As filed with the Securities and Exchange Commission on February 14, 2000
Registration No. 333-94369
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT No. 1
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
DELAWARE CANANDAIGUA BRANDS, INC. 16-0716709 2084
AND ITS SUBSIDIARY GUARANTORS:
NEW YORK BATAVIA WINE CELLARS, INC. 16-1222994 2084
NEW YORK CANANDAIGUA WINE COMPANY, INC. 16-1462887 2084
NEW YORK CANANDAIGUA EUROPE LIMITED 16-1195581 5182
NEW YORK ROBERTS TRADING CORP. 16-0865491 4212
NEW YORK POLYPHENOLICS, INC. 16-1546354 2834
ENGLAND AND WALES CANANDAIGUA LIMITED 98-0198402 6719
NETHERLANDS CANANDAIGUA B.V. 98-0205132 6159
CALIFORNIA SIMI WINERY, INC. 94-2244918 2084
NEW YORK SCV-EPI VINEYARDS, INC. 16-1568478 0172
DELAWARE FRANCISCAN VINEYARDS, INC. 94-2602962 2084
CALIFORNIA ALLBERRY, INC. 68-0324763 2084
CALIFORNIA CLOUD PEAK CORPORATION 68-0324762 2084
CALIFORNIA M.J. LEWIS CORP. 94-3065450 2084
CALIFORNIA MT. VEEDER CORPORATION 94-2862667 2084
DELAWARE BARTON INCORPORATED 36-3500366 5181
DELAWARE BARTON BRANDS, LTD. 36-3185921 2085
MARYLAND BARTON BEERS, LTD. 36-2855879 5181
CONNECTICUT BARTON BRANDS OF CALIFORNIA, INC. 06-1048198 5182
GEORGIA BARTON BRANDS OF GEORGIA, INC. 58-1215938 2085
NEW YORK BARTON DISTILLERS IMPORT CORP. 13-1794441 5182
DELAWARE BARTON FINANCIAL CORPORATION 51-0311795 6153
ILLINOIS BARTON CANADA, LTD. 36-4283446 6794
WISCONSIN STEVENS POINT BEVERAGE CO. 39-0638900 2082
ILLINOIS MONARCH IMPORT COMPANY 36-3539106 5181
GEORGIA THE VIKING DISTILLERY, INC. 58-2183528 2085
(State or other (Exact name of registrant (I.R.S. (Primary
jurisdiction of as specified in its charter) Employer Standard
incorporation Identification Industrial
or organization) No.) Classification
Code Number)
300 WILLOWBROOK OFFICE PARK
FAIRPORT, NEW YORK 14450
716-218-2169
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
ROBERT SANDS, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
CANANDAIGUA BRANDS, INC.
300 WILLOWBROOK OFFICE PARK
FAIRPORT, NEW YORK 14450
716-218-2169
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
<PAGE>
---------------------------
COPY TO:
BERNARD S. KRAMER, ESQ.
MCDERMOTT, WILL & EMERY
227 WEST MONROE STREET
CHICAGO, ILLINOIS 60606-5096
---------------------------
Approximate date of commencement of proposed sale of securities to the
public: As soon as practicable after the effective date of this registration
statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. /_/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. /_/
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /_/
---------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2000
CANANDAIGUA BRANDS, INC.
OFFER TO EXCHANGE
8 1/2% SENIOR B SENIOR NOTES DUE 2009
FOR
8 1/2% SERIES NOTES DUE 2009
----------------------------------
o We are offering to exchange(pound)75,000,000 of our new 8 1/2%
Series B Senior Notes due 2009 for(pound)75,000,000 of our old
8 1/2% Senior Notes due 2009. We are offering to issue the new
notes to satisfy our obligations contained in the registration
rights agreement entered into when the old notes were sold in
transactions permitted by Rule 144A and Regulation S under the
Securities Act.
o The terms of the new notes and the old notes are substantially
identical, except for transfer restrictions, registration
rights, and liquidated damages that apply to the old notes.
o The exchange offer expires at 5:00 p.m., New York City time,
on ___________________, 2000, unless we extend it.
o The exchange of outstanding old notes for new notes will not
be a taxable event for United States federal income tax
purposes. See "U.S. Federal Income Tax Considerations" on page
49 for more information.
o We have applied to list the new notes on the Luxembourg Stock
Exchange.
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF RISK
FACTORS THAT YOU SHOULD CONSIDER BEFORE DECIDING TO TENDER YOUR OLD NOTES.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this prospectus is , 2000.
<PAGE>
TABLE OF CONTENTS
PAGE
Where You Can Find More Information......................................... i
Forward-Looking Statements.................................................. ii
Prospectus Summary.......................................................... 1
Risk Factors................................................................ 9
The Exchange Offer.......................................................... 13
Use of Proceeds............................................................. 18
Capitalization.............................................................. 18
Description of Notes........................................................ 19
U.S. Federal Income Tax Considerations...................................... 49
Plan of Distribution........................................................ 52
Legal Matters............................................................... 53
Experts..................................................................... 53
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy reports, statements or
other information at the SEC's public reference rooms at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and its regional offices at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, New York, New York
10048. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public from
commercial document retrieval services, at the web site maintained by the SEC at
"http://www.sec.gov", and at our own web site at "http://www.cbrands.com". If
the new notes are listed on the Luxembourg Stock Exchange, copies of our
reports, proxy statements and other information will also be made available free
of charge at the office of our agent, Paribas Luxembourg, in Luxembourg.
We have filed with the SEC a registration statement on Form S-4
to register the securities. This prospectus is part of that registration
statement and, as permitted by the SEC's rules, does not contain all the
information set forth in the registration statement. For further information you
may refer to the registration statement and to the exhibits and schedules filed
as part of the registration statement. You can review and copy the registration
statement and its exhibits and schedules at the SEC's public reference rooms as
described above. The registration statement, including its exhibits and
schedules, is also available on SEC's web site.
The SEC allows us to "incorporate by reference" the information
we file with it, which means that we can disclose important business and
financial information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and the information that we file with the SEC later will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any filings that we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
subsequent to the date of this prospectus and prior to the expiration of the
exchange offer:
o Annual Report on Form 10-K for the fiscal year ended February
28, 1999;
o Quarterly Reports on Form 10-Q for the quarterly periods ended
May 31, 1999, August 31, 1999, and November 30, 1999; and
o Current Reports on Form 8-K filed on March 3, 1999, April 13,
1999, April 15, 1999, April 23, 1999, April 26, 1999, June 9,
1999, June 21, 1999, June 23, 1999, August 4, 1999, September
27, 1999 October 13, 1999, and January 4, 2000, and on Form
8-K/A filed on June 25, 1999 and November 23, 1999.
This prospectus incorporates important business and financial
information about the Company and the guarantors of the new notes that is not
included in or delivered with this prospectus. You may request a copy of this
information and any of the filings identified above, at no cost, by writing or
telephoning us at: Canandaigua Brands, Inc., Attention: David S. Sorce,
Secretary, 300 WillowBrook Office Park, Fairport, New York 14450; telephone
number 716-218-2169. TO ENSURE TIMELY DELIVERY OF ANY DOCUMENTS YOU REQUEST, YOU
SHOULD MAKE YOUR REQUEST NO LATER THAN ____________, 2000 (FIVE DAYS PRIOR TO
THE EXPIRATION DATE OF THE EXCHANGE OFFER). In addition, copies of those
documents will also be made available free of charge at the office of our agent
in Luxembourg.
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE
OR PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT
AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL INFORMATION.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY SUPPLEMENT
IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.
---------------------
FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are subject to a number
of risks and uncertainties, many of which are beyond our control. All statements
other than statements of historical facts included in this prospectus, including
the statements under "Prospectus Summary," regarding our business strategy,
future operations, financial position, estimated revenues, projected costs,
prospects, plans and objectives of management, as well as information concerning
expected actions of third parties are forward-looking statements. When used in
this prospectus, the words "anticipate," "intend," "estimate," "expect,"
"project" and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain such identifying
words. All forward-looking statements speak only as of the date of this
prospectus. We do not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we can give no assurance that such
expectations will prove to be correct. Important factors that could cause our
actual results to differ materially from our expectations ("cautionary
statements") are disclosed under "Risk Factors" and elsewhere in this
prospectus. The cautionary statements qualify all forward-looking statements
attributable to us or persons acting on our behalf.
<PAGE>
PROSPECTUS SUMMARY
The following summary highlights selected information from this
prospectus and may not contain all the information that is important to you. We
encourage you to read this prospectus in its entirety. Unless we indicate
otherwise, the terms "Company", "we", "us" and "our" refer to Canandaigua
Brands, Inc. together with its subsidiaries. The Company is a Delaware
corporation that was incorporated on December 4, 1972. Our principal executive
offices are located at 300 WillowBrook Office Park, Fairport, New York 14450,
and our telephone number is 716-218-2169.
THE COMPANY
The Company is a leading producer and marketer of branded
beverage alcohol products in North America and the United Kingdom. According
to available industry data, we rank as the second largest supplier of wine, the
second largest importer of beer and the fourth largest supplier of distilled
spirits in the United States. Our wholly-owned British subsidiary, Matthew Clark
plc ("Matthew Clark"), is a leading producer of cider, wine and bottled water,
and a leading beverage alcohol wholesaler in the United Kingdom.
Since our founding in 1945 as a producer and marketer of wine
products, we have grown through acquisitions, new product offerings and new
distribution agreements. Since 1991 we have successfully integrated numerous
acquisitions that have diversified our product portfolio and increased our
market share, net sales and cash flow. Internal growth has been driven by
developing new products and repositioning existing brands to focus on the
fastest growing sectors of the beverage alcohol industry.
We market and sell over 180 premier branded products to more than
1,000 wholesale distributors in the United States. We also distribute our own
branded products and those of other companies to more than 16,000 customers in
the United Kingdom. We operate more than 20 production facilities throughout the
world and purchase products for resale from other producers.
<PAGE>
THE EXCHANGE OFFER
NOTES OFFERED......................... We are offering up to(pound)75,000,000
aggregate principal amount of new 8 1/2%
Series B Senior Notes due 2009.
The new 8 1/2% Series B Senior Notes
have been registered under the
Securities Act.
THE EXCHANGE OFFER.................... We are offering to issue the new notes
in exchange for a like principal amount
of your old notes. For procedures for
tendering, see "The Exchange Offer."
EXPIRATION DATE; WITHDRAWAL RIGHTS.... The exchange offer expires at, and you
may withdraw your tender of old notes at
any time before, 5:00 p.m. New York City
time (10:00 p.m. London time) on
_______, 2000 unless we extend the
expiration date.
PROCEDURES FOR TENDERING OLD NOTES.... We issued the old notes as global
securities. Two global securities were
issued, one of which was for issuances
of notes under Rule 144A of the
Securities Act, the other of which was
for issuances of notes under Regulation
S under the Securities Act.
The Rule 144A global note was deposited
with Citibank, N.A., as custodian for
the Depository Trust Company ("DTC").
Citibank, N.A. holds this global note in
the name of Cede & Co., as the nominee
of DTC. Beneficial interests in notes
issued under Rule 144A are shown on
records that the DTC maintains in
book-entry form.
The Regulation S global note was
deposited with Citibank, N.A. as common
depositary in the name of Citivic
Nominees Ltd., as nominee for Euroclear
and Cedelbank. Security entitlements
with respect to notes issued under
Regulation S are shown on records in
book-entry form that Euroclear,
Cedelbank, or your securities
intermediary maintain.
To tender old notes in the exchange
offer the registered holder (Euroclear,
Cedelbank, or DTC) must transfer your
outstanding notes in accordance with
Euroclear's, Cedelbank's, or DTC's
standard procedures for such transfer.
In lieu of delivering a letter of
transmittal to the exchange agent, a
computer-generated message, in which the
holder of the old notes acknowledges and
agrees to be bound by the letter of
transmittal, must be transmitted by
Euroclear, Cedelbank, or DTC on behalf
of a holder and received by the exchange
agent before 5:00 p.m., New York City
time (10:00 p.m.. London time), on the
expiration date.
U.S. FEDERAL INCOME TAX CONSEQUENCES.. Your exchange of old notes for new notes
in the exchange offer should not result
in any income, gain or loss to you for
United States federal income tax
purposes. See "U.S. Federal Income Tax
Considerations."
USE OF PROCEEDS....................... We will not receive any proceeds from
the exchange pursuant to the exchange
offer.
EXCHANGE AGENT........................ Citibank N.A., through its offices in
London specified in this prospectus, is
acting as the exchange agent for the
exchange offer. See "The Exchange
Offer-Exchange Agent" for the telephone
number of the offices of the exchange
agent.
<PAGE>
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the new notes to be issued in the exchange offer and
the outstanding old notes are substantially identical, except for transfer
restrictions, registration rights, and liquidated damages that apply to the old
notes. When we refer to the term "note" or "notes", we are referring to both the
outstanding old notes and the new notes to be issued in the exchange offer.
ISSUER................................ Canandaigua Brands, Inc.
TOTAL AMOUNT OF NOTES OFFERED......... (pound)75,000,000 aggregate principal
amount of new 8 1/2% Series B Senior
Notes due 2009.
MATURITY.............................. November 15, 2009.
INTEREST PAYMENT DATES................ Semi-annually on May 15 and November 15,
commencing May 15, 2000.
SUBSIDIARY GUARANTORS................. The notes will be unconditionally
guaranteed by each of our subsidiaries
that guarantee any of our other
indebtedness or other indebtedness of
the guarantors of the notes.
RANKING............................... The notes will be senior unsecured
obligations and will rank equally with
our other unsecured and unsubordinated
indebtedness. The notes will be
effectively subordinated to our secured
indebtedness.
OPTIONAL REDEMPTION................... The notes are redeemable at any time at
a make-whole amount. See "Description of
the Notes-Optional Redemption."
CHANGE OF CONTROL..................... Upon the occurrence of a "Change of
Control," each holder of the notes will
have the right to require us to
repurchase such holder's notes at a
price equal to 101% of the principal
amount hereof, plus accrued and unpaid
interest, if any, to the date of
repurchase.
COVENANTS............................. The indenture relating to the notes will
contain various covenants, including,
but not limited to, covenants with
respect to the following matters:
o limitation on indebtedness;
o limitation on restricted payments;
o limitation on transactions with
affiliates;
o limitation on liens;
o limitation on sale of assets;
o limitation on issuances of
guarantees;
o limitation on subsidiary capital
stock;
o limitation on dividends and other
payment restrictions affecting
subsidiaries; and
o restrictions on consolidations,
mergers and the sale of assets.
ADDITIONAL AMOUNTS.................... All payments with respect to the notes
or guarantees will be made without
withholding or deduction for taxes
unless required by law, regulation or
governmental policy or the
interpretation or administration
thereof, in which case, we will, except
in certain circumstances (e.g., where a
holder has failed to provide proper
certification, such as a Form W-8,
serving as a precondition to exemption
from, or reduction in the rate of such
withholding or deduction), pay such
additional amounts as may be necessary
so that the net amount received by the
holders after such withholding or
deduction will not be less than the
amount that would have been received in
the absence of such withholding or
deduction. See "Description of the
Notes-Additional Amounts".
REDEMPTION FOR CHANGES IN
WITHHOLDING TAX..................... We may, at our option, redeem the notes
of any holder, in whole but not in part,
at a redemption price equal to 100% of
the principal amount of the notes of
such holder, plus accrued and unpaid
interest, if any, if we have then
become, or if on the next date
thereafter on which any amount will fall
due for payment under or with respect to
the notes or guarantees we will in the
absence of such redemption become,
obligated to pay any Additional Amounts
on such notes as a result of any changes
in withholding tax laws, policies,
treaties or regulations, or any change
in or amendment to any official position
or administration or assessing practices
regarding the application or
interpretation of such laws, policies,
treaties or regulations, which change or
amendment is announced or becomes
effective on or after the date the notes
are issued; provided, however, that (i)
notice shall not be given earlier than
60 days prior to the earliest date on
which we would be obligated to pay
Additional Amounts, (ii) we will be
required to consummate such redemption
within 180 days of the date on which
such Additional Amounts are payable and
(iii) if, after giving effect to such
redemption, less than a majority of the
aggregate principal amount of notes
originally issued would remain
outstanding, we will be required to make
an offer to purchase the remaining notes
at a purchase price equal to 100% of the
aggregate principal amount thereof, plus
accrued and unpaid interest, if any, to
the date of redemption. See "Description
of the Notes-Redemption for Changes in
Withholding Tax."
LISTING............................... We have applied to list the new notes on
the Luxembourg Stock Exchange.
GOVERNING LAW......................... The notes and the indenture will be
governed by the laws of the State of New
York.
TRUSTEE............................... Harris Trust and Savings Bank, Chicago.
PRINCIPAL PAYING AGENT, TRANSFER AGENT,
AND REGISTRAR........................ Citibank, N.A, London.
PAYING AGENT, TRANSFER AGENT, AND
LISTING AGENT IN LUXEMBOURG.......... Paribas Luxembourg.
BOOK-ENTRY TRANSFER FACILITIES........ Euroclear and Cedelbank, as appropriate.
RISK FACTORS
You should carefully consider all of the information set forth in
this prospectus and, in particular, should evaluate the specific factors under
"Risk Factors" beginning on page 9 before tendering your old notes in the
exchange offer.
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected financial data of the
Company for each of the three fiscal years in the period ended February 28,
1999, for the six month period ended February 29, 1996, for each of the two
fiscal years in the period ended August 31, 1995 and for each of the nine month
periods ended November 30, 1998 and 1999. The statement of income data for the
three fiscal years ended February 28, 1999, the six month period ended February
29, 1996, and the two fiscal years ended August 31, 1995 is derived from our
audited historical financial statements incorporated by reference into this
prospectus, which financial statements have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports thereon. The
statement of income data for the nine month periods ended November 30, 1998 and
1999 has been derived from our unaudited financial statements incorporated by
reference into this prospectus. The summary financial data below reflect results
of Matthew Clark since its acquisition on December 1, 1998, results of several
well known Canadian whisky brands, including Black Velvet and related assets
since their acquisition from Diageo Inc. and certain of its affiliates on April
9, 1999, and the results of Franciscan Vineyards, Inc. and Simi Winery, Inc.
since their acquisition on June 4, 1999. During January 1996, the Board of
Directors of the Company changed the Company's fiscal year end from August 31 to
the last day of February.
In the opinion of our management, the unaudited data includes all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the data for such periods. Interim results are not necessarily
indicative of results that can be expected in future periods. It is important
that you read the selected financial data presented below in conjunction with
the historical financial statements and unaudited pro forma financial data
included in reports we have filed with the SEC that are incorporated by
reference into this prospectus. See "Where You Can Find More Information."
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
FOR THE NINE MONTHS ENDED FOR THE YEARS
ENDED NOVEMBER 30, FOR THE YEARS ENDED FEBRUARY 28, FEBRUARY 2, ENDED AUGUST 31,
------------------------ ------------------------------------- ----------- ------------------------
1999 1998 1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross sales $ 2,383,909 $ 1,374,183 $ 1,984,801 $ 1,632,357 $ 1,534,452 $ 738,415 $ 1,185,074 $ 861,059
Less-excise taxes (570,640) (336,283) (487,458) (419,569) (399,439) (203,391) (278,530) (231,475)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net sales 1,813,269 1,037,900 1,497,343 1,212,788 1,135,013 535,024 906,544 629,584
Cost of product sold (1,258,332) (726,908) (1,049,309) (869,038) (812,812) (389,281) (657,883) (458,311)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Gross profit 554,937 310,992 448,034 343,750 322,201 145,743 248,661 171,273
Selling, general and
administrative expenses (368,130) (202,561) (299,526) (231,680) (208,991) (112,411) (159,196) (121,388)
Nonrecurring charges (5,510) -- (2,616) -- -- (2,404) (2,238) (24,005)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income 181,297 108,431 145,892 112,070 113,210 30,928 87,227 25,880
Interest expense, net (78,219) (23,700) (41,462) (32,189) (34,050) (17,298) (24,601) (18,056)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before taxes and
extraordinary item 103,078 84,731 104,430 79,881 79,160 13,630 62,626 7,824
Provision for income taxes (41,231) (34,740) (42,521) (32,751) (32,977) (6,221) (24,008) (2,640)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before
extraordinary item 61,847 49,991 61,909 47,130 46,183 7,409 38,618 5,184
Extraordinary item, net of
income taxes -- -- (11,437) -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income $ 61,847 $ 49,991 $ 50,472 $ 47,130 $ 46,183 $ 7,409 $ 38,618 $ 5,184
=========== =========== =========== =========== =========== =========== =========== ===========
Earnings per common share:
Basic:
Income before
extraordinary item $ 3.43 $ 2.72 $ 3.38 $ 2.52 $ 2.39 $ 0.38 $ 2.06 $ 0.34
Extraordinary item -- -- (0.62) -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Earnings per common
share - basic $ 3.43 $ 2.72 $ 2.76 $ 2.52 $ 2.39 $ 0.38 $ 2.06 $ 0.34
=========== =========== =========== =========== =========== =========== =========== ===========
Diluted:
Income before
extraordinary item $ 3.34 $ 2.65 $ 3.30 $ 2.47 $ 2.37 $ 0.37 $ 2.03 $ 0.33
Extraordinary item -- -- (0.61) -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Earnings per common
share - diluted $ 3.34 $ 2.65 $ 2.69 $ 2.47 $ 2.37 $ 0.37 $ 2.03 $ 0.33
=========== =========== =========== =========== =========== =========== =========== ===========
Total assets $ 2,532,995 $ 1,186,246 $ 1,793,776 $ 1,090,555 $ 1,043,281 $ 1,045,590 $ 770,004 $ 814,718
=========== =========== =========== =========== =========== =========== =========== ===========
Long-term debt $ 1,253,863 $ 291,386 $ 831,689 $ 309,218 $ 338,884 $ 327,616 $ 198,859 $ 289,122
=========== =========== =========== =========== =========== =========== =========== ===========
Ratio of earnings to fixed
charges(1)(2) 2.2x 4.1x 3.2x 3.2x 3.1x 1.7x 3.3x 1.4x
=========== =========== =========== =========== =========== =========== =========== ===========
(1) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" represent income before provision for income taxes plus fixed
charges. "Fixed charges" consist of interest expensed and capitalized,
amortization of debt issuance costs, amortization of discount on debt, and the
portion of rental expense which management believes is representative of the
interest component of lease expense.
(2) The ratio of earnings to combined fixed charges and preferred stock dividend
requirements is the same as the ratio of earnings to fixed charges.
</TABLE>
<PAGE>
RISK FACTORS
You should consider carefully all of the information in this
prospectus and incorporated by reference in this prospectus. In particular, you
should carefully evaluate the following risks before tendering your old notes in
the exchange offer. However, the risk factors set forth below, other than the
first risk factor, are also generally applicable to the old notes as well as the
new notes.
IF YOU DO NOT EXCHANGE YOUR OLD NOTES FOR NEW NOTES, YOU WILL CONTINUE TO HOLD
NOTES SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND WHICH ARE NOT FREELY
TRANSFERABLE
If you do not tender your old notes or you tender your old notes
and we do not accept the tender, your old notes will continue to be subject to
their existing restrictions on transfer and exchange. In general, unless the old
notes are registered under the Securities Act, you cannot offer or sell your old
notes except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. Except in limited
circumstances which we summarize under "The Exchange Offer-Purpose and Effect of
the Exchange Offer" in this prospectus, we do not have any obligation to
register your old notes under the Securities Act. We do not expect that we will
take any action to register the old notes under the Securities Act unless we are
required to do so in those limited circumstances.
OUR INDEBTEDNESS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL HEALTH
AND OUR ABILITY TO FULFILL OUR OBLIGATIONS UNDER THE NOTES
We have incurred substantial indebtedness to finance our
acquisitions and we may incur substantial additional indebtedness in the future
to finance further acquisitions. As of November 30, 1999, we have approximately
$1.4 billion of indebtedness outstanding, which does not include approximately
$183 million of revolving loans we had available to draw under our bank credit
facility. Our ability to satisfy our financial obligations under our
indebtedness outstanding from time to time will depend upon our future operating
performance, which is subject to prevailing economic conditions, levels of
interest rates and financial, business and other factors, many of which are
beyond our control. Therefore, there can be no assurance that our cash flow from
operations will be sufficient to meet all of our debt service requirements and
to fund our capital expenditure requirements.
Our current and future debt service obligations and covenants
could have important consequences to you if you purchase the notes offered by
this prospectus. Such obligations and covenants include the following:
o Our ability to obtain financing for future working capital needs
or acquisitions or other purposes may be limited;
o A significant portion of our cash flow from operations will be
dedicated to the payment of principal and interest on our
indebtedness, thereby reducing funds available for operations;
o We are subject to restrictive covenants that could limit our
ability to conduct our business; and
o We may be more vulnerable to adverse economic conditions than
less leveraged competitors and, thus, may be limited in our
ability to withstand competitive pressures.
