<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 7, 1999
REGISTRATION NO. 333-75517
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE GILLETTE COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3420 04-1366970
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
PRUDENTIAL TOWER BUILDING
BOSTON, MASSACHUSETTS 02199
(617) 421-7000
(Address of principal executive offices, including zip code)
JILL C. RICHARDSON
SECRETARY
THE GILLETTE COMPANY
PRUDENTIAL TOWER BUILDING
BOSTON, MASSACHUSETTS 02199
(617) 421-7000
(Name and address, including zip code, and telephone
number, including area code, of agent for service)
------------------------
Please send copies of all communications to:
<TABLE>
<S> <C> <C> <C>
WILLIAM J. MOSTYN, III, MARY E. WEBER, ESQ. FRANCIS J. MORISON, ESQ. DAVID J. SORKIN, ESQ.
ESQ. Ropes & Gray Davis Polk & Wardwell Simpson Thacher & Bartlett
The Gillette Company One International Place 450 Lexington Avenue 425 Lexington Avenue
Prudential Tower Building Boston, Massachusetts 02110 New York, New York 10017 New York, New York 10021
Boston, Massachusetts 02199 (617) 951-7000 (212) 450-4000 (212) 455-2000
(617) 421-7000
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effectiveness of the Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement under the earlier effective
registration statement for the same offering. [ ]
If this form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock -- $1.00 Par Value
(including Preferred Stock
Purchase Rights).............. 29,502,559 Shares $60.84375 $1,795,046,324.16 $499,022.88(3)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 3,848,160 shares which may be sold pursuant to the Underwriters'
overallotment option.
(2) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933. The maximum
price per share information is based on the average of the high and the low
sale prices on March 30, 1999.
(3) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION
IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 7, 1999
PROSPECTUS
25,654,399 SHARES
[GILLETTE COMPANY LOGO]
COMMON STOCK
------------------------
The KKR partnerships will offer all of the shares to be sold in the
offering. The U.S. underwriters will offer 23,088,959 shares in the United
States and Canada, and the international managers will offer 2,565,440 shares
outside of the United States and Canada.
Our common stock is listed on the New York Stock Exchange under the
ticker symbol "G". On June 4, 1999, the last sale price of one share of our
common stock on the New York Stock Exchange was $51 15/16.
------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public Offering Price.................................. $ $
Underwriting Discount.................................. $ $
Proceeds, before expenses, to the KKR partnerships..... $ $
</TABLE>
The U.S. underwriters may also purchase up to an additional 3,463,344
shares of common stock from the KKR partnerships at the public offering price,
less the underwriting discount, within 30 days from the date of this prospectus
to cover over-allotments. The international managers may similarly purchase up
to an aggregate of an additional 384,816 shares from the KKR partnerships.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The shares of common stock will be ready for delivery on or about
, 1999.
------------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
------------------------
The date of this prospectus is , 1999.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Information about The Gillette Company...................... 3
Where You Can Find More Information......................... 4
Recent Developments......................................... 5
Use of Proceeds............................................. 6
Selling Stockholder......................................... 6
Description of Capital Stock................................ 7
Underwriting................................................ 11
Legal Matters............................................... 14
Experts..................................................... 14
</TABLE>
------------------------
In this prospectus, "Gillette", "we", "us" and "our" refer to The
Gillette Company.
2
<PAGE> 4
INFORMATION ABOUT THE GILLETTE COMPANY
Our businesses range across several industry segments, including blades
and razors, toiletries, stationery products, electric shavers, small household
appliances, hair care appliances, oral care appliances, oral care products and
alkaline batteries for consumer products.
Founded in 1901, we are the world leader in male grooming products, a
category that includes blades and razors and shaving preparations. We hold the
number one position worldwide in selected female grooming products, such as wet
shaving products and hair epilation devices. We are the world's top seller of
writing instruments and correction products, toothbrushes and oral care
appliances. In addition, we are the world leader in alkaline batteries.
We have a wide array of well-established brands, including: razor and
blade products under the MACH 3(R), Sensor Excel(R), Sensor(R), Atra(R), Trac
II(R), Custom Plus(R) and Good News(R) names; Braun(R) electric shavers and
appliances; Gillette(R) Series, Right Guard(R), Soft & Dri(R) and Dry Idea(R)
deodorant antiperspirant brands; White Rain(R) hair care line; Parker(R), Paper
Mate(R), Waterman(R) and Flair(R) writing instruments; Liquid Paper(R)
correction products; Oral-B(R) dental products; and Duracell(R) consumer
batteries.
We are divided into five worldwide business management groups, organized
on a product line basis: male and female grooming; Duracell; Braun; Oral-B; and
Stationery; and five commercial operations groups, organized on a geographic
basis: North America; Latin America; Europe; Africa, Middle East and Eastern
Europe or "AMEE"; and Asia-Pacific. The business management groups are
responsible for consumer marketing, research and development and manufacturing.
The commercial operations groups are responsible for sales and trade marketing.
As of March 31, 1999, we conducted manufacturing operations at 62
facilities in 25 countries and distributed products through wholesalers,
retailers and agents in over 200 countries and territories.
Our executive offices are located at Prudential Tower Building, Boston,
Massachusetts 02199, and our telephone number is (617) 421-7000.
3
<PAGE> 5
WHERE YOU CAN FIND MORE INFORMATION
We are governed by the informational requirements of the Securities
Exchange Act of 1934, and we file reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
public reference rooms maintained by the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549 and at its regional offices at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World
Trade Center, 13th Floor, New York, New York 10048. Please call the SEC at
1-800-SEC-0330 for further information about the public reference rooms. We also
file reports, proxy statements and other information with the SEC
electronically, and these materials may be inspected and copied at the SEC's Web
site (http://www.sec.gov). In addition, these materials can be read at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
This prospectus is part of a registration statement that we have filed
with the SEC. This prospectus does not contain all the information set forth in
the registration statement. Parts of the registration statement have been
omitted in accordance with the rules and regulations of the SEC. You may read
and copy the registration statement at the SEC's public reference rooms
described above.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and the information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act before the termination of this offering:
(1) The description of our capital stock contained in our Registration
Statement on Form 8-A/ A filed on November 12, 1996.
(2) Our Annual Report on Form 10-K for the fiscal year ended December
31, 1998.
(3) Our Current Report on Form 8-K filed on February 19, 1999.
(4) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999.
(5) Our Current Report on Form 8-K filed on April 7, 1999.
Upon written or oral request, we will provide without charge to each
person, including any beneficial owner, to whom this prospectus is delivered, a
copy of any or all of the documents that have been incorporated by reference in
this prospectus. You may obtain these documents by writing to The Gillette
Company, Prudential Tower Building, Boston, Massachusetts 02199, Attention:
Corporate Secretary, or by calling (617) 421-7000.
4
<PAGE> 6
RECENT DEVELOPMENTS
FIRST QUARTER RESULTS
On April 15, 1999, we announced our earnings for the three months ended
March 31, 1999.
Sales for the three months ended March 31, 1999 were $1.94 billion, a
decrease of 4% from $2.03 billion in the first quarter of 1998. Excluding the
adverse effects of exchange and the divestitures of our Jafra cosmetics and
rechargeable battery businesses, sales rose 3% rather than the reported 4%
decrease. Profit from operations was $447 million, up 3% from $434 million a
year earlier. First quarter net income of $269 million, which was reduced by the
higher interest costs associated with our share buyback program, was virtually
unchanged from our previous year's first quarter net income of $268 million.
Fully diluted net income per common share increased 4% to $0.24, compared with
$0.23 for the prior year's first quarter.
The unaudited consolidated income account follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1999 1998
---- ----
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Net Sales................................................... $1,939 $2,025
Profit from Operations...................................... 447 434
Income Before Income Taxes.................................. 412 414
Income Taxes................................................ 143 146
Net Income.................................................. $ 269 $ 268
====== ======
Weighted Average Number of Common Shares Outstanding
Basic.................................................. 1,107 1,122
Assuming Full Dilution................................. 1,132 1,152
Net Income per Common Share
Basic.................................................. $ 0.24 $ 0.24
Assuming Full Dilution................................. $ 0.24 $ 0.23
</TABLE>
DIVIDENDS
On April 15, 1999, our Board of Directors declared a quarterly dividend
of $0.1475 per common share, payable on June 4, 1999 to stockholders of record
on May 3, 1999. This represented a 16% increase from the previous quarterly
dividend of $0.1275 per common share and established a new annual rate of $0.59
per common share, compared with the former rate of $0.51 per common share.
5
<PAGE> 7
USE OF PROCEEDS
All net proceeds from the sale of the shares of our common stock offered
in this prospectus will go to the KKR partnerships. Neither we nor any of our
executive officers or employees will be selling shares or receiving proceeds
from this offering.
SELLING STOCKHOLDER
The KKR partnerships acquired the shares of our common stock in a merger
in which we acquired Duracell.
The following table sets forth information regarding beneficial
ownership of our common stock by the KKR partnerships at March 31, 1999. The
information below assumes that the underwriters do not exercise their
over-allotment options. If the over-allotment options are exercised in full, the
KKR partnerships will offer 29,502,559 shares of common stock. Shares of common
stock shown as beneficially owned by the KKR partnerships are owned of record by
KKR Associates and by DI Associates, L.P. and KKR Partners II, L.P., of which
KKR Associates is the sole general partner and as to which it possesses sole
voting and investment power. Henry R. Kravis, who is one of our directors, is a
general partner of KKR Associates.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING SHARES BEING OFFERED AFTER OFFERING
----------------------- ----------------------- -----------------------
SHARES PERCENTAGE SHARES PERCENTAGE SHARES PERCENTAGE
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
KKR partnerships.......... 51,308,798 4.6% 25,654,399 2.3% 25,654,399 2.3%
</TABLE>
6
<PAGE> 8
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 2,320,000,000 shares of common
stock, $1.00 par value, and 5,000,000 shares of preferred stock, without par
value.
COMMON STOCK
The holders of our common stock are entitled to receive dividends when
and as declared by our Board of Directors and paid by us. This right is
subordinate to the preferences of our outstanding preferred stock. Holders of
our common stock have one vote per share. There is no cumulative voting. If we
are liquidated, dissolved or wound up, we will pay our creditors first, followed
by our preferred stockholders. Subsequently, we will distribute our remaining
assets to our common stockholders in proportion to the number of shares that
each stockholder owns. Other than the preferred stock purchase rights referred
to below, holders of our common stock have no preemptive or other subscription
rights. There are no conversion, redemption or sinking fund provisions
applicable to our common stock. Our Board of Directors is authorized to issue
all of the authorized and unissued shares of our common stock.
BankBoston, N.A. is the registrar and transfer agent of the shares of
our common stock.
At March 31, 1999, 1,109,122,807 shares of our common stock were
outstanding and held of record by 61,696 holders.
PREFERRED STOCK
Our Board of Directors is authorized to fix the terms of one or more
series of a class of preferred stock. They are also authorized to issue any or
all of the authorized and unissued shares of preferred stock. Issuances of
preferred stock may limit or qualify the rights of the holders of our common
stock.
Series C ESOP Convertible Preferred Stock
At March 31, 1999, 147,581 shares of Series C ESOP convertible preferred
stock, no par value per share, were outstanding. All of the outstanding shares
of our ESOP convertible preferred stock are held by our Employee Stock Ownership
Plan. The shares of Series C ESOP convertible preferred stock have the following
terms:
- Dividends. The holders of the ESOP convertible preferred stock are
entitled to receive cash dividends in the amount of $48.23 per share
per year. These dividends accrue whether or not declared. If they are
not paid when accrued, they also cumulate. If full cumulative
dividends on the ESOP convertible preferred stock have not been
declared and paid or set apart for payment when due, we are not
allowed to pay dividends on any other class of stock ranking junior to
the ESOP convertible preferred stock, including our common stock.
- Liquidation. If we are liquidated, dissolved or wound-up, holders of
ESOP convertible preferred stock are entitled to receive liquidating
distributions in the amount of $602.875 per share, plus an amount
equal to all accumulated and unpaid dividends.
- Conversion. As of March 31, 1999, each share of ESOP convertible
preferred stock was convertible into 80 shares of common stock. This
conversion ratio will be adjusted for stock dividends, stock splits
and similar events.
- Voting. In any matter submitted to a vote of the holders of our
common stock, each share of ESOP convertible preferred stock is
entitled to a number of votes equal to the number of shares of common
stock into which a share could be converted on the record date for the
vote, whether or not then convertible.
- Redemption. The ESOP convertible preferred stock is redeemable upon
the occurrence of specified changes in control or other events at
varying prices not less than $602.875 per share
7
<PAGE> 9
plus accumulated and unpaid dividends. Depending on the event, this
redemption may be at our option or at the option of the holder.
Preferred Stock Purchase Rights
We entered into a Renewed Rights Agreement dated as of December 14,
1995, effective as of December 9, 1996, with the First National Bank of Boston,
as Rights Agent. One-half of a right is attached to each outstanding share of
our common stock and 40 rights are attached to each share of our ESOP
convertible preferred stock. At March 31, 1999, 560,464,643.5 rights were
outstanding.
Each whole right may be exercised to purchase one ten-thousandth of a
share of our Series A junior participating preferred stock for $225. The rights
become exercisable on the earlier of:
- ten business days after we announce that a person has acquired 15% or
more of our common stock, or
- ten business days after a tender offer commences that could result in
a person's ownership of 15% or more of our common stock.
When the rights become exercisable, they will also become transferable apart
from the shares of common stock or ESOP convertible preferred stock to which
they are currently attached.
If a person acquires 15% or more of our common stock, each holder of a
right, other than the person who acquired our common stock, will have the right
to receive, upon exercise of the right, shares of our common stock valued at
double the exercise price. Holders will not have these rights if the person who
acquires 15% or more of our common stock does so in a tender or exchange offer
for all of our outstanding stock on terms approved by our Board of Directors. In
the event of a merger or similar transaction that has not been approved by our
Board of Directors, each holder of a right, other than the person who acquired
our common stock, will have the right to receive, upon exercise of the right,
shares of common stock of the acquiring company valued at double the exercise
price.
The rights have no voting power and are not entitled to receive
dividends. The expiration date of the rights is December 14, 2005, but that date
may be extended. We can redeem all of the outstanding rights for $0.01 each at
any time until 10 business days following the date we announce that a person has
acquired 15% or more of our common stock.
Because this is a summary, it does not contain a complete description of
the rights. The form of Renewed Rights Agreement, which specifies the terms of
the rights, has been filed with the SEC as an exhibit to our Form 8-K dated
December 18, 1995, and has been incorporated by reference into our Form 8A/A
filed on November 12, 1996, which is incorporated by reference in this
prospectus. See "Where You Can Find More Information."
Series A Junior Participating Preferred Stock
Our Board of Directors has reserved 400,000 shares of Series A junior
participating preferred stock for issuance upon exercise of the rights. The
junior participating preferred stock may be issued in fractional shares. The
shares of junior participating preferred stock have the following terms:
- Dividends. Each share of junior participating preferred stock will be
entitled to receive cumulative quarterly cash dividends payable on the
fifteenth day of January, April, July and October in each year. These
dividends are payable at the greater of (a) $20 or (b) 10,000 times
the aggregate per share amount of all dividends and distributions
declared on our common stock, other than a dividend payable in shares
of our common stock, since the previous quarterly dividend payment
date for the junior participating preferred stock. The dividend may
change due to anti-dilution adjustments. This dividend right is
subordinate to the payment of dividends on the Series C ESOP
convertible preferred stock and any other senior preferred stock.
8
<PAGE> 10
- Voting. Holders of shares of junior participating preferred stock
will be entitled to 10,000 votes on all matters submitted to a vote of
our stockholders. The number of votes per share of junior
participating preferred stock may change due to anti-dilution
adjustments. Holders of shares of junior participating preferred stock
will vote together with the holders of our common stock as a single
class, except as otherwise required by law. If at the time of any
annual meeting of stockholders for the election of directors the
amount of accrued but unpaid dividends upon the junior participating
preferred stock is equal to six full quarterly dividends, the holders
of shares of junior participating preferred stock, voting separately
as a class, will have the right to elect two members of the Board of
Directors. This right will continue until all accrued dividends are
paid. In addition, while dividends on the junior participating
preferred stock are unpaid as described above, the terms of the junior
participating preferred stock limit our ability to pay dividends and
to redeem, repurchase or otherwise acquire shares of our common stock.
- Liquidation. If we are liquidated, dissolved or wound-up, holders of
junior participating preferred stock will be entitled to receive,
before any distribution is made with respect to shares of stock
ranking junior to the junior participating preferred stock, an amount
equal to the greater of (a) $200 per share or (b) 10,000 times the
aggregate per share amount to be distributed to holders of our common
stock. The ratio in clause (b) may change due to anti-dilution
adjustments.
- Consolidations, mergers and similar transactions. If a consolidation,
merger, combination or similar transaction occurs and shares of our
common stock are exchanged for or changed into stock or securities of
another company, cash and/or other property, then the shares of junior
participating preferred stock will be similarly exchanged or changed.
Each share of junior participating preferred stock will be exchanged
or changed in an amount per share equal to 10,000 times the aggregate
amount of stock, securities, cash and/or other property payable in
kind into which or for which each share of our common stock is changed
or exchanged. This ratio may change due to anti-dilution adjustments.
- Ranking. The shares of junior participating preferred stock rank
junior to the Series C ESOP convertible preferred stock. Future series
of preferred stock will rank on an equal basis with the junior
participating preferred stock with respect to dividends and/or
liquidation preference, unless our Board of Directors determines that
these future series will be senior to the junior participating
preferred stock.
- Redemption. The junior participating preferred stock may not be
mandatorily redeemed by us.
PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS AND DELAWARE LAW
AFFECTING CHANGES OF CONTROL
In addition to several of the provisions described above, provisions of
our Certificate of Incorporation and bylaws and Delaware law, including some of
those described below, may have anti-takeover effects.
- Board of Directors. Under Article 9 of our Certificate of
Incorporation and the related provisions of Article XIII of our
bylaws, our Board of Directors is classified into three classes. Each
class is as equal in number as possible. One class is elected each
year for a three-year term. A director may only be removed for cause
by the majority vote of the outstanding shares entitled to vote. The
affirmative vote of at least 75% of the votes of the shares entitled
to vote is required to amend or repeal Article 9 of the Certificate of
Incorporation or Article XIII of the bylaws or to adopt any provision
inconsistent with those articles.
- Meetings of stockholders. The bylaws provide that special meetings of
stockholders may be called only by our Chief Executive Officer or by
our Board of Directors. The bylaws also
9
<PAGE> 11
provide that in general we must receive stockholder proposals intended
to be presented at a meeting of stockholders, including proposals for
the nomination of directors, 60 days in advance of the meeting.
- Indemnification. Our bylaws contain provisions requiring us to
indemnify any of our directors, officers, employees or agents to the
fullest extent permitted under Delaware law. Our Certificate of
Incorporation provides that our directors will not be personally
liable to us or to our stockholders for monetary damages arising out
of the director's breach of that person's fiduciary duty as a
director, except to the extent that Delaware law does not permit
exemption from such liability.
- Amendment of bylaws. Our Board of Directors is expressly authorized
to adopt, amend or repeal the bylaws of the Company, except as
provided in our Certificate of Incorporation. The stockholders may
also adopt, amend or repeal the bylaws.
- Delaware law. We are governed by the provisions of Section 203 of the
General Corporation Law of Delaware. In general, this statute
prohibits a publicly-held Delaware corporation like us from engaging
in a business combination with an interested stockholder for a period
of three years after the date of the transaction in which the person
becomes an interested stockholder. This prohibition does not apply to
a business combination approved in a manner described in the statute
or if the stockholder acquires at least 85% of our outstanding stock,
excluding stock held by directors who are also officers and specified
employee rights plans. An interested stockholder is generally
considered to be:
- a person who owns 15% or more of our voting stock,
- a person who is an affiliate of ours and owned 15% or more of our
voting stock within the prior three years, or
- an affiliate of either of these persons.
