|
To:
|
Constellation
Brands, Inc.
370
Woodcliff Drive, Suite 300
Fairport,
NY 14450
|
|
|
|
|
From:
|
Citibank,
N.A.
388
Greenwich Street, 5th
Floor
New
York, NY 10013
Attn:
Corporate
Equity Derivatives
Telephone:
(212) 723-7361/(212) 723-7026
Facsimile:
(212) 723-8328
|
|
Re:
|
Issuer
Forward Repurchase
Transaction
|
|
General
Terms:
|
||
|
Trade
Date:
|
May
7, 2007
|
|
|
Seller:
|
Bank
|
|
|
Buyer:
|
Counterparty
|
|
|
Shares:
|
Class A
Common Stock, par value USD 0.01 per share, of Counterparty
(Ticker
Symbol: “STZ”)
|
|
|
Prepayment:
|
Applicable
|
|
|
Prepayment
Amount:
|
USD
421,079,174
|
|
|
Prepayment
Date:
|
The
first Scheduled Trading Day following the Trade Date
|
|
|
Notional
Amount:
|
USD
444,237,464
|
|
|
Exchange:
|
New
York Stock Exchange
|
|
|
Related
Exchange(s):
|
All
Exchanges
|
|
|
Calculation
Agent:
|
Bank
|
|
|
Valuation
Terms:
|
||
|
Averaging
Dates:
|
Each
of the consecutive Scheduled Trading Days commencing on,
and including,
the first Scheduled Trading Day immediately following the
Trade Date and
ending on, and including, the earlier of (i) the Scheduled
Final Averaging
Date or (ii) the Acceleration Date.
|
|
|
Scheduled
Final Averaging Date:
|
October
4, 2007
|
|
|
Valuation
Date:
|
The
final Averaging Date
|
|
|
Acceleration
of Valuation Date:
|
Bank
shall have the right, in its absolute discretion, to accelerate
the
Valuation Date, by designating any Scheduled Trading Day,
occurring on or
after the Scheduled Earliest Acceleration Date, as such Valuation
Date
(the “Acceleration
Date”)
by delivering to Counterparty a written notice of such designation
prior
to the close of regular trading on the Exchange on the Scheduled
Trading
Day immediately following such Acceleration Date.
|
|
|
Scheduled
Earliest Acceleration Date:
|
June
29, 2007
|
|
|
Averaging
Date Disruption:
|
Modified
Postponement, provided
that notwithstanding anything to the contrary in the Equity
Definitions,
if a Market Disruption Event occurs on any Averaging Date,
the Calculation
Agent may, if appropriate in light of market conditions,
regulatory
considerations or otherwise, take any or all of the following
actions: (i)
postpone the Valuation Date in accordance with the provisions
of
6.7(c)(iii) of the Equity Definitions or (ii) determine that
such
Averaging Date is a Disrupted Day only in part, in which
case the VWAP
Price for such Averaging Date shall be determined by the
Calculation Agent
based on Rule 10b-18 eligible transactions in the Shares on such
Averaging Date effected during the portion of such Averaging
Date
unaffected by such event or events, and the weighing of the
VWAP Prices
for all other Averaging Dates shall be adjusted by the Calculation
Agent
for purposes of determining the Settlement Price based on,
among other
factors, the duration of any Market Disruption Event and
the volume,
historical trading patterns and price of the Shares.
|
|
|
Market
Disruption Events:
|
The
first sentence of Section 6.3(a) of the Equity Definitions
is hereby
amended (A) by deleting the words “during the one hour period that ends at
the relevant Valuation Time, Latest Exercise Time, Knock-In
Valuation Time
or Knock-Out Valuation Time, as the case may be,” in the third, fourth and
fifth lines thereof, and (B) by replacing the words “or (iii) an Early
Closure.” by “(iii) an Early Closure, or (iv) a Regulatory
Disruption.”
|
|
|
Regulatory
Disruption:
|
Any
event that Bank reasonably and in good faith concludes, based
on advice of
outside legal counsel, that it is appropriate with regard
to any legal,
regulatory or self-regulatory requirements or related policies
and
procedures (whether or not such requirements, policies or
procedures are
imposed by law or have been voluntarily adopted by Bank,
and including
without limitation Rule 10b-5, Regulation 13D-G and Regulation
14E under
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
and Regulation M), for Bank to refrain from any market activity
in
connection with the Transaction and Bank actually refrains
from market
activity as a result of such event. Bank shall notify Counterparty
as soon
as reasonably practicable, but in no event later than 4:00
P.M. New York
City time on the next Exchange Business Day following the
day on which the
Regulatory Disruption occurred that a Regulatory Disruption
has occurred
and the Averaging Dates affected by it.
