliate or Associate of
an Acquiring Person or of any such Acquiring Person's Affiliate or Associate and
was a member of such Board prior to the time when such Acquiring Person became
an Acquiring Person, and any successor of a Continuing Director, while such
successor is a member of such Board, who is not an Acquiring Person or an
Affiliate or Associate of an Acquiring Person or a representative or nominee of
an Acquiring Person or of any Affiliate or Associate of such Acquiring Person
and is recommended or elected to succeed the Continuing Director by a majority
of the Continuing Directors.
(q) "DEFERRAL PERIOD" means the period of time for which a
Participant elects to defer receipt of Base Salary Deferrals and Bonus
Deferrals, credited to such Participant's Account for a Plan Year, and the
earnings thereon. A Participant's election of a Deferral Period made with
respect to Bonus Deferrals for a Plan Year (i) may be different from such
election with respect to Salary Deferrals for such Plan Year, and (ii) shall
apply to Matching Contributions made by the Company with respect to such Bonus
Deferrals for such Plan Year.
(r) "DEFERRALS" means (i) with respect to a Participant who is an
Employee, Base Salary Deferrals and/or Bonus Deferrals, and (ii) with respect to
a Participant who is a Director, Director Fee Deferrals.
(s) "DEFERRED COMPENSATION AGREEMENT" means the written agreement
or electronic means by which a Participant elects the amount of Deferrals for a
Plan Year, the Deferral Period, the deemed investment and the form of payment
for the Deferrals and Matching Contributions, credited to such Participant's
Account for a Plan Year, and the earnings thereon. A Participant's election
with respect to the amount of Salary Deferrals and investment and form of
payment of such Salary Deferrals for a Plan Year may be different from such
elections with respect to Bonus Deferrals for such Plan Year. A Participant's
election on a Deferred Compensation Agreement made with respect to a Bonus
Deferral for a Plan Year shall apply to Matching Contributions made by the
Company with respect to such Bonus Deferrals for such Plan Year.
(t) "DIRECTOR" means any member of the Board or the board of
directors of a Subsidiary and who is not an officer or Employee of the Company
or a Subsidiary.
(u) "DIRECTOR FEE DEFERRALS" means the amount of Director Fees
which a Participant elects to have withheld on a pre-tax basis from his Director
Fees and credited to his Account pursuant to Section 4.1.
(v) "DIRECTOR FEES" means the amount of cash paid to a Director,
including but not limited to board of director fees, committee fees, annual
retainer director fees and such other amounts paid to a Director, for services
as a Director of the Company or a Subsidiary.
(w) "DISABILITY" means such physical or mental illness that
prevents the Participant from performing his regular duties for the Company
and/or Subsidiary, as determined by the Committee.
(x) "EFFECTIVE DATE" means April 1, 2000.
(y) "EMPLOYEE" means any common-law employee of the Company or an
Affiliated Company.
(z) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(aa) "MARKET VALUE" means the average of the closing stock price
of the Stock as reported by the New York Stock Exchange - Composite Transactions
during the ten (10) trading days immediately preceding the date in question, or,
if the Stock is not quoted on such composite tape or if such Stock is not listed
on such exchange, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934, as amended, on which the Stock is
listed, or if the Stock is not listed on any such exchange, the average of the
closing bid quotations with respect to a share of the Stock during the ten (10)
days immediately preceding the date in question on the NASDAQ Stock Market
National Market System or any system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of the Stock
as determined by a majority of the Continuing Directors in good faith.
(bb) "MATCHING CONTRIBUTION" means the amount of the contribution
made by the Company and/or a Subsidiary on behalf of a Participant who elects to
make Bonus Deferrals to the Plan for a Plan Year, subject to the provisions of
Section 4.4.
(cc) "PARTICIPANT" means each Employee who has been selected for
participation in the Plan and each Director who has become a Participant
pursuant to Article III.
(dd) "PLAN" means the ENERGIZER HOLDINGS, INC. DEFERRED
COMPENSATION PLAN, as amended from time to time.
(ee) "RALSTON PLAN" means the Ralston Purina Company Deferred
Compensation Plan for Key Employees.
(ff) "RALSTON PLAN ACCOUNT" means the amounts credited on behalf
of a Participant under the Ralston Plan as of March 31, 2000.
(gg) "RETIREMENT" means, with respect to a Participant who is a
Director, the Director's resignation or removal as a Director of the Company and
Subsidiaries following attainment of age 70.
(hh) "PLAN YEAR" means the twelve-consecutive month period
commencing January 1 of each year and ending on December 31, except that the
first Plan Year shall be the period beginning on April 1, 2000 and ending on
December 31, 2000.
(ii) "STOCK" means shares of the Company's common stock, par value
$.01 per share, which consists of shares of a class of common stock designated
as Energizer Common Stock ("ENR Stock") or any such other security outstanding
upon the reclassification or redesignation of the Company's ENR Stock or any
other outstanding class or series of common stock of the Company, including,
without limitation, any stock split-up, stock dividend, creation of tracking
stock, or other distributions of stock in respect of stock, or any reverse stock
split-up, or recapitalization of the Company or any merger or consolidation of
the Company with any Affiliate, or any other transaction, whether or not with or
into or otherwise involving an Acquiring Person.
(jj) "STOCK UNIT" means a stock unit that is equivalent to one
share of Stock.
(kk) "SUBSIDIARY" means any trade or business under common control
with the Company as defined in Code Section 1563(a)(1).
(ll) "TERMINATION FOR CAUSE" means a Participant's termination of
employment with the Company and its Subsidiaries because the Participant
willfully engaged in gross misconduct; provided, however, that a "Termination
for Cause" shall not include a termination attributable to: (i) poor work
performance, bad judgment or negligence on the part of the Participant; or (ii)
an act or omission reasonable believed by the Participant in good faith to have
been in or not opposed to the best interests of his employer and reasonably
believed by the Participant to be lawful.
(mm) "TRUST" means the fund established in consequence of and for
the purpose of the Plan, to be held in trust by the Trustee, from which Trust
benefits under the Plan may be paid.
(nn) "TRUST AGREEMENT" means the Trust under the Energizer
Holdings, Inc. Deferred Compensation Plan made and entered into by the Company
with the Trustee pursuant to the Plan, as said Agreement may be amended from
time to time.
(oo) "TRUSTEE" means any person, persons or corporation designated
by the Company from time to time to hold, invest and disburse, in accordance
with the Plan and Trust Agreement, the assets of the Plan.
(pp) "VALUATION DATE" means the last business day of each calendar
quarter, unless changed by the Committee, and each special valuation date
designated by the Committee.
2.2 NUMBER AND GENDER.
Wherever appropriate herein, words used in the singular shall be
considered to include the plural and words used in the plural shall be
considered to include the singular. The masculine gender, where appearing in
the Plan, shall be deemed to include the feminine gender.
2.3 HEADINGS.
The headings of Articles and Sections herein are included solely for
convenience and do not bear on the interpretation of the text. If there is any
conflict between such headings and the text of the Plan, the text shall control.
As used in the Plan, the terms "Article", "Section" and "Appendix" mean the text
that accompanies the specified Article, Section or Appendix of the Plan.
<PAGE>
ARTICLE III
PARTICIPATION AND ELIGIBILITY
3.1 ELIGIBILITY.
(a) Employees - The Committee shall select who is eligible to
---------
participate in the Plan from among the management and highly compensated
Employees of the Company and its Subsidiaries who are subject to the income tax
laws of the United States. In making its selections hereunder, the Committee
shall take into consideration the nature of the services rendered or to be
rendered to the Company and its Subsidiaries by an Employee, his present and
potential contribution to the success of the Company and its Subsidiaries, and
such other factors as the Committee deems relevant in accomplishing the purposes
of the Plan. The Committee shall notify each Participant of his selection as a
Participant.
(b) Directors - A Director is eligible to participate in the Plan.
---------
3.2 PARTICIPATION.
An Employee or Director shall become a Participant effective as of the
date the Committee determines, which date shall be on or after the date his
Deferred Compensation Agreement becomes effective. Subject to the provisions of
Section 3.3 a Participant shall remain eligible to continue participation in the
Plan for each Plan Year following his initial year of participation in the Plan.
3.3 DURATION OF PARTICIPATION.
(a) Employee - A Participant who is an Employee shall cease to be a
--------
Participant as of the date on which his or her employment with the Company and
all Subsidiaries terminates or is deemed terminated by the Company, the date the
Committee terminates such Participant's participation in the Plan or the date on
which the Plan terminates, whichever date is earliest. Any such Committee
action shall be communicated to such Participant prior to the effective date of
such action.
If the Committee determines in good faith that a Participant no longer
qualifies as a member of a select group of management or highly compensated
employees, as membership in such group is determined in accordance with the
provisions of Section 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee
shall have the right, in its sole discretion, to (i) terminate any deferral
election the Participant has made for the remainder of the Plan Year in which
the Participant's membership changes, (ii) prevent the Participant from making
future deferral elections and/or (iii) immediately distribute the Participant's
Account in which he is vested and terminate the Participant's participation in
the Plan.
(b) Director - A Participant who is a Director shall cease to be a
--------
Participant as of the date on which he ceases to be a Director, the date the
Committee terminates such Participant's participation in the Plan or the date on
which the Plan terminates, whichever date is earliest. Any such Committee
action shall be communicated to such Participant prior to the effective date of
such election.
<PAGE>
ARTICLE IV
DEFERRAL AND MATCHING CONTRIBUTIONS
4.1 DEFERRALS BY PARTICIPANTS.
(a) Deferred Elections by Participants - Before the first day of each
------------------------------------
Plan Year (or the remaining portion thereof for an Employee or Director who
commences participation in the Plan other than on the first day of a Plan Year),
a Participant may file with the Committee a Deferred Compensation Agreement
pursuant to which such Participant elects to make Deferrals for such Plan Year.
Any such Participant election shall be subject to any maximum or minimum
percentage or dollar amount limitations and to any other rules prescribed by the
Committee in its sole discretion.
(b) Effect of Termination on Deferral Election - Base Salary Deferrals
-------------------------------------------
will be credited to the Account of each Participant as of the last day of each
calendar month, provided that such Participant is an Employee on the last day of
such calendar month. A Participant whose employment terminates during the
calendar month shall be paid in cash the amount of his Base Salary Deferrals for
such month. Bonus Deferrals will be credited to the Account of each Participant
as soon as administratively feasible after such Bonus Compensation otherwise
would have been paid to the Participant in cash, provided that the Participant
is an Employee as of such date. A Participant whose employment terminates
before his Bonus Compensation would have been paid to him in cash will be paid
his Bonus Deferral in cash. Director Fee Deferrals will be credited to the
Account of each Participant as soon as administratively feasible after such
Director Fees otherwise would have been paid to the Participant in cash,
provided that the Participant is a Director as of such date. A Participant
whose relationship as a Director terminates before his Director Fees would have
been paid to him in cash will be paid his Director Fee Deferrals in cash.
4.2 EFFECTIVE DATE OF DEFERRED COMPENSATION AGREEMENT.
A Participant's initial Deferred Compensation Agreement shall be
effective as of the date the Participant commences participation in the Plan.
Each subsequent Deferred Compensation Agreement shall become effective on the
first day of the Plan Year to which it relates. If a Participant fails to
complete a Deferred Compensation Agreement on or before the date the Participant
commences participation in the Plan or the first day of any Plan Year, the
Participant shall be deemed to have elected not to make Deferrals for such Plan
Year (or remaining portion thereof if the Participant enters the Plan other than
on the first day of a Plan Year).
4.3 MODIFICATION OR REVOCATION OF ELECTION OF PARTICIPANT.
A Participant may not discontinue or change the amount of his
Deferrals during a Plan Year. Under no circumstances may a Participant's
Deferred Compensation Agreement be made, modified or revoked retroactively.
<PAGE>
4.4 MATCHING CONTRIBUTIONS.
For each Plan Year, the Company and/or its Subsidiaries shall make a
Matching Contribution with respect to a Participant's Bonus Deferrals and
Director Fee Deferrals for such Plan Year that are invested in the Stock Unit
fund pursuant to Section 6.3; provided however, that such Bonus Deferrals and
Director Fee Deferrals for such Plan Year must be invested in the Stock Unit
fund as provided in Section 6.3 for a period of not less than twelve (12) months
beginning on the date such Bonus Deferrals and Director Fee Deferrals are
credited to such Participant's Account in order to receive a Matching
Contribution. The amount, if any, of such Matching Contribution for each Plan
Year shall be determined by the Company in its sole discretion.
4.5 MANDATED DEFERRALS.
If the Committee mandates the deferral of any compensation in order to
preserve the deductibility of such compensation, when paid, under Code Section
162(m), such amounts shall remain deferred until such time as the Committee
directs. The Participant shall be entitled to elect the hypothetical investment
of such amounts in accordance with Section 7.3. Such mandated deferrals shall
not be entitled to a Matching Contribution and shall be paid in a lump sum as
soon as practicable after they become deductible by the Company or its
Subsidiaries as determined by the Committee or its delegee.
<PAGE>
ARTICLE V
VESTING
5.1 VESTING IN BASE SALARY DEFERRALS AND BONUS DEFERRALS.
A Participant shall always be 100% vested in the amounts credited to
his Account attributable to his Base Salary Deferrals, Bonus Deferrals and
Director Fee Deferrals, including earnings thereon. A Participant shall also be
100% vested in his Ralston Plan Account and in the amounts credited as of March
31, 2000 (including amounts attributable to services performed on or before
March 31, 2000 and not paid until after such date but that are subject to a
deferral election pursuant to the Ralston Plan) under the Ralston Plan.
5.2 VESTING IN MATCHING CONTRIBUTIONS.
(a) Employees - A Participant who is an Employee shall become 100%
---------
vested in the Matching Contributions and earnings thereon, credited/debited to
his Account for a Plan Year, upon the expiration of thirty-six (36) months
beginning on the date such Matching Contributions are credited to his Account.
Notwithstanding the foregoing, a Participant who is an Employee shall,
become 100% vested in the Matching Contributions and earnings thereon,
credited/debited to his Account upon the Participant's death, disability,
involuntary termination (other than Termination for Cause) or upon a Change of
Control.
(b) Directors - A Participant who is a Director, shall always be 100%
---------
vested in the amounts credited to his Account, including earnings thereon.
5.3 DEFERRAL PERIODS.
(a) Employees - A Participant who is an Employee must specify on the
---------
Deferred Compensation Agreement, the Deferral Period for the Base Salary
Deferrals and the Deferral Period for the Bonus Deferrals for the Plan Year to
which the Deferred Compensation Agreement relates, and earnings thereon, subject
to certain rules as determined by the Committee from time to time. A
Participant shall elect one of the Deferral Period options as follows: (1) a
Deferral Period of at least three (3) years pursuant to which a distribution is
made in January of the fourth (or later) Plan Year following the Plan Year for
which the Base Salary Deferrals, and Bonus Deferrals and Matching Contributions
thereon, were made, and (2) termination of employment with the Company and all
Subsidiaries for any reason.
(b) Directors - A Participant who is a Director may not elect a
---------
Deferral Period with respect to Director Fee Deferrals. Payment of such
Director Fee Deferrals shall be made in accordance with the provisions of
Section 7.1.
<PAGE>
ARTICLE VI
ACCOUNTS
6.1 ESTABLISHMENT OF BOOKKEEPING ACCOUNTS.
A separate bookkeeping account shall be maintained for each
Participant. Such account shall be credited with the Deferrals made by the
Participant pursuant to Section 4.1, the Matching Contributions made by the
Company or a Subsidiary pursuant to Section 4.4, and amounts credited to his
Ralston Plan Account and credited (or charged, as the case may be) with the
hypothetical investment results pursuant to Section 6.3.
6.2 SUBACCOUNTS.
Within each Participant's bookkeeping account, separate subaccounts
may be maintained to the extent necessary for the administration of the Plan.
For example, it may be necessary to maintain separate subaccounts where the
Participant has specified different Deferral Periods, methods of payment or
investment directions with respect to his Deferrals for different Plan Years.
6.3 INVESTMENT OF ACCOUNTS.
A Participant shall elect to invest the amounts credited to his
Account in such measurement funds as are selected by the Committee in its sole
discretion, including but not limited to the Stock Unit measurement fund. The
Committee may change or eliminate such measurement funds from time to time. The
investment of such funds shall be made in accordance with such rules and
procedures established by the Committee.
A Participant's Account shall consist of a cash subaccount and a stock
subaccount. Amounts credited to the cash subaccount shall be invested in
investments other than Stock Units. Amounts credited to the stock subaccount
shall be maintained as Stock Units. A Participant shall elect on his Deferred
Compensation Agreement the portion of his Deferrals for a Plan Year that will be
credited to a cash subaccount and to the stock subaccount. The balance of a
Participant's Account as of any date is the aggregate of the cash subaccount and
the stock subaccount as of such date. The balance of each cash subaccount shall
be expressed in United States dollars. The balance of each stock subaccount
shall be expressed in the numbers of shares of Stock deemed credited to such
subaccount, with fractional shares of Stock calculated to three decimal places.
The number of Stock Units credited to the stock subaccount as of any date shall
be equal to the quotient of the amount credited to the stock subaccount divided
by the Market Value on such date. Upon the occurrence of any stock split-up
dividend, issuance of any tracking stock, combination or reclassification with
respect to any outstanding series or class of Stock, or consolidation, merger or
sale of all or substantially all of the assets of the Company, the number of
Stock Units in each stock subaccount shall, to the extent appropriate, be
adjusted accordingly.
Matching Contributions must be invested in the Stock Unit fund for a
period of not less than thirty-six (36) months beginning on the date such
Matching Contributions are credited to a Participant's Account.
As of each Valuation Date, a Participant's Account shall be adjusted
with earnings and losses to reflect the investment elections made by the
Participant.
6.4 HYPOTHETICAL NATURE OF ACCOUNTS.
The Account established under this Article VI shall be hypothetical in
nature and shall be maintained for bookkeeping purposes only so that earnings
and losses on the Base Salary Deferrals, Bonus Contributions and Matching
Contributions made to the Plan can be credited (or charged, as the case may be).
Neither the Plan nor any of the Accounts (or subaccounts) established hereunder
shall hold any actual funds or assets. The right of any person to receive one
or more payments under the Plan shall be an unsecured claim against the general
assets of the Company. Any liability of the Company to any Participant, former
Participant, or Beneficiary with respect to a right to payment shall be based
solely upon contractual obligations created by the Plan. Neither the Company
and/or any Subsidiary, the Board, nor any other person shall be deemed to be a
trustee of any amounts to be paid under the Plan. Nothing contained in the
Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary relationship, between
the Company and/or any Subsidiary and a Participant or any other person.
<PAGE>
ARTICLE VII
PAYMENT OF ACCOUNT
7.1 TIMING OF DISTRIBUTION OF BENEFITS.
(a) Employees - With respect to a Participant who is an Employee,
---------
distribution of Base Salary Deferrals, Bonus Deferrals and Matching
Contributions, shall be made as soon as practicable following the date the
Deferral Period for such Deferrals ends.
(b) Directors - With respect to a Participant who is a Director,
---------
distribution of Director Fee Deferrals shall be made not later than sixty (60)
days following the date the Participant's relationship as a Director terminates.
7.2 ADJUSTMENT FOR INVESTMENT GAINS AND LOSSES UPON A DISTRIBUTION.
Upon a distribution pursuant to this Article VII, the balance of a
Participant's Account shall be determined as of the Valuation Date immediately
preceding the date of the distribution to be made and shall be adjusted for
investment gains and losses which have accrued to the date of distribution but
which have not been credited to his Account.
7.3 FORM OF PAYMENT OR PAYMENTS.
Deferrals and Matching Contributions, made to the Plan for a Plan
Year, shall be distributed to the Participant in accordance with the form of
payment specified as follows:
(a) Lump Sum Payment-A Participant who is an Employee shall be
------------------
paid his benefit in the form of a lump sum payment if the vested amount to be
distributed to such Participant, determined as of the date such amount is to be
distributed, is less than $100,000. A Participant who is a Director shall
receive payment of his Account in a lump sum payment.
(b) Annual Installment Payment-A Participant who is an Employee
----------------------------
may elect, in his Deferred Compensation Agreement, to be paid his benefit in a
series of annual installment payments provided that the vested amount to be
distributed to such Participant, determined as of the date such amount is to be
distributed, is equal to or greater than $100,000. If a Participant does not
elect payment in the form of installment payments or if the vested amount to be
distributed to such Participant determined as of the date such amount is to be
distributed is equal to or greater than $100,000 at the time such payment is to
be made, his benefit shall be paid in the form of a lump sum payment. If a
benefit is to paid in a series of annual installment payments, the annual
installment payments may be made for a period equal to five (5) or ten (10)
years. Annual installments shall commence within 60 days of termination of
employment with the Company and all Subsidiaries provided that the vested amount
to be distributed to such Participant determined as of the date such amount is
to be distributed is equal to or greater than $100,000. Subsequent annual
installment payments shall be paid as soon as administratively feasible after
January l of each year. The amount of each annual installment payment shall be
calculated by multiplying the amount credited to be distributed to such
Participant by a fraction, the numerator of which is one, and the denominator of
which is the remaining number of annual installment payments to be made to the
Participant.