The restrictive covenants included in our bank credit facility,
our current indentures and the indenture under which the notes will be issued
include, among others, those restricting additional liens, additional borrowing,
the sale of assets, the payment of dividends, transactions with affiliates, the
making of investments and certain other fundamental changes. The bank credit
facility also contains restrictions on acquisitions and certain financial ratio
tests including a debt coverage ratio, a senior debt coverage ratio, a fixed
charges ratio and an interest coverage ratio. These restrictions could limit our
ability to conduct business. A failure to comply with the obligations contained
in the bank credit facility, our current indentures or the indenture under which
the new notes will be issued could result in an event of default under such
agreements, which could require us to immediately repay the related debt and
also debt under other agreements that may contain cross-acceleration or
cross-default provisions.
THE NOTES ARE UNSECURED; THE STOCK OF SOME OF OUR SUBSIDIARIES IS PLEDGED TO
SECURE OUR BANK CREDIT FACILITY
The notes will not be secured by any of our assets. Our
obligations under our bank credit facility, however, are secured by (i) first
priority pledges of 100% of the capital stock of Canandaigua Limited and all of
our domestic operating subsidiaries and (ii) first priority pledges of 65% of
the capital stock held by us of Matthew Clark, B.B. Servicios, S.A. de C.V.,
Canandaigua World Sales Limited and Schenley Distilleries Inc./Les Distilleries
Schenley Inc. If the Company becomes insolvent or is liquidated, or if payment
under our bank credit facility is accelerated, the lenders under the facility
would be entitled to exercise the remedies available to a secured lender under
applicable law and pursuant to the agreement governing such indebtedness. In any
such event, because the notes will not be secured by any of our assets, it is
possible that there would be no assets remaining from which claims of the
holders of the notes could be satisfied or, if any such assets remained, such
assets might be insufficient to satisfy such claims fully.
OUR ABILITY TO MAKE PAYMENTS ON THE NOTES DEPENDS ON OUR ABILITY TO RECEIVE
DIVIDENDS FROM OUR SUBSIDIARIES; MATTHEW CLARK IS NOT A GUARANTOR OF THE NOTES
We are a holding company and conduct almost all of our operations
through our subsidiaries. As of November 30, 1999, approximately 87% of our
tangible assets were held by our subsidiaries. The capital stock of our
subsidiaries represents substantially all the assets of the holding company.
Accordingly, we are dependent on the cash flows of our subsidiaries to meet our
obligations, including the payment of the principal and interest on the notes.
The notes are expected to be guaranteed, jointly and severally,
by each of our subsidiaries that guarantee any of our other indebtedness or
other indebtedness of the guarantors of the notes. Holders of the notes will not
have a direct claim on assets of subsidiaries that do not guarantee the notes
(including, most significantly, the assets of Matthew Clark). For the year ended
February 28, 1999 (giving pro forma effect to the acquisitions of Matthew Clark,
the Black Velvet Assets, Franciscan and Simi, as if each had occurred on March
1, 1998) approximately $679 million of our net sales were from operations of
Matthew Clark, which is not a guarantor of the notes, and approximately $1.5
billion from our operations and the operations of the guarantors. Under U.S.
bankruptcy law and comparable provisions of state fraudulent transfer laws, a
court could subordinate or void any guarantee if it found that the guarantee was
incurred with actual intent to hinder, delay or defraud creditors or the
guarantor did not receive fair consideration or reasonably equivalent value for
the guarantee and the guarantor was any of the following: (i) insolvent or was
rendered insolvent because of the guarantee; (ii) engaged in a business or
transaction for which its remaining assets constituted unreasonably small
capital; or (iii) intended to incur, or believed that it would incur, debts
beyond its ability to pay at maturity. To the extent any guarantee were to be
voided as a fraudulent conveyance or held unenforceable for any other reason,
holders of the notes would cease to have any claim in respect of such guarantor
and would be solely our creditors and any guarantor whose guarantee was not
voided or held unenforceable. In such event, the claims of the holders of the
notes against the issuer of an invalid guarantee would be subject to the prior
payment of all liabilities of such guarantor. There can be no assurance that,
after providing for all prior claims, there would be sufficient assets to
satisfy the claims of the holders of the notes relating to any voided guarantee.
Based upon financial and other information currently available to
us, we believe that the notes and the guarantees are being incurred for proper
purposes and in good faith and that we and each guarantor is solvent and will
continue to be solvent after issuing the notes or its guarantee, as the case may
be, will have sufficient capital for carrying on its business after such
issuance and will be able to pay its debts as they mature. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Financial Liquidity and Capital Resources" and "Description of the
Notes."
WE MAY NOT BE ABLE TO PURCHASE THE NOTES IN THE EVENT OF A CHANGE OF CONTROL
Upon the occurrence of certain specific kinds of change of
control events, we will be required to make an offer to repurchase the notes at
101% of their principal amount plus accrued interest and we will be required to
repay our senior secured credit facility in full. However, it is possible that
we will not have sufficient funds at the time of the change of control to make
the required repurchase of notes or to repay our senior secured credit facility.
Even if we did have sufficient funds to carry out such a repurchase, the
financial effect of the repurchase could cause us to default on our other
indebtedness. See "Description of the Notes-Certain Covenants-Purchase of Notes
Upon a Change of Control."
OUR ACQUISITION STRATEGY MAY NOT BE SUCCESSFUL
We have recently made a number of acquisitions and anticipate
that we may, from time to time, acquire additional businesses, assets or
securities of companies which we believe would provide a strategic fit with our
business. Any other acquired business will need to be integrated with our
existing operations. There can be no assurance that we will effectively
assimilate the business or product offerings of acquired companies into our
business or product offerings. Any acquisitions also will be accompanied by
risks such as potential exposure to unknown liabilities of acquired companies,
the difficulty and expense of integrating the operations and personnel of the
acquired companies, the potential disruption to our business, the diversion of
management time and attention, the impairment of relationships with and the
possible loss of key employees and customers of the acquired business, the
incurrence of amortization expenses if any acquisition is accounted for as a
purchase. Our failure to adequately manage the risks associated with any
acquisitions could have a material adverse effect on our financial condition or
results of operations.
THE TERMINATION OR NON-RENEWAL OF IMPORTED BEER DISTRIBUTION AGREEMENTS COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS
All of our imported beer products are marketed and sold pursuant
to exclusive distribution agreements with the suppliers of these products which
are subject to renewal from time to time. Our exclusive agreement to distribute
Corona and its other Mexican beer brands in 25 primarily Western states expires
in December 2006 and, subject to compliance with certain performance criteria,
continued retention of personnel and other terms of the agreement, will be
automatically renewed for additional terms of five years. Changes in control of
our company or our subsidiaries involved in importing the Mexican beer brands,
or changes in the chief executive officer of such subsidiaries, may be a basis
for the supplier, unless it consents to such changes, to terminate the
agreement. The supplier's consent to such changes may not be unreasonably
withheld. Prior to their expiration, these agreements may be terminated if we
fail to meet certain performance criteria. We believe that we are currently in
compliance with all of our material imported beer distribution agreements. From
time to time we have failed, and may in the future fail, to satisfy certain
performance criteria in our distribution agreements. It is possible that our
beer distribution agreements may not be renewed or may be terminated prior to
expiration.
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY A GENERAL DECLINE IN THE CONSUMPTION
OF PRODUCTS WE SELL
In the United States the overall per capita consumption of
beverage alcohol products by adults (ages 21 and over) has declined
substantially over the past twenty years. These declines have been caused by a
variety of factors including:
o increased concern about the health consequences of consuming
beverage alcohol products and about drinking and driving;
o a trend toward a healthier diet including lighter, lower calorie
beverages such as diet soft drinks, juices and sparkling water
products;
o the increased activity of anti-alcohol consumer groups;
o an increase in the minimum drinking age from 18 to 21 in various
states; and
o increased federal and state excise taxes.
LACK OF PUBLIC MARKET FOR THE NOTES
The notes will be new securities for which there currently is no
established trading market. Although we have applied for listing of the old
notes and new notes on the Luxembourg Stock Exchange, there can be no assurance
regarding the future development of a market for the notes or the ability of
holders of the notes to sell their notes or the price at which such holders may
be able to sell their notes. If such a market were to develop, the notes could
trade at prices that may be higher or lower than the initial offering price
depending on many factors, including prevailing interest rates, our operating
results and the market for similar securities. Therefore, thee can be no
assurance as to the liquidity of any trading market for the notes or that an
active public market for the notes will develop. See the section entitled "Plan
of Distribution."
INCREASE IN EXCISE TAXES AND GOVERNMENT RESTRICTIONS COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS
In the United States, the federal government and individual
states impose excise taxes on beverage alcohol products in varying amounts which
have been subject to change. Increases in excise taxes on beverage alcohol
products, if enacted, could materially and adversely affect our financial
condition or results of operations. In addition, the beverage alcohol products
industry is subject to extensive regulation by state and federal agencies. The
federal Bureau of Alcohol, Tobacco and Firearms and the various state liquor
authorities regulate such matters as licensing requirements, trade and pricing
practices, permitted and required labeling, advertising and relations with
wholesalers and retailers. In recent years, federal and state regulators have
required warning labels and signage. In the United Kingdom, Matthew Clark
carries on its excise trade under a Customs and Excise License. Licenses are
required for all premises where wine is produced. Matthew Clark holds a license
to act as an excise warehouse operator and registrations have been secured for
the production of cider and bottled water. New or revised regulations or
increased licensing fees and requirements could have a material adverse effect
on our financial condition or results of operations.
WE RELY ON THE PERFORMANCE OF WHOLESALE DISTRIBUTORS FOR THE SUCCESS OF OUR
BUSINESS
In the United States, we sell our products principally to
wholesalers for resale to retail outlets including grocery stores, package
liquor stores, club and discount stores and restaurants. The replacement or poor
performance of our major wholesalers or our inability to collect accounts
receivable from our major wholesalers could materially and adversely affect our
results of operations and financial condition. Distribution channels for
beverage alcohol products have been characterized in recent years by rapid
change, including consolidations of certain wholesalers. In addition,
wholesalers and retailers of our products offer products which compete directly
with our products for retail shelf space and consumer purchases. Accordingly,
there is a risk that these wholesalers or retailers may give higher priority to
products of our competitors. In the future, our wholesalers and retailers may
not continue to purchase our products or provide our products with adequate
levels of promotional support.
WE GENERALLY DO NOT HAVE LONG-TERM SUPPLY CONTRACTS AND WE ARE SUBJECT TO
SUBSTANTIAL PRICE FLUCTUATIONS FOR GRAPES AND GRAPE-RELATED MATERIALS; WE HAVE A
LIMITED GROUP OF SUPPLIERS OF GLASS BOTTLES
Our business is heavily dependent upon raw materials, such as
grapes, grape juice concentrate, grains, and alcohol from third-party suppliers,
tequila from Mexico and packaging materials. We could experience raw material
supply, production or shipment difficulties which could adversely affect our
ability to supply goods to our customers. We are also directly affected by
increases in the costs of such raw materials. In the recent past we have
experienced dramatic increases in the cost of grapes. Although we believe we
have adequate sources of grape supplies, in the event demand for certain wine
products exceeds expectations, we could experience shortages. In addition, one
of our largest components of cost of goods sold is that of glass bottles, which
have only a small number of producers. The inability of any of our glass bottle
suppliers to satisfy our requirements could adversely affect our business.
COMPETITION COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS
We are in a highly competitive industry and the dollar amount,
and unit volume, of our sales could be negatively affected by our inability to
maintain or increase prices, changes in geographic or product mix, a general
decline in beverage alcohol consumption or the decision of our wholesale
customers, retailers or consumers to purchase competitive products instead of
our products. Wholesaler, retailer and consumer purchasing decisions are
influenced by, among other things, the perceived absolute or relative overall
value of our products, including their quality or pricing, compared to
competitive products. Unit volume and dollar sales could also be affected by
pricing, purchasing, financing, operational, advertising or promotional
decisions made by wholesalers and retailers which could affect their supply of,
or consumer demand for, our products. We could also experience higher than
expected selling, general and administrative expenses if we find it necessary to
increase the number of our personnel or our advertising or promotional
expenditures to maintain our competitive position or for other reasons.
WE ARE CONTROLLED BY THE SANDS FAMILY
Our outstanding capital stock consists of Class A Common Stock
and Class B Common Stock. Holders of Class A Common Stock are entitled to one
vote per share and are entitled, as a class, to elect one fourth of the members
of the Board of Directors. Holders of Class B Common Stock are entitled to 10
votes per share and are entitled, as a class, to elect the remaining directors.
As of November 30, 1999, the Sands family beneficially owned approximately 13%
of the outstanding shares of Class A Common Stock (exclusive of shares of Class
A Common Stock issuable pursuant to the conversion feature of the Class B Common
Stock owned by the Sands family) and approximately 90% of the outstanding shares
of Class B Common Stock. On all matters other than the election of directors,
the Sands family has the ability to vote approximately 65% of the votes entitled
to be cast by holders of our outstanding capital stock, voting as a single
class. Consequently, we are essentially controlled by the Sands family and they
would generally have sufficient voting power to determine the outcome of any
corporate transaction or other matter submitted to our stockholders for
approval.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the issuance of the old notes, we entered into
a registration rights agreement. Under the registration rights agreement, we
agreed to:
o use our reasonable best efforts to file a registration
statement with the SEC for an exchange of the new notes for
the old notes under the Securities Act and to keep such
registration statement effective until the closing of the
exchange offer;
o use our reasonable best efforts to cause the exchange offer to
be consummated within 210 days following the original issuance
of the old notes;
o keep the exchange offer open for acceptance for a period of
not less than 20 business days after the date notice thereof
is mailed to holders of the old notes, or longer if required
by applicable law; and
o accept for exchange all old notes validly tendered and not
validly withdrawn in the exchange offer in accordance with the
terms of the exchange offer registration statement and letter
of transmittal.
As soon as practicable after the exchange offer registration
statement becomes effective, we will offer eligible holders of the old notes the
opportunity to exchange their old notes for new notes registered under the
Securities Act. Holders are eligible if they are not prohibited by any law or
policy of the SEC from participating in this exchange offer. The new notes will
be substantially identical to the old notes except that the new notes will not
contain terms with respect to transfer restrictions, registration rights or
additional interest.
In the event that due to a change in current interpretations by
the SEC, we are not permitted to effect the exchange offer, it is contemplated
that we will instead file a shelf registration statement covering resales by the
holders of the old notes and will use our reasonable best efforts to cause the
shelf registration statement to become effective and to keep the shelf
registration statement effective for a maximum of two years from the closing
date, which is the date we delivered the old notes to their initial purchaser.
The description of the registration rights agreement contained in
this section is a summary only. For more information, you should review the
provisions of the registration rights agreement that we filed with the SEC as an
exhibit to the registration statement of which this prospectus is a part.
In this section entitled "The Exchange Offer," the term "holder"
means any person whose old notes are held of record by DTC, Euroclear or
Cedelbank and who wants to deliver these old notes by book-entry transfer.
TERMS OF THE EXCHANGE OFFER
The expiration date of the exchange offer is 5:00 p.m., New York
City time (10:00 p.m., London time), on ________, _________ , 2000 unless we
extend the exchange offer.
The exchange offer is not conditioned upon holders tendering a
minimum principal amount of old notes.
You do not have any appraisal or dissenters' rights in the
exchange offer. If you do not tender old notes or you tender old notes that we
do not accept, your old notes will remain outstanding. Any old notes will be
entitled to the benefits of the indenture under which they were, and the new
notes will be, issued. The old notes will not, however, be entitled to any
further registration rights under the registration rights agreement, except
under limited circumstances. See "Risk Factors-If You Do Not Exchange Your Old
Notes for New Notes, You Will Continue to Hold Notes Subject to Restrictions on
Transferability and Which Are Not Freely Transferable" for more information
regarding notes outstanding after the exchange offer.
After the expiration date, we will return to you any tendered old
notes that we did not accept for exchange.
You will not have to pay brokerage commissions or fees or
transfer taxes for exchanging your notes if you follow the instructions in the
letter of transmittal. We will pay the charges and expenses, other than those
taxes described below, in the exchange offer. See "-Fees and Expenses" below for
further information regarding fees and expenses. Neither we nor our board of
directors recommends that you tender or not tender old notes in the exchange
offer. In addition, we have not authorized anyone to make any recommendation.
You must decide whether to tender in the exchange offer and, if so, the
aggregate amount of old notes to tender.
We have the right, in accordance with applicable law, at any
time:
o to delay the acceptance of the old notes;
o to terminate the exchange offer if we determine that any of
the conditions to the exchange offer have not occurred or have
not been satisfied;
o to extend the expiration date of the exchange offer and keep
all old notes tendered other than those notes properly
withdrawn; and
o to waive any condition or amend the terms of the exchange
offer.
If we materially change the exchange offer, or if we waive a
material condition of the exchange offer, we will promptly distribute a
prospectus supplement to you disclosing the change or waiver. We also will
extend the exchange offer if required by Rule 14e-1 under the U.S. Securities
Exchange Act of 1934. If we exercise any of the rights listed above, we will
promptly give written notice of the action to the exchange agent, as described
below under "-Exchange Agent", and we will issue a release to appropriate news
agencies. In the case of an extension, an announcement will be made no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE, AND ISSUANCE OF NEW NOTES
We will issue to the exchange agent new notes for old notes
tendered and accepted and not withdrawn promptly after the expiration date. The
exchange agent might not deliver the new notes to all tendering holders at the
same time. The timing of delivery depends upon when the exchange agent receives
and processes the required documents.
We will be deemed to have exchanged old notes validly tendered
and not withdrawn when we give written notice to the exchange agent of their
acceptance. The exchange agent is our agent for receiving tenders of old notes,
letters of transmittal and related documents. If for any reason, we:
o delay the acceptance or exchange of any old notes, or
o extend the exchange offer, or
o are unable to accept or exchange notes,
then the exchange agent may, on our behalf and subject to Rule 14e-1(c) under
the Exchange Act, retain tendered notes. Old notes that the exchange agent
retains may not be withdrawn, except according to the withdrawal procedures
outlined below in "Procedures for Tendering Old Notes-Withdrawal of Tenders."
In tendering old notes, you must warrant in the letter of
transmittal or in an agent's message, which is described below, that:
o you have full power and authority to tender, exchange, sell,
assign and transfer old notes;
o we will acquire good, marketable and unencumbered title to the
tendered old notes, free and clear of all liens, restrictions,
charges and other encumbrances; and
o the old notes tendered for exchange are not subject to any
adverse claims or proxies.
You also must warrant and agree that you will, upon request,
execute and deliver any additional documents that either we or the exchange
agent requests to complete the exchange, sale, assignment, and transfer of the
old notes.
PROCEDURES FOR TENDERING OLD NOTES
To tender old notes in the exchange offer, the registered holder
of the notes must transfer such old notes into the exchange agent's account in
accordance with DTC's ATOP procedures or Euroclear's or Cedelbank's standard
transfer procedures.
In lieu of delivering a letter of transmittal to the exchange
agent, a computer-generated message, in which the holder of the old notes
acknowledges and agrees to be bound by the terms of the letter of transmittal
must be transmitted by DTC, Euroclear or Cedelbank as the case may be, on behalf
of a holder and received by the exchange agent prior to 5:00 p.m., New York City
time (10:00 p.m., London time), on the expiration date.
The tender by a holder of old notes will constitute an agreement
between such holder and us in accordance with the terms and subject to the
conditions set forth herein and in the letter of transmittal.
No letter of transmittal should be sent to us.
Only a registered holder of old notes may tender old notes in the
exchange offer.
Any beneficial holder whose old notes are registered in the name
of his broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on his behalf.
DETERMINATION OF VALIDITY
All the questions as to the validity, form, eligibility, time of
receipt, acceptance and withdrawal of the tendered old notes will be determined
by us in our sole discretion, which determinations will be final and binding. We
reserve the absolute right to reject any and all old notes not validly tendered
or any old notes our acceptance of which would, in the opinion of our counsel,
be unlawful. We also reserve the absolute right to waive any irregularities or
conditions of tender as to particular old notes. Our interpretation of the terms
and conditions of the exchange offer, including the instructions in the letter
of transmittal, will be final and binding on parties. Unless waived, any defects
or irregularities in connection with tenders of old notes must be cured within
such time as we shall determine. Neither we, the exchange agent, nor any other
person shall be under any duty to give notification of defects or irregularities
with respect to tenders of old notes nor shall any of them incur any liability
for failure to give such notification. Tenders of old notes will not be deemed
to have been made until such irregularities have been cured or waived. Any old
notes received by the exchange agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned without cost by the exchange agent to the tendering holder of such old
notes unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.
In addition, we reserve the right in our sole discretion to:
o purchase or make offers for any old notes that remain
outstanding subsequent to the expiration date, or to terminate
the exchange offer, and
o to the extent permitted by applicable law, purchase old notes
in the open market, in privately negotiated transactions or
otherwise.
The terms of any such purchases or offers may differ from the terms of the
exchange offer.
By tendering, each holder of old notes will represent to us that,
among other things, the new notes acquired pursuant to the exchange offer are
being obtained in the ordinary course of business of the person receiving such
new notes, whether or not such person is the holder, that neither the holder nor
any other person has an arrangement or understanding with any person to
participate in the distribution of the new notes and that neither the holder nor
any such other person is an "affiliate" of ours within the meaning of Rule 405
under the Securities Act.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of old notes may be
withdrawn at any time prior to 5:00 p.m. New York City time (10:00 p.m. London
time), on the expiration date unless previously accepted for exchange.
To withdraw a tender of old notes in the exchange offer, a notice
of withdrawal must be transmitted by DTC, Euroclear, Cedelbank, as the case may
be, and received by the exchange agent, in accordance with the standard
operating procedures of DTC, Euroclear or Cedelbank, as the case may be, on
behalf of a holder, prior to 5:00 p.m. New York City time (10:00 p.m. London
time), on the expiration date and prior to acceptance for exchange thereof by
us. Any such notice of withdrawal must:
o specify the name of the person having deposited the old notes
to be withdrawn;
o identify the old notes to be withdrawn, including the
principal amount of such old notes; and
o be signed by the depositor in the same manner as the original
signature on the letter of transmittal by which such old notes
were tendered, or be accompanied by documents of transfers
sufficient to permit the trustee with respect to the old notes
to register the transfer of such old notes into the name of
the depositor withdrawing the tender.
All questions as to the validity, form and eligibility, including
time of receipt, for such withdrawal notices will be determined by us, whose
determination shall be final and binding on all parties. Any old notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
exchange offer and no exchange notes will be issued with respect thereto unless
the old notes so withdrawn are validly tendered. Any old notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the exchange offer. Properly withdrawn old
notes may be tendered by following one of the procedures for tendering described
above at any time prior to the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the exchange offer, we
are not required to accept for exchange, or to issue new notes in exchange for,
any old notes and may terminate or amend the exchange offer if at any time
before the acceptance of the old notes for exchange or the exchange of the new
notes for the old notes, if (i) such acceptance or issuance would violate
applicable law or any applicable interpretation of the SEC's staff, (ii) any
action or proceeding is instituted or threatened in any court or by any
governmental agency which might materially impair the ability of the Company to
proceed with the exchange offer, or there has occurred in any existing action or
proceeding that would materially impair the ability of the Company to consummate
the exchange offer, and (iii) the Company has not obtained all governmental
approvals that it deems necessary to consummate the exchange offer.
The foregoing conditions are for our sole benefit and any of them
may be asserted by us regardless of the circumstances giving rise to such
condition or may be waived by us in whole or in part at any time and from time
to time in our sole discretion. Our failure at any time to exercise the
foregoing rights is not to be deemed a waiver of any of our rights and each of
our rights shall be deemed an ongoing right which may be asserted at any time
and from time to time.
In addition, we will not accept for exchange any old notes
tendered, and no new notes will be issued in exchange for any such old notes, if
at such time any stop order is threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part or the
qualification of the indenture under the Trust Indenture Act.
EXCHANGE AGENT
Citibank, N.A. has been appointed as exchange agent for the
exchange of the old notes. Questions and requests for assistance relating to the
exchange of the old notes and requests for additional copies of this prospectus
or of the letter of transmittal should be directed to the exchange agent at
Citibank N.A. (telephone (44 171) 508-3839).
RESALES OF NEW NOTES
Based on the staff of the SEC's letters to other parties, we
believe that holders of new notes, other than broker-dealers, can offer the new
notes for resale, resell and otherwise transfer the new notes without delivering
a prospectus to prospective purchasers. However, you must acquire the new notes
in the ordinary course of business and have no intention of engaging in a
distribution of the new notes, as a "distribution" is defined by the Securities
Act. We are exchanging the old notes for new notes in reliance upon the staff of
the SEC's position, set forth in interpretive letters to third parties in other
similar transactions. We will not seek our own interpretive letter. As a result,
we cannot assure you that the staff will take the same position on this exchange
offer as it did in interpretive letters to other parties.
FEES AND EXPENSES
We will not make any payment to brokers, dealers, or others
soliciting acceptances of the exchange offer except for reimbursement of mailing
expenses.