|
|
|
Settlement
Terms:
|
||
|
Initial
Share Delivery:
|
On
the Initial Share Delivery Date, Bank shall deliver to Counterparty
the
number of Shares equal to (i) the Minimum Share Number minus
(ii) the Original Share Number.
|
|
|
Initial
Share Delivery Date:
|
The
first Scheduled Trading Day following the Trade Date.
|
|
|
Minimum
Share Number:
|
17,927,062
|
|
|
Original
Share Number:
|
1,028,000
|
|
|
Settlement:
|
On
the Settlement Date, Bank shall deliver to Counterparty,
the Number of
Shares to be Delivered.
|
|
|
Settlement
Date:
|
The
date that falls one Settlement Cycle following the Valuation
Date.
|
|
|
Number
of Shares to be Delivered:
|
A
number of Shares equal to (i) the Settlement Share Number
minus
(ii) the Minimum Share Number.
|
|
|
Settlement
Share Number:
|
A
number of shares equal to (i) the Notional Amount divided
by
(ii) (A) the Settlement Price minus
(B) the Discount per Share; provided
that
if such quotient is less than the Minimum Share Number, the
Settlement
Share Number shall be equal to such Minimum Share Number.
|
|
|
Settlement
Price:
|
The
arithmetic average of the VWAP Prices for all Averaging Dates.
|
|
|
Discount
per Share:
|
USD
0.345
|
|
|
VWAP
Price:
|
For
any Averaging Date, the Rule 10b-18 dollar volume weighted
average price
per Share for such day based on transactions executed during
such day, as
reported on Bloomberg Page “STZ.N <Equity> AQR SEC” (or any
successor thereto) or, in the event such price is not so
reported on such
day for any reason, as reasonably determined by the Calculation
Agent.
|
|
|
Excess
Dividend Amount:
|
For
the avoidance of doubt, all references to the Excess Dividend
Amount in
Section 9.2(a)(iii) of the Equity Definitions shall be
deleted.
|
|
|
Share
Delivery Mechanics:
|
To
the extent Bank is obligated to deliver Shares hereunder,
the provisions
of the last sentence of Section 9.2 and Sections 9.4, 9.7,
9.8, 9.9, 9.10,
9.11 (except that the Representation and Agreement contained
in Section
9.11 of the Equity Definitions shall be modified by excluding
any
representations therein relating to restrictions, obligations,
limitations
or requirements under applicable securities laws as a result
of the fact
that Counterparty is the Issuer of the Shares) and 9.12 of
the Equity
Definitions will be applicable as if Physical Settlement
applied;
provided
that both the Initial Share Delivery Date and the Settlement
Date shall be
deemed to be a “Settlement Date” for purpose of Section 9.4.
|
|
|
Dividends:
|
||
|
Dividend:
|
Any
dividend or distribution on the Shares other than any dividend
or
distribution of the type described in Sections 11.2(e)(i),
11.2(e)(ii)(A)
or 11.2(e)(ii)(B) of the Equity Definitions.
|
|
|
Share
Adjustments:
|
||
|
Method
of Adjustment:
|
Calculation
Agent Adjustment; provided
that Dividends shall not be Potential Adjustment Events.
