EXHIBIT 99.1
AGREEMENT
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This Agreement, dated as of April 6, 1995, is among E.I. du Pont de
Nemours and Company, a Delaware corporation (the "Company"), The Seagram Company
Ltd., a Canadian corporation ("S"), and JES Developments, Inc., a Delaware
corporation and a wholly-owned subsidiary of S("Subsidiary").
WHEREAS, Subsidiary currently owns an aggregate of 164,222,031 shares
of the Common Stock, par value $0.60 per share, of the Company (the "Common
Stock"); and
WHEREAS, the Company and S have determined that it is in their mutual
best interests for the Company to acquire from Subsidiary certain shares of
Common Stock held by Subsidiary, upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows.
ARTICLE I
THE REDEMPTION
Section 1.1 Redeemed Shares. Simultaneously with the execution and
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delivery of this Agreement, Subsidiary is transferring, assigning and delivering
to the Company an aggregate of 156,000,000 shares of Common Stock (the "Redeemed
Shares"), and the Company is acquiring the Redeemed Shares at the closing
described in Section 2.1 hereof (the "Closing"), free and clear of all liens,
claims, options, proxies, voting agreements, security interests, charges and
encumbrances. In consideration for such transfer, assignment and delivery, the
Company is paying and delivering to Subsidiary (i) an aggregate of
$1,000,000,000 in immediately available funds (the "Cash Price"), (ii) warrants
of the Company, in the forms of Exhibits A, B and C to this Agreement, to
purchase an aggregate of 156,000,000 shares of Common Stock (the "Warrants",
such term to include any warrants of the Company issued, pursuant to the warrant
agreement in the form of Exhibit D to this Agreement (the "Warrant Agreement"),
in substitution or exchange for the warrants
being so delivered to Subsidiary) and (iii) promissory notes of the Company, in
the form of Exhibit E to this Agreement, in an aggregate principal amount of
$7,336,250,000 (the "Notes"). The foregoing transactions are collectively
referred to in this Agreement as the "Redemption Transaction".
ARTICLE II
THE CLOSING
Section 2.1 Time and Place. The Closing of the Redemption
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Transaction is taking place at the offices of Skadden, Arps, Slate, Meagher &
Flom, at 919 Third Avenue, New York, New York 10022 or One Rodney Square,
Wilmington, Delaware 19899, as specified by the Company, simultaneously with the
execution and delivery of this Agreement.
Section 2.2 Deliveries. At the Closing, (i) Subsidiary is
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delivering the Redeemed Shares to the Company, with documentation satisfactory
to the Company evidencing the transfer of the Redeemed Shares, in form
acceptable for transfer on the Company's books, (ii) the Company and Warco
Transfer Corporation, as Warrant Agent ("Warco"), are executing and delivering
the Warrant Agreement and (iii) the Company is (a) agreeing to cause the Cash
Price to be transferred to an account of Subsidiary designated by Subsidiary not
later than 12:00 Noon, New York City time, on April 7, 1995 and (b) delivering
the Warrants and the Notes to Subsidiary. In addition, at the Closing, (i) S is
delivering to the Company the written resignations of Edgar M. Bronfman, Charles
R. Bronfman, Edgar Bronfman, Jr. and John L. Weinberg from the Company's Board
of Directors, (ii) the Company is delivering to S the written resignations of
Edgar S. Woolard, Jr. and Richard E. Heckert from S's Board of Directors, (iii)
the Company, S and Subsidiary are executing and delivering the registration
rights agreement in the form of Exhibit F to this Agreement (the "Registration
Rights Agreement") and (iv) the Company and certain stockholders of S are
entering into the agreement in the form of Exhibit G to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF S AND SUBSIDIARY
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S and Subsidiary hereby jointly and severally represent and warrant to
the Company as follows.
Section 3.1 Organization. S is a corporation duly organized and
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validly existing under the laws of Canada and has been duly qualified for the
transaction of business under the laws of the Province of Quebec. Subsidiary is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.
Section 3.2 Authority Relative to this Agreement. Each of S and
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Subsidiary has all necessary corporate power and authority to execute and
deliver this Agreement and the Registration Rights Agreement and perform its
obligations hereunder and thereunder. The execution and delivery by each of S
and Subsidiary of this Agreement and the Registration Rights Agreement and the
performance by each of S and Subsidiary of its obligations hereunder and
thereunder have been duly and validly authorized by the Board of Directors of
each of S and Subsidiary, and by the sole stockholder of Subsidiary, and no
other corporate proceedings on the part of S or Subsidiary are necessary to
authorize the execution, delivery or performance of this Agreement or the
Registration Rights Agreement.
Section 3.3 Binding Agreement. This Agreement and the Registration
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Rights Agreement have been duly and validly executed and delivered by each of S
and Subsidiary and constitute valid and binding agreements of each of S and
Subsidiary, enforceable against each of S and Subsidiary in accordance with
their respective terms.
Section 3.4 Non-Contravention. The execution and delivery by S and
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Subsidiary of this Agreement and the Registration Rights Agreement do not, the
performance by S and Subsidiary of their obligations hereunder and thereunder
will not and the acquisition by Subsidiary of the Warrants and the Notes does
not (i) contravene or conflict with the certificate of incorporation, by-laws or
similar charter or other organizational documents of S or Subsidiary or (ii)
contravene or conflict with or constitute a violation of or default under or
give rise to a right of termination, cancellation or acceleration of any right
or obligation of S or Subsidiary under any provision of applicable law or
regulation of the United States
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or Canada or any state or province thereof or of any agreement, contract,
judgment, injunction, order, decree or other instrument binding upon S or
Subsidiary, which contravention, conflict, violation, default or right of
termination, cancellation or acceleration would result in the case of this
clause (ii) in a material adverse effect on the business, assets, results of
operations or financial condition of S and its subsidiaries, taken as a whole.
Section 3.5 Ownership of Securities. Except for the Redeemed Shares,
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8,222,031 additional shares of Common Stock owned by Subsidiary (the "Retained
Shares") and an aggregate of not more than 500,000 additional shares of Common
Stock, neither S nor any corporation or entity controlled by it (any such
corporation or entity, an "Affiliate") Beneficially Owns (such term and like
terms meaning "beneficially owns" within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) or has any
right to acquire (whether currently, upon lapse of time, following the
satisfaction of any conditions, upon the occurrence of any event or any
combination of the foregoing) any Voting Securities. As used in this Agreement,
"Voting Securities" means any securities of the Company entitled, or which may
be entitled, to vote (whether or not entitled to vote generally in the election
of directors of the Company), or any securities convertible into or exercisable
or exchangeable for such securities (whether or not the right to convert,
exercise or exchange is subject to the passage of time or contingencies or
both).
Section 3.6 Title to Redeemed Shares. Subsidiary has good and
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marketable title to all of the Redeemed Shares, free and clear of all liens,
claims, options, proxies, voting agreements, security interests, charges and
encumbrances other than the Existing Standstill Agreement (as defined in Section
6.4 hereof), and has complete and unrestricted power to transfer, assign and
deliver the Redeemed Shares to the Company. Upon transfer of the Redeemed
Shares to the Company as provided herein, the Company will acquire good and
marketable title to the Redeemed Shares, free and clear of all liens, claims,
options, proxies, voting agreements, security interests, charges and
encumbrances.
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Section 3.7 Ownership of Subsidiary. S owns indirectly all of the
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outstanding capital stock of Subsidiary, free and clear of all liens, claims,
options, proxies, voting agreements, security interests, charges and
encumbrances.
Section 3.8 Acquisition for Investment. Subject to Section 5.3(g)
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hereof, Subsidiary is acquiring the Warrants and the Notes solely for its own
account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to S and Subsidiary as
follows.
Section 4.1 Organization. Each of the Company and Warco is a
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corporation duly organized, validly existing and in good standing under the laws
of Delaware.
Section 4.2 Authority Relative to this Agreement. The Company has
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all necessary corporate power and authority to execute and deliver this
Agreement, the Warrant Agreement and the Registration Rights Agreement, to issue
the Warrants and the Notes and to perform its obligations hereunder and
thereunder. The execution and delivery by the Company of this Agreement, the
Warrant Agreement and the Registration Rights Agreement, the issuance of the
Warrants and the Notes and the performance by the Company of its obligations
hereunder and thereunder have been duly and validly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize the execution and delivery of this Agreement,
the Warrant Agreement or the Registration Rights Agreement, the issuance of the
Warrants or the Notes or the performance by the Company of its obligations
hereunder or thereunder. Warco has all necessary corporate power and authority
to execute and deliver the Warrant Agreement and to perform its obligations
thereunder. The execution and delivery by Warco of the Warrant Agreement and
the performance by Warco of its obligations thereunder have been duly and
validly authorized by the Board of Directors of Warco and no other corporate
proceedings on
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the part of Warco are necessary to authorize the execution and delivery of the
Warrant Agreement or the performance by Warco of its obligations thereunder.
Section 4.3 Binding Agreements. This Agreement, the Warrant
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Agreement, the Registration Rights Agreement, the Warrants and the Notes have
been duly and validly executed and delivered by the Company and constitute valid
and binding agreements of the Company, enforceable against the Company in
accordance with their respective terms. The Warrant Agreement has been duly and
validly executed and delivered by Warco and constitutes a valid and binding
agreement of Warco, enforceable against Warco in accordance with its terms.
