EXHIBIT 2.13
CONFORMED COPY
================================================================================
INCORPORACAO AGREEMENT
dated as of
March 3, 2004
among
COMPANHIA DE BEBIDAS DAS AMERICAS - AMBEV,
INTERBREW S.A.,
LABATT BREWING CANADA HOLDING LTD.
and
LABATT BREWING COMPANY LIMITED
================================================================================
TABLE OF CONTENTS
ARTICLE I
The Incorporacao
SECTION 1.01. The Incorporacao..............................................1
SECTION 1.02. Labatt Restructuring..........................................3
SECTION 1.03. Closing Date..................................................4
SECTION 1.04. Transactions to be Effected at or after the Closing...........4
SECTION 1.05. Provisions relating to the Femsa Cerveza Interest and
Labatt USA....................................................5
ARTICLE II
Representations and Warranties Relating to AmBev and the AmBev Shares
SECTION 2.01. Organization, Standing and Power..............................7
SECTION 2.02. Capital Stock of AmBev and its Subsidiaries...................7
SECTION 2.03. Authority; Execution and Delivery; and Enforceability.........8
SECTION 2.04. No Conflicts..................................................8
SECTION 2.05. Consents......................................................9
SECTION 2.06. The AmBev Shares..............................................9
SECTION 2.07. Securities Act................................................9
SECTION 2.08. Private Offering.............................................10
SECTION 2.09. SEC Documents................................................10
SECTION 2.10. Absence of Certain Changes and Events........................11
SECTION 2.11. Brokers or Finders...........................................12
ARTICLE III
Representations and Warranties of Interbrew and Mergeco
SECTION 3.01. Organization, Standing and Power.............................12
SECTION 3.02. Capital Stock of Mergeco; Capital Stock of Labatt Holdco;
Labatt Holdco Shares; Mergeco..............................12
SECTION 3.03. Authority; Execution and Delivery; and Enforceability........14
SECTION 3.04. No Conflicts.................................................14
SECTION 3.05. Consents.....................................................15
SECTION 3.06. The Labatt Holdco Shares; the Remaining Share................15
SECTION 3.07. The Labatt Shares............................................15
SECTION 3.08. Securities Act...............................................16
SECTION 3.09. Private Offering.............................................16
SECTION 3.10. Brokers or Finders...........................................16
ii
ARTICLE IV
Representations and Warranties Relating to Labatt
SECTION 4.01. Organization and Standing; Books and Records.................16
SECTION 4.02. Capital Stock of Labatt and the Labatt Subsidiaries..........17
SECTION 4.03. Authority; Execution and Delivery; Enforceability............18
SECTION 4.04. No Conflicts.................................................18
SECTION 4.05. Consents.....................................................19
SECTION 4.06. Labatt Financial Statements..................................19
SECTION 4.07. Assets Other than Real Property Interests....................21
SECTION 4.08. Real Property................................................21
SECTION 4.09. Intellectual Property........................................22
SECTION 4.10. Contracts....................................................23
SECTION 4.11. Labatt Permits...............................................25
SECTION 4.12. Insurance....................................................25
SECTION 4.13. Taxes........................................................26
SECTION 4.14. Proceedings..................................................27
SECTION 4.15. Compensation and Benefit Plans...............................28
SECTION 4.16. Absence of Changes or Events.................................31
SECTION 4.17. Compliance with Applicable Laws..............................32
SECTION 4.18. Employee and Labor Matters...................................33
SECTION 4.19. Sufficiency of Assets........................................34
SECTION 4.20. Private Offering.............................................34
ARTICLE V
Covenants
SECTION 5.01. Covenants Relating to Conduct of Business of AmBev,
Interbrew and Mergeco......................................34
SECTION 5.02. Covenants Relating to Conduct of Business of Labatt..........35
SECTION 5.03. No Solicitation..............................................38
SECTION 5.04. Access to Information........................................39
SECTION 5.05. Confidentiality..............................................39
SECTION 5.06. Reasonable Best Efforts; Post-Closing Cooperation............40
SECTION 5.07. Expenses; Transfer Taxes.....................................41
SECTION 5.08. Publicity....................................................41
SECTION 5.09. Further Assurances...........................................41
SECTION 5.10. Transfer Restrictions........................................42
SECTION 5.11. Letter Agreement.............................................42
SECTION 5.12. Net Debt as of Closing.......................................42
SECTION 5.13. Inactive Subsidiaries........................................42
SECTION 5.14. Modification of Economic Value Appraisal.....................43
iii
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to each Party's Obligation........................43
SECTION 6.02. Conditions to Obligation of Interbrew and Mergeco............44
SECTION 6.03. Conditions to Obligation of AmBev............................45
SECTION 6.04. Postponement of Closing......................................46
SECTION 6.05. Frustration of Closing Conditions............................47
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination..................................................47
SECTION 7.02. Effect of Termination........................................47
SECTION 7.03. Amendments and Waivers.......................................48
ARTICLE VIII
Indemnification
SECTION 8.01. Indemnification of AmBev Indemnitees.........................48
SECTION 8.02. Calculation of Losses........................................49
SECTION 8.03. Termination of Indemnification...............................50
SECTION 8.04. Procedures...................................................50
SECTION 8.05. Indemnification of Interbrew Indemnitees.....................51
SECTION 8.06. Calculation of Losses........................................52
SECTION 8.07. Termination of Indemnification...............................53
SECTION 8.08. Procedures...................................................53
SECTION 8.09. Survival.....................................................54
SECTION 8.10. Pension Exclusions...........................................55
ARTICLE IX
General Provisions
SECTION 9.01. Assignment...................................................55
SECTION 9.02. No Third-Party Beneficiaries.................................56
SECTION 9.03. Attorney Fees................................................56
SECTION 9.04. Notices......................................................56
SECTION 9.05. Interpretation; Exhibits; Disclosure Schedules and
Schedules; Certain Definitions.............................58
SECTION 9.06. Counterparts.................................................64
SECTION 9.07. Entire Agreement.............................................64
SECTION 9.08. Severability.................................................64
SECTION 9.09. Arbitration..................................................65
iv
SECTION 9.10. Governing Law................................................66
EXHIBITS
Exhibit 1.01(b)(i)(A) Form of Protocol of Incorporacao
Exhibit 1.01(b)(i)(B) Form of Proposta
INCORPORACAO AGREEMENT (this "Agreement") dated as of
March 3, 2004, among COMPANHIA DE BEBIDAS DAS AMERICAS -
AMBEV, a corporation organized under the laws of the
Federative Republic of Brazil ("AmBev"), INTERBREW S.A., a
public limited liability company organized under the laws
of Kingdom of Belgium ("Interbrew"), LABATT BREWING CANADA
HOLDING LTD., a company organized under the laws of the
Bahamas and a wholly owned subsidiary of Interbrew
("Mergeco"), and LABATT BREWING COMPANY LIMITED, a
corporation organized under the federal laws of Canada
("Labatt").
WHEREAS Interbrew and certain other parties have entered into a
Contribution and Subscription Agreement (the "Contribution and Subscription
Agreement") dated the date hereof;
WHEREAS the Board of Directors of Interbrew, the Board of Directors
of Mergeco, the Board of Directors of Labatt and the Board of Directors of
AmBev have approved this Agreement and the transactions contemplated hereby,
including the Incorporacao, upon the terms and subject to the conditions set
forth herein, and have determined that the Incorporacao is in the best
interests of each of their respective companies; and
WHEREAS certain terms used in this Agreement are defined in Section
9.05(b), and all other capitalized terms used herein and not otherwise defined
have the meanings assigned to them in the Contribution and Subscription
Agreement.
Accordingly, the parties hereby agree as follows:
ARTICLE I
The Incorporacao
SECTION 1.01. The Incorporacao. (a) (i) On the terms and subject
to the conditions of this Agreement and in accordance with Brazilian Corporate
Law and the Protocol of Incorporacao, at the Effective Time, Mergeco shall be
merged into AmBev by means of an Incorporacao as defined in Article 227 of
Brazilian Corporate Law (the "Incorporacao"), whereupon AmBev shall continue
as the surviving corporation and the corporate existence of Mergeco shall
cease. From and after the Effective Time, the Incorporacao shall have the
effects provided under Brazilian Corporate Law and the Protocol of
Incorporacao, and AmBev shall, as the surviving corporation of the
Incorporacao, possess all the rights, powers, privileges and franchises, and
be subject and successor to all of the obligations, liabilities and
restrictions of Mergeco.
