AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 1995
REGISTRATION NO. 33-57857
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
AMENDMENT N0. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
DURACELL INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3692 06-1240267
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification No.)
incorporation or
organization)
</TABLE>
------------------
BERKSHIRE CORPORATE PARK
BETHEL, CONNECTICUT 06801
(203) 796-4000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
GREGG A. DWYER
SENIOR VICE PRESIDENT AND SECRETARY
DURACELL INTERNATIONAL INC.
BERKSHIRE CORPORATE PARK
BETHEL, CONNECTICUT 06801
(203) 796-4158
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------
COPIES TO:
<TABLE>
<S> <C>
VINCENT PAGANO, JR., ESQ. RAYMOND Y. LIN, ESQ.
SIMPSON THACHER & BARTLETT LATHAM & WATKINS
425 LEXINGTON AVENUE 885 THIRD AVENUE
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10022
(212) 455-2000 (212) 906-1200
</TABLE>
------------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, 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. / /
------------------
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two separate prospectuses. The first
prospectus relates to a public offering in the United States and Canada of an
aggregate of 8,000,000 shares of Common Stock (the "U.S. Offering"). The second
prospectus relates to a concurrent offering outside the United States and Canada
of an aggregate of 2,000,000 shares of Common Stock (the "International
Offering" and, together with the U.S. Offering, the "Offerings"). The
prospectuses for the U.S. Offering and International Offering will be identical
with the exception of the following alternate pages for the International
Offering: a front cover page, a "Certain U.S. Tax Considerations Applicable to
Non-U.S. Holders of the Common Stock" section, an "Underwriting" section and a
back cover page. Such alternate pages appear in this Registration Statement
immediately following the complete prospectus for the U.S. Offering.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MARCH 1, 1995
PROSPECTUS
- ----------
10,000,000 SHARES
DURACELL INTERNATIONAL INC.
COMMON STOCK
-------------------
Of the 10,000,000 shares of Common Stock offered, 8,000,000 shares are being
offered hereby in the United States and Canada and 2,000,000 shares are being
offered in a concurrent international offering outside the United States and
Canada. The price to the public and the aggregate underwriting discount per
share are identical for both Offerings. See "Underwriting."
All 10,000,000 shares of Common Stock offered are being sold by the Selling
Stockholders. None of the officers of the Company are selling any shares in the
Offerings. The Company will not receive any of the proceeds from the sale of the
shares of Common Stock offered hereby. See "Principal and Selling Stockholders."
The Common Stock is listed on the New York Stock Exchange under the symbol
"DUR." On February 28, 1995, the last reported sale price of the Common Stock on
the New York Stock Exchange was $41 5/8.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) SELLING STOCKHOLDERS
<S> <C> <C> <C>
Per Share.................................. $ $ $
Total(2)................................... $ $ $
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities under the Securities Act of
1933. See "Underwriting."
(2) The Selling Stockholders have granted the U.S. Underwriters and the
International Underwriters 30-day options to purchase up to 1,200,000 and
300,000 additional shares of Common Stock, respectively, to cover
over-allotments. If these options are exercised in full, the total Price to
Public, Underwriting Discount, and Proceeds to Selling Stockholders will be
$ , $ and $ , respectively. See "Underwriting."
-------------------
The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares of
Common Stock will be made in New York, New York on or about March , 1995.
-------------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON
SALOMON BROTHERS INC
-------------------
The date of this Prospectus is March , 1995.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). The Registration Statement of which this
Prospectus forms a part, as well as reports, proxy statements and other
information filed by the Company, may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, New York, New York 10048. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Reports and other information concerning the Company can
also be inspected at the office of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect to the Common Stock being offered pursuant to this
Prospectus. This Prospectus does not contain all information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. The Registration Statement may be
inspected and copied at the public reference facilities maintained by the
Commission at the addresses set forth in the preceding paragraph. Statements
contained herein concerning the provisions of any documents are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed with the Commission, are
hereby incorporated by reference:
1. Annual Report on Form 10-K of the Company for the fiscal year ended
June 30, 1994;
2. Quarterly Reports on Form 10-Q of the Company for the quarterly
periods ended October 1, 1994 and December 31, 1994; and
3. The description of Common Stock contained in the Company's
registration statement filed pursuant to the Exchange Act, and any amendment
or report filed for the purpose of updating such description.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the completion of the offerings being made hereby, shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statements as modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any or all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus (other than certain exhibits to
such documents). Requests for such documents may be made by writing Duracell
International Inc., Berkshire Corporate Park, Bethel, Connecticut 06801
(Attention: Vice President, Investor Relations) or by calling (203) 796-4364.
IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OFFERED
HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
THE COMPANY
Duracell International Inc. ("Duracell" or the "Company") is the world's
leading manufacturer and marketer of high-performance alkaline batteries.
DURACELL batteries are sold throughout the world, primarily under the
DURACELL(R) trademark. DURACELL is the best-selling alkaline battery brand in
the world.
Duracell has experienced 21 consecutive years of sales increases, due in
large part to the expanding market for its principal product, alkaline
batteries. In fiscal 1994, Duracell manufactured and sold approximately 2.4
billion alkaline batteries. Management believes that the alkaline segment of the
consumer battery market provides significant future growth opportunities.
Alkaline batteries represent an estimated 33% of the batteries sold in the
consumer markets where Duracell does business, and have steadily increased their
share of the consumer battery market.
Alkaline batteries represent an estimated 85% of the U.S. consumer battery
market. The U.S. alkaline battery market continues to grow as a result of the
large and growing installed base of battery-powered consumer devices and a
continued consumer shift toward alkaline batteries, which provide considerably
longer service life than traditional zinc carbon batteries.
The DURACELL brand is the leading alkaline battery brand in Europe, where
alkaline batteries represent only an estimated 50% of the consumer battery
market in the combined areas of Western and Eastern Europe (excluding Russia).
Management believes that Duracell's strong market share in Western Europe,
combined with the opening of markets in Eastern Europe, where Duracell has
established offices in Poland, Hungary and the Czech Republic, leaves Duracell
well positioned for future growth in Europe.
The Company has experienced significant growth in Other International
Markets, which consist of certain Latin American, South American, Caribbean,
Middle East, African, Pacific Rim and various other developing alkaline markets.
Over the past several years Duracell has also begun expanding into China and
India, two of the world's largest battery markets. These markets, which have a
combined annual consumption of about five billion of mostly poor quality zinc
carbon batteries, also offer potential for additional significant growth. Entry
into these markets has been through majority owned joint ventures which will
build manufacturing facilities with construction to commence prior to the end of
1995. Although Duracell has achieved a high alkaline share in numerous countries
included in Other International Markets, overall alkaline sales as a percentage
of total battery sales (estimated at 15%) is low as compared to zinc carbon
battery sales. Management believes that Duracell is well positioned for
continued growth in Other International Markets and that these markets have
significant potential for continued alkaline penetration.
Unlike most of its competition, Duracell markets consumer batteries
worldwide under a single brand name. Duracell distributes its products through
more than 500,000 retail locations, ranging from mass merchandisers to small
photo outlets, and supports its sales with extensive advertising and sales
promotion campaigns. In addition, Duracell markets lithium batteries, zinc air
batteries, and a range of other specialty batteries, including nickel metal
hydride rechargeable batteries for use in high-power consumer devices such as
laptop computers, cellular phones and other consumer electronic devices.
As part of its growth strategy, Duracell reviews battery related
acquisitions, joint venture opportunities and new battery technologies.
Consistent with this approach, Duracell entered the high power rechargeable
battery market in August 1992 with a Technical Cooperation Agreement with
Toshiba Battery Co., Ltd. and Varta Batterie A.G. for the purpose of engaging in
joint research and development of nickel metal hydride rechargeable cells. The
agreement has a five year term, and each company has the right to use any
technological developments emanating from their joint efforts. In October 1994
affiliates of Duracell, Toshiba and Varta formed a joint venture for the purpose
of manufacturing nickel metal hydride cells in the United States. Duracell's and
Toshiba's affiliates each hold a 40% interest in the joint venture and Varta's
affiliate has a 20% stake. Construction of the manufacturing facility is
3
<PAGE>
expected to begin prior to the end of 1995. Duracell also plans to begin
manufacturing lithium ion high power rechargeable batteries initially in its
Waterbury, Connecticut facility prior to the end of 1996.
Duracell employs approximately 7,700 people, with 3,700 in North America,
2,200 throughout Europe and 1,800 in Other International Markets. Manufacturing
facilities are located in the United States, Canada, Mexico, the United Kingdom
and Belgium.
The Company was organized in 1988 at the direction of the private investment
firm of Kohlberg Kravis Roberts & Co., L.P. ("KKR") to acquire Duracell Inc. and
its battery-related subsidiaries and affiliates. The shares of the Company's
common stock (the "Common Stock") to be sold hereby in the United States and
Canada and international offerings (collectively, the "Offerings") are being
offered by limited partnerships affiliated with KKR (the "Selling
Stockholders"). Following the Offerings, assuming that the Underwriters'
over-allotment options are not exercised, approximately 39% of the Company's
Common Stock outstanding on a fully diluted basis will be held by the Selling
Stockholders.
The principal executive offices of the Company are located at Berkshire
Corporate Park, Bethel, Connecticut 06801; its telephone number is (203)
796-4000. Unless the context indicates otherwise, the terms "Duracell" and the
"Company" also include the subsidiaries of the Company.
PROCEEDS OF OFFERING
The Company will not receive any proceeds from the sale of Common Stock
offered hereby.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is listed and traded on the New York Stock Exchange under
the symbol "DUR". The number of holders of record of Common Stock at January 28,
1995 was 6,085. The Company paid its initial quarterly cash dividend on the
Common Stock in the quarter ended September 1992 at the rate of $.08 per share.
Quarterly dividends were subsequently increased as indicated below. The Company
expects to continue paying cash dividends with a payout ratio in line with
comparable consumer products companies. The future payment of dividends,
however, remains subject to the discretion of the Board of Directors and
dependent upon the Company's results of operations, financial condition, cash
requirements and other relevant factors.
The following table sets forth the high and low sale prices for the Common
Stock for the calendar quarters indicated as reported by the New York Stock
Exchange Composite Tape and dividends paid in such quarters.
<TABLE>
HIGH LOW DIVIDENDS
------------ ------------ ---------
<S> <C> <C> <C>
1995:
First Quarter (through February 28, 1995)......... 43 3/4 36 3/4 $ .26*
1994:
Fourth Quarter.................................... 46 40 1/4 .22
Third Quarter..................................... 47 1/4 39 .22
Second Quarter.................................... 44 1/4 38 5/8 .22
First Quarter..................................... 44 1/4 36 .22
1993:
Fourth Quarter.................................... 37 7/8 32 1/4 .16
Third Quarter..................................... 38 1/8 28 1/2 .16
Second Quarter.................................... 36 27 1/4 .16
First Quarter..................................... 36 1/4 29 7/8 .16
</TABLE>
- ------------
* Payable on March 20, 1995 to holders of record on March 6, 1995.
The last reported sale price of the Common Stock on the New York Stock
Exchange as of a recent date is set forth on the cover page of this Prospectus.
4
<PAGE>
SELECTED FINANCIAL DATA
Set forth below is selected consolidated financial data of the Company at
and for each of the five fiscal years for the period ended June 30, 1994,
derived from financial statements of the Company which were audited by Deloitte
& Touche LLP, independent auditors. Also set forth below is selected financial
data of the Company at and for the six fiscal months ended December 31, 1994 and
December 25, 1993 which were derived from unaudited financial statements, which
financial statements, in the opinion of management, reflect all adjustments
necessary for a fair presentation of such data. The selected financial data for
each of the five fiscal years for the period ended June 30, 1994 should be read
in conjunction with the more detailed financial information included in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1994,
which is incorporated in this Prospectus by reference.
Because battery sales are seasonal, the Company's results for the first and
second quarters of its fiscal year historically have shown greater sales and
profits than those for the second half.
<TABLE>
<CAPTION>
SIX FISCAL MONTHS ENDED FISCAL YEAR ENDED JUNE 30,
---------------------------- ----------------------------------------------
DECEMBER 31, DECEMBER 25,
1994 1993 1994 1993 1992 1991 1990
------------- ------------- ------ ------------- ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue.................................. $ 1,222 $ 1,098 $1,871 $ 1,742 $1,617 $1,524 $1,335
Operating income before restructuring.... 287 255 356 307 285 256 226
Restructuring............................ -- -- -- (65)(1) -- -- --
Operating income......................... 287 255 356 242 285 256 226
Interest expense......................... 14 16 30 46 80 186 204
Income before extraordinary items and
accounting change..................... 164 143 200 124(1)(2) 167 41 6
Net income (loss)........................ 164 143 200 49(1)(3) 128(4) (34)(4) 6
Per share data:
Income before restructuring,
extraordinary items and accounting
change................................ 1.35 1.21 1.68 1.44 1.43 .50 .08
Income before extraordinary items
and accounting change................. 1.35 1.21 1.68 1.04(1) 1.43 .50 .08
Net income (loss)....................... 1.35 1.21 1.68 .41(1)(3) 1.09(4) (.42)(4) .08
Dividends............................... .44 .32 .76 .48 -- -- --
Weighted average shares and share
equivalents outstanding................ 121 119 119 119 117 82 73
<CAPTION>
JUNE 30,
DECEMBER 31, DECEMBER 25, --------------------------------------------------
1994 1993 1994 1993 1992 1991 1990
------------- ------------- ------ ------------- ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets............................. $ 2,454 $ 2,157 $2,286 $ 1,998 $2,157 $2,054 $2,111
Working capital.......................... 462 295 379 203 216 148 141
Total debt............................... 418 452 406 505 734 923 1,449
Stockholders' equity..................... 1,249 1,116 1,154 982 1,008 716 264
</TABLE>
- ------------
(1) During the fiscal year ended June 30, 1993 organizational and manufacturing
restructuring actions were taken designed to capitalize on opportunities to
create a lower cost structure through functional efficiencies and optimal
use of global manufacturing resources. During 1994 the Company began
realizing the benefits of the actions taken. In North America, the Company's
global manufacturing strategy has been implemented, resulting in providing
Latin America and Asia Pacific operating units with lower cost, no added
mercury alkaline batteries. Streamlining in Europe resulted in cost savings
from the integration of sales, marketing, distribution and administrative
functions. The closure of the Brazilian manufacturing facility contributed
to the increased profitability of Other International Markets since lower
cost product is now sourced from the United States and Europe. The cash
outlays and equipment related write-offs related to the restructuring were
substantially complete as of June 30, 1994.
(2) Income before extraordinary items and accounting change for the fiscal year
ended June 30, 1993 was $171 million before the $47 million after-tax impact
of restructuring costs.
(3) Effective in the first quarter of fiscal year 1993, the Company adopted
Statement of Financial Accounting Standards ("FAS") No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions" and recorded a
$75 million or $.63 per share after-tax one-time noncash charge for the
cumulative effect of adoption.
(4) During the fiscal years ended June 30, 1992 and 1991, the Company recorded
extraordinary losses of $39 million, or $.34 per share, and $75 million, or
$.92 per share, respectively, related to the Company's subordinated debt
repurchase program, which was completed in September 1991.
5
<PAGE>
FINANCIAL OVERVIEW
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX FISCAL MONTHS ENDED
---------------------------- FISCAL YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 25, ------------------------------------------
1994 1993 1994 1993 1992 1991 1990
------------- ------------- ------ ------ ------ ------ ------
(UNITS/$ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Alkaline unit volume................................... 1,592 1,416 2,437 2,196 1,978 1,842 1,706
Revenue................................................ $1,222 $1,098 $1,871 $1,742 $1,617 $1,524 $1,335
Cost of products sold.................................. 413 364 647 640 591 585 522
Advertising and promotion.............................. 285 261 428 357 327 305 265
R&D/Engineering........................................ 28 25 52 45 36 31 27
Other operating expenses............................... 209 193 388 393 378 347 295
----- ----- ------ ------ ------ ------ ------
Operating income before restructuring.................. 287 255 356 307(1) 285 256 226
Operating margin before restructuring.................. 23.5% 23.2% 19.0% 17.6(1) 17.6% 16.8% 16.9%
Restructuring.......................................... -- -- -- 65 -- -- --
----- ----- ------ ------ ------ ------ ------
Operating income....................................... 287 255 356 242 285 256 226
Operating margin....................................... 23.5% 23.2% 19.0% 13.9% 17.6% 16.8% 16.9%
Interest expense....................................... 14 16 30 46 80 186 204
Tax expense............................................ 106 92 120 59 44 24 13
Effective tax rate..................................... 39.2% 39.1% 37.5% 32.2% 20.9% 36.4% 69.1%
Income before extraordinary items and accounting
change................................................. 164 143 200 124 167 41 6
Earnings per share before restructuring, extraordinary
items and accounting change........................... 1.35 1.21 1.68 1.44 1.43 .50 .08
</TABLE>
- ------------
(1) Operating income before restructuring was reduced $11 million, and operating
margin before restructuring was reduced 0.7 percentage points from 18.3%,
reflecting the annual operating impact from the adoption of FAS No. 106.
SIX MONTHS ENDED DECEMBER 31, 1994 VERSUS
SIX MONTHS ENDED DECEMBER 25, 1993
Earnings for the six months ended December 31, 1994 were $164 million or
$1.35 per share, representing increases of 14% and 12%, respectively, over the
prior year period. These improvements resulted from double-digit gains in
worldwide alkaline volume (12%), revenue (11%) and operating income (12%).
Operating income increased on the strength of alkaline volume driven revenue
gains and improved operating leverage, partially offset by higher spending on
research and development and geographic expansion. European sales and operating
income benefited from positive currency translation. Partially offsetting the
operating income growth was higher tax expense, which increased $14 million,
primarily as a result of increased pre-tax earnings.
As used in the following tables, "Performance" excludes the impact of
foreign currency translation (i.e., the impact of translating the income
statement from local currency into U.S. dollars).
North America
<TABLE>
<CAPTION>
SIX FISCAL MONTHS ENDED
-----------------------------------------------
% CHANGE
DEC. 31, DEC. 25, -----------------------
1994 1993 REPORTED PERFORMANCE
-------- -------- -------- -----------
(UNITS/$ IN
MILLIONS)
<S> <C> <C> <C> <C>
Alkaline Unit Volume...................................... 828 720 15 15
Revenue................................................... $ 681 $ 610 12 12
Operating Income.......................................... $ 219 $ 194 13 13
</TABLE>
Alkaline volume grew as a result of expanded warehouse club distribution and
increased demand in the mass merchandiser category. Higher sales reflect
alkaline volume growth and increased lithium sales. Operating income rose 13%,
driven by higher sales and improved leveraging of non-advertising and promotion
operating expenses, partially offset by increased investment in advertising and
promotion.
6
<PAGE>
Europe
<TABLE>
<CAPTION>
SIX FISCAL MONTHS ENDED
-----------------------------------------------
% CHANGE
DEC. 31, DEC. 25, -----------------------
1994 1993 REPORTED PERFORMANCE
-------- -------- -------- -----------
(UNITS/$ IN
MILLIONS)
<S> <C> <C> <C> <C>
Alkaline Unit Volume...................................... 398 393 1 1
Revenue................................................... $ 352 $ 338 4 (2)
Operating Income.......................................... $ 83 $ 78 7 1
</TABLE>
Alkaline volume increased 1% as successful promotional activity in Italy,
new distribution into Eastern Europe, and the launch of improved alkaline
batteries and new environmentally friendly packaging in the United Kingdom were
offset by the impact of unfavorable economic conditions, particularly in France
and Spain. Excluding favorable currency translation of $22 million, sales
decreased 2% due to unfavorable country mix. On a performance basis, operating
income grew 1% as the impact of lower sales (excluding favorable currency
translation) and increased costs to support new business in Eastern Europe were
offset by leveraging of operating expenses.
Other International Markets
<TABLE>
<CAPTION>
SIX FISCAL MONTHS ENDED
-----------------------------------------------
% CHANGE
DEC. 31, DEC. 25, -----------------------
1994 1993 REPORTED PERFORMANCE
-------- -------- -------- -----------
(UNITS/$ IN
MILLIONS)
<S> <C> <C> <C> <C>
Alkaline Unit Volume...................................... 366 304 21 21
Revenue................................................... $ 189 $ 150 26 27
Operating Income.......................................... $ 30 $ 23 31 32
</TABLE>
Expanded distribution throughout Asia (including China), Africa and the
Middle East, combined with market and share growth in Mexico, Brazil and
Australia, resulted in alkaline volume and sales increases of 21% and 26%,
respectively. Leveraging of operating expenses helped operating income grow
faster than sales.
Corporate/Research & Development
<TABLE>
<CAPTION>
SIX FISCAL MONTHS ENDED
--------------------------
DEC. 31, DEC. 25,
1994 1993
-------- --------
($ IN MILLIONS)
<S> <C> <C>
Operating Expenses..................................................... $ 46 $ 40
</TABLE>
Higher spending on research and development related to the Company's high
power nickel metal hydride and lithium ion rechargeable batteries, combined with
additional goodwill amortization resulting from the Company's settlement with
the U.S. Internal Revenue Service (the "IRS") (see "Financial Condition" for
further information regarding the IRS settlement) were the principal drivers of
the 14% increase in operating expenses.
Income Tax Expense
The provision for income taxes increased as a result of higher pre-tax
income.
7
<PAGE>
FISCAL YEAR 1994 VERSUS FISCAL YEAR 1993
North America
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JUNE 30, % CHANGE
-------------------- -----------------------
1994 1993 REPORTED PERFORMANCE
-------- -------- -------- -----------
(UNITS/$ IN
MILLIONS)
<S> <C> <C> <C> <C>
Alkaline Unit Volume...................................... 1,182 1,036 14 14
Revenue................................................... $1,009 $ 897 13 13
Operating Income:
Before Restructuring..................................... $ 279 $ 234 20 20
Restructuring............................................ -- (15) -- --
-------- -------- -- --
$ 279 $ 219 28 28
-------- -------- -- --
-------- -------- -- --
</TABLE>
North America's double-digit growth in volume, revenue and operating income
was a key driver of Duracell's record year. Alkaline volume growth was driven by
strong market and share growth in the mass merchandiser trade class in the
United States and distribution gains in the warehouse club market segment.
Revenue increased reflecting the higher alkaline volumes and generally higher
prices, partially offset by $6 million of unfavorable foreign currency
translation in Canada. Higher lithium and nickel metal hydride battery sales
were also contributors.
