UNDERWRITING AGREEMENT

Exhibit 1.1

 

 

 

 

 

UNDERWRITING AGREEMENT

 

January 5, 2006

 

Fortune Brands, Inc.

300 Tower Parkway

Lincolnshire, Illinois 60069

 

 

Dear Sirs:

 

We (the “Manager”) understand that Fortune Brands, Inc., a Delaware corporation (the “Company”), proposes to issue and sell $750,000,000 aggregate principal amount of its 5 1/8% Notes due 2011 (the “2011 Notes”), $950,000,000 aggregate principal amount of its 5 3/8% Notes due 2016 (the “2016 Notes”) and $300,000,000 aggregate principal amount of its 5 7/8% Notes due 2036 (the “2036 Notes” and collectively with the 2011 Notes and the 2016 Notes, the “Debt Securities” or the “Offered Securities”). Subject to the terms and conditions set forth herein or incorporated by reference herein, the Company hereby agrees to sell and the underwriters named below (the “Underwriters”) agree to purchase $750,000,000 principal amount of the 2011 Notes at 99.286% of the principal amount of such 2011 Notes and accrued interest from January 12, 2006, if any, to the date of payment and delivery, $950,000,000 principal amount of the 2016 Notes at 98.990% of the principal amount of such 2016 Notes and accrued interest from January 12, 2006, if any, to the date of payment and delivery and $300,000,000 principal amount of the 2036 Notes at 97.463% of the principal amount of such 2036 Notes and accrued interest from January 12, 2006, if any, to the date of payment and delivery.

 

 

Upon delivery of such Offered Securities, the Underwriters will pay for such Offered Securities at a closing to be held at the offices of Chadbourne & Parke LLP, 30 Rockefeller Plaza, New York, New York 10112 at 10:00 a.m. (New York time) on January 12, 2006, or at such other time, not later than January 18, 2006, as shall be designated by the Manager.

 

1. Definitions. The following terms shall have the meanings ascribed to them below for purposes of this Agreement and, notwithstanding the definitions of such terms contained in the Fortune Brands, Inc. Underwriting Agreement (Debt Securities and Warrants to Purchase Debt Securities) dated January 5, 2006 (the “Standard Provisions”), a copy of which you have previously received, shall have the meanings ascribed to them below for purposes of the Standard Provisions:

 

(a) “Rules” refers to the rules promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

 

(b) “Registration Statement” as of any time means the Registration Statement (as otherwise defined in the Standard Provisions) and any additional information contained in a form of prospectus or prospectus supplement that is deemed retroactively to be a part of the Registration Statement pursuant to Rules 430A, 430B or 430C.

 

(c) “Statutory Prospectus” means the prospectus relating to the Offered Securities that is included in the Registration Statement in the form first used (or made available upon request of purchasers pursuant to Rule 173) in connection with confirmation of sales of the Offered Securities, including any document incorporated by reference therein and any prospectus or prospectus supplement deemed to be a part thereof that has not been superseded or modified. For purposes of this definition, information contained in a form of prospectus (including a prospectus supplement) that is deemed retroactively to be a part of the Registration Statement pursuant to Rules 430A, 430B or 430C shall be considered to be included in the Statutory Prospectus only as of the actual time that form of prospectus (including a prospectus supplement) is filed with the Commission pursuant to Rule 424(b).

 

(d) “Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433, relating to the Offered Securities in the form

filed or required to be filed with the Commission by the Company or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).

 

(e) “General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors, as evidenced by its being specified in Schedule A to this Agreement.

 

(f) “Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not a General Use Free Writing Prospectus.

 

(g) “Time of Sale” means the time when sales of the Offered Securities are first made.

 

(h) “Time of Sale Information” means a Preliminary Prospectus Supplement dated January 5, 2006, together with the Base Prospectus included in the Registration Statement and each General Use Free Writing Prospectus issued at or prior to the Time of Sale.

