EXHIBIT 99.2
WARRANT AGREEMENT
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This Warrant Agreement, dated as of April 6, 1995, is between E.I. du Pont
de Nemours and Company, a Delaware corporation (the "Company"), and Warco
Transfer Corporation, a Delaware corporation and a wholly-owned subsidiary of
the Company, as Warrant Agent (the "Warrant Agent").
WHEREAS, simultaneously with the execution and delivery of this Agreement,
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"), are entering into an agreement (the "Redemption Agreement")
which provides for, among other things, the Company to acquire from Subsidiary
certain shares of the Common Stock, par value $0.60 per share (the "Common
Stock"), of the Company;
WHEREAS, pursuant to the Redemption Agreement, the Company proposes to
issue to Subsidiary warrants entitling Subsidiary to purchase an aggregate of
156,000,000 shares of Common Stock; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of the certificates evidencing such warrants and other matters as
provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. Certain Definitions. As used in this Agreement, the
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following terms, unless otherwise expressly provided, shall have the following
meanings:
(a) "Acceleration Event Period" shall mean (a) the period commencing
on the tenth Business Day (but not earlier than the second Business Day
following public announcement of the record date hereinafter described) and
ending on the third Business Day preceding
the record date established by the Company for purposes of determining the
stockholders of the Company who are (i) entitled to vote on any Significant
Event or on any Significant Distribution which is submitted to a vote of the
stockholders of the Company or (ii) entitled to receive a Significant
Distribution which is not submitted to a vote of the stockholders of the
Company; provided that if, in connection with a Spinoff Distribution which is
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not submitted to a vote of the stockholders of the Company, the Company elects
to issue Spinoff Warrants to the registered holders of one or more classes of
Warrants, as provided in Section 13 hereof, then no Acceleration Event Period
shall be deemed to occur with respect to any S Warrants of such class or
classes; (b) the period commencing on the first Business Day following
commencement of an Unsolicited Offer (as defined in the Redemption Agreement)
which satisfies the requirements of the first proviso contained in Section
5.3(f) thereof and ending upon the termination or expiration of such Unsolicited
Offer; and (c) the period commencing on the first Business Day following
commencement of a tender or exchange offer which is recommended to stockholders
of the Company by at least a majority of the entire Board of Directors of the
Company and ending upon the termination or expiration of such offer.
(b) "Affiliate" shall mean any corporation or entity controlled by S;
provided that if, in accordance with Section 5.3(c) of the Redemption Agreement,
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a Disposition of any Warrants is made pursuant to a dividend or other
distribution to stockholders of S generally, then "Affiliate" shall also mean
and include any affiliate or associate (as such terms are defined in Rule 12b-2
under the Exchange Act) of S who or which, together with such affiliate's or
associate's respective 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) with respect to securities of S
of which such affiliate or associate is a part, Beneficially Owns securities of
S representing more than 5% of the total combined voting power in the election
of directors of S of all securities of S outstanding immediately prior to such
Disposition.
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(c) "Beneficially Owns" and like terms shall mean "beneficially owns"
within the meaning of Rule 13d-3 under the Exchange Act.
(d) "Business Day" shall mean any day other than a Saturday or a
Sunday or a day on which commercial banking institutions in the City of New York
are authorized by law to be closed. Any reference in this Agreement to "days"
(unless Business Days are specified) shall mean calendar days.
(e) "Derivative Exercise Period" shall mean any period during which
an outstanding Derivative S Security is exchangeable or exercisable for, or
convertible into, shares of Common Stock.
(f) "Derivative S Security" shall mean any security of S or any
Affiliate thereof 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, Common Stock, and in
respect of which the Company had been entitled to purchase (but did not
purchase), prior to the Disposition of such security by S or an Affiliate
thereof, Warrants exercisable for the Common Stock deliverable upon exercise,
exchange or conversion of such security.
(g) "Disposition" shall mean any direct or indirect (including,
without limitation, through the disposition or transfer of control of another
person), sale, assignment, transfer, pledge, hypothecation, granting of any
option with respect to or other disposition of any interest in (or the entering
into of an agreement or understanding with respect to the foregoing) any
Warrants.
(h) "European Exercise Period" shall mean (i) with respect to the
First S Warrants, the period commencing on August 6, 1997 and ending at the
Expiration Time, (ii) with respect to the Second S Warrants, the period
commencing on August 6, 1998 and ending at the Expiration Time and (iii) with
respect to the Third S Warrants, the period commencing on August 6, 1999 and
ending at the Expiration Time.
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(i) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(j) "Exercise Price" shall mean, subject to adjustment as provided in
this Agreement, (i) $89.33 in the case of each First Warrant, (ii) $101.14 in
the case of each Second Warrant and (iii) $113.63 in the case of each Third
Warrant.
(k) "Expiration Time" shall mean 5:00 P.M., New York City time, on
(i) October 6, 1997, in the case of the First Warrants, (ii) October 6, 1998, in
the case of the Second Warrants and (iii) October 6, 1999, in the case of the
Third Warrants.
(l) "First Warrants", "Second Warrants" and "Third Warrants" shall
have the respective meanings assigned to such terms in Section 3 hereof.
(m) "First Non-S Warrants", "Second Non-S Warrants" and "Third Non-S
Warrants" shall have the respective meanings assigned to such terms in Section 3
hereof.
(n) "First S Warrants", "Second S Warrants" and "Third S Warrants"
shall have the respective meanings assigned to such terms in Section 3 hereof.
(o) "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
(p) "Non-S Person" shall mean any person or entity which is not an S
Group Member.
(q) "Non-S Warrant" shall mean any Warrant which is, and the Shares
issuable upon exercise of which would be, Beneficially Owned exclusively by one
or more Non-S Persons.
(r) "S Group Member" shall mean S or any of its Affiliates, including
without limitation, Subsidiary.
(s) "S Warrant" shall mean any Warrant which is, or the Shares
issuable upon exercise of which
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(whether or not such Warrant is exercisable at such time) would be, Beneficially
Owned by one or more S Group Members.
(t) "Shares" shall mean the Common Stock issuable upon exercise
of any Warrant.
(u) "Significant Distribution" shall mean any distribution to all
holders of Common Stock which requires an adjustment to the Exercise Price
pursuant to Section 12(c) hereof, whether or not such distribution is submitted
to a vote of the stockholders of the Company.
(v) "Significant Event" shall mean any of the following which are
submitted to a vote of the stockholders of the Company, if stockholder approval
thereof is required by the General Corporation Law of the State of Delaware or
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 include any
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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; provided, further, that
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"Significant Event" shall not mean or include any Significant Distribution.