7.4 DEATH BENEFITS
(a) Employees - In the event of the death of a Participant who is an
---------
Employee prior to attainment of age fifty (50) years, the amount credited to the
Participant's Account shall be paid in a lump sum to the Beneficiary. If a
Participant who is an Employee dies at or after attainment of age fifty (50)
years, the amount credited to the Participant's Account shall be paid in
accordance with the applicable form of distribution elected by the Participant;
but if no Beneficiary is designated, then benefits shall be paid in a lump sum
to the Participant's estate or as provided by law. Distribution shall be made
(and, in the case of installment payments, shall commence) no later than sixty
(60) days following the Participant's death.
(b) Directors - In the event of the death of a Participant who is a
---------
Director, the amount credited to the Participant's Account shall be paid in a
lump sum not later than sixty (60) days following the date of the Participant's
death.
7.5 DESIGNATION OF BENEFICIARIES.
A Participant may designate the Beneficiary or Beneficiaries to whom
his benefit under the Plan shall be paid if he dies before he receives complete
payment of such benefit. A Beneficiary designation (i) must be made on a
beneficiary designation form provided by the Committee, (ii) shall be effective
on the date such designation form is actually received by the Committee, and
(iii) shall revoke all prior designations made by the Participant. A
Beneficiary designation form received by the Committee after the date of the
Participant's death shall be null and void. If a Participant has not designated
a Beneficiary, if no designated Beneficiary survives the Participant or if the
Beneficiary designation is legally invalid for any reason, then, the
Participant's Beneficiary shall be the Participant's executor or administrator,
or his heirs at law if there is no administration of such Participant's estate.
7.6 UNCLAIMED BENEFITS.
In the case of a benefit payable on behalf of such Participant, if the
Committee is unable to locate the Participant or Beneficiary to whom such
benefit is payable, such benefit may be forfeited to the Company, upon the
Committee's determination. Notwithstanding the foregoing, if subsequent to any
such forfeiture the Participant or Beneficiary to whom such benefit is payable
makes a valid claim for such benefit, such forfeited benefit shall be paid by
the Company or restored to the Plan by the Company.
7.7 WITHDRAWAL.
A Participant (or, after a Participant's death, his or her
Beneficiary) may elect, at any time, to withdraw all of his Account in
accordance with such rules and procedures prescribed by the Committee. No
partial withdrawals of a Participant's Account may be made. The Participant (or
his or her Beneficiary) shall make this election by giving the Committee advance
written notice of the election in a form determined from time to time by the
Committee. The Participant (or his or her Beneficiary) shall be paid the
withdrawal amount within 60 days of his or her election. The Committee may
impose suspensions of future deferrals or other penalties as a condition to such
withdrawals. The payment of this Withdrawal Amount shall not be subject to the
deduction limitation under Code Section 162(m).
<PAGE>
ARTICLE VIII
ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
have all powers necessary or appropriate to enable it to carry out its
administrative duties. Not in limitation, but in application of the foregoing,
the Committee shall have the duty and power to interpret the Plan and determine
all questions that may arise hereunder as to the status and rights of Employees,
Participants, and Beneficiaries. The Committee may exercise the powers hereby
granted in its sole and absolute discretion. No member of the Committee shall
be personally liable for any actions taken by the Committee unless the member's
action involves willful misconduct. The Committee may delegate its
administrative responsibilities to any Employee of the Company provided such
designation is in writing.
<PAGE>
ARTICLE IX
AMENDMENT AND TERMINATION
The power to amend, modify or terminate the Plan in whole or in part
and at any time is reserved to the Committee, except that the co-Chief Executive
Officer of the Company, may make amendments to resolve ambiguities, supply
omissions and cure defects, and may make any amendments deemed necessary or
desirable to comply with federal tax laws or regulations to avoid adverse tax
consequences to Participants or to the Company, and any other amendments deemed
necessary or desirable, which shall be reported to the Committee.
Notwithstanding the foregoing, no amendment or modification which would
reasonably be considered to be adverse to a Participant or Beneficiary may apply
to or affect the terms of any deferral of compensation that was approved prior
to the effective date of such amendment or modification without the consent of
the Participant or Beneficiary affected thereby.
The Board reserves the right to terminate the Plan in whole or in
part, but such termination shall not affect the Deferred Compensation Agreements
then in effect, except that no additional amounts may be deferred by
Participants to the Plan after the date of termination of the Plan.
Upon termination of the Plan, all benefits shall be paid at such time
and in such manner as provided in Article VII.
<PAGE>
ARTICLE X
GENERAL PROVISIONS
10.1 NON-ALIENATION OF BENEFITS.
No right or benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber, or change any right or
benefit under this Plan shall be void. No right or benefit hereunder shall in
any manner be liable for or subject to the debts, contracts, liabilities or
torts of the person entitled to such benefits. If the Participant or
Beneficiary becomes bankrupt, or attempts to anticipate, alienate, sell, assign,
pledge, encumber, or change any right hereunder, then such right or benefit
shall, in the discretion of the Committee, cease and terminate, and in such
event, the Committee may hold or apply the same or any part thereof for the
benefit of the Participant or Beneficiary, spouse, children, or other
dependents, or any of them in such manner and in such amounts and proportions as
the Committee may deem proper.
10.2 CONTRACTUAL RIGHT TO BENEFITS FUNDING.
The Plan creates and vests in each Participant a contractual right to
the benefits to which he is entitled hereunder, enforceable by the Participant
against the Company. The benefits to which a Participant is entitled under the
Plan shall be paid from the general assets of the Company or from the Trust that
may be established or maintained to provide such benefits.
If a Trust is established and maintained, amounts deposited with the
Trustee shall be held and disposed of in accordance with the terms of the Trust
Agreement and payments made under the terms of the Trust Agreement shall be in
satisfaction of claims against the Company under the Plan. Nothing in the Plan
or Trust Agreement shall relieve the Company of its liabilities to pay amounts
under the Plan except to the extent that such liabilities are met from the use
of the assets held in Trust.
10.3 INDEMNIFICATION AND EXCULPATION.
The members of the Committee and their agents, and the officers,
directors and employees of the Company and any Subsidiary shall be indemnified
and held harmless by the Company against and from any and all loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by them in
connection with or resulting from any claim, action, suit, or proceeding to
which they may be a party or in which they may be involved by reason of any
action taken or failure to act under this Plan and against and from any and all
amounts paid by them in settlement (with the Company's written approval) or paid
by them in satisfaction of a judgment in any such action, suit, or proceeding.
The foregoing provision shall not be applicable to any person if the loss, cost,
liability, or expense is due to such person's gross negligence or willful
misconduct.
10.4 NO EMPLOYMENT AGREEMENT.
The Plan is not a contract of employment, and participation in the
Plan shall not confer on any Employee the right to be retained in the employ of
the Company and/or any Subsidiary.
10.5 CLAIMS FOR BENEFITS.
A Participant or Beneficiary may claim any benefit to which he or she
is entitled under this Plan by a written notice to the Committee. If a claim is
denied, it must be denied within a reasonable period of time, and be contained
in a written notice stating the following:
(a) The specific reason for the denial.
(b) Specific reference to the Plan provision on which the denial
is based.
(c) Description of additional information necessary for the
claimant to present his claim, if any, and an explanation of why such material
is necessary.
(d) An explanation of the Plan's claims review procedure.
The claimant will have sixty (60) days to request a review of the
denial by the Committee, which will provide a full and fair review. The request
for review must be in writing delivered to the Committee. The claimant may
review pertinent documents, and he may submit issues and comments in writing.
The decision by the Committee with respect to the review must be given within
sixty (60) days after receipt of the request, unless special circumstances
require an extension (such as for a hearing). In no event shall the decision be
delayed beyond one hundred and twenty (120) days after receipt of the request
for review. The decision shall be written in a manner calculated to be
understood by the claimant, and it shall include specific reasons and refer to
specific Plan provisions as to its effect.
10.6 SUCCESSOR TO COMPANY.
The Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company, expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Plan, in the same manner and to the same extent that the Company would be
required to perform. Accordingly, this Plan and the related Deferred
Compensation Agreements shall be binding upon, and the term "Company" shall
include any successor or assignee to the business or assets of the Company.
10.7 SEVERABILITY.
In the event any provision of the Plan shall be held invalid or
illegal for any reason, any illegality or invalidity shall not affect the
remaining parts of the Plan, but the Plan shall be construed and enforced as if
the illegal or invalid provision had never been inserted, and the Company shall
have the privilege and opportunity to correct and remedy such questions of
illegality or invalidity by amendment as provided in the Plan.
10.8 ENTIRE PLAN.
This document and any amendments contain all the terms and provisions
of the Plan and shall constitute the entire Plan, any other alleged terms or
provisions being of no effect.
10.9 PAYEE NOT COMPETENT.
In the event that the Committee shall find that the Participant is
unable to care for his affairs because of illness or accident, the Committee may
direct that any benefit payment due him, unless claim shall have been made
therefor by a duly appointed legal representative, be paid to his spouse, a
child, a parent or other blood relative, or to a person with whom he resides,
and any such payment so made shall be a complete discharge of the liabilities of
the Plan therefor.
10.10 TAX WITHHOLDING.
The Company shall have the right to deduct from each payment to be
made under the Plan any required withholding taxes.
10.11 GOVERNING LAW.
This Plan shall be construed and governed in accordance with the laws
of the state of Missouri without reference to conflict of law principles.
IN WITNESS WHEREOF, the Company has caused this Plan to be properly
executed on the ______ day of _____________________, 2000.
ENERGIZER HOLDINGS, INC.
BY:
ITS:
INDEMNIFICATION AGREEMENT
-------------------------
INDEMNIFICATION AGREEMENT (the "Agreement") made this ______ day of
______________, 20__, between ENERGIZER HOLDINGS, INC., a Missouri corporation
(the "Company") and _____________ ("Officer").
WHEREAS, Officer is a Corporate Officer of the Company, and in such
capacity is performing a valuable service for Company; and
WHEREAS, the Company's Articles of Incorporation (the "Articles") permit
the indemnification of directors, officers, employees and certain agents of the
Company, and indemnification is also authorized by Section 351.355 of the
Missouri Revised Statutes 1978, as amended to date (the "Indemnification
Statute"); and
WHEREAS, the Articles and the Indemnification Statute permit full
indemnification of officers absent knowingly fraudulent, deliberately dishonest
or willful misconduct; and
WHEREAS, in order to induce Officer to continue to serve as a Corporate
Officer of the Company, Company has determined and agreed to enter into this
contract with Officer;
NOW THEREFORE, in consideration of Officer's continued service as a
Corporate Officer after the date hereof, the Company and Officer agree as
follows:
1. Indemnity of Officer. Company hereby agrees to hold harmless and
----------------------
indemnify Officer to the full extent authorized or permitted by the provisions
of the Indemnification Statute, or by any amendment thereof, or by any other
statutory provision authorizing or permitting such indemnification which is
adopted after the date hereof.
2. Additional Indemnity. Subject to the exclusions set forth in Section
--------------------
3 hereof, Company further agrees to hold harmless and indemnify Officer against
any and all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement, actually and reasonably incurred by Officer in connection
with any threatened, pending or completed action, claim, suit or proceeding,
whether civil, criminal, administrative or investigative (including an action by
or in the right of the Company) to which Officer is, was or at any time becomes
a party, or is threatened to be made a party, by reason of the fact that Officer
is, was or at any time (whether before or after the date of this Agreement)
becomes a director, officer, employee or agent of the Company, or is or was
serving or at any time serves at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
<PAGE>
3. Limitations on Additional Indemnity.No indemnity pursuant to Section 2
---------------------------------------
hereof shall be paid by Company:
(a) Except to the extent the aggregate of losses to be indemnified
thereunder exceeds the amount of such losses for which the Officer is
indemnified pursuant to Section 1 hereof or pursuant to any insurance policies
or other comparable policies purchased and maintained by the Company;
(b) In respect to remuneration paid to Officer if it shall be finally
judicially adjudged that such remuneration was in violation of law;
(c) On account of any suit in which a judgment is rendered against
Officer for an accounting of profits made from the purchase or sale by Officer
of securities of the Company pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended or similar provisions of any state
or local statutory law;
(d) On account of Officer's conduct which is finally judicially
adjudged to have been knowingly fraudulent, deliberately dishonest or willful
misconduct;
(e) If it shall be finally judicially adjudged that such
indemnification is not lawful.
Reference in this Agreement to a matter being "finally judicially adjudged"
shall mean that there shall have been a final decision by a court having
jurisdiction in the matter, all appeals having been denied or not have been
taken and the time therefore to have expired.
4. Continuation of Indemnity. All agreements and obligations of
---------------------------
Company contained herein shall continue during the period Officer is a Corporate
Officer of Company and shall continue thereafter so long as Officer shall be
subject to any possible or threatened, pending or completed action or claim,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that Officer was a Corporate Officer of the Company or was
serving in any other capacity referred to herein.
5. Notification and Defense of Claim. Promptly after receipt by
-------------------------------------
Officer of notice of the commencement of any action, claim, suit or proceeding
against [him] by reason of [his] status as a Corporate Officer of the Company or
any other capacity referenced herein, Officer will notify Company of the
commencement thereof; provided, however, that the omission to so notify Company
will not relieve Company from any liability which it may have to Officer under
this Agreement unless and only to the extent that Company's rights are actually
prejudiced by such failure. With respect to any such action, claim, suit or
proceeding as to which Officer notifies Company of the commencement thereof:
(a) Company will be entitled to participate therein at its own expense;
and,
(b) Except as otherwise provided below, to the extent that it may wish,
Company jointly with any other party will be entitled to assume the defense
thereof, with counsel satisfactory to Officer. After notice from Company to
Officer of its election to so assume the defense thereof, Company will not be
liable to Officer under this Agreement for any legal or other expenses
subsequently incurred by Officer in connection with the defense thereof unless
Officer shall have reasonably concluded that there may be a conflict of interest
between Company and Officer in the conduct of the defense of such action, in
which case, Company shall not be entitled to assume the defense of any action,
claim, suit or proceeding brought by or on behalf of Company;
(c) Company shall not be liable to indemnify Officer under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent. Company shall not settle any action or claim in any
manner which would impose any penalty or limitation on Officer without Officer's
written consent. Neither Company nor Officer will unreasonably withhold their
consent to any proposed settlement.
6. Advancement and Repayment of Expenses.
-----------------------------------------
(a) To the extent that the Company assumes the defense of any action,
claim, suit or proceeding against Officer, Officer agrees that [he] will
reimburse Company for all reasonable expenses paid by Company in defending any
such action, claim, suit or proceeding against Officer in the event and only to
the extent that it shall be finally judicially adjudged that Officer is not
entitled to be indemnified by Company for such expenses under the provisions of
the Indemnification Statute, the Articles, this Agreement or otherwise.
(b) To the extent that the Company does not assume the defense of any
action, claim, suit or proceeding against Officer, Company shall advance to
Officer all reasonable expenses, including all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with defending, preparing to defend or
investigating any civil or criminal action, suit or proceeding, within twenty
days after the receipt by Company of a statement or statements from Officer
requesting such advance or advances, whether prior to or after final disposition
of such action, suit or proceeding. Such statement or statements shall
reasonably evidence the expenses incurred by Officer and shall include or be
preceded or accompanied by an undertaking by or on behalf of Officer to repay
all of such expenses advanced if it shall be finally judicially adjudged that
Officer is not entitled to be indemnified against such expenses. Any advances
and undertakings to repay pursuant to this paragraph shall be unsecured and
interest free.
<PAGE>
7. Enforcement.
-----------
(a) Company expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on Company hereby in order to
induce Officer to continue to serve as a Corporate Officer of Company, and
acknowledges that Officer is relying upon this Agreement in continuing in such
capacity.
(b) In the event Officer is required to bring any action to enforce
rights or to collect moneys due under this Agreement and is successful in such
action, Company shall reimburse Officer for all of Officer's reasonable fees and
expenses in bringing and pursuing such action.
8. Separability. Each of the provisions of this Agreement is a
------------
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
9. Governing Law; Binding Effect; Amendment and Termination.
--------------------------------------------------------------
(a) This Agreement shall be interpreted and enforced in accordance with
the laws of the State of Missouri.
(b) This Agreement shall be binding upon Officer and upon Company, its
successors and assigns, and shall inure to the benefit of Officer, his or her
heirs, personal representatives and assigns, and to the benefit of Company, its
successors and assigns.
(c) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless signed in writing by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
ENERGIZER HOLDINGS, INC.
By:_____________________________
OFFICER
By:_____________________________
<PAGE>
INDEMNIFICATION AGREEMENT
-------------------------
INDEMNIFICATION AGREEMENT (the "Agreement") made this ______ day of
______________, 20__, between ENERGIZER HOLDINGS, INC., a Missouri corporation
(the "Company") and ___________ ("Director").
WHEREAS, Director is a member of the Board of Directors of the Company, and
in such capacity is performing a valuable service for Company; and
WHEREAS, the Company's Articles of Incorporation (the "Articles") permit
the indemnification of directors, officers, employees and certain agents of the
Company, and indemnification is also authorized by Section 351.355 of the
Missouri Revised Statutes 1978, as amended to date (the "Indemnification
Statute"); and
WHEREAS, the Articles and the Indemnification Statute permit full
indemnification of officers absent knowingly fraudulent, deliberately dishonest
or willful misconduct; and
WHEREAS, in order to induce Director to continue to serve as a member of
the Board of Directors of the Company, Company has determined and agreed to
enter into this contract with Director;
NOW THEREFORE, in consideration of Director's continued service as a member
of the Board of Directors after the date hereof, the Company and Director agree
as follows:
1. Indemnity of Director. Company hereby agrees to hold harmless and
-----------------------
indemnify Director to the full extent authorized or permitted by the provisions
of the Indemnification Statute, or by any amendment thereof, or by any other
statutory provision authorizing or permitting such indemnification which is
adopted after the date hereof.
2. Additional Indemnity. Subject to the exclusions set forth in Section
--------------------
3 hereof, Company further agrees to hold harmless and indemnify Director against
any and all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement, actually and reasonably incurred by Director in connection
with any threatened, pending or completed action, claim, suit or proceeding,
whether civil, criminal, administrative or investigative (including an action by
or in the right of the Company) to which Director is, was or at any time becomes
a party, or is threatened to be made a party, by reason of the fact that
Director is, was or at any time (whether before or after the date of this
Agreement) becomes a director, officer, employee or agent of the Company, or is
or was serving or at any time serves at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
<PAGE>
3. Limitations on Additional Indemnity.No indemnity pursuant to Section 2
---------------------------------------
hereof shall be paid by Company:
(a) Except to the extent the aggregate of losses to be indemnified
thereunder exceeds the amount of such losses for which the Director is
indemnified pursuant to Section 1 hereof or pursuant to any insurance policies
or other comparable policies purchased and maintained by the Company;
(b) In respect to remuneration paid to Director if it shall be finally
judicially adjudged that such remuneration was in violation of law;
(c) On account of any suit in which a judgment is rendered against
Officer for an accounting of profits made from the purchase or sale by Director
of securities of the Company pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended or similar provisions of any state
or local statutory law;
(d) On account of Director's conduct which is finally judicially
adjudged to have been knowingly fraudulent, deliberately dishonest or willful
misconduct;
(e) If it shall be finally judicially adjudged that such
indemnification is not lawful.
Reference in this Agreement to a matter being "finally judicially adjudged"
shall mean that there shall have been a final decision by a court having
jurisdiction in the matter, all appeals having been denied or not have been
taken and the time therefore to have expired.
4. Continuation of Indemnity. All agreements and obligations of
---------------------------
Company contained herein shall continue during the period Director is a member
of the Board of Directors of Company and shall continue thereafter so long as
Director shall be subject to any possible or threatened, pending or completed
action or claim, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Director was a member of the Board of
Directors of the Company or was serving in any other capacity referred to
herein.
