Exhibit 1.1
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RAYOVAC CORPORATION
(a Wisconsin corporation)
5,360,000 Shares of Common Stock
FORM OF
U.S. PURCHASE AGREEMENT
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Dated: November , 1997
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Table of Contents
Page
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U.S. PURCHASE AGREEMENT 1
SECTION 1. Representations and Warranties 4
(a) Representations and Warranties by the Company 4
(i) Compliance with Registration Requirements 4
(ii) Independent Accountants 5
(iii) Financial Statements 5
(iv) No Material Adverse Change in Business 6
(v) Good Standing of the Company 7
(vi) Good Standing of Subsidiaries 7
(vii) Capitalization 7
(viii) Authorization of Agreement 7
(ix) Authorization and Description of Securities 7
(x) Absence of Defaults and Conflicts 7
(xi) Absence of Labor Dispute 8
(xii) Absence of Proceedings 8
(xiii) Accuracy of Exhibits 9
(xiv) Possession of Intellectual Property 9
(xv) Absence of Further Requirements 9
(xvi) Possession of Licenses and Permits 10
i
(xvii) Title to Property 10
(xviii) Investment Company Act 10
(xix) Environmental Laws 11
(xx) Registration Rights 11
(xxi) Stabilization or Manipulation 11
(xxii) Accounting Controls 11
(xxiii) Tax Returns 12
(xxiv) No Association with NASD 12
(b) Representations and Warranties by the Selling Shareholders 12
(i) Accurate Disclosure 12
(ii) Authorization of Agreements 13
(iii) Valid Title 13
(iv) Due Execution of Power of Attorney and Custody Agreement 14
(v) Absence of Manipulation 14
(vi) Absence of Further Requirements 14
(vii) Certificates Suitable for Transfer 14
(viii) Irrevocable Obligations 15
(ix) No Association with NASD 15
(x) Power and Authority 15
(c) Officer's Certificates 16
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing 16
(a) Initial Securities 16
(b) Option Securities 16
(c) Payment 17
(d) Denominations; Registration 17
(e) Appointment of Qualified Independent Underwriter 17
ii
SECTION 3. Covenants of the Company 18
(a) Compliance with Securities Regulations and Commission Requests 18
(b) Filing of Amendments 18
(c) Delivery of Registration Statements 18
(d) Delivery of Prospectuses 19
(e) Continued Compliance with Securities Laws 19
(f) Blue Sky Qualifications 19
(g) Rule 158 20
(h) Use of Proceeds 20
(i) Listing 20
(j) Restriction on Sale of Securities 20
(k) Reporting Requirements 21
(l) Compliance with NASD Rules 21
SECTION 4. Payment of Expenses 21
(a) Expenses 21
(b) Expenses of the Selling Shareholders 22
(c) Termination of Agreement 22
(d) Allocation of Expenses 22
iii
SECTION 5. Conditions of U.S. Underwriters' Obligations 22
(a) Effectiveness of Registration Statement 22
(b) Opinion of Counsel for Company and the Selling Shareholders 22
(c) Opinion of Counsel for U.S. Underwriters 23
(d) Officers' Certificate 23
(e) Selling Shareholders' Certificate 23
(f) Accountant's Comfort Letters 24
(g) Bring-down Comfort Letters 24
(h) Approval of Listing 24
(i) No Objection 24
(j) Lock-up Agreement 24
(k) Purchase of Initial International Securities 24
(l) Custody Agreement 24
(m) Conditions to Purchase of U.S. Option Securities 25
(n) Additional Documents 26
(o) Termination of Agreement 26
SECTION 6. Indemnification 26
(a) Indemnification of U.S. Underwriters by the Company 26
(b) Indemnification of U.S. Underwriters by the Selling Shareholders 28
(c) Indemnification of Company, Directors and Officers and
Selling Shareholders 30
(d) Actions against Parties; Notification 30
(e) Settlement without Consent if Failure to Reimburse 31
(f) Indemnification for Reserved Securities 32
(g) Indemnification for Direct Shares 32
(h) Other Agreements with Respect to Indemnification 32
iv
SECTION 7. Contribution 32
SECTION 8. Representations, Warranties and Agreements to Survive Delivery 34
SECTION 9. Termination of Agreement 34
(a) Termination; General 34
(b) Liabilities 34
SECTION 10. Default by One or More of the U.S. Underwriters 35
SECTION 11. Notices 35
SECTION 12. Parties 36
SECTION 13. Governing Law and Time 36
SECTION 14. Effect of Headings 36
SECTION 15. Counterparts 36
SCHEDULES
SCHEDULE A LIST OF UNDERWRITERS
SCHEDULE B LIST OF SELLING SHAREHOLDERS
SCHEDULE C PRICING INFORMATION
SCHEDULE D LIST OF PERSONS SUBJECT TO LOCK-UP
EXHIBIT A-1 FORM OF OPINION OF COMPANY'S GENERAL COUNSEL
EXHIBIT A-2 FORM OF OPINION OF COMPANY'S COUNSEL
EXHIBIT A-3 FORM OF OPINION OF SELLING SHAREHOLDERS' COUNSEL
EXHIBIT B FORM OF LOCK-UP LETTER
EXHIBIT C-1 FORM OF COMFORT LETTER OF KPMG PEAT MARWICK LLP
EXHIBIT C-2 FORM OF COMFORT LETTER OF COOPERS & LYBRAND LLP
v
RAYOVAC CORPORATION
(a Wisconsin corporation)
5,360,000 Shares of Common Stock
(Par Value $0.01 Per Share)
U.S. PURCHASE AGREEMENT
November __, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Bear, Stearns & Co. Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Smith Barney Inc.
as U.S. Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Rayovac Corporation, a Wisconsin corporation (the "Company"), and the
persons listed on Schedule B hereto (the "Selling Shareholders") confirm their
respective agreements with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and each of the other U.S. 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 hereof), for whom Merrill Lynch, Bear, Stearns & Co. Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Smith Barney Inc. are acting as
representatives (in such capacity, the "U.S. Representatives"), with respect to
(i) the issue and sale by the Company and the purchase by the U.S. Underwriters,
acting severally and not jointly, of the number of shares of Common Stock, par
value $0.01 per share, of the Company ("Common Stock") set forth in Schedule A
hereto and (ii) the grant by the Selling Shareholders, acting severally and not
jointly, to the U.S. Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of
1
804,000 additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 5,360,000 shares of Common Stock (the "Initial U.S. Securities") to be
purchased by the U.S. Underwriters, and all or any part of the 804,000 shares of
Common Stock subject to the option described in Section 2(b) hereof (the "U.S.
Option Securities"), are hereinafter called, collectively, the "U.S.
Securities."
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of an aggregate of 1,340,000 shares of
Common Stock (the "Initial International Securities") through arrangements with
certain underwriters outside the United States and Canada (the "International
Managers") for which Merrill Lynch International, Bear, Stearns International
Limited, Donaldson, Lufkin & Jenrette Securities Corporation and Smith Barney
Inc. are acting as lead managers (the "Lead Managers") and the grant by the
Selling Shareholders, acting severally and not jointly, to the International
Managers, acting severally and not jointly, of an option to purchase all or any
part of the International Managers' pro rata portion of up to 201,000 additional
shares of Common Stock solely to cover overallotments, if any (the
"International Option Securities" and, together with the U.S. Option Securities,
the "Option Securities"). The Initial International Securities and the
International Option Securities are hereinafter called the "International
Securities." It is understood that the Company is not obligated to sell and the
U.S. Underwriters are not obligated to purchase, any Initial U.S. Securities
unless all of the Initial International Securities are contemporaneously
purchased by the International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters," the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities," and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities."
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (in
such capacity, the "Global Coordinator").
The Company and the Selling Shareholders 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 this Agreement has been executed
and delivered.
The Company and the U.S. Underwriters agree that up to 530,000 shares of
Common Stock to be purchased by the Underwriters (the "Reserved Securities")
shall be reserved for sale by the Underwriters to certain eligible employees and
persons having relationships with the Company as part of the distribution of the
Securities by the Underwriters, subject to the terms of this Agreement, the
applicable rules, regulations and interpretations of the National Association of
Securities Dealers, Inc. and all other applicable laws, rules and regulations.
To the extent that such Reserved
2
Securities are not orally confirmed for purchase by such eligible employees and
persons having relationships with the Company by the end of the first business
day after the date of this Agreement, such Reserved Securities may be offered to
the public as part of the public offering contemplated hereby. In addition, the
Company is concurrently offering up to 270,000 shares of Common Stock (the
"Direct Shares") directly to certain employee participants in the Company's
Profit Sharing and Savings Plan pursuant to a separate prospectus included in
the Registration Statement (as defined below).
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-35181), as amended
by Amendment No. 1 thereto, covering the registration of the Securities under
the Securities Act of 1933, as amended (the "1933 Act"), including the related
preliminary prospectus or prospectuses. Promptly after execution and delivery of
this Agreement, the Company will either (i) prepare and file a prospectus in
accordance with the provisions of Rule 430A ("Rule 430A") of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or
(ii) if the Company has elected to rely upon Rule 434 ("Rule 434") of the 1933
Act Regulations, prepare and file a term sheet (a "Term Sheet") in accordance
with the provisions of Rule 434 and Rule 424(b). Two forms of prospectus are to
be used in connection with the offering and sale of the Securities: one relating
to the U.S. Securities (the "Form of U.S. Prospectus") and one relating to the
International Securities (the "Form of International Prospectus"). The Form of
International Prospectus is identical to the Form of U.S. Prospectus, except for
the front cover and back cover pages and the information under the caption
"Underwriting." The information included in any such prospectus or in any such
Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
registration statement at the time it became effective (a) pursuant to paragraph
(b) of Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to
paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each Form of
U.S. Prospectus and Form of International Prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final Form of U.S. Prospectus and the final Form of
International Prospectus in the forms first furnished to the Underwriters for
use in connection with the offering of the Securities are herein called the
"U.S. Prospectus" and the "International Prospectus," respectively, and
collectively, the "Prospectuses." If Rule 434 is relied on, the terms "U.S.
Prospectus" and "International Prospectus" shall refer to the preliminary U.S.
Prospectus dated October 31, 1997 and the preliminary International Prospectus
dated October 31, 1997, respectively, each
3
together with the applicable Term Sheet, and all references in this
Agreement to the date of such Prospectuses shall mean the date of the applicable
Term Sheet. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the U.S. Prospectus, the International
Prospectus or any Term Sheet or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each U.S. Underwriter as of the date hereof, as of the Closing
Time referred to in Section 2(c) hereof, and as of each Date of Delivery (if
any) referred to in Section 2(b) hereof, and agrees with each U.S. Underwriter,
as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any U.S. Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not 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, and the Prospectuses, any preliminary prospectuses and any
supplement thereto or prospectus wrapper prepared in connection therewith,
at their respective times of issuance and at the Closing Time, complied and
will comply in all material respects with any applicable laws or
regulations of foreign jurisdictions in which the Prospectuses and such
preliminary prospectuses, as amended or supplemented, if applicable, are
distributed in connection with the offer and sale of Reserved Securities.
Neither of the Prospectuses nor any amendments or supplements thereto
(including any prospectus wrapper), at the time the Prospectuses or any
amendments or supplements thereto were issued and at the Closing Time (and,
if any U.S. Option Securities are purchased, at the Date of Delivery),
included or will include, at the aforesaid times, an untrue statement of a
material fact or omitted or will omit, at the aforesaid times, 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. If
Rule 434 is used,
4
the Company will comply with the requirements of Rule 434 and the
Prospectuses shall not be "materially different," as such term is used in
Rule 434, from the prospectuses included in the Registration Statement at
the time it became effective. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the U.S. Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through the U.S. Representative(s) expressly for use in the
Registration Statement or the U.S. Prospectus or by any International
Manager through the Lead Managers expressly for use in the Registration
Statement or the International Prospectus.
