EX-99.6
SUBSCRIPTION AGENT AGREEMENT
This Subscription Agent Agreement (the "Agreement") is made as of
October 9, 2001 between The Chalone Wine Group, Ltd. (the "Company") and
EquiServe Trust Company, N.A., as subscription agent (the "Agent"). All terms
not defined herein shall have the meaning given in the prospectus (the
"Prospectus") included in the Registration Statement on Form S-3 (File No.
333-69470) filed by the Company with the Securities and Exchange Commission on
September 14, 2001, as amended by any amendment filed with respect thereto (the
"Registration Statement").
WHEREAS, the Company proposes to make a subscription offer by issuing
certificates or other evidences of subscription rights, in the form designated
by the Company (the "Subscription Certificates") to shareholders of record (the
"Shareholders") of its Common Stock, ("Common Stock"), as of a record date
specified by the Company (the "Record Date"), pursuant to which each Shareholder
will have certain rights (the "Rights") to subscribe for shares of Common Stock,
as described in and upon such terms as are set forth in the Prospectus, a final
copy of which has been or, upon availability will promptly be, delivered to the
Agent; and
WHEREAS, the Company wishes the Agent to perform certain acts on behalf
of the Company, and the Agent is willing to so act, in connection with the
distribution of the Subscription Certificates and the issuance and exercise of
the Rights to subscribe therein set forth, all upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements set forth herein, the parties agree as follows:
1. APPOINTMENT. The Company hereby appoints the Agent to act as
subscription agent in connection with the distribution of Subscription
Certificates and the issuance and exercise of the Rights in accordance with the
terms set forth in this Agreement and the Agent hereby accepts such appointment.
2. FORM AND EXECUTION OF SUBSCRIPTION CERTIFICATES.
(a) Each Subscription Certificate shall be irrevocable and
non-transferable. The Agent shall, in its capacity as Transfer Agent of the
Company, maintain a register of Subscription Certificates and the holders of
record thereof (each of whom shall be deemed a "Shareholder" hereunder for
purposes of determining the rights of holders of Subscription Certificates).
Each Subscription Certificate shall, subject to the provisions thereof, entitle
the Shareholder in whose name it is recorded to the following:
(1) With respect to Record Date Shareholders only, the right
to acquire during the Subscription Period, as defined in the Prospectus, at the
Subscription Price, as defined in the Prospectus, a number of shares of Common
Stock equal to one share of Common Stock for every one Right (the "Primary
Subscription Right"); and
EX-99.6
(2) With respect to Record Date Shareholders only, the right
to subscribe for additional shares of Common Stock, subject to the availability
of such shares and to the allotment of such shares as may be available among
Record Date Shareholders who exercise Over-Subscription Rights on the basis
specified in the Prospectus; provided, however, that such Record Date
Shareholder has exercised all Primary Subscription Rights issued to him or her
(the "Over-Subscription Privilege").
3. RIGHTS AND ISSUANCE OF SUBSCRIPTION CERTIFICATES.
(a) Each Subscription Certificate shall evidence the Rights of the
Shareholder therein named to purchase Common Stock upon the terms and conditions
therein and herein set forth.
(b) Upon the written advice of the Company, signed by any of its duly
authorized officers, as to the Record Date, the Agent shall, from a list of the
Company Shareholders as of the Record Date to be prepared by the Agent in its
capacity as Transfer Agent of the Company, prepare and record Subscription
Certificates in the names of the Shareholders, setting forth the number of
Rights to subscribe for the Company's Common Stock calculated on the basis of
one Right for every 5.8375077 shares of Common Stock recorded on the books in
the name of each such Shareholder as of the Record Date. The number of Rights
that are issued to Record Date Shareholders will be rounded down by the Agent,
to the nearest number of Full Rights as Fractional Rights will not be issued.