Operating income (excluding the 1993 restructuring) reflects higher gross
profit, primarily volume driven. Operating expense leverage of non-advertising
and promotion expenses more than offset the increased investments in advertising
and promotion, resulting in operating income growing faster than revenue.
Europe
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JUNE 30, % CHANGE
-------------------- -----------------------
1994 1993 REPORTED PERFORMANCE
-------- -------- -------- -----------
(UNITS/$ IN
MILLIONS)
<S> <C> <C> <C> <C>
Alkaline Unit Volume...................................... 683 658 4 4
Revenue................................................... $ 576 $ 606 ( 5) 6
Operating Income:
Before Restructuring..................................... $ 120 $ 121 ( 2) 10
Restructuring............................................ -- (32) -- --
-------- -------- -- --
$ 120 $ 89 34 55
-------- -------- -- --
-------- -------- -- --
</TABLE>
European alkaline volume growth was achieved despite weak economies in key
markets and sharp competition. Distribution was added in Hungary and the Czech
Republic, which--combined with increased shipments to industrial, military and
other battery manufacturers--more than offset the impact of the economic and
competitive pressures. Private label in the U.K., which benefited from the
economic squeeze on consumers, impacted Duracell's share. Excluding the $61
million impact of unfavorable currency translation, revenue rose 6% due to
alkaline volume growth and higher prices partially offset by unfavorable country
mix.
Operating income on a performance basis (excluding the 1993 restructuring
and $12 million of unfavorable currency translation) increased 10% as a result
of revenue growth, restructuring related savings and leveraging of
non-advertising and promotion expenses.
8
<PAGE>
Other International Markets
<TABLE><CAPTION>
FISCAL YEAR ENDED
JUNE 30, % CHANGE
-------------------- -----------------------
1994 1993 REPORTED PERFORMANCE
-------- -------- -------- -----------
(UNITS/$ IN
MILLIONS)
<S> <C> <C> <C> <C>
Alkaline Unit Volume...................................... 572 502 14 14
Revenue................................................... $ 287 $ 240 20 19
Operating Income:
Before Restructuring..................................... $ 42 $ 33 27 30
Restructuring............................................ -- (18) -- --
-------- -------- --- ---
$ 42 $ 15 179 191
-------- -------- --- ---
-------- -------- --- ---
</TABLE>
Other International Markets' unit volume improved through expanded
distribution and alkaline penetration in Latin America, Africa and the Middle
East, as well as increased distribution into China. The growth in Latin America
was led by Argentina, Venezuela and Chile. Excluding Brazil and Mexico, where
growth was not as healthy, alkaline volume increased 23%. Revenue increased
primarily from alkaline volume growth and higher prices.
Operating income (excluding the 1993 restructuring) increased as a result of
higher revenue, closure of the Brazilian manufacturing facility (which resulted
in sourcing of lower cost U.S. and European product) and duty reductions in
Latin American countries. These benefits were offset by increased advertising
and promotion expenses behind the DURACELL brand and higher spending on
geographic expansion to support future growth.
Corporate/Research & Development
<TABLE><CAPTION>
FISCAL YEAR
ENDED
JUNE 30,
---------------
1994 1993
---- ----
($ IN MILLIONS)
<S> <C> <C>
Operating Expenses........................................................... $ 85 $ 81
</TABLE>
Record investments in research were made to further the development of new
high power products, such as nickel metal hydride and lithium ion rechargeable
batteries, and to further enhance the performance and quality of DURACELL
alkaline batteries.
Interest Expense
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
JUNE 30,
---------------
1994 1993
---- ----
($ IN MILLIONS)
<S> <C> <C>
Interest Expense............................................................. $ 30 $ 46
</TABLE>
The decrease in interest expense was primarily attributable to debt
reductions using excess cash generated from operations after funding all
operational needs.
Income Tax Expense
<TABLE><CAPTION>
FISCAL YEAR
ENDED
JUNE 30,
---------------
1994 1993
---- ----
($ IN MILLIONS)
<S> <C> <C>
Earnings Before Taxes........................................................ $320 $183
Tax Expense.................................................................. $120 $ 59
Effective Tax Rate........................................................... 38% 32%
</TABLE>
Significantly higher tax expense was incurred in 1994 as a result of
increased earnings before taxes and a higher effective tax rate. The effective
tax rate rose due to the full utilization of U.S. net operating loss
carryforwards for book purposes in 1993.
9
<PAGE>
Restructuring
During 1994 Duracell began realizing the benefits of the restructuring
actions taken in 1993. In North America, the implementation of Duracell's global
manufacturing strategy resulted in providing Latin America and Asia Pacific
operating units with lower cost, no added mercury alkaline batteries.
Streamlining in Europe resulted in cost savings from the integration of sales,
marketing, distribution and administrative functions. The closure of the
Brazilian manufacturing facility contributed to the increased profitability of
Other International Markets since lower cost product is now sourced from the
United States and Europe. The cash outlays and equipment-related write-offs
related to the restructuring were substantially complete as of June 30, 1994.
FINANCIAL CONDITION
CASH FLOW
Following is a summary of Duracell's key cash flow components:
<TABLE>
<CAPTION>
SIX FISCAL MONTHS ENDED
---------------------------- FISCAL YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 25, ----------------------------------------
1994 1993 1994 1993 1992 1991 1990
------------ ------------ ---- ----- ----- ----- -----
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash provided by operating
activities........................... $103 $111 $245 $ 297 $ 188 $ 158 $ 130
Capital expenditures................. (52) (23) (69) (42) (54) (38) (32)
Dividends paid....................... (52) (37) (89) (55) -- -- --
Debt increase (reduction)............ 5 (55) (94) (192) (244) (551) (123)
</TABLE>
Cash provided by operating activities for the six months ended December 31,
1994 was used principally for continued investment in the business through
capital expenditures and the payment of dividends. The increase in capital
expenditures is expected to continue during fiscal 1995 and over the next
several years, when compared to prior years, for capacity expansion, including
the construction of new alkaline manufacturing facilities in China and India,
efficiencies in the manufacturing process, and investments to manufacture new
high power nickel metal hydride and lithium ion rechargeable batteries.
In August 1992, Duracell, Toshiba Battery Co., Ltd. and Varta Batterie A.G.
(the "Alliance members") signed a Technical Cooperation Agreement whereunder
they agreed to engage in joint research and development of superior performing,
cadmium-free nickel metal hydride rechargeable cells. These cells are used in
powering high-power devices with rapidly growing markets, such as laptop
computers, cellular phones and other consumer electronic devices. Nickel metal
hydride batteries last longer on a single charge than conventional nickel
cadmium rechargeable batteries and are environmentally safer. The Agreement has
a five year term. Each of the Alliance members has the right to use any
technological developments emanating from their joint efforts, as well as the
right to license the other members' pre-existing nickel metal hydride technology
on commercially reasonable terms. The Alliance members remain in active
technical collaboration.
In October 1994, affiliated companies of the Alliance members formed a joint
venture for the purpose of manufacturing nickel metal hydride cells in the
United States. Duracell's and Toshiba's affiliates each hold a forty percent
(40%) interest in the joint venture and Varta's affiliate has a twenty percent
(20%) stake. Mebane, North Carolina has been selected as the site for the joint
venture's manufacturing facility and the facility is in the planning stage with
construction expected to begin in 1995. The cells made by the joint venture will
be sold to the Alliance members and will supplement the parties' cell needs now
being satisfied by production at Toshiba's existing nickel metal hydride plant
in Japan. The duration of the joint venture is indefinite and Duracell's initial
capital contribution is expected to be $20 million, which will be paid into the
joint venture over several years beginning in fiscal 1995.
10
<PAGE>
The Company will rely on cash generated from operations to fund its future
working capital and capital expenditure requirements needed to support continued
alkaline growth, geographic expansion and investment in high power rechargeable
batteries. Funds available from unused bank credit facilities will be used
primarily to fund seasonal working capital during the year when receivables and
inventories rise to meet operating requirements.
Taxes paid for the six months ended December 31, 1994 ($36.2 million) have
remained low in relation to the tax provision ($105.7 million) as taxable income
was shielded by deductions for amortization and depreciation taken earlier for
tax purposes than recognized for book purposes, principally in the United
States. As of the end of fiscal 1994, the U.S. tax net operating loss
carryforward was $130 million. The Company has resolved all issues arising from
the IRS's audit of the Company's income tax returns for the years ended June 30,
1988, 1989 and 1990. The settlement was made pursuant to the IRS's Intangibles
Settlement Initiative, a program designed by the IRS to allow an early
settlement of a large number of pending cases involving acquisitions that
included significant intangible assets. The settlement reduced the U.S. net
operating loss carryforward for tax purposes at June 30, 1994 from $350 million
to approximately $130 million and will impact cash flows principally over three
years. Because the settlement relates to deductions claimed in connection with
assets acquired by the Company in June 1988, the additional tax that will result
from the settlement has been recorded as an increase to both deferred tax
liabilities and goodwill of $105 million on the June 30, 1994 balance sheet. The
settlement will not have a significant impact on the Company's future earnings.
Dividends paid for the six months ended December 31, 1994 increased 40% over
the prior year period, reflecting the March 1994 dividend increase and the
greater number of shares outstanding. On February 23, 1995 the Company announced
an 18% increase in its quarterly cash dividend to $.26 per share, payable on
March 20, 1995, from the previous $.22 per share.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1994, Duracell had $813 million in contractually
committed lines of credit from long-term bank credit facilities under which $353
million was outstanding. Commitments under the facilities are used to support
commercial paper, of which $218 million was outstanding at December 31, 1994.
Duracell's commercial paper program is rated investment grade. Unused borrowing
capacity under its principal bank credit facilities at December 31, 1994 was
$460 million.
Duracell utilizes interest rate swaps to reduce the impact on interest
expense of fluctuating rates on variable rate debt. Swaps or other financial
instruments that are speculative are not permitted. Interest expense reflects
the effective interest rate which is fixed through the interest rate swaps. As
of December 31, 1994, $150 million of interest rate swaps were outstanding,
effectively fixing that amount of variable rate U.S. dollar debt to an average
7.44% fixed rate U.S. dollar debt. No funds under the swap contracts were
actually borrowed or are to be repaid. The Company is subject to market risk to
the extent that interest rates on the swapped portion of the outstanding debt
decrease below 7.44%. The fair value of interest rate swaps as of December 31,
1994 was favorable $3.1 million. These swaps mature on various dates beginning
November 1998 and ending May 1999. The counterparties in these swaps are
commercial banks having an investment grade credit rating.
Duracell is exposed to risk from fluctuating prices for commodities used in
the manufacture of batteries. Some of this risk is hedged through commodity
swaps executed over the counter with commercial banks. Duracell utilizes
commodity swaps to effectively fix the price the Company will pay for the
commodity over the life of the swap. Swaps or other financial instruments that
are speculative are not permitted. Costs of products sold reflects the commodity
cost including the effects of the commodity swaps. As of December 31, 1994, $17
million of commodity swaps were outstanding, all maturing within two years from
the contract date. The maturity of the contracts is intended to correlate to the
actual purchases of the commodity. The Company is subject to market risk to the
extent that commodity prices decrease below the contract prices. The fair value
of commodity swaps as of December 31, 1994 was favorable $1.8 million. This fair
value has been deferred, and will be reflected
11
<PAGE>
in the cost of the commodity as it is actually purchased. The counterparties in
these swaps are commercial banks having an investment grade credit rating.
International operations accounted for approximately one-half of Duracell's
revenue and operating income in 1994. It is Duracell's policy to reduce cash
flow volatility due to foreign exchange fluctuations. Accordingly, the Company
closely monitors its foreign currency cash flow transactions and executes
forward contracts to reduce its foreign exchange exposures. Duracell does not
hedge foreign currency translation or foreign currency net assets or liabilities
unless such net amounts are expected to be remitted in the form of dividends or
payment of intercompany loans. Duracell also does not speculate in foreign
currencies. As of December 31, 1994, forward exchange contracts outstanding
totaled $116 million and mature within one year from the contract dates.
Contract maturities are intended to approximate the actual timing of settlement
of foreign currency commitments. Gains and losses from these contracts are
included in income, except for those contracts which hedge existing and
identified future foreign currency firm third party commitments.
As of December 31, 1994 the fair value of forward contracts was favorable
$5.0 million. Of this fair value, $0.3 million arose from forward contracts
related to anticipated intercompany transactions, and is reflected in income as
such contracts do not qualify for hedge accounting. The remaining fair value of
$4.7 million has been deferred, and will be included in the value of the related
foreign currency transactions as they occur.
In September 1994, Duracell Inc. (the Company's U.S. operating subsidiary)
entered into an Administrative Order By Consent with the U.S. Environmental
Protection Agency ("EPA") whereunder in December 1994 Duracell submitted to the
EPA a plan for a complete remedial investigation and feasibility study relating
to mercury and volatile organic compounds contamination at the Company's
Lexington, North Carolina manufacturing site. The Company has also agreed to
implement such plan following the EPA's approval of it. Comprehensive
remediation actions have taken place at the Lexington site over the past ten
years, but some additional remediation work is proposed in the plan submitted to
the EPA. As of December 31, 1994, Duracell estimates that future investigatory
and remediation costs will be approximately $6 million, the cost of which the
Company has fully reserved. The Company believes that the amount reserved is
sufficient to remediate the property; however, the final remediation plan has
not been agreed to by the EPA. The Company believes that if additional remedial
work is required by the EPA beyond the work planned by the Company, such
additional remediation would not likely exceed an additional $6 million.
FINANCIAL STRATEGY
After fully funding investments in its core business and key strategic
initiatives, and maintaining the capital structure necessary to sustain an
investment grade credit rating, Duracell returned a portion of cash flow to
shareholders by paying cash dividends of $89 million, or $.76 per common share,
during the fiscal year ended June 30, 1994. This return amounted to 44% of
income before extraordinary items and accounting changes compared with 31% in
1993 (excluding restructuring). For the six months ended December 31, 1994
Duracell paid $51.8 million, or $.44 per share, compared to $37.1 million, or
$.32 per share, for the six months ended December 25, 1993. On February 23, 1995
Duracell announced an 18% increase in its quarterly cash dividend to $.26 per
share from the previous $.22 per share. Duracell expects to continue paying cash
dividends with a payout ratio in line with comparable consumer product
companies.
During December 1994 the Company repurchased 441,400 shares of its common
stock in open market purchases at a total cost of $18.4 million. During January
1995 the Company repurchased an additional 558,600 shares in open market
purchases at a total cost of $22.8 million. Future excess cash may be used to
repurchase shares of Duracell's common stock depending upon prevailing market
conditions. The Company has the authorization to purchase up to 3,000,000 shares
of its common stock reflecting the original 4,000,000 share authorization by the
Board of Directors less the 1,000,000 shares purchased through January 1995.
12
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
All of the shares of Common Stock being offered hereby are being sold by the
Selling Stockholders.
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of January 28, 1995, assuming the exercise of all
options exercisable on, or within 60 days of, such date, and as adjusted to give
effect to the Offerings (assuming the Underwriters' overallotment options are
not exercised) by (i) each director, (ii) the Chief Executive Officer and each
of the other four most highly compensated executive officers of the Company
during fiscal 1994, (iii) all executive officers and directors as a group and
(iv) the Company's principal stockholders, including the Selling Stockholders.
Other than as set forth in the table below, there are no persons known to the
Company to beneficially own more than 5% of the Common Stock.
<TABLE>
<CAPTION>
BEFORE OFFERINGS AFTER OFFERINGS
------------------------- -------------------------
FULLY FULLY
NAME DILUTED PERCENTAGE DILUTED PERCENTAGE
- -------------------------------------------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
KKR Associates(1)
9 West 57th Street
New York, New York 10019.................. 57,200,000 47.33% 47,200,000 39.05%
Charles R. Perrin(2)........................ 579,256 0.48% 579,256 0.48%
Charles E. Kiernan(3)....................... 140,850 0.12% 140,850 0.12%
G. Wade Lewis............................... 71,918 (8) 71,918 (8)
C. Robert Kidder(4)......................... 470,733 0.39% 470,733 0.39%
Robert M. Kavner............................ 1,500 (8) 1,500 (8)
Paula Stern................................. 1,500 (8) 1,500 (8)
Scott M. Stuart(1).......................... 5,000 (8) 5,000 (8)
Henry R. Kravis(1)(5)....................... -- -- -- --
Paul E. Raether(1)(6)....................... -- -- -- --
George R. Roberts(1)(7)..................... -- -- -- --
Christophe Ripert........................... 18,750 (8) 18,750 (8)
All directors and executive officers as a
group (19 persons)........................ 1,652,825 1.37% 1,652,825 1.37%
</TABLE>
- -------------------
(1) Shares of Common Stock shown as owned by KKR Associates are owned of record
by limited partnerships affiliated with KKR (the "Common Stock
Partnerships") of which KKR Associates is the sole general partner and as to
which it possesses sole voting and investment power. Messrs. Kravis,
Raether, Roberts and Stuart (all of whom are directors of the Company) and
Saul A. Fox, Edward A. Gilhuly, Perry Golkin, James H. Greene, Jr., Robert
I. MacDonnell, Michael W. Michelson, Clifton S. Robbins and Michael T.
Tokarz, as the general partners of KKR Associates, may be deemed to share
beneficial ownership of such shares. Each of these individuals disclaims
beneficial ownership of any shares shown as owned by KKR Associates.
(2) A private foundation established by Mr. Perrin owns 100,000 shares. Mr.
Perrin has disclaimed beneficial ownership of these shares.
(3) A trust for the benefit of Mr. Kiernan's family owns 44,503 shares. Mr.
Kiernan has disclaimed beneficial ownership of these shares.
(4) A trust for the benefit of members of Mr. Kidder's family owns 43,000
shares. Mr. Kidder has disclaimed beneficial ownership of these shares.
(5) A trust for the benefit of members of Mr. Kravis's family owns 50,000
shares. Mr. Kravis has disclaimed beneficial ownership of these shares.
(6) A trust for the benefit of members of Mr. Raether's family owns 50,000
shares. Mr. Raether has disclaimed beneficial ownership of these shares.
(7) A private foundation established by Mr. Roberts owns 70,000 shares. Mr.
Roberts has disclaimed beneficial ownership of these shares.
(8) Less than 0.1%.
13
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 150,000,000 shares
of Common Stock, par value $.01 per share, and 100,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock").
COMMON STOCK
As of February 23, 1995, 116,915,880 shares of Common Stock were issued and
outstanding, and 9,415,485 shares were issuable upon exercise of outstanding
stock options.
Each share of Common Stock is entitled to one vote at all meetings of
stockholders of the Company for the election of directors and all other matters
submitted to stockholder vote. The Common Stock does not have cumulative voting
rights. Accordingly, the holders of a majority of the outstanding shares of
Common Stock can elect all the directors if they choose to do so. Dividends may
be paid to the holders of Common Stock when, as and if declared by the Board of
Directors of the Company out of funds legally available therefor. The Common
Stock has no preemptive or similar rights. Holders of Common Stock are not
liable to further call or assessment. Upon the liquidation, dissolution or
winding up of the affairs of the Company, any assets remaining after provision
for payment of creditors would be distributed pro rata among holders of Common
Stock.
The Restated Certificate of Incorporation of the Company provides that,
except under certain circumstances, directors of the Company shall not be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duties as a director. That provision does not exonerate the
directors from liability under federal securities laws, and has no effect on any
non-monetary remedies that may be available to the Company or its stockholders.
The By-laws of the Company provide for indemnification of the officers and
directors of the Company to the full extent permitted by applicable law.
The Company's By-laws provide for additional notice requirements for
stockholder nominations and proposals at annual or special meetings of the
Company. At annual meetings, stockholders will be entitled to submit nominations
for directors or other proposals only upon written notice to the Company at
least 60 days prior to the annual meeting.
First Chicago Trust Company of New York is the Registrar and the Transfer
Agent for the Common Stock.
PREFERRED STOCK
The Board of Directors of the Company is authorized, without further
stockholder action, to divide any or all shares of authorized Preferred Stock
into series and to fix and determine the designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereon, of any series so established, including voting powers,
dividend rights, liquidation preferences, redemption rights and conversion
privileges. As of the date of this Prospectus, the Board of Directors of the
Company has not authorized any series of Preferred Stock and there are no plans,
agreements or understandings for the issuance of any shares of Preferred Stock.
14
<PAGE>
UNDERWRITING
The U.S. Underwriters named below (the "U.S. Underwriters"), acting through
their U.S. representatives, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Goldman, Sachs & Co., Bear, Stearns & Co. Inc., CS First Boston Corporation,
and Salomon Brothers Inc (the "U.S. Representatives"), have severally agreed,
subject to the terms and conditions of a U.S. Purchase Agreement with the
Selling Stockholders and the Company (the "U.S. Purchase Agreement"), to
purchase from the Selling Stockholders the aggregate number of shares of
Common Stock set forth opposite their respective names below. The U.S.
Underwriters are committed to purchase all of such shares if any are purchased.
Under certain circumstances, the commitments of non-defaulting U.S. Underwriters
may be increased as set forth in the U.S. Purchase Agreement.
NUMBER OF
U.S. UNDERWRITERS SHARES
- ------------------------------------------------------------- ---------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................
Goldman, Sachs & Co. ........................................
Bear, Stearns & Co. Inc. ....................................
CS First Boston Corporation..................................
Salomon Brothers Inc.........................................
---------
Total........................................................ 8,000,000
---------
---------
The Selling Stockholders have also entered into a purchase agreement (the
"International Purchase Agreement") with certain underwriters outside the United
States (the "International Underwriters" and, together with the U.S.
Underwriters, the "Underwriters"), for whom Merrill Lynch International
Limited, Goldman Sachs International, Bear, Stearns International Limited, CS
First Boston Limited and Salomon Brothers International Limited are
acting as representatives (the "International Representatives"). Subject to
the terms and conditions set forth in the International Purchase Agreement,
and concurrently with the sale of 8,000,000 shares of Common Stock to the U.S.
Underwriters pursuant to the U.S. Purchase Agreement, the Selling Stockholders
have agreed to sell to the International Underwriters, and the International
Underwriters have severally agreed to purchase, an aggregate of 2,000,000
shares of Common Stock. Under certain circumstances under the International
Purchase Agreement, the commitments of non-defaulting International Underwriters
may be increased. The initial public offering price per share and the total
underwriting discount per share are identical under the U.S. Purchase
Agreement and the International Purchase Agreement.