Each preliminary prospectus and the prospectuses filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. 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.
(iii) Financial Statements. The historical financial statements
included in the Registration Statement and the Prospectuses, together with
the related schedule and notes, present fairly the financial position of
the Company and its consolidated Subsidiaries (as defined below) at the
dates indicated and the statement of operations, shareholders' equity and
cash flows of the Company and its consolidated Subsidiaries for the periods
specified; said financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The supporting schedules included in
the Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data and
the summary financial information included in the Prospectuses present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement. The pro forma financial data and the related notes
thereto included in the Registration Statement and the Prospectuses present
fairly the information shown therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.
5
(iv) No Material Adverse Change in Business. 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),
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 (a "Material Adverse Effect"), (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.
(v) Good Standing of the Company. The Company has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of Wisconsin and has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other 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 so
to qualify or to be in good standing would not result in a Material Adverse
Effect.
(vi) Good Standing of Subsidiaries. Each subsidiary of the Company
(each a "Subsidiary" and, collectively, the "Subsidiaries") 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 so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed 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 in jurisdictions where such legal concepts are
recognized and is owned by the Company, directly or through Subsidiaries,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity (except as set forth in the Registration
Statement and except for any director or member qualifying shares); none of
the outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of such
Subsidiary. The only Subsidiaries of the Company are the subsidiaries
listed on Exhibit 21 to the Registration Statement and, except for Rayovac
Europe Limited (which represents less than 15% of the
6
assets, liabilities and earnings of the Company), the Company has no
"significant subsidiaries" as defined in Section 1-02 of Regulation S-X.
(vii) Capitalization. After giving effect to the amendment and
restatement of the Amended and Restated Articles of Incorporation of the
Company to be effective prior to the Closing Time, the authorized, issued
and outstanding capital stock of the Company is as set forth in the
Prospectuses in the column entitled "Actual" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to this
Agreement, pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectuses or pursuant to the exercise of convertible
securities or options referred to in the Prospectuses). The shares of
issued and outstanding capital stock of the Company have been and at the
Closing Time, including the U.S. Option Securities to be purchased by the
U.S. Underwriters from the Selling Shareholders, will have been duly
authorized and validly issued and are fully paid and non-assessable; none
of the outstanding shares of capital stock of the Company was or as of the
Closing Time, including the U.S. Option Securities to be purchased by the
U.S. Underwriters from the Selling Shareholders, will have been or was
issued in violation of the preemptive or other similar rights of any
securityholder of the Company.
(viii) Authorization of Agreement. This Agreement and the
International Purchase Agreement have been duly authorized, executed and
delivered by the Company.
(ix) Authorization and Description of Securities. The Securities to be
purchased by the U.S. Underwriters and the International Managers from the
Company have been duly authorized for issuance and sale to the U.S.
Underwriters pursuant to this Agreement and the International Managers
pursuant to the International Purchase Agreement, respectively, and, when
issued and delivered by the Company pursuant to this Agreement and the
International Purchase Agreement, respectively, against payment of the
consideration set forth herein and the International Purchase Agreement,
respectively, will be validly issued, fully paid and non-assessable; the
Direct Shares to be offered and sold separately by the Company have been
duly authorized by the Company and when issued and delivered by the Company
against payment therefor will be validly issued, fully paid and
non-assessable; the Common Stock conforms to the descriptions thereof
contained under "Description of Capital Stock" in the Prospectuses and such
description conforms to the rights set forth in the instruments defining
the same; no holder of the Securities will be subject to personal liability
by reason of being such a holder; and the issuance of the Securities is not
subject to the preemptive or other similar rights of any securityholder of
the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor any of
its Subsidiaries is in violation of its charter or by-laws or in default in
the performance or observance of any obligation, agreement, covenant or
condition
7
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or 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 Subsidiary is subject (collectively, "Agreements and Instruments")
except for such defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement and
the International Purchase Agreement and the consummation of the
transactions contemplated in this Agreement, the International Purchase
Agreement and in the Registration Statement (including the issuance and
sale of the Securities (and the Direct Shares) and the use of the proceeds
from the sale of the Securities (and Direct Shares) as described in the
Prospectuses under the caption "Use of Proceeds") and the compliance by the
Company with its obligations under this Agreement and the International
Purchase Agreement have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any Subsidiary pursuant to, the Agreements and
Instruments which would reasonably be expected, either singly or in the
aggregate to result in a Material Adverse Effect, nor will such action
result in any violation of any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of their assets, properties or operations,
including specifically but without limitation with respect to the Direct
Shares any violation of the Employee Retirement Income Security Act, which
would reasonably be expected, either singly or in the aggregate to result
in a Material Adverse Effect; nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any
Subsidiary. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any Subsidiary.
(xi) Absence of Labor Dispute. Except as described in the Registration
Statement with respect to the renegotiation of collective bargaining
agreements, no labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent, and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or any Subsidiary's principal suppliers,
manufacturers, customers, dealers or contractors, which, in either case,
may reasonably be expected to result in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the
Company, threatened, against or affecting the Company or any Subsidiary,
which is required to be disclosed in the Registration Statement (other than
as disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement and the
International Purchase Agreement or the performance by the Company of its
obligations hereunder or thereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any Subsidiary is a party
or of which any of their respective property or assets is the subject which
are not described in the Registration Statement, including ordinary routine
litigation incidental to the business of the Company and its Subsidiaries
would not reasonably be expected to result in a Material Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents which
are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not been so
described and filed as required.
(xiv) Possession of Intellectual Property. Except as described in the
Registration Statement, the Company and its Subsidiaries own or possess the
right to utilize, or can acquire on reasonable terms, adequate 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, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now operated by
them, and neither the Company nor any of its Subsidiaries has received any
notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of its
Subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or authoriza-
tion, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder,
in connection with the offering, issuance or sale of the Securities under
this Agreement and the International Purchase Agreement or the consummation
of the transactions contemplated by this Agreement and the International
Purchase Agreement, except (i) such as have been already obtained or as may
be required under the 1933 Act or the 1933 Act Regulations and foreign or
state securities or blue sky laws or the rules or regulations of the NASD
and (ii) such as have been obtained under the laws and regulations of
jurisdictions outside the United States in
9
which the Reserved Securities are offered.
(xvi) Possession of Licenses and Permits. The Company and its
Subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them except where the
failure to possess the same would not, singly or in the aggregate have a
Material Adverse Effect; the Company and its Subsidiaries are in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate, have
a Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect; and neither the
Company nor any of its Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(xvii) Title to Property. The Company and its Subsidiaries have good
and marketable title to all real property owned by the Company and its
Subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectuses or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company or any of
its Subsidiaries or (c) would not reasonably be expected to result in a
Material Adverse Effect; and all of the leases and subleases material to
the business of the Company and its Subsidiaries, considered as one
enterprise, and under which the Company or any of its Subsidiaries holds
properties described in the Prospectuses, are in full force and effect, and
neither the Company nor any Subsidiary has any notice of any claim of any
sort that has been asserted by anyone adverse to the rights of the Company
or any Subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such Subsidiary to
the continued possession of the leased or subleased premises under any such
lease or sublease which would reasonably be expected to result in a
Material Adverse Effect.
(xviii) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
10
(xix) Environmental Laws. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its
Subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its Subsidiaries have all
permits, licenses, authorizations and approvals currently required for
their respective businesses and for the businesses contemplated to be
conducted upon consummation of the offering of the Securities under any
applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
Subsidiaries and (D) there are no events, facts or circumstances that might
reasonably be expected to form the basis of any liability or obligation of
the Company or any of its Subsidiaries, including, without limitation, any
order, decree, plan or agreement requiring clean-up or remediation, or any
action, suit or proceeding by any private party or governmental body or
agency, against or affecting the Company or any of its Subsidiaries
relating to any Hazardous Materials or any Environmental Laws.
(xx) Registration Rights. There are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement under the 1933 Act. Except as described in
the Registration Statement, there are no persons with registration rights
or other similar rights to have any securities registered by the Company
under the 1933 Act.
(xxi) Stabilization or Manipulation. Neither the Company nor any of
its officers, directors or controlling persons has taken, directly or
indirectly, any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale of the Securities.
(xxii) Accounting Controls. The Company and its Subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded
11
as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxiii) Tax Returns. The Company and its Subsidiaries have filed all
federal, state, local and foreign tax returns that are required to have
been filed by them pursuant to applicable foreign, federal, state, local or
other law or have duly requested extensions thereof, except insofar as the
failure to file such returns or request such extensions would not
reasonably be expected to result in a Material Adverse Effect, and has paid
all taxes due pursuant to such returns or pursuant to any assessment
received by the Company and its Subsidiaries, except for such taxes or
assessments, if any, as are being contested in good faith and as to which
adequate reserves have been provided or where the failure to pay would not
reasonably be expected to result in a Material Adverse Effect. The charges,
accruals and reserves on the books of the Company in respect of any income
and corporation tax liability of the Company and each Subsidiary for any
years not finally determined are adequate to meet any assessments or
re-assessments for additional income tax for any years not finally
determined, except to the extent of any inadequacy that would not
reasonably be expected to result in a Material Adverse Effect.
(xxiv) No Association with NASD. Neither the Company nor any of its
affiliates (within the meaning of NASD Conduct Rule 2720(b)(1)(a))
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, or is an associated person
(within the meaning of Article I, Section 1(q) of the By-laws of the
National Association of Securities Dealers, Inc.), of any member firm of
the National Association of Securities Dealers, Inc., other than as
described on an appendix to the Selling Shareholders' Power of Attorney
and Custody Agreement (as defined herein).
(b) Representations and Warranties by the Selling Shareholders. Each
Selling Shareholder, severally and not jointly, represents and warrants to each
U.S. Underwriter as of each Date of Delivery, and agrees with each U.S.
Underwriter, as follows:
(i) Accurate Disclosure. (A) The information furnished in writing by
or on behalf of such Selling Shareholder expressly for use in the
Registration Statement and any amendments or supplements thereto does not
contain an untrue statement of a material fact with respect to such Selling
Shareholder or omit to state a material fact with respect to such Selling
Shareholder required to be stated therein or necessary to make the
statements regarding the Selling Shareholder therein not misleading and (B)
the information furnished in writing by or on behalf of such Selling
Shareholder expressly for use in the Prospectus
12
does not include an untrue statement of a material fact with respect to
such Selling Shareholder or omit to state a material fact with respect to
such Selling Shareholder necessary in order to make the statements
regarding the Selling Shareholder therein, in the light of the
circumstances under which they were made, not misleading.
(ii) Authorization of Agreements. Such Selling Shareholder has the
full right, power and authority to enter into this Agreement and the Power
of Attorney and Custody Agreement (the "Power of Attorney and Custody
Agreement") with [Firstar Bank], as custodian (the "Custodian"), and the
attorneys-in-fact named therein (each an "Attorney-in-Fact"), and to sell,
transfer and deliver the Securities to be sold by such Selling Shareholder
hereunder. The execution and delivery of this Agreement and the Power of
Attorney and Custody Agreement and the sale and delivery of the Securities
to be sold by such Selling Shareholder and the consummation of the
transactions contemplated herein and compliance by such Selling Shareholder
with its obligations hereunder have been duly authorized by such Selling
Shareholder and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any tax, lien,
charge or encumbrance upon the Securities to be sold by such Selling
Shareholder or any property or assets of such Selling Shareholder pursuant
to any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, license, lease or other agreement or instrument to which
such Selling Shareholder is a party or by which such Selling Shareholder
may be bound, or to which any of the property or assets of such Selling
Shareholder is subject (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not result in a material adverse
change in the condition (financial or otherwise), earnings, business
affairs or business prospects of such Selling Shareholder (a "Selling
Shareholder Material Adverse Effect"), whether or not arising in the
ordinary course of business), nor will such action result in any violation
of the provisions of the charter or by-laws or other organizational
instrument of such Selling Shareholder, if applicable, or any applicable
treaty, law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign,
having jurisdiction over such Selling Shareholder or any of its properties
which would reasonably be expected, either singly or in the aggregate to
result in a Selling Shareholder Material Adverse Effect.