Section 4.4 Non-Contravention. The execution and delivery by the
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Company of this Agreement, the Warrant Agreement and the Registration Rights
Agreement and the issuance of the Warrants and the Notes do not, the performance
by the Company of its obligations hereunder and thereunder will not, the
execution and delivery by Warco of the Warrant Agreement do not, and the
performance by Warco of its obligations thereunder will not (i) contravene or
conflict with the certificate of incorporation or by-laws of the Company or
Warco or (ii) contravene or conflict with or constitute a violation of or
default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company, Warco or any of the
Company's other subsidiaries under any provision of applicable law or regulation
of the United States or any state thereof or of any agreement, contract,
judgment, injunction, order, decree or other instrument binding upon the
Company, Warco or any of the Company's other subsidiaries, which contravention,
conflict, violation, default or right of termination, cancellation or
acceleration would result in the case of this clause (ii) in a material adverse
effect on the business, assets, results of operations or financial condition of
the Company and its subsidiaries, taken as a whole.
Section 4.5 Warrant Shares. The shares of Common Stock issuable upon
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exercise of the Warrants have been duly authorized by all necessary corporate
action on the part of the Company and have been duly reserved for issuance.
When shares of Common Stock are issued and
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paid for upon exercise of the Warrants as provided therein, such shares will be
validly issued, fully paid and nonassessable, and the issuance of such shares
will not be subject to preemptive rights of any other stockholder of the
Company.
Section 4.6 Ownership of Warco. The Company owns directly all of the
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outstanding capital stock of Warco, free and clear of all liens, claims,
options, proxies, voting agreements, security interests, charges and
encumbrances.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Standstill. During the period (the "Standstill Period")
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commencing on the date hereof and ending on the 15th anniversary of the date
hereof (the "Termination Date"), S shall not, and shall cause its Affiliates not
to, directly or indirectly, alone or in concert with others:
(a) acquire, offer or propose to acquire or agree to acquire,
whether by purchase, tender or exchange offer, through the acquisition of
control of another person, by joining a partnership, limited partnership,
syndicate or other "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) or otherwise, Beneficial Ownership of any Voting Securities or any
rights to acquire (whether currently, upon lapse of time, following the
satisfaction of any conditions, upon the occurrence of any event or any
combination of the foregoing) any Voting Securities, other than the Warrants and
other than as a result of the exercise of the Warrants or as a result of any
stock dividends or other distributions or offerings made available by the
Company to holders of Voting Securities generally; provided that any such Voting
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Securities shall be subject to the restrictions of this Agreement; provided,
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further, that the acquisition by Affiliates of S of Beneficial Ownership of not
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more than an aggregate of 500,000 additional shares of Common Stock shall not be
deemed to breach this Section 5.1(a);
(b) propose or seek to effect any merger, business combination,
restructuring, recapitalization or
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similar transaction involving the Company or any of its subsidiaries or the sale
or other disposition of any material portion of the assets of the Company or any
of its subsidiaries; provided that, subject to Section 5.2 hereof, nothing
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contained in this clause (b) shall limit the right to vote as a stockholder in
connection with any such transaction;
(c) deposit any Voting Securities in a voting trust or subject
any Voting Securities to any arrangement or agreement with respect to the voting
of such Voting Securities, except as to voting on specific matters as to which S
or its Affiliates are permitted to solicit proxies pursuant to the proviso of
Section 5.1(e) hereof;
(d) seek election to, seek to place a representative on, or seek
the removal of any member of, the Company's Board of Directors, except pursuant
to Section 5.8 hereof;
(e) engage in any "solicitation" (within the meaning of Rule 14a-
1 under the Exchange Act) of proxies or consents (whether or not relating to the
election or removal of directors) with respect to the Company, or become a
"participant" in any "election contest" (within the meaning of Rule 14a-11 under
the Exchange Act) or execute any written consent in lieu of a meeting of the
holders of any class of Voting Securities; provided that (i) the limitation
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contained in this Section 5.1(e) shall not apply to any Significant Event (as
defined in Section 5.2 hereof) that is initiated or proposed by the Company and
(ii) if S opposes any solicitation by the Company's management with respect to
any such Significant Event and neither S nor any of its Affiliates otherwise
publishes or distributes solicitation material required to be filed with the
Securities and Exchange Commission by Regulation 14A under the Exchange Act, the
Company shall include in its proxy statement in connection with such
solicitation by the Company's management the fact that S opposes such
solicitation and a brief statement of S's reasons for such opposition;
(f) call or seek to have called any meeting of the stockholders
of the Company;
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(g) initiate, propose or otherwise solicit stockholders for the
approval of any stockholder proposal (as described in Rule 14a-8 under the
Exchange Act or otherwise) with respect to the Company;
(h) except for the purpose of voting on specific matters as to
which S or its Affiliates are permitted to solicit proxies pursuant to the
proviso of Section 5.1(e) hereof, form, join or in any way participate in or
assist in the formation of a "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) with respect to any Voting Securities, other than any such
"group" consisting exclusively of S and/or wholly-owned subsidiaries of S, and
any Affiliates of S which shall have acquired additional shares of Common Stock
not in breach of Section 5.1(a) hereof; provided, that any such subsidiary which
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is not incorporated under the laws of any state of the United States of America
consents, pursuant to documentation reasonably satisfactory in form and
substance to the Company, to the jurisdiction and venue of any state or federal
court sitting in the Borough of Manhattan in the State of New York for purposes
of enforcing this Agreement;
(i) disclose any intention, plan or arrangement inconsistent
with the foregoing;
(j) advise, assist or encourage or finance any other persons in
connection with any of the foregoing types of activities; or
(k) request the Company (or its directors, officers, employees
or agents) to amend or waive any provision of this Agreement unless the Company
shall have previously notified S in writing that such request, if made, would
not require public disclosure by the Company.
Section 5.2 Voting. At all times during the Standstill Period, S
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shall, and shall cause each of its Affiliates to, vote all Voting Securities
which they Beneficially Own for the slate of nominees proposed by the Board of
Directors of the Company and on all other matters to be voted on by the holders
of Voting Securities, in the same proportion as the votes cast by the other
holders of Voting Securities; provided that Voting Securities Beneficially Owned
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by S or its Affiliates may
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be voted as they determine in their sole discretion on any Significant Event.
As used in this Agreement, "Significant Event" means any of the following, if
stockholder approval thereof is required by the General Corporation Law of the
State of Delaware, the rules of the New York Stock Exchange or the charter or
by-laws of the Company: any charter or by-law amendment (other than a proposal
to require cumulative voting in the election of directors), acquisition or
disposition of assets (by way of merger, consolidation or otherwise), change in
capitalization, liquidation, or other action out of the ordinary course of
business of the Company; provided that "Significant Event" shall not mean or
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include any proposals to approve, adopt or amend any bonus, profit sharing,
pension, retirement, thrift, savings, incentive, variable, stock purchase, stock
ownership, stock appreciation, stock option, dividend reinvestment or other
benefit or compensation plan, program, agreement or arrangement for employees or
directors of the Company or any of its subsidiaries. At all times during the
Standstill Period, S and its Affiliates, as the Beneficial Owners of Voting
Securities, shall be present, in person or by proxy, at all meetings of
stockholders of the Company, so that all Voting Securities which S or any of its
Affiliates Beneficially Owns may be counted for the purpose of determining the
presence of a quorum at all meetings of stockholders of the Company.
Section 5.3 Dispositions. During the Standstill Period, S shall not,
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and shall cause its Affiliates not to, directly or indirectly (including,
without limitation, through the disposition or transfer of control of another
person), sell, assign, transfer, pledge, hypothecate, grant any option with
respect to or otherwise dispose of any interest in (or enter into an agreement
or understanding with respect to the foregoing) the Notes or any Voting
Securities, including, without limitation, any of the Warrants (a
"Disposition"), except as set forth below in this Section 5.3. Without limiting
the generality of the foregoing, any sale of securities of S or any of its
Affiliates which is currently (or following the passage of time, the occurrence
of any event or the giving of notice), directly or indirectly, exchangeable or
exercisable for, or convertible into, any Voting Securities (an "S Security
Disposition") shall constitute a Disposition of such Voting Securities.
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(a) Dispositions may be made to wholly-owned subsidiaries of S;
provided, that such subsidiaries agree in writing to be bound by this Agreement
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to the same extent as S and Subsidiary; provided, further, that any such
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subsidiary which is not incorporated under the laws of any state of the United
States of America consents, pursuant to documentation reasonably satisfactory in
form and substance to the Company, to the jurisdiction and venue of any state or
federal court sitting in the Borough of Manhattan in the State of New York for
purposes of enforcing this Agreement.