(w) "Spinoff Company" shall mean the corporation or other entity the
capital stock or other equity interests of which are distributed in a Spinoff
Distribution.
(x) "Spinoff Distribution" shall mean any Significant Distribution in
which the Company distributes capital stock of or other equity interests in any
corporation or entity other than Company.
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(y) "Spinoff Warrants" shall have the meaning set forth in Section 13
(a) hereof.
(z) "Voting Securities" shall mean 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).
(aa) "Warrants" shall mean the warrants initially issued to
Subsidiary pursuant to the Redemption Agreement and initially exercisable for an
aggregate of 156,000,000 shares of Common Stock, and any warrants issued upon
transfer, division or combination thereof or in substitution thereof pursuant to
this Agreement.
(ab) "Warrant Certificates" shall mean the certificates evidencing
the Warrants, as more particularly described in Section 2 hereof.
Section 2. Appointment of Warrant Agent. The Company hereby appoints
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the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 3. Form of Warrant Certificates. The Warrant Certificates to
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be delivered pursuant to this Agreement shall be in registered form only. The
Warrant Certificates evidencing the S Warrants shall be substantially in the
forms set forth in Exhibit S-1 (such S Warrants, the "First S Warrants"),
Exhibit S-2 (such S Warrants, the "Second S Warrants") or Exhibit S-3 (such S
Warrants, the "Third S Warrants") attached hereto, as applicable. The Warrant
Certificates evidencing the Non-S Warrants, if any, shall be substantially in
the forms set forth in Exhibit NS-1 (such Non-S Warrants, the "First Non-S
Warrants"), Exhibit NS-2 (such Non-S Warrants, the "Second Non-S Warrants") or
Exhibit NS-3 (such Non-S Warrants, the "Third Non-S Warrants") attached hereto,
as applicable. The First S Warrants and any
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First Non-S Warrants are collectively referred to herein as the "First
Warrants", the Second S Warrants and any Second Non-S Warrants are collectively
referred to herein as the "Second Warrants", and the Third S Warrants and any
Third Non-S Warrants are collectively referred to herein as the "Third
Warrants."
Section 4. Execution of Warrant Certificates.
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(a) Warrant Certificates shall be signed on behalf of the Company by
its Chairman of the Board, President, Vice Chairman, Senior Vice President-
Finance or Vice President and Treasurer and by its Secretary or an Assistant
Secretary under its corporate seal. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any
future Chairman of the Board, President, Vice Chairman, Senior Vice President-
Finance, Vice President and Treasurer, Secretary or Assistant Secretary and may
be imprinted or otherwise reproduced on the Warrant Certificates and for that
purpose the Company may adopt and use the facsimile signature of any person who
shall have been Chairman of the Board, President, Vice Chairman, Senior Vice
President-Finance, Vice President and Treasurer, Secretary or an Assistant
Secretary notwithstanding the fact that at the time the Warrant Certificates
shall be countersigned and delivered or disposed of he shall have ceased to hold
such office. The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates.
(b) In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent
pursuant to Section 5 hereof, or disposed of by the Company, such Warrant
Certificates nevertheless may be countersigned and delivered or disposed of as
though such person had not ceased to be such officer of the Company; and any
Warrant Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Warrant Certificate, shall be a proper
officer of the Company to sign such Warrant Certificate, although at the date of
the execution of
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this Warrant Agreement any such person was not such officer.
(c) Warrant Certificates shall be dated the date of countersignature
by the Warrant Agent pursuant to Section 5 hereof.
Section 5. Registration and Countersignature. Warrant Certificates
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distributed as provided in Section 12 shall be registered in the names of the
record holders of the Warrant Certificates to whom they are to be distributed.
Warrant Certificates shall be manually countersigned by the Warrant Agent and
shall not be valid for any purpose unless so countersigned. The Company and the
Warrant Agent may deem and treat the registered holder of a Warrant Certificate
as the absolute owner thereof (notwithstanding any notation of ownership or
other writing thereon made by anyone), for the purpose of any exercise thereof
and any distribution to the holder thereof and for all other purposes, and
neither the Company nor the Warrant Agent shall be affected by any notice to the
contrary.
Section 6. Registration of Transfers and Exchanges.
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(a) Subject to the transfer restrictions contained in the Redemption
Agreement, the Warrant Agent shall from time to time register the transfer of
any outstanding Warrant Certificates upon the records to be maintained by it for
that purpose, upon surrender thereof accompanied by (i) a written instrument of
transfer in the form of the assignment appearing at the end of the forms of the
Warrant Certificates, duly executed by the registered holder or holders thereof
or by the duly appointed legal representative thereof or by a duly authorized
attorney and (ii) in the case of any transfer by an S Group Member, or by any
other party bound by any of the provisions of Article V of the Redemption
Agreement, (A) an officer's certificate, in form and substance reasonably
satisfactory to the Warrant Agent and the Company, certifying that such transfer
would not violate any provision of the Redemption Agreement and (B) duly
executed consents to jurisdiction and/or agreements of Purchasing Persons (as
such term is defined in the Re-
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demption Agreement), to the extent required by Section 5.3(a), Section 5.3(b) or
Section 5.3(c) of the Redemption Agreement. Upon any such registration of
transfer, a new Warrant Certificate of like tenor and representing in the
aggregate a like number of Warrants shall be issued to the transferee and the
surrendered Warrant Certificate shall be cancelled by the Warrant Agent. For
purposes of this Agreement, but without limiting the provisions of Section 2 of
this Agreement, the Warrant Certificates in the forms set forth in Exhibits S-1
and NS-1 attached hereto shall be deemed "of like tenor", the Warrant
Certificates in the forms set forth in Exhibits S-2 and NS-2 shall be deemed "of
like tenor", and the Warrant Certificates set forth in Exhibits S-3 and NS-3
shall be deemed "of like tenor". S Group Members may only hold S Warrants;
holders of Warrants who are Non-S Persons will have the right to exchange First
S Warrants for First Non-S Warrants, Second S Warrants for Second Non-S Warrants
and Third S Warrants for Third Non-S Warrants, in each case representing the
same number of Warrants and Shares subject thereto as that exchanged.
