SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 4, 1999
------------
COMMISSION FILE NUMBER 0-7570
DELAWARE CANANDAIGUA BRANDS, INC. 16-0716709
AND ITS SUBSIDIARIES:
NEW YORK BATAVIA WINE CELLARS, INC. 16-1222994
NEW YORK CANANDAIGUA WINE COMPANY, INC. 16-1462887
NEW YORK CANANDAIGUA EUROPE LIMITED 16-1195581
ENGLAND AND WALES CANANDAIGUA LIMITED ---
NEW YORK POLYPHENOLICS, INC. 16-1546354
NEW YORK ROBERTS TRADING CORP. 16-0865491
DELAWARE BARTON INCORPORATED 36-3500366
DELAWARE BARTON BRANDS, LTD. 36-3185921
MARYLAND BARTON BEERS, LTD. 36-2855879
CONNECTICUT BARTON BRANDS OF CALIFORNIA, INC. 06-1048198
GEORGIA BARTON BRANDS OF GEORGIA, INC. 58-1215938
NEW YORK BARTON DISTILLERS IMPORT CORP. 13-1794441
DELAWARE BARTON FINANCIAL CORPORATION 51-0311795
WISCONSIN STEVENS POINT BEVERAGE CO. 39-0638900
ILLINOIS MONARCH IMPORT COMPANY 36-3539106
GEORGIA THE VIKING DISTILLERY, INC. 58-2183528
(State or other (Exact name of registrant as (I.R.S. Employer
jurisdiction of specified in its charter) Identification
incorporation or No.)
organization)
300 WillowBrook Office Park, Fairport, New York 14450
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (716) 218-2169
--------------
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 4, 1999, Canandaigua Brands, Inc. (collectively with its
affiliates, the "Company"), acquired all of the issued and outstanding shares of
the capital stock of Franciscan Vineyards, Inc., a Delaware corporation ("FVI"),
for an aggregate adjusted purchase price of $179.6 million. At the time of the
closing of the stock purchase, FVI had outstanding debt, net of cash acquired,
of approximately $28.9 million. The net debt included bank debt and accrued
interest, obligations to FVI affiliates and option obligations, and was
effectively assumed by the Company upon the acquisition of FVI's capital stock.
In addition, the Company purchased vineyards, a winery, equipment and other
vineyard related assets located in Northern California (collectively, the
"Vineyards") for an aggregate purchase price of approximately $30.3 million.
The FVI stock was acquired directly or indirectly from FVI's six
shareholders: Agustin Huneeus, the Vintner Chairman of FVI; his son Agustin
Francisco Huneeus, a Vice President of FVI; three German partnerships owned and
controlled by a German family group; and Jean-Michel Valette, FVI's President
(collectively, the "Sellers"). The Vineyards were purchased from entities that
are affiliated with the Sellers. Immediately prior to the acquisition
transactions, FVI entered into an agreement to sell certain real property, sold
its Quintessa brand and agreed to sell its Quintessa inventory, entered into a
wine processing agreement with respect to the Quintessa brand, entered into
distribution agreements with respect to the Quintessa and Veramonte brands,
consented to the capital stock restructuring of certain of its affiliates, and
entered into certain grape purchase contracts, in each case, with certain of the
Sellers or their affiliates. FVI also entered into employment and consulting
arrangements with certain Sellers who are key employees of FVI. In connection
with the transactions, the Company also agreed to cause FVI to make a
post-closing capital contribution of up to $3.2 million to an entity owned 70%
by FVI and 30% by affiliates of certain of the Sellers.
The consideration for the transaction was determined on an arms-length
basis through negotiations between the Sellers, the Company and their respective
advisors. The purchase price for the FVI stock and Vineyards, as well as the
post-closing capital contribution, was funded with proceeds from loans under a
Second Amended and Restated Credit Agreement, dated as of May 12, 1999, and an
Incremental Facility Loan Agreement (Series A), dated as of May 27, 1999, each
among the Company, a syndicate of lenders and The Chase Manhattan Bank, as
administrative agent for such lenders.
FVI and its subsidiaries own and operate vineyards and produce and
distribute wines in the United States and Chile which sell in the super premium
and ultra premium price categories. The principal brands owned or distributed by
FVI and its subsidiaries include Franciscan Oakville Estate, Mt. Veeder,
Estancia, Veramonte and Quintessa. The Company intends to continue to operate
the businesses of FVI and its subsidiaries.
Prior to the transactions described above, there was no material
relationship between the Sellers or any other officers, directors or
shareholders of FVI or its affiliates and the Company or any of its affiliates,
any director or officer of the Company or any associate of any such director or
officer.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Not Applicable.
(b) PRO FORMA FINANCIAL INFORMATION. Not Applicable.
(c) EXHIBITS. See Index to Exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CANANDAIGUA BRANDS, INC.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Senior Vice
President and Chief Financial
Officer
SUBSIDIARIES
BATAVIA WINE CELLARS, INC.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Treasurer
CANANDAIGUA WINE COMPANY, INC.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Treasurer
CANANDAIGUA EUROPE LIMITED
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Treasurer
CANANDAIGUA LIMITED
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Finance Director
(Principal Financial Officer and
Principal Accounting Officer)
POLYPHENOLICS, INC.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
and Treasurer
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ROBERTS TRADING CORP.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, President
Treasurer
BARTON INCORPORATED
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BRANDS, LTD.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BEERS, LTD.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BRANDS OF CALIFORNIA, INC.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BRANDS OF GEORGIA, INC.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON DISTILLERS IMPORT CORP.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON FINANCIAL CORPORATION
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
<PAGE>
STEVENS POINT BEVERAGE CO.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
MONARCH IMPORT COMPANY
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
THE VIKING DISTILLERY, INC.
Dated: June 21, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
<PAGE>
INDEX TO EXHIBITS
(1) UNDERWRITING AGREEMENT
Not Applicable.
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION
2.1 Stock Purchase Agreement, dated April 21, 1999, between Franciscan
Vineyards, Inc., Agustin Huneeus, Agustin Francisco Huneeus, Jean-Michel
Valette, Heidrun Eckes-Chantre Und Kinder Beteiligungsverwaltung II, GbR,
Peter Eugen Eckes Und Kinder Beteiligungsverwaltung II, GbR, Harald
Eckes-Chantre, Christina Eckes-Chantre, Petra Eckes-Chantre and Canandaigua
Brands, Inc. (including a list briefly identifying the contents of all
omitted schedules thereto (filed herewith)). The Company will furnish
supplementally to the Commission, upon request, a copy of any omitted
schedule.
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
4.1 First Amended and Restated Credit Agreement, dated as of November 2, 1998,
between the Company, its principal operating subsidiaries, and certain
banks for which The Chase Manhattan Bank acts as Administrative Agent
(filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated
December 1, 1998 and incorporated herein by reference).
4.2 Second Amended and Restated Credit Agreement, dated as of May 12, 1999,
between the Company, its principal operating subsidiaries, and certain
banks for which The Chase Manhattan Bank acts as Administrative Agent
(filed herewith).
4.3 Incremental Facility Loan Agreement, dated as of May 27, 1999, between
between the Company, its principal operating subsidiaries, and certain
banks for which The Chase Manhattan Bank acts as Administrative Agent
(filed herewith).
(16) LETTER RE CHANGE IN CERTIFYING ACCOUNTANT
Not Applicable.
(17) LETTER RE DIRECTOR RESIGNATION
Not Applicable.
(20) OTHER DOCUMENTS OR STATEMENTS TO SECURITY HOLDERS
Not Applicable.
(23) CONSENTS OF EXPERTS AND COUNSEL
Not Applicable.
(24) POWER OF ATTORNEY
Not Applicable.
(27) FINANCIAL DATA SCHEDULE
Not Applicable.
(99) ADDITIONAL EXHIBITS
None
STOCK PURCHASE AGREEMENT
Between
FRANCISCAN VINEYARDS, INC.
(a Delaware corporation)
Agustin Huneeus
Agustin Francisco Huneeus
Jean-Michel Valette
Heidrun Eckes-Chantre Und Kinder Beteiligungsverwaltung II, GbR
Peter Eugen Eckes Und Kinder Beteiligungsverwaltung II, GbR
Harald Eckes-Chantre,
Christina Eckes-Chantre and
Petra Eckes-Chantre
and
CANANDAIGUA BRANDS, INC.
(a Delaware corporation)
Dated: April 21, 1999
<PAGE>
TABLE OF CONTENTS
Page
1. PLAN OF ACQUISITION.........................................................3
1.1 Sale and Purchase of Shares.........................................3
1.2 Purchase Price and Payment..........................................3
1.3 Adjustments to Purchase Price.......................................3
1.4 Closing.............................................................4
1.5 Execution and Delivery of Purchase Price
and Closing Documents......................................... .....4
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLERS...................5
2.1 Due Incorporation/Qualification.....................................5
2.2 Outstanding Capital Stock; Title....................................6
2.3 Subsidiaries and Other Affiliates...................................7
2.4 Consents............................................................7
2.5 No Breach...........................................................8
2.6 Financial Statements of the Company and ACSA and EVSA...............8
2.7 Absence of Certain Changes..........................................9
2.8 Tax Matters........................................................10
2.9 Litigation.........................................................11
2.10 Compliance With Laws..............................................11
2.11 Title to and Condition of Assets..................................12
2.12 Inventory.........................................................12
2.13 Product Recall....................................................12
2.14 Labor Matters.....................................................12
2.15 Intellectual Property.............................................12
2.16 Employee Benefits Plan............................................13
2.17 Employment Contracts..............................................15
2.18 Contracts.........................................................15
2.19 Insurance.........................................................15
2.20 Environmental Compliance..........................................15
2.21 Related Transactions..............................................16
2.22 Survival..........................................................16
2.23 Disclosure........................................................16
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER................................16
3.1 Due Incorporation..................................................16
3.2 Power and Authority................................................16
3.3 Consents...........................................................17
3.4 No Breach..........................................................17
3.5 BATF/ABC Licensing.................................................17
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3.6 Financing..........................................................18
3.7 Investment Intent..................................................18
3.8 Survival...........................................................18
4. COVENANTS OF THE COMPANY AND SELLERS.......................................18
4.1 Operation of Business of the Company...............................18
4.2 Access to Records..................................................19
4.3 Consents...........................................................19
4.4 Notification.......................................................19
4.5 No Shop Provision..................................................20
4.6 Hart-Scott-Rodino Act..............................................20
4.7 Environmental Assessment...........................................20
4.8 Certain Financial Information......................................22
4.9 Identification of Inventory........................................22
4.10 Title Matters.....................................................23
4.11 Cooperation in Huneeus-Chantre Properties Plan Severance.........24
5. BUYER'S COVENANTS..........................................................24
5.1 (Intentionally left blank).........................................24
5.2 HSR Act............................................................24
5.3 Notification of Certain Matters....................................24
5.4 Company Records....................................................24
5.5 Brokers and Finders................................................25
5.6 Environmental Assessment Commissioned..............................25
5.7 Repayment of Loans.................................................25
5.8 Payment of Legal Fees..............................................25
6. CONDITIONS TO BUYER'S OBLIGATIONS..........................................25
6.1 Covenants..........................................................25
6.2 HSR Act............................................................26
6.3 Resignation of Directors and Termination of Valette
Employment Agreement...............................................26
6.4 Sale of Vineyards..................................................26
6.5 EVSA Stock Agreement...............................................26
6.6 ACSA Stock Agreement...............................................27
6.7 ACSA and EVSA Shareholders Agreements and Buy-Sell Agreement.......27
6.8 ACSA Distribution Agreement........................................27
6.9 Grape Supply Agreements............................................27
6.10 (Intentionally left blank)........................................28
6.11 Quintessa Wine Processing Agreement...............................28
6.12 Lewis Ranch Purchase Agreement....................................28
6.13 Intercompany Loans................................................28
6.14 (Intentionally left blank)........................................28
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6.15 Employment and Consulting Agreement...............................28
6.16 Environmental Assessment..........................................28
6.17 No Knowledge of Breach by Other Parties...........................29
6.18 Opinions of Counsel...............................................29
6.19 Chilean Counsel Opinionl..........................................29
6.20 (Intentionally left blank)........................................29
6.21 Payment to MJ Lewis Corp..........................................29
6.22 Additional Undertakings...........................................29
7. CONDITIONS TO SELLERS' OBLIGATIONS.........................................30
7.1 Representations and Covenants......................................30
7.2 HSR Act............................................................30
7.3 Sale of Vineyards..................................................30
7.4 EVSA Stock Agreement...............................................30
7.5 ACSA Stock Agreement...............................................30
7.6 ACSA and EVSA Shareholders Agreements and Buy-Sell Agreement.......31
7.7 ACSA Distribution Agreement........................................31
7.8 Grape Supply Agreements............................................31
7.9 (Intentionally left blank).........................................32
7.10 Quintessa Wine Processing Agreement...............................32
7.11 Lewis Ranch Purchase Agreement....................................32
7.12 Intercompany Loans................................................32
7.13 (Intentionally left blank)........................................32
7.14 Non-Competition and Confidentiality Agreement.....................32
7.15 No Knowledge of Breach by Other Party.............................33
7.16 Opinion of Counsel................................................33
8. INDEMNIFICATION AND CERTAIN REMEDIES.......................................33
8.1 Obligation of Sellers to Indemnify for Certain Liabilities.........33
8.2 Obligation of Buyer to Indemnify...................................33
8.3 Claims.............................................................34
8.4 Obligations of Sellers to Reduce Purchase Price....................34
9. TERMINATION AND ABANDONMENT................................................35
9.1 Methods of Termination.............................................35
9.2 Procedure Upon Termination.........................................35
10. MISCELLANEOUS.............................................................35
10.1 Counterparts......................................................35
10.2 Notices...........................................................35
10.3 Public Announcement...............................................37
10.4 Successors and Assigns............................................37
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10.5 Governing Law.....................................................37
10.6 Waiver and Other Action...........................................38
10.7 Entire Agreement..................................................38
10.8 Severability......................................................38
10.9 Interpretation....................................................38
10.10 Third Party Beneficiaries........................................38
10.11 Arbitration of Environmental Dispute.............................38
10.12 Venue............................................................41
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made as of April 21,
1999, among Agustin Huneeus, Agustin Francisco Huneeus, Jean-Michel Valette,
Heidrun Eckes-Chantre Und Kinder Beteiligungsverwaltung II, GbR (formerly known
as Heidrun Eckes-Chantre-Tabet Und Kinder Beteiligungsverwaltung II, GbR), and
Peter Eugen Eckes Und Kinder Beteiligungsverwaltung II, GbR (the "Selling
Shareholders") and Harald Eckes-Chantre, Christina Eckes-Chantre and Petra
Eckes-Chantre (the "Selling Partners") (collectively with the Selling
Shareholders, the "Sellers"), Franciscan Vineyards, Inc., a Delaware corporation
(the "Company"), and Canandaigua Brands, Inc., a Delaware corporation ("Buyer").
BACKGROUND
The Company is engaged in producing wines which have a distinguished
place in the wine market. The wines are produced primarily from grapes grown by
the Company and affiliates of the Sellers at facilities located in the most
important wine producing regions in the State of California and in Chile (the
"Business"). The Company's wines sell in the premium, super premium and ultra
premium price categories. The principal brands sold by the Company are
Franciscan, Mt. Veeder, Estancia, Veramonte and Quintessa. The Company's Chilean
affiliates were among the first significant producers of premium grapes and
wines in Chile's famed Casablanca Valley.
Buyer is engaged in the international production and marketing of wine,
spirits and beer.
The Sellers and affiliates of the Company now desire to sell and
transfer all of their ownership in the Company to the Buyer and to enter into
ancillary agreements involving the sale and purchase of certain vineyards, the
purchase of grapes, wine processing, distribution and joint ownership of certain
corporations in Chile, along with other arrangements with Buyer pertaining to
the Business. The Buyer desires to acquire the Business and to enter into these
other agreements and arrangements. The Buyer further desires that the Business
continue operating with the same vision, drive and direction currently guiding
the Business.
Empresas Vitivincolas SA is a Chilean corporation owning and operating
vineyards in Chile ("EVSA"). Alto de Casablanca SA is a Chilean corporation
owning and operating the Veramonte winery ("ACSA"). Stonewall Canyon Vineyards,
LLC, a California limited liability company ("SCV") and Eckes Properties, Inc.,
a California corporation ("EPI") own vineyards in Monterey County, Napa County
and the Alexander Valley of Sonoma County, California and are affiliates of the
Sellers.
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Sellers are directly or indirectly the owners of all of the issued and
outstanding shares of capital stock consisting of 10,198 shares of Class A and
Class B common stock and 628,500 shares of Class C stock and 901,087 shares of
preferred stock of the Company (collectively, the "Shares") and the Selling
Partners are the owners of all partnership interests in PCH IV Eckes-Chantre
Beteiligungsverwaltung GbR ("PCH IV") which holds certain of the Shares. In
connection with the closing of the transactions contemplated by this Agreement,
the holders of all options to acquire shares of common stock in the Company
pursuant to stock option and stock purchase agreements ("Option Holders") will
be bought out of their option rights by the Company in the form of a cashless
exercise of their stock options. The Shares will be sold on the terms and
conditions of this Agreement for a purchase price of $180,830,000.
At the same time as the acquisition of the Company is consummated,
other arrangements involving the Buyer will be consummated as follows: (i) SCV
and EPI will sell and Buyer will purchase certain vineyards and related vineyard
assets of these two companies for a purchase price of $28,400,000, and at the
same time SCV will distribute to the Company an amount equal to the Company's
basis in SCV as held by its MJ Lewis subsidiary, (ii) Huneeus-Chantre Properties
LLC ("HCP") and the Company will modify the existing grape purchase contract by
which the Company buys substantially all of the grapes grown on the Quintessa
vineyards to provide for HCP or its affiliates to retain certain of these grapes
but without changing the price terms of the agreement, (iii) H/Q Wines LLC ("H/Q
Wines") and the Company will enter into a medium-term agreement whereby the
Company will handle the vinification, aging, bottling and storage of Quintessa
wines while H/Q Wines seeks to build or acquire its own facilities for these
purposes, (iv) the Company will pay in cash all obligations which it owes to
SCV, EPI, HCP, EVSA and ACSA, other intercompany obligations will be reconciled,
and key executive loans from the Company will be repaid, (v) all of the
outstanding Series A preferred stock of each of EVSA and ACSA, which stock is
currently owned by the Company, will be converted to common stock of EVSA and
ACSA at or prior to Closing, and the Company will acquire sufficient additional
common stock of EVSA to achieve 70% ownership of both EVSA and ACSA and will
enter into a shareholders agreement concerning each of these companies, (vi) the
Company will enter into agreements with Agustin Huneeus, Jean-Michel Valette and
Agustin Francisco Huneeus to assure their continued involvement in the Company
after the Closing, (vii) ACSA and the Company will enter into an exclusive,
worldwide distribution agreement in perpetuity with respect to the Veramonte
brand providing an appropriate pricing mechanism and other terms, (viii) the
shareholders of ACSA, EVSA and the parties to the ACSA Distribution Agreement
will enter into a buy/sell agreement providing for certain parties to trigger a
buy/sell arrangement with respect to ACSA and EVSA and the termination of the
Distribution Agreement after a certain period, and (ix) the parties will
negotiate in good
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faith to enter into an agreement whereby H\Q Wines may acquire the Quintessa
brand and inventory from the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
promises, representations, warranties and covenants contained herein, the
parties hereto agree as follows:
1. PLAN OF ACQUISITION.
1.1 SALE AND PURCHASE OF SHARES. Subject to and upon the terms
and conditions contained herein, at the closing provided for in Section 1.4
(Closing),
(a) the Selling Shareholders will sell and transfer to
Buyer, and Buyer will purchase and accept delivery from Selling Shareholders,
all of the Shares (other than the Shares held by PCH IV, which are addressed in
paragraph 1.1(b) below); and
(b) the Selling Partners will sell and transfer to Buyer,
and Buyer will purchase and accept delivery from the Selling Partners, of
assignment of all of the partnership interests in PCH IV (the "Partnership
Interests").