10
<PAGE> 12
UNDERWRITING
GENERAL
The KKR partnerships intend to offer shares of our common stock in the
United States and Canada through a number of U.S. underwriters and elsewhere
through a number of international managers. Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Credit Suisse First Boston Corporation, Goldman, Sachs &
Co., J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated and Salomon
Smith Barney Inc. are acting as U.S. representatives of each of the U.S.
underwriters named below. In a U.S. purchase agreement entered into by us, the
KKR partnerships and the U.S. underwriters, the KKR partnerships have agreed to
sell to the U.S. underwriters, and each of the U.S. underwriters has agreed to
purchase from the KKR partnerships, the number of shares of common stock shown
opposite its name below. The obligations of the U.S. underwriters to purchase
these shares are several and not joint. They are subject to the terms and
conditions contained in the U.S. purchase agreement.
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITER SHARES
---------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Credit Suisse First Boston Corporation......................
Goldman, Sachs & Co.........................................
J.P. Morgan Securities Inc..................................
Morgan Stanley & Co. Incorporated...........................
Salomon Smith Barney Inc. ..................................
----------
Total.......................................... 23,088,959
==========
</TABLE>
The KKR partnerships have also entered into an international purchase
agreement with a group of international managers outside the United States and
Canada for whom Merrill Lynch International, Credit Suisse First Boston (Europe)
Limited, Goldman Sachs International, J.P. Morgan Securities Ltd., Morgan
Stanley & Co. International Limited and Salomon Brothers International Limited
are acting as lead managers. Concurrently with the sale of 23,088,959 shares of
common stock to the U.S. underwriters as described above, the KKR partnerships
have agreed to sell to the international managers, and the international
managers have agreed to purchase from the KKR partnerships, a total of 2,565,440
shares of common stock. The obligations of the international managers to
purchase these shares are several and not joint. They are subject to the terms
and conditions contained in the international purchase agreement. The public
offering price per share and the total underwriting discount per share of common
stock are identical under the U.S. purchase agreement and the international
purchase agreement.
In the U.S. purchase agreement, the U.S. underwriters severally have
agreed to purchase all of the shares of common stock being sold under that
agreement if any of those shares are purchased. In the international purchase
agreement, the international managers severally have agreed to purchase all of
the shares of common stock being sold under that agreement if any of those
shares are purchased. If there is a default by a U.S. underwriter or an
international manager, the U.S. purchase agreement and the international
purchase agreement provide that, in specified circumstances, the purchase
commitments of the nondefaulting underwriters or managers may be increased or
the purchase agreement may be terminated. The closings for the sales of shares
of common stock to the U.S. underwriters and to the international managers are
conditioned upon one another.
We and the KKR partnerships have agreed to indemnify the U.S.
underwriters and the international managers against specified liabilities,
including some liabilities under the Securities Act, or to contribute to
payments the U.S. underwriters and international managers may be required to
make for those liabilities.
The U.S. underwriters are severally offering the shares of common stock,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of specified legal matters by counsel for the underwriters and
satisfaction of other conditions. The U.S. underwriters reserve the right to
withdraw, cancel or modify this offering and to reject orders in whole or in
part.
11
<PAGE> 13
COMMISSIONS AND DISCOUNTS
The U.S. representatives have advised us and the KKR partnerships that
the U.S. underwriters propose initially to offer the shares of common stock to
the public at the public offering price appearing on the cover page of this
prospectus, and to selected dealers at that price less a concession not in
excess of $ per share of common stock. The U.S. underwriters may allow, and
those dealers may reallow, a discount not in excess of $ per share of common
stock to other dealers. After the public offering, the public offering price,
concession and discount may change.
The following table shows the per share and total public offering price,
underwriting discount to be paid by the KKR partnerships to the U.S.
underwriters and the international managers and the proceeds before expenses to
the KKR partnerships. This information is presented assuming either no exercise
or full exercise by the U.S. underwriters and the international managers of
their over-allotment options described below.
<TABLE>
<CAPTION>
Per Without With
Share Option Option
--------- -------- --------
<S> <C> <C> <C>
Public Offering Price.............................. $ $ $
Underwriting Discount.............................. $ $ $
Proceeds, before expenses, to the KKR
partnerships..................................... $ $ $
</TABLE>
We will pay the expenses of the offering, not including the underwriting
discount, which are estimated at $874,000.
INTERSYNDICATE AGREEMENT
The U.S. underwriters and the international managers have entered into
an intersyndicate agreement that provides for the coordination of their
activities. Under the intersyndicate agreement, the U.S. underwriters and the
international managers are permitted to sell shares of our common stock to each
other for purposes of resale at the public offering price, less an amount not
greater than the selling concession. Under the intersyndicate agreement, the
U.S. underwriters and any dealer to whom they sell shares of our common stock
will not offer to sell or sell shares of our common stock to persons who are
non-U.S. or non-Canadian persons or to persons they believe intend to resell to
persons who are non-U.S. or non-Canadian persons, and the international managers
and any dealer to whom they sell shares of our common stock will not offer to
sell or sell shares of our common stock to U.S. persons or to Canadian persons
or to persons they believe intend to resell to U.S. or Canadian persons, except
in the case of transactions permitted by the intersyndicate agreement.
OVER-ALLOTMENT OPTION
The KKR partnerships have granted an option to the U.S. underwriters,
exercisable from time to time for 30 days after the date of this prospectus, to
purchase up to a total of 3,463,344 additional shares of our common stock at the
public offering price appearing on the cover page of this prospectus, less the
underwriting discount. The U.S. underwriters may exercise this option solely to
cover over-allotments, if any, made on the sale of our common stock offered by
this prospectus. If the U.S. underwriters exercise this option, each U.S.
underwriter will be obligated, subject to specified conditions, to purchase a
number of additional shares of our common stock proportionate to the U.S.
underwriter's initial number of shares reflected in the table shown above. The
KKR partnerships have granted a similar over-allotment option to the
international managers to purchase up to a total of 384,816 additional shares of
common stock.
NO SALES OF SIMILAR SECURITIES
We and the KKR partnerships have agreed, without the prior written
consent of Merrill Lynch on behalf of the underwriters for a period of 90 days
after the date of this prospectus, not to
12
<PAGE> 14
- sell, pledge, assign, or transfer or dispose of any shares of our
common stock, or any option, right, warrant or contract to purchase
our common stock or any securities convertible into or exercisable or
exchangeable for our common stock or
- enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of our common stock
whether any such swap or transaction is to be settled by delivery of
our common stock or other securities, in cash or otherwise.
We are not subject to these restrictions in the following instances:
- issuances of common stock, options, phantom stock or other securities
or rights under any of our employee or director compensation, option,
savings, benefit or other plans, and hedging transactions and programs
in connection with any of these plans.
- issuances upon exercise, conversion or exchange of any securities or
obligations outstanding on the date of the U.S. purchase agreement.
- issuances of equity securities as consideration for an acquisition.
- purchases of stock or uses of put options or other derivative
securities pursuant to any previously announced stock repurchase
program.
- issuances of common stock, and securities or agreements with respect
to our common stock, in the aggregate not greater than 2,000,000
shares of common stock.
NEW YORK STOCK EXCHANGE
Our common stock is listed on the New York Stock Exchange under the
symbol "G".
PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS
Until this distribution of our common stock is completed, rules of the
SEC may limit the ability of the underwriters and selling group members to bid
for and purchase our common stock. As an exception to these rules, the U.S.
representatives are permitted to engage in transactions that stabilize the price
of our common stock. These transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of our common stock.
If the underwriters create a short position in our common stock in
connection with the offering, meaning if they sell more shares of our common
stock than are set forth on the cover page of this prospectus, the U.S.
representatives may reduce that short position by purchasing our common stock in
the open market. The U.S. representatives may also elect to reduce any short
position by exercising all or part of the over-allotment option described above.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases.
None of Gillette, the KKR partnerships or any of the underwriters makes
any representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of Gillette's common
stock. In addition, none of Gillette, the KKR partnerships or any of the
underwriters makes any representation that the U.S. representatives or the lead
managers will engage in those transactions or that those transactions, once
commenced, will not be discontinued without notice.
OTHER RELATIONSHIPS
Several of the underwriters and their affiliates engage in transactions
with, and perform services for, us, our affiliates, the KKR partnerships and
their affiliates in the ordinary course of business and have engaged, and may in
the future engage, in commercial banking and investment banking transactions
with us, our affiliates, the KKR partnerships and their affiliates, for which
they have received or will receive customary compensation.
13
<PAGE> 15
LEGAL MATTERS
The validity of the common stock being offered in this prospectus will
be passed upon for us by James P. Connolly, Esq., Acting General Counsel. As of
June 2, 1999, Mr. Connolly beneficially owned approximately 198,996 shares of
our common stock, including options to purchase 103,665 shares of common stock
and 25 shares of common stock through his interest in our Employee Stock
Ownership Plan. The validity of the common stock being offered in this
prospectus will be passed upon for the U.S. underwriters by Davis Polk &
Wardwell, New York, New York.
EXPERTS
The consolidated financial statements and schedules appearing in our
annual report on Form 10-K for the year ended December 31, 1998, have been
audited by KPMG LLP, independent auditors, as set forth in their reports. These
reports are incorporated by reference in this prospectus in reliance upon such
reports given upon authority of KPMG LLP as experts in accounting and auditing.
14
<PAGE> 16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
25,654,399 SHARES
[GILLETTE COMPANY LOGO]
COMMON STOCK
---------------------
PROSPECTUS
---------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 17
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION
IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 7, 1999
PROSPECTUS
25,654,399 SHARES
[GILLETTE COMPANY LOGO]
COMMON STOCK
------------------------
The KKR partnerships will offer all of the shares to be sold in the
offering. The international managers will offer 2,565,440 shares outside of the
United States and Canada, and the U.S. underwriters will offer 23,088,959 shares
in the United States and Canada.
Our common stock is listed on the New York Stock Exchange under the
ticker symbol "G". On June 4, 1999, the last sale price of one share of our
common stock on the New York Stock Exchange was $51 15/16.
------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public Offering Price.................................. $ $
Underwriting Discount.................................. $ $
Proceeds, before expenses, to the KKR partnerships..... $ $
</TABLE>
The international managers may also purchase up to an additional 384,816
shares of common stock from the KKR partnerships at the public offering price,
less the underwriting discount, within 30 days from the date of this prospectus
to cover over-allotments. The U.S. underwriters may similarly purchase up to an
aggregate of an additional 3,463,344 shares from the KKR partnerships.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The shares of common stock will be ready for delivery on or about
, 1999.
------------------------
MERRILL LYNCH INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
GOLDMAN SACHS INTERNATIONAL
J.P. MORGAN SECURITIES LTD.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY INTERNATIONAL
------------------------
The date of this prospectus is , 1999.
<PAGE> 18
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Information about The Gillette Company...................... 3
Where You Can Find More Information......................... 4
Recent Developments......................................... 5
Use of Proceeds............................................. 6
Selling Stockholder......................................... 6
Material United States Tax Considerations Applicable to
Non-United States Holders of Our Common Stock............. 7
Description of Capital Stock................................ 10
Underwriting................................................ 14
Legal Matters............................................... 17
Experts..................................................... 17
</TABLE>
------------------------
In this prospectus, "Gillette", "we", "us" and "our" refer to The
Gillette Company.
2
<PAGE> 19
INFORMATION ABOUT THE GILLETTE COMPANY
Our businesses range across several industry segments, including blades
and razors, toiletries, stationery products, electric shavers, small household
appliances, hair care appliances, oral care appliances, oral care products and
alkaline batteries for consumer products.
Founded in 1901, we are the world leader in male grooming products, a
category that includes blades and razors and shaving preparations. We hold the
number one position worldwide in selected female grooming products, such as wet
shaving products and hair epilation devices. We are the world's top seller of
writing instruments and correction products, toothbrushes and oral care
appliances. In addition, we are the world leader in alkaline batteries.
We have a wide array of well-established brands, including: razor and
blade products under the MACH 3(R), Sensor Excel(R), Sensor(R), Atra(R), Trac
II(R), Custom Plus(R) and Good News(R) names; Braun(R) electric shavers and
appliances; Gillette(R) Series, Right Guard(R), Soft & Dri(R) and Dry Idea(R)
deodorant antiperspirant brands; White Rain(R) hair care line; Parker(R), Paper
Mate(R), Waterman(R) and Flair(R) writing instruments; Liquid Paper(R)
correction products; Oral-B(R) dental products; and Duracell(R) consumer
batteries.
We are divided into five worldwide business management groups, organized
on a product line basis: male and female grooming; Duracell; Braun; Oral-B; and
Stationery; and five commercial operations groups, organized on a geographic
basis: North America; Latin America; Europe; Africa, Middle East and Eastern
Europe or "AMEE"; and Asia-Pacific. The business management groups are
responsible for consumer marketing, research and development and manufacturing.
The commercial operations groups are responsible for sales and trade marketing.
As of March 31, 1999, we conducted manufacturing operations at 62
facilities in 25 countries and distributed products through wholesalers,
retailers and agents in over 200 countries and territories.
Our executive offices are located at Prudential Tower Building, Boston,
Massachusetts 02199, and our telephone number is (617) 421-7000.
3
<PAGE> 20
WHERE YOU CAN FIND MORE INFORMATION
We are governed by the informational requirements of the Securities
Exchange Act of 1934, and we file reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
public reference rooms maintained by the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549 and at its regional offices at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World
Trade Center, 13th Floor, New York, New York 10048. Please call the SEC at
1-800-SEC-0330 for further information about the public reference rooms. We also
file reports, proxy statements and other information with the SEC
electronically, and these materials may be inspected and copied at the SEC's Web
site (http://www.sec.gov). In addition, these materials can be read at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
This prospectus is part of a registration statement that we have filed
with the SEC. This prospectus does not contain all the information set forth in
the registration statement. Parts of the registration statement have been
omitted in accordance with the rules and regulations of the SEC. You may read
and copy the registration statement at the SEC's public reference rooms
described above.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and the information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act before the termination of this offering:
(1) The description of our capital stock contained in our Registration
Statement on Form 8-A/A filed on November 12, 1996.
(2) Our Annual Report on Form 10-K for the fiscal year ended December
31, 1998.
(3) Our Current Report on Form 8-K filed on February 19, 1999.
(4) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999.
(5) Our Current Report on Form 8-K filed on April 7, 1999.
Upon written or oral request, we will provide without charge to each
person, including any beneficial owner, to whom this prospectus is delivered, a
copy of any or all of the documents that have been incorporated by reference in
this prospectus. You may obtain these documents by writing to The Gillette
Company, Prudential Tower Building, Boston, Massachusetts 02199, Attention:
Corporate Secretary, or by calling (617) 421-7000.
4
<PAGE> 21
RECENT DEVELOPMENTS
FIRST QUARTER RESULTS
On April 15, 1999, we announced our earnings for the three months ended
March 31, 1999.
Sales for the three months ended March 31, 1999 were $1.94 billion, a
decrease of 4% from $2.03 billion in the first quarter of 1998. Excluding the
adverse effects of exchange and the divestitures of our Jafra cosmetics and
rechargeable battery businesses, sales rose 3% rather than the reported 4%
decrease. Profit from operations was $447 million, up 3% from $434 million a
year earlier. First quarter net income of $269 million, which was reduced by the
higher interest costs associated with our share buyback program, was virtually
unchanged from our previous year's first quarter net income of $268 million.
Fully diluted net income per common share increased 4% to $0.24, compared with
$0.23 for the prior year's first quarter.
The unaudited consolidated income account follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1999 1998
---- ----
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Net Sales................................................... $1,939 $2,025
Profit from Operations...................................... 447 434
Income Before Income Taxes.................................. 412 414
Income Taxes................................................ 143 146
Net Income.................................................. $ 269 $ 268
====== ======
Weighted Average Number of Common Shares Outstanding
Basic.................................................. 1,107 1,122
Assuming Full Dilution................................. 1,132 1,152
Net Income per Common Share
Basic.................................................. $ 0.24 $ 0.24
Assuming Full Dilution................................. $ 0.24 $ 0.23
</TABLE>
DIVIDENDS
On April 15, 1999, our Board of Directors declared a quarterly dividend
of $0.1475 per common share, payable on June 4, 1999 to stockholders of record
on May 3, 1999. This represented a 16% increase from the previous quarterly
dividend of $0.1275 per common share and established a new annual rate of $0.59
per common share, compared with the former rate of $0.51 per common share.
5
<PAGE> 22
USE OF PROCEEDS
All net proceeds from the sale of the shares of our common stock offered
in this prospectus will go to the KKR partnerships. Neither we nor any of our
executive officers or employees will be selling shares or receiving proceeds
from this offering.
SELLING STOCKHOLDER
The KKR partnerships acquired the shares of our common stock in a merger
in which we acquired Duracell.
The following table sets forth information regarding beneficial
ownership of our common stock by the KKR partnerships at March 31, 1999. The
information below assumes that the underwriters do not exercise their
over-allotment options. If the over-allotment options are exercised in full, the
KKR partnerships will offer 29,502,559 shares of common stock. Shares of common
stock shown as beneficially owned by the KKR partnerships are owned of record by
KKR Associates and by DI Associates, L.P. and KKR Partners II, L.P., of which
KKR Associates is the sole general partner and as to which it possesses sole
voting and investment power. Henry R. Kravis, who is one of our directors, is a
general partner of KKR Associates.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING SHARES BEING OFFERED AFTER OFFERING
----------------------- ----------------------- -----------------------
SHARES PERCENTAGE SHARES PERCENTAGE SHARES PERCENTAGE
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
KKR partnerships.......... 51,308,798 4.6% 25,654,399 2.3% 25,654,399 2.3%
</TABLE>
6
<PAGE> 23
MATERIAL UNITED STATES TAX CONSIDERATIONS APPLICABLE TO
NON-UNITED STATES HOLDERS OF OUR COMMON STOCK
The following is a general discussion of material United States federal
income and estate tax consequences of the ownership and disposition of our
common stock by a person that, for United States federal income tax purposes, is
a non-resident alien individual, a foreign corporation, a foreign partnership or
a foreign estate or trust as defined in the Internal Revenue Code. We refer to
these persons in the following discussion as "non-U.S. holders." This discussion
does not consider specific facts and circumstances that may be relevant to a
particular non-U.S. holder in light of the holder's particular situation. This
discussion does not deal with all aspects of United States federal income and
estate taxation that may be relevant to non-U.S. holders, including special
rules applicable to some United States expatriates. In addition, it does not
deal with United States state and local or foreign tax consequences. This
discussion is not intended for non-U.S. holders who will not hold our common
stock as capital assets or non-U.S. holders who receive special treatment under
the Internal Revenue Code, including insurance companies, tax-exempt entities,
financial institutions, broker-dealers and persons who would hold our common
stock as part of a straddle, hedge or conversion transaction. Furthermore, the
following discussion is based on provisions of the Internal Revenue Code,
existing and proposed regulations and administrative and judicial
interpretations as of the date of this prospectus, all of which may change.
These changes may have retroactive effect. Each prospective non-U.S. holder is
urged to consult a tax advisor with respect to the United States federal tax
consequences of purchasing, holding and disposing of our common stock, as well
as any tax consequences that may arise under the laws of any state, municipality
or other taxing jurisdiction.
Among other ways, a non-U.S. citizen may be deemed to be a resident
alien rather than a non-resident alien with respect to any calendar year by
virtue of being present in the United States on at least 31 days in that
calendar year and for an aggregate of at least 183 days during the current
calendar year and the two preceding calendar years. All of the days present in
the current year, one-third of the days present in the immediately preceding
year and one-sixth of the days present in the second preceding year will be
counted for this purpose. Resident aliens are subject to United States federal
tax as if they were United States citizens.