(b) Dispositions of Voting Securities may be made pursuant to a
public offering, effected in accordance with the Registration Rights Agreement,
or in privately-negotiated transactions; provided that prior to any such
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Disposition, S and its Affiliates shall have complied with the provisions of
Section 5.4(I) hereof and the Company shall have had the right pursuant to
Section 5.4(I) hereof to purchase the Voting Securities proposed to be subject
to such Disposition (or, in the case of Voting Securities issuable or
deliverable in the future upon the exercise, exchange or conversion of
securities of S or any Affiliate of S, to purchase the Voting Securities as to
which a Section 5.4(I) Transfer Notice is deemed to have been delivered pursuant
to Section 5.4(I)(a) hereof); provided, further, that (i) such Dispositions
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shall not be made to any person who or which, together with such person's
affiliates and associates (as such terms are defined in Rule 12b-2 under the
Exchange Act) and the members of any "group" (within the meaning of Section
13(d)(3) of the Exchange Act) existing with respect to Voting Securities of
which such person is a part (any such person and its affiliates, associates and
group members being collectively referred to herein as a "Purchasing Person"),
would immediately thereafter, to the knowledge of S or any of its Affiliates
after reasonable inquiry, Beneficially Own Voting Securities representing 3% or
more of the total combined voting power in the election of directors of the
Company of all Voting Securities then outstanding; (ii) if any such Disposition
is made to any Purchasing Person who would immediately thereafter, to the
knowledge of S or any of its Affiliates after reasonable inquiry, Beneficially
Own Voting Securities representing more than 1%, but less than 3%, of the total
combined voting power in the election of directors of the Company of all Voting
Securities
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then outstanding, then, prior to and as a condition to the effectiveness of any
such Disposition, S shall obtain the written agreement (which agreement shall be
addressed to the Company and reasonably satisfactory in form and substance to
the Company) of each such Purchasing Person to be bound by Article V of this
Agreement (other than Section 5.6, Section 5.7 and Section 5.8 hereof) to the
same extent as S as if references to S in such Article were to such Purchasing
Person; and (iii) no such Disposition of Warrants shall be effected prior to May
15, 1996. Notwithstanding the foregoing provisions of this Section 5.3(b),
Dispositions of Voting Securities to investment advisors, investment companies,
insurance companies, mutual funds, pension funds, bank trust funds, foundations
and charitable trusts ("Designated Institutions") or to registered broker
dealers acting as principals ("Broker Principals") may be made pursuant to a
public offering, effected in accordance with the Registration Rights Agreement,
or in privately-negotiated transactions; provided that prior to any such
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Disposition, S and its Affiliates shall have complied with the provisions of
Section 5.4(I) hereof and the Company shall have had the right pursuant to
Section 5.4(I) hereof to purchase the Voting Securities proposed to be subject
to such Disposition (or, in the case of Voting Securities issuable or
deliverable in the future upon the exercise, exchange or conversion of
securities of S or an Affiliate of S, to purchase the Voting Securities as to
which a Section 5.4(I) Transfer Notice is deemed to have been delivered pursuant
to Section 5.4(I)(a) hereof); provided, further, that (i) such Dispositions
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shall not be made to any Designated Institution or Broker Principal which,
together with such Designated Institution's or Broker Principal's affiliates and
associates (as such terms are defined in Rule 12b-2 under the Exchange Act) and
the members of any "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) existing with respect to Voting Securities of which such
Designated Institution or Broker Principal, as the case may be, is a part, would
immediately thereafter, to the knowledge of S or any of its Affiliates after
reasonable inquiry, Beneficially Own Voting Securities representing 5% or more
(in the case of any Designated Institution and its affiliates, associates and
group members) or 10% or more (in the case of any Broker Principal and its
affiliates, associates and group members) of the total combined voting power in
the election of directors of the Company of all Voting Securities
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then outstanding; (ii) if any such Disposition is made to any Broker Principal
which (together with its affiliates, associates and group members) would
immediately thereafter, to the knowledge of S or any of its Affiliates after
reasonable inquiry, Beneficially Own Voting Securities representing more than
3%, but less than 10%, of the total combined voting power in the election of
directors of the Company of all Voting Securities then outstanding, then, prior
to and as a condition to the effectiveness of any such Disposition, S shall
obtain the written agreement (which agreement shall be addressed to the Company
and reasonably satisfactory in form and substance to the Company) of each such
Broker Principal to be bound by Article V of this Agreement (other than Section
5.6, Section 5.7 and Section 5.8 hereof) to the same extent as S as if
references to S in such Article were to such Broker Principal (except that,
notwithstanding any such agreement of any such Broker Principal, any such Broker
Principal may, without complying with the provisions of Section 5.4(I)(a)
hereof, effect short sales of Voting Securities to any Purchasing Person who
would not immediately thereafter, to the knowledge of such Broker Principal
after reasonable inquiry, Beneficially Own Voting Securities representing more
than 1% of the total combined voting power in the election of directors of the
Company of all Voting Securities then outstanding); and (iii) no such
Disposition of Warrants shall be effected prior to May 15, 1996. All Warrants
Beneficially Owned by a Purchasing Person, Designated Institution or Broker
Principal shall be assumed to have been fully exercised for purposes of
calculating, as described above in this Section 5.3(b), the voting power
represented by the Voting Securities Beneficially Owned by such Purchasing
Person, Designated Institution or Broker Principal, as the case may be.
(c) Dispositions of Voting Securities may be made pursuant to a
dividend or other distribution to stockholders of S generally; provided that
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prior to any such Disposition, S and its Affiliates shall have complied with the
provisions of Section 5.4(I) hereof and the Company shall have had the right
pursuant to Section 5.4(I) hereof to purchase the Voting Securities proposed to
be subject to such Disposition; provided, further, that (i) if any Purchasing
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Person who or which is an affiliate or associate (as such terms are defined in
Rule 12b-2 under the Exchange Act) of S would receive in con-
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nection with such Disposition more than 5% of the Voting Securities disposed of
therein, then, prior to and as a condition to the effectiveness of any such
Disposition, S shall obtain the written agreement (which agreement shall be
addressed to the Company and reasonably satisfactory in form and substance to
the Company) of each such Purchasing Person to be bound by Article V of this
Agreement (other than Section 5.6, Section 5.7 and Section 5.8 hereof) to the
same extent as S as if references to S in such Article were to such Purchasing
Person; and (ii) no such Disposition of Warrants shall be effected prior to May
15, 1996.
(d) Dispositions may be made (i) to the Company in accordance
with Section 5.4 hereof and (ii) in accordance with Section 5.5 hereof.
(e) Dispositions may be made pursuant to a tender offer or
exchange offer or any other transaction which is recommended to stockholders of
the Company by a least a majority of the entire Board of Directors of the
Company.
(f) Dispositions of Common Stock or Warrants may be made
pursuant to a tender offer or exchange offer which is not recommended to
stockholders of the Company by a least a majority of the entire Board of
Directors of the Company (an "Unsolicited Offer"); provided, that such
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Unsolicited Offer is for at least a majority of the Common Stock outstanding on
a fully diluted basis; provided, further, that prior to any such Disposition, S
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and its Affiliates shall have complied with the provisions of Section 5.4(II)
hereof and the Company (and/or its designees) shall have had the right pursuant
to Section 5.4(II) hereof to purchase the Common Stock and Warrants proposed to
be subject to such Disposition.
(g) After the 30th day following the date of this Agreement, a
pledge or pledges of the Notes, to secure bona fide loans, may be made to any
bank organized under the laws of the United States having stockholders' equity
of at least $1 billion, and upon any foreclosure in connection therewith, the
Notes may be transferred to the foreclosing bank or banks.
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The Company, S and Subsidiary agree that (i) Dispositions of the Retained Shares
shall not be subject to this Section 5.3, Section 5.4(I) or Section 5.4(II)
unless at the time of such Disposition, the S Voting Power (as defined in
Section 5.5 hereof) exceeds 5%; and (ii) neither S nor any of its Affiliates nor
any Purchasing Person shall, in connection with any proposed Disposition, be
required to make "reasonable inquiry" with respect to the Voting Securities
Beneficially Owned by the proposed transferee in such Disposition unless the
Voting Securities proposed to be subject to such Disposition represent more than
1/4 of 1% of the total combined voting power in the election of directors of the
Company of all Voting Securities then outstanding (assuming full exercise of any
Warrants included in such Voting Securities).
Section 5.4 Company's Right to Purchase Voting Securities. (I) Prior
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to any Disposition of Voting Securities pursuant to Section 5.3(b) or Section
5.3(c) hereof, the Company shall have the right, exercisable in accordance with
this Section 5.4(I), to purchase all, but not less than all, of the Voting
Securities intended to be subject to such Disposition by S or any of its
Affiliates; provided that with respect to any intended Disposition of fewer than
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all outstanding First S Warrants, Second S Warrants and/or Third S Warrants (as
such terms are defined in the Warrant Agreement), the Company shall also have
the right, exercisable in accordance with this Section 5.4(I), to purchase (i)
in the case of any intended Disposition of fewer than all outstanding First S
Warrants, all outstanding First S Warrants; (ii) in the case of any intended
Disposition of fewer than all outstanding Second S Warrants, all outstanding
Second S Warrants; and (iii) in the case of any intended Disposition of fewer
than all outstanding Third S Warrants, all outstanding Third S Warrants.
