EXHIBIT 1
3,937,744 SHARES
CANANDAIGUA WINE COMPANY, INC.
CLASS A COMMON STOCK
($0.01 PAR VALUE)
UNDERWRITING AGREEMENT
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November __, 1994
CS FIRST BOSTON CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
WILLIAM BLAIR & COMPANY
CHASE SECURITIES, INC.,
As Representatives of the Several Underwriters,
c/o CS First Boston Corporation,
Park Avenue Plaza
New York, N.Y. 10055
Dear Sirs:
1. Introductory. Canandaigua Wine Company, Inc., a Delaware
corporation ("Company"), proposes to issue and sell to the several Underwriters
named in Schedule A hereto ("Underwriters") 2,400,000 shares of its Class A
Common Stock, $0.01 par value ("Securities"), and the stockholders listed in
Schedule B hereto ("Selling Stockholders") propose severally to sell to the
Underwriters an aggregate of 750,195 outstanding shares of the Securities (such
3,150,195 shares of Securities being hereinafter referred to as the "U.S. Firm
Securities").
It is understood that the Company and the Selling Stockholders are
concurrently entering into a Subscription Agreement, dated the date hereof
("Subscription Agreement"), with CS First Boston Limited ("CSFBL"), Merrill
Lynch International Limited, William Blair & Company and the other managers
named therein ("Managers") relating to the concurrent offering and sale of
787,549 shares of Securities ("International Firm Securities") outside the
United States and Canada ("International Offering").
In addition, the Company proposes to issue and sell, at the option of
CS First Boston Corporation ("CSFBC"), an aggregate of not more than 590,662
additional shares of Securities ("Optional Securities") to be purchased by the
Underwriters and Managers on a pro rata basis. The Optional Securities to be
purchased by the Underwriters are hereinafter called the "U.S. Optional
Securities" and the Optional Securities to be purchased by the Managers are
hereinafter called the "International Optional Securities". The U.S. Firm
Securities and the U.S. Optional Securities are hereinafter called the "U.S.
Securities"; the International Firm Securities and the International Optional
Securities are hereinafter called the "International Securities"; and the U.S.
Firm Securities and the International Firm Securities are hereinafter called the
"Firm Securities". The U.S. Securities and the International Securities are
collectively referred to as the "Offered Securities". To provide for the
coordination of their activities, the Underwriters and the Managers have entered
into an Agreement Between U.S. Underwriters and Managers (the "Intersyndicate
Agreement") which permits them, among other things, to sell the Offered
Securities to each other for purposes of resale.
The Company and the Selling Stockholders hereby agree with the several
Underwriters as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 33-55997) relating to the
Offered Securities, including a form of prospectus relating to the
U.S. Securities, has been filed with the Securities and Exchange
Commission ("Commission") and either (A) has been declared effective
under the Securities Act of 1933 ("Act") and is not proposed to be
amended or (B) is proposed to be amended by amendment or post-
effective amendment. If the Company does not propose to amend such
registration statement and if any post-effective amendment to such
registration statement has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent such
amendment has been declared effective by the Commission. For purposes
of this Agreement, "Effective Time" means (A) if the Company has
advised the Representatives that it does not propose to amend such
registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this
Agreement, was declared effective by the Commission, or (B) if the
Company has advised the Representatives that it proposes to file an
amendment or post-effective amendment to such registration statement,
the date and time as of which such registration statement, as amended
by such amendment or
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post-effective amendment, as the case may be, is declared effective by
the Commission. "Effective Date" means the date of the Effective Time.
Such registration statement, as amended at the Effective Time,
including all material incorporated by reference therein and including
all information (if any) deemed to be a part of such registration
statement as of the Effective Time pursuant to Rule 430A(b) under the
Act, is hereinafter referred to as the "Registration Statement", and
the form of prospectus relating to the U.S. Securities, as first filed
with the Commission pursuant to and in accordance with Rule 424(b)
("Rule 424(b)") under the Act or (if no such filing is required) as
included in the Registration Statement, including all material
incorporated by reference in such prospectus, is hereinafter referred
to as the "U.S. Prospectus", and the form of prospectus relating to
the International Securities, which is identical to the U.S.
Prospectus except for the outside front cover page, the inside front
cover page, the outside back cover page and the text under the
captions "Underwriting" and "Notice to Canadian Residents" in the U.S.
Prospectus and under the caption "'Subscription and Sale" in the form
of prospectus relating to the International Securities (copies of such
pages and text having been heretofore delivered to CSFBL on behalf of
the Managers), is hereinafter referred to as the "International
Prospectus"; and the U.S. Prospectus and the International Prospectus
are hereinafter collectively referred to as the "Prospectuses".
(ii) If the Effective Time is prior to the execution and delivery
of this Agreement: (A) on the Effective Date, the Registration
Statement conformed in all material respects to the requirements of
the Act and the rules and regulations of the Commission ("Rules and
Regulations") and did not include 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 not misleading, and (B) on
the date of this Agreement, the Registration Statement conforms, and
at the time of filing of the U.S. Prospectus pursuant to Rule 424(b),
the Registration Statement and the U.S. Prospectus will conform, in
all material respects, to the requirements of the Act and the Rules
and Regulations, and none of such documents, nor the International
Prospectus, includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading. If the Effective Time is subsequent to the
execution and delivery of this Agreement: on the Effective Date, the
Registration Statement and the U.S. Prospectus will conform in all
material respects to the requirements of the Act and the Rules and
Regulations, and none of such documents, nor the
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International Prospectus, will include any untrue statement of a
material fact or will omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading. The two preceding sentences do not apply to statements in
or omissions from the Registration Statement or either of the
Prospectuses based upon written information furnished to the Company
by any Underwriter through the Representatives or by any Manager
through CSFBL specifically for use therein, it being understood and
agreed that the only such information is that described as such in
Section 7(c).
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectuses; and the
Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except where the failure to so qualify would not
individually or in the aggregate have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(iv) Each subsidiary of the Company has been duly incorporated
and is an existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectuses; and each subsidiary of the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification, except where
the failure to so qualify would not individually or in the aggregate
have a material adverse effect on the Company and its subsidiaries
taken as a whole; all of the issued and outstanding capital stock of
each subsidiary of the Company has been duly authorized and validly
issued and is fully paid and nonassessable; and the capital stock of
each subsidiary owned by the Company, directly or through subsidiaries
(except directors qualifying shares, if any), is owned beneficially by
the Company free from liens, encumbrances and defects, except with
respect to the security interests granted by the Company and its
subsidiaries pursuant to the Second Amendment and Restatement dated as
of August 5, 1994 of the Amendment and Restatement of Credit Agreement
dated as of June 29, 1993 among the Company, certain subsidiaries,
each of the lenders set forth on the signature page thereto (the
"Banks") and The Chase Manhattan Bank (National Association) as Agent
(the "Credit Agreement") and the Second Amended
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and Restated Security Agreement dated as of August 5, 1994 among the
Company, certain of its subsidiaries, the Banks and the Agent (the
"Security Agreement").
(v) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized; all
outstanding shares of capital stock of the Company are, and, when the
Offered Securities have been delivered and paid for in accordance with
this Agreement and the Subscription Agreement on each Closing Date (as
defined below), such Offered Securities will have been, validly
issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectuses; and the
stockholders of the Company have no preemptive rights with respect to
the Securities.
(vi) Except as disclosed in the Prospectuses, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or
any Underwriter or Manager for a brokerage commission, finder's fee or
other like payment in connection with the offer and sale of the
Offered Securities.
(vii) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act
with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in
the securities registered pursuant to the Registration Statement or in
any securities being registered pursuant to any other registration
statement filed by the Company under the Act, except those rights
granted pursuant to the Stock Purchase Agreement among the Company,
Barton Incorporated and the stockholders of Barton Incorporated dated
April 27, 1993 (the "Barton Stock Purchase Agreement") and each of the
Option Agreements between the Company and each holder of options to
purchase Securities which options were granted pursuant to the Asset
Sale Agreement between the Company and Vintners International Company,
Inc. dated September 14, 1993 (the "Vintners Agreement," and together
with the Barton Stock Purchase Agreement, the "Registration
Agreements"), pursuant to which the Company is either registering the
Securities covered thereunder or is not required to register such
Securities in connection with this Offering or the International
Offering.