5. Notification and Defense of Claim. Promptly after receipt by
-------------------------------------
Director of notice of the commencement of any action, claim, suit or proceeding
against [him] by reason of [his] status as a Director of the Company or any
other capacity referenced herein, Director will notify Company of the
commencement thereof; provided, however, that the omission to so notify Company
will not relieve Company from any liability which it may have to Director under
this Agreement unless and only to the extent that Company's rights are actually
prejudiced by such failure. With respect to any such action, claim, suit or
proceeding as to which Director notifies Company of the commencement thereof:
(a) Company will be entitled to participate therein at its own expense;
and,
(b) Except as otherwise provided below, to the extent that it may wish,
Company jointly with any other party will be entitled to assume the defense
thereof, with counsel satisfactory to Director . After notice from Company to
Director of its election to so assume the defense thereof, Company will not be
liable to Director under this Agreement for any legal or other expenses
subsequently incurred by Director in connection with the defense thereof unless
Director shall have reasonably concluded that there may be a conflict of
interest between Company and Director in the conduct of the defense of such
action, in which case, Company shall not be entitled to assume the defense of
any action, claim, suit or proceeding brought by or on behalf of Company;
(c) Company shall not be liable to indemnify Director under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent. Company shall not settle any action or claim in any
manner which would impose any penalty or limitation on Director without
Director's written consent. Neither Company nor Director will unreasonably
withhold their consent to any proposed settlement.
6. Advancement and Repayment of Expenses.
-----------------------------------------
(a) To the extent that the Company assumes the defense of any action,
claim, suit or proceeding against Director, Director agrees that [he] will
reimburse Company for all reasonable expenses paid by Company in defending any
such action, claim, suit or proceeding against Director in the event and only to
the extent that it shall be finally judicially adjudged that Director is not
entitled to be indemnified by Company for such expenses under the provisions of
the Indemnification Statute, the Articles, this Agreement or otherwise.
(b) To the extent that the Company does not assume the defense of any
action, claim, suit or proceeding against Director , Company shall advance to
Director all reasonable expenses, including all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with defending, preparing to defend or
investigating any civil or criminal action, suit or proceeding, within twenty
days after the receipt by Company of a statement or statements from Director
requesting such advance or advances, whether prior to or after final disposition
of such action, suit or proceeding. Such statement or statements shall
reasonably evidence the expenses incurred by Director and shall include or be
preceded or accompanied by an undertaking by or on behalf of Director to repay
all of such expenses advanced if it shall be finally judicially adjudged that
Director is not entitled to be indemnified against such expenses. Any advances
and undertakings to repay pursuant to this paragraph shall be unsecured and
interest free.
<PAGE>
7. Enforcement.
-----------
(a) Company expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on Company hereby in order to
induce Director to continue to serve as a member of the Board of Directors of
Company, and acknowledges that Director is relying upon this Agreement in
continuing in such capacity.
(b) In the event Director is required to bring any action to enforce
rights or to collect moneys due under this Agreement and is successful in such
action, Company shall reimburse Director for all of Director's reasonable fees
and expenses in bringing and pursuing such action.
8. Separability. Each of the provisions of this Agreement is a
------------
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
9. Governing Law; Binding Effect; Amendment and Termination.
--------------------------------------------------------------
(a) This Agreement shall be interpreted and enforced in accordance with
the laws of the State of Missouri.
(b) This Agreement shall be binding upon Director and upon Company, its
successors and assigns, and shall inure to the benefit of Director , his or her
heirs, personal representatives and assigns, and to the benefit of Company, its
successors and assigns.
(c) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless signed in writing by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
ENERGIZER HOLDINGS, INC.
By:_____________________________
DIRECTOR
By:_____________________________
ENERGIZER HOLDINGS, INC.
EXECUTIVE SAVINGS INVESTMENT PLAN
I. DEFINITIONS
1.1 "Affiliated Company" means Energizer Holdings, Inc., those domestic
corporations in which Energizer Holdings, Inc. owns directly or indirectly more
than 50% of the voting stock, or any other entity so designed by the Committee.
1.2 "Board" means the Board of Directors of Energizer Holdings, Inc.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Committee" means the Committee appointed to administer the Plan, its
designee, or any successor to such Committee.
1.5 "Company" means Energizer Holdings, Inc.
1.6 "Compensation" means all or any part of any cash compensation and other
consideration due to an Employee for services rendered or to be rendered to the
Company or an Affiliated Company, as determined by the Committee.
1.7 "Disability" means a finding by the Committee of a Participant's
permanent and total disability.
1.8 "Employee" means a person employed by the Company or an Affiliated
Company and who is one of a select group of management or highly-compensated
employees.
1.9 "Entry Date" means the last day of any payroll period during which or
with respect to which an Employee, meeting the eligibility requirements of
Section 2.2 and 2.3, has his or her deferrals pursuant to the SIP limited by the
deferral limitations of ERISA.
1.10 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.11 "Participant" means an Employee who is deferring, or an Employee or
former Employee who has deferred, Compensation pursuant to Article III of the
Plan.
1.12 "Plan" means the Energizer Holdings, Inc. Executive Savings Investment
Plan, as amended from time to time.
1.13 "Retirement" means termination of Employment at or after age 55.
1.14 "SIP" means the Energizer Holdings, Inc. Savings Investment Plan, as
amended from time to time.
1.15 "Termination of Employment" means separation from employment with the
Company or an Affiliated Company for reasons other than death of the
Participant; provided, however, that a transfer in employment between the
Company or an Affiliated Company shall not be deemed a Termination of
Employment. For purposes of this Plan, the sale by the Company or an affiliate
of all or substantially all of the outstanding capital stock of the Company or
an Affiliated Company shall be deemed to be a Termination of Employment of
Participants employed by such Company or Affiliated Company.
1.16 "Valuation Date" means December 31 of each Year.
1.17 "Year" means a calendar year, unless otherwise specified.
II. ELIGIBILITY AND PARTICIPATION
2.1 Prior Participants. An Employee who was a Participant in the Ralston
-------------------
Purina Company Executive Savings Plan on March 31, 2000 shall continue his or
her status as a Participant.
2.2 Other Employees. An Employee who is entitled to Compensation shall be
----------------
eligible to elect to participate in the Plan during the period of time in which
the Employee:
(a) (1) is Chairman of the Board, Chief Executive Officer, President,
Vice President, Secretary or Treasurer of the Company; a Vice President of an
administrative or operating division of the Company; a Chairman of the Board,
Chief Executive Officer, President or Corporate Vice President of the Company or
an Affiliated Company, or
(2) is designated by the Chief Executive Officer of the Company as
eligible to participate in the Plan;
and
(b) has elected to defer Compensation as permitted under the terms of the
SIP.
2.3 Initial Enrollment. An Employee may first become a Participant upon an
-------------------
Entry Date if he or she has previously completed and submitted to the Employee
Benefits Committee an enrollment form, supplied by the Committee, by which an
Employee elects to defer a specified percentage of compensation in accordance
with Article III.
2.4 Annual Deferral Elections. A new election to defer compensation must be
-------------------------
submitted in December each Year to the Committee on forms provided by it in
order for a Participant to defer income pursuant to the Plan during the
following Year. Each deferral election is effective for an entire Year, and
cannot be increased or decreased during that period.
2.5 Cessation of Deferrals. A Participant who ceases to meet the
------------------------
eligibility requirements of Section 2.2(a) may no longer defer Compensation
--
pursuant to the Plan effective as of the first payroll period beginning after
such cessation of eligibility. Such Participant shall continue to be a
Participant in the Plan for all other purposes until distribution of his or her
account balance.
III. CONTRIBUTIONS
3.1 Deferrals into the Plan. A Participant whose deferrals into the SIP are
-----------------------
limited during a Year by the deferral limits imposed by ERISA and the Code
may defer a portion of such Participant's Compensation, in excess of that
permitted to be deferred pursuant to the SIP, on a before-tax basis into the
Plan. No after-tax deferrals are permitted under the Plan. If a Participant's
deferrals from a single payment of Compensation must be apportioned between the
SIP and the Plan, the deferral percentage applicable to the initial deferral
under the Plan shall be equal to the deferral percentage then in effect for the
SIP. Subsequent deferrals pursuant to the Plan shall be made at the deferral
percentage elected by the Participant for the Plan for that Year.
3.2 Basic Matched Contributions. Subject to Section 3.1, each Participant
-----------------------------
may defer receipt of a portion of his or her Compensation in any amount from 2%
to 6%, in 1% increments, for each payroll period in a Year beginning with that
payroll period in which the Participant exceeds the deferral limits in the SIP.
Such deferrals into the Plan shall be defined as Basic Matched
Contributions.
3.3 Basic Unmatched Contributions. Subject to Section 3.1, each Participant
-----------------------------
who has elected the maximum Basic Matched Contribution rate of 4% may defer
receipt of a portion of his or her Compensation by an additional 1% to 4%, in 1%
increments, for each payroll period in a calendar year beginning with that
payroll period in which the Participant exceeds the deferral limits in the SIP.
Such deferrals into the Plan shall be defined as Basic Unmatched Contributions.
3.4 Company Matching Contributions. With respect to each payroll period,
--------------------------------
the Company shall contribute on behalf of each Participant an amount equal to
25% of such Participant's Basic Matched Contributions. Such contributions shall
be defined as Company Matching Contributions.
3.5 Participants' Accounts.
-----------------------
(a) The Company shall establish a book reserve account for each Participant.
With respect to each payroll period, as appropriate, the Company shall credit to
a Participant's account his or her Basic Matched Contributions and Basic
Unmatched Contributions, and Company Matching Contributions in accordance with
Section 3.4.
(b) Each Participant's account balance shall be credited, effective as of
December 31 each Year, with annual earnings equal to the rate of earnings net of
expenses for that Year under the Fixed Income Fund of the SIP. Deferrals made
during a Year will be credited at the end of that first Year with a pro rata
share of annual earnings from the time of deferral.
(c) Each Participant shall be furnished annually a statement setting forth
the value of his or her account.
IV. VESTING OF CONTRIBUTIONS
4.1 Vesting of Basic Contributions. Each Participant shall be vested at all
------------------------------
times in amounts attributable to his or her Basic Matched Contributions,
Basic Unmatched Contributions, and any earnings thereon.
4.2 Vesting of Company Matching Contributions. A Participant shall be
---------------------------------------------
vested in the following manner in Company Matching Contributions made to such
Participant's account:
(a) at the rate of 25% for each whole year of employment with the Company as
recognized under the terms of the SIP; or
(b) 100% vested in the event of the occurrence of any one of the following:
(1) attainment of age 65
(2) Retirement
(3) Disability
(4) death
(5) termination of the Plan.
V. DISTRIBUTIONS
5.1 Time of Distribution to Participant. Amounts due to a Participant
---------------------------------------
including, to the extent it can be calculated and paid simultaneously with the
rest of the distribution, interest on such amounts, shall be paid on the 60th
day after such Participant's Retirement or other Termination of Employment. Any
interest accrued on such distribution that cannot be calculated at the time
of the initial distribution shall be paid as promptly thereafter as practicable.
Notwithstanding the foregoing, distributions to Participants found to be
Disabled shall be made on the 60th day following the determination of such
Disability. No distribution to a Participant shall be made upon termination of
the Plan until such Participant's Retirement, Termination of Employment or
Disability.
5.2 Distribution Upon Death. In the event of the Participant's death, all
-------------------------
amounts due to be distributed shall be paid to the Beneficiary designated by the
Participant in writing submitted to the Committee; but if none is
designated, then benefits shall be paid to the Participant's estate or as
provided by law. Changes in designation may be made by filing a written request
with the Committee. Distribution in full shall be paid on the 60th day
following the Participant's death. The Committee reserves the right to review
and approve Beneficiary designations.
5.3 Amount to be Distributed. At the appropriate time of distribution
---------------------------
described in Sections 5.1 or 5.2, the Company shall distribute the value of a
Participant's entire Basic Matched Contributions, Basic Unmatched Contributions
and the vested amount of such Participant's Company Matching Contributions.
Earnings on the vested portion of a Participant's account balance, calculated at
the interest rate applicable to the Valuation Date immediately preceding
the distribution, shall be credited to the Participant's account for the period
between the most recent Valuation Date and the date of distribution of the
principal account balance.
5.4 Form of Distribution. All amounts to be distributed from a
----------------------
Participant's account pursuant to this Article V shall be made in the form of
----
payment elected by the Participant. A Participant may elect to receive the
value of his account in a single lump payment, five annual installments or ten
annual installments. Provided, however, a Participant must have attained age 50
and elected to receive installments at least one year before such
installment payments commence.
5.5 Withdrawals and Loans.
-----------------------
(a) Loans are not permitted under the Plan.
(b) No withdrawals are permitted except that the Committee, in its sole and
absolute discretion, may permit withdrawals by a Participant of any vested
amount from such Participant's accounts if the Committee determines, in its
discretion, that such funds are needed due to serious and immediate financial
hardship from an unforeseeable emergency. Serious and immediate financial
hardship to the Participant must result from a sudden and unexpected illness or
accident of the Participant or a dependent, loss of property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising from events
beyond the control of the Participant. A distribution based upon such financial
hardship cannot exceed the amount necessary to meet such immediate financial
need. In addition, the Committee may impose suspension of a Participant's
deferrals into the Plan or other penalties as a condition of such withdrawals.
VI. FORFEITURES
6.1 Time of Forfeiture. In the event of a Participant's Termination of
--------------------
Employment prior to the attainment of age 65, the unvested, if any, portion of
Company Matching Contributions allocated to such Participant's account, and any
earnings thereon, shall be forfeited as of the date of such Termination of
Employment.
6.2 Disposition of Forfeitures. All forfeitures arising out of the
----------------------------
application of the provisions of Section 6.1 shall be used to reduce Company
Matching Contributions otherwise payable to Participants' accounts under the
Plan.
VII. AMENDMENT AND ADMINISTRATION OF THE PLAN
7.1 Power to Amend. The power to amend, modify or terminate this Plan at
----------------
any time is reserved to the Committee; provided that, no amendment, modification
or termination may apply to or affect the terms of any deferral of
Compensation deferred prior to the effective date of such amendment,
modification or termination, without the consent of the Participant or
Beneficiary affected thereby.
7.2 Administration of the Plan. The Committee shall administer the Plan
-----------------------------
and, in connection therewith, shall have full power to designate types of
Compensation which may be deferred and upon which a Company Matching
Contribution may be calculated; to construe and interpret the Plan; to establish
rules and regulations; to delegate responsibilities to others to assist it
in administering the Plan or performing any responsibilities hereunder; and to
perform all other acts it believes reasonable and proper in connection with the
administration of the Plan.
VIII. MISCELLANEOUS
8.1 Company's Obligations Unfunded. All benefits due a Participant or
--------------------------------
Beneficiary under the Plan are unfunded and unsecured and are payable out of the
general funds of the Company. The Company, in its sole and absolute
discretion, may establish a grantor trust for the payment of benefits and
obligations hereunder, the assets of which shall be at all times subject to the
claims of creditors of the Company as provided for in such trust, provided that
such trust does not alter the characterization of the Plan as an unfunded plan
for purposes of ERISA. Such trust shall make distributions in accordance with
the terms of the Plan.
8.2 No Right to Continued Employment. Neither the establishment of the Plan
--------------------------------
nor the payment of any benefits thereunder nor any action of the Company,
its affiliates, the Board, or the Committee shall be held or construed to confer
upon any person any legal right to be continued in the employ of the Company or
an Affiliated Company.
8.3 Transferability of Benefits. The right to receive payment of benefits
-----------------------------
under this Plan shall not be transferred, assigned or pledged except by
beneficiary designation, will or pursuant to the laws of descent and
distribution.
8.4 Address of Participant or Beneficiary. A Participant shall keep the
-----------------------------------------
Committee apprised of the Participant's current address and that of any
Beneficiary at all times during participation in the Plan. At the death of a
Participant, a Beneficiary who is entitled to receive payment of benefits under
the Plan shall keep the Committee apprised of such Beneficiary's current address
until the entire amount to be distributed has been paid.
8.5 Taxes. Any taxes required to be withheld under applicable federal,
-----
state or local tax laws or regulations may be withheld from any payment due
hereunder.
8.6 Missouri Law to Govern. All questions pertaining to the interpretation,
----------------------
construction, administration, validity and effect of the provisions of the
Plan shall be determined in accordance with the laws of the State of Missouri.
8.7 Headings. Headings of Articles and Sections of the Plan are inserted
--------
for convenience of reference. They constitute no part of the Plan.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a
duly authorized officer as of the _____ day of ______________________, 2000.
ENERGIZER HOLDINGS, INC.
By:
Title:
ENERGIZER HOLDINGS, INC.
EXECUTIVE HEALTH PLAN
I . DEFINITIONS
1.1 "Affiliated Company" means Energizer Holdings, Inc., those domestic
corporations in which Energizer Holdings, Inc. owns directly or indirectly more
than 50% of the voting stock, or any other entity so designed by the Committee.
1.2 "Committee" means the Committee appointed to administer the Plan, its
designee, or any successor to such Committee.
1.3 "Company" means Energizer Holdings, Inc.
1.4 "Covered expenses" are expenses incurred for medical, dental, vision
care services and supplies. This includes usual and customary charges in
conjunction with diagnosis, cure, mitigation or treatment of a sickness, injury
or preventative treatment associated with an illness. (A usual and customary
allowance is the fee most frequently charged for a similar service or supply in
a geographic area. The fees are updated on a regular basis to adjust for
changes.)
1.5 "Covered Individual" is an Employee or a dependent of an Employee
covered under this Plan.
1.6 A "dependent" of an Employee is eligible for coverage under this Plan
and is:
(a) A person defined in an Energizer Holdings, Inc. Health Maintenance
Organization ("HMO"), the Energizer Holdings, Inc. Comprehensive Health Plan,
Well-Med Plan, and CBC CIGNA Plan as a dependent of a covered Employee. This
includes the covered Employee's spouse and unmarried children under 19 years of
age. "Children" means the covered Employee's biological children, children who
have been legally adopted by the covered Employee or who have been placed with
the covered Employee for adoption, foster children, or stepchildren living in
the covered Employee's household, dependent upon the covered Employee for
principal support, and
(1) related to the covered Employee by blood or marriage,
(2) under the covered Employee's legal guardianship; or
(3) for whom the covered Employee has have a legal obligation for total or
partial support.
(b) A full-time, unmarried student who is a dependent of a covered Employee
regardless of age, provided the student is enrolled in an accredited educational
institution, and receives primary support from the covered Employee or from a
covered surviving spouse.
(c) A former spouse of a covered Employee provided the divorce decree became
final after April 1, 1977, and the former spouse was covered as a dependent
under this Plan prior to the divorce.
(d) A surviving spouse and dependents of a covered Employee who died on or
after July 21, 1988, and who at the time of death had a minimum of two years of
service with the Company.
1.7 "Employee" means a person employed by the Company or an Affiliated
Company and who is one of a select group of management or highly-compensated
employees.
1.8 "Family Unit" is the covered Employee and covered dependents.
1.9 "Plan" means the Energizer Holdings, Inc. Executive Health Plan.
1.10 "Retired Employee" is a Corporate Officer of the Company who retired
between January 1, 1979, and July 31, 1980, and who at the time of retirement
was not eligible for coverage under the Plan as a retired Employee, or an
Employee covered under this Plan who retired or terminated after age 55 with at
least two years of continuous service, or who was terminated involuntarily after
attaining a combination of age and years of service totaling at least 80, or who
is designated by the Chief Executive Officer of Energizer Holdings, Inc. as
eligible to participate in this Plan as a retiree.
II . ELIGIBILITY
Employees eligible for coverage under this Plan consists of:
(a) Principal Corporate Officers of Energizer Holdings, Inc. or an
Affiliated Company: Chairman of the Board, Chief Executive Officers, President,
any Vice President, Secretary, Treasurer; Chairmen of the Board, Chief Executive
Officers, Presidents and Corporate Vice Presidents of CBC, EBC, PTI and any
other controlled affiliates designated by the Benefits Policy Board;
(b) Vice Presidents of administrative or operating divisions of the
Company or an Affiliated Company; any other person designated by the Chief
Executive Officer of the Company;
(c) if presently employed by the Company or an Affiliated Company,
former Vice Presidents of administrative and operating divisions of the Company
or an Affiliated Company, and former Chairmen of the Board, Chief Executive
Officers, Presidents and Corporate Vice Presidents of a participating Affiliated
Company.
Employees described in (a), (b), or (c) above must participate in an
Energizer Holdings, Inc. HMO, the Energizer Holdings, Inc. Comprehensive Health
Plan or Well-Med Plan or, if a CBC executive, the CIGNA Plan as a prerequisite
for Plan participation.
In addition, individuals employed by a foreign affiliate of the Company or
an Affiliated Company who are not U.S. citizens and who are designated as
participants in this Plan must be covered by the available overseas health
coverage or an Energizer Holdings, Inc. HMO, the Energizer Holdings, Inc.
Comprehensive or Well-Med Plan as a prerequisite for Plan participation.
III . CONTRIBUTIONS
Active Employees are not required to pay contributions for their Plan
coverage or that of their dependents. However, they are required to pay
contributions for an Energizer Holdings, Inc. HMO, the Energizer Holdings, Inc.
Comprehensive, Well-Med and CIGNA coverage.
Retirees must contribute either the rate being charged for high option
retiree coverage under an Energizer Holdings, Inc. HMO, the Energizer Holdings,
Inc. Comprehensive Health Plan High option, the rate for Well-Med, or the CIGNA
retiree coverage if they participate in the Plan but are ineligible to
participate in an Energizer Holdings, Inc. HMO, the Energizer Holdings, Inc.