 

2. Representations and Warranties of the Company. In addition to the representations, warranties and agreements of the Company in the Standard Provisions, the Company, as of the date of this Agreement, represents and warrants to, and agrees with, each Underwriter that:

 

(a) As of the Time of Sale, neither (i) any Time of Sale Information nor (ii) any Limited Use Free Writing Prospectus, when considered together with the Time of Sale Information, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of the Closing Date, neither (i) the Time of Sale Information and the Statutory Prospectus (collectively, the “General Disclosure Package”) nor (ii) any individual Limited Use Free Writing Prospectus, when considered together with the General Disclosure Package, will include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding two sentences do not apply to statements in or omissions from any prospectus included in the Registration Statement or any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Manager specifically for use therein.

 

(b) Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Offered Securities or until any earlier date that the Company notified or notifies the Manager as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement. If at any time following issuance of an

Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus related to the Offered Securities conflicted or would conflict with the information then contained in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, (i) the Company has promptly notified or will promptly notify the Manager and (ii) the Company has promptly amended or will promptly amend or supplement such Issuer Free Writing Prospectus related to the Offered Securities to eliminate or correct such conflict, untrue statement or omission. The foregoing two sentences do not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Manager specifically for use therein.

 

(c) (i) The Registration Statement is not the subject of any pending proceeding or examination under Sections 8(d) or 8(e) of the Securities Act and (ii) the Company is not, to the best of its knowledge, the subject of a pending proceeding under Section 8A of the Securities Act in connection with the offering of the Securities.

 

(d) At the earliest time after the filing of the Registration Statement that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2)) of the Offered Securities and at the date of this Agreement, the Company was not an “ineligible issuer,” as defined in Rule 405.

 

3. Certain Agreements of the Company. (a)   The Company has complied and will comply with Rule 433. Each Issuer Free Writing Prospectus complied in all material respects with Rule 433 and has been, or will be, filed to the extent required in accordance with such rule.

 

(b) The reference to “is required by law to be delivered” in the first sentence of paragraph (c) of Article VI of the Standard Provisions is replaced with “is (or but for the exemption in Rule 172 would be required by law to be) delivered”.

4. Free Writing Prospectuses. The Company represents and agrees that, unless it obtains the prior consent of the Manager, and each Underwriter represents and agrees that, unless it obtains the prior consent of the Company and the Manager, it has not made and will not make any offer relating to the Offered Securities that would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission. Notwithstanding the preceding sentence, the Company hereby consents to the provision by the Underwriters of a Term Sheet, the form of which is set forth in Schedule B attached hereto.

 

5. Non-U.S. Offering. In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each Underwriter hereby represents and agrees that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of the Debt Securities to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Debt Securities which has been approved by the competent authority in that Relevant Member State, or where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of Debt Securities to the public in that Relevant Member State at any time:

 

(i)

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

 

(ii)

to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

 

(iii)

in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive (other than any such exclusion provided by Article 3.2(b) thereof).

 

In particular, each Underwriter hereby represents and agrees that:

 

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) received by it in connection with the issue or sale of the Debt Securities in circumstances in which Section 21(1) of the FSMA does not apply to us; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Debt Securities in, from or otherwise involving the United Kingdom.

 

For purposes of this Section 5, an “offer of notes to the public” means the communication in any form and by any means of sufficient information on the terms of the offer and the Debt Securities to be offered so as to enable an investor to decide to purchase or subscribe for the Debt Securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive. The expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State. References to “€” are to euros.

 

6. Conditions of Underwriters’ Obligations. (a) The reference to “the Registration Statement and the Prospectus” in the first sentence of paragraph (a) of Article V is replaced with “the Registration Statement, Prospectus and Time of Sale Information”.