(a) If S or any of its Affiliates wishes to effect any
Disposition of Voting Securities pursuant to Section 5.3(b) or Section 5.3(c)
hereof, S shall give notice (a "Section 5.4(I) Transfer Notice") to the Company
of such intended Disposition, specifying the Voting Securities to be subject to
Disposition and the intended method of Disposition; provided that (i) any
--------
request for registration of Registrable Securities (as such term is defined in
the Registration Rights Agreement) shall be
15
deemed a Section 5.4(I) Transfer Notice with respect to the Registrable
Securities requested to be registered (except that a request for registration of
Common Stock issuable or deliverable in the future upon the exercise, exchange
or conversion of securities of S or an Affiliate of S shall be deemed a request
to register (and shall require delivery of a Section 5.4(I) Transfer Notice with
respect to) such number of Warrants and shares of Common Stock (allocated as S
may specify in such request for registration among the First S Warrants, Second
S Warrants and Third S Warrants then outstanding (provided that no S Warrants so
specified will expire prior to the expiration of the Company's right to elect to
purchase such S Warrants pursuant to this Section 5.4(I)(a)) and the issued and
outstanding shares of Common Stock then Beneficially Owned by S and its
Affiliates or, if no such allocation is specified by S, as shall be so allocated
by the Company among such outstanding S Warrants and issued and outstanding
shares of Common Stock then Beneficially Owned by S and its Affiliates upon
notice to S) as shall equal the maximum number of shares of Common Stock so
issuable or deliverable; provided that if any such allocation by either S or the
Company includes Warrants and shares of Common Stock, such registration request
shall be deemed (x) a request to register (and shall require delivery of a
Section 5.4(I) Transfer Notice with respect to) all of the Warrants included in
such allocation and (y) a separate request to register (and shall require
delivery of a Section 5.4(I) Transfer Notice with respect to) all of the shares
of Common Stock included in such allocation) and (ii) an S Security Disposition
shall be deemed to be a Disposition of Warrants and/or Common Stock (and to
require Section 5.4(I) Transfer Notices with respect thereto) to the same extent
as is provided in the parenthetical exception to the preceding clause (i) in the
case where such S Security Disposition was proposed to be effected as a
registration of Registrable Securities; provided, further, that no Section
-------- -------
5.4(I) Transfer Notice with respect to any Warrants may be given prior to May
15, 1996. With respect to any intended Disposition of Voting Securities
pursuant to Section 5.3(b) hereof (other than any intended Disposition of
Warrants or any intended Disposition in a public offering effected in accordance
with the Registration Rights Agreement), S must also set forth in the applicable
Section 5.4(I) Transfer Notice the terms of a bona fide third party offer (a
"Third Party Offer") to purchase
16
such Voting Securities theretofore received and then remaining open (including
the identity of the offeror and the price offered). If the Company wishes to
purchase the Voting Securities specified in the Section 5.4(I) Transfer Notice,
then within fifteen business days following receipt of the Section 5.4(I)
Transfer Notice, the Company shall deliver a written notice (a "Section 5.4(I)
Acceptance Notice") to S indicating that the Company wishes to purchase such
Voting Securities (which Voting Securities may consist of or include, as
contemplated by the proviso to the first sentence of this Section 5.4(I), all of
the outstanding First S Warrants, Second S Warrants and/or Third S
Warrants)(such Voting Securities, the "Section 5.4(I) Securities"), a date for
the closing of such purchase, which shall not be more than sixty days after
delivery of such Section 5.4(I) Acceptance Notice (subject to extension as
provided in Section 5.4(I)(f) hereof), and a place for the closing of such
purchase (a "Section 5.4(I) Closing"). Upon delivery of a Section 5.4(I)
Acceptance Notice, a binding agreement shall be deemed to exist providing for
the purchase by the Company of the Section 5.4(I) Securities to which such
Section 5.4(I) Acceptance Notice relates, upon the terms and subject to the
conditions set forth in this Section 5.4(I); provided, that (i) the Company may
--------
rescind its Section 5.4(I) Acceptance Notice (in which event it will have no
obligation to purchase such Section 5.4(I) Securities) at any time within two
business days following any determination of (x) the value of any untraded
securities pursuant to Section 5.4(I)(b)(ii) hereof or (y) fair market value
pursuant to Section 5.4(I)(b)(iii) hereof; and (ii) S may rescind its Section
5.4(I) Transfer Notice (in which event it will have no obligation to sell such
Section 5.4(I) Securities) at any time within two business days following any
determination of fair market value pursuant to Section 5.4(I)(b)(iii) hereof if
the closing price of the Common Stock (as determined in accordance with the
second sentence of Section 5.4(I)(b)(i) hereof) on the date of such
determination is less than 95% of the closing price of the Common Stock on the
date that such Section 5.4(I) Transfer Notice is delivered to the Company.
(b) The purchase price for any Section 5.4(I) Securities (the
"Section 5.4(I) Price") shall be determined as set forth below.
17
(i) With respect to any Section 5.4(I) Securities (other than
Warrants) for which no Third Party Offer is disclosed or for which a Third
Party Offer consisting of other than solely cash and/or readily marketable
securities is disclosed, in each case in the applicable Section 5.4(I)
Transfer Notice (including, without limitation, Section 5.4(I) Securities
requested to be registered pursuant to the Registration Rights Agreement),
the Section 5.4(I) Price per share or other unit of such Section 5.4(I)
Securities shall equal the lower of (A) the average closing price per share
or per unit of the Section 5.4(I) Securities during the 30 consecutive
trading days immediately preceding the Company's receipt of the Section
5.4(I) Transfer Notice and (B) the average closing price per share or per
unit of Section 5.4(I) Securities during the ten consecutive trading days
immediately following the Company's receipt of the Section 5.4(I) Transfer
Notice. The closing price for each such day shall be the last sale price
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices regular way, in either case on the New
York Stock Exchange, or, if the Section 5.4(I) Securities are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which the Section 5.4(I) Securities are listed or admitted to
trading, or, if the Section 5.4(I) Securities are not listed or admitted to
trading on any national securities exchange but are designated as national
market system securities by the National Association of Securities Dealers
("NASD"), the last sale price, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, in either case as
reported on the NASD Automated Quotation/National Market System, or if the
Section 5.4(I) Securities are not so designated as national market system
securities, the average of the highest reported bid and lowest reported
asked prices as furnished by the NASD or similar organization if the NASD
is no longer reporting such information.
18
(ii) With respect to any Section 5.4(I) Securities (other than
Warrants) for which a Third Party Offer is disclosed in the applicable
Section 5.4(I) Transfer Notice which provides for consideration consisting
solely of cash and/or marketable securities, the Section 5.4(I) Price per
share or other unit of such Section 5.4(I) Securities shall equal the per
share or per unit price specified in such Third Party Offer. The value of
any readily marketable securities identified in such Third Party Offer
shall equal the average closing price per share or per unit of such
securities during the 30 consecutive trading days immediately preceding the
Company's receipt of the Section 5.4(I) Transfer Notice. The closing price
for each such day shall be the last sale price regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices regular way, in either case on the New York Stock Exchange, or, if
such securities are not listed or admitted to trading on such exchange, on
the principal national securities exchange on which such securities are
listed or admitted to trading, or, if such securities are not listed or
admitted to trading on any national securities exchange but are designated
as national market system securities by the NASD, the last sale price, or,
in case no such sale takes place on such day, the average of the closing
bid and asked prices, in either case as reported on the NASD Automated
Quotation/National Market System, or if such securities are not so
designated as national market system securities, the average of the highest
reported bid and lowest reported asked prices as furnished by the NASD or
similar organization if the NASD is no longer reporting such information.
In the case of any securities not theretofore traded, such securities must
be issued or proposed to be issued by an entity which has been subject to
the reporting requirements of the Exchange Act for at least one year, and
the value of such securities shall be determined by two nationally
recognized investment banking firms, one firm to be selected by each of S
and the Compa-
19
ny, or in the event such firms are unable to agree, by a third nationally
recognized investment banking firm selected by such firms. S and the
Company shall use their best efforts to cause any such determination of
value to be made within five business days following the Company's receipt
of the applicable Section 5.4(I) Transfer Notice. In connection with any
determination of fair market value pursuant to this Section 5.4(I)(b)(ii),
each party will bear the fees and expenses of the investment banking firm
selected by it and the parties will bear equally the fees and expenses of
any third investment banking firm.
(iii) With respect to any Warrants constituting Section 5.4(I)
Securities, the Section 5.4(I) Price shall be the fair market value of such
Warrants at the close of business on the Warrant Valuation Date (as
determined below); provided that if the Company exercises its right
--------
pursuant to the proviso to the first sentence of this Section 5.4(I), or if
the Warrants specified in the Section 5.4(I) Transfer Notice include all
outstanding First S Warrants, Second S Warrants and/or Third S Warrants,
the Section 5.4(I) Price for any such Warrants shall not exceed the sum of
(A) the fair market value of such Warrants as of the date hereof plus (B)
90% of the positive difference, if any, between (x) the fair market value
of such Warrants at the close of business on the Warrant Valuation Date
minus (y) the fair market value of such Warrants as of the date hereof.
For purposes of the foregoing, the parties agree that the aggregate fair
market value of the First S Warrants, the Second S Warrants and the Third S
Warrants issued as of the date hereof is, as of the date hereof, $135
million, $151.875 million and $151.875 million, respectively. The fair
market value of the Warrants at the close of business on the Warrant
Valuation Date shall be determined by two nationally recognized investment
banking firms, one firm to be selected by each of S and the Company, or in
the event such firms are unable to agree, by a third nationally recog-
20
nized investment banking firm selected by such firms as provided below.
Such investment banking firms or firm shall be required to use the
valuation methodology set forth in Exhibit H to this Agreement in
determining the fair market value of the Warrants at the close of business
on the Warrant Valuation Date. The parties will select their respective
investment banking firms and instruct such firms to review and agree upon
all data relevant to the valuation methodology set forth in Exhibit H to
this Agreement on the business day following the Company's receipt of the
applicable Section 5.4(I) Transfer Notice. In the event such firms do so
agree, the Warrant Valuation Date shall be the 14th business day following
the Company's receipt of such Section 5.4(I) Transfer Notice. If such
firms have not so agreed by the 14th business day following such receipt,
then on the 15th business day following such receipt, such firms shall
select a third investment banking firm. Such third investment banking firm
shall be required to determine the fair market value of the Warrants at the
close of business on the 17th business day following the Company's receipt
of such Section 5.4(I) Transfer Notice and in such event, the Warrant
Valuation Date shall be the 17th business day following the Company's
receipt of such Section 5.4(I) Transfer Notice. In connection with any
determination of fair market value pursuant to this Section 5.4(I)(b)(iii),
each party will bear the fees and expenses of the investment banking firm
selected by it and the parties will bear equally the fees and expenses of
any third investment banking firm.
(iv) The purchase price for any Section 5.4(I) Securities with
respect to which S or any of its Affiliates wishes to effect a Disposition
and which are deemed to have been requested to be registered or are deemed
to have been subject to Disposition pursuant to the first sentence of
Section 5.4(I)(a) shall, notwithstanding anything to the contrary contained
in this Section 5.4(I), be determined in accordance with Section
5.4(I)(b)(iii) in the
21
case of Warrants and Section 5.4(I)(b)(i) in the case of Section 5.4(I)
Securities other than Warrants.