Each Subscription Certificate shall be dated as of the Record Date and shall be
executed manually or by facsimile signature of a duly authorized officer of the
Subscription Agent. Upon the written advice, signed as aforesaid, as to the
effective date of the Registration Statement, the Agent shall promptly
countersign and deliver the Subscription Certificates, together with a copy of
the Prospectus, instruction letter and any other document as the Company deems
necessary or appropriate, to all Shareholders with record addresses in the
United States (including its territories and possessions and the District of
Columbia). Delivery shall be by first class mail (without registration or
insurance), except for those Shareholders having a registered address outside
the United States (who will only receive copies of the Prospectus, instruction
letter and other documents as the Company deems necessary or appropriate, if
any), delivery shall be by air mail (without registration or insurance) and by
first class mail (without registration or insurance) to those Shareholders
having APO or FPO addresses. No Subscription Certificate shall be valid for any
purpose unless so executed.
(c) The Agent will mail a copy of the Prospectus, instruction letter, a
special notice and other documents as the Company deems necessary or
appropriate, if any, but not Subscription Certificates (unless so directed by
the Company) to Record Date Shareholders whose record addresses are outside the
United States (including its territories and possessions and the District of
Columbia ) ("Foreign Record Date Shareholders"). The Rights to which such
Subscription Certificates relate will be held by the Agent for such Foreign
Record Date Shareholders' accounts until instructions are received to exercise,
sell or transfer the Rights.
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EX-99.6
4. EXERCISE.
(a) Record Date Shareholders may acquire shares of Common Stock on
Primary Subscription and pursuant to the Over-Subscription Privilege by delivery
to the Agent as specified in the Prospectus of (i) the Subscription Certificate
with respect thereto, duly executed by such Shareholder in accordance with and
as provided by the terms and conditions of the Subscription Certificate,
together with (ii) the estimated purchase price, as disclosed in the Prospectus,
for each share of Common Stock subscribed for by exercise of such Rights, in
U.S. dollars by money order or check drawn on a bank in the United States, in
each case payable to the order of the Company or the Agent.
(b) Rights may be exercised at any time after the date of issuance of
the Subscription Certificates with respect thereto but no later than 5:00 P.M.
New York City time on such date as the Company shall designate to the Agent in
writing (the "Expiration Date"). For the purpose of determining the time of the
exercise of any Rights, delivery of any material to the Agent shall be deemed to
occur when such materials are received at the Shareholder Services Division of
the Agent specified in the Prospectus.
(c) Notwithstanding the provisions of Section 4 (a) and 4 (b) regarding
delivery of an executed Subscription Certificate to the Agent prior to 5:00 P.M.
New York City time on the Expiration Date, if prior to such time, with respect
to any Record Date Shareholder, the Agent receives a Notice of Guaranteed
Delivery by facsimile (telecopy) or otherwise from a bank, a trust company or a
New York Stock Exchange member and payment of the full Subscription Price for
the shares of Common Stock subscribed for on Primary Subscription and any
additional shares of Common Stock subscribed for pursuant to the
Over-Subscription Privilege, guaranteeing delivery of a properly completed and
executed Subscription Certificate, then such exercise of Primary Subscription
Rights and Over-Subscription Rights shall be regarded as timely, subject,
however, to receipt of the duly executed Subscription Certificate by the Agent
within three Business Days (as defined below) after the Expiration Date. For the
purposes of the Prospectus and this Agreement, "Business Day" shall mean any day
on which trading is conducted on the New York Stock Exchange.
(d) Any excess payment to be refunded by the Company to a shareholder
will be mailed by the Agent as soon as practicable after the Expiration Date
(the "Confirm Date").
5. VALIDITY OF SUBSCRIPTIONS. Irregular subscriptions not otherwise
covered by specific instructions herein shall be submitted to an appropriate
officer of the Company and handled in accordance with his or her instructions.
Such instructions will be documented by the Agent indicating the instructing
officer and the date thereof.