15
<PAGE>
The U.S. Underwriters and the International Underwriters have entered into
an Intersyndicate Agreement which provides for the coordination of their
activities. The Underwriters are permitted to sell shares of Common Stock to
each other for purposes of resale at the initial public offering price, less an
amount not greater than the selling concession.
The Selling Stockholders have granted the U.S. Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to
1,200,000 additional shares of Common Stock to cover over-allotments, if any, at
the initial public offering price, less the underwriting discount. If the U.S.
Underwriters exercise this option, each of the U.S. Underwriters will have a
firm commitment, subject to certain conditions, to purchase approximately the
same percentage of the option shares as the number of shares of Common Stock to
be purchased by that U.S. Underwriter shown in the foregoing table bears to the
8,000,000 shares of Common Stock initially offered hereby.
The Selling Stockholders have granted the International Underwriters an
option exercisable for 30 days after the date of this Prospectus to purchase up
to 300,000 additional shares of Common Stock to cover over-allotments, if any,
on terms similar to those granted to the U.S. Underwriters.
The U.S. Underwriters propose initially to offer the shares of Common Stock
to the public at the public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of $ per share. The U.S. Underwriters may allow, and such dealers may reallow,
a discount not in excess of $ per share on sales to certain other dealers.
After the initial public offering of the Common Stock, the public offering
price, concession and discount may be changed.
The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities which may be incurred in
connection with the offering of the Common Stock and the exercise of the
over-allotment options, including liabilities under the Securities Act.
Without the consent of Merrill Lynch & Co., as representative of the U.S.
Underwriters, each of the Company, the Selling Stockholders, and the executive
officers of the Company have agreed not to, for a period of 90 days, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for any such shares. The foregoing agreements are
subject to certain exceptions.
Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to persons who are non-United States persons or to
persons they believe intend to resell to persons who are non-United States
persons, and the International Underwriters and any dealer to whom they sell
shares of Common Stock will not offer to sell or sell shares of Common Stock to
United States persons or to persons they believe intend to resell to United
States persons, except in each case for transactions pursuant to such agreement.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby will be passed
upon for the Company by Simpson Thacher & Bartlett (a partnership which includes
professional corporations), New York, New York, and certain legal matters will
be passed upon for the Underwriters by Latham & Watkins, New York, New York.
Certain partners of Latham & Watkins and Simpson Thacher & Bartlett, members of
their respective families, related persons and others have an indirect interest,
through limited partnerships, in less than 1% of the Common Stock in the case of
each firm. Such persons do not have the power to vote or dispose of such shares
of Common Stock. Latham & Watkins renders legal services to KKR on a regular
basis and renders certain legal services to the Company.
16
<PAGE>
EXPERTS
The Company's consolidated financial statements and related financial
statement schedules incorporated in this Prospectus by reference from the
Company's Annual Report on Form 10-K for the year ended June 30, 1994 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
17
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
-------------------
TABLE OF CONTENTS
PAGE
----
Available Information................. 2
Incorporation of Certain Information
by Reference........................ 2
The Company........................... 3
Proceeds of Offering.................. 4
Price Range of Common Stock and
Dividend Policy....................... 4
Selected Financial Data............... 5
Financial Overview.................... 6
Principal and Selling Stockholders.... 13
Description of Capital Stock.......... 14
Underwriting.......................... 15
Legal Matters......................... 16
Experts............................... 17
10,000,000 SHARES
DURACELL
INTERNATIONAL INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON
SALOMON BROTHERS INC
MARCH , 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[ALTERNATE]
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MARCH 1, 1995
PROSPECTUS
- ----------
10,000,000 SHARES
DURACELL INTERNATIONAL INC.
COMMON STOCK
-------------------
Of the 10,000,000 shares of Common Stock offered, 2,000,000 shares are being
offered hereby in an international offering outside the United States and Canada
and 8,000,000 shares are being offered in a concurrent offering in the United
States and Canada. The price to the public and the aggregate underwriting
discount per share are identical for both Offerings. See "Underwriting."
All 10,000,000 shares of Common Stock offered are being sold by the Selling
Stockholders. None of the officers of the Company are selling any shares in the
Offerings. The Company will not receive any of the proceeds from the sale of the
shares of Common Stock offered hereby. See "Principal and Selling Stockholders."
The Common Stock is listed on the New York Stock Exchange under the symbol
"DUR." On February 28, 1995, the last reported sale price of the Common Stock on
the New York Stock Exchange was $41 5/8.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) SELLING STOCKHOLDERS
<S> <C> <C> <C>
Per Share.................................. $ $ $
Total(2)................................... $ $ $
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities under the Securities Act of
1933. See "Underwriting."
(2) The Selling Stockholders have granted the International Underwriters and the
U.S. Underwriters 30-day options to purchase up to 300,000 and 1,200,000
additional shares of Common Stock, respectively, to cover over-allotments.
If these options are exercised in full, the total Price to Public,
Underwriting Discount, and Proceeds to Selling Stockholders will be
$ , $ and $ , respectively. See "Underwriting."
-------------------
The shares of Common Stock are being offered by the several Underwriters
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares of
Common Stock will be made in New York, New York on or about March , 1995.
-------------------
MERRILL LYNCH INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
CS FIRST BOSTON
SALOMON BROTHERS INTERNATIONAL LIMITED
-------------------
The date of this Prospectus is March , 1995.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
[Alternate Tax Section for International Prospectus]
CERTAIN U.S. TAX CONSIDERATIONS APPLICABLE TO
NON-U.S. HOLDERS OF THE COMMON STOCK
The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock by a
person that, for U.S. federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership or a foreign estate or
trust (a "non-U.S. holder"). This discussion does not consider specific facts
and circumstances that may be relevant to a particular non-U.S. holder's tax
position and does not deal with U.S. state and local or non-U.S. tax
consequences. Furthermore, the following discussion is based on provisions of
the U.S. Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed regulations promulgated thereunder, and administrative and judicial
interpretations thereof as of the date hereof, all of which are subject to
change, possibly with retroactive effect. Each prospective non-U.S. holder is
urged to consult a tax advisor with respect to the U.S. federal tax consequences
of holding and disposing of Common Stock, as well as any tax consequences that
may arise under the laws of any U.S. state, municipality or other taxing
jurisdiction.
An individual may, among other ways, be deemed to be a resident alien (as
opposed to a non-resident alien) by virtue of being present in the United States
on at least 31 days in the calendar year and for an aggregate of 183 days during
a three-year period ending in the current calendar year (counting for such
purposes 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). Resident aliens are subject to U.S. federal tax as
if they were U.S. citizens.
Dividends. Dividends paid to a non-U.S. holder of Common Stock will be
subject to withholding of U.S. federal income tax at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty, unless 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 such holder's conduct of a trade or business in the
United States are subject to U.S. federal income tax on a net income basis at
applicable graduated individual or corporate rates, and are not generally
subject to withholding. Any such effectively connected dividends received by a
foreign corporation may also, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.
Dividends paid to an address outside the United States are presumed to be
paid to a resident of such country (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 rate. Under proposed U.S. Treasury
regulations, not currently in effect, however, a non-U.S. holder of Common Stock
who wishes to claim the benefit of an applicable treaty rate would be required
to satisfy applicable certification and other requirements. Currently certain
certification and disclosure requirements must be complied with in order to be
exempt from withholding under the effectively connected income exemption.
A non-U.S. holder of Common Stock that is eligible for a reduced rate of
U.S. 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 U.S.
Internal Revenue Service.
Gain on Disposition of Common Stock. A non-U.S. holder generally will not be
subject to U.S. federal income tax in respect of gain recognized on a
disposition of 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, attributable to a permanent establishment maintained by the
non-U.S. holder, (ii) in the case of a non-U.S. holder who is an individual
and holds the Common Stock as capital asset, such holder is present in the
United States for 183 or more days in the taxable year of the sale and certain
other conditions are met, or (iii) the Company is or has been a "U.S. real
property holding corporation" for federal income tax purposes. The Company has
not been, is not and does not anticipate becoming, a "U.S. real property
holding corporation" for U.S. federal income tax purposes. If an individual
non-U.S. holder falls under clause (i) above, he or she will be taxed on his
or her net gain derived from the sale at regular graduated U.S. federal income
tax rates. If an individual non-U.S. holder falls under clause (ii) above, he
or she will be subject to a flat 30% tax on the gain derived from the sale
which may be offset by U.S. capital losses. If a non-U.S. holder that is a
foreign corporation falls under clause (i) above, it will be taxed on its
gain at regular graduated U.S. federal income tax rates and, in addition, may
be subject to the branch profits tax equal to 30% of its "effectively connected
earnings and profits" within the meaning of the Code for the taxable year, as
adjusted for certain items, or at such lower rate as may be specified by an
applicable income tax treaty.
15
<PAGE>
[Alternate Tax Section for International Prospectus]
Federal Estate Taxes. Common Stock owned or treated as owned by a non-U.S.
holder at the time of death will be included in such holder's gross estate for
U.S. federal estate tax purposes, unless an applicable estate tax treaty
provides otherwise.
U.S. Information Reporting Requirements and Backup Withholding Tax. The
Company must report annually to the Internal Revenue Service and to each
non-U.S. holder the amount of dividends paid to such holder and the tax withheld
with respect to such dividends, regardless of whether withholding was required.
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.
Backup withholding (which generally is a withholding tax imposed at the rate
of 31% on certain payments to persons that fail to furnish certain information
under the U.S. information reporting requirements) will generally not apply to
dividends paid to a non-U.S. holder at an address outside the United States
unless the payer has knowledge that the payee is a U.S. person.
In general, backup withholding and information reporting will not apply to a
payment of the proceeds of a sale of Common Stock to or through a foreign office
of a broker. If, however, such broker is, for U.S. federal income tax purposes,
a U.S. person, a controlled foreign corporation, or a foreign person that
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the United States, such payments will not be subject to
backup withholding but will be subject to information reporting, unless (1) such
broker has documentary evidence in its records that the beneficial owner is a
non-U.S. holder and certain other conditions are met, or (2) the beneficial
owner otherwise establishes an exemption.
Payment to or through a U.S. office of a broker of the proceeds of a sale of
Common Stock is subject to both backup withholding and information reporting
unless the beneficial owner certifies under penalties of perjury that it is a
non-U.S. holder, or otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the U.S. Internal Revenue
Service.
The backup withholding and information reporting rules are currently under
review by the U.S. Treasury Department and their application to the Common
Stock could be changed by future regulations.
16
<PAGE>
[Alternate Underwriting Section for International Prospectus]
UNDERWRITING
The International Underwriters named below (the "International
Underwriters"), acting through their International representatives, Merrill
Lynch International Limited, Goldman Sachs International, Bear, Stearns
International Limited, CS First Boston Limited and Salomon Brothers
International Limited (the "International Representatives"), have severally
agreed, subject to the terms and conditions of an International Purchase
Agreement with the Selling Stockholders and the Company (the "International
Purchase Agreement"), to purchase from the Selling Stockholders the aggregate
number of shares of Common Stock set forth opposite their respective names
below. The International Underwriters are committed to purchase all of such
shares if any are purchased. Under certain circumstances, the commitments of
non-defaulting International Underwriters may be increased as set forth in the
International Purchase Agreement.
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL UNDERWRITERS SHARES
- ----------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch International Limited....................................
Goldman Sachs International ...........................................
Bear, Stearns International Limited....................................
CS First Boston Limited................................................
Salomon Brothers International Limited.................................
---------
Total....................................................... 2,000,000
---------
---------
</TABLE>
The Selling Stockholders have also entered into a purchase agreement (the
"U.S. Purchase Agreement") with certain underwriters in the United States (the
"U.S. Underwriters" and, together with the International Underwriters, the
"Underwriters"), for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Goldman, Sachs & Co., Bear, Stearns & Co. Inc., CS First Boston Corporation
and Salomon Brothers Inc are acting as representatives (the "U.S.
Representatives"). Subject to the terms and conditions set forth in the U.S.
Purchase Agreement, and concurrently with the sale of 2,000,000 shares of
Common Stock to the International Underwriters pursuant to the International
Purchase Agreement, the Selling Stockholders have agreed to sell to the U.S.
Underwriters, and the U.S. Underwriters have severally agreed to purchase, an
aggregate of 8,000,000 shares of Common Stock. Under certain circumstances
under the U.S. Purchase Agreement, the commitments of non-defaulting U.S.
Underwriters may be increased. The initial public offering price per share and
the total underwriting discount per share are identical under the International
Purchase Agreement and the U.S. Purchase Agreement.
The International Underwriters and the U.S. Underwriters have entered into
an Intersyndicate Agreement which provides for the coordination of their
activities. The Underwriters are permitted to sell shares of Common Stock to
each other for purposes of resale at the initial public offering price, less an
amount not greater than the selling concession.
The Selling Stockholders have granted the International Underwriters an
option exercisable for 30 days after the date of this Prospectus to purchase up
to 300,000 additional shares of Common Stock to cover over-allotments, if any,
at the initial public offering price, less the underwriting discount. If the
International Underwriters exercise this option, each of the International
Underwriters will have a firm commitment, subject to certain conditions, to
purchase approximately the same percentage of the option shares as the number of
shares of Common Stock to be purchased by that International Underwriter shown
in the foregoing table bears to the 2,000,000 shares of Common Stock initially
offered hereby.
The Selling Stockholders have granted the U.S. Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to
1,200,000 additional shares of Common Stock to cover over-allotments, if any, on
terms similar to those granted to the International Underwriters.
17
<PAGE>
[Alternate Underwriting Section for International Prospectus]
The International Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus, and to certain dealers at such price less a concession
not in excess of $ per share. The International Underwriters may allow, and
such dealers may reallow, a discount not in excess of $ per share on sales to
certain other dealers. After the initial public offering of the Common Stock,
the public offering price, concession and discount may be changed.
The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities which may be incurred in
connection with the offering of the Common Stock and the exercise of the
over-allotment options, including liabilities under the Securities Act.
Without the consent of Merrill Lynch & Co. as representative of the U.S.
Underwriters, each of the Company, the Selling Stockholders and the executive
officers of the Company have agreed not to, for a period of 90 days, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for any such shares. The foregoing agreements are
subject to certain exceptions.
Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to persons who are non-United States persons or to
persons they believe intend to resell to persons who are non-United States
persons, and the International Underwriters and any dealer to whom they sell
shares of Common Stock will not offer to sell or sell shares of Common Stock to
United States persons or to persons they believe intend to resell to United
States persons, except in each case for transactions pursuant to such agreement.
Each International Underwriter has agreed that (i) it has not offered or
sold and will not offer or sell in the United Kingdom, by means of any document,
any shares of Common Stock offered hereby other than to persons whose ordinary
business it is to buy or sell shares or debentures, whether as principal or
agent, or in circumstances which do not constitute an offer to the public within
the meaning of the Companies Act 1985; (ii) it has complied and will comply
with all applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Common Stock in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and
will only issue or pass on in the United Kingdom any document received by it
in connection with the issue of the Common Stock to a person who is of a kind
described in Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1988 or to whom the document may otherwise
be lawfully issued or passed on.
Purchasers of the shares offered hereby 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 set forth on the cover page hereof.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby will be passed
upon for the Company by Simpson Thacher & Bartlett (a partnership which includes
professional corporations), New York, New York, and certain legal matters will
be passed upon for the Underwriters by Latham & Watkins, New York, New York.
Certain partners of Latham & Watkins and Simpson Thacher & Bartlett, members of
their respective families, related persons and others have an indirect interest,
through limited partnerships, in less than 1% of the Common Stock in the case of
each firm. Such persons do not have the power to vote or dispose of such shares
of Common Stock. Latham & Watkins renders legal services to KKR on a regular
basis and renders certain legal services to the Company.
EXPERTS
The Company's consolidated financial statements and related financial
statement schedules incorporated in this Prospectus by reference from the
Company's Annual Report on Form 10-K for the year ended June 30, 1994 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
18
<PAGE>
ALTERNATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR AN UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
-------------------
TABLE OF CONTENTS
PAGE
----
Available Information................. 2
Incorporation of Certain Information
by Reference........................ 2
The Company........................... 3
Proceeds of Offering.................. 4
Price Range of Common Stock and
Dividend Policy....................... 4
Selected Financial Data............... 5
Financial Overview.................... 6
Principal and Selling Stockholders.... 13
Description of Capital Stock.......... 14
Certain U.S. Tax Considerations
Applicable to Non-U.S. Holders of
the Common Stock.................... 15
Underwriting.......................... 17
Legal Matters......................... 18
Experts............................... 18
10,000,000 SHARES
DURACELL
INTERNATIONAL INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
MERRILL LYNCH
INTERNATIONAL LIMITED
GOLDMAN SACHS
INTERNATIONAL
BEAR, STEARNS
INTERNATIONAL LIMITED
CS FIRST BOSTON
SALOMON BROTHERS
INTERNATIONAL LIMITED
MARCH , 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fee........................................... $ 166,801
NASD Filing Fee............................................ 30,500
Printing and Engraving Expenses............................ 150,000
Legal Fees and Expenses.................................... 100,000
Accounting Fees and Expenses............................... 75,000
Blue Sky Fees and Expenses................................. 15,000
Miscellaneous.............................................. 7,699
-----------
Total...................................................... $ 545,000
-----------
-----------
All of such expenses will be paid by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is a Delaware corporation. Reference is made to Section
102(b)(7) of the Delaware General Corporation Law (the "DGCL"), which enables a
corporation in its original certificate of incorporation or an amendment thereto
to eliminate or limit the personal liability of a director for violations of the
director's fiduciary duty, except (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit.
Reference also is made to Section 145 of the DGCL, which provides that a
corporation may indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer, director,
employee or agent of such corporation, or is or was serving at the request of
such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such officer, director, employee or agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, for criminal proceedings, had no reasonable
cause to believe that his conduct was unlawful. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses that such officer or
director actually and reasonably incurred.
The Restated Certificate of Incorporation of the Company provides that
except under certain circumstances, directors of the Company shall not be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duties as a director. Article IV of the By-laws of the
Company provides for indemnification of the officers and directors of the
Company to the full extent permitted by applicable law.
II-1
<PAGE>
ITEM 16. EXHIBITS
EXHIBIT
NO. DESCRIPTION
- ------- ----------------------------------------------------------------------
1.1 --Proposed form of U.S. Purchase Agreement.
1.2 --Proposed form of International Purchase Agreement.
*5.1 --Opinion of Simpson Thacher & Bartlett regarding the
legality of the shares of
Common Stock being registered.
23.1 --Consent of Deloitte & Touche LLP.
*23.2 --Consent of Simpson Thacher & Bartlett (included in their
opinion filed as Exhibit
5.1).
24.1 --Powers of Attorney (previously filed except for powers of
attorney of Mr. Kavner and Ms. Stern which are filed herewith).
- ------------
* Previously filed.
ITEM 17. UNDERTAKINGS
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.
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 described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification 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.
The registrant hereby undertakes:
(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 a registration statement in reliance upon Rule 430A and contained in the
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 the
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.
II-2
<PAGE>
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 THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK ON
MARCH 1, 1995.
DURACELL INTERNATIONAL INC.
By /s/ ROBERT A. BURGHOLZER, JR.
...................................
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED ON MARCH 1, 1995.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- -------------------------------------- ---------------------------------------------------
<S> <C>
* Chairman of the Board, Chief Executive Officer and
...................................... Director
Charles R. Perrin
* President, Chief Operating Officer and Director
......................................
Charles E. Kiernan
* Senior Vice President, Finance, Chief Financial
...................................... Officer and Director
G. Wade Lewis
/s/ ROBERT A. BURGHOLZER, JR. Vice President and Controller
......................................
Robert A. Burgholzer, Jr.
* Director
......................................
C. Robert Kidder
* Director
......................................
Henry R. Kravis
* Director
......................................
Paul E. Raether
* Director
......................................
George R. Roberts
* Director
......................................
Scott M. Stuart
*
...................................... Director
Robert M. Kavner
*
...................................... Director
Paula Stern
*By: /s/ ROBERT A. BURGHOLZER, JR.
..................................
Attorney-in-fact
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL PAGE
EXHIBITS NUMBER
- ------- ----------------
<S> <C> <C>
1.1 --Proposed form of U.S. Purchase Agreement............................
1.2 --Proposed form of International Purchase Agreement...................
23.1 --Consent of Deloitte & Touche LLP....................................
24.1 --Powers of Attorney..................................................
</TABLE>
Exhibit 1.1
8,000,000 SHARES
DURACELL INTERNATIONAL INC.
(A DELAWARE CORPORATION)
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
U.S. PURCHASE AGREEMENT
March , 1995
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON CORPORATION
SALOMON BROTHERS INC
as U.S. Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
Ladies and Gentlemen:
Duracell International Inc., a Delaware corporation (the "Company"), and the
stockholders of the Company named in Schedule B hereto (the "Selling
Stockholders"), confirm their agreements with Merrill Lynch & Co. of Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Goldman, Sachs &
Co. ("Goldman Sachs"), Bear, Stearns & Co. Inc. ("Bear Stearns"), CS First
Boston Corporation ("CS First Boston"), Salomon Brothers Inc ("Salomon
Brothers") and each of the other underwriters named in Schedule A hereto
(collectively, the "U.S. Underwriters," which term shall also include any
underwriter substituted as hereinafter provided in Section 10), for whom Merrill
Lynch, Goldman Sachs, Bear Stearns, CS First Boston and Salomon Brothers are
acting as representatives (in such capacity, Merrill Lynch, Goldman Sachs, Bear
Stearns, CS First Boston and Salomon Brothers shall hereinafter be referred to
as the "U.S. Representatives"), with respect to the sale by the Selling
Stockholders, acting severally and not jointly, of 8,000,000 shares of
common stock, par value $.01 per share, of the Company (the "Common Stock"), and
the purchase by the U.S. Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock set forth in Schedule A hereto (the
"Initial U.S. Securities"). The Selling Stockholders grant to the U.S.
Underwriters the option described in Section 2 to purchase all or any part of
1,200,000 additional shares in the aggregate (the "U.S. Option Securities") of
Common Stock to cover over-allotments of the Initial U.S. Securities. The
Initial U.S. Securities and the U.S. Option Securities to be purchased by the
U.S. Underwriters are hereinafter called the "U.S. Securities."