The estimated cash expenses to be incurred in connection with the
exchange offer will be paid by the Company. Such expenses include fees and
expenses of the Exchange Agent and Trustee, accounting fees and legal fees,
among others.
TRANSFER TAXES
You will not be obligated to pay any transfer taxes in connection
with any tender of old notes for exchange, except if you instruct us to register
new notes in the name of, or request that old notes not tendered or not accepted
in the exchange offer be returned to, a person other than the registered
tendering holder, you will be responsible for the payment of any applicable
transfer tax thereon.
<PAGE>
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange of old
notes for new notes in the exchange offer. We have used the net proceeds from
the sale of the old notes to repay amounts that were outstanding under our bank
credit facility.
CAPITALIZATION
The following table sets forth our unaudited actual
capitalization as of November 30, 1999. Since November 30, 1999, there has been
no material change in our capitalization.
<TABLE>
<CAPTION>
NOVEMBER 30,
1999
-------------
Dollars in millions (except share data)
<S> <C>
Long term debt (including current maturities):
Revolving credit facility ...................................................... $ 106.4
Term loan facility ............................................................. 572.3
8 5/8% Senior Notes due 2006 ................................................... 200.0
8 1/2% Senior Notes due 2009 ................................................... 119.9(a)
8 3/4% Senior Subordinated Notes due 2003 ...................................... 192.8
8 1/2% Senior Subordinated Notes due 2009 ...................................... 200.0
Other .......................................................................... 17.1
----------
Total debt .............................................................. 1,408.5
----------
Stockholders' equity:
Preferred Stock, $.01 par value-authorized 1,000,000 shares; issued none ....... --
Class A Common Stock, $.01 par value-
authorized 120,000,000 shares; issued 18,135,272 shares ................. .2
Class B Convertible Common Stock, $.01 par value-
authorized 20,000,000 shares; issued 3,762,970 shares ................... --
Additional paid-in capital ..................................................... 243.6
Retained earnings .............................................................. 342.9
Accumulated other comprehensive income-
cumulative translation adjustment ....................................... (7.7)
Less: Treasury stock ........................................................... (81.7)
----------
Total stockholders' equity .............................................. 497.3
----------
Total capitalization .................................................... $ 1,905.8
----------
- ---------
(a) Represents(pound)75.0 million converted at a rate of(pound)1.00 = $1.5981.
</TABLE>
<PAGE>
DESCRIPTION OF THE NOTES
The terms of the new notes to be issued in the exchange offer and
the outstanding old notes are substantially identical, except for transfer
restrictions, registration rights, and liquidated damages provisions that apply
to the old notes. Any old notes that remain outstanding after the exchange
offer, together with new notes issued in the exchange offer, will be treated as
a single class of securities under the Indenture for voting purposes. When we
refer to the term "note" or "notes", we are referring to both the outstanding
old notes and the new notes to be issued in the exchange offer. When we refer to
"holders" of the notes, we are referring to those persons who are the registered
holders of notes on the books of the registrar appointed under the Indenture.
The new notes will be issued under the indenture (the
"Indenture"), dated as of November 17, 1999, among the Company, certain
subsidiaries of the Company that are guaranteeing the notes (the "Guarantors"),
and Harris Trust and Savings Bank, as trustee (the "Trustee"). The Indenture is
filed as an exhibit to the registration statement of which this prospectus forms
a part. The maximum aggregate principal amount of notes that may be issued under
the Indenture is (pound)150.0 million.
The following is a summary of the material provisions of the
Indenture. It does not purport to be complete, and where reference is made to
particular provisions of the Indenture, such provisions, including the
definitions of certain terms, are qualified in their entirety by reference to
all of the provisions of the Indenture and those terms made a part of the
Indenture by the Trust Indenture Act. For definitions of certain capitalized
terms used in the following summary, see "-Certain Definitions."
GENERAL
The notes will mature on November 15, 2009 and will be unsecured
senior obligations of the Company and will rank pari passu in right of payment
to all existing and future unsecured senior Indebtedness. Each note will bear
interest at an annual rate of 8 1/2% from November 17, 1999 or from the most
recent interest payment date to which interest has been paid. Interest on the
notes will be payable semi-annually on May 15 and November 15 in each year,
commencing May 15, 2000, to the Person in whose name the note (or any
predecessor note) is registered at the close of business on the May 1 or
November 1 next preceding such interest payment date. The entire aggregate
principal amount of the notes will become due and payable upon maturity.
Payment of the notes is guaranteed unconditionally by the
Guarantors on a senior basis. The Guarantors are comprised of all of the direct
and indirect Domestic Restricted Subsidiaries of the Company and direct and
indirect Foreign Restricted Subsidiaries that in each case guarantee Other
Indebtedness. The Guarantors (except Canandaigua B.V. and M.J. Lewis Corp.) have
also guaranteed all obligations of the Company under the Credit Agreement. No
holder of any other Indebtedness of the Company will have the benefit of any
guarantees which the holders of the notes do not have.
The notes are direct, senior unsecured obligations of the Company
and rank and will rank pari passu, without any preferences among themselves,
with all other outstanding unsecured and unsubordinated indebtedness, present
and future.
PAYMENT ON NOTES; SUBSTITUTION OF CURRENCY
The euro, the currency introduced at the start of the third stage
of economic and monetary union pursuant to the treaty establishing the European
Economic Community, as amended by the Treaty on European Union, was introduced
on January 1, 1999. The United Kingdom was not a participant at that date;
however, the United Kingdom Government stated that the United Kingdom might wish
to join the single currency at a later date. If the United Kingdom adopts the
euro, it will replace pounds sterling as the legal tender in the United Kingdom
and result in the effective redenomination of the notes into euros and the
regulations of the European Commission relating to the euro shall apply to the
notes. The circumstances and consequences described in this paragraph entitle
neither the Company, the Guarantors nor any holder of notes to early redemption,
rescission, notice or repudiation of the terms and conditions of the notes or
the Indenture or to raise other defenses or to request any compensation claim,
nor will they affect any of the other obligations of the Company or the
Guarantors under the notes and the Indenture.
NOTICES
Notices to holders shall, at such time as, and so long as the
notes are listed on the Luxembourg Stock Exchange and the rules of such stock
exchange shall so require, be published in a newspaper having a general
circulation in Luxembourg (which is expected to be the Luxemburger Wort).
Notices to holders of notes shall also be mailed by first class mail to each
holder at its address appearing in the register of holders on the appropriate
date provided herein. For so long as any of the notes are represented by the
Global Notes, notice to holders shall (in addition to publication as described
above) also be given by delivery of the relevant notice to DTC, Euroclear and/or
Cedelbank (as the case may be) for communication to the holders of the
Book-Entry Interests.
ADDITIONAL AMOUNTS
All payments made by the Company or any Guarantor under or with
respect to the notes or any Guarantee will be made free and clear of and without
withholding or deduction for or on account of any present or future tax, duty,
levy, impost, assessment or other governmental charge (including penalties,
interest and other liabilities related thereto) imposed or levied by or on
behalf of the government of the United States of America or any other
jurisdiction in which any Guarantor is incorporated or of any prefecture or
territory thereof or by any authority or agency therein or thereof having power
to tax (hereinafter, "Taxes"), unless the Company or such Guarantor is required
to withhold or deduct Taxes by law, regulation or governmental policy or by the
interpretation or administration thereof. If the Company or any Guarantor is
required to withhold or deduct any amount for or on account of Taxes from any
payment made under or with respect to the notes or any Guarantee, the Company or
such Guarantor will pay such additional amounts ("Additional Amounts") as may be
necessary so that the net amount received by each holder (including Additional
Amounts) after such withholding or deduction will not be less than the amount
the holder would have received if such Taxes had not been withheld or deducted;
provided that no Additional Amounts will be payable with respect to a payment
made to a holder and no reimbursement shall be made to a holder for Taxes paid
by such holder (each such holder, an "Excluded holder") with respect to any Tax
imposed, levied, payable or due (i) by reason of the holder's or beneficial
owner's present or former connection with the United States of America or any
other jurisdiction in which any Guarantor is incorporated or any prefecture or
territory thereof, other than through the mere receipt or holding of notes or by
reason of the receipt of payments thereunder; (ii) by reason of the failure of
the holder or beneficial owner of notes to satisfy any certification,
identification, information or other reporting requirements which the holder or
such beneficial owner is legally required to satisfy, whether imposed by
statute, treaty, regulation, administrative practice or otherwise, as a
precondition to exemption from, or reduction in the rate of deduction or
withholding of, Taxes; or (iii) by reason of the presentation (where
presentation is required in order to receive payment) of such notes for payment
more than 30 days after the date such payment became due and payable or was duly
provided for under the terms of the notes, whichever is later. The obligation of
the Company or any Guarantor to pay Additional Amounts or to reimburse a holder
for Taxes paid by such holder in respect of Taxes shall not apply with respect
to: (x) any estate, inheritance, gift, sales, transfer, personal property or
similar Taxes; (y) any Tax which is payable otherwise than by deduction or
withholding from payments made under or with respect to the notes or any
Guarantee; or (z) Taxes imposed on or with respect to any payment by the Company
or such Guarantor to the holder or beneficial owner if such holder or beneficial
owner is a fiduciary or partnership or person other than the sole beneficial
owner of such payment to the extent that such Taxes would not have been imposed
on a beneficiary or settlor with respect to such fiduciary, a member of such
partnership or the beneficial owner of such payment had such beneficiary,
settlor, member or beneficial owner been the holder of such Note. The Company or
such Guarantor will also (i) make such withholding or deduction compelled by
applicable law and (ii) remit the full amount deducted or withheld to the
relevant authority in accordance with applicable law. The Company or such
Guarantor will, upon written request of a holder, furnish to each such holder
certified copies of tax receipts evidencing the payment of any Taxes by the
Company or such Guarantor in such form as provided in the normal course by the
taxing authority imposing such Taxes and as is reasonably available to the
Company or such Guarantor, within 60 days after the later of the date of receipt
of such written request and the date of receipt of such evidence. If
notwithstanding the Company's or such Guarantor's efforts to obtain such
receipts, the same are not obtainable, the Company or such Guarantor will
promptly provide such holder with other evidence reasonably satisfactory to such
holder of such payments by the Company or such Guarantor. The Indenture will
further provide that, if the Company conducts business in any jurisdiction (the
"Taxing Jurisdiction") other than the United States of America, or if any
Guarantor conducts business in any Taxing Jurisdiction other than the
jurisdiction under which such Guarantor is incorporated, in a manner which
causes holders to be liable for taxes on payments under the notes or any
Guarantee for which they would not have been so liable but for such conduct of
business in the Taxing Jurisdiction, the provision of the notes described above
shall be considered to apply to such holders as if references in such provision
to "Taxes" included taxes imposed by way of deduction or withholding by such
Taxing Jurisdiction and references to Excluded holder shall be deemed to include
holders or beneficial owners having a present or former connection with such
Taxing Jurisdiction or any state, prefecture or territory thereof. The Company
or such Guarantor will, upon written request of any holder (other than an
Excluded holder), reimburse each such holder for the amount of (i) any Taxes so
levied or imposed and paid by such holder as a result of payments made under or
with respect to the notes and (ii) any Taxes so levied or imposed with respect
to any reimbursement under the foregoing clause (i) and paid by such holder so
that the net amount received by such holder (net of payments made under or with
respect to the notes) after such reimbursement will not be less than the net
amount the holder would have received if Taxes on such reimbursement had not
been imposed. The Indenture will provide that neither the Company nor any
Guarantor will take any action or fail to act in any manner which will have the
effect of requiring the payment of any Additional Amounts such that the Company
may exercise its option to effect a Tax Redemption; provided, however, that the
Company and its Subsidiaries will not be required to change their jurisdiction
or alter their operations in any manner and will not be required to take any
other unreasonable act thereunder.
At least 30 days prior to each date on which any payment under or
with respect to the notes is due and payable, if the Company or any Guarantor
will pay Additional Amounts with respect to such payment (unless such obligation
to pay Additional Amounts arises after the 30th day prior to the date on which
payment under or with respect to the notes is due and payable, in which case it
shall be promptly thereafter), the Company or such Guarantor will deliver to the
Trustee an officers' certificate stating the fact that such Additional Amounts
will be payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional Amounts to
holders on the payment date. Whenever in the Indenture or in this "Description
of the Notes" there is mentioned, in any context, the payment of principal,
interest, if any, or any other amount payable under or with respect to any note,
such mention shall be deemed to include mention of the payment of Additional
Amounts to the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof.
OPTIONAL REDEMPTION
The notes will be redeemable, in whole or in part, at the option
of the Company at any time at a redemption price equal to the greater of (i)
100% of the principal amount of such notes, and (ii) as determined by the
Quotation Agent (as defined below), the sum of the present values of the
remaining scheduled payments of principal and interest thereon (not including
any portion of such payments of interest accrued as of the date of redemption)
discounted to the date of redemption on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Adjusted Gilt Rate (as defined
below) plus 50 basis points plus, in each case, accrued interest thereon to the
date of redemption.
As used herein:
"Adjusted Gilt Rate" means, with respect to any redemption date,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Gilt Issue, assuming a price for the Comparable Gilt Issue (expressed
as a percentage of its principal amount) equal to the Comparable Gilt Price for
such redemption date.
"Comparable Gilt Issue" means the United Kingdom Government
Obligation selected by the Quotation Agent as having a maturity comparable to
the remaining term of the notes to be redeemed, that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such notes.
"Comparable Gilt Price" means, with respect to any redemption
date, (i) the average of the Reference Gilt Dealer Quotations for such
redemption date, after excluding the highest and lowest such Reference Gilt
Dealer Quotations, or (ii) if the Trustee obtains fewer than three such
Reference Gilt Dealer Quotations, the average of all such Quotations.
"Quotation Agent" means the Reference Gilt Dealer appointed by
the Company.
"Reference Gilt Dealer" means each of (x) J.P. Morgan Securities
Ltd., and its respective successors; provided, however, that if the foregoing
shall cease to be a primary United Kingdom Government Obligations dealer in
London (a "Primary U.K. Government Obligations Dealer"), the Company shall
substitute therefor another Primary U.K. Government Obligations Dealer; and (y)
any other Primary U.K. Government Obligations Dealer selected by the Company.
"Reference Gilt Dealer Quotations" means, with respect to each
Reference Gilt Dealer and any redemption date, the average, as determined by the
Company, of the bid and asked prices for the Comparable Gilt Issue (expressed in
each case as a percentage of its principal amount) quoted in writing to the
Trustee by such Reference Gilt Dealer at 11:00 a.m.; London time, on the third
business day preceding such redemption date.
Notice of any redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each holder of the notes to be
redeemed. Unless the Company defaults in payment of the redemption price, on and
after the redemption date, interest will cease to accrue on the notes or
portions thereof called for redemption.
In the event that less than all of the notes are to be redeemed
at any time pursuant to an optional redemption, selection of such notes for
redemption will be made by the Trustee in compliance with the requirements of
the Luxembourg Stock Exchange, if the notes are listed thereon, or if the notes
are not then listed on the Luxembourg Stock Exchange, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided,
however, that no notes of a principal amount of (pound)1,000, or less shall be
redeemed in part. Notice of redemption shall be mailed by first-class mail at
least 30 but not more than 60 days before the redemption date to each holder of
notes to be redeemed at its registered address. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in a
principal amount equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon cancellation of the original Note. On and after
the redemption date, interest will cease to accrue on notes or portions thereof
called for redemption as long as the Company has deposited with the paying agent
for the notes funds in satisfaction of the applicable redemption price pursuant
to the Indenture. Notice of optional redemption will be published in the manner
described above under "-Notices."
REDEMPTION FOR CHANGES IN WITHHOLDING TAX
The notes of any holder will be subject to redemption as a whole,
but not in part, at the option of the Company (a "Tax Redemption") at any time
upon not less than 30 nor more than 60 days' notice mailed to such holder of
notes to be redeemed, at 100% of the principal amount thereof on the date of
redemption, plus accrued and unpaid interest, if any, to the redemption date, in
the event the Company or any Guarantor has become or would be obligated to pay,
on any date on which any amount would be payable with respect to such notes or
any Guarantee any Additional Amounts as a result of any change in or amendment
to the laws, policies or treaties (including any regulation or ruling
promulgated thereunder) of the United States of America or any jurisdiction in
which any Guarantor is incorporated (or any prefecture, territory or taxing
authority thereof or therein), or any change in or amendment to any official
position or administration or assessing practices regarding the application or
interpretation of such laws, policies, treaties, rulings or regulations, which
change or amendment is announced or becomes effective on or after the Issue
Date, provided, however, that, (i) no notice of redemption shall be given
earlier than 60 days prior to the earliest date on which the Company or such
Guarantor would be obligated to pay such Additional Amounts were a payment in
respect of the notes then due, (ii) if the Company elects to exercise its Tax
Redemption option, it shall consummate any such Tax Redemption within 180 days
following the date on which the amount to which the payment of such Additional
Amounts relates would be payable to such holder and (iii) upon the exercise by
the Company of its Tax Redemption option at any time such that, after giving
effect to the exercise of such Tax Redemption option, less than a majority of
the aggregate principal amount of the notes originally issued remains
outstanding, prior to the consummation of such Tax Redemption the Company shall
make an offer to purchase from all holders, upon not less than 30 nor more than
60 days' notice, the notes of such holders at 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the redemption date;
provided further, that prior to any such Tax Redemption, (i) the Company will
deliver to the Trustee a copy of the written opinion of independent counsel to
the effect that the Company or any Guarantor has or will become obligated to pay
Additional Amounts as a result of such change, amendment, administration,
application or interpretation and (ii) the Company or such Guarantor will use
reasonable efforts to cause the reduction or elimination of the obligation to
pay any such Additional Amounts.
SINKING FUND
The notes will not be entitled to the benefit of any sinking
fund.
GUARANTEES OF THE NOTES
The Indenture will provide that each of the Guarantors will
unconditionally guarantee (the "Guarantees") on a senior basis, jointly and
severally, all of the Company's obligations under the notes, including its
obligations to pay principal, premium, if any, and interest with respect to the
notes. The Guarantees will be general unsecured obligations of the Guarantors.
The Guarantors (except for Canandaigua B.V. and M.J. Lewis Corp.) have also
guaranteed all obligations of the Company under the Credit Agreement. The
obligations under the Credit Agreement are secured by (i) first priority pledges
of 100% of the capital stock of Canandaigua Limited and all of the Company's
domestic operating subsidiaries and (ii) first priority pledges of 65% of the
capital stock held by the Company of Matthew Clark, B.B. Servicios, S.A. de
C.V., Canandaigua World Sales Limited and Schenley Distilleries Inc./Les
Distelleries Schenley Inc. The obligations of each Guarantor are limited to the
maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under the Indenture, will result in the obligations of
such Guarantor under its Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in a pro rata amount, based on the net assets of each
Guarantor determined in accordance with GAAP.
The Company shall cause each Restricted Subsidiary issuing a
Guarantee after the Issue Date to execute and deliver to the Trustee a
supplemental indenture in form reasonably satisfactory to the Trustee pursuant
to which such Restricted Subsidiary shall become a party to the Indenture and
thereby unconditionally guarantee all of the Company's Obligations under the
notes and the Indenture on the terms set forth therein. Thereafter, such
Restricted Subsidiary shall (unless released in accordance with the terms of the
Indenture) be a Guarantor for all purposes of the Indenture.
The Indenture will provide that if the notes are defeased in
accordance with the terms of the Indenture, or if, subject to the requirements
of the first paragraph under "Consolidation, Merger, Sale of Assets" all or
substantially all of the assets of any Guarantor or all of the Capital Stock of
any Guarantor are sold (including by issuance or otherwise) by the Company in a
transaction constituting an Asset Sale, and if (x) the Net Cash Proceeds from
such Asset Sale are used in accordance with the covenant described under
"Certain Covenants-Limitation on Sale of Assets" or (y) the Company delivers to
the Trustee an Officers' Certificate to the effect that the Net Cash Proceeds
from such Asset Sale shall be used in accordance with the covenant described
under "Certain Covenants-Limitation on Sale of Assets" and within the time
limits specified by such covenant, then such Guarantor or the Guarantors, as the
case may be (in the event of a defeasance of the notes or a sale or other
disposition of all of the Capital Stock of such Guarantor) or the corporation
acquiring such assets (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) shall be released and
discharged of its Guarantee obligations in respect of the Indenture and the
notes.
Any Guarantor that is designated an Unrestricted Subsidiary
pursuant to and in accordance with "Certain Covenants-Designation of
Unrestricted Subsidiaries" below shall upon such Designation be released and
discharged of its Guarantee obligations in respect of the Indenture and the
notes and any Unrestricted Subsidiary whose Designation is revoked pursuant to
"Certain Covenants-Designation of Unrestricted Subsidiaries" below will be
required to become a Guarantor in accordance with the procedure described in the
third preceding paragraph. In the case where a Guarantor is released and
discharged of its Guarantee, we will, if listed on the Luxembourg Stock
Exchange, inform the Luxembourg Stock Exchange and holders will be notified in
accordance with the procedure described in "-Notices."
The Guarantors of the notes are the following subsidiaries of the
Company: Allberry, Inc., Barton Beers, Ltd., Barton Brands of California, Inc.,
Barton Brands of Georgia, Inc., Barton Brands, Ltd., Barton Canada, Ltd. Barton
Distillers Import Corp., Barton Financial Corporation, Barton Incorporated,
Batavia Wine Cellars, Inc., Canandaigua B.V., Canandaigua Europe Limited,
Canandaigua Limited, Canandaigua Wine Company, Inc., Cloud Peak Corporation,
Franciscan Vineyards, Inc., M.J. Lewis Corp., Monarch Import Company, Mt. Veeder
Corporation, Polyphenolics, Inc., Roberts Trading Corp., SCV-EPI Vineyards,
Inc., Simi Winery, Inc., Stevens Point Beverage Co., and The Viking Distillery,
Inc.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Indebtedness. (a) The Company will not, and will
not permit any of its Restricted Subsidiaries to, Incur any Indebtedness
(including any Acquired Indebtedness), except that the Company and any Guarantor
may Incur Indebtedness (including any Acquired Indebtedness) and any Restricted
Subsidiary that is not a Guarantor may Incur Acquired Indebtedness if, in each
case, the Consolidated Fixed Charge Coverage Ratio for the Company for the four
full fiscal quarters immediately preceding the Incurrence of such Indebtedness
taken as one period (and after giving pro forma effect to (i) the Incurrence of
such Indebtedness and (if applicable) the application of the net proceeds
therefrom, including to refinance other Indebtedness, as if such Indebtedness
was Incurred, and the application of such proceeds occurred, at the beginning of
such four-quarter period; (ii) the Incurrence, repayment or retirement of any
other Indebtedness by the Company and its Restricted Subsidiaries since the
first day of such four-quarter period as if such Indebtedness was Incurred,
repaid or retired at the beginning of such four-quarter period (except that, in
making such computation, the amount of Indebtedness under any revolving credit
facility shall be computed based upon the average daily balance of such
Indebtedness during such four-quarter period); (iii) in the case of Acquired
Indebtedness, the related acquisition as if such acquisition occurred at the
beginning of such four quarter period; and (iv) any acquisition or disposition
by the Company and its Restricted Subsidiaries of any company or any business or
any assets out of the ordinary course of business, whether by merger, stock
purchase or sale or asset purchase or sale, or any related repayment of
Indebtedness, in each case since the first day of such four-quarter period,
assuming such acquisition or disposition had been consummated on the first day
of such four-quarter period) is equal to at least 2.00:1.00.