Comprehensive Health Plan or CIGNA Plan. (Contact the Committee for current
rates.)
The surviving spouse of an executive who dies prior to retirement must pay
premiums equal to those being charged to active Employees participating in an
Energizer Holdings, Inc. HMO, the Energizer Holdings, Inc. Comprehensive Health
Plan, Well-Med Plan, or CIGNA Plan until the date on which the deceased
executive would have been 65 years old. A surviving dependent child who
continues to meet the eligibility requirements for this Plan is also subject to
those same contribution requirements.
IV . EFFECTIVE DATE OF COVERAGE
The coverage of an Employee and his/her eligible dependent(s) will become
effective on the Employee's entry or re-entry date into an eligible class.
V . BENEFITS PAYABLE
The benefits payable under this Plan are the covered expenses incurred for
medical, dental and vision care expenses defined in Section 213(e) of the
Internal Revenue Code of 1986, as amended and in Internal Revenue Service
Regulation 1.213-1 as amended.
Examples of expenses which may be considered covered expenses are expenses
incurred for the following medical, dental or vision care, services and
supplies:
Ambulance Artificial limbs
Chiropodists Chiropractors
Crutches Diagnostic services
Doctors Hospital Care - room and board
Laboratory services Prescription drugs
Nurses - services rendered by a Registered Nurse, Licensed Practical Nurse,
or a Practical Nurse if an RN or LPN is not available (including nurses' room
and board paid by the Employee)
Osteopaths Physicians
Podiatrists Psychiatrists
Special medical equipment Surgeons
Special food or beverages prescribed for the treatment of an illness
Therapy
Eye care X-ray services
Guide dogs for the blind and deaf Dental care
Transportation expenses for medical care Psychologists
Claims for expenses incurred in making a capital expenditure or improvement
to real estate must be approved by the Company in advance of such expenditure.
VI . MAXIMUM BENEFIT FOR AN ACTIVE EMPLOYEE'S FAMILY UNIT
6.1 The maximum calendar-year benefit payable to an active Employee, his/her
spouse and his/her dependents from the Plan is $50,000 for the family unit
as a whole. The maximum calendar-year benefit payable to his/her divorced
spouse and his/her dependents from the Plan is $25,000 for the family unit as a
whole.
6.2 A surviving spouse and/or dependents of an active executive who meet the
criteria under Section (I)(C)(4) will be entitled to coverage limits equal to
those provided in an Energizer Holdings, Inc. HMO, the Energizer Holdings, Inc.
Comprehensive Health Plan, Well-Med Plan, or CIGNA Plan in addition to the
annual maximum coverage limits affected in this Plan.
VII . MAXIMUM BENEFIT FOR A RETIRED EMPLOYEE'S FAMILY UNIT
7.1 The maximum calendar-year benefit payable to a retired Employee and
his/her surviving dependents is $50,000 for the family unit as a whole. This
maximum calendar-year benefit is in addition to the $750,000 lifetime maximum
from the underlying coverage of an Energizer Holdings, Inc. HMO, the Energizer
Holdings, Inc. Comprehensive Health Plan or Well-Med Plan for retirees and the
lifetime maximum for CIGNA retiree coverage. Executives who are eligible for an
Energizer Holdings, Inc. HMO, the Energizer Holdings, Inc. Comprehensive
Health Plan, Well-Med Plan, or CIGNA Plan retiree coverage must participate in
order to receive retiree benefits from the Plan. They must enroll in either the
High option or Well Med option coverage; they cannot enroll for Low Option.
7.2 A retiree who is ineligible for an Energizer Holdings, Inc. HMO, the
Energizer Holdings, Inc. Comprehensive Health Plan, Well-Med Plan or CIGNA Plan
but who participates in this Plan, is eligible for a $1,000,000 lifetime benefit
for all covered medical expenses. However, such a retiree is not eligible for
the $50,000 calendar-year benefit after the $1,000,000 lifetime maximum has been
exhausted. A $25,000 maximum calendar-year benefit will be payable to his/her
divorced spouse(s) or dependent(s) other than a surviving spouse.
7.3 Individuals who retire from a foreign affiliate of the Company or an
Affiliated Company who are not U.S. citizens are not eligible for retiree health
under this Plan.
VIII . EXCEPTIONS
Benefits will not be payable under this Plan for expenses incurred for or
in connection with:
8.1 Medical care, services and supplies for which no charge is made or for
which the covered individual is not, in the absence of this coverage, legally
obligated to pay.
8.2 Medical care, services and supplies which are furnished by a hospital or
facility operated by or at the direction of the U.S. Government or any
authorized agency thereof, or furnished at the expense of such Government or
Agency, or by a doctor employed by such a hospital or facility, unless (1) the
treatment is of an emergency nature, and (2) the insured individual is not
entitled to such treatment without charge by reason of status as a veteran or
otherwise.
8.3 Medical care, services or supplies to the extent that they are paid for,
payable or furnished (1) pursuant to any plan or program administered by a
National Government or Agency thereof or with funds received from taxation or
contributions collected pursuant to legislation by a National Government, or (2)
pursuant to any State Cash Sickness law or laws of a similar character,
including any group insurance policy approved under such a law.
8.4 Blood or blood plasma for which the hospital or other supplier makes a
refund or allowance to or on behalf of the covered individual either as a result
of the operation of a group blood bank or otherwise, but only to the extent of
the refund or allowance.
8.5 Sickness covered by Workers' Compensation law, occupational disease law,
or laws of similar character, or injury arising out of or in the course of any
occupation or employment for compensation, profit or gain.
8.6 Charges resulting from an injury, sickness, or pregnancy for which a
covered individual received any medical care or services within the three month
period immediately before becoming covered under this Plan until the earlier of:
(a) the end of a period of 12 consecutive months during which the covered
individual has not received in connection with such injury, sickness, or
condition any medical, surgical, hospital or nursing services or treatment of
any kind or any drugs or medicine lawfully obtainable only upon prescription of
a doctor; or
(b) the end of a period of 12 consecutive months during which the covered
individual has been continuously covered under this Plan.
The following charges shall not be subject to this exception F:
(1) charges for professional services and supplies related to care and
treatment of teeth or nerves connected to teeth, and
(2) charges incurred by an individual who was covered under an Energizer
Holdings, Inc. HMO, the Energizer Holdings, Inc. Comprehensive Plan or Well-Med
Plan on the date immediately preceding the day his/her Plan coverage became
effective under this Plan, to the extent that the requirements of exception F
have been satisfied under an Energizer Holdings, Inc. HMO, the Energizer
Holdings, Inc. Comprehensive Health Plan or Well-Med Plan.
8.7 Medical care, services and supplies to the extent that they are paid for
or payable under an Energizer Holdings, Inc. HMO, the Energizer Holdings,
Inc. Comprehensive Health Plan, Well-Med Plan, or CIGNA Plan.
8.8 Use of a Christian Science Practitioner.
8.9 Insurance premiums for hospitalization, medical, dental or vision care;
or for pre-paid medical, dental or vision care. Included in this exclusion are
premiums paid for participation in an Energizer Holdings, Inc. HMO, the
Energizer Holdings, Inc. Comprehensive Health Plan, Well-Med Plan, or CIGNA Plan
as either an active Employee or retiree.
8.10 Expenses subject to the "At Risk" and "Under the Influence" copayment
provisions for the Executives who choose the Well-Med Plan.
IX . TERMINATION OF EMPLOYEE COVERAGE
The coverage of each Employee will terminate on the earlier of the
following dates:
9.1 The date the Employee ceases to be eligible for coverage.
9.2 The date of termination of this Plan.
X . COVERAGE OF RETIRED EMPLOYEES
The coverage of each Retired Employee will continue upon payment of the
required premiums after the Employee's termination if he or she is either:
10.1 age 55 with at least two years of service and leaves voluntarily or
involuntarily, or
10.2 has a combination of age and years of service totaling at least 80 and
leaves involuntarily, or
10.3 has CEO approval.
An Employee shall not be eligible for retiree health coverage under this
Plan if he or she terminates from the Company or an Affiliated Company by reason
of a divestiture, spinoff or other disposition of a subsidiary, division or
other business unit.
XI . TERMINATION OF DEPENDENT COVERAGE
The coverage of each dependent of an Employee terminates on the earliest of
the following dates:
11.1 The date the Employee's coverage terminates except as noted in
subsection C below for dependents of a deceased Employee.
11.2 The date a dependent ceases to qualify as eligible as defined in this
Plan; provided that a covered unmarried child who (1) before the date he ceases
to be eligible due to attaining age 19, becomes incapable of self-sustaining
employment by reason of mental or physical handicap, and (2) is dependent upon
the Employee for his principal support and maintenance, will not cease to
qualify solely because of attained age while that dependent remains
incapacitated and dependent provided initial proof of incapacity and dependency
status submitted to the Company or an Affiliated Company at its home office, not
more than 31 days after such dependent would cease to be eligible by reason of
attained age.
11.3 With respect to the coverage of a former spouse of an Employee, or a
surviving spouse, and surviving children of a deceased Employee who at the time
of death had a minimum of two years of service, upon the earliest of the
following: (1) the date a former spouse or surviving spouse remarries or dies,
or (2) the 65th birthday of the former spouse, or (3) the date a former spouse
becomes eligible for government-sponsored medical benefits. If a surviving
spouse dies while a child is covered under this Plan, the child will remain
eligible as long as he or she qualifies as a dependent.
The insurance of a former spouse will not terminate upon termination of
insurance of the Employee if at the time the divorce decree became final the
Employee was age 55 or over and had 20 years or more of service.
11.4 With respect to a dependent who is a full-time, unmarried student, the
earlier of (1) the end of a ninety-day period immediately following the date the
dependent ceases to be enrolled as a student, or (2) the date the dependent
becomes eligible under any other group medical plan or program.
XII . CONTINUATION OF HEALTH COVERAGE
(As required by the Consolidated Omnibus Budget Reconciliation Act of 1985
- - COBRA.) The Plan will allow continued health coverage for the covered
Employee and the Employee's eligible family members, under certain
circumstances.
WHEN DOES THE CONTINUATION PROVISION APPLY?
The continuation provision applies when a covered Employee or an eligible
family member experiences a situation - called a "qualifying event" - which
would normally result in the loss of health coverage under the health plan for
the covered Employee or the covered family member. In such a situation the
covered Employee may elect to continue his/her present coverage for a specified
period. Qualifying events include:
(a) the termination of the covered Employee's employment, either voluntary
or involuntary (unless the covered Employee is discharged for gross misconduct);
(b) a reduction in the covered Employee's work hours.
Also, the Employee's covered family members may continue their present
coverage for a specified period in the event of the Employee's:
(1) death,
(2) termination of employment (for reasons other than the Employee's gross
misconduct) or reduction in work hours,
(3) divorce,
(4) entitlement to Medicare, or
(5) dependent child's ceasing to meet the definition of an eligible
dependent under the health plan.
HOW MUCH DOES CONTINUED COVERAGE COST?
The Employee is required to pay the Plan's full cost of continued coverage
plus a 2% charge to cover the cost of administration. The Employee will be
asked to pay for the coverage in monthly installments and his/her first payment
must begin no later than 45 days after the date that he/she elects continued
coverage. The Committee, St. Louis, can provide the Employee with current cost
information.
CAN THE EMPLOYEE CONTINUE FULL HEALTH COVERAGE?
If the Employee chooses continued coverage the Employee and his/her covered
dependents will be entitled to the same coverage the Employee and his/her
covered dependents had the day prior to the qualifying event, and the Employee
or his/her covered dependents will not be asked to furnish a statement of
health. If the Employee or his/her dependents do not choose continued coverage,
Plan coverage will end for the applicable participant on the day the qualifying
event occurred.
HOW LONG IS COVERAGE CONTINUED?
Coverage may be continued for 18 months after the date of the qualifying
event in the case of termination of employment or reduction of hours, and 29 or
36 months for all other events listed. If a covered family member becomes
entitled to continued coverage because of termination of the Employee's
employment or reduction in the Employee's hours and a covered family member then
experiences another of the events which would entitle such person to continued
coverage, he or she may extend the 18-month continuation period to 36 months
from the date of the event that first made him or her eligible for continued
coverage. At the end of the 18-month or 36-month continuation period, the
Employee will be given the option to enroll in an individual conversion medical
plan provided by General American Life Insurance Company.
Coverage may be terminated earlier than the above dates for an individual:
(a) who becomes covered under another group health plan as an Employee or
otherwise, unless a pre-existing condition is not covered by the new plan;
(b) who becomes eligible for Medicare;
(c) who fails to make a required premium payment; or
(d) whose Company or an Affiliated Company ceases to provide a group health
plan.
The Employee must notify the Committee, St. Louis, upon the occurrence of
events (a) or (b) above.
WHAT IF THE EMPLOYEE BECOME ENTITLED TO MEDICARE?
If the Employee becomes entitled to Medicare, regardless of whether this
results in loss of the Employee's coverage under the Plan, the Employee's spouse
and dependents who are entitled to continued coverage are eligible for a
continuation period of not shorter that 36 months from the date the Employee
becomes entitled to Medicare. This continuation period is measured from the
time the Employee is entitled to Medicare, not from the time his/her spouse and
dependent loses coverage. The total continuation period for the Employee's
spouse and dependents may actually exceed 36 months, depending on when the
Employee becomes entitled to Medicare.
ARE THERE ANY OTHER SITUATIONS THAT WOULD ALLOW FOR EXTENDED COVERAGE?
If the Employee, his/her spouse or dependents lose coverage because of
termination of the Employee's employment or reduction of hours and if the
Employee or a dependent as determined under Title II or XVI of the Social
Security Act to have been disabled at that time, then the disabled person may
extend the continued coverage period for 11 additional months, provided:
A notice of a Social Security determination is given to the Plan
Administrator before the end of the initial 18-month period and within 60 days
after the date of such determination.
The Plan may require payments of up to 150 percent of the applicable cost
for providing the coverage for these 11 additional months.
NOTE: The Plan provides for continued coverage for up to 29 months if a
----
participant becomes disabled, as defined in the Plan.
WHAT MUST I DO TO OBTAIN CONTINUED COVERAGE?
Both the Employee and the Company or the Affiliated Company have
responsibilities when certain events occur which qualify the Employee for
continued coverage.
The Employee or the Employee's eligible family members must notify the
Committee immediately in the event of:
Divorce
Cessation of dependent child coverage
The Committee will notify any eligible family members who are affected by
the event of their right to elect continued coverage.
The Employee or the Employee's eligible family members will be notified of
the right to elect continued coverage within 14 days in the event of:
Termination of employment
Reduction in hours
The Employee's death
The Employee's entitlement to Medicare
The Employee or the Employee's eligible family members will have a 60-day
period during which continued coverage may be elected. The 60-day period begins
on the later of (1) the date the Employee's coverage terminates by reason of the
qualifying event, or (2) the date the Employee or the Employee's eligible family
members were notified of the right to elect continued coverage. Please note:
The Employee is not eligible for continuation of coverage if the Employee
remains covered by another group health plan upon termination of coverage in the
Plan.
ADDITIONAL INFORMATION
If the Employee has any questions or need further information about the
continued coverage provision he/she should contact COBRA Administrator,
Committee, St. Louis, MO 63164.
Also, if the Employee has changed marital status, or if the Employee or
his/her spouse has a change of address, the Committee should be notified.
XIII . EXTENDED MEDICAL BENEFIT ON TERMINATION OF COVERAGE
If an individual is disabled on the date his/her coverage under the Plan is
terminated for any reason, benefits will be payable subject to the applicable
maximum and other provisions and exceptions of the Plan for covered expenses
incurred as a result of the injury or sickness causing such disability provided
that:
13.1 In no event shall benefits be payable for charges for health care,
services or supplies rendered or received more than 24 months after the date
such termination occurs.
13.2 He/she remains continuously disabled from the same cause until the date
the health care, service or supply is rendered or received.
13.3 He/she does not become covered under any other group policy or plan,
including any group basis service or prepayment plan, which entitles him/her to
receive benefits for the injury or sickness causing the disability.
XIV . TAX CONSEQUENCES
Benefits provided under this Plan are not taxable as ordinary income under
current tax laws.
Please note that the tax laws change frequently. The Employee will be
advised if a tax law change has any effect on the Employee's Plan coverage.
XV . MODIFICATION, TERMINATION OF COVERAGE
The Company may amend the provisions or terminate the Plan at any time,
subject to the following restrictions:
15.1 The nature and scope of coverage for any actively employed executive
covered by this Plan will not be reduced or terminated unless coverage is
reduced or terminated for the entire class of covered executives.
15.2 The nature and scope of coverage for retired executives and their
dependents covered by this Plan will not be changed to their detriment unless
mandated by law.
15.3 The Company reserves the right to assign its rights and obligations
under this Plan to a third party.
XVI . FILING A CLAIM
Claim forms for the Plan should be submitted along with itemized bills to
the Committee, St. Louis. The Committee will honor an assignment to the
treating physician, hospital, etc., of all benefits paid through an Energizer
Holdings, Inc. HMO, the Energizer Holdings, Inc. Comprehensive Health Plan,
Well-Med Plan, or CIGNA Plan but all payments made through the Plan will be to
the Employee.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a
duly authorized officer as of the _____ day of ______________________, 2000.
ENERGIZER HOLDINGS, INC.
By:
Title:
ENERGIZER HOLDINGS, INC.
EXECUTIVE LONG TERM DISABILITY PLAN
I. DEFINITIONS
1.1 "Affiliated Company" means Energizer Holdings, Inc., those domestic
corporations in which Energizer Holdings, Inc. owns directly or indirectly more
than 50% of the voting stock, or any other entity so designed by the Committee.
1.2 "Benefit Earnings" means the categories of compensation as set forth in
Exhibit A.
1.3 "Board" means the Board of Directors of Energizer Holdings, Inc.
1.4 "Code" means the Internal Revenue Code of 1986, as amended.
1.5 "Committee" means the Committee appointed to administer the Plan, its
designee, or any successor to such Committee.
1.6 "Company" means Energizer Holdings, Inc.
1.7 "Covered Employee" means an Employee who meets the requirements for
coverage under the Plan pursuant to Section 2.1.
1.8 "Disability" means a finding by the Committee of a Participant's
permanent and total disability.
1.9 "Employee" means a person employed by the Company or an Affiliated
Company and who is one of a select group of management or highly-compensated
employees.
1.10 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.11 "LTD Plan" means the Energizer Holdings, Inc. Long Term Disability
Plan, as amended from time to time.
1.12 "Maximum Benefit Limitation" means the maximum monthly benefit payable
pursuant to the LTD Plan taking into account any applicable reduction amount as
defined in such LTD Plan.
1.13 "Monthly Benefit Earnings" means a Covered Employee's Benefit Earnings
for a calendar year, divided by twelve months or by the number of months for
which such Benefit Earnings were credited if less than twelve.
1.14 "Plan" means the Energizer Holdings, Inc. Executive Long Term
Disability Plan, as amended from time to time.
II. ELIGIBILITY
2.1 Covered Employees. An Employee is eligible for coverage under this Plan
-----------------
if he or she:
(a) (1) is Chairman of the Board, Chief Executive Officer, President,
Vice President, Secretary or Treasurer of the Company or an Affiliated Company;
a Vice President of an administrative or operating division of the Company or an
Affiliated Company; a Chairman of the Board, Chief Executive Officer, President
or Corporate Vice President of the Company or an Affiliated Company or
(2) is designated by the Chief Executive officer of the Company as eligible
to participate in the Plan; and
(b) is enrolled as a participant in the LTD Plan.
2.2 Effective Date of Coverage. An Employee shall be deemed to be a Covered
--------------------------
Employee effective as of the date he or she first meets the requirements of
Section 2.1.
2.3 Termination of Coverage. An Employee ceases to be a Covered Employee on
-----------------------
the earlier of the following dates:
(a) The date the Employee ceases to meet the requirements of Section
2.1(a); or
(b) The date the Employee is no longer enrolled for coverage under the LTD
Plan. In the event the Employee reinstates coverage under the LTD Plan, and
such Employee continues to satisfy the eligibility requirements of Section
2.1(a), coverage under this Plan shall be reinstated simultaneously with
coverage under the LTD Plan.
III. CONTRIBUTIONS
No contributions shall be required of Covered Employees for coverage under
this Plan.
IV. DISABILITY BENEFITS
4.1 Amount and Form of Benefit.
------------------------------
(a) A Covered Employee who is deemed to be disabled pursuant to the terms
and conditions of the LTD Plan shall be entitled to receive a monthly benefit
from the Plan which shall be equal to 66-2/3 percent of the Employee's earnings
for the previous calendar year in excess of $160,000 or the amount specified in
Code section 401(a)(17) as adjusted in accordance with Code section
401(a)(17)(B), for any calendar year.