It is understood and agreed by all parties that the Company and the Selling
Stockholders are concurrently entering into an agreement dated the date hereof
(the "International Purchase Agreement") providing for the sale by the Selling
Stockholders of up to 2,000,000 shares of Common Stock (the "Initial
International Securities") through arrangements with certain managing
underwriters outside the United States and Canada (the "Managers") for whom
Merrill Lynch International Limited, Goldman Sachs International, Bear, Stearns
International Limited, CS First Boston Limited and Salomon Brothers
International Limited are acting as lead managers (the "Lead Managers") and
<PAGE>
the grant by the Selling Stockholders to the Managers of an option to purchase
all or any part of 300,000 additional shares in the aggregate of Common Stock
(the "International Option Securities") to cover over-allotments of the Initial
International Securities. The Initial International Securities and the
International Option Securities are hereinafter called the "International
Securities." The U.S. Securities and the International Securities, collectively,
are hereinafter called the "Securities."
Prior to the purchase and public offering of the U.S. Securities by the
several U.S. Underwriters, the Selling Stockholders and the U.S.
Representatives, acting on behalf of the several U.S. Underwriters, shall enter
into an agreement substantially in the form of Exhibit A hereto (the "U.S.
Pricing Agreement"). The U.S. Pricing Agreement may take the form of an exchange
of any standard form of written telecommunication between the Selling
Stockholders and the U.S. Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the U.S.
Securities will be governed by this U.S. Purchase Agreement (this "Agreement"),
as supplemented by the U.S. Pricing Agreement. From and after the date of the
execution and delivery of the U.S. Pricing Agreement, this Agreement shall be
deemed to incorporate the U.S. Pricing Agreement.
The initial public offering price and the purchase price with respect to the
International Securities shall be set forth in a separate instrument (the
"International Pricing Agreement"), the form of which is attached to the
International Purchase Agreement. The price per security for the International
Securities to be purchased by the Managers pursuant to the International
Purchase Agreement shall be identical to the price per security for the U.S.
Securities to be purchased by the U.S. Underwriters hereunder.
Two forms of prospectus are to be used in connection with the offering and
sale of the Securities, one relating to the International Securities (the
"International Form of Prospectus") and the other relating to the U.S.
Securities (the "U.S. Form of Prospectus"). The U.S. Form of Prospectus is
identical to the International Form of Prospectus, except for the front cover
page, a "Certain U.S. Federal Tax Consequences to Non-U.S. Holders" section in
the International Form of Prospectus, the "Underwriting" section and the back
cover page.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-57857) and related
preliminary prospectuses for the registration of the Securities under the
Securities Act of 1933, as amended (the "1933 Act"), has filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof, and will file such additional amendments thereto
and such amended prospectuses as may hereafter be required. Such registration
statement (as amended, if applicable) and the U.S. Form of Prospectus and the
International Form of Prospectus constituting parts thereof (including in each
case all documents incorporated by reference therein and the information, if
any, deemed to be part thereof pursuant to Rule 430A(b) of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")),
as from time to time amended or supplemented pursuant to the 1933 Act or
otherwise, are hereinafter referred to as the "Registration Statement," the
"U.S. Prospectus" and the "International Prospectus," respectively, and the U.S.
Prospectus and the International Prospectus are hereinafter called,
collectively, the "Prospectuses," and, each individually, a "Prospectus," except
that if any revised U.S. Prospectus or revised International Prospectus shall be
provided to the U.S. Underwriters or the Managers, respectively, by the Company
or the Selling Stockholders for use in connection with the offering of the
Securities which differs from the form of such prospectus on file at the
Commission at the time the Registration Statement becomes effective (whether or
not such revised prospectus is required to be filed by the Company pursuant to
Rule 424(b) of the 1933 Act Regulations), the terms "U.S. Prospectus,"
"International Prospectus," "Prospectuses" and "Prospectus" shall refer to such
revised prospectuses from and after the time they are first provided to the U.S.
Underwriters and the Managers, respectively, for such use.
The Company and the Selling Stockholders understand that the U.S.
Underwriters propose to make a public offering of the U.S. Securities as soon as
the U.S. Representatives deem advisable after the Registration Statement becomes
effective and the U.S. Pricing Agreement has been executed and delivered.
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<PAGE>
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to each U.S. Underwriter as of the
date hereof and as of the date of the U.S. Pricing Agreement (such latter date
being hereinafter referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective and at the
Representation Date, the Registration Statement will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations
and will not contain an 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. The Prospectuses, at the Representation
Date (unless the term "Prospectuses" refers to prospectuses which have been
provided to the U.S. Underwriters or the Managers by the Company for use in
connection with the offering of the Securities which differ from the
Prospectuses on file at the Commission at the time the Registration
Statement becomes effective, in which case at the time they are first
provided to the U.S. Underwriters or the Managers for such use) and at each
of the Closing Time and the Delivery Date referred to in Section 2, will not
include an 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; provided, however,
that the representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or
Prospectuses made in reliance upon and in conformity with information
furnished to the Company in writing by any U.S. Underwriter through the U.S.
Representatives, or by any Manager through the Lead Managers, expressly for
use in the Registration Statement or Prospectuses.
(ii) The documents incorporated by reference in the Registration
Statement, the Prospectuses, any amendment or supplement thereto or any
preliminary prospectus, when they become effective under the 1933 Act or are
filed with the Commission under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), as the case may be, will comply in all material
respects with the requirements of the 1933 Act or the 1934 Act as applicable
and the 1933 Act Regulations and the rules and regulations of the Commission
under the 1934 Act (the "1934 Act Regulations"), as applicable.
(iii) The accountants who certified the financial statements and
supporting schedules included in the Registration Statement are independent
public accountants as required by the 1933 Act and the 1933 Act Regulations.
(iv) The financial statements included in the Registration Statement and
the Prospectuses present fairly the financial position of the Company and
its consolidated subsidiaries as at the dates indicated and the results of
their operations for the periods specified; except as otherwise stated in
the Registration Statement, such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein.
(v) Since the respective dates as of which information is given in the
Registration Statement and the Prospectuses, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings or business affairs of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, (B) there have been no
transactions entered into by the Company or any of its subsidiaries, other
than those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one enterprise,
and (C) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
(vi) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease
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and operate its properties and to conduct its business as described in the
Prospectuses; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not have a material adverse effect on the condition, financial or
otherwise, or the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise.
(vii) Each Significant Subsidiary (as defined in Regulation S-X of the
Commission) of the Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectuses
and is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings or business affairs of the Company and its subsidiaries considered
as one enterprise; all of the issued and outstanding capital stock of each
such subsidiary has been duly authorized and validly issued, is fully paid
and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or claim, except that all or a portion of the capital
stock of certain such subsidiaries is pledged as security for certain debt
obligations of the Company and its subsidiaries.
(viii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectuses under "Description of Capital
Stock" (except for subsequent issuances, if any, pursuant to reservations,
option agreements, employee benefit plans or the exercise of convertible
securities referred to in the Prospectuses); the shares of issued and
outstanding Common Stock, including the Securities to be purchased by the
U.S. Underwriters and the Managers from the Selling Stockholders, have been
duly authorized and validly issued and are fully paid and non-assessable.
(ix) Neither the Company nor any of its subsidiaries is in violation of
its charter or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject, other than any such violation
or default that would not have a material adverse effect on the condition,
financial or otherwise, or the earnings or business affairs of the Company
and its subsidiaries considered as one enterprise; and the execution,
delivery and performance of this Agreement and the International Purchase
Agreement, and the consummation of the transactions contemplated herein and
therein, have been duly authorized by all necessary corporate action and
will not, except with respect to registration rights remaining available to
certain individuals under their Common Stock Subscription Agreements with
the Company that have not expired or been waived, conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Company or any of its subsidiaries is a party or by which it or any of them
may be bound, or to which any of the property or assets of the Company or
any of its subsidiaries is subject, nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or any
of its subsidiaries or any applicable law, administrative regulation or
administrative or court decree, other than any such conflict, breach or
violation that would not have a material adverse effect on the condition,
financial or otherwise, or the earnings or business affairs of the Company
and its subsidiaries considered as one enterprise.
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<PAGE>
(x) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, is imminent that
might have a material adverse effect on the condition, financial or
otherwise, or the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise; and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors which might be expected to
result in any material adverse change in the condition, financial or
otherwise, or in the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise.
(xi) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company or the Selling Stockholders, threatened, against or
affecting the Company or any of its subsidiaries, which is required to be
disclosed in the Registration Statement (other than as disclosed therein),
or which, considered singly or in the aggregate, might result in any
material adverse change in the condition, financial or otherwise, or in the
earnings or business affairs of the Company and its subsidiaries considered
as one enterprise, or which might materially and adversely affect the
consummation of this Agreement or the International Purchase Agreement; and
there are no contracts or documents of the Company or any of its
subsidiaries which are required to be filed as exhibits to the Registration
Statement (or to any of the documents incorporated by reference therein) by
the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act
Regulations which have not been so filed.
(xii) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively,
"intellectual property") presently employed by them in connection with the
business now operated by them, except where the failure to own or possess or
have the ability to acquire any such intellectual property would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings or business affairs of the Company and its subsidiaries considered
as one enterprise, and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in any material adverse change in the condition, financial or
otherwise, or in the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise.
(xiii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the sale of
the U.S. Securities hereunder or the International Securities under the
International Purchase Agreement, except such as may be required under the
1933 Act, the 1933 Act Regulations or state or foreign securities laws.
(xiv) The Company and its subsidiaries possess such certificates,
authorizations or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them, except where the failure to possess such certificates,
authorizations or permits would not have a material adverse effect on the
condition, financial or otherwise, or the earnings or business affairs of
the Company and its subsidiaries considered as one enterprise, and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling, or finding, would materially
and adversely affect the condition, financial or otherwise, or the earnings
or business affairs of the Company and its subsidiaries considered as one
enterprise.
(xv) The Company and its subsidiaries have good title to all properties
owned by them, in each case free and clear of all liens, encumbrances and
defects except (i) as do not materially
5
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interfere with the use made and proposed to be made of such properties, (ii)
as set forth in the Registration Statement (including the Notes to the
Financial Statements included therein) or (iii) as could not reasonably be
expected to materially and adversely affect the condition, financial or
otherwise, or the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise.
(xvi) There are no holders of securities (debt or equity) of the Company
or any of its subsidiaries, or holders of rights, options, or warrants to
obtain securities of the Company or any of its subsidiaries, who have the
right to request the Company to register securities held by them under the
1933 Act, other than (i) holders who have waived such rights or will not
have such rights for the 90-day period after the Representation Date and
have waived their rights with respect to the inclusion of their securities
in the Registration Statement, (ii) the Selling Stockholders who are selling
Securities pursuant to this Agreement and the International Purchase
Agreement and (iii) certain members of management of the Company who have
certain piggyback registration rights with respect to securities of the
Company.
(xvii) Except as disclosed in the Registration Statement, the Company
and its subsidiaries are in material compliance with all applicable existing
federal, state, local and foreign laws and regulations relating to
protection of human health or the environment or imposing liability or
standards of conduct concerning any Hazardous Material (as hereinafter
defined) ("Environmental Laws"), except, in each case, where such
noncompliance, singly or in the aggregate, would not have a material and
adverse effect on the condition, financial or otherwise, or the earnings or
business affairs of the Company and its subsidiaries considered as one
enterprise. The term "Hazardous Material" means (a) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (b) any "hazardous
waste" as defined by the Resource Conservation and Recovery Act, as amended,
(c) any petroleum or petroleum product, (d) any polychlorinated biphenyl,
and (e) any pollutant or contaminant or hazardous, dangerous, or toxic
chemical, material, waste or substance regulated under or within the meaning
of any other Environmental Law.
(xviii) There is no alleged liability, or to the best knowledge and
information of the Company, potential liability, (including, without
limitation, alleged or potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) of the Company or any of its
subsidiaries arising out of, based on or resulting from the presence or
release into the environment of any Hazardous Material at any location,
whether or not owned by the Company or any of its subsidiaries or any
violation or alleged violation of any Environmental Law, (x) which alleged
or potential liability is required to be disclosed in the Registration
Statement, other than as disclosed therein, or (y) which alleged or
potential liability, singly or in the aggregate, would have a material and
adverse effect on the condition, financial or otherwise, or the earnings or
business affairs of the Company and its subsidiaries considered as one
enterprise, except for any alleged or potential liability for which the
Company has been indemnified by Kraft, Inc. The Company does not expect that
the liabilities for which the Company has been indemnified by Kraft, Inc.
(after taking into account such indemnification), will have a material
adverse effect on the condition, financial or otherwise, or the earnings or
business affairs of the Company and its subsidiaries considered as one
enterprise.
(b) Each of the Selling Stockholders, severally, represents and warrants to,
and agrees with, each U.S. Underwriter as follows:
(i) The execution and delivery of this Agreement, the International
Purchase Agreement, the U.S. Pricing Agreement and the International Pricing
Agreement, and the consummation of the transactions herein and therein
contemplated will not result in a breach by such Selling Stockholder of, or
constitute a default by such Selling Stockholder under, any indenture, deed
or trust,
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<PAGE>
contract, or other agreement or instrument or any decree, judgment or order
to which such Selling Stockholder is a party or by which such Selling
Stockholder may be bound.
(ii) Such Selling Stockholder has and will have at Closing Time referred
to in Section 2(c) hereof good and marketable title to the Securities to be
sold by such Selling Stockholder hereunder, free and clear of any pledge,
lien, security interest, encumbrance, claim or equity other than pursuant to
this Agreement or the International Purchase Agreement; such Selling
Stockholder has full right, power and authority to sell, transfer and
deliver the Securities to be sold by such Selling Stockholder hereunder and
under the International Purchase Agreement; and upon delivery of the
Securities to be sold by such Selling Stockholder hereunder and under the
International Purchase Agreement and payment of the purchase price therefor
as herein and therein contemplated, each of the U.S. Underwriters and
Managers will receive good and marketable title to its ratable share of the
Securities purchased by it from such Selling Stockholder, free and clear of
any pledge, lien, security interest, encumbrance, claim or equity.
(iii) All authorizations, approvals and consents necessary for the
execution and delivery by such Selling Stockholder of this Agreement, the
International Purchase Agreement, the U.S. Pricing Agreement and the
International Pricing Agreement, and the sale and delivery of the Securities
to be sold by such Selling Stockholder hereunder and under the International
Purchase Agreement (other than, at the time of the execution hereof or
thereof, the issuance of the order of the Commission declaring the
Registration Statement effective and such authorizations, approvals or
consents as may be necessary under state or foreign securities laws) have
been obtained and are in full force and effect; and such Selling Stockholder
has the full right, power and authority to enter into this Agreement, the
International Purchase Agreement, the U.S. Pricing Agreement and the
International Pricing Agreement, and to sell, transfer and deliver the
Securities to be sold by such Selling Stockholder hereunder and under the
International Purchase Agreement.
(iv) During a period of 90 days from the Representation Date, such
Selling Stockholder will not, without the prior written consent of Merrill
Lynch, directly or indirectly, offer to sell, sell, grant any option for the
sale of, establish a "put equivalent position" as defined in Rule 16a-1(h)
under the 1934 Act with respect to, or otherwise dispose of, any Common
Stock or any securities convertible into or exchangeable or exercisable for
Common Stock owned by such Selling Stockholder or with respect to which such
Selling Stockholder has the power of disposition, other than to the U.S.
Underwriters and the Managers pursuant to this Agreement and the
International Purchase Agreement.
(v) To the extent that any statements or omissions made in the
Registration Statement, any preliminary prospectus, the Prospectuses or any
amendment or supplement thereto are made in reliance upon and in conformity
with information furnished in writing to the Company by such Selling
Stockholder expressly for use therein, the Registration Statement and such
preliminary prospectus do not, and the Prospectuses and any amendments or
supplements thereto will not, as of the applicable effective date or as of
the applicable filing date, as the case may be, contain an 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
(vi) 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 Securities.
(c) Any certificate signed by any officer of the Company or by the general
partner of any Selling Stockholder and delivered, pursuant to this Agreement or
in connection with the payment of the purchase price and delivery of the
certificates for the Initial U.S. Securities, the U.S. Option Securities, the
Initial International Securities or the International Option Securities, to the
U.S. Representatives, the Lead Managers, the U.S. Underwriters, the Managers,
counsel for the U.S. Underwriters or counsel for the Managers shall be deemed a
representation and warranty by the Company or by such Selling Stockholder, as
the case may be, to each U.S. Representative, U.S. Underwriter, Lead Manager and
Manager as to the matters covered thereby.
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SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING.
(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, each of the Selling
Stockholders, severally and not jointly, agrees to sell to each U.S.
Underwriter, severally and not jointly, and each U.S. Underwriter, severally and
not jointly, agrees to purchase from each of the Selling Stockholders at the
price per share set forth in the U.S. Pricing Agreement, the number of Initial
U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter, plus any additional number of U.S. Securities which such U.S.
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof. If the Company elects to rely upon Rule 430A under the 1933
Act Regulations, Schedule A may be attached to the U.S. Pricing Agreement.
(1) If the Company has elected not to rely upon Rule 430A under the 1933
Act Regulations, the initial public offering price and the purchase price
per share to be paid by the several U.S. Underwriters for the U.S.
Securities have each been determined and set forth in the U.S. Pricing
Agreement, dated the date hereof, and an amendment to the Registration
Statement and the Prospectuses will be filed before the Registration
Statement becomes effective.
(2) If the Company has elected to rely upon Rule 430A under the 1933 Act
Regulations, the purchase price per share to be paid by the several U.S.
Underwriters for the U.S. Securities shall be an amount equal to the initial
public offering price, less an amount per share to be determined by
agreement between the U.S. Representatives and the Selling Stockholders. The
initial public offering price per share of the U.S. Securities shall be a
fixed price to be determined by agreement between the U.S. Representatives
and the Selling Stockholders. The initial public offering price and the
purchase price, when so determined, shall be set forth in the U.S. Pricing
Agreement. In the event that such prices have not been agreed upon and the
U.S. Pricing Agreement has not been executed and delivered by all parties
thereto by the close of business on the fourth business day following the
date of this Agreement, this Agreement shall terminate forthwith, without
liability of any party to any other party, unless otherwise agreed to by the
Company, the Selling Stockholders and the U.S. Representatives.
(3) In addition, on the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
the Selling Stockholders, severally and not jointly, hereby grant to the
U.S. Underwriters, severally and not jointly, an option to purchase up to an
additional 1,200,000 U.S. Option Securities in the aggregate at the same
purchase price per share as shall be applicable to the Initial U.S.
Securities. The option granted hereby will expire 30 days after the date
upon which the Registration Statement becomes effective or, if the Company
has elected to rely upon Rule 430A under the 1933 Act Regulations, 30 days
after the date of the U.S. Pricing Agreement, and may be exercised from time
to time, in whole or in part, only for the purpose of covering
over-allotments that may be made in connection with the offering and
distribution of the Initial U.S. Securities upon notice by the U.S.
Representatives to the Selling Stockholders setting forth the number of U.S.
Option Securities held by such Selling Stockholder as to which the several
U.S. Underwriters are exercising the option, and the time and date of
payment and delivery thereof. Such time and date of delivery (the "Delivery
Date") shall be determined by the U.S. Representatives but shall not be
later than five full business days after the exercise of such option, nor in
any event prior to the Closing Time (as defined in paragraph (b) below). If
the option is exercised as to all or any portion of the U.S. Option
Securities, the U.S. Option Securities as to which the option is exercised
shall be sold by the Selling Stockholders, severally and not jointly, in
proportion to the number of Initial U.S. Securities being sold by such
Selling Stockholder, and shall be purchased by the U.S. Underwriters,
severally and not jointly, in the respective underwriting obligation
proportions.
(b) Payment of the purchase price, and delivery of certificates, for the
U.S. Securities shall be made at the office of Latham & Watkins, 885 Third
Avenue, Suite 1000, New York, New York 10022, or at such other place as shall be
agreed upon by the U.S. Representatives and the Selling Stockholders
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at 10:00 A.M. on the fifth business day (unless postponed in accordance with the
provisions of Section 10) following the date the Registration Statement becomes
effective (or, if the Company has elected to rely upon Rule 430A, the fifth
business day after execution of the U.S. Pricing Agreement), or such other time
not later than ten business days after such date as shall be agreed upon by the
U.S. Representatives and the Selling Stockholders (such time and date of payment
and delivery being herein called the "Closing Time"). In addition, in the event
that any or all of the U.S. Option Securities are purchased by the U.S.
Underwriters, payment of the purchase price, and delivery of certificates, for
such U.S. Option Securities shall be made at the office of Latham & Watkins, 885
Third Avenue, Suite 1000, New York, New York 10022, or at such other place as
shall be agreed upon by the U.S. Representatives and the Selling Stockholders,
on the Delivery Date as specified in the notice from the U.S. Representatives to
the Selling Stockholders. Payment shall be made to the Selling Stockholders by
certified or official bank check or checks drawn in New York Clearing House
funds or similar next day funds payable to the order of such Selling Stockholder
against delivery to the U.S. Representatives for the respective accounts of the
U.S. Underwriters of certificates for the U.S. Securities to be purchased by
them. Certificates for the U.S. Securities shall be in such denominations and
registered in such names as the U.S. Representatives may request in writing at
least two business days before Closing Time or Delivery Date, as the case may
be. It is understood that each U.S. Underwriter has authorized the U.S.
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the U.S. Securities which it has agreed to
purchase. Any of Merrill Lynch, Goldman, Sachs, Bear, Stearns, CS First Boston
and Salomon Brothers individually and not as a U.S. Representative, may (but
shall not be obligated to) make payment of the purchase price for the U.S.
Securities to be purchased by any U.S. Underwriter whose check has not been
received by Closing Time or the Delivery Date, as the case may be, but such
payment shall not relieve such U.S. Underwriter from its obligations hereunder.
The certificates for the U.S. Securities shall be made available for examination
and packaging by the U.S. Representatives not later than 10:00 A.M. on the last
business day prior to Closing Time or Delivery Date, as the case may be, at such
place as the U.S. Representatives may designate in New York, New York.
SECTION 3. COVENANTS OF THE COMPANY.