DIVIDENDS ON COMMON STOCK
Dividends paid to a non-U.S. holder of our common stock generally will
be subject to withholding of United States federal income tax at a rate of 30%
of the gross amount of these dividends. This rate may be lower if specified by
an applicable income tax treaty. Withholding will not apply to dividends paid to
a non-U.S. holder of our common stock if the dividends are effectively connected
with the conduct of a trade or business by the non-U.S. holder within the United
States. Dividends that are effectively connected with the holder's conduct of a
trade or business in the United States are subject to United States federal
income tax on a net income basis at applicable graduated individual or corporate
rates. Withholding generally does not apply to these dividends, provided that
the holder complies with certification and disclosure requirements. A foreign
corporation which receives effectively connected dividends may also, under some
circumstances, be required to pay an additional "branch profits tax" on these
dividends at a 30% rate, or at a lower rate if provided by an applicable income
tax treaty.
Under the current law, dividends paid to an addressee outside the United
States are presumed to be paid to a resident of the country of address, unless
the payer has knowledge to the contrary, for purposes of the withholding
discussed above and for purposes of determining the applicability of a tax
treaty. Under recently finalized new withholding regulations, a non-U.S. holder
of our common stock will be required to satisfy certification and other
requirements in order to claim the benefit of a reduced withholding tax rate
with respect to dividends under an applicable treaty. In addition, under the new
withholding regulations, in the case of common stock held by a foreign
partnership, the certification requirements would generally be applied to the
partners and the partnership may be required to provide information, including a
United States taxpayer identification number. The new withholding regulations
also provide look-through rules for tiered partnerships. The new withholding
regulations are generally
7
<PAGE> 24
effective for payments made after December 31, 2000. Non-U.S. holders are
encouraged to consult their own tax advisors with respect to the application of
the new withholding regulations.
A non-U.S. holder of our common stock that is eligible for a reduced
rate of United States withholding tax pursuant to an income tax treaty may
obtain a refund of any excess amounts withheld by filing an appropriate claim
for refund with the United States Internal Revenue Service.
GAIN ON DISPOSITION OF OUR COMMON STOCK
A non-U.S. holder generally will not be subject to United States federal
income tax in respect of gain recognized on a sale or other disposition of our
common stock unless (i) the gain is effectively connected with a trade or
business of the non-U.S. holder in the United States or, if a tax treaty
applies, is attributable to a permanent establishment maintained by the non-U.S.
holder in the United States, (ii) in the case of a non-U.S. holder who is an
individual and holds our common stock as a capital asset, such holder is present
in the United States for 183 or more days in the taxable year of the sale and
other conditions are met, or (iii) we are or have been a "United States real
property holding corporation" for United States federal income tax purposes at
any time within the shorter of the five-year period preceding the disposition or
the holder's holding period and the non-U.S. holder owned more than 5% of our
common stock at any time during this period. We believe that we have not been
and are not a United States real property holding corporation for United States
federal income tax purposes and do not currently anticipate becoming a United
States real property holding corporation. Different tax consequences would apply
to some non-U.S. holders if we were to become a United States real property
holding corporation. If a non-U.S. holder falls under clause (i) above, the
holder will be taxed on the net gain derived from the sale at regular graduated
United States federal income tax rates (the branch profits tax also may apply if
the non-U.S. holder is a corporation). If a non-U.S. holder falls under clause
(ii) above, the holder generally must pay a flat 30% tax on the net gain derived
from the sale which gain may be offset by United States capital losses
recognized in the same taxable year as the sale.
FEDERAL ESTATE TAX
Common stock owned or treated as owned by a non-U.S. holder at the time
of death, or common stock of which the non-U.S. holder made specified types of
lifetime transfers, will be included in the holder's gross estate for United
States federal estate tax purposes, unless an applicable estate tax treaty
provides otherwise.
UNITED STATES INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX
We must report to the United States Internal Revenue Service and to each
non-U.S. holder the amount of dividends paid to the holder. In addition, we must
report the name and address of each holder and the tax withheld, if any, with
respect to these dividends. Copies of the information returns reporting such
dividends and withholding may also be made available to the tax authorities in
the country in which the non-U.S. holder resides under the provisions of an
applicable income tax treaty.
Under current law, backup withholding will generally not apply to
dividends paid to a non-U.S. holder at an address outside the United States.
However, backup withholding will apply if the non-U.S. holder is engaged in a
trade or business in the United States or if the payer has knowledge that the
payee is a United States person. Backup withholding is a withholding imposed at
the rate of 31% on some payments to persons that fail to furnish information
under United States information reporting requirements. However, under the new
withholding regulations, which are generally effective for dividends paid after
December 31, 2000, backup withholding may apply to dividend payments unless
certification requirements are satisfied. See the discussion above with respect
to rules applicable to foreign partnerships under the new withholding
regulations.
In general, backup withholding and information reporting will not apply
to a payment of the proceeds of a sale of common stock effected outside the
United States by a foreign office of a broker. If, however, the broker is, for
United States federal income tax purposes, a United States person, a controlled
8
<PAGE> 25
foreign corporation, a foreign person that derives 50% or more of its gross
income for specified periods from the conduct of a trade or business in the
United States or, effective for payments after December 31, 2000, a foreign
partnership (i) more than 50% of the income or capital interests of which are
owned by United States persons or (ii) that is engaged in a United States trade
or business, backup withholding will not apply to these payments, but
information reporting requirements will apply. However, these payments will not
be subject to information reporting if the broker has documentary evidence in
its records that the beneficial owner of the stock sold is a non-U.S. holder and
other conditions are met or (2) the beneficial owner otherwise establishes an
exemption.
Payment to or through a United States office of a broker of the proceeds
of a sale of common stock is generally subject to both backup withholding and
information reporting unless the beneficial owner certifies on a Form W-8 (or a
suitable substitute form) under penalties of perjury that it is a non-U.S.
holder, or otherwise establishes an exemption.
Generally effective for payments after December 31, 2000, the new
withholding regulations unify some of the certification procedures and forms and
the reliance standards relating to information reporting and backup withholding.
Any amounts withheld under the backup withholding rules may be allowed
as a refund or a credit against the holder's United States federal income tax
liability provided the required information is furnished to the United States
Internal Revenue Service.
9
<PAGE> 26
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 2,320,000,000 shares of common
stock, $1.00 par value, and 5,000,000 shares of preferred stock, without par
value.
COMMON STOCK
The holders of our common stock are entitled to receive dividends when
and as declared by our Board of Directors and paid by us. This right is
subordinate to the preferences of our outstanding preferred stock. Holders of
our common stock have one vote per share. There is no cumulative voting. If we
are liquidated, dissolved or wound up, we will pay our creditors first, followed
by our preferred stockholders. Subsequently, we will distribute our remaining
assets to our common stockholders in proportion to the number of shares that
each stockholder owns. Other than the preferred stock purchase rights referred
to below, holders of our common stock have no preemptive or other subscription
rights. There are no conversion, redemption or sinking fund provisions
applicable to our common stock. Our Board of Directors is authorized to issue
all of the authorized and unissued shares of our common stock.
BankBoston, N.A. is the registrar and transfer agent of the shares of
our common stock.
At March 31, 1999, 1,109,122,807 shares of our common stock were
outstanding and held of record by 61,696 holders.
PREFERRED STOCK
Our Board of Directors is authorized to fix the terms of one or more
series of a class of preferred stock. They are also authorized to issue any or
all of the authorized and unissued shares of preferred stock. Issuances of
preferred stock may limit or qualify the rights of the holders of our common
stock.
Series C ESOP Convertible Preferred Stock
At March 31, 1999, 147,581 shares of Series C ESOP convertible preferred
stock, no par value per share, were outstanding. All of the outstanding shares
of our ESOP convertible preferred stock are held by our Employee Stock Ownership
Plan. The shares of Series C ESOP convertible preferred stock have the following
terms:
- Dividends. The holders of the ESOP convertible preferred stock are
entitled to receive cash dividends in the amount of $48.23 per share
per year. These dividends accrue whether or not declared. If they are
not paid when accrued, they also cumulate. If full cumulative
dividends on the ESOP convertible preferred stock have not been
declared and paid or set apart for payment when due, we are not
allowed to pay dividends on any other class of stock ranking junior to
the ESOP convertible preferred stock, including our common stock.
- Liquidation. If we are liquidated, dissolved or wound-up, holders of
ESOP convertible preferred stock are entitled to receive liquidating
distributions in the amount of $602.875 per share, plus an amount
equal to all accumulated and unpaid dividends.
- Conversion. As of March 31, 1999, each share of ESOP convertible
preferred stock was convertible into 80 shares of common stock. This
conversion ratio will be adjusted for stock dividends, stock splits
and similar events.
- Voting. In any matter submitted to a vote of the holders of our
common stock, each share of ESOP convertible preferred stock is
entitled to a number of votes equal to the number of shares of common
stock into which a share could be converted on the record date for the
vote, whether or not then convertible.
- Redemption. The ESOP convertible preferred stock is redeemable upon
the occurrence of specified changes in control or other events at
varying prices not less than $602.875 per share
10
<PAGE> 27
plus accumulated and unpaid dividends. Depending on the event, this
redemption may be at our option or at the option of the holder.
Preferred Stock Purchase Rights
We entered into a Renewed Rights Agreement dated as of December 14,
1995, effective as of December 9, 1996, with the First National Bank of Boston,
as Rights Agent. One-half of a right is attached to each outstanding share of
our common stock and 40 rights are attached to each share of our ESOP
convertible preferred stock. At March 31, 1999, 560,464,643.5 rights were
outstanding.
Each whole right may be exercised to purchase one ten-thousandth of a
share of our Series A junior participating preferred stock for $225. The rights
become exercisable on the earlier of:
- ten business days after we announce that a person has acquired 15% or
more of our common stock, or
- ten business days after a tender offer commences that could result in
a person's ownership of 15% or more of our common stock.
When the rights become exercisable, they will also become transferable apart
from the shares of common stock or ESOP convertible preferred stock to which
they are currently attached.
If a person acquires 15% or more of our common stock, each holder of a
right, other than the person who acquired our common stock, will have the right
to receive, upon exercise of the right, shares of our common stock valued at
double the exercise price. Holders will not have these rights if the person who
acquires 15% or more of our common stock does so in a tender or exchange offer
for all of our outstanding stock on terms approved by our Board of Directors. In
the event of a merger or similar transaction that has not been approved by our
Board of Directors, each holder of a right, other than the person who acquired
our common stock, will have the right to receive, upon exercise of the right,
shares of common stock of the acquiring company valued at double the exercise
price.
The rights have no voting power and are not entitled to receive
dividends. The expiration date of the rights is December 14, 2005, but that date
may be extended. We can redeem all of the outstanding rights for $0.01 each at
any time until 10 business days following the date we announce that a person has
acquired 15% or more of our common stock.
Because this is a summary, it does not contain a complete description of
the rights. The form of Renewed Rights Agreement, which specifies the terms of
the rights, has been filed with the SEC as an exhibit to our Form 8-K dated
December 18, 1995, and has been incorporated by reference into our Form 8A/A
filed on November 12, 1996, which is incorporated by reference in this
prospectus. See "Where You Can Find More Information."
Series A Junior Participating Preferred Stock
Our Board of Directors has reserved 400,000 shares of Series A junior
participating preferred stock for issuance upon exercise of the rights. The
junior participating preferred stock may be issued in fractional shares. The
shares of junior participating preferred stock have the following terms:
- Dividends. Each share of junior participating preferred stock will be
entitled to receive cumulative quarterly cash dividends payable on the
fifteenth day of January, April, July and October in each year. These
dividends are payable at the greater of (a) $20 or (b) 10,000 times
the aggregate per share amount of all dividends and distributions
declared on our common stock, other than a dividend payable in shares
of our common stock, since the previous quarterly dividend payment
date for the junior participating preferred stock. The dividend may
change due to anti-dilution adjustments. This dividend right is
subordinate to the payment of dividends on the Series C ESOP
convertible preferred stock and any other senior preferred stock.
11
<PAGE> 28
- Voting. Holders of shares of junior participating preferred stock
will be entitled to 10,000 votes on all matters submitted to a vote of
our stockholders. The number of votes per share of junior
participating preferred stock may change due to anti-dilution
adjustments. Holders of shares of junior participating preferred stock
will vote together with the holders of our common stock as a single
class, except as otherwise required by law. If at the time of any
annual meeting of stockholders for the election of directors the
amount of accrued but unpaid dividends upon the junior participating
preferred stock is equal to six full quarterly dividends, the holders
of shares of junior participating preferred stock, voting separately
as a class, will have the right to elect two members of the Board of
Directors. This right will continue until all accrued dividends are
paid. In addition, while dividends on the junior participating
preferred stock are unpaid as described above, the terms of the junior
participating preferred stock limit our ability to pay dividends and
to redeem, repurchase or otherwise acquire shares of our common stock.
- Liquidation. If we are liquidated, dissolved or wound-up, holders of
junior participating preferred stock will be entitled to receive,
before any distribution is made with respect to shares of stock
ranking junior to the junior participating preferred stock, an amount
equal to the greater of (a) $200 per share or (b) 10,000 times the
aggregate per share amount to be distributed to holders of our common
stock. The ratio in clause (b) may change due to anti-dilution
adjustments.
- Consolidations, mergers and similar transactions. If a consolidation,
merger, combination or similar transaction occurs and shares of our
common stock are exchanged for or changed into stock or securities of
another company, cash and/or other property, then the shares of junior
participating preferred stock will be similarly exchanged or changed.
Each share of junior participating preferred stock will be exchanged
or changed in an amount per share equal to 10,000 times the aggregate
amount of stock, securities, cash and/or other property payable in
kind into which or for which each share of our common stock is changed
or exchanged. This ratio may change due to anti-dilution adjustments.
- Ranking. The shares of junior participating preferred stock rank
junior to the Series C ESOP convertible preferred stock. Future series
of preferred stock will rank on an equal basis with the junior
participating preferred stock with respect to dividends and/or
liquidation preference, unless our Board of Directors determines that
these future series will be senior to the junior participating
preferred stock.
- Redemption. The junior participating preferred stock may not be
mandatorily redeemed by us.
PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS AND DELAWARE LAW
AFFECTING CHANGES OF CONTROL
In addition to several of the provisions described above, provisions of
our Certificate of Incorporation and bylaws and Delaware law, including some of
those described below, may have anti-takeover effects.
- Board of Directors. Under Article 9 of our Certificate of
Incorporation and the related provisions of Article XIII of our
bylaws, our Board of Directors is classified into three classes. Each
class is as equal in number as possible. One class is elected each
year for a three-year term. A director may only be removed for cause
by the majority vote of the outstanding shares entitled to vote. The
affirmative vote of at least 75% of the votes of the shares entitled
to vote is required to amend or repeal Article 9 of the Certificate of
Incorporation or Article XIII of the bylaws or to adopt any provision
inconsistent with those articles.
- Meetings of stockholders. The bylaws provide that special meetings of
stockholders may be called only by our Chief Executive Officer or by
our Board of Directors. The bylaws also provide that in general we
must receive stockholder proposals intended to be presented at a
12
<PAGE> 29
meeting of stockholders, including proposals for the nomination of
directors, 60 days in advance of the meeting.
- Indemnification. Our bylaws contain provisions requiring us to
indemnify any or our directors, officers, employees or agents to the
fullest extent permitted under Delaware law. Our Certificate of
Incorporation provides that our directors will not be personally
liable to us or to our stockholders for monetary damages arising out
of the director's breach of that person's fiduciary duty as a
director, except to the extent that Delaware law does not permit
exemption from such liability.
- Amendment of bylaws. Our Board of Directors is expressly authorized
to adopt, amend or repeal the bylaws of the Company, except as
provided in our Certificate of Incorporation. The stockholders may
also adopt, amend or repeal the bylaws.
- Delaware law. We are governed by the provisions of Section 203 of the
General Corporation Law of Delaware. In general, this statute
prohibits a publicly-held Delaware corporation like us from engaging
in a business combination with an interested stockholder for a period
of three years after the date of the transaction in which the person
becomes an interested stockholder. This prohibition does not apply to
a business combination approved in a manner described in the statute
or if the stockholder acquires at least 85% of our outstanding stock,
excluding stock held by directors who are officers and specified
employee rights plans. An "interested stockholder" is generally
considered to be:
- a person who owns 15% or more of our voting stock,
- a person who is an affiliate of ours and owned 15% or more of our
voting stock within the prior three years, or
- an affiliate of either of these persons.
13
<PAGE> 30
UNDERWRITING
GENERAL
The KKR partnerships intend to offer shares of our common stock outside
the United States and Canada through a number of international managers and in
the United States and Canada through a number of U.S. underwriters. Merrill
Lynch International, Credit Suisse First Boston (Europe) Limited, Goldman Sachs
International, J.P. Morgan Securities Ltd., Morgan Stanley & Co. International
Limited and Salomon Brothers International Limited are acting as lead managers
of each of the international managers named below. In an international purchase
agreement entered into by us, the KKR partnerships and the international
managers, the KKR partnerships have agreed to sell to the international
managers, and each of the international managers has agreed to purchase from the
KKR partnerships, the number of shares of common stock shown opposite its name
below. The obligations of the international managers to purchase these shares
are several and not joint. They are subject to the terms and conditions
contained in the international purchase agreement.
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGER SHARES
--------------------- -------------
<S> <C>
Merrill Lynch International.................................
Credit Suisse First Boston (Europe) Limited.................
Goldman Sachs International.................................
J.P. Morgan Securities Ltd..................................
Morgan Stanley & Co. International Limited..................
Salomon Brothers International Limited......................
---------
Total.......................................... 2,565,440
=========
</TABLE>
The KKR partnerships have also entered into a U.S. purchase agreement
with a group of underwriters in the United States and Canada for whom Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse First Boston
Corporation, Goldman, Sachs & Co., J.P. Morgan Securities Inc., Morgan Stanley &
Co. Incorporated and Salomon Smith Barney Inc. are acting as U.S.
representatives. Concurrently with the sale of 2,565,440 shares of common stock
to the international managers as described above, the KKR partnerships have
agreed to sell to the U.S. underwriters, and the U.S. underwriters have agreed
to purchase from the KKR partnerships, a total of 23,088,959 shares of common
stock. The obligations of the U.S. underwriters to purchase these shares are
several and not joint. They are subject to the terms and conditions contained in
the U.S. purchase agreement. The public offering price per share and the total
underwriting discount per share of common stock are identical under the
international purchase agreement and the U.S. purchase agreement.
In the international purchase agreement, the international managers
severally have agreed to purchase all of the shares of common stock being sold
under that agreement if any of those shares are purchased. In the U.S. purchase
agreement, the U.S. underwriters severally have agreed to purchase all of the
shares of common stock being sold under that agreement if any of those shares
are purchased. If there is a default by a U.S. underwriter or an international
manager, the U.S. purchase agreement and the international purchase agreement
provide that, in specified circumstances, the purchase commitments of the
nondefaulting underwriters or managers may be increased or the purchase
agreement may be terminated. The closings for the sales of common stock to the
international managers and to the U.S. underwriters are conditioned upon one
another.
We and the KKR partnerships have agreed to indemnify the international
managers and the U.S. underwriters against specified liabilities, including some
liabilities under the Securities Act, or to contribute to payments the
international managers and U.S. underwriters may be required to make for those
liabilities.
The international managers are severally offering the shares of common
stock, subject to prior sale, when, as and if issued to and accepted by them,
subject to approval of specified legal matters by
14
<PAGE> 31
counsel for the international managers and satisfaction of other conditions. The
international managers reserve the right to withdraw, cancel or modify this
offering and to reject orders in whole or in part.