|
|
|
Extraordinary
Events:
|
||
|
Consequences
of Merger Events:
|
||
|
(a)
Share-for-Share:
|
Calculation
Agent Adjustment
|
|
|
(b)
Share-for-Other:
|
Cancellation
and Payment on the portion of the Other Consideration that
consists of
cash; Calculation Agent Adjustment on the remainder of the
Other
Consideration
|
|
|
(c)
Share-for-Combined:
|
Component
Adjustment
|
|
|
Tender
Offer:
|
Applicable
|
|
|
Consequences
of Tender Offers:
|
||
|
(a)
Share-for-Share:
|
Calculation
Agent Adjustment
|
|
|
(b)
Share-for-Other:
|
Cancellation
and Payment on the portion of the Other Consideration that
consists of
cash; Calculation Agent Adjustment on the remainder of the
Other
Consideration
|
|
|
(c)
Share-for-Combined:
|
Component
Adjustment
|
|
|
Nationalization,
Insolvency or
Delisting:
|
Cancellation
and Payment (Calculation Agent Determination); provided
that in addition to the provisions of Section 12.6(a)(iii)
of the Equity
Definitions, it will also constitute a Delisting if the Exchange
is
located in the United States and the Shares are not immediately
re-listed,
re-traded or re-quoted on any of the New York Stock Exchange,
the American
Stock Exchange, the NASDAQ Global Select Market or the NASDAQ
Global
Market (or their respective successors); if the Shares are
immediately
re-listed, re-traded or re-quoted on any such exchange or
quotation
system, such exchange or quotation system shall thereafter
be deemed to be
the Exchange.
|
|
|
Additional
Disruption Events:
|
||
|
Change
in Law:
|
Applicable
|
|
|
Insolvency
Filing:
|
Applicable
|
|
|
Determining
Party:
|
For
all Extraordinary Events, Bank
|
|
|
Non-Reliance:
|
Applicable
|
|
|
Agreements
and Acknowledgments
Regarding
Hedging Activities:
|
Applicable
|
|
|
Additional
Acknowledgments:
|
Applicable
|
|
| 3. |
Account
Details:
|
|
|
(a)
Account for delivery of Shares
to
Counterparty
|
To
be provided under separate cover
|
|
|
(b)
Account for payments to
Counterparty:
|
To
be provided under separate cover
|
|
|
(c)
Account for payments to Bank:
|
To
be provided under separate cover
|
|
|
4.
|
Offices:
|
|
|
(a)
The Office of Counterparty for the Transaction is: Counterparty
is not a
Multibranch Party
|
||
|
(b)
The Office of Bank for the Transaction is:
New
York
|
||
|
5.
|
Notices:
For purposes of this Confirmation:
|
|
|
(a)
Address for notices or communications to Counterparty:
|
||
|
Constellation
Brands, Inc.
370
Woodcliff Drive, Suite 300
Fairport,
NY 14450
Attn:
General Counsel
Telephone:
(585) 218-3650
Facsimile:
(585) 218-3904
|
||
|
(b)
Address for notices or communications to Bank:
|
||
|
Citibank,
N.A.
388
Greenwich Street, 5th
Floor
New
York, NY 10013
Attn:
Corporate
Equity Derivatives
Telephone:
(212) 723-7361/(212) 723-7026
Facsimile:
(212) 723-8328
|
||
|
6.
|
Additional
Provisions Relating to Transactions in the Shares.
|
|
|
(a) Counterparty
acknowledges and agrees that the Minimum Shares delivered
on the Minimum
Share Delivery Date may be sold short to Counterparty. Counterparty
further acknowledges that Bank may, during the period from
the Trade Date
to the Valuation Date (the “Relevant
Period”),
purchase Shares in connection with the Transaction, which
Shares
may be used to cover all or a portion of such short sale
or may be
delivered to Counterparty. Such purchases will be conducted
independently
of Counterparty. The timing of such purchases by Bank, the
number of
Shares purchased by Bank on any day, the price paid per Share
pursuant to
such purchases and the manner in which such purchases are
made, including
without limitation whether such purchases are made on any
securities
exchange or privately, shall be within the absolute discretion
of Bank.
It
is the intent of the parties that the Transaction comply
with the
requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange Act,
and the
parties agree that this Confirmation shall be interpreted
to comply with
the requirements of Rule 10b5-1(c).
Counterparty
acknowledges and agrees that (A) Counterparty does not have,
and shall not
attempt to exercise, any influence over how, when or whether
Bank effects
any purchases of Shares in connection with the Transaction,
(B) during the
period beginning on (but excluding) the Trade Date and ending
on the last
day of the
Relevant Period, if any, neither Counterparty nor its officers
or
employees shall, directly or indirectly, communicate any
information
regarding Counterparty or the Shares to any employee of Bank
or its
affiliates responsible for trading the Shares in connection
with the
transactions contemplated hereby,
(C) Counterparty is entering into the Transaction in good
faith and not as
part of a plan or scheme to evade compliance with federal
securities laws
including, without limitation, Rule 10b-5 promulgated under
the Exchange
Act and (D) Counterparty will not alter or deviate from this
Confirmation
or enter into or alter a corresponding hedging transaction
with respect to
the Shares. Counterparty also acknowledges and agrees that
any amendment,
modification, waiver or termination of this Confirmation
must be effected
in accordance with the requirements for the amendment or
termination of a
“plan” as defined in Rule 10b5-1(c) under the Exchange Act. Without
limiting the generality of the foregoing, any such amendment,
modification, waiver or termination shall be made in good
faith and not as
part of a plan or scheme to evade the prohibitions of Rule
10b-5 under the
Exchange Act, and no such amendment, modification, waiver
or termination
shall be made at any time at which Counterparty or any officer
or director
of Counterparty is aware of any material nonpublic information
regarding
Counterparty or the Shares.