1.2 PURCHASE PRICE AND PAYMENT.
(a) PURCHASE PRICE. Upon the terms and subject to the
conditions contained in this Agreement, Buyer will purchase the Shares and the
Partnership Interests from Sellers in cash in the aggregate amount of One
Hundred Eighty Million and Eight Hundred Thirty Thousand Dollars ($180,830,000)
(the "Purchase Price"), of which all will be paid at the Closing. The Purchase
Price is to be allocated amongst the Sellers as shown in Exhibit 1.2(a)
(Allocation of Purchase Price).
1.3 ADJUSTMENTS TO PURCHASE PRICE. At Closing, the Purchase
Price shall be adjusted with respect to the following matters:
(a) reduced by 60% of an amount equal to aggregate cash
bonuses not to exceed $4 million paid by the Company to non-option participants
of Company in anticipation of the Closing; and
(b) if required, reduced by an amount not to exceed $9
million in accordance with ss.8.4 (Obligations of Sellers to Reduce Purchase
Price), clause (b) of ss.4.7 (Environmental Matters) and subject to the rights
of the parties to terminate this Agreement pursuant to clause (b) of
ss.9.1(Methods of Termination); and
(c) reduced by an amount equal to the dollar amount
expended by the Company in connection with the cashless exercise and
cancellation of all rights of the Option Holders to acquire stock in the
Company; and
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(d) increased by the amount transferred to MJ Lewis Corp.
by SCV pursuant to Section 6.4.
1.4 CLOSING. Upon the terms and subject to the conditions
ontained in this Agreement, the Closing (the "Closing") shall take place at the
offices of Farella Braun & Martel LLP, San Francisco, CA or such other place as
the parties may mutually agree in writing no later than 10:00 a.m. on June 4,
1999 (the "Initial Closing Date"). If the conditions to Closing have not been
met before the Initial Closing Date, either Buyer or the Company may elect by
written notice to the other parties to extend the time for the Closing to an
outside Closing date not more than thirty (30) days after the Initial Closing
Date.
1.5 EXECUTION AND DELIVERY OF PURCHASE PRICE AND CLOSING
DOCUMENTS. At the Closing, amongst other things called for by this Agreement:
(a) Buyer shall deliver the Purchase Price (less the
Deferred Share Purchase Price) to each Seller in accordance with the allocation
shown in Exhibit 1.2(a) (Allocation of Purchase Price) by wire transfer to each
Seller's account or by other immediately available funds, pursuant to
instructions given to Buyer by each Seller prior to Closing.
(b) The Selling Shareholders shall deliver certificates
representing their Shares, duly endorsed or accompanied by stock powers executed
and in form sufficient to fully vest title in Buyer to all of such Shares.
(c) The Selling Partners shall deliver assignments of the
Partnership Interests in form sufficient to vest title in Buyer to all of the
Partnership Interests, together with any other documents of transfer or
assignment reasonably requested by Buyer to consummate the transactions
contemplated hereby.
(d) The Company and/or Sellers shall deliver the stock
books, stock ledgers, minute books, corporate seals, and all other documents,
instruments, opinions, writings and other materials required to be delivered by
the Company and/or Sellers pursuant to this Agreement.
(e) The Company, Sellers, and Buyer shall deliver
opinions of counsel as provided in Sections 6.18 and 7.16.
(f) (Intentionally left blank)
(g) Except to the extent otherwise provided in Exhibit
1(g) (Steps in Closing), all actions taken at the Closing shall be deemed to
have been taken simultaneously at the time the last of any such actions is taken
or completed.
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLERS.
Except (i) as set forth in the disclosure schedule attached hereto as
Exhibit 2 (Disclosure Schedule) to this Agreement (the "Disclosure Schedule"),
(ii) as set forth in the Company's 1998 Financial Statements (as defined below),
or (iii) as to properties or assets being purchased as part of the transactions
contemplated by this Agreement, each Seller, for himself, herself or itself, and
not jointly, and the Company represent and warrant to Buyer, as of the date of
this Agreement and as of the Closing Date, as follows:
2.1 DUE INCORPORATION, QUALIFICATION AND CORPORATE POWER.
(a) INCORPORATION/QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company is duly qualified and in good standing to
do business as a foreign corporation in California and does not maintain offices
or own assets in any other state, nor is the Company qualified to do business in
any other state. The subsidiaries of the Company shown in the Disclosure
Schedule (the "Subsidiaries") are corporations duly organized, validly existing
and in good standing under the laws of the State of California.
(b) AUTHORITY OF COMPANY. The Company has the full
corporate power and authority, and all authorizations and permits required by
governmental or other authorities, to carry on its business as now being
conducted, and the authority to execute, deliver and perform this Agreement. The
Subsidiaries have the full corporate power and authority, and all authorizations
and permits required by governmental or other authorities, to carry on their
respective businesses as now being conducted. This Agreement has been duly
authorized, executed and delivered by the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate and perform the transactions contemplated by this Agreement.
This Agreement is a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, reorganization, insolvency or similar laws and subject to
general principles of equity.
(c) AUTHORITY OF SELLERS. Each Seller represents as to
itself that (i) he, she or it has the legal capacity and authority to execute,
deliver and perform this Agreement; (ii) this Agreement has been duly
authorized, executed and delivered by the Seller and no other action by the
Seller is necessary to authorize this Agreement or to consummate and perform the
transactions contemplated by this Agreement; and (iii) this Agreement is a
legal, valid and binding obligation of the Seller enforceable against the Seller
in accordance with its terms, except as enforceability may be limited by
bankruptcy, reorganization, insolvency or similar laws and subject to general
principles of equity.
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(d) ARTICLES OF INCORPORATION AND BYLAWS. The Company has
(or will cause to be) delivered to Buyer true and complete copies of the
Articles of Incorporation and Bylaws of the Company and of the Subsidiaries as
in effect on the date hereof. Neither the Company nor the Subsidiaries are in
default under or in violation of any provision of its Articles of Incorporation
or Bylaws.
2.2 OUTSTANDING CAPITAL STOCK; TITLE.
(a) CAPITALIZATION. The authorized capital stock of the
Company consists of 12,198 Shares of common stock, 1,000,000 Shares of preferred
stock and 1,000,000 shares of Class C stock, of which 10,198 Shares of Class A
and B common stock, 628,500 shares of Class C stock and 901,087 Shares of
preferred stock are issued and outstanding, with options or rights to acquire
1,636 additional shares of Class A and Class B common stock (the "Stock
Options") remaining outstanding and unexercised. The Shares have been duly
authorized and validly issued and are fully paid, nonassessable, and at the time
of delivery at the Closing will be free and clear of all liens, claims, pledges
and encumbrances and shall (including the Shares held by PCH IV) constitute 100%
of the outstanding capital stock of the Company. Since December 31, 1998,
$1,490,940 of new cash capital has been contributed to the Company in the form
of cash or notes which will be repaid in full at or before the Closing.
(b) OWNERSHIP.
(i) Each Selling Shareholder represents as to
that Selling Shareholder that (i) the Selling Shareholder is the lawful record
and beneficial owner of the number of Shares set forth next to its name in the
Disclosure Schedule; (ii) there are no voting trusts, voting agreements, proxies
or other agreements or instruments or understandings with respect to the voting
of the Shares of the Selling Shareholder; and (iii) the Selling Shareholder has
and, on the Closing Date, will transfer to Buyer, good, valid and marketable
title to the Selling Shareholder Shares, free and clear of any and all liens,
pledges, encumbrances and restrictions.
(ii) Each Selling Partner jointly and severally
represents that: (i) PCH IV is the lawful record and beneficial owner of the
number of Shares set forth next to PCH IV's name in the Disclosure Schedule;
(ii) there are no voting trusts, voting agreements, proxies or other agreements,
instruments or understandings with respect to the voting of the Shares held by
PCH IV; (iii) the Selling Partners are the lawful owner of all the Partnership
Interests and no other person, corporation, company or other entity has any
interest in PCH IV; (iv) on the Closing Date, PCH IV will have no liabilities,
accrued
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or contingent, and as a result of the purchase of the Partnership Interests as
contemplated hereby, Buyer will neither assume nor become obligated for any
liabilities of any kind; (v) on the Closing, the only assets or property of PCH
IV will be 360,435 Shares of preferred stock and 2,000 Shares of Class A common
stock of the Company; (vi) the Selling Partners have, and on the Closing Date,
will transfer to Buyer, valid title to the Partnership Interests, free and clear
of any and all liens, pledges, encumbrances and restrictions, and following the
purchase by Buyer of the Partnership Interests hereunder, Buyer will acquire all
ownership interests in and to PCH IV and will be the sole beneficial owner of
the assets held by PCH IV, and (vii) upon the acquisition by Buyer of the
Partnership Interests, PCH IV shall immediately dissolve by operation of law.
(c) OPTIONS OR OTHER RIGHTS OBLIGATING COMPANY. There are
no outstanding or authorized Shares, options, warrants, or purchase,
subscription, call, conversion, exchange or other contracts or instruments
convertible into Shares ("Securities") obligating the Company to sell, exchange
or otherwise deliver, or to purchase, redeem or otherwise receive or acquire
Securities of the Company. No dividends have been declared and remain unpaid by
the Company.
(d) OPTIONS OR OTHER RIGHTS OBLIGATING SELLERS.
(i) Each Seller represents as to that Seller
that there are no outstanding or authorized Securities obligating the Seller to
sell, exchange or otherwise deliver, or to purchase or otherwise receive or
acquire Securities of the Company.
(ii) Each Selling Partner jointly and severally
represents as to PCH IV that there
are no outstanding or authorized Securities obligating PCH IV to sell, exchange
or otherwise deliver, or to purchase or otherwise receive or acquire Securities
of the Company.
2.3 SUBSIDIARIES AND OTHER AFFILIATES.
The Company does not own, directly or indirectly, any
capital stock of, or other investment or interest in, any corporation,
partnership, limited liability company, joint venture or other entity.
2.4 CONSENTS.
(a) CONSENTS RELATING TO COMPANY. Except as required by
the Bureau of Alcohol, Tobacco & Firearms, the California Department of
Alcoholic Beverage Control or pursuant to HSR, there are no authorizations,
consents, permits, licenses or approvals of, or declarations, registrations or
filings with, any governmental or regulatory authority required by the Company
in connection with the execution, delivery or performance by the Company of this
Agreement or the consummation by the Company of the transactions contemplated
hereby.
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(b) CONSENTS RELATING TO THE SELLERS. Each Seller
represents as to that Seller (and the Selling Partners jointly and severally
represent as to PCH IV) that except as required by the Bureau of Alcohol,
Tobacco & Firearms, the California Department of Alcoholic Beverage Control or
pursuant to HSR, there are no authorizations, consents, permits, licenses or
approvals of, or declarations, registrations or filings with, any governmental
or regulatory authority required by the Seller (and, in the case of the Selling
Partners, by PCH IV) in connection with the execution, delivery or performance
by the Seller of this Agreement or the consummation by the Seller of the
transactions contemplated hereby.
2.5 NO BREACH.
(a) NO BREACH BY COMPANY. The execution, delivery and
performance of this Agreement by the Company of the transactions contemplated
hereby or thereby will not violate, breach, conflict with, constitute a default
under or result in the imposition of any lien, claim or encumbrance upon the
Shares or any property or asset of the Company pursuant to: (i) any provision of
the Articles of Incorporation or Bylaws of the Company; (ii) any law, statute,
rule or regulation or order, writ, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body to which the Company or any
of its respective properties is subject, or (iii) any lease or other agreement
(other than obligations which involve $250,000 or less per year) to which the
Company is a party, by which the Company is bound, or to which any of the assets
or properties are subject.
(b) NO BREACH BY SELLERS. Each Seller represents as to
that Seller (and the Selling Partners jointly and severally represent and
warrant as to PCH IV) that the execution, delivery and performance of this
Agreement by Sellers of the transactions contemplated hereby or thereby will not
violate, breach, conflict with, constitute a default under or result in the
imposition of any lien, claim or encumbrance upon the Shares, the Partnership
Interests (and, in the case of the Selling Partners, upon PCH IV) or any
property or asset of the Company pursuant to: (i) any provision of the Articles
of Incorporation or Bylaws of the Company or, in the case of the Selling
Partners, the Partnership Agreement of PCH IV; (ii) any law, statute, rule or
regulation or order, writ, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body to which Sellers or any of their
properties are subject, or (iii) any lease or other agreement (other than
obligations which involve $250,000 or less of annual revenue or expense) to
which the Seller is a party, by which the Seller is bound, or to which any of
the Seller's assets or properties are subject.
2.6 FINANCIAL STATEMENTS OF THE COMPANY AND ACSA AND EVSA
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(a) The Company has delivered to Buyer true, correct and
complete copies of the following financial statements, including the notes
thereto, of the Company (collectively the "Financial Statements"): the audited
balance sheets of the Company as of December 31, 1998 (the "Balance Sheet
Date"), audited balance sheets as of December 31, 1997 and December 31, 1996,
with the related statements of income, and statements of cash flows for the
years then ended, all certified by the Company's independent public accountants
(with the Financial Statements for the year ended December 31, 1998 referred to
as the "1998 Financial Statements"). The Company has no debts, obligations,
guaranties of the obligations of others or liabilities of the type required to
be disclosed in the Financial Statements under generally accepted accounting
principles, except for (1) debts, obligations, guaranties and liabilities
reflected or reserved against in the Financial Statements and (2) debts,
obligations, guaranties and liabilities incurred or entered into in the ordinary
course of business after the Balance Sheet Date. The Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently applied by the Company throughout the periods indicated and fairly
present the financial position of the Company as of the respective dates thereof
and the results of its operations for the periods indicated.
(b) ACSA and EVSA have delivered to the Buyer true,
correct and complete copies of the following financial statements, including the
notes thereto, of ACSA and EVSA (collectively the "ACSA and EVSA Financial
Statements"); the audited balance sheets of ACSA and EVSA as of December 31,
1998 and 1997, of ACSA as of December 31, 1997 and 1996, and of ACSA as of
December 31, 1996 and 1995, with the related statement of income, and statements
of cash flows for the years then ended, all certified by ACSA and EVSA's
independent public accountants. ACSA and EVSA have no debts, obligations,
guaranties of the obligations of others or liabilities of the type required to
be disclosed in the ACSA and EVSA Financial Statements under generally accepted
accounting principles, except for (1) debts, obligations, guaranties and
liabilities reflected in the ACSA and EVSA Financial Statements and (2) debts,
obligations, guaranties and liabilities incurred or entered into in the ordinary
course of business after December 31, 1998. The ACSA and EVSA Financial
Statements have been prepared in accordance with generally accepted principles
consistently applied by ACSA throughout the periods indicated and fairly present
the financial position of ACSA and EVSA as of the respective dates thereof and
the results of its operations for the periods indicated.
2.7 ABSENCE OF CERTAIN CHANGES. Except with regard to the
Announcement Matters referred to below, since December 31, 1998 (the date of the
most recent unaudited financial statements of the Company, the "Balance Sheet
Date"), the affairs of the Company have been conducted in the ordinary course of
business and the Company has not suffered any adverse change in its business,
results of operations, working capital, assets, or liabilities, or the manner of
conducting its business. Without limiting the
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generality of the foregoing, since the Balance Sheet Date none of the following
has occurred:
(a) any transaction contracted for or concluded by the
Company except transactions in the ordinary course of business or transactions
not having an adverse effect on the Company;
(b) any change in accounting methods or practices by the
Company;
(c) any increase in salary, bonus or other compensation
payable or to become payable by the Company to any of its officers, directors or
employees in an amount in excess of the Company' periodic bonuses and increases;
(d) any sale or transfer of any of the Company's assets
except in the ordinary course of business or as may be contemplated in
connection with the Closing of the transactions contemplated by this Agreement;
(e) any amendment or termination of any agreement of the
Company involving more than $250,000 per year of revenue or expense which is not
terminable on notice of ninety (90) days or less without a penalty (a "Material
Contract"), except as may be contemplated in connection with the Closing of the
transactions contemplated by this Agreement;
(f) any loan by the Company to any person or entity or
guaranty by the Company of any such loan, except in the ordinary course of
business or as may be contemplated in connection with the Closing of the
transactions contemplated by this Agreement;
(g) any mortgage, pledge or other encumbrance of any
asset of the Company, except in the ordinary course of business or as may be
contemplated in connection with the Closing of the transactions contemplated by
this Agreement;
(h) commencement or notice or threat of commencement of
any civil litigation or any governmental proceeding against or investigation of
the Company.
The "Announcement Matters" means the resignation or termination of employees,
suppliers or customers or changes in sales volumes beyond the Company's
reasonable control which occur as a result of the announcement or consummation
of the transactions contemplated by this Agreement.
2.8 TAX MATTERS. For purposes of this Agreement, the term "Taxes"
means all taxes of any kind or nature, including but not limited to U.S., state,
local and foreign income taxes, withholding taxes, branch profit taxes, gross
receipts taxes, franchise taxes,
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sales and use taxes, business and occupation taxes, property taxes, VAT, custom
duties or imposts, stamp taxes, excise taxes, payroll taxes, intangible taxes
and capital taxes and any penalties or interest thereon.
(a) The Company has filed within the time and in the
manner prescribed by law all tax returns and reports required to be filed by it
under the laws of the United States and each state or other jurisdiction in
which it conducts business activities requiring the filing of tax returns or
reports and has paid all taxes shown due on such returns or subsequent
assessments.
(b) There are no tax liens (whether imposed by the United
States, any state, local, foreign or other taxing authority) outstanding against
the Company or any of its assets (other than liens for taxes not yet due and
owing).
(c) All Taxes that the Company is required to withhold or
to collect have been duly withheld or collected and all withholdings and
collections either have been duly and timely paid over to the appropriate
governmental authorities or are, together with the payments due or to become due
in connection therewith, duly reflected on the Financial Statements.
(d) On or before the date of Closing, the Company and its
shareholders, directors and option holders shall have taken all steps necessary
under United States Internal Revenue Code ss.280G (including executing all
shareholder and other approvals), to cause any and all payments made by the
Company in connection with this Agreement and the transactions contemplated
hereby to any "disqualified individuals" (as such term is defined in IRC
ss.280G) which might otherwise constitute "excess parachute payments" (as such
term is defined in IRC ss.280G) to be fully deductible to the Company.
(e) In connection with the recapitalization of the
Company's Class C stock into the Company's preferred stock as provided in
Section 6.20, and the transfer of funds by SCV to MJ Lewis Corp., as described
in Sections 6.4 and 6.21, the Company will not incur any tax liability.