(ii) Subject to the provisions of this Agreement, Interbrew, Mergeco
and AmBev shall cause the Incorporacao to be consummated by preparing the
Protocol of Incorporacao (which shall be executed by the executive
officers of
2
AmBev and the executive officers of Mergeco), the Proposta
and other necessary or advisable documents complying with Brazilian
Corporate Law and submitting such documents, as may be necessary or
advisable, to the approval of the respective shareholders of AmBev and of
Mergeco. The Incorporacao shall become effective at such time as the
Incorporacao is approved at the Second Extraordinary Shareholders Meeting
(the time the Incorporacao becomes effective being referred to herein as
the "Effective Time"). At the Effective Time, by virtue of the
Incorporacao, the shareholders of Mergeco shall receive 9,532,468,614
newly issued common shares of AmBev (the "AmBev Common Shares") and
13,812,648,539 newly issued preferred shares of AmBev (the "AmBev
Preferred Shares" and such AmBev Common Shares and AmBev Preferred
Shares, as may be adjusted pursuant to Section 1.05, the "AmBev Shares"),
which will be subscribed to by the executive officers of Mergeco, on
behalf of the shareholders of Mergeco, and be deemed to be paid with
Mergeco's net worth. For purposes of the Incorporacao and in connection
with the issuance of the AmBev Shares, Mergeco's net worth as of the
Reference Date shall be valued assuming that Mergeco owns the Labatt
Holdco Shares and Labatt Holdco owns the Labatt Shares as of the
Reference Date, and the AmBev Shares shall be issued pursuant to a ratio
approved by the respective shareholders of AmBev and of Mergeco based on
the Economic Valuation Report. The reference date (the "Reference Date")
for the Net Worth Appraisal shall be a date proposed by the Board of
Directors of AmBev and the Board of Directors of Mergeco and approved by
shareholders of AmBev and Mergeco pursuant to the Brazil Merger
Documentation.
(b) Transactions related to the Consummation of the Incorporacao.
For purposes of consummating the Incorporacao, prior to the Closing:
(i) the executive officers and the Board of Directors of Mergeco and
the executive officers and the Board of Directors of AmBev shall cause to
be prepared and execute (A) a protocol concerning the Incorporacao (the
"Protocol of Incorporacao") pursuant to Brazilian Corporate Law,
substantially in the form of Exhibit 1.01(b)(i)(A), and (B) a proposal
and justification regarding the Incorporacao (the "Proposta" and,
together with the Protocol of Incorporacao, the "Brazil Merger
Documentation") pursuant to Brazilian Corporate Law, substantially in the
form of Exhibit 1.01(b)(i)(B);
(ii) Interbrew shall cause Interbrew International B.V. ("IIBV"), a
corporation organized under the laws of the Netherlands, a direct or
indirect wholly owned subsidiary of Interbrew and the sole holder of all
the issued and outstanding capital stock of Mergeco (the "Mergeco
Shares"), to (A) approve the Incorporacao pursuant to Bahamas Corporate
Law and (B) authorize the executive officers of Mergeco to take all
actions necessary or advisable in connection with the Incorporacao,
including the subscription to the AmBev Shares in connection with the
Incorporacao;
3
(iii) AmBev shall cause to be prepared and delivered to the Board of
Directors of AmBev and Interbrew (A) prior to the date hereof, a
valuation report (the "Economic Valuation Report") based on which the
executive officers and the Board of Directors of AmBev shall propose the
exchange ratio between the Mergeco Shares and the AmBev Shares and (B)
prior to the Second Extraordinary Shareholders Meeting, an appraisal
report (the "Net Worth Appraisal") pursuant to Article 226 of Brazilian
Corporate Law relating to the net worth of Mergeco;
(iv) an extraordinary meeting of the shareholders of AmBev (the
"First Extraordinary Shareholders Meeting") shall be held at the earliest
date permitted by Applicable Law and the by-laws of AmBev for the purpose
of (A) approving the Brazil Merger Documentation, including the Exchange
Ratio and (B) appointing APSIS Consultoria Empresarial S/C Ltda., or
another appraiser reasonably satisfactory to AmBev, for the preparation
of the Net Worth Appraisal and approving any fees payable to such
appraiser;
(v) Interbrew and Mergeco shall, and shall cause Labatt to, prepare
an audited pro forma balance sheet and audited statements of earnings,
deficit and cash flows of Mergeco, dated as of and for the year ended the
Reference Date, reconciled to Brazilian GAAP, in accordance with
Brazilian Corporate Law and Brazilian securities laws and regulations,
which will be relied on for purposes of the Net Worth Appraisal and for
presentation to the Second Extraordinary Shareholders Meeting;
(vi) AmBev shall prepare the disclosure material in connection with
the Incorporacao required by Regulation No. 319 of the Brazilian
Securities and Exchange Commission ("CVM"), cause such disclosure
material to be published in the form required by Brazilian Corporate Law
and submit it to the CVM and the Sao Paulo Stock Exchange for their
information and for filing;
(vii) promptly after the First Extraordinary Shareholders Meeting,
AmBev shall file the minutes thereof with the Sao Paulo Registry of
Commerce, the New York Stock Exchange, the Sao Paulo Stock Exchange, the
CVM and the SEC; and
(viii) AmBev shall use its reasonable best efforts to obtain, and
Interbrew shall cooperate and assist AmBev in obtaining, the approvals of
the Brazilian Central Bank of (A) the acquisition of the Labatt Holdco
Shares by AmBev and (B) the issuance and delivery of the AmBev Shares to
IIBV as a result of the Incorporacao, each in the manner contemplated by
this Agreement (such approvals, the "Brazilian Central Bank Approval").
SECTION 1.02. Labatt Restructuring. (a) Prior to the Closing,
Interbrew shall cause Labatt and its subsidiaries to undertake a restructuring
in accordance with the restructuring plan attached hereto as Schedule 1.02
(the "Restructuring Plan"), provided that Interbrew and Mergeco shall have the
right to make such changes to the Restructuring Plan as they (with the written
consent of AmBev, such consent not to be unreasonably delayed or withheld)
deem appropriate so long as such changes could not
4
impose on AmBev any tax or other liabilities that could not be imposed on
AmBev under the Restructuring Plan, could not materially delay consummation of
the Closing and could not otherwise adversely affect AmBev or Labatt, subject
to AmBev's waiver of such condition. The "Restructuring" means consummation of
the transactions contemplated by the Restructuring Plan as it may be changed
in accordance with this Section 1.02.
(b) Canada Revenue Certificate. Interbrew shall use its reasonable
efforts to obtain prior to the Closing a certificate issued by the Minister of
National Revenue of Canada under subsection 116(2) of the Act with respect to
the transfer of the Labatt Shares from IIBV to Labatt Holdco, with a
certificate limit that is not less than the cost to Labatt Holdco for Canadian
tax purposes (which shall be equal to the fair market value) of the Labatt
Shares and, if such certificate is obtained prior to the Closing, Interbrew
shall deliver a copy of such certificate to AmBev at Closing. Interbrew shall
indemnify Labatt Holdco (on an after-tax basis) for any Taxes and other
expenses incurred in respect of the failure by Interbrew to deliver to AmBev
at Closing such a certificate (with a certificate limit as described above).
SECTION 1.03. Closing Date. The closing of the Incorporacao (the
"Closing") shall take place at the offices of AmBev, at approximately 10:00
AM, Sao Paulo time, on the day the Second Extraordinary Shareholders Meeting
is held, which shall be on a date as promptly as practicable but no later than
the thirtieth day following the satisfaction (or, to the extent permitted, the
waiver by the parties entitled to the benefits thereof) of the conditions set
forth in Article VI, other than those conditions that by their terms are to be
satisfied at the Closing or at such other time and date as may be mutually
agreed by AmBev and Interbrew, and immediately following the closing of
transactions contemplated by the Contribution and Subscription Agreement. The
date on which the Closing occurs is referred to in this Agreement as the
"Closing Date". Immediately upon the closing of the Contribution and
Subscription contemplated by the Contribution and Subscription Agreement, all
of the conditions set forth in Article VI shall be deemed immediately
satisfied.