(viii) The Securities are listed on The Nasdaq Stock Market
("NASDAQ").
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(ix) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement or the Subscription
Agreement in connection with the issuance and sale of the Offered
Securities, except such as have been obtained and made under the Act
and such as may be required under state securities laws.
(x) The execution, delivery and performance of this Agreement and
the Subscription Agreement, the issuance and sale of the Offered
Securities and the consummation of the transactions herein
contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute,
any rule, regulation or order of any governmental agency or body or
any court, domestic or foreign, having jurisdiction over the Company
or any subsidiary of the Company or any of their properties, or any
agreement or instrument to which the Company or any such subsidiary is
a party or by which the Company or any such subsidiary is bound or to
which any of the properties of the Company or any such subsidiary is
subject, or the charter or by-laws of the Company or any such
subsidiary; and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by
this Agreement and the Subscription Agreement, respectively.
(xi) This Agreement and the Subscription Agreement have been duly
authorized, executed and delivered by the Company.
(xii) The Company and its subsidiaries have good and marketable
title to all real properties and all other properties and assets owned
by them, in each case free from liens, encumbrances and defects that
would materially affect the value thereof or materially interfere with
the use made or to be made thereof by them, except with respect to
security interests granted to the Banks under the Credit Agreement and
the Security Agreement and the liens set forth in Schedule I-B
thereto; and except as disclosed in the Prospectuses, the Company and
its subsidiaries hold any leased real or personal property under valid
and enforceable leases with no exceptions that would materially
interfere with the use made or to be made thereof by them.
(xiii) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by them
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and have not received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(xiv) Except as disclosed in the Prospectuses, no labor dispute
with the employees of the Company or any subsidiary exists or, to the
knowledge of the Company, is imminent that might have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(xv) The Company and its subsidiaries own, possess or can acquire
on reasonable terms, adequate trademarks, trade names and other rights
to inventions, know-how, patents, copyrights, confidential information
and other intellectual property (collectively, "intellectual property
rights") necessary to conduct the business now operated by them, or
presently employed by them, except where the failure to own or possess
or have the ability to acquire any such intellectual property would
not, individually or in the aggregate, have a material adverse effect
on the Company and its subsidiaries taken as a whole, and have not
received any notice of infringement of or conflict with asserted
rights of others with respect to any intellectual property rights
that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(xvi) Except as disclosed in the Prospectuses, neither the
Company nor any of its subsidiaries is in violation of any statute,
any rule, regulation, decision or order of any governmental agency or
body or any court, domestic or foreign, relating to the use, disposal
or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental laws"),
owns or operates any real property contaminated with any substance
that is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is
subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in
the aggregate have a material adverse effect on the Company and its
subsidiaries taken as a whole; and the Company is not aware of any
pending investigation which might lead to such a claim.
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(xvii) Except as disclosed in the Prospectuses, there are no
pending actions, suits or proceedings against or affecting the
Company, any of the subsidiaries or any of their respective properties
that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the condition (financial or otherwise), business,
properties or results of operations of the Company and its
subsidiaries taken as a whole, or would materially and adversely
affect the ability of the Company to perform its obligations under
this Agreement or the Subscription Agreement, or which are otherwise
material in the context of the sale of the Offered Securities; and no
such actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(xviii) The financial statements included in the Registration
Statement and Prospectuses present fairly the financial position of
the Company and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown,
and, except as otherwise disclosed in the Prospectuses, such financial
statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a
consistent basis; and the schedules, if any, included in the
Registration Statement present fairly the information required to be
stated therein.
(xix) Except as disclosed in the Prospectuses, since the date of
the latest audited financial statements included in the Prospectuses
there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole, and,
except as disclosed in or contemplated by the Prospectuses, there has
been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(xx) The Company is not and, after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectuses, will not be an "investment
company" as defined in the Investment Company Act of 1940.
(xxi) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes and the Company agrees to comply with such Section if prior
to the completion of the distribution of the Offered Securities it
commences doing such business.
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(xxii) All United States federal income tax returns of the
Company and its subsidiaries required by law to be filed have been
filed (taking into account extensions granted by the applicable
federal governmental agency) and all taxes shown by such returns or
otherwise assessed, which are due and payable, have been paid, except
for such taxes, if any, as are being contested in good faith and as to
which adequate reserves have been provided and except for such taxes
the payment of which would not individually or in the aggregate result
in a material adverse effect on the Company and its subsidiaries taken
as a whole. All other corporate franchise and income tax returns of
the Company and its subsidiaries required to be filed pursuant to
applicable foreign, state or local laws have been filed, except
insofar as the failure to file such returns would not individually or
in the aggregate result in a material adverse effect on the Company
and its subsidiaries taken as a whole, and all taxes shown on such
returns or otherwise assessed which are due and payable have been
paid, except for such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided and except
for such taxes the payment of which would not individually or in the
aggregate result in a material adverse effect on the Company and its
subsidiaries taken as a whole.
(b) Each Selling Stockholder severally represents and warrants to, and
agrees with, the several Underwriters that:
(i) Such Selling Stockholder has or will have, upon exercise of
options (to which such Selling Stockholder has valid and unencumbered
title) to purchase Class A Common Stock, and on each Closing Date
hereinafter mentioned will have valid and unencumbered title to the Offered
Securities to be delivered by such Selling Stockholder on such Closing Date
and full right, power and authority to enter into the Power of Attorney and
Custody Agreement, this Agreement and the Subscription Agreement and to
sell, assign, transfer and deliver the Offered Securities to be delivered
by such Selling Stockholder on such Closing Date hereunder; and upon the
delivery of and payment for the Offered Securities on each Closing Date
hereunder the several Underwriters and Managers will acquire valid and
unencumbered title to the Offered Securities to be delivered by such
Selling Stockholder on such Closing Date.
(ii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by such Selling Stockholder for the consummation of
the transactions
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contemplated by the Power of Attorney and Custody Agreement, this
Agreement and the Subscription Agreement in connection with the sale
of the Offered Securities, except such as have been obtained and made
under the Act and such as may be required under state securities laws.
(iii) The execution, delivery and performance of the Power of
Attorney and Custody Agreement, this Agreement and the Subscription
Agreement and the consummation of the transactions therein and herein
contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute,
any rule, regulation or order of any governmental agency or body or
any court having jurisdiction over such Selling Stockholder or any of
its properties or any agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound
or to which any of the properties of such Selling Stockholder is
subject, or if applicable, the charter of by-laws of such Selling
Stockholder.
(iv) The Power of Attorney and Custody Agreement with respect to
such Selling Stockholder has been duly authorized (with respect to
Selling Stockholders which are not individuals), executed and
delivered by such Selling Stockholder and constitute valid and legally
binding obligations of such Selling Stockholder enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles.
(v) This Agreement and the Subscription Agreement have been duly
authorized by such Selling Stockholders which are not individuals.
This Agreement and the Subscription Agreement have been duly executed
and delivered by the Attorney-in-Fact on behalf of such Selling
Stockholder.
(vi) Such Selling Stockholder is not prompted to sell the Offered
Securities to be sold by such Selling Stockholder by any information
concerning the Company that is not set forth in the Prospectuses or
other documents filed by the Company with the Commission pursuant to
the periodic reporting and other informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act").
(vii) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to cause or result in
stabilization
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or manipulation of the price of the Class A Common Stock; and such
Selling Stockholder has not distributed and will not distribute any
prospectus (as such term is defined in the Act and the Rules and
Regulations) in connection with the offering and sale of the Offered
Shares other than any preliminary prospectus filed with the Commission
or the Prospectuses or other material permitted by the Act or the
Rules and Regulations.
(viii) Except for Centre Capital Investors, L.P. and Household
Commercial of California, Inc., neither such Selling Stockholder nor
any of its affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, or has any other association with (within the meaning of
Article I, Section 1(m) of the By-laws of the National Association of
Securities Dealers, Inc.), any member firm of the National Association
of Securities Dealers, Inc.