(c) At any Section 5.4(I) Closing, the Company shall pay to S
(or its designees) the aggregate Section 5.4(I) Price for the Section 5.4(I)
Securities by wire transfer of immediately available funds, and S shall deliver
or cause to be delivered to the Company such Section 5.4(I) Securities, with
documentation satisfactory to the Company evidencing the transfer of such
Section 5.4(I) Securities, in form acceptable for transfer on the Company's
books. In the event a Section 5.4(I) Closing occurs after the 30th day following
delivery of the applicable Section 5.4(I) Acceptance Notice, then, in addition
to the aggregate Section 5.4(I) Price, the Company shall pay to S (or its
designees) interest on the aggregate Section 5.4(I) Price for the period from
and after such 30th day to and including the date of such Section 5.4(I)
Closing. Such interest shall accrue at the Federal Funds Rate (as defined in the
Notes) as in effect from time to time, plus 1/4 of 1%. Such interest shall not
be compounded and shall be calculated on the basis of a 360-day year and the
actual number of days elapsed.
(d) If the Company does not exercise its right to purchase
Voting Securities specified in a Section 5.4(I) Transfer Notice, or if the
Company exercises its right to rescind as described in the proviso to the last
sentence of Section 5.4(I)(a) hereof, or if any agreement deemed to exist with
respect to Voting Securities upon delivery of the applicable Section 5.4(I)
Acceptance Notice is terminated pursuant to Section 5.4(I)(f) hereof, then the
party giving such Section 5.4(I) Transfer Notice shall be free to effect the
Disposition of such Voting Securities, subject to Section 5.3 hereof (other than
the restrictions contained therein relating to the Company's purchase rights
under this Section 5.4); provided that, with respect to any such Disposition
--------
other than a public offering of Voting Securities pursuant to the Registration
Rights Agreement, such Disposition is completed within 60 days following the
expiration of the period in which the Company had the right to elect to purchase
such Voting Securities or such rescission or termination, as the case may be
(which 60
22
day period may be extended day by day by S if as of such 60th day or any day
thereafter on which such period is extended (x) all waiting periods, if any,
applicable to such Disposition under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), shall not have expired or
been terminated or (y) any statute, rule, regulation, executive order, decree,
ruling, injunction or other order shall have been enacted, entered, promulgated
or enforced by any court or governmental authority of competent jurisdiction
which prohibits such Disposition or makes such Disposition illegal, provided
that no such extension shall be for more than 60 days in the aggregate);
provided, further, that such Disposition is effected in accordance with the
- -------- -------
intended method of Disposition described in the applicable Section 5.4(I)
Transfer Notice; provided, further, that with respect to any such Disposition of
-------- -------
Voting Securities (other than Warrants) for which a Third Party Offer is
disclosed in the applicable Section 5.4(I) Transfer Notice, the Disposition of
such Voting Securities is to the third party offeror identified in such Section
5.4(I) Transfer Notice at the price specified therein or at any price in excess
thereof. If any such Disposition (other than a public offering of Voting
Securities pursuant to the Registration Rights Agreement) is not completed
within the 60 day period specified in the first proviso of the preceding
sentence, any Voting Securities specified in the applicable Section 5.4(I)
Transfer Notice and not disposed of in such Disposition shall again be subject
to the Company's purchase rights under this Section 5.4, to the extent provided
in Section 5.3 hereof. In the case of a Disposition intended to be effected
through a public offering pursuant to the Registration Rights Agreement, the
Company's purchase rights under this Section 5.4, to the extent provided in
Section 5.3 hereof, shall again apply to (i) all Voting Securities specified in
the applicable Section 5.4(I) Transfer Notice, if S or any of its Affiliates
declines to proceed with such public offering and (ii) any Voting Securities
which remain unsold at the time the Company is entitled to terminate the
effectiveness of the Registration (as defined in the Registration Rights
Agreement) with respect to such Voting Securities.
(e) Without limiting the provisos of Section 5.3(b) and 5.3(c)
hereof, if any Disposition is made in accordance with Section 5.3(b) or Section
5.3(c)
23
hereof to any Purchasing Person (other than a Designated Institution or Broker
Principal) who immediately thereafter Beneficially Owns Voting Securities
representing more than 1% of the total combined voting power in the election of
directors of the Company of all Voting Securities then outstanding, then such
person shall be deemed to have consented to be bound by Article V of this
Agreement (other than Section 5.6, Section 5.7 and Section 5.8 hereof) to the
same extent as S as if references to S in such Article were to such Purchasing
Person. All Warrants Beneficially Owned by a Purchasing Person shall be assumed
to have been fully exercised for purposes of calculating, as described above in
this Section 5.4(I)(e), the voting power represented by the Voting Securities
Beneficially Owned by such Purchasing Person.
(f) The obligations of the parties to effect any Section 5.4(I)
Closing shall be subject to the satisfaction of the following conditions: (i)
all waiting periods, if any, applicable to the transactions occurring at such
Section 5.4(I) Closing under the HSR Act, shall have expired or been terminated
and (ii) no statute, rule, regulation, executive order, decree, ruling,
injunction or other order shall have been enacted, entered, promulgated or
enforced by any court or governmental authority of competent jurisdiction which
prohibits such transactions or makes such transactions illegal. If, as of any
date on which a Section 5.4(I) Closing is scheduled to occur, the foregoing
conditions relating thereto have not been satisfied, then such Section 5.4(I)
Closing shall occur as promptly as practicable following such satisfaction, and
the parties shall use their reasonable best efforts to cause the satisfaction of
such conditions; provided that if the foregoing conditions relating to any
--------
Section 5.4(I) Closing are not satisfied within 120 days following the delivery
of the applicable Section 5.4(I) Acceptance Notice, then S or the Company may
terminate the agreement deemed to exist upon delivery of the applicable Section
5.4(I) Acceptance Notice.
(II) Prior to any Disposition of Common Stock or Warrants pursuant to
Section 5.3(f) hereof, the Company (and/or its designees) shall have the right,
exercisable in accordance with this Section 5.4(II), to purchase all of the
Common Stock and/or Warrants permitted to be subject to such Disposition by S or
any of its Affiliates.
24
(a) If S or any of its Affiliates wishes to effect any
Disposition of Common Stock or Warrants pursuant to Section 5.3(f) hereof, S
shall give notice (a "Section 5.4(II) Transfer Notice") to the Company of such
intended Disposition at least seven business days prior to the latest date, as
provided below, on which the Company (and/or its designees) is entitled to
exercise its right to purchase the securities specified in such Section 5.4(II)
Transfer Notice; provided that S may rescind such Section 5.4(II) Transfer
--------
Notice at any time prior to delivery of a Section 5.4(II) Acceptance Notice (as
defined below). The Section 5.4(II) Transfer Notice shall specify the Common
Stock and/or Warrants to be subject to Disposition, which Common Stock and/or
Warrants (assuming full exercise thereof) shall represent not more than that
percentage of the total number of shares of Common Stock Beneficially Owned by S
and its Affiliates which equals the percentage of the shares of Common Stock
outstanding on a fully diluted basis that the bidder in the Unsolicited Offer is
offering to purchase; provided that a Section 5.4(II) Transfer Notice shall not
--------
so specify any Warrants unless Warrants are being tendered for by the bidder in
the Unsolicited Offer; provided, further, that all shares of Common Stock
-------- -------
specified in a Section 5.4(II) Transfer Notice shall be issued and outstanding
(which shares may be shares issued in connection with the accelerated exercise
of Warrants pursuant to the terms thereof). If the Company (and/or its
designees) wishes to purchase the securities specified in the Section 5.4(II)
Transfer Notice, then not later than 24 hours prior to the latest time by which
such securities must be tendered in order to be accepted in the Unsolicited
Offer, the Company shall deliver a written notice (a "Section 5.4(II) Acceptance
Notice") to S specifying that the Company (and/or its designees) wishes to
purchase such securities (such securities, the "Section 5.4(II) Securities"), a
date for the closing of such purchase, which shall not be more than sixty days
after delivery of such Section 5.4(II) Acceptance Notice (subject to extension
as provided in Section 5.4(II)(e) hereof), and a place for the closing of such
purchase (a "Section 5.4(II) Closing"). Upon delivery of a Section 5.4(II)
Acceptance Notice, a binding agreement shall be deemed to exist providing for
the purchase by the Company (and/or its designees) of the Section 5.4(II)
Securities to which such Section 5.4(II) Acceptance Notice relates, upon the
terms and subject to the conditions set forth in this
25
Section 5.4(II); provided, that if following delivery of a Section 5.4(II)
--------
Acceptance Notice, the price per share of Common Stock or the price per Warrant
offered in the Unsolicited Offer is increased, the Company may, not later than
24 hours prior to the latest time by which Common Stock and/or Warrants must be
tendered in order to be accepted in the Unsolicited Offer, rescind its Section
5.4(II) Acceptance Notice (in which event it will have no obligation to purchase
such Section 5.4(II) Securities). Notwithstanding anything to the contrary
contained in this Section 5.4(II), for so long as the agreement deemed to exist
upon delivery of a Section 5.4(II) Acceptance Notice remains in effect, S shall
not and shall cause its Affiliates not to, tender any shares of Common Stock or
Warrants pursuant to the Unsolicited Offer.
(b) The purchase price for any Section 5.4(II) Securities (the
"Section 5.4(II) Price") shall be the per share price of Common Stock paid in
the Unsolicited Offer (in the case of Common Stock) or the excess of the per
share price of Common Stock paid in the Unsolicited Offer over the exercise
price of the Warrants (in the case of Warrants). The value of any securities
offered in the Unsolicited Offer shall equal the average closing price per share
or per unit of such securities during the 30 consecutive trading days
immediately preceding the Company's receipt of the Section 5.4(II) Transfer
Notice. The closing price for each such day shall be the last sale price
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices regular way, in either case on the New York
Stock Exchange, or, if such securities are not listed or admitted to trading on
such exchange, on the principal national securities exchange on which such
securities are listed or admitted to trading, or, if such securities are not
listed or admitted to trading on any national securities exchange but are
designated as national market system securities by the NASD, the last sale
price, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, in either case as reported on the NASD Automated
Quotation/National Market System, or if such securities are not so designated as
national market system securities, the average of the highest reported bid and
lowest reported asked prices as furnished by the NASD or similar organization if
the NASD is no longer reporting such information. In the case of any securities
not thereto-
26
fore traded, the value of such securities shall be determined by two nationally
recognized investment banking firms, one firm to be selected by each of S and
the Company, or in the event such firms are unable to agree, by a third
nationally recognized investment banking firm selected by such firms. S and the
Company shall use their best efforts to cause any such determination of value to
be made within five business days following the Company receipt of a Section
5.4(II) Transfer Notice. In connection with any determination of value pursuant
to this Section 5.4(II)(b), each party will bear the fees and expenses of the
investment banking firm selected by it and the parties will bear equally the
fees and expenses of any third investment banking firm.