SECTION 1.04. Transactions to be Effected at or after the Closing.
(a) At the Closing:
(i) An extraordinary meeting of the shareholders (the "Second
Extraordinary Shareholders Meeting") of AmBev shall be held for the
purpose of (A) approving the Net Worth Appraisal, (B) approving the
Incorporacao and (C) authorizing the issuance of the AmBev Shares in
connection with the Incorporacao and the capital increase resulting
therefrom.
(ii) An executive officer of Mergeco shall subscribe to the AmBev
Shares on behalf of the shareholders of Mergeco, and AmBev shall deliver
to or cause to be delivered to Interbrew (A) a copy of the minutes of the
Second Extraordinary Shareholders Meeting approving the Incorporacao, (B)
evidence of the registration of IIBV as holder of the AmBev Shares in the
share register of
5
AmBev or in any shareholder register or account of
AmBev held by a professional depository of securities, as the case may
be, and (C) such other documents as Interbrew or its counsel may
reasonably request to demonstrate satisfaction of the conditions and
compliance with the covenants set forth in this Agreement.
(iii) AmBev shall enter into two non-cash (symbolic) foreign
exchange agreements with a financial institution authorized to conduct
foreign exchange transactions in Brazil to reflect (A) the acquisition of
the Labatt Holdco Shares by AmBev and (B) the issuance and delivery of
the AmBev Shares to IIBV.
(iv) Interbrew shall deliver or cause to be delivered to AmBev (A)
the share certificate representing the Labatt Shares registered in the
name of Labatt Holdco and evidence of the registration of Labatt Holdco
as holder of the Labatt Shares in the share register of Labatt, (B) upon
approval by the shareholders of AmBev of the Incorporacao at the Second
Extraordinary Shareholders Meeting, the share certificate representing
the Labatt Holdco Shares registered in the name of AmBev and evidence of
the registration of AmBev as holder of the Labatt Holdco Shares in the
share register of Labatt Holdco, and (C) such other documents as AmBev or
its counsel may reasonably request to demonstrate satisfaction of the
conditions and compliance with the covenants set forth in this Agreement.
(b) (i) Promptly after the Closing, AmBev shall file the minutes of
the Second Extraordinary Shareholders Meeting with the Sao Paulo Registry of
Commerce, the New York Stock Exchange, the Sao Paulo Stock Exchange, the CVM
and the SEC, (ii) not more than two (2) Business Days following the Closing,
Interbrew shall deliver, or cause to be delivered, to Companhia Brasileira de
Bebidas ("CBB") the share certificate representing the Remaining Share,
properly endorsed for transfer and accompanied by stock powers duly endorsed
in blank and (iii) within one Business Day following the Closing, AmBev shall
cause to be filed with the Bahamian corporate registry evidence of the
Incorporacao in accordance with Section 78 of the Bahamas Corporate Law.
SECTION 1.05. Provisions relating to the Femsa Cerveza Interest and
Labatt USA. (a) Notwithstanding any other provision of this Agreement, from
the date hereof through the Closing Date, Interbrew and Labatt shall be
permitted to (i) negotiate with Femsa or any of its subsidiaries (A) to sell
the Femsa Cerveza Interest to Femsa or a subsidiary of Femsa (a "Femsa
Party"), (B) to repurchase the approximately 30% minority interest in LF
Holdings I L.L.C., a Delaware limited liability company, and LF Holdings II
L.L.C., a Delaware limited liability company, and (C) to terminate, amend or
restate certain related distribution agreements (clauses (B) and (C) being
collectively referred to herein as the "Labatt USA Restructuring"); (ii) enter
into or cause a subsidiary to approve, execute and deliver definitive
agreement(s) providing for the sale of the Femsa Cerveza Interest to a Femsa
Party or for the Labatt USA Restructuring at such price and upon such terms
and conditions as may be agreed by Interbrew and Labatt, acting in their sole
discretion, on the one hand, and the applicable Femsa Party, on the
6
other hand (such price, the "Femsa Cerveza Price"); (iii) take such actions
and execute such documents, agreements, certificates and other instruments as
may be necessary or desirable in order to consummate the sale of the Femsa
Cerveza Interest to a Femsa Party (a "Femsa Cerveza Exclusion") or the Labatt
USA Restructuring; (iv) consummate prior to Closing all or any portion of the
Femsa Cerveza Exclusion or Labatt USA Restructuring; (v) distribute to
Interbrew or a subsidiary of Interbrew the net proceeds received from a Femsa
Cerveza Exclusion or a Labatt USA Restructuring prior to the Closing (net of
(x) any transaction expenses incurred by Labatt or a Labatt Subsidiary as a
result of a Femsa Cerveza Exclusion or Labatt USA Restructuring and (y) any
Taxes incurred by Labatt or a Labatt Subsidiary as a result of such Femsa
Cerveza Exclusion or Labatt USA Restructuring or as a result of the
distribution of amounts received in respect of a Femsa Cerveza Exclusion or
Labatt USA Restructuring); and (vi) if definitive agreements are entered into
with respect to the Femsa Cerveza Exclusion or Labatt USA Restructuring or the
consent or necessary waivers are received from Femsa and Femsa Cerveza, to
distribute or transfer prior to the Closing the Femsa Cerveza Interest and
Labatt USA, or either of them, to Interbrew or another subsidiary of Interbrew
for fair market value and distribute the net proceeds after paying any Taxes
or expenses. Interbrew and Labatt shall consult with AmBev from time to time
with respect to any discussions held with Femsa regarding any of the foregoing
and, notwithstanding any of the foregoing, shall not enter into any commitment
that would be binding on Labatt or any of the Labatt Subsidiaries after
Closing or that would impose any liability on Labatt or any of the Labatt
Subsidiaries after Closing, in either case without the prior consent of AmBev.
(b) In the event that a Femsa Cerveza Exclusion is consummated, or
the Femsa Cerveza Interest is distributed or transferred to Interbrew or a
subsidiary of Interbrew other than Labatt or any of the Labatt Subsidiaries,
at or prior to the Closing, (i) the AmBev Shares to be issued in the
Incorporacao shall be adjusted by (x) reducing the number of AmBev Common
Shares to be issued pursuant to the Incorporacao by 1,666,286,732 AmBev Common
Shares to 7,866,181,882 and (y) reducing the number of AmBev Preferred Shares
to be issued pursuant to the Incorporacao by 2,414,467,220 AmBev Preferred
Shares to 11,398,181,319 AmBev Preferred Shares and (ii) if it has been
issued, the principal balance of the Femsa Cerveza Promissory Note shall be
repaid in full prior to the Closing. In the event that a Labatt USA
Restructuring is consummated, or Labatt USA is distributed or transferred to
Interbrew or a subsidiary of Interbrew other than Labatt or any of the Labatt
Subsidiaries, at or prior to the Closing, if it has been issued, the Labatt
USA Promissory Note shall be repaid in full prior to the Closing.
ARTICLE II
Representations and Warranties
Relating to AmBev and the AmBev Shares
AmBev represents and warrants as of the date hereof (except to the
extent that any such representation and warranty expressly speaks as of
another date, in which
7
case such representation and warranty shall be as of such other date) to
Interbrew and Mergeco as follows:
SECTION 2.01. Organization, Standing and Power. AmBev is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized. Each subsidiary of AmBev is
a corporation or other legal entity duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is organized (to
the extent recognized by the laws of the jurisdiction in which it is
organized). Each of AmBev and its subsidiaries has full power (corporate or
otherwise) and authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to own, lease or
otherwise hold its properties and assets and to conduct its business as
presently conducted, other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or in the
aggregate, have not had and would not reasonably be expected to have an AmBev
Material Adverse Effect. Each of AmBev and its subsidiaries is duly qualified
and in good standing to do business as a foreign corporation in each
jurisdiction in which the conduct or nature of its business or the ownership,
leasing or holding of its properties makes such qualification necessary,
except such jurisdictions where the failure to be so qualified or in good
standing, individually or in the aggregate, has not had and would not
reasonably be expected to have an AmBev Material Adverse Effect. AmBev has
made available, or will have made available prior to the Closing, to Interbrew
or its counsel true and complete copies of AmBev's by-laws, as amended to
date.