(ix) If the Effective Time is prior to the execution and delivery
of this Agreement: (A) on the Effective Date, the Registration
Statement and the documents incorporated by reference therein did not
include 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 not misleading, and (B) on the date of this
Agreement, at the time of filing the U.S. Prospectus pursuant to Rule
424(b) and at the Closing Date, the Registration Statement, the
Prospectuses and the documents incorporated by reference therein do
not include, or will not include, any untrue statement of a material
fact or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading. If the Effective Time is subsequent to the execution and
delivery of this Agreement: on the Effective Date and the Closing
Date, the Registration Statement, the Prospectuses and the documents
incorporated by reference therein will not include any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading. The two preceding sentences do not apply to
statements in or omissions from the Registration Statement or either
of the Prospectuses based upon written information furnished to the
Company by any Underwriter through the Representatives or by any
Manager through CSFBL specifically for use therein, it being
understood and agreed that the only such information is that described
as such in Section 7(c). For Selling Stockholders which are not
executive officers or directors of the Company, the first two
sentences of this paragraph (ix) apply only to the extent that any
statements in or omissions from the Registration Statement or either
of the Prospectuses are
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based on written information furnished to the Company by such Selling
Stockholder specifically for use therein.
3. Purchase, Sale and Delivery of Offered Securities. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Company and each Selling
Stockholder agree, severally and not jointly, to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
and each Selling Stockholder, at a purchase price of $ per share, that
number of U.S. Firm Securities (rounded up or down, as determined by CSFBC in
its discretion, in order to avoid fractions) obtained by multiplying 2,400,000
U.S. Firm Securities in the case of the Company and the number of U.S. Firm
Securities set forth opposite the name of such Selling Stockholder in Schedule B
hereto, in the case of a Selling Stockholder, in each case by a fraction the
numerator of which is the number of U.S. Firm Securities set forth opposite the
name of such Underwriter in Schedule A hereto and the denominator of which is
the total number of U.S. Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold
by the Selling Stockholders hereunder have been placed in custody, for delivery
under this Agreement, under Custody Agreements made with The First National Bank
of Boston as custodian ("Custodian"). Each Selling Stockholder agrees that the
shares represented by the certificates held in custody for the Selling
Stockholders under such Custody Agreements are subject to the interests of the
Underwriters hereunder, that the arrangements made by the Selling Stockholders
for such custody are to that extent irrevocable, and that the obligations of the
Selling Stockholders hereunder shall not be terminated by operation of law,
whether by the death of any individual Selling Stockholder or the occurrence of
any other event, or in the case of a trust, by the death of any trustee or
trustees or the termination of such trust. If any individual Selling
Stockholder or any such trustee or trustees should die, or if any other event
should occur, or if any of such trusts should terminate, before the delivery of
the Offered Securities hereunder, certificates for such Offered Securities shall
be delivered by the Custodian in accordance with the terms and conditions of
this Agreement as if such death or other event or termination had not occurred,
regardless of whether or not the Custodian shall have received notice of such
death or other event or termination.
The Company and the Custodian will deliver the U.S. Firm Securities to
the Representatives for the accounts of the Underwriters, against payment of the
purchase price by certified or official bank check or checks in New York
Clearing House (next day) funds drawn to the order of the Company in the case of
2,400,000 shares of U.S. Firm Securities and the Custodian in the case of
750,195 shares of U.S. Firm Securities, at the New York office of Fried, Frank,
Harris, Shriver & Jacobson, at 10:00 A.M., New York time, on November __, or at
such other time no later than seven full business days
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thereafter as CSFBC and the Company determine, such time being herein referred
to as the "First Closing Date". The certificates for the U.S. Firm Securities so
to be delivered will be in definitive form, in such denominations and registered
in such names as CSFBC requests and will be made available for checking and
packaging at the above office of Fried, Frank, Harris, Shriver & Jacobson (or
such other office designated by the Underwriters) at least 24 hours prior to the
First Closing Date.
In addition, upon written notice from CSFBC given to the Company from
time to time not more than 30 days subsequent to the date of the initial public
offering of the Offered Securities, the Underwriters may purchase all or less
than all of the U.S. Optional Securities at the purchase price per Security to
be paid for the U.S. Firm Securities. The U.S. Optional Securities to be
purchased by the Underwriters on any Optional Closing Date shall be in the same
proportion to all the Optional Securities to be purchased by the Underwriters
and the Managers on such Optional Closing Date as the U.S. Firm Securities bear
to all the Firm Securities. The Company agrees to sell to the Underwriters such
U.S. Optional Securities and the Underwriters agree, severally and not jointly,
to purchase such U.S. Optional Securities. Such U.S. Optional Securities shall
be purchased for the account of each Underwriter in the same proportion as the
number of shares of U.S. Firm Securities set forth opposite such Underwriter's
name bears to the total number of shares of U.S. Firm Securities (subject to
adjustment by CSFBC to eliminate fractions) and may be purchased by the
Underwriters only for the purpose of covering over-allotments made in connection
with the sale of the U.S. Firm Securities. No Optional Securities shall be sold
or delivered unless the U.S. Firm Securities and the International Firm
Securities previously have been, or simultaneously are, sold and delivered. The
right to purchase the Optional Securities or any portion thereof may be
exercised from time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by CSFBC on behalf of the
Underwriters and the Managers to the Company.
Each time for the delivery of and payment for the U.S. Optional
Securities, being herein referred to as an "Optional Closing Date", which may be
the First Closing Date (the First Closing Date and each Optional Closing Date,
if any, being sometimes referred to as a "Closing Date"), shall be determined by
CSFBC but shall be not later than seven full business days after written notice
of election to purchase Optional Securities is given. The Company will deliver
the U.S. Optional Securities being purchased on each Optional Closing Date to
the Representatives for the accounts of the several Underwriters, against
payment of the purchase price therefor by certified or official bank check or
checks in New York Clearing House (next day) funds drawn to the order of the
Company, at the New York office of Fried, Frank, Harris, Shriver & Jacobson.
The certificates for the U.S. Optional Securities being purchased on each
Optional Closing Date will be in definitive form, in such denominations and
registered in such names as
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CSFBC requests upon reasonable notice prior to such Optional Closing Date and
will be made available for checking and packaging at the office of Fried, Frank,
Harris, Shriver & Jacobson (or such other office designated by the Underwriters)
at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the U.S. Securities for sale to the public as set
forth in the U.S. Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders.
The Company and the Selling Stockholders agree with the several Underwriters
that:
(a) If the Effective Time is prior to the execution and delivery
of this Agreement, the Company will file the U.S. Prospectus with the
Commission pursuant to and in accordance with subparagraph (1) (or, if
applicable and if consented to by CSFBC, subparagraph (4)) of Rule
424(b) not later than the earlier of (A) the second business day
following the execution and delivery of this Agreement or (B) the
fifth business day after the Effective Date. The Company will advise
CSFBC promptly of any such filing pursuant to Rule 424(b).
(b) The Company will advise CSFBC promptly of any proposal to
amend or supplement the registration statement as filed or the related
prospectus or the Registration Statement or either of the Prospectuses
and will not effect such amendment or supplement without CSFBC's prior
consent which consent will not be unreasonably withheld; and the
Company will also advise CSFBC promptly of the effectiveness of the
Registration Statement (if the Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment or
supplement of the Registration Statement or either of the Prospectuses
and of the institution by the Commission of any stop order proceedings
in respect of the Registration Statement and will use its best efforts
to prevent the issuance of any such stop order and to obtain as soon
as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection
with sales by any Underwriter, Manager or dealer, any event occurs as
a result of which either or both of the Prospectuses as then amended
or supplemented would include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it is
-14-
necessary at any time to amend either or both of the Prospectuses to
comply with the Act, the Company will promptly notify CSFBC of such
event and will promptly prepare and, in the case of the U.S.
Prospectus, file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither CSFBC's consent
to, nor the Underwriters' delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(d) As soon as practicable, but not later than the Availability
Date (as defined below), the Company will make generally available to
its securityholders an earnings statement covering a period of at
least 12 months beginning after the Effective Date which will satisfy
the provisions of Section 11(a) of the Act. For the purpose of the
preceding sentence, "Availability Date" means the 45th day after the
end of the fourth fiscal quarter following the fiscal quarter that
includes the Effective Date, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth
fiscal quarter.