The Company covenants with each U.S. Underwriter as follows:
(a) The Company will notify the U.S. Representatives immediately after
it becomes aware, and promptly confirm the notice in writing, of (i) the
effectiveness of the Registration Statement and any amendment thereto
(including any post-effective amendment), (ii) the receipt of any comments
from the Commission, (iii) any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the
Prospectuses or for additional information, and (iv) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose
or the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, or the threatening or initiation of any proceeding
for that purpose. The Company will make every reasonable effort to prevent
the issuance of any stop order or any order preventing or suspending the use
of any preliminary prospectus or suspending such qualification and, if any
stop order or any order preventing or suspending the use of any preliminary
prospectus or suspending such qualification is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) The Company will give the U.S. Representatives notice of its
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment), any amendment or supplement to the
Prospectuses (including any revised prospectuses which the Company proposes
for use by the U.S. Underwriters or Managers in connection with the offering
of the Securities which differ from the prospectuses on file at the
Commission at the time the Registration Statement becomes effective, whether
or not such revised prospectuses are required to be filed pursuant to Rule
424(b) of the 1933 Act Regulations) or any document incorporated by
reference into the Prospectus in order to comply with the 1933 Act or the
1934 Act, will furnish the
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U.S. Representatives with copies of any such amendment, supplement or
document a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file any such amendment, supplement or
document or use any such prospectuses to which the U.S. Underwriters or
counsel for the U.S. Underwriters shall reasonably object in writing or
which is not in compliance with the 1933 Act or the 1933 Act Regulations.
(c) The Company will deliver to the U.S. Representatives five signed
copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and all documents incorporated by reference therein) and
as many conformed copies as the U.S. Representatives may reasonably request,
and will also deliver to the U.S. Representatives a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits or documents incorporated by reference therein) for each
of the U.S. Underwriters.
(d) The Company will furnish to each U.S. Underwriter, from time to time
during the period when the U.S. Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the U.S. Prospectus
(as amended or supplemented) as such U.S. Underwriter may reasonably request
for the purposes contemplated by the 1933 Act, the 1933 Act Regulations, the
1934 Act or the 1934 Act Regulations.
(e) If any event shall occur as a result of which it is necessary, in
the opinion of counsel for the U.S. Underwriters, to amend or supplement the
U.S. Prospectus or any document incorporated by reference therein in order
to make the U.S. Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if for any other
reason it shall be necessary to amend or supplement the U.S. Prospectus or
any document incorporated by reference therein in order to comply with the
1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act
Regulations, the Company will forthwith amend or supplement the U.S.
Prospectus or such document incorporated by reference therein (in form and
substance reasonably satisfactory to counsel for the U.S. Underwriters and
in compliance with the 1933 Act, the 1933 Act Regulations, the 1934 Act or
the 1934 Act Regulations) so that, as so amended or supplemented, the U.S.
Prospectus or such document incorporated by reference therein will not
include an 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 existing at the time it is delivered to a purchaser, not
misleading and will comply with the 1933 Act, 1933 Act Regulations, the 1934
Act and the 1934 Act Regulations, and the Company will furnish to the U.S.
Underwriters a reasonable number of copies of such amendment or supplement.
(f) The Company will endeavor, in cooperation with the U.S.
Underwriters, to qualify the U.S. Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions of the
United States as the U.S. Representatives may designate; provided, however,
that the Company shall not be obligated to qualify as a foreign corporation
in any jurisdiction in which it is not so qualified or to file a general
consent to service of process in any jurisdiction. In each jurisdiction in
which the U.S. Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction
to continue such qualification in effect for a period of not less than one
year from the effective date of the Registration Statement.
(g) The Company will make generally available to its security holders as
soon as practicable, but not later than 60 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month
period beginning not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in Rule 158) of the
Registration Statement.
(h) If, at the time that the Registration Statement becomes effective,
any information shall have been omitted therefrom in reliance upon Rule 430A
of the 1933 Act Regulations, then immediately following the execution of the
U.S. Pricing Agreement, the Company will prepare,
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and thereafter the Company will file or transmit for filing with the
Commission in accordance with such Rule 430A and Rule 424(b) of the 1933 Act
Regulations, copies of an amended U.S. Prospectus, or, if required by such
Rule 430A, a post-effective amendment to the Registration Statement
(including an amended U.S. Prospectus), containing all information so
omitted.
(i) During a period of 90 days from the Representation Date, the Company
will not, without the prior written consent of Merrill Lynch, directly or
indirectly, sell, offer to sell, grant any option for the sale of, establish
a "put equivalent position" as defined in Rule 16a-1(h) under the 1934 Act
with respect to, or otherwise dispose of, any Common Stock or any security
convertible into or exchangeable or exercisable for Common Stock (except for
Common Stock or options or rights to acquire Common Stock issued (i)
pursuant to reservations, option agreements, employee benefit plans or the
exercise of convertible securities, in each case as referred to in Section
1(a)(viii) hereof or (ii) to directors or employees of the Company, provided
that the Common Stock issued or issuable to such directors or employees
under this clause (ii) shall not exceed 500,000 shares in the aggregate),
other than offers to sell and sales to the U.S. Underwriters pursuant to
this Agreement and offers to sell and sales to the Managers pursuant to the
International Purchase Agreement.
SECTION 4. PAYMENT OF EXPENSES.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the printing and filing, and
delivery to the U.S. Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto, (ii) the printing of this
Agreement, the U.S. Pricing Agreement, and the Intersyndicate Agreement, (iii)
the preparation, issuance and delivery of the certificates for the U.S.
Securities to the U.S. Underwriters, including capital duties, stamp duties and
stock transfer taxes, if any, payable upon issuance of any of the Securities,
the sale of the Securities to the U.S. Underwriters and their transfer between
the U.S. Underwriters and the Managers pursuant to an agreement among the U.S.
Underwriters and the Managers, (iv) the fees and disbursements of the Company's
counsel and accountants and of the Selling Stockholders' counsel, (v) the
qualification of the U.S. Securities under securities laws in accordance with
the provisions of Section 3(f), including filing fees and the reasonable fees
and disbursements of counsel for the U.S. Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey, (vi) the printing
and delivery to the U.S. Underwriters of copies of the preliminary prospectuses
and of the U.S. Prospectus and any amendments or supplements thereto, (vii) the
printing and delivery to the U.S. Underwriters of copies of the Blue Sky Survey
and (viii) the fee of the National Association of Securities Dealers, Inc.
If this Agreement is terminated by the U.S. Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i), the Company shall reimburse
the U.S. Underwriters for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the U.S. Underwriters.
SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS.
The obligations of the U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company and the Selling
Stockholders herein contained, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following further
conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date hereof, or, with the consent of the U.S.
Representatives, at a later time and date, not later, however, than 5:30
P.M. on the first day on which the New York Stock Exchange is regularly open
for business following the date hereof, or at such later time and date as
may be approved by a majority in interest of the U.S. Underwriters and a
majority in interest of the Managers; and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by
the Commission. If the Company has elected to rely upon Rule 430A of the
1933 Act Regulations, the price of the
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U.S. Securities and any price-related information previously omitted from
the effective Registration Statement pursuant to such Rule 430A shall have
been transmitted to the Commission for filing pursuant to Rule 424(b) of the
1933 Act Regulations within the prescribed time period, and prior to Closing
Time the Company shall have provided evidence satisfactory to the U.S.
Representatives of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and declared
effective in accordance with the requirements of Rule 430A of the 1933 Act
Regulations.
(b) At Closing Time the U.S. Representatives shall have received:
(1) The favorable opinion, dated as of Closing Time, of Simpson
Thacher & Bartlett, counsel for the Company and the Selling Stockholders
in form and substance satisfactory to counsel for the U.S. Underwriters,
to the effect that:
(i) The Company is a corporation validly incorporated and
existing and in good standing under the laws of the State of
Delaware.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described
in the Registration Statement.
(iii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectuses under "Description of
Capital Stock" (except for subsequent issuances, if any, pursuant to
reservations, agreements, employee benefit plans or the exercise of
convertible securities referred to in the Prospectuses) and the
shares of issued and outstanding Common Stock, including the
Securities to be purchased by the U.S. Underwriters from the Selling
Stockholders, have been duly authorized and validly issued and are
fully paid and non-assessable.
(iv) Each of Duraname Corp. and Duracell Inc. has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement; all of the issued and outstanding capital
stock of each such subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and, based solely on an
examination of the relevant minute books and stock transfer records,
all of the issued and outstanding capital stock of such subsidiaries
is owned of record by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim, except that all or a portion of the capital
stock of such subsidiaries is pledged as security for certain debt
obligations of the Company and its subsidiaries.
(v) This Agreement and the International Purchase Agreement have
each been duly authorized, executed and delivered by the Company.
(vi) The Registration Statement is effective under the 1933 Act
and, to the best of their knowledge and information, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(vii) At the time the Registration Statement became effective,
the Registration Statement (other than the financial statements, the
supporting schedules and other financial and statistical data
included therein, as to which no opinion need be rendered) complied
as to form in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations and the documents incorporated by
reference in the Registration Statement or Prospectuses or any
amendment or supplement thereto, when they became effective under the
1933 Act or were filed with the Commission under the 1934 Act,
complied in all material respects with the 1933 Act, the 1933 Act
Regulations, the 1934 Act, or the 1934 Act Regulations, as
applicable.
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(viii) The statements contained in the Prospectuses under the
caption "Description of Capital Stock," insofar as they purport to
constitute summaries of the terms of the Common Stock, constitute
accurate summaries thereof in all material respects.
(ix) No authorization, approval, consent or order of any court or
governmental authority or agency is required under United States
federal law, New York State law or the General Corporation Law of the
State of Delaware in connection with the sale of the Securities to
the U.S. Underwriters hereunder or to the Managers under the
International Purchase Agreement, except such as may be required
under the 1933 Act, the 1933 Act Regulations or state securities law;
and the execution and delivery of this Agreement and the
International Purchase Agreement, and the consummation of the
transactions contemplated herein and therein, do not and will not,
except with respect to registration rights remaining available to
certain individuals under their Common Stock Subscription Agreements
with the Company that have not expired or been waived, conflict with
or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant
to, any agreement or instrument listed or referred to in Item 10 of
the exhibits to the Company's Annual Report on Form 10-K filed with
the Commission for the fiscal year ended June 30, 1994, nor will such
action result in any violation of (A) the provisions of the
certificate of incorporation or by-laws of the Company, (B) any
applicable federal law of the United States or law of the State of
New York, or any administrative regulation thereunder, or any
provision of the General Corporation Law of the State of Delaware or
(C) any administrative or court decree known to such counsel.
(x) This Agreement, the International Purchase Agreement, the
U.S. Pricing Agreement and the International Pricing Agreement have
been duly authorized, executed and delivered by each of the Selling
Stockholders.
(xi) Immediately prior to the sale of the Securities in the
manner provided in the U.S. Purchase Agreement and the International
Purchase Agreement, each Selling Stockholder was the sole registered
owner of the Securities to be sold by it and each Selling Stockholder
has full power, right and authority to sell such Securities; upon
payment for and delivery of the Securities in the manner provided in
the U.S. Purchase Agreement and International Purchase Agreement,
assuming that the U.S. Underwriters and Managers have purchased such
Securities in good faith and without notice of any adverse claim, the
U.S. Underwriters and Managers will acquire all of the rights of each
Selling Stockholder in the Securities free of any adverse claim, any
lien in favor of the Company and any restriction on transfer imposed
by the Company;
(2) The favorable opinion, dated as of Closing Time, of Gregg A.
Dwyer, Senior Vice President, General Counsel and Secretary of the
Company, in form and substance satisfactory to counsel for the U.S.
Underwriters, to the effect that:
(i) Each of the Company, Duraname Corp. and Duracell Inc. has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in
the Registration Statement and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required; all of the
issued and outstanding capital stock of each of Duraname Corp. and
Duracell Inc. has been duly authorized and validly issued, is fully
paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim, except that all or a
portion of the capital stock of such subsidiaries is pledged as
security for certain debt obligations of the Company and its
subsidiaries.
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(ii) To the best of his knowledge and information after due
inquiry, there are no legal or governmental proceedings pending or
threatened which are required to be disclosed in the Registration
Statement, other than as disclosed therein.
(iii) To the best of his knowledge and information after due
inquiry, there are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed
as exhibits thereto other than those described or referred to therein
or filed or incorporated by reference as exhibits thereto, and no
default exists in the due performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument so described, referred to, filed or incorporated by
reference, except where such default would not have a material
adverse effect on the condition, financial or otherwise, or the
earnings or business affairs of the Company and its subsidiaries
considered as one enterprise.
(iv) No authorization, approval, consent or order of any court or
governmental authority or agency is required in connection with the
sale of the Securities to the U.S. Underwriters hereunder or to the
Managers under the International Purchase Agreement, except such as
may be required under the 1933 Act, the 1933 Act Regulations, state
securities law or foreign laws or regulations; and the execution and
delivery of this Agreement and the International Purchase Agreement,
and the consummation of the transactions contemplated herein and
therein, do not and will not, except with respect to registration
rights remaining available to certain individuals under their Common
Stock Subscription Agreements with the Company that have not expired
or been waived, conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument known to such counsel to
which the Company or any of its subsidiaries is a party or by which
it or any of them may be bound, or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor will
such action result in any violation of (A) the provisions of the
charter or by-laws of the Company or, to the best of his knowledge
and information, any Significant Subsidiary, (B) any applicable law
or administrative regulation or (C) any administrative or court
decree known to such counsel.
(3) The favorable opinions, dated as of Closing Time, of counsel to
N.V. Duracell Belgium S.A., N.V. Duracell Batteries S.A., and Duracell
Batteries Ltd. (collectively, the "Foreign Subsidiaries"), which counsel
shall be reasonably satisfactory to the U.S. Underwriters, in form and
substance satisfactory to counsel for the U.S. Underwriters, to the
effect that each such Foreign Subsidiary has been duly organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of organization; and to the best knowledge and information
of such Foreign Counsel, all of the issued and outstanding capital stock
of each such Foreign Subsidiary is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance or claim, except that all or a portion of the
capital stock of such subsidiaries is pledged as security for certain
debt obligations of the Company and its subsidiaries.
(4) The favorable opinion, dated as of Closing Time, of Latham &
Watkins, counsel for the U.S. Underwriters, with respect to the matters
set forth in clauses (i) and (v) through (viii), inclusive, of subsection
(b)(1) of this section.
(5) In giving their opinions required by subsections (b)(1), (2) and
(4), respectively, of this section, Simpson Thacher & Bartlett, Gregg A.
Dwyer and Latham & Watkins shall each additionally state that although
such counsel has not undertaken to determine independently the accuracy
and completeness of the statements contained in the Registration
Statement or in
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the Prospectuses and takes no responsibility therefor, such counsel has
participated in discussions and meetings with officers and other
representatives of the Company and discussions with the auditors for the
Company in connection with the preparation of the Registration Statement
and the Prospectuses. Such counsel has not, however, undertaken to
determine independently and, therefore, does not assume any
responsibility, explicitly or implicitly, for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or
the Prospectuses. Nothing has come to such counsel's attention that has
caused such counsel to believe that (i) the Registration Statement, at
the time it became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) the
Prospectuses, at the Closing Time or the Delivery Date, as the case may
be, contained any untrue statement of a material fact or omitted 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.
(c) At Closing Time there shall not have been, since the date hereof or
since the respective dates as of which information is given in the
Prospectuses, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the U.S. Representatives
shall have received a certificate of the President or a Vice President and
the chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1 are true and
correct in all material respects with the same force and effect as though
expressly made at and as of Closing Time, (iii) the Company has complied in
all material respects with all agreements in this Agreement and satisfied
all conditions in this Agreement on its part to be performed or satisfied at
or prior to Closing Time, and (iv) to the best of their knowledge, no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or threatened
by the Commission. As used in this Section 5(c), the term "Prospectuses"
means the Prospectuses in the form first used to confirm sales of the
Securities.
(d) At the time of the execution of this Agreement, the U.S.
Representatives shall have received from Deloitte & Touche a letter dated
such date, in form and substance satisfactory to the U.S. Representatives,
to the effect that (i) they are independent public accountants with respect
to the Company and its subsidiaries within the meaning of the 1933 Act and
the 1933 Act Regulations, (ii) it is their opinion that the financial
statements and supporting schedules included in the Registration Statement
and covered by their opinions therein comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
1933 Act Regulations, (iii) based upon limited procedures set forth in
detail in such letter, nothing has come to their attention which causes them
to believe that (A) the unaudited financial statements and supporting
schedules of the Company and its subsidiaries included in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations or are not presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that
of the audited financial statements included in the Registration Statement
or (B) at a specified date not more than five days prior to the date of this
Agreement, there has been any change in the capital stock of the Company or
any increase in the consolidated long term debt of the Company and its
subsidiaries or any decrease in consolidated net current assets or net
assets as compared with the amounts shown in the June 30, 1994 balance sheet
included in the Registration Statement or, during the period from June 30,
1994 to a specified date not more than five days prior to the date of this
Agreement, there were any decreases, as compared with the corresponding
period in the preceding year, in consolidated net sales or net income of the
Company and its subsidiaries, except in all instances for changes, increases
or decreases which the Registration Statement and the Prospectuses disclose
15
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have occurred or may occur; and (iv) in addition to the examination referred
to in their opinions and the limited procedures referred to in clause (iii)
above, they have carried out certain specified procedures, not constituting
an audit, with respect to certain amounts, percentages and financial
information which are included in the Registration Statement and
Prospectuses and which are specified by the U.S. Representatives, and have
found such amounts, percentages and financial information to be in agreement
with the relevant accounting, financial and other records of the Company and
its subsidiaries identified in such letter.
(e) At Closing Time the U.S. Representatives shall have received from
Deloitte & Touche a letter, dated as of Closing Time, to the effect that
they reaffirm the statements made in the letter furnished pursuant to
subsection (d) of this section, except that the specified date referred to
shall be a date not more than five days prior to Closing Time.
(f) At Closing Time counsel for the U.S. Underwriters shall have been
furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the issuance and sale of the
U.S. Securities as herein contemplated and related proceedings, or in order
to evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained. All proceedings
taken by the Company and the Selling Stockholders in connection with the
issuance and sale of the U.S. Securities as herein contemplated shall be
satisfactory in form and substance to the U.S. Representatives and counsel
for the U.S. Underwriters.
(g) At Closing Time the Representatives shall have received a
certificate of the general partner of each of the Selling Stockholders,
dated as of Closing Time, to the effect that (i) the representations and
warranties of each Selling Stockholder contained in Section 1(b) are true
and correct with the same force and effect as though expressly made at and
as of Closing Time and (ii) each Selling Stockholder has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time.
(h) In the event the U.S. Underwriters exercise their option provided in
Section 2 hereof to purchase all or any portion of the U.S. Option
Securities, the representations and warranties of the Company and the
Selling Stockholders contained herein and the statements in any certificates
furnished by the Company and the Selling Stockholders hereunder shall be
true and correct in all material respects as of each Delivery Date, and the
U.S. Underwriters shall have received:
(1) A certificate, dated such Delivery Date, of the President or a
Vice President of the Company and the chief financial or chief accounting
officer of the Company confirming that the certificate delivered at
Closing Time pursuant to Section 5(c) hereof remains true as of such
Delivery Date.
(2) A certificate, dated such Delivery Date, of the general partner
for each of the Selling Stockholders, confirming that the certificate
delivered at Closing Time pursuant to Section 5(g) hereof remains true as
of such Delivery Date.
(3) The favorable opinions of Simpson Thacher & Bartlett, counsel for
the Company and the Selling Stockholders, in form and substance
satisfactory to counsel for the U.S. Underwriters, dated such Delivery
Date, relating to the U.S. Option Securities and otherwise to the same
effect as the opinions required by Section 5(b)(1) hereof, revised to
reflect the sale of U.S. Option Securities.
16
<PAGE>
(4) The favorable opinions of Gregg A. Dwyer, Senior Vice President,
General Counsel and Secretary of the Company, dated such Delivery Date,
to the same effect as the opinions required by Section 5(b)(2) hereof,
revised to reflect the sale of U.S. Option Securities.
(5) The favorable opinions of Latham & Watkins, counsel for the U.S.
Underwriters, dated such Delivery Date, to the same effect as the
opinions required by Section 5(b)(4) hereof, revised to reflect the sale
of U.S. Option Securities.
(6) A letter from Deloitte & Touche in form and substance
satisfactory to the U.S. Underwriters, dated the Delivery Date,
substantially the same in scope and substance as the letter furnished to
the U.S. Underwriters pursuant to Section 5(e) hereof except that the
"specified date" in the letter furnished pursuant to this section shall
be a date not more than five days prior to such Delivery Date.
If any condition specified in this section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
U.S. Representatives by notice to the Company and the Selling Stockholders at
any time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4.
SECTION 6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each U.S. Underwriter
and each person, if any, who controls any U.S. Underwriter within the meaning of
Section 15 of the 1933 Act, and each officer and director of each U.S.
Underwriter and of any such controlling person to the extent and in the manner
set forth in clauses (i), (ii) and (iii) below. In addition, the Selling
Stockholders (in proportion that the number of Securities being sold by each
Selling Stockholder bears to the total number of Securities) agree to indemnify
and hold harmless each U.S. Underwriter and each person, if any, who controls
any U.S. Underwriter within the meaning of Section 15 of the 1933 Act as
follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including, without limitation, all documents
incorporated by reference therein and the information deemed to be part of
the Registration Statement pursuant to Rule 430A(b) of the 1933 Act
Regulations, if applicable, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including,
subject to Section 6(c) hereof, the fees and disbursements of counsel chosen
by the U.S. Representatives), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
17
<PAGE>
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter through the U.S. Representatives, or by any Manager through the
Lead Managers, expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectuses; and provided further, that each Selling
Stockholder agrees to indemnify and hold harmless each U.S. Underwriter as
provided above, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with information furnished in writing to the Company by
such Selling Stockholder expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectuses.
(b) Each U.S. Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act and each Selling Stockholder against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement, or any preliminary prospectus or the Prospectuses in
reliance upon and in conformity with written information furnished to the
Company by such U.S. Underwriter through the U.S. Representatives expressly for
use in the Registration Statement, such preliminary prospectus or the
Prospectuses.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
(d) The U.S. Underwriters severally confirm, and the Company and each of the
Selling Stockholders agree, that the statements with respect to the public
offering of the Shares set forth on the cover page of, and in the third, sixth
and ninth paragraphs of text under the caption "Underwriting" in, the U.S.
Prospectus constitute the only information furnished in writing to the Company
by or on behalf of the several U.S. Underwriters through the Representatives
expressly for use in the Registration Statement and the U.S. Prospectus.
(e) Each Selling Stockholder severally confirms, and each of the U.S.