(c) At any Section 5.4(II) Closing, the Company (and/or its
designees) shall pay to S (or its designees) the aggregate Section 5.4(II) Price
for the Section 5.4(II) Securities by wire transfer of immediately available
funds, and S shall deliver or cause to be delivered to the Company (and/or its
designees) such Section 5.4(II) Securities, with documentation satisfactory to
the Company evidencing the transfer of such Section 5.4(II) Securities, in form
acceptable for transfer on the Company's books. In the event a Section 5.4(II)
Closing occurs after the 30th day following delivery of the applicable Section
5.4(II) Acceptance Notice, then, in addition to the aggregate Section 5.4(II)
Price, the Company (and/or its designees) shall pay to S (or its designees)
interest on the aggregate Section 5.4(II) Price for the period from and after
such 30th day to and including the date of such Section 5.4(II) Closing. Such
interest shall accrue at the Federal Funds Rate (as defined in the Notes) as in
effect from time to time, plus 1/4 of 1%. Such interest shall not be compounded
and shall be calculated on the basis of a 360-day year and the actual number of
days elapsed.
(d) If the Company (and/or its designees) does not exercise its
right to purchase the securities specified in a Section 5.4(II) Transfer Notice,
then the party giving such Section 5.4(II) Transfer Notice shall be free to
effect the Disposition pursuant to the Unsolicited Offer of such securities, but
only such securities, so specified in such Section 5.4(II) Transfer Notice
(without being subject to the restrictions contained in Section 5.3(f) hereof
relating to the Company's
27
purchase rights under this Section 5.4(II)); provided that (i) such Disposition
--------
is effected at a price equal to or in excess of the price offered in the
Unsolicited Offer at the time that the Company's right to purchase such
securities expires and (ii) the foregoing shall not apply with respect to any
shares as to which the Company shall have delivered a Section 5.4(II) Acceptance
Notice in the event that the agreement deemed to exist with respect to such
securities upon delivery of the applicable Section 5.4(II) Acceptance Notice is
terminated pursuant to Section 5.4(II)(e) hereof. If any such Disposition is
not completed within 60 days following the expiration of the Company's right to
purchase the securities specified in a Section 5.4(II) Transfer Notice, any
securities specified in such Section 5.4(II) Transfer Notice and not disposed of
in such Disposition shall again be subject to the Company's purchase rights
under this Section 5.4(II), to the extent provided in Section 5.3(f) hereof.
(e) The obligations of the parties to effect any Section 5.4(II)
Closing shall be subject to the satisfaction of the following conditions: (i)
all waiting periods, if any, applicable to the transactions occurring at such
Section 5.4(II) Closing under the HSR Act, shall have expired or been terminated
and (ii) no statute, rule, regulation, executive order, decree, ruling,
injunction or other order shall have been enacted, entered, promulgated or
enforced by any court or governmental authority of competent jurisdiction which
prohibits such transactions or makes such transactions illegal. The obligation
of the Company (and/or its designees) to effect any Section 5.4(II) Closing
shall be further subject to the condition that a majority of the shares of
Common Stock outstanding on a fully diluted basis (excluding for purposes of
calculating such number of shares outstanding on a fully diluted basis all
issued and outstanding shares of Common Stock Beneficially Owned by S and its
Affiliates and all shares of Common Stock issuable upon exercise of S Warrants)
shall have been paid for or shall simultaneously with such Section 5.4(II)
Closing be paid for pursuant to the Unsolicited Offer. If, as of any date on
which a Section 5.4(II) Closing is scheduled to occur, the foregoing conditions
relating thereto have not been satisfied, then such Section 5.4(II) Closing
shall occur as promptly as practicable following such satisfaction, and, with
respect to
28
the conditions set forth in the first sentence of this Section 5.4(II)(e), the
parties shall use their reasonable best efforts to cause the satisfaction of
such conditions. If (x) the conditions relating to any Section 5.4(II) Closing
are not satisfied within 120 days following the delivery of the applicable
Section 5.4(II) Acceptance Notice, or (y) the Unsolicited Offer is terminated
without the condition set forth in the second sentence of this Section
5.4(II)(e) being satisfied, then S or the Company in the case of the preceding
clause (x), or the Company in the case of the preceding clause (y), may
terminate the agreement deemed to exist upon delivery of the applicable Section
5.4(II) Acceptance Notice by delivering written notice to the other.
Section 5.5 Required Dispositions.
---------------------
(a) If at any time S Voting Power (as defined below) is at least
24% and as a result of a repurchase of Common Stock by the Company ("Company
Repurchase"), S Voting Power immediately following such Company Repurchase S
Voting Power shall be greater than S Voting Power immediately prior to such
Company Repurchase, then, if and to the extent requested by the Company by
written notice to S, S shall, within six months after such request, dispose of
or cause its Affiliates to dispose of (a "Required Disposition") such number of
shares of Common Stock (to such parties and in such manner as shall be requested
by the Company) as shall be necessary to reduce S Voting Power to no more than S
Voting Power immediately prior to such Company Repurchase; provided, that in no
--------
event shall S or any of its Affiliates be required to dispose of any of the
Retained Shares; provided, further, that if any Required Disposition during such
-------- -------
six-month period would result in liability to S or any of its Affiliates under
Section 16(b) of the Exchange Act or any similar successor statute by reason of
the purchase of Common Stock upon exercise of the Warrants, then such six-month
period shall begin on the first date on which such Required Disposition may be
effected without liability under Section 16(b) of the Exchange Act. As used in
this Agreement, "S Voting Power" means, as of any particular time, the
percentage of all of the then issued and outstanding shares of Common Stock
represented by the issued and outstanding shares of Common Stock which are then
Beneficially Owned by S and its Affiliates (it being agreed that, for pur-
29
poses of calculating the S Voting Power, the issued and outstanding shares of
Common Stock Beneficially Owned by S and its Affiliates shall specifically
exclude any shares subject to unexercised Warrants).
(b) The Company agrees to indemnify S and its Affiliates against
any Loss (as defined below) incurred by them as a result of any Required
Disposition. For purposes of this Section 5.5, shares of Common Stock disposed
of in a Required Disposition shall be deemed to be the shares (other than the
Retained Shares) purchased at the earliest time by S or its Affiliates. "Loss"
means the amount, if any, by which (i) the purchase price of the Common Stock
disposed of by S or its Affiliates in a Required Disposition (excluding any out-
of-pocket expenses incurred in connection with such purchase), exceeds (ii) the
proceeds received by S and its Affiliates from the sale of such Common Stock in
such Required Disposition (net of any out-of-pocket expenses incurred in
connection with such sale); provided, that if the Company Repurchase is effected
--------
through a tender offer, and the Company in its sole discretion shall have
consented in writing (which consent may be rescinded at any time) to the tender
pursuant to such offer by S and its Affiliates of all of the shares of Common
Stock owned by them, and S and its Affiliates tender pursuant to such offer
fewer than all of the shares of Common Stock owned by them (other than as a
result of the rescission of such consent), then, with respect to each share sold
in such Required Disposition, such Required Disposition shall be deemed to have
been effected at the price per share paid in such tender offer (but only if
greater than the average price per share actually received in such Required
Disposition); provided, further, that if the Company Repurchase is effected
-------- -------
through an open market purchase program and the Company in its sole discretion
shall have consented in writing (which consent may be rescinded at any time) to
the sale by S and its Affiliates of a greater number of shares than S and its
Affiliates actually sell during such program (and such consent remains effective
for at least 30 days during such program), then, with respect to each share sold
in such Required Disposition, such Required Disposition shall be deemed to have
been effected at the average price per share paid by the Company during such
program (but only if greater than the average price per share actually received
in such Required Disposition).
30
Section 5.6 No Restrictions. So long as Section 5.1, Section 5.2,
---------------
Section 5.3, Section 5.4, Section 5.5 and Section 5.9 hereof are in full force
and effect, the Company will not take or recommend to its stockholders any
action during the term of this Agreement which would (i) impose limitations on
the legal rights of S or its Affiliates as Company stockholders other than those
imposed pursuant to the express terms of this Agreement, including, without
limitation, any action which would impose restrictions (A) based upon the size
of security holding, nationality of a security holder, the business in which a
security holder is engaged or other considerations applicable to S or its
Affiliates and not to security holders generally, or (B) with reference to
Common Stock generally, by means of the issuance of or proposal to issue any
other class of securities having voting power disproportionately greater than
the equity investment in the Company represented by such securities; (ii)
involve the issuance or corporate action providing for the issuance of any
warrant, capital stock or other security (A) which is, or under specified
circumstances will become, convertible into or represent the right to acquire
any securities of S or its Affiliates (other than pursuant to customary
provisions for adjusting the securities for which any such warrant is
exercisable or into which any such stock or security is convertible) or (B) any
other rights of which (including rights of redemption) are dependent upon the
amount of Voting Securities owned by S or its Affiliates; (iii) deny any benefit
to S or its Affiliates proportionately as holders of any class of Voting
Securities that is made available to other holders of the same class of Voting
Securities generally; or (iv) alter voting or other rights of the holders of any
class of Voting Securities so that any such rights (or the vote required with
respect to any matter) are determined with reference to the amount of Voting
Securities held by S or its Affiliates; provided, that this Section 5.6 shall
--------
not prohibit the Company from taking any action otherwise prohibited hereby
(including, without limitation, adopting a stockholder rights plan or similar
plan), so long as S and its Affiliates are, either expressly or as part of a
class of stockholders which includes S and its Affiliates, exempted from such
action or the limitations on legal rights imposed thereby.