2.9 LITIGATION. There is no (i) suit, action, litigation or other
similar proceeding pending or threatened against the Company, affecting the
Company or its business, assets, properties or operations or (ii) order,
judgment or decree to which the Company or its business, assets, properties or
operations is subject.
2.10 COMPLIANCE WITH LAWS. The Company is in compliance with all
laws, ordinances, regulations and orders applicable to its business or
operations ("Laws") and has not since January 1, 1996, received any notification
of any asserted past or present failure to comply with any law, ordinance,
regulation or order. The Disclosure Schedule contains a complete list of all of
the governmental licenses and permits, consents, orders,
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decrees, notifications and other compliance requirements under which the Company
is operating or bound.
2.11 TITLE TO AND CONDITION OF ASSETS. The tangible personal
property included in the Company's assets is in usable condition. Except as set
forth in the Financial Statements or the Disclosure Schedule and subject to the
provisions of Section 4.10 (Title Matters), the Company has good and marketable
and unencumbered legal title to each of its assets, free and clear of any claim,
charge, easement, encumbrance, security interest, lien, option, pledge, right of
others, or restriction (whether on voting, sale, transfer, disposition or
otherwise), whether imposed by agreement, law, equity or otherwise except for
any restrictions on transfer generally arising under any applicable federal or
state securities law ("Encumbrances"). There is no pending or threatened action
that would interfere with the quiet enjoyment of such leaseholds by the Company.
2.12 INVENTORY. All inventory of the Company reflected in the
Financial Statements has been produced and packaged in accordance with all
applicable laws, regulations and orders and is usable and salable in the
ordinary course of business and is of equivalent quality to the inventory of the
Company over the past three (3) years, except for inventory items, if any, which
have been written down in the Financial Statements to realizable fair market
value or for which adequate reserves have been provided therein.
2.13 PRODUCT RECALL. The Company has not since January 1, 1996
recalled any products made, bottled, distributed or sold by the Company and it
is not now nor has it ever been under any obligation to do so, and there is no
reasonable basis known to the Company for any such recall.
2.14 LABOR MATTERS. The Company is not a party to any labor
agreement with respect to its employees with any labor organization, group or
association. Since January 1, 1996, the Company has not experienced any attempt
by organized labor or its representatives to make the Company conform to demands
of organized labor relating to its employees or to enter into a binding
agreement with organized labor that would cover the employees of the Company.
There is no unfair labor practice charge or complaint against the Company
pending before the National Labor Relations Board or any other governmental
agency, and since January 1, 1996, the Company has not experienced a work
stoppage or other labor difficulty.
2.15 INTELLECTUAL PROPERTY
(a) Set forth in the Disclosure Schedule is a list and a
brief description or identification of all trademarks and trademark applications
(including registration and application numbers therefor), owned by Company
and/or used in connection with the Business. The Company owns all right, title
and interest in and to or possesses licenses or other rights to use all
trademarks and trademark applications, trade names, fictitious or assumed names,
service marks, service mark
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applications, registered copyrights, copyright applications, trade secrets,
license agreements and all similar proprietary rights used in connection with
the Business (collectively the "Intellectual Property") necessary to conduct its
business as now operated. The Intellectual Property does not infringe any rights
of others nor is any other person infringing the Intellectual Property.
(b) The Company has not received any written notice from
any third party within twelve months prior to the date of this Agreement that
challenges the ownership of or the Company's right to use any of the
Intellectual Property. None of the Intellectual Property has expired or been
canceled or abandoned. Any applications for Intellectual Property (including all
applications required for renewal of Intellectual Property) which are pending
with the applicable governmental entities have not been finally rejected on any
grounds and neither Sellers nor the Company has any knowledge of any reason why
any such applications should not be granted. None of the past or present
employees, officers, directors or shareholders of the Company has any rights in
any of the Intellectual Property. The Company has not granted any outstanding,
written licenses that are in effect relating to the Intellectual Property other
than to distributors and brokers solely in connection with the promotion and
sale of the Company's products. The Company does not have any obligation under
any contract or agreement to make any material royalty or other payments for use
of any of the Intellectual Property.
2.16 EMPLOYEE BENEFITS PLAN.
(a) The Disclosure Schedule lists all employee benefit
plans and agreements to which the Company is a party or by which the Company is
bound with respect to (i) pension or retirement income plans and agreements,
(ii) plans, agreements, arrangements or practices, whether or not written,
relating to other "fringe benefits" to employees, officers, directors, agents,
or others, including, but not limited to vacation, sick leave, medical,
hospitalization, dental, child care, parenting, sabbatical, life and other
insurance, and similar or related benefits, and perquisites including, but not
limited to, company automobiles, club memberships or privileges, and other
similar or related benefits, (iii) any other "employee benefit plan" as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended and the related regulations and published interpretations ("ERISA")
(such plans, agreements, arrangements or practices described in this sentence
herein referred to individually as a "Plan" and collectively as the "Plans").
The Company has delivered to Buyer true and complete copies of all documents
constituting such Plans together with summary plan descriptions of those plans
or arrangements not otherwise in writing.
(b) The Company is in compliance with the applicable
provisions of ERISA and the Internal Revenue Code of 1986, as amended (the
"Code") with respect to all Plans, and the Company is in compliance with Laws
applicable to such Plans.
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Without limiting the generality of the foregoing all Plans are fully funded in
accordance with their terms and applicable Law. The Company has performed all of
its obligations under all Plans. Each of the Plans, which is intended to be
qualified and tax exempt under code Sections 401(a) and 501(a), is so qualified
and is subject to a current favorable determination letter from the Internal
Revenue Service.
The representations and warranties set forth in Sections
2.16(c) through (h) below shall not be deemed to have been breached by the
Sellers or the Company if any such breach is as a result of operations in the
ordinary course of business or is not adverse to the Company.
(c) Except as contemplated in this Agreement, the Company
has no express or implied commitment (i) to create or incur liability with
respect to or cause to exist any other employee benefit plan, program or
arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Plan, other than with respect to a modification, change or
termination required by ERISA or the Code.
(d) Neither the Company nor any "ERISA Affiliate" of the
Company has ever sponsored, contributed to or participated in a pension plan
subject to Title IV of ERISA, including but not limited to any defined benefit
plan, any multiemployer plan (as defined in Section 4001(a)(3) of ERISA), or any
multiple employer plan subject to Sections 4063 and 4064 of ERISA, and no fact
or event exists which could give rise to any liability under Title IV of ERISA.
An "ERISA Affiliate" is any trade or business (whether or not incorporated)
which is treated with the Company as a single employer under Section 414(b),
(c), (m) or (o) of the Code.
(e) There has been no prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Plan. Except as set forth on the Disclosure Schedule, neither the Company nor
any ERISA Affiliate is currently liable or has previously incurred any liability
for any tax or penalty arising under the Code or ERISA, and no fact or event
exists which could give rise to any such liability.
(f) There has been no violation of ERISA with respect to
the filing of applicable returns, reports, documents and notices regarding any
of the Plans with the Secretary of Labor or the Secretary of the Treasury or the
furnishing of such notices or documents to the participants or beneficiaries of
the Plans.
(g) There are no pending legal proceedings which have
been asserted or instituted against any of the Plans, the assets of any such
Plans or the Company or any
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ERISA Affiliate or the plan administrator or any fiduciary of the Plans with
respect to the operation of such plans (other than routine, uncontested benefits
claims).
(h) The Company does not maintain any welfare benefit
plan providing continuing benefits after the termination of employment (other
than as required by Section 4980B of the Code and at the former employee's own
expense), and the Company and each of its ERISA Affiliates have complied in all
material respects with the notice and continuation requirements of Section 4980B
of the Code and the regulations thereunder.
2.17 EMPLOYMENT CONTRACTS. The Disclosure Schedule contains a list
of all employment contracts, deferred compensation, profit-sharing, stock
purchase, stock option, stock appreciation right, bonus and severance plans and
agreements or similar agreements by which the Company is bound. Except as set
forth in the Disclosure Schedule or the Financial Statements and except as
contemplated pursuant to this Agreement, (i) all the contracts and arrangements
described in this Section 2.17 are in full force and effect and there is no
default by the Company under any of them, and (ii) the Company has not entered
into any written severance agreement or similar arrangement in respect of any
present or former employee that will result in any obligation (absolute or
contingent) of Buyer or the Company to make any payment in excess of $100,000 to
any present or former employee following termination of employment.
2.18 CONTRACTS. The Company is not in material default under any
contracts to which it is a party which call for or involve the payment,
potential payment or accrued obligation by the Company from the date hereof
through the earliest date such contract can be terminated unilaterally either by
the Company or the other party thereto without penalty, of an amount in excess
of $35,000; provided, however, all contracts not so listed in the Disclosure
Schedule or the Financial Statements shall not in the aggregate exceed $225,000.
The accounts receivable of the Company are legally valid and enforceable
obligations, it being understood that no guaranty of collection is hereby given.
2.19 INSURANCE. The Disclosure Schedule contains a list of all
insurance policies held by the Company concerning its business. There is no
current default with respect to the payment of premiums under any such contract
or otherwise.
2.20 ENVIRONMENTAL COMPLIANCE. The Company has not generated, used,
transported, treated, stored, released or disposed of, and has not expressly
permitted anyone else to generate, use, transport, treat, store, release or
dispose of any Hazardous Substance including substances that are defined or
listed in, or otherwise classified pursuant to any applicable Laws as "hazardous
substances" "hazardous materials," "hazardous wastes" or "toxic substances"
including petroleum and asbestos (collectively, "Hazardous Substance") in
violation of any Law. Any Hazardous Substance handled or
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dealt with or disposed of in any way in connection with operation of the
Company, whether by the Company or the Company's agents, during Sellers'
ownership, has been handled, dealt with, or disposed of in all respects in
compliance with applicable Laws. There has not been any generation, use,
transportation, treatment, storage, release or disposal of any Hazardous
Substance by the Company or the use of any property or facility of the Company
which has created or might reasonably be expected to create any liability under
any laws or which would require reporting to or notification of any governmental
entity.
2.21 RELATED TRANSACTIONS. Except as contemplated by this
Agreement, the Company is not, directly or indirectly, a party to any
transactions with any officer, director or shareholder of the Company or their
affiliates which will survive the Closing, and none of such persons has any
direct or indirect interest in any, supplier or customer of the Company which
will survive the Closing.
2.22 SURVIVAL. The representations and warranties contained in
Sections 2.1(c), 2.2(b), 2.2(d), 2.4(b) and 2.5(b) (the "Surviving
Representations and Warranties") shall survive the Closing Date. All other
representations and warranties of the Company and Sellers contained in this
Article 2 shall terminate at the Closing. None of the representations and
warranties is a condition to the obligation of Buyer to consummate the
transactions contemplated pursuant to this Agreement.
2.23 DISCLOSURE. No representation or warranty made by the Company
or Sellers contained in this Agreement or in the Disclosure Schedule and the
certificates or other instruments delivered pursuant to this Agreement, as of
the date hereof, contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
or therein, in light of the circumstances under which they were made, not
misleading, except as the accuracy or completeness thereof may be affected by
this Agreement and the transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to the Company and each of the Sellers,
as of the date of this Agreement and as of the Closing Date, as follows:
3.1 DUE INCORPORATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
3.2 POWER AND AUTHORITY. Buyer has the corporate power and
authority and all authorizations and permits required by governmental or other
authorities, to carry on its business as currently being conducted and to
execute, deliver and perform this
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Agreement and the other documents required to be executed by it in connection
with this Agreement, and the execution, delivery and performance by it of this
Agreement and the other agreements and documents executed or to be executed by
it in connection with this Agreement have been duly authorized, executed and
delivered by Buyer and no other corporate proceedings on the part of Buyer are
necessary to authorize this Agreement and the agreements and instruments entered
into by Buyer in connection herewith or to consummate and perform the
transactions contemplated hereby and the agreements and instruments entered into
by Buyer in connection herewith. This Agreement and the agreements and
instruments entered into by Buyer in connection herewith constitute valid and
binding agreements enforceable against Buyer in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws and subject to general principles of equity. Buyer acknowledges
that it is a sophisticated investor, familiar with the wine industry generally,
has made a reasonable investigation of the Company and its business, and is
aware of the risks inherent in an investment in a business such as that of the
Company. Because of its experience and business acumen it has the expertise to
ask the questions necessary to make an informed decision as to whether to
purchase the Shares as contemplated by this Agreement. Buyer has made reasonable
investigation and inquiry of all matters related to this agreement and the
Disclosure Schedule to the extent permitted prior to the execution of this
Agreement and will continue its investigation through the day of Closing.
3.3 CONSENTS. There are no authorizations, consents, permits,
licenses or approvals of, or declarations, registrations or filings with, any
governmental or regulatory authority or agency required by Buyer that have not
been received in connection with the execution, delivery or performance by Buyer
of this Agreement or the other agreements executed or to be executed by it in
connection with this Agreement or the consummation by Buyer of the transactions
contemplated by this Agreement.
3.4 NO BREACH. The execution, delivery and performance of this
Agreement and the consummation by Buyer of the transactions contemplated hereby,
will not constitute a default under, or permit the termination or the
acceleration of maturity or performance of, (i) any provision of the Articles of
Incorporation or Bylaws of Buyer; (ii) any law, statute, rule or regulation or
order, writ, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body to which Buyer or its properties are subject, or
(iii) any material contract or obligation to which Buyer is a party, by which
Buyer is bound, or to which any of its assets or properties are subject.
3.5 BATF/ABC LICENSING. Buyer has or will have obtained prior to
the Closing Date all licenses or approvals required to be obtained prior to the
Closing for the consummation of the transactions contemplated hereunder by the
Bureau of Alcohol, Tobacco & Firearms and the California Department of Alcoholic
Beverage Control.
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3.6 FINANCING. Buyer has available (and will have available, and
to the extent necessary to complete its obligations under this Agreement will
draw on, at the Closing) a commitment from The Chase Manhattan Bank, Chase
Securities Inc. and Credit Suisse First Boston (collectively "Chase") to provide
sufficient funds to enable Buyer to consummate the transactions contemplated
hereby. Such commitment to be substantially in the form previously furnished to
Sellers and subject only to the terms and conditions stated therein. Buyer is in
full compliance with its existing credit facilities, will execute and agree to
loan terms and conditions in connection with documents required pursuant to
Chase's commitment which are the same as or generally similar to Buyer's
existing loan terms, conditions, representations and other covenants or which
are otherwise market terms in similar loans and are consistent with the
commitment, will take all steps on its part necessary under Chase's commitment
to cause Chase to fund its commitment, has no knowledge Chase will not fund its
commitment in connection with the Closing, and without the prior written
approval of the Company will not amend the Chase commitment in any manner that
could reasonably be expected to adversely affect the certainty of Buyer's
ability to obtain the financing contemplated by the commitment or the
consummation of the transactions contemplated hereby.
3.7 INVESTMENT INTENT. Buyer is acquiring the Shares and
Partnership Interests for investment for its own account, not as nominee or
agent, and not with a view to the sale, distribution, subdivision, transfer or
fractionalization thereof. Buyer acknowledges that the Shares and Partnership
Interests (a) have not been registered under the Securities Act of 1933 or any
state securities law and there is no commitment to register the Shares or
Partnership Interests, and (b) cannot be resold, unless they are subsequently
registered or an exemption from registration is available.
3.8 SURVIVAL. All representations and warranties of Buyer
contained in Sections 3.1 to 3.4 shall survive the Closing Date ("Surviving
Buyer Representations and Warranties"). All other representations and warranties
of Buyer contained in this Article 3 shall terminate at the Closing.
4. COVENANTS OF THE COMPANY AND SELLERS.
From the date of this Agreement until the earlier of the Closing or
termination of this Agreement , (i) the Company covenants and agrees that, and
(ii) each Seller agrees that he, she or it shall take all commercially
reasonable steps to ensure that:
4.1 OPERATION OF BUSINESS OF THE COMPANY. The Company will carry
on its business and activities in substantially the same manner as previously
carried out and will use its reasonable efforts, consistent with past practices,
to (i) preserve existing relationships with vendors, customers, and others
having business relationships with the Company, (ii) maintain its tangible
assets in good order, condition and repair, reasonable
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wear and tear excepted, (iii) not enter into any lease, amendment of lease,
agreement to sell grapes, or other agreement with respect to the use or
occupancy of any real property now owned or leased by the Company except as
contemplated by this Agreement, without the Buyer's prior consent which may not
be unreasonably withheld, conditioned or delayed, (iv) continue to comply with
all applicable Laws, (v) perform its obligations with respect to its lenders,
and (vi) with respect to the real property owned or leased by the Company,
refrain from (w) transferring any interest in the property, (x) creating any
easement, lien, mortgage or encumbrance, (y) enter into any development or other
agreement with respect to the property without the permission of Buyer or as
contemplated by this Agreement, or (z) permit any changes to the zoning
classification of the property. The Company will continue to carry its existing
insurance, if present coverage continues to be generally available at
substantially the same premium cost.
4.2 ACCESS TO RECORDS. Until Closing and subject to the terms of
the existing agreements with Buyer regarding confidentiality, the Company shall
afford to Buyer, its officers, employees, counsel, accountants, and other
representatives reasonable access upon reasonable prior notice, to inspect and
copy the books, records, contracts and other documents of the Company at the
Company's offices in order that Buyer may have full opportunity to make such
investigations as it shall desire to make of the affairs of the Company; and the
Company will cause its officers and accountants to furnish such additional
financial and operating data and other information relating to the business and
assets of the Company as Buyer shall, from time to time, reasonably request.
4.3 CONSENTS. The Company shall use its reasonable efforts to
assist Buyer in obtaining any consents required to effect the transactions
contemplated in this Agreement; it being understood that while the Closing of
the transactions contemplated by this Agreement does not require the Company to
obtain the consent of its lenders (as loans of lenders who do not consent will
be paid off by the Company immediately following the Closing), the Company will
nonetheless in advance of the Closing use its reasonable efforts to assist Buyer
in obtaining the consent to the transactions contemplated by this Agreement of
those lenders, if any, designated by Buyer.
4.4 NOTIFICATION. From time to time prior to the Closing, the
Company shall promptly advise Buyer in writing of (i) any event known to the
Company (which for purposes of this Agreement shall mean to the actual knowledge
of Jean-Michel Valette, Agustin Huneeus, Agustin Francisco Huneeus and William
Skowronski) or (ii) any event occurring subsequent to the date of this Agreement
which becomes known to the Company which would render any representation or
warranty of the Company contained in this Agreement, if made on or as of the
date of such event or the Closing, inaccurate in any material respect.
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4.5 NO SHOP PROVISION. From and after the date of this Agreement
until the earlier of the Closing or the termination of this Agreement pursuant
to its terms, Sellers shall not, and shall instruct the Company and the
Company's and Sellers' respective directors, officers, employees,
representatives, investment bankers, agents and affiliates not to, (a) solicit
or initiate the submission of any Acquisition Proposal (as defined below) by any
person, entity or group (other than Buyer and its affiliates, agents and
representatives) or (b) participate in any discussions or negotiations or enter
into any agreement or understanding with any person, entity or group (other than
Buyer and its affiliates, agents and representatives) in connection with any
Acquisition Proposal. Upon execution of this Agreement, Sellers shall cease, and
shall cause the Company to cease, all current discussions relating to any
Acquisition Proposal (other than discussions with Buyer and its affiliates,
agents and representatives). For the purposes of this Agreement, an "Acquisition
Proposal" means any proposal or offer for any merger, exchange offer, sale of
shares, consolidation, sale of all or substantially all of the assets of or
similar corporate transaction with respect to the Company (other than sales of
assets in the ordinary course of business in immaterial amounts or as otherwise
permitted or contemplated under the terms of this Agreement).