(e) The Company will furnish to the Representatives copies of the
Registration Statement (5 of which will be signed and will include all
exhibits), each preliminary prospectus relating to the U.S.
Securities, and, so long as delivery of a prospectus relating to the
Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter, Manager or dealer, the U.S.
Prospectus and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as CSFBC
requests. The Company will pay the expenses of printing and
distributing to the Underwriters (or, if applicable, the Managers) all
such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions in the U.S.
and Canada as CSFBC designates and will continue such qualifications
in effect so long as required for the distribution; provided,
however, that the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction where it is not now so qualified or required to
file such consent.
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal
year, a copy
-15-
of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy
of each report and any definitive proxy statement of the Company filed
with the Commission under the Exchange Act or mailed to stockholders,
and (ii) from time to time, such other information concerning the
Company as CSFBC may reasonably request.
(h) For a period of 90 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or
indirectly, or cause to be filed with the Commission a registration
statement under the Act relating to any shares of Class A Common Stock
or any securities convertible into or exchangeable or exercisable for
any shares of Class A Common Stock or announce the intention to make
such offer, sale, pledge, disposal or filing except the shares of
Class A Common Stock offered in the Offerings, without the prior
written consent of CSFBC; provided, however, that (i) the Company may
grant options exercisable for up to 200,000 shares of Class A Common
Stock pursuant to any employee stock option plan, (ii) the Company may
offer and sell Class A Common Stock pursuant to the Company's employee
stock purchase plan, and (iii) the Company may issue Class A Common
Stock upon the exercise of options outstanding on the date hereof and
pursuant to other obligations binding upon the Company and in effect
on the date hereof. The Company has obtained a similar agreement from
the Sands family addressed to the Underwriters and Managers with
respect to the offer and sale of Securities held by them.
(i) For a period of 90 days after the date of the initial public
offering of the Offered Securities, the Company will, pursuant to its
Option Agreements related to the Asset Sale Agreement between the
Company and Vintners International Company dated as of September 14,
1993, as amended, postpone the filing of any registration statement
pursuant to any request under the Option Agreements. The Company
hereby represents and warrants to the Underwriters that (A) it has not
received a Registration Request (as defined under the Option
Agreements) and that (B) the Company has not terminated a previous
Blackout Period (as defined in the Option Agreements) within 90 days
prior to the date of the initial public offering of the Offered
Securities.
(j) The Company, during the period when the Prospectuses are
required to be delivered under the Act, will file promptly all
documents required to be filed with the Commission pursuant to Section
13, 14 or 15
-16-
of the Exchange Act subsequent to the time the Registration Statement
becomes effective.
The Company and each Selling Stockholder agree with the several
Underwriters that the Company and such Selling Stockholders will pay all
expenses incident to the performance of the obligations of the Company and such
Selling Stockholders, as the case may be, under this Agreement, and the Company
will reimburse the Underwriters (if and to the extent incurred by them) for any
filing fees and other expenses (including fees and disbursements of counsel)
incurred by them in connection with qualification of the Offered Securities for
sale under the laws of such jurisdictions in the United States as CSFBC
designates and the printing of memoranda relating thereto, for the filing fee of
the National Association of Securities Dealers, Inc. relating to the Offered
Securities (and fees and disbursements of counsel relating thereto), for any
travel expenses of the Company's officers and employees and any other expenses
of the Company in connection with attending or hosting meetings with prospective
purchasers of the Offered Securities, for any transfer taxes on the sale by the
Selling Stockholders of the Offered Securities to the Underwriters and for
expenses incurred in distributing preliminary prospectuses and the Prospectuses
(including any amendments and supplements thereto) to the Underwriters.
The Company and the Selling Stockholders will indemnify and hold
harmless the Underwriters against any documentary, stamp or similar issuance
tax, including any interest and penalties, on the creation, issuance and sale of
the Offered Securities and on the execution and delivery of this Agreement. All
payments to be made by the Company and the Selling Stockholders hereunder shall
be made without withholding or deduction for or on account of any present or
future taxes, duties or governmental charges whatsoever unless the Company or
the Selling Stockholders are compelled by law to deduct or withhold such taxes,
duties or charges. In that event, the Company and the Selling Stockholders
shall pay such additional amounts as may be necessary in order that the net
amounts received after such withholding or deduction shall equal the amounts
that would have been received if no withholding or deduction had been made.
Each Selling Stockholder agrees to deliver to the CSFBC Transactions
Advisory Group on or prior to the First Closing Date a properly completed and
executed United States Treasury Department Form W-9 or W-8, whichever is
applicable (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the U.S. Firm
Securities on the First Closing Date and the U.S. Optional Securities to be
purchased on each Optional Closing
-17-
Date will be subject to the accuracy of the representations and warranties on
the part of the Company and the Selling Stockholders herein, to the accuracy of
the statements of Company officers made pursuant to the provisions hereof, to
the performance by the Company and the Selling Stockholders of their obligations
hereunder and to the following additional conditions precedent:
(a) The Representatives shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time is prior to the
execution and delivery of this Agreement, shall be on or prior to the
date of this Agreement or, if the Effective Time is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing
of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to the Effective Time), of Arthur
Andersen LLP, public accountants for the Company, confirming that they
are independent public accountants within the meaning of the Act and
the applicable published Rules and Regulations thereunder and stating
to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference in the
Registration Statement comply in form in all material respects
with the applicable accounting requirements of the Act and the
related published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review
of interim financial information as described in Statement of
Auditing Standards No. 71, Interim Financial Information, on the
unaudited financial statements included or incorporated by
reference in the Registration Statement;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial
statements of the Company, inquiries of officials of the Company
who have responsibility for financial and accounting matters and
other specified procedures, nothing came to their attention that
caused them to believe that:
(A) the unaudited financial statements and schedules
included or incorporated by reference in the Registration
Statement do not comply in form in all material respects
with the applicable accounting requirements of the Act and
the related published Rules and Regulations or any
-18-
material modifications should be made to such unaudited
financial statements and schedules for them to be in
conformity with generally accepted accounting principles;
(B) at a specified date not more than five days prior
to the date of this Agreement, there was any change in the
capital stock or increase in long-term debt, and at the date
of the latest available balance sheet read by such
accountants, there was any decrease in consolidated current
assets, working capital, stockholders' equity or total
assets as compared with amounts shown on the latest balance
sheet included in the Prospectuses; or
(C) for the period from the closing date of the latest
income statement included in the Prospectuses to a specified
date not more than five days prior to the date of this
Agreement there were any decreases, as compared with the
corresponding period of the previous year, in consolidated
net sales, operating income, income before provision for
income taxes or net income;
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Prospectuses disclose
have occurred or may occur or which are described in such letter;
(iv) they have read the pro forma consolidated financial
information of the Company and the pro forma adjustments applied
to the historical amounts included in or incorporated by
reference into the Registration Statement (collectively, the "Pro
Forma Statements"); inquired of officials of the Company who
have responsibility for financial and accounting matters;
compared the historical amounts of the Company in the Pro Forma
Statements with audited consolidated financial statements or
accounting records; and proved the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the Pro Forma Statements; on the basis of this
review, and other specified procedures, nothing came to their
attention that caused them to believe that the Pro Forma
Statements included in the Registration Statement and in
Amendment No. 2 on Form 8-K/A dated November 1, 1994 to the
Company's Form 8-K dated August 5, 1994 do not comply as to form
in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X and that the pro
-19-
forma adjustments have not been properly applied to the
historical amounts in the compilation of such statements; and
(v) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information included or incorporated by reference in the
Registration Statement (in each case to the extent that such
dollar amounts, percentages and other financial information are
derived from the general accounting records of the Company and
its subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such
records by analysis or computation) with the results obtained
from inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to be
in agreement with such results, except as otherwise specified in
such letter.
For purposes of this subsection, if the Effective Time is subsequent
to the execution and delivery of this Agreement, "Registration
Statement" shall mean the registration statement as proposed to be
amended by the amendment or post-effective amendment to be filed
shortly prior to the Effective Time, and "Prospectuses" shall mean the
prospectus relating to the U.S. Securities included in the
Registration Statement and the corresponding form of prospectus
relating to the International Securities. All financial statements
and schedules included in material incorporated by reference into the
Prospectuses shall be deemed included in the Registration Statement
for purposes of this subsection.