(iii) Valid Title. Such Selling Shareholder has on the date hereof and
will at the Closing Time and on the Date of Delivery have good and valid
title to the U.S. Option Securities to be sold by such Selling Shareholder
hereunder, free and clear of any security interest, mortgage, pledge, lien,
charge, claim, equity or encumbrance of any kind, other than pursuant to
this Agreement; and upon delivery of such U.S. Option Securities and
payment of the purchase price therefor as herein contemplated, assuming
each such Underwriter has no notice of any adverse claim as such term is
used in the Uniform Commercial Code,
13
each of the Underwriters will receive valid title to the U.S. Option
Securities purchased by it from such Selling Shareholder, free and clear of
any security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
(iv) Due Execution of Power of Attorney and Custody Agreement. Each
such Selling Shareholder has duly executed and delivered a Power of
Attorney and Custody Agreement; the Custodian is authorized by each such
Selling Shareholder to deliver the U.S. Option Securities to be sold by
such Selling Shareholder hereunder and to accept payment therefor; and each
Attorney-in-Fact named in the Power of Attorney and Custody Agreement
executed by such Selling Shareholder is authorized by such Selling
Shareholder to execute and deliver this Agreement and the certificate
referred to in Section 5(e) of this Agreement or that may be required
pursuant to Sections 5(m) or 5(n) of this Agreement on behalf of such
Selling Shareholder, to sell, assign and transfer to the U.S. Underwriters
the U.S. Option Securities to be sold by such Selling Shareholder
hereunder, to determine the purchase price to be paid by the U.S.
Underwriters to such Selling Shareholder, as provided in Section 2(a)
hereof, to authorize the delivery of the Securities to be sold by such
Selling Shareholder hereunder, to accept payment therefor, and otherwise to
act on behalf of such Selling Shareholder in connection with this
Agreement.
(v) Absence of Manipulation. Such Selling Shareholder 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.
(vi) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by each such Selling Shareholder
of their obligations hereunder or in the Power of Attorney and Custody
Agreement, or in connection with the sale and delivery of the U.S. Option
Securities being sold by each such Selling Shareholder hereunder or the
consummation of the transactions contemplated by this Agreement, except
such as may have previously been made or obtained or as may be required
under the 1933 Act or the 1933 Act Regulations or state or foreign
securities laws or under the rules of the National Association of
Securities Dealers, Inc.
(vii) Certificates Suitable for Transfer. Certificates for all of the
U.S. Option Securities to be sold by such Selling Shareholder pursuant to
this Agreement, in suitable form for transfer by delivery or accompanied by
duly executed instruments of transfer or assignment in blank with
signatures guaranteed, have been placed in custody with the Custodian with
irrevocable conditional instructions to deliver such U.S. Option Securities
to the U.S. Underwriters pursuant to this Agreement.
14
(viii) Irrevocable Obligations. The U.S. Option Securities represented
by the Certificates held in custody for such holder under the Custody
Agreement are subject to the interests of the U.S. Underwriters hereunder;
the arrangements made by such holder for such custody, and the appointment
by such holder of the Attorneys-in-fact by the Power of Attorney, are to
that extent irrevocable; the obligations of such holder hereunder shall not
be terminated, except as provided in the Agreement or in the Power of
Attorney, by operation of law, whether by the death or incapacity of any
individual Selling Shareholder or, in the case of an estate or trust, by
the death or incapacity of any executor or trustee or the termination of
such trust estate or trust, or in the case of a partnership or corporation,
by the dissolution of such partnership or corporation, or by the occurrence
of any other event, if any individual Selling Shareholder or any such
executor or trustee should die or become incapacitated, or if any such
estate or trust should be terminated, or any such partnership or
corporation should be dissolved, or if any other event should occur, before
the delivery of the U.S. Option Securities hereunder, certificates
representing the U.S. Option Securities shall be delivered by or on behalf
of such holder in accordance with the terms and conditions of this
Agreement and of the Custody Agreements; and actions taken by the
Attorney-in-Fact pursuant to the Powers of Attorney shall be as valid as if
such death, incapacity, termination, dissolution or other event had not
occurred, regardless of whether or not the Custodian, Attorney-in-Fact, or
any of them, shall have received notice of such death, incapacity,
termination, dissolution or other event.
(ix) No Association with NASD. Neither such Selling Shareholder nor
any of its affiliates (within the meaning of NASD Conduct Rule
2720(b)(1)(a)) directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, or is an
associated person (within the meaning of Article I, Section 1(q) of the
By-laws of the National Association of Securities Dealers, Inc.), of, any
member firm of the National Association of Securities Dealers, Inc., other
than as described on an appendix to the Power of Attorney and Custody
Agreement to which such Selling Shareholder is a party.
(x) Power and Authority. If such Selling Shareholder is a corporation,
partnership or trust, such Selling Shareholder has been duly organized or
incorporated and is validly existing as a corporation or partnership or
limited partnership in good standing under the laws of its jurisdiction of
incorporation or organization, if applicable, and has the power and
authority to own its property and to conduct its business and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not result in a material
adverse change in the condition (financial or otherwise), earnings,
business affairs or business prospects of each the Selling Shareholders,
whether
15
or not arising in the ordinary course of business, or materially impair its
ability to consummate the transactions contemplated hereby.
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its Subsidiaries delivered to the Global Coordinator, the U.S.
Representatives or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by the Company to each U.S. Underwriter as to the
matters covered thereby; and any certificate signed by or on behalf of any
Selling Shareholder as such and delivered to the U.S. Representatives or to
counsel for the U.S. Underwriters pursuant to the terms of this Agreement shall
be deemed a representation and warranty by such Selling Shareholder, as the case
may be, to the U.S. Underwriters as to the matters covered thereby.
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth,
the Company agrees to sell to each U.S. Underwriter, severally and not
jointly, to the extent indicated on Schedule A hereto, and each U.S.
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price per share set forth in Schedule C, 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 Initial U.S. Securities which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Selling Shareholders, severally and not jointly, hereby grant an
option to the U.S. Underwriters, severally and not jointly, to purchase up to an
additional 804,000 shares of Common Stock to the extent indicated on Schedule B,
at the price per share set forth in Schedule C, less an amount per share equal
to any dividends or distributions declared by the Company and payable on the
Initial U.S. Securities but not payable on the U.S. Option Securities. The
option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Selling Shareholders setting forth the number of U.S. Option
Securities as to which the several U.S. Underwriters are then exercising the
option and the time and date of payment and delivery for such U.S. Option
Securities. Any such time and date of delivery for the U.S. Option Securities (a
"Date of Delivery") shall be determined by the Global Coordinator, but shall not
be later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the U.S. Option Securities, each of the
U.S. Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of U.S. Option Securities then being purchased
which the number of Initial U.S. Securities set forth in Schedule A opposite the
name of such U.S. Underwriter bears to the total number of Initial U.S.
Securities, subject in each case to such adjustments as
16
the Global Coordinator in its discretion shall make to eliminate any sales or
purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Fried,
Frank, Harris, Shriver & Jacobson, 1 New York Plaza, New York, New York 10004,
or at such other place as shall be agreed upon by the Global Coordinator and the
Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs
after 4:30 P.M. (Eastern time) on any given day) business day after the date
hereof (unless postponed in accordance with the provisions of Section 10), or
such other time not later than ten business days after such date as shall be
agreed upon by the Global Coordinator and the Company (such time and date of
payment and delivery being herein called "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 for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Selling Shareholders or the Attorneys-in-Fact on
behalf of the Selling Shareholders, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Selling Shareholders.
Payment shall be made to the Company and the Selling Shareholders by wire
transfer of immediately available funds to a bank account designated by the
Company and the Custodian pursuant to the Selling Shareholders' Power of
Attorney and Custody Agreement, as the case may be, 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. 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 Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representatives in The City of New
York not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
(e) Appointment of Qualified Independent Underwriter. The Company hereby
confirms its engagement of Smith Barney Inc. as, and Smith Barney Inc. hereby
17
confirms its agreement with the Company to render services as, a "qualified
independent underwriter" within the meaning of Rule 2720 of the Conduct Rules of
the National Association of Securities Dealers, Inc. with respect to the
offering and sale of the U.S. Securities. Smith Barney Inc., solely in its
capacity as qualified independent underwriter and not otherwise, is referred to
herein as the "Independent Underwriter."
SECTION 3. Covenants of the Company. The Company covenants with each U.S.
Underwriter as follows: (a) Compliance with Securities Regulations and
Commission Requests. The Company, subject to Section 3(b), will comply with
the requirements of Rule 430A or Rule 434, as applicable, and will notify
the Global Coordinator immediately, and confirm the notice in writing, (i)
when any post-effective amendment to the Registration Statement shall
become effective, or any supplement to the Prospectuses or any amended
Prospectuses shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of 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) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b)
and will take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Global Coordinator
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectuses, will furnish the Global Coordinator with copies of any
such documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to
which the Global Coordinator or counsel for the U.S. Underwriters shall
reasonably object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the U.S. Representatives and counsel for the U.S.
Underwriters, without charge, signed copies of the Registration Statement
as originally filed and of each amendment thereto (including exhibits filed
therewith) and signed copies of all consents and certificates of experts,
and will also deliver to the U.S. Representatives, without charge, a
conformed copy of the Registration
18
Statement as originally filed and of each amendment thereto (without
exhibits) for each of the U.S. Underwriters. The copies of the Registration
Statement and each amendment thereto furnished to the U.S. Underwriters
will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered or will
deliver to each U.S. Underwriter, without charge, as many copies of each
preliminary prospectus as such U.S. Underwriter reasonably requested, and
the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each U.S.
Underwriter, without charge, during the period when the U.S. Prospectus is
required to be delivered under the 1933 Act or the Securities Exchange Act
of 1934 (the "1934 Act"), such number of copies of the U.S. Prospectus (as
amended or supplemented) as such U.S. Underwriter may reasonably request.
The U.S. Prospectus and any amendments or supplements thereto furnished to
the U.S. Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement, the International Purchase Agreement and in the Prospectuses. If
at any time when a prospectus is required by the 1933 Act to be delivered
in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary to amend the
Registration Statement or amend or supplement any Prospectus in order that
the Prospectuses will not include any untrue statements of a material fact
or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary, at any
such time to amend the Registration Statement or amend or supplement any
Prospectus in order to comply with the requirements of the 1933 Act or the
1933 Act Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectuses comply with such requirements, and the
Company will furnish to the U.S. Underwriters such number of copies of such
amendment or supplement as the U.S. Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the U.S. Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the Global Coordinator may
designate and to maintain such qualifications in effect for a period of not
less than one year from the later of the effective date of the Registration
Statement and any Rule 462(b)
19
Registration Statement; provided, however, that neither the Company nor any
of the Selling Shareholders shall be obligated to file any general consent
to service of process or to qualify as a foreign corporation or as a dealer
in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject. In each jurisdiction in which the
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 and any Rule 462(b)
Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds."