6. OVER-SUBSCRIPTION. If, after allocation of shares of Common Stock to
Record Date Shareholders, there remain unexercised Rights, then the Agent shall
allot the shares issuable upon exercise of such unexercised Rights (the
"Remaining Shares") to shareholders who have exercised all the Rights initially
issued to them and who wish to acquire more than the number of shares for which
the Rights issued to them are exercisable. Shares subscribed for pursuant to the
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EX-99.6
Over-Subscription Privilege will be allocated in the amounts of such
over-subscriptions. If the number of shares for which the Over-Subscription
Privilege has been exercised is greater than the Remaining Shares, the Agent
shall allocate the Remaining Shares to Record Date Shareholders exercising
Over-Subscription Privilege based on the number of shares of Common Stock each
Record Date Shareholder exercising his or her Over-Subscription Privilege
purchased pursuant to his or her Primary Subscription; provided, however, that
the Agent will not allocate more shares to a Record Date Shareholder than such
Record Date Holder has actually subscribed and paid for. The percentage of
Remaining Shares each over-subscribing Record Date Shareholder or other Rights
holder may acquire will be rounded down to result in delivery of whole shares of
Common Stock. The Agent shall advise the Company immediately upon the completion
of the allocation set forth above as to the total number of shares subscribed
and distributable.
7. DELIVERY OF CERTIFICATES. The Agent will deliver certificates
representing those shares of Common Stock purchased pursuant to exercise of
Primary Subscription Rights and the Over-Subscription Privilege on the Confirm
Date.
8. HOLDING PROCEEDS OF RIGHTS OFFERING
(a) All proceeds received by the Agent from Shareholders in respect of
the exercise of Rights shall be held by the Agent, on behalf of the Company, in
a segregated account (the "Account"). No interest shall accrue to the Company or
shareholders on funds held in the Account pending disbursement in the manner
described in Section 4(d) above.
(b) The Agent shall deliver all proceeds received in respect of the
exercise of Rights to the Company as promptly as practicable, but in no event
later than five business days after the Confirmation Date.
9. REPORTS.
(a) Daily, during the period commencing on October 22, 2001, until
termination of the Subscription Period, the Agent will report by telephone or
telecopier, confirmed by letter, to an Officer of the Company, data regarding
Rights exercised, the total number of shares of Common Stock subscribed for, and
payments received therefor, bringing forward the figures from the previous day's
report in each case so as to show the cumulative totals and any such other
information as may be mutually determined by the Company and the Agent.
10. LOSS OR MUTILATION. If any Subscription Certificate is lost, stolen,
mutilated or destroyed, the Agent may, on such terms which will indemnify and
protect the Company and the Agent as the Agent may in its discretion impose
(which shall, in the case of a mutilated Subscription Certificate include the
surrender and cancellation thereof), issue a new Subscription Certificate of
like denomination in substitution for the Subscription Certificate so lost,
stolen, mutilated or destroyed.
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EX-99.6
11. COMPENSATION FOR SERVICES. The Company agrees to pay to the Agent
compensation for its services as such in accordance with its Fee Schedule to act
as Agent, dated September 9, 2001 and attached hereto as Exhibit A. The Company
further agrees that it will reimburse the Agent for its reasonable out-of-pocket
expenses incurred in the performance of its duties as such.
12. INSTRUCTIONS AND INDEMNIFICATION. The Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions:
(a) The Agent shall be entitled to rely upon any instructions or
directions furnished to it by an appropriate officer of the Company, whether in
conformity with the provisions of this Agreement or constituting a modification
hereof or a supplement hereto. Without limiting the generality of the foregoing
or any other provision of this Agreement, the Agent, in connection with its
duties hereunder, shall not be under any duty or obligation to inquire into the
validity or invalidity or authority or lack thereof of any instruction or
direction from an officer of the Company which conforms to the applicable
requirements of this Agreement and which the Agent reasonably believes to be
genuine and shall not be liable for any delays, errors or loss of data occurring
by reason of circumstances beyond the Agent's control.