(b) Benefits shall be payable to a disabled Covered Employee in monthly
installments on the first day of each month as benefits from the LTD Plan are
paid.
4.2 Termination of Benefit. Benefits shall be payable pursuant to this Plan
----------------------
for the period of time benefits are payable pursuant to the LTD Plan.
4.3 Benefit Upon Divestiture of a Business. In the event that the stock or
---------------------------------------
all or substantially all of the assets of the Company or an Affiliated Company
are sold to a purchaser ("Purchaser"), the Company reserves the right to
transfer to such Purchaser its obligations to pay disability benefits with
respect to any disabled Covered Employee who was employed by such Company or
Affiliated Company. Upon the assumption of such obligations by the Purchaser,
the Company shall guarantee the payment of such disability benefits in the event
that the Purchaser fails to pay benefits consistent with the obligations it
has assumed.
V. MISCELLANEOUS
5.1 Obligations Unfunded. All disability benefits due a disabled Covered
---------------------
Employee pursuant to the Plan are unfunded and unsecured and are payable out of
the general funds of the Company. The Company shall make no provision for the
funding or insuring of any benefits payable hereunder.
The Company may, in its sole and absolute discretion, establish a grantor
trust for the payment of benefits hereunder, the assets of which shall be at all
times subject to the claims of creditors of the Company, as provided for in such
trust, provided that such trust does not alter the characterization of the Plan
as an unfunded plan for purposes of ERISA. Such trust shall make distributions
in accordance with the terms of the Plan.
5.2 No Right to Continued Employment. Neither the establishment of the Plan
--------------------------------
nor the payment of any benefits thereunder nor any action of the Company or
an Affiliated Company shall be held or construed to confer upon any person any
legal right to be continued in the employ of the Company or an Affiliated
Company.
5.3 Power to Amend or Terminate. The Board of Directors of the Company and
----------------------------
the Committee are empowered to amend, modify or terminate this Plan at any time.
5.4 Transferability of Benefits. The right to receive payment of disability
---------------------------
benefits under this Plan shall not be transferred, assigned or pledged.
5.5 Anticipation of Benefits. A disabled Covered Employee shall have a
--------------------------
claim upon the Company or an Affiliated Company only to the extent of the
monthly payments, if any, due such Employee up to and including the then current
month, and the Covered Employee shall not have a claim against the Company
or an Affiliated Company for any subsequent monthly payment unless and until
such payments shall become due and payable.
5.6 Taxes. Disability benefits payable under the Plan are taxable to the
-----
Covered Employee. Any taxes required to be withheld under applicable federal,
state or local tax laws or regulations may be withheld from any payment due
hereunder.
5.7 Missouri Law to Govern. Except to the extent preempted by ERISA or
-------------------------
other federal law, all questions pertaining to the interpretation, construction,
administration, validity and effect of the provisions of the Plan shall be
determined in accordance with the laws of the State of Missouri.
5.8 Headings. Headings of Articles and sections of the Plan are inserted
--------
for convenience of reference, and constitute no part of the Plan.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a
duly authorized officer as of the _____ day of ______________________, 2000.
ENERGIZER HOLDINGS, INC.
By:
Title:
<PAGE>
ENERGIZER HOLDINGS, INC.
EXECUTIVE LONG TERM DISABILITY PLAN
EXHIBIT A
ENERGIZER HOLDINGS, INC.
FINANCIAL PLANNING PLAN
I. DEFINITIONS
1.1 "Affiliated Company" means Energizer Holdings, Inc., those domestic
corporations in which Energizer Holdings, Inc. owns directly or indirectly more
than 50% of the voting stock, or any other entity so designed by the Committee.
"Board" means the Board of Directors of Energizer Holdings, Inc.
"Committee" means the Committee appointed to administer the Plan, its designee,
or any successor to such Committee.
"Company" means Energizer Holdings, Inc.
"Eligible Employee" means an Employee who meets the requirements for coverage
under Section 2.1 of the Plan.
"Employee" means a person employed by the Company or an Affiliated Company and
who is one of a select group of management or highly-compensated employees.
"Plan" means the Energizer Holdings, Inc. Financial Planning Plan.
1.8 "Plan Year" means the twelve consecutive month period ending on
December 31.
II. ELIGIBILITY
Eligible Employees. The class of Employees eligible for coverage under this
- -------------------
Plan consists of:
(a) Principal Corporate Officers of the Company and/or an Affiliated
Company;
(b) Vice Presidents of the administrative and operating divisions of the
Company and/or an Affiliated Company;
(c) Principal Officers of major affiliates of the Company or an Affiliated
Company; and
(d) non-officer executives authorized by the Committee.
Termination of Participation. An Eligible Employee shall cease participating in
- ----------------------------
the Plan as of the date the Eligible Employee terminates employment with the
Company and all Affiliated Companies. Provided, however, if an Eligible
Employee dies while actively employed, such Eligible Employee shall cease
participating in the Plan as of the one-year anniversary of the Eligible
Employee's death.
III. BENEFITS
Amount of Reimbursement. The Eligible Employee shall select the advisor or
- -------------------------
advisors to perform the services described in Section 3.2. The Company will
reimburse the Eligible Employee in an amount equal to 80% of the expenses
incurred by the Eligible Employee for the services performed in accordance with
Section 3.2. Eligible Employees shall submit requests for reimbursement to the
Committee.
The maximum amount that will be reimbursed for expenses performed in
accordance with Section 3.2 shall be as follows:
First Subsequent Maximum
Plan Year Plan Year Plan Year
Reimbursable Reimbursable Carryforward
Amount Amount Amount
------ ------ ------
Principal
Corporate Officers $8,000 $6,000 $6,000
Vice Presidents of $5,000 $4,000 $4,000
designated divisions
and subsidiaries
The Plan is administered on a Plan Year basis. Any qualifying bill for the
first Plan Year during which the Employee became an Eligible Employee may be
submitted for retroactive reimbursement up to the maximum first Plan Year
reimbursable amount.
The reimbursable amounts for the first two Plan Years can be combined and
paid out at any time during the first two Plan Years of eligibility, allowing
even greater flexibility in initiating a comprehensive individualized program
with potentially high "start-up" costs.
Beginning with the third Plan Year the Employee is an Eligible Employee,
his/her annual reimbursable limit or any portion thereof which might be unused
will be the maximum carryforward amount to be applied the Plan Year only.
If an Eligible Employee dies while an active Employee, the estate of the
Eligible Employee may be reimbursed for expenses incurred for the Covered
Services described below for the one-year period following the Eligible
Employee's death.
3.1 Reimbursable Expenses. An Eligible Employee shall be reimbursed for
----------------------
expenses incurred for the Covered Services described below:
Overall financial planning related to:
- - Investments
- - Cash flow and budgeting
- - Estate
- - Tax
- - Retirement
- - Insurance needs analysis
- - Educational funding
- - Company compensation and benefits
Preparation of legal documents:
- - Wills
- - Trusts
- - Tax Returns
Personal Computer Software Programs for:
- - Tax compliance
- - Cash flow and budgeting
- - Other topics related to overall financial planning or the preparation of
legal documents.
Excluded Services. An Eligible Employee shall not be reimbursed for expenses
- ------------------
incurred for the Excluded Services described below:
Financial service commissions such as broker's fees and mutual fund fees.
Fees related to the Eligible Employee's (or spouse's) "active" financial
interest or legal obligations in any outside business, except to the extent of
direct impact on the executive's tax returns.
Trust fees to banks or other financial institutions.
IV. TAX DEDUCTIBILITY AND WITHHOLDING
Reimbursements made under this Plan are taxable income to the Eligible
Employee and will be handled as such by the Company. Reimbursements are not
used in calculating benefit earnings for Company benefit plans.
V. AMENDMENT AND TERMINATION
The Board and the Committee are each empowered to amend, modify or
terminate this Plan at any time.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a
duly authorized officer this _____ day of ______________________, 2000.
ENERGIZER HOLDINGS, INC.
By:
Title:
ENERGIZER HOLDINGS, INC.
EXECUTIVE GROUP PERSONAL EXCESS LIABILITY INSURANCE PLAN
I. DEFINITIONS
1.1 "Affiliated Company" means Energizer Holdings, Inc., those domestic
corporations in which Energizer Holdings, Inc. owns directly or indirectly more
than 50% of the voting stock, or any other entity so designed by the Committee.
1.2 "Board" means the Board of Directors of Energizer Holdings, Inc.
1.3 "Committee" means the Committee appointed to administer the Plan, its
designee, or any successor to such Committee.
1.4 "Company" means Energizer Holdings, Inc.
1.5 "Eligible Employee" means an Employee who meets the requirements for
coverage under the Plan pursuant to Section 3.1.
1.6 "Employee" means a person employed by the Company or an Affiliated
Company and who is one of a select group of management or highly-compensated
employees.
1.7 "Plan" means the Energizer Holdings, Inc. Executive Group Personal
Excess Liability Insurance Plan.
II. ELIGIBILITY
2.1 Eligible Employees. The class of Employees eligible for coverage under
--------------------
this Plan consists of:
(a) Principal Corporate Officers of the Company or an Affiliated
Company, Vice Presidents of the administrative and operating divisions of the
Company or an Affiliated Company,
(b) Chairmen of the Board, Chief Executive Officers, Presidents and
Corporate Vice Presidents of an Affiliated Company which are designated by the
Committee as eligible to participate in this Plan, and
(c) if presently employed by the Company or an Affiliated Company,
former Vice Presidents of administrative and operating divisions of the Company
or Affiliated Company, and former Chairmen of the Board, Chief Executive
Officers, Presidents and Corporate Vice Presidents of a participating Affiliated
Company.
2.2 Termination of Coverage. Services under this Plan will cease when the
--------------------------
Eligible Employee is no longer actively employed by the Company or Affiliated
Company.
III. BENEFITS
The personal excess liability coverage available under the Plan is set
forth in Exhibit A attached hereto.
IV. AMENDMENT AND TERMINATION
The Board and the Committee are each empowered to amend, modify or
terminate this Plan at any time.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a
duly authorized officer as of the _____ day of ______________________, 2000.
ENERGIZER HOLDINGS, INC.
By:
Title:
<PAGE>
ENERGIZER HOLDINGS, INC.
EXECUTIVE GROUP PERSONAL EXCESS LIABILITY INSURANCE PLAN
EXHIBIT A
April 1, 2000
PERSONAL & CONFIDENTIAL
- -------------------------
GROUP PERSONAL EXCESS LIABILITY COVERAGE
----------------------------------------
The Company has purchased a Group Personal Excess Liability Insurance Policy
which, as a Corporate Officer or Vice President, provides you excess liability
coverage in the amount of $5,000,000 for liability claims associated with your
homes, vehicles, watercraft, or individuals so long as the covered damages are
in excess of underlying insurance coverage. (Minimums required if you
participate.)
As part of a comprehensive executive benefits plan the Company determined this
coverage was sufficiently important to provide "peace of mind" and allow
continued "job focus" in the event of a mishap and possible distracting personal
litigation.
Personal investments which are common, such as swimming pools, second homes,
boats, and the increased liability risks associated with them combined with the
general litigiousness in this country today support maintenance of the excess
coverage the Company is pleased to provide you. You will have imputed income
for this benefit value but the Company will provide a gross up so it will truly
be a no-cost benefit to you.
Please note enclosed:
1. SPECIMEN POLICY - defining the coverage
2. COVERAGE HIGHLIGHTS
3. UNDERLYING REQUIREMENTS - Coverages you must have with your primary
insurance prior to this "excess" taking effect.
4. Qs & As - Commonly asked questions and answers
5. INDIVIDUAL QUESTIONNAIRE
6. POLICY DOCUMENT
It would be to your advantage to review these materials thoroughly along with
your underlying policy coverages to determine their sufficiency or, in the case
of Personal Excess coverage you may now have - its redundancy.
Please return the questionnaire enclosed to:
The Committee
[Address]
[Address]
St. Louis, MO [Zip Code]
Phone: (314) _________________
Individual questions you may have can be addressed to the Committee at the phone
number above. You will be notified in advance of any significant changes to the
Energizer Group Personal Excess Liability Plan in which you are covered.
Sincerely,
[Name]
Vice President and
Director, Administration
<PAGE>
Group Personal Individual Questionnaire
---------------------------------------
Name: Primary Residence Address:
1. Number of residences owned or leased and occupied by you? ________
2. Number of residences owned and not occupied by you? ________
3. Number of licensed vehicles owned or leased by you, or a member of your
family living in a residence owned or leased by you? ________
4. How many family members are licensed drivers? (Include all dependents
and family members living in residences you own or lease.) ________
How many licensed drivers are under 25 years of age? ________
5. How many recreational vehicles do you own? (Non-licensed for road use,
such as snowmobiles, ATV's, golf carts, tractors) ________
6. How many watercraft do you own?
Under 26 feet or under 50 horsepower ________
26 feet or 50 horsepower or more ________
7. List all motor vehicle violations for all licensed drivers for the past
three years:
8. List all Liability Losses under your homeowners, personal automobile, or
---------
watercraft policies: (Within last three years)
<PAGE>
GROUP
PERSONAL EXCESS
LIABILITY POLICY
COVERAGE SUMMARY
Named and address of Insured
c/o ENERGIZER HOLDINGS, INC. Policy Number __________
[Address]
[Address] Issued by the stock insurance company indicated below, herein
called the Company.
(Per Endorsement)
ST. LOUIS, MISSOURI CHUBB CUSTOM INSURANCE COMPANY
Incorporated under the laws of Delaware, herein called the Company.
Sponsoring Organization and Address
CORPORATE OFFICERS, VICE PRESIDENTS OF THE ADMINISTRATIVE AND OPERATING DIVISION
OF ENERGIZER HOLDINGS, INC. (Per Endorsement) Producer Number 0052600
V. POLICY PERIOD
From: APRIL 1, 2000 To: APRIL 1, 2001
VI. PREMIUM
Amount
VII. LIMIT OF LIABILITY
5,000,000 Each Occurrence
1,000,000 Excess Uninsured Motorists Protection Each Occurrence
VIII. REQUIRED PRIMARY UNDERLYING INSURANCE
Personal Liability (Homeowners) for personal injury and property damage in the
minimum amount of 100,000 each occurrence.
Registered vehicles in the minimum amount of 250,000/500,000 bodily injury and
100,000 property damage; or 300,000 single limit each occurrence. Registered
vehicles include motorcycles and motorhomes.
Unregistered vehicles in the minimum amount of 100,000 bodily injury and
property damage each occurrence.
Watercraft less than 26 feet and 50 engine rated horsepower or less for bodily
injury and property damage in the minimum amount of 100,000 each occurrence.
Watercraft 26 feet or longer or more than 50 engine rated horsepower for bodily
injury and property damage in the minimum amount of 100,000 each occurrence.
Uninsured motorists protection in the minimum amount of 250,000/500,000 bodily
injury or 300,000 single limit occurrence.
FAILURE TO COMPLY WITH THE REQUIRED PRIMARY UNDERLYING INSURANCE WILL RESULT IN
A GAP IN COVERAGE.
<PAGE>
SCHEDULE OF FORMS
Policy Number: ____________________
Insured: c/o ENERGIZER HOLDINGS, INC.
(Per Endorsement)
Policy Period From: APRIL 1, 2000 to APRIL 1, 2001
The following is a schedule of forms issued with the policy at inception:
FORM NAME FORM NUMBER
- ---------- ------------
CONTRACT/POLICY TERMS __________ (__/__)
CCIC - SERVICE OF SUIT __________ (__/__)
MANUSCRIPT __________ (__/__)
MANUSCRIPT __________ (__/__)
MANUSCRIPT __________ (__/__)
<PAGE>
GROUP PERSONAL
EXCESS LIABILITY
POLICY
<PAGE>
GROUP PERSONAL EXCESS LIABILITY POLICY
--------------------------------------
INTRODUCTION
This is your Chubb Group Personal Excess Liability Policy. Together with your
Coverage Summary, it explains your coverages and other conditions of your
insurance in detail.
This policy is a contract between you and us. READ YOUR POLICY CAREFULLY and
keep it in a safe place.
AGREEMENT
We agree to provide the insurance described in this policy in return for the
premium paid by the Sponsoring Organization and your compliance with the policy
conditions.
DEFINITIONS
In this policy, we use words in their plain English meaning. Words with special
meanings are defined in the part of the policy where they are used. The few
defined terms used throughout the policy are defined here:
YOU means the individual who is a member of the Defined Group shown as the Named
Insured in the Coverage Summary.
WE and US mean the insurance company named in the Coverage Summary.
FAMILY MEMBER means your relative who lives with you, or any other person under
25 in your care or your relative's care who lives with you.
SPONSORING ORGANIZATION means the entity, corporation, partnership or sole
proprietorship sponsoring and defining the criteria for qualification as a Named
Insured.
POLICY means your entire Group Personal Excess Liability Policy, including the
Coverage Summary.
COVERAGE SUMMARY means the most recent Coverage Summary we issued to you,
including any subsequent coverage amendments.
OCCURRENCE means a loss or accident to which this insurance applies occurring
within the policy period. Continuous or repeated exposure to substantially the
same general conditions unless excluded is considered to be one occurrence.
BUSINESS means any employment, trade, occupation, profession, or farm operation
including the raising or care of animals.
DEFINED GROUP means those individuals meeting the criteria for qualification as
Named Insured as defined by the Sponsoring Organization and accepted by us.
GROUP PERSONAL EXCESS LIABILITY COVERAGE
This part of your Group Personal Excess Liability Policy provides you with
liability coverage in excess of your underlying insurance anywhere in the world
unless stated otherwise or an exclusion applies.
PAYMENT FOR A LOSS
AMOUNT OF COVERAGE
The amount of coverage for liability is shown in the Coverage Summary. We will
pay on your behalf up to that amount for covered damages from any one
occurrence, regardless of how many claims, homes, vehicles, watercraft, or
people are involved in the occurrence.
Any costs we pay for legal expenses (see Defense coverages) are in addition to
the amount of coverage.
UNDERLYING INSURANCE
We will pay only for covered damages in excess of all underlying insurance
covering those damages, even if the underlying coverage is for more than the
minimum amount.
"Underlying insurance" includes all liability coverage that applies to the
covered damages, except for other insurance purchased in excess of this policy.
- - any person or organization with respect to their legal responsibility for
acts or omissions of you or a family member; or
- - any combination of the above.
"Damages" means the sum that is paid or is payable to satisfy a claim settled by
us or resolved by judicial procedure or by a compromise we agree to in writing.
"Personal injury" means the following injuries, and resulting death:
- - bodily injury;
- - shock, mental anguish, or mental injury;
- - false arrest, false imprisonment, or wrongful detention;
- - wrongful entry or eviction;
- - malicious prosecution or humiliation; and
- - libel, slander, defamation of character, or invasion of privacy.
"Bodily injury" means physical bodily harm, including sickness or disease that
results from it, and required care, loss of services and resulting death.
"Property damage" means physical injury to or destruction of tangible property
and the resulting loss of its use. Tangible property includes the cost of
recreating or replacing stocks, bonds, deeds, mortgages, bank deposits, and
similar instruments, but does not include the value represented by such
instruments.
"Registered vehicle" means any motorized land vehicle not described in
"unregistered vehicle."
"Unregistered vehicle" means: any motorized land vehicle not designed for or
required to be registered for use on public roads; any motorized land vehicle
which is in dead storage at your residence; any motorized land vehicle used
solely on and to service your residence premises; or golf carts.
EXCESS UNINSURED MOTORISTS PROTECTION
This coverage is in effect only if excess uninsured motorists protection is
shown in the Coverage Summary.
We cover damages for bodily injury and property damage a covered person is
legally entitled to receive from the owner or operator of an uninsured motorized
land vehicle. We cover these damages in excess of the underlying insurance or
the Required Primary Underlying Insurance, whichever is greater, if they are
caused by an occurrence during the policy period, unless otherwise stated.
AMOUNT OF COVERAGE. The maximum amount of excess uninsured motorists protection
available for any one occurrence is the excess uninsured motorists protection
amount shown in the Coverage Summary regardless of the number of vehicles
covered by the Required Premium Underlying Insurance. We will not pay more than
this amount in any one occurrence for covered damages regardless of how many
claims, vehicles or people are involved in the occurrence.
This coverage will follow form.
UNINSURED MOTORISTS PROTECTION ARBITRATION
If we and a covered person disagree whether that person is legally entitled to
recover damages from the owner or operator of an uninsured motor vehicle, or do
not agree as to the amount of damages, either party may make a written demand
for arbitration. In this event, each party will select an arbitrator. The two
arbitrators will select a third. If they cannot agree on a third arbitrator
within 45 days, either may request that the arbitration be submitted to the
American Arbitration Association. When the covered person's recovery exceeds
the minimum limit specified in the applicable jurisdiction's financial
responsibility law, each party will pay the expenses it incurs, and bear the
expenses of the third arbitrator equally. Otherwise, we will bear all the
expenses of the arbitration.