(i) Listing. The Company will use its best efforts to effect the
listing of the Common Stock (including the Securities) on the New York
Stock Exchange.
(j) Restriction on Sale of Securities. During a period of 180 days
from the date of the Prospectuses, the Company will not, without the prior
written consent of the Global Coordinator, (i) directly or indirectly,
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of any share of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the
1933 Act with respect to any of the foregoing or (ii) enter into any swap
or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i)
or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise except pursuant to Common Stock issued in
connection with (y) the Company's stock option plans existing at the
Closing Time or (z) acquisitions by the Company; provided that, in the case
of clause (z), it shall be a condition to such stock issuance that the
third party receiving such shares executes a lock-up agreement on
substantially the same terms as described above for a period expiring 180
days from the date of the Prospectus and there shall be no further transfer
of such shares except in accordance with the provisions of such lock-up
agreement. The foregoing sentence shall not apply to the Securities to be
sold hereunder or under the International Purchase Agreement.
20
(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the rules and regulations of the Commission thereunder.
(l) Compliance with NASD Rules. The Company hereby agrees that it will
ensure that the Reserved Securities and Direct Shares will be restricted as
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three or five months, as the case may be,
following the date of this Agreement. The Underwriters will notify the
Company as to which persons will need to be so restricted. At the request
of the Underwriters, the Company will direct the transfer agent to place a
stop transfer restriction upon such securities for such period of time.
Should the Company release, or seek to release, from such restrictions any
of the Reserved Securities or Direct Shares, the Company agrees to
reimburse the Underwriters for any reasonable expenses (including, without
limitation, legal expenses) they incur in connection with such release.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities by the Company to the Underwriters
and the transfer of the Securities between the U.S. Underwriters and the
International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectuses and any amendments or supplements thereto, (vii)
the preparation, printing and delivery to the Underwriters of copies of the blue
sky survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the NASD of the terms of the sale of the
Securities, (x) the fees and expenses incurred in connection with the listing of
the Securities on the New York Stock Exchange and (xi) all costs and expenses of
the Underwriters, including the fees and disbursements of counsel for the
Underwriters, in connection with matters related to the Reserved
21
Securities and Direct Shares which are designated by the Company for sale to
eligible employees and other persons having relationships with the Company and
(xii) the fees and expenses of the Independent Underwriter.
(b) Expenses of the Selling Shareholders. The Company will pay all
expenses incident to the performance of the Selling Shareholders'
obligations under, and the consummation of the transactions contemplated
by, this Agreement (other than any underwriting discount), including (i)
any stamp duties, capital duties and stock transfer taxes, if any, payable
upon the sale of the U.S. Option Securities by the Selling Shareholders to
the Underwriters, and their transfer between the Underwriters pursuant to
an agreement between such Underwriters and (ii) the fees and disbursements
of the Selling Shareholders' counsel and accountants.
(c) Termination of Agreement. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5 or
Sections 9(a)(i) or (ii) hereof, 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.
(d) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company and the Selling Shareholders may make
for the sharing of such costs and expenses.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The obligations of
the several U.S. Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Shareholders
contained in Section 1 hereof or in certificates of any officer of the Company
or any Subsidiary of the Company or on behalf of the Selling Shareholders
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective under the 1933 Act; 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, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the U.S. Underwriters. A prospectus containing the Rule 430A
Information shall have been filed with the Commission in accordance with
Rule 424(b) (or a post-effective amendment providing such information shall
have been filed and declared effective in accordance with the requirements
of Rule 430A) or, if the Company has elected to rely upon Rule 434, a Term
Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) Opinion of Counsel for Company and the Selling Shareholders. At
Closing Time, the U.S. Representatives shall have received the favorable
22
opinions, dated as of Closing Time, of (i) Dewitt Ross & Stevens, s.c.,
counsel to the Company, relating to certain matters of Wisconsin law and
(ii) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Company, in
each case in form and substance reasonably satisfactory to counsel for the
U.S. Underwriters, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters to the effect set forth in Exhibits
A-1 and A-2, respectively, hereto.
(c) Opinion of Counsel for U.S. Underwriters. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of Fried, Frank, Harris, Shriver & Jacobson, counsel for the
U.S. Underwriters, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters with respect to the matters set
forth in clauses (i), (ii), (v), (vi) (solely as to preemptive or other
similar rights arising by operation of law or under the charter or by laws
of the Company), (viii), (x), (xi), (xv) (solely as to the information in
the Prospectus under "Description of Capital Stock") of Exhibit A-1 and the
penultimate paragraph of Exhibit A-2 hereto. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York and the federal law of the
United States and the General Corporation Law of the State of Delaware,
upon the opinions of counsel satisfactory to the U.S. Representatives. Such
counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its Subsidiaries and of the
Selling Shareholders and certificates of public officials.
(d) Officers' Certificate. 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), 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 of the Company and of 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(a) hereof are true and correct
with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened by the
Commission.
(e) Selling Shareholders' Certificate. At Closing Time, the
Representatives shall have received a certificate of each Selling
Shareholder (which may be executed on behalf of each Selling Shareholder by
the general
23
partner or a duly authorized executive officer of such Selling
Shareholder), dated as of Closing Time, to the effect that (i) the
representations and warranties of such Selling Shareholder contained in
Section 1(b) hereof are true and correct with the same force and effect as
though expressly made at and as of the Closing Time and (ii) such Selling
Shareholder has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied under this Agreement at or prior
to the Closing Time; provided that such Selling Shareholder certificate may
provide that such certificate shall be of no force or effect in the event
that no Option Shares are purchased from the Selling Shareholders
hereunder.
(f) Accountant's Comfort Letters. At the time of the execution of this
Agreement, the U.S. Representatives shall have received from KPMG Peat
Marwick LLP a letter in the form of Exhibit C-1 hereto and from Coopers &
Lybrand LLP a letter in the form of Exhibit C-2 hereto, dated such date, in
form and substance reasonably satisfactory to the U.S. Representatives,
together with signed or reproduced copies of such letter for each of the
other U.S. Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectuses.
(g) Bring-down Comfort Letters. At Closing Time, the U.S.
Representatives shall have received letters from KPMG Peat Marwick LLP and
Coopers & Lybrand LLP, dated as of Closing Time, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection
(e) of this Section, except that the specified date referred to shall be a
date not more than three business days prior to Closing Time.
(h) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(i) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(j) Lock-up Agreements. At the date of this Agreement, the U.S.
Representatives shall have received an agreement substantially in the form
of Exhibit B hereto signed by the persons listed on Schedule D hereto.
(k) Purchase of Initial International Securities. Contemporaneously
with the purchase by the U.S. Underwriters of the Initial U.S. Securities
under this Agreement, the International Managers shall have purchased the
Initial International Securities under the International Purchase
Agreement.
24
(l) Custody Agreement. At the date of this Agreement the U.S.
Representatives shall have received copies of a Custody Agreement and Power
of Attorney executed by each of the Selling Shareholders.
(m) Conditions to Purchase of U.S. Option Securities. In the event
that the U.S. Underwriters exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the U.S. Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company or any Subsidiary
of the Company hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the U.S. Representatives
shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(d) hereof remains true and correct as of such Date of
Delivery.
(ii) Selling Shareholder's Certificate. At the Date of Delivery,
the U.S. Representatives shall have received a certificate of each
Selling Shareholder (which may be executed on behalf of each Selling
Shareholder by the general partner or a duly authorized executive
officer of such Selling Shareholder), dated as of Date of Delivery, to
the effect that (x) the representations and warranties of such
Selling Shareholder contained in Section 1(b) hereof are true and
correct with the same force and effect as though expressly made at and
as of Date of Delivery and (y) such Selling Shareholder has complied
with all agreements and satisfied all conditions on their part to be
performed or satisfied under this Agreement at or prior to Date of
Delivery.
(iii) Opinion of Counsel for Company and the Selling
Shareholders. The favorable opinion of (x) Dewitt Ross & Stevens,
s.c., Counsel to the Company, relating to certain matters of Wisconsin
law, (y) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
Company, and (z) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
the Selling Shareholders in form and substance reasonably satisfactory
to counsel for the U.S. Underwriters together with signed or
reproduced copies of such letter for each of the other U.S.
Underwriters, dated such Date of Delivery, relating to the U.S. Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b) hereof with
respect to opinions (x) and (y) and shall be to the effect set forth
in Exhibit A-3 in the case of opinion (z).
25
(iii) Opinion of Counsel for U.S. Underwriters. The favorable
opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel for the
U.S. Underwriters, dated such Date of Delivery, relating to the U.S.
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(c)
hereof.
(iv) Bring-down Comfort Letters. Letters from Coopers & Lybrand
LLP and KPMG Peat Marwick LLP, in form and substance reasonably
satisfactory to the U.S. Representatives and dated such Date of
Delivery, substantially in the same form and substance as the letter
furnished to the U.S. Representatives pursuant to Section 5(g) hereof,
except that the "specified date" in the letter furnished pursuant to
this paragraph shall be a date not more than five days prior to such
Date of Delivery.
(n) Additional Documents. At Closing Time and at each Date of Delivery,
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 Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and the Selling Shareholders in connection with the
issuance and sale of the Securities as herein contemplated shall be reasonably
satisfactory in form and substance to the U.S. Representatives and counsel for
the U.S. Underwriters.
(o) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of U.S. Option
Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several U.S. Underwriters to purchase the relevant Option
Securities, may be terminated by the U.S. Representatives by notice to the
Company at any time at or prior to Closing Time or such Date of Delivery, as the
case may be, and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections 1, 6, 7 and
8 shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of U.S. Underwriters by the Company. (1) 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 or Section 20 of the 1934 Act as follows to the extent set forth below:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue
26
statement of a material fact contained in the Registration Statement (or
any amendment thereto), including the Rule 430A Information and the Rule
434 Information, 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 included 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, arising out of (A) the violation of any applicable
laws or regulations of foreign jurisdictions where Reserved Securities have
been offered and (B) any untrue statement or alleged untrue statement of a
material fact included in the supplement or prospectus wrapper material
distributed in foreign jurisdictions in connection with the reservation and
sale of the Reserved Securities and Direct Shares to eligible employees and
persons having relationships with the Company or the omission or alleged
omission therefrom of a material fact necessary to make the statements
therein, when considered in conjunction with the Prospectuses or
preliminary prospectuses, not misleading;
(iii) 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 or in connection with any violation of
the nature referred to in Section 6(a)(1)(ii)(A) hereof; provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the indemnifying party; and
(iv) against any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel chosen by Merrill Lynch), 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 or
in connection with any violation of the nature referred to in Section
6(a)(1)(ii)(A) hereof, to the extent that any such expense is not paid
under (i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not (i) 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 any
International Manager through the Lead Managers expressly for use in the
Registration Statement (or any amendment thereto),
27
including the Rule 430A Information and the Rule 434 Information, if applicable,
or any preliminary prospectus or the U.S. Prospectus or International
Prospectus, as the case may be (or any amendment or supplement thereto) or (ii)
inure to the benefit of any U.S. Underwriter from whom the person asserting any
loss, liability, claim, damage or expense, purchased Securities, or any person
controlling such U.S. Underwriter, if it shall be established that a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such U.S. Underwriter to such person, if required by law to have been so
delivered, at or prior to the confirmation of the sale of such Securities to
such person in any case where the Company complied with its obligations under
Sections 3(a), 3(b) and 3(d), and if the Prospectus (as so amended or
supplemented) would have cured any defect giving rise to such loss, liability,
claim damage, or expense.