(b) Warrant Certificates may be exchanged at the option of the
holders thereof, when surrendered to the Warrant Agent at its office maintained
for the purpose of exchanging, transferring or exercising the Warrants in
Wilmington, Delaware or such other office in New York, New York, in either case
as the Warrant Agent may designate from time to time (the "Warrant Agent
Office"), for another Warrant Certificate or other Warrant Certificates of like
tenor and representing in the aggregate a like number of Warrants. Warrant
Certificates surrendered for exchange, transfer or exercise shall be cancelled
by the Warrant Agent. Warrant Certificates cancelled as provided in this
Section 6 shall then be disposed of by the Warrant Agent in a manner
satisfactory to the Company.
(c) The Warrant Agent is hereby authorized to countersign, in
accordance with the provisions of this Section 6 and of Section 5, the new
Warrant Certificates required pursuant to the provisions of such Sections, and
for the purpose of any distribution of Warrant Certificates contemplated by
Section 12.
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Section 7. Duration and Exercise of Warrants.
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(a) S Warrants may be exercised only (i) during an Acceleration Event
Period, (ii) to the extent necessary to enable S or an Affiliate thereof to
obtain shares of Common Stock which it is required at such time to deliver upon
the exchange, exercise or conversion of an outstanding Derivative S Security
held by a Non-S Person during a Derivative Exercise Period (to the extent either
such period in (i) or (ii) occurs prior to the respective Expiration Times of
the S Warrants) or (iii) during the respective European Exercise Periods of the
S Warrants. Non-S Warrants may be exercised at any time or from time to time
until their respective Expiration Times (the "American Exercise Period").
Notwithstanding the foregoing, if at any time a registration statement shall be
in effect with respect to Shares issuable upon exercise of any Non-S Warrants,
then the Company shall have the right to suspend the exercisability of such Non-
S Warrants for up to 30 days if the Company furnishes the Warrant Agent with an
opinion of counsel to the Company (who may be an employee of the Company) to the
effect that the prospectus included in such registration statement is reasonably
likely to be deemed to contain a material misstatement or omission by reason of
its failure to disclose material information concerning a pending or
contemplated financing, acquisition, disposition of assets or stock, merger or
other transaction, which information was not at such time otherwise publicly
disclosed.
(b) Subject to the provisions of this Agreement, including Section
12, on or after the date of this Agreement the holder of each Warrant shall have
the right to purchase from the Company (and the Company shall issue and sell to
such holder) one fully paid and non-assessable Share at the Exercise Price, upon
the surrender to the Warrant Agent at the Warrant Agent Office of the Warrant
Certificate evidencing such Warrant, with the form of election to purchase on
the reverse thereof properly completed and executed, together with any other
documents required by this Agreement, and upon payment of the Exercise Price in
lawful money of the United States of America. Any Warrants evidenced by a
Warrant Certificate may be exercised either as an entirety or from time
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to time for part of the number of Warrants specified in such Warrant
Certificate. In the event that less than all the Warrants evidenced by a
Warrant Certificate surrendered upon the exercise of Warrants are exercised, a
new Warrant Certificate or Certificates of like tenor will be issued for the
remaining number of Warrants evidenced by the Warrant Certificate so
surrendered. Except as otherwise expressly provided in this Agreement, no
adjustments shall be made for any cash dividends on Shares issuable on the
exercise of a Warrant.
(c) Subject to Section 7(b) and Section 8 hereof, upon such surrender
of a Warrant Certificate, delivery of any such documents and payment of the
Exercise Price, the Warrant Agent shall cause to be issued and delivered to or
upon the written order of the registered holder of such Warrant Certificate and
in such name or names as such registered holder may designate, a certificate for
the Share or Shares issuable upon the exercise of the Warrant or Warrants
evidenced by such Warrant Certificate. Such certificate shall be deemed to have
been issued and any person so designated to be named therein shall be deemed to
have become the holder of record of such Share or Shares as of close of business
on the date of the surrender of such Warrant Certificate and payment of the
Exercise Price. The Warrant Agent is hereby authorized to countersign any
required new Warrant Certificate or Certificates pursuant to the provisions of
this Section 7 and of Section 5.
(d) The obligation of the Company and the Warrant Agent to issue and
deliver shares of Common Stock upon any exercise of Warrants shall be subject to
the satisfaction of the following conditions: (i) all waiting periods, if any,
applicable to such issuance and delivery 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 issuance and delivery or makes such issuance and delivery
illegal.
Section 8. Payment of Taxes. The Company will pay taxes and other
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governmental charges that may be
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imposed by the laws of the United States of America or any state thereof with
respect to the initial issuance of Shares upon the exercise of Warrants, unless
such tax or charge is imposed by law upon the holder of any Warrant, in which
case such taxes or charges shall be paid by such holder; provided that the
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Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue of any Warrant Certificates or any
certificates for Shares in a name other than that of the registered holder of a
Warrant Certificate surrendered upon the exercise of a Warrant, and the Company
shall not be required to issue or deliver such Warrant Certificates or
certificates unless and until the person or entity requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
Section 9. Mutilated or Missing Warrant Certificates. In case any
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Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company
shall issue, and the Warrant Agent shall countersign, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence reasonably
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and indemnity or bond, if requested,
also reasonably satisfactory to them (it being understood that the written
agreement of S shall be sufficient indemnity); provided, in the case of
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mutilation, no indemnity shall be required if the Warrant Certificate or Warrant
Certificates in identifiable form are surrendered to the Warrant Agent for
cancellation. Applicants for such substitute Warrant Certificates shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company or the Warrant Agent may prescribe.
Section 10. Reservation of Shares.
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(a) The Company will at all times reserve and keep available, free
from preemptive rights, out of
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Common Stock held in its treasury and/or its authorized but unissued Common
Stock, for the purpose of enabling it to satisfy any obligation to issue Shares
upon exercise of Warrants, the number of Shares deliverable upon the exercise of
all outstanding unexercised Warrants. The Warrant Agent is hereby irrevocably
authorized to requisition from time to time from the Transfer Agent for the
Common Stock certificates issuable upon exercise of Warrants, and the Company
will supply such Transfer Agent with duly executed stock certificates for such
purpose.
(b) Before taking any action which would cause an adjustment pursuant
to Section 12 in either the Exercise Price or the number of Shares issuable upon
exercise of such Warrant, the Company will take any corporate action which may,
in the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Shares at the Exercise Price as so adjusted.
(c) The Company represents and warrants that all Shares will, upon
issuance in accordance with the terms of this Agreement, be fully paid and
nonassessable and, except for any applicable restrictions contained in the
Redemption Agreement, will be free and clear from all taxes, liens, charges,
security interests or other encumbrances created by the Company with respect to
the issuance thereof.