Underwriters agrees, that the information (other than the percentage of shares
owned) pertaining to each Selling Stockholder under the caption "Principal and
Selling Stockholders" in the U.S. Prospectus constitutes the only information
furnished in writing to the Company by such Selling Stockholder expressly for
use in the Registration Statement and the U.S. Prospectus.
SECTION 7. CONTRIBUTION.
In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in Section 6 is for any reason held
to be unenforceable by the indemnified parties although applicable in accordance
with its terms, the Company, the Selling Stockholders and the U.S. Underwriters
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement incurred by the
Company and the Selling Stockholders and one or more of the U.S. Underwriters,
as incurred, in such proportions that the U.S. Underwriters are responsible for
that portion represented by the percentage that the underwriting discount
appearing on the cover page of the U.S. Prospectus bears to the initial public
offering price
18
<PAGE>
appearing thereon and the Company and the Selling Stockholders, in the
proportions that they have agreed to indemnify, shall be responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this section, each person, if any, who
controls a U.S. Underwriter within the meaning of Section 15 of the 1933 Act,
and each officer or director of a U.S. Underwriter and of any such control
person, shall have the same rights to contribution as such U.S. Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement
and the U.S. Pricing Agreement, or contained in certificates of officers of the
Company or certificates of the Selling Stockholders submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any U.S. Underwriter or controlling
person, or by or on behalf of the Company or the Selling Stockholders, and shall
survive delivery of the U.S. Securities to the U.S. Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The U.S. Representatives may terminate this Agreement, by notice to the
Company and the Selling Stockholders, at any time at or prior to Closing Time
(i) if there has been, since the date of this Agreement or since the respective
dates as of which information is given in the Prospectuses, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States, Europe or elsewhere, or any new outbreak of hostilities or
material escalation thereof or other calamity or crisis, the effect of which is
such as to make it, in the judgment of the U.S. Representatives, impracticable
to market the U.S. Securities or to enforce contracts for the sale of the U.S.
Securities, or (iii) if trading in the Common Stock has been suspended by the
Commission, or if trading generally on the New York Stock Exchange has been
suspended, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required, by the New York Stock
Exchange or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by Federal, New York, or Connecticut
authorities or (iv) if there has occurred any change or development involving a
prospective change in national or international political, financial or economic
conditions or currency exchange rates or exchange controls which, in the opinion
of the U.S. Representatives, is likely to have a materially adverse effect on
the market for the U.S. Securities. As used in this Section 9(a), the term
"Prospectuses" means the Prospectuses in the form first used to confirm sales of
the Securities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Sections 4 and 6.
SECTION 10. DEFAULT BY ONE OR MORE OF THE U.S. UNDERWRITERS.
If one or more of the U.S. Underwriters shall fail at Closing Time to
purchase the U.S. Securities which it or they are obligated to purchase under
this Agreement and the U.S. Pricing Agreement (the "Defaulted Securities"), the
U.S. Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting U.S. Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon
19
<PAGE>
and upon the terms herein set forth. If, however, the U.S. Representatives shall
not have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
U.S. Securities, the non-defaulting U.S. Underwriters shall be obligated to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting U.S. Underwriters; or
(b) if the number of Defaulted Securities exceeds 10% of the U.S.
Securities, this Agreement shall terminate without liability on the part of
any non-defaulting U.S. Underwriter.
No action taken pursuant to this section shall relieve any defaulting U.S.
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, the U.S. Representatives, the Company or the Selling
Stockholders shall have the right to postpone Closing Time for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectuses or in any other documents or arrangements.
The U.S. Underwriters shall also have the right to amend Schedule A hereto
by making such substitutions or corrections as indicated in the U.S. Pricing
Agreement.
SECTION 11. NOTICES.
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 U.S. Underwriters shall be directed to the
U.S. Representatives in care of Merrill Lynch at Merrill Lynch World
Headquarters, North Tower, World Financial Center, New York, New York
10281-1305, attention of Alison J. Mass, Managing Director, telecopy number
(212) 449-9021, with a copy to Latham & Watkins, 885 Third Avenue, New York, New
York 10022, attention of Raymond Y. Lin, telecopy number (212) 751-4864; notices
to the Company shall be directed to it at Berkshire Industrial Park, Bethel,
Connecticut 06801, attention of Gregg A. Dwyer, telecopy number (203) 796-4518,
with copies to Kohlberg Kravis Roberts & Co., L.P., 9 West 57th Street, New
York, New York 10019, attention of Scott M. Stuart, telecopy number (212)
750-0003, and Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New
York 10017, attention of Vincent Pagano, Jr., telecopy number (212) 455-2502;
and notices to the Selling Stockholders shall be directed to such Selling
Stockholder in care of Kohlberg Kravis Roberts & Co., L.P., 9 West 57th Street,
New York, New York 10019, attention of Scott M. Stuart, telecopy number (212)
750-0003, and Simpson Thacher & Bartlett, 425 Lexington Avenue, New York 10017,
attention of Vincent Pagano, Jr., telecopy number (212) 455-2502.
SECTION 12. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the U.S.
Underwriters, the Company and the Selling Stockholders and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the U.S.
Underwriters, the Company and the Selling Stockholders and their respective
successors, and the controlling persons, officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the U.S.
Underwriters, the Company and the Selling Stockholders and their respective
successors, and such controlling persons, officers and directors and their heirs
and legal representatives, and for the benefit of no other person, firm,
corporation or partnership. No purchaser of U.S. Securities from any U.S.
Underwriter shall be deemed to be a successor by reason merely of such purchase.
20
<PAGE>
The U.S. Pricing Agreement shall inure to the benefit of and be binding upon
the U.S. Underwriters and the Selling Stockholders and their respective
successors. Nothing expressed or mentioned in the U.S. Pricing Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the U.S. Underwriters and the Selling Stockholders and their respective
successors, and the controlling persons, officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of the U.S. Pricing
Agreement or any provision therein contained. The U.S. Pricing Agreement and all
conditions and provisions thereof are intended to be for the sole and exclusive
benefit of the U.S. Underwriters and the Selling Stockholders and their
respective successors, and such controlling persons, officers and directors and
their heirs and legal respresentatives, and for the benefit of no other person,
firm, corporation or partnership. No purchaser of U.S. Securities from any U.S.
Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME.
This Agreement and the U.S. Pricing Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
giving effect to principles of conflict of laws. Specified times of day refer to
New York City time. As used herein, the term "business day" means any day on
which the New York Stock Exchange and commercial banks in London are regularly
open for business.
SECTION 14. LIMITATION OF LIABILITY.
No partner of any Selling Stockholder or any successor partner of any
Selling Stockholder (including, without limitation, any general partner or
successor general partner thereof) shall have any liability or obligation for
the performance of any Selling Stockholder's obligations hereunder, and all
liabilities or obligations of any Selling Stockholder arising hereunder shall be
limited to and satisfied only out of the property of such Selling Stockholder.
21
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the U.S. Underwriters, the Company and the Selling Stockholders in accordance
with its terms.
Very truly yours,
DURACELL INTERNATIONAL INC.
By:
..................................
Title: Chairman and Chief
Executive Officer
DI ASSOCIATES, L.P.
By: KKR ASSOCIATES, its General Partner
By:
..................................
General Partner
KKR PARTNERS II, L.P.
By: KKR ASSOCIATES, its General Partner
By:
..................................
General Partner
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON CORPORATION
SALOMON BROTHERS INC
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
..................................
Title:
For itself and each of the U.S.
Representatives on behalf of the other
U.S. Underwriters named in the U.S.
Purchase Agreement.
22
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER
NAME OF UNDERWRITER OF SECURITIES
- ------------------------------------------------------------------------------- --------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................................
Merrill Lynch & Co.............................................................
Goldman, Sachs & Co............................................................
Bear, Stearns & Co. Inc........................................................
CS First Boston Corporation....................................................
Salomon Brothers Inc...........................................................
[Other Underwriters]...........................................................
--------------
Total.......................................................................... [8,000,000]
--------------
--------------
</TABLE>
23
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
NUMBER OF INITIAL NUMBER OF U.S.
U.S. SECURITIES OPTION SECURITIES
NAME TO BE SOLD TO BE SOLD
- ------------------------------------------------------ ----------------- -----------------
<S> <C> <C>
DI Associates, L.P....................................
KKR Partners II, L.P..................................
</TABLE>
24
<PAGE>
EXHIBIT A
8,000,000 SHARES
DURACELL INTERNATIONAL INC.
(A DELAWARE CORPORATION)
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
U.S. PRICING AGREEMENT
March , 1995
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON CORPORATION
SALOMON BROTHERS INC
as U.S. Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
Ladies and Gentlemen:
Reference is made to the U.S. Purchase Agreement, dated March , 1995 (the
"U.S. Purchase Agreement"), relating to the purchase by the several U.S.
Underwriters named in Schedule A thereto, for whom Merrill Lynch & Co. of
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., Bear,
Stearns & Co. Inc., CS First Boston Corporation and Salomon Brothers Inc are
acting as representatives (the "U.S. Representatives"), of the above shares of
Common Stock (the "U.S. Securities") of Duracell International Inc. (the
"Company").
Pursuant to Section 2 of the U.S. Purchase Agreement, the Selling
Stockholders agree with each U.S. Underwriter as follows:
1. The initial public offering price per share for the U.S. Securities,
determined as provided in said Section 2, shall be $ .
2. The purchase price per share for the U.S. Securities to be paid by
the several U.S. Underwriters shall be $ , being an amount equal to the
initial public offering price set forth above less $ per share.
A-1
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement between the U.S.
Underwriters and the Selling Stockholders in accordance with its terms.
Very truly yours,
DI ASSOCIATES, L.P.
By: KKR ASSOCIATES, its General Partner
By:
..................................
General Partner
KKR PARTNERS II, L.P.
By: KKR ASSOCIATES, its General Partner
By:
..................................
General Partner
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON CORPORATION
SALOMON BROTHERS INC
By: ..................................
For itself and each of the U.S.
Representatives on behalf of the other
U.S. Underwriters named in the U.S.
Purchase Agreement.
A-2
Exhibit 1.2
SCHEDULE A
2,000,000 SHARES
DURACELL INTERNATIONAL INC.
(A DELAWARE CORPORATION)
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
INTERNATIONAL PURCHASE AGREEMENT
March , 1995
MERRILL LYNCH INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
CS FIRST BOSTON LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
as Lead Managers of the several Managers
c/o Merrill Lynch International Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Ladies and Gentlemen:
Duracell International Inc., a Delaware corporation (the "Company"), and the
stockholders of the Company named in Schedule B hereto (the "Selling
Stockholders"), confirm the agreements with Merrill Lynch International Limited
("MLIL"), Goldman Sachs International ("GSI"), Bear, Stearns International
Limited ("BSIL"), CS First Boston Limited ("CSFBL"), Salomon Brothers
International Limited ("SBIL") and each of the other managing underwriters named
in Schedule A hereto (collectively, the "Managers," which term shall also
include any managing underwriter substituted as hereinafter provided in Section
10), for whom MLIL, GSI, BSIL, CSFBL, and SBIL are acting as lead managers (in
such capacity, MLIL, GSI, BSIL, CSFBL, and SBIL shall hereinafter be referred to
as the "Lead Managers"), with respect to the sale by the Selling Stockholders,
acting severally and not jointly, of 2,000,000 shares of common stock, par value
$.01 per share, of the Company (the "Common Stock"), and the purchase by the
Managers, acting severally and not jointly, of the respective numbers of shares
of Common Stock set forth in Schedule A hereto (the "Initial International
Securities"). The Selling Stockholders grant to the Managers the option
described in Section 2 to purchase all or any part of 300,000 additional shares
in the aggregate (the "International Option Securities") of Common Stock to
cover over-allotments of the Initial International Securities. The Initial
International Securities and the International Option Securities to be purchased
by the Managers are hereinafter called the "International Securities."
It is understood and agreed by all parties that the Company and the Selling
Stockholders are concurrently entering into an agreement dated the date hereof
(the "U.S. Purchase Agreement") providing for the sale by the Selling
Stockholders of up to an aggregate of 8,000,000 shares of Common Stock (the
"Initial U.S. Securities") through arrangements with certain underwriters in the
United States and Canada (the "U.S. Underwriters") for whom Merrill Lynch & Co.
of Merrill Lynch, Pierce,
<PAGE>
Fenner & Smith Incorporated ("Merrill Lynch"), Goldman, Sachs & Co., Bear,
Stearns & Co. Inc., CS First Boston Corporation and Salomon Brothers Inc are
acting as representatives (the "U.S. Representatives") and the grant by the
Selling Stockholders to the U.S. Representatives of an option to purchase all or
any part of 1,200,000 additional shares of Common Stock (the "U.S. Option
Securities") to cover over-allotments of the Initial U.S. Securities. The
Initial U.S. Securities and the U.S. Option Securities are hereinafter called
the "U.S. Securities." The U.S. Securities and the International Securities,
collectively, are hereinafter called the "Securities."
Prior to the purchase and public offering of the International Securities by
the several Managers, the Selling Stockholders and the Lead Managers, acting on
behalf of the several Managers, shall enter into an agreement substantially in
the form of Exhibit A hereto (the "International Pricing Agreement"). The
International Pricing Agreement may take the form of an exchange of any standard
form of written telecommunication between the Selling Stockholders and the Lead
Managers and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the International Securities will be governed
by this International Purchase Agreement (this "Agreement"), as supplemented by
the International Pricing Agreement. From and after the date of the execution
and delivery of the International Pricing Agreement, this Agreement shall be
deemed to incorporate the International Pricing Agreement.
The initial public offering price and the purchase price with respect to the
U.S. Securities shall be set forth in a separate instrument (the "U.S. Pricing
Agreement"), the form of which is attached to the U.S. Purchase Agreement. The
price per security for the U.S. Securities to be purchased by the U.S.
Underwriters pursuant to the U.S. Purchase Agreement shall be identical to the
price per security for the International Securities to be purchased by the
Managers hereunder.
Two forms of prospectus are to be used in connection with the offering and
sale of the Securities, one relating to the International Securities (the
"International Form of Prospectus") and the other relating to the U.S.
Securities (the "U.S. Form of Prospectus"). The U.S. Form of Prospectus is
identical to the International Form of Prospectus, except for the front cover
page, a "Certain U.S. Federal Tax Consequences to Non-U.S. Holders" section in
the International Form of Prospectus, the "Underwriting" section and the back
cover page.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-57857) and related
preliminary prospectuses for the registration of the Securities under the
Securities Act of 1933, as amended (the "1933 Act"), has filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof, and will file such additional amendments thereto
and such amended prospectuses as may hereafter be required. Such registration
statement (as amended, if applicable) and the International Form of Prospectus
and the U.S. Form of Prospectus constituting parts thereof (including in each
case all documents incorporated by reference therein and the information, if
any, deemed to be part thereof pursuant to Rule 430A(b) of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")),
as from time to time amended or supplemented pursuant to the 1933 Act or
otherwise, are hereinafter referred to as the "Registration Statement," the
"International Prospectus" and the "U.S. Prospectus," respectively, and the
International Prospectus and the U.S. Prospectus are hereinafter called,
collectively, the "Prospectuses," and, each individually, a "Prospectus," except
that if any revised U.S. Prospectus or revised International Prospectus shall be
provided to the Managers or the U.S. Underwriters, respectively, by the Company
or the Selling Stockholders for use in connection with the offering of the
Securities which differs from the form of such prospectus on file at the
Commission at the time the Registration Statement becomes effective (whether or
not such revised prospectus is required to be filed by the Company pursuant to
Rule 424(b) of the 1933 Act Regulations), the terms "International Prospectus,"
"U.S. Prospectus," "Prospectuses" and "Prospectus" shall refer to such revised
prospectuses from and after the time they are first provided to the Mangers and
the U.S. Underwriters, respectively, for such use.
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The Company and the Selling Stockholders understand that the Managers
propose to make a public offering of the International Securities as soon as the
Lead Managers deem advisable after the Registration Statement becomes effective
and the International Pricing Agreement has been executed and delivered.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to each Manager as of the date
hereof and as of the date of the International Pricing Agreement (such latter
date being hereinafter referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective and at the
Representation Date, the Registration Statement will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations
and will not contain an 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. The Prospectuses, at the Representation
Date (unless the term "Prospectuses" refers to prospectuses which have been
provided to the Managers or the U.S. Underwriters by the Company for use in
connection with the offering of the Securities which differ from the
Prospectuses on file at the Commission at the time the Registration
Statement becomes effective, in which case at the time they are first
provided to the Managers or the U.S. Underwriters for such use) and at each
of the Closing Time and the Delivery Date referred to in Section 2, will not
include an 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; provided, however,
that the representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or
Prospectuses made in reliance upon and in conformity with information
furnished to the Company in writing by any Manager through the Lead
Managers, or by any U.S. Underwriter through the U.S. Representatives,
expressly for use in the Registration Statement or Prospectuses.
(ii) The documents incorporated by reference in the Registration
Statement, the Prospectuses, any amendment or supplement thereto or any
preliminary prospectus when they become effective under the 1933 Act or are
filed with the Commission under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), as the case may be, will comply in material
respects with the requirements of the 1933 Act or the 1934 Act, as
applicable and the 1933 Act Regulations and the rules and regulations of the
Commission under the 1934 Act (the "1934 Act Regulations"), as applicable.
(iii) The accountants who certified the financial statements and
supporting schedules included in the Registration Statement are independent
public accountants as required by the 1933 Act and the 1933 Act Regulations.
(iv) The financial statements included in the Registration Statement and
the Prospectuses present fairly the financial position of the Company and
its consolidated subsidiaries as at the dates indicated and the results of
their operations for the periods specified; except as otherwise stated in
the Registration Statement, such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein.
(v) Since the respective dates as of which information is given in the
Registration Statement and the Prospectuses, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings or business affairs of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, (B) there have been no
transactions entered into by the Company or any of its subsidiaries, other
than those in the ordinary course of business, which are material with
respect to
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the Company and its subsidiaries considered as one enterprise, and (C) there
has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(vi) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectuses; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the earnings or
business affairs of the Company and its subsidiaries considered as one
enterprise.
(vii) Each Significant Subsidiary (as defined in Regulation S-X of the
Commission) of the Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectuses
and is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings or business affairs of the Company and its subsidiaries considered
as one enterprise; all of the issued and outstanding capital stock of each
such subsidiary has been duly authorized and validly issued, is fully paid
and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or claim, except that all or a portion of the capital
stock of certain such subsidiaries is pledged as security for certain debt
obligations of the Company and its subsidiaries.
(viii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectuses under "Capitalization" (except
for subsequent issuances, if any, pursuant to reservations, option
agreements, employee benefit plans or the exercise of convertible securities
referred to in the Prospectuses); the shares of issued and outstanding
Common Stock, including the Securities to be purchased by the Managers and
the U.S. Underwriters from Selling Stockholders, have been duly authorized
and validly issued and are fully paid and non-assessable.
(ix) Neither the Company nor any of its subsidiaries is in violation of
its charter or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject other than any such violation
or default that would not have a material adverse effect on the condition,
financial or otherwise, or the earnings or business affairs of the Company
and its subsidiaries considered as one enterprise; and the execution,
delivery and performance of this Agreement and the U.S. Purchase Agreement,
and the consummation of the transactions contemplated herein and therein,
have been duly authorized by all necessary corporate action and will not,
except with respect to registration rights remaining available to certain
individuals under their Common Stock Subscription Agreements with the
Company that have not expired or been waived, conflict with or constitute a
breach of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be bound, or
to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any of its
subsidiaries or any applicable law, administrative regulation or
administrative or court decree, other than any such conflict, breach or
violation that would not have a material adverse
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effect on the condition, financial or otherwise, or the earnings or business
affairs of the Company and its subsidiaries considered as one enterprise.
(x) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, is imminent that
might have a material adverse effect on the condition, financial or
otherwise, or the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise; and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors which might be expected to
result in any material adverse change in the condition, financial or
otherwise, or in the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise.
(xi) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company or the Selling Stockholders, threatened, against or
affecting the Company or any of its subsidiaries, which is required to be
disclosed in the Registration Statement (other than as disclosed therein),
or which, considered singly or in the aggregate, might result in any
material adverse change in the condition, financial or otherwise, or in the
earnings or business affairs of the Company and its subsidiaries considered
as one enterprise, or which might materially and adversely affect the
consummation of this Agreement or the U.S. Purchase Agreement; and there are
no contracts or documents of the Company or any of its subsidiaries which
are required to be filed as exhibits to the Registration Statement (or to
any of the documents incorporated by reference therein) by the 1933 Act, the
1933 Act Regulations, the 1934 Act or the 1934 Act Regulations which have
not been so filed.
(xii) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively,
"intellectual property") presently employed by them in connection with the
business now operated by them, except where the failure to own or possess or
have the ability to acquire any such intellectual property would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings or business affairs of the Company and its subsidiaries considered
as one enterprise, and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in any material adverse change in the condition, financial or
otherwise, or in the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise.
(xiii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the sale of
the International Securities hereunder or the U.S. Securities under the U.S.
Purchase Agreement, except such as may be required under the 1933 Act, the
1933 Act Regulations or state or foreign securities laws.
(xiv) The Company and its subsidiaries possess such certificates,
authorizations or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them, except where the failure to possess such certificates,
authorizations or permits would not have a material adverse effect on the
condition, financial or otherwise, or the earnings or business affairs of
the Company and its subsidiaries considered as one enterprise, and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling, or finding, would materially
and adversely affect the condition, financial or otherwise, or the earnings
or business affairs of the Company and its subsidiaries considered as one
enterprise.
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(xv) The Company and its subsidiaries have good title to all properties
owned by them, in each case free and clear of all liens, encumbrances and
defects except (i) as do not materially interfere with the use made and
proposed to be made of such properties, (ii) as set forth in the
Registration Statement (including the Notes to the Financial Statements
included therein) or (iii) as could not reasonably be expected to materially
and adversely affect the condition, financial or otherwise, or the earnings
or business affairs of the Company and its subsidiaries considered as one
enterprise.
(xvi) There are no holders of securities (debt or equity) of the Company
or any of its subsidiaries, or holders of rights, options, or warrants to
obtain securities of the Company or any of its subsidiaries, who have the
right to request the Company to register securities held by them under the
1933 Act, other than (i) holders who have waived such rights or will not
have such rights for the 180-day period after the Representation Date and
have waived their rights with respect to the inclusion of their securities
in the Registration Statement, (ii) the Selling Stockholders who are selling
Securities pursuant to the Agreement and the U.S. Purchase Agreement and
(iii) certain members of management of the Company who have certain
piggyback registration rights with respect to securities of the Company.