(b) The foregoing limitation will not apply to the incurrence of any of the
following (collectively "Permitted Indebtedness"):
(i) Indebtedness of the Company and any Restricted Subsidiary
under the Credit Agreement in an aggregate principal
amount at any one time outstanding not to exceed an amount
equal to the greater of (x) $1 billion, minus the amount
of any repayment of such Indebtedness under the Credit
Agreement pursuant to "Certain Covenants-Limitation on
Sale of Assets" below and (y) the Borrowing Base;
(ii) Indebtedness of the Company pursuant to the notes and
other Indebtedness outstanding on the Issue Date (other
than Indebtedness under the Credit Agreement);
(iii) Indebtedness of any Guarantor pursuant to a Guarantee;
(iv) Indebtedness of the Company owing to a Restricted
Subsidiary; provided that any Indebtedness of the Company
owing to a Restricted Subsidiary that is not a Guarantor
is made pursuant to an intercompany note in the form
attached to the Indenture and is subordinated in right of
payment from and after such time as the notes shall become
due and payable (whether at Stated Maturity, acceleration
or otherwise) to the payment and performance of the
Company's obligations under the notes; provided, further
that any disposition, pledge or transfer of any such
Indebtedness to a Person (other than a disposition, pledge
or transfer to a Restricted Subsidiary or a pledge to or
for the benefit of the lenders under the Credit Agreement)
shall be deemed to be an incurrence of such Indebtedness
by the obligor not permitted by this clause (iv);
(v) Indebtedness of a Restricted Subsidiary owing to the
Company or a Wholly Owned Restricted Subsidiary; provided
that, with respect to Indebtedness owing to a Wholly Owned
Restricted Subsidiary that is not a Guarantor, (x) any
such Indebtedness is made pursuant to an intercompany note
in the form attached to the Indenture and (y) any such
Indebtedness shall be subordinated in right of payment
from and after such time as the obligations under the
Guarantee by such Wholly Owned Restricted Subsidiary shall
become due and payable to the payment and performance of
such Wholly Owned Restricted Subsidiary's obligations
under its Guarantee; provided, further that (a) any
disposition, pledge or transfer of any such Indebtedness
to a Person (other than a disposition, pledge or transfer
to the Company or a Restricted Subsidiary or a pledge to
or for the benefit of the lenders under the Credit
Agreement) shall be deemed to be an incurrence of such
Indebtedness by the obligor not permitted by this clause
(v), and (b) any transaction pursuant to which any
Restricted Subsidiary, which has Indebtedness owing to the
Company or any other Restricted Subsidiary, ceases to be a
Restricted Subsidiary shall be deemed to be the incurrence
of Indebtedness by such Restricted Subsidiary that is not
permitted by this clause (v);
(vi) guarantees of any Restricted Subsidiary made in accordance
with the provisions of "Certain Covenants-Limitation on
Guarantees by Restricted Subsidiaries";
(vii) Hedging Obligations of the Company or any Guarantor
entered into in the ordinary course of business (and not
for speculative purposes) designed to protect against
fluctuations in: (x) interest rates in respect of
Indebtedness of the Company or any of its Restricted
Subsidiaries, as long as such obligations at the time
incurred do not exceed the aggregate principal amount of
such Indebtedness then outstanding or in good faith
anticipated to be outstanding within 90 days of such
Incurrence, (y) currencies or (z) commodities;
(viii) any renewals, extensions, substitutions, refundings,
refinancings or replacements (collectively, a
"refinancing") of any Indebtedness described in clauses
(ii) and (iii) of this definition of "Permitted
Indebtedness," including any successive refinancings so
long as the aggregate principal amount of Indebtedness
represented thereby is not increased by such refinancing
plus the lesser of (1) the stated amount of any premium,
interest or other payment required to be paid in
connection with such a refinancing pursuant to the terms
of the Indebtedness being refinanced or (2) the amount of
premium, interest or other payment actually paid at such
time to refinance the Indebtedness, plus, in either case,
the amount of expenses of the Company incurred in
connection with such refinancing and, in the case of Pari
Passu Indebtedness or Subordinated Indebtedness, such
refinancing does not reduce the Average Life to Stated
Maturity or the Stated Maturity of such Indebtedness; and
(ix) Indebtedness, in addition to that described in clauses (i)
through (viii) of this definition of "Permitted
Indebtedness," and any renewals, extensions,
substitutions, refinancings or replacements of such
Indebtedness, not to exceed $75.0 million outstanding at
any one time in the aggregate.
Limitation on Restricted Payments. (a) The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution
to holders of, any shares of the Company's Capital Stock
(other than dividends or distributions payable solely in
shares of its Qualified Capital Stock or in options,
warrants or other rights to acquire such Qualified Capital
Stock);
(ii) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of the Capital Stock of
the Company or any Affiliate thereof (other than any
Wholly Owned Restricted Subsidiary of the Company) or
options, warrants or other rights to acquire such Capital
Stock;
(iii) make any principal payment on, or repurchase, redeem,
defease, retire or otherwise acquire for value, prior to
any scheduled principal payment, sinking fund or maturity,
any Subordinated Indebtedness;
(iv) declare or pay any dividend or distribution on any Capital
Stock of any Restricted Subsidiary to any Person (other
than the Company or any of its Restricted Subsidiaries) or
purchase, redeem or otherwise acquire or retire for value
any Capital Stock of any Restricted Subsidiary held by any
Person (other than the Company or any of its Wholly Owned
Restricted Subsidiaries);
(v) Incur, create or assume any guarantee of Indebtedness of
any Affiliate (other than a Wholly Owned Restricted
Subsidiary of the Company); or
(vi) make any Investment in any Person (other than any
Permitted Investments)
(any of the foregoing payments described in clauses (i) through (vi), other than
any such action that is a Permitted Payment, collectively, "Restricted
Payments") unless after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, as determined by the
Board of Directors of the Company, whose determination shall be conclusive and
evidenced by a board resolution), (1) no Default or Event of Default shall have
occurred and be continuing and such Restricted Payment shall not be an event
which is, or after notice or lapse of time or both, would be, an "event of
default" under the terms of any Indebtedness of the Company or its Restricted
Subsidiaries; (2) immediately before and immediately after giving effect to such
transaction on a pro forma basis, the Company could Incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the provisions described
under "Limitation on Indebtedness"; and (3) the aggregate amount of all such
Restricted Payments declared or made after the date of the Indenture does not
exceed the sum of:
(A) 50% of the aggregate cumulative Consolidated Net Income of
the Company accrued on a cumulative basis during the
period beginning on December 1, 1998 and ending on the
last day of the Company's last fiscal quarter ending prior
to the date of the Restricted Payment (or, if such
aggregate cumulative Consolidated Net Income shall be a
loss, minus 100% of such loss); plus
(B) the aggregate Net Cash Proceeds received after the date of
the Indenture by the Company from the issuance or sale
(other than to any of its Subsidiaries) of its shares of
Qualified Capital Stock or any options, warrants or rights
to purchase such shares of Qualified Capital Stock of the
Company (except, in each case, to the extent such proceeds
are used to purchase, redeem or otherwise retire Capital
Stock or Subordinated Indebtedness as set forth below);
plus
(C) the aggregate Net Cash Proceeds received after the date of
the Indenture by the Company (other than from any of its
Subsidiaries) upon the exercise of any options or warrants
to purchase shares of Qualified Capital Stock of the
Company; plus
(D) the aggregate Net Cash Proceeds received after the date of
the Indenture by the Company from debt securities or
Redeemable Capital Stock that have been converted into or
exchanged for Qualified Capital Stock of the Company to
the extent such debt securities or Redeemable Capital
Stock are originally sold for cash plus the aggregate Net
Cash Proceeds received by the Company at the time of such
conversion or exchange; plus
(E) in the event the Company or any Restricted Subsidiary
makes an Investment in a Person that, as a result of or in
connection with such Investment becomes a Restricted
Subsidiary, an amount equal to the Company's or any
Restricted Subsidiary's existing Investment in such Person
that was previously treated as a Restricted Payment; plus
(F) so long as the Designation thereof was treated as a
Restricted Payment made after the Issue Date, with respect
to any Unrestricted Subsidiary that has been redesignated
as a Restricted Subsidiary after the Issue Date in
accordance with "Certain Covenants-Designation of
Unrestricted Subsidiaries", an amount equal to the
Company's Investment in such Unrestricted Subsidiary
(provided that such amount shall not in any case exceed
the Designation Amount with respect to such Restricted
Subsidiary upon its Designation); plus
(G) $50.0 million; minus
(H) the Designation Amount (measured as of the date of
Designation) with respect to any Subsidiary of the Company
which has been designated as an Unrestricted Subsidiary
after the Issue Date in accordance with "Certain
Covenants-Designation of Unrestricted Subsidiaries."
(b) Notwithstanding the foregoing, and in the case of clauses (ii),
(iii) and (iv) below, so long as there is no Default or Event of
Default continuing, the foregoing provisions shall not prohibit
the following actions (clauses (i) through (iv) being referred to
as a "Permitted Payment"):
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at such date of declaration
such payment would be permitted by the provisions of
paragraph (a) of this Section and such payment shall be
deemed to have been paid on such date of declaration for
purposes of the calculation required by paragraph (a) of
this Section;
(ii) the repurchase, redemption, or other acquisition or
retirement of any shares of any class of Capital Stock of
the Company in exchange for (including any such exchange
pursuant to the exercise of a conversion right or
privilege or in which cash is paid in lieu of the issuance
of fractional shares or scrip), or out of the Net Cash
Proceeds of, a substantially concurrent issue and sale for
cash (other than to a Subsidiary) of other shares of
Qualified Capital Stock of the Company; provided that the
Net Cash Proceeds from the issuance of such shares of
Qualified Capital Stock are excluded from clause (3)(B) of
paragraph (a) of this Section;
(iii) any repurchase, redemption, defeasance, retirement,
refinancing or acquisition for value or payment of
principal of any Subordinated Indebtedness in exchange
for, or out of the Net Cash Proceeds of, a substantially
concurrent issuance and sale for cash (other than to any
Subsidiary of the Company) of any Qualified Capital Stock
of the Company, provided that the Net Cash Proceeds from
the issuance of such shares of Qualified Capital Stock are
excluded from clause (3)(B) of paragraph (a) of this
Section;
(iv) the repurchase, redemption, defeasance, retirement,
refinancing or acquisition for value or payment of
principal of any Subordinated Indebtedness (other than
Redeemable Capital Stock) (a "refinancing") through the
issuance of new Subordinated Indebtedness of the Company,
provided that any such new Subordinated Indebtedness (1)
shall be in a principal amount that does not exceed the
principal amount so refinanced (or, if such Subordinated
Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a
declaration or acceleration thereof, then such lesser
amount as of the date of determination), plus the lesser
of (x) the stated amount of any premium, interest or other
payment required to be paid in connection with such a
refinancing pursuant to the terms of the Indebtedness
being refinanced or (y) the amount of premium, interest or
other payment actually paid at such time to refinance the
Indebtedness, plus, in either case, the amount of expenses
of the Company Incurred in connection with such
refinancing; (2) has an Average Life to Stated Maturity
greater than the remaining Average Life to Stated Maturity
of the notes; (3) has a Stated Maturity for its final
scheduled principal payment later than the Stated Maturity
for the final scheduled principal payment of the notes;
and (4) is expressly subordinated in right of payment to
the notes at least to the same extent as the Indebtedness
to be refinanced.
Limitation on Transactions with Affiliates. The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into or suffer to exist any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with any Affiliate of the Company (other
than the Company or a Wholly Owned Restricted Subsidiary) unless (i) such
transaction or series of transactions is in writing on terms that are no less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
would be available in a comparable transaction in arm's-length dealings with an
unrelated third party, (ii) with respect to any transaction or series of
transactions involving aggregate payments in excess of $10.0 million, the
Company delivers an officers' certificate to the Trustee certifying that such
transaction or series of related transactions complies with clause (i) above and
such transaction or series of related transactions has been approved by the
Board of Directors of the Company, and (iii) with respect to a transaction or
series of related transactions involving aggregate value in excess of $25.0
million, the Company delivers to the Trustee an opinion of either an independent
investment banking firm of national standing in the United States or an
independent public accounting firm of national standing in the United States,
stating that the transaction or series of transactions is fair to the Company or
such Restricted Subsidiary; provided, however, that this provision shall not
apply to any transaction with an officer or director of the Company entered into
in the ordinary course of business (including compensation or employee benefit
arrangements with any officer or director of the Company).
Limitation on Liens. The Company will not, and will not permit
any Restricted Subsidiary to, directly or indirectly, create, Incur, affirm or
suffer to exist any Lien of any kind upon any of its property or assets
(including any intercompany notes), owned at the date of the Indenture or
acquired after the date of the Indenture, or any income or profits therefrom,
except if the notes (or a Guarantee, in the case of Liens of a Guarantor) are
directly secured equally and ratably with (or prior to in the case of Liens with
respect to Subordinated Indebtedness or Indebtedness of a Guarantor subordinated
in right of payment to any Guarantee) the obligation or liability secured by
such Lien, excluding, however, from the operation of the foregoing any of the
following:
(a) any Lien existing as of the date of the Indenture;
(b) any Lien arising by reason of (1) any judgment, decree or
order of any court, so long as such Lien is adequately
bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment,
decree or order shall not have been finally terminated or
the period within which such proceedings may be initiated
shall not have expired; (2) taxes not yet delinquent or
which are being contested in good faith; (3) security for
payment of workers' compensation or other insurance; (4)
good faith deposits in connection with tenders, leases, or
contracts (other than contracts for the payment of money);
(5) zoning restrictions, easements, licenses,
reservations, provisions, covenants, conditions, waivers,
restrictions on the use of property or minor
irregularities of title (and with respect to leasehold
interests, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to
exist and arising by, through or under a landlord or owner
of the leased property, with or without consent of the
lessee), none of which materially impairs the use of any
parcel of property material to the operation of the
business of the Company or any Restricted Subsidiary or
the value of such property for the purpose of such
business; (6) deposits to secure public or statutory
obligations, or in lieu of surety or appeal bonds; (7)
certain surveys, exceptions, title defects, encumbrances,
easements, reservations of, or rights of others for,
rights of way, sewers, electric lines, telegraph or
telephone lines and other similar purposes or zoning or
other restrictions as to the use of real property not
interfering with the ordinary conduct of the business of
the Company or any of its Restricted Subsidiaries; (8)
operation of law in favor of mechanics, materialmen,
laborers, employees or suppliers, incurred in the ordinary
course of business for sums which are not yet delinquent
or are being contested in good faith by negotiations or by
appropriate proceedings which suspend the collection
thereof; or (9) standard custodial, bailee or depository
arrangements (including (x) in respect of deposit accounts
with banks and other financial institutions and (y)
standard customer agreements in respect of accounts for
the purchase and sale of securities and other property
with brokerage firms or other types of financial
institutions);
(c) any Lien now or hereafter existing on property of the
Company or any Guarantor securing Indebtedness outstanding
under the Credit Agreement;
(d) any Lien securing Acquired Indebtedness created prior to
(and not created in connection with, or in contemplation
of) the incurrence of such Indebtedness by the Company or
any Restricted Subsidiary, in each case which Indebtedness
is permitted under the provisions of "Certain
Covenants-Limitation on Indebtedness"; provided that any
such Lien only extends to the assets that were subject to
such lien securing such Acquired Indebtedness prior to the
related transaction by the Company or its Restricted
Subsidiaries; and
(e) any extension, renewal, refinancing or replacement, in
whole or in part, of any Lien described in the foregoing
clauses (a) through (d) so long as the amount of security
is not increased thereby.
Limitation on Sale of Assets. (a) The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly,
consummate an Asset Sale (other than an Asset Swap permitted by clause (g)
below) unless (i) at least 75% of the proceeds from such Asset Sale are received
in cash; provided, however that the amount of (A) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet or the
notes thereto) of the Company or any Restricted Subsidiary that are assumed by
the transferee in such Asset Sale and from which the Company or such Restricted
Subsidiary is released and (B) any notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
immediately converted by the Company or such Restricted Subsidiary into cash,
shall be deemed cash for purposes of this covenant, and (ii) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset Sale at
least equal to the Fair Market Value of the shares or assets sold (other than in
the case of an involuntary Asset Sale, as determined by the Board of Directors
of the Company and evidenced in a board resolution).
(b) If all or a portion of the Net Cash Proceeds of any Asset
Sale are not required to be applied to repay permanently
any secured Indebtedness then outstanding as required by
the terms thereof or the Company determines not to apply
such Net Cash Proceeds to the permanent repayment of such
secured Indebtedness or if no secured Indebtedness is then
outstanding, then the Company may within 12 months of the
Asset Sale, invest the Net Cash Proceeds in other
properties and assets that (as determined by the Board of
Directors of the Company) replace the properties and
assets that were the subject of the Asset Sale or in
properties and assets that will be used in the businesses
of the Company or its Restricted Subsidiaries as existing
at such time or reasonably related thereto. The amount of
such Net Cash Proceeds neither used to permanently repay
or prepay secured Indebtedness nor used or invested as set
forth in this paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals $10.0
million or more, the Company shall apply the Excess
Proceeds to the repayment of the notes and any Pari Passu
Indebtedness required to be repurchased under the
instrument governing such Pari Passu Indebtedness as
follows: (a) the Company shall make an offer to purchase
(an "Offer") from all holders of the notes in accordance
with the procedures set forth in the Indenture in the
maximum principal amount (expressed as a multiple
of(pound)1,000) of notes that may be purchased out of an
amount (the "Note Amount") equal to the product of such
Excess Proceeds multiplied by a fraction, the numerator of
which is the outstanding principal amount of the notes,
and the denominator of which is the sum of the outstanding
principal amount of the notes and such Pari Passu
Indebtedness (subject to proration in the event such
amount is less than the aggregate Offered Price (as
defined) of all notes tendered) and (b) to the extent
required by such Pari Passu Indebtedness to permanently
reduce the principal amount of such Pari Passu
Indebtedness, the Company shall make an offer to purchase
or otherwise repurchase or redeem Pari Passu Indebtedness
(a "Pari Passu Offer") in an amount (the "Pari Passu Debt
Amount") equal to the excess of the Excess Proceeds over
the Note Amount; provided that in no event shall the Pari
Passu Debt Amount exceed the principal amount of such Pari
Passu Indebtedness plus the amount of any premium required
to be paid to repurchase such Pari Passu Indebtedness. The
offer price shall be payable in cash in an amount equal to
100% of the principal amount of the notes plus accrued and
unpaid interest, if any, to the date (the "Offer Date")
such Offer is consummated (the "Offered Price"), in
accordance with the procedures set forth in the Indenture.
To the extent that the aggregate Offered Price of the
notes tendered pursuant to the Offer is less than the Note
Amount relating thereto or the aggregate amount of Pari
Passu Indebtedness that is purchased is less than the Pari
Passu Debt Amount (the amount of such shortfall, if any,
constituting a "Deficiency"), the Company shall use such
Deficiency in the business of the Company and its
Restricted Subsidiaries. Upon completion of the purchase
of all the notes tendered pursuant to an Offer and the
purchase of the Pari Passu Indebtedness pursuant to a Pari
Passu Offer, the amount of Excess Proceeds, if any, shall
be reset at zero.
(d) If the Company becomes obligated to make an Offer pursuant
to clause (c) above, the notes shall be purchased by the
Company, at the option of the holder thereof, in whole or
in part in integral multiples of (pound)1,000, on a date
that is not earlier than 45 days and not later than 60
days from the date the notice is given to holders, or such
later date as may be necessary for the Company to comply
with the requirements under the Exchange Act, subject to
proration in the event the Note Amount is less than the
aggregate Offered Price of all notes tendered.
(e) The Company shall comply with the applicable tender offer
rules, including Rule 14e-1 under the Exchange Act, and
any other applicable securities laws or regulations in
connection with an Offer.
(f) The Company will not, and will not permit any Subsidiary
to, create or permit to exist or become effective any
restriction (other than restrictions existing under
Indebtedness as in effect on the date of the Indenture) as
such Indebtedness may be refinanced from time to time,
provided that such restrictions are no less favorable to
the holders of notes than those existing on the date of
the Indenture that would materially impair the ability of
the Company to make an Offer to purchase the notes or, if
such Offer is made, to pay for the notes tendered for
purchase.
(g) The Company will not, and will not permit any Restricted
Subsidiary, to engage in any Asset Swaps, unless: (i) at
the time of entering into such Asset Swap, and immediately
after giving effect to such Asset Swap, no Default or
Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; (ii) in the event
such Asset Swap involves an aggregate amount in excess of
$10.0 million, the terms of such Asset Swap have been
approved by a majority of the members of the board of
directors of the Company which determination shall include
a determination that the Fair Market Value of the assets
being received in such swap are at least equal to the Fair
Market Value of the assets being swapped and (iii) in the
event such Asset Swap involves an aggregate amount in
excess of $20.0 million, the Company has also received a
written opinion from an independent investment banking
firm of nationally recognized standing or an independent
public accounting firm of nationally recognized standing
that such Asset Swap is fair to the Company or such
Restricted Subsidiary, as the case may be, from a
financial point of view.
Limitation on Guarantees by Restricted Subsidiaries. The
Indenture will provide that in the event the Company (i) organizes or acquires
any Domestic Restricted Subsidiary after the Issue Date that is not a Guarantor
and causes or permits such Restricted Subsidiary to, directly or indirectly,
guarantee the payment of any Indebtedness ("Other Indebtedness") of the Company
or any Guarantor or (ii) causes or permits any Foreign Restricted Subsidiary
that is not a Guarantor to, directly or indirectly, guarantee the payment of any
Other Indebtedness, then, in each case the Company shall cause such Restricted
Subsidiary to simultaneously execute and deliver a supplemental indenture to the
Indenture pursuant to which it will become a Guarantor under the Indenture;
provided, however, that in the event a Domestic Restricted Subsidiary is
acquired in a transaction in which a merger agreement is entered into, such
Domestic Restricted Subsidiary shall not be required to execute and deliver such
supplemental indenture until the consummation of the merger contemplated by any
such merger agreement; provided, further, that if such Other Indebtedness is (i)
Indebtedness that is ranked pari passu in right of payment with the notes or the
Guarantees of such Restricted Subsidiary, as the case may be, the Guarantee of
such Restricted Subsidiary shall be pari passu in right of payment with the
guarantee of the Other Indebtedness; or (ii) Subordinated Indebtedness, the
Guarantee of such Restricted Subsidiary shall be senior in right of payment to
the guarantee of the Other Indebtedness (which guarantee of such Subordinated
Indebtedness shall provide that such guarantee is subordinated to the Guarantees
of such Subsidiary to the same extent and in the same manner as the Other
Indebtedness is subordinated to the notes or the Guarantee of such Restricted
Subsidiary, as the case may be). The Guarantee of a Guarantor shall be released
upon the sale or transfer of all or substantially all of the assets or all of
the Capital Stock of such Guarantor; provided, that, either (i) such sale or
transfer complies with the provisions set forth in "Certain Covenants-Limitation
on Sale of Assets" or (ii) such sale or transfer need not comply with the
provisions set forth in "Certain Covenants-Limitation on Sale of Assets" because
the Capital Stock so sold or transferred does not constitute an "Asset Sale" by
operation of the provisions of clause (y) of the last sentence of the definition
of Asset Sale.
Purchase of Notes Upon a Change of Control. If a Change of
Control shall occur at any time, then each holder of notes shall have the right
to require that the Company purchase such holder's notes in whole or in part in
integral multiples of (pound)1,000, at a purchase price (the "Change of Control
Purchase Price") in cash in an amount equal to 101% of the principal amount of
such notes, plus accrued and unpaid interest, if any, to the date of purchase
(the "Change of Control Purchase Date"), pursuant to the offer described below
(the "Change of Control Offer") and the other procedures set forth in the
Indenture.
Within 15 days following any Change of Control, the Company shall
notify the Trustee thereof, give written notice of such Change of Control to
each holder of notes by first-class mail, postage prepaid, at his address
appearing in the security register and publish such notice in a leading
Luxembourg newspaper, if the Company is then listed on the Luxembourg Stock
Exchange, stating, among other things, the purchase price and that the purchase
date shall be a Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed, or such later date as is necessary to comply
with requirements under the Exchange Act; that any Note not tendered will
continue to accrue interest; that, unless the Company defaults in the payment of
the purchase price, any notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Purchase Date; and certain other procedures that a holder of notes must follow
to accept a Change of Control Offer or to withdraw such acceptance.
If a Change of Control Offer is made, there can be no assurance
that the Company will have available funds sufficient to pay the Change of
Control Purchase Price for all of the notes that might be delivered by holders
of the notes seeking to accept the Change of Control Offer. The Credit Agreement
restricts the ability of the Company to purchase the notes prior to full
repayment of indebtedness under the Credit Agreement and, upon a Change of
Control, all amounts outstanding under the Credit Agreement become due and
payable. There can be no assurance that in the event of a Change in Control the
Company will be able to obtain the necessary consents from the lenders under the
Credit Agreement to consummate a Change of Control Offer. The failure of the
Company to make or consummate the Change of Control Offer or pay the Change of
Control Purchase Price when due will result in an Event of Default and will give
the Trustee and the holders of the notes the rights described under "Events of
Default."
The definition of "Change of Control" in the Indenture is defined
to mean the occurrence of any of the following events: (i) any "person" or
"group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act), other than Permitted holders, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person
shall be deemed to have beneficial ownership of all shares that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 30% of the
voting power of the total outstanding Voting Stock of the Company voting as one
class, provided that the Permitted holders "beneficially own" (as so defined) a
percentage of Voting Stock having a lesser percentage of the voting power than
such other Person and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors of the Company; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election to such
Board or whose nomination for election by the shareholders of the Company, was
approved by a vote of 662/3% of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of such Board of Directors then in office; (iii) the Company
consolidates with or merges with or into any Person or conveys, transfers or
leases all or substantially all of its assets to any Person, or any corporation
consolidates with or merges into or with the Company, in any such event pursuant
to a transaction in which the outstanding Voting Stock of the Company is changed
into or exchanged for cash, securities or other property, other than any such
transaction where the outstanding Voting Stock of the Company is not changed or
exchanged at all (except to the extent necessary to reflect a change in the
jurisdiction of incorporation of the Company) or where (A) the outstanding
Voting Stock of the Company is changed into or exchanged for (x) Voting Stock of
the surviving corporation which is not Redeemable Capital Stock or (y) cash,
securities and other property (other than Capital Stock of the surviving
corporation) in an amount which could be paid by the Company as a Restricted
Payment in accordance with "Certain Covenants-Limitation on Restricted Payments"
(and such amount shall be treated as a Restricted Payment subject to the
provisions in the Indenture described under "Certain Covenants-Limitation on
Restricted Payments") and (B) no "person" or "group" other than Permitted
Holders owns immediately after such transaction, directly or indirectly, more
than the greater of (1) 30% of the voting power of the total outstanding Voting
Stock of the surviving corporation voting as one class and (2) the percentage of
such voting power of the surviving corporation held, directly or indirectly, by
Permitted Holders immediately after such transaction; or (iv) the Company is
liquidated or dissolved or adopts a plan of liquidation or dissolution other
than in a transaction which complies with the provisions described under
"Consolidation, Merger, Sale of Assets."