Section 11. Stock Exchange Listing. The Company agrees, at its
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expense, to ensure that all Shares are, prior to issuance, listed on the New
York Stock Exchange or, if the Shares are no longer listed on the New York Stock
Exchange, the principal national securities exchange or national market system
on which the Shares are primarily traded or quoted, as specified in Section
12(d).
Section 12. Adjustment of Exercise Price and Number of Shares
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Purchasable or Number of Warrants. The Exercise Price and the number of shares
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of Common Stock purchasable upon the exercise of each Warrant are subject to
adjustment from time to time upon the occurrence of the events enumerated in
this Section 12.
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(a) In case the Company shall at any time after the date of this
Agreement (i) declare a dividend on the Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) other than in
a transaction to which Section 12(i) applies, issue any shares of its capital
stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), the Exercise Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date shall be proportionately adjusted so that
the holder of any Warrant upon exercising such Warrant after such time shall be
entitled to receive the aggregate number and kind of shares of capital stock
which, if such Warrant had been exercisable and exercised immediately prior to
such date, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any event
listed above in this Section 12(a) shall occur.
(b) In case the Company shall issue rights, warrants, options or
other securities to all holders of Common Stock entitling them (for a period
expiring within 60 calendar days after the date of issuance) to subscribe for or
purchase Common Stock (or securities convertible into Common Stock) at a price
per share of Common Stock (or having a conversion price per share of Common
Stock, if a security convertible into Common Stock) less than the current market
price per share of Common Stock (as defined in Section 12(d) hereof) on the
record date mentioned below, the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding on such record date
plus the number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so to be offered (or the aggregate
initial conver-
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sion price of the convertible securities so to be offered) would purchase at
such current market price and of which the denominator shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock to be offered for subscription or purchase (or
into which the convertible securities to be offered are initially convertible).
In case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be determined by the Board of Directors of the Company, whose determination
shall be conclusive and described in a statement filed with the Warrant Agent.
Shares of Common Stock owned by or held for the account of the Company or any
majority-owned subsidiary of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights,
warrants, options or other securities are not so issued, the Exercise Price
shall again be adjusted to be the Exercise Price which would then be in effect
if such record date had not been fixed. In the event that any of such rights,
warrants, options or other securities expire or otherwise terminate and shall
not have been exercised, the Exercise Price shall again be adjusted to be the
Exercise Price which would then be in effect if such unexercised rights,
warrants, options or other securities had not been issued.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness or assets (other than
ordinary cash dividends or ordinary cash distributions payable out of surplus or
net profits or dividends payable in Common Stock) or subscription rights or
warrants (excluding those referred to in Section 12(b) hereof), the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the current market price per share of
Common Stock (as defined in Section 12(d) hereof) on such record date, less the
fair market value (as
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determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive and described in a statement filed with the
Warrant Agent) of the portion of the assets or evidence of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one share
of Common Stock, and of which the denominator shall be such current market price
per share of Common Stock; provided, that in case the Company shall fix a record
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date for the making of a distribution to all holders of Common Stock (including
any such distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of cash or evidences of indebtedness
(other than ordinary cash dividends or ordinary cash distributions payable out
of surplus or net profits), then, at the option of the Company, and upon notice
to S and the Warrant Agent prior to such record date, in lieu of the foregoing
adjustment to the Exercise Price and any adjustment to the number of shares of
Common Stock issuable upon exercise of the Warrants pursuant to Section 12(g)
hereof, the Exercise Price to be in effect after such record date shall be the
Exercise Price in effect immediately prior to such record date minus the amount
of cash or the face amount of indebtedness so to be distributed applicable to
one share of Common Stock. The adjustments set forth in this Section 12(c)
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Exercise Price shall again be
adjusted to be the Exercise Price which would then be in effect if such record
date had not been fixed.
(d) For the purpose of any computation under Section 12(b) and
Section 12(c), the current market price per share of Common Stock on any date
shall be deemed to be the average of the closing prices for the five consecutive
trading days on the New York Stock Exchange commencing seven trading days before
such date. The closing price for each 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 Common Stock is not listed or admitted to trading on such
exchange, on the principal national securities exchange on which the Common
Stock is
16
listed or admitted to trading, or, if the Common Stock is not listed or admitted
to trading on any national securities exchange but is designated as a national
market system security 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 Common Stock is
not so designated as a national market system security, 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.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, that any adjustments which by reason of this Section 12(e) are not
- --------
required to be made shall be carried forward and taken into account in any
subsequent adjustment; provided, further, that any such adjustment of less than
-------- -------
1% which is so carried forward shall be given effect at the time the aggregate
of all such adjustments is at least 1% and any Warrant is exercised if any such
adjustments had not theretofore been given effect. All calculations under this
Section 12 shall be made to the nearest cent or to the nearest one-hundredth of
a share, as the case may be, but in no event shall the Company be obligated to
issue any fractional share of Common Stock upon exercise of any Warrant.
(f) In the event that at any time, as a result of an adjustment made
pursuant to Section 12(a) hereof, the holder of any Warrant shall become
entitled to receive any shares of capital stock of the Company other than shares
of Common Stock, thereafter the number of such other shares of capital stock so
receivable upon exercise of such Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Section 12(a) through
Section 12(c) hereof, inclusive, and the provisions of Sections 7, 8, 10, 11,
12(e), 12(i), 13 and 14 hereof with respect to the Common Stock shall apply on
like terms to any such other shares.
17
(g) Upon each adjustment of the Exercise Price as a result of the
calculations made in Section 12(a), Section 12(b) or Section 12(c) hereof
(subject to the proviso in Section 12(c) hereof), each Warrant outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase (during any Acceleration Event Period, Derivative Exercise
Period, European Exercise Period or American Exercise Period, as the case may
be), at the adjusted Exercise Price, that number of shares of Common Stock
(calculated to the nearest hundredth) obtained by (A) multiplying the number of
shares purchasable upon exercise of such Warrant immediately prior to such
adjustment of the number of shares by the Exercise Price in effect immediately
prior to such adjustment of the Exercise Price and (B) dividing the product so
obtained by the Exercise Price in effect immediately after such adjustment of
the Exercise Price; provided that if, in connection with a Spinoff Distribution,
--------
the Company elects to issue Spinoff Warrants to the registered holders of one or
more classes of Warrants, as provided in Section 13 hereof, then no adjustment
pursuant to this Section 12(g) shall be made to any Warrants of such class or
classes.