SECTION 2.02. Capital Stock of AmBev and its Subsidiaries. The
authorized capital stock of AmBev consists of 45,000,000,000 (forty-five
billion) common shares and preferred shares, without par value. As of the date
hereof, there are 15,735,878,391 common shares and 22,801,455,371 preferred
shares (including 104,545,599 common shares and 565,740,839 preferred shares
held in treasury) issued and outstanding (the "AmBev Capital Stock"). Except
for the AmBev Capital Stock and as set forth in Schedule 2.02, there are no
shares of capital stock or other equity or voting securities of AmBev issued,
reserved for issuance or outstanding. The AmBev Capital Stock and any other
equity or voting securities of AmBev are duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights, with no personal
liability attaching to ownership thereof and are not subject to and have not
been issued in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of Applicable Law, the by-laws of AmBev or any Contract to which
AmBev is a party or otherwise bound. All the outstanding shares of capital
stock of each subsidiary of AmBev have been duly authorized and validly issued
and are fully paid and nonassessable and free of preemptive rights, with no
personal liability attaching to ownership thereof. Except as set forth on
Schedule 2.02, there are not any bonds, debentures, notes or other
indebtedness of AmBev having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of the AmBev Capital Stock may vote ("Voting AmBev Debt"). Except as
set forth in Schedule 2.02, there are not any options, warrants, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock based performance units, commitments, Contracts,
8
arrangements or undertakings of any kind (collectively, "Rights") to which
AmBev or any of its subsidiaries is a party or by which any of them is bound
(i) obligating AmBev or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock of
or other equity interests in, or any security convertible or exercisable for
or exchangeable into any capital stock of or other equity interest in, AmBev
or of any of its subsidiaries or any Voting AmBev Debt, (ii) obligating AmBev
or any of its subsidiaries to issue, grant, extend or enter into any such
Rights or (iii) that give any person the right to receive any economic benefit
or right similar to or based upon the economic benefits and rights accruing to
holders of the AmBev Capital Stock. There are not any outstanding contractual
obligations of AmBev or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of AmBev or any of its
subsidiaries.
SECTION 2.03. Authority; Execution and Delivery; and Enforceability.
AmBev has full power and authority to execute this Agreement and the other
agreements and instruments to be executed and delivered in connection with or
as contemplated by this Agreement (such other agreements and instruments being
collectively referred to as the "Operative Agreements") to which it is, or is
specified to be, a party and to consummate the transactions contemplated
hereby and thereby (the "Transactions"), other than approvals described in
Sections 1.01 and 1.04 to be received at the First Extraordinary Shareholders
Meeting and the Second Extraordinary Shareholders Meeting. The execution and
delivery by AmBev of this Agreement and the other Operative Agreements to
which it is, or is specified to be, a party and the consummation by AmBev of
the Transactions have been duly authorized by all necessary action (corporate
or otherwise), other than approvals described in Sections 1.01 and 1.04 to be
received at the First Extraordinary Shareholders Meeting and the Second
Extraordinary Shareholders Meeting and as set forth in Schedule 2.03. AmBev
has duly executed and delivered this Agreement and prior to the Closing will
have duly executed and delivered each other Operative Agreement specified to
be delivered on or before the Closing to which it is, or is specified to be, a
party, and this Agreement constitutes, and each other Operative Agreement to
which it is, or is specified to be, a party will as of the Closing constitute,
its legal, valid and binding obligation, enforceable against it in accordance
with its terms, subject to the effects of applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and equitable
principles of general applicability.
SECTION 2.04. No Conflicts. The execution and delivery by AmBev of
this Agreement do not, the execution and delivery by AmBev of each other
Operative Agreement to which it is, or is specified to be, a party will not,
and the consummation of the Transactions and compliance by AmBev with the
terms hereof and thereof will not contravene, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation under, to loss of a material benefit under or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, require the consent of any person under, or result in the creation of
any mortgages, liens, security or other interests, charges, easements, leases,
subleases, covenants, rights of way, options, claims, restrictions or
encumbrances of any kind (collectively, "Liens") upon any of the properties or
assets of AmBev or any of its subsidiaries under, any provision of
9
(i) the charter documents, by-laws or other organizational documents of AmBev
or any of its subsidiaries, if applicable, (ii) any contract, lease, license,
indenture, agreement, commitment or other legally binding arrangement (a
"Contract") to which AmBev or any of its subsidiaries is a party or by which
any of their properties or assets are bound or (iii) any judgment, order or
decree ("Judgment") or statute, law (including common law), ordinance, rule or
regulation ("Applicable Law") applicable to AmBev or any of its subsidiaries
or their properties or assets, other than, in the case of clauses (ii) and
(iii) above, any such items that, individually or in the aggregate, have not
had and would not reasonably be expected to have an AmBev Material Adverse
Effect, except as set forth in Schedule 2.04.
SECTION 2.05. Consents. Except as set forth in Schedule 2.05, no
consent, approval, license, permit, order or authorization ("Consent") of, or
registration, declaration or filing with, any national, state, provincial,
local or foreign government or any tribunal or court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity"),
is required to be obtained or made by or with respect to AmBev or any of its
subsidiaries in connection with the execution, delivery and performance of
this Agreement or any other Operative Agreement to which AmBev or any of its
subsidiaries is, or is specified to be, a party or the consummation of the
Transactions to be consummated by AmBev or its subsidiaries, other than (A)
compliance with and filings under any applicable antitrust or foreign
investment laws, including the Competition Act (Canada), the Investment Canada
Act, the United States ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, the antitrust laws of the United States of Mexico and the
Federative Republic of Brazil (collectively, the "Antitrust Laws"), (B)
compliance with and filings under the securities laws of Brazil and (C) the
Brazilian Central Bank Approval.
SECTION 2.06. The AmBev Shares. Upon issuance, the AmBev Shares will
be duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights, with no personal liability attaching to ownership thereof
and will not be subject to or issued in violation of any Applicable Law or of
any purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of Applicable Law,
the charter documents or by-laws of AmBev or its subsidiaries or any Contract
to which AmBev is a party or otherwise bound. Assuming Interbrew has the
requisite power and authority to be the lawful owner of the AmBev Shares, upon
(i) delivery to Interbrew at the Closing of evidence of the registration of
Interbrew as holder of the AmBev Shares in the shareholder register of AmBev
or, as the case may be, in any shareholder register or account of AmBev held
by a professional depository of securities and (ii) AmBev's receipt of the
Labatt Holdco Shares and completion of the actions specified in Section 1.04,
good and valid title to the AmBev Shares will pass to Interbrew, free and
clear of any Liens, other than those arising from acts of Interbrew or its
affiliates.
SECTION 2.07. Securities Act. The Labatt Holdco Shares to be
acquired by AmBev as a result of the Incorporacao, when acquired by AmBev,
will be acquired for investment only and not with a view to any public
distribution thereof, and AmBev
10
shall not offer to sell or otherwise dispose of the Labatt Holdco Shares so
acquired by it in violation of any of the registration requirements of the
Securities Act of 1933 (the "Securities Act").
SECTION 2.08. Private Offering. None of AmBev, its affiliates and
its representatives has issued, sold or offered any security of AmBev to any
person under circumstances that would cause the issuance and delivery of the
AmBev Shares as contemplated by this Agreement to be subject to the
registration requirements of the Securities Act. None of AmBev, its affiliates
and its representatives will offer the AmBev Shares or any part thereof or any
similar securities for issuance or sale to, or solicit any offer to acquire
any of the same from, anyone so as to make the issuance and sale of the AmBev
Shares subject to the registration requirements of Section 5 of the Securities
Act. Assuming the representations of Interbrew contained in Section 3.08 are
true and correct, the issuance and delivery of the AmBev Shares on or prior to
the Closing Date will be exempt from the registration and prospectus delivery
requirements of the Securities Act.
SECTION 2.09. SEC Documents. (a) Since January 1, 2003, AmBev has
filed all reports, schedules, forms, statements and other documents required
to be filed by AmBev with the SEC, pursuant to Sections 13(a) and 15(d) of the
Exchange Act (the "AmBev SEC Documents").