(xvii) Except as disclosed in the Registration Statement, the Company
and its subsidiaries are in material compliance with all applicable existing
federal, state, local and foreign laws and regulations relating to
protection of human health or the environment or imposing liability or
standards of conduct concerning any Hazardous Material (as hereinafter
defined) ("Environmental Laws"), except, in each case, where such
noncompliance, singly or in the aggregate, would not have a material and
adverse effect on the condition, financial or otherwise, or the earnings or
business affairs of the Company and its subsidiaries considered as one
enterprise. The term "Hazardous Material" means (a) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (b) any "hazardous
waste" as defined by the Resource Conservation and Recovery Act, as amended,
(c) any petroleum or petroleum product, (d) any polychlorinated biphenyl,
and (e) any pollutant or contaminant or hazardous, dangerous, or toxic
chemical, material, waste or substance regulated under or within the meaning
of any other Environmental Law.
(xviii) There is no alleged liability, or to the best knowledge and
information of the Company, potential liability, (including, without
limitation, alleged or potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) of the Company or any of its
subsidiaries arising out of, based on or resulting from the presence or
release into the environment of any Hazardous Material at any location,
whether or not owned by the Company or any of its subsidiaries or any
violation or alleged violation of any Environmental Law, (x) which alleged
or potential liability is required to be disclosed in the Registration
Statement, other than as disclosed therein, or (y) which alleged or
potential liability, singly or in the aggregate, would have a material and
adverse effect on the condition, financial or otherwise, or the earnings or
business affairs of the Company and its subsidiaries considered as one
enterprise, except for any alleged or potential liability for which the
Company has been indemnified by Kraft, Inc. The Company does not expect that
the liabilities for which the Company has been indemnified by Kraft, Inc.
(after taking into account such indemnification) will have a material
adverse effect on the condition, financial or otherwise, or the earnings or
business affairs of the Company and its subsidiaries considered as one
enterprise.
(b) Each of the Selling Stockholders, severally, represents and warrants to,
and agrees with, each Manager as follows:
(i) The execution and delivery of this Agreement, the U.S. Purchase
Agreement, the International Pricing Agreement and the U.S. Pricing
Agreement, and the consummation of the transactions herein or therein
contemplated will not result in a breach by such Selling Stockholder of, or
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constitute a default by such Selling Stockholder under, any indenture, deed
or trust, contract, or other agreement or instrument or any decree, judgment
or order to which such Selling Stockholder is a party or by which such
Selling Stockholder may be bound.
(ii) Such Selling Stockholder has and will have at Closing Time referred
to in Section 2(c) hereof good and marketable title to the Securities to be
sold by such Selling Stockholder hereunder, free and clear of any pledge,
lien, security interest, encumbrance, claim or equity other than pursuant to
this Agreement or the U.S. Purchase Agreement; such Selling Stockholder has
full right, power and authority to sell, transfer and deliver the Securities
to be sold by such Selling Stockholder hereunder and under the U.S. Purchase
Agreement; and upon delivery of the Securities to be sold by such Selling
Stockholder hereunder and under the U.S. Purchase Agreement and payment of
the purchase price therefor as herein and therein contemplated, each of the
Managers and U.S. Underwriters will receive good and marketable title to its
ratable share of the Securities purchased by it from such Selling
Stockholder, free and clear of any pledge, lien, security interest,
encumbrance, claim or equity.
(iii) All authorizations, approvals and consents necessary for the
execution and delivery by such Selling Stockholder of this Agreement, the
U.S. Purchase Agreement, the International Pricing Agreement and the U.S.
Pricing Agreement, and the sale and delivery of the Securities to be sold by
such Selling Stockholder hereunder and under the U.S. Purchase Agreement
(other than, at the time of the execution hereof or thereof, the issuance of
the order of the Commission declaring the Registration Statement effective
and such authorizations, approvals or consents as may be necessary under
state or foreign securities laws) have been obtained and are in full force
and effect; and such Selling Stockholder has the full right, power and
authority to enter into this Agreement, the U.S. Purchase Agreement, the
International Pricing Agreement and the U.S. Pricing Agreement, and to sell,
transfer and deliver the Securities to be sold by such Selling Stockholder
hereunder and under the U.S. Purchase Agreement.
(iv) During a period of 90 days from the Representation Date, such
Selling Stockholder will not, without the prior written consent of Merrill
Lynch, directly or indirectly, offer to sell, sell, grant any option for the
sale of, establish a "put equivalent position" as defined in Rule 16a-1(h)
under the 1934 Act with respect to, or otherwise dispose of, any Common
Stock or any securities convertible into or exchangeable or exercisable for
Common Stock owned by such Selling Stockholder or with respect to which such
Selling Stockholder has the power of disposition, other than to the Managers
and the U.S. Underwriters pursuant to this Agreement and the U.S. Purchase
Agreement.
(v) To the extent that any statements or omissions made in the
Registration Statement, any preliminary prospectus, the Prospectuses or any
amendment or supplement thereto are made in reliance upon and in conformity
with information furnished in writing to the Company by such Selling
Stockholder expressly for use therein, the Registration Statement and such
preliminary prospectus do not, and the Prospectuses and any amendments or
supplements thereto will not, as of the applicable effective date or as of
the applicable filing date, as the case may be, contain an 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
(vi) 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 Securities.
(c) Any certificate signed by any officer of the Company or by the general
partner of any Selling Stockholder and delivered, pursuant to this Agreement or
in connection with the payment of the
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purchase price and delivery of the certificates for the Initial International
Securities, the International Option Securities, the Initial U.S. Securities or
the U.S. Option Securities, to the Lead Managers, the U.S. Representatives, the
Managers, the U.S. Underwriters, counsel for the Managers or counsel for the
U.S. Representatives shall be deemed a representation and warranty by the
Company or by such Selling Stockholder, as the case may be, to each Lead
Manager, Manager, U.S. Representative and U.S. Underwriter as to the matters
covered thereby.
SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING.
(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, each of the Selling
Stockholders, severally and not jointly, agrees to sell to each Manager,
severally and not jointly, and each Manager, severally and not jointly, agrees
to purchase from each of the Selling Stockholders, at the price per share set
forth in the International Pricing Agreement, the number of Initial
International Securities set forth in Schedule A opposite the name of such
Manager, plus any additional number of International Securities which such
Manager may become obligated to purchase pursuant to the provisions of Section
10 hereof. If the Company elects to rely upon Rule 430A under the 1933 Act
Regulations, Schedule A may be attached to the International Pricing Agreement.
(1) If the Company has elected not to rely upon Rule 430A under the 1933
Act Regulations, the initial public offering price and the purchase price
per share to be paid by the several Managers for the International
Securities have each been determined and set forth in the International
Pricing Agreement, dated the date hereof, and an amendment to the
Registration Statement and the Prospectuses will be filed before the
Registration Statement becomes effective.
(2) If the Company has elected to rely upon Rule 430A under the 1933 Act
Regulations, the purchase price per share to be paid by the several Managers
for the International Securities shall be an amount equal to the initial
public offering price, less an amount per share to be determined by
agreement between the Lead Managers and the Selling Stockholders. The
initial public offering price per share of the International Securities
shall be a fixed price to be determined by agreement between the Lead
Managers and the Selling Stockholders. The initial public offering price and
the purchase price, when so determined, shall be set forth in the
International Pricing Agreement. In the event that such prices have not been
agreed upon and the International Pricing Agreement has not been executed
and delivered by all parties thereto by the close of business on the fourth
business day following the date of this Agreement, this Agreement shall
terminate forthwith, without liability of any party to any other party,
unless otherwise agreed to by the Company, the Selling Stockholders and the
Lead Managers.
(3) In addition, on the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
the Selling Stockholders hereby grant to the Managers, severally and not
jointly, an option to purchase up to an additional 300,000 International
Option Securities in the aggregate at the same purchase price per share as
shall be applicable to the Initial International Securities. The option
granted hereby will expire 30 days after the date upon which the
Registration Statement becomes effective or, if the Company has elected to
rely upon Rule 430A under the 1933 Act Regulations, 30 days after the date
of the International Pricing Agreement, and may be exercised from time to
time, in whole or in part, only for the purpose of covering over-allotments
that may be made in connection with the offering and distribution of the
Initial International Securities upon notice by the Lead Managers to the
Selling Stockholders setting forth the number of International Option
Securities held by such Selling Stockholder as to which the several Managers
are exercising the option, and the time and date of payment and delivery
thereof. Such time and date of delivery (the "Delivery Date") shall be
determined by the Lead Managers but shall not be later than five full
business days after the exercise of such option, nor in any event prior to
the Closing Time (as defined in paragraph (b) below). If the option is
exercised as to all or any portion of the International Option Securities,
the
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International Option Securities as to which the option is exercised shall be
sold by the Selling Stockholders, severally and not jointly, in proportion
to the number of Initial International Securities being sold by such Selling
Stockholder and shall be purchased by the Managers, severally and not
jointly, in the respective underwriting obligation proportions.
(b) Payment of the purchase price, and delivery of certificates, for the
International Securities shall be made at the office of Latham & Watkins, 885
Third Avenue, Suite 1000, New York, New York 10022, or at such other place as
shall be agreed upon by the Lead Managers and the Selling Stockholders, at 10:00
A.M. on the fifth business day (unless postponed in accordance with the
provisions of Section 10) following the date the Registration Statement becomes
effective (or, if the Company has elected to rely upon Rule 430A, the fifth
business day after execution of the International Pricing Agreement), or such
other time not later than ten business days after such date as shall be agreed
upon by the Lead Managers, the Company and the Selling Stockholders (such time
and date of payment and delivery being herein called the "Closing Time"). In
addition, in the event that any or all of the International Option Securities
are purchased by the Managers, payment of the purchase price, and delivery of
certificates, for such International Option Securities shall be made at the
office of Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New York
10022, or at such other place as shall be agreed upon by the U.S.
Representatives and the Selling Stockholders, on the Delivery Date as specified
in the notice from the Lead Managers to the Selling Stockholders. Payment shall
be made to the Selling Stockholders by certified or official bank check or
checks drawn in New York Clearing House funds or similar next day funds payable
to the order of such Selling Stockholder against delivery to the Lead Managers
for the respective accounts of the Managers of certificates for the
International Securities to be purchased by them. Certificates for the
International Securities shall be in such denominations and registered in such
names as the Lead Managers may request in writing at least two business days
before Closing Time or Delivery Date, as the case may be. It is understood that
each Manager has authorized the Lead Managers, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
International Securities which it has agreed to purchase. Any of MLIL, GSI,
BSIL, CSFBL, or SBIL, individually and not as a Lead Manager, may (but shall not
be obligated to) make payment of the purchase price for the International
Securities to be purchased by any Manager whose check has not been received by
Closing Time or the Delivery Date, as the case may be, but such payment shall
not relieve such Manager from its obligations hereunder. The certificates for
the International Securities shall be made available for examination and
packaging by the Lead Managers not later than 10:00 A.M. on the last business
day prior to Closing Time or Delivery Date, as the case may be, at such place as
the Lead Managers may designate in New York, New York.
SECTION 3. COVENANTS OF THE COMPANY.
The Company covenants with each Manager as follows:
(a) The Company will notify the Lead Managers immediately after it
becomes aware, and promptly confirm the notice in writing, of (i) the
effectiveness of the Registration Statement and any amendment thereto
(including any post-effective amendment), (ii) the receipt of any comments
from the Commission, (iii) any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the
Prospectuses or for additional information, and (iv) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose
or the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, or the threatening or initiation of any proceeding
for that purpose. The Company will make every reasonable effort to prevent
the issuance of any stop order or any order preventing or suspending the use
of any preliminary prospectus or suspending such qualification and, if any
stop order or any order preventing or suspending the use of any preliminary
prospectus or suspending such qualification is issued, to obtain the lifting
thereof at the earliest possible moment.
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(b) The Company will give the Lead Managers notice of its intention to
file or prepare any amendment to the Registration Statement (including any
post-effective amendment), any amendment or supplement to the Prospectuses
(including any revised prospectuses which the Company proposes for use by
the Managers or U.S. Underwriters in connection with the offering of the
Securities which differ from the prospectuses on file at the Commission at
the time the Registration Statement becomes effective, whether or not such
revised prospectuses are required to be filed pursuant to Rule 424(b) of the
1933 Act Regulations) or any document incorporated by reference into the
Prospectuses in order to comply with the 1933 Act or the 1934 Act will
furnish the Lead Managers with copies of any such amendment, supplement or
document a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file any such amendment, supplement or
document or use any such prospectuses to which the Lead Managers or counsel
for the Managers shall reasonably object in writing or which is not in
compliance with the 1933 Act or the 1933 Act Regulations.
(c) The Company will deliver to the Lead Managers five signed copies of
the Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
all documents incorporated by reference therein) and as many conformed
copies as the Lead Managers may reasonably request, and will also deliver to
the Lead Managers a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits or
documents incorporated by reference therein) for each of the Managers.
(d) The Company will furnish to each Manager, from time to time during
the period when the International Prospectus is required to be delivered
under the 1933 Act or the 1934 Act such number of copies of the
International Prospectus (as amended or supplemented) as such Manager may
reasonably request for the purposes contemplated by the 1933 Act, the 1933
Act Regulations, the 1934 Act or the 1934 Act Regulations.
(e) If any event shall occur as a result of which it is necessary, in
the opinion of counsel for the Managers, to amend or supplement the
International Prospectus or any document incorporated by reference therein
in order to make the International Prospectus not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if
for any other reason it shall be necessary to amend or supplement the
International Prospectus or any document incorporated by reference therein
in order to comply with the 1933 Act, the 1933 Act Regulations, the 1934 Act
and the 1934 Act Regulations, the Company will forthwith amend or supplement
the International Prospectus or such documents incorporated by reference
therein (in form and substance reasonably satisfactory to counsel for the
Managers and in compliance with the 1933 Act, the 1933 Act Regulations, the
1934 Act or the 1934 Act Regulations) so that, as so amended or
supplemented, the International Prospectus or such document incorporated by
reference therein will not include an 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 existing at the time it is
delivered to a purchaser, not misleading and will comply with the 1933 Act,
1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, and the
Company will furnish to the Managers a reasonable number of copies of such
amendment or supplement.
(f) The Company will endeavor, in cooperation with the Managers, to
qualify the International Securities for offering and sale under the
applicable securities laws of such jurisdictions as the Lead Managers may
designate; provided, however, that the Company shall not be obligated to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified or to file a general consent to service of process in any
jurisdiction. In each jurisdiction in which the International Securities
have been so qualified, the Company will file such statements and reports as
may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement.
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(g) The Company will make generally available to its security holders as
soon as practicable, but not later than 60 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month
period beginning not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in Rule 158) of the
Registration Statement.
(h) If, at the time that the Registration Statement becomes effective,
any information shall have been omitted therefrom in reliance upon Rule 430A
of the 1933 Act Regulations, then immediately following the execution of the
International Pricing Agreement, the Company will prepare, and thereafter
the Company will file or transmit for filing with the Commission in
accordance with such Rule 430A and Rule 424(b) of the 1933 Act Regulations,
copies of an amended International Prospectus, or, if required by such Rule
430A, a post-effective amendment to the Registration Statement (including an
amended International Prospectus), containing all information so omitted.
(i) During a period of 90 days from the Representation Date, the Company
will not, without the prior written consent of Merrill Lynch, directly or
indirectly, sell, offer to sell, grant any option for the sale of, establish
a "put equivalent position" as defined in Rule 16a-1(h) under the 1934 Act
with respect to, or otherwise dispose of, any Common Stock or any security
convertible into or exchangeable or exercisable for Common Stock (except for
Common Stock or options or rights to acquire Common Stock issued (i)
pursuant to reservations, option agreements, employee benefit plans or the
exercise of convertible securities, in each case as referred to in Section
1(a)(viii) hereof or (ii) to directors or employees of the Company, provided
that the Common Stock issued or issuable to such directors or employees
under this clause (ii) shall not exceed 500,000 shares in the aggregate),
other than offers to sell and sales to the Managers pursuant to this
Agreement and offers to sell and sales to the U.S. Representatives pursuant
to the U.S. Purchase Agreement.
SECTION 4. PAYMENT OF EXPENSES.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the printing and filing, and
delivery to the Managers of copies of the Registration Statement as originally
filed and of each amendment thereto, (ii) the printing of this Agreement, the
International Pricing Agreement, the Agreement Among Managers, the
Intersyndicate Agreement and the Managers' Questionnaire, (iii) the preparation,
issuance and delivery of the certificates for the International Securities to
the Managers, including capital duties, stamp duties and stock transfer taxes,
if any, payable upon issuance of any of the Securities, the sale of the
Securities to the Managers and their transfer between the Managers and the U.S.
Underwriters pursuant to an agreement among the Managers and the U.S.
Underwriters, (iv) the fees and disbursements of the Company's counsel and
accountants and of the Selling Stockholders' counsel, (v) the qualification of
the International Securities under securities laws in accordance with the
provisions of Section 3(f), including filing fees and the reasonable fees and
disbursements of counsel for the Managers in connection therewith and in
connection with the preparation of the Blue Sky Survey, (vi) the printing and
delivery to the Managers of copies of the preliminary prospectuses and of the
International Prospectus and any amendments or supplements thereto, (vii) the
printing and delivery to the Managers of copies of the Blue Sky Survey and
(viii) the fee of the National Association of Securities Dealers, Inc.,
If this Agreement is terminated by the Lead Managers in accordance with the
provisions of Section 5 or Section 9(a)(i), the Company shall reimburse the
Managers for all of their out-of-pocket expenses, including the reasonable fees
and disbursements of counsel for the Managers.
SECTION 5. CONDITIONS OF MANAGERS' OBLIGATIONS.
The obligations of the Managers hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
herein contained, to the performance by the
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Company and the Selling Stockholders of their obligations hereunder and to the
following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date hereof, or, with the consent of the Lead
Managers, at a later time and date, not later, however, than 5:30 P.M. on
the first day on which the New York Stock Exchange is regularly open for
business following the date hereof, or at such later time and date as may be
approved by a majority in interest of the Managers and a majority in
interest of the U.S. Underwriters; and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by
the Commission. If the Company has elected to rely upon Rule 430A of the
1933 Act Regulations, the price of the International Securities and any
price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the 1933 Act Regulations
within the prescribed time period, and prior to Closing Time the Company
shall have provided evidence satisfactory to the Lead Managers of such
timely filing, or a post-effective amendment providing such information
shall have been promptly filed and declared effective in accordance with the
requirements of Rule 430A of the 1933 Act Regulations.
(b) At Closing Time the Lead Managers shall have received:
(1) The favorable opinion, dated as of Closing Time, of Simpson
Thacher & Bartlett, counsel for the Company and the Selling Stockholders,
in form and substance satisfactory to counsel for the Managers, to the
effect that:
(i) The Company is a corporation validly incorporated and
existing and in good standing under the laws of the State of
Delaware.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described
in the Registration Statement.
(iii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectuses under "Description of
Capital Stock" (except for subsequent issuances, if any, pursuant to
reservations, agreements, employee benefit plans or the exercise of
convertible securities referred to in the Prospectuses) and the
shares of issued and outstanding Common Stock, including the
Securities to be purchased by Managers from the Selling Stockholders
have been duly authorized and validly issued and are fully paid and
non-assessable.
(iv) Each of Duraname Corp. and Duracell Inc. has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement; all of the issued and outstanding capital
stock of each such subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and, based solely on an
examination of the relevant minute books and stock transfer records,
all of the issued and outstanding capital stock of such subsidiaries
is owned of record by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim, except that all or a portion of the capital
stock of such subsidiaries is pledged as security for certain debt
obligations of the Company and its subsidiaries.
(v) This Agreement and the U.S. Purchase Agreement have each been
duly authorized, executed and delivered by the Company.
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(vi) The Registration Statement is effective under the 1933 Act
and, to the best of their knowledge and information, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(vii) At the time the Registration Statement became effective,
the Registration Statement (other than the financial statements, the
supporting schedules and other financial and statistical data
included therein, as to which no opinion need be rendered) complied
as to form in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations and the documents incorporated by
reference in the Registration Statement or Prospectuses or any
amendment or supplement thereto, when they became effective under the
1933 Act or were filed with the Commission under the 1934 Act,
complied in all material respects with the 1933 Act, the 1933 Act
Regulations, the 1934 Act, or the 1934 Act Regulations, as
applicable.
(viii) The statements contained in the Prospectuses under the
caption "Description of Capital Stock," insofar as they purport to
constitute summaries of the terms of the Common Stock, constitute
accurate summaries thereof in all material respects.
(ix) No authorization, approval, consent or order of any court or
governmental authority or agency is required under United States
federal law, New York State law or the General Corporation Law of the
State of Delaware in connection with the sale of the Securities to
the Managers hereunder or to the U.S. Underwriters under the U.S.
Purchase Agreement, except such as may be required under the 1933
Act, the 1933 Act Regulations or state securities law; and the
execution and delivery of this Agreement and the U.S. Purchase
Agreement, and the consummation of the transactions contemplated
herein and therein, do not and will not, except with respect to
registration rights remaining available to certain individuals under
their Common Stock Subscription Agreements with the Company that have
not expired or been waived, conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any agreement or
instrument listed or referred to in Item 10 of the exhibits to the
Company's Annual Report on Form 10-K, filed with Commission for the
fiscal year ended June 30, 1994, nor will such action result in any
violation of (A) the provisions of the certificate of incorporation
or by-laws of the Company, (B) any applicable federal law of the
United States or law of the State of New York, or any administrative
regulation thereunder, or any provision of the General Corporation
Law of the State of Delaware or (C) any administrative or court
decree known to such counsel.
(x) This Agreement, the U.S. Purchase Agreement, the
International Pricing Agreement and the U.S. Pricing Agreement have
been duly authorized, executed and delivered by each of the Selling
Stockholders.
(xi) Immediately prior to the sale of the Securities in the
manner provided in the International Purchase Agreement and the U.S.
Purchase Agreement, each Selling Stockholder was the sole registered
owner of the Securities to be sold by it and each Selling Stockholder
has full power, right and authority to sell such Securities; upon
payment for and delivery of the Securities in the manner provided in
the International Purchase Agreement and U.S. Purchase Agreement,
assuming that the Managers and the U.S. Underwriters have purchased
such Securities in good faith and without notice of any adverse
claim, the Managers and the U.S. Underwriters will acquire all of the
rights of each Selling Stockholder in the Securities free of any
adverse claim, any lien in favor of the Company and any restriction
on transfer imposed by the Company.