"Permitted Holders" means as of the date of determination (i)
Marilyn Sands, Richard Sands and Robert Sands; (ii) family members or the
relatives of the Persons described in clause (i) or the Mac and Sally Sands
Foundation, Incorporated; (iii) any trusts created for the benefit of the
Persons described in clauses (i), (ii) or (v) or for the benefit of Andrew Stern
or any trust for the benefit of any such trust; (iv) any partnerships that are
controlled by (and a majority of the partnership interests in which are owned
by) any of the Persons described in clauses (i), (ii), (iii) or (v) or by any
partnership that satisfies the conditions of this clause (iv); or (v) in the
case of Marvin Sands and in the event of the incompetence or death of any of the
persons described in clauses (i) and (ii), such Person's estate, executor,
administrator, committee or other personal representative or beneficiaries, in
each case who at any particular date shall beneficially own or have the right to
acquire, directly or indirectly, Capital Stock of the Company.
The term "all or substantially all" as used in the definition of
"Change of Control" has not been interpreted under New York law (which is the
governing law of the Indenture) to represent a specific quantitative test. As a
consequence, in the event the holders of the notes elected to exercise their
rights under the Indenture and the Company elected to contest such election,
there could be no assurance as to how a court interpreting New York law would
interpret the phrase.
The definition of "Change of Control" is limited in scope. As a
result the provisions of the Indenture will not afford holders of notes the
right to require the Company to purchase the notes in the event of a highly
leveraged transaction or certain transactions with the Company's management or
its affiliates, including a reorganization, restructuring, merger or similar
transaction (including, in certain circumstances, an acquisition of the Company
by management or its affiliates) involving the Company that may adversely affect
holders of the notes, if such transaction is not a transaction defined as a
Change of Control. A transaction involving the Company's management or its
affiliates, or a transaction involving a recapitalization of the Company, will
result in a Change of Control if it is the type of transaction specified by such
definition.
The existence of a holder's right to require the Company to
purchase such holder's notes upon a Change of Control may deter a third party
from acquiring the Company in a transaction which constitutes a Change of
Control.
The Company will comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable securities
laws or regulations in connection with a Change of Control Offer.
The Company will not, and will not permit any Subsidiary to,
create or permit to exist or become effective any restriction (other than
restrictions existing under Indebtedness as in effect on the date of the
Indenture) that would materially impair the ability of the Company to make a
Change of Control Offer to purchase the notes or, if such Change of Control
Offer is made, to pay for the notes tendered for purchase.
Limitation on Restricted Subsidiary Capital Stock. The Company
will not permit any Restricted Subsidiary of the Company to issue any Capital
Stock, except for (i) Capital Stock issued to and held by the Company or a
Wholly Owned Restricted Subsidiary, (ii) Capital Stock issued by a Person prior
to the time (A) such Person becomes a Restricted Subsidiary, (B) such Person
merges with or into a Restricted Subsidiary or (C) a Restricted Subsidiary
merges with or into such Person; provided that such Capital Stock was not issued
or incurred by such Person in anticipation of the type of transaction
contemplated by subclauses (A), (B) or (C), and (iii) Capital Stock issued or
sold by a Restricted Subsidiary, where immediately after giving effect to such
issuance or sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary.
Limitation on Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (i) pay dividends or make
any other distribution on its Capital Stock, (ii) pay any Indebtedness owed to
the Company or a Restricted Subsidiary of the Company, (iii) make any Investment
in the Company or a Restricted Subsidiary of the Company or (iv) transfer any of
its properties or assets to the Company or any Restricted Subsidiary, except (a)
any encumbrance or restriction pursuant to an agreement in effect on the date of
the Indenture; (b) any encumbrance or restriction, with respect to a Restricted
Subsidiary that is not a Restricted Subsidiary of the Company on the date of the
Indenture, in existence at the time such Person becomes a Restricted Subsidiary
of the Company and, in the case of clauses (a) and (b), not incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary; (c) any encumbrance or restriction existing under any agreement that
extends, renews, refinances or replaces the agreements containing the
encumbrances or restrictions in the foregoing clauses (a) and (b), or in this
clause (c); provided that the terms and conditions of any such encumbrances or
restrictions are not materially less favorable to the holders of the notes than
those under or pursuant to the agreement evidencing the Indebtedness so
extended, renewed, refinanced or replaced (except that an encumbrance or
restriction that is not more restrictive than those set forth in the Indenture
shall in any event be permitted); and (d) any encumbrance or restriction created
pursuant to an asset sale agreement, stock sale agreement or similar instrument
pursuant to which an Asset Sale permitted under "Certain Covenants-Limitation on
Sale of Assets" is to be consummated, so long as such restriction or encumbrance
shall be effective only for a period from the execution and delivery of such
agreement or instrument through a termination date not later than 270 days after
such execution and delivery.
Designation of Unrestricted Subsidiaries. The Company may
designate after the Issue Date any Subsidiary of the Company as an "Unrestricted
Subsidiary" under the Indenture (a "Designation") only if:
(i) no Default or Event of Default shall have occurred
and be continuing at the time of or after giving
effect to such Designation;
(ii) at the time of and after giving effect to such
Designation, the Company could Incur $1.00 of
additional Indebtedness (other than Permitted
Indebtedness) under the Consolidated Fixed Charge
Coverage Ratio of the first paragraph of "Certain
Covenants-Limitation on Indebtedness"; and
(iii) the Company would be permitted to make an
Investment (other than a Permitted Investment) at
the time of Designation (assuming the effectiveness
of such Designation) pursuant to paragraph (a) of
"Certain Covenants-Limitation on Restricted
Payments" above in an amount (the "Designation
Amount") equal to the amount of the Company's
Investment in such Subsidiary on such date.
Neither the Company nor any Restricted Subsidiary shall at any
time (x) provide credit support for, subject any of its property or assets
(other than the Capital Stock of any Unrestricted Subsidiary) to the
satisfaction of, or guarantee, any Indebtedness of any Unrestricted Subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness) or (y) be directly or indirectly liable for any Indebtedness of
any Unrestricted Subsidiary. For purposes of the foregoing, the Designation of a
Subsidiary of the Company as an Unrestricted Subsidiary shall be deemed to
include the Designation of all of the Subsidiaries of such Subsidiary.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") only if:
(i) no Default or Event of Default shall have occurred
and be continuing at the time of and after giving
effect to such Revocation; and
(ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such
Revocation would, if Incurred at such time, have
been permitted to be Incurred for all purposes of
the Indenture.
All Designations and Revocations must be evidenced by resolutions
of the Board of Directors of the Company, delivered to the Trustee certifying
compliance with the foregoing provisions.
Limitation of Applicability of Certain Covenants if Notes Rated
Investment Grade. Notwithstanding the foregoing, the Company's and its
Restricted Subsidiaries' obligations to comply with the provisions of the
Indenture described (x) above under the captions "Certain Covenants-Limitation
on Indebtedness," "Certain Covenants-Limitation on Restricted Payments,"
"Certain Covenants-Limitation on Transactions with Affiliates," "Certain
Covenants-Limitation on Restricted Subsidiary Capital Stock," "Certain
Covenants-Limitation on Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries," and "Certain Covenants-Designation of Unrestricted
Subsidiaries," and (y) below in clause (iv) of the first paragraph under the
caption "Consolidation, Merger, Sale of Assets," will terminate and cease to
have any further effect from and after the first date when the notes are rated
Investment Grade.
Provision of Financial Statements. Whether or not the Company is
subject to Section 13(a) or 15(d) of the Exchange Act, the Company will, to the
extent permitted under the Exchange Act, file with the Commission the annual
reports, quarterly reports and other documents which the Company would have been
required to file with the Commission pursuant to such Sections 13(a) or 15(d) if
the Company were so subject, such documents to be filed with the Commission on
or prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required so to file such documents if the Company were
so subject. The Company will also in any event (x) within 15 days of each
Required Filing Date (i) transmit by mail to all holders, as their names and
addresses appear in the security register, without cost to such holders and (ii)
file with the Trustee copies of the annual reports, quarterly reports and other
documents which the Company would have been required to file with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act if the Company were
subject to such Sections and (y) if filing such documents by the Company with
the Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective holder at the Company's cost.
Additional Covenants. The Indenture also contains covenants with
respect to the following matters: (i) payment of principal, premium and
interest; (ii) maintenance of an office or agency in the City of New York; (iii)
arrangements regarding the handling of money held in trust; (iv) maintenance of
corporate and partnership existence; (v) payment of taxes and other claims; (vi)
maintenance of properties; and (vii) maintenance of insurance.
CONSOLIDATION, MERGER, SALE OF ASSETS
The Company shall not, in a single transaction or through a
series of related transactions, consolidate with or merge with or into any other
Person or sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets as an entirety to any Person or
group of affiliated Persons, or permit any of its Restricted Subsidiaries to
enter into any such transaction or transactions if such transaction or
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or disposal of all or substantially all of the properties and
assets of the Company and its Restricted Subsidiaries on a Consolidated basis to
any other Person or group of affiliated Persons, unless at the time and after
giving effect thereto: (i) either (a) the Company shall be the continuing
corporation or (b) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which acquires
by sale, assignment, conveyance, transfer, lease or disposition of all or
substantially all of the properties and assets of the Company and its Restricted
Subsidiaries on a Consolidated basis (the "Surviving Entity") shall be a
corporation duly organized and validly existing under the laws of the United
States of America, any state thereof or the District of Columbia and such Person
assumes, by a supplemental indenture in a form reasonably satisfactory to the
Trustee, all the obligations of the Company under the notes and the Indenture,
and the Indenture shall remain in full force and effect; (ii) immediately before
and immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction on a pro forma basis, the Consolidated Net Worth of
the Company (or the Surviving Entity if the Company is not the continuing
obligor under the Indenture) is equal to or greater than the Consolidated Net
Worth of the Company immediately prior to such transaction; (iv) immediately
before and immediately after giving effect to such transaction on a pro forma
basis (on the assumption that the transaction occurred on the first day of the
four-quarter period immediately prior to the consummation of such transaction
with the appropriate adjustments with respect to the transaction being included
in such pro forma calculation), the Company (or the Surviving Entity if the
Company is not the continuing obligor under the Indenture) could incur $1.00 of
additional Indebtedness under the provisions of "Certain Covenants-Limitation on
Indebtedness" (other than Permitted Indebtedness); (v) each Guarantor, if any,
unless it is the other party to the transactions described above, shall have by
supplemental indenture confirmed that its Guarantee shall apply to such Person's
obligations under the Indenture and the notes; (vi) if any of the property or
assets of the Company or any of its Restricted Subsidiaries would thereupon
become subject to any Lien, the provisions of "Certain Covenants-Limitation on
Liens" are complied with; and (vii) the Company or the Surviving Entity shall
have delivered, or caused to be delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an officers' certificate and an opinion
of counsel, each to the effect that such consolidation, merger, transfer, sale,
assignment, conveyance, lease or other transaction and the supplemental
indenture in respect thereto comply with the Indenture and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
Each Guarantor shall not, and the Company will not permit a
Guarantor to, in a single transaction or through a series of related
transactions merge or consolidate with or into any other corporation (other than
the Company or any other Guarantor) or other entity, or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets on a consolidated basis to any entity (other than the
Company or any other Guarantor) unless at the time and after giving effect
thereto: (i) either (1) such Guarantor shall be the continuing corporation or
partnership or (2) the entity (if other than such Guarantor) formed by such
consolidation or into which such Guarantor is merged or the entity which
acquires by sale, assignment, conveyance, transfer, lease or disposition the
properties and assets of such Guarantor shall be a corporation duly organized
and validly existing under the Laws of the United States, any state thereof or
the District of Columbia and shall expressly assume by a supplemental indenture,
executed and delivered to the Trustee, in a form reasonably satisfactory to the
Trustee, all the obligations of such Guarantor under its Guarantee and the
Indenture; (ii) immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and (iii) such Guarantor shall have delivered to the Trustee an
officers' certificate and an opinion of counsel in form and substance reasonably
satisfactory to the Trustee, each stating that such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and such supplemental
indenture comply with the Indenture, and thereafter all obligations of the
predecessor shall terminate. The provisions of this paragraph shall not apply to
any transaction (including any Asset Sale made in accordance with "Certain
Covenants-Limitation on Sale of Assets") with respect to any Guarantor (i) if
the Guarantee of such Guarantor is released in connection with such transaction
in accordance with the last sentence of "Certain Covenants-Limitation on
Guarantees by Restricted Subsidiaries" or (ii) if such transaction need not
comply with the provisions set forth in "Certain Covenants-Limitation on Sale of
Assets" because the properties or assets so sold, assigned, conveyed,
transferred, leased or otherwise disposed of do not constitute an "Asset Sale"
by operation of the provisions of clause (y) of the last sentence of the
definition of Asset Sale.
In the event of any transaction (other than a lease) described in
and complying with the conditions listed in the immediately preceding paragraphs
in which the Company or any Guarantor is not the continuing corporation, the
successor Person formed or remaining shall succeed to, and be substituted for,
and may exercise every right and power of, the Company or such Guarantor, as the
case may be, and the Company or such Guarantor, as the case may be, would be
discharged from all obligations and covenants under the Indenture and the notes.
EVENTS OF DEFAULT
An Event of Default will occur under the Indenture if:
(i) there shall be a default in the payment of any
interest on any note when it becomes due and
payable, and such default shall continue for a
period of 30 days;
(ii) there shall be a default in the payment of the
principal of (or premium, if any, on) any note at
its Maturity (upon acceleration, optional or
mandatory redemption, required repurchase or
otherwise);
(iii) (a) there shall be a default in the performance, or
breach, of any covenant or agreement of the Company
or any Guarantor under the Indenture (other than a
default in the performance, or breach, of a
covenant or agreement which is specifically dealt
with in clauses (i) or (ii) or in clauses (b), (c)
and (d) of this clause (iii)) and such default or
breach shall continue for a period of 30 days after
written notice has been given, by certified mail,
(x) to the Company by the Trustee or (y) to the
Company and the Trustee by the holders of at least
25% in aggregate principal amount of the
outstanding notes, specifying such default or
breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" under the
Indenture; (b) there shall be a default in the
performance or breach of the provisions described
in "Consolidation, Merger, Sale of Assets"; (c) the
Company shall have failed to make or consummate an
Offer in accordance with the provisions of "Certain
Covenants-Limitation on Sale of Assets," or (d) the
Company shall have failed to make or consummate a
Change of Control Offer in accordance with the
provisions of "Certain Covenants-Purchase of notes
Upon a Change of Control;"
(iv) one or more defaults shall have occurred under any
agreements, indentures or instruments under which
the Company, any Guarantor or any Subsidiary then
has outstanding Indebtedness in excess of $10.0
million in the aggregate and, if not already
matured at its final maturity in accordance with
its terms, such Indebtedness shall have been
accelerated;
(v) any Guarantee shall for any reason cease to be, or
be asserted in writing by any Guarantor or the
Company not to be, in full force and effect and
enforceable in accordance with its terms, except to
the extent contemplated by the Indenture and any
such Guarantee;
(vi) one or more judgments, orders or decrees for the
payment of money in excess of $15.0 million, either
individually or in the aggregate (net of amounts
covered by insurance, bond, surety or similar
instrument), shall be entered against the Company,
any Guarantor, any Subsidiary or any of their
respective properties and shall not be discharged
and either (a) any creditor shall have commenced an
enforcement proceeding upon such judgment, order or
decree or (b) there shall have been a period of 60
consecutive days during which a stay of enforcement
of such judgment or order, by reason of an appeal
or otherwise, shall not be in effect;
(vii) any holder or holders of at least $10.0 million in
aggregate principal amount of Indebtedness of the
Company, any Guarantor or any Subsidiary after a
default under such Indebtedness shall notify the
Trustee of the intended sale or disposition of any
assets of the Company, any Guarantor or any
Subsidiary that have been pledged to or for the
benefit of such holder or holders to secure such
Indebtedness or shall commence proceedings, or take
any action (including by way of set-off), to retain
in satisfaction of such Indebtedness or to collect
on, seize, dispose of or apply in satisfaction of
Indebtedness, assets of the Company, any Guarantor
or any Subsidiary (including funds on deposit or
held pursuant to lock-box and other similar
arrangements);
(viii) there shall have been the entry by a court of
competent jurisdiction of (a) a decree or order for
relief in respect of the Company, any Guarantor or
any Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or (b) a decree
or order adjudging the Company, any Guarantor or
any Subsidiary bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or
composition of or in respect of the Company, any
Guarantor or any Subsidiary under any applicable
federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the
Company, any Guarantor or any Subsidiary or of any
substantial part of their respective properties, or
ordering the winding up or liquidation of their
affairs, and any such decree or order for relief
shall continue to be in effect, or any such other
decree or order shall be unstayed and in effect,
for a period of 60 consecutive days; or
(ix) (a) the Company, any Guarantor or any Subsidiary
commences a voluntary case or proceeding under any
applicable Bankruptcy Law or any other case or
proceeding to be adjudicated bankrupt or insolvent;
(b) the Company, any Guarantor or any Subsidiary
consents to the entry of a decree or order for
relief in respect of the Company, any Guarantor or
such Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or
to the commencement of any bankruptcy or insolvency
case or proceeding against it; (c) the Company, any
Guarantor or any Subsidiary files a petition or
answer or consent seeking reorganization or relief
under any applicable federal or state law; (d) the
Company, any Guarantor or any Subsidiary (x)
consents to the filing of such petition or the
appointment of, or taking possession by, a
custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company,
any Guarantor or such Subsidiary or of any
substantial part of their respective properties,
(y) makes an assignment for the benefit of
creditors or (z) admits in writing its inability to
pay its debts generally as they become due; or (e)
the Company, any Guarantor or any Subsidiary takes
any corporate action in furtherance of any such
actions in this paragraph (ix).
If an Event of Default (other than as specified in clauses (viii)
and (ix) of the prior paragraph) shall occur and be continuing, the Trustee or
the holders of not less than 25% in aggregate principal amount of the notes then
outstanding may, and the Trustee at the request of such holders shall, declare
all unpaid principal of, premium, if any, and accrued interest on all of the
notes, to be due and payable immediately, by a notice in writing to the Company
(and to the Trustee if given by the holders of the notes). If an Event of
Default specified in clause (viii) or (ix) of the prior paragraph occurs and is
continuing, then all the notes shall ipso facto become and be immediately due
and payable, in an amount equal to the principal amount of the notes, together
with accrued and unpaid interest, if any, to the date the notes become due and
payable, without any declaration or other act on the part of the Trustee or any
holder.
After a declaration of acceleration, but before a judgment or
decree for payment of the money due has been obtained by the Trustee, the
holders of a majority in aggregate principal amount of notes outstanding by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if: (a) the Company has paid or deposited with
the Trustee a sum sufficient to pay (i) all sums paid or advanced by the Trustee
under the Indenture and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, (ii) all overdue interest on
the notes, and (iii) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the notes; (b) all Events of
Default, other than the nonpayment of principal of the notes which have become
due solely by such declaration of acceleration, have been cured or waived; and
(c) the rescission will not conflict with any judgment or decree.
The holders of not less than a majority in aggregate principal
amount of the notes outstanding, may, on behalf of the holders of all the notes,
waive any past defaults under the Indenture and its consequences, except a
default in the payment of the principal of, premium, if any, or interest on any
note, or in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each series of notes
outstanding.
The Company is also required to notify the Trustee within five
business days of the occurrence of any Default.
The Trust Indenture Act contains limitations on the rights of the
Trustee, should it become a creditor of the Company or any Guarantor, to obtain
payment of claims in certain cases or to realize on certain property received by
it in respect of any such claims, as security or otherwise. The Trustee is
permitted to engage in other transactions; provided that if it acquires any
conflicting interest it must eliminate such conflict upon the occurrence of an
Event of Default or else resign.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the outstanding
notes, except for: (i) the rights of holders of the notes to receive payments in
respect of the principal of, premium, if any, and interest on the notes when
such payments are due; (ii) the Company's obligations with respect to the notes
concerning issuing temporary notes, registration of notes, mutilated, destroyed,
lost or stolen notes and the maintenance of an office or agency for payments;
(iii) the rights, powers, trust duties and immunities of the Trustee and the
Company's obligations in connection therewith; and (iv) the Legal Defeasance
provisions of the Indenture. In addition, the Company may, at its option and at
any time, elect to have the obligations of the Company released with respect to
certain covenants that are described in the Indenture ("Covenant Defeasance")
and thereafter any omission to comply with such obligations shall not constitute
a Default or Event of Default with respect to the particular series of notes. In
the event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, reorganization and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the particular series of notes subject to such Covenant Defeasance.
In order to exercise either Legal Defeasance or Covenant
Defeasance: (i) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the holders of the notes cash in pounds sterling,
non-callable United Kingdom Government Obligations, or a combination thereof, in
such amounts as will be sufficient, in the opinion of an internationally
recognized firm of independent public accountants, to pay the principal of,
premium, if any, and interest on the outstanding notes, on the stated date for
payment thereof; (ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee, (x) an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the holders of the notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred and (y) an opinion of counsel in
the United Kingdom or a ruling of the Inland Revenue of the United Kingdom to
the effect that holders of the notes will not recognize income, gain or loss for
United Kingdom income tax or other tax purposes as a result of such termination
and will be subject to United Kingdom income tax and other tax on the same
amounts, in the same manner and at the same times as would have been the case
had such Legal Defeasance not occurred (and for purposes of such opinion, such
United Kingdom counsel shall assume that holders of the notes include holders
who are not resident in the United Kingdom); (iii) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee opinions of counsel
in the United States and counsel in the United Kingdom reasonably acceptable to
the Trustee confirming that the holders of the notes will not recognize income,
gain or loss for United States federal income tax purposes or United Kingdom
income tax purposes as a result of such Covenant Defeasance and will be subject
to United States federal income tax and United Kingdom income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred; (iv) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit (other that a
Default or Event of Default with respect to the Indenture resulting from the
Incurrence of Indebtedness, all or a portion of which will be used to defease
the notes concurrently with such Incurrence); (v) such Legal Defeasance or
Covenant Defeasance shall not result in a breach or violation of, or constitute
a default under, the Indenture or any other material agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound; (vi) the Company shall have delivered to
the Trustee an officers' certificate stating that the deposit was not made by
the Company with the intent of preferring the holders of the notes over any
other creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company or others; (vii) the
Company shall have delivered to the Trustee an officers' certificate and
opinions of counsel, each stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with; (viii) the Company shall have delivered to the Trustee opinions of counsel
to the effect that (A) the trust funds will not be subject to any rights of
holders of Indebtedness of the Company other than the notes and (B) assuming no
intervening bankruptcy of the Company between the date of deposit and the 91st
day following the deposit and that no holder of the notes is an insider of the
Company, after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; and (ix) certain other
customary conditions precedent specified in the Indenture are satisfied.
SATISFACTION AND DISCHARGE
The Indenture shall cease to be of further effect (except as to
surviving rights of registration of transfer or exchange of the notes, as
expressly provided for in the Indenture) as to all outstanding notes when (a)
either (i) all the notes theretofore authenticated and delivered (except lost,
stolen or destroyed notes which have been replaced or paid) canceled or have
been delivered to the Trustee for cancellation or (ii) all notes not theretofore
delivered to the Trustee canceled or for cancellation (x) have become due and
payable, (y) will become due and payable at their Stated Maturity within one
year, or (z) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company, and the Company or any
Guarantor has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire indebtedness on
the notes not theretofore delivered to the Trustee canceled or for cancellation,
including principal of, premium, if any, and accrued interest at such Stated
Maturity or redemption date; (b) the Company or any Guarantor has paid or caused
to be paid all other sums payable under the Indenture by the Company or any
Guarantor; and (c) the Company has delivered to the Trustee an officers'
certificate and an opinion of counsel each stating that (i) all conditions
precedent under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with and (ii) such satisfaction and discharge will
not result in a breach or violation of, or constitute a default under, the
Indenture or any other material agreement or instrument to which the Company or
any Guarantor is a party or by which the Company or any Guarantor is bound.