(2) In addition to and without limitation of the Company to indemnify Smith
Barney Inc. as an Underwriter, the Company agrees to indemnify and hold harmless
the Independent Underwriter and each person, if any, who controls the
Independent Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, incurred as a result of the
Independent Underwriter's participation as a "qualified independent underwriter"
within the meaning of Rule 2720 of the Conduct Rules of the National Association
of Securities Dealers, Inc. in connection with the offering of the U.S.
Securities.
(b) Indemnification of U.S. Underwriters by the Selling Shareholders. (1)
Each Selling Shareholder, severally and not jointly, 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 or Section 20
of the 1934 Act as follows to the extent set forth below:
(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 the Rule 430A Information and the
Rule 434 Information, 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 included 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, arising out of (A) the violation of any applicable
laws or regulations of foreign jurisdictions where Reserved Securities have
been offered and (B) any untrue statement or alleged untrue statement of a
material
28
fact included in the supplement or prospectus wrapper material distributed
in foreign jurisdictions in connection with the reservation and sale of the
Reserved Securities and Direct Shares to eligible employees and persons
having relationships with the Company or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein, when
considered in conjunction with the Prospectuses or preliminary
prospectuses, not misleading;
(iii) 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 or in connection with any violation of
the nature referred to in Section 6(b)(1)(ii)(A) hereof; provided that
(subject to Section 6(e) below) any such settlement is effected with the
written consent of the indemnifying party; and
(iv) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), 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 or
in connection with any violation of the nature referred to in Section
6(b)(1)(ii)(A) hereof, to the extent that any such expense is not paid
under (i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not (i) 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 any
International Manager through the Lead Managers expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the U.S. Prospectus or International Prospectus, as the case may
be (or any amendment or supplement thereto) or (ii) inure to the benefit of any
U.S. Underwriter from whom the person asserting any loss, liability, claim,
damage or expense, purchased Securities, or any person controlling such U.S.
Underwriter, if it shall be established that a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such U.S.
Underwriter to such person, if required by law to have been so delivered, at or
prior to the confirmation of the sale of such Securities to such person in any
case where the Company complied with its obligations under Sections 3(a), 3(b)
and 3(d), and if the Prospectus (as so amended or supplemented) would have cured
any defect giving rise to such loss, liability, claim damage, or expense;
provided, however, further, that with respect to each Selling Shareholder, (x)
the indemnification provision in this paragraph (b) shall only apply to any
loss, liability,
29
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 such Selling
Shareholder expressly for use in the Registration Statement (or any amendment
thereto) including the Rule 430A information and the Rule 434 Information if
applicable, or any or such preliminary prospectus or the U.S. Prospectus or
International Prospectus, as the case may be (or any amendment or supplement
thereto) and (y) each such Selling Shareholder's aggregate liability under this
Section 6 shall be limited to an amount equal to the net proceeds (after
deducting the underwriting discount but before deducting expenses) received by
such Selling Shareholder from the sale of Securities pursuant to this Agreement.
(c) Indemnification of Company, Directors and Officers and Selling
Shareholders. 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 or Section 20 of the 1934 Act and each
Selling Shareholder and each person, if any, who controls any Selling
Shareholder within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 6(a)and Section 6(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary U.S. prospectus or the U.S.
Prospectus (or any amendment or supplement thereto) 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 (or any amendment thereto) or such preliminary prospectus
or the U.S. Prospectus (or any amendment or supplement thereto).
(d) Actions against Parties; Notification. 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 hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on
30
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 6(a) and Section 6(b) above or Sections 6(f) or 6(g), counsel to the
indemnified parties shall be selected by Merrill Lynch, and, in the case of
parties indemnified pursuant to Section 6(c) above, counsel to the indemnified
parties shall be selected by the Company or the indemnified Selling Shareholder,
as appropriate. An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any
necessary 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; provided, that, if indemnity is sought pursuant to Section
6(a)(2), Sections 6(f) or 6(g), then, in addition to the fees and expenses of
such counsel for the indemnified parties, the indemnifying party shall be liable
for the reasonable fees and expenses of not more than one counsel (in addition
to any necessary local counsel) separate from its own counsel and that of the
other indemnified parties for the Independent Underwriter in its capacity as a
"qualified independent underwriter" and all persons, if any, who control the
Independent Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of 1934 Act 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 if, in the reasonable judgment of the Independent
Underwriter, there may exist a conflict of interest between the Independent
Underwriter and the other indemnified parties. Any such separate counsel for the
Independent Underwriter and such control persons of the Independent Underwriter
shall be designated in writing by the Independent Underwriter. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(e) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel for which the indemnifying
party is responsible pursuant to the terms hereof, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(1)(iii) or Section 6(b)(1)(iii) or pursuant to Sections 6(f) or
6(g) effected without its written consent if (i) such settlement is entered into
more than 60 days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall have received notice of the terms of
such settlement at least 45 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior
31
to the date of such settlement.
(f) Indemnification for Reserved Securities. In connection with the offer
and sale of the Reserved Securities, the Company agrees, promptly upon a request
in writing, to indemnify and hold harmless the Underwriters from and against any
and all losses, liabilities, claims, damages and expenses incurred by them as a
result of the failure of certain eligible employees and other persons to pay for
and accept delivery of Reserved Securities which, by the end of the first
business day following the date of this Agreement, were subject to an orally
confirmed agreement to purchase.
(g) Indemnification for Direct Shares. The Company agrees to indemnify and
hold harmless the Underwriters from and against any and all losses, liabilities,
claims, damages and expenses incurred by them in connection with the offer and
sale by the Company of the Direct Shares.
(h) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company and the Selling
Shareholders with respect to indemnification.
SECTION 7. Contribution. If, although applicable in accordance with its
terms, the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Shareholders on the
one hand and the U.S. Underwriters on the other hand from the offering of the
U.S. Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Shareholders on
the one hand and of the U.S. Underwriters on the other hand in connection with
the statements or omissions, or in connection with any violation of the nature
referred to in Section 6(a)(1)(ii)(A) or Section 6(b)(1)(ii)(A) hereof, which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Shareholders
on the one hand and the U.S. Underwriters on the other hand in connection with
the offering of the U.S. Securities pursuant to this Agreement shall be deemed
to be in the same respective proportions as the total net proceeds from the
offering of the U.S. Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Shareholders and the total
underwriting discount received by the U.S. Underwriters, in each case as set
forth on the cover of the U.S. Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the U.S. Securities as set forth on such cover.
The relative fault of the Company and the Selling Shareholders on the one
hand
32
and the U.S. Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Selling Shareholders or by the
U.S. Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
any violation of the nature referred to in Section 6(a)(1)(ii)(A) or Section
6(b)(1)(ii)(A) hereof.
The Company, the Selling Shareholders and the U.S. Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 7
were determined by pro rata allocation (even if the U.S. Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party 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 or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the U.S. Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
U.S. Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, (a) each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, (b) 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 or Section 20 of the
1934 Act shall have the same rights to contribution as the Company and (c) each
person, if any, who controls any Selling Shareholder within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as such Selling Shareholder. The U.S. Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial U.S. Securities set forth opposite their
respective names in Schedule A hereto and not joint.
Notwithstanding the provisions of this Section 7, no Selling Shareholder
shall be required to contribute any amount in excess of the amount equal to the
net proceeds (after deducting the underwriting discount but before deducting
expenses) received by
33
such Selling Shareholder from the sale of U.S. Option Securities pursuant to
this Agreement.
The provisions of this Section shall not affect any agreement among the
Company and the Selling Shareholders with respect to contribution.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its Subsidiaries or the
Selling Shareholders 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
any Selling Shareholder, and shall survive delivery of the U.S. Option
Securities to the U.S. Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The U.S. Representatives may terminate this
Agreement, by notice to the Company and the Attorneys-in-Fact on behalf of the
Selling Shareholders, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the U.S. Prospectus, 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 shall have occurred a downgrading in the rating
assigned to any of the Company's debt securities by any nationally recognized
securities rating agency, or if such securities rating agency shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities, or
(iii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the U.S. Representatives, impracticable
to market the Securities or to enforce contracts for the sale of the Securities,
or (iv) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the New York Stock Exchange, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (v) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
34
SECTION 10. Default by One or More of the U.S. Underwriters. If one or more
of the U.S. Underwriters shall fail at the Closing Time or a Date of Delivery to
purchase the Securities which it or they are obligated to purchase under this
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 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
number of U.S. Securities to be purchased on such date, each of the
non-defaulting U.S. Underwriters shall be obligated, severally and not
jointly, 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 number of
U.S. Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the U.S. Underwriters to purchase the U.S. Option Securities
to be purchased and sold on such Date of Delivery 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 or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the U.S.
Underwriters to purchase and the Selling Shareholders to sell the relevant U.S.
Option Securities, either (i) the U.S. Representatives or (ii) the Selling
Shareholders shall have the right to postpone the Closing Time or the relevant
Date of Delivery, as the case may be, for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements. As used herein, the term "U.S.
Underwriter" includes any person substituted for a U.S. Underwriter under this
Section 10.
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 at North Tower, World
Financial Center, New York, New York 10281-1201, attention of W. Gregg Smart,
with a copy to Fried, Frank, Harris, Shriver & Jacobson, 1 New York Plaza, New
York, New York 10004, attention of Valerie Ford Jacob, Esq.; notices to the
Company shall be directed to it at Rayovac
35
Corporation, 601 Rayovac Drive, Madison, Wisconsin 53711, attention of James A.
Broderick, Esq., with a copy to Louis A. Goodman, Esq. Skadden, Arps, Slate,
Meagher & Flom LLP, One Beacon Street, Boston, MA 02108; notices to the Selling
Shareholders shall be delivered to them at The Thomas H. Lee Company, 75 State
Street, Suite 2600, Boston, MA 02109 with a copy to Louis A. Goodman, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP, One Beacon Street, Boston, MA 02108.
SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be binding upon the U.S. Underwriters, the Company and the Selling Shareholders
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
Shareholders and their respective successors and the controlling persons and
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
Shareholders and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of 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 SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 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 NEW
YORK CITY ARE REGULARLY OPEN FOR BUSINESS.
SECTION 14 Effect of Headings. The Article and Section headings herein and
the Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 15. Counterparts. This Agreement may be executed in one or more
counterparts and, when a counterpart has been executed by each party hereto, all
such counterparts taken together shall constitute one and the same agreement.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
36
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 among
the U.S. Underwriters, the Company and the Selling Shareholders in accordance
with its terms.
Very truly yours,
RAYOVAC CORPORATION
By:
----------------------------
Name: David A. Jones
Title: Chairman of the Board,
Chief Executive Officer
and President
SELLING SHAREHOLDERS
THOMAS H. LEE EQUITY
FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By:
----------------------------
Name:
Title:
THOMAS H. LEE FOREIGN
FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By:
----------------------------
Name:
Title:
1
THL-CCI Limited Partnership
By:
-----------------------------------
Name: Warren C. Smith, Jr.
as agent and attorney-in-fact
under appointment of Power of
Attorney dated ________, 1997 for
THL-CCI Limited Partnership
CONFIRMED AND ACCEPTED,
as of the date first above
written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SMITH BARNEY INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _______________________________________
Authorized Signatory
For themselves and as U.S. Representatives of the
other U.S. Underwriters named in Schedule A hereto.
2
SCHEDULE A
Number of Initial
Name of U.S. Underwriter U.S. Securities
- ------------------------ ---------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Bear, Stearns & Co. Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Smith Barney Inc.
Total 5,360,000
3
SCHEDULE B
Selling Shareholder Maximum Number of U.S.