Unless both parties agree otherwise, arbitration will take place in the county
and state in which the covered person lives. Local rules of law as to procedure
and evidence will apply. A decision agreed to by two arbitrators will be
binding unless the recovery amount for bodily injury exceeds the minimum limit
specified by the applicable jurisdiction's financial responsibility law. If the
amount exceeds that limit, either party may demand the right to a trial. This
demand must be made within 60 days of the arbitrator's decision. If this demand
is not made, the amount of damages agreed to by the arbitrators will be binding.
WORKERS' COMPENSATION OR DISABILITY. We do not cover any damages a covered
person is legally obligated to provide under any workers' compensation,
disability benefits, unemployment compensation or similar laws. But we do
provide coverage in excess over any other insurance for damages a covered person
is legally obligated to pay for bodily injury to a domestic employee of a
residence covered under the Required Primary Underlying Insurance which are not
compensable under workers' compensation, unless another exclusion applies.
DIRECTOR'S LIABILITY. We do not cover any damages for any covered person's
actions or failure to act as an officer or member of a board of directors of any
corporation or organization. This exclusion does not apply to a not-for-profit
corporation or organization, or to a condominium or cooperative association.
DAMAGE TO COVERED PERSON'S PROPERTY. We do not cover any person for property
damage to property owned by any covered person.
DAMAGE TO PROPERTY IN YOUR CARE. We do not cover any person for property damage
to property rented to, occupied by, used by, or in the care of any covered
person, to the extent that the covered person is required by contract to provide
insurance. But we do cover such damages for loss caused by fire, smoke, or
explosion unless another exclusion applies.
DISCRIMINATION. We do not cover any damages arising out of discrimination due
to age, race, color, sex, creed, national origin, or any other discrimination.
INTENTIONAL ACTS. We do not cover any damages arising out of an act intended by
a covered person to cause personal injury or property damage, even if the injury
or damage is of a different degree or type than actually intended or expected.
An intentional act is one whose consequences could have been foreseen by a
reasonable person. But we do cover such damages if the act was intended to
protect people or property unless another exclusion applies.
MOLESTATION, MISCONDUCT OR ABUSE. We do not cover any damages arising out of
any actual, alleged or threatened:
- - sexual molestation;
- - sexual misconduct or harassment; or
- - abuse.
NONPERMISSIVE USE. We do not cover any person who uses a motorized land vehicle
or watercraft without permission from you or a family member.
BUSINESS PURSUITS. We do not cover any damages arising out of a covered
person's business pursuits, investment or other for-profit activities, for the
account of a covered person or others, or business property except on a follow
form basis.
But we do cover damages arising out of volunteer work for an organized
charitable, religious or community group, an incidental business away from home,
incidental business at home, incidental business property, incidental farming,
or residence premises conditional business liability unless another exclusion
applies. We also cover damages arising out of your ownership, maintenance, or
use of a private passenger motor vehicle in business activities other than
selling, repairing, servicing, storing, parking, testing, or delivering
motorized land vehicles.
"Incidental business away from home" is a self-employed sales activity, or a
self-employed business activity normally undertaken by person under the age of
18 such as newspaper delivery, babysitting, caddying, and lawn care. Either of
these activities must:
- - not yield gross revenues in excess of $5,000 in any year;
- - have no employees subject to worker's compensation or other similar
disability laws;
- - conform to local, state, and federal laws.
"Incidental business at home" is a business activity, other than farming,
conducted on your residence premises which must:
- - not yield gross revenues in excess of $5,000 in any year, except for the
business activity of managing one's own personal investments;
- - have no employees subject to worker's compensation or other similar
disability laws;
- - conform to local, state, and federal laws.
ILLNESS. We do not cover personal injury or property damage resulting from any
illness, sickness or disease transmitted intentionally or unintentionally by a
covered person to anyone, or any consequence resulting from that illness,
sickness or disease. We also do not cover any damages for personal injury
resulting from the fear of contracting any illness, sickness or disease, or any
consequence resulting from the fear of contracting any illness, sickness or
disease.
PARENTAL LIABILITY. We do not cover any damages arising from parental liability
for the acts of a minor using a motorized land vehicle, watercraft 26 feet or
longer or with more than 50 engine rated horsepower, or aircraft. But we do
cover parental liability for the acts of a minor using a motorized land vehicle
or watercraft on a follow form basis for the type of motorized land vehicle or
watercraft involved, unless another exclusion applies.
ENTRUSTMENT. We do not cover any damages arising from the entrustment by any
covered person of a motorized land vehicle, watercraft 26 feet or longer or with
more than 50 engine rated horsepower, or aircraft to any person. But we do
cover entrustment by any covered person of a motorized land vehicle or
watercraft on a follow form basis for the type of motorized land vehicle or
watercraft involved, unless another exclusion applies.
NUCLEAR OR RADIATION HAZARD. We do not cover any damages caused directly or
indirectly by nuclear reaction, radiation, or radioactive contamination,
regardless of how is was caused.
NOTE: MISSING PAGE 8 OF 9 (SEE ORIGINAL)
<PAGE>
LIABILITY CONDITIONS
YOUR DUTIES AFTER A LOSS
In case of an accident or occurrence, the covered person shall perform the
following duties that apply:
NOTIFICATION. You must notify us or your agent or broker as soon as possible.
ASSISTANCE. You must provide us with all available information. This includes
any suit papers or other documents which help us in the event that we defend
you.
COOPERATION. You must cooperate with us fully in any legal defense. This may
include any association by us with the covered person in defense of a claim
reasonably likely to involve us.
APPEALS
If a covered person, or any primary insurer, does not appeal a judgment for
covered damages, we may choose to do so. We will then become responsible for
all expenses, taxable costs, and interest arising out of the appeal. However,
the amount of coverage for damages will not be increased.
SPECIAL CONDITIONS
In the event of conflict with any other conditions of your policy, these
conditions supersede.
LEGAL ACTION AGAINST US
You agree not to bring action against us unless you have first complied with all
conditions of this policy. If you have a loss, you agree not to bring any
action against us until the obligation has been determined by final judgment or
a written agreement by us.
NOTICE OF CANCELLATION AND COVERAGE TERMINATION CONDITIONS
YOUR CANCELLATION. The Sponsoring Organization may cancel this policy by
returning it to us or notifying us in writing at any time subject to the
following:
- - the Sponsoring Organization must notify us in advance of the requested
cancellation date; and
- - the Sponsoring Organization must provide proof of notification to each
member of the Defined Group covered under this policy.
OUR CANCELLATION. At our discretion we may cancel this policy by mailing to the
Sponsoring Organization at the address shown on the Coverage Summary upon ten
(10) days notice for non-payment of premium or thirty (30) days notice in all
other cases.
TERMINATION. Should an individual for any reason no longer qualify as a member
of the Defined Group, coverage will cease sixty (60) days from the date of such
termination, or the policy expiration or cancellation date, whichever comes
first.
REFUND. In the event of cancellation by the Sponsoring Organization or us, we
will refund any unearned premium on the effective date of cancellation, or as
soon as possible afterwards to the Sponsoring Organization. The unearned
premium will be computed short rate for the unexpired term of the policy.
In Witness Whereof, the company issuing this policy has caused this policy to be
signed by its authorized officers, but this policy shall not be valid unless
also signed by a duly authorized representative of the company.
CHUBB CUSTOM INSURANCE COMPANY
President Secretary
<PAGE>
ENDORSEMENT
Policy Period APRIL 1, 2000 to APRIL 1, 2001
Effective Date APRIL 01, 2000
Policy Number ____________________
Insured c/o ENERGIZER HOLDINGS, INC.
(Per Endorsement)
Name of Company CHUBB CUSTOM INSURANCE COMPANY
Date Issued APRIL 1, 2000
UNDER CONDITIONS, THE FOLLOWING CONDITION IS ADDED:
In the event we fail to pay any amount claimed to be due under this
insurance at your request we will submit to the jurisdiction of a court of
competent jurisdiction within the United States of America. Nothing in this
condition constitutes or should be understood to constitute a waiver of our
rights to commence an action in any court of competent jurisdiction in the
United States or to remove an action to a United States District Court or to
seek a transfer of a case to another court as permitted by the laws of the
United States or of any state in the United States.
Service of process in such suit may be made upon President, Chubb Custom
Insurance Company, 15 Mountain View Road, P.O. Box 1615, Warren, NJ 07061-1615,
or his/her nominee.
The above named is authorized and directed to accept service of process on
our behalf in any such suit and/or upon the request to give you a written
undertaking that we will enter a general appearance in the event such a suit
shall be instituted.
SERVICE
OF SUIT CONDITIONS In accordance with any statute of any state, territory or
district of the United States of America, which makes provision therefore, we
designate the Superintendent, Commissioner or Director of Insurance, Secretary
of State or other officer or officers specified for that purpose in the statute
or his or their successor or successors in office, as their true and lawful
attorney upon whom may be served any lawful process in any action, suit or
proceeding instituted by or on your behalf or the behalf of any beneficiary
arising out of this contract of insurance, and hereby designate President, Chubb
Custom Insurance Company or his/her nominee, as the person to whom the said
officer is authorized to mail such process or a true copy thereof.
All Other Terms And Conditions Remain Unchanged.
Authorized Representative
- --------------------------
Date
<PAGE>
GROUP EXCESS LIABILITY POLICY
ENDORSEMENT
Policy Period APRIL 1, 2000 to APRIL 1, 2001
Effective Date APRIL 01, 2000
Policy Number ___________________
Insured c/o ENERGIZER HOLDINGS, INC.
(Per Endorsement)
Name of Company CHUBB CUSTOM INSURANCE COMPANY
Date Issued APRIL 1, 2000
THIS POLICY IS SUBJECT TO THE FOLLOWING ENDORSEMENT
As respects to Uninsured and Underinsured Motorists coverage provided by this
policy, the Limit of Liability set forth on the Coverage Page, Form 10-02-0691
(Ed. 8-96), is limited to $1,000,000. Each Occurrence in Excess of the Required
Primary Underlying limits of $300,000.
It is understood and agreed that this limit is included within, not in addition
to, the policy limit as stated on the Coverage Page, Form 10-02-0691 (Ed. 8-96).
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
Authorized Representative
- --------------------------
<PAGE>
GROUP EXCESS LIABILITY POLICY
ENDORSEMENT
Policy Period APRIL 1, 2000 to APRIL 1, 2001
Effective Date APRIL 01, 2000
Policy Number ___________________
Insured c/o ENERGIZER HOLDINGS, INC.
(Per Endorsement)
Name of Company CHUBB CUSTOM INSURANCE COMPANY
Date Issued APRIL 01, 2000
THIS POLICY IS SUBJECT TO THE FOLLOWING ENDORSEMENT
It is hereby agreed that the Named Insured is amended to read:
Corporate Officers, Vice Presidents of the Administrative and Operating Division
of Energizer Holdings, Inc. and the Principle Corporate Officers of any other
controlled affiliate of Energizer Holdings, Inc. when officers are designated as
eligible to participate by the Co-Chief Executive Officers.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
Authorized Representative
- --------------------------
<PAGE>
GROUP EXCESS LIABILITY POLICY
ENDORSEMENT
Policy Period APRIL 01, 2000 to APRIL 1, 2001
Effective Date APRIL 01, 2000
Policy Number ___________________
Insured c/o ENERGIZER HOLDINGS, INC.
(Per Endorsement)
Name of Company CHUBB CUSTOM INSURANCE COMPANY
Date Issued APRIL 1, 2000
THIS POLICY IS SUBJECT TO THE FOLLOWING ENDORSEMENT
The Termination Clause on page 9 of 9 of the Group Personal Excess Liability
contract (form 10-02-0691) is hereby amended to read as follows:
"Termination. Should an individual for any reason no longer qualify as a member
shown on the Schedule of Insureds endorsement, coverage will cease sixty (60)
days from the date of such termination, or the policy expiration or cancellation
date, whichever comes first."
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
Authorized Representative
- --------------------------
<PAGE>
GROUP PERSONAL EXCESS LIABILITY
COVERAGE HIGHLIGHTS
- - Worldwide Coverage Territory
- - Defense in addition to the limit
- - $1MM sublimit available for Excess Uninsured Motorists protection
- - Personal injury claims such as mental anguish; libel, slander, and
defamation of character
- - Incidental business pursuits with no employees not yielding revenues in
excess of $5,000
- - Incidental farming which does not produce more than $2,500 in gross annual
revenues
- - Supplemental payments - "all earnings lost by each covered person at our
request, up to $250 a day, to a total of $10,000
- - Termination - coverage will cease sixty (60) days from the date of such
termination, or policy expiration or cancellation date, whichever comes first
<PAGE>
GROUP PERSONAL EXCESS LIABILITY POLICY
The following are some frequently asked questions:
1. WHO IS INCLUDED WITHIN THE GROUP POLICY AS THE NAMED INSURED?
The named insured means the person shown as the named insured on the participant
-------------
list and that person's spouse and any relative related by blood, marriage or
adoption who is a resident of the same household. Any other person under the
age of 25 who is in their care, or a relative's care who lives with them.
2. WHAT IS THE LIMIT OF COVERAGE PROVIDED FOR EACH PARTICIPANT?
Each participant is covered for the limit selected. The limit applies
separately to each individual and is not subject to a policy aggregate. There
may be more than one limit available on the Group policy. For example, coverage
can be purchased for $5,000,000 and $10,000,000. Each participant would be
identified and premium paid for the coverage limit they selected. Defense costs
are outside the policy limit.
3. IS PERSONAL INJURY INCLUDED?
Yes. Personal Injury means: (a) Bodily injury, shock, mental anguish, mental
injury, sickness or disease, including death; (b) Injury because of false arrest
or imprisonment, malicious prosecution, wrongful entry or eviction, humiliation,
libel, slander, defamation of character or invasion of privacy.
4. WHAT IS EXCESS UNINSURED/UNDERINSURED MOTORISTS COVERAGE AND WHY IS IT SO
IMPORTANT?
Should you or a member of your family be involved in an accident with an
uninsured/underinsured driver, this coverage will reimburse you for the damages
you should have been able to collect from the other driver's insurance, i.e.:
loss of income/ future earnings, short term/long term medical expenses, pain and
suffering. Also, this coverage would respond if you or a family member were
injured by an uninsured/ underinsured driver as a pedestrian or in a "hit and
run" occurrence.
5. IS COVERAGE INCLUDED WHILE SERVING AS DIRECTOR OR OFFICER OF A NON-PROFIT
ORGANIZATION?
Yes. Coverage for personal injury or property damage claims arising from
activities as a Director or Officer of a non-profit organization, or to a
condominium or cooperative association.
6. ARE PROFESSIONAL AND BUSINESS ACTIVITIES INCLUDED?
Coverage is provided on a follow form basis (i.e., coverage is included in
primary homeowners, personal automotive policies), subject to the restrictions
set forth in the policy.
7. CAN THE POLICY BE CONVERTED TO A PERSONAL UMBRELLA POLICY IF THE
PARTICIPANT LEAVES THE FIRM (OTHER THAN RETIREMENT REASONS) OR IF THE GROUP
POLICY CEASES TO EXIST?
No. The policy is not convertible. The participant would have to replace
coverage through their personal insurance broker. The policy provides a grace
period for coverage to be terminated after 60 days.
8. CAN I KEEP MY CURRENT UMBRELLA POLICY IN EFFECT IF I PARTICIPATE IN THIS
PROGRAM?
Yes. The Group Umbrella limit would be in addition to your individual limit.
With the high limits and broad coverage available through the Group Personal
Excess Liability Policy, there should be no need to continue a separate Personal
Umbrella unless it is needed to comply with required underlying limits. Should
you decide to keep in place your Personal Umbrella Policy, we suggest that a
copy of your current Umbrella wording be reviewed to determine how it would
respond to a loss.
9. ARE MY CHILDREN WHO ARE AWAY AT COLLEGE COVERED UNDER MY PERSONAL EXCESS
LIABILITY POLICY?
Yes, as long as they maintain that your household is their primary residence
when not at college. Note: if they have their own insurance, their policy
should also be written with the required underlying limits or there will a
self-insured gap.
10. AM I INSURED FOR EXCESS AUTOMOBILE LIABILITY COVERAGE WHEN I RENT A CAR
FOR PERSONAL REASONS OR WHEN I AM ON VACATION ABROAD?
In most states, your primary Automobile policy will apply to rentals in the U.S.
- - check with your insurance agent. If it does not, you need to request the
maximum Automobile Liability limits available from the rental car company. This
would also apply to rentals abroad. A rental is considered a short term of 30
days or less. Anything over that time period would necessitate your purchasing
the required underlying auto limits of $250,000/$500,000 and $100,000 property
damage or $300,000 combined single limit. Note: There is no auto physical
damage (comprehensive or collision) provided by this policy.
11. WHAT ARE THE CONSEQUENCES IF I CAN'T OR DON'T OBTAIN THE REQUIRED
UNINSURED/UNDERINSURED MOTORISTS LIMITS OF $250,000/$500,000 AND $100,000
PROPERTY DAMAGE OR $300,000 COMBINED SINGLE LIMIT?
You will be self-insured (uninsured) for the gap between the
Uninsured/Underinsured Motorists limits you have on your primary auto policy and
the required underlying limits of $250,000/$500,000 and $100,000 property damage
or $300,000 combined single limit.
12. WHAT DO I DO IF I CANNOT GET THE REQUIRED LEVEL OF UNDERLYING COVERAGE
FOR UNINSURED/UNDERINSURED MOTORISTS?
Ask your insurance agent to find an insurance company that can provide the
required coverage. You can also purchase an Excess Liability policy, but make
sure it covers all family members in your household and all of your vehicles; it
must also provide uninsured/underinsured motorist coverage. Not all Excess
Liability policies include this coverage.
13. AM I COVERED FOR MY VACATION HOME THAT IS RENTED OUT?
The policy has a business pursuits exclusion; however, this exclusion does not
apply to a 1, 2, 3, or 4 family dwelling that you rent out as long as it is
insured under a personal comprehensive liability policy with a limit of at least
$100,000.
14. MY NEIGHBOR AND I JOINTLY OWN A VACATION HOME. AM I COVERED?
Yes. For your interests only, as long as the home is insured under a personal
comprehensive liability policy (not a commercial policy) with a limit of at
least $100,000 and you are a named insured on the policy. Your neighbor is not
covered under your policy.
15. MY CHILD, WHO IS A RESIDENT OF MY HOUSEHOLD, HAS A MINIBIKE/MOPED/GOLF
CART THAT IS NOT LICENSED FOR ROAD USE. AM I COVERED?
You should have Comprehensive Personal Liability coverage with a limit of
$100,000 (check your homeowner's policy; it may provide coverage for unlicensed
recreational vehicles).
16. I RACE MY BOAT ON THE WEEKENDS. AM I COVERED?
Yes, if you are racing a sailboat. However, coverage is not provided for any
car, motorcycle, recreational vehicle or other watercraft while practicing for
or taking part in a competitive race.
17. I OWN OR RENT AN AIRCRAFT AND PILOT IT AS A HOBBY. AM I COVERED?
No. Coverage is not provided for the ownership, maintenance, or use of any
aircraft. However, this does not apply to an aircraft chartered with a pilot
and crew by the insured.
ENERGIZER HOLDINGS, INC.
EXECUTIVE RETIREE LIFE PLAN
I. DEFINITIONS
1.1 "Affiliated Company" means Energizer Holdings, Inc., those domestic
corporations in which Energizer Holdings, Inc. owns directly or indirectly more
than 50% of the voting stock, or any other entity so designed by the Committee.
1.2 "Board" means the Board of Directors of Energizer Holdings, Inc.
1.3 "Committee" means the Committee appointed to administer the Plan, its
designee, or any successor to such Committee.
1.4 "Company" means Energizer Holdings, Inc.
1.5 "Employee" means a person employed by the Company or an Affiliated
Company and who is one of a select group of management or highly-compensated
employees.
1.6 "Group Life Insurance Plan" means the Energizer Holdings, Inc. Group
Life Insurance Plan.
1.7 "Plan" means the Energizer Holdings, Inc. Executive Group Personal
Excess Liability Insurance Plan.
ELIGIBILITY
An Employee is eligible for coverage under the Plan if he or she:
(a) is a Principal Corporate Officer of the Company or an Affiliated
Company; Vice President of the administrative or operating division of the
Company or an Affiliated Company; Chairman of the Board, Chief Executive
Officer, President or Corporate Vice President of the Company or an Affiliated
Company which are designated by the Committee as eligible to participate in the
Plan; and
(b) is enrolled as a participant in the Group Life Insurance Plan.
In addition, an Employee must be at least age fifty-five (55) and have
completed at least two years of service with the Company or an Affiliated
Company or have a combined age and years of service total of at least eighty
(80) to be eligible for coverage under the Plan. All such Employees must
terminate employment with the Company or an Affiliated Company on a voluntary
basis.