 

(b) In addition to the conditions set forth in Article V of the Standard Provisions (including paragraphs (b) and (c) thereof), the obligations of the several Underwriters to purchase and pay for the Offered Securities will be subject to the condition precedent that the Underwriters shall have received a letter, dated the Closing Date, of each of Chadbourne & Parke LLP, counsel for the Company, and Davis Polk & Wardwell, counsel for the Underwriters, to the effect that:

 

Such counsel has no reason to believe that the documents specified in a schedule to such counsel’s letter, consisting of those included in the Time of Sale Information (as defined in Section 1(h) of this Agreement), as of the Time of Sale (which such counsel may assume is the date of this Agreement) and as of the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

7. Indemnification and Contribution. References to “the Prospectus” in Article VIII of the Standard Provisions shall be deemed to refer to “each Statutory Prospectus, the Prospectus, the Time of Sale Information and any Issuer Free Writing Prospectus.”

 

8. Terms and Conditions of Debt Securities. The Debt Securities will have the terms and conditions set forth in “Description of the Notes” in the prospectus supplement for the Debt Securities dated January 5, 2006, and terms defined therein will have the same meanings when used in this Agreement. The following is a summary of such terms and conditions for the Debt Securities:

 

The 2011 Notes shall have the following terms:

Principal Amount:

$750,000,000, subject to further issuances, as described below.

 

Maturity:

January 15, 2011.

 

Interest Rate:

5  1 / 8 % per annum, computed on the basis of a 360-day year comprised of twelve 30-day months.

 

Optional Redemption Provisions:

The Company may redeem all or a portion of the 2011 Notes at any time, and from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2011 Notes then outstanding to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest (including interest accrued and unpaid to the date of redemption) on the 2011 Notes to be redeemed discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable treasury rate (as defined in the Description of the Notes), plus 15 basis points.

 

Interest Payment Dates:

January 15 and July 15, commencing July 15, 2006 (the Interest payable on July 15, 2006 being in respect of the period commencing January 12, 2006).

 

Form and Denomination:

Global Security held through book-entry facilities of The Depository Trust Company (as described in the Description of the Notes).

 

Sinking Fund Provisions:

None.

 

Further Issuances:

The Company may create and issue further notes ranking equally and ratably with the 2011 Notes offered hereby in all respects, so that such further notes will

be consolidated and form a single series with the 2011 Notes offered hereby and will have the same terms as to status, redemption or otherwise.

 

The 2016 Notes shall have the following terms:

 

Principal Amount:

$950,000,000, subject to further issuances, as described below.

 

Maturity:

January 15, 2016.

 

Interest Rate:

5  3 / 8 % per annum, computed on the basis of a 360-day year comprised of twelve 30-day months.

 

Optional Redemption Provisions:

The Company may redeem all or a portion of the 2016 Notes at any time, and from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2016 Notes then outstanding to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest (including interest accrued and unpaid to the date of redemption) on the 2016 Notes to be redeemed discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable treasury rate (as defined in the Description of the Notes), plus 20 basis points.

 

Interest Payment Dates:

January 15 and July 15, commencing July 15, 2006 (the Interest payable on July 15, 2006 being in respect of the period commencing January 12, 2006).

 

Form and Denomination:

Global Security held through book-entry facilities of The Depository Trust Company (as described in the Description of the Notes).

Sinking Fund Provisions:

None.

 

Further Issuances:

The Company may create and issue further notes ranking equally and ratably with the 2016 Notes offered hereby in all respects, so that such further notes will be consolidated and form a single series with the 2016 Notes offered hereby and will have the same terms as to status, redemption or otherwise.

 

The 2036 Notes shall have the following terms:

 

Principal Amount:

$300,000,000, subject to further issuances, as described below.

 

Maturity:

January 15, 2036.

 

Interest Rate:

5  7 / 8 % per annum, computed on the basis of a 360-day year comprised of twelve 30-day months.

 

Optional Redemption Provisions:

The Company may redeem all or a portion of the 2036 Notes at any time, and from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2036 Notes then outstanding to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest (including interest accrued and unpaid to the date of redemption) on the 2036 Notes to be redeemed discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable treasury rate (as defined in the Description of the Notes), plus 25 basis points.