MODIFICATIONS AND AMENDMENTS
Modifications and amendments of the Indenture with respect to the
notes may be made by the Company, each Guarantor, if any, and the Trustee with
the consent of the holders of not less than a majority in aggregate outstanding
principal amount of the notes; provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding note
affected thereby: (i) change the Stated Maturity of the principal of, or any
installment of interest on, any note or reduce the principal amount thereof or
the rate of interest thereon or any premium payable upon the redemption thereof,
or change the coin or currency in which the principal of any note or any premium
or the interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity thereof;
(ii) amend, change or modify the obligation of the Company to make and
consummate an Offer with respect to any Asset Sale or Asset Sales in accordance
with "Certain Covenants-Limitation on Sale of Assets" or the obligation of the
Company to make and consummate a Change of Control Offer in the event of a
Change of Control in accordance with "Certain Covenants-Purchase of notes Upon a
Change of Control," including amending, changing or modifying any definitions
with respect thereto; (iii) reduce the percentage in principal amount of
outstanding notes, the consent of whose holders is required for any such
supplemental indenture, or the consent of whose holders is required for any
waiver; (iv) modify any of the provisions relating to supplemental indentures
requiring the consent of holders or relating to the waiver of past defaults or
relating to the waiver of certain covenants, except to increase the percentage
of outstanding notes required for such actions or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the holder of each note affected thereby; (v) except as otherwise permitted
under "Consolidation, Merger, Sale of Assets," consent to the assignment or
transfer by the Company or any Guarantor of any of its rights and obligations
under the Indenture; or (vi) amend or modify any of the provisions of the
Indenture to cause the notes or any Guarantee to be subordinate to any other
Indebtedness.
The holders of not less than a majority in aggregate principal
amount of the notes outstanding may waive compliance with certain restrictive
covenants and provisions of the Indenture, as they relate to such series of
notes.
GOVERNING LAW
The Indenture, the notes and the Guarantees will be governed by,
and construed in accordance with the laws of the State of New York, without
giving effect to the conflicts of law principles thereof. Under the Judiciary
Law of the State of New York, a judgment or decree in an action based upon an
obligation denominated in a currency other than United States dollars will be
rendered in the foreign currency of the underlying obligation and converted into
United States dollars at a rate of exchange prevailing on the date of entry of
the judgment or decree.
THE TRUSTEE
The Indenture will provide that, except during the continuance of
an Event of Default, the Trustee will perform only such duties as are
specifically set forth in the applicable Indenture. During the existence of an
Event of Default, the Trustee will exercise such rights and powers vested in it
by the Indenture, and use the same degree of care and skill in its exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
Each Indenture and the provisions of the Trust Indenture Act
contain certain limitations on the rights of the Trustee, should it become a
creditor of the Company, to obtain payments of claims in certain cases or to
realize on certain property received in respect of any such claim as security or
otherwise. Subject to the Trust Indenture Act, the Trustee will be permitted to
engage in other transactions; provided that if the Trustee acquires any
conflicting interest as described in the Trust Indenture Act, it must eliminate
such conflict or resign.
BOOK-ENTRY, DELIVERY AND FORM
The new notes will be issued initially in the form of
unrestricted global notes (the "Global Notes") deposited with the Paying Agent
in London, Citibank, N.A., as common depositary (in such capacity, the "Common
Depositary"), in the name of Citivic Nominees Ltd., as nominee for Euroclear and
Cedelbank. Except as described in this prospectus, beneficial interests in the
Global Notes will be shown on, and transfers thereof will be effected only
through, records maintained in book-entry form by Euroclear and Cedelbank.
DEPOSITARY PROCEDURES
Euroclear and Cedelbank. We understand as follows with respect to
Euroclear and Cedelbank: Euroclear and Cedelbank each hold securities for their
holders and facilitate the clearance and settlement of securities transactions
by electronic book-entry transfer between their respective holders, thereby
eliminating the need for physical movements of certificates and any risk from
lack of simultaneous transfers of securities. Euroclear and Cedelbank each
provide various services including safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Each of Euroclear and Cedelbank can settle securities transactions in
any of more than 30 currencies, including pounds sterling. Euroclear and
Cedelbank each also deal with domestic securities markets in several countries
through established depository and custodial relationships. The respective
systems of Euroclear and Cedelbank have established an electronic bridge between
their two systems across which their respective holders may settle trades with
each other. Account holders in both Euroclear and Cedelbank are world-wide
financial institutions including underwriters, securities brokers and dealers,
banks, trust companies and clearing corporations. Indirect access to both
Euroclear and Cedelbank is available to other institutions that clear through or
maintain a custodial relationship with a holder of either system. A holder's
overall contractual relations with either Euroclear or Cedelbank are governed by
the respective rules and operating procedures of Euroclear or Cedelbank and any
applicable laws. Both Euroclear and Cedelbank act under such rules and operating
procedures only on behalf of their respective holders and have no record of or
relationship with any persons who are not direct holders.
Investors who hold accounts with Euroclear or Cedelbank may
acquire, hold and transfer security entitlements with respect to Global Notes
against Euroclear or Cedelbank and its respective property by book-entry to
accounts with Euroclear or Cedelbank, each of which has an account with the
Common Depositary and subject at all times to the procedures and requirements of
Euroclear or Cedelbank, as the case may be. "Security entitlement" means the
rights and property interests of a holder against its securities intermediary
under applicable law in or with respect to a security, including any ownership,
co-ownership, contractual or other rights. Investors who do not have accounts
with Euroclear or Cedelbank may acquire, hold and transfer security entitlements
with respect to a Global Note against the securities intermediary and its
property with which such investors hold accounts by book-entry to accounts with
such securities intermediary, which in turn may hold a security entitlement with
respect to the Global Note through Euroclear or Cedelbank. Investors electing to
acquire security entitlements with respect to a Global Note through an account
with Euroclear or Cedelbank or some other securities intermediary must follow
the settlement procedures of their securities intermediary with respect to the
settlement of new issues of securities. Security entitlements with respect to
the Global Notes to be acquired through an account with Euroclear or Cedelbank
will be credited to such account as of the settlement date against payment in
pounds sterling for value as of the settlement date. Investors electing to
acquire, hold or transfer security entitlements with respect to a Global Note
through an account with Euroclear, Cedelbank or some other securities
intermediary other than in connection with the initial distribution of the notes
must follow the settlement procedures of their securities intermediary with
respect to the settlement of secondary market transactions in securities.
Except as described below, owners of interests in the Global
Notes will not have notes registered in their names, will not receive physical
delivery of notes in certificated form and will not be considered the registered
owners or holders of notes for any purpose. So long as the Common Depositary is
the registered owner or holder of a Global Note, such party will be considered
the sole owner or holder of the notes represented by such Global Note for all
purposes under the indenture and the notes. Accordingly, each person owning a
beneficial interest in a Global Note must rely on the procedures of Euroclear
and Cedelbank, as the case may be, and their participants or holders to exercise
any rights and remedies of a holder under the Indenture. Payments of principal
and interest on the Global Notes will be made to the Common Depositary on behalf
of Euroclear and Cedelbank, as the case may be, as the registered owners
thereof.
The laws of some countries and some states in the United States
require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Note to such persons may be limited to that extent.
Because Euroclear and Cedelbank can act only on behalf of their respective
participants or holders, as the case may be, the ability of a person having
beneficial interests in a Global Note to pledge such interests to persons or
entities that do not participate in the relevant clearing system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests.
The CUSIP for the new notes is 137219 AG 6. The ISIN number for
the new notes is US137219AG66. The new notes have been accepted for clearance by
Euroclear and Cedelbank under the common code 010585295.
PAYMENTS ON THE GLOBAL NOTES
Payments in respect of the principal of, premium, if any, and
interest on a Global Note will be made through the Paying Agent and will be
payable to the Common Depositary on behalf of Euroclear and Cedelbank each in
its capacity as the registered holder of the notes under the Indenture. Under
the terms of the indenture, the Company and the Trustee will treat the persons
in whose names the notes, including the Global Notes, are registered as the
owners thereof for the purpose of receiving such payments and for any and all
other purposes whatsoever. Consequently, none of the Company, the Trustee, or
any agent of the Company, or the Trustee has or will have any responsibility or
liability for
(1) any aspect or accuracy of the records of the relevant
clearing system, the participants therein or the holders
thereof, as the case may be, relating to payments made on
account of beneficial ownership interests in the Global
Notes, or for maintaining, supervising or reviewing any
records of such clearing system, participant or holder
relating to beneficial ownership interests in the Global
Notes, or
(2) any other matter relating to the actions and practices of
the relevant clearing system or the participants therein
or the holders thereof.
Euroclear or Cedelbank upon receipt of any such payment, will
immediately credit the accounts of their relevant participants or holders, as
the case maybe, with payments in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the Global Notes, as
shown on the records of Euroclear or Cedelbank. The Company expects that
payments by such participants or holders, as the case may be, to the beneficial
owners of Global Notes will be governed by standing instructions and customary
practices and will be the responsibility of such participants or holders.
Neither the Company nor the Trustee will have responsibility or liability for
the payment of amounts owing in respect of beneficial interests in the Global
Notes held by the Common Depositary for Euroclear and Cedelbank.
TRANSFERS OF GLOBAL SECURITIES AND INTERESTS THEREIN
Unless definitive securities are issued, the Global Notes may be
transferred, in whole and not in part, only by Euroclear and Cedelbank to the
Common Depositary, as the case may be, or by the Common Depositary to Euroclear
and Cedelbank, respectively, or to another nominee or successor thereof or a
nominee of such successor.
Transfers of beneficial interests in the Global Notes will be
subject to the applicable rules and procedures of Euroclear and Cedelbank, as
the case maybe, and their respective holders and intermediaries. Any secondary
market trading activity in beneficial interests in the Global Notes is expected
to occur through the participants or holders and intermediaries, as the case may
be, of Euroclear and Cedelbank, and the securities custody accounts of investors
will be credited with their holdings against payment in same-day funds on the
settlement date.
No service charge will be made for any registration of transfer
or exchange of the notes, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Although Euroclear and Cedelbank have agreed to various
procedures to facilitate transfers of interests in the Global Notes among
participants and holders in Euroclear and Cedelbank, they are under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither we, the Trustee, nor any
agent of ours or the Trustee will have any responsibility for the nonperformance
or misperformance (as a result of insolvency, mistake, misconduct or otherwise)
by Euroclear or Cedelbank or their respective participants, indirect
participants, holders or intermediaries of their respective obligations under
the rules and procedures governing their operations.
We understand that under existing industry practices, if we or
the Trustee requests any action of holders of notes, or if an owner of a
beneficial interest in a Global Note desires to give instructions or take an
action that a holder is entitled to give or take under the indenture, Euroclear
or Cedelbank, as the case may be, would authorize their respective participants
or holders, as the case may be, owning the relevant beneficial interest to give
instructions to take such action, and such participants or holders would
authorize indirect participants or intermediaries to give instructions or take
such action, or would otherwise act upon the instructions of such indirect
participants or intermediaries. Euroclear or Cedelbank is not required to
authorize holders to take any action.
We understand that under existing practices of Euroclear or
Cedelbank if less than all of the notes are to be redeemed at any time,
Euroclear or Cedelbank, as the case may be, will credit their participants' or
holders' accounts on a proportionate basis, with adjustments to prevent
fractions, or by lot or on such other basis as Euroclear or Cedelbank, as the
case may be, deems fair and appropriate, provided that no beneficial interests
of less than (pound)1,000, may be redeemed in part.
CERTIFICATED NOTES
Beneficial interests in a Global Note are exchangeable for
definitive notes in registered certificated form only (i) (in whole but not in
part) either Euroclear or Cedelbank is closed for business for a continuous
period of 14 days (other than by reason of holiday, statutory or otherwise) or
announces an intention permanently to cease business or does in fact do so and
no alternative clearance system satisfactory to the Trustee is available, or
(ii) (in part) an Event of Default under the Indenture occurs and is continuing,
upon the request delivered in writing to Euroclear and/or Cedelbank, the Trustee
or the Common Depositary (iii) (in whole but not in part) at any time the
Company in its sole discretion determines that the Global Notes should be
exchanged for definitive notes or (iv) (in whole but not in part) the Common
Depositary is at any time unwilling or unable to continue as Common Depositary
and a successor depositary is not able to be appointed by the Company within 90
days.
Any certificated notes will be issued in registered form in
denominations of (pound)1,000 in nominal amount and integral multiples thereof.
In all cases, certificated notes delivered in exchange for any Global Note or
beneficial interest in the Global Notes will be registered in the names, and
issued in any approved denominations, requested by or on behalf of Euroclear or
Cedelbank, as the case may be, in accordance with their customary procedures.
The notes may not be issued in bearer form.
In the case of the issuance of certificated notes in the limited
circumstances set forth above, the holder of any such certificated note may
transfer such note by surrendering it at the offices or agencies of the Company
maintained for such purpose within the City and State of New York. Until
otherwise designated by the Company, the Company's office or agency in the City
and State of New York and London, England, respectively, will be the offices of
the Trustee maintained for such purpose. In the event of a partial transfer of a
holding of notes represented by one certificate, or partial redemption of such a
holding represented by one certificate, a new certificate shall be issued to the
transferee in respect of the part transferred or redeemed and a further new
certificate in respect of the balance of the holding not transferred or redeemed
shall be issued to the transferor, provided that no certificate in denominations
less than (pound)1,000 shall be issued. Each new certificate to be issued shall
be available for delivery within ten business days at the office of the Trustee.
The cost of preparing, printing, packaging and delivering the certificated notes
shall be borne by the Company.
The Company shall not be required to register the transfer or
exchange of certificated notes for a period of 15 days preceding
(a) the due date for any payment of principal of or interest on
the notes or
(b) the date fixed for a selection of notes to be redeemed.
Also, the Company is not required to register the transfer or
exchange of any notes selected for redemption. In the event of the transfer of
any certificated note, the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents, and the Company may
require a holder to pay any taxes and fees required by law and permitted by the
indenture and the notes.
If certificated notes are issued and a holder of a certificated
note claims that the note has been lost, destroyed or wrongfully taken or if
such note is mutilated and is surrendered to the Trustee, the Company shall
issue and the Trustee shall authenticate a replacement note if the Trustee's and
the Company's requirements are met. If required by the Trustee or the Company,
an indemnity bond sufficient in the judgment of both to protect the Company, the
Trustee or any paying agent or authenticating agent appointed pursuant to the
indenture from any loss which any of them may suffer if a note is replaced must
be posted. The Company may charge for its expenses in replacing a note.
In case any such mutilated, destroyed, lost or stolen note has
become or is about to become due and payable, or is about to be redeemed or
purchased by the Company pursuant to the provisions of the Indenture, the
Company in its discretion may, instead of issuing a new note, pay, redeem or
purchase such note, as the case may be.
To the extent permitted by law, the Company, the Paying Agent,
the Registrar and the Transfer Agent shall be entitled to treat the person in
whose name any certificated note is registered as the absolute owner thereof.
The Indenture will contain provisions relating to the maintenance of a register
reflecting ownership of certificated notes, if any, and other provisions
customary for a registered debt security including registration as to both
principal and stated interest and restrictions on transfer except by surrender
of a certificated note and either the reissuance of such certificated note or
the issuance of a new certificated note to the new holder. Payment of principal
on each certificated note will be made to the holder against presentation and
surrender. Payment of interest on each certificated note will be made to the
holder appearing on the register at the close of business on the record date at
his address shown on the register on the record date.
None of the Company, the Trustee, the Depositary or any Paying
Agent will have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, any Book-Entry Interest.
TRANSFER AND EXCHANGE
A holder may transfer or exchange interests in the notes in
accordance with procedures described in "Book-Entry; Delivery and Form". The
registrar and the Trustee may require a holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
holder to pay any taxes and fees required by law or permitted by the indenture.
The Company is not required to transfer or exchange any note selected for
redemption. Also, the Company is not required to transfer or exchange any note
for a period of 15 days before a selection of notes to be redeemed. The
registered holder of a note will be treated as the owner of it for all purposes.
REDEMPTION OF GLOBAL NOTES
In the event that any Global Note (or any portion thereof) is
redeemed, the Depositary will redeem an equal amount of the Book-Entry Interests
in such Global Note from the amount received by it in respect to the redemption
of such Global Note. The redemption price payable in connection with the
redemption of such Book-Entry Interests will be equal to the amount received by
the Depositary in connection with the redemption of such Global Note (or any
portion thereof).
RESIGNATION OF COMMON DEPOSITARY
The Common Depositary may at any time resign as Common Depositary
by written notice to the Company and the Trustee, such resignation to become
effective upon the appointment of a successor Common Depositary, in which case
the Global Notes shall be delivered to such successor. If no successor has been
so appointed by the Company within 90 days, certificated notes shall be issued
in exchange therefor as described above.
LISTING
The Company has applied to list the notes on the Luxembourg Stock
Exchange. The legal notice relating to the issue of the notes and the
certificate of incorporation of the Company will be registered prior to the
listing with the Chief Registrar of the District Court in Luxembourg, where such
documents are available for inspection and where copies thereof can be obtained
upon request. In addition, as long as the notes are listed on the Luxembourg
Stock Exchange, an agent for making payments on, and transfers of, notes will be
maintained in Luxembourg. The Company has initially designated Paribas
Luxembourg as its agent for this purpose.
REPORTS
The Trustee will immediately send to Euroclear, Cedelbank and
DTC, a copy of any notices, reports and other communications received relating
to the Company, the notes, the Guarantees or the Book-Entry Interests.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person (i)
existing at the time such Person becomes a Restricted Subsidiary or (ii) assumed
in connection with the acquisition of assets from such Person, in each case,
other than Indebtedness incurred in connection with, or in contemplation of,
such Person becoming a Restricted Subsidiary or such acquisition. Acquired
Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any Person or the date the acquired Person becomes a
Restricted Subsidiary.
"Affiliate" means, with respect to any specified Person: (i) any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person; (ii) any other Person
that owns, directly or indirectly, 5% or more of such Person's Capital Stock or
any officer or director of any such Person or other Person or, with respect to
any natural Person, any person having a relationship with such Person by blood,
marriage or adoption not more remote than first cousin; or (iii) any other
Person 10% or more of the voting Capital Stock of which are beneficially owned
or held directly or indirectly by such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person directly or
indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer,
lease or other disposition (including, without limitation, by way of merger,
consolidation or Sale and Leaseback Transaction) (collectively, a "transfer"),
directly or indirectly, in one or a series of related transactions, of: (i) any
Capital Stock of any Restricted Subsidiary; (ii) all or substantially all of the
properties and assets of any division or line of business of the Company or its
Restricted Subsidiaries; or (iii) any other properties or assets of the Company
or any Restricted Subsidiary, other than in the ordinary course of business. For
the purposes of this definition, the term "Asset Sale" shall not include (x) any
transfer of properties and assets (A) that is governed by the first paragraph
under "Consolidation, Merger, Sale of Assets" or (B) that is of the Company to
any Restricted Subsidiary, or of any Subsidiary to the Company or any Subsidiary
in accordance with the terms of the Indenture or (y) transfers of properties and
assets in any given fiscal year with an aggregate Fair Market Value of less than
$3,000,000.
"Asset Swap" means the execution of a definitive agreement,
subject only to customary closing conditions, that the Company in good faith
believes will be satisfied, for a substantially concurrent purchase and sale, or
exchange, of Productive Assets between the Company or any of its Restricted
Subsidiaries and another Person or group of affiliated Persons; it being
understood that an Asset Swap may include a cash equalization payment made in
connection therewith provided that such cash payment, if received by the Company
or its Subsidiaries, shall be deemed to be proceeds received from an Asset Sale
and applied in accordance with "Certain Covenants-Limitation on Sale of Assets."
"Average Life to Stated Maturity" means, as of the date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from the date of
determination to the date or dates of each successive scheduled principal
payment of such Indebtedness multiplied by (b) the amount of each such principal
payment by (ii) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States Federal or State law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Borrowing Base" means the sum of (i) 85% of accounts receivable
of the Company and its Subsidiaries and (ii) 50% of the net book value of the
inventory of the Company and its Subsidiaries, in each case, as determined on a
consolidated basis in accordance with GAAP.
"Capital Lease Obligation" means any obligations of the Company
and its Restricted Subsidiaries on a Consolidated basis under any capital lease
of real or personal property which, in accordance with GAAP, has been recorded
as a capitalized lease obligation.
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or if at any time
after the execution of the Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means Canandaigua Brands, Inc., a corporation
incorporated under the laws of Delaware, until a successor Person shall have
become such pursuant to the applicable provisions of the Indenture, and
thereafter "Company" shall mean such successor Person.
"Consolidated Fixed Charge Coverage Ratio" of the Company means,
for any period, the ratio of (a) the sum of Consolidated Net Income (Loss),
Consolidated Interest Expense, Consolidated Income Tax Expense and Consolidated
Non-cash Charges deducted in computing Consolidated Net Income (Loss) in each
case, for such period, of the Company and its Restricted Subsidiaries on a
Consolidated basis, all determined in accordance with GAAP to (b) the sum of
Consolidated Interest Expense for such period and cash and non-cash dividends
paid on any Preferred Stock of the Company and its Restricted Subsidiaries
during such period; provided that (i) in making such computation, the
Consolidated Interest Expense attributable to interest on any Indebtedness
computed on a pro forma basis and (A) bearing a floating interest rate, shall be
computed as if the rate in effect on the date of computation had been the
applicable rate for the entire period and (B) which was not outstanding during
the period for which the computation is being made but which bears, at the
option of the Company, a fixed or floating rate of interest, shall be computed
by applying at the option of the Company, either the fixed or floating rate and
(ii) in making such computation, the Consolidated Interest Expense of the
Company attributable to interest on any Indebtedness under a revolving credit
facility computed on a pro forma basis shall be computed based upon the average
daily balance of such Indebtedness during the applicable period.
"Consolidated Income Tax Expense" means for any period, as
applied to the Company, the provision for federal, state, local and foreign
income taxes of the Company and its Restricted Subsidiaries for such period as
determined in accordance with GAAP on a Consolidated basis.
"Consolidated Interest Expense" of the Company means, without
duplication, for any period, the sum of (a) the interest expense of the Company
and its Restricted Subsidiaries for such period, on a Consolidated basis,
including, without limitation, (i) amortization of debt discount, (ii) the net
cost under interest rate contracts (including amortization of discounts), (iii)
the interest portion of any deferred payment obligation and (iv) accrued
interest, plus (b) (i) the interest component of the Capital Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by the Company and its
Restricted Subsidiaries during such period and (ii) all capitalized interest of
the Company and its Restricted Subsidiaries, in each case as determined in
accordance with GAAP on a basis. Whenever pro forma effect is to be given to an
acquisition or disposition of assets for the purpose of calculating the
Consolidated Fixed Charge Coverage Ratio, the amount of Consolidated Interest
Expense associated with any Indebtedness Incurred in connection with such
acquisition or disposition of assets, shall be calculated on a pro forma basis
in accordance with Regulation S-X under the Securities Act, as in effect on the
date of such calculation.
"Consolidated Net Income (Loss)" of the Company means, for any
period, the Consolidated net income (or loss) of the Company and its Restricted
Subsidiaries for such period as determined in accordance with GAAP on a
Consolidated basis, adjusted, to the extent included in calculating such net
income (loss), by excluding, without duplication: (i) all extraordinary gains or
losses (less all fees and expenses relating thereto); (ii) the portion of net
income (or loss) of the Company and its Restricted Subsidiaries allocable to
minority interests in unconsolidated Persons to the extent that cash dividends
or distributions have not actually been received by the Company or one of its
Restricted Subsidiaries; (iii) net income (or loss) of any Person combined with
the Company or any of its Restricted Subsidiaries on a "pooling of interests"
basis attributable to any period prior to the date of combination; (iv) any gain
or loss, net of taxes, realized upon the termination of any employee pension
benefit plan; (v) net gains (but not losses) (less all fees and expenses
relating thereto) in respect of dispositions of assets other than in the
ordinary course of business; or (vi) the net income of any Restricted Subsidiary
to the extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulations
applicable to that Restricted Subsidiary or its stockholders. Whenever pro forma
effect is to be given to an acquisition or disposition of assets for the purpose
of calculating the Consolidated Fixed Charge Coverage Ratio, the amount of
income or earnings related to such assets shall be calculated on a pro forma
basis in accordance with Regulation S-X under the Securities Act, as in effect
on the date of such calculation.
"Consolidated Net Tangible Assets" means with respect to any
Person, as of any date of determination, the book value of such Persons total
assets, less goodwill, deferred financing costs and other intangibles and less
accumulated amortization, shown on the most recent balance sheet of such Person,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Worth" of any Person means the Consolidated
stockholders' equity (excluding Redeemable Capital Stock) of such Person and its
subsidiaries, as determined in accordance with GAAP on a Consolidated basis.
"Consolidated Non-cash Charges" of the Company means, for any
period, the aggregate depreciation, amortization and other non-cash charges of
the Company and its Consolidated Restricted Subsidiaries for such period, as
determined in accordance with GAAP on a Consolidated basis (excluding any
non-cash charge which requires an accrual or reserve for cash charges for any
future period).