(b) As of its respective date (or, if amended, as of the date of
such amendment), each AmBev SEC Document complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to such AmBev SEC Document, as the case
may be, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. Each of the consolidated financial statements
of AmBev included in the AmBev SEC Documents (the "AmBev SEC Financial
Statements") and the audited consolidated financial statements of AmBev for
the year ended December 31, 2003 attached hereto as Schedule 2.09 (the "AmBev
2003 Financial Statements") comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles of Brazil ("Brazilian GAAP") applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and, as of the Closing Date, will be reconciled to U.S.
GAAP, and fairly present the consolidated financial position of AmBev and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods shown (subject, in the case
of unaudited statements, to normal year-end audit adjustments).
(c) Except as set forth in Schedule 2.10 or as disclosed in the
AmBev SEC Documents filed and publicly available prior to the date of this
Agreement, the AmBev 2003 Financial Statements or the Quinsa SEC Documents,
(i) there are no civil, criminal or administrative actions, suits, claims,
hearings, investigations or proceedings pending or, to the knowledge of AmBev,
threatened against any of AmBev or any of
11
AmBev's subsidiaries, which have had or would reasonably be expected to have,
individually or in the aggregate, an AmBev Material Adverse Effect and (ii)
AmBev and its subsidiaries do not have any debts, liabilities or obligations
of any nature (whether accrued or fixed, absolute or contingent, matured or
unmatured, determined or determinable, unasserted or otherwise) except for
liabilities or obligations (A) disclosed, reflected or reserved against in (1)
the AmBev SEC Documents filed and publicly available prior to the date of this
Agreement, (2) the AmBev 2003 Financial Statements or (3) the Quinsa SEC
Documents, (B) as otherwise contemplated by this Agreement, (C) as set forth
on Schedule 2.09, (D) incurred in the ordinary course of business consistent
with past practice since the date of the AmBev 2003 Financial Statements and
(E) which have not had or would not reasonably be expected to have,
individually or in the aggregate, an AmBev Material Adverse Effect.
(d) AmBev and its subsidiaries do not have any liabilities or
obligations of any nature required to be disclosed by Brazilian GAAP with
reference to the AmBev 2003 Financial Statements, taken as a whole, except as
disclosed, reflected or reserved against in the AmBev 2003 Financial
Statements or the notes thereto.
SECTION 2.10. Absence of Certain Changes and Events. Except as set
forth in Schedule 2.10 or as disclosed in (x) the AmBev SEC Documents filed
and publicly available prior to the date of this Agreement, (y) the AmBev 2003
Financial Statements or (z) the Quinsa SEC Documents, since December 31, 2003,
AmBev has conducted its business only in the ordinary course consistent with
past practice, and there has not been:
(i) any event, change, effect or development that, individually or
in the aggregate, has had or would reasonably be expected to have an
AmBev Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to
any AmBev Capital Stock, except, for the avoidance of doubt, the proposed
cash dividend in respect of 2003 as disclosed in the AmBev 2003 Financial
Statements, or any repurchase for value by AmBev of any AmBev Capital
Stock or Rights of AmBev;
(iii) any issuance, split, combination or reclassification of any
AmBev Capital Stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for
shares of Rights of AmBev; or
(iv) any change in accounting methods, principles or practices by
AmBev or any of its subsidiaries materially affecting the consolidated
assets, liabilities or results of operations of AmBev, except insofar as
may have been required by an applicable change in Brazilian GAAP, U.S.
GAAP or Applicable Law.
12
SECTION 2.11. Brokers or Finders. No agent, broker, investment
banker or other firm or person retained, directly or indirectly, by or on
behalf of AmBev or their affiliates is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the Transactions, except Citigroup Global Markets, Inc., whose fees and
expenses will be paid by AmBev, and Rinaldini & Co, whose fees will be paid by
Tinsel Investments S.A.
ARTICLE III.
Representations and Warranties of Interbrew and Mergeco
Each of Interbrew and Mergeco represents and warrants as of the date
hereof (except to the extent that any such representation and warranty
expressly speaks as of another date, in which case such representation and
warranty shall be as of such other date) severally with respect to itself, and
Interbrew represents and warrants as of the date hereof (except to the extent
that any such representation and warranty expressly speaks as of another date,
in which case such representation and warranty shall be as of such other date)
with respect to Mergeco and Labatt Holdco, to AmBev as follows:
SECTION 3.01. Organization, Standing and Power. Each of Interbrew,
Mergeco and Labatt Holdco is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
organized (to the extent recognized by the laws of the jurisdiction in which
it is organized). Each of Interbrew, Mergeco and Labatt Holdco has full power
(corporate or otherwise) and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals necessary to
enable it to own, lease or otherwise hold its properties and assets and to
conduct its business as presently conducted, other than such franchises,
licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, have not had or would not reasonably be
expected to have an Interbrew Material Adverse Effect. Each of Interbrew,
Mergeco and Labatt Holdco is duly qualified and in good standing to do
business as a foreign corporation in each jurisdiction in which the conduct or
nature of its business or the ownership, leasing or holding of its properties
makes such qualification necessary, except such jurisdictions where the
failure to be so qualified or in good standing, individually or in the
aggregate, has not had and would not reasonably be expected to have an
Interbrew Material Adverse Effect. Each of Mergeco and Labatt Holdco has made
available, or will have made available by Closing, to AmBev true and complete
copies of its charter documents, articles of incorporation, by-laws or other
governing documents, as the case may be, in each case as amended to date.
SECTION 3.02. Capital Stock of Mergeco; Capital Stock of Labatt
Holdco; Labatt Holdco Shares; Mergeco.
(a) The authorized capital stock of Mergeco consists of US$50,000
divided into 50,000 shares with a par value US$1.00 each, and there are 5,000
such shares issued and outstanding (the "Mergeco Capital Stock"). Except for
the Mergeco Capital Stock and except as set forth in Schedule 3.02, there are
no shares of capital stock or other equity or voting securities of Mergeco
issued, reserved for issuance or
13
outstanding. The Mergeco Capital Stock and any other equity or voting
securities of Mergeco, including the Mergeco Shares, are duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights,
with no personal liability attaching to ownership thereof and are not subject
to and have not been issued in violation of any purchase option, call option,
right of first refusal, preemptive right, subscription right or any similar
right under any provision of Applicable Law, the charter documents or by-laws
of Mergeco or its subsidiaries or any Contract to which Mergeco is a party or
otherwise bound. There are not any bonds, debentures, notes or other
indebtedness of Mergeco having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of Mergeco Capital Stock may vote ("Voting Mergeco Debt"). Except as
set forth in Schedule 3.02, there are not any Rights to which Mergeco is a
party or by which it is bound (i) obligating Mergeco to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity
interest in, Mergeco or any Voting Mergeco Debt, (ii) obligating Mergeco to
issue, grant, extend or enter into any such Rights or (iii) that give any
person the right to receive any economic benefit or right similar to or based
upon the economic benefits and rights accruing to holders of Mergeco Capital
Stock. There are not any outstanding contractual obligations of Mergeco to
repurchase, redeem or otherwise acquire any shares of capital stock of
Mergeco.
(b) As of the date hereof, the authorized capital stock of Labatt
Holdco consists of EUR90,000 and there are EUR18,000 divided over 180 shares
of EUR 100 issued and outstanding (the "Labatt Holdco Capital Stock"). Except
for the Labatt Holdco Capital Stock and except as set forth in Schedule 3.02
or pursuant to this Agreement or the Letter Agreement, there are no shares of
capital stock or other equity or voting securities of Labatt Holdco issued,
reserved for issuance or outstanding. The Labatt Holdco Capital Stock and any
other equity or voting securities of Labatt Holdco, including the Labatt
Holdco Shares, are duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights, with no personal liability
attaching to ownership thereof and are not subject to and have not been issued
in violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision
of Applicable Law, the charter documents or by-laws of Labatt Holdco or its
subsidiaries or any Contract to which Labatt Holdco is a party or otherwise
bound (other than pursuant to this Agreement or the Letter Agreement). There
are not any bonds, debentures, notes or other indebtedness of Labatt Holdco
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which holders of Labatt Holdco
Capital Stock may vote ("Voting Labatt Holdco Debt"). Except as set forth in
Schedule 3.02 or pursuant to this Agreement or the Letter Agreement, there are
not any Rights to which Labatt Holdco is a party or by which it is bound (i)
obligating Labatt Holdco to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, Labatt Holdco or any
Voting Labatt Holdco Debt, (ii) obligating Labatt Holdco to issue, grant,
extend or enter into any such Rights or (iii) that give any person the right
to receive any economic benefit or right similar to or based upon the economic
benefits and rights accruing to holders of
14
Labatt Holdco Capital Stock. There are not any outstanding contractual
obligations of Labatt Holdco to repurchase, redeem or otherwise acquire any
shares of capital stock of Labatt Holdco.