COMMISSIONS AND DISCOUNTS
The lead managers have advised us and the KKR partnerships that the
international managers propose initially to offer the shares of common stock to
the public at the public offering price appearing on the cover page of this
prospectus, and to selected dealers at that price less a concession not in
excess of $ per share of common stock. The international managers may allow,
and those dealers may reallow, a discount not in excess of $ per share of
common stock to other dealers. After the public offering, the public offering
price, concession and discount may change.
The following table shows the per share and total public offering price,
underwriting discount to be paid by the KKR partnerships to the international
managers and the U.S. underwriters and the proceeds before expenses to the KKR
partnerships. This information is presented assuming either no exercise or full
exercise by the international managers and the U.S. underwriters of their
over-allotments options described below.
<TABLE>
<CAPTION>
Per Without With
Share Option Option
--------- -------- --------
<S> <C> <C> <C>
Public Offering Price.............................. $ $ $
Underwriting Discount.............................. $ $ $
Proceeds, before expenses, to the KKR
partnerships..................................... $ $ $
</TABLE>
We will pay the expenses of the offering, not including the underwriting
discount, which are estimated at $874,000.
INTERSYNDICATE AGREEMENT
The international managers and the U.S. underwriters have entered into
an intersyndicate agreement that provides for the coordination of their
activities. Under the intersyndicate agreement, the international managers and
the U.S. underwriters are permitted to sell shares of our common stock to each
other for purposes of resale at the public offering price, less an amount not
greater than the selling concession. Under the intersyndicate agreement, the
U.S. underwriters and any dealer to whom they sell shares of our common stock
will not offer to sell or sell shares of our common stock to persons who are
non-U.S. or non-Canadian persons or to persons they believe intend to resell to
persons who are non-U.S. or non-Canadian persons, and the international managers
and any dealer to whom they sell shares of our common stock will not offer to
sell or sell shares of our common stock to U.S. persons or to Canadian persons
or to persons they believe intend to resell to U.S. or Canadian persons, except
in the case of transactions permitted by the intersyndicate agreement.
OVER-ALLOTMENT OPTION
The KKR partnerships have granted an option to the international
managers, exercisable from time to time for 30 days after the date of this
prospectus, to purchase up to a total of 384,816 additional shares of our common
stock at the public offering price appearing on the cover page of this
prospectus, less the underwriting discount. The international managers may
exercise this option solely to cover over-allotments, if any, made on the sale
of our common stock offered by this prospectus. If the international managers
exercise this option, each international manager will be obligated, subject to
specified conditions, to purchase a number of additional shares of our common
stock proportionate to the international manager's initial number of shares
reflected in the table shown above. The KKR partnerships have granted a similar
over-allotment option to the U.S. underwriters to purchase up to a total of
3,463,344 additional shares of common stock.
15
<PAGE> 32
NO SALES OF SIMILAR SECURITIES
We and the KKR partnerships have agreed, without the prior written
consent of Merrill Lynch on behalf of the international managers for a period of
90 days after the date of this prospectus, not to
- sell, pledge, assign, or transfer or dispose of any shares of our
common stock, or any option, right, warrant or contract to purchase
our common stock or any securities convertible into or exercisable or
exchangeable for our common stock or
- enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of our common stock
whether any such swap or transaction is to be settled by delivery of
our common stock or other securities, in cash or otherwise.
We are not subject to these restrictions in the following instances:
- issuances of common stock, options, phantom stock or other securities
or rights under any of our employee or director compensation, option,
savings, benefit or other plans, and hedging transactions and programs
in connection with any of these plans.
- issuances upon exercise, conversion or exchange of any securities or
obligations outstanding on the date of the international purchase
agreement.
- issuances of equity securities as consideration for an acquisition.
- purchases of stock or uses of put options or other derivative
securities pursuant to any previously announced stock repurchase
program.
- issuances of common stock, and securities or agreements with respect
to our common stock, in the aggregate not greater than 2,000,000
shares of common stock.
NEW YORK STOCK EXCHANGE
Our common stock is listed on the New York Stock Exchange under the
symbol "G".
NASD REGULATIONS
Purchasers of the shares offered by this prospectus may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country of purchase in addition to the offering price appearing on the cover
page of this prospectus.
OTHER RELATIONSHIPS
Several of the underwriters and their affiliates engage in transactions
with, and perform services for, us, our affiliates, the KKR partnerships and
their affiliates in the ordinary course of business and have engaged, and may in
the future engage, in commercial banking and investment banking transactions
with us, our affiliates, the KKR partnerships and their affiliates for which
they have received or will receive customary compensation.
16
<PAGE> 33
LEGAL MATTERS
The validity of the common stock being offered in this prospectus will
be passed upon for us by James P. Connolly, Esq., Acting General Counsel. As of
June 2, 1999, Mr. Connolly beneficially owned approximately 198,996 shares of
our common stock, including options to purchase 103,665 shares of common stock
and 25 shares of common stock through his interest in our Employee Stock
Ownership Plan. The validity of the common stock being offered in this
prospectus will be passed upon for the international managers by Davis Polk &
Wardwell, New York, New York.
EXPERTS
The consolidated financial statements and schedules appearing in our
annual report on Form 10-K for the year ended December 31, 1998, have been
audited by KPMG LLP, independent auditors, as set forth in their reports. These
reports are incorporated by reference in this prospectus in reliance upon such
reports given upon authority of KPMG LLP as experts in accounting and auditing.
17
<PAGE> 34
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
25,654,399 SHARES
[GILLETTE COMPANY LOGO]
COMMON STOCK
---------------------
PROSPECTUS
---------------------
MERRILL LYNCH INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
GOLDMAN SACHS INTERNATIONAL
J.P. MORGAN SECURITIES LTD.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY INTERNATIONAL
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 35
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee........................................ $499,022.88
Legal fees and expenses*.................................... 125,000.00
Printing expenses*.......................................... 50,000.00
Accounting fees and expenses*............................... 100,000.00
Miscellaneous*.............................................. 99,977.12
-----------
Total Expenses......................................... $874,000.00
===========
</TABLE>
- ---------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, as amended (the
"DGCL") provides that a corporation may indemnify any person 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 or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such person's conduct was unlawful. Section 145 further provides that a
corporation similarly may indemnify any such person serving in any such capacity
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor, against expenses (including attorney's fees)
actually and reasonably incurred in connection with the defense or settlement of
such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or such other court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (1) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (2) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) under Section 174 of the DGCL (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or (4)
for any transaction from which the director derived an improper personal
benefit.
The Registrant's bylaws provide that the Registrant shall indemnify
current or former directors, officers, employees or agents of the Registrant, in
connection with proceedings brought against such persons by reason of their
position with the Registrant to the fullest extent permitted by Delaware law.
The Registrant's Certificate of Incorporation, as amended, provides that a
director of the Registrant shall not be liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except as is not permitted under the DGCL.
II-1
<PAGE> 36
The Registrant has obtained insurance policies that insure its directors
and officers against certain liabilities.
The proposed form of the underwriting agreement provides for
indemnification of the directors and officers of the Registrant by the
underwriters against certain liabilities. The selling stockholder has also
agreed to indemnify the directors and officers of the Registrant against certain
liabilities.
For the undertaking with respect to indemnification, see Item 17 herein.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
TITLE OF
EXHIBIT
- --------
<C> <S>
1.1 Form of U.S. Purchase Agreement
1.2 Form of International Purchase Agreement
4.1 Renewed Rights Agreement dated as of December 14, 1995
between The Gillette Company and The First National Bank of
Boston, filed as Exhibit 4 to The Gillette Company Current
Report on Form 8-K, dated December 18, 1995, Commission File
No. 1-922, incorporated by reference herein
4.2 Specimen of form of certificate representing ownership of
The Gillette Company Common Stock, $1.00 par value,
effective December 10, 1996, filed as Exhibit 4(a) to The
Gillette Company Annual Report on Form 10-K for the year
ended December 31, 1996, Commission File No. 1-922,
incorporated by reference herein
4.3 Form of Certificate of Designation, Preferences and Rights
of Series A Junior Participating Preferred Stock of The
Gillette Company filed as Exhibit A to Exhibit 1 to The
Gillette Company Current Report on Form 8-K, dated December
30, 1985, Commission File No. 1-911, incorporated by
reference as Exhibit 4(c) to The Gillette Company Annual
Report on Form 10-K for the year ended December 31, 1996,
Commission File No. 1-922, incorporated by reference herein
4.4 Amendment to Certificate of Designations, Preferences and
Rights of Series A Junior Participating Preferred Stock
dated December 9, 1996, filed as Exhibit 4(c) to The
Gillette Company Annual Report on Form 10-K for the year
ended December 31, 1996, File No. 1-922, incorporated by
reference herein
4.5 Certificate of Designation of the Series C ESOP Convertible
Preferred Stock of The Gillette Company, dated January 17,
1990, filed as Exhibit 4(e) to The Gillette Company Annual
Report on Form 10-K for the year ended December 31, 1989,
Commission File No. 1-922, incorporated by reference herein
4.6 Certificate of Amendment relating to an increase in the
amount of authorized shares of preferred stock and common
stock, filed as Exhibit 3(i) to The Gillette Company
Quarterly Report on Form 10-Q for the period ended March 31,
1998, Commission File No. 1-922, incorporated by reference
herein
5.1 Opinion of James P. Connolly, Esq., Acting General Counsel*
23.1 Consent of KPMG LLP
23.2 Consent of James P. Connolly, Esq., Acting General Counsel
(to be included in the opinion filed as Exhibit 5.1)*
24.1 Power of Attorney*
</TABLE>
- ---------------
* Previously filed.
II-2
<PAGE> 37
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned Registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
2. For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions set forth in Item 15 above,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification (other than by policies
of insurance) is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 38
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, State of
Massachusetts, on the 7th day of June, 1999.
THE GILLETTE COMPANY
By: /s/ CHARLES W. CRAMB
------------------------------------
Name: Charles W. Cramb
Title: Senior Vice
President -- Finance,
Chief Financial Officer and
Principal Accounting Officer
Pursuant to the requirement of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board, Chief Executive June 7, 1999
- -------------------------------------- Officer and Director
Michael C. Hawley
/s/ CHARLES W. CRAMB Senior Vice President -- Finance, June 7, 1999
- -------------------------------------- Chief Financial Officer and Principal
Charles W. Cramb Accounting Officer
* Director June 7, 1999
- --------------------------------------
Warren E. Buffett
* Director June 7, 1999
- --------------------------------------
Wilbur H. Gantz
* Director June 7, 1999
- --------------------------------------
Michael B. Gifford
* Director June 7, 1999
- --------------------------------------
Carol R. Goldberg
* Director June 7, 1999
- --------------------------------------
Herbert H. Jacobi
* Director June 7, 1999
- --------------------------------------
Henry R. Kravis
</TABLE>
II-4
<PAGE> 39
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director June 7, 1999
- --------------------------------------
Jorge Paulo Lemann
* Director June 7, 1999
- --------------------------------------
Richard R. Pivirotto
* Director June 7, 1999
- --------------------------------------
Alexander B. Trowbridge
* Director June 7, 1999
- --------------------------------------
Marjorie M.T. Yang
* Director June 7, 1999
- --------------------------------------
Alfred M. Zeien
*By: /s/ CHARLES W. CRAMB
- --------------------------------------
Charles W. Cramb, for himself and as
attorney-in-fact
</TABLE>
II-5
<PAGE> 40
EXHIBIT INDEX
<TABLE>
<CAPTION>
TITLE OF
EXHIBIT
- --------
<C> <S>
1.1 Form of U.S. Purchase Agreement
1.2 Form of International Purchase Agreement
4.1 Renewed Rights Agreement dated as of December 14, 1995
between The Gillette Company and The First National Bank of
Boston, filed as Exhibit 4 to The Gillette Company Current
Report on Form 8-K, dated December 18, 1995, Commission File
No. 1-922, incorporated by reference herein
4.2 Specimen of form of certificate representing ownership of
The Gillette Company Common Stock, $1.00 par value,
effective December 10, 1996, filed as Exhibit 4(a) to The
Gillette Company Annual Report on Form 10-K for the year
ended December 31, 1996, Commission File No. 1-922,
incorporated by reference herein
4.3 Form of Certificate of Designation, Preferences and Rights
of Series A Junior Participating Preferred Stock of The
Gillette Company filed as Exhibit A to Exhibit 1 to The
Gillette Company Current Report on Form 8-K, dated December
30, 1985, Commission File No. 1-911, incorporated by
reference as Exhibit 4(c) to The Gillette Company Annual
Report on Form 10-K for the year ended December 31, 1996,
Commission File No. 1-922, incorporated by reference herein
4.4 Amendment to Certificate of Designations, Preferences and
Rights of Series A Junior Participating Preferred Stock
dated December 9, 1996, filed as Exhibit 4(c) to The
Gillette Company Annual Report on Form 10-K for the year
ended December 31, 1996, File No. 1-922, incorporated by
reference herein
4.5 Certificate of Designation of the Series C ESOP Convertible
Preferred Stock of The Gillette Company, dated January 17,
1990, filed as Exhibit 4(e) to The Gillette Company Annual
Report on Form 10-K for the year ended December 31, 1989,
Commission File No. 1-922, incorporated by reference herein
4.6 Certificate of Amendment relating to an increase in the
amount of authorized shares of preferred stock and common
stock, filed as Exhibit 3(i) to The Gillette Company
Quarterly Report on Form 10-Q for the period ended March 31,
1998, Commission File No. 1-922, incorporated by reference
herein
5.1 Opinion of James P. Connolly, Esq., Acting General Counsel*
23.1 Consent of KPMG LLP
23.2 Consent of James P. Connolly, Esq., Acting General Counsel
(to be included in the opinion filed as Exhibit 5.1)*
24.1 Power of Attorney*
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 1.1
THE GILLETTE COMPANY
(a Delaware corporation)
25,654,399 SHARES OF COMMON STOCK, $1.00 PAR VALUE
U.S. Purchase Agreement
[ ], 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
J.P. Morgan Securities Inc.
Morgan Stanley & Co. Incorporated
Salomon Smith Barney Inc.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Certain stockholders named in Schedule II hereto (the "SELLING
STOCKHOLDERS") of The Gillette Company, a Delaware corporation (the "COMPANY"),
propose to sell to the several Underwriters listed in Schedule I hereto (the
"UNDERWRITERS"), an aggregate of 23,088,959 shares of Common Stock, par value
$1.00 per share, of the Company (the "UNDERWRITTEN SHARES") and, for the sole
purpose of covering over-allotments in connection with the sale of the
Underwritten Shares, at the option of the Underwriters, up to an additional
3,463,344 shares of Common Stock of the Company (the "OPTION SHARES"). The
Underwritten Shares and the Option Shares are herein referred to as the
"SHARES". The outstanding shares of Common Stock of the Company are herein
referred to
<PAGE> 2
as the "STOCK". The Stock, including the Shares, has attached thereto rights
(the "RIGHTS") to purchase one ten-thousandth of a share of Series A Junior
Participating Preferred Stock for $225 per share exercisable only upon the
occurrence of certain events. The Rights have been issued pursuant to a Rights
Agreement (the "RIGHTS AGREEMENT") dated as of December 14, 1995 between the
Company and The First National Bank of Boston, as Rights Agent.
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
statement, including a prospectus, relating to the Shares and the attached
Rights. The registration statement as amended at the time when it shall become
effective including information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act, is referred to in this Agreement as the "REGISTRATION
STATEMENT", and the prospectus in the form first used to confirm sales of Shares
is referred to in this Agreement as the "PROSPECTUS". If the Company has filed
an abbreviated registration statement to register additional shares of Stock
pursuant to Rule 462(b) and under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference to the term "Registration Statement" shall be
deemed to include such Rule 462 Registration Statement. Any reference in this
Agreement to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as
of the effective date of the Registration Statement or the date of such
preliminary prospectus or the Prospectus, as the case may be, and any reference
to "amend", "amendment" or "supplement" with respect to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to refer
to and include any documents filed after such date under the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "EXCHANGE ACT") that are deemed to be
incorporated by reference therein.
The Company and each of the Selling Stockholders hereby agrees with the
Underwriters as follows:
1. Each of the Selling Stockholders agrees, severally and not
jointly, to sell the Underwritten Shares to the several Underwriters as
hereinafter provided, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees to purchase, severally and not jointly, from each of
the Selling Stockholders at a purchase price per share of $[ ] (the "PURCHASE
PRICE") the number of Underwritten Shares
2
<PAGE> 3
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying the aggregate number of Underwritten Shares to be sold by each of
the Selling Stockholders as set forth opposite their respective names in
Schedule II hereto by a fraction, the numerator of which is the aggregate number
of Underwritten Shares to be purchased by such Underwriter as set forth opposite
the name of such Underwriter in Schedule I hereto and the denominator of which
is the aggregate number of Underwritten Shares to be purchased by all the
Underwriters from all the Selling Stockholders hereunder.
In addition, each of the Selling Stockholders agrees to, severally and
not jointly, sell the Option Shares to the several Underwriters as hereinafter
provided, and each Underwriter on the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
shall have the option to purchase, severally and not jointly, from each of the
Selling Stockholders at the Purchase Price that portion of the number of Option
Shares set forth opposite such Selling Stockholder's name in Schedule II hereto
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying the number of Option
Shares set forth opposite such Selling Stockholder's name in Schedule II by a
fraction, the numerator of which is the product of (i) the aggregate number of
Underwritten Shares to be purchased by such Underwriter as set forth opposite
the name of such Underwriter in Schedule I hereto and (ii) the total number of
Option Shares to be purchased by the Underwriters and the denominator of which
is the product of (i) the number of Underwritten Shares to be purchased by all
the Underwriters from all the Selling Stockholders hereunder and (ii) the total
number of Option Shares set forth in Schedule II. Any such election to purchase
Option Shares shall be made in proportion to the number of Option Shares to be
sold by each Selling Stockholder.
The Underwriters may exercise the option to purchase the Option Shares
at any time from time to time on or before the thirtieth day following the date
of this Agreement, by written notice from the Representatives to the Selling
Stockholders and the Company. Such notice shall set forth the aggregate number
of Option Shares as to which the option is being exercised and the date and time
when the Option Shares are to be delivered and paid for which may be the same
date and time as the Closing Date (as hereinafter defined) but shall not be
earlier than the Closing Date nor later than the tenth full Business Day (as
hereinafter defined) after the date of such notice (unless such time and date
are postponed in accordance with the provisions of Section 9 hereof). Any such
notice shall be given at least two Business Days prior to the date and time of
delivery specified therein.
2. The Company and the Selling Stockholders understand that the
Underwriters intend (i) to make a public offering of the Shares as soon after
(A)
3
<PAGE> 4
the Registration Statement has become effective and (B) the parties hereto have
executed and delivered this Agreement, as in the judgment of the Representatives
is advisable and (ii) initially to offer the Shares upon the terms set forth in
the Prospectus.
3. Payment for the Shares shall be made by wire transfer in
immediately available funds to the account specified by the Selling
Stockholders, to you in the case of the Underwritten Shares, at 9:00 A.M., New
York City time, on [ ], 1999, or at such other time on the same or such other
date, not later than the fifth Business Day thereafter, as you and the Selling
Stockholders may agree upon in writing or, in the case of the Option Shares, on
the date and time specified by you in the written notice of the Underwriters'
election to purchase such Option Shares. The time and date of such payment for
the Underwritten Shares are referred to herein as the "CLOSING DATE" and the
time and date for such payment for the Option Shares, if other than the Closing
Date, are herein referred to as the "ADDITIONAL CLOSING DATE". As used herein,
the term "BUSINESS DAY" means any day other than a day on which banks are
permitted or required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
you for the respective accounts of the several Underwriters of the Shares to be
purchased on such date registered in such names and in such denominations as you
shall request in writing not later than two full Business Days prior to the
Closing Date or the Additional Closing Date, as the case may be, with any
transfer taxes payable in connection with the transfer to the Underwriters of
the Shares duly paid by the Selling Stockholders. The certificates for the
Shares will be made available for inspection and packaging by you at the office
of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017 not
later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date or the Additional Closing Date, as the case may be.