"Consolidation" means, with respect to any Person, the
consolidation of the accounts of such Person and each of its subsidiaries if and
to the extent the accounts of such Person and each of its subsidiaries would
normally be consolidated with those of such Person, all in accordance with GAAP.
The term "Consolidated" shall have a similar meaning.
"Credit Agreement" means the Credit Agreement, dated as of
October 6, 1999, between the Company, the Subsidiaries of the Company identified
on the signature pages thereof, the lenders named therein, The Chase Manhattan
Bank, as administrative agent, including any deferrals, renewals, extensions,
replacements, refinancings or refundings thereof or amendments, modifications or
supplements thereto and any agreements therefor (including any of the foregoing
that increase the principal amount of Indebtedness or the commitments to lend
thereunder and have been made in compliance with the provisions of "Certain
Covenants-Limitation on Indebtedness"; provided that, for purposes of the
definition of "Permitted Indebtedness," no such increase may result in principal
amount of Indebtedness of the Company under the Credit Agreement exceeding the
amount permitted by subparagraph (b)(i) of "Certain Covenants-Limitation on
Indebtedness"), whether by or with the same or any other lender, creditor, group
of lenders or group of creditors, and including related notes, guarantees and
note agreements and other instruments and agreements executed in connection
therewith.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Designation" has the meaning set forth under "Certain
Covenants-Designation of Unrestricted Subsidiaries."
"Designation Amounts" has the meaning set forth under "Certain
Covenants-Designation of Unrestricted Subsidiaries."
"Domestic Restricted Subsidiary" means a Restricted Subsidiary of
the Company organized under the laws of the United States or any political
subdivision thereof or the operations of which are located substantially inside
the United States.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means, with respect to any asset or property,
the sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary of
the Company not organized under the laws of the United States or any political
subdivision thereof and the operations of which are located substantially
outside of the United States.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles in the United States, consistently
applied, which are in effect on the date of the Indenture.
"Guarantee" means the guarantee by each Guarantor of the
Company's Indenture Obligations pursuant to a guarantee given in accordance with
the Indenture, including the Guarantees by the Guarantors and any Guarantee
delivered pursuant to provisions of "Certain Covenants-Limitation on Guarantees
by Restricted Subsidiaries."
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person referred to in the definition of Indebtedness
contained in this Section guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to
supply funds to, or in any other manner invest in, the debtor (including any
agreement to pay for property or services without requiring that such property
be received or such services be rendered), (iv) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net worth, solvency
or other financial condition of the debtor or (v) otherwise to assure a creditor
against loss; provided that the term "guarantee" shall not include endorsements
for collection or deposit, in either case in the ordinary course of business.
"Guarantor" means the Subsidiaries listed on the signature pages
of the Indenture as guarantors and each other Subsidiary, formed, created or
acquired after the Issue Date, required to become a Guarantor after the Issue
Date, pursuant to "Certain Covenants-Limitation on Guarantees by Restricted
Subsidiaries."
"Hedging Agreement" means, with respect to any Person, all
interest rate swap or similar agreements or foreign currency or commodity hedge,
exchange or similar agreements of such Person.
"Hedging Obligations" means, with respect to any Person, the
Obligations of such Person under Hedging Agreements.
"holders" mean the registered holders of the notes.
"Incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (including by conversion,
exchange or otherwise), assume, guarantee or otherwise become liable in respect
of such Indebtedness or other obligation or the recording, as required pursuant
to GAAP or otherwise, of any such Indebtedness or other obligation on the
balance sheet of such Person (and "Incurrence," "Incurred" and "Incurring" shall
have meanings correlative to the foregoing). Indebtedness of any Acquired Person
or any of its Subsidiaries existing at the time such Acquired Person becomes a
Subsidiary (or is merged into or consolidated with the Company or any
Subsidiary), whether or not such Indebtedness was Incurred in connection with,
as a result of, or in contemplation of, such Acquired Person becoming a
Subsidiary (or being merged into or consolidated with the Company or any
Subsidiary), shall be deemed Incurred at the time any such Acquired Person
becomes a Subsidiary or merges into or consolidates with the Company or any
Subsidiary.
"Indebtedness" means, with respect to any Person, without
duplication: (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade payables
and other accrued current liabilities arising in the ordinary course of
business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit issued under
letter of credit facilities, acceptance facilities or other similar facilities
and in connection with any agreement to purchase, redeem, exchange, convert or
otherwise acquire for value any Capital Stock of such Person, or any warrants,
rights or options to acquire such Capital Stock, now or hereafter outstanding,
(ii) all obligations of such Person evidenced by bonds, notes, debentures or
other similar instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), but excluding trade payables arising in the ordinary course
of business, (iv) all Hedging Obligations of such Person, (v) all Capital Lease
Obligations of such Person, (vi) all Indebtedness referred to in clauses (i)
through (v) above of other Persons and all dividends of other Persons, the
payment of which is secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien, upon or
with respect to property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, (vii) all Guaranteed Debt of such
Person, (viii) all Redeemable Capital Stock valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends, and (ix) any amendment, supplement, modification, deferral, renewal,
extension, refunding or refinancing of any liability of the types referred to in
clauses (i) through (viii) above. For purposes hereof, the "maximum fixed
repurchase price" of any Redeemable Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
the Indenture, and if such price is based upon, or measured by, the Fair Market
Value of such Redeemable Capital Stock, such Fair Market Value to be determined
in good faith by the board of directors of the issuer of such Redeemable Capital
Stock.
"Indenture Obligations" means the obligations of the Company and
any other obligor under the Indenture or under the notes, including any
Guarantor, to pay principal of, premium, if any, and interest when due and
payable, and all other amounts due or to become due under or in connection with
the Indenture, the notes and the performance of all other obligations to the
Trustee and the holders under the Indenture and the notes, according to the
terms thereof.
"Insolvency or Liquidation Proceeding" means, with respect to any
Person, any liquidation, dissolution or winding up of such Person, or any
bankruptcy, reorganization, insolvency, receivership or similar proceeding with
respect to such Person, whether voluntary or involuntary.
"Investments" means, with respect to any Person, directly or
indirectly, any advance, loan (including guarantees), or other extension of
credit or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase, acquisition or ownership by such Person of any
Capital Stock, bonds, notes, debentures or other securities issued or owned by,
any other Person and all other items that would be classified as investments on
a balance sheet prepared in accordance with GAAP.
"Investment Grade" means a rating of (i) BBB- or higher by S&P
and Ba1 or higher by Moody's or (ii) Baa3 or higher by Moody's and BB+ or higher
by S&P.
"Issue Date" means November 17, 1999.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.
"Maturity" when used with respect to any Note means the date on
which the principal of such Note becomes due and payable as therein provided or
as provided in the Indenture, whether at Stated Maturity, the Offer Date or the
redemption date and whether by declaration of acceleration, Offer in respect of
Excess Proceeds, Change of Control, call for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by
any Person, the proceeds thereof in the form of cash or Temporary Cash
Investments including payments in respect of deferred payment obligations when
received in the form of, or stock or other assets when disposed for, cash or
Temporary Cash Investments (except to the extent that such obligations are
financed or sold with recourse to the Company or any Restricted Subsidiary) net
of (i) brokerage commissions and other actual fees and expenses (including fees
and expenses of counsel and investment bankers) related to such Asset Sale, (ii)
provisions for all taxes payable as a result of such Asset Sale, (iii) payments
made to retire Indebtedness where payment of such Indebtedness is secured by the
assets or properties the subject of such Asset Sale, (iv) amounts required to be
paid to any Person (other than the Company or any Restricted Subsidiary) owning
a beneficial interest in the assets subject to the Asset Sale and (v)
appropriate amounts to be provided by the Company or any Restricted Subsidiary,
as the case may be, as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected in
an officers' certificate delivered to the Trustee and (b) with respect to any
issuance or sale of Capital Stock or options, warrants or rights to purchase
Capital Stock, or debt securities or Capital Stock that have been converted into
or exchanged for Capital Stock, as referred to under "Certain
Covenants-Limitation on Restricted Payments," the proceeds of such issuance or
sale in the form of cash or Temporary Cash Investments, including payments in
respect of deferred payment obligations when received in the form of, or stock
or other assets when disposed for, cash or Temporary Cash Investments (except to
the extent that such obligations are financed or sold with recourse to the
Company or any Restricted Subsidiary), net of attorneys' fees, accountants' fees
and brokerage, consultation, underwriting and other fees and expenses actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Obligations" means any principal, interest (including, without
limitation, Post-Petition Interest), penalties, fees, indemnifications,
reimbursement obligations, damages and other liabilities payable under the
documentation governing any Indebtedness.
"Other Indebtedness" has the meaning set forth under "Certain
Covenants-Limitation on Guarantees by Restricted Subsidiaries."
"Pari Passu Indebtedness" means any Indebtedness of the Company
or a Guarantor that is pari passu in right of payment to the notes or a
Guarantee, as the case may be.
"Permitted Investment" means (i) Investments in any Wholly Owned
Restricted Subsidiary or any Person which, as a result of such Investment,
becomes a Wholly Owned Restricted Subsidiary; (ii) Indebtedness of the Company
or a Restricted Subsidiary described under clauses (iv) and (v) of the
definition of "Permitted Indebtedness"; (iii) Temporary Cash Investments; (iv)
Investments acquired by the Company or any Restricted Subsidiary in connection
with an Asset Sale permitted under "Certain Covenants-Limitation on Sale of
Assets" to the extent such Investments are non-cash proceeds as permitted under
such covenant; (v) guarantees of Indebtedness otherwise permitted by the
Indenture; (vi) Investments in existence on the date of the Indenture; and (vii)
Investments in joint ventures in an aggregate amount not to exceed at any one
time the greater of (x) $50.0 million and (y) 5.0% of Consolidated Net Tangible
Assets.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions thereof.
"Post-Petition Interest" means, with respect to any Indebtedness
of any Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such Insolvency or Liquidation Proceeding.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred stock whether now outstanding, or issued after the date
of the Issue Date, and including, without limitation, all classes and series of
preferred or preference stock.
"Productive Assets" means assets of a kind used or usable by the
Company and its Restricted Subsidiaries in their respective businesses
(including without limitation, contracts, leases, licenses, or other agreements
of value to the Company or any of its Restricted Subsidiaries), provided,
however, that productive assets to be acquired by the Company or any Restricted
Subsidiary shall be, in the good faith judgment of management of the Company or
such Restricted Subsidiary, assets which are reasonably related, ancillary or
complementary to the business of the Company and its Restricted Subsidiaries as
conducted on the Issue Date.
"Qualified Capital Stock" of any Person means any and all Capital
Stock of such Person other than Redeemable Capital Stock.
"Redeemable Capital Stock" means any Capital Stock that, either
by its terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is or upon the happening of an event (other than as a
result of a change of control provision substantially similar to that contained
in "Certain Covenants-Purchase of notes Upon a Change of Control") or passage of
time would be, required to be redeemed prior to any Stated Maturity of the
principal of the notes or is redeemable at the option of the holder thereof at
any time prior to any such Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to any such Stated Maturity
at the option of the holder thereof.
"Restricted Subsidiary" means any Subsidiary of the Company that
has not been designated by the Board of Directors of the Company, by a
resolution of the Board of Directors of the Company delivered to the Trustee, as
an Unrestricted Subsidiary pursuant to "Certain Covenants-Designation of
Unrestricted Subsidiaries" above. Any such designation may be revoked by a
resolution of the Board of Directors of the Company delivered to the Trustee,
subject to the provisions of such covenant.
"Sale and Leaseback Transaction" means any transaction or series
of related transactions pursuant to which the Company or a Restricted Subsidiary
sells or transfers any property or asset in connection with the leasing, or the
resale against installment payments, of such property or asset to the seller or
transferor.
"Securities Act" means the Securities Act of 1933, as amended.
"S&P" means Standard & Poor's Ratings Group or any successor
thereto.
"Stated Maturity" when used with respect to any Indebtedness or
any installment of interest thereon, means the dates specified in such
Indebtedness as the fixed date on which the principal of such Indebtedness or
such installment of interest is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company or
a Guarantor subordinated in right of payment to the notes, or a Guarantee, as
the case may be.
"Subsidiary" means any Person a majority of the equity ownership
or the Voting Stock of which is at the time owned, directly or indirectly, by
the Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries.
"Temporary Cash Investments" means: (i) any evidence of
Indebtedness of a Person, other than the Company or its Subsidiaries, maturing
not more than one year after the date of acquisition, issued by the United
States of America or the United Kingdom, or an instrumentality or agency thereof
and guaranteed fully as to principal, premium, if any, and interest by the
United States of America or the United Kingdom, (ii) any certificate of deposit,
maturing not more than one year after the date of acquisition, issued by, or
time deposit of, a commercial banking institution that is a member of the
Federal Reserve System and that has combined capital and surplus and undivided
profits of not less than $500,000,000, whose debt has a rating, at the time as
of which any investment therein is made, of "P-1" (or higher) according to
Moody's Investors Service, Inc. ("Moody's") or any successor rating agency or
"A-1" (or higher) according to Standard and Poor's Corporation ("S&P") or any
successor rating agency, (iii) commercial paper, maturing not more than one year
after the date of acquisition, issued by a corporation (other than an Affiliate
or Subsidiary of the Company) organized and existing under the laws of the
United States of America with a rating, at the time as of which any investment
therein is made, of "P-1" (or higher) according to Moody's or "A-1" (or higher)
according to S&P and (iv) any money market deposit accounts issued or offered by
a domestic commercial bank having capital and surplus in excess of $500,000,000.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"United Kingdom Government Obligations" means direct obligations
of, and obligations guaranteed by, the United Kingdom for the payment of which
the full faith and credit of the United Kingdom is pledged.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to "Certain Covenants-Designation of Unrestricted
Subsidiaries" above. Any such designation may be revoked by a resolution of the
Board of Directors of the Company delivered to the Trustee, subject to the
provisions of such covenant.
"Voting Stock" means stock of the class or classes pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of a corporation (irrespective of whether or not at the time stock
of any other class or classes shall have or might have voting power by reason of
the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means any Restricted
Subsidiary all the Capital Stock of which (other than directors' qualifying
shares and up to 5% of the issued and outstanding Capital Stock which may be
owned by executive officers of such Subsidiary) is owned by the Company or
another Wholly Owned Restricted Subsidiary.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain anticipated U.S. federal
income tax consequences of the purchase, ownership and disposition of the notes,
based upon the Internal Revenue Code of 1986, as amended, and existing
regulations, rulings and judicial decisions as of the date of this prospectus.
Such authorities may be repealed, revoked or modified, possibly with retroactive
effect, so as to result in federal income tax consequences different from those
discussed below. Except as specifically set forth in this prospectus, this
summary deals only with notes held as capital assets by initial holders, and
does not deal with special situations, such as those of dealers in securities or
currencies, financial institutions, banks, tax-exempt organizations, insurance
companies, holders that are partnerships or other pass-through entities and
holders whose "functional currency" is not the U.S. dollar, or special rules
with respect to "straddle," "conversion," "hedging" or "constructive sales"
transactions. This summary is not binding on the Internal Revenue Service or the
courts. No ruling has been sought or will be sought from the Internal Revenue
Service with respect to the positions and issues discussed herein, and there can
be no assurance that the Internal Revenue Service will not take a different
position concerning the tax consequences of the purchase, ownership or
disposition of the notes or that any such position would not be sustained.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE
PARTICULAR TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF NOTES THAT
MAY BE SPECIFIC TO THEM, INCLUDING THE TAX CONSEQUENCES ARISING UNDER ANY STATE,
LOCAL OR FOREIGN LAWS.
As used in this prospectus, the term "U.S. Holder" means a
beneficial owner of a note who or that is for United States federal income tax
purposes (i) a citizen or resident of the United States, (ii) a corporation
created or organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is subject to U.S.
federal income taxation regardless of source, or (iv) a trust if both: (A) a
U.S. court is able to exercise primary supervision over the administration of
the trust, and (B) one or more U.S. persons have the authority to control all
substantial decisions of the trust. As used in this Prospectus, the term
"Non-U.S. Holder" means a holder of a note that is not a U.S. Holder.
EXCHANGE OF NOTES
There will be no federal income tax consequences to holders
exchanging old notes for new notes pursuant to the exchange offer since the
exchange offer will be by operation of the original terms of the old notes,
pursuant to a unilateral act by us, and will not result in any material
alteration in the terms of the old notes. Each exchanging holder will have the
same adjusted tax basis and holding period in the new notes as it had in the old
notes immediately before the exchange.
U.S. HOLDERS
Interest. Interest (including additional amounts, if any) on the
notes generally will be taxable to a U.S. Holder as ordinary interest income at
the time accrued or received in accordance with the U.S. Holder's regular method
of accounting for federal income tax purposes.
A U.S. Holder who uses the cash method of accounting for federal
income tax purposes and who receives interest on a note in pounds sterling will
be required to include in income the U.S. dollar value of such pounds sterling.
The U.S. dollar value will be determined using the spot rate in effect on the
date such payment is received, regardless of whether the payment is in fact
converted to U.S. dollars at that time. No exchange gain or loss will be
recognized by such holder if the pounds sterling are converted to U.S. dollars
on the date received. The U.S. federal income tax consequences of the conversion
of pounds sterling into U.S. dollars are described below. See "-Exchange of
Foreign Currencies."
A U.S. Holder who uses the accrual method of accounting for
federal income tax purposes, or who is otherwise required to accrue interest
prior to receipt, will be required to include in income the U.S. dollar value of
the amount of interest income accrued, or otherwise required to be taken into
account, with respect to a note in a taxable year. The U.S. dollar value of the
accrued income will be determined by translating that income at the average rate
of exchange for the relevant interest accrual period, or with respect to an
accrual period that spans two taxable years, at the average rate for the portion
of the accrual period within the taxable year. The average rate of exchange for
an interest accrual period, or portion thereof, is the simple average of the
exchange rates for each business day of the period, or another average that is
reasonably derived and consistently applied.
An accrual basis U.S. Holder may elect, however, to translate the
accrued interest income using the spot rate of exchange in effect on the last
day of the accrual period or, with respect to the earlier taxable year portion
of an accrual period that spans two taxable years, using the spot rate of
exchange in effect on the last day of the taxable year. In addition, if the last
day of an accrual period is within five business days of the receipt, or
payment, of the accrued interest, a U.S. Holder may elect to translate such
interest using the spot rate of exchange in effect on the date of receipt or
payment. The above election must be made in a statement filed with the U.S.
Holder's tax return and will apply to other debt obligations held by the U.S.
Holder at the beginning of the first taxable year in which the election applies
or acquired thereafter and may not be changed without the consent of the
Internal Revenue Service. Whether or not such election is made, a U.S. Holder
may recognize exchange gain or loss with respect to accrued interest income on
the date such interest income is received.
The exchange gain or loss will be treated as ordinary income or
loss. The amount of ordinary income or loss recognized will equal the
difference, if any, between the U.S. dollar value of the pounds sterling
received, determined using the spot rate in effect on the date the payment is
received and the U.S. dollar value of the interest income that has accrued
during the interest accrual period, as determined above. No additional exchange
gain or loss will be recognized by the holder if the pounds sterling are
converted to U.S. dollars on the date received. The U.S. federal income tax
consequences of the conversion of pounds sterling into U.S. dollars are
described below. See "-Exchange of Foreign Currencies."
Dispositions. Upon the sale, exchange, retirement or other
disposition of a note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the disposition
(other than any amounts attributable to accrued but unpaid interest) and the
holder's adjusted tax basis in the note. The gain or loss generally will be
capital gain or loss, except with respect to gains or losses attributable to
changes in currency exchange rates, as described below. To the extent that the
amount realized represents accrued but unpaid interest, however, such amounts
must be taken into account as interest income, with exchange gain or loss
computed as described above. If a U.S. Holder receives foreign currency on a
sale, exchange or retirement, the amount realized will be based on the U.S.
dollar value of the foreign currency on the date of disposition assuming the
notes are not traded on an established securities market. A U.S. Holder's
adjusted tax basis in a note will equal the U.S. dollar cost of the note to the
holder on the date of purchase assuming the notes are not traded on an
established securities market. If a U.S. Holder purchases a note with previously
owned foreign currency, the holder will recognize ordinary income or loss in an
amount equal to the difference, if any, between the holder's tax basis in the
foreign currency and the U.S. dollar value of the foreign currency used to
purchase the note, determined on the date of purchase.
If the notes are traded on an established securities market,
there is a special rule for purchases and sales of those notes by a cash basis
taxpayer under which units of foreign currency paid or received are translated
into U.S. dollars at the spot rate on the settlement date of the purchase or
sale. In that case, no exchange gain or loss will result from currency
fluctuations between the trade date and the settlement of such a purchase or
sale. An accrual basis taxpayer may elect the same treatment required of cash
basis taxpayers with respect to purchases and sales of publicly traded notes,
provided the election is applied consistently. Such election cannot be changed
without the consent of the Internal Revenue Service.
Gain or loss realized by a U.S. Holder upon the sale, exchange or
retirement of a note that is attributable to fluctuations in the currency
exchange rates will be ordinary income or loss and generally will not be treated
as interest income or expense. Gain or loss attributable to fluctuations in
exchange rates will equal the difference between the U.S. dollar value of the
foreign currency principal amount of the note, determined on the date the
payment is received or the note is disposed of, and the U.S. dollar value of the
foreign currency principal amount of the note, determined on the date the U.S.
Holder acquired the note. The foreign currency gain or loss will be recognized
only to the extent of the total gain or loss realized by the U.S. Holder on the
sale, exchange or retirement of the note.
For certain non-corporate U.S. Holders, including individuals,
the rate of taxation of capital gains will depend upon the holder's holding
period in the note, with a preferential rate generally available for notes held
for more than one year. The deductibility of capital losses is subject to
limitations.
Exchange of Foreign Currencies. A. U.S. Holder will have a tax
basis in any pounds sterling received, as interest or on the sale, exchange,
retirement or other disposition of a note, equal to their U.S. dollar value at
the time the interest is received or at the time payment is received in
consideration of the sale, exchange or retirement. Any gain or loss realized by
a U.S. Holder on a sale or other disposition of pounds sterling, including their
exchange for U.S. dollars or their use to purchase notes, will be ordinary
income or loss.
NON-U.S. HOLDERS
The following discussion is limited to the U.S. federal income
tax consequences relevant to a holder of a note that is a Non-U.S. Holder.
Interest. Subject to the discussion below concerning backup
withholding, payments of interest on a note to any Non-U.S. Holder will
generally not be subject to U.S. federal income or withholding tax, provided
that (1) the holder is not (i) a direct or indirect owner, taking into account
certain attribution rules, of 10% or more of the total voting power of all
voting stock of the issuer or (ii) a controlled foreign corporation related to
the issuer through stock ownership, (2) such interest payments are not
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business within the United States and (3) the issuer or its paying agent
receives (i) from the Non-U.S. Holder, a properly completed Form W-8, or
substitute Form W-8, under penalties of perjury, which provides the Non-U.S.
Holder's name and address and certifies that the Non-U.S. Holder of the note is
a Non-U.S. Holder or (ii) from a security clearing organization, bank or other
financial institution that holds the notes in the ordinary course of its trade
or business (a "financial institution") on behalf of the Non-U.S. Holder,
certification under penalties of perjury that such a Form W-8 or substitute Form
W-8 has been received by it, or by another such financial institution, from the
Non-U.S. Holder, and a copy of the Form W-8 or substitute Form W-8, is furnished
to the payor.
A Non-U.S. Holder that does not qualify for exemption from
withholding under the preceding paragraph generally will be subject to
withholding of U.S. federal income tax at the rate of 30%, or lower applicable
treaty rate, on payments of interest on the notes. To the extent a Non-U.S.
Holder seeks a reduced rate of withholding under a treaty, such holder must
provide the issuer or its paying agent with a properly completed Form 1001 or
Form W-8.
If the payments of interest on a note are effectively connected
with the conduct by a Non-U.S. Holder of a trade or business in the United
States, such payments will be subject to U.S. federal income tax on a net basis
at the rates applicable to United States persons generally and, with respect to
corporate holders, may also be subject to a 30% branch profits tax. If payments
are subject to U.S. federal income tax on a net basis in accordance with the
rules described in the preceding sentence, those payments will not be subject to
withholding tax so long as the holder provides the issuer or its paying agent
with a properly executed Form 4224.
Non-U.S. Holders should consult any applicable income tax
treaties, which may provide for a lower rate of withholding tax, exemption from
or reduction of branch profits tax, or other rules different from those
described above.
Dispositions. Subject to the discussion below concerning backup
withholding, any gain realized by a Non-U.S. Holder on the sale, exchange,
retirement or other disposition of a note generally will not be subject to U.S.
federal income or withholding tax, unless (i) such gain is effectively connected
with the conduct by such Non-U.S. Holder of a trade or business within the
United States, (ii) the Non-U.S. Holder is an individual who is present in the
United States for 183 days or more in the taxable year of the disposition and
certain other conditions are satisfied, or (iii) the Non-U.S. Holder is subject
to tax pursuant to the provisions of U.S. tax law applicable to certain U.S.
expatriates.