4.6 HART-SCOTT-RODINO ACT. The Company and Sellers shall make any
and all filings required to be made on their part under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 ("HSR Act"). The Company and Sellers shall
furnish to Buyer such necessary information and reasonable assistance as Buyer
may request in connection with its preparation of necessary filings or
submissions under the provisions of the HSR Act. The Company and Sellers shall
supply Buyer with copies of all correspondence, filings or communications,
including file memoranda evidencing telephonic conferences with representatives
of either the Federal Trade Commission, the Antitrust Division of the United
States Department of Justice, or any other governmental entity or members of
their respective staffs, with respect to the transactions contemplated by this
Agreement and any related or contemplated transactions, except for documents
filed pursuant to Item 4(c) of the Notification and Report Form or
communications regarding the same. All required filing fees shall be paid
equally by Buyer and Sellers.
4.7 ENVIRONMENTAL ASSESSMENT.
(a) Between the date of this Agreement and Closing,
Sellers shall cause Buyer to be granted access to the facilities and vineyards
of the Company and the other vineyards being sold to the Buyer as contemplated
by this Agreement for the purposes of conducting an environmental assessment at
Buyer's sole cost and expense, which may include subsurface soil and groundwater
sampling by environmental consultants reasonably acceptable to the Company and
Sellers and pursuant to a scope of work determined by Buyer and approved by the
Company, which approval shall not be unreasonably withheld (the "Environmental
Assessment"). Buyer shall provide
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reasonable advance written notice if its access involves any drilling, trenching
or similar physical disturbance of the surface of the property or is with
respect to any Hazardous Substance inspection involving any on-site testing of
soil or subsurface conditions, and Sellers will have the right to have a
representative present. In conducting the Environmental Assessment, Buyer and
its agents and representatives shall comply with all applicable Laws, maintain
customary and appropriate insurance coverage, and not unreasonably interfere in
the operations of the owner of the property. Buyer's access hereunder shall be
at its sole cost, expense, and risk and Buyer expressly assumes all
responsibility for, and indemnifies Company and Sellers against, any
liabilities, damages, claims and expenses arising out of the conduct of any
environmental site inspections by Buyer and its agents, consultants or
representatives other than those that constitute Environmental Remediation Costs
pursuant to Section 6.13 (Environmental Assessment), and shall repair any damage
to and restore to its prior condition the property which has been inspected.
In connection with any Environmental Assessment, Buyer shall cause the
following to occur:
(i) The Environmental Assessment shall be
conducted pursuant to standard quality control/quality assurance procedures and
in accordance with the terms of the preceding paragraph.
(ii) Before any final report is prepared as the
result of the Environmental Assessment, such preliminary report shall be
conspicuously labeled as a draft, and Buyer shall promptly give Sellers a copy
of the draft report. Until the Closing, Buyer shall keep the draft report and
the information contained therein confidential and shall not disclose it to any
person or entity without Sellers' prior written consent; provided, however, that
Buyer may furnish a copy of this draft report to any proposed lender or to any
consultant engaged in, or commenting upon the results of, the draft report, or
to any other person working with or on behalf of Buyer who agrees to maintain
the draft report in confidence.
(iii) If for any reason the Closing fails to occur,
then thereafter and as a promise which will survive the termination of this
Agreement, Buyer shall not disclose to any party the contents of the draft
report except pursuant to valid legal process or with the written consent of
Sellers.
(iv) Any ground water, soil or other samples taken
from the property will be properly disposed of by Buyer at Buyer's sole cost and
in accordance with all applicable Laws.
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(v) If requested by Buyer, the licensed
professional company performing the Environmental Assessment shall prepare its
good faith estimate of the Environmental Remediation Costs as defined in ss.6.13
(Environmental Assessment).
(b) The Sellers shall pay or the Company and Sellers
shall reduce the Purchase Price with respect to all Environmental Remediation
Costs as identified in the Environmental Assessment, subject to the provisions
of ss.8.4 (Obligations of Sellers to Reduce Purchase Price); provided that if
Sellers dispute the determination of the Environmental Remediation Costs, the
amount of the Purchase Price reduction attributable to the Environmental
Remediation Costs shall be deposited in an escrow with the title insurance
company issuing the Buyer's title insurance (or a national bank acceptable to
Buyer and Sellers) to be held in interest bearing securities selected by Buyer,
and disbursed at the request of Buyer to pay the costs of remediation work and
any fines or penalties which may be assessed in connection with any remedial
work, and 180 days following the completion of this work, or ten (10) years
after the date of this Agreement, whichever is earlier, the remaining balance,
including accrued interest, in the escrow account shall be paid to Sellers in
the proportions in which the original Purchase Price was to have been paid to
them before the reduction.
4.8 CERTAIN FINANCIAL INFORMATION.
The Company and Sellers shall provide, or shall use their best efforts
to cause to be provided to, Buyer and shall assist in the preparation by Buyer
of, the audited and unaudited financial and other information required for the
preparation of summary financial data and pro forma financial information
regarding the Business, for all periods required by applicable provisions of
Regulations S-X and S-K promulgated under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder. The Sellers and the Company shall provide such
management representation letters and shall use their best efforts to cause the
Company's outside public accountants to deliver such consents and comfort as are
customary under applicable accounting standards, as promptly as reasonably
practicable, but in no event later than forty-five days following the Closing.
Buyer shall be responsible for the costs and expenses incurred in connection
with such preparation, review and audit. Sellers agree that Buyer may use, and
Sellers shall deliver such consents and shall authorize their outside public
accountants to deliver such consents, (as may reasonably be requested by Buyer)
to the use of the financial and other information provided pursuant to this
Section 4.8, regarding the Business or any other financial information provided
by Sellers to Buyer specifically for the following purposes, in any registration
statement, prospectus, Rule 144A offering memorandum, Form 8-K or other public
filing or document at any time on and after the date of this Agreement.
4.9 IDENTIFICATION OF INVENTORY. On a mutually agreeable date
prior to Closing, Company and Buyer shall conduct a reasonable inspection of the
quantity and
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quality of the inventory of the Company. The Company will conduct or will permit
Buyer to conduct such tests of inventory as Buyer reasonably requests.
4.10 TITLE MATTERS
(a) The Company has provided or shall promptly provide
Buyer with a copy of current preliminary title reports for all real property
(the "Property") owned by the Company (the "Preliminary Title Report"), issued
by First American Title Company or its affiliates or another major title
insurance company selected by the Company and doing business in California (the
"Title Company"), together with a copy of each document referred to in the
Preliminary Title Report. At the Closing, Buyer may purchase at its expense for
the Company and/or its benefit title insurance showing good and marketable title
to the Property vested in Buyer. To the extent that such title insurance policy
shows the Company's title is subject only to those exceptions shown in the
Preliminary Title Report, or disclosed in any visual inspection of the Property
by the Title Company or by any survey delivered to Buyer, which taken as a whole
do not materially and adversely impair the ability of a reasonable owner of the
Property to continue to farm the Property in the manner in which it is currently
being farmed by the Company or to cultivate the acreage of vineyards currently
under cultivation, or to operate its facilities in the manner in which the
Company is currently operating in the ordinary course of business, or which may
be approved in writing by Buyer (together, the "Permitted Exceptions") the
representations in ss.2.11 (Title to and Condition of Assets) with respect to
real property title matters shall be deemed satisfied.
(b) The Company may cure any defects in title with
respect to the Property that are necessary to permit the issuance of the Title
Policy containing only Permitted Exceptions. To the extent that by the time of
the Closing, the Company has not removed any such defect in title, the Closing
shall still occur, but there shall be a deemed Loss for the purpose of ss.8.4
(Sellers Obligations to Reduce Purchase Price) equal to the amount by which the
fair market value of the Property is reduced by reason of the unremoved defect,
with the amount of this Loss to be as agreed by the parties at the time of the
Closing; if the parties do not agree, then as reasonably estimated by Buyer. If
the parties have not agreed on the amount of this Loss, then Buyer shall deposit
in escrow with the Title Company the amount of any Purchase Price reduction it
reasonably claims in connection with this Loss, and this sum shall be held in
escrow in an interest-bearing account until such time as the parties have
reached agreement on the actual amount of the price reduction associated with
this Loss or the matter is determined by a court of competent jurisdiction,
whose order has become final and no longer subject to appeal. At that time, the
difference between the amount of the Purchase Price paid to Sellers at the
Closing and the finally-determined amount of the Purchase Price, plus interest
thereon at the weighted average yield earned on the funds that remained in the
escrow shall be paid
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to Sellers and the balance of the funds remaining in the escrow shall be paid to
Buyer, with the costs of the escrow to be split equally between Sellers and
Buyer.
(c) The Company will make available to Buyer as soon as
practicable after the execution of this Agreement copies of all boundary surveys
in its possession, together with affidavits of no change duly executed by the
Company or its agent, with respect to the real property owned or leased by the
Company and which is not being sold by the Company in connection with the
transactions contemplated by this Agreement.
4.11 COOPERATION IN HUNEEUS-CHANTRE PROPERTIES PLAN SEVERANCE.
The Company shall terminate the application of all Huneeus-Chantre
Properties Plans which are operated jointly with the Company, as soon as
reasonably practicable following the Closing, and Buyer agrees to cooperate in
such termination.
5. BUYER'S COVENANTS. Buyer covenants as follows:
5.1 (Intentionally left blank)
5.2 HSR ACT. Buyer shall make any and all filings required to be
made on its part under the HSR Act. Buyer shall furnish the Company and Sellers
such necessary information and reasonable assistance as the Company and Sellers
may request in connection with its preparation of necessary filings or
submissions under the provisions of the HSR Act. Buyer shall supply the Company
and Sellers with copies of all correspondence, filings or communications,
including file memoranda evidencing telephonic conferences with representatives
of either the Federal Trade Commission, the Antitrust Division of the United
States Department of Justice, or any other governmental entity or members of
their respective staffs, with respect to the transactions contemplated by this
Agreement and any related or contemplated transactions, except for documents
filed pursuant to Item 4(c) of the Notification and Report Form or
communications regarding the same. All required filing fees shall be paid
equally by Buyer and Sellers.
5.3 NOTIFICATION OF CERTAIN MATTERS. Buyer shall give prompt
notice to the Company and Sellers, of (i) the occurrence, or failure to occur,
of any event known to Buyer that would be likely to cause any representation or
warranty by Buyer contained in this Agreement, if made on or as of the date of
such event or the Closing, to be inaccurate in any material respect, and (ii)
any failure of Buyer to comply with or satisfy, any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement.
5.4 COMPANY RECORDS. Buyer agrees for a period of five (5) years
subsequent to the Closing Date, upon reasonable request of any Seller, to make
available to such
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Seller all information and statements in the Company's possession with regard to
periods prior to the Closing Date which may be reasonably required by the
Sellers.
5.5 BROKERS AND FINDERS. Buyer shall pay all broker, finder or
similar fees or commissions to any agent, broker, finder or other persons or
entity acting on behalf of Buyer in connection with the transactions
contemplated by this Agreement.
5.6 ENVIRONMENTAL ASSESSMENT COMMISSIONED. Prior to or
simultaneously with the execution of this Agreement, Buyer shall have
commissioned the Environmental Assessment, with the draft report to be delivered
to Buyer within a period not to exceed twenty (20) business days from the date
of such commissioning. The Environmental Assessment shall cover all property and
facilities owned or leased by the Company or to be acquired by Buyer pursuant to
this Agreement and shall be conducted and prepared by a firm reasonably
acceptable to Buyer and the Company.
5.7 REPAYMENT OF LOANS. Not later than sixty (60) days following
the Closing, Buyer will repay in full all loans from lenders to the Company
which required the consent of the lender to the transactions contemplated by
this Agreement and whose consent was not obtained.
5.8 PAYMENT OF LEGAL FEES. Buyer acknowledges that the Company and
certain Sellers have incurred legal fees payable to the law firm of Farella,
Braun & Martel LLP in connection with the process of negotiating and
implementing the sale of the stock and assets of the Company (the "Legal Fees").
Buyer has agreed that the Company, and not the Sellers, shall pay the Legal
Fees, subject to Agustin Huneeus' payment of a dollar amount of the Legal Fees
equal to the legal fees of the law firm of Heller, Ehrman, White & McAuliffe for
its representation of Harald and Peter Eckes in these transactions, and subject
to the Legal Fees being reasonable in light of the legal work performed.
6. CONDITIONS TO BUYER'S OBLIGATIONS.
The obligation of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, at or before the Closing,
of each of the following conditions, unless waived in writing by Buyer:
6.1 COVENANTS. The Company and Sellers shall have performed and
complied in all material respects with all agreements, covenants and conditions
on their part required to be performed or complied with on or prior to the
Closing Date. For purposes of this Agreement, any non-performance or breach of
any representation or warranty by Sellers or the Company shall not be a basis
for Buyer to refuse or fail to consummate the transactions contemplated by this
Agreement, but may be a basis for a reduction of the Purchase Price pursuant to
Section 8.4, indemnification to Buyer pursuant to Section 8 or termination of
this Agreement by Buyer pursuant to Section 9.1.
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6.2 HSR ACT. All waiting periods under the HSR Act shall have
expired or the requisite governmental approval shall have been obtained.
6.3 RESIGNATION OF DIRECTORS AND TERMINATION OF VALETTE EMPLOYMENT
AGREEMENT. Sellers shall have provided resignations of Dieter Broska, Agustin
Huneeus, Peter Eckes, Harald Eckes-Chantre and Jean-Michel Valette as directors
of the Company effective immediately following the Closing, and the existing
employment agreement of Jean-Michel Valette shall have been superseded,
terminated and released, without liability to the Company.
6.4 SALE OF VINEYARDS. Prior to the Closing, Buyer and each of SCV
and EPI as applicable ("Vineyard Owners") shall have entered into an agreement
substantially in the form attached hereto as Exhibits 6.4(a) and (b) (Sale of
Vineyards) (each a "Vineyard Sale Agreement") for the sale and transfer of
certain vineyard properties owned by these entities (the "Vineyard Properties").
Each Vineyard Sale Agreement shall provide for a purchase price equal to (i)
Seventeen Million Four Hundred Thousand Dollars ($17,400,000) for the SCV
Vineyard Properties and Eleven Million Dollars ($11,000,000) for the EPI
Vineyard Properties; plus (ii) all cultural costs paid or incurred by the
Vineyard Owner with respect to the Vineyard Property during the period starting
November 1, 1998 through the Closing Date; plus (iii) all property taxes paid or
incurred in connection with the ownership of the Vineyard Property for the
period starting November 1, 1998 through the Closing Date plus (iv) the net book
value of the equipment related to the Stonewall Vineyard less the book value of
the equipment related to the Los Encinos Vineyard. Immediately following the
closing of the transactions contemplated in the Vineyard Sale Agreements, SCV
shall have, as set forth in Exhibit 1(g) (Steps in Closing), transferred to MJ
Lewis Corp., a wholly-owned subsidiary of the Company, $10,000,000, an amount
equal to the tax basis of the interest of MJ Lewis Corp. in SCV. Unless Sellers
and Buyer agree in writing otherwise prior to the Closing Date, each of the
transactions contemplated in the Vineyard Sale Agreements shall have closed on
the day of the Closing, but immediately before the Closing pursuant to this
Agreement.
6.5 EVSA STOCK AGREEMENT. Prior to or on the day of the Closing,
all outstanding and issued shares of the Series A preferred stock of EVSA held
by the Company shall have been duly exchanged for or converted into shares of
common stock of EVSA pursuant to an agreement substantially in the form attached
hereto as Exhibit 6.5 (EVSA Stock Agreement) (the "EVSA Agreement"). The EVSA
Agreement will also provide for the Company to acquire from the other
shareholders of EVSA at a price of $6,293,000 sufficient additional common
shares of EVSA so that the Company would hold 70% of the common shares of EVSA,
with the other shareholders of EVSA holding 30% of the common stock of EVSA. All
intercompany accounts between EVSA and the Company, if any, and all cash capital
contributed by the Company to EVSA since December 31, 1998, if any, shall be
repaid prior to Closing.
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6.6 ACSA STOCK AGREEMENT. Prior to or on the day of the Closing,
all outstanding and issued shares of the Series A preferred stock of ACSA held
by the Company shall have been duly exchanged for or converted into shares of
common stock of ACSA representing 70% of the common shares of ACSA (with the
other shareholders of ACSA thereupon holding shares of common stock of ACSA
representing 30% of the common shares of ACSA) pursuant to an agreement
substantially in the form attached hereto as Exhibit 6.6 (ACSA Stock Agreement)
(the "ACSA Agreement"). All intercompany accounts between ACSA and the Company,
excluding the advance by the Company of approximately $3 million which shall be
repaid with future wine deliveries, and all cash capital contributed to ACSA
since December 31, 1998, if any, shall be repaid prior to Closing.
6.7 ACSA AND EVSA SHAREHOLDERS AGREEMENTS AND BUY-SELL AGREEMENT.
Prior to or on the day of the Closing, the Company, ACSA and the other
shareholders of ACSA, and the Company, EVSA and the other shareholders of EVSA,
shall enter into shareholders agreements substantially in the forms attached
hereto as Exhibit 6.7(a) (ACSA Shareholders Agreement and EVSA Shareholders
Agreement) providing for the management of the ACSA and EVSA and certain
restrictions on transfer of ACSA and EVSA stock to the Company and EVSA. Prior
to or on the day of the Closing, the Company, the other shareholders of ACSA and
EVSA, Buyer and other parties shall enter into a buy-sell agreement
substantially in the form attached hereto as Exhibit 6.7(b) (Buy-Sell
Agreement).
6.8 ACSA DISTRIBUTION AGREEMENT. Prior to or on the day of the
Closing, Buyer, the Company and ACSA shall have entered into a new long-term
distribution agreement substantially in the form attached hereto as Exhibit 6.8
(ACSA Distribution Agreement) (the "Distribution Agreement") pursuant to which
the Company shall be granted the exclusive, worldwide distribution rights in
perpetuity for the Veramonte brand of wine, subject to termination in connection
with the buy/sell rights in the Buy/Sell Agreement amongst the Company, the
shareholders of ACSA and EVSA and others. Performance by the Company of its
obligations pursuant to the Distribution Agreement shall be guaranteed by Buyer.
6.9 GRAPE SUPPLY AGREEMENTS. Prior to or on the day of the
Closing, the Company, Buyer and HCP shall have entered into a grape supply
agreement substantially in the form attached hereto as Exhibit 6.9(a) (Quintessa
Grapes) (the "Quintessa Grape Agreement"). The Quintessa Agreement shall provide
for the supply of grapes by HCP to the Company under the same terms and
conditions and at the same prices as set forth in the Grape Purchase Agreement
dated as of August 4, 1994 as amended in July, 1996 and November 26, 1996
between the Company and HCP and shall provide that performance by the Company of
its obligations pursuant to the Quintessa Grape Agreement shall be guaranteed by
Buyer. Pursuant to the Quintessa Grape Agreement,
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HCP and its affiliate H/Q Wines will have the right to retain a specified
tonnage of grapes from its annual production. Prior to the Closing, the Company,
Buyer and H/Q Vineyards shall have entered into grape supply agreements
substantially in the form attached hereto as Exhibits 6.9(b) and (c),
(respectively the Encinos and Lewis Grape Agreements) providing for similar
terms and covering grapes to be grown on the Los Encinos and Lewis Ranches. The
Lewis Grape Agreement shall also include a plan relating to the varieties of
grapes to be planted and a schedule for plantings.