|
||
|
(b) Counterparty
agrees that neither Counterparty nor any of its affiliates
or agents
shall, without prior notice to Bank, take any action that
would cause
Regulation M to be applicable to any purchases of Shares,
or any
security
for which the Shares are a reference security (as defined
in Regulation
M), by Counterparty or any of its affiliated purchasers (as
defined in
Regulation M) during the Relevant Period.
|
||
|
(c)
Counterparty
shall, at least one day prior to the first day of the Relevant
Period,
notify Bank of the total number of Shares purchased in Rule
10b-18
purchases of blocks pursuant to the once-a-week block exception
contained
in Rule 10b-18(b)(4) by or for Counterparty or any of its
affiliated
purchasers during each of the four calendar weeks preceding
the first day
of the Relevant Period and during the calendar week in which
the first day
of the Relevant Period occurs (“Rule 10b-18 purchase”, “blocks” and
“affiliated purchaser” each being used as defined in Rule 10b-18).
|
||
|
(d)
During
the Relevant Period, Counterparty shall (i) notify Bank prior
to the
opening of trading in the Shares on any day on which Counterparty
makes,
or expects to be made, any public announcement (as defined
in Rule 165(f)
under the Securities Act of 1933, as amended (the “Securities
Act”),
of any merger, acquisition, or similar transaction involving
a
recapitalization relating to the Company (other than any
such transaction
in which the consideration consists solely of cash and there
is no
valuation period), (ii) promptly notify Bank following any
such
announcement that such announcement has been made, and (iii)
promptly
deliver to Bank following the making of any such announcement
a
certificate indicating (A) Counterparty’s average daily Rule 10b-18
purchases (as defined in Rule 10b-18) during the three full
calendar
months preceding the date of the announcement of such transaction
and (B)
Counterparty’s block purchases (as defined in Rule 10b-18) effected
pursuant to paragraph (b)(4) of Rule 10b-18 during the three
full calendar
months preceding the date of the announcement of such transaction.
In
addition, Counterparty shall promptly notify Bank of the
earlier to occur
of the completion of such transaction and the completion
of the vote by
target shareholders. Counterparty acknowledges that any such
public
announcement may result in a Regulatory Disruption and may
cause the
Relevant Period to be suspended. Accordingly, Counterparty
acknowledges
that its actions in relation to any such announcement or
transaction must
comply with the standards set forth in Section 6(a).
|
||
|
(e)
Without
the prior written consent of Bank, which shall not be unreasonably
delayed
or withheld, Counterparty shall not, and shall cause its
affiliated
purchasers (each as defined in Rule 10b-18) not to, directly
or indirectly
(including, without limitation, by means of a cash-settled
or other
derivative instrument) purchase, offer to purchase, place
any bid or limit
order that would effect a purchase of, or commence any tender
offer
relating to, any Shares (or an equivalent interest, including
a unit of
beneficial interest in a trust or limited partnership or
a depository
share) or any security convertible into or exchangeable for
Shares during
the Relevant Period; provided,
however, that such affiliated purchasers shall be entitled
to purchase
Shares from Counterparty upon the exercise of options granted
to such
affiliated purchasers or pursuant to any equity-based plan
of
Counterparty. During such time, any purchases of Shares (or
any security
convertible into or exchangeable for Shares) by Counterparty
shall be made
through Bank (unless otherwise consented to by Bank) and
subject to such
conditions as Bank shall impose, and shall be in compliance
with Rule
10b-18 or otherwise in a manner that Counterparty and Bank
believe is in
compliance with applicable requirements (including, without
limitation,
Rule 10b-5, Regulation 13D-G and Regulation 14E under the
Exchange Act).