(b) The Company will indemnify the Agent and its nominees against, and
hold it harmless from, all liability which may arise out of or in connection
with the services described in this Agreement or the instructions or directions
furnished to the Agent relating to this Agreement by an appropriate officer of
the Company, except for any liability which shall arise out of the negligence,
bad faith or willful misconduct of the Agent or such nominees.
13. CHANGES IN SUBSCRIPTION CERTIFICATE. The Agent may, without the consent
or concurrence of the Shareholders in whose names Subscription Certificates are
registered, by supplemental agreement or otherwise, concur with the Company in
making any changes or corrections in a Subscription Certificate that it shall
have been advised by counsel (who may be counsel for the Company) is appropriate
to cure any ambiguity or to correct any defective or inconsistent provision or
clerical omission or mistake or manifest error therein or herein contained, and
which shall not be inconsistent with the provision of the Subscription
Certificate except insofar as any such change may confer additional rights upon
the Shareholders.
14. ASSIGNMENT, DELEGATION.
(a) Except as provided in Section 14(c) below, neither this Agreement
nor any rights or obligations hereunder may be assigned or delegated by either
party without the written consent of the other party.
(b) This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns. Nothing in
this Agreement is intended or shall be construed to confer upon any other person
any right, remedy or claim or to impose upon any other person any duty,
liability or obligation.
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EX-99.6
(c) The Agent may, without further consent on the part of the Company,
(i) subcontract for the performance hereof with EquiServe Limited Partnership or
(ii) subcontract with other subcontractors for systems, processing, and
telephone and mailing services as may be required from time to time; provided,
however, that the Agent shall be as fully responsible to the Company for the
acts and omissions of any subcontractor as it is for its own acts and omissions.
15. GOVERNING LAW. The validity, interpretation and performance of this
Agreement shall be governed by the law of the Commonwealth of Massachusetts.
16. THIRD PARTY BENEFICIARIES. This Agreement does not constitute an
agreement for a partnership or joint venture between the Agent and the Company.
Neither party shall make any commitments with third parties that are binding on
the other party without the other party's prior written consent.
17. FORCE MAJEURE. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
or damage reasonably beyond its control, or other cause reasonably beyond its
control, such party shall not be liabile for damages to the other for any
damages resulting from such failure to perform or otherwise from such causes.
Performance under this Agreement shall resume when the affected party or parties
are able to perform substantially that party's duties.
18. CONSEQUENTIAL DAMAGES. Neither party to this Agreement shall be liable
to the other party for any consequential, indirect, special or incidental
damages under any provisions of this Agreement or for any consequential,
indirect, special or incidential damages arising out of any act or failure to
act hereunder even if that party has been advised of or has foreseen the
possibility of such damages.
19. SEVERABILITY. If any provision of this Agreement shall be held
invalid, unlawful, or unenforceable, the valididty, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired.
20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
21. CAPTIONS. The captions and descriptive headings herein are for the
convenience of the parties only. They do not in any way modify, amplify, alter
or give full notice of the provisions hereof.
22. FACSIMILE SIGNATURES. Any facsimile signature of any party hereto
shall constitute a legal, valid and binding execution hereof by such party.
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EX-99.6
23. CONFIDENTIALITY. The Agent and the Company agree that all books,
records, informtion and data pertaining to the business of the other party which
are exchanged or received pursuant to the negotiation or the carrying out of
this Agreement including the fees for services set forth in the attached
schedule shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
24. TERM. This Agreement shall remain in effect until terminated on
December 31, 2001 (the "Termination Date") or, prior to the Termination Date,
upon 30 days' written notice by either party to the other. Upon termination of
the Agreement, the Exchange Agent shall retain all canceled Certificates and
related documentation as required by applicable law.
25. MERGER OF AGREEMENT. This Agreement, including Exhibit A hereto,
constitutes the entire agreement between the parties hereto and supercedes any
prior agreement with respect to the subject matter hereof whether oral or
written.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, as of the day
and year first above written.
EQUISERVE TRUST COMPANY, N.A. THE CHALONE WINE GROUP, LTD.