Federal Estate Tax. Notes held, or treated as held, by an
individual who is a Non-U.S. Holder at the time of his or her death will not be
subject to U.S. federal tax provided that (i) the individual does not actually
or constructively own 10% or more of the total voting power of all voting stock
of the issuer and (ii) income on the notes was not effectively connected with
the conduct by the Non-U.S. Holder of a trade or business within the United
States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Payments with respect to the notes and the proceeds upon the sale
or other disposition of the notes may be subject to information reporting and
possibly U.S. backup withholding at a 31% rate. Backup withholding will not
apply to a U.S. Holder who furnishes its correct taxpayer identification number
and provides other certification. Backup withholding will not apply to payments
made by the issuer in respect of the notes to a Non-U.S. Holder, if the holder
certifies, under penalty of perjury, that it is not a U.S. person and provides
its name and address, provided that neither the issuer nor its paying agent has
actual knowledge that the holder is a U.S. person, or the Non-U.S. Holder
otherwise establishes an exemption. Copies of information returns may be made
available, under the provisions of a specific treaty or agreement, to the tax
authorities of the country in which the Non-U.S. Holder resides.
Payment of proceeds from the disposition of notes to or through
the United States office of any broker, U.S. or foreign, will be subject to
information reporting and backup withholding unless the owner certifies as to
its non-U.S. status under penalty of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of a note
to or through a non-U.S. office of a non-U.S broker that is not a "U.S. related
person," as defined in applicable Treasury Regulations, will not be subject to
information reporting or backup withholding. In the case of the payment of
proceeds from the disposition of a note to or through a non-U.S. office of a
broker that is a U.S. person or a "U.S. related person," the regulations require
information reporting on the payment unless the broker has documentary evidence
in its files that the owner is not a U.S. person and the broker has no knowledge
to the contrary. Backup withholding will not apply to payments made through a
non-U.S. foreign office of a broker that is a U.S. person or a "U.S. related
person," absent actual knowledge that the payee is a U.S. person.
Amounts withheld under the backup withholding rules do not
constitute a separate United States federal income tax. Rather, any amount
withheld under the backup withholding rules will be allowed as a refund or a
credit against a holder's U.S. federal income tax liability, if any, provided
that the requisite procedures are followed.
The Treasury Department recently promulgated final regulations
regarding the withholding and information reporting rules discussed above. In
general, the final regulations do not significantly alter the substantive
withholding and information reporting requirements but rather unify current
certification procedures and forms and clarify certain standards governing the
information upon which a withholding agent may rely. The final regulations are
generally effective for payments made after December 31, 2000 subject to certain
transition rules. Non-U.S. Holders should consult their own tax advisors with
respect to the impact, if any, of the final regulations.
PLAN OF DISTRIBUTION
If you are a broker-dealer and hold old notes for your own
account as a result of market-making activities or other trading activities and
you receive new notes in exchange for old notes in the exchange offer, you may
be a statutory underwriter and must acknowledge that you will deliver a
prospectus in connection with any resale of such new notes. This prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of new notes received in exchange for
old notes where such old notes were acquired as a result of market-making
activities or other trading activities. We acknowledge and, unless you are a
broker-dealer, you must acknowledge that you are not engaged in, do not intend
to engage in, and have no arrangement or understanding with any person to
participate in a distribution of new notes. We have agreed that starting on the
expiration date of the exchange offer and ending on the close of business on the
180th day following the expiration date of the exchange offer, we will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the new notes or a combination of those methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any resale of that kind may
be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such new notes. Any broker-dealer
that resells new notes that were received by it for its own account pursuant to
the exchange offer and any broker or dealer that participates in a distribution
of such new notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of new notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration date, we will
promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal.
We have agreed to pay all expenses incident to the exchange offer
(including the expenses of one counsel for the holders of the notes) other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the notes, including any broker-dealers, against various liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the issuance of the new notes will be passed upon
for us by McDermott, Will & Emery.
EXPERTS
The audited consolidated financial statements incorporated by
reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
giving said report.
The statement of assets and liabilities related to the product
lines sold to Canandaigua Brands, Inc. as of April 9, 1999 and the related
statement of identified income and expenses for the year ended December 31,
1998, have been incorporated by reference herein in reliance upon the report of
KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
<PAGE>
Until , 2000, which is 90 days after the date of this prospectus, if you are a
dealer effecting transactions in the new notes, whether or not you are
participating in the exchange offer, you may be required to deliver a
prospectus. This obligation is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
CANANDAIGUA BRANDS, INC.
OFFER TO EXCHANGE
(POUND)75,000,000
8 1/2% SENIOR NOTES DUE 2009
---------------------
PROSPECTUS
--------------------
_____________, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law (Section 102) allows a
corporation to eliminate or limit the personal liability of a director to the
corporation or its stockholders for monetary damages for a breach of fiduciary
duty as a director, but a corporation may not so eliminate or limit a director's
liability for a breach of the duty of loyalty, a failure to act in good faith,
engaging in intentional misconduct or a knowing violation of a law, authorizing
the payment of a dividend or approving a stock repurchase in violation of the
Delaware General Corporation Law, or obtaining an improper personal benefit. The
Company's Restated Certificate of Incorporation contains a provision which
eliminates directors' personal liability to the extent permitted by the Delaware
General Corporation Law.
The Delaware General Corporation Law (Section 145) gives Delaware
corporations broad powers to indemnify their present and former directors and
officers and those of affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes the Company to buy directors' and
officers' liability insurance. Such indemnification is not exclusive of any
other right to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or otherwise.
The Company's Restated Certificate of Incorporation provides for
indemnification to the fullest extent authorized by Section 145 of the Delaware
General Corporation Law for directors, officers and employees of the Company and
also to persons who are serving at the request of the Company as directors,
officers or employees of other corporations (including subsidiaries); provided
that, with respect to proceedings initiated by such indemnitee, indemnification
shall be provided only if such proceedings were authorized by the Board of
Directors. This right of indemnification is not exclusive of any other right
which any person may acquire under any statute, bylaw, agreement, contract, vote
of stockholders or otherwise.
The Company maintains a directors' and officers' liability
insurance and corporate reimbursement policy insuring directors and officers
against loss arising from claims made arising out of the performance of their
duties.
ITEM 21. EXHIBITS.a
Exhibit
Number Description of Exhibit
- ------ ----------------------
4.1 Indenture, dated as of November 17, 1999, by and among the
Company, certain subsidiaries and Harris Trust and Savings Bank,
as Trustee*
4.2 Registration Rights Agreement, dated as of November 17, 1999, by
and among the Company, the guarantors named therein, and J.P.
Morgan Securities Ltd.*
4.3 Form of new notes (included in Exhibit 4.1)*
5 Opinion of McDermott, Will & Emery*
12 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Arthur Andersen LLP
23.2 Consent of KPMG LLP
23.3 Consent of McDermott, Will & Emery (included in Exhibit 5)*
24 Powers of Attorney (included on the signature pages of the
registration statement)*
25 Statement of Eligibility of Trustee on Form T-1*
99.1 Form of Letter of Transmittal*
99.2 Form of Letter to Registered Holders*
99.3 Form of Letter to Clients and Instruction to Registered Holder
from Beneficial Owner*
* previously filed
(a) The exhibits listed are pursuant to Regulation S-K Item 601 exhibit table
footnote 3: "an exhibit need not be provided about a company if (1) with respect
to such company an election has been made under Forms S-4 or F-4 to provide
information about such company at a level prescribed by Forms S-2, S-3, F-2 or
F-3 and (2) the form, the level of which has been elected under Forms S-4 or
F-4, would not require such company to provide such exhibit if it were
registering a primary offering."
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required
by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any
facts or events arising after the
effective date of the registration
statement (or the most recent
post-effective amendment thereof)
which, individually or in the
aggregate, represent a fundamental
change in the information set forth
in the registration statement.
Notwithstanding the foregoing, any
increase or decrease in volume of
securities offered (if the total
dollar amount of securities offered
would not exceed that which was
registered) and any deviation from
the low or high end of the estimated
offering range may be reflected in
the form of prospectus filed with
the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in
volume and price represent no more
than a 20 percent change in the
maximum aggregate offering price set
forth in the "Calculation of
Registration Fee" table in the
effective registration statement;
(iii) To include any material information
with respect to the plan of
distribution not previously
disclosed in the registration
statement or any material change to
such information in the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a
new registration statement relating to the
securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the
registration statement through the date of responding to the
request.
(e) The undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fairport,
State of New York on February 14, 2000.
Canandaigua Brands, Inc.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President, Chief Executive Officer and a February 14, 2000
Richard E. Sands Director (Principal Executive Officer)
*
- ----------------------------------------- Executive Vice President, General Counsel February 14, 2000
Robert S. Sands and a Director
/s/ Thomas S. Summer
- ----------------------------------------- Senior Vice President and Chief Financial February 14, 2000
Thomas S. Summer Officer (Principal Financial Officer and
Principal Accounting Officer)
*
- ----------------------------------------- Director February 14, 2000
Thomas C. McDermott
*
- ----------------------------------------- Director February 14, 2000
James A. Locke, III
*
- ----------------------------------------- Director February 14, 2000
Paul L. Smith
*
- ----------------------------------------- Director February 14, 2000
George Bresler
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fairport,
State of New York on February 14, 2000.
Batavia Wine Cellars, Inc.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President (Principal Executive Officer) February 14, 2000
Ned Cooper
/s/ Thomas S. Summer
- ----------------------------------------- Treasurer (Principal Financial Officer and February 14, 2000
Thomas S. Summer Principal Accounting Officer)
*
- ----------------------------------------- Vice President and a Director February 14, 2000
Richard E. Sands
*
- ----------------------------------------- Secretary and a Director February 14, 2000
Robert S. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on February 14, 2000.
Barton Incorporated
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer
Vice President
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President, Chief Executive Officer and a February 14, 2000
Alexander L. Berk Director (Principal Executive Officer)
*
- ----------------------------------------- Executive Vice President, Treasurer, Assistant February 14, 2000
Raymond E. Powers Secretary and a Director (Principal Financial
Officer and Principal Accounting Officer)
*
- ----------------------------------------- Vice President and a Director February 14, 2000
Edward L. Golden
*
- ----------------------------------------- Vice President and a Director February 14, 2000
Richard E. Sands
*
- ----------------------------------------- Vice President and a Director February 14, 2000
Robert S. Sands
*
- ----------------------------------------- Director February 14, 2000
William F. Hackett
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on February 14, 2000.
Barton Brands, Ltd.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, Vice President
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President and a Director (Principal February 14, 2000
Edward L. Golden Executive Officer)
*
- ----------------------------------------- Executive Vice President, Treasurer, February 14, 2000
Raymond E. Powers Assistant Secretary and a Director
(Principal Financial Officer and Principal
Accounting Officer)
*
- ----------------------------------------- Executive Vice President and a Director February 14, 2000
Alexander L. Berk
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on February 14, 2000.
Barton Beers, Ltd.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer,
Vice President
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- Chief Executive Officer and a Director February 14, 2000
Richard E. Sands (Principal Executive Officer)
*
- ----------------------------------------- Executive Vice President, Treasurer, February 14, 2000
Raymond E. Powers Assistant Secretary and a Director
(Principal Financial Officer and Principal
Accounting Officer)
*
- ----------------------------------------- Executive Vice President and a Director February 14, 2000
Alexander L. Berk
*
- ----------------------------------------- President and a Director February 14, 2000
William F. Hackett
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on February 14, 2000.
Barton Brands of California, Inc.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, Vice President
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President and a Director (Principal February 14, 2000
Alexander L. Berk Executive Officer)
*
- ----------------------------------------- Executive Vice President, Treasurer, February 14, 2000
Raymond E. Powers Assistant Secretary and a Director
(Principal Financial Officer and Principal
Accounting Officer)
*
- ----------------------------------------- Vice President and a Director February 14, 2000
Edward L. Golden
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on February 14, 2000.
Barton Brands of Georgia, Inc.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, Vice President
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President and a Director (Principal February 14, 2000
Alexander L. Berk Executive Officer)
*
- ----------------------------------------- Executive Vice President, Treasurer, February 14, 2000
Raymond E. Powers Assistant Secretary and a Director
(Principal Financial Officer and Principal
Accounting Officer)
*
- ----------------------------------------- Vice President and a Director February 14, 2000
Edward L. Golden
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on February 14, 2000.
Barton Distillers Import Corp.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, Vice President
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President and a Director (Principal February 14, 2000
Alexander L. Berk Executive Officer)
*
- ----------------------------------------- Executive Vice President, Treasurer, February 14, 2000
Raymond E. Powers Assistant Secretary and a Director
(Principal Financial Officer and Principal
Accounting Officer)
*
- ----------------------------------------- Director February 14, 2000
Edward L. Golden
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on February 14, 2000.
Barton Financial Corporation
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, Vice President
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President, Secretary and a Director February 14, 2000
Raymond E. Powers (Principal Executive Officer)
*
- ----------------------------------------- Treasurer and a Director February 14, 2000
Charles T. Schlau (Principal Financial Officer and Principal
Accounting Officer)
*
- ----------------------------------------- Vice President and a Director February 14, 2000
Charles B. Campbell, Jr.
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on February 14, 2000.
Stevens Point Beverage Co.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer
Vice President
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President, Chief Executive Officer and a February 14, 2000
James P. Ryan Director (Principal Executive Officer)
*
- ----------------------------------------- Executive Vice President, Treasurer, February 14, 2000
Raymond E. Powers Assistant Secretary, and a Director
(Principal Financial Officer and Principal
Accounting Officer)
*
- ----------------------------------------- Executive Vice President and a Director February 14, 2000
Alexander L. Berk
*
- ----------------------------------------- Director February 14, 2000
William F. Hackett
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on February 14, 2000.
Monarch Import Company
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, Vice President
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- Chief Executive Officer (Principal February 14, 2000
James P. Ryan Executive Officer)
*
- ----------------------------------------- Executive Vice President, Treasurer, February 14, 2000
Raymond E. Powers Assistant Secretary, and a Director
(Principal Financial Officer and Principal
Accounting Officer)
*
- ----------------------------------------- President and a Director February 14, 2000
Alexander L. Berk
*
- ----------------------------------------- Vice President and a Director February 14, 2000
William F. Hackett
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fairport,
State of New York on February 14, 2000.
Canandaigua Wine Company, Inc.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer
Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President and Chief Executive Officer February 14, 2000
Jon Moramarco (Principal Executive Officer)
/s/ Thomas S. Summer
- ----------------------------------------- Treasurer (Principal Financial Officer and February 14, 2000
Thomas S. Summer Principal Accounting Officer)
*
- ----------------------------------------- Vice President and a Director February 14, 2000
Robert S. Sands
*
- ----------------------------------------- Vice President and a Director February 14, 2000
Richard E. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on February 14, 2000.
The Viking Distillery, Inc.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, Vice President
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President and a Director (Principal February 14, 2000
Alexander L. Berk Executive Officer)
*
- ----------------------------------------- Executive Vice President, and Treasurer, February 14, 2000
Raymond E. Powers Assistant Secretary, and a Director
(Principal Financial Officer and Principal
Accounting Officer)
*
- ----------------------------------------- Vice President and a Director February 14, 2000
Edward L. Golden
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fairport,
State of New York on February 14, 2000.
Canandaigua Europe Limited
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President (Principal Executive Officer) February 14, 2000
Douglas Kahle
/s/ Thomas S. Summer
- ----------------------------------------- Treasurer (Principal Financial Officer and February 14, 2000
Thomas S. Summer Principal Accounting Officer)
*
- ----------------------------------------- Vice President and Director February 14, 2000
Richard E. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fairport,
State of New York on February 14, 2000.
Roberts Trading Corp.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer,
President and Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Thomas S. Summer
- ------------------------------------------ President and Treasurer (Principal
Thomas S. Summer Executive Officer, Principal Financial February 14, 2000
Officer and Principal Accounting Officer)
*
- ----------------------------------------- Vice President and a Director February 14, 2000
Richard E. Sands
*
- ----------------------------------------- Vice President, Secretary and a Director February 14, 2000
Robert S. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fairport,
State of New York on February 14, 2000.
Canandaigua Limited
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, Finance Director
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- --------------------------------------- Chief Executive Officer and a Director
Robert S. Sands (Principal Executive Officer and February 14, 2000
Authorized Representative in the United
States)
/s/ Thomas S. Summer
- --------------------------------------- Finance Director (Principal Financial February 14, 2000
Thomas S. Summer Officer and Principal Accounting Officer)
*
- --------------------------------------- Director February 14, 2000
Richard E. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fairport,
State of New York on February 14, 2000.
Polyphenolics, Inc.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer,
Vice President and Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ----------------------------------------- President and Director (Principal February 14, 2000
Richard Keeley Executive Officer)
/s/ Thomas S. Summer
- ----------------------------------------- Vice President and Treasurer (Principal February 14, 2000
Thomas S. Summer Financial Officer and Principal Accounting
Officer)
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on February 14, 2000.
Barton Canada, Ltd.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, Vice President
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ------------------------------------------- President and a Director (Principal
Alexander L. Berk Executive Officer) February 14, 2000
*
- ------------------------------------------- Executive Vice President, Treasurer, February 14, 2000
Raymond E. Powers Assistant Secretary and a Director
(Principal Financial Officer and Principal
Accounting Officer)
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Edward L. Golden
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fairport,
State of New York on February 14, 2000.
Simi Winery, Inc.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer, President and
Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Thomas S. Summer
- ------------------------------------------- President, Treasurer and a Director February 14, 2000
Thomas S. Summer (Principal Executive Officer, Principal
Financial Officer and Principal Accounting
Officer)
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Richard E. Sands
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Robert S. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of St. Helena,
State of California on February 14, 2000.
SCV-EPI Vineyards, Inc.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer
Vice President and Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- -------------------------------------------- President and Chief Executive Officer February 14, 2000
Jean-Michel Valette (Principal Executive Officer)
/s/ Thomas S. Summer
- ------------------------------------------- Vice President and Treasurer February 14, 2000
Thomas S. Summer (Principal Financial Officer and Principal
Accounting Officer)
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Richard E. Sands
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Robert S. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of St. Helena,
State of California on February 14, 2000.
Franciscan Vineyards, Inc.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer
Vice President and Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ------------------------------------------- President and Chief Executive Officer February 14, 2000
Jean-Michel Valette (Principal Executive Officer)
/s/ Thomas S. Summer
- ------------------------------------------- Vice President and Treasurer February 14, 2000
Thomas S. Summer (Principal Financial Officer and Principal
Accounting Officer)
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Richard E. Sands
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Robert S. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of St. Helena,
State of California on February 14, 2000.
Allberry, Inc.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer
Vice President and Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ------------------------------------------- President and Chief Executive Officer February 14, 2000
Jean-Michel Valette (Principal Executive Officer)
/s/ Thomas S. Summer
- ------------------------------------------- Vice President and Treasurer February 14, 2000
Thomas S. Summer (Principal Financial Officer and Principal
Accounting Officer)
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Richard E. Sands
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Robert S. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of St. Helena,
State of California on February 14, 2000.
Cloud Peak Corporation
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer
Vice President and Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ------------------------------------------- President and Chief Executive Officer February 14, 2000
Jean-Michel Valette (Principal Executive Officer)
/s/ Thomas S. Summer
- ------------------------------------------- Vice President and Treasurer February 14, 2000
Thomas S. Summer (Principal Financial Officer and Principal
Accounting Officer)
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Richard E. Sands
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Robert S. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of St. Helena,
State of California on February 14, 2000.
M.J. Lewis Corp.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer
Vice President and Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ------------------------------------------- President and Chief Executive Officer February 14, 2000
Jean-Michel Valette (Principal Executive Officer)
/s/ Thomas S. Summer
- ------------------------------------------- Vice President and Treasurer February 14, 2000
Thomas S. Summer (Principal Financial Officer and Principal
Accounting Officer)
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Richard E. Sands
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Robert S. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of St. Helena,
State of California on February 14, 2000.
Mt. Veeder Corporation
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer
Vice President and Treasurer
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ------------------------------------------- President and Chief Executive Officer February 14, 2000
Jean-Michel Valette (Principal Executive Officer)
/s/ Thomas S. Summer
- ------------------------------------------- Vice President and Treasurer February 14, 2000
Thomas S. Summer (Principal Financial Officer and Principal
Accounting Officer)
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Richard E. Sands
*
- ------------------------------------------- Vice President and a Director February 14, 2000
Robert S. Sands
*By: /s/ Thomas S. Summer
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Amsterdam,
the Netherlands on February 14, 2000.
Canandaigua B.V.
By: /s/ Thomas S. Summer
------------------------------------------
Thomas S. Summer,
Authorized Representative
Pursuant to the requirements of the Securities Act this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ------------------------------------------- Managing Director (Principal Executive February 14, 2000
G.A.L.R. Diepenhorst Officer)
*
- ------------------------------------------- Managing Director (Principal Financial February 14, 2000
E.F. Switters Officer and Principal Accounting Officer)
/s/ Thomas S. Summer
- ------------------------------------------- Authorized Representative in the United February 14, 2000
Thomas S. Summer States
(Principal Financial Officer and
*By: /s/ Thomas S. Summer Principal Accounting Officer)
-------------------------------------
Thomas S. Summer
Attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description of Exhibit
- ------ ----------------------
4.1 Indenture, dated as of November 17, 1999, by and among the
Company, certain subsidiaries and Harris Trust and Savings Bank,
as Trustee*
4.2 Registration Rights Agreement, dated as of November 17, 1999, by
and among the Company, the guarantors named therein, and J.P.
Morgan Securities Ltd.*
4.3 Form of new notes (included in Exhibit 4.1)*
5 Opinion of McDermott, Will & Emery*
12 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Arthur Andersen LLP
23.2 Consent of KPMG LLP
23.3 Consent of McDermott, Will & Emery (included in Exhibit 5)*
24 Powers of Attorney (included on the signature pages of the
registration statement)*
25 Statement of Eligibility of Trustee on Form T-1*
99.1 Form of Letter of Transmittal*
99.2 Form of Letter to Registered Holders*
99.3 Form of Letter to Clients and Instruction to Registered Holder
from Beneficial Owner*
* previously filed
EXHIBIT 12
----------
CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands of dollars)
<TABLE>
<CAPTION>
For the nine For the Six For the Years
Months Ended For the Years Ended Months Ended Ended
November 30, February 28, February 29, August 31,
------------------- ------------------------------ ------------ -------------------
1999 1998 1999 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:(a)
Income before provision for income taxes $103,078 $ 84,731 $104,430 $ 79,881 $ 79,160 $ 13,630 $ 62,626 $ 7,824
Add fixed charges 83,075 27,307 46,523 35,851 37,074 18,684 27,337 19,919
-------- -------- -------- -------- -------- -------- -------- --------
Earnings $186,153 $112,038 $150,953 $115,732 $116,234 $ 32,314 $ 89,963 $ 27,743
======== ======== ======== ======== ======== ======== ======== ========
Fixed Charges:
Interest on debt and capitalized leases $ 80,291 $ 24,951 $ 43,537 $ 32,917 $ 34,473 $ 17,447 $ 25,121 $ 18,367
Amortization of direct financing costs 1,483 1,647 1,867 2,082 2,112 1,046 1,881 1,287
Amortization of discount on debt 316 287 388 352 112 -- -- --
Interest element of rentals 985 422 731 500 377 191 335 265
-------- -------- -------- -------- -------- -------- -------- --------
Total fixed charges $ 83,075 $ 27,307 $ 46,523 $ 35,851 $ 37,074 $ 18,684 $ 27,337 $ 19,919
======== ======== ======== ======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 2.2 4.1 3.2 3.2 3.1 1.7 3.3 1.4
======== ======== ======== ======== ======== ======== ======== ========
(a) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" represent income before provision for income taxes plus fixed
charges. "Fixed charges" consist of interest expensed and capitalized,
amortization of debt issuance costs, amortization of discount on debt, and
the portion of rental expense which management believes is representative
of the interest component of lease expense.
</TABLE>
EXHIBIT 23.1
------------
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated April 22, 1999
included in Canandaigua Brands, Inc.'s Form 10-K for the year ended February 28,
1999 and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Rochester, New York,
February 14, 2000
EXHIBIT 23.2
-------------
[KPMG Logo]
Stamford Square
3001 Summer Street
Stamford, CT 06905
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Canandaigua Brands, Inc.:
We consent to the incorporation by reference in this registration statement on
Form S-4 of Canandaigua Brands, Inc. of our report dated June 24, 1999, with
respect to the statement of assets and liabilities related to the product lines
sold to Canandaigua Brands, Inc. as of April 9, 1999 and the related statement
of identified income and expenses for the year ended December 31, 1998, which
report appears in the Form 8-K/A Amendment No. 2 of Canandaigua Brands, Inc.
dated April 9, 1999 and to the reference to our firm under the heading "Experts"
in this registration statement.
/s/ KPMG LLP
February 14, 2000
[Graphic] KPMG LLP. KPMG LLP, a U.S. limited liability partnership, is
a member of KPMG International, a Swiss association.