4. (a) The Company represents and warrants to each Underwriter
and the Selling Stockholders that:
(i) no stop order suspending the effectiveness
of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the
knowledge of the Company, threatened by the Commission; and
the Registration Statement and Prospectus (as amended or
supplemented if the Company shall have furnished any
amendments or supplements thereto) comply, or will comply, as
the case may be, in all material respects with the Securities
Act and do not and will not, as of the applicable
4
<PAGE> 5
effective date as to the Registration Statement and any
amendment thereto and as of the date of the Prospectus and any
amendment or supplement thereto, contain any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus, as amended or
supplemented, if applicable, at the Closing Date or Additional
Closing Date, as the case may be, will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
except that the foregoing representations and warranties shall
not apply to statements or omissions in the Registration
Statement and any amendment thereto or the Prospectus and any
amendment or supplement thereto made in reliance upon and in
conformity with information relating to (x) any Underwriter
furnished to the Company in writing by such Underwriter
through you expressly for use therein and (y) any Selling
Stockholder furnished to the Company in writing by such
Selling Stockholder expressly for use therein (the "SELLING
STOCKHOLDER INFORMATION");
(ii) the documents incorporated by reference in
the Prospectus, when they became effective or were filed with
the Commission, as the case may be, conformed in all material
respects to the requirements of the Exchange Act, and none of
such documents when they became effective or were filed with
the Commission contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; and any further documents so
filed and incorporated by reference in the Prospectus, when
such documents are filed with the Commission, will conform in
all material respects to the requirements of the Exchange Act,
and will not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading;
(iii) except as noted therein, the consolidated
financial statements, and the related notes thereto,
incorporated by reference in the Registration Statement and
the Prospectus present fairly in all material respects the
consolidated financial position of the Company and its
consolidated subsidiaries as of the dates indicated and the
results of their operations and changes in their consolidated
cash flows for the periods specified; and said financial
statements
5
<PAGE> 6
have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and the
supporting schedules incorporated by reference in the
Registration Statement present fairly in all material respects
the information required to be stated therein; and the pro
forma financial information, and the related notes thereto,
incorporated by reference in the Registration Statement and
the Prospectus has been prepared in accordance with the
applicable requirements of the Securities Act and the Exchange
Act, as applicable;
(iv) since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, there has not been any material change in the
capital stock of the Company or long-term debt of the Company
and its consolidated subsidiaries taken as a whole or any
material adverse change, or any known development involving
the reasonable likelihood of a prospective material adverse
change, in the business, operations or financial condition, of
the Company and its consolidated subsidiaries, taken as a
whole, otherwise, in each case, than as set forth or
contemplated in the Prospectus; and except as set forth or
contemplated in the Prospectus neither the Company nor any of
the consolidated subsidiaries listed on Appendix A hereto (the
"SIGNIFICANT SUBSIDIARIES") has entered into any transaction
or agreement (whether or not in the ordinary course of
business) material to the Company and its consolidated
subsidiaries taken as a whole;
(v) the Company has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has
been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified
or in good standing would not have a material adverse effect
on the Company and its consolidated subsidiaries, taken as a
whole;
(vi) each of the Company's Significant
Subsidiaries has been duly incorporated and is validly
existing as a corporation under the laws of its jurisdiction
of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as
described in the Prospectus; and, except as set forth
6
<PAGE> 7
in Exhibit 22 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998, all the outstanding shares
of capital stock of each Significant Subsidiary of the Company
have been duly authorized and validly issued, are fully-paid
and non-assessable, and (except, in the case of foreign
subsidiaries, for directors' qualifying shares) are owned by
the Company, directly or indirectly, free and clear of all
liens, encumbrances, security interests and claims;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company;
(viii) the Company has an authorized capitalization
as set forth in the Prospectus as of the dates provided
therein and such authorized capital stock conforms as to legal
matters to the description thereof set forth in the
Prospectus, and all of the outstanding shares of capital stock
of the Company (including the Shares) have been duly
authorized and validly issued, are fully-paid and
non-assessable and are not subject to any pre-emptive or
similar rights; and, except as described in or expressly
contemplated by the Prospectus, there are no outstanding
rights (including, without limitation, pre-emptive rights),
warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other
equity interest in the Company or any of its subsidiaries, or
any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any
capital stock of the Company or any such subsidiary, any such
convertible or exchangeable securities or any such rights,
warrants or options;
(ix) the Rights Agreement has been duly
authorized, executed and delivered by the Company; the Rights
have been duly authorized and validly issued by the Company;
and the Series A Junior Participating Preferred Stock has been
duly authorized by the Company and validly reserved for
issuance upon the exercise of the Rights and, when issued in
accordance with the terms of the Rights Agreement, will be
validly issued, fully paid and non-assessable;
(x) neither the Company nor any of its
Significant Subsidiaries is, or with the giving of notice or
lapse of time or both would be, in violation of or in default
under, its Certificate of Incorporation or By-Laws or any
material indenture, mortgage,
7
<PAGE> 8
deed of trust, loan agreement or other material agreement or
instrument to which the Company or any of its Significant
Subsidiaries is a party or by which it or any of them or any
of their respective properties is bound, except for violations
and defaults which individually and in the aggregate are not
material to the Company and its consolidated subsidiaries
taken as a whole; the performance by the Company of its
obligations under this Agreement and the consummation of the
transactions contemplated herein will not conflict with or
result in a breach of any of the terms or provisions of, or
constitute a default under, any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or
instrument to which the Company or any of its Significant
Subsidiaries is a party or by which the Company or any of its
Significant Subsidiaries is bound or to which any of the
property or assets of the Company or any of its Significant
Subsidiaries is subject, nor will any such action result in
any violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Company or any applicable
law or statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the
Company, its Significant Subsidiaries or any of their
respective properties; and no consent, approval,
authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for
the consummation by the Company of the transactions
contemplated by this Agreement, except such consents,
approvals, authorizations, orders, registrations or
qualifications as have been obtained under the Securities Act
and as may be required under state securities or Blue Sky Laws
in connection with the purchase and distribution of the Shares
by the Underwriters;
(xi) other than as set forth or contemplated in
the Prospectus, there are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened to
which the Company or any of its Significant Subsidiaries is or
may be a party or to which any property of the Company or any
of its Significant Subsidiaries is or may be the subject
which, if determined adversely to the Company or any of its
Significant Subsidiaries, could individually or in the
aggregate reasonably be expected to have a material adverse
effect on the business, operations, or financial condition of
the Company and its consolidated subsidiaries, taken as a
whole, and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others;
8
<PAGE> 9
and there are no contracts or other documents that are
required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required;
(xii) no person has the right to require the
Company to register any securities for offering and sale under
the Securities Act by reason of the filing of the Registration
Statement with the Commission or the sale of the Shares by the
Selling Stockholders pursuant hereto; and
(xiii) the Company has not taken nor will it take,
directly or indirectly, any action designed to, or that might
be reasonably expected to, cause or result in stabilization or
manipulation of the price of the stock.
(b) Each of the Selling Stockholders severally represents
and warrants to, and agrees with, each of the Underwriters and the
Company that:
(i) all consents, approvals, authorizations and
orders necessary for the execution and delivery by such
Selling Stockholder of this Agreement and for the sale and
delivery of the Shares to be sold by such Selling Stockholder
hereunder, have been obtained; and such Selling Stockholder
has full right, power and authority to enter into this
Agreement and to sell, assign, transfer and deliver the Shares
to be sold by such Selling Stockholder hereunder; this
Agreement has been duly authorized, executed and delivered by
such Selling Stockholder;
(ii) the sale of the Shares to be sold by such
Selling Stockholder hereunder and the compliance by such
Selling Stockholder with all of the provisions of this
Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute
a default under, any statute, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to
which such Selling Stockholder is a party or by which such
Selling Stockholder is bound or to which any of the property
or assets of such Selling Stockholder is subject, nor will
such action result in any violation of the Partnership
Agreement of such Selling Stockholder or any statute or any
order, rule or regulation of any court or governmental agency
or body
9
<PAGE> 10
having jurisdiction over such Selling Stockholder or the
property of such Selling Stockholder;
(iii) such Selling Stockholder has good and valid
title to the Shares to be sold at the Closing Date or
Additional Closing Date, as the case may be, by such Selling
Stockholder hereunder, free and clear of all liens,
encumbrances, equities or adverse claims other than those
created pursuant to this Agreement; such Selling Stockholder
will have, immediately prior to the Closing Date or Additional
Closing Date, as the case may be, good and valid title to the
Shares to be sold at the Closing Date or Additional Closing
Date, as the case may be, by such Selling Stockholder, free
and clear of all liens, encumbrances, equities or adverse
claims other than those created pursuant to this Agreement;
and, upon delivery of the certificates representing such
Shares and payment therefor pursuant hereto, good and valid
title to such Shares, free and clear of all liens,
encumbrances, equities or adverse claims, will pass to the
several Underwriters;
(iv) such Selling Stockholder has not taken and
will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably
be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares; and
(v) the Selling Stockholder Information does not
and will not, as of the applicable effective date of the
Registration Statement and any amendment thereto, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Selling
Stockholder Information included in the Prospectus, as amended
or supplemented, if applicable, furnished to the Company in
writing by such Selling Stockholder expressly for use therein
at the Closing Date or Additional Closing Date, as the case
may be, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
Each of the Selling Stockholders specifically agrees that the
obligations of such Selling Stockholder hereunder shall not be terminated by
operation of law, whether by dissolution of its partnership, or by the
occurrence of any other event.
10
<PAGE> 11
If any such partnership should be dissolved, or if any other such event should
occur, before the delivery of the Shares by it hereunder, certificates
representing such Shares shall be delivered by or on behalf of such Selling
Stockholder in accordance with the terms and conditions of this Agreement.
5. (a) The Company covenants and agrees with each of the several
Underwriters as follows:
(i) to use its reasonable efforts to cause the
Registration Statement to become effective at the earliest
possible time and, if required, to file the final Prospectus
with the Commission within the time periods specified by Rule
424(b) and Rule 430A under the Securities Act and to file
promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Shares; and to
furnish copies of the Prospectus to the Underwriters in New
York City prior to 10:00 A.M., New York City time, on the
Business Day next succeeding the date of this Agreement in
such quantities as the Representatives may reasonably request;
(ii) to deliver, at the expense of the Company,
to you five copies of the Registration Statement (as
originally filed) and each amendment thereto, in each case
including one signed copy and all exhibits and documents
incorporated by reference therein and, during the period
mentioned in Section 5(a)(v) below, to each of the
Underwriters as many copies of the Prospectus (including all
amendments and supplements thereto) and documents incorporated
by reference therein as you may reasonably request;
(iii) during the period mentioned in Section
5(a)(v) below, before filing any amendment or supplement to
the Registration Statement or the Prospectus, whether before
or after the time the Registration Statement becomes
effective, to furnish to you a copy of the proposed amendment
or supplement for review and not to file any such proposed
amendment or supplement to which the Representatives
reasonably object;
(iv) during the period mentioned in Section
5(a)(v) below, to advise you promptly, and to confirm such
advice in writing (A) when the Registration Statement has
become effective, (B) when
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any amendment to the Registration Statement has been filed or
becomes effective, (C) when any supplement to the Prospectus
or any amended Prospectus has been filed and to furnish you
with copies thereof, (D) of any request by the Commission for
any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for any additional
information, (E) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of
any preliminary prospectus or the Prospectus or the initiation
or threatening of any proceeding for that purpose, and (F) of
the receipt by the Company of any notification with respect to
any suspension of the qualification of the Shares for offer
and sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and to use its best
efforts to prevent the issuance of any such stop order, or of
any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or of any order suspending any
such qualification of the Shares, or notification of any such
order thereof and, if issued, to obtain as soon as possible
the withdrawal thereof;
(v) if, during such period of time after the
first date of the public offering of the Shares as in the
opinion of counsel for the Underwriters a prospectus relating
to the Shares is required by law to be delivered in connection
with sales by the Underwriters or any dealer, any event shall
occur as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements
therein, in light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with
law, forthwith to prepare and furnish, at the expense of the
Company, to the Underwriters and to the dealers (whose names
and addresses you will furnish to the Company) to which Shares
may have been sold by you on behalf of the Underwriters and to
any other dealers upon request, such amendments or supplements
to the Prospectus as may be necessary so that the statements
in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the
Prospectus will comply with law; provided that the preparation
and furnishing of any such amendment or supplement shall be at
the expense of the Underwriters if such amendment or
supplement is required more than 90 days after the first date
of public offering of the Shares;
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<PAGE> 13
(vi) to use reasonable efforts to qualify the
Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions as you shall reasonably request and
to continue such qualification in effect so long as reasonably
required for distribution of the Shares; provided that the
Company shall not be required to file a general consent to
service of process in any jurisdiction;
(vii) to make generally available to its security
holders and to you as soon as practicable an earnings
statement covering a period of at least twelve months
beginning with the first fiscal quarter of the Company
occurring after the effective date of the Registration
Statement, which shall satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 of the Commission
promulgated thereunder;
(viii) for a period of ten years after the date
hereof, to furnish to you copies of all reports or other
communications (financial or other) furnished to holders of
the Shares, and copies of any reports and financial statements
furnished to or filed with the Commission or any national
securities exchange;
(ix) for a period of 90 days after the date of
the initial public offering of the Shares not to (A) sell,
pledge, assign or transfer or dispose of any equity securities
of the Company or any option, right, warrant or contract to
purchase any equity securities of the Company or any
securities convertible into or exercisable or exchangeable for
any equity security of the Company or (B) enter into any swap
or other agreement that transfers, in whole or in part, any of
the economic consequences of ownership of the Stock, whether
any such transaction described in clause (A) or (B) above is
to be settled by delivery of Stock or such other securities,
in cash or otherwise without the prior written consent of
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MERRILL LYNCH"), other than (u) any issuances
of Stock, options, phantom stock or other securities or rights
pursuant to any employee or director compensation, option,
savings, benefit or other plan of the Company, (v) hedging
transactions and programs in connection with any such plan,
(w) any issuances upon exercise, conversion or exchange of any
securities or obligations outstanding on the date of this
Agreement, (x) any issuances of equity securities as
consideration for an acquisition, (y) and purchases of stock
or uses of put options or other derivative securities pursuant
to any
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<PAGE> 14
previously announced stock repurchase program and (z) any
issuances of Stock, and securities or agreements with respect
thereto, in the aggregate not greater than 2,000,000 shares of
Stock;
(x) to pay or cause to be paid all costs and
expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the
foregoing, all costs and expenses (A) incident to the
preparation, registration, execution and delivery of the
Shares (other than transfer taxes) and the transfer of shares
of Common Stock between the Managers (as defined in the
International Purchase Agreement dated the date hereof
providing for the offering by the Selling Stockholders of
shares of Common Stock through arrangements with certain
managers outside of the United States and Canada) and the
Underwriters, (B) incident to the preparation, printing and
filing under the Securities Act of the Registration Statement,
the Prospectus and any preliminary prospectus (including in
each case all exhibits, amendments and supplements thereto),
(C) incurred in connection with the registration or
qualification of the Shares under the laws of such
jurisdictions as you may designate (including reasonable fees
of counsel for the Underwriters and its disbursements), (D)
related to the filing with, and clearance of the offering by,
the National Association of Securities Dealers, Inc., (E) in
connection with the printing (including word processing and
duplication costs) and delivery of this Agreement, the
Preliminary and Supplemental Blue Sky Memoranda and the
furnishing to the Underwriters and dealers of copies of the
Registration Statement and the Prospectus, including mailing
and shipping, as herein provided, (F) any expenses incurred by
the Company in connection with a "road show" presentation to
potential investors, (G) the cost of preparing stock
certificates and (H) the cost and charges of any transfer
agent and any registrar.
(b) Each of the Selling Stockholders covenants and agrees
with each of the several Underwriters as follows:
(i) for a period of 90 days after the date of
the initial public offering of the Shares not to (A) sell,
pledge, assign or transfer or dispose of any equity security
of the Company or any option, right, warrant or contract to
purchase any equity security of the Company or any securities
convertible into or exercisable or exchangeable for any equity
security of the Company or (B) enter
14
<PAGE> 15
into any swap or other agreement that transfers, in whole or
in part, any of the economic consequences of ownership of the
Stock, whether any such transaction described in clause (A) or
(B) above is to be settled by delivery of Stock or such other
securities, in cash or otherwise or (C) make any written
demand for the registration of any shares of Stock or any
security convertible into or exercisable or exchangeable for
Stock without the prior written consent of Merrill Lynch or
publicly announce an intention to do so, in each case other
than (x) the Shares to be sold by such Selling Stockholder
hereunder (y) distribution of Stock by the Selling
Stockholders to their respective partners and (z) donations of
Stock to charitable organizations provided that, in the case
of clauses (y) and (z) the recipient of such Stock agrees to
be bound by the foregoing lock-up (including the exceptions
set forth therein); and
(ii) to pay or cause to be paid all taxes, if
any, on the transfer and sale of the Shares being sold by such
Selling Stockholder.