Option Securities to be Sold
----------------------------
THOMAS H. LEE EQUITY FUND III, L.P. ----------------------------
THOMAS H. LEE FOREIGN FUND III, L.P. ----------------------------
THL-CCI Limited Partnership ----------------------------
Total 804,000
4
SCHEDULE C
Rayovac Corporation
________________ Shares of Common Stock
Par Value $0.01 Per Share)
1. The initial public offering price per share for the 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; provided that the
purchase price per share for any U.S. Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial U.S. Securities but not payable on the U.S.
Option Securities.
5
SCHEDULE D
List of Persons and Entities Subject to Lock-up
Thomas H. Lee Equity Fund III, L.P.
THL-CCI Limited Partnership
Thomas H. Lee Foreign Fund III, L.P.
Roger F. Warren
Trygve Lonnebotn
David A. Jones
James A. Broderick
Russell E. Lefevre
Raymond L. Balfour
Gary E. Wilson
Dale R. Tetzlaff
Kenneth V. Biller
Kent J. Hussey
Stephen P. Shanesy
Merrell M. Tomlin
Scott A. Schoen
Thomas R. Shepherd
Warren C. Smith
1
EXHIBIT A-1
FORM OF OPINION OF DEWITT ROSS & STEVENS, s.c., WISCONSIN COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)*
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Wisconsin.
(ii) The issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Company.
(iii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement.
(iv) The form of certificate used to evidence the Common Stock complies in
all material respects with all applicable statutory requirements, with any
applicable requirements of the charter and by-laws of the Company and the
requirements of the New York Stock Exchange.
(v) 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 so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(vi) The statements in the Prospectuses under the captions "Description of
Capital Stock," to the extent that such statements constitute matters of law,
summaries of legal matters or legal conclusions are correct in all material
respects.
(vii) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectuses in the column entitled "Actual" under the
caption "Capitalization" (except for subsequent issuances, if any, pursuant to
the U.S. Purchase Agreement and the International Purchase Agreement); the
shares of issued and outstanding capital stock have been and will have been at
the Closing Time duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of capital stock of the
Company was or will have been at the Closing Time issued in violation of the
preemptive or other similar rights of any securityholder
of the Company.
- --------
* Full Form of opinion, including qualifications to be attached prior to
execution.
1
(viii) The Securities to be purchased by the U.S. Underwriters and the
International Managers from the Company have been duly authorized for issuance
and sale to the Underwriters pursuant to the U.S. Purchase Agreement and the
International Purchase Agreement, respectively, and, when issued and delivered
by the Company pursuant to the U.S. Purchase Agreement and the International
Purchase Agreement, respectively, against payment of the consideration set forth
in the U.S. Purchase Agreement and the International Purchase Agreement, will be
validly issued and fully paid and non-assessable and no holder of the Securities
is or will be subject to personal liability by reason of being such a holder.
(ix) Each subsidiary incorporated or organized under the laws of the state
of Wisconsin (a "Wisconsin Subsidiary") has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the state
of Wisconsin, 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 so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(x) The information in the Registration Statement under Item 14, to the
extent that it constitutes matters of law, summaries of legal matters, the
Company's charter and bylaws or legal proceedings, or legal conclusions, has
been reviewed by us and is correct in all material respects.
(xi) The U.S. Purchase Agreement and the International Purchase Agreement
have been duly authorized, executed and delivered by the Company.
(xii) To the best of our knowledge, neither the Company nor any Wisconsin
Subsidiary is in violation of its charter or by-laws and no default by the
Company or any Wisconsin Subsidiary exists in the due performance or observance
of any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectuses or filed or incorporated by reference as an exhibit to the
Registration Statement.
(xiii) The execution, delivery and performance of the U.S. Purchase
Agreement and the International Purchase Agreement and the consummation of the
transactions contemplated in the U.S. Purchase Agreement, the International
Purchase Agreement and in the Registration Statement (including the issuance and
sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use Of Proceeds")
and compliance by the Company with its obligations under the U.S. Purchase
Agreement and the International Purchase Agreement have been duly authorized by
all necessary corporate action and do not and will not, whether with or without
the giving of notice or lapse of time or both, conflict
2
with or constitute a breach of, or default or Repayment Event (as defined in
Section 1(a)(x) of the Purchase Agreements) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any Wisconsin Subsidiary pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to us, to which the Company or any Wisconsin
Subsidiary 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 Wisconsin Subsidiary is
subject (except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or by-laws of
the Company or any Wisconsin Subsidiary, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any Wisconsin Subsidiary or any of their respective
properties, assets or operations.
In rendering such opinion, such counsel may rely as to matters of fact (but
not as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall not
state that it is to be governed or qualified by, or that it is otherwise subject
to, any treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
3
EXHIBIT A-2
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)*
November [ ], 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Bear, Stearns & Co. Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Smith Barney Inc.
as U.S. Representatives of the several
U.S. Underwriters to be named in the
U.S. Purchase Agreement
Merrill Lynch International
Bear, Stearns International Limited
Donaldson, Lufkin & Jenrette Securities Corporation
Smith Barney Inc.
as representatives of the several
international managers to be named
in the International Purchase Agreement
c/o Merrill Lynch & Co.
North Tower
World Financial Center
New York, New York 10281-1209
Re: Public Offering of 6,700,000 Shares of
Common Stock of Rayovac Corporation
-----------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Rayovac Corporation, a Wisconsin
corporation (the "Company"), in connection with (i) the registration and sale by
- --------
* Full Form of opinion, including qualifications to be attached prior to
execution.
MERRILL LYNCH & CO.
Merrill Lynch International
November [ ], 1997
Page 2
the Company of 5,360,000 shares of the Company's Common Stock, par value $0.01
per share (the "U.S. Shares"), pursuant to the terms of the U.S. Purchase
Agreement (the "U.S. Purchase Agreement"), dated November [ ], 1997, among the
Company, the U.S. Underwriters named in Schedule A thereto (the "U.S.
Underwriters") and the shareholders of the Company named in Schedule B thereto
(the "Selling Shareholders") and (ii) the registration and sale by the Company
of 1,340,000 shares of Common Stock (the "International Shares," and together
with the U.S. Shares, the "Shares"), pursuant to the terms of the International
Purchase Agreement (the "International Purchase Agreement"), dated November [ ],
1997, between the Company and the international managers named in Schedule A
thereto (the "International Managers") and the Selling Shareholders.
This opinion is being furnished pursuant to Section 5(b) of each of the
U.S. Purchase Agreement and the International Purchase Agreement. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
set forth in the U.S. Purchase Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement on Form S-1 (File No. 333-35181) relating to the Shares filed with the
Securities and Exchange Commission (the "Commission") on September 8, 1997 under
the Securities Act of 1933, as amended (the "Act"), Amendment No. 1 thereto, as
filed with the Commission on October 31, 1997, [and Amendment No. 2 thereto, as
filed with the Commission on November , 1997,] including the information deemed
to be a part of the Registration Statement at the time of effectiveness pursuant
to Rule 430A of the General Rules and Regulations under the Act (the "Rules and
Regulations") (such registration statement, as so amended, being hereinafter
referred to as the "Registration Statement"); (ii) the final U.S. prospectus
dated November [ ], 1997, relating to the U.S. Shares filed with the Commission
on November [ ], 1997 pursuant to Rule 424(b) of the Rules and Regulations (the
"U.S. Prospectus"); (iii) the final International Prospectus dated November [],
1997, relating to the International Shares filed with the Commission on
November [ ], 1997, pursuant to Rule 424(b) of the Rules and Regulations (the
"International Prospectus" and together with the U.S. Prospectus, the
"Prospectuses"); (iv) executed copies of the U.S. Purchase Agreement and the
International Purchase Agreement; (v) a specimen certificate representing the
Common Stock (the "Specimen Certificate"); and (vi) the certificate of James A.
MERRILL LYNCH & CO.
Merrill Lynch International
November [ ], 1997
Page 3
Broderick, General Counsel to the Company, attached hereto as Exhibit A (the
"Officer's Certificate"). We have also examined originals or copies, certified
or otherwise identified to our satisfaction, of all such records of the Company
and all such agreements, certificates of public officials, certificates of
officers or other representatives of the Company and others, and such other
documents, certificates and records as we have deemed necessary or appropriate
as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
executed documents, we have assumed that the parties thereto (including the
Company) had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such parties
of such documents and the validity and binding effect thereof. As to any facts
material to the opinions expressed herein that were not independently
established or verified, we have relied upon oral or written statements and
representations of officers and other representatives of the Company.
For purposes of the opinions set forth below, with respect to any document
which by its terms or otherwise is governed by the laws of any jurisdiction
other than the United States of America or the State of New York, such opinions
are based solely upon our understanding of the plain language of such document,
and we express no opinion as to the interpretation of any such document or of
any term or provision thereof under applicable governing law or as to the effect
on the opinions expressed herein of any interpretation thereof inconsistent with
such understanding. For purposes of our opinion set forth in paragraph 4, we
have assumed that the certificates representing the shares referred to in such
paragraph conform to the Specimen Certificate. Our opinion set forth in
paragraph 5, is based solely upon the Officer's Certificate and our discussions
with James A. Broderick, General Counsel of the Company; we have not performed
any docket search in any jurisdiction, and have not done any other investigation
of any kind.
MERRILL LYNCH & CO.
Merrill Lynch International
November [ ], 1997
Page 4
The opinions expressed herein are limited to the laws of the State of New
York, the General Corporation Law of the State of Delaware and the federal laws
of the United States of America to the extent specifically referred to herein.
As used herein, (i) the term "Applicable Laws" means the General
Corporation Law of the State of Delaware and those laws, rules and regulations
of the State of New York and of the United States of America that, in our
experience, are normally applicable to transactions of the type contemplated by
the U.S. Purchase Agreement, but without our having made any special
investigation concerning the applicability of any other law, rule or regulation;
provided, that such term does not include any federal or state securities or
other antifraud laws or the rules and regulations of the National Association
of Securities Dealers, Inc.; (ii) the term "Applicable Contracts" means those
contracts and agreements listed on Annex A to the Officer's Certificate; and
(iii) the term "Governmental Approval" means any consent, approval, license,
authorization or validation of, or filing, recording or registration with, any
United States federal or New York executive, legislative, judicial,
administrative or regulatory body (a "Governmental Entity"), pursuant to
Applicable Laws.
Based upon and subject to the foregoing and to the other qualifications and
limitations set forth herein, we are of the opinion that:
1. All of the issued and outstanding capital stock of ROV Holding, Inc. has
been duly authorized and validly issued and is fully paid and nonassessable.
None of the outstanding shares of capital stock of ROV Holding, Inc. was issued
in violation of the preemptive rights of any security holder of ROV Holding,
Inc. arising under the Certificate of Incorporation or By-laws of ROV Holding,
Inc. or any other similar rights arising under any Applicable Contract.
2. To our knowledge, based solely on our examination of the stock record
book of ROV Holding, Inc., the issued and outstanding capital stock of ROV
Holding, Inc. is owned of record by the Company, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity arising under any
Applicable Contract, except for the pledge of the capital stock of ROV Holding,
Inc. by the Company pursuant to a Company Pledge Agreement dated as of September
12, 1996 between the Company and Bank of America National Trust and Savings
Association in its capacity as administrative agent for the lenders referred to
therein.
MERRILL LYNCH & CO.
Merrill Lynch International
November [ ], 1997
Page 5
3. The Registration Statement, as of its effective date, and the
Prospectuses, as of their date, appeared on their face to be appropriately
responsive in all material respects to the requirements of the Securities Act
and the Rules and Regulations, except that, in each case, we express no opinion
as to the financial statements, schedules and other financial data included
therein or excluded therefrom or the exhibits to the Registration Statement, and
we do not assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement except to the extent
indicated in paragraph 6 below.