(c) Immediately prior to the Effective Time, Labatt Holdco will own,
beneficially and of record, all of the issued and outstanding shares of Labatt
(the "Labatt Shares"). Except for the Labatt Shares, as of the Closing Date,
Labatt Holdco will not directly own any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
person.
(d) Immediately prior to the Effective Time, Mergeco will own,
beneficially and of record, all the issued and outstanding shares of Labatt
Holdco, excluding one share (the "Labatt Holdco Shares") and the remaining
share (the "Remaining Share") will be owned beneficially and of record, by
IIBV. As of the date hereof and, except for the Labatt Holdco Shares as of the
Closing Date, except as set forth in the Restructuring Plan, Mergeco does not
and will not directly own any capital stock, membership interest, partnership
interest, joint venture interest or other equity interest in any person or any
other assets and does not and will not have any liabilities.
(e) As of the date of this Agreement IIBV is, and, immediately prior
to the Effective Time, IIBV will be the sole shareholder of Mergeco, and
holds, and, immediately prior to the Effective Time, will hold, 100% of the
Mergeco Shares. The Mergeco Shares constitute, and, immediately prior to the
Effective Time, will constitute, 100% of the outstanding equity interests in
Mergeco.
SECTION 3.03. Authority; Execution and Delivery; and Enforceability.
Each of Interbrew and Mergeco has full power and authority to execute this
Agreement and the other Operative Agreements to which it is, or is specified
to be, a party and to consummate the Transactions, except as set forth in
Schedule 3.03. The execution and delivery by each of Interbrew and Mergeco of
this Agreement and the other Operative Agreements to which it is, or is
specified to be, a party and the consummation by Interbrew and Mergeco of the
Transactions have been duly authorized by all necessary action (corporate or
otherwise), except as set forth in Schedule 3.03. Each of Interbrew and
Mergeco has duly executed and delivered this Agreement and prior to the
Closing will have duly executed and delivered each other Operative Agreement
specified to be delivered on or before the Closing to which it is, or is
specified to be, a party, and this Agreement constitutes, and each such other
Operative Agreement to which it is, or is specified to be, a party will as of
the Closing Date constitute, its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to the effects of
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and equitable principles of general applicability.
SECTION 3.04. No Conflicts. The execution and delivery by each of
Interbrew and Mergeco of this Agreement do not, the execution and delivery by
each of Interbrew and Mergeco of each other Operative Agreement to which it
is, or is specified to be, a party will not, and the consummation of the
Transactions and compliance by each of Interbrew and Mergeco with the terms
hereof and thereof will not contravene, conflict
15
with, or result in any violation of or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation under, to loss of a material
benefit under or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, require the consent of any person under, or
result in the creation of any Liens upon any of the properties or assets of
Interbrew or any of its subsidiaries or Mergeco or any of its subsidiaries
under, any provision of (i) the charter documents or by-laws of Interbrew or
any of its subsidiaries or Mergeco or any of its subsidiaries, (ii) any
Contract to which Interbrew or any of its subsidiaries or Mergeco or any of
its subsidiaries is a party or by which any of their respective properties or
assets is bound or (iii) any Judgment or Applicable Law applicable to
Interbrew or any of its subsidiaries or their respective properties or assets
or Mergeco or any of its subsidiaries or their respective properties or
assets, other than, in the case of clauses (ii) and (iii) above, any such
items that, individually or in the aggregate, have not had and would not
reasonably be expected to have an Interbrew Material Adverse Effect, except as
set forth in Schedule 3.04.
SECTION 3.05. Consents. Except as set forth in Schedule 3.05, no
Consent of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Interbrew or
any of its subsidiaries or Mergeco or any of its subsidiaries in connection
with the execution, delivery and performance of this Agreement or any other
Operative Agreement to which Interbrew or Mergeco is, or is specified to be, a
party, or the consummation of the Transactions to be consummated by Interbrew,
Mergeco or their respective subsidiaries, other than (i) compliance with and
filings under the Antitrust Laws, (ii) compliance with and filings under the
securities laws of Belgium or (iii) the Brazilian Central Bank Approval.
SECTION 3.06. The Labatt Holdco Shares; the Remaining Share. (a)
Assuming AmBev has the requisite power and authority to be the lawful owner of
the Labatt Holdco Shares, upon (i) delivery to AmBev at the Closing of
evidence of the registration of AmBev as holder of the Labatt Holdco Shares in
the shareholder register of Labatt Holdco or, as the case may be, in any
shareholder register or account of Labatt Holdco held by a professional
depository of securities and (ii) Interbrew's receipt of the AmBev Shares and
completion of the actions specified in Section 1.04, good and valid title to
the Labatt Holdco Shares (excluding, for the avoidance of doubt, the Remaining
Share) will pass to AmBev, free and clear of any Liens, other than those
arising from acts of AmBev or its affiliates.
(b) Assuming CBB has the requisite power and authority to be the
lawful owner of the Remaining Share, upon delivery to CBB of evidence of the
registration of CBB as holder of the Remaining Share in the shareholder
register of Labatt Holdco or, as the case may be, in any shareholder register
or account of Labatt Holdco held by a professional depository of securities,
good and valid title to the Remaining Share will pass to CBB, free and clear
of any Liens, other than those arising from acts of CBB or its affiliates.
SECTION 3.07. The Labatt Shares. The Labatt Shares are duly
authorized, validly issued, fully paid and nonassessable and free of
preemptive rights,
16
with no personal liability attaching to ownership thereof and are not subject
to and have not been issued in violation of any Applicable Law or of any
purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of Applicable Law,
the charter documents or by-laws of Labatt or any of its subsidiaries or any
Contract to which Interbrew, Labatt or any of their respective subsidiaries is
a party or otherwise bound. The Labatt Shares are not subject to the terms of
any shareholders agreement.
SECTION 3.08. Securities Act. The AmBev Shares to be delivered to
the shareholders of Mergeco pursuant to the Incorporacao, when delivered, will
be retained for investment only and not with a view to any public distribution
thereof, and Interbrew shall not offer to sell or otherwise dispose of such
AmBev Shares so received by it in violation of any of the registration
requirements of the Securities Act.
SECTION 3.09. Private Offering. None of Interbrew, Mergeco, their
respective affiliates and their respective representatives has issued, sold or
offered any security of Labatt Holdco to any person under circumstances that
would cause the issuance and delivery of the Labatt Holdco Shares as
contemplated by this Agreement to be subject to the registration requirements
of the Securities Act. None of Interbrew, Mergeco, their respective affiliates
and their respective representatives will offer the Labatt Holdco Shares or
any part thereof or any similar securities for issuance or sale to, or solicit
any offer to acquire any of the same from, anyone so as to make the issuance
and sale of the Labatt Holdco Shares subject to the registration requirements
of Section 5 of the Securities Act. Assuming the representations of AmBev
contained in Section 2.07 are true and correct, the acquisition by AmBev of
the Labatt Holdco Shares will be exempt from the registration and prospectus
delivery requirements of the Securities Act.
SECTION 3.10. Brokers or Finders. No agent, broker, investment
banker or other firm or person retained, directly or indirectly, by or on
behalf of Interbrew or its affiliates is or will be entitled to any broker's
or finder's fee or any other commission or similar fee in connection with any
of the Transactions, except (i) ▇▇▇▇▇▇▇ ▇▇▇▇▇ International and (ii) Lazard
B.V., whose fees and expenses will be paid by Interbrew (unless otherwise
mutually agreed in writing by Interbrew and AmBev).