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(2) The favorable opinion, dated as of Closing Time, of Gregg A.
Dwyer, Senior Vice President, General Counsel and Secretary of the
Company, in form and substance satisfactory to counsel for the U.S.
Underwriters, to the effect that:
(i) Each of the Company, Duraname Corp. and Duracell Inc. has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in
the Registration Statement and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required; all of the
issued and outstanding capital stock of each of Duraname Corp. and
Duracell Inc. has been duly authorized and validly issued, is fully
paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim, except that all or a
portion of the capital stock of such subsidiaries is pledged as
security for certain debt obligations of the Company and its
subsidiaries.
(ii) To the best of his knowledge and information after due
inquiry, there are no legal or governmental proceedings pending or
threatened which are required to be disclosed in the Registration
Statement, other than as disclosed therein.
(iii) To the best of his knowledge and information after due
inquiry, there are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed
as exhibits thereto other than those described or referred to therein
or filed or incorporated by reference as exhibits thereto, and no
default exists in the due performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument so described, referred to, filed or incorporated by
reference, except where such default would not have a material
adverse effect on the condition, financial or otherwise, or the
earnings or business affairs of the Company and its subsidiaries
considered as one enterprise.
(iv) No authorization approval, consent or order of any court or
governmental authority or agency is required in connection with the
sale of the Securities to the Managers hereunder or to the U.S.
Underwriters under the U.S. Purchase Agreement, except such as may be
required under the 1933 Act, the 1933 Act Regulations, state
securities law or foreign laws or regulations; and the execution and
delivery of this Agreement and the U.S. Purchase Agreement, and the
consummation of the transactions contemplated herein and therein, do
not and will not, except with respect to registration rights
remaining available to certain individuals under their Common Stock
Subscription Agreements with the Company that have not expired or
been waived, conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument known to such counsel to
which the company or any of its subsidiaries is a party or by which
it or any of them may be bound, or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor will
such action result in any violation of (A) the provisions of the
charter or by-laws of the Company or, to the best of his knowledge
and information, any Significant Subsidiary, (B) any applicable law
or administrative regulation or (C) any administrative or court
decree known to such counsel.
(3) The favorable opinions, dated as of Closing Time, of counsel to
N.V. Duracell Belgium S.A., N.V. Duracell Batteries S.A., and Duracell
Batteries Ltd. (collectively, the
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"Foreign Subsidiaries"), which counsel shall be reasonably satisfactory
to the U.S. Underwriters, in form and substance satisfactory to counsel
for the U.S. Underwriters, to the effect that each such Foreign
Subsidiary has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of
organization; and, to the best knowledge and information of such Foreign
Counsel, all of the issued and outstanding capital stock of each such
Foreign Subsidiary is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or claim, except that all or a portion of the capital
stock of such subsidiaries is pledged as security for certain debt
obligations of the Company and its subsidiaries.
(4) The favorable opinion, dated as of Closing Time, of Latham &
Watkins, counsel for the Managers, with respect to the matters set forth
in clauses (i) and (v) through (viii), inclusive, of subsection (b)(1) of
this section.
(5) In giving their opinions required by subsections (b)(1), (2) and
(4), respectively, of this section, Simpson Thacher & Bartlett, Gregg A.
Dwyer and Latham & Watkins shall each additionally state that although
such counsel has not undertaken to determine independently the accuracy
and completeness of the statements contained in the Registration
Statement or in the Prospectuses and takes no responsibility therefor,
such counsel has participated in discussions and meetings with officers
and other representatives of the Company and discussions with the
auditors for the Company in connection with the preparation of the
Registration Statement and the Prospectuses. Such counsel has not,
however, undertaken to determine independently and, therefore, does not
assume any responsibility, explicitly or implicitly, for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectuses. Nothing has come to such counsel's
attention that has caused such counsel to believe that (i) the
Registration Statement, at the time it became effective, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or (ii) the Prospectuses, at the Closing Time or the
Delivery Date, as the case may be, contained any untrue statement of a
material fact or omitted 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.
(c) At Closing Time there shall not have been, since the date hereof or
since the respective dates as of which information is given in the
Prospectuses, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Lead Managers shall have
received a certificate of the President or a Vice President and the chief
financial or chief accounting officer of the Company, dated as of Closing
Time, to the effect that (i) there has been no such material adverse change,
(ii) the representations and warranties in Section 1 are true and correct in
all material respects with the same force and effect as though expressly
made at and as of Closing Time, (iii) the Company has complied in all
material respects with all agreements in this Agreement and satisfied all
conditions in this Agreement on its part to be performed or satisfied at or
prior to Closing Time, and (iv) to the best of their knowledge, no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or threatened
by the Commission. As used in this Section 5(c), the term "Prospectuses"
means the Prospectuses in the form first used to conform sales of the
Securities.
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(d) At the time of the execution of this Agreement, the Lead Managers
shall have received from Deloitte & Touche a letter dated such date, in form
and substance satisfactory to the Lead Managers, to the effect that (i) they
are independent public accountants with respect to the Company and its
subsidiaries within the meaning of the 1933 Act and the 1933 Act
Regulations, (ii) it is their opinion that the financial statements and
supporting schedules included in the Registration Statement and covered by
their opinions therein comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations, (iii) based upon limited procedures set forth in detail in such
letter, nothing has come to their attention which causes them to believe
that (A) the unaudited financial statements and supporting schedules of the
Company and its subsidiaries included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations or are not
presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements included in the Registration Statement or (B) at a
specified date not more than five days prior to the date of this Agreement,
there has been any change in the capital stock of the Company or any
increase in the consolidated long term debt of the Company and its
subsidiaries or any decrease in consolidated net current assets or net
assets as compared with the amounts shown in the June 30, 1994 balance sheet
included in the Registration Statement or, during the period from June 30,
1994 to a specified date not more than five days prior to the date of this
Agreement, there were any decreases, as compared with the corresponding
period in the preceding year, in consolidated net sales or net income of the
Company and its subsidiaries, except in all instances for changes, increases
or decreases which the Registration Statement and the Prospectuses disclose
have occurred or may occur; and (iv) in addition to the examination referred
to in their opinions and the limited procedures referred to in clause (iii)
above, they have carried out certain specified procedures, not constituting
an audit, with respect to certain amounts, percentages and financial
information which are included in the Registration Statement and
Prospectuses and which are specified by the Lead Managers, and have found
such amounts, percentages and financial information to be in agreement with
the relevant accounting, financial and other records of the Company and its
subsidiaries identified in such letter.
(e) At Closing Time the Lead Managers shall have received from Deloitte
& Touche a letter, dated as of Closing Time, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection
(d) of this section, except that the specified date referred to shall be a
date not more than five days prior to Closing Time.
(f) At Closing Time counsel for the Managers shall have been furnished
with such documents and opinions as they may reasonably require for the
purpose of enabling them to pass upon the issuance and sale of the
International Securities as herein contemplated and related proceedings, or
in order to evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions, herein contained.
All proceedings taken by the Company and the Selling Stockholders in
connection with the issuance and sale of the International Securities as
herein contemplated shall be satisfactory in form and substance to the Lead
Managers and counsel for the Managers.
(g) At Closing Time the Representatives shall have received a
certificate of the general partner of each of the Selling Stockholders,
dated as of Closing Time, to the effect that (i) the representations and
warranties of each Selling Stockholder contained in Section 1(b) are true
and correct with the same force and effect as though expressly made at and
as of Closing Time and (ii) each Selling Stockholder has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time.
(h) In the event the Managers exercise their option provided in Section
2 hereof to purchase all or any portion of the International Option
Securities, the representations and warranties of the Company and the
Selling Stockholders contained herein and the statements in any certificates
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furnished by the Company and the Selling Stockholders hereunder shall be
true and correct in all material respects as of each Delivery Date, and the
Managers shall have received:
(1) A certificate, dated such Delivery Date, of the President or a
Vice President of the Company and the chief financial or chief accounting
officer of the Company confirming that the certificate delivered at
Closing Time pursuant to Section 5(c) hereof remains true as of such
Delivery Date.
(2) A certificate, dated such Delivery Date of the general partner
for each of the Selling Stockholders, confirming that the certificate
delivered at Closing Time pursuant to Section 5(g) hereof remains true as
of such Delivery Date.
(3) The favorable opinions of Simpson Thacher & Bartlett, counsel for
the Company and the Selling Stockholders, in form and substance
satisfactory to counsel for the Managers, dated such Delivery Date
relating to the International Option Securities and otherwise to the same
effect as the opinions required by Section 5(b)(1) hereof, revised to
reflect the sale of International Option Securities.
(4) The favorable opinions of Gregg A. Dwyer, Senior Vice President,
General Counsel and Secretary of the Company, dated such Delivery Date,
to the same effect as the opinions required by Section 5(b)(2) hereof,
revised to reflect the sale of International Option Securities.
(5) The favorable opinions of Latham & Watkins, counsel for the
Managers, dated such Delivery Date, to the same effect as the opinions
required by Section 5(b)(4) hereof, revised to reflect the sale of
International Option Securities.
(6) A letter from Deloitte & Touche in form and substance
satisfactory to the Managers, dated the Delivery Date, substantially the
same in scope and substance as the letter furnished to the Managers
pursuant to Section 5(e) hereof except that the "specified date" in the
letter furnished pursuant to this section shall be a date not more than
five days prior to such Delivery Date.
If any condition specified in this section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Lead Managers by notice to the Company and the Selling Stockholders at any time
at or prior to Closing Time, and such termination shall be without liability of
any party to any other party except as provided in Section 4.
SECTION 6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Manager and each
person, if any, who controls any Manager within the meaning of Section 15 of the
1933 Act, and each officer and director of each Manager and of any such
controlling person to the extent and in the manner set forth in clauses (i),
(ii) and (iii) below. In addition, the Selling Stockholders (in proportion that
the number of Securities being sold by each such Selling Stockholder bears to
the number of Securities) agree to indemnify and hold harmless each Manager and
each person, if any, who control any Manager within the meaning of Section 15 of
1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including, without limitation, all documents
incorporated by reference therein and the information deemed to be part of
the Registration Statement pursuant to Rule 430A(b) of the 1933 Act
Regulations, if applicable, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact
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necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including,
subject to Section 6(c) hereof, the fees and disbursements of counsel chosen
by the Lead Managers), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense is
not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Manager through the Lead Managers, or by any U.S. Underwriter through the U.S.
Representatives, expressly for use in the Registration Statement or any
preliminary prospectus or the Prospectuses; and provided further, that each
Selling Stockholder agrees to indemnify and hold harmless each Manager as
provided above, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with information furnished in writing to the Company by
such Selling Stockholder expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectuses.
(b) Each Manager severally agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act and each Selling Stockholder against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement, or any preliminary prospectus or the Prospectuses in
reliance upon and in conformity with written information furnished to the
Company by such Manager through the Lead Managers expressly for use in the
Registration Statement, such preliminary prospectus or the Prospectuses.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
(d) The International Underwriters severally confirm, and the Company and
each of the Selling Stockholders agree, that the statements with respect to the
public offering of the Shares set forth on the cover page of, and in the third,
sixth, ninth and tenth paragraphs of text under the caption "Underwriting" in,
the International Prospectus constitute the only information furnished in
writing to the Company by or on behalf of the several International Underwriters
through the Representatives expressly for use in the Registration Statement and
the International Prospectus.
(e) Each Selling Stockholder severally confirms, and each of the
International Underwriters agrees, that the information (other than the
percentage of shares owned) pertaining to each Selling Stockholder under the
caption "Principal and Selling Stockholders" in the International Prospectus
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constitutes the only information furnished in writing to the Company by such
Selling Stockholder expressly for use in the Registration Statement and the
International Prospectus.
SECTION 7. CONTRIBUTION.
In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in Section 6 is for any reason held
to be unenforceable by the indemnified parties although applicable in accordance
with its terms, the Company, the Selling Stockholders and the Managers shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnity agreement incurred by the Company, the
Selling Stockholders and one or more of the Managers, as incurred, in such
proportions that the Managers are responsible for that portion represented by
the percentage that the underwriting discount appearing on the cover page of the
International Prospectus bears to the initial public offering price appearing
thereon and the Company and the Selling Stockholders, in proportions that they
have agreed to indemnify, shall be responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this section, each person, if any, who controls a Manager within the meaning
of Section 15 of the 1933 Act, and each officer or director of a Manager and of
any such control person, shall have the same rights to contribution as such
Manager, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as the Company.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement
and the International Pricing Agreement, or contained in certificates of
officers of the Company or certificates of the Selling Stockholders submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Manager or controlling person,
or by or on behalf of the Company or the Selling Stockholders, and shall survive
delivery of the International Securities to the Managers.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Lead Managers may terminate this Agreement, by notice to the Company
and the Selling Stockholders, at any time at or prior to Closing Time (i) if
there has been, since the date of this Agreement or since the respective dates
as of which information is given in the Prospectuses, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States, Europe or elsewhere, or any new outbreak of hostilities or
material escalation thereof or other calamity or crisis, the effect of which is
such as to make it, in the judgment of the Lead Managers, impracticable to
market the International Securities or to enforce contracts for the sale of the
International Securities, or (iii) if trading in the Common Stock has been
suspended by the Commission, or if trading generally on the New York Stock
Exchange has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by the
New York Stock Exchange or by order of the Commission or any other governmental
authority, or if a banking moratorium has been declared by Federal, New York, or
Connecticut authorities or (iv) if there has occurred any change or development
involving a prospective change in national or international political, financial
or economic conditions or currency exchange rates or exchange controls which, in
the opinion of the Lead Managers, is likely to have a materially adverse effect
on the market for the International Securities. As used in this Section 9(a),
the term "Prospectuses" means the Prospectuses in the form first used to confirm
sales of the Securities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Sections 4 and 6.
19
<PAGE>
SECTION 10. DEFAULT BY ONE OR MORE OF THE MANAGERS.
If one or more of the Managers shall fail at Closing Time to purchase the
International Securities which it or they are obligated to purchase under this
Agreement and the International Pricing Agreement (the "Defaulted Securities"),
the Lead Managers shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Managers, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth. If, however, the Lead Managers shall not have completed such arrangements
within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 20% of the
International Securities, the non-defaulting Managers shall be obligated to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting Managers; or
(b) if the number of Defaulted Securities exceeds 20% of the
International Securities, this Agreement shall terminate without liability
on the part of any non-defaulting Manager.
No action taken pursuant to this section shall relieve any defaulting
Manager from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, the Lead Managers, the Company or the Selling Stockholders shall
have the right to postpone Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or
Prospectuses or in any other documents or arrangements.
The Lead Managers shall also have the right to amend Schedule A hereto by
making such substitutions or corrections as indicated in the International
Pricing Agreement.
SECTION 11. NOTICES.
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 directed to the Lead
Managers in care of MLIL at Ropemaker Place, 25 Ropemaker Street, London EC2Y
9LY, England, Managing Director, Equity Syndicate Department, with a copy to
Latham & Watkins, 885 Third Avenue, New York, New York 10022, attention of
Raymond Y. Lin, telecopy number (212) 751-4864; notices to the Company shall be
directed to it at Berkshire Industrial Park, Bethel, Connecticut 06801,
attention of Gregg A. Dwyer, telecopy number (203) 796-4518, with copies to
Kohlberg Kravis Roberts & Co., L.P., 9 West 57th Street, New York, New York
10019, attention of Scott M. Stuart, telecopy number (212) 750-0003, and Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, attention of
Vincent Pagano, Jr., telecopy number (212) 455-2502; and notices to the Selling
Stockholders shall be directed to such Selling Stockholder in care of Kohlberg
Kravis Roberts & Co., L.P., 9 West 57th Street, New York, New York 10019,
attention of Scott M. Stuart, telecopy number (212) 750-0003, and Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, attention of
Vincent Pagano, Jr., telecopy number (212) 455-2502.
SECTION 12. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
Managers, the Company and the Selling Stockholders and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Managers, the Company and the Selling Stockholders and their respective
successors, and the controlling persons, officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Managers,
the Company and the Selling Stockholders and their respective successors, and
such controlling persons, officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm, corporation or
partnership. No purchaser of
20
<PAGE>
International Securities from any Manager shall be deemed to be a successor by
reason merely of such purchase.
The International Pricing Agreement shall inure to the benefit of and be
binding upon the Managers and the Selling Stockholders and their respective
successors. Nothing expressed or mentioned in the International Pricing
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Managers and the Selling Stockholders and their
respective successors, and the controlling persons, officers and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of the
International Pricing Agreement or any provision therein contained. The
International Pricing Agreement and all conditions and provisions thereof are
intended to be for the sole and exclusive benefit of the Managers and the
Selling Stockholders and their respective successors, and such controlling
persons, officers and directors and their heirs and legal representatives, and
for the benefit of no other person, firm, corporation or partnership. No
purchaser of International Securities from any Manager shall be deemed to be a
successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME.
This Agreement and the International Pricing Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York
without giving effect to principles of conflict of laws. Specified times of day
refer to New York City time. As used herein, the term "business day" means any
day on which the New York Stock Exchange and commercial banks in London are
regularly open for business.
SECTION 14. LIMITATION OF LIABILITY.
No partner of any Selling Stockholder or any successor partner of any
Selling Stockholder (including, without limitation, any general partner or
successor general partner thereof) shall have any liability or obligation for
the performance of any Selling Stockholder's obligations hereunder, and all
liabilities or obligations of any Selling Stockholder arising hereunder shall be
limited to and satisfied only out of the property of such Selling Stockholder.
21
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Managers, the Company and the Selling Stockholders in accordance with its
terms.
Very truly yours,
DURACELL INTERNATIONAL INC.
By:
..................................
Title: Chairman and Chief
Executive Officer
DI ASSOCIATES, L.P.
By: KKR ASSOCIATES, its General Partner
By:
. .
General Partner
KKR PARTNERS II, L.P.
By: KKR ASSOCIATES, its General Partner
By:
..................................
General Partner
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
CS FIRST BOSTON LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
By: MERRILL LYNCH INTERNATIONAL LIMITED
By:
..................................
For itself and each of the Lead Managers on behalf of the other
Managers named in the International Purchase Agreement.
22
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER
NAME OF UNDERWRITER OF SECURITIES
- -------------------------------------------------------------------------------- --------------
<S> <C>
Merrill Lynch International Limited.............................................
Goldman Sachs International.....................................................
Bear, Stearns International Limited.............................................
CS First Boston Limited.........................................................
Salomon Brothers International Limited..........................................
[other Underwriters]............................................................
--------------
Total............................................................... 2,000,000
--------------
--------------
</TABLE>
23
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
NUMBER OF INITIAL NUMBER OF INTERNATIONAL
INTERNATIONAL SECURITIES OPTION SECURITIES
NAME TO BE SOLD TO BE SOLD
- --------------------------------------------- ------------------------ -----------------------
<S> <C> <C>
DI Associates, L.P...........................
KKR Partners II, L.P.........................
</TABLE>
24
<PAGE>
EXHIBIT A
2,000,000 SHARES
DURACELL INTERNATIONAL INC.
(A DELAWARE CORPORATION)
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
INTERNATIONAL PRICING AGREEMENT
-------------------------------
March , 1995
MERRILL LYNCH INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
CS FIRST BOSTON LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
as Lead Managers of the several Managers named in the
within-mentioned International Purchase Agreement
c/o Merrill Lynch International Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Ladies and Gentlemen:
Reference is made to the International Purchase Agreement, dated March ,
1995 (the "International Purchase Agreement"), relating to the purchase by the
several Managers named in Schedule A thereto, for whom Merrill Lynch
International Limited, Goldman Sachs International, Bear, Stearns International
Limited, CS First Boston Limited and Salomon Brothers International Limited
are acting as lead managers (the "Lead Managers"), of the above shares of Common
Stock (the "International Securities") of Duracell International Inc. (the
"Company").
Pursuant to Section 2 of the International Purchase Agreement, the Selling
Stockholders agree with each Manager as follows:
1. The initial public offering price per share for the International
Securities, determined as provided in said Section 2, shall be U.S. $ .
2. The purchase price per share for the International Securities to be
paid by the several Managers shall be U.S. $ , being an amount equal to
the initial public offering price set forth above less U.S. $ per share.
A-1
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement between the Managers and
the Selling Stockholders in accordance with its terms.
Very truly yours,
DI ASSOCIATES, L.P.
By: KKR ASSOCIATES, its General Partner
By:
..............................
General Partner
KKR PARTNERS II, L.P.
By: KKR ASSOCIATES, its General Partner
By:
..............................
General Partner
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
CS FIRST BOSTON LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
By: MERRILL LYNCH INTERNATIONAL LIMITED
By:
..................................
For itself and each of the Lead Managers on behalf of the other
Managers named in the International Purchase Agreement.
A-2
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
the Registration Statement of Duracell International Inc. on Form S-3 of our
reports dated August 10, 1994 appearing in and incorporated by reference in
the Annual Report on Form 10-K of Duracell International Inc. for the year
ended June 30, 1994 and to the references to us under the headings "Selected
Financial Data" and "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Stamford, Connecticut
March 1, 1995
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, do hereby make, constitute and appoint Robert A. Burgholzer, Jr.
and Gregg A. Dwyer and each of them, my attorneys-in-fact and agents with full
power of substitution for me and in my name, place and stead, in any and all
capacities, to execute for me and on my behalf the Registration Statement on
Form S-3 relating to the sale of shares of common stock of Duracell
International Inc., and any and all amendments to the foregoing Registration
Statement and any other documents and instruments incidental thereto, and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents and/or any of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 25th
day of February, 1995.
/s/ Paula Stern
----------------------------
Paula Stern
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, do hereby make, constitute and appoint Robert A. Burgholzer, Jr.
and Gregg A. Dwyer and each of them, my attorneys-in-fact and agents with full
power of substitution for me and in my name, place and stead, in any and all
capacities, to execute for me and on my behalf the Registration Statement on
Form S-3 relating to the sale of shares of common stock of Duracell
International Inc., and any and all amendments to the foregoing Registration
Statement and any other documents and instruments incidental thereto, and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents and/or any of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 26th
day of February, 1995.
/s/ Robert M. Kavner
----------------------------
Robert M. Kavner