|
||
|
(f)
Counterparty
acknowledges that it shall not (i) declare any ordinary cash
dividend on
the Shares with a ex-dividend date occurring prior to or
on the Valuation
Date or (ii) declare any Dividend (as defined above) other
than an
ordinary cash dividend on the Shares, in either case that
affects any
Dividend for which the ex-dividend date occurs during the
period from and
including the Trade Date to and including the Valuation Date,
and that any
such declaration of a dividend shall constitute an Additional
Termination
Event with respect to this Transaction, with respect to which
Counterparty
shall the sole Affected Party.
|
||
|
7.
|
Representations,
Warranties and Agreements.
|
|
|
(a)
In
addition to the representations, warranties and agreements
in the
Agreement and those contained elsewhere herein, Counterparty
represents
and warrants to and for the benefit of, and agrees with,
Bank as follows:
|
||
|
(i)
(A) None of Counterparty and its officers and directors
is aware of any material nonpublic information regarding
Counterparty or
the Shares and (B) Counterparty is in compliance in all material
respects
with its reporting obligations under the Exchange Act, and
its most recent
Annual Report on Form 10-K, together with all reports subsequently
filed
by it pursuant to the Exchange Act, taken together and as
amended and
supplemented to the date of this representation, do not,
as of their
respective filing dates, contain any untrue statement of
a material fact
or omit to state any material fact required to be stated
therein or
necessary to make the statements therein, in light of the
circumstances
under which they were made, not misleading.
|
||
|
(ii)
Without limiting the generality of Section 13.1 of the Equity
Definitions,
Counterparty acknowledges that Bank is not making any representations
or
warranties with respect to the treatment of the Transaction
under FASB
Statements 133, as amended, or 150, EITF Issue No. 00-19
(or any successor
issue statements) or under FASB’s Liabilities & Equity
Project.
|
||
|
(iii)
Without limiting the generality of Section 3(a)(iii) of the
Agreement, the
Transaction will not violate Rule 13e-1 or Rule 13e-4 under
the Exchange
Act.
|
||
|
(iv)
Prior to the Trade Date, Counterparty shall deliver to Bank
a resolution
of Counterparty’s board of directors authorizing the Transaction and such
other certificate or certificates as Bank shall reasonably
request.
Counterparty has publicly disclosed on March 1, 2007 its
intention to
repurchase Shares for up to USD $500,000,000 and, since such
disclosure
has not purchased Shares for more than USD $500,000,000 minus
the
Prepayment Amount.
|
||
|
(v)
Counterparty is not entering into this Confirmation to create
actual or
apparent trading activity in the Shares (or any security
convertible into
or exchangeable for Shares) or to raise or depress or otherwise
manipulate
the price of the Shares (or any security convertible into
or exchangeable
for Shares) or otherwise in violation of the Exchange Act,
and will not
engage in any other securities or derivative transaction
to such ends.
|
||
|
(vi)
Counterparty is
not entering into this Transaction on the basis of, and is
not aware of,
any material non-public information with respect to the Common
Stock or in
anticipation of, in connection with, or to facilitate, a
distribution of
its securities, a self tender offer or a third-party tender
offer.
|
||
|
(vii)
Counterparty is not, and after giving effect to the transactions
contemplated hereby will not be, an “investment company” as such term is
defined in the Investment Company Act of 1940, as amended.
|
||
|
(viii)
(A) The assets of Counterparty at their fair valuation exceed
the
liabilities of Counterparty, including contingent liabilities,
(B) the
capital of Counterparty is adequate to conduct the business
of
Counterparty and (C) Counterparty has the ability to pay
its debts and
obligations as such debts mature and does not intend to,
or does not
believe that it will, incur debt beyond its ability to pay
as such debts
mature.
|
||
|
(b) Each
of Bank and Counterparty agrees and represents that it is
an “eligible
contract participant” as defined in Section 1a(12) of the U.S. Commodity
Exchange Act, as amended.