ARTICLE IV
Representations and Warranties
Relating to Labatt
Each of Interbrew, Mergeco and Labatt hereby, jointly and severally,
represents and warrants as of the date hereof (except to the extent that any
such representation and warranty expressly speaks as of another date, in which
case such representation and warranty shall be as of such other date) to AmBev
as follows:
SECTION 4.01. Organization and Standing; Books and Records. (a)
Labatt is a corporation duly organized, validly existing and in good standing
under the federal laws of Canada. Schedule 4.01 sets forth all the
subsidiaries of Labatt which
17
will be owned, directly or indirectly, by Labatt after the consummation of the
Restructuring (the "Labatt Subsidiaries"). Each Labatt Subsidiary is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation (to the extent
recognized by the laws of the jurisdiction in which it is organized), which
jurisdiction is set forth in Schedule 4.01, and each of Labatt and the Labatt
Subsidiaries has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and
assets and to carry on its business as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Labatt Material Adverse Effect. Each of Labatt and the
Labatt Subsidiaries is duly registered, licensed or otherwise qualified and in
good standing to do business as an extra-provincial or foreign corporation in
each jurisdiction in which the conduct or nature of its business or the
ownership, leasing or holding of its properties makes such registration,
license or qualification necessary, except such jurisdictions where the
failure to be so registered, licensed or otherwise qualified or in good
standing, individually or in the aggregate, has not had and would not
reasonably be expected to have a Labatt Material Adverse Effect.
(b) Labatt has made available, or, upon AmBev's request, will make
available prior to the Closing, to AmBev or its counsel true and complete
copies of (i) the articles of incorporation and by-laws, each as amended to
date, of Labatt and (ii) the comparable governing instruments, each as amended
to date, of each subsidiary of Labatt. The share register and transfer books
and the minute books of Labatt (which have been made available for inspection
by AmBev or its counsel prior to the date hereof) are true and complete,
except as set forth in Schedule 4.01.
SECTION 4.02. Capital Stock of Labatt and the Labatt Subsidiaries.
(a) The authorized capital stock of Labatt consists of an unlimited number of
common shares and an unlimited number of preference shares, in each case
without nominal or par value. As of the date hereof, there are 1,921,539
common shares issued and outstanding (the "Labatt Capital Stock"). Except for
the Labatt Capital Stock and as set forth in Schedule 4.02 or pursuant to this
Agreement or the Restructuring Plan, there are no shares of capital stock or
other equity or voting securities of Labatt issued, reserved for issuance or
outstanding. The Labatt Capital Stock and any other equity or voting
securities of Labatt and all the shares in each of the Labatt Subsidiaries,
including the Labatt Shares, are duly authorized, validly issued, fully paid
and nonassessable and free of preemptive rights, with no personal liability
attaching to ownership thereof and are not subject to and have not been issued
in violation of any Applicable Law or of any purchase option, call option,
right of first refusal, preemptive right, subscription right or any similar
right under any provision of Applicable Law, the charter documents or by-laws
of Labatt or the Labatt Subsidiaries or any Contract to which Labatt or the
Labatt Subsidiaries is a party or otherwise bound (other than pursuant to this
Agreement or the Restructuring Plan). There are not any bonds, debentures,
notes or other indebtedness of Labatt having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters
on which holders of Labatt Capital Stock may vote ("Voting Labatt Debt").
Except as set forth in Schedule 4.02, there are not any Rights to
18
which Labatt is a party or by which it is bound (i) obligating Labatt to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of or other equity interests in, or any security
convertible or exercisable for or exchangeable into any capital stock of or
other equity interest in, Labatt or any Voting Labatt Debt, (ii) obligating
Labatt to issue, grant, extend or enter into any such Rights or (iii) that
give any person the right to receive any economic benefit or right similar to
or based upon the economic benefits and rights accruing to holders of Labatt
Capital Stock. There are not any outstanding contractual obligations of Labatt
to repurchase, redeem or otherwise acquire any shares of capital stock of
Labatt.
(b) (i) Except as set forth in Schedule 4.02, Labatt is the sole
registered and beneficial owner of all of the issued and outstanding shares in
the capital of the Labatt Subsidiaries, free and clear of all Liens.
(ii) Except for its interests in the Labatt Subsidiaries, the Femsa
Cerveza Interest and except for the ownership interests set forth in
Schedule 4.02, after giving effect to the Restructuring as if such
transactions were consummated as of the date hereof, Labatt does not own,
directly or indirectly, any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest
with a fair market value as of the date of this Agreement in excess of
C$15,000,000 in any person.
(iii) Except as set forth in Schedule 4.02, Labatt owns, directly or
indirectly, the Femsa Cerveza Interest, free and clear of all Liens. As
of December 18, 2003, the Femsa Cerveza Interest constituted 30.0% of the
outstanding capital stock of Femsa Cerveza and as of the date hereof
constitutes approximately 30% of the outstanding capital stock of Femsa
Cerveza.
SECTION 4.03. Authority; Execution and Delivery; Enforceability.
Labatt has full power and authority to execute this Agreement and the
Operative Agreements to which it is, or is specified to be, a party, and to
consummate the Transactions. The execution and delivery by Labatt of this
Agreement and the Operative Agreements to which it is, or is specified to be,
a party and the consummation by Labatt of the Transactions have been duly
authorized by all necessary corporate action. Labatt has duly executed and
delivered this Agreement and prior to the Closing will have duly executed and
delivered each Operative Agreement to which it is, or is specified to be, a
party, and this Agreement constitutes, and each Operative Agreement to which
it is, or is specified to be, a party will after the Closing constitute, its
legal, valid and binding obligation, enforceable against it in accordance with
its terms, subject to the effects of applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and equitable principles of
general applicability.
SECTION 4.04. No Conflicts. The execution and delivery by Labatt of
this Agreement do not, the execution and delivery by Labatt of each Operative
Agreement to which it is, or is specified to be, a party will not, and the
consummation of the Transactions and compliance by Labatt with the terms
hereof and thereof will not contravene, conflict with, or result in any
violation of or default (with or without notice
19
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation under, to loss of a material
benefit under or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, require the consent of any person under, or
result in the creation of any Liens upon any of the properties or assets of
Labatt or any of the Labatt Subsidiaries under, any provision of (i) the
charter documents, by-laws or other organizational documents of Labatt or its
subsidiaries, if applicable, (ii) any Contract to which Labatt or any of the
Labatt Subsidiaries is a party or by which any of its properties or assets are
bound or (iii) any Judgment or Applicable Law applicable to Labatt or any of
the Labatt Subsidiaries or its properties or assets, other than, in the case
of clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Labatt
Material Adverse Effect, except as set forth in Schedule 4.04.
SECTION 4.05. Consents. Except as set forth in Schedule 4.05, no
Consent of, or registration, declaration or filing with, any Governmental
Entity or any third party is required to be obtained or made by or with
respect to Labatt, any of the Labatt Subsidiaries or the Femsa Cerveza
Interest in connection with the execution, delivery and performance of this
Agreement or any Operative Agreement to which Labatt is, or is specified to
be, a party or the consummation of the Transactions to be consummated by
Labatt or the Labatt Subsidiaries, other than compliance with and filings
under any Antitrust Laws.
SECTION 4.06. Labatt Financial Statements. (a) Schedule 4.06(a) sets
forth Labatt's audited consolidated balance sheet and statements of earnings,
deficit and cash flows as of and for the year ended December 31, 2003 (the
"Labatt Financial Statements"). The Labatt Financial Statements have been
prepared in conformity with Canadian GAAP applied on a consistent basis
(except in each case as described in the notes thereto) and on that basis
fairly present the consolidated financial position of Labatt and its
subsidiaries as of the respective dates thereof and the consolidated results
of operations and cash flows of Labatt and its subsidiaries for the respective
periods indicated therein.