(b) The Representatives shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time is prior to the
execution and delivery of this Agreement, shall be on or prior to the
date of this Agreement or, if the Effective Time is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing
of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to the Effective Time), of
Deloitte & Touche LLP confirming that they were independent public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder for Barton Incorporated and its
subsidiaries ("Barton") as of June 28, 1993, and stating to the effect
that:
(i) in their opinion the financial statements and schedules,
if any, examined by them and incorporated by reference in the
-20-
Registration Statement comply in form in all material respects
with the applicable accounting requirements of the Act and the
related published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review
of interim financial information as described in Statement of
Auditing Standards No. 71, Interim Financial Information, on the
unaudited financial statements referred to in Paragraphs 4.a and
4.b of such letter and included or incorporated by reference in
the Registration Statement;
(iii) on the basis of the review referred to in clause (ii)
above and inquiries of officials of Barton who have
responsibility for financial and accounting matters, nothing came
to their attention that caused them to believe that the unaudited
financial statements and schedules, if any, referred to in
section (b)(ii) above do not comply in form in all material
respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations or any material
modifications should be made to such unaudited financial
statements and schedules, if any, for them to be in conformity
with generally accepted accounting principles; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information included or incorporated by reference in the
Registration Statement with the Company's accounting records or
to amounts in schedules prepared by Barton (which schedules have
been compared to the underlying accounting records of Barton) and
have found such dollar amounts, percentages and other financial
information to be in agreement, except as otherwise specified in
such letter.
For purposes of this subsection, if the Effective Time is subsequent
to the execution and delivery of this Agreement, "Registration
Statement" shall mean the registration statement as proposed to be
amended by the amendment or post-effective amendment to be filed
shortly prior to the Effective Time, and "Prospectuses" shall mean the
prospectus relating to the U.S. Securities included in the
Registration Statement and the corresponding form of prospectus
relating to the International Securities. All financial statements
and schedules included in material incorporated by reference into the
Prospectuses shall be deemed included in the Registration Statement
for purposes of this subsection.
-21-
(c) The Representatives shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time is prior to the
execution and delivery of this Agreement, shall be on or prior to the
date of this Agreement or, if the Effective Time is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing
of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to the Effective Time), of Ernst &
Young LLP, public accountants for Vintners International Company, Inc.
("Vintners"), confirming that they are independent public accountants
within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference in the
Registration Statement comply in form in all material respects
with the applicable accounting requirements of the Act and the
related published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review
of interim financial information as described in Statement of
Auditing Standards No. 71, Interim Financial Information, on the
unaudited financial statements included or incorporated by
reference in the Registration Statement;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial
statements of Vintners, inquiries of officials of Vintners who
have responsibility for financial and accounting matters and
other specified procedures, nothing came to their attention that
caused them to believe that A) with respect to the two-month
periods ended September 30, 1993 and 1992, the unaudited
financial statements and schedules included or incorporated by
reference in the Registration Statement do not comply in form in
all material respects with the applicable accounting requirements
of the Act and the related published Rules and Regulations, B)
with respect to the unaudited condensed statement of operations
information of Vintners for the six weeks ended October 15, 1993,
the unaudited amounts were not determined on a basis
substantially consistent with that of the corresponding amounts
in the audited statements of operations or C) with respect to the
unaudited financial statements and schedules included or
incorporated by reference in the Registration Statement,
-22-
any material modifications should be made to such unaudited
financial statements and schedules for them to be in conformity
with generally accepted accounting principles; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information included or incorporated by reference in the
Registration Statement (in each case to the extent that such
dollar amounts, percentages and other financial information are
derived from the general accounting records of Vintners subject
to the internal controls of Vintners's accounting system or are
derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such
general accounting records and other procedures specified in such
letter and have found such dollar amounts, percentages and other
financial information to be in agreement with such results,
except as otherwise specified in such letter.
For purposes of this subsection, if the Effective Time is subsequent
to the execution and delivery of this Agreement, "Registration
Statement" shall mean the registration statement as proposed to be
amended by the amendment or post-effective amendment to be filed
shortly prior to the Effective Time, and "Prospectuses" shall mean the
prospectus relating to the U.S. Securities included in the
Registration Statement and the corresponding form of prospectus
relating to the International Securities. All financial statements
and schedules included in material incorporated by reference into the
Prospectuses shall be deemed included in the Registration Statement
for purposes of this subsection.
(d) The Representatives shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time is prior to the
execution and delivery of this Agreement, shall be on or prior to the
date of this Agreement or, if the Effective Time is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing
of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to the Effective Time), of KPMG
Peat Marwick LLP, public accountants for the Almaden/Inglenook Product
Lines of Heublein, Inc. ("Heublein"), confirming that they are
independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating to
the effect that:
-23-
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference in the
Registration Statement comply in form in all material respects
with the applicable accounting requirements of the Act and the
related published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review
of interim financial information as described in Statement of
Auditing Standards No. 71, Interim Financial Information, on the
unaudited financial statements included or incorporated by
reference in the Registration Statement;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial
statements of Heublein, inquiries of officials of Heublein who
have responsibility for financial and accounting matters and
other specified procedures, nothing came to their attention that
caused them to believe that the unaudited financial statements
and schedules included or incorporated by reference in the
Registration Statement do not comply in form in all material
respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations or any material
modifications should be made to such unaudited financial
statements and schedules for them to be in conformity with
generally accepted accounting principles; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information included or incorporated by reference in the
Registration Statement (in each case to the extent that such
dollar amounts, percentages and other financial information are
derived from the general accounting records of Heublein subject
to the internal controls of Heublein's accounting system or are
derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such
general accounting records and other procedures specified in such
letter and have found such dollar amounts, percentages and other
financial information to be in agreement with such results,
except as otherwise specified in such letter.
For purposes of this subsection, if the Effective Time is subsequent
to the execution and delivery of this Agreement, "Registration
Statement" shall
-24-
mean the registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to the
Effective Time, and "Prospectuses" shall mean the prospectus relating
to the U.S. Securities included in the Registration Statement and the
corresponding form of prospectus relating to the International
Securities. All financial statements and schedules included in
material incorporated by reference into the Prospectuses shall be
deemed included in the Registration Statement for purposes of this
subsection.
(e) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not
later than 10:00 P.M., New York time, on the date of this Agreement or
such later date as shall have been consented to by CSFBC. If the
Effective Time is prior to the execution and delivery of this
Agreement, the U.S. Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and Section
5(a) of this Agreement. Prior to such Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Stockholder, the
Company or the Representatives, shall be contemplated by the
Commission.
(f) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development or
event involving a prospective change, in the condition (financial or
other), business, properties or results of operations of the Company
or its subsidiaries which, in the judgment of a majority in interest
of the Underwriters including the Representatives, is material and
adverse and makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the
U.S. Securities; (ii) any downgrading in the rating of any debt
securities of the Company by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the
Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities of the
Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of
such rating); (iii) any suspension or a material limitation of trading
in securities generally on the New York Stock Exchange or Nasdaq Stock
Market, or any setting of minimum prices for trading on such exchange,
or any suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market; (iv) any banking
moratorium declared by U.S. Federal or New York authorities; or (v)
any
-25-
outbreak or escalation of major hostilities in which the United
States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the
judgment of a majority in interest of the Underwriters including the
Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the public offering or the sale of and
payment for the U.S. Securities.