/s/ Laurie Trickett /s/ Shawn Conroy Blom
--------------------------------- -----------------------------------------
Signature Signature
Director-Corp. Actions Vice President & Chief Financial Offier
--------------------------------- -----------------------------------------
Title Title
October 9, 2001 October 9, 2001
--------------------------------- -----------------------------------------
Date Date
7
EX--A of EX-99.6
[LOGO]
EQUISERVE TRUST COMPANY, N.A.
PROPOSAL
TO SERVE AS
SUBSCRIPTION AGENT FOR
CHALONE WINE GROUP
A. FEES FOR SERVICES *
===================================================================================================
$ 10,000.00 Project Management Fee
$ 2.00 Per subscription form issued and mailed
$ 9.50 Per subscription form processed (registered and beneficial)
$ 15.00 Per defective subscription form received
$ 15.00 Per notice of guaranteed delivery received
$ 1.75 Per refund check issued and mailed (if applicable)
$ 50.00 Per incoming wire
$ 3,000.00 Per offer extension
$ 5,000.00 Minimum charge should the project be canceled for any reason
prior to the mailing of the subscription form
===================================================================================================
*EXCLUDES OUT-OF-POCKET EXPENSES AS DESCRIBED IN SECTION C, "ITEMS NOT COVERED"
B. SERVICES COVERED
o Designating an operational team to carry out Subscription
Agent duties, including document review and execution of legal
agreement, review of subscription form and communication
materials, project management, and on-going project updates
and reporting
o Calculating Rights to be distributed to each shareholder and
printing shareholder information on the subscription form
o Issuing and mailing subscription forms to registered
shareholders
o Tracking and reporting the number of exercises made, as
required
o Processing Rights received and exercised o Deposit participant
checks daily and forward all participant funds to CHALONE WINE
Group at the end of the offering period
o Providing receipt summation of checks received
o Affixing legends to appropriate stock certificates, where
applicable
o Issuing and mailing stock certificates and/or checks
o Interfacing with the Information Agent
o Calculating, issuing and mailing of proration and/or
over-subscription checks if applicable
EX--A of EX-99.6
o Calculating, issuing and mailing of solicitation checks if
applicable
C. ITEMS NOT COVERED
o Items not specified in the "Services Covered" section set
forth in this Agreement, including any services associated
with new duties, legislation or regulatory fiat which become
effective after the date of this Agreement (these will be
provided on an appraisal basis)
o All out-of-pocket expenses such as telephone line charges,
overprinting, certificates, checks, postage, stationery, wire
transfers, and excess material disposal (these will be billed
as incurred)
o Reasonable legal review fees if referred to outside counsel
o Overtime charges assessed in the event of late delivery of
material for mailings unless the target mail date is
rescheduled
D. ASSUMPTIONS
o Proposal based upon document review and information known at
this time about the transaction.
o Significant changes made in the terms or requirements of this
transaction could require modifications to this proposal
o Proposal must be executed prior to the initial mailing
o Company responsible for printing of materials(Rights Card,
Prospectus and ancillary documents)
o Material to be mailed to shareholders must be received no less
than five (5) business days prior to the start of the mailing
project
o No interest shall accrue to the company or the shareholders
o This proposal is valid for sixty (60) days
E. PAYMENT FOR SERVICES
The Project Management Fee will be rendered and payable on the
effective date of the transaction. An invoice for any out-of-pockets
and per item fees realized will be rendered and payable on a monthly
basis, except for postage expenses in excess of $5,000. Funds for such
mailing expenses must be received one (1) business day prior to the
scheduled mailing date.
EQUISERVE TRUST COMPANY, N.A. CHALONE WINE GROUP
By: /s/ Erik Schwendenman By: /s/ Shawn Conroy Blom
----------------------------------- ----------------------------
Erik Schwendenman Shawn Conroy Blom
Title: Director, Business Development Title: Vice President and Chief
------------------------------- Financial Offier
-------------------------
Date: 9/9/01 Date: 9/9/01
-------------------------------- --------------------------