6.10 (Intentionally left blank)
6.11 QUINTESSA WINE PROCESSING AGREEMENT. Prior to or on the
Closing Date, the Company, Buyer and H\Q Wines shall have entered into a Wine
Processing Agreement substantially in the form attached hereto as Exhibit 6.11
(Wine Processing) (the "Quintessa Wine Processing Agreement") which shall
provide for the manufacture and storage of bulk and finished wine by the Company
for H/Q Wines.
6.12 LEWIS RANCH PURCHASE AGREEMENT. Prior to the day of the
Closing, the Company and H/Q Vineyards shall have entered into a land purchase
agreement for the sale by the Company of the land located at 1465 Coombsville
Road in Napa, California (the "Lewis Ranch"), substantially in the form attached
hereto as Exhibit 6.12 (Lewis Ranch).
6.13 INTERCOMPANY LOANS. On or before the Closing Date, any amounts
outstanding on all intercompany loans payable by the Company to SCV, EPI, EVSA
or ACSA or by SCV, EPI, HCP, EVSA or ACSA to the Company, including those under
the loan agreements between the Company and SCV (but not including the Company's
advances to ACSA which are to be repaid over time by the delivery of wine),
shall have been repaid, and the loan by the Company to its President and CEO
described in the Disclosure Schedule shall have been repaid.
6.14 (Intentionally left blank)
6.15 EMPLOYMENT AND CONSULTING AGREEMENT. Prior to or on the day of
the Closing, Buyer and Agustin Huneeus shall have entered into an employment and
consulting agreement substantially in the form attached hereto as Exhibit 6.15
(Employment and Consulting Agreement).
6.16 ENVIRONMENTAL ASSESSMENT. The Environmental Assessment report
shall have been received by Buyer. If the Environmental Assessment report
identifies any violation of applicable law which requires remedial work, the
firm conducting the Environmental Assessment at Buyer's request shall prepare an
estimate of the costs of remediation work and the amount of any fines or
penalties which may be assessed in connection with any remedial work (the
"Environmental Remediation Costs").
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6.17 NO KNOWLEDGE OF BREACH BY OTHER PARTIES. Buyer shall have
received from each Seller and the Company a certificate dated as of the Closing
Date certifying that each such Seller and the Company, to his, her or its best
knowledge, is not aware of any breach of representation and warranty or covenant
by Buyer under this Agreement or specifying those of which the party executing
the certificate is aware.
6.18 OPINIONS OF COUNSEL. Buyer shall have received from the
Sellers' counsels legal opinions addressing the matters set forth in Exhibit
6.18(a) (Sellers' Opinions) with respect to the due authorization of the
documents executed and delivered on behalf of the Sellers under this Agreement
and the capital structure of the Company, and from the Selling Partner's and PCH
IV's counsel, a legal opinion addressing the matters set forth in Exhibit
6.18(b) (Selling Partners' Opinion) with respect to the dissolution of PCH IV
and certain tax consequences resulting therefrom. In addition, the Selling
Partners shall deliver to Buyer a balance sheet of PCH IV as of the Closing
prepared by KPMG Peat Marwick showing that PCH IV has no liabilities and has no
assets other than the Shares referred to in Section 2.2(b)(ii).
6.19 CHILEAN COUNSEL OPINION. Buyer shall have received from the
firm of Urenda, Rencoret, Orrego y Dorr of Santiago, Chile a legal opinion to
the effect that as soon as reasonably practicable following the Closing and the
payment by the Company of the $6,293,000 for additional EVSA common stock, the
Company will be the owner of 70% of the common stock of EVSA and ACSA, that the
governing documents of ACSA and EVSA which are the equivalent of the articles
and bylaws of a United States corporation are in the forms attached to the
opinion and are in full force and effect subject only to the completion of
registration and publication formalities required by Chilean law in connection
with the capital restructuring of ACSA and EVSA described in Sections 6.5 and
6.6, that the shares owned by the Company in ACSA and EVSA are duly and validly
issued and outstanding and are non-assessable and that there are no Chilean
taxes payable by the Company, ACSA or EVSA in connection with the conversion of
the Series A preferred shares in these companies previously held by the Company
and now converted into common shares.
6.20 (Intentionally left blank)
6.21 PAYMENT TO MJ LEWIS CORP. SCV shall have transferred to MJ
Lewis Corp. the amount provided for in Section 6.4.
6.22 ADDITIONAL UNDERTAKINGS. Such additional undertakings from the
owners of H/Q Wines shall have been entered into as Buyer may have reasonably
requested and whose form is reasonably approved by the law firm of Farella Braun
& Martel, LLP.
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7. CONDITIONS TO SELLERS' OBLIGATIONS.
The obligation of the Company and Sellers to consummate the transaction
contemplated by this Agreement shall be subject to the satisfaction, at or
before the Closing, of each of the following conditions, unless waived in
writing by the Company and Sellers:
7.1 REPRESENTATIONS AND COVENANTS. Buyer shall have performed and
complied in all material respects with all representations and warranties
agreements, covenants and conditions on its part required to be performed or
complied with on or prior to the Closing Date.
7.2 HSR ACT. All waiting periods under the HSR Act shall have
expired or the requisite governmental approval shall have been obtained.
7.3 SALE OF VINEYARDS. Prior to the Closing, Buyer and each of SCV
and EPI as applicable ("Vineyard Owners") shall have entered into an agreement
substantially in the form attached hereto as Exhibits 6.4(a) and (b) (Sale of
Vineyards) (each a "Vineyard Sale Agreement") for the sale and transfer of
certain vineyard properties owned by these entities (the "Vineyard Properties").
Each Vineyard Sale Agreement shall provide for a purchase price equal to (i)
Seventeen Million Four Hundred Thousand Dollars ($17,400,000 for the SCV
Vineyard Properties and Eleven Million Dollars ($11,000,000) for the EPI
Vineyard Properties; plus (ii) all cultural costs paid or incurred by the
Vineyard Owner with respect to the Vineyard Property during the period starting
November 1, 1998 through the Closing Date; plus (iii) all property taxes paid or
incurred in connection with the ownership of the Vineyard Property for the
period starting November 1, 1998 through the Closing Date plus (iv) the net book
value of the equipment related to the Stonewall Vineyard less the book value of
the equipment related to the Los Encinos Vineyard. Immediately following the
closing of the transactions contemplated in the Vineyard Sale Agreements, SCV
shall have, as set forth in Exhibit 1(g) (Steps in Closing), transferred to MJ
Lewis Corp., a wholly-owned subsidiary of the Company, the amount specified in
Section 6.4. Unless Sellers and Buyer agree in writing otherwise prior to the
Closing Date, each of the transactions contemplated in the Vineyard Sale
Agreements shall have closed on the day of Closing, but immediately before the
Closing pursuant to this Agreement.
7.4 EVSA STOCK AGREEMENT. Prior to or on the day of the Closing,
all outstanding and issued shares of the Series A preferred stock of EVSA held
by the Company shall have been duly exchanged for or converted into shares of
common stock of EVSA pursuant to an agreement substantially in the form attached
hereto as Exhibit 6.5 (EVSA Stock Agreement) (the "EVSA Agreement"). The EVSA
Agreement will also provide for the Company to acquire from the other
shareholders of EVSA at a
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price of $6,293,000 sufficient additional common shares of EVSA so that the
Company would hold 70% of the common shares of EVSA, with the other shareholders
of EVSA holding 30% of the common stock of EVSA. All intercompany accounts
between EVSA and the Company, if any, and all cash capital contributed by the
Company to EVSA since December 31, 1998, if any, shall be repaid prior to
Closing.
7.5 ACSA STOCK AGREEMENT. Prior to or on the day of the Closing,
all outstanding and issued shares of the Series A preferred stock of ACSA held
by the Company shall have been duly exchanged for or converted into shares of
common stock of ACSA representing 70% of the common shares of ACSA (with the
other shareholders of ACSA thereupon holding shares of common stock of ACSA
representing 30% of the common shares of ACSA) pursuant to an agreement
substantially in the form attached hereto as Exhibit 6.6 (ACSA Stock Agreement)
(the "ACSA Agreement"). All intercompany accounts between ACSA and the Company,
excluding the advance by the Company of approximately $3 million which shall be
repaid with future wine deliveries, and all cash capital contributed to ACSA
since December 31, 1998, if any, shall be repaid prior to Closing.
7.6 ACSA AND EVSA SHAREHOLDERS AGREEMENTS AND BUY-SELL AGREEMENT.
Prior to or on the day of the Closing, the Company, ACSA and the other
shareholders of ACSA, and the Company, EVSA and the other shareholders of EVSA,
shall enter into shareholders agreements substantially in the forms attached
hereto as Exhibit 6.7(a) (ACSA Shareholders Agreement and EVSA Shareholders
Agreement) providing for the management of the ACSA and EVSA and certain
restrictions on transfer of ACSA and EVSA stock to the Company and EVSA. Prior
to or on the day of the Closing, the Company, the other shareholders of ACSA and
EVSA, Buyer and other parties shall enter into a buy-sell agreement
substantially in the form attached hereto as Exhibit 6.7(b) (Buy-Sell
Agreement).
7.7 ACSA DISTRIBUTION AGREEMENT. Prior to or on the day of the
Closing, Buyer, the Company and ACSA shall have entered into a new long-term
distribution agreement substantially in the form attached hereto as Exhibit 6.8
(ACSA Distribution Agreement) (the "Distribution Agreement") pursuant to which
the Company shall be granted the exclusive, worldwide distribution rights in
perpetuity for the Veramonte brand of wine, subject to termination in connection
with the buy/sell rights in the ACSA and EVSA Shareholder Agreements.
Performance by the Company of its obligations pursuant to the Distribution
Agreement shall be guaranteed by Buyer.
7.8 GRAPE SUPPLY AGREEMENTS. Prior to or on the day of the
Closing, the Company, Buyer and HCP shall have entered into a grape supply
agreement substantially in the form attached hereto as Exhibit 6.9(a) (Quintessa
Grapes) (the "Quintessa Grape Agreement"). The Quintessa Grape Agreement shall
provide for the
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supply of grapes by HCP to the Company under the same terms and conditions and
at the same prices as set forth in the Grape Purchase Agreement dated as of
August 4, 1994 as amended in July 1996 and November 26, 1996 between the Company
and HCP and shall provide that performance by the Company of its obligations
pursuant to the Quintessa Grape Agreement shall be guaranteed by Buyer. Pursuant
to the Quintessa Grape Agreement, HCP and its affiliate H/Q Wines will have the
right to retain a specified tonnage of grapes from its annual production. Prior
to the Closing, the Company, Buyer and H/Q Vineyards shall have entered into
grape supply agreements substantially in the form attached hereto as Exhibits
6.9(b) and (c), (respectively the Encinos and Lewis Grape Agreements) providing
for similar terms and covering grapes to be grown on the Los Encinos and Lewis
Ranches. The Lewis Grape Agreement shall also include a plan relating to the
varieties of grapes to be planted and a schedule for plantings.
7.9 (Intentionally left blank)
7.10 QUINTESSA WINE PROCESSING AGREEMENT. Prior to or on the
Closing Date, the Company, Buyer and Q shall have entered into a Wine Processing
Agreement substantially in the form attached hereto as Exhibit 6.11 (Wine
Processing) (the "Quintessa Wine Processing Agreement") which shall provide for
the manufacture and storage of bulk and finished wine by the Company for H/Q
Wines.
7.11 LEWIS RANCH PURCHASE AGREEMENT. Prior to the day of the
Closing, the Company and H\Q Vineyards shall have entered into a land purchase
agreement for the sale by the Company of the land located at 1465 Coombsville
Road in Napa, California known as the Lewis Ranch (the "Lewis Ranch"),
substantially in the form attached hereto as Exhibit 6.12 (Lewis Ranch).
7.12 INTERCOMPANY LOANS. On or before the Closing Date, any amounts
outstanding on all intercompany loans payable by the Company to SCV, EPI, HCP,
EVSA or ACSA or by SCV, EPI, HCP, EVSA or ACSA to the Company, including those
under the loan agreements between the Company and SCV (but not including the
Company's advances to ACSA which are to be repaid over time by the delivery of
wine), shall have been repaid, and the loan by the Company to its President and
CEO described in the Disclosure Schedule shall have been repaid.
7.13 (Intentionally left blank)
7.14 NON-COMPETITION AND CONFIDENTIALITY AGREEMENT.
Prior to or on the day of the Closing, Buyer and Agustin Huneeus shall
have entered into an employment and consulting agreement substantially in the
form attached hereto as (Exhibit 6.15 (Employment and Consulting Agreement).
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7.15 NO KNOWLEDGE OF BREACH BY OTHER PARTY. Each Seller shall have
received a certificate dated as of the Closing Date certifying that Buyer, to
its best knowledge, is not aware of any breach of representation and warranty or
covenant under this Agreement or specifying those of which Buyer is aware of.
7.16 OPINION OF COUNSEL. Sellers shall receive at Closing from
Nixon, Hargrave, Devans & Doyle LLP, Buyer's counsel, an opinion dated the
Closing Date, addressing the matters set forth in Exhibit 7.16 (Buyer's Opinion)
with respect to the due authorization of the documents executed and delivered on
behalf of the Buyer under this Agreement.
8. INDEMNIFICATION AND CERTAIN REMEDIES.
8.1 OBLIGATION OF SELLERS TO INDEMNIFY FOR CERTAIN LIABILITIES.
Any Seller having breached any Surviving Representations and Warranties,
covenants or agreement of such Seller shall separately, and not jointly,
indemnify Buyer and hold harmless and, upon Buyer's request, defend Buyer,
and/or its affiliates, subsidiaries, directors, officers, employees, agents and
assigns from and against any claims, demands, causes of action, proceedings,
losses, liabilities, damages, deficiencies, interest, penalties, expenses,
judgments and costs (including reasonable attorneys', consultants' and
accountants' fees and disbursements, court costs, amounts paid in settlement and
expenses of investigation) incurred by Buyer (collectively, "Losses") based
upon, arising out of or otherwise in respect of the breach of such Surviving
Representation and Warranty, covenant or agreement by such Seller, subject in
each instance to Section 8.3 below, and provided however that the obligation of
any Seller pursuant to this Section 8.1 with respect to a Loss shall be limited
to (a) such Seller's ownership percentage as set forth in Exhibit 1.2(a)
(Allocation of Purchase Price), multiplied by (b) the amount of such Loss. Any
claim by Buyer hereunder shall be made no later than the first anniversary of
the Closing Date. Buyer's indemnification rights under this Agreement shall be
limited to Losses arising out of a breach of a Surviving Representation and
Warranty, covenant or agreement and this shall be the sole remedy of Buyer with
respect thereto.
8.2 OBLIGATION OF BUYER TO INDEMNIFY. Buyer shall indemnify,
defend and hold harmless each Seller and his, her or its respective heirs and
assigns from and against any Losses (as the term "Losses" is defined in Section
8.1 above) arising out of or otherwise in respect of the breach of any
representation, warranty, covenant or agreement of Buyer contained in this
Agreement or in any document or other writing delivered pursuant to this
Agreement and for any liabilities arising with respect to the operation of the
Company after the Closing Date. Any claim by Sellers hereunder shall be made no
later than the first anniversary of the Closing Date.
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8.3 CLAIMS. If any party (the "Indemnitee") receives notice of
circumstances that would give rise to a claim by such party or notice of any
claim or the commencement of any action or proceeding with respect to which any
other party (or parties) is obligated to provide indemnification (the
"Indemnifying Party") pursuant to Section 8.1 or 8.2 (a "Claim"), the Indemnitee
shall promptly give the Indemnifying Party notice thereof. Within 30 days after
such notice, the Indemnifying Party shall notify the Indemnitee whether it
irrevocably elects to make payment of the amount claimed or, with respect to
third party claims, to contest such claim by appropriate legal proceedings. The
failure of the Indemnifying Party to notify the Indemnitee of its intention
within such 30 days shall constitute and irrevocable election by them that it
shall pay the amount claimed, as appropriate. Any defense of a claim shall be
conducted by counsel of good standing chosen by Indemnitee and satisfactory to
Indemnifying Party. Such defense shall be conducted at the expense of
Indemnifying Party, except that if any proceeding involves both claims against
which indemnity is granted hereunder and other claims for which indemnification
is not granted hereunder, the expenses of defending against such claims shall be
borne by the Indemnifying Party and the Indemnitee in respective proportions to
the dollar amount of the claims for which they may be liable based on the
aggregate dollar amount of the claims.
8.4 OBLIGATIONS OF SELLERS TO REDUCE PURCHASE PRICE. The Purchase
Price or the purchase price under the applicable Vineyard Sale Agreement(s), as
the case may be, shall be reduced at the time of Closing with respect to any
Losses (other than Environmental Remediation Costs and those relating to matters
covered by insurance carried by or for the benefit of the Company) arising out
of or otherwise in respect of the breach of any representation or warranty made
by Sellers or Company to Buyer pursuant to this Agreement to the extent such
Losses in the aggregate exceed $3 million but do not thereafter exceed $9
million (or $12 million in total). For the purposes of this Section 8.4, Losses
shall also include Environmental Remediation Costs, if such Environmental
Remediation Costs exceed $1 million. Subject to the procedure provided in ss.4.7
(Environmental Assessment), all Environmental Remediation Costs in excess of $1
million shall be a reduction of the Purchase Price or the purchase price under
the applicable Vineyard Sale Agreement(s), as the case may be, irrespective of
whether the aggregate of Losses and Environmental Remediation Costs exceed $3
million. In the event Losses (not including the Environmental Remediation Costs)
exceed $3 million and the Environmental Remediation Costs do not exceed $1
million, then the Purchase Price or the purchase price under the applicable
Vineyard Sale Agreements, as the case may be, shall be reduced by the total of
Losses exceeding $3 million plus all such Environmental Remediation Costs. To
the extent Losses exceed $3 million and include matters relating to the filing
of Form 5500 by the Company, Sellers shall have the obligation, notwithstanding
the above, to pay all Losses directly relating to such Form 5500 filings in cash
to Buyer.
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9. TERMINATION AND ABANDONMENT.
9.1 METHODS OF TERMINATION. The transactions contemplated by this
Agreement may be terminated at any time prior to the Closing as follows:
(a) By mutual consent of the parties to this Agreement
evidenced in a writing signed by the parties;
(b) By either Buyer or Sellers in the event that the
aggregate Losses for which adjustments to the Purchase Price would otherwise be
made pursuant to this Agreement and the Vineyard Purchase Agreements exceeds $9
million;
(c) By the Company or Buyer at any time after the Initial
Closing Date or any extension thereof pursuant to ss.1.4 (Closing), if the
Closing has not occurred;
(d) By Buyer, if a condition set forth in Article 6 has
not been satisfied; and
(e) By Sellers or the Company, if a condition set forth
in Article 7 has not been satisfied.