(g) The Representatives shall have received an opinion, dated
such Closing Date, of McDermott, Will & Emery, counsel for the Company
and the Selling Stockholders, to the effect that:
(i) The Company has been duly incorporated, is validly
existing and in good standing under the laws of the State of
Delaware and is duly qualified and in good standing as a foreign
corporation in the States of California, New Hampshire and New
York. California Products Company ("CPC") has been duly
incorporated, is validly existing and in good standing under the
laws of the State of California. Barton Management, Inc. ("BMI")
has been duly incorporated, is validly existing and in good
standing under the laws of the State of Illinois and is duly
qualified and in good standing as a foreign corporation in the
States of California, Georgia, Montana, New York and West
Virginia. Barton Beers, Ltd. is duly qualified and in good
standing as a foreign corporation in the States of California,
Connecticut, Florida, Illinois, Montana, New Jersey and New
Hampshire. Barton Brands of California, Inc. is duly qualified
and in good standing as a foreign corporation in the State of
California;
(ii) The Offered Securities delivered on such Closing Date
have been duly authorized and validly issued, and are fully paid
and nonassessable. The stockholders of the Company have no
preemptive rights with respect to the Offered Securities;
(iii) There are no contracts, agreements or understandings
known to such counsel between the Company and any person granting
such person the right to require the Company to file a
registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or
to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or
in any securities being registered pursuant to any other
registration statement filed by the
-26-
Company under the Act, except those rights granted pursuant to
the Registration Agreements, pursuant to which the Company is
either registering the Securities covered thereunder or is not
required to register such Securities in connection with this
offering or the International Offering;
(iv) No consent, approval, authorization, order,
registration or qualification of or with any governmental
authority or agency or, to such counsel's knowledge, any court or
similar body is required under the laws of the United States and
the State of New York and the General Corporation Law of the
State of Delaware to be obtained or made by the Company for the
execution, delivery or performance of, or the consummation of the
transactions contemplated by, this Agreement, the Subscription
Agreement or the Power of Attorney and Custody Agreement in
connection with the issuance or sale of the Offered Securities,
except (i) such as have been obtained under the Act and (ii) such
as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Offered
Shares by the U.S. Underwriters (as to which no opinion is
required);
(v) The execution, delivery and performance of this
Agreement or the Subscription Agreement, the issuance and sale of
the Offered Securities, the consummation of the transactions
herein or therein contemplated, and the application of the net
proceeds from the sale of the Offered Shares in the manner
described in the Prospectuses under the caption "Use of Proceeds"
does not and will not (A) conflict with the charter and by-laws
of the Company, CPC or BMI, (B) conflict with, constitute a
breach of, or a default by the Company or any of its
subsidiaries, as the case may be, under, or result in the
creation or imposition of any lien, security interest or
encumbrance upon any of the assets of the Company or any of its
subsidiaries, as the case may be, pursuant to the terms of any
indenture, mortgage, deed of trust, loan or credit agreement,
bond, debenture, note, lease or other agreement or instrument
listed on Annex 1 hereto, (C) contravene the General Corporation
Law of the State of Delaware or any statute, rule or regulation
under the laws of the United States and the States of New York,
California and Illinois applicable to the Company or any of its
subsidiaries or any of their respective properties or (D) to the
knowledge of such counsel, conflict with or violate any judgment,
decree or order of any court or
-27-
governmental agency or court or body applicable to CPC or BMI and
their respective properties;
(vi) The Company has the corporate power and authority to
authorize, execute, deliver and perform all of its obligations
under this Agreement and the Subscription Agreement. The
execution, delivery and performance of this Agreement and the
Subscription Agreement have been duly authorized by the Company.
This Agreement and the Subscription Agreement have been duly
executed and delivered by the Company;
(vii) The Offered Shares conform in all material respects
to the descriptions thereof under the caption "Description of
Capital Stock" in the Prospectuses. The statements made in the
Prospectuses under the caption "Recent Acquisitions" in so far as
they describe certain provisions of the agreements listed on
Annex 2 hereto, are accurate in all material respects;
(viii) The Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1993 (the "Form 10-K"), at the time
it was filed with the Commission, appeared on its face to be
appropriately responsive in all material respects to the
requirements of the Exchange Act, and the rules and regulations
as promulgated by the Commission under the Exchange Act, except
that such counsel may not express any opinion as to the financial
statements, schedules and other financial data included therein
or incorporated by reference therein, or excluded therefrom or
the exhibits to the Form 10-K (except to the extent set forth in
the next sentence of this paragraph) and such counsel need not
assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Form 10-K. To such
counsel's knowledge without having made any independent
investigation and based upon representations of officers of the
Company as to factual matters, there were no contracts or
documents required to be filed as exhibits to the Form 10-K on
the date it was filed which were not so filed;
(ix) Such counsel has been advised by the Commission that
the Registration Statement has become effective under the Act at
a.m. on November __, 1994, to the knowledge of such counsel after
due inquiry any required filing of the U.S. Prospectus pursuant
to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b), and, to the knowledge of such
counsel, no
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stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are pending or threatened by the
Commission;
(x) The Registration Statement, including all information
(if any) deemed to be a part of such registration statement as of
the Effective Time pursuant to Rule 430A(b) under the Act, as of
its Effective Date, and the U.S. Prospectus, as of its date,
appeared on their face to be appropriately responsive in all
material respects to the requirements of the Act and the Rules
and Regulations, except that such counsel may not express opinion
as to the financial statements, schedules and other financial
data included therein or incorporated by reference in, or
excluded therefrom or the exhibits to the Registration Statement
(except to the extent set forth in the next sentence of this
paragraph), and such counsel need not assume any responsibility
for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the U.S. Prospectus
except to the extent set forth in paragraph (vii) of this
opinion. To such counsel's knowledge without having made any
independent investigation and based upon representations of
officers of the Company as to factual matters, there were no
contracts or documents required to be filed as exhibits to the
Registration Statement as of its Effective Date which were not so
filed;
(xii) The Company is not required to register under the
Investment Company Act of 1940, as amended (the "1940 Act"), as
an "investment company" as such term is defined in the 1940 Act;
(xiii) Upon payment for the Offered Securities to be sold
by the Selling Stockholders and when the Underwriters take
delivery of the certificates representing the Offered Shares to
be sold by the Selling Stockholders and assuming the Underwriters
are acquiring such Offered Securities in good faith without
notice of any adverse claim (within the meaning of the New York
Uniform Commercial Code) the Underwriters will acquire such
Offered Securities free of any adverse claim;
(xiv) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or to our knowledge
any court is required to be obtained or made by any Selling
Stockholder under the laws of the United States and New York and
the General Corporation Law of the State of Delaware for the
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consummation of the transactions contemplated by the Power of
Attorney and Custody Agreement, this Agreement or the
Subscription Agreement in connection with the sale of the Offered
Securities sold by the Selling Stockholders, except such as have
been obtained and made under the Act and such as may be required
under state securities laws, provided that the foregoing opinion
is limited to such consents, approvals, authorizations, orders or
filings which, in our experience, are normally applicable to
public offerings of securities of the type contemplated by this
Agreement and the Subscription Agreement but which do not include
laws applicable because of the specific regulatory status of any
of the Selling Stockholders;
(xv) To our knowledge, the execution, delivery and
performance of this Agreement, the Subscription Agreement, the
Power of Attorney and Custody Agreement and the transactions
herein contemplated will not result in a breach or violation of
any statute, any rule, regulation or order of any governmental
agency or body or any court having jurisdiction over any Selling
Stockholder under the laws of the United States and New York and
the General Corporation Law of the State of Delaware, provided
that the foregoing opinion is limited to such breaches or
violations which, in our experience, are normally applicable to
public offerings of securities of the type contemplated by this
Agreement and the Subscription Agreement but which do not include
laws applicable because of the specific regulatory status of any
of the Selling Stockholders;
(xvi) The Power of Attorney and related Custody Agreement
with respect to each Selling Stockholder has been duly executed
and delivered by such Selling Stockholder and, assuming due
authorization by the Selling Stockholders which are not
individuals, constitute valid and legally binding obligations of
each such Selling Stockholder enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; and
(xvii) This Agreement and the Subscription Agreement have
been duly executed and delivered by ___________ as Attorney-in-
Fact for each Selling Stockholder.