Individuals employed by a foreign affiliate of the Company or an Affiliated
Company who are not U.S. citizens and, except at the discretion of the Vice
President and Director of Administration, U.S. citizens employed by a foreign
affiliate of the Company or an Affiliated Company, are ineligible for coverage
under this Plan.
BENEFITS
If the Employee is enrolled in the Group Life Insurance Plan, the Company
will provide at Company expense an Executive Retiree Death Benefit equal to 50%
of the Employee's previous full year's benefit earnings at the time he/she
retires. Personal medical information will be required by the insurance company
in order to obtain this additional benefit, no executive will be denied
participation in the Plan.
The benefits payable under this Plan are taxable as ordinary income to the
beneficiary. However, the amount of actual payment will be increased to offset
the approximate tax consequences.
MODIFICATION, TERMINATION OF COVERAGE
The Company may amend the provisions or terminate the Plan at any time,
subject to the following restrictions:
The nature and scope of coverage for any actively employed executive
covered by this Plan will not be reduced or terminated unless coverage is
reduced or terminated for the entire class of covered executives.
The nature and scope of coverage for retired executives covered by this
Plan will not be changed to the detriment of the retired executives unless
mandated by law.
The Company reserves the right to assign its rights and obligations under
this Plan to a third party.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a
duly authorized officer as of the _____ day of ______________________, 2000.
ENERGIZER HOLDINGS, INC.
By:
Title:
ENERGIZER HOLDINGS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
I. DEFINITIONS
1.1 "Affiliated Company" means Energizer Holdings, Inc., those domestic
corporations in which Energizer Holdings, Inc. owns directly or indirectly more
than 50% of the voting stock, or any other entity so designed by the Committee.
1.2 "Beneficiary" means either a Surviving Spouse (as defined in the
Retirement Plan) or any other person (including a trust) designated pursuant to
the terms of the Retirement Plan to receive benefits under the terms of that
Plan as a result of an Employee's death.
1.3 "Benefit Limitations" means the limitations on benefit accruals
under the Retirement Plan set forth in Section 2.1.
1.4 "Code" means the Internal Revenue Code of 1986, as amended.
1.5 "Committee" means the Committee of the Board of Directors of
Energizer Holdings, Inc., its designee, or any successor to such Committee.
1.6 "Company" means Energizer Holdings, Inc.
1.7 "Compensation" means compensation included for purposes of
computation of benefits pursuant to the Retirement Plan.
1.8 "Employee" means a person employed by any of the Affiliated
Companies who is one of a select group of management or highly-compensated
employees.
1.9 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.10 "Plan" means the Energizer Holdings, Inc. Supplemental Executive
Retirement Plan.
1.11 "Retirement" means the effective date on which an Employee or such
Employee's Beneficiary begins to receive benefits pursuant to the Retirement
Plan.
1.12 "Retirement Plan" means the Energizer Holdings, Inc. Retirement
Plan or any successor plan.
1.13 "Section 415 Limitation" means the limitation, imposed by Section
415 of the Code, on the amount of retirement benefits payable from a qualified
retirement plan to a participant in such plan.
1.14 "Supplemental Retirement Benefits" means benefits payable pursuant
to Article III of the Plan.
1.15 "Surviving Spouse" means the spouse of an Employee who dies prior
to Retirement.
II. ELIGIBILITY
2.1 Benefit Limitations. Any Employee described in Section 2.2 shall
--------------------
be eligible to accrue Supplemental Retirement Benefits as described in Article
III in the event that such Employee's retirement benefits accrued pursuant to
the Retirement Plan are limited by the Section 415 Limitation and/or the
Compensation limitations imposed by Section 401(a) of the Code.
2.2 Eligible Employees. The following Employees shall be eligible to
-------------------
accrue Supplemental Retirement Benefits to the extent their benefits accrued
under the Retirement Plan are limited by the Benefit Limitations set forth in
Section 2.1 above:
(a) Principal Corporate Officers of the Company or an Affiliated Company:
Chief Executive Officer, President, any Vice President, Secretary, Treasurer;
(b) Chairmen of the Board, Chief Executive Officers, Presidents and
Corporate Vice Presidents of the Company and any Affiliated Companies designated
by the Chief Executive Officer of the Company;
(c) Vice Presidents of administrative or operating divisions of the Company
or an Affiliated Company;
(d) Any other Employee designated by the Chief Executive Officer of the
Company.
III. SUPPLEMENTAL RETIREMENT BENEFITS
3.1 Amount and Form of Employee's Benefit. Any Employee who meets the
--------------------------------------
eligibility requirements of Article II shall be entitled to receive a
Supplemental Retirement Benefit which shall be equal in value to the additional
benefit which such Employee would have received pursuant to the Retirement Plan
but for the Benefit Limitations.
Notwithstanding the form of benefit selected by the Employee to be paid from the
Retirement Plan, the amounts payable pursuant to this Section 3.1 shall be paid
in the form of a five-year certain annuity if the Employee is unmarried at the
time of commencement of payment, or in the form of a 50% contingent annuitant
benefit if the Employee is married at that time, such optional forms to be
calculated in a manner consistent with administration of the Retirement Plan;
except that an Employee may irrevocably elect, in the year prior to the year in
which such Employee first accrues a benefit under the Plan, to receive benefits
pursuant to this Section in a five-year certain annuity, ten-year certain
annuity, life annuity, 50% contingent annuitant benefit or 100% contingent
annuitant benefit.
In addition, if the Employee is enrolled in the Account Option Benefit as
defined under the Retirement Plan, such Employee may elect to receive his/her
benefit in a single lump-sum payment. Such Employee must elect this form of
payment at least one year prior to the date payments under this Plan begin.
Benefits shall be payable to an Employee in monthly installments on the
first day of each month following Retirement.
3.2 Beneficiaries. In the event of an eligible Employee's death, such
-------------
Employee's Beneficiary shall receive Supplemental Retirement Benefits equal in
amount to the additional monthly benefit which such Beneficiary would have
received from the Retirement Plan but for the Benefit Limitations applicable to
the Employee's accrued benefit.
3.3 Lump Sum Payments. In lieu of monthly installment payments
-------------------
described in Section 3.1 and 3.2, the Committee, at its sole discretion, may
pay, on the sixtieth (60th) day after Retirement or death of an Employee,
Supplemental Retirement Benefits in the form of a single lump-sum distribution
equal in amount to the present value of the right to receive such Supplemental
Retirement Benefits on a monthly basis, but only in the event that such monthly
benefit payment is less than $100. The present value shall be determined using
the discount rate and mortality assumptions utilized in the Retirement Plan to
determine the present value of lump-sum cash distributions permitted by Section
417 of the Code, as such rate may be determined or adjusted from time to time.
IV. ERISA BENEFIT LIMITATION
4.1 Obligations Unfunded. All benefits due an Employee or Beneficiary
---------------------
pursuant to the Plan are unfunded and unsecured and are payable out of the
general funds of the Company. The Company shall make no provision for the
funding or insuring of any benefits payable hereunder. In the event that the
Company shall decide to establish an advance accrual reserve on its books
against the future expense of payments made hereunder, such reserve shall not
under any circumstances be deemed to be an asset of the Plan, nor a source of
payment of any claims under the Plan but at all times shall remain a part of the
general assets of the Company, and shall be subject to the claims of its
creditors.
The Company may, in its sole and absolute discretion, establish a grantor trust
for the payment of benefits hereunder, the assets of which shall be at all times
subject to the claims of creditors of the Company, as provided for in such
trust, provided that such trust does not alter the characterization of the Plan
as an unfunded plan for purposes of ERISA. Such trust shall make distributions
in accordance with the terms of the Plan.
4.2 Excess Benefit Plan. The portion of the Plan relating to
---------------------
Supplemental Retirement Benefits payable on account of the Section 415
Limitations constitutes an excess benefit plan as defined in Section 3(36) of
ERISA.
4.3 No Right to Continued Employment. Neither the establishment of the
--------------------------------
Plan nor the payment of any benefits thereunder nor any action of the Affiliated
Companies shall be held or construed to confer upon any person any legal right
to be continued in the employ of any Affiliated Company.
4.4 Power to Amend or Terminate. The Board of Directors of the
-------------------------------
Company, the Committee and their delegees are each empowered to amend, modify or
terminate this Plan at any time, except that no amendment, modification or
termination may reduce or otherwise detrimentally affect benefits payable under
this Plan to an Employee or his Beneficiary without regard to such amendment
unless the Employee (or Beneficiary, if the Employee is deceased) consents to
such change.
4.5 Benefits Upon Divestiture or Other Disposition of Business. In the
----------------------------------------------------------
event that, as a result of a sale of stock or assets or another transaction by
which all or part of an Affiliated Company ceases to be an affiliate of the
Company, an Employee's employment with an Affiliated Company is terminated or
his employer is no longer an Affiliated Company, the Company reserves the right
to offset, against any Supplemental Retirement Benefits otherwise payable to
such Employee or his Beneficiary, retirement benefits payable to such Employee
or his Beneficiary from any pension or retirement plan of such purchaser, its
affiliate or successor ("Purchaser") after consummation of such sale to the
extent such benefits duplicate the benefits payable under this Plan. The
Company also reserves the right to assign its rights and obligations pursuant to
this Plan and, upon the assumption of such rights and obligations by a third
party, The Company shall guarantee the payment of such transferred obligations
in the event that the assignee fails to pay them.
4.6 Transferability of Benefits. The Employee's right to receive
-----------------------------
payment of benefits under this Plan shall not be transferred, assigned or
pledged except by beneficiary designation, by will or pursuant to the laws of
descent and distribution. A beneficiary designation form shall be effective
only when the form is received by the Company and shall cancel all beneficiary
designation forms of the Employee previously received by the Company.
4.7 Anticipation of Benefits. An Employee shall have a claim upon the
-------------------------
Company only to the extent of the monthly payments, if any, due such Employee up
to and including the then current month, and the Employee shall not have a claim
against the Company for any subsequent monthly payment unless and until such
payments shall become due and payable.
4.8 Taxes. Any taxes required to be withheld under applicable federal,
-----
state or local tax laws or regulations may be withheld from any payment due
hereunder.
4.9 Missouri Law to Govern. Except to the extent preempted by federal
-----------------------
law, all questions pertaining to the interpretation, construction,
administration, validity and effect of the provisions of the Plan shall be
determined in accordance with the laws of the State of Missouri.
4.10 Headings. Headings of Articles and Sections of the Plan are
--------
inserted for convenience of reference, and constitute no part of the Plan.
4.11 Gender. The use of masculine pronouns herein shall be deemed to
------
include both males and females.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a
duly authorized officer as of the _____ day of ______________________, 2000.
ENERGIZER HOLDINGS, INC.
By: ____________________________________
Title: ____________________________________
BANC ONE CAPITAL MARKETS, INC.
a subsidiary of BANK ONE Corporation 1
ENERGIZER HOLDINGS, INC. SPIN-OFF TERM SHEET
--------------------------------------------
February 16, 2000
This Term Sheet is delivered with a Commitment Letter of even date herewith.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth in Annex I attached hereto and in the Commitment.
--------
* * *
This Term Sheet is intended as an outline only and does not purport to summarize
all the conditions, covenants, representations, warranties and other provisions
which would be contained in definitive legal documentation for the financing
contemplated hereby. The commitment of the Administrative Agent and the other
Lenders is subject to negotiation and execution of definitive Loan Documents in
form and substance satisfactory to the Lenders and their respective counsel. In
addition, the organizational structure of the Company after the Spin-Off
Transactions, the form and structure of the Spin-Off Transactions and the
financial, legal, accounting, tax and all other aspects of the transaction which
is the subject hereof shall be satisfactory to the Administrative Agent and the
Lenders and their respective counsel.
BORROWER: The initial borrower will be Ralston Purina Company
("RALSTON"); provided that the financing shall be provided to Ralston
immediately prior to and not sooner than two calendar days prior to the date of
the consummation of the "Spin-Off" (as defined below). Simultaneously with the
consummation of the Spin-Off, all of the indebtedness, obligations and
liabilities of Ralston under the Loan Documents will assigned to and assumed by
Energizer Holdings, Inc. ("ENERGIZER" or the "COMPANY") and Ralston shall be
released from any liability in connection with the Credit Agreement (the "DEBT
ASSUMPTION").
TRANSACTION: Ralston, of which the Company is a wholly-owned
subsidiary, has indicated its intention to distribute the shares of the Company
to Ralston's shareholders in a tax-free transaction (the "SPIN-OFF"), following
which all of the Company's shares will be held by Ralston's shareholders at the
time of the Spin-Off. Ralston and the Company have indicated their intention to
close financing facilities, in addition to the Facilities, which may consist of
a bridge facility or facilities made available to Ralston, all or a portion of
which may be assumed by the Company as part of the Spin-Off, and which will be
refinanced shortly after the effective date of the Spin-Off with a receivables
securitization facility made available to the Company (the "SECURITIZATION
FACILITY") and/or a private placement of the Company's senior unsecured notes,
pari passu with the Facilities (the "SENIOR NOTES"). The Facilities, the bridge
facilities, the Securitization Facility, the Senior Notes and other financing
facilities entered into in connection with or following the Spin-Off are
collectively referred to herein as the "FINANCING FACILITIES". The proceeds of
the Financing Facilities will be used: (a) prior to the Debt Assumption, for
Ralston's general corporate purposes; and (b) thereafter, for the Company's
general corporate purposes, including to finance friendly acquisitions. The
definitive legal structure of the Spin-Off, the amount, structure and nature of
the Financing Facilities (other than the Facilities), including the entities
obligated thereon and the amount assumed by the Company from Ralston, the
various transactions and transitional provisions between Ralston and the Company
and the related transactions (collectively, the "SPIN-OFF TRANSACTIONS") have
not yet been finally determined and must be satisfactory to the Administrative
Agent. Without limiting the foregoing, the aggregate amount of committed
financing available to the Company (or to Ralston and to be assumed by the
Company) under the Financing Facilities, including the Facilities, shall not be
less than $650 million.
Each existing and future "Material Domestic Subsidiary" of the Company
(other than the special purpose subsidiaries in connection with the
Securitization Facility (the "SPVS")) shall unconditionally guarantee all of the
indebtedness, obligations and liabilities of the Company arising under or in
connection with the Loan Documents. "MATERIAL DOMESTIC SUBSIDIARY" shall mean a
direct or indirect subsidiary of the Company organized under the laws of any
jurisdiction of the United States if such subsidiary's assets comprise greater
than 3% of the consolidated domestic assets (excluding the SPVs from such
calculation) of the Company and its subsidiaries.
Not more than 10% of the Company's consolidated domestic assets
(excluding the SPVs from such calculation) shall be in subsidiaries which are
not guarantors.
SUBSIDIARY GUARANTIES: Prior to the consummation of the Debt
Assumption, each of the Company and its Material Domestic Subsidiaries (other
than the SPVs) shall unconditionally guarantee all of the indebtedness,
obligations and liabilities of Ralston arising under or in connection with the
Loan Documents.
LEAD ARRANGER AND
SOLE BOOK MANAGER: Banc One Capital Markets, Inc. ("BOCM" or the
"ARRANGER").
ADMINISTRATIVE AGENT: Bank One, NA, with its main office in Chicago,
Illinois ("BANK ONE" or the "ADMINISTRATIVE AGENT").
LENDERS: A syndicate of Lenders selected by BOCM in consultation with
the Company (the "LENDERS").
DOCUMENTATION: The Facilities will be evidenced by one or more credit
agreements (collectively, the "CREDIT AGREEMENT"), guarantees and other loan
documents (collectively, the "LOAN DOCUMENTS") mutually satisfactory to Ralston,
the Company and the Lenders.
SYNDICATION MANAGEMENT: The Arranger will, in consultation with the
Company, manage all aspects of the syndication including, without limitation,
the timing of offers to potential Lenders, the amounts offered to potential
Lenders, the acceptance of commitments, and the compensation provided. The
Arranger shall, in consultation with the Company, allocate the commitments
received from the Lenders.
LENDER COMMITMENTS: Allocation of the commitments received from the
various Lenders shall be made by the Arranger pro rata among the 5-Year
--- ----
Revolving Credit Facility (as defined below) and the 364-Day Credit Facility (as
defined below).
THE FACILITIES
FACILITIES:
AGGREGATE AMOUNT: Up to $450 million (the "AGGREGATE COMMITMENT").
<PAGE>
PURPOSE: Prior to the Debt Assumption, for Ralston's general corporate
purposes and thereafter for the Company's general corporate purposes and
friendly acquisitions.
364-DAY CREDIT FACILITY
-----------------------
FACILITY A: 364-day credit facility with a one year term out option
(the "364-DAY CREDIT FACILITY").
AMOUNT: Up to $225 million.
364 days after the date of execution of the Loan Documents (such date
of execution, the "CLOSING DATE").
MATURITY:
Not more than 59 days and not less than 30 days before the end of the
applicable 364-day period, the Company may request in writing that the maturity
date for the expiring 364-Day Credit Facility be extended for an additional 364
days. Within 20 days after such extension request, each Lender may, in its sole
discretion, agree to such extension by giving written notice thereof to the
Company and the Administrative Agent (and the failure to provide such notice
shall be deemed to be a declination of such consent). Subject to the Required
Lenders agreeing to extend, the then applicable expiration date of the 364-Day
Credit Facility shall, following an extension request, be extended for those
consenting Lenders by 364 days. The Company reserves the right to replace
dissenting Lender(s) with existing or new Lenders.
EXTENSION:
CONVERSION
TO TERM LOAN: At the Company's option upon written notice to the
Administrative Agent (who shall promptly notify each of the Lenders), the
Company may convert the aggregate outstanding principal amount of the 364-Day
Credit Facility to a term loan having a maturity not more than 364 days after
the conversion date identified in such notice.
<PAGE>
5-YEAR REVOLVING CREDIT FACILITY
--------------------------------
FACILITY B: 5-year revolving credit facility (the "5-YEAR
REVOLVING CREDIT FACILITY")
AMOUNT: Up to $225 million.
MATURITY:
5 years from the Closing Date.
$10,000,000 of the 5-Year Revolving Credit Facility shall be available
for the issuance of standby letters of credit (the "LETTERS OF CREDIT") by the
Administrative Agent or by any other Lender (each such Lender an "ISSUER") at
the request and for the account of the Company.
No Letter of Credit shall have an expiry date later than the earlier
of (a) one year after the date of issuance and (b) five business days prior to
final maturity of the 5-Year Revolving Credit Facility; provided that any Letter
--------
of Credit with a one-year tenor may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (b) above).
-----------
LETTER OF CREDIT SUBFACILITY: Immediately upon the issuance of each
Letter of Credit, each Lender shall be deemed to have automatically and
unconditionally purchased and received from the Issuer an undivided interest and
participation in and to such Letter of Credit, the obligations of the Company in
respect thereof, and the liability of the Issuer thereunder, in an amount equal
to the face amount of such Letter of Credit multiplied by such Lender's
commitment percentage under the 5-Year Revolving Credit Facility.
The Administrative Agent may elect in its sole discretion to make
swingline loans to the Company under the 5-Year Revolving Credit Facility not to
exceed $10 million in the aggregate outstanding at any time, which are repayable
with interest within 5 business days. All swingline loans shall bear interest
for the account of the Administrative Agent at the Alternate Base Rate or such
other rate as may be agreed to between the Company and the Administrative Agent.
The amount available under the 5-Year Revolving Credit Facility shall be reduced
by the amount of the swingline usage.
SWING LINE
SUBFACILITY: At any time at the option of the Administrative Agent or
if any swingline loan is not repaid by the Company on the date when due, each
Lender will make a revolving loan under the 5-Year Revolving Credit Facility the
proceeds of which will be used to repay the swingline loan or, if any such
revolving credit loan may not be made, irrevocably purchase from the
Administrative Agent, without recourse or warranty, such participation in the
swingline loan as shall be necessary to cause each such Lender to share ratably
in such swingline loan.
OTHER TERMS
-----------
LIBOR, adjusted for reserves.
Alternate Base Rate.
LIBOR loans will be available for interest periods of one, two, three
or six months and, to the extent available, nine or twelve months. All interest
on LIBOR loans will be calculated on a 360-day basis.
The "ALTERNATE BASE RATE" means the greater of (i) the prime rate of
interest announced from time to time by Bank One or its parent (which is not
necessarily the lowest rate charged to any customer) changing when and as said
rate changes or (ii) the federal funds rate plus %. All interest in Alternate
Base Rate loans will be calculated on a 365/366-day basis.
<PAGE>
BORROWING OPTIONS:
"LIBOR" means the applicable London Interbank Offered Rate for
deposits in U.S. Dollars appearing on Reuters Screen FRBD as of 11:00 a.m.
(London Time) two business days prior to the first day of the applicable
interest period, adjusted for reserves.
INCREASED COSTS: The Credit Agreement will contain customary provisions
regarding availability, increased costs (including capital cost increases
imposed by regulatory authorities), illegality and early payment.