9.2 PROCEDURE UPON TERMINATION. In the event of termination
pursuant to this Section 9, a written notice thereof shall forthwith be given by
the terminating party to the other party and the transactions contemplated by
this Agreement shall be terminated and abandoned without further actions. If the
transactions contemplated by this Agreement are terminated and/or abandoned as
provided herein, then:
(a) Each party will redeliver all documents, work papers,
and other material of any other party relating to the transactions contemplated
by this Agreement, whether obtained before or after the execution hereof, to the
party furnishing the same; and
(b) The confidentiality of all confidential information
received by any party hereto with respect to the business of any other party or
its subsidiaries shall survive the termination of this Agreement.
10. MISCELLANEOUS.
10.1 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute only one original.
10.2 NOTICES. All notices, demands, requests, or other
communications that may be or are required to be given, served, or sent by any
party to any other party pursuant to
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this Agreement shall be in writing and shall be delivered in person, mailed by
registered or certified mail, return receipt requested, or delivered by a
commercial courier guaranteeing overnight delivery, addressed as follows:
If to the Company or Sellers: (Via US Mail)
Franciscan Vineyards, Inc.
P.O. Box 407
Rutherford, CA 94573
(Via Federal Express)
Franciscan Vineyards, Inc.
1178 Galleron Road
St. Helena, CA 94574
Attention: Jean-Michel Valette, President
Facsimile: (707) 963-7867
e-mail: [email protected]
With a copy to: Farella Braun & Martel LLP
235 Montgomery Street, 30th Floor
San Francisco, CA 94104
Attention: Jeffrey P. Newman, Esq.
Facsimile: (415) 954-4480
e-mail: [email protected]
With a copy to: Greene Radovsky Maloney & Share LLP
Four Embarcadero Center, Suite 4000
San Francisco, CA 94111-4106
Attention: Richard Greene, Esq.
Facsimile: (415) 777-4961
e-mail: [email protected]
With a copy to: Heller, Ehrman, White & McAuliffe
525 University Avenue, 10th Floor
Palo Alto, CA 94301-1908
Attention: Richard A. Peers, Esq.
Facsimile: (650) 324-0638
e-mail: [email protected]
If to Buyer: Canandaigua Brands, Inc.
300 Willowbrook Office Park
Fairport, NY 14450
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Attention: Robert Sands, Esq.
Facsimile: (716) 218-2120
e-mail: [email protected]
With a copy to: Nixon, Hargrave, Devans & Doyle, LLP
Clinton Square
Rochester, NY 14603
Attention: James A. Locke III, Esq.
Facsimile: (716) 263-1600
e-mail: [email protected]
If a Party has furnished a facsimile and/or e-mail address, a nonbinding
confirming copy of the Notice shall also be sent by facsimile transmission or
e-mail. Delivery shall be effective upon delivery or refusal of delivery, with
the receipt or affidavit of the United States Postal Service or overnight
delivery service deemed conclusive evidence of such delivery or refusal. Each
party may designate by notice in writing a new address to which any notice,
demand, request, or communication may thereafter be so given, served, or sent.
10.3 PUBLIC ANNOUNCEMENT. Neither the Company, Sellers or Buyer
shall, without the approval of the other parties hereto, (which approval shall
not be unreasonably withheld), make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that any such party shall so be obligated by applicable
law, in which case the other party shall be advised and the parties shall use
their best efforts to cause a mutually agreeable release or announcement to be
issued, provided that the parties shall cooperate in making a public
announcement concerning this Agreement immediately following its execution. The
foregoing shall not be deemed to preclude communications or disclosures
necessary to implement the provisions of this Agreement.
10.4 SUCCESSORS AND ASSIGNS. This Agreement and the rights,
interests, and obligations hereunder shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Buyer shall have the right, on or prior to Closing, to assign its rights and
delegate its duties pursuant to this Agreement to a wholly-owned subsidiary,
provided, however, that Buyer shall remain liable for all obligations of such
subsidiary.
10.5 GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of California without giving effect to
principles of conflicts of laws.
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10.6 WAIVER AND OTHER ACTION. This Agreement may be amended,
modified, or supplemented only by a written instrument executed by the party
against which enforcement of the amendment, modification, or supplement is
sought.
10.7 ENTIRE AGREEMENT. This Agreement, the Exhibits hereto, and the
other documents executed or delivered pursuant hereto contain the complete
agreement among the parties with respect to the transactions contemplated hereby
and supersede all prior agreements and understandings among the parties with
respect to such transactions contemplated by this Agreement with the exception
of the Non-Disclosure Agreement executed by the Company and Buyer as of March
23, 1999. Section and other headings are for reference purposes only and shall
not affect the interpretation or construction of this Agreement.
10.8 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable, such provision shall be fully severable, and
this Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision were never a part hereof-, the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance (except to the
extent such remaining provisions constitute obligations of another party to this
Agreement corresponding to the unenforceable provision); and in lieu of such
illegal, invalid, or unenforceable provision, there shall be added automatically
as part of this Agreement, a provision as similar in its terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid, and
enforceable.
10.9 INTERPRETATION. This Agreement shall be construed according to
the fair meaning of its language. The rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be employed
in interpreting this Agreement. Whenever the term "including" is used in this
Agreement, it shall be interpreted as meaning "including, but not limited to"
the matter or matters thereafter enumerated.
10.10 THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended to confer upon any person other than the parties hereto and their
successors and permitted assigns any rights or remedies under or by reason of
this Agreement.
10.11 ARBITRATION OF ENVIRONMENTAL DISPUTE. Any dispute arising
from, or relating to, Environmental Remediation Costs shall be resolved at the
request of any party through binding arbitration. Within 14 business days after
demand for arbitration has been made by a party, the parties, and/or their
counsel, shall meet to discuss the issues involved, to discuss a suitable
arbitrator and arbitration procedure, and to agree on arbitration rules
particularly tailored to the matter in dispute, with a view to the dispute's
prompt, efficient, and just resolution. Upon the failure of the parties to agree
upon
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arbitration rules and procedures within a reasonable time (not longer than
thirty (30) days from the demand), the Commercial Arbitration Rules of the
American Arbitration Association shall be applicable. Likewise, upon the failure
of the parties to agree upon an arbitrator within a reasonable time (not longer
than thirty (30) days from the demand), there shall be a panel comprised of one
(1) arbitrator, to be appointed by the American Arbitration Association. At
least thirty (30) days before the arbitration hearing, the parties shall allow
each other reasonable written discovery including the inspection and copying of
documents and other tangible items relevant to the issues which are to be
presented at the arbitration hearing. The arbitrator shall be empowered to
decide any disputes regarding the scope of discovery. Fees for the arbitrator
shall be divided equally between the parties, and the parties will be
individually responsible for the payment of the fees. The prevailing party in
any arbitration, proceeding or legal action arising out of, or in connection
with, this Agreement shall be entitled to recover its reasonable attorneys' fees
and costs incurred in connection with such arbitration, proceeding or legal
action. The arbitrator shall determine who the prevailing party is for this
purpose.
The award rendered by the arbitrator shall be final and binding upon
the parties. The arbitration shall be conducted in San Francisco, California.
The California State Superior Court located in San Francisco, California shall
have exclusive jurisdiction over disputes between the parties in connection with
such arbitration and the enforcement thereof. The parties consent to the
jurisdiction and venue of the California State Superior Court located in San
Francisco, California. Notwithstanding the fact that the parties have agreed to
have any disputes arising from, or related to, this Agreement resolved by
binding arbitration, such arbitration provision shall not prevent the parties
from seeking ancillary or equitable relief in connection therewith from the
California State Superior Court, including specific performance.
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"NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE `ARBITRATION OF
DISPUTES' PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY
CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO
HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN
THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND
APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE
`ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO
ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY."
BUYER _________________________ SELLERS _________________________
COMPANY________________________
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10.12 VENUE. If any legal proceeding or any action (excluding
arbitration described in Section 10.11) relating to this Agreement or any of the
other agreements being executed and delivered in connection herewith, or any of
the transactions contemplated hereby or thereby, is brought or otherwise
initiated such action shall be brought in a court of appropriate jurisdiction
sitting in San Francisco or Napa County, California if the claim is brought
against the Company or any Seller(s); in Monroe County, New York if the claim is
brought against Buyer. The Company, each Shareholder and Buyer (i) hereby
irrevocably submits itself to the jurisdiction of a court of appropriate
jurisdiction in these respective counties, and (ii) to the extent permitted by
applicable law, hereby waives, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such suit, action or proceeding, the defense that
the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper, or that this Agreement or
other agreements executed in connection herewith, or the subject matter thereof,
may not be enforced in or by such courts. Without limiting the foregoing, Buyer,
the Company and each of the Sellers consent to process being served on it in any
such suit, action or proceeding at the address of such party set forth in
Section 10.2, and agree that they would generally prefer any suit action or
claim under this Section 10.12 to be heard in federal, not state, court and
shall use their best efforts to do so if there is applicable jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
with the intention of being bound by this Agreement as of the day and year first
above written.
COMPANY: BUYER:
FRANCISCAN VINEYARDS, INC., CANANDAIGUA BRANDS, INC.,
a Delaware corporation a Delaware corporation
By:/s/Jean-Michel Valette By:/s/Richard Sands
Jean-Michel Valette, President Richard Sands, President
SELLERS:
HEIDRUN ECKES-CHANTRE UND KINDER
BETEILIGUNGSVERWALTUNG II, GbR
/s/Agustin Huneeus
Agustin Huneeus, an individual
/s/Agustin Francisco Huneeus By: /s/Heidrun Eckes-Chantre
Agustin Francisco Huneeus, an individual Heidrun Eckes-Chantre
/s/Jean-Michel Valette PETER EUGEN ECKES UND KINDER
Jean-Michel Valette, an individual BETEILIGUNGSVERWALTUNG II, GbR
/s/Harald Eckes-Chantre By: /s/Peter Eugen Eckes
Harald Eckes-Chantre, an individual Peter Eugen Eckes
Its: Managing Partner
/s/Christina Eckes-Chantre
Christina Eckes-Chantre, an individual
/s/Petra Eckes-Chantre
Petra Eckes-Chantre, an individual
<PAGE>
The Registrant has omitted from this filing the Schedules listed below. The
Registrant will furnish supplementally to the Commission, upon request, a copy
of any omitted Schedule.
Exhibit Description
- - ------- -----------
1.2(a) Allocation of Purchase Price
1(g) Steps in Closing
2 Disclosure Schedule
6.4(a) Vineyard Sale Agreement
6.4(b) Vineyard Sale Agreement
6.5 EVSA Stock Agreement
6.6 ACSA Stock Agreement
6.7(a) ACSA and EVSA Shareholders Agreement
6.7(b) Buy-Sell Agreement
6.8 ACSA Distribution Agreement
6.9(a) Quintessa Grape Agreement
6.9(b) Encinos Grape Agreement
6.9(c) Lewis Grape Agreement
6.11 Wine Processing Agreement
6.12 Lewis Ranch Agreement
6.15 Employment and Consulting Agreement
6.18 Sellers' Opinions
6.18(b) Selling Partners' Opinion
7.16 Buyer's Opinion
================================================================================
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
May 12, 1999
between
CANANDAIGUA BRANDS, INC.
The SUBSIDIARY GUARANTORS Party Hereto
The LENDERS Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
------------------------------
$1,200,000,000
------------------------------
CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
THE BANK OF NOVA SCOTIA,
as Syndication Agent
CREDIT SUISSE FIRST BOSTON
and
FLEET NATIONAL BANK,
as Co-Documentation Agents
================================================================================
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of May
12, 1999, between CANANDAIGUA BRANDS, INC., a Delaware corporation (the
"Borrower"), the SUBSIDIARY GUARANTORS party hereto, the LENDERS party hereto,
and THE CHASE MANHATTAN BANK, a New York State banking corporation ("Chase"), as
administrative agent for said Lenders (in such capacity, together with its
successors in such capacity, the "Administrative Agent").
The Borrower, the Subsidiary Guarantors party hereto, the
Lenders party hereto, and the Administrative Agent are party to a First Amended
and Restated Credit Agreement dated as of November 2, 1998 (said First Amended
and Restated Credit Agreement, as in effect on the date hereof immediately
before giving effect to the amendment and restatement contemplated hereby, being
herein called the "Existing Credit Agreement"), providing for extensions of
credit (by means of loans and letters of credit) to be made by said Lenders to
the Borrower in an original aggregate principal or face amount not exceeding
$1,000,000,000, which amount may, in the circumstances therein provided, be
increased to $1,200,000,000.
The parties hereto now wish to amend the Existing Credit
Agreement in certain respects to provide for certain modifications to the
Existing Credit Agreement and, as so amended, to restate the Existing Credit
Agreement in its entirety, the modifications to be effected pursuant to this
Second Amended and Restated Credit Agreement requiring only the consent of the
"Required Lenders" under and as defined in the Existing Credit Agreement.
Accordingly, the parties hereto hereby agree that the Existing Credit Agreement
shall, subject to the execution and delivery of this Second Amended and Restated
Credit Agreement by each of the intended parties hereto, but with effect as of
the date hereof, be amended and restated to read in its entirety as set forth in
the Existing Credit Agreement, which is hereby incorporated herein by reference,
with the amendments set forth in Article II below (as so amended and restated,
the "Credit Agreement"):
ARTICLE I
Definitions
Except as used in the definitions set forth in Article II
below, references to "hereby," "herein," "hereof" and "herewith" refer to this
Second Amended and Restated Credit Agreement and not to the Existing Credit
Agreement. Capitalized terms used but not otherwise defined herein have the
meanings given them in the Credit Agreement.
<PAGE>
-2-
ARTICLE II
Amendments
Subject to the satisfaction or waiver of the conditions
precedent set forth in Article IV of this Second Amended and Restated Credit
Agreement, but effective as of the date hereof, the Existing Credit Agreement is
hereby amended as follows:
SECTION 2.01. References to "Existing Credit Agreement".
References in the Existing Credit Agreement to "this Agreement" (including
indirect references) shall be deemed to be references to the Credit Agreement.
SECTION 2.02. Definitions. Section 1.01 of the Existing Credit
Agreement is amended by adding the following new definitions (to the extent not
already included in said Section 1.01) and inserting the same in the appropriate
alphabetical locations and amending in their entirety the following definitions
(to the extent already included in said Section 1.01) to read in their entirety
as follows:
"Agreement" shall mean, on any date from and after the Second
Restatement Effective Date, this Agreement as in effect on the Second
Restatement Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect
on such date.
"Applicable Percentage" means (a) with respect to any Tranche
I Revolving Lender for purposes of Sections 2.05 or 2.06 or Article
VIII, the percentage of the total Tranche I Revolving Commitments
represented by such Tranche I Revolving Lender's Tranche I Revolving
Commitment, (b) with respect to any Tranche II Revolving Lender for
purposes of Section 2.06 or Article VIII, the percentage of the total
Tranche II Revolving Commitments represented by such Tranche II
Revolving Lender's Tranche II Revolving Commitment, (c) with respect to
any Revolving Lender in respect of any indemnity claim under Section
10.03(c) arising out of an action or omission of the Administrative
Agent, the Swingline Lender or the Issuing Lender under this Agreement
relating to Swingline Loans or Letters of Credit, the percentage of the
total Revolving Commitments of the applicable Class represented by such
Revolving Lender's Revolving Commitments of such Class and (d) with
respect to any Lender in respect of any indemnity claim under Section
10.03(c) arising out of an action or omission of the Administrative
Agent under this Agreement (other than one relating to Swingline Loans
or Letters of Credit), the percentage of the total Commitments or Loans
of all Classes hereunder represented by the aggregate amount of such
Lender's Commitments or Loans of all Classes hereunder. If the Tranche
I Revolving Commitments or Tranche II Revolving Commitments have
terminated or expired, the Applicable Percentages shall be determined
based upon the Tranche I Revolving Commitments or Tranche II Revolving
Commitments, as applicable, most recently in effect (and giving effect
to any assignments).
"Applicable Rate" means, for any day, with respect to any ABR
Borrowing (including any Swingline ABR Borrowing), Syndicated
Eurocurrency Borrowing,
<PAGE>
-3-
Swingline FFBR Borrowing or Swingline Eurocurrency Borrowing, or with
respect to the facility fees or commitment fees payable hereunder, as
the case may be, the rate per annum set forth in the schedule below,
as applicable, based upon the Debt Ratio as of the most recent
determination date, provided that prior to the Second Restatement
Effective Date, the Applicable Rate for any Borrowing shall not be
lower than the rates set forth below for Category 2 and on and after
the Second Restatement Effective Date through the later of November
30, 1999 and the payment in full of the Tranche II Term Loans, the
Applicable Rate for any Borrowing shall not be lower than the rates
set forth below for Category 1:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
DEBT RATIO: REVOLVING AND TRANCHE I AND II INCREMENTAL FACILITY
SWINGLINE LOANS TERM LOANS AND
TRANCHE III
TERM LOANS
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
ABR RATE EURO-CURRENCY ABR EURO-CURRENCY ABR EURO-CURRENCY FACILITY/
AND RATE RATE RATE RATE COMMITMENT
SWINGLINE FEE RATE
FFBR RATE
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Category 1
4.00x 1.000 2.000 1.500 2.500 1.750 2.750 0.500
------------------------------------------------------------------------------------------------
Category 2
< 4.00x and 0.750 1.750 1.250 2.250 1.500 2.500 0.500
= 3.65x
------------------------------------------------------------------------------------------------
Category 3
< 3.65x and 0.500 1.500 1.000 2.000 1.500 2.500 0.500
= 3.00x
------------------------------------------------------------------------------------------------
Category 4
< 3.00x and 0.375 1.375 0.750 1.750 1.500 2.500 0.375
= 2.50x
------------------------------------------------------------------------------------------------
Category 5
< 2.50x 0.125 1.125 0.500 1.500 1.500 2.500 0.375
------------------------------------------------------------------------------------------------
</TABLE>
For purposes of the foregoing, (i) the Debt Ratio shall be
determined as of the end of each fiscal quarter of the Borrower's
fiscal year based upon the Borrower's consolidated financial statements
delivered pursuant to Section 6.01(a) or (b) (or, prior to the first
such delivery, referred to in Section 4.04(a)(iii)), and (ii) subject
to the foregoing provisions of this definition, each change in the
Applicable Rate resulting from a change in the Debt Ratio shall be
effective during the period commencing on and including the date three
Business Days after delivery to the Administrative Agent of such
consolidated financial statements indicating such change and ending on
the date immediately preceding the effective date of the next such
change; provided that the Debt Ratio shall be deemed to be in Category
1 (A) at any time that an Event of Default has occurred and is
continuing and (B) if the Borrower fails to deliver the consolidated
financial statements required to be delivered by it pursuant to Section
6.01(a) or (b), during the period from the expiration of the time for
delivery thereof until such consolidated financial statements are
delivered.
<PAGE>
-4-
"Debt Ratio" means, as at the last day of any fiscal quarter
of the Borrower (the "day of determination"), the ratio of (a) the
average of the aggregate amounts of Indebtedness of the Borrower and
its Consolidated Subsidiaries (determined on a consolidated basis,
without duplication, in accordance with GAAP) as at such day and as at
the last days of each of the three immediately preceding fiscal
quarters to (b) Operating Cash Flow for the period of four consecutive
fiscal quarters ending on such day of determination.