(h) The Company may elect on or after the date of any adjustment of
the Exercise Price to adjust the number of Warrants, in substitution for an
adjustment in the number of Shares purchasable upon the exercise of a Warrant as
provided in Section 12(g) hereof; provided that if, in connection with a Spinoff
--------
Distribution, the Company elects to issue Spinoff Warrants to the registered
holders of one or more classes of Warrants, as provided in Section 13 hereof,
then no adjustment pursuant to this Section 12(h) shall be made to any Warrants
of such class or classes. The Company will cause to be distributed to
registered holders of Warrant Certificates either Warrant Certificates
representing the additional Warrants issued pursuant to any such adjustment or
substitute Warrant Certificates to replace all outstanding Warrant Certificates.
(i) In case of any capital reorganization of the Company, or of any
reclassification of the Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value,
18
or as a result of subdivision or combination), or in the case of consolidation
of the Company with or the merger of the Company with or into any other
corporation or of the sale of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation, each Warrant shall after
such reorganization, reclassification, consolidation, merger or sale be
exercisable (but only during any Acceleration Event Period, Derivative Exercise
Period, European Exercise Period or American Exercise Period, as the case may
be), upon the terms and conditions specified in this Agreement, for the number
of shares of stock or other securities or property to which a holder of the
number of shares of Common Stock purchasable (at the time of such
reorganization, reclassification, consolidation, merger or sale) upon exercise
of such Warrant would have been entitled upon such reorganization,
reclassification, consolidation, merger or sale; and in any such case, if
necessary, the provisions set forth in this Section 12 with respect to the
rights and interests thereafter of the holders of Warrants shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably be,
to any shares of stock or other securities or property thereafter deliverable on
the exercise of the Warrants; provided that this Section 12(i) shall not apply
--------
to any Spinoff Distribution which is effected by means of any such
reclassification, consolidation or merger (it being agreed that any such Spinoff
Distribution shall be subject to Section 12(c) hereof and, to the extent the
Company so elects, Section 13 hereof). The subdivision or combination of shares
of Common Stock at any time outstanding into a greater or lesser number of
shares shall not be deemed to be a reclassification of the Common Stock for the
purposes of this Section 12(i). The Company shall not effect any such
consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets or other appropriate corporation or entity shall assume, by written
instrument executed and delivered to the Warrant Agent, the due and punctual
performance of every covenant and obligation in this Agreement to be performed
and observed by the Company and all other liabilities and obligations of the
Company hereunder, including without limitation the obligation to
19
deliver to the holder of each Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such holder may be entitled to
purchase under this Agreement.
(j) In any case in which this Section 12 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Warrant exercised after such record date
the Shares and other capital stock of the Company, if any, issuable upon such
exercise over and above the Shares and other capital stock of the Company, if
any, issuable upon such exercise on the basis of the Exercise Price in effect
prior to such adjustment; provided, that the Company shall deliver to such
--------
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.
(k) If, during the period commencing on the date of this Agreement
and ending on the date that is three months thereafter, the Company intends in
good faith to make any public or private offering of Voting Securities for cash,
other than an offering of Voting Securities to a "Flexitrust" or employee
benefit plan or trust (an "Offering"), and if at such time any S Warrants are
outstanding and unexercised, then the Company shall promptly notify the Warrant
Agent and S of such intended Offering (the "Offering Notice"). The Offering
Notice shall describe the Voting Securities intended to be sold in the Offering
and the anticipated timing of the Offering. If, in connection with any such
Offering, S desires that the Exercise Price and the number of Shares subject to
such S Warrants be adjusted as described below, then S shall so notify the
Company within five Business Days following delivery of the Offering Notice.
Any such election by S Group shall be irrevocable. If S elects to have such
adjustment made, then, as of the time at which the Offering is consummated, each
S Warrant shall be adjusted as follows: (i) the Exercise Price shall be
increased to equal the product of the Exercise Price in effect immediately prior
to the consummation of the Offering, multiplied by a fraction (the "Adjustment
20
Fraction"), the numerator of which is the number of shares of Common Stock
outstanding on a fully diluted basis immediately following the consummation of
the Offering and the denominator of which is the number of shares of Common
Stock outstanding on a fully diluted basis immediately prior to the consummation
of the Offering and (ii) the number of Shares issuable upon exercise of each S
Warrant shall be increased to equal the product of the number of the Shares
issuable upon exercise of such S Warrant immediately prior to the consummation
of such Offering, multiplied by the Adjustment Fraction. Adjustments to the S
Warrants pursuant to this Section 12(k) shall be made successively if the
Company consummates more than one Offering and S requests such adjustments in
accordance with the terms hereof. Notwithstanding the foregoing provisions of
this Section 12(k), (i) no such adjustment shall be made in connection with any
Offering if the Company does not file a registration statement relating to such
Offering with the Securities and Exchange Commission within three months
following the date of this Agreement and (ii) no such adjustment in connection
with any particular Offering shall be made if such Offering is consummated more
than five months following the date of this Agreement.
(l) In case the Company shall, by dividend or otherwise, at any time,
distribute to all holders of its Common Stock cash (including any distribution
of cash out of the retained earnings of the Company but excluding any cash that
is distributed as part of a distribution requiring an adjustment pursuant to
Section 12(c)) in an aggregate amount that, together with (i) the aggregate
amount of any other distributions to all holders of the Common Stock made
exclusively in cash within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to Section 12(c) or
pursuant to this Section 12(l) has been made and (ii) the portion of the
aggregate of any cash plus the fair market value (as determined in good faith by
the Board of Directors, whose determination shall be conclusive and described in
a statement filed with the Warrant Agent) of consideration payable in respect of
any tender offer by the Company for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment of such
distribution
21
that is in excess of an amount equal to the product of (x) the number of shares
of Common Stock with respect to which the aggregate tender offer consideration
is payable times (y) the current market price of Common Stock on the tenth
business day next succeeding the date of expiration of the tender offer, exceeds
12 1/2 % of the product of the current market price per share on the date fixed
for stockholders entitled to receive such distribution times the number of
shares of Common Stock outstanding on such date (excluding shares held in the
treasury of the Company), the Exercise Price after such payment shall be equal
to the Exercise Price determined by multiplying the Exercise Price in effect
immediately prior to the effectiveness of the change contemplated by this
Section 12(l) by a fraction of which the numerator shall be the current market
price per share of the Common Stock on the date of such effectiveness less the
amount of cash so distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock on
the date of such distribution, such reduction to become effective immediately
prior to the opening of business on the day following the date fixed for the
payment of such distribution.