(b) Except as set forth in Schedule 4.06(a), Labatt and its
subsidiaries do not have any liabilities or obligations of any nature (whether
accrued or fixed, absolute or contingent, determined or determinable,
unasserted or otherwise), except for liabilities or obligations (i) disclosed,
reflected or reserved against in the Labatt Financial Statements (including
the notes thereto), (ii) set forth in Schedule 4.06 or as otherwise
contemplated by this Agreement, and (iii) for liabilities and obligations
incurred in the ordinary course of business consistent with past practice and
which have not had or would not reasonably be expected to have, individually
or in the aggregate, a Labatt Material Adverse Effect and (iv) arising since
the date of the Labatt Financial Statements and not in violation of this
Agreement and which have not had or would not reasonably be expected to have,
individually or in the aggregate, a Labatt Material Adverse Effect.
(c) Except as set forth on Schedule 4.06, the reserves and accrued
liabilities disclosed on or reflected in the Labatt Financial Statements and
the books and
20
records and to be reflected on the Labatt Financial Statements,
are sufficient in all respects to provide for the liabilities in respect of
which they have been established.
(d) The total expense, determined in accordance with International
Accounting Standards Board standards and consistent with prior practice, with
respect to all Benefit Plans that are defined benefit plans of Labatt and the
Labatt Subsidiaries (excluding (1) Labatt Holdings Inc., a Delaware
corporation ("ELH") and its subsidiaries, (2) Issima and its subsidiaries, (3)
Cerbuco and its subsidiaries, (4) any expense related to Femsa Cerveza and (5)
those Benefit Plan liabilities listed on Schedule 8.01(a)(iii)) included in
the Base Plan Excerpt was equal to C$66,200,000 (it being acknowledged that
the actual such expense for fiscal year 2003 was C$68,081,000 due to audit
adjustments).
(e) The projected pension expense included in the projected EBITDA
for the fiscal years 2004, 2005 and 2006, as projected by Labatt in connection
with the preparation of the Base Plan Excerpt, included the following pension
income and expense items: (i) current service cost, (ii) interest cost, (iii)
expected return on assets, (iv) amortization of actuarial losses, (v)
amortization of prior service cost and (vi) other curtailment/settlement. Such
pension expenses were projected to be that (x) net expenses of Labatt
(excluding (1) ELH and its subsidiaries, (2) Issima and its subsidiaries, (3)
Cerbuco and its subsidiaries, (4) any expense related to Femsa Cerveza and (5)
those Benefit Plan liabilities listed on Schedule 8.01(a)(iii)), would be
C$64,000,000, C$51,000,000, and C$49,000,000 for the 2004, 2005 and 2006
fiscal years, respectively, and (y) employer contributions to defined
contribution plans would not exceed C$3,500,000 for each of the 2004, 2005 and
2006 fiscal years. The projected information described above was prepared in
good faith and upon assumptions that, at the time prepared and first
delivered, were believed to be reasonable by Labatt and Interbrew. The parties
acknowledge and agree that the actual results of Labatt and the Labatt
Subsidiaries for such fiscal years may vary from such projections, and no
representation or warranty is made as to the accuracy of such projections
other than as expressly set forth in the preceding sentence.
(f) (i) Schedule 4.06(f)(i) sets forth the unaudited pro forma
consolidated balance sheet of Labatt and the Labatt Subsidiaries (including
ELH) as of December 31, 2003, after giving pro forma effect to the
Restructuring as if the Restructuring had occurred as of such date, assuming
that the Femsa Cerveza Interest was owned by Labatt, and that Issima
Luxembourg International S.a.rl, a Luxembourg societe a responsabilite limitee
unipersonelle ("Issima"), and Cerbuco Brewing Inc., a Canadian corporation
("Cerbuco"), had been disposed of by Labatt (the "Pro Forma Balance Sheet").
(ii) Schedule 4.06(f)(ii) sets forth the unaudited pro forma
consolidated statement of earnings of Labatt and the Labatt Subsidiaries
(excluding ELH) for the period ending December 31, 2003, after giving pro
forma effect to the Restructuring as if the Restructuring had occurred
but assuming that the Femsa Cerveza Interest, Issima and Cerbuco had been
disposed of by Labatt and excluding (1) any refinancing of the
indebtedness of Labatt and the Labatt Subsidiaries to be performed in
connection with the Restructuring, including
21
related prepayment costs, fees and other expenses, and assuming any cash
and short term investments of Labatt and the Labatt Subsidiaries are
reinvested and (2) service fees paid to Interbrew under applicable
services agreements (the "Pro Forma Income Statement").
(iii) Each of the Pro Forma Balance Sheet and the Pro Forma Income
Statement (A) has been prepared in good faith in accordance with the
procedures specified therein and based upon assumptions that, as of the
date hereof, are believed to be reasonable by Labatt and Interbrew, (B)
with respect to the Pro Forma Balance Sheet, subject to the assumptions
and specified procedures set forth in the Pro Forma Balance Sheet, and
with respect to the Pro Forma Income Statement, subject to the
assumptions and specified procedures set forth in the Pro Forma Income
Statement, accurately reflects all adjustments necessary to give effect
to the Restructuring and (C) presents fairly (subject to the procedures
and assumptions referenced in the preceding clause) the pro forma
financial position at the time or for the period indicated (x) in the
case of the Pro Forma Balance Sheet, of Labatt and the Labatt
Subsidiaries (including ELH), after giving pro forma effect to the
Restructuring and assuming that the Femsa Cerveza Interest was owned by
Labatt and Issima and Cerbuco had been disposed of by Labatt and (y) in
the case of the Pro Forma Income Statement, of the Canadian businesses of
Labatt and the Labatt Subsidiaries (excluding ELH) and assuming the Femsa
Cerveza Interest, Issima and Cerbuco had been disposed of by Labatt,
after giving pro forma effect to the Restructuring (and excluding (1) any
refinancing of the indebtedness of Labatt and the Labatt Subsidiaries to
be performed in connection with the Restructuring, including related
prepayment costs, fees and other expenses, and assuming any cash and
short term investments of Labatt and the Labatt Subsidiaries are
reinvested and (2) service fees paid to Interbrew under applicable
services agreements).
SECTION 4.07. Assets Other than Real Property Interests. Labatt or
its subsidiaries are the sole legal, beneficial and (where their interests are
registrable) registered owner of all the material assets reflected on the
Labatt Financial Statements or acquired after the date thereof, other than
those set forth in Schedule 4.07 or otherwise disposed of since the date of
the Labatt Financial Statements in the ordinary course of business consistent
with past practice, in each case free and clear of all Liens, except for (i)
such Liens as are set forth in Schedule 4.07, (ii) Liens that secure
obligations that are reflected as liabilities on the Labatt Financial
Statements or Liens the existence of which is referred to in the notes to the
Labatt Financial Statements, and (iii) Labatt Permitted Liens. This Section
4.07 does not relate to real property or interests in real property (including
leased real property), such items being the subject of Section 4.08, or to
Intellectual Property, such items being the subject of Section 4.09.
SECTION 4.08. Real Property. Either Labatt or a Labatt Subsidiary
has good and insurable fee title to all material real property and material
interests in real property owned in fee by Labatt and the Labatt Subsidiaries
(individually, a "Labatt Owned Property") and is a party to good and valid
leases for all material real property and material interests in real property
leased by Labatt or a Labatt Subsidiary
22
(individually, a "Labatt Leased Property", with a Labatt Owned Property or
Labatt Leased Property being sometimes referred to herein, individually, as a
"Labatt Property"), in each case free and clear of all Liens, except (i) such
Liens as are set forth in Schedule 4.08, (ii) Liens that secure obligations
that are reflected as liabilities on the Labatt Financial Statements or Liens
the existence of which is referred to in the notes to the Labatt Financial
Statements, (iii) leases, subleases and similar agreements set forth in
Schedule 4.10, (iv) Labatt Permitted Liens and (v) such imperfections in title
and Liens that, individually or in the aggregate, do not, and could not
reasonably be expected to, materially impair the continued use and operation
of the Labatt Property to which they relate in the conduct of the business of
Labatt and Labatt Subsidiaries as presently conducted.
SECTION 4.09. Intellectual Property. (a) With respect to all
Intellectual Property owned, used or filed by or licensed to Labatt or a
Labatt Subsidiary, other than unregistered copyrights that, individually or in
the aggregate, are not material to the conduct of the business of Labatt and
the Labatt Subsidiaries as presently conducted (such Intellectual Property