6. The several obligations of the Underwriters hereunder to
purchase the Shares on the Closing Date or the Additional Closing Date, as the
case may be, are subject to the performance by the Company and each of the
Selling Stockholders of their respective obligations hereunder and to the
following additional conditions:
(a) the Registration Statement shall have become
effective (or if a post-effective amendment is required to be filed
under the Securities Act, such post-effective amendment shall have
become effective) not later than 5:00 P.M., New York City time, on the
date hereof; and no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission; the Prospectus shall have been filed with
the Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the rules and regulations under
the Securities Act and in accordance with Section 5(a)(i) hereof; and
all requests for additional information shall have been complied with
to your satisfaction;
(b) the respective representations and warranties of the
Company and the Selling Stockholders contained herein are true and
correct on and as of the Closing Date or the Additional Closing Date,
as the case may be, as if made on and as of the Closing Date or the
Additional Closing Date, as the case may be, and each of the Company
and the Selling Stockholders
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<PAGE> 16
shall have complied with all agreements and all conditions on its part
to be performed or satisfied hereunder at or prior to the Closing Date
or the Additional Closing Date, as the case may be;
(c) subsequent to the execution and delivery of this
Agreement and prior to the Closing Date or the Additional Closing Date,
as the case may be, there shall not have occurred any downgrading, nor
shall any notice have been given of (i) any downgrading, (ii) any
intended or potential downgrading or (iii) any review or possible
change that is with negative implications, in the rating accorded any
securities of or guaranteed by the Company by any "nationally
recognized statistical rating organization", as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is
given in the Prospectus there shall not have been any material change
in the capital stock of the Company or long-term debt of the Company
and its consolidated subsidiaries taken as a whole or any material
adverse change, or any known development involving the reasonable
likelihood of a prospective material adverse change, in the business,
operations or financial condition of the Company and its consolidated
subsidiaries, taken as a whole, otherwise, in each case, than as set
forth or contemplated in the Prospectus, the effect of which in your
reasonable judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares on the Closing
Date or the Additional Closing Date, as the case may be, on the terms
and in the manner contemplated in the Prospectus;
(e) you shall have received on and as of the Closing Date
or the Additional Closing Date, as the case may be, (i) a certificate
of an executive officer of the Company satisfactory to you to the
effect set forth in Sections 6(a), 6(b) and 6(c) (with respect to the
respective representations, warranties, agreements and conditions of
the Company) and to the further effect that there has not occurred any
material adverse change, or any known development involving the
reasonable likelihood of a prospective material adverse change, in the
business, operations or financial condition, of the Company and its
consolidated subsidiaries, taken as a whole, from that set forth or
contemplated in the Prospectus and (ii) a certificate of the Selling
Stockholders, satisfactory to you to the effect set forth in Section
6(b) (with respect to the respective representations, warranties,
agreements and conditions of the Selling Stockholders);
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<PAGE> 17
(f) James P. Connolly, Esq., Acting General Counsel of
the Company, shall have furnished to you his written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, in
form and substance satisfactory to you, to the effect that:
(i) the Company has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation, with corporate
power and authority to own its properties and conduct its
business as described in the Prospectus as then amended or
supplemented;
(ii) the Company has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business,
so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have
a material adverse effect on the Company and its subsidiaries
taken as a whole;
(iii) other than as set forth or contemplated in
the Prospectus, there are no legal or governmental proceedings
pending or, to the best of such counsel's knowledge,
threatened to which the Company is or may be a party or to
which any property of the Company is or may be the subject
which, if determined adversely to the Company, could
individually or in the aggregate reasonably be expected to
have a material adverse effect on the business, operations or
financial condition of the Company and its consolidated
subsidiaries taken as a whole; to the best of such counsel's
knowledge, no such proceedings are contemplated by
governmental authorities or threatened by others; and such
counsel does not know of any contracts or other documents of a
character required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as
required;
(iv) this Agreement has been duly authorized,
executed and delivered by the Company;
(v) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
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<PAGE> 18
(vi) the outstanding shares of capital stock of
the Company (including the Shares) have been duly authorized
and are validly issued, fully paid and non-assessable;
(vii) the statements in the Prospectus under
"Description of Capital Stock", in the Prospectus incorporated
by reference from Item 3 of Part 1 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 and
in the Registration Statement in Item 15, insofar as such
statements constitute a summary of the terms of the Stock,
legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such
terms, legal matters, documents or proceedings;
(viii) such counsel is of the opinion that the
Registration Statement and the Prospectus and any amendments
and supplements thereto (except for the financial statements
and related schedules therein, as to which such counsel need
express no opinion) complied as to form when filed with the
Commission in all material respects with the requirements of
the Securities Act and believes that (except for the financial
statements and related schedules therein, as to which such
counsel need express no belief) each part of the Registration
Statement (including the documents incorporated by reference
therein) and the prospectus included therein when such part of
the Registration Statement became effective did not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, and that the
Prospectus, as amended or supplemented, if applicable, does
not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
(ix) the Company is not, nor with the giving of
notice or lapse of time or both would not be, in violation of
or in default under, its Certificate of Incorporation or
By-Laws or any material indenture, mortgage, deed of trust,
loan agreement or other material agreement or instrument known
to such counsel to which the Company is a party or by which it
or any of its properties is bound, except for violations and
defaults which individually and in the aggregate are not
material to the Company and its consolidated subsidiaries
taken as a whole; and the performance by the
18
<PAGE> 19
Company of its obligations under this Agreement and the
consummation of the transactions contemplated herein will not
conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument known to such counsel to
which the Company is a party or by which the Company is bound
or to which any of the property or assets of the Company is
subject, nor will any such action result in any violation of
the provisions of the Certificate of Incorporation or the
By-Laws of the Company or any applicable law or statute or any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company, its subsidiaries
or any of their respective properties;
(x) no consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required for the consummation
by the Company of the transactions contemplated by this
Agreement, except such consents, approvals, authorizations,
orders, registrations or qualifications as have been obtained
under the Securities Act and as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(xi) the documents incorporated by reference in
the Prospectus or any further amendment or supplement thereto
made by the Company prior to the Closing Date or the
Additional Closing Date, as the case may be (except for the
financial statements and related schedules therein, as to
which such counsel need express no opinion), when they were
filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder; and
(xii) the Rights Agreement has been duly
authorized, executed and delivered by the Company; the Rights
have been duly authorized and issued by the Company, and the
Series A Junior Participating Preferred Stock has been duly
authorized by the Company and validly reserved for issuance
upon the exercise of the Rights and, when issued upon such
exercise in accordance with the terms of the Rights Agreement,
will be validly issued, fully paid and non-assessable.
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<PAGE> 20
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the
United States and the States of Delaware and Massachusetts, to the
extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (reasonably
satisfactory to Underwriters' counsel) of other counsel reasonably
acceptable to the Underwriters' counsel, familiar with the applicable
laws and (B) as to matters of fact, to the extent such counsel deems
proper, on certificates of responsible officers of the Company and
certificates or other written statements of officials of jurisdictions
having custody of documents respecting the corporate existence or good
standing of the Company. The opinion of such counsel for the Company
shall state that the opinion of any such other counsel upon which they
relied is in form satisfactory to such counsel and, in such counsel's
opinion, the Underwriters and they are justified in relying thereon.
With respect to the matters to be covered in Section 6(f)(viii) and
Section 6(f)(xi) above counsel may state his opinion and belief is
based upon his participation in the preparation of the Registration
Statement and the Prospectus and any amendment or supplement thereto
and review and discussion of the contents thereof but is without
independent check or verification except as specified.
The opinion described above shall be rendered to the
Underwriters at the request of the Company and shall so state therein.
(g) Simpson Thacher & Bartlett, counsel for the Selling
Stockholders, shall have furnished to the Representatives their written
opinion, dated the Closing Date, or the Additional Closing Date, as the
case may be, in form and substance satisfactory to the Representatives,
to the effect that:
(i) this Agreement has been duly authorized,
executed and delivered by or on behalf of each of the Selling
Stockholders; and
(ii) each Selling Stockholder is the sole record
owner of all of the Underwritten Shares or Option Shares then
to be sold by such Selling Stockholder, each Selling
Stockholder has full partnership power, right and authority to
sell the applicable Shares; upon payment for and delivery of
the Shares in accordance with this Agreement, the Underwriters
will acquire all of the rights of each Selling Stockholder in
the applicable Shares; and (assuming that the Underwriters do
not have notice of any adverse claim to the Shares) the
Underwriters will acquire their interest in such
20
<PAGE> 21
Shares free of any adverse claim (within the meaning of the
Uniform Commercial Code as in effect in the State of New
York).
(h) on the date hereof and also on the Closing Date or
Additional Closing Date, as the case may be, KPMG Peat Marwick LLP
shall have furnished to you letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, containing
statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus;
(i) the Representatives shall have received on and as of
the Closing Date or Additional Closing Date, as the case may be, an
opinion of Davis Polk & Wardwell, counsel to the Underwriters, with
respect to the Registration Statement, the Prospectus and other related
matters as the Representatives may reasonably request, and such counsel
shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters; and
(j) on or prior to the Closing Date or Additional Closing
Date, as the case may be, the Company and the Selling Stockholders
shall have furnished to the Representatives such further certificates
and documents as the Representatives shall reasonably request.
7. The Company agrees to indemnify and hold harmless each Selling
Stockholder and each Underwriter and each person, if any, who controls any
Selling Stockholder or any Underwriter within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages and liabilities (including, without limitation,
the legal fees and other expenses incurred in connection with any suit, action
or proceeding or any claim asserted) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein and except in the case of any Selling Stockholder or any person
controlling such Selling Stockholder for the Selling Stockholder Information;
provided that the
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<PAGE> 22
foregoing indemnity with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter (or to the benefit of any person controlling
such Underwriter) from whom the person asserting any such losses, claims,
damages or liabilities purchased Shares if such untrue statement or omission or
alleged untrue statement or omission made in such preliminary prospectus is
eliminated or remedied in the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) and, if
required by law, a copy of the Prospectus (as so amended or supplemented) shall
not have been furnished to such person at or prior to the written confirmation
of the sale of such Shares to such person.
Each of the Selling Stockholders severally in proportion to the number
of Shares to be sold by such Selling Stockholder hereunder agrees to indemnify
and hold harmless the Company and each Underwriter and each person, if any, who
controls the Company or any Underwriter within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to each Underwriter and Selling
Stockholder, but only with reference to the Selling Stockholder Information in
the Registration Statement, the Prospectus, any amendment or supplement thereto,
or any preliminary prospectus; provided that the foregoing indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such Underwriter) from
whom the person asserting any such losses, claims, damages or liabilities
purchased Shares if such untrue statement or omission or alleged untrue
statement or omission made in such preliminary prospectus is eliminated or
remedied in the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and, if required by law, a copy
of the Prospectus (as so amended or supplemented) shall not have been furnished
to such person at or prior to the written confirmation of the sale of such
Shares to such person.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement, each Selling Stockholder and each person who controls the Company or
any Selling Stockholder within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company and the Selling Stockholders to each Underwriter, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by such Underwriter through you expressly for use in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any
preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in
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<PAGE> 23
respect of which indemnity may be sought pursuant to the preceding paragraphs of
this Section 7, such person (the "INDEMNIFIED PERSON") shall promptly notify the
person or persons against whom such indemnity may be sought (each an
"INDEMNIFYING PERSON") in writing, provided that the failure of an Indemnified
Person to give notice as provided herein shall not release the Indemnifying
Person of its obligations under this Section 7 and such Indemnifying Persons,
upon request of the Indemnified Person, shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Persons may designate in such proceeding and shall
pay the fees and expenses of such counsel related to such proceeding. In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person and not the Indemnifying Persons unless (i) the
Indemnifying Persons and the Indemnified Person shall have mutually agreed to
the contrary, (ii) the Indemnifying Persons have failed within a reasonable time
to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both an Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that no
Indemnifying Person shall, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are
incurred. Any such separate firm for the Underwriters and such control persons
of Underwriters shall be designated in writing by Merrill Lynch and any such
separate firm for the Company, its directors, its officers who sign the
Registration Statement and such control persons of the Company shall be
designated in writing by the Company and any such separate firm for the Selling
Stockholders shall be designated in writing by the Selling Stockholders. No
Indemnifying Person shall be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, each Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment.
If the indemnification provided for in the first four paragraphs of
this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on
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<PAGE> 24
the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Selling Stockholders and
the total underwriting discounts and the commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Prospectus bear to the aggregate public offering price of the Shares. The
relative fault of the Company and the Selling Stockholders on the one hand and
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Selling Stockholders or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 7
were determined by pro rata allocation (even if the Selling Stockholders or the
Underwriters were treated as one entity for such purposes) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Person in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 7, in no event shall an Underwriter be required to contribute any amount
in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to con tribute pursuant to this
Section 7 are several in proportion to the respective number of Shares set forth
opposite their names in Schedule I hereto, and not joint.
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<PAGE> 25
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity, except that the indemnity and
contribution agreements contained in this Section 7 shall supersede the rights
and remedies of the Company and the Selling Stockholders under the Registration
Rights Agreement dated as of September 12, 1996 among such parties solely with
respect to the offering of Shares contemplated hereby.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company and the Selling
Stockholders set forth in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any other person controlling the Company or the Selling Stockholders and (iii)
acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or
the obligations of the several Underwriters with respect to the Option Shares)
may be terminated in your absolute discretion, by notice given to the Selling
Stockholders and the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (or, in the case of the Option Shares,
prior to the Additional Closing Date) (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange or the National Association of
Securities Dealers, Inc., (ii) trading of any securities of or guaranteed by the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State or authorities, or
(iv) there shall have occurred any outbreak or escalation of hostilities or any
calamity or crisis in financial markets or elsewhere that, in your reasonable
judgment, is material and adverse and which, in your reasonable judgment, makes
it impracticable to market the Shares being delivered at the Closing Date or the
Additional Closing Date, as the case may be, on the terms and in the manner
contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate
25
<PAGE> 26
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
Underwritten Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 9 by an amount in excess of one-tenth of such
number of Shares without the written consent of such Underwriter. If on the
Closing Date or the Additional Closing Date, as the case may be, any Underwriter
or Underwriters shall fail or refuse to purchase Shares which it or they have
agreed to purchase hereunder on such date, and the aggregate number of Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to you and the Selling Stockholders for the purchase of such Shares
are not made within 36 hours after such default, this Agreement (or the
obligations of the several Underwriters to purchase the Option Shares, as the
case may be) shall terminate without liability on the part of any non-defaulting
Underwriter or the Selling Stockholder. In any such case either you or the
Selling Stockholders shall have the right to postpone the Closing Date (or, in
the case of the Option Shares, the Additional Closing Date), but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company or the
Selling Stockholders to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason any of the Company or the
Selling Stockholders shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Company agrees to reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and expenses of its counsel)
reasonably incurred by the Underwriter in connection with this Agreement or the
offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding
upon the Company, the Selling Stockholders and the Underwriters, any controlling
persons
26
<PAGE> 27
referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person, firm or corporation any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. No purchaser of Shares from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by you
jointly or by Merrill Lynch alone on behalf of the Underwriters, and any such
action taken by you jointly or by Merrill Lynch alone shall be binding upon the
Underwriters. All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Underwriters shall be given
to the Representatives, c/o Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, North Tower, World Financial Center, New York, New York
10281-1209 (telefax: 212-449-1885); Attention: Financial Sponsors Group. Notices
to the Company shall be given to it at The Gillette Company, Prudential Tower
Building, Boston, Massachusetts 02199, (telefax: 617-421-7866); Attention:
General Counsel's Office with a copy to the Secretary's Office. Notices to the
Selling Stockholders shall be given to them at DI Associates LP, KKR Partners
II, L.P. and KKR Associates, c/o Kohlberg Kravis Roberts & Co., 9 West 57th
Street, Suite 4250, New York, New York 10019, (telefax: 212-750-0003);
Attention: Scott Stuart.
13. This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the same
instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF.
27
<PAGE> 28
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
THE GILLETTE COMPANY
By:
----------------------------------
Name:
Title:
Selling Stockholders
DI ASSOCIATES, L.P.
By: KKR Associates, as General Partner
By:
----------------------------------
Name:
Title:
KKR PARTNERS II, L.P.
By: KKR Associates, as General Partner
By:
----------------------------------
Name:
Title:
KKR ASSOCIATES
By:
----------------------------------
Name:
Title:
<PAGE> 29
Accepted: [ ], 1999
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
CREDIT SUISSE FIRST BOSTON
CORPORATION
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO.
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
Acting on behalf of itself and the several
Underwriters named in Schedule I
hereto.
By:
----------------------------------------
Name:
Title: Authorized Signatory
<PAGE> 30
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITER TO BE PURCHASED
----------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..........................................
Credit Suisse First Boston Corporation.........................
Goldman, Sachs & Co............................................
J.P. Morgan Securities Inc.....................................
Morgan Stanley & Co. Incorporated..............................
Salomon Smith Barney Inc.......................................
[other underwriters]
----------
Total.......................................................... 23,088,959
==========
</TABLE>
<PAGE> 31
SCHEDULE II
NUMBER OF NUMBER OF
SELLING STOCKHOLDERS UNDERWRITTEN SHARES OPTION SHARES
- -------------------- ------------------- -------------
DI Associates, L.P.
KKR Partners II, L.P.
KKR Associates
<PAGE> 32
Appendix A
LIST OF SIGNIFICANT SUBSIDIARIES
Braun -- GmbH
Gilfin B.V.
1
<PAGE> 1
EXHIBIT 1.2
THE GILLETTE COMPANY
(a Delaware corporation)
25,654,399 SHARES OF COMMON STOCK, $1.00 PAR VALUE
International Purchase Agreement
[ ], 1999
Merrill Lynch International
Credit Suisse First Boston (Europe) Limited
Goldman Sachs International
J.P. Morgan Securities Ltd.
Morgan Stanley & Co. International Limited
Salomon Brothers International Limited
as Lead Managers of the several Managers
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Ladies and Gentlemen:
Certain stockholders named in Schedule II hereto (the "SELLING
STOCKHOLDERS") of The Gillette Company, a Delaware corporation (the "COMPANY"),
propose to sell to the several Managers listed in Schedule I hereto (the
"MANAGERS"), an aggregate of 2,565,440 shares of Common Stock, par value $1.00
per share, of the Company (the "UNDERWRITTEN SHARES") and, for the sole purpose
of covering over-allotments in connection with the sale of the Underwritten
Shares, at the option of the Managers, up to an additional 384,816 shares of
Common Stock of the Company (the "OPTION SHARES"). The Underwritten Shares and
the Option Shares are herein referred to as the "SHARES". The outstanding shares
of Common Stock of the Company are herein referred to as the "STOCK". The Stock,
including the Shares, has attached thereto rights (the "RIGHTS") to purchase one
ten-thousandth of a share of Series A Junior Participating Preferred Stock for
$225 per share exercisable only upon the occurrence of certain events. The
Rights have been issued pursuant to a Rights
<PAGE> 2
Agreement (the "RIGHTS AGREEMENT") dated as of December 14, 1995 between the
Company and The First National Bank of Boston, as Rights Agent.
It is understood that the Company and the Selling Stockholders are
concurrently entering into an agreement dated the date hereof providing for the
offering by the Selling Stockholders of an aggregate of 23,088,959 shares of
Common Stock (the "U.S. UNDERWRITTEN SHARES") through arrangements with certain
underwriters in the United States and Canada (the "U.S. UNDERWRITERS") for which
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse First Boston
Corporation, Goldman, Sachs & Co., J.P. Morgan Securities Inc., Morgan Stanley &
Co. Incorporated and Salomon Smith Barney Inc. are acting as representative(s)
and the grant by the Selling Stockholders to the U.S. Underwriters, acting
severally and not jointly, of an option to purchase all or any part of the U.S.
Underwriters' pro rata portion of up to 3,463,344 additional shares of Common
Stock solely to cover over-allotments, if any. It is understood that the Selling
Stockholders are not obligated to sell, and the Managers are not obligated to
purchase, any Underwritten Shares unless all of the U.S. Underwritten Shares are
contemporaneously purchased by the U.S. Underwriters.
The Managers and the U.S. Underwriters will concurrently enter into an
Intersyndicate Agreement of even date herewith providing for the coordination of
certain transactions among the Managers and the U.S. Underwriters under the
direction of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (in such capacity, the "GLOBAL COORDINATOR").
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
statement, including a prospectus, relating to the Shares and the attached
Rights. The registration statement as amended at the time when it shall become
effective including information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act, is referred to in this Agreement as the "REGISTRATION
STATEMENT", and the prospectus in the form first used to confirm sales of Shares
is referred to in this Agreement as the "PROSPECTUS". If the Company has filed
an abbreviated registration statement to register additional shares of Stock
pursuant to Rule 462(b) and under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference to the term "Registration Statement" shall be
deemed to include such Rule 462 Registration Statement. Any reference in this
Agreement to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as
of the effective date
2
<PAGE> 3
of the Registration Statement or the date of such preliminary prospectus or the
Prospectus, as the case may be, and any reference to "amend", "amendment" or
"supplement" with respect to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to refer to and include any
documents filed after such date under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "EXCHANGE ACT") that are deemed to be incorporated by
reference therein.
The Company and each of the Selling Stockholders hereby agrees with the
Managers as follows:
1. Each of the Selling Stockholders agrees, severally and not
jointly, to sell the Underwritten Shares to the several Managers as hereinafter
provided, and each Manager, upon the basis of the representations and warranties
herein contained, but subject to the conditions hereinafter stated, agrees to
purchase, severally and not jointly, from each of the Selling Stockholders at a
purchase price per share of $[ ] (the "PURCHASE PRICE") the number of
Underwritten Shares (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying the aggregate number of Underwritten Shares to be sold
by each of the Selling Stockholders as set forth opposite their respective names
in Schedule II hereto by a fraction, the numerator of which is the aggregate
number of Underwritten Shares to be purchased by such Manager as set forth
opposite the name of such Manager in Schedule I hereto and the denominator of
which is the aggregate number of Underwritten Shares to be purchased by all the
Managers from all the Selling Stockholders hereunder.