|
||
|
(c) Each
of Bank and Counterparty acknowledges that the offer and
sale of the
Transaction to it is intended to be exempt from registration
under the
Securities Act, by virtue of Section 4(2) thereof. Accordingly,
Counterparty represents and warrants to Bank that (i) it
has the financial
ability to bear the economic risk of its investment in the
Transaction and
is able to bear a total loss of its investment, (ii) it is
an “accredited
investor” as that term is defined in Regulation D as promulgated under
the
Securities Act, (iii) it is entering into the Transaction
for its own
account and without a view to the distribution or resale
thereof, and (iv)
the assignment, transfer or other disposition of the Transaction
has not
been and will not be registered under the Securities Act
and is restricted
under this Confirmation, the Securities Act and state securities
laws.
|
||
|
(d) The
parties hereto agree and acknowledge that Bank is a “financial
institution,” “swap participant” and “financial participant” within the
meaning of Sections 101(22), 101(53C) and 101(22A) of Title
11 of the
United States Code (the “Bankruptcy
Code”).
The parties hereto further agree and acknowledge that (A)
this
Confirmation is (i) a “securities contract,” as such term is defined in
Section 741(7) of the Bankruptcy Code, with respect to which
each payment
and delivery hereunder or in connection herewith is a “settlement payment”
within the meaning of Sections 362 and 546 of the Bankruptcy
Code and (ii)
a “swap agreement,” as such term is defined in Section 101(53B) of the
Bankruptcy Code, with respect to which each payment and delivery
hereunder
or in connection herewith is a “transfer” and a “payment or other transfer
of property” within the meaning of Sections 362 and 546 of the Bankruptcy
Code, and (B) Bank is entitled to the protections afforded
by, among other
sections, Sections 362(b)(6), 362(b)(17), 362(o), 546(e),
546(g), 555, 560
and 561 of the Bankruptcy Code.
|
||
|
(e) Bank
represents and warrants that it has in place and agrees that
it will
maintain reasonable policies and procedures, taking into
consideration the
nature of its business, to ensure that individuals making
investment
decisions will not violate laws prohibiting trading on the
basis of
material nonpublic information. Such individuals shall not
be in
possession of material nonpublic information with respect
to Counterparty
during all relevant times beginning on the date hereof and
continuing
through the Relevant Period.
|
||
|
8.
|
Other
Provisions.
|
|
|
(a) Alternative
Calculations and Payment on Early Termination and on Certain
Extraordinary
Events.
If, Bank shall owe Counterparty any amount pursuant to Sections
12.2,
12.3, 12.6, 12.7 or 12.9 of the Equity Definitions (except
in the event of
an Insolvency, a Nationalization, a Tender Offer or a Merger
Event, in
each case, in which the consideration or proceeds to be paid
to holders of
Shares consists solely of cash) or pursuant to Section 6(d)(ii)
of the
Agreement (except in the event of an Event of Default in
which
Counterparty is the Defaulting Party or a Termination Event
in which
Counterparty is the Affected Party, that resulted from an
event or events
within Counterparty’s control) (a “Payment
Obligation”),
Counterparty shall have the right, in its sole discretion,
to require Bank
to satisfy any such Payment Obligation by the Share Termination
Alternative (as defined below) by giving irrevocable telephonic
notice to
Bank, confirmed in writing within one Scheduled Trading Day,
between the
hours of 9:00 A.M. and 4:00 P.M. New York City time on the
Merger Date,
Tender Offer Date, Announcement Date or Early Termination
Date, as
applicable (“Notice
of Share Termination”).
Upon such Notice of Share Termination, the following provisions
shall
apply on the Scheduled Trading Day immediately following
the Merger Date,
the Tender Offer Date, Announcement Date or Early Termination
Date, as
applicable:
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Share
Termination Alternative:
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Applicable
and means that Bank shall deliver to Counterparty the Share
Termination
Delivery Property on the date on which the Payment Obligation
would
otherwise be due pursuant to Section 12.7 or 12.9 of the
Equity
Definitions or Section 6(d)(ii) of the Agreement, as applicable
(the
“Share
Termination Payment Date”),
in satisfaction of the Payment Obligation.
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Share
Termination Delivery
Property:
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A
number of Share Termination Delivery Units, as calculated
by the
Calculation Agent, equal to the Payment Obligation divided
by the Share
Termination Unit Price. The Calculation Agent shall adjust
the Share
Termination Delivery Property by replacing any fractional
portion of a
security therein with an amount of cash equal to the value
of such
fractional security based on the values used to calculate
the Share
Termination Unit Price.