Notwithstanding the foregoing, (i) Indebtedness as at the last
day of each fiscal quarter included in the determination of average
Indebtedness pursuant to clause (a) above shall be determined under the
assumption that any prepayment of Term Loans hereunder from the
proceeds of any Equity Issuance at any time during any such fiscal
quarter included in the calculation thereof shall have been made in the
first such fiscal quarter, (ii) for the last day of any fiscal quarter
ending prior to the end of the Term Loan Availability Period, the
average Indebtedness specified in clause (a) above shall be increased
by an amount equal to the aggregate principal amount of Loans that
would be required to be borrowed under this Agreement to finance in
full the acquisition by U.K. Acquisition of all of the Target Shares
pursuant to the Tender Offer and the repayment in full of all
Indebtedness outstanding under the Target Credit Facilities (but
without duplication of (x) any Loans actually outstanding under this
Agreement on such date and applied to such purpose and (y) any
Indebtedness outstanding under the Target Credit Facilities on such
date), (iii) for purposes of determining Operating Cash Flow pursuant
to clause (b) above for any period ending on or prior to the end of the
Term Loan Availability Period, the Target and its Subsidiaries shall in
any event be deemed to be Consolidated Subsidiaries of the Borrower and
(iv) if during the period of four fiscal quarters ending on the day of
determination the Borrower shall have consummated any Acquisition or
Disposition (other than the Tender Offer) for aggregate consideration
of $10,000,000 or more then the average Indebtedness as at the last day
of each fiscal quarter in such period shall be determined on a pro
forma basis by adding (in the case of an Acquisition), without
duplication of amounts already included, the amount of Indebtedness
incurred or assumed by the Borrower or any of its Subsidiaries in
connection with such Acquisition and subtracting (in the case of a
Disposition), without duplication of amounts already excluded, the
amount of Indebtedness repaid in connection with such Disposition.
"Existing Credit Agreement" shall have the meaning assigned to
such term in the preamble to the Second Amended and Restated Credit
Agreement.
"Franciscan Acquisition" means the acquisition by the
Borrower, directly or indirectly through one or more Wholly Owned
Subsidiaries, of the shares of stock of Franciscan Vineyards, Inc.,
together with certain related assets, pursuant to the Franciscan
Acquisition Agreement.
"Franciscan Acquisition Agreement" means the Stock Purchase
Agreement dated as of April 21, 1999 between Franciscan Vineyards,
Inc., the Sellers referred to therein and the Borrower.
<PAGE>
-5-
"Incremental Facility Commitment" means, with respect to each
Lender, the commitment, if any, of such Lender to make Incremental
Facility Loans, expressed as an amount representing the maximum
aggregate amount of such Lender's Incremental Facility Exposure
hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.09 or 2.11 and (b) reduced or increased from time
to time pursuant to assignments by or to such Lender pursuant to
Section 10.04. The initial amount of each Lender's Incremental Facility
Commitment is set forth on such Lender's signature page of the
Incremental Facility Loan Agreement, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its
Incremental Facility Commitment, as applicable. The initial amount of
each Lender's Incremental Facility Commitments shall be determined in
accordance with the provisions of Section 2.01(c).
"Incremental Facility Exposure" means, with respect to any
Lender at any time, the outstanding principal amount of such Lender's
Incremental Facility Loans.
"Incremental Facility Lenders" means a Lender with an
Incremental Facility Commitment or, if the Incremental Facility
Commitments have terminated or expired, a Lender with Incremental
Facility Exposure.
"Incremental Facility Loan" means an "Incremental Facility
Loan" provided for by Section 2.01(c), which may be ABR Loans and/or
Eurocurrency Loans.
"Incremental Facility Loan Agreement" means, with respect to
any Series of Incremental Facility Loans, an agreement between the
Borrower and one or more Lenders pursuant to which each such Lender
agrees to become obligated in respect of an Incremental Facility
Commitment of such Series hereunder.
"Interest Expense" means, for any period, the sum, for the
Borrower and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP), of the
following: (a) all interest in respect of Indebtedness (including the
interest component of any payments in respect of Capital Lease
Obligations) accrued or capitalized during such period (whether or not
actually paid during such period) plus (b) the net amounts payable (or
minus the net amounts receivable) under Interest Rate Protection
Agreements accrued during such period (whether or not actually paid or
received during such period) minus (c) all interest income during such
period.
Notwithstanding the foregoing, if during any period for which
Interest Expense is being determined the Borrower shall have
consummated any Acquisition or Disposition for aggregate consideration
of $10,000,000 or more then, for all purposes of this Agreement (other
than for purposes of the definition of Excess Cash Flow), Interest
Expense shall be determined on a pro forma basis as if such Acquisition
or Disposition (and any Indebtedness incurred by the Borrower or any of
its Subsidiaries in connection with such Acquisition or repaid as a
result of such Disposition) had been made or consummated (and such
Indebtedness incurred or repaid) on the first day of such period (and
interest on any such Indebtedness shall be deemed to be calculated for
such period at
<PAGE>
-6-
a rate per annum equal to the actual rate of interest in effect in
respect of Indebtedness under this Agreement outstanding during such
period).
"Operating Cash Flow" means, for any period, the sum, for the
Borrower and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP), of the
following: (a) net operating income (calculated before income taxes,
interest income, Interest Expense, extraordinary and unusual items and
income or loss attributable to equity in Affiliates) for such period
plus (b) depreciation and amortization (to the extent deducted in
determining net operating income) for such period plus (c) the
Adjustment Amount for such period, if such Adjustment Amount is expense
(or minus the Adjustment Amount for such period, if such Adjustment
Amount is income) plus (d) unusual non-recurring charges against net
operating income of the Target and its Subsidiaries described on
Schedule IX hereto (as such Schedule may be amended from time to time
with the consent of the Borrower and the Required Lenders).
Notwithstanding the foregoing, if during any period for which
Operating Cash Flow is being determined the Borrower or any of its
Subsidiaries shall have consummated any Acquisition or Disposition for
aggregate consideration of $10,000,000 or more then, for all purposes
of this Agreement (other than for purposes of determining Excess Cash
Flow), Operating Cash Flow shall be determined on a pro forma basis as
if such Acquisition or Disposition had been made or consummated on the
first day of such period.
"Revolving Commitments" means, collectively, the Tranche I
Revolving Commitments and the Tranche II Revolving Commitments.
"Revolving Lenders" means, collectively, the Tranche I
Revolving Lenders and the Tranche II Revolving Lenders.
"Revolving Loans" means, collectively, the Tranche I Revolving
Loans and the Tranche II Revolving Loans.
"Second Amended and Restated Credit Agreement" shall mean that
certain Second Amended and Restated Credit Agreement, between the
Borrower, the Subsidiary Guarantors, the Lenders and the Administrative
Agent, dated as of May 12, 1999.
"Second Restatement Effective Date" shall mean the date upon
which each of the conditions precedent set forth in Article IV of the
Second Amended and Restated Credit Agreement shall have been satisfied
or waived.
"Senior Debt Ratio" means, as at the last day of any fiscal
quarter of the Borrower (the "day of determination"), the ratio of (a)
the average of the aggregate amounts of Indebtedness (other than any
Subordinated Indebtedness) of the Borrower and its Consolidated
Subsidiaries (determined on a consolidated basis, without duplication,
in accordance with GAAP) as at such day and as at the last days of each
of the three immediately preceding fiscal quarters to (b) Operating
Cash Flow for the period of four consecutive fiscal quarters ending on
such day of determination.
<PAGE>
-7-
Notwithstanding the foregoing, (i) Indebtedness as at the last
day of each fiscal quarter included in the determination of average
Indebtedness pursuant to clause (a) above shall be determined under the
assumption that any prepayment of Term Loans hereunder from the
proceeds of any Equity Issuance or Debt Incurrence at any time during
any such fiscal quarter included in the calculation thereof shall have
been made in the first such fiscal quarter, (ii) for the last day of
any fiscal quarter ending prior to the end of the Term Loan
Availability Period, the average Indebtedness specified in clause (a)
above shall be increased by an amount equal to the aggregate principal
amount of Loans that would be required to be borrowed under this
Agreement to finance in full the acquisition by U.K. Acquisition of all
of the Target Shares pursuant to the Tender Offer and the repayment in
full of all Indebtedness outstanding under the Target Credit Facilities
(but without duplication of (x) any Loans actually outstanding under
this Agreement on such date and applied to such purpose and (y) any
Indebtedness outstanding under the Target Credit Facilities on such
date), (iii) for purposes of determining Operating Cash Flow pursuant
to clause (b) above for any period ending on or prior to the end of the
Term Loan Availability Period, the Target and its Subsidiaries shall in
any event be deemed to be Consolidated Subsidiaries of the Borrower,
(iv) if during the period of four fiscal quarters ending on the day of
determination the Borrower shall have consummated any Acquisition or
Disposition (other than the Tender Offer) for aggregate consideration
of $10,000,000 or more then the average Indebtedness as at the last day
of each fiscal quarter in such period shall be determined on a pro
forma basis by adding (in the case of an Acquisition), without
duplication of amounts already included, the amount of Indebtedness
(other than Subordinated Indebtedness) incurred or assumed by the
Borrower or any of its Subsidiaries in connection with such Acquisition
and subtracting (in the case of a Disposition), without duplication of
amounts already excluded, the amount of Indebtedness (other than
Subordinated Indebtedness) repaid in connection with such Disposition
and (v) if during the period of four fiscal quarters ending on the day
of determination the Borrower shall have repaid any Indebtedness (other
than Subordinated Indebtedness) from the proceeds of Subordinated
Indebtedness, then the average Indebtedness as at the last day of each
fiscal quarter in such period shall be determined on a pro forma basis
by subtracting, without duplication of amounts already excluded, the
amount of such Indebtedness so repaid from the proceeds of Subordinated
Indebtedness.
SECTION 2.03. Deletion and Modification of Certain
Definitions. The definitions of "Tranche III Revolving Commitment", "Tranche III
Revolving Exposure", "Tranche III Revolving Lenders", "Tranche III Revolving
Loan" and "Tranche III Revolving Loan Agreement" are hereby deleted from Section
1.01 of the Existing Credit Agreement, and any reference to any of such terms in
the Existing Credit Agreement is hereby amended to be a reference to
"Incremental Facility Commitment", "Incremental Facility Exposure", "Incremental
Facility Lenders", "Incremental Facility Loan" and "Incremental Facility Loan
Agreement", respectively.
<PAGE>
-8-
SECTION 2.04. Incremental Facility Loans. Section 2.01(c) of
the Existing Credit Agreement is hereby amended to read in its entirety as
follows:
"(c) Incremental Facility Loans. In addition to borrowings of
Tranche I Revolving Loans and Tranche II Revolving Loans specified in
Section 2.01(a) and (b), respectively, at any time and from time to
time on or before November 30, 1999, the Borrower may request that the
Lenders offer to enter into commitments to make Incremental Facility
Loans to the Borrower in Dollars (it being understood that such offer
may be made by any financial institution that is to become a Lender
hereunder in connection with the making of such offer under this
paragraph (c), so long as the Administrative Agent shall have consented
to such financial institution being a Lender hereunder (such consent
shall not be unreasonably withheld)). In the event that one or more of
the Lenders offer, in their sole discretion, to enter into such
commitments, and such Lenders and the Borrower agree as to the amount
of such commitments that shall be allocated to the respective Lenders
making such offers and as to the fees (if any) to be payable by the
Borrower in connection therewith, the Borrower, the Administrative
Agent and such Lenders shall execute and deliver an Incremental
Facility Loan Agreement and such Lenders shall become obligated to make
Incremental Facility Loans under this Agreement in an amount equal to
the amount of their respective Incremental Facility Commitments, as
specified in such Incremental Facility Loan Agreement. The Incremental
Facility Loans to be made pursuant to any Incremental Facility Loan
Agreement in response to any such request by the Borrower shall be
deemed to be a separate "Series" of Incremental Facility Loans for all
purposes of this Agreement.
Anything herein to the contrary notwithstanding, (i) the
minimum aggregate principal amount of Incremental Facility Commitments
entered into pursuant to any request specified above (and, accordingly,
the minimum aggregate principal amount of any Series of Incremental
Facility Loans) shall be $50,000,000 and (ii) the aggregate outstanding
principal amount of Incremental Facility Loans of all Series, together
with the aggregate unutilized Incremental Facility Commitments of all
Series, shall not exceed $200,000,000 at any time.
Following agreement by the Borrower and one or more of the
Lenders as provided above, subject to the terms and conditions set
forth herein, each Incremental Facility Lender of any Series agrees to
make Incremental Facility Loans of such Series to the Borrower as
specified in the Incremental Facility Loan Agreement, in Dollars in an
aggregate principal amount up to but not exceeding the amount of the
Incremental Facility Commitment of such Series of such Incremental
Facility Lender. Amounts repaid in respect of Incremental Facility
Loans may not be reborrowed. Incremental Facility Loans shall be made
as ABR Loans and Eurocurrency Loans available in Dollars only, and
shall not be available as Competitive Loans or Swingline Loans, nor
shall the Incremental Facility Commitments be available for the
issuance of Letters of Credit."
<PAGE>
-9-
SECTION 2.05. Conversions and Continuations. Section 2.02(d)
of the Existing Credit Agreement
is hereby amended to read in its entirety as follows:
"(d) Conversion or Continuation of Eurocurrency Loans.
Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert to or continue
as a Syndicated Eurocurrency Borrowing: (i) any Revolving Borrowing or
Competitive Borrowing if the Interest Period requested with respect
thereto would end after the Revolving Commitment Termination Date; or
(ii) any Term Loan Borrowing of any Class, or any Incremental Facility
Loan of any Series, if the Interest Period requested with respect
thereto would commence before and end after any Term Loan Principal
Payment Date unless, after giving effect thereto, the aggregate
principal amount of the Tranche I Term Loans, Tranche II Term Loans,
Tranche III Term Loans or Incremental Facility Loans of such Series, as
the case may be, having Interest Periods that end after such Term Loan
Principal Payment Date shall be equal to or less than the aggregate
principal amount of the Tranche I Term Loans, Tranche II Term Loans,
Tranche III Term Loans or Incremental Facility Loans of such Series,
respectively, permitted to be outstanding after giving effect to the
payments of principal required to be made on such Term Loan Principal
Payment Date."
SECTION 2.06. Notices of Borrowings. Clause (i) of Section
2.03 of the Existing Credit Agreement is hereby amended to read in its entirety
as follows:
"(i) whether the requested Borrowing is to be a Tranche I
Revolving Borrowing, Tranche II Revolving Borrowing, Incremental
Facility Borrowing, Tranche I Term Loan Borrowing, Tranche II Term Loan
Borrowing or Tranche III Term Loan Borrowing;"
SECTION 2.07. Competitive Bid Loans. The first sentence of
Section 2.04(a) of the Existing Credit Agreement is hereby amended to read in
its entirety as follows:
"Subject to the terms and conditions set forth herein, from
time to time during the Revolving Availability Period the Borrower may
request Competitive Bids and may (but shall not have any obligation to)
accept Competitive Bids and borrow Competitive Loans denominated in
Dollars or Sterling; provided that (i) the sum of the total Tranche I
Revolving Exposures plus the aggregate principal amount of outstanding
Competitive Loans made by Tranche I Revolving Lenders at any time shall
not exceed the total Tranche I Revolving Commitments, (ii) the sum of
the total Tranche II Revolving Exposures plus the aggregate principal
amount of outstanding Competitive Loans made by Tranche II Revolving
Lenders at any time shall not exceed the total Tranche II Revolving
Commitments and (iii) the sum of the aggregate principal amount of
outstanding Tranche II Revolving Loans and Competitive Loans
denominated in Sterling at any time shall not exceed
(pound)50,000,000."
<PAGE>
-10-
SECTION 2.08. Letters of Credit. Section 2.06(c) of the
Existing Credit Agreement is hereby amended to read in its entirety as follows:
"(c) Limitations on Amounts. A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrower
shall be deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension (i) the aggregate LC
Exposure of Chase, as an Issuing Lender (determined for these purposes
without giving effect to the participations therein of the Revolving
Lenders pursuant to paragraph (e) of this Section), shall not exceed
$20,000,000, (ii) the aggregate LC Exposure of First Chicago, as an
Issuing Lender (determined for these purposes without giving effect to
the participations therein of the Revolving Lenders pursuant to
paragraph(e) of this Section), shall not exceed the Qingdao Letter of
Credit Limit, (iii) the sum of the total Tranche I Revolving Exposures
plus the aggregate principal amount of outstanding Competitive Loans
made by Tranche I Revolving Lenders shall not exceed the total Tranche
I Revolving Commitments and (iv) the sum of the total Tranche II
Revolving Exposures plus the aggregate principal amount of outstanding
Competitive Loans made by Tranche II Revolving Lenders shall not exceed
the total Tranche II Revolving Commitments."
SECTION 2.09. Termination of Commitments. Section 2.09(a) of
the Existing Credit Agreement is hereby amended to read in its entirety as
follows:
"(a) Scheduled Termination. Unless previously terminated, (i)
the Tranche I Term Loan Dollar Commitments, the Tranche I Term Loan
Sterling Commitments and the Tranche II Term Loan Commitments shall
terminate at 5:00 p.m. on the last day of the Term Loan Availability
Period, (ii) the Tranche III Term Loan Commitments shall terminate at
5:00 p.m., New York City time, on the Initial Funding Date, (iii) the
Revolving Commitments shall terminate on the Revolving Commitment
Termination Date and (iv) the Incremental Facility Commitments of any
Series shall terminate immediately after the making of the Incremental
Facility Loans of such Series."
SECTION 2.10. Repayment of Incremental Facility Loans. Section
2.10(a) of the Existing Credit Agreement is hereby amended by deleting the "and"
at the end of clause (v), replacing the period at the end of clause (vi) with ",
and" and adding a new clause (vii) to read as follows:
"(vii) to the Administrative Agent for account of the
Incremental Facility Lenders the outstanding principal amount of the
Incremental Facility Loans of any Series on each Term Loan Principal
Payment Date set forth below in an aggregate principal amount equal to
the percentage of the original principal amount of the Incremental
Facility Loans of such Series set forth opposite such Term Loan
Principal Payment Date:
<PAGE>
-11-
Term Loan
Principal Payment Date Amount (%)
December 1, 1999 .25
March 1, 2000 .25
June 1, 2000 .25
September 1, 2000 .25
December 1, 2000 .25
March 1, 2001 .25
June 1, 2001 .25
September 1, 2001 .25
December 1, 2001 .25
March 1, 2002 .25
June 1, 2002 .25
September 1, 2002 .25
December 1, 2002 .25
March 1, 2003 .25
June 1, 2003 .25
September 1, 2003 .25
December 1, 2003 .25
March 1, 2004 11.96875
June 1, 2004 11.96875
September 1, 2004 11.96875
December 1, 2004 11.96875
March 1, 2005 11.96875
June 1, 2005 11.96875
September 1, 2005 11.96875
December 1, 2005 11.96875"
SECTION 2.11. Mandatory Prepayments. Clause "second" of
Section 2.11(b)(vi)(A) of the Existing Credit Agreement is hereby amended to
read in its entirety as follows:
"second, after the payment in full of any then-outstanding
Term Loans of any Class, to prepay Revolving Loans (without reduction
of Revolving Commitments) and Incremental Facility Loans, in each case
ratably in accordance with the respective principal amounts thereof."