4. The Specimen Certificate complies in all material respects with any
requirements of the New York Stock Exchange applicable to companies whose
securities are listed thereon.
5. To our knowledge, except as set forth in the Registration Statement or
the Prospectuses, there are no legal, regulatory or governmental proceedings
pending in any New York State or federal court to which the Company or any
subsidiary of the Company listed on Exhibit 21 to the Registration Statement
(each, a "Subsidiary") is a party, or to which the property of the Company or
any Subsidiary is subject, which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially and
adversely affect the transactions contemplated by the U.S. Purchase Agreement or
the International Purchase Agreement or the performance by the Company of its
obligations thereunder.
6. The statements in the Prospectuses under the captions "Description of
Capital Stock," "Description of Certain Indebtedness," "Shares Eligible for
Future Sale," "Underwriting" and "Certain Federal Income Tax Considerations," to
the extent that such statements constitute matters of law, summaries of legal
matters or legal conclusions, are correct in all material respects.
7. No Governmental Approval is required under Applicable Laws in connection
with the consummation by the Company of the transactions contemplated by the
U.S. Purchase Agreement or the International Purchase Agreement except that we
do not express any opinion as to any consent or authorization which may have
become applicable to the Company as a result of the involvement of the U.S.
MERRILL LYNCH & CO.
Merrill Lynch International
November [ ], 1997
Page 6
Underwriters or of the International Managers in the transactions contemplated
by the U.S. Purchase Agreement or the International Purchase Agreement, because
of their legal or regulatory status or because of any other facts specifically
pertaining to them.
8. Neither the execution and delivery of the U.S. Purchase Agreement or
the International Purchase Agreement nor the consummation of the transactions
contemplated therein will contravene any Applicable Laws.
9. To our knowledge, based solely upon a review of the Applicable
Contracts, there are no Applicable Contracts of a character required to be filed
as exhibits to the Registration Statement which are not filed as required.
10. The execution, delivery and performance of the U.S. Purchase Agreement
and the International Purchase Agreement and the consummation of the
transactions contemplated thereby and the use of the proceeds from the sale of
the Shares as described in the Prospectuses under the caption "Use of Proceeds"
do not and will not, either by itself or the giving of notice or the lapse of
time or both, conflict with or constitute a breach of or a default or Repayment
Event (as defined in Section 1(a)(x) of the Purchase Agreements) under any
Applicable Contract or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any Subsidiary
pursuant to any Applicable Contract to which the Company or any Subsidiary 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 Subsidiary is subject or any Applicable
Law or Governmental Approval of any Governmental Entity having jurisdiction over
the Company or any Subsidiary or any of their respective properties, assets or
operations, except in any such case for any such conflicts, breaches, or
defaults which would not have a Material Adverse Effect.
11. Except as disclosed in the Registration Statement, to our knowledge,
there are no persons with registration rights or other similar rights under any
Applicable Contract to have any shares of Common Stock registered pursuant to
the Registration Statement or otherwise registered by the Company pursuant to
the 1933 Act.
MERRILL LYNCH & CO.
Merrill Lynch International
November [ ], 1997
Page 7
12. The Company is not subject to registration as an investment company
under the Investment Company Act of 1940, as amended.
We have been orally advised by the Commission that the Registration
Statement was declared effective under the Act at [ ], Washington, D.C. time, on
November [ ], 1997; the required filing of the Prospectuses pursuant to Rule
424(b) has been made in the manner and within the time period required by Rule
424(b); and, to our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened by the Commission.
In addition, we have participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company, and you and your counsel, at which the contents of
the Registration Statement, the Prospectuses and related matters were discussed
and, although we are not passing upon, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectuses and have made no independent check or
verification thereof, on the basis of the foregoing, no facts have come to our
attention that have led us to believe that 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 that the Prospectuses, as of
their dates and as of the date hereof, contained or contains an untrue statement
of a material fact or omitted or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that we express no opinion or belief with
respect to the financial statements, schedules and other financial data included
therein or excluded therefrom or the exhibits to the Registration Statement.
This opinion is furnished to you solely for your benefit in connection with
the closings under the U.S. Purchase Agreement and the International Purchase
Agreement occurring today and is not to be used, circulated, quoted or otherwise
referred to for any other purpose or relied upon by any other person without our
prior express written permission.
Very truly yours,
EXHIBIT A-3
FORM OF OPINION OF COUNSEL OF
SELLING SHAREHOLDERS
TO BE DELIVERED PURSUANT TO
SECTION 5(b)*
November __, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Bear, Stearns & Co., Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Smith Barney Inc.
as U.S. Representatives of the several
U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
MERRILL LYNCH INTERNATIONAL
Bear, Stearns International Limited
Donaldson, Lufkin & Jenrette Securities Corporation
Smith Barney Inc.
as Lead Managers for the several International Managers
c/o Merrill Lynch International
25 Ropemaker Place
London EC2Y 9LY
England
Re: Overallotment Option in Connection
With Public Offering of Shares of
Common Stock of Rayovac Corporation
-----------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Thomas H. Lee Equity Fund
III, L.P., THL-CCI Limited Partnership, Thomas H. Lee Foreign Fund III, L.P.,
(each a "Selling Shareholder" and together the "Selling Shareholders") in
connection with the execution and delivery by the Selling Shareholders of (i)
the U.S. Purchase Agreement dated as of November __, 1997 (the "U.S. Purchase
Agreement") among
- --------
* Full Form of opinion, including qualifications to be attached prior to
execution.
MERRILL LYNCH & CO.
MERRILL LYNCH INTERNATIONAL
November __, 1997
Page 2
Rayovac Corporation, a Wisconsin corporation (the "Company"), the Selling
Shareholders, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation, Bear Stearns & Co., Inc., and Smith
Barney Inc. as representatives (the "U.S. Representatives") of the U.S.
Underwriters listed in Schedule A thereto and (ii) the International Purchase
Agreement dated as of November __, 1997 (the "International Purchase Agreement")
among the Company, the Selling Shareholders, and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation, Bear
Stearns International Limited, and Smith Barney Inc. as lead managers (the "Lead
Managers") on behalf of the International Managers listed in Schedule A thereto,
and the sale by the Selling Shareholders to the U.S. Underwriters (as defined in
the U.S. Purchase Agreement) and the International Managers (as defined in the
International Purchase Agreement) of an aggregate of 1,005,000 shares of Common
Stock, par value $0.01 per share, of the Company (the "Common Stock") pursuant
to the exercise by the U.S. Underwriters and the International Managers of the
options granted by the Selling Shareholders, acting severally and not jointly,
to (i) the U.S. Underwriters, acting severally and not jointly, to purchase all
or any part of 804,000 additional shares of Common Stock (the "U.S. Option
Securities") and (ii) the International Managers, acting severally and not
jointly, to purchase all or any part of 201,000 additional shares of Common
Stock (the "International Option Securities," and together with the U.S. Option
Securities, the "Option Shares") to cover over allotments, if any, described in
Section 2(b) of each of the U.S. Purchase Agreement and the International
Purchase Agreement. This opinion is delivered to you pursuant to Section 5(b)
of each of the U.S. Purchase Agreement and the International Purchase Agreement.
Capitalized terms used herein but not otherwise defined herein shall have the
same meaning ascribed to them in the U.S. Purchase Agreement.
In connection with this opinion, we have examined or are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the U.S. Purchase Agreement; (ii) the International Purchase Agreement;
(iii) the Irrevocable Power of Attorney and Custody Agreement dated as of
November ___, 1997 among each Selling Shareholder and ________________________,
each acting as Attorney-in-Fact (each, an "Attorney-in-Fact" and together, the
MERRILL LYNCH & CO.
MERRILL LYNCH INTERNATIONAL
November __, 1997
Page 3
"Attorneys-in-Fact"), and [Firstar Trust Bank], as Custodian (the "Custodian")
(the "Custody Agreement" and together with the U.S. Purchase Agreement and the
International Purchase Agreement, the "Transaction Documents"), (iv) the Limited
Partnership Agreement of Thomas H. Lee Foreign Fund III, L.P. (the "Foreign
Fund"), dated as of February 6, 1996, by and among THL Equity Advisors III
Limited Partnership, a Massachusetts limited partnership ("Advisors"), and the
limited partners listed on Exhibit A thereto; (v) the Second Amended and
Restated Limited Partnership Agreement of Thomas H. Lee Equity Fund III, L.P.
(the "Equity Fund" and together with the Foreign Fund, the "Funds"), dated as of
December 22, 1995, by and among Advisors and the limited partners listed on
Exhibit A thereto; (vi) the Thirteenth Amended and Restated Agreement of Limited
Partnership of THL-CCI Limited Partnership ("CCI", and together with the Funds,
the "Partnerships"), dated as of January 17, 1997, by and among THL Investment
Management Corp. and the persons and entities admitted as limited partners;
(vii) the Certificate of Limited Partnership of the Foreign Fund, dated as of
January 23, 1996; (viii) the Certificate of Limited Partnership of the Equity
Fund, dated as of February 14, 1995; (ix) the Certificate of Limited Partnership
of CCI, dated as of July 10, 1992, as amended November 30, 1993 and March 13,
1996; (x) the First Amended and Restated Agreement of Limited Partnership of
Advisors, dated as of August 15, 1995 by and among THL Equity Trust III, a
Massachusetts business trust ("Equity Trust"), and the limited partners
signatories thereto; (xi) the Certificate of Limited Partnership of Advisors,
dated as of February 16, 1995; (xii) the Declaration of Trust of Equity Trust,
made as of February 14, 1995, by and between Thomas H. Lee, as grantor, and the
trustees signatories thereto; (xiii) the Consent of Trustees of Equity Trust,
dated as of January 17, 1997; (xiv) the Articles of Organization and By-laws of
THL Investment Management Corp., each as in effect as of the date hereof; (xv)
the Consent of Sole Director of THL Investment Management Corp., dated as of
January 17, 1997; (xvi) the Certificate of Advisors, as general partner of the
Equity Fund, dated as of January 17, 1997; (xvii) the Certificate of Advisors,
as general partner of the Foreign Fund, dated as of November __, 1997; (xviii)
the Certificate of Equity Trust, as general partner of Advisors, dated as of
November __, 1997; (xix) the Officer's Certificate of THL Investment Management
Corp., as general partner of CCI, dated as of November __, 1997; (xx) the
Officer's Certificate of THL Investment Management Corp., dated as of November
__, 1997; (xxi) the Certificate of Equity Trust, dated as of November __, 1997
and (xxii) certificates representing the Option Shares. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such records of each of the Partnerships and others and such agreements,
certificates of public officials, certificates of officers or other
representatives of each of the Partnerships and others and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
MERRILL LYNCH & CO.
MERRILL LYNCH INTERNATIONAL
November __, 1997
Page 4
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such latter documents. As to any facts material to the opinions set
forth herein which we did not independently establish or verify, we have relied
upon statements and representations of officers and other representatives of
each of the Partnerships and others.
As used herein, (i) the term "Applicable Laws" means the General
Corporation Law and Revised Uniform Limited Partnership Act of the State of
Delaware, the Business Corporation Law and the Uniform Limited Partnership Act
of the Commonwealth of Massachusetts and those laws, rules and regulations of
the State of New York and of the United States of America that, in our
experience, are normally applicable to transaction of the type contemplated by
the Transaction Documents, but without our having made any special investigation
concerning the applicability of any other law, rule or regulation; provided,
that such term does not include any federal or state securities or other
antifraud laws or the rules and regulations of the National Association of
Securities Dealers, Inc.; (ii) the term "Applicable Contracts" means those
contracts and agreements listed on Annex A hereto; and (iii) the term
"Governmental Approval" means any consent, approval, license, authorization or
validation of, or filing, recording or registration with, any United States
Federal or Delaware, Massachusetts or New York executive, legislative, judicial,
administrative or regulatory body (a "Governmental Entity"), pursuant to
Applicable Laws.