Section 5.7 Information.
-----------
31
(a) At any time that S shall account for its investment in the
Company pursuant to the equity method, the Company will furnish to S all
information that is required by generally accepted accounting principles to
enable S to account for its investment in such manner. To the extent reasonably
requested by S, the Company will, and will cause its employees, independent
public accountants and other representatives to, provide information regarding
the Company to, and otherwise cooperate with, S so as to enable S to prepare
financial statements in accordance with accounting principles generally accepted
in the United States and/or Canada, and to comply with its reporting
requirements and other disclosure obligations under applicable United States and
Canadian securities laws and regulations.
(b) If the Company so requests, S shall deliver to the Company,
no less frequently than quarterly, accurate written reports as to the amount of
each class of Voting Securities then Beneficially Owned by S and its Affiliates.
The Company shall be entitled to rely on the most recently delivered such report
for all purposes of this Agreement.
(c) If S so requests, the Company shall deliver to S no less
frequently than quarterly accurate written reports as to the amount of each
class of Voting Securities then outstanding. S shall be entitled to rely on the
most recently delivered such report for all purposes of this Agreement.
(d) Each of the Company, S and Subsidiary will provide the
other, and shall cause each of their respective subsidiaries to provide the
other, with such assistance as may reasonably be requested by them in connection
with the preparation of any tax return, any audit or other examination by any
taxing authority, or any judicial or administrative proceedings relating to
liability for taxes relating to the Redemption Transaction, and each will retain
and provide the other with any records or information which may be relevant to
such return, audit or examination, proceedings or determination. The party
requesting assistance hereunder shall reimburse the other party for all
reasonable expenses incurred in providing such assistance, including any
expenses of third parties. Any information obtained pursuant to this Section
5.7(d) shall be kept strictly
32
confidential by the parties hereto. Notwithstanding the foregoing, neither the
Company nor any of its affiliates shall have any obligation to make available or
provide a copy of any tax return filed by the Company or its affiliates or any
related materials.
Section 5.8 Board Representation.
--------------------
(a) So long as Section 5.1, Section 5.2, Section 5.3, Section
5.4, Section 5.5 and Section 5.9 hereof are in full force and effect, if at any
time the S Voting Power is increased to more than 10% as a result of the
exercise of Warrants, and for so long thereafter as the S Voting Power is more
than 10%, S shall be entitled to designate up to such number of persons for
election to the Company's Board of Directors and the Strategic Direction
Committee (or any successor thereto) of the Company's Board of Directors as
shall be equal to 6% (rounded to the nearest whole number, but not less than
one) of the total numbers of members of such board and committee, respectively,
at each annual meeting of stockholders of the Company after the date hereof. The
numbers of persons S shall be entitled to designate for election to the
Company's Board of Directors and the Strategic Direction Committee (or any
successor thereto) of such Board shall be increased to the whole number closest
to the following applicable percentage of the total numbers of members of such
Board and committee, respectively:
(i) 9%, if the S Voting Power is increased to more than 15%
as a result of the exercise of Warrants and for so long thereafter as the S
Voting Power is more than 15%,
(ii) 12%, if the S Voting Power is increased to more than
20% as a result of the exercise of Warrants and for so long thereafter as
the S Voting Power is more than 20%, or
(iii) 15%, if the S Voting Power is increased to more than
24% as a result of the exercise of Warrants and for so long thereafter as
the S Voting Power is more than 24%
33
(b) The designation by S of any person for election to the
Company's Board of Directors, other than those persons serving on such Board
immediately prior to the date hereof, shall be made after consultation with the
Company, and any person designated by S for election to the Strategic Direction
Committee (or any successor thereto) of the Company's Board of Directors, other
than Edgar M. Bronfman, Charles R. Bronfman and Edgar Bronfman, Jr. (or if none
of them are directors of the Company, the person serving as chairman of the
board or chief executive officer of S), shall be a person agreed to by the
Company (which agreement will not be unreasonably withheld). The Company's
nominating committee shall recommend to the Company's Board of Directors that
all persons designated by S for election to the Company's Board of Directors in
accordance with the provisions of this Section 5.8 (and any additional designees
as the parties may agree) be included in the slate of nominees recommended by
such Board to the Company's stockholders for election as directors at each
annual meeting of the stockholders of the Company, and there shall be a
recommendation to the Board of Directors that all persons designated by S for
election to the Strategic Direction Committee (or any successor thereto) of the
Company's Board of Directors in accordance with the provisions of this Section
5.8 (and any additional designees as the parties may agree) be elected to such
committee. In the event that any designee of S for election to the Company's
Board of Directors or its Strategic Direction Committee (or any successor
thereto) pursuant to the foregoing provisions shall cease to serve as a director
or committee member for any reason, the vacancy resulting therefrom shall be
filled according to the procedures described above.
(c) At any time that the S Voting Power is increased to more
than 10%, and for so long thereafter as the S Voting Power is more than 10%, S's
management shall recommend to its Board of Directors that the person serving as
the chief executive officer of the Company and one other person designated by
such chief executive officer after consultation with S, or any two other persons
designated by the Company after consultation with S (and any additional
designees as the parties may agree) be included in the slate of nominees
recommended by the Board of Directors of S to shareholders for election as
directors at each annual meeting of shareholders of S.
34
In the event that any of such designees shall cease to serve as a director for
any reason, the vacancy resulting thereby shall be filled according to the
procedures described above.
(d) The Company will furnish to S's designees on the Company's
Board of Directors all information that is provided to the other directors of
the Company. S will furnish to the Company's designees on S's Board of Directors
all information that is provided to the other directors of S.
Section 5.9 Spinoff Distributions. In the event that the Company
---------------------
makes any Spinoff Distribution, then, whether or not Spinoff Warrants are issued
in connection therewith, effective as of the date of such Spinoff Distribution,
without any action on the part of the Company, the Spinoff Company or S, there
shall be deemed to exist between S and the Spinoff Company a binding agreement
(the "Spinoff Agreement") containing provisions substantially identical to
Article V and Article VI hereof, including the definitions of any capitalized
terms used in such Articles but defined in other Articles of this Agreement;
provided that, for purposes of the Spinoff Agreement, (i) references to the
- --------
Company shall mean the Spinoff Company; (ii) references to the Common Stock, the
Warrants and the Warrant Agreement shall mean the common stock of the Spinoff
Company, the Spinoff Warrants (if any) and the warrant agreement pursuant to
which the Spinoff Warrants (if any) are issued, respectively, and references to
the Notes, the Retained Shares, the Existing Standstill Agreement and the
Existing Registration Rights Agreement shall be disregarded; (iii) references to
"the date hereof" and "the date of this Agreement" shall mean the date of the
Spinoff Distribution; (iv) references to the General Corporation Law of the
State of Delaware and the New York Stock Exchange in the definition of
Significant Event shall mean, respectively, the general corporation law of the
state in which the Spinoff Company is incorporated and the rules of the
principal national securities exchange on which the common stock of the Spinoff
Company is listed or admitted to trading (or, if the common stock of the Spinoff
Company is not listed or admitted to trading on any national securities exchange
but is designated as a national market system security by the NASD, the NASD
35
rules applicable to companies so designated); (v) references to the fair market
value of the Warrants as of the date hereof (as contemplated by Section
5.4(I)(b)(iii) hereof) shall mean the fair market value of the Spinoff Warrants
(if any) as of the date of the Spinoff Distribution, as determined by two
nationally recognized investment banking firms, one firm to be selected by each
of S and the Company, or in the event such firms are unable to agree, by a third
nationally recognized investment banking firm selected by such firms; (vi) the
reference to valuation methodology (as contemplated by Section 5.4 (b)(iii)
hereof) shall mean valuation methodology relating to the Spinoff Warrants (if
any), as determined by two nationally recognized investment banking firms, one
firm to be selected by each of S and the Company, or in the event such firms are
unable to agree, by a third nationally recognized investment banking firm
selected by such firms (which valuation methodology shall in any event be
consistent with the valuation methodology set forth in Exhibit H to this
Agreement, except as appropriate to reflect differences between the Company and
the Spinoff Company or their respective equity securities); (vii) the
Termination Date shall be the 15th anniversary of the date of this Agreement;
and (viii) if Spinoff Warrants are not issued in connection with the Spinoff
Distribution, then, in addition to the termination rights contemplated by
Section 6.1 hereof, the Spinoff Company in its discretion may terminate the
Spinoff Agreement by written notice to S at any time after the first anniversary
of the Spinoff Distribution. Prior to any Spinoff Distribution, S shall, and
the Company shall cause the Spinoff Company to, enter into an agreement
memorializing the Spinoff Agreement. Capitalized terms used but not defined in
this Section 5.9 shall have the meanings assigned to such terms in the Warrant
Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Termination. This Agreement shall terminate on the
-----------
Termination Date; provided that the Company shall have the right to terminate
--------
this Agreement in whole or in part upon written notice to S if, at the time such
notice is given, (i) neither S nor any of its Affiliates Beneficially Owns any
Warrants which are or may thereafter be exercisable in accordance with their
36
terms and (ii) the S Voting Power is less than 2%; provided, further, that S
-------- -------
shall have the right to terminate this Agreement upon written notice to the
Company if the Company materially breaches any of its obligations hereunder
(other than Section 6.11 hereof) or under the Notes; provided, further, that S
-------- -------
shall have the right to terminate this Agreement upon written notice to the
Company given on or after third anniversary of the date on which all of the
Warrants shall have expired unexercised or shall have been reacquired by the
Company. In the event of any such termination of this Agreement, unless the
parties otherwise agree, S and the Company shall cause all of their respective
designees serving on the Board of Directors or any committee thereof of the
other party pursuant to Section 5.8 hereof, if any, to resign from such Board of
Directors and committee, effective as of the date of such termination.