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Share
Termination Unit Price:
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The
value of property contained in one Share Termination Delivery
Unit on the
date such Share Termination Delivery Units are to be delivered
as Share
Termination Delivery Property, as determined by the Calculation
Agent
(pursuant to Paragraph (e) of this Section 9) and notified
by the
Calculation Agent to Bank at the time of notification of
the Payment
Obligation.
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Share
Termination Delivery Unit:
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In
the case of a Termination Event, Event of Default or Delisting,
one Share
or, in the case of an Insolvency, Nationalization, Merger
Event or Tender
Offer, a unit consisting of the number or amount of each
type of property
received by a holder of one Share (without consideration
of any
requirement to pay cash or other consideration in lieu of
fractional
amounts of any securities) in such Insolvency, Nationalization,
Merger
Event or Tender Offer. If such Insolvency, Nationalization,
Merger Event
or Tender Offer involves a choice of consideration to be
received by
holders, such holder shall be deemed to have elected to receive
the
maximum possible amount of cash.
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Failure
to Deliver:
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Applicable
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Other
applicable provisions:
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If
Share Termination Alternative is applicable, the provisions
of Sections
9.8, 9.9, 9.10, 9.11 (except that the Representation and
Agreement
contained in Section 9.11 of the Equity Definitions shall
be modified by
excluding any representations therein relating to restrictions,
obligations, limitations or requirements under applicable
securities laws
as a result of the fact that Counterparty is the Issuer of
the Shares) and
9.12 of the Equity Definitions will be applicable, except
that all
references in such provisions to “Physically-Settled” shall be read as
references to “settled by Share Termination Alternative” and all
references to “Shares” shall be read as references to “Share Termination
Delivery Units”.
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(b) Calculations.
All determinations made by the Calculation Agent shall be
made in good
faith and in a commercially reasonable manner. Following
any calculation
by the Calculation Agent hereunder, upon a prior written
request by the
Counterparty, the Calculation Agent will provide to the Counterparty
by
e-mail to the e-mail address provided by the Counterparty
in such a prior
written request a report (in a commonly used file format
for the storage
and manipulation of financial data) displaying in reasonable
detail the
basis for such calculation.
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(c) Equity
Rights.
Bank acknowledges and agrees that this Confirmation is not
intended to
convey to it rights with respect to the Transaction that
are senior to the
claims of common stockholders in the event of Counterparty’s bankruptcy.
For the avoidance of doubt, the parties agree that the preceding
sentence
shall not apply at any time other than during Counterparty’s bankruptcy to
any claim arising as a result of a breach by Counterparty
of any of its
obligations under this Confirmation or the Agreement. For
the avoidance of
doubt, the parties acknowledge that this Confirmation is
not secured by
any collateral that would otherwise secure the obligations
of Counterparty
herein under or pursuant to any other agreement.
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(d) Assignment.
Notwithstanding Section 7 of the Agreement, Bank may assign
it rights and
obligations under the Transaction, in whole and not in part,
to any
Affiliate of Bank effective upon delivery to Counterparty
of the full
unconditional guarantee by Bank, in favor of Counterparty,
of the
obligations of such Affiliate; provided,
however, that Bank shall not assign its rights or delegate
its obligations
under this Transaction if such assignment or delegation would
result in
(i) an Event of Default with respect to which Bank is the
Defaulting
Party, a Termination Event, a Potential Event of Default
with respect to
which Bank would be the Defaulting Party or a potential Termination
Event,
(ii) Counterparty being required to pay to the transferee
an amount in
respect of an Indemnifiable Tax under Section 2(d)(i)(4)
(except in
respect of interest under Section 2(e), 6(d)(ii) or 6(e))
greater than the
amount that Counterparty would have been required to pay
Bank in the
absence of such transfer, or (iii) Counterparty receiving
a payment from
which an amount has been withheld or deducted, on account
of a Tax under
Section 2(d)(i) (except in respect of interest under Section
2(e),
6(d)(ii) or 6(e)), in excess of the amount that Bank would
have been
required to so withhold or deduct in the absence of such
transfer, unless
the transferee would be required to make additional payments
pursuant to
Section 2(d)(i)(4) corresponding to such withholding or deduction.
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(e) Agreement
Regarding Calculations.
In
calculating any adjustment pursuant to Article 11 of the
Equity
Definitions or any amount payable pursuant to Article 12
of the Equity
Definitions or Section 6 of the Agreement, the Calculation
Agent shall not
take into account (i) changes to costs of funding, stock
loan rates or any
dividends since the trade date or (ii) losses or costs incurred
in
connection with terminating, liquidating or re-establishing
any hedge
related to the Transaction (or any gain resulting from any
of them).