In addition, such opinion shall state that such counsel has
participated in conferences with officers and representatives of the
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Company, representatives of the independent accountants of the
Company, Barton, Vintners and Heublein and the Underwriters and the
Managers at which the contents of the Registration Statement, the
Prospectuses and the Form 10-K were discussed. Although such counsel
is not required to pass upon or assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement, the Prospectuses or any of the documents
incorporated by reference therein, and are not required to make an
independent check or verification thereof, except to the extent set
forth in their opinion in paragraph (vii), such counsel is required to
state that, based upon the foregoing, no facts have come to their
attention to lead them to believe that as of its Effective Date, the
Registration Statement (including all information (if any) deemed to
be a part of such registration statement as of the Effective Time
pursuant to Rule 430A(b) under the Act) and the documents incorporated
therein by reference (except to the extent statements contained in
such documents have been modified or superseded by statements
contained in the Prospectuses), contained an untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or the Prospectuses (including the documents incorporated
therein by reference except to the extent statements contained therein
have been modified or superseded by statements contained in the
Prospectuses) as of their date and as of the Closing Date contained an
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except
that such counsel need not express any opinion or belief as to the
financial statements, schedules and other financial data included
therein, or incorporated by reference into, or excluded from the
Registration Statement or the Prospectuses or the exhibits to the
Registration Statement.
Such counsel may limit its opinion to the laws of the United
States and the States of New York, Illinois and California and the
General Corporation Law of the State of Delaware.
(h) The Representatives shall have received an opinion, dated
such Closing Date, of Harter, Secrest & Emery, counsel for the
Company, to the effect that:
(i) Each of the subsidiaries of the Company listed on Annex
1 attached hereto (the "Subsidiaries") is a corporation duly
incorporated or a limited partnership duly formed, in each case,
validly existing and in good standing under the laws of their
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respective jurisdiction of incorporation. The Company and each
of the Subsidiaries is duly qualified and in good standing as a
foreign corporation in each jurisdiction listed on Annex 2
attached hereto. The Company and each Subsidiary has all
requisite corporate or partnership authority to own, lease and
license its respective properties and conduct its business as now
being conducted and as described in the Registration Statement
and the Prospectuses. All of the issued and outstanding capital
stock of each Subsidiary has been duly authorized and validly
issued and is fully paid and non-assessable and were not issued
in violation of any preemptive or similar rights of stockholders
arising under the corporate law of the state of incorporation of
such Subsidiary, the charter or bylaws of such Subsidiary, or to
the knowledge of such counsel, any agreement to which such
Subsidiary is party, and, to the knowledge of such counsel, is
owned by the Company or such Subsidiary, free and clear of any
lien, adverse claim, security interest, restriction on transfer,
shareholders' agreement, voting trust or other defect of title
whatsoever except for the liens under the Second Amended and
Restated Credit Agreement dated as of August 5, 1994;
(ii) The Company has an authorized capitalization as set
forth in the Prospectuses and all of the outstanding shares of
capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable and were not
issued in violation of any preemptive or similar rights of
stockholders of the Company arising under the General Corporation
Law of the State of Delaware, under the charter or bylaws of the
Company or, to the best of such counsel's knowledge, under any
agreement to which the Company is a party;
(iii) The execution, delivery and performance of this
Agreement, the Subscription Agreement and the Offered Securities
by the Company, and the application of the net proceeds from the
sale of the Offered Securities in the manner described in the
Prospectuses under the caption "Use of Proceeds", does not and
will not, to the knowledge of such counsel, conflict with or
violate any judgment, decree or order of any court or
governmental agency or court or body applicable to the Company or
any of its subsidiaries or any of their respective properties;
(iv) To the best knowledge of such counsel after due
inquiry, except as described or referred to in the Prospectuses,
there
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is not pending or threatened any action, suit, proceeding,
inquiry or investigation, to which the Company or any of the
Subsidiaries is a party, or to which the property of the Company
or any of the Subsidiaries is subject, before or brought by any
court or governmental agency or body, which, if determined
adversely to the Company or any of the Subsidiaries, would
individually or in the aggregate result in any material adverse
change in the business, financial position, net worth, results of
operations or prospects, or materially adversely affect the
properties or assets, of the Company and the Subsidiaries taken
as a whole or might materially adversely affect the consummation
of the transactions contemplated by the Registration Statement;
and all pending legal or governmental proceedings to which the
Company or any of the Subsidiaries is a party or that affect any
of their respective properties that are not described in the
Prospectuses, including ordinary routine litigation incidental to
the business, are, considered in the aggregate not to result in a
material adverse change in the business, financial position, net
worth, results of operations or prospects, or materially
adversely affect the properties or assets, of the Company and the
Subsidiaries taken as a whole;
(v) The Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended November 30, 1993, February 23, 1994,
and May 31, 1994, and the Company's Current Reports on Form 8-K/A
which amended the Form 8-K dated June 29, 1993; Form 8-K dated
September 15, 1993; Form 8-K dated October 15, 1993, as amended
by Form 8-K/A, Form 8-K/A-2 and Form 8-K/A-3; Form 8-K dated June
23, 1994; Form 8-K dated August 5, 1994, as amended by Form 8-K/A
and Form 8-K/A-2; Form 8-K dated October 21, 1994; and Form 8-K
dated November 7, 1994 (collectively, the "Reports"), at the
time they were filed with the Commission, complied in all
material respects to the requirements of the Exchange Act, and
the rules and regulations as promulgated by the Commission under
the Exchange Act, except that such counsel may not express any
opinion as to the financial statements, schedules and other
financial data included therein or incorporated by reference
therein, or excluded therefrom or the exhibits to the Reports
(except to the extent set forth in the next sentence of this
paragraph) and such counsel need not assume any responsibility
for the accuracy, completeness or fairness of the statements
contained in the Reports. To such counsel's knowledge without
having made any
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independent investigation and based upon representations of
officers of the Company as to factual matters, there were no
contracts or documents required to be filed as exhibits to the
Reports on the respective dates on which such Reports were filed
which were not so filed.
Such counsel may limit its opinion to the laws of the United
States and the State of New York and the General Corporation Law of
the State of Delaware.
(i) The Representatives shall have received from Fried, Frank,
Harris, Shriver & Jacobson (a partnership including professional
corporations), counsel for the Underwriters and the Managers, such
opinion or opinions, dated such Closing Date, with respect to the
organization of the Company, the validity of the Offered Securities
delivered on such Closing Date, the Registration Statement, the
Prospectuses and other related matters as the Representatives may
require, and the Selling Stockholders and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(j) The Representatives shall have received a certificate, dated
such Closing Date, of the Chief Executive Officer and a principal
financial or accounting officer of the Company in which such officers,
to the best of their knowledge after reasonable investigation, shall
state that the representations and warranties of the Company in this
Agreement are true and correct, that the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date, that no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or are contemplated by the Commission and that, subsequent to the
respective dates of the most recent financial statements in the
Prospectuses, there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Company and its subsidiaries taken as a whole
except as set forth in or contemplated by the Prospectuses or as
described in such certificate.
(k) The Representatives shall have received letters, dated such
Closing Date, of Arthur Andersen LLP, Deloitte & Touche LLP, Ernst &
Young LLP and KPMG Peat Marwick LLP, respectively, which meet the
requirements of subsections (a), (b), (c) and (d) of this Section,
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respectively, except that the specified date referred to in such
subsection will be a date not more than five days prior to such
Closing Date for the purposes of this subsection.
(l) On such Closing Date, the Managers shall have purchased the
International Firm Securities and, if applicable, the International
Optional Securities, as the case may be, pursuant to the Subscription
Agreement.
The Selling Stockholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, either of the Prospectuses, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein, it being understood
and agreed that the only information furnished by any Underwriter consists of
the information described as such in subsection (c) below; and provided,
further, that the foregoing indemnity with respect to any untrue statement
contained in or omission from a preliminary prospectus shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) from
whom the person asserting any such loss, claim, damage or liability purchased
any of the Securities if a copy of the final U.S. Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of the Underwriter to such
person, if (i) such is required by law, at or prior to the written confirmation
of the sale of such Securities to such person, (ii) the final U.S. Prospectus
(as so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or
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liability, (iii) such failure to deliver the U.S. Prospectus was not a result of
noncompliance by the Company with Section 5(e) and (iv) the Underwriters shall
have no requirement to deliver documents incorporated by reference in the U.S.
Prospectus (as then amended or supplemented).
(b) The Selling Stockholders, jointly and severally, will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectuses, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Selling Stockholders will not be liable in any such
- ------------------
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by an Underwriter
through the Representatives specifically for use therein, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in subsection (c) below; provided, further,
------------------
that the foregoing indemnity with respect to any untrue statement contained in
or omission from a preliminary prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased any of the
Securities if a copy of the final U.S. Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of the Underwriter to such
person, if (i) such is required by law, at or prior to the written confirmation
of the sale of such Securities to such person, (ii) the final U.S. Prospectus
(as so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability, (iii) such failure to deliver the U.S.