In addition, each of the Selling Stockholders agrees to, severally and
not jointly, sell the Option Shares to the several Managers as hereinafter
provided, and each Manager on the basis of the representations and warranties
herein contained, but subject to the conditions hereinafter stated, shall have
the option to purchase, severally and not jointly, from each of the Selling
Stockholders at the Purchase Price that portion of the number of Option Shares
set forth opposite such Selling Stockholder's name in Schedule II hereto as to
which such election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying the number of Option
Shares set forth opposite such Selling Stockholder's name in Schedule II by a
fraction, the numerator of which is the product of (i) the aggregate number of
Underwritten Shares to be purchased by such Manager as set forth opposite the
name of such Manager in Schedule I hereto and (ii) the total number of Option
Shares to be purchased by the Managers and the denominator of which is the
product of (i) the number of Underwritten Shares to be purchased by all the
Managers from all the Selling Stockholders hereunder and (ii) the total number
of Option Shares set forth in Schedule II. Any such
3
<PAGE> 4
election to purchase Option Shares shall be made in proportion to the number of
Option Shares to be sold by each Selling Stockholder.
The Managers may exercise the option to purchase the Option Shares at
any time from time to time on or before the thirtieth day following the date of
this Agreement, by written notice from the Lead Managers to the Selling
Stockholders and the Company. Such notice shall set forth the aggregate number
of Option Shares as to which the option is being exercised and the date and time
when the Option Shares are to be delivered and paid for which may be the same
date and time as the Closing Date (as hereinafter defined) but shall not be
earlier than the Closing Date nor later than the tenth full Business Day (as
hereinafter defined) after the date of such notice (unless such time and date
are postponed in accordance with the provisions of Section 9 hereof). Any such
notice shall be given at least two Business Days prior to the date and time of
delivery specified therein.
2. The Company and the Selling Stockholders understand that the
Managers intend (i) to make a public offering of the Shares as soon after (A)
the Registration Statement has become effective and (B) the parties hereto have
executed and delivered this Agreement, as in the judgment of the Lead Managers
is advisable and (ii) initially to offer the Shares upon the terms set forth in
the Prospectus.
3. Payment for the Shares shall be made by wire transfer in
immediately available funds to the account specified by the Selling
Stockholders, to you in the case of the Underwritten Shares, at 9:00 A.M., New
York City time, on [ ], 1999, or at such other time on the same or such other
date, not later than the fifth Business Day thereafter, as you and the Selling
Stockholders may agree upon in writing or, in the case of the Option Shares, on
the date and time specified by you in the written notice of the Managers'
election to purchase such Option Shares. The time and date of such payment for
the Underwritten Shares are referred to herein as the "CLOSING DATE" and the
time and date for such payment for the Option Shares, if other than the Closing
Date, are herein referred to as the "ADDITIONAL CLOSING DATE". As used herein,
the term "BUSINESS DAY" means any day other than a day on which banks are
permitted or required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
you for the respective accounts of the several Managers of the Shares to be
purchased on such date registered in such names and in such denominations as you
shall request in writing not later than two full Business Days prior to the
Closing Date or the Additional Closing Date, as the case may be, with any
transfer taxes
4
<PAGE> 5
payable in connection with the transfer to the Managers of the Shares duly paid
by the Selling Stockholders. The certificates for the Shares will be made
available for inspection and packaging by you at the office of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017 not later than 1:00
P.M., New York City time, on the Business Day prior to the Closing Date or the
Additional Closing Date, as the case may be.
4. (a) The Company represents and warrants to each Manager and
the Selling Stockholders that:
(i) no stop order suspending the effectiveness
of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the
knowledge of the Company, threatened by the Commission; and
the Registration Statement and Prospectus (as amended or
supplemented if the Company shall have furnished any
amendments or supplements thereto) comply, or will comply, as
the case may be, in all material respects with the Securities
Act and do not and will not, as of the applicable effective
date as to the Registration Statement and any amendment
thereto and as of the date of the Prospectus and any amendment
or supplement thereto, contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading, and the Prospectus, as amended or
supplemented, if applicable, at the Closing Date or Additional
Closing Date, as the case may be, will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
except that the foregoing representations and warranties shall
not apply to statements or omissions in the Registration
Statement and any amendment thereto or the Prospectus and any
amendment or supplement thereto made in reliance upon and in
conformity with information relating to (x) any Manager
furnished to the Company in writing by such Manager through
you expressly for use therein and (y) any Selling Stockholder
furnished to the Company in writing by such Selling
Stockholder expressly for use therein (the "SELLING
STOCKHOLDER INFORMATION");
(ii) the documents incorporated by reference in
the Prospectus, when they became effective or were filed with
the Commission, as the case may be, conformed in all material
respects to the requirements of the Exchange Act, and none of
such documents when they became effective or were filed with
the
5
<PAGE> 6
Commission contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; and any further documents so
filed and incorporated by reference in the Prospectus, when
such documents are filed with the Commission, will conform in
all material respects to the requirements of the Exchange Act,
and will not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading;
(iii) except as noted therein, the consolidated
financial statements, and the related notes thereto,
incorporated by reference in the Registration Statement and
the Prospectus present fairly in all material respects the
consolidated financial position of the Company and its
consolidated subsidiaries as of the dates indicated and the
results of their operations and changes in their consolidated
cash flows for the periods specified; and said financial
statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis,
and the supporting schedules incorporated by reference in the
Registration Statement present fairly in all material respects
the information required to be stated therein; and the pro
forma financial information, and the related notes thereto,
incorporated by reference in the Registration Statement and
the Prospectus has been prepared in accordance with the
applicable requirements of the Securities Act and the Exchange
Act, as applicable;
(iv) since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, there has not been any material change in the
capital stock of the Company or long-term debt of the Company
and its consolidated subsidiaries taken as a whole or any
material adverse change, or any known development involving
the reasonable likelihood of a prospective material adverse
change, in the business, operations or financial condition, of
the Company and its consolidated subsidiaries, taken as a
whole, otherwise, in each case, than as set forth or
contemplated in the Prospectus; and except as set forth or
contemplated in the Prospectus neither the Company nor any of
the consolidated subsidiaries listed on Appendix A hereto (the
"SIGNIFICANT SUBSIDIARIES") has entered into any transaction
or agreement (whether or not in the ordinary course of
business) material to the Company and its consolidated
subsidiaries taken as a whole;
6
<PAGE> 7
(v) the Company has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has
been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified
or in good standing would not have a material adverse effect
on the Company and its consolidated subsidiaries, taken as a
whole;
(vi) each of the Company's Significant
Subsidiaries has been duly incorporated and is validly
existing as a corporation under the laws of its jurisdiction
of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as
described in the Prospectus; and, except as set forth in
Exhibit 22 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1998, all the outstanding shares of
capital stock of each Significant Subsidiary of the Company
have been duly authorized and validly issued, are fully-paid
and non-assessable, and (except, in the case of foreign
subsidiaries, for directors' qualifying shares) are owned by
the Company, directly or indirectly, free and clear of all
liens, encumbrances, security interests and claims;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company;
(viii) the Company has an authorized capitalization
as set forth in the Prospectus as of the dates provided
therein and such authorized capital stock conforms as to legal
matters to the description thereof set forth in the
Prospectus, and all of the outstanding shares of capital stock
of the Company (including the Shares) have been duly
authorized and validly issued, are fully-paid and
non-assessable and are not subject to any pre-emptive or
similar rights; and, except as described in or expressly
contemplated by the Prospectus, there are no outstanding
rights (including, without limitation, pre-emptive rights),
warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other
equity interest in the Company or any of its subsidiaries, or
any contract, commitment,
7
<PAGE> 8
agreement, understanding or arrangement of any kind relating
to the issuance of any capital stock of the Company or any
such subsidiary, any such convertible or exchangeable
securities or any such rights, warrants or options;
(ix) the Rights Agreement has been duly
authorized, executed and delivered by the Company; the Rights
have been duly authorized and validly issued by the Company;
and the Series A Junior Participating Preferred Stock has been
duly authorized by the Company and validly reserved for
issuance upon the exercise of the Rights and, when issued in
accordance with the terms of the Rights Agreement, will be
validly issued, fully paid and non-assessable;
(x) neither the Company nor any of its
Significant Subsidiaries is, or with the giving of notice or
lapse of time or both would be, in violation of or in default
under, its Certificate of Incorporation or By-Laws or any
material indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which the Company
or any of its Significant Subsidiaries is a party or by which
it or any of them or any of their respective properties is
bound, except for violations and defaults which individually
and in the aggregate are not material to the Company and its
consolidated subsidiaries taken as a whole; the performance by
the Company of its obligations under this Agreement and the
consummation of the transactions contemplated herein will not
conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company or any
of its Significant Subsidiaries is a party or by which the
Company or any of its Significant Subsidiaries is bound or to
which any of the property or assets of the Company or any of
its Significant Subsidiaries is subject, nor will any such
action result in any violation of the provisions of the
Certificate of Incorporation or the By-Laws of the Company or
any applicable law or statute or any order, rule or regulation
of any court or governmental agency or body having
jurisdiction over the Company, its Significant Subsidiaries or
any of their respective properties; and no consent, approval,
authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for
the consummation by the Company of the transactions
contemplated by this Agreement, except such consents,
approvals, authoriza-
8
<PAGE> 9
tions, orders, registrations or qualifications as have been
obtained under the Securities Act and as may be required under
state securities or Blue Sky Laws in connection with the
purchase and distribution of the Shares by the Managers;
(xi) other than as set forth or contemplated in
the Prospectus, there are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened to
which the Company or any of its Significant Subsidiaries is or
may be a party or to which any property of the Company or any
of its Significant Subsidiaries is or may be the subject
which, if determined adversely to the Company or any of its
Significant Subsidiaries, could individually or in the
aggregate reasonably be expected to have a material adverse
effect on the business, operations, or financial condition of
the Company and its consolidated subsidiaries, taken as a
whole, and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others; and there are no
contracts or other documents that are required to be described
in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described
or filed as required;
(xii) no person has the right to require the
Company to register any securities for offering and sale under
the Securities Act by reason of the filing of the Registration
Statement with the Commission or the sale of the Shares by the
Selling Stockholders pursuant hereto; and
(xiii) the Company has not taken nor will it take,
directly or indirectly, any action designed to, or that might
be reasonably expected to, cause or result in stabilization or
manipulation of the price of the stock.
(b) Each of the Selling Stockholders severally represents
and warrants to, and agrees with, each of the Managers and the Company
that:
(i) all consents, approvals, authorizations and
orders necessary for the execution and delivery by such
Selling Stockholder of this Agreement and for the sale and
delivery of the Shares to be sold by such Selling Stockholder
hereunder, have been obtained; and such Selling Stockholder
has full right, power and authority to enter into this
Agreement and to sell, assign,
9
<PAGE> 10
transfer and deliver the Shares to be sold by such Selling
Stockholder hereunder; this Agreement has been duly
authorized, executed and delivered by such Selling
Stockholder;
(ii) the sale of the Shares to be sold by such
Selling Stockholder hereunder and the compliance by such
Selling Stockholder with all of the provisions of this
Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute
a default under, any statute, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to
which such Selling Stockholder is a party or by which such
Selling Stockholder is bound or to which any of the property
or assets of such Selling Stockholder is subject, nor will
such action result in any violation of the Partnership
Agreement of such Selling Stockholder or any statute or any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over such Selling Stockholder or
the property of such Selling Stockholder;
(iii) such Selling Stockholder has good and valid
title to the Shares to be sold at the Closing Date or
Additional Closing Date, as the case may be, by such Selling
Stockholder hereunder, free and clear of all liens,
encumbrances, equities or adverse claims other than those
created pursuant to this Agreement; such Selling Stockholder
will have, immediately prior to the Closing Date or Additional
Closing Date, as the case may be, good and valid title to the
Shares to be sold at the Closing Date or Additional Closing
Date, as the case may be, by such Selling Stockholder, free
and clear of all liens, encumbrances, equities or adverse
claims other than those created pursuant to this Agreement;
and, upon delivery of the certificates representing such
Shares and payment therefor pursuant hereto, good and valid
title to such Shares, free and clear of all liens,
encumbrances, equities or adverse claims, will pass to the
several Managers;
(iv) such Selling Stockholder has not taken and
will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably
be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares; and
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<PAGE> 11
(v) the Selling Stockholder Information does not
and will not, as of the applicable effective date of the
Registration Statement and any amendment thereto, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Selling
Stockholder Information included in the Prospectus, as amended
or supplemented, if applicable, furnished to the Company in
writing by such Selling Stockholder expressly for use therein
at the Closing Date or Additional Closing Date, as the case
may be, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
Each of the Selling Stockholders specifically agrees that the
obligations of such Selling Stockholder hereunder shall not be terminated by
operation of law, whether by dissolution of its partnership, or by the
occurrence of any other event. If any such partnership should be dissolved, or
if any other such event should occur, before the delivery of the Shares by it
hereunder, certificates representing such Shares shall be delivered by or on
behalf of such Selling Stockholder in accordance with the terms and conditions
of this Agreement.
5. (a) The Company covenants and agrees with each of the several
Managers as follows:
(i) to use its reasonable efforts to cause the
Registration Statement to become effective at the earliest
possible time and, if required, to file the final Prospectus
with the Commission within the time periods specified by Rule
424(b) and Rule 430A under the Securities Act and to file
promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Shares; and to
furnish copies of the Prospectus to the Managers in New York
City prior to 10:00 A.M., New York City time, on the Business
Day next succeeding the date of this Agreement in such
quantities as the Lead Managers may reasonably request;
(ii) to deliver, at the expense of the Company,
to you five copies of the Registration Statement (as
originally filed) and each amendment thereto, in each case
including one signed copy and all
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<PAGE> 12
exhibits and documents incorporated by reference therein and,
during the period mentioned in Section 5(a)(v) below, to each
of the Lead Managers as many copies of the Prospectus
(including all amendments and supplements thereto) and
documents incorporated by reference therein as you may
reasonably request;
(iii) during the period mentioned in Section
5(a)(v) below, before filing any amendment or supplement to
the Registration Statement or the Prospectus, whether before
or after the time the Registration Statement becomes
effective, to furnish to you a copy of the proposed amendment
or supplement for review and not to file any such proposed
amendment or supplement to which the Global Coordinator
reasonably objects;
(iv) during the period mentioned in Section
5(a)(v) below, to advise you promptly, and to confirm such
advice in writing (A) when the Registration Statement has
become effective, (B) when any amendment to the Registration
Statement has been filed or becomes effective, (C) when any
supplement to the Prospectus or any amended Prospectus has
been filed and to furnish you with copies thereof, (D) of any
request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the
Prospectus or for any additional information, (E) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus
or the Prospectus or the initiation or threatening of any
proceeding for that purpose, and (F) of the receipt by the
Company of any notification with respect to any suspension of
the qualification of the Shares for offer and sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose; and to use its best efforts to
prevent the issuance of any such stop order, or of any order
preventing or suspending the use of any preliminary prospectus
or the Prospectus, or of any order suspending any such
qualification of the Shares, or notification of any such order
thereof and, if issued, to obtain as soon as possible the
withdrawal thereof;
(v) if, during such period of time after the
first date of the public offering of the Shares as in the
opinion of counsel for the Managers a prospectus relating to
the Shares is required by law to be delivered in connection
with sales by the Managers or any dealer, any event shall
occur as a result of which it is necessary to amend or
supplement the Prospectus in order to make the
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<PAGE> 13
statements therein, in light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if
it is necessary to amend or supplement the Prospectus to
comply with law, forthwith to prepare and furnish, at the
expense of the Company, to the Managers and to the dealers
(whose names and addresses you will furnish to the Company) to
which Shares may have been sold by you on behalf of the
Managers and to any other dealers upon request, such
amendments or supplements to the Prospectus as may be
necessary so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus will comply with law;
provided that the preparation and furnishing of any such
amendment or supplement shall be at the expense of the
Managers if such amendment or supplement is required more than
90 days after the first date of public offering of the Shares;
(vi) to use reasonable efforts to qualify the
Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions as you shall reasonably request and
to continue such qualification in effect so long as reasonably
required for distribution of the Shares; provided that the
Company shall not be required to file a general consent to
service of process in any jurisdiction;
(vii) to make generally available to its security
holders and to you as soon as practicable an earnings
statement covering a period of at least twelve months
beginning with the first fiscal quarter of the Company
occurring after the effective date of the Registration
Statement, which shall satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 of the Commission
promulgated thereunder;
(viii) for a period of ten years after the date
hereof, to furnish to you copies of all reports or other
communications (financial or other) furnished to holders of
the Shares, and copies of any reports and financial statements
furnished to or filed with the Commission or any national
securities exchange;
(ix) for a period of 90 days after the date of
the initial public offering of the Shares not to (A) sell,
pledge, assign or transfer or dispose of any equity securities
of the Company or any option, right, warrant or contract to
purchase any equity securities
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<PAGE> 14
of the Company or any securities convertible into or
exercisable or exchangeable for any equity security of the
Company or (B) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic
consequences of ownership of the Stock, whether any such
transaction described in clause (A) or (B) above is to be
settled by delivery of Stock or such other securities, in cash
or otherwise without the prior written consent of the Global
Coordinator, other than (u) any issuances of Stock, options,
phantom stock or other securities or rights pursuant to any
employee or director compensation, option, savings, benefit or
other plan of the Company, (v) hedging transactions and
programs in connection with any such plan, (w) any issuances
upon exercise, conversion or exchange of any securities or
obligations outstanding on the date of this Agreement, (x) any
issuances of equity securities as consideration for an
acquisition, (y) and purchases of stock or uses of put options
or other derivative securities pursuant to any previously
announced stock repurchase program and (z) any issuances of
Stock, and securities or agreements with respect thereto, in
the aggregate not greater than 2,000,000 shares of Stock;
(x) to pay or cause to be paid all costs and
expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the
foregoing, all costs and expenses (A) incident to the
preparation, registration, execution and delivery of the
Shares (other than transfer taxes) and the transfer of shares
of Common Stock between the Managers and the U.S.
Underwriters, (B) incident to the preparation, printing and
filing under the Securities Act of the Registration Statement,
the Prospectus and any preliminary prospectus (including in
each case all exhibits, amendments and supplements thereto),
(C) incurred in connection with the registration or
qualification of the Shares under the laws of such
jurisdictions as you may designate (including reasonable fees
of counsel for the Managers and its disbursements), (D)
related to the filing with, and clearance of the offering by,
the National Association of Securities Dealers, Inc., (E) in
connection with the printing (including word processing and
duplication costs) and delivery of this Agreement, the
Preliminary and Supplemental Blue Sky Memoranda and the
furnishing to the Managers and dealers of copies of the
Registration Statement and the Prospectus, including mailing
and shipping, as herein provided, (F) any expenses incurred by
the Company in connection with a "road show" presentation to
potential investors, (G) the cost of
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<PAGE> 15
preparing stock certificates and (H) the cost and charges of
any transfer agent and any registrar.
(b) Each of the Selling Stockholders covenants and agrees
with each of the several Managers as follows:
(i) for a period of 90 days after the date of
the initial public offering of the Shares not to (A) sell,
pledge, assign or transfer or dispose of any equity security
of the Company or any option, right, warrant or contract to
purchase any equity security of the Company or any securities
convertible into or exercisable or exchangeable for any equity
security of the Company or (B) enter into any swap or other
agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Stock, whether any
such transaction described in clause (A) or (B) above is to be
settled by delivery of Stock or such other securities, in cash
or otherwise or (C) make any written demand for the
registration of any shares of Stock or any security
convertible into or exercisable or exchangeable for Stock
without the prior written consent of the Global Coordinator or
publicly announce an intention to do so, in each case other
than (x) the Shares to be sold by such Selling Stockholder
hereunder (y) distribution of Stock by the Selling
Stockholders to their respective partners and (z) donations of
Stock to charitable organizations provided that, in the case
of clauses (y) and (z) the recipient of such Stock agrees to
be bound by the foregoing lock-up (including the exceptions
set forth therein); and
(ii) to pay or cause to be paid all taxes, if
any, on the transfer and sale of the Shares being sold by such
Selling Stockholder.