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(f) Special
Provisions for Counterparty Payments.
The parties hereby agree that, notwithstanding anything to
the contrary
herein or in the Agreement, in the event that (i) an Early
Termination
Date (whether as a result of an Event of Default or Termination
Event)
occurs or is designated with respect to any Transaction and,
as a result,
Counterparty owes to Bank an amount calculated under Section
6(e) of the
Agreement or (ii) an Extraordinary Event occurs that results
in the
termination or cancellation of any Transaction pursuant to
Article 12 of
the Equity Definitions and, as a result, Counterparty owes
to Bank a
Cancellation Amount or any other amount in respect to the
Transaction,
such amount shall be deemed to be zero. For the avoidance
of doubt, the
Counterparty shall not be required to make any additional
cash payments
(other than the Prepayment Amount) or deliver (or return)
any Shares in
connection with the Transaction.
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(g) Disclosure.
Effective from the date of commencement of discussions concerning
the
Transaction, Counterparty and each of its employees, representatives,
or
other agents may disclose to any and all persons, without
limitation of
any kind, the tax treatment and tax structure of the Transaction
and all
materials of any kind (including opinions or other tax analyses)
that are
provided to Counterparty relating to such tax treatment and
tax
structure.
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(h) Designation
by Bank.
Notwithstanding any other provision in this Confirmation
to the contrary,
Bank (the “Designator”)
may designate any of its Affiliates (the “Designee”)
to deliver and otherwise perform its obligations to deliver
any Shares or
other securities in respect of the Transaction, and the Designee
may
assume such obligations, if any. Such designation shall not
relieve the
Designator of any of its obligations, if any, hereunder.
Notwithstanding
the previous sentence, if the Designee shall have performed
the
obligations, if any, of the Designator hereunder, then the
Designator
shall be discharged of its obligations, if any, to Counterparty
to the
extent of such performance.
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(i) No
Commissions.
For avoidance of doubt, Counterparty shall have no obligation
to pay to
Bank or to any other
party any brokerage commission or similar fee for any purchase
or sale of
Shares (by any party) in connection with the Transaction.
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(j) Waiver
of Trial by Jury.
EACH
OF COUNTERPARTY AND BANK HEREBY IRREVOCABLY WAIVES (ON ITS
OWN BEHALF AND,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS
STOCKHOLDERS)
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION
OR THE ACTIONS
OF BANK OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE
OR ENFORCEMENT
HEREOF.
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(k) Set-off
and Netting.
For the avoidance of doubt, the Parties' intention is that
this
Confirmation and the Transaction not be affected in any way
by any other
contractual arrangement between the Parties or their respective
Affiliates
(each, an “Other
Contract”).
Accordingly, (i) notwithstanding anything in this Confirmation
to the
contrary, neither Party shall be entitled to exercise any
rights under
this Confirmation or the Transaction based on an Other Contact,
including,
without limitation, any set-off or netting rights or any
right to declare
a default or termination under this Confirmation or Transaction
due to a
default by the other Party or its Affiliates under any Other
Contract, and
(ii) notwithstanding any provision in any Other Agreement
to the contrary,
neither Party nor any of its Affiliates shall be entitled
to exercise any
rights under any Other Contract based on this Confirmation
or the
Transaction, including, without limitation, any set-off or
netting rights
or any right to declare a default or termination under any
Other Contract
due to a default by the other Party or its Affiliates under
this
Confirmation or Transaction. In addition, each Party shall
cause its
Affiliates not to exercise any rights under any Other Contract
based on
this Confirmation or the Transaction and, upon the written
request of the
other Party, to cause such Affiliates to waive such rights
as they relate
to this Confirmation and the Transaction.
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Yours
sincerely,
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CITIBANK,
N.A.
|
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By:
|
/s/ William Ortner |
|
Name:
|
William Ortner |
|
Title:
|
Authorized Representative |
|
Confirmed
as of the date first above written:
|
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CONSTELLATION
BRANDS, INC.
|
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|
By:
|
/s/
Thomas D. Roberts
|
|
Name:
|
Thomas
D. Roberts
|
|
Title:
|
SVP
+ Treasurer
|