 

Interest Payment Dates:

January 15 and July 15, commencing July 15, 2006 (the Interest payable on July 15, 2006 being in

respect of the period commencing January 12, 2006).

 

Form and Denomination:

Global Security held through book-entry facilities of The Depository Trust Company (as described in the Description of the Notes).

 

Sinking Fund Provisions:

None.

 

Further Issuances:

The Company may create and issue further notes ranking equally and ratably with the 2036 Notes offered hereby in all respects, so that such further notes will be consolidated and form a single series with the 2036 Notes offered hereby and will have the same terms as to status, redemption or otherwise.

The Company acknowledges and agrees that the Underwriters are acting solely in the capacity of an arm’s length contractual counterparty to the Company with respect to the offering of Offered Securities (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person. Additionally, no Underwriter is advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or liability to the Company with respect thereto. Any review by the Underwriters of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company.

 

All of the provisions (other than the provisions of Article VII) contained in the Standard Provisions, are herein incorporated by reference in their entirety and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein. Notwithstanding the preceding sentence, in the event of any conflict between the Standard Provisions and this Agreement, the provisions of this Agreement shall control. The term “Manager” as used therein shall mean Barclays Capital Inc., Credit Suisse First Boston LLC, LaSalle Financial Services, Inc., Citigroup Global Markets Inc., and J.P. Morgan Securities Inc., whose authority thereunder may be exercised by them jointly.

 

For themselves and on behalf of the several Underwriters named above.

 

 

 

 

 

 

 

 

 

Accepted:

 

FORTUNE BRANDS, INC.

 

By:		/ S / M ARK H AUSBERG
Name: Mark Hausberg Title: Senior Vice President – Finance and Treasurer

Schedule A

 

General Use Free Writing Prospectuses

 

1) Term Sheet for the Offered Securities dated January 5, 2006, accepted by the Securities and Exchange Commission on January 6, 2006 (SEC Accession No. 0001193125-06-002141)

Schedule B

 

January 5, 2006

 

Fortune Brands, Inc.

 

Pricing Term Sheet

 

Issuer:

Fortune Brands, Inc.

 

Size:

$750,000,000 5  1 / 8 % Notes due January 15,

 

2011 (2011 Notes)

 

$950,000,000 5  3 / 8 % Notes due January 15,

 

2016 (2016 Notes)

 

$300,000,000 5  7 / 8 % Notes due January 15,

 

2036 (2036 Notes)

 

Price:

99.886% of face amount (2011 Notes)

 

99.640% of face amount (2016 Notes)

 

98.338% of face amount (2036 Notes)

 

Gross Spread:

0.600% (2011 Notes)

 

0.650% (2016 Notes)

 

0.875% (2036 Notes)

 

Net Proceeds (after expenses):

$744,120,000 (2011 Notes)

 

$939,740,000 (2016 Notes)

 

$292,179,000 (2036 Notes)

 

Yield to Maturity:

5.151% (2011 Notes)

 

5.422% (2016 Notes)

 

5.995% (2036 Notes)

 

Spread to Benchmark Treasury:

+87 bp (2011 Notes)

 

+107 bp (2016 Notes)

 

+145 bp (2036 Notes)

 

Benchmark Treasury:

5-Year 4 3/8% Notes due December 15,

 

2010 (2011 Notes)

 

10-Year 4 1/2% Notes due November 15,

 

2015 (2016 Notes)

 

30-Year 5 3/8% Bonds due February 15,

 

2031 (2036 Notes)

Benchmark Treasury Yield:

4.281% (2011 Notes)

 

4.352% (2016 Notes)

 

4.545% (2036 Notes)

 

Interest Payment Dates:

January 15 and July 15, commencing July 15, 2006.

 

Optional Redemption Provisions:

Make-whole call:

At any time, in whole or in part, at a redemption price equal to the greater of (i) 100% of the principal amount of the Notes to be redeemed, or (ii) the sum of the present values of the