6. The several obligations of the Managers hereunder to purchase
the Shares on the Closing Date or the Additional Closing Date, as the case may
be, are subject to the performance by the Company and each of the Selling
Stockholders of their respective obligations hereunder and to the following
additional conditions:
(a) the Registration Statement shall have become
effective (or if a post-effective amendment is required to be filed
under the Securities Act, such post-effective amendment shall have
become effective) not later than 5:00 P.M., New York City time, on the
date hereof; and no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment shall be in
effect, and no proceedings for such
15
<PAGE> 16
purpose shall be pending before or threatened by the Commission; the
Prospectus shall have been filed with the Commission pursuant to Rule
424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Securities Act and in accordance
with Section 5(a)(i) hereof; and all requests for additional
information shall have been complied with to your satisfaction;
(b) the respective representations and warranties of the
Company and the Selling Stockholders contained herein are true and
correct on and as of the Closing Date or the Additional Closing Date,
as the case may be, as if made on and as of the Closing Date or the
Additional Closing Date, as the case may be, and each of the Company
and the Selling Stockholders shall have complied with all agreements
and all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date or the Additional Closing Date, as the
case may be;
(c) subsequent to the execution and delivery of this
Agreement and prior to the Closing Date or the Additional Closing Date,
as the case may be, there shall not have occurred any downgrading, nor
shall any notice have been given of (i) any downgrading, (ii) any
intended or potential downgrading or (iii) any review or possible
change that is with negative implications, in the rating accorded any
securities of or guaranteed by the Company by any "nationally
recognized statistical rating organization", as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is
given in the Prospectus there shall not have been any material change
in the capital stock of the Company or long-term debt of the Company
and its consolidated subsidiaries taken as a whole or any material
adverse change, or any known development involving the reasonable
likelihood of a prospective material adverse change, in the business,
operations or financial condition of the Company and its consolidated
subsidiaries, taken as a whole, otherwise, in each case, than as set
forth or contemplated in the Prospectus, the effect of which in your
reasonable judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares on the Closing
Date or the Additional Closing Date, as the case may be, on the terms
and in the manner contemplated in the Prospectus;
(e) you shall have received on and as of the Closing Date
or the Additional Closing Date, as the case may be, (i) a certificate
of an executive officer of the Company satisfactory to you to the
effect set forth
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<PAGE> 17
in Sections 6(a), 6(b) and 6(c) (with respect to the respective
representations, warranties, agreements and conditions of the Company)
and to the further effect that there has not occurred any material
adverse change, or any known development involving the reasonable
likelihood of a prospective material adverse change, in the business,
operations or financial condition, of the Company and its consolidated
subsidiaries, taken as a whole, from that set forth or contemplated in
the Prospectus and (ii) a certificate of the Selling Stockholders,
satisfactory to you to the effect set forth in Section 6(b) (with
respect to the respective representations, warranties, agreements and
conditions of the Selling Stockholders);
(f) James P. Connolly, Esq., Acting General Counsel of
the Company, shall have furnished to you his written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, in
form and substance satisfactory to you, to the effect that:
(i) the Company has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation, with corporate
power and authority to own its properties and conduct its
business as described in the Prospectus as then amended or
supplemented;
(ii) the Company has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business,
so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have
a material adverse effect on the Company and its subsidiaries
taken as a whole;
(iii) other than as set forth or contemplated in
the Prospectus, there are no legal or governmental proceedings
pending or, to the best of such counsel's knowledge,
threatened to which the Company is or may be a party or to
which any property of the Company is or may be the subject
which, if determined adversely to the Company, could
individually or in the aggregate reasonably be expected to
have a material adverse effect on the business, operations or
financial condition of the Company and its consolidated
subsidiaries taken as a whole; to the best of such counsel's
knowledge, no such proceedings are contemplated by
governmental authorities or threatened by others; and such
counsel does not know of any contracts or other documents of a
character
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<PAGE> 18
required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required;
(iv) this Agreement has been duly authorized,
executed and delivered by the Company;
(v) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(vi) the outstanding shares of capital stock of
the Company (including the Shares) have been duly authorized
and are validly issued, fully paid and non-assessable;
(vii) the statements in the Prospectus under
"Description of Capital Stock", in the Prospectus incorporated
by reference from Item 3 of Part 1 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 and
in the Registration Statement in Item 15, insofar as such
statements constitute a summary of the terms of the Stock,
legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such
terms, legal matters, documents or proceedings;
(viii) such counsel is of the opinion that the
Registration Statement and the Prospectus and any amendments
and supplements thereto (except for the financial statements
and related schedules therein, as to which such counsel need
express no opinion) complied as to form when filed with the
Commission in all material respects with the requirements of
the Securities Act and believes that (except for the financial
statements and related schedules therein, as to which such
counsel need express no belief) each part of the Registration
Statement (including the documents incorporated by reference
therein) and the prospectus included therein when such part of
the Registration Statement became effective did not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, and that the
Prospectus, as amended or supplemented, if applicable, does
not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements therein, in
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<PAGE> 19
the light of the circumstances under which they were made, not
misleading;
(ix) the Company is not, nor with the giving of
notice or lapse of time or both would not be, in violation of
or in default under, its Certificate of Incorporation or
By-Laws or any material indenture, mortgage, deed of trust,
loan agreement or other material agreement or instrument known
to such counsel to which the Company is a party or by which it
or any of its properties is bound, except for violations and
defaults which individually and in the aggregate are not
material to the Company and its consolidated subsidiaries
taken as a whole; and the performance by the Company of its
obligations under this Agreement and the consummation of the
transactions contemplated herein will not conflict with or
result in a breach of any of the terms or provisions of, or
constitute a default under, any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or
instrument known to such counsel to which the Company is a
party or by which the Company is bound or to which any of the
property or assets of the Company is subject, nor will any
such action result in any violation of the provisions of the
Certificate of Incorporation or the By-Laws of the Company or
any applicable law or statute or any order, rule or regulation
of any court or governmental agency or body having
jurisdiction over the Company, its subsidiaries or any of
their respective properties;
(x) no consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required for the consummation
by the Company of the transactions contemplated by this
Agreement, except such consents, approvals, authorizations,
orders, registrations or qualifications as have been obtained
under the Securities Act and as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Managers;
(xi) the documents incorporated by reference in
the Prospectus or any further amendment or supplement thereto
made by the Company prior to the Closing Date or the
Additional Closing Date, as the case may be (except for the
financial statements and related schedules therein, as to
which such counsel need express no opinion), when they were
filed with the Commission, complied as to form in all material
respects with the
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<PAGE> 20
requirements of the Exchange Act and the rules and regulations
of the Commission thereunder; and
(xii) the Rights Agreement has been duly
authorized, executed and delivered by the Company; the Rights
have been duly authorized and issued by the Company, and the
Series A Junior Participating Preferred Stock has been duly
authorized by the Company and validly reserved for issuance
upon the exercise of the Rights and, when issued upon such
exercise in accordance with the terms of the Rights Agreement,
will be validly issued, fully paid and non-assessable.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the
United States and the States of Delaware and Massachusetts, to the
extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (reasonably
satisfactory to Managers' counsel) of other counsel reasonably
acceptable to the Managers' counsel, familiar with the applicable laws
and (B) as to matters of fact, to the extent such counsel deems proper,
on certificates of responsible officers of the Company and certificates
or other written statements of officials of jurisdictions having
custody of documents respecting the corporate existence or good
standing of the Company. The opinion of such counsel for the Company
shall state that the opinion of any such other counsel upon which they
relied is in form satisfactory to such counsel and, in such counsel's
opinion, the Managers and they are justified in relying thereon. With
respect to the matters to be covered in Section 6(f)(viii) and Section
6(f)(xi) above counsel may state his opinion and belief is based upon
his participation in the preparation of the Registration Statement and
the Prospectus and any amendment or supplement thereto and review and
discussion of the contents thereof but is without independent check or
verification except as specified.
The opinion described above shall be rendered to the Managers
at the request of the Company and shall so state therein.
(g) Simpson Thacher & Bartlett, counsel for the Selling
Stockholders, shall have furnished to the Managers their written
opinion, dated the Closing Date, or the Additional Closing Date, as the
case may be, in form and substance satisfactory to the Managers, to the
effect that:
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<PAGE> 21
(i) this Agreement has been duly authorized,
executed and delivered by or on behalf of each of the Selling
Stockholders; and
(ii) each Selling Stockholder is the sole record
owner of all of the Underwritten Shares or Option Shares then
to be sold by such Selling Stockholder, each Selling
Stockholder has full partnership power, right and authority to
sell the applicable Shares; upon payment for and delivery of
the Shares in accordance with this Agreement, the Managers
will acquire all of the rights of each Selling Stockholder in
the applicable Shares; and (assuming that the Managers do not
have notice of any adverse claim to the Shares) the Managers
will acquire their interest in such Shares free of any adverse
claim (within the meaning of the Uniform Commercial Code as in
effect in the State of New York).
(h) on the date hereof and also on the Closing Date or
Additional Closing Date, as the case may be, KPMG Peat Marwick LLP
shall have furnished to you letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, containing
statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus;
(i) the Managers shall have received on and as of the
Closing Date or Additional Closing Date, as the case may be, an opinion
of Davis Polk & Wardwell, counsel to the Managers, with respect to the
Registration Statement, the Prospectus and other related matters as
the Managers may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters; and
(j) on or prior to the Closing Date or Additional Closing
Date, as the case may be, the Company and the Selling Stockholders
shall have furnished to the Lead Managers such further certificates and
documents as the Lead Managers shall reasonably request.
7. The Company agrees to indemnify and hold harmless each Selling
Stockholder and each Manager and each person, if any, who controls any Selling
Stockholder or any Manager within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, the
legal fees
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<PAGE> 22
and other expenses incurred in connection with any suit, action or proceeding or
any claim asserted) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Manager furnished to the Company in
writing by such Manager through you expressly for use therein and except in the
case of any Selling Stockholder or any person controlling such Selling
Stockholder for the Selling Stockholder Information; provided that the foregoing
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Manager (or to the benefit of any person controlling such
Manager) from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares if such untrue statement or omission or alleged
untrue statement or omission made in such preliminary prospectus is eliminated
or remedied in the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) and, if required by law, a
copy of the Prospectus (as so amended or supplemented) shall not have been
furnished to such person at or prior to the written confirmation of the sale of
such Shares to such person.
Each of the Selling Stockholders severally in proportion to the number
of Shares to be sold by such Selling Stockholder hereunder agrees to indemnify
and hold harmless the Company and each Manager and each person, if any, who
controls the Company or any Manager within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to each Manager and Selling Stockholder,
but only with reference to the Selling Stockholder Information in the
Registration Statement, the Prospectus, any amendment or supplement thereto, or
any preliminary prospectus; provided that the foregoing indemnity with respect
to any preliminary prospectus shall not inure to the benefit of any Manager (or
to the benefit of any person controlling such Manager) from whom the person
asserting any such losses, claims, damages or liabilities purchased Shares if
such untrue statement or omission or alleged untrue statement or omission made
in such preliminary prospectus is eliminated or remedied in the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) and, if required by law, a copy of the Prospectus (as so
amended or supplemented) shall not have been furnished to such person at or
prior to the written confirmation of the sale of such Shares to such person.
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Each Manager agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement, each Selling Stockholder and each person who controls the Company or
any Selling Stockholder within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company and the Selling Stockholders to each Manager, but only with
reference to information relating to such Manager furnished to the Company in
writing by such Manager through you expressly for use in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any
preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to the preceding
paragraphs of this Section 7, such person (the "INDEMNIFIED PERSON") shall
promptly notify the person or persons against whom such indemnity may be sought
(each an "INDEMNIFYING PERSON") in writing, provided that the failure of an
Indemnified Person to give notice as provided herein shall not release the
Indemnifying Person of its obligations under this Section 7 and such
Indemnifying Persons, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Persons may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person and not the Indemnifying Persons unless
(i) the Indemnifying Persons and the Indemnified Person shall have mutually
agreed to the contrary, (ii) the Indemnifying Persons have failed within a
reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both an Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that no Indemnifying Person shall, in connection with any proceeding
or related proceeding in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Indemnified Persons, and that all such fees and expenses shall be reimbursed
as they are incurred. Any such separate firm for the Managers and such control
persons of Managers shall be designated in writing by the Global Coordinator and
any such separate firm for the Company, its directors, its officers who sign the
Registration Statement and such control persons of the Company shall be
designated in writing by the Company and any such separate firm for the Selling
Stockholders shall be designated in writing by the Selling Stockholders. No
Indemnifying Person shall be liable for any settlement of any proceeding
23
<PAGE> 24
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, each Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment.
If the indemnification provided for in the first four paragraphs of
this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Managers on the other hand from the offering of the Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Stockholders on the one hand and the Managers on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Managers on the other hand shall be deemed
to be in the same respective proportions as the net proceeds from the offering
(before deducting expenses) received by the Selling Stockholders and the total
underwriting discounts and the commissions received by the Managers, in each
case as set forth in the table on the cover of the Prospectus bear to the
aggregate public offering price of the Shares. The relative fault of the Company
and the Selling Stockholders on the one hand and the Managers on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company and the
Selling Stockholders or by the Managers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Selling Stockholders and the Managers agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Selling Stockholders or the
Managers were treated as one entity for such purposes) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
Indemnified Person as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by
24
<PAGE> 25
such Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall an Manager be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Manager has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Managers' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule I hereto,
and not joint.
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity, except that the indemnity and
contribution agreements contained in this Section 7 shall supersede the rights
and remedies of the Company and the Selling Stockholders under the Registration
Rights Agreement dated as of September 12, 1996 among such parties solely with
respect to the offering of Shares contemplated hereby.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company and the Selling
Stockholders set forth in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Manager or any person controlling any
Manager or by or on behalf of the Company, its officers or directors or any
other person controlling the Company or the Selling Stockholders and (iii)
acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or
the obligations of the several Managers with respect to the Option Shares) may
be terminated in your absolute discretion, by notice given to the Selling
Stockholders and the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (or, in the case of the Option Shares,
prior to the Additional Closing Date) (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange or the National Association of
Securities Dealers, Inc., (ii) trading of any securities of or guaranteed by the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State or authorities, or
(iv) there shall have occurred any outbreak or escalation of hostilities or any
calamity or crisis in
25
<PAGE> 26
financial markets or elsewhere that, in your reasonable judgment, is material
and adverse and which, in your reasonable judgment, makes it impracticable to
market the Shares being delivered at the Closing Date or the Additional Closing
Date, as the case may be, on the terms and in the manner contemplated in the
Prospectus.
9. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may
be, any one or more of the Managers shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Manager or Managers agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of Shares to be purchased on such date, the other Managers shall be obligated
severally in the proportions that the number of Shares set forth opposite their
respective names in Schedule I bears to the aggregate number of Underwritten
Shares set forth opposite the names of all such non-defaulting Managers, or in
such other proportions as you may specify, to purchase the Shares which such
defaulting Manager or Managers agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Shares that any Manager has
agreed to purchase pursuant to Section 1 be increased pursuant to this Section 9
by an amount in excess of one-tenth of such number of Shares without the written
consent of such Manager. If on the Closing Date or the Additional Closing Date,
as the case may be, any Manager or Managers shall fail or refuse to purchase
Shares which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares to be purchased on such date,
and arrangements satisfactory to you and the Selling Stockholders for the
purchase of such Shares are not made within 36 hours after such default, this
Agreement (or the obligations of the several Managers to purchase the Option
Shares, as the case may be) shall terminate without liability on the part of any
non-defaulting Manager or the Selling Stockholder. In any such case either you
or the Selling Stockholders shall have the right to postpone the Closing Date
(or, in the case of the Option Shares, the Additional Closing Date), but in no
event for longer than seven days, in order that the required changes, if any, in
the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Manager from liability in respect of any default of such
Manager under this Agreement.
10. If this Agreement shall be terminated by the Managers, or any
of them, because of any failure or refusal on the part of the Company or the
Selling
26
<PAGE> 27
Stockholders to comply with the terms or to fulfill any of the conditions of
this Agreement, or if for any reason any of the Company or the Selling
Stockholders shall be unable to perform its obligations under this Agreement or
any condition of the Managers' obligations cannot be fulfilled, the Company
agrees to reimburse the Managers or such Managers as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and expenses of its counsel) reasonably incurred by the
Manager in connection with this Agreement or the offering contemplated
hereunder.
11. This Agreement shall inure to the benefit of and be binding
upon the Company, the Selling Stockholders and the Managers, any controlling
persons referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person, firm or corporation any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. No purchaser of Shares from any Manager shall be deemed to be a
successor by reason merely of such purchase.
12. Any action by the Managers hereunder may be taken by you
jointly or by Merrill Lynch International alone on behalf of the Managers, and
any such action taken by you jointly or by Merrill Lynch International alone
shall be binding upon the Managers. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Managers shall be given to the Lead Managers, c/o Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, North Tower, World Financial Center,
New York, New York 10281-1209 (telefax: 212-449-1885); Attention: Financial
Sponsors Group. Notices to the Company shall be given to it at The Gillette
Company, Prudential Tower Building, Boston, Massachusetts 02199, (telefax:
617-421-7866); Attention: General Counsel's Office with a copy to the
Secretary's Office. Notices to the Selling Stockholders shall be given to them
at DI Associates LP, KKR Partners II, L.P. and KKR Associates, c/o Kohlberg
Kravis Roberts & Co., 9 West 57th Street, Suite 4250, New York, New York 10019,
(telefax: 212-750-0003); Attention: Scott Stuart.
13. This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the same
instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF.
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<PAGE> 28
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
THE GILLETTE COMPANY
By:
----------------------------------
Name:
Title:
Selling Stockholders
DI ASSOCIATES, L.P.
By: KKR Associates, as General Partner
By:
----------------------------------
Name:
Title:
KKR PARTNERS II, L.P.
By: KKR Associates, as General Partner
By:
----------------------------------
Name:
Title:
KKR ASSOCIATES
By:
----------------------------------
Name:
Title:
<PAGE> 29
Accepted: [ ], 1999
MERRILL LYNCH INTERNATIONAL
CREDIT SUISSE FIRST
BOSTON (EUROPE) LIMITED
GOLDMAN SACHS
INTERNATIONAL
J.P. MORGAN SECURITIES LTD.
MORGAN STANLEY & CO.
INTERNATIONAL LIMITED
By: MERRILL LYNCH INTERNATIONAL
Acting on behalf of itself and the several
Managers named in Schedule I hereto.
By:
---------------------------------------
Name:
Title: Authorized Signatory
<PAGE> 30
SCHEDULE I
NUMBER OF SHARES
MANAGER TO BE PURCHASED
------- ----------------
Merrill Lynch International......................................
Credit Suisse First Boston (Europe) Limited......................
Goldman Sachs International......................................
J.P. Morgan Securities Ltd.......................................
Morgan Stanley & Co. International Limited.......................
Salomon Brothers International Limited...........................
[other managers]
---------
Total............................................................ 2,565,440
=========
<PAGE> 31
SCHEDULE II
NUMBER OF NUMBER OF
SELLING STOCKHOLDERS UNDERWRITTEN SHARES OPTION SHARES
- -------------------- ------------------- -------------
DI Associates, L.P.
KKR Partners II, L.P.
KKR Associates
<PAGE> 32
Appendix A
LIST OF SIGNIFICANT SUBSIDIARIES
Braun -- GmbH
Gilfin B.V.
1
<PAGE> 1
EXHIBIT 23.1
ACCOUNTANTS' CONSENT
The Board of Directors of The Gillette Company:
We consent to the incorporation herein by reference of our reports dated
February 11, 1999 included in The Gillette Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998 and to the reference to our firm
under the heading "Experts" in the prospectus.
KPMG LLP
Boston, Massachusetts
June 7, 1999