(m) If the Company becomes subject to a third party tender offer
followed by a merger or any other action of the Company the result of which is
to entitle holders of the Common Stock to receive cash or other property such
that the Common Stock ceases to exist, each Warrant will terminate on the date
the Common Stock ceases to exist and be unwound at its fair market value based
on the unexpired term of the Warrant. The settlement price of each such Warrant
shall be payable promptly after such termination and will be determined using
the valuation methodology described in Exhibit H to the Redemption Agreement,
using the tender price per share as the prevailing price of Common Stock. To
the extent property other than cash is offered in the tender offer, the parties
agree that such property will be valued in accordance with the provisions of
Section 5.4(II)(b) of the Redemption Agreement.
Section 13. Special Provisions Relating to Spinoff Distributions.
----------------------------------------------------
22
(a) In connection with any Spinoff Distribution, the Company shall
have the right, but not the obligation, to cause the Spinoff Company to issue
warrants to purchase capital stock or other equity interests of the Spinoff
Company ("Spinoff Warrants") to the registered holders of one class, two classes
or all three classes of Warrants (the classes of Warrants for purposes of this
Agreement being the First Warrants, the Second Warrants and the Third Warrants),
in the Company's sole and absolute discretion; provided that Spinoff Warrants,
--------
if issued to the registered holders of any class of Warrants, shall be issued to
all of the registered holders of such class of Warrants. If Spinoff Warrants
are issued to the registered holders of any class of Warrants, then no
adjustment to the number of Shares purchasable upon the exercise of any Warrant
of such class or to the number of Warrants comprising such class shall be made
pursuant to Section 12(g) or Section 12(h) hereof, respectively, as a result of
the Spinoff Distribution. If Spinoff Warrants are issued in connection with a
Spinoff Distribution, then the Company shall cause to be filed with the Warrant
Agent and shall cause to be given to each of the registered holders of the
Warrant Certificates written notice of such election (which notice may, where
appropriate, be included as a part of any notice required to be given pursuant
to Section 15(b) or 15(c) hereof). Such notice shall be given not later than 10
calendar days prior to the record date established by the Company for purposes
of determining the stockholders of the Company who are (i) entitled to vote on
any Spinoff Distribution which is submitted to a vote of the stockholders of the
Company or (ii) entitled to receive a Spinoff Distribution which is not
submitted to a vote of the stockholders of the Company. Any such election shall
be irrevocable and binding upon the Company.
(b) The Spinoff Warrants shall have terms and conditions
substantially similar to the terms and conditions of the class or respective
classes of Warrants to the registered holders of which Spinoff Warrants are
issued (including, without limitation, terms and conditions relating to
exercisability, antidilution and expiration as set forth in this Agreement).
The number of shares of capital stock or other equity interests of a
23
Spinoff Company issuable upon exercise of each Spinoff Warrant shall equal the
number of such shares or interests to which a holder of the number of Shares
purchasable (at the time of such Spinoff Distribution) upon exercise of one
Warrant of the applicable class would have been entitled upon such Spinoff
Distribution. The exercise price of each Spinoff Warrant shall equal the amount
by which the Exercise Price of the applicable class of Warrants is reduced
pursuant to Section 12(c) hereof as a result of the Spinoff Distribution. The
Company shall deliver certificates evidencing the Spinoff Warrants to the
registered holders of Warrants entitled thereto concurrently with the notice
required by Section 15(a) hereof.
(c) Notwithstanding anything in this Agreement to the contrary, no S
Warrant of a particular class may be exercised in connection with any Spinoff
Distribution which is not submitted to a vote of the stockholders of the Company
if Spinoff Warrants are issued as provided in this Section 13 to the registered
holders of the class of Warrants of which such S Warrant is a part; provided
--------
that this Section 13(c) shall not limit the exercisability of any S Warrants
during their respective European Exercise Periods.
Section 14. Fractional Warrants and Fractional Shares.
-----------------------------------------
(a) The Company shall not be required to issue fractions of Warrants
on any distribution of Warrants to holders of Warrant Certificates pursuant to
Section 12(h) hereof or to distribute Warrant Certificates which evidence
fractional Warrants. In lieu of such fractional Warrants there shall be paid to
the registered holders of the Warrant Certificates with regard to which such
fractional Warrants would otherwise be issuable, an amount in cash equal to the
same fraction of the fair market value of a full Warrant (as determined by the
Board of Directors of the Company, whose determination shall be conclusive and
described in a statement filed with the Warrant Agent).
(b) Notwithstanding an adjustment pursuant to Section 12(g) hereof in
the number of Shares pur-
24
chasable upon the exercise of a Warrant, the Company shall not be required to
issue fractions of Shares upon exercise of the Warrants or to distribute
certificates which evidence fractional Shares. In lieu of fractional Shares,
there shall be paid to the registered holders of Warrant Certificates at the
time the Warrants evidenced by such Warrant Certificates are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a share of Common Stock. For purposes of this Section 14(b), the
current market value of a share of Common Stock shall be determined in the
manner set forth in Section 12(d) hereof
Section 15. Notice to Warrantholders.
------------------------
(a) Upon any adjustment of the Exercise Price pursuant to Section 12
hereof, the Company within 20 Business Days thereafter shall (i) cause to be
-
filed with the Warrant Agent a certificate of a firm of independent public
accountants of recognized standing selected by the Board of Directors of the
Company (who may be the regular auditors of the Company) setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Shares purchasable upon exercise of a Warrant after
such adjustment in the Exercise Price, which certificate shall be conclusive
evidence of the correctness of the matters set forth therein (except as
otherwise provided in the second succeeding sentence) and (ii) cause to be given
--
to each of the registered holders of the Warrant Certificates written notice of
such adjustments. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be mailed under the other
provisions of this Section 15. In the event that any registered holder of S
Warrants disagrees with any such adjustment, it shall notify the Company and the
Warrant Agent thereof and any disagreement shall be resolved jointly by two
independent accounting firms of recognized standing, one such firm to be
selected by each of the Company and S, or, in the event such firms are unable to
agree, by a third independent accounting firm of recognized standing to be
selected by such firms. Each of the Company and S shall bear all of the fees
and expenses of the accounting firm
25
selected by it, and shall bear 50% of the fees and expenses of any third
accounting firm.