Section 6.2 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties made herein shall survive through the term of
this Agreement.
Section 6.3 Legends. If requested in writing by the Company, S shall
-------
present or cause to be presented promptly all certificates representing Voting
Securities Beneficially Owned by S or any of its Affiliates, for the placement
thereon of a legend substantially to the following effect, which legend will
remain thereon as long as such Voting Securities are subject to the restrictions
contained in this Agreement:
"The securities represented by this certificate are subject to the
provisions of an Agreement, dated as of April 6, 1995, among E.I. du
Pont de Nemours and Company, The Seagram Company Ltd. and JES
Developments, Inc. and may not be sold, pledged, hypothecated or
otherwise transferred except in accordance therewith. A copy of said
Agreement is on file at the office of the Corporate Secretary of E.I.
du Pont de Nemours and Company."
The Company may enter a stop transfer order with the transfer agent or agents of
Voting Securities against any Disposition not in compliance with the provisions
of this Agreement.
37
Section 6.4 Entire Agreement; Termination of Existing Agreement.
---------------------------------------------------
This Agreement, the Warrant Agreement, the Registration Rights Agreement, the
Warrants and the Notes constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof. Without limiting the foregoing, upon the
execution and delivery of this Agreement by the parties hereto, the Existing
Standstill Agreement and the Existing Registration Rights Agreement shall
terminate; provided that termination of the Existing Standstill Agreement and
--------
the Existing Registration Rights Agreement shall not relieve any party thereto
from liability for breach of any provision thereof prior to such termination.
As used in this Agreement, (i) "Existing Standstill Agreement" means the
agreement, dated as of October 2, 1981, as amended and restated as of March 26,
1986, between the Company and S, and (ii) "Existing Registration Rights
Agreement" means the registration rights agreement, dated as of October 2, 1981,
between the Company and S.
Section 6.5 Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to specific performance of the terms hereof, in addition
to any other remedy at law or in equity.
Section 6.6 Expenses. Except as otherwise expressly provided herein,
--------
all costs and expenses incurred in connection with the transactions contemplated
by this Agreement shall be paid by the party incurring such expenses.
Section 6.7 Assignment. This Agreement shall be binding upon and
----------
inure to the benefit of the parties hereto and their successors by operation of
law, but may not otherwise be assigned by any party hereto without the prior
written consent of the other parties hereto.
Section 6.8 Validity. If any provision of this Agreement, or the
--------
application thereof to any person or circumstance is held invalid or
unenforceable, the re-
38
mainder of this Agreement, and the application of such provision to other
persons or circumstances, shall not be affected thereby, and to such end, the
provisions of this Agreement are agreed to be severable.
Section 6.9 Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given if so given) by delivery in person, by fax
(receipt of which is confirmed), or by reputable overnight courier (receipt of
which is confirmed) to the other party as follows:
if to the Company:
E.I. du Pont de Nemours and Company
1007 Market Street
Wilmington, Delaware 19898
Telephone: (302) 773-0177
Fax: (302) 773-4679
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: Roger S. Aaron, Esq.
and
Lou R. Kling, Esq.
Telephone: (212) 735-3000
Fax: (212) 735-2000
if to S or Subsidiary to:
The Seagram Company Ltd.
1430 Peel Street
Montreal, Quebec
Canada H3A 1S9
Attn: Laura Falk Scott, Esq.
Telephone: (514) 849-5271
Fax: (514) 849-1430
and
39
JES Developments, Inc.
c/o Joseph E. Seagram & Sons, Inc.
375 Park Avenue
New York, New York 10152
Attn: Daniel R. Paladino, Esq.
Vice President and General Counsel
Telephone: (212) 572-1345
Fax: (212) 572-1398
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Edgar M. Masinter, Esq.
and
Sarah E. Cogan, Esq.
Telephone: (212) 455-2000
Fax: (212) 455-2502
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
Section 6.10 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of law thereof.
Section 6.11 Registration Rights Agreement. The Company will comply
-----------------------------
in all material respects with all of its obligations under the Registration
Rights Agreement.
Section 6.12 Descriptive Headings. The descriptive headings herein
--------------------
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
Section 6.13 No Third Party Beneficiaries. This Agreement shall be
----------------------------
binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement. Without
40
limiting the generality of the foregoing, and notwithstanding anything in this
Agreement to the contrary, the parties expressly agree that the rights, benefits
and remedies conferred upon S and its Affiliates under Section 5.6, Section 5.7
and Section 5.8 hereof are conferred exclusively upon S and its Affiliates, and
accordingly, the Company shall not be obligated to confer any of such rights,
benefits or remedies upon, and none of such rights, benefits or remedies shall
be enforceable by or on behalf of, any other person or entity.
Section 6.14 Investment Banking Firms. The parties agree that
------------------------
whenever investment banking firms are to be selected pursuant to this Agreement
or the Registration Rights Agreement, (i) the Company may so select from among
James D. Wolfensohn Incorporated or The First Boston Corporation (or any other
firm reasonably acceptable to S); and (ii) S and its Affiliates may so select
from among Goldman, Sachs & Co. and Lazard Freres & Co. (or any other firm
reasonably acceptable to the Company).
Section 6.15 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
41
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its representatives thereunto duly authorized, all
as of the day and year first above written.
E.I. du Pont de Nemours and Company
By /s/ Edgar S. Woolard, Jr.
--------------------------
Name: Edgar S. Woolard, Jr.
Title:Chairman of the Board and Chief
Executive Officer
The Seagram Company Ltd.
By /s/ Edgar Bronfman, Jr.
------------------------
Name: Edgar Bronfman, Jr.
Title:President and Chief Executive
Officer
JES Developments, Inc.
By /s/ Daniel R. Paladino
-----------------------
Name: Daniel R. Paladino
Title:Vice President
42
Exhibit A
---------
Form of 2 1/2 Year Warrant
--------------------------
43
Exhibit B
---------
Form of 3 1/2 Year Warrant
--------------------------
44
Exhibit C
---------
Form of 4 1/2 Year Warrant
--------------------------
45
Exhibit D
---------
Form of Warrant Agreement
-------------------------
46
Exhibit E
---------
Form of Notes
-------------
47
Exhibit F
---------
Form of Registration Rights Agreement
-------------------------------------
48
Exhibit G
---------
Form of S Stockholder Agreement
-------------------------------
49
Exhibit H
---------
Warrant Valuation
-----------------
Initial Fair Market Value
- -------------------------
2 1/2 Year Warrant: $2.8125 per share of Common Stock issuable thereunder, or
$135 million in the aggregate for 48 million underlying shares.
3 1/2 Year Warrant: $2.8125 per share of Common Stock issuable thereunder, or
$151.875 million in the aggregate for 54 million underlying shares.
4 1/2 Year Warrant: $2.8125 per share of Common Stock issuable thereunder, or
$151.875 million in the aggregate for 54 million underlying shares.
Aggregate initial fair market value of all Warrants: $438.75 million.
Valuation Methodology.
- ----------------------
[see following page]
50
Valuation Methodology
- ---------------------
* Use Goldman, Sachs & Co. ("Goldman") " OCCAM-OPTIONS CALCULATOR" (Version
3.1 March 17, 1992). A diskette copy of such model has been delivered to
James D. Wolfensohn Incorporated (Wolfensohn") and Wolfensohn has signed a
Software License Agreement with Goldman with respect thereto. Goldman will
deliver additional copies of the diskette to the Company, S or other
investment banking firms selected by the Company or S in connection with
the valuation of the Warrants upon the execution by the Company, S or such
other investment banking firm of a Software License Agreement in form
reasonably satisfactory to Goldman.
* Use the following assumptions:
Initial
Model Inputs Description Assumptions
------------ ----------- -----------
(1) Underlyer Price Closing common stock price $63.125
--------------- on the NYSE on the Warrant
Valuation Date.
(2) Expiration Expiration Date of the A: 10/6/97
---------- Warrant in question. B: 10/6/98
C: 10/6/99
(3) Today's Date: Warrant Valuation Date 4/5/95
------------
(4) Riskless Rate: Interpolated U.S. Treasury A: 6.73%(1)
------------- rate input as a semi-annual B. 6.82&(1)
rate and computed with the C. 6.90%(1)
continuously compounded
equivalent of the semi-
annual rate for the period
from the Warrant Valuation
Date to the Expiration and
rounded to two significant
digits. U.S. Treasury rate
interpolated based on
closing prices and yields
for relevant "on-the-run"
U.S. Treasuries.
(5) Dividend Yield: The annualized dividend yield on $2.04(2)/
-------------- the common stock based on the
current or announced quarterly 63.125
dividend and the common stock
price determined in (1) above =3.23%
using annual compounding and
rounded to two significant digits.
(6) Option Type: European Style Warrants European
-----------
(7) Volatility: 21.50% (to be used in all subse- 21.50%
---------- quent valuations)
- ----------
(1) Semi-annual yields to maturity based on closing prices and yields (2-year
rate 6.68%; 3-year rate 6.78%; and 5-year rate 6.94%) as of April 5, 1995.
To obtain the valuation, such semi-annual yields need to be converted to
their continuously compounded equivalents.
(2) The $2.04/share annualized rate being a negotiated amount based on a
current quarterly dividend of $.47/share plus a potential increase of
$.04/share.
2