Prospectus was not a result of noncompliance by the Company with Section 5(e)
and (iv) the Underwriters shall have no requirement to deliver documents
incorporated by reference in the Prospectus (as then amended or supplemented);
and provided, further, that the Selling Stockholders who are not executive
- ----------------------
officers or directors of the Company shall only be subject to such liability to
the extent that the untrue statement or alleged untrue statement or omission or
alleged omission is based upon written information in or from the Registration
Statement or either of the Prospectuses provided by such Selling Stockholders
specifically for use
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therein; and provided, further, that the Selling Stockholders who are executive
----------------------
officers or directors of the Company shall not be responsible under this
subsection (b) for any amount which exceeds the net proceeds received by such
Selling Stockholder from the sale of the Offered Securities.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and each Selling Stockholder against any losses, claims,
damages or liabilities to which the Company or such Selling Stockholder may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, either of the Prospectuses, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Company and each Selling Stockholder in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed that the
only such information furnished by any Underwriter consists of the following
information in the U.S. Prospectus furnished on behalf of each Underwriter: the
last paragraph at the bottom of the cover page concerning the terms of the
offering by the Underwriters; the legend concerning over-allotments,
stabilizing and passive market making on the inside front cover page; the
Underwriters and the number of shares to be purchased by each Underwriter in the
first paragraph, and the fifth, sixth, seventh, eighth, ninth and last
paragraphs under the caption "Underwriting".
(d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a), (b) or (c) above. In case any such action
is brought against any indemnified party and it notifies an indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such
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indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(e) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a), (b)
or (c) above, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other from the offering of the U.S. Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholders on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering of the
U.S. Securities (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and commissions
received by the Underwriters. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (e). Notwithstanding the
provision of this subsection (e), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the U.S.
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged
-38-
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (e) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section shall be in addition to any liability which the Company and the
Selling Stockholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
Selling Stockholder and to each director of the Company, to each officer of the
Company who has signed the Registration Statement and to each person, if any,
who controls the Company or a Selling Stockholder within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase U.S. Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of U.S.
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of U.S. Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company and the Selling Stockholders for
the purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the U.S. Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
U.S. Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of U.S. Securities that the Underwriters are
obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC, the Company and the Selling Stockholders for the purchase of such U.S.
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any non-
defaulting Underwriter, the Company or the Selling Stockholders, except as
provided in Section 9 (provided that if such default occurs with respect to U.S.
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the U.S. Firm Securities or any U.S. Optional Securities
purchased prior to such termination). As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
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9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Selling Stockholders, of the Company or its officers and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation, or statement
as to the results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the U.S. Securities. If this Agreement is terminated pursuant to Section 8
or if for any reason the purchase of the U.S. Securities by the Underwriters is
not consummated, the Company and the Selling Stockholders shall remain
responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling
Stockholders, and the Underwriters pursuant to Section 7 shall remain in effect.
If any U.S. Securities have been purchased hereunder the representations and
warranties in Section 2 and all obligations under Section 5 shall also remain in
effect. If the purchase of the U.S. Securities by the Underwriters is not
consummated for any reason other than solely because of the termination of this
Agreement pursuant to Section 8 or the occurrence of any event specified in
clause (iii), (iv) or (v) of Section 6(f), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the U.S.
Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representatives, c/o CS First Boston Corporation, Park Avenue Plaza, New
York, N.Y. 10055, Attention: Investment Banking Department--Transactions
Advisory Group, or, if sent to the Company or the Selling Stockholders, will be
mailed, delivered or telegraphed and confirmed to it at Canandaigua Wine
Company, Inc., 116 Buffalo Street, Canandaigua, New York 14424, Attention:
Robert Sands; provided, however, that any notice to an Underwriter pursuant to
Section 7 will be mailed, delivered or telegraphed and confirmed to such
Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives
and successors and the officers and directors and controlling persons referred
to in Section 7, and no other person will have any right or obligation
hereunder.
12. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives jointly or by
CS First Boston Corporation will be binding upon all the Underwriters. Richard
Sands and/or Robert Sands as attorneys-in-fact will act for the Selling
Stockholders in connection with
-40-
such transactions, and any action under or in respect of this Agreement taken by
Richard Sands and/or Robert Sands will be binding upon all the Selling
Stockholders.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
The Company and the Selling Stockholders hereby submit to the non-
exclusive jurisdiction of the Federal and state courts in the Borough of
Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
-41-
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Selling Stockholders, the Company and the several Underwriters in accordance
with its terms.
Very truly yours,
CANANDAIGUA WINE COMPANY, INC.
By: ________________________________
Name:
Title:
THE SELLING STOCKHOLDERS NAMED
IN SCHEDULE B ATTACHED HERETO
By: ________________________________
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
CS FIRST BOSTON CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
WILLIAM BLAIR & COMPANY
CHASE SECURITIES, INC.
Acting on behalf of themselves and as
the Representatives of the several
Underwriters.
By CS FIRST BOSTON CORPORATION
By: ____________________________
Name:
Title:
-42-
SCHEDULE A
Number of U.S.
Firm Securities to
Underwriter be Purchased
------------------
CS First Boston Corporation.............
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................
William Blair & Company.................
Chase Securities, Inc. .................
---------
Total................................... 3,150,195
=========
SCHEDULE B
Number of
U.S. Firm Securities
Selling Stockholder to be Sold
- ------------------- --------------------
Alexander L. Berk................................. 1,881
Mandell L. and Madeleine H. Berman................ 7,918
Arthur Brody...................................... 35,289
Centre Capital Investors, L.P. ................... 32,230
Michael P.H. Cliff................................ 11,849
Chrysler Capital Corporation...................... 1,825
Michael J. Doyle.................................. 2,073
Byron and Dorothy Gerson.......................... 7,458
Roger Gimbel...................................... 1,876
Edward L. Golden.................................. 16,850
Norman R. Goldstein............................... 12,301
Ellis M. Goodman.................................. 140,864
Margaret J. Gramble.............................. 126
Bernard Grobman................................... 1,876
William F. Hackett................................ 8,800
Donald S. and Darrell L. Hirsch, as Trustees of
the Donald S. and Darrell Lynn Hirsch
Family Living Trust........................ 2,458
Household Commercial of California, Inc. ......... 116,660
Frank A. Jerant................................... 1,945
Hugh Kennedy...................................... 1,491
John M. Kent...................................... 2,407
Edwin W. Macrae................................... 1,390
Fred R. Mardell................................... 48,000
Thomas A. Medley.................................. 962
Harry Mekow....................................... 2,246
Merrill Lynch, Pierce, Fenner & Smith
Custodian FBO Michael P.H. Cliff........... 713
Stephen M. Neumer, as Trustee of the Goodman Gift
Trust FBO Sara Goodman..................... 54,425
Stephen M. Neumer, as Trustee of Goodman Gift
Trust FBO Paul Goodman..................... 54,425
Raymond E. Powers................................. 2,400
Norman P. Rappaport............................... 18,201
Helene Reinlieb................................... 2,528
Estate of Manny Reinlieb.......................... 2,528
Rothschild Trust (Schweiz) AG and Rothschild Trust
Cayman Limited, as Trustees of the Harry and
Judith Solomon 1986 Own Settlement........... 27,658
Rothschild Trust (Schweiz) AG and Rothschild Trust
Cayman Limited, as Trustees of the Harry and
Judith Solomon 1986 No. III Children's
Settlement................................... 27,658
Irving Russo...................................... 2,778
Herbert H. Schiff................................. 4,862
Gary J. Schlem.................................... 126
Paul M. Schlem.................................... 36,907
J.E. Seagram Corp................................. 669
Joseph E. Seagram & Sons, Inc..................... 22,082
Smith Barney as IRA Custodian for Michael J. Doyle 303
Spectrum Associates............................... 7,918
The Tyssen Trust................................. 8,269
Vintners Associates, Inc. ........................ 10,706
Marvin Weisenfeld................................. 1,207
William Zheutlin.................................. 3,057
-------
Total............................................. 750,195