<PAGE>
-12-
SECTION 2.12. Mandatory Prepayments. Clause "second" of
Section 2.11(b)(vi)(B) of the Existing Credit Agreement is hereby amended to
read in its entirety as follows:
"second, after the payment in full of any then-outstanding
Term Loans of any Class, to prepay Revolving Loans (without reduction
of Revolving Commitments) and Incremental Facility Loans, in each case
ratably in accordance with the respective principal amounts thereof."
SECTION 2.13. Pro Rata Treatment. Section 2.18(c) of the
Existing Credit Agreement is hereby amended to read in its entirety as follows:
"(c) Pro Rata Treatment. Except to the extent otherwise
provided herein (including in Section 2.10(a)(ii)): (i) each Syndicated
Borrowing of a particular Class shall be made from the relevant
Lenders, each payment of facility fee and commitment fee under Section
2.12 in respect of Commitments of a particular Class shall be made for
account of the relevant Lenders, and each termination or reduction of
the amount of the Commitments of a particular Class under Section 2.09
shall be applied to the respective Commitments of such Class of the
relevant Lenders, pro rata according to the amounts of their respective
Commitments of such Class; (ii) each Syndicated Borrowing of any Class
shall be allocated pro rata among the relevant Lenders according to the
amounts of their respective Commitments of such Class (in the case of
the making of Syndicated Loans) or their respective Loans of such Class
(in the case of conversions and continuations of Loans); (iii) each
payment or prepayment of principal of Revolving Loans, Incremental
Facility Loans of any Series, Tranche I Term Loans, Tranche II Term
Loans and Tranche III Term Loans by the Borrower shall be made for
account of the relevant Lenders pro rata in accordance with the
respective unpaid principal amounts of the Syndicated Loans of such
Class or Series held by them; and (iv) each payment of interest on
Revolving Loans, Incremental Facility Loans of any Series, Tranche I
Term Loans, Tranche II Term Loans and Tranche III Term Loans by the
Borrower shall be made for account of the relevant Lenders pro rata in
accordance with the amounts of interest on such Loans then due and
payable to the respective Lenders."
SECTION 2.14. Section 6.08 of the Existing Credit Agreement is
amended by adding a new sentence at the end thereof to read as follows:
"The proceeds of the Incremental Facility Loans of any Series
will be used to finance acquisitions (including the Franciscan
Acquisition) and related fees and expenses."
<PAGE>
-13-
SECTION 2.15. Paragraphs (a) and (c) of Section 7.08 of the
Existing Credit Agreement are hereby amended to read in their entirety as
follows, respectively:
"(a) Debt Ratio. The Borrower will not permit the Debt Ratio
to exceed the following respective ratios at any time during the
following respective periods:
Period Ratio
-------------------- -----------
From the date hereof
through August 31, 2000 4.75 to 1
From September 1, 2000
through August 31, 2001 4.50 to 1
From September 1, 2001
and at all times thereafter 4.00 to 1
(c) Interest Coverage Ratio. The Borrower will not permit the
Interest Coverage Ratio to be less than the following respective ratios
at any time during the following respective periods:
Period Ratio
-------------------- -----------
From the date hereof
through February 29, 2000 2.25 to 1
From March 1, 2000
through February 28, 2001 2.50 to 1
From March 1, 2001
through February 28, 2002 2.75 to 1
From March 1, 2002
and at all times thereafter 3.00 to 1"
<PAGE>
-14-
ARTICLE III
Representations and Warranties
The Borrower hereby represents and warrants to the Lenders (i)
as of the date hereof and (ii) as of the Second Restatement Effective Date (as
defined in Article II hereof), after giving effect to the Second Amended and
Restated Credit Agreement, that:
(i) no Default has occurred and is continuing;
(ii) each of the representations and warranties of the
Borrowers in Article IV of the Existing Credit Agreement and in the
other Loan Documents are true and complete on the date hereof, with the
same force and effect as if made on and as of the date hereof (or, if
any such representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date), as if each
reference in said Article IV or in each such Loan Document to "this
Agreement" included reference to this Second Amended and Restated
Credit Agreement; and
(iii) the Borrower has heretofore delivered to the
Administrative Agent a true and complete copy of the Franciscan
Acquisition Agreement (including any modifications and supplements
thereto, and any schedules delivered thereunder) as in effect on the
date hereof.
ARTICLE IV
Conditions Precedent
The amendments set forth in Article II hereof shall become
effective on the date upon which each of the following conditions precedent
shall have been fulfilled to the satisfaction of the Administrative Agent:
SECTION 4.01. Execution by All Parties. This Second Amended
and Restated Credit Agreement shall have been executed and delivered by the
Borrower, each of the Subsidiary Guarantors, Lenders constituting the "Required
Lenders" under the Existing Credit Agreement, and the Administrative Agent.
SECTION 4.02. Other Documents. The Administrative Agent shall
have received such documents as the Administrative Agent, any Lender or special
New York counsel to Chase may reasonably request in connection herewith.
<PAGE>
-15-
ARTICLE V
Confirmation of Collateral Security
Each Obligor, by its signature below, hereby confirms that the
obligations of such Obligor in respect of the Incremental Facility Loans, are
entitled to the benefits of the Guarantees and collateral security provided for
pursuant to the Security Documents to which such Obligor is a party.
ARTICLE VI
Miscellaneous.
Except as herein provided, the Existing Credit Agreement shall
remain unchanged and in full force and effect. This Second Amended and Restated
Credit Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Second Amended and Restated Credit
Agreement by signing any such counterpart and sending the same by telecopier,
mail messenger or courier to the Administrative Agent or counsel to the
Administrative Agent. This Second Amended and Restated Credit Agreement shall be
governed by, and construed in accordance with, the law of the State of New York.
<PAGE>
-16-
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amended and Restated Credit Agreement to be duly executed and delivered as of
the day and year first above written.
CANANDAIGUA BRANDS, INC.
By /s/Thomas S. Summer
Title: Senior Vice President
and Chief Financial Officer
SUBSIDIARY GUARANTORS
BATAVIA WINE CELLARS, INC.
CANANDAIGUA EUROPE LIMITED
CANANDAIGUA WINE COMPANY, INC
POLYPHENOLICS, INC.
ROBERTS TRADING CORP.
By /s/Thomas S. Summer
Title: Treasurer
BARTON INCORPORATED
BARTON BRANDS, LTD.
BARTON BEERS, LTD.
BARTON BRANDS OF CALIFORNIA, INC.
BARTON BRANDS OF GEORGIA, INC.
BARTON DISTILLERS IMPORT CORP.
BARTON FINANCIAL CORPORATION
MONARCH IMPORT COMPANY
STEVENS POINT BEVERAGE CO.
THE VIKING DISTILLERY, INC.
By /s/Thomas S. Summer
Title: Vice President
CANANDAIGUA LIMITED
By /s/Thomas S. Summer
Title: Finance Director
CANANDAIGUA B.V.
By /s/Thomas S. Summer
Title: Authorized Attorney
<PAGE>
-17-
LENDERS
THE CHASE MANHATTAN BANK,
individually, as Swingline Lender
and as Administrative Agent
By /s/Bruce Borden
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/J. Alan Edwards
Title: Authorized Signatory
CREDIT SUISSE FIRST BOSTON
By /s/Chris T. Horgan
Title: Vice President
By /s/Kristin Lepri
Title: Associate
FLEET NATIONAL BANK
By /s/Martin K. Birmingham
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH
By /s/Ian Reece
Title: Senior Credit Officer
By /s/Leigh R. Reed
Title:Vice President
<PAGE>
-18-
CREDIT LYONNAIS, NEW YORK BRANCH
By /s/Vladmir Labbun
Title: First Vice President - Manager
FIRST NATIONAL BANK OF CHICAGO
By /s/Jeffrey Lubatkin
Title: Officer
FIRST UNION NATIONAL BANK
(successor to CoreStates Bank, N.A.)
By /s/Donna J. Emhart
Title: Vice President
NATIONSBANK, N.A.
By:/s/Kathryn W. Robinson
Title: Senior Vice President
SUNTRUST BANK, ATLANTA
By /s/Hugh E. Brown
Title: Associate
By /s/ Robert V. Honeycutt
Title: Vice President
WELLS FARGO BANK, NATIONAL ASSOCIATION
By /s/Tracey A. Hanson
Title: Vice President
<PAGE>
-19-
BARCLAYS BANK PLC
By /s/Marlene Wechselblatt
Title: Vice President
CIBC INC
By /s/Gerald Girardi
Title: Executive Director
COBANK, ACB
By /s/Brian J. Klatt
Title: Vice President
CREDIT AGRICOLE INDOSUEZ
By /s/Alan L. Schmelzer
Title: Senior Relationship Manager
B /s/Katherine L. Abbott
Title: First Vice President/Managing
Director
DEUTSCHE BANK, NEW YORK and/or
CAYMAN ISLANDS BRANCH
By /s/Alexander Karow
Title: Associate
By /s/Stephen A. Wiedemann
Title: Director
MANUFACTURERS AND TRADERS TRUST
COMPANY
By /s/Philip M. Smith
Title: Regional Senior Vice President
<PAGE>
-20-
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By /s/Patrick Rounds
Title: Vice President
By /s/Greg Roux
Title: Vice President
BANK UNITED
By /s/Phil Green
Title: Director - Commercial
Syndications
BANQUE NATIONALE DE PARIS
By /s/Richard L. Sted
Title:
By /s/Richard Pace
Title: Vice President
Corporate Banking Division
HARRIS TRUST AND SAVINGS BANK
By /s/Edwin A. Adams, Jr.
Title: Vice President
KEY BANK NATIONAL ASSOCIATION
By /s/Lawrence A. Mack
Title: Senior Vice President
<PAGE>
-21-
NATIONAL CITY BANK
By /s/Lisa B. Lisi
Title: Vice President
STATE STREET BANK AND TRUST COMPANY
By /s/Christopher Del Signore
Title: Vice President
USTRUST
By /s/Thomas F. Macina
Title: Vice President
WACHOVIA BANK, N.A.
By /s/Fitzhugh L. Wickham
Title: Vice President
THE BANK OF NEW YORK
By /s/Thomas C. McCrohan
Title: Vice President
KBC BANK
By:_________________________________
Title:
By:_________________________________
Title:
<PAGE>
-22-
HSBC BANK USA
By /s/Martin F. Brown
Title: Authorized Signatory
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By /s/Jim Brown
Title: Vice President
DEUTSCHE FINANCIAL SERVICES
CORPORATION
By /s/Edwin G. Chewning
Title: Vice President
INCREMENTAL FACILITY LOAN AGREEMENT (SERIES A)
INCREMENTAL FACILITY LOAN AGREEMENT dated as of May 27, 1999
between CANANDAIGUA BRANDS, INC., the Subsidiary Guarantors party hereto, the
Incremental Facility Lenders party hereto and THE CHASE MANHATTAN BANK, as
Administrative Agent.
Canandaigua Brands, Inc., the Subsidiary Guarantors named
therein, the lenders named therein and The Chase Manhattan Bank, as
Administrative Agent, are parties to a Second Amended and Restated Credit
Agreement dated as of May 12, 1999, pursuant to which the First Amended and
Restated Credit Agreement dated as of November 2, 1998 between said parties was
further amended and restated (said First Amended and Restated Credit Agreement,
as so further amended and restated, being herein called the "Credit Agreement").
Terms defined in the Credit Agreement are used herein as defined therein.
Pursuant to Section 2.01(c) of the Credit Agreement, the
Borrower has requested the Lenders provide an aggregate amount of $200,000,000
of Incremental Facility Commitments, to be designated as "Series A Incremental
Facility Commitments", providing for "Series A Incremental Facility Loans". The
Incremental Facility Lenders signatory to this Agreement have agreed to enter
into such Commitments and make such Loans on the terms set forth below and,
accordingly, the parties hereto hereby agree as follows:
Section 1. Series A Incremental Facility Commitments. Each
Incremental Facility Lender executing this Agreement hereby agrees, subject to
the terms and conditions set forth in the Credit Agreement, to make a Series A
Incremental Facility Loan to the Borrower on or before June 30, 1999, in an
aggregate principal amount up to but not exceeding its Series A Incremental
Facility Commitment as set forth on each Incremental Facility Lender's signature
page hereto. Each Incremental Facility Lender's Series A Incremental Facility
Commitments not utilized on or before June 30, 1999 shall terminate at 5:00
p.m., New York Time, on June 30, 1999.
Section 2. Repayment, Etc. The Borrower hereby acknowledges
and confirms that it has agreed, pursuant to the Credit Agreement, to repay the
principal of the Series A Incremental Facility Loans borrowed under the Credit
Agreement when and as the same become due and payable as provided in the Credit
Agreement. The Borrower agrees that the Applicable Rate on any Series A
Incremental Facility Loan shall be the appropriate rates specified in the
definition of Applicable Rate in Section 1.01 of the Credit Agreement.
<PAGE>
-2-
Section 3. Miscellaneous. This Agreement shall be construed in
accordance with and governed by the law of the State of New York. This Agreement
may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties hereto may execute
this Agreement by signing any such counterpart and sending the same by
telecopier, mail messenger or courier to the Administrative Agent or counsel to
the Administrative Agent. This Agreement and any separate letter agreements with
respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof. This Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
<PAGE>
-3-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
CANANDAIGUA BRANDS, INC.
By: /s/Thomas S. Summer
---------------------
Title:Senior Vice President
and Chief Financial
Officer
SUBSIDIARY GUARANTORS
BATAVIA WINE CELLARS, INC.
CANANDAIGUA EUROPE LIMITED
CANANDAIGUA WINE COMPANY, INC
POLYPHENOLICS, INC.
ROBERTS TRADING CORP.
By /s/Thomas S. Summer
- - -----------------------
Title: Treasurer
BARTON INCORPORATED
BARTON BRANDS, LTD.
BARTON BEERS, LTD.
BARTON BRANDS OF CALIFORNIA, INC.
BARTON BRANDS OF GEORGIA, INC.
BARTON DISTILLERS IMPORT CORP.
BARTON FINANCIAL CORPORATION
MONARCH IMPORT COMPANY
STEVENS POINT BEVERAGE CO.
THE VIKING DISTILLERY, INC.
By /s/Thomas S. Summer
- - -------------------------
Title: Vice President
CANANDAIGUA LIMITED
By /s/Thomas S. Summer
Title: Finance Director
<PAGE>
-4-
CANANDAIGUA B.V.
By /s/Thomas S. Summer
Title: Authorized Attorney
<PAGE>
LENDERS
Commitment
$61,500,000 THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent
By /s/Bruce Borden
Title: Vice President
<PAGE>
LENDERS
Commitment
$7,500,000 FLEET NATIONAL BANK
By /s/Martin K. Birmingham
Title: Vice President
<PAGE>
LENDERS
Commitment
$7,500,000 THE BANK OF NOVA SCOTIA
By /s/J. Alan Edwards
Title: Authorized Signatory
<PAGE>
LENDERS
Commitment
$5,000,000 CREDIT SUISSE FIRST BOSTON
By /s/Kristin Lepri
Title: Associate
By /s/Bill O'Daly
Title: Vice President
<PAGE>
LENDERS
Commitment
$5,000,000 COBANK, ACB
By /s/Brian J. Klatt
Title: Vice President
<PAGE>
LENDERS
Commitment
$5,000,000 COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By /s/Anthony Rock
Title: Vice President
By /s/Sean Mounier
Title: First Vice President
<PAGE>
LENDERS
Commitment
$5,000,000 CREDIT LYONNAIS, NEW YORK BRANCH
By /s/Vladimir Labun
Title: First Vice President -
Manager
<PAGE>
LENDERS
Commitment
$5,000,000 KEY BANK NATIONAL ASSOCIATION
By /s/Lawrence A. Mack
Title: Senior Vice President
<PAGE>
LENDERS
Commitment
$5,000,000 MANUFACTURERS AND TRADERS TRUST
COMPANY
By /s/Philip M. Smith
Title: Regional Vice President
<PAGE>
LENDERS
Commitment
$5,000,000 NATIONSBANK, N.A.
By /s/Kathryn W. Robinson
Title: Senior Vice President
<PAGE>
LENDERS
Commitment
$5,000,000 SUNTRUST BANK, ATLANTA
By /s/Robert V. Hoenycutt
Title: Vice President
<PAGE>
LENDERS
Commitment
$4,000,000 THE BANK OF NEW YORK
By /s/Thomas C. McCrohan
Title: Vice President
<PAGE>
LENDERS
Commitment
$4,000,000 HARRIS TRUST AND SAVINGS BANK
By /s/Edwin A. Adams
Title: Vice President
<PAGE>
LENDERS
Commitment
$4,000,000 IMPERIAL BANK
By /s/Ray Vadalma
Title: Senior Vice President
<PAGE>
LENDERS
Commitment
$4,000,000 COOPERATIEVE CENTRALE RAIFFEISEN-
BOERELEENBANK B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH
By /s/Caroline M. Hastings
Title: Vice President
By /s/Pieter Kodde
Title: Senior Vice President
<PAGE>
LENDERS
Commitment
$4,000,000 WELLS FARGO, NATIONAL ASSOCIATION
By /s/Tracey A. Hanson
Title: Vice President
<PAGE>
LENDERS
Commitment
$5,000,000 MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By /s/George D. Pelose
Title: Authorized Signatory
<PAGE>
LENDERS
Commitment
$7,000,000 KZH IV LLC
By /s/Virginia Conway
Title: Authorized Agent
<PAGE>
LENDERS
Commitment
$7,000,000 HIGHLAND CAPITAL MANAGEMENT, L.P.
By
Title:
<PAGE>
LENDERS
Commitment
$2,000,000 ARCHIMEDES FUNDING, L.L.C.,
by: ING Capital Advisors, Inc.,
as Collateral Manager
By /s/Michael J. Campbell
Title: Senior Vice President
<PAGE>
LENDERS
Commitment
$5,000,000 KZH-ING-2 LLC
By /s/Virginia Conway
Title: Authorized Agent
<PAGE>
LENDERS
Commitment
$7,000,000 METROPOLITAN LIFE INSURANCE COMPANY
By /s/James R. Dingler
Title: Director
<PAGE>
LENDERS
Commitment
$7,000,000 OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.
its General Partner
By: Oak Hill Securities MGP, Inc.
its General Partner
By /s/ Scott D. Krase
Title: Vice President
<PAGE>
LENDERS
Commitment
$3,500,000 PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc.
as its investment manager
By /s/Charles E. LeMieux, CFA
Title: Assistant Vice President
<PAGE>
LENDERS
Commitment
$7,000,000 STANFIELD CAPITAL
By
Title:
<PAGE>
LENDERS
Commitment
$7,000,000 KZH APPALOOSA LLC
By /s/Virginia Conway
Title: Authorized Agent
<PAGE>
LENDERS
Commitment
$5,000,000 GALAXY CLO 1999-1, LTD.
By /s/Steve B. Staver
Title: Authorized Agent
<PAGE>
LENDERS
Commitment
$5,000,000 JACKSON NATIONAL LIFE
INSURANCE COMPANY (PPM)
By: PPM America, Inc., as
Attorney-in-fact, on behalf of
Jackson National Life Insurance
Company
By /s/Michael King
Title: Vice President
<PAGE>
LENDERS
Commitment
$5,000,000 KZH STERLING LLC
By /s/Virginia Conway
Title: Authorized Agent
<PAGE>
LENDERS
Commitment
$5,000,000 MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST
By /s/Peter Gewirtz
Title: Authorized Signatory