Pricing on the commitments and loans (including after exercise of the
term-out option, if applicable) will be at the rates, expressed in basis points
per annum, set out in the attached pricing grids (the "PRICING GRID") and
varying according to the pricing level commensurate with credit quality.
PRICING:
<PAGE>
FACILITY FEE: The Company shall pay a per annum fee calculated on a
360-day basis payable on each Lender's commitment, irrespective of usage,
quarterly in arrears and on termination of the applicable Facility at the rate
set out in the Pricing Grid.
Ralston shall pay or shall cause the Company to pay such fees payable
to the Administrative Agent and the Arranger as are specified in the fee letter
dated February 9, 2000 among the Administrative Agent, the Arranger, Ralston and
the Company.
OTHER FEES:
Standby Letters of Credit: The Company shall pay to the
----------------------------
Administrative Agent for the ratable account of the Lenders under the 5-Year
---
Revolving Credit Facility a per annum Letter of Credit Fee equal to the
applicable LIBOR Margin for the 5-Year Revolving Credit Facility as reflected in
the Pricing Grid, payable quarterly on the average daily outstanding face amount
available for drawing under all standby Letters of Credit which have been issued
under the Facilities.
Fronting Fee. In addition, for each Letter of Credit a Letter of
-------------
Credit fronting fee will be payable by the Company to the Issuer for its sole
account in such amount as is negotiated with the Issuer.
Customary Charges. The Company shall pay to the Issuer its
------------------
documentary and processing charges in accordance with the Issuer's standard
schedule for such charges with respect to the issuance, amendment, cancellation,
negotiation or transfer of each Letter of Credit and each drawing made
thereunder.
LETTER OF CREDIT FEES:
<PAGE>
DEFAULT RATE: After a Default and upon notice from the Administrative
Agent or the Required Lenders, the interest rates will be equal to the then
highest rate (or fee) under the various Facilities plus 2% per annum; provided,
---- --------
that during the continuation of a bankruptcy or insolvency default such rate
increase shall be applicable without any election or action on the part of the
Administrative Agent or the Lenders.
DRAWDOWNS: Minimum amounts of $10 million with additional increments of
$1 million. After the initial drawdown by Ralston, drawdowns are at the
Company's option with one business days notice for Alternate Base Rate Loans and
three business days for LIBOR Loans.
VOLUNTARY PREPAYMENTS: Alternate Base Rate Loans may be prepaid at any
time on one business days notice. LIBOR Loans may be prepaid before the end of
an interest period on three business days notice subject to payment of funding
indemnification and breakage costs.
TERMINATION OR REDUCTION OF COMMITMENTS: The Company may terminate the
unused commitments in amounts of at least $25 million at any time on three
business days written notice.
CONDITIONS OF BORROWING
The Credit Agreement will contain customary conditions to each loan
(including, but not limited to, absence of default or unmatured default,
continued accuracy of representation and warranties, and absence of material
litigation).
CONDITIONS TO EACH LOAN:
Additional conditions precedent to initial loan under the Facilities
will include, without limitation:
- The delivery of satisfactory loan and other closing documents,
including but not limited to the Credit Agreement, the guaranties, appropriate
resolutions, good standing certificates, incumbency certificates, no-default and
compliance certificates and opinions of counsel;
- No material adverse change from the information set forth in the
Form 10 filed January 11, 2000 and the projections and other information
provided to the Administrative Agent and the Lenders;
- Evidence that all conditions to consummation of the Spin-Off
Transactions have occurred and that the aggregate amount of committed Financing
Facilities (including hereunder) is not less than $650 million;
- The Company shall having received all necessary regulatory and
corporate approvals for the consummation of the Spin-Off Transactions and the
Financing Facilities;
- The Administrative Agent and the Lenders shall have received and be
satisfied with the pro forma post-Spin-Off Transactions consolidated balance
sheet and financial projections of the Company and its subsidiaries, together
with a chief financial officer's solvency certificate for the Company and its
subsidiaries post-Spin-Off Transactions which is satisfactory in form and
substance to the Administrative Agent and the Lenders and which shall be
consistent with the information delivered to the Administrative Agent prior to
the date hereof and to the other Lenders prior to their issuance of any
commitments.
- The Administrative Agent and the Lenders shall be satisfied with
the capitalization of the Company and its subsidiaries post-Spin-Off
Transactions. Without limiting the foregoing, net worth of the Company and its
consolidated subsidiaries as of and after the consummation of the Spin Off
Transactions shall not be less than a minimum amount to be agreed upon between
the Administrative Agent and the Company prior to the commencement of
syndication.
CONDITIONS TO INITIAL LOAN:
REPRESENTATIONS AND WARRANTIES
The Credit Agreement shall contain a representation regarding no material
adverse change only upon the signing and initial funding. The Credit Agreement
shall also contain representations and warranties with respect to the Company
and its subsidiaries to be made as of the Closing Date and in connection with
each loan and letter of credit issuance which are customary in transactions of
this nature, including, representations and warranties with respect to: absence
of default or unmatured default; corporate existence and standing; authorization
and validity; no conflict; government consent; financial statements; taxes;
litigation and contingent obligations; subsidiaries; ERISA; accuracy of
information; Regulation U; material agreements; compliance with laws; ownership
of property; insurance; environmental matters; Investment Company Act and Public
Utility Holding Company Act.
<PAGE>
COVENANTS
The Credit Agreement will have customary covenants, including but not limited
to:
- Annual certified audited consolidated and consolidating financial
statements of the Company and its consolidated subsidiaries due within 90 days
after each fiscal year;
- Quarterly certified unaudited consolidated financial statements of
the Company and its consolidated subsidiaries due within 45 days after each of
the first three fiscal quarters; and
- Quarterly no default certificate signed by the Chief Financial
Officer or Treasurer and delivered with the financial statements.
FINANCIAL REPORTING:
- Securitization Attributed Indebtedness not to exceed $250 million.
SECURITIZATION FACILITY:
- Subsidiary Indebtedness (not including the Securitization
Attributed Indebtedness) not to exceed $250 million.
SUBSIDIARY INDEBTEDNESS:
- No other restriction on Indebtedness of the Company and its
Subsidiaries, except for those restrictions imposed by the financial covenants.
INDEBTEDNESS GENERALLY:
- Asset sales will be limited to 20% of consolidated total assets
during the term of the Facilities.
ASSET SALES:
Acquisitions will be permitted provided:
- At the time thereof there is no Default or Unmatured Default.
- The acquisition is consummated pursuant to a negotiated acquisition
agreement on a non-hostile basis pursuant to an acquisition agreement approved
by the board of directors or other applicable governing body of the seller prior
to the commencement thereof.
- The Company is in pro forma compliance with the financial covenants
--- -----
for the twelve-month period ending on the last day of the Company's most
recently completed fiscal quarter as if such acquisition had occurred on the
first day of such twelve-month period.
- After giving effect to such acquisition, the representations and
warranties set forth in the Credit Agreement shall be true and correct in all
material respects.
- The target companies shall be companies operating in businesses
similar to or related to the current and future businesses conducted by the
Company and its subsidiaries, as well as suppliers to or distributors of
products similar to those of the Company and its subsidiaries; provided
acquisitions outside of such lines of business shall be permitted so long as the
aggregate purchase price for all such acquisitions does not exceed five percent
(5.0%) of the Company's consolidated tangible net assets.
PERMITTED ACQUISITIONS:
Negative pledge against encumbering any assets of the Company and its
subsidiaries except:
- Customary permitted liens.
- Liens in connection with the Securitization Facility.
- Basket to permit other secured indebtedness not to exceed 5% of
consolidated total assets.
NEGATIVE PLEDGE:
Customary affirmative covenants including: notice of Default, taxes,
insurance, compliance with laws, maintenance of properties, maintenance of
insurance, keeping of books and records, inspection.
Customary negative covenants including, without limitation,
restrictions on investments, sale leasebacks, use of proceeds, mergers, and
non-arm's length transactions with affiliates and with Ralston (subject to
exceptions to be agreed upon).
OTHER COVENANTS:
FINANCIAL COVENANTS:
The following financial covenants shall be calculated on a consolidated
basis for the Company and its Subsidiaries:
Maximum Consolidated Total Debt/ EBITDA Ratio: At no time shall the ratio
----------------------------------------------
of total indebtedness of the Company and its Subsidiaries (including
Securitization Attributed Indebtedness) at the end of the most recently
completed fiscal quarter to EBITDA of the Company and its consolidated
subsidiaries for the Company's then most recently completed four fiscal quarters
exceed 3.0 to 1.0.
Minimum Interest Coverage Ratio: The ratio of (a) EBIT of the Company and
--------------------------------
its consolidated subsidiaries for the Company's then most recently completed
four fiscal quarters to (b) total interest expense of the Company and its
consolidated subsidiaries, adjusted by adding thereto (to the extent not
otherwise included therein) the amount of all cash fees, service charges, and
other costs, as well as all collections or other amounts retained by purchasers
of assets pursuant to Securitization Facility, which are in excess of amounts
paid to the Company and its consolidated subsidiaries under the Securitization
Facility for the purchase of assets pursuant to such Securitization Facility and
are the equivalent of the interest component of the financing if the transaction
were characterized as an on-balance sheet transaction shall be greater than 3.00
to 1.00 as of the end of each fiscal quarter (calculated as of the end of each
such fiscal quarter for the four-fiscal quarter period ending on such date).
DEFAULTS
The Agreement will have customary defaults including, but not limited to,
defaults for nonpayment of principal when due, nonpayment of interest and fees
within 5 days, material misrepresentations, default in the performance of any
negative covenant, default in the performance of any financial covenant, default
in performance of any other term or covenant (with grace periods, where
applicable, to be agreed upon), bankruptcy or insolvency, ERISA, a change in
ownership or control, unstayed judgment in excess of $30 million and
cross-default to any indebtedness equal to or in excess of $30 million in the
aggregate for the Company or any subsidiary, which default would permit the
holders of such indebtedness to cause such indebtedness to become due prior to
its stated maturity.
Change in ownership or control would be defined as an event or series of events
by which: (i) any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly
or indirectly, of thirty percent (30%) or more of the voting power of the then
outstanding capital stock of the Company entitled to vote generally in the
election of the directors of the Company; (ii) during any period of 12
consecutive calendar months, the board of directors of the Company shall cease
to have as a majority of its members individuals who either: (a) were directors
of the Company on the first day of such period, or (b) were elected or
nominated for election to the board of directors of the Company at the
recommendation of or other approval by at least a majority of the directors then
still in office at the time of such election or nomination who were directors of
the Company on the first day of such period, or whose election or nomination for
election was so approved; (iii) other than as a result of a transaction not
prohibited under the terms of the Credit Agreement, the Company shall cease to
own, of record and beneficially, with sole voting and dispositive power, (a)
100% of the outstanding shares of Capital Stock of each of the guarantors or (b)
shall cease to have the power, directly or indirectly, to elect all of the
members of the board of directors of each of the guarantors; or (iv) the
Company consolidates with or merges into another corporation or conveys,
transfers or leases all or substantially all of its property to any person, or
any corporation consolidates with or merges into the Company, in either event
pursuant to a transaction in which the outstanding Capital Stock of the Company
is reclassified or changed into or exchanged for cash, securities or other
property.
OTHER MATTERS
Assignments: Each Lender may, in its sole discretion, sell
-----------
participations and may, in a manner acceptable to the Administrative Agent, sell
assignments in the loans and in its commitment and disclose public information
to prospective participants and assignees, and share, at its option, any fees
with such participants and assignees. Nonpublic information may be disclosed to
prospective participants and assignees; provided such participants and assignees
agree to be bound by the confidentiality provisions set forth in the Credit
Agreement with respect thereto.
Consents: Assignments under the 5-Year Revolving Credit Facility
--------
and/or the 364-Day Credit Facility shall require the consent of the Company and
the Administrative Agent (such consents not to be unreasonably withheld);
provided, the consent of the Company shall not be required (i) if a Default or
--
Unmatured Default shall have occurred and is continuing and (ii) if the
assignment is to another Lender or to an affiliate of a Lender.
Minimum: Assignments shall be in minimum amounts of $5,000,000 or the
-------
entire remaining balance of the assigning Lender's commitment or such lesser
amount as may be acceptable to the Administrative Agent and the Company
(provided the consent of the Company shall not be required to any reduction of
such minimum amount so long as a Default or Unmatured Default shall have
occurred and be continuing).
ASSIGNMENTS/ PARTICIPATIONS: Assignment Fee: The assignor shall pay an
--------------
assignment fee of $3,500 to the Administrative Agent upon any assignment by a
Lender of its rights and obligations under the Facilities (including, but not
limited to, an assignment by a Lender to another Lender, but excluding any
assignment by a Lender to an affiliate of such Lender).
REQUIRED LENDERS: "REQUIRED LENDERS" means, with respect to the 5-Year
Revolving Credit Facility and the 364-Day Credit Facility, Lenders holding
greater than 50% of the commitments under each such Facility, or, if the
commitments have been terminated under such Facility, of the outstanding loans
under such Facility.
EXPENSES: The Company agrees to reimburse or pay the Administrative
Agent for all reasonable costs, fees and expenses, whether incurred prior to or
subsequent to closing, in the preparation, negotiation, execution and
administration of the Credit Agreement and the other Loan Documents, including
reasonable fees and time charges of legal counsel.
GOVERNING LAW: Illinois.
COUNSEL TO THE ADMINISTRATIVE AGENT: Sidley & Austin.
<TABLE>
<CAPTION>
Exhibit 21
SUBSIDIARIES OF REGISTRANT
--------------------------
<S> <C> <C>
Jurisdictions of Percentage of
Subsidiary Name Incorporation Control
- --------------------------------------------- ----------------------------- -------------
* Berec Components Limited UK 100%
Berec Overseas Investments Limited UK 100%
EBC Batteries, Inc. Delaware 100%
EBC (India) Company Ltd. India 100%
EBC Uruguay, S. A. Uruguay 100%
Energizer Asia Pacific, Inc. Delaware 100%
Energizer Australia Pty. Ltd. Australia 100%
Energizer Canada (division of RP Canada) Canada 100%
Energizer (China) Co., Ltd. China 100%
Energizer Hellas A.E. Greece 100%
Energizer Holdings, Inc. Missouri 100%
Energizer Hong Kong Limited Hong Kong 100%
Energizer Hungary Trading Ltd. Hungary 100%
Energizer Iberia, S.A. Spain 100%
Energizer India Limited India 51%
Energizer International, Inc. Delaware 100%
Energizer Italia, S.p.A. Italy 100%
Energizer Japan, Inc. Delaware 100%
Energizer Korea, Ltd. Korea 100%
Energizer Lanka Limited Sri Lanka 60%
Energizer LLC Russia 100%
Energizer Malaysia SDN.BHD. Malaysia 80%
Energizer Middle East and Africa Limited Delaware 100%
* Energizer Nordic A/S Denmark 100%
Energizer Philippines, Inc. Philippines 100%
* Energizer Pil Ticaret Ltd.Sti Turkey 100%
Energizer Polska Spolka zo.o Poland 100%
Energizer Puerto Rico, Inc. Puerto Rico 100%
Energizer SA Switzerland 100%
Energizer Slovakia, Spol.Sr.O. Slovak Republic 100%
Energizer (South Africa) Ltd. Delaware 100%
Energizer (Thailand) Limited Thailand 100%
Energizer UK Company UK 100%
Ever Ready (Ireland) Limited Ireland 100%
Ever Ready Limited UK 100%
Eveready Batteries Kenya Ltd. Kenya 14%
Eveready Battery Company, Inc. Delaware 100%
Eveready Battery International, Inc. Delaware 100%
Eveready de Chile S.A. Chile 100%
Eveready de Colombia, S.A. Colombia 100%
Eveready de Mexico S.A. de C.V. Mexico 100%
Eveready de Venezuela, C.A. Venezuela 100%
Eveready Ecuador C.A. Ecuador 100%
Eveready Egypt S.A.E. Egypt 51%
Eveready Energizer Miniatures Limited India 49%
* Eveready Ghana Limited Ghana 66.6%
Eveready Hong Kong Company Hong Kong 100%
Eveready New Zealand Limited New Zealand 100%
Eveready Singapore Pte. Ltd. Singapore 100%
Fibat S.A. France 20%
PT Eveready Battery Indonesia Indonesia 80%
PT Eveready Trading Indonesia Indonesia 100%
Ralston Battery Systems Ges.m.b.H. Austria 100%
Ralston Energy Systems Benelux, S.A. Belgium 100%
Ralston Energy Systems Deutschland G.m.b.H. Germany 100%
Ralston Energy Systems France S.A. France 100%
Ralston Energy Systems Iberica, S.A. Spain 100%
Ralston Energy Systems spol.sr.o. Czech Republic 100%
Ralston Energy Systems U.K. Limited UK 100%
Ralston Purina Argentina S.A. Argentina 100%
Ralston Purina do Brasil Ltda. Brazil 100%
Ralston Trust Limited UK 100%
Rechargeabe Products (UK) Ltd. UK 100%
Sonca Products Limited Hong Kong 100%
* WER (MVL) (1998) Limited UK 100%
<FN>
* In liquidation.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
12/31/99 ENERGIZER HOLDINGS, INC. COMBINED BALANCE SHEET AND 12/31/99 AND
12/31/98 COMBINED STATEMENTS OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> SEP-30-2000 SEP-30-1999
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 19,900 0<F4>
<SECURITIES> 0 0<F4>
<RECEIVABLES> 625,900 0<F4>
<ALLOWANCES> 20,400 0<F4>
<INVENTORY> 345,600 0<F4>
<CURRENT-ASSETS> 1,075,200 0<F4>
<PP&E> 1,004,000 0<F4>
<DEPRECIATION> 538,400 0<F4>
<TOTAL-ASSETS> 1,850,800 0<F4>
<CURRENT-LIABILITIES> 561,500 0<F4>
<BONDS> 1,400 0<F4>
0 0<F4>
0 0<F4>
<COMMON> 0 0<F4>
<OTHER-SE> 1,265,200<F1> 0<F4>
<TOTAL-LIABILITY-AND-EQUITY> 1,850,800 0<F4>
<SALES> 673,600 582,400
<TOTAL-REVENUES> 673,600 582,400
<CGS> 322,200 305,100
<TOTAL-COSTS> 322,200 305,100
<OTHER-EXPENSES> 175,100 177,100
<LOSS-PROVISION> 0<F2> 0<F2>
<INTEREST-EXPENSE> 2,600 2,800
<INCOME-PRETAX> 173,700 97,400
<INCOME-TAX> 69,000 42,600
<INCOME-CONTINUING> 104,700 54,800
<DISCONTINUED> 0 (2,800)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 104,700 52,000
<EPS-BASIC> 0<F3> 0<F3>
<EPS-DILUTED> 0<F3> 0<F3>
<FN>
<F1>REPRESENTS RALSTON PURINA COMPANY'S NET INVESTMENT IN ENERGIZER.
<F2>LOSS-PROVISION INCLUDED IN OTHER-EXPENSES ABOVE.
<F3>EARNINGS PER SHARE ARE NOT CALCULATED ON HISTORICAL FINANCIAL INFORMATION FOR
FORM 10.
<F4>INFORMATION NOT FILED AS PART OF FORM 10.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
9/30/99 ENERGIZER HOLDINGS, INC. COMBINED BALANCE SHEET AND 9/30/99 COMBINED
STATEMENT OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> SEP-30-1999
<CASH> 27,800
<SECURITIES> 0
<RECEIVABLES> 461,200
<ALLOWANCES> 19,300
<INVENTORY> 383,000
<CURRENT-ASSETS> 974,000
<PP&E> 1,010,100
<DEPRECIATION> 537,300
<TOTAL-ASSETS> 1,833,700
<CURRENT-LIABILITIES> 495,900
<BONDS> 1,900
0
0
<COMMON> 0
<OTHER-SE> 1,312,900<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,833,700
<SALES> 1,872,300
<TOTAL-REVENUES> 1,872,300
<CGS> 997,900
<TOTAL-COSTS> 997,900
<OTHER-EXPENSES> 611,900
<LOSS-PROVISION> 6,700
<INTEREST-EXPENSE> 7,600
<INCOME-PRETAX> 248,200
<INCOME-TAX> 88,400
<INCOME-CONTINUING> 159,800
<DISCONTINUED> (79,800)<F2>
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,000
<EPS-BASIC> 0<F3>
<EPS-DILUTED> 0<F3>
<FN>
<F1>REPRESENT RALSTON PURINA COMPANY'S NET INVESTMENT IN ENERGIZER.
<F2>INCLUDES (74,200) NET LOSS ON DISPOSITION OF DISCONTINUED OPERATIONS.
<F3>EARNINGS PER SHARE ARE NOT CALCULATED ON HISTORICAL FINANCIAL INFORMATION FOR
FORM 10.
</FN>
</TABLE>