(b) In case:
(i) the Company shall authorize the issuance to all holders of
Common Stock of rights or warrants to subscribe for or purchase capital
stock of the Company or of any other subscription rights or warrants;
(ii) the Company shall authorize the distribution to all holders
of Common Stock of evidences of its indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in Common Stock);
(iii) of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is
required, or of the conveyance or transfer of the properties and assets of
the Company substantially as an entirety, or of any capital reorganization
or any reclassification of the Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination);
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(v) the Company proposes to take any other action which would
require an adjustment of the Exercise Price pursuant to Section 12 hereof;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered holders of the Warrant Certificates, at
least 10 calendar days prior to the applicable record date herein-
26
after specified, a written notice stating (i) the date as of which the holders
of record of shares of Common Stock to be entitled to receive any such rights,
warrants or distribution are to be determined or (ii) the date on which any such
consolidation, merger, conveyance, transfer, reorganization, reclassification,
dissolution, liquidation, or winding up is expected to become effective, and the
date as of which it is expected that holders of record of shares of Common Stock
shall be entitled to exchange such shares for securities or other property, if
any, deliverable upon such consolidation, merger, conveyance, transfer,
reorganization, reclassification, dissolution, liquidation or winding up. Where
appropriate, such notice may be included as a part of any notice required under
Section 15(c) hereof.
(c) Without limiting the provisions of Section 15(a) or Section 15(b)
hereof, so long as any S Warrants are outstanding and unexercised, the Company
shall cause to be filed with the Warrant Agent and shall cause to be given to
each of the registered holders of Warrant Certificates evidencing Warrants,
written notice of the commencement of any Acceleration Event Period. Any such
notice shall be so filed and given not later than the fifth Business Day
preceding the date of such commencement. S shall give the Company and the
Warrant Agent notice at least five Business Days prior to the Commencement of
any Derivative Exercise Period and prompt notice following expiration of any
Derivative Exercise Period.
(d) The failure to give any notice required by Section 13 hereof or
this Section 15 or any defect in any such notice shall not affect the legality
or validity of any distribution, right, warrant, consolidation, merger,
conveyance, transfer, reorganization, reclassification, dissolution,
liquidation, or winding up or the vote upon any action.
(e) Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as stockholders in respect of the
meetings of stockholders or the election of
27
directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company.
Section 16. Legends.
-------
(a) Each Warrant Certificate evidencing S Warrants shall be stamped
or otherwise imprinted with a legend in substantially the following form:
"These Warrants and any shares of capital stock or other securities
issuable upon the exercise of these Warrants have not been registered under
the Securities Act of 1933, as amended, or the securities laws of any
state. The sale, pledge, hypothecation or other transfer of these Warrants
and such shares or other securities is subject to compliance with
applicable securities laws.
The sale, pledge, hypothecation or other transfer of these Warrants and
such shares or other securities is also subject to certain restrictions
contained in the Agreement, dated as of April 6, 1995 (the "Redemption
Agreement"), among E.I. du Pont de Nemours and Company, The Seagram Company
Ltd. and JES Developments, Inc. The holder of these Warrants by acceptance
hereof agrees to be bound by such restrictions. A copy of the Redemption
Agreement is on file with the Corporate Secretary of E.I. du Pont de
Nemours and Company."
(b) Each Warrant Certificate evidencing Non-S Warrants shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"These Warrants and any shares of capital stock or other securities
issuable upon the exercise of these Warrants have not been registered under
the Securities Act of 1933, as amended, or the securities laws of any
state. The sale, pledge, hypothecation or other transfer of these Warrants
and such shares or other securities is subject to compliance with
applicable securities laws.
The sale, pledge, hypothecation or other transfer of these Warrants and
such shares or other securities
28
may also be subject to certain restrictions contained in the Agreement,
dated as of April 6, 1995 (the "Redemption Agreement"), among E.I. du Pont
de Nemours and Company, The Seagram Company Ltd. and JES Developments, Inc.
The holder of these Warrants by acceptance hereof agrees to be bound by
such restrictions. A copy of the Redemption Agreement is on file with the
Corporate Secretary of E.I. du Pont de Nemours and Company."
(c) Each certificate for Common Stock (or other securities) issued
upon the exercise of S Warrants shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"These securities have not been registered under the Securities Act of
1933, as amended, or the securities laws of any state. The sale, pledge,
hypothecation or other transfer of these securities is subject to
compliance with applicable securities laws.
The sale, pledge, hypothecation or other transfer of these securities is
also subject to certain restrictions contained in the Agreement, dated as
of April 6, 1995 (the "Redemption Agreement"), among E.I. du Pont de
Nemours and Company, The Seagram Company Ltd. and JES Developments, Inc.
The holder of these securities by acceptance hereof agrees to be bound by
such restrictions. A copy of the Redemption Agreement is on file with the
Corporate Secretary of E.I. du Pont de Nemours and Company."
(d) Each certificate for Common Stock (or other securities) issued
upon the exercise of Non-S Warrants shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"These securities have not been registered under the Securities Act of
1933, as amended, or the securities laws of any state. The sale, pledge,
hypothecation or other transfer of these securities is subject to
compliance with applicable securities laws.
29
The sale, pledge, hypothecation or other transfer of these securities may
also be subject to certain restrictions contained in the Agreement, dated
as of April 6, 1995 (the "Redemption Agreement"), among E.I. du Pont de
Nemours and Company, The Seagram Company Ltd. and JES Developments, Inc.
The holder of these securities by acceptance hereof agrees to be bound by
such restrictions, if applicable. A copy of the Redemption Agreement is on
file with the Corporate Secretary of E.I. du Pont de Nemours and Company."
(e) Notwithstanding the provisions of Section 16(a), Section 16(b),
Section 16(c) and Section 16(d) hereof, (i) the Warrant Agent shall deliver
Warrant Certificates or certificates for shares of Common Stock, as the case may
be, without the first paragraph of the legend set forth in any such Section if
the securities referred to in such paragraph shall have been registered under
the Securities Act or if such legend is otherwise not required under the
Securities Act, and if such legend has been set forth on any previously
delivered certificates, such legend shall be removed from any certificate at the
request of the holder thereof if the securities referred to in such paragraph
shall have been registered under the Securities Act of 1933, or if such legend
is otherwise not required under the Securities Act, and (ii) the Company shall
cause the Warrant Agent to issue certificates without the second paragraph of
the legend set forth in any such Section if the Company receives evidence
reasonably satisfactory to it that the securities referred to in such paragraph
are not subject to any restrictions contained in the Redemption Agreement. The
Company agrees that it will provide the Warrant Agent with notice of the
effectiveness of any registration statement relating to Registrable Securities
(as defined below), which notice shall identify the Registrable Securities
registered pursuant thereto.
Section 17. Registration Rights. Subject to the terms of the
-------------------
Registration Rights Agreement, dated as of April 6, 1995 (the "Registration
Rights Agreement"), among the Company, S and Subsidiary, the Warrants and the
Shares issuable upon exercise of the Warrants shall con-
30
stitute Registrable Securities (as such term is defined in the Registration
Rights Agreement).