MERRILL LYNCH & CO.
MERRILL LYNCH INTERNATIONAL
November __, 1997
Page 5
The opinions expressed herein are limited to (i) the General Corporation
Law and the Revised Uniform Limited Partnership Act of the State of Delaware;
(ii) the Business Corporation Law and the Uniform Limited Partnership Act of the
Commonwealth of Massachusetts; (iii) the laws of the State of New York; and (iv)
the federal laws of the United States of America to the extent specifically
referred to herein.
Based upon and subject to the foregoing, and to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. No Governmental Approval is required under Applicable Laws in connection
with the offer, sale or delivery of the Option Shares by the Selling
Shareholders under the U.S. Purchase Agreement and the International Purchase
Agreement or the performance by each of the Selling Shareholders of its
obligations under any of the Transaction Documents; provided, that we express no
opinion as to any Governmental Approval which may be required under state
securities laws or that may have become applicable to any Selling Shareholder as
a result of your involvement in the U.S. Purchase Agreement or the International
Purchase Agreement because of your legal or regulatory status or because of any
other facts specifically pertaining to you.
2. Each of the Custody Agreement, the U.S. Purchase Agreement and the
International Purchase Agreement has been duly executed and delivered by each
Selling Shareholder.
3. The Attorney-in-Fact has been duly authorized by each Selling
Shareholder to deliver and sell the U.S. Option Securities and the International
Option Securities on behalf of each Selling Shareholder in accordance with the
terms of each of the U.S. Purchase Agreement and the International Purchase
Agreement.
MERRILL LYNCH & CO.
MERRILL LYNCH INTERNATIONAL
November __, 1997
Page 6
4. The execution, delivery and performance of each of the Transaction
Documents and the sale and delivery of the U.S. Option Securities and the
International Option Securities and the consummation of the transactions
contemplated in each of the U.S. Purchase Agreement and the International
Purchase Agreement and compliance by each Selling Shareholder with its
obligations under each of the U.S. Purchase Agreement and the International
Purchase Agreement have been duly authorized by all necessary partnership action
on the part of each Selling Shareholder and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under any Applicable Law or Governmental
Approval of any Governmental Entity having jurisdiction over any Selling
Shareholder or any of their properties (except for such conflicts, breaches or
defaults or liens, charges or encumbrances which would not have a material
adverse effect on the condition (financial or otherwise), earnings, business
affairs or business prospects of any Selling Shareholder, whether or not arising
in the ordinary course of business) nor will such action result in any violation
of the provisions of the partnership agreements of any of the Selling
Shareholders.
5. To our knowledge, each Selling Shareholder has the power and authority
as a limited partnership to sell, transfer and deliver the U.S. Option
Securities and the International Option Securities pursuant to each of the U.S.
Purchase Agreement and the International Purchase Agreement. Assuming that
neither any U.S. Representatives nor any U.S. Underwriter has notice of adverse
claims with respect to the certificates identified on Schedule A as representing
the U.S. Option Securities, then upon physical delivery to Merrill Lynch & Co.
as designee of the U.S. Representatives in the State of New York of such
certificates indorsed to the U.S. Representatives or indorsed in blank, the U.S.
Representatives will acquire such certificates (and the shares of Common Stock
represented thereby) free of any adverse claims within the meaning of the
Uniform Commercial Code in effect in the State of New York. Assuming that
neither any Lead Manager nor any International Manager has notice of adverse
claims with respect to the certificates identified on Schedule A as representing
the International Option Securities, then upon physical delivery to Merrill
Lynch & Co. as designee of the Lead Managers in the State of New York of such
certificates indorsed to the Lead Managers or indorsed in blank, the Lead
Managers will acquire such certificates (and the shares of Common Stock
represented thereby) free of any adverse claims within the meaning of the
Uniform Commercial Code in effect in the State of New York.
MERRILL LYNCH & CO.
MERRILL LYNCH INTERNATIONAL
November __, 1997
Page 7
This opinion is furnished to you solely for your benefit in connection with
the closings under the U.S. Purchase Agreement and the International Purchase
Agreement occurring today and is not to be used, circulated, quoted or otherwise
referred to for any other purpose or relied upon by any other person without our
prior express written permission.
Very truly yours,
EXHIBIT B
_________________, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Bear, Stearns & Co. Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Smith Barney Inc.
as U.S. Representatives of the several
U.S. Underwriters to be named in the
within-mentioned U.S. Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Public Offering by Rayovac Corporation
Dear Sirs:
The undersigned, a stockholder [and an [officer] or [director]] of
Rayovac Corporation, a Wisconsin corporation (the "Company"), understands that
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Bear, Stearns & Co. Inc., Donaldson, Lufkin & Jenrette
Securities Corporation and Smith Barney Inc. propose to enter into a U.S.
Purchase Agreement (the "U.S. Purchase Agreement") with the Company providing
for the public offering of shares (the "Securities") of the Company's common
stock, par value $0.01 per share (the "Common Stock"). In recognition of the
benefit that such an offering will confer upon the undersigned as a stockholder
of the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the U.S. Purchase Agreement that, during a period of
180 days from the date of the U.S. Purchase Agreement, the undersigned will not,
without the prior written consent of Merrill Lynch, directly or indirectly, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any shares of the Company's
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock, whether now owned or hereafter acquired by the undersigned or
with respect to which the undersigned has or hereafter acquires the power of
disposition, or file any registration
1
statement under the Securities Act of 1933, as amended, with respect to any of
the foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities, in
cash or otherwise.
Notwithstanding the foregoing, the undersigned may transfer any or all
of its shares of Company Common Stock (i) by gift, will or intestacy, (ii) to
its affiliates, as such term is defined in Rule 405 promulgated under the
Securities Act of 1933, as amended, or (iii) in the event the undersigned is an
individual, to his or her immediate family or to a trust the beneficiaries of
which are exclusively the undersigned and/or a member or members of his or her
immediate family; provided, however, that in any such case it shall be a
condition to any such transfer that the transferee execute an agreement stating
that the transferee is receiving and holding the shares subject to the
provisions of this letter agreement and there shall be no further transfer of
such shares except in accordance with the provisions of this letter agreement.
Very truly yours,
Signature:
Print Name:
2
EXHIBIT C-1
FORM OF COMFORT LETTER OF
KPMG PEAT MARWICK LLP PURSUANT TO SECTION 5(f)
(i) We are independent public accountants with respect to the Company
within the meaning of the 1933 Act and the applicable published 1933 Act
Regulations.
(ii) In our opinion, the audited financial statements and the related
financial statement schedules included in the Registration Statement and the
Prospectuses comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the published rules and regulations
thereunder.
(iii) On the basis of procedures (but not an examination in accordance
with generally accepted auditing standards) consisting of a reading of the
unaudited interim consolidated financial statements of the Company for the
periods ______________ and________________ included in the Registration
Statement and the Prospectuses (collectively, the "Quarterly Financials"), a
reading of the minutes of all meetings of the stockholders and directors of the
Company and its Subsidiaries and the committees of the Company's Board of
Directors and any subsidiary committees since October 1, 1997, inquiries of
certain officials of the Company and its subsidiaries responsible for financial
and accounting matters, a review of interim financial information in accordance
with standards established by the American Institute of Certified Public
Accountants in Statement on Auditing Standards No. 71, Interim Financial
Information ("SAS 71"), with respect to the Quarterly Financials and such other
inquiries and procedures as may be specified in such letter, nothing came to our
attention that caused us to believe that:
(A) the Quarterly Financials included in the Registration Statement
and the Prospectuses 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 any material modifications should be made to the unaudited consolidated
financial statements included in the Registration Statement and the Prospectuses
for them to be in conformity with generally accepted accounting principles;
(B) at a specified date not more than five days prior to the date of
this Agreement, there was any change in the common stock of the Company and its
subsidiaries or any decrease in the working capital, total assets, total current
assets or stockholder's equity of the Company and its subsidiaries or any
increase in the long-term debt or total liabilities of the Company and its
subsidiaries, in each case as compared with amounts shown in the latest balance
sheet included in the Registration Statement, except in each case for changes,
decreases or increases that the Registration Statement discloses have occurred
or may occur; or
1
(C) for the period from September 30, 1997 to a specified date not
more than five days prior to the date of this Agreement, there was any decrease
in net sales, gross profit, income from operations before non-recurring charges,
income (loss) from operations, interest expense, net income in each case as
compared with the comparable period in the preceding year, except in each case
for any decreases that the Registration Statement discloses have occurred or may
occur.
(iv) Based upon the procedures set forth in clause (iii) above and a
reading of the Selected Financial Data included in the Registration Statement
and a reading of the financial statements from which such data were derived,
nothing came to our attention that caused us to believe that the Selected
Financial Data included in the Registration Statement do not comply as to form
in all material respects with the disclosure requirements of Item 301 of
Regulation S-K of the 1933 Act, that the amounts included in the Selected
Financial Data are not in agreement with the corresponding amounts in the
audited consolidated financial statements for the respective periods or that the
financial statements not included in the Registration Statement from which
certain of such data were derived are not in conformity with generally accepted
accounting principles.
(v) We have compared the information in the Registration Statement
under selected captions with the disclosure requirements of Regulation S-K of
the 1933 Act and on the basis of limited procedures specified herein. nothing
came to our attention that caused us to believe that this information does not
comply as to form in all material respects with the disclosure requirements of
Items 302, 402 and 503(d), respectively, of Regulation S-K.
(vi) We are unable to and do not express any opinion on the Pro Forma
Financial Information included in the Registration Statement or on the pro forma
adjustments applied to the historical amounts included in the Pro Forma
Financial Information. However, for purposes of this letter we have:
(A) read the Pro Forma Financial Information;
(B) performed an audit of the financial statements to which the pro
forma adjustments were applied;
(C) made inquiries of certain officials of the Company who have
responsibility for financial and accounting matters about the basis for their
determination of the pro forma adjustments and whether the Pro Forma Financial
Information complies as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X; and
(D) proved the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the Pro Forma Financial Information;
and
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on the basis of such procedures and such other inquiries and procedures as
specified herein, nothing came to our attention that caused us to believe that
the Pro Forma Financial Information included in the Registration Statement does
not comply as to form in all material respects with the applicable requirements
of Rule 11-02 of Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements.
(vii) In addition to the procedures referred to in clause (iii) above,
we have performed other procedures, not constituting an audit, with respect to
certain amounts, percentages, numerical data and financial information appearing
in the Registration Statement, which are specified herein, and have compared
certain of such items with, and have found such items to be in agreement with,
the accounting and financial records of the Company.
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EXHIBIT C-2
FORM OF COMFORT LETTER OF
COOPERS & LYBRAND LLP PURSUANT TO SECTION 5(f)
(i) We are independent public accountants with respect to the Company
and its predecessors within the meaning of the 1933 Act and the applicable
published 1933 Act Regulations.
(ii) In our opinion, the audited financial statements and the related
financial statement schedules of Rayovac Corporation for the Transition Period
ended September 30, 1996, for the fiscal years ended June 30, 1996, 1995 and
1994 included in the Registration Statement and the Prospectuses comply as to
form in all material respects with the applicable accounting requirements of the
1933 Act and the published rules and regulations thereunder.
(iii) In addition, we have performed other procedures, not constituting
an audit, with respect to certain amounts, percentages, numerical data and
financial information appearing in the Registration Statement, which are
specified herein, and have compared certain of such items with, and have found
such items to be in agreement with, the accounting and financial records of the
Company.
1