Section 18. Merger, Consolidation or Change of Name of Warrant Agent.
--------------------------------------------------------
(a) Any corporation into which the Warrant Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Warrant Agent shall be
a party, or any corporation succeeding to the business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Warrant Agent under the provisions of Section 21 hereof. In case at the time
such successor to the Warrant Agent shall succeed to the agency created by this
Agreement, and in case at that time any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor to the Warrant Agent
may adopt the countersignature of the original Warrant Agent; and in case at
that time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates either
in the name of the predecessor Warrant Agent or in the name of the successor
Warrant Agent; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.
(b) In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent whose name has changed may
adopt the countersignature under its prior name, and in case at that time any of
the Warrant Certificates shall not have been countersigned, the Warrant Agent
may countersign such Warrant Certificates either in its prior name or in its
changed name, and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.
31
Section 19. Warrant Agent. The Warrant Agent undertakes the duties
-------------
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant Certificate in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant Certificate for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate, or
other paper, document or instrument believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the performance
of this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement and to indemnify the Warrant
32
Agent and save it harmless against any and all liabilities, including judgments,
costs and counsel fees, for anything done or omitted by the Warrant Agent in the
execution of this Agreement except as a result of its negligence or bad faith.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Warrant
Certificates shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred, but this provision
shall not affect the power of the Warrant Agent to take such action as it may
consider proper, whether with or without any such security or indemnity. All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
shall be brought in its name as Warrant Agent, and any recovery of judgment
shall be for the ratable benefit of the registered holders of the Warrants, as
their respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee thereof, may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant Agent
under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof.
The Warrant Agent shall not be liable for anything which it may do or refrain
from doing in connection with this Agreement except for its own negligence or
bad faith.
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(i) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Warrant Agent for the carrying out or performing of the provisions of
this Agreement. Subject to the provisions of the Registration Rights Agreement
and the other provisions of this Agreement, if the Company is required under
applicable federal or state securities laws to deliver a prospectus upon
exercise of Warrants, the Company will furnish to the Warrant Agent sufficient
copies of a prospectus, and the Warrant Agent agrees that upon the exercise of
any Warrant Certificate by the holder thereof, the Warrant Agent will deliver to
such holder, prior to or concurrently with the delivery of the certificate or
certificates for the Shares issued upon such exercise, a copy of the prospectus.
Section 20. Disposition of Proceeds of Exercise of Warrants. The
-----------------------------------------------
Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all moneys received by the Warrant
Agent on the purchase of Shares through the exercise of Warrants.
Section 21. Change of Warrant Agent. If the Warrant Agent shall
-----------------------
become incapable of acting as Warrant Agent, the Company shall appoint a
successor. If at the time of such incapacity any Non-S Warrants are outstanding
and unexercised and the Company shall fail to make such appointment within a
period of 30 days after it has been notified in writing of such incapacity by
the incapacitated Warrant Agent or by any registered holder of a Warrant
Certificate, then the registered holder of any Warrant Certificate may apply to
any court of competent jurisdiction for the appointment of a successor to the
incapacitated Warrant Agent. Pending appointment of a successor to the Warrant
Agent, either by the Company or by such a court, the duties of the Warrant Agent
shall be carried out by the Company. Any successor warrant agent whether
appointed by the Company or by such a court, shall be a bank or trust company,
in good standing, incorporated under the laws of the State of New York or of the
United States of America, and having its principal
34
office in the Borough of Manhattan, The City of New York, State of New York and
must have at the time of its appointment as warrant agent a combined capital and
surplus of at least one billion dollars. After appointment the successor
warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall deliver and transfer to
the successor warrant agent any property at the time held by it hereunder and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
removal of the Warrant Agent or the appointment of a successor warrant agent as
the case may be.
Section 22. Methods of Giving Notices.
-------------------------
(a) Any notice pursuant to this Agreement to be given to the Company
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) as follows:
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
and so long as any S Warrants are outstanding and unexercised, 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
35
or to such other address as the person to whom notice is given may have
previously furnished to S and the Warrant Agent in writing in the manner set
forth herein.
(b) Any notice pursuant to this Agreement to be given to any S Group
Member or any registered holder of S Warrants 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) as follows:
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 Company and the Warrant Agent in writing in the
manner set forth herein.
(c) Any notice pursuant to this Agreement to be given to the Warrant
Agent 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) as follows::
36
Warco Transfer Corporation
c/o 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
or to such other address as the Warrant Agent may have previously furnished to
the Company and S in writing in the manner set forth herein.
(d) Any notice pursuant to this Agreement to be given to any
registered holder of Warrant Certificates evidencing Non-S Warrants shall be
given by first-class mail, postage pre-paid, to such holder at his address
appearing on the Warrant register (and shall be deemed to have been duly given
if so mailed).
Section 23. Supplements and Amendments. The Company and the Warrant
--------------------------
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Warrant Certificates in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Warrant Agent may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Warrant Certificates. In
addition, (i) prior to the issuance of any Non-S Warrants, any provision of this
Agreement and the S Warrants may be amended with the written consent of the
Company and S and (ii) following the issuance of any Non-S Warrants, any
provision of this Agreement and any Warrant may be amended with the consent of
(a) the Company, (b) if any S Warrants are then outstanding, S, and (c) the
holders of a majority of the Non-S Warrants (calculated by reference to the
numbers of shares subject thereto) whose rights and obligations specified herein
or in the Warrants are adversely affected by such amendment; provided that no
--------
such amendment shall adversely affect the rights and obligations of the Warrant
Agent without its consent.
37
Section 24. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 25. Termination. This Agreement shall terminate at the close
-----------
of business on October 6, 1999. Notwithstanding the foregoing, this Agreement
will terminate on any earlier date if all Warrants have been exercised or
acquired by the Company or cancelled in accordance with the terms hereof. The
provisions of Section 19 shall survive such termination.
Section 26. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
------------- -------------------------------------
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
- --------------------------------------------------------------------------------
THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
- -------------------------------------------------------------------------------
LAW THEREOF.
- -----------
Section 27. Benefits of This Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the registered holders of the Warrant Certificates any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the registered holders of the Warrant Certificates.
Section 28. Counterparts. This Agreement may be executed in any
------------
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, 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
Warco Transfer Corporation
By /s/ Louise B. Lancaster
---------------------------------
Name: Louise B. Lancaster
Title: Corporate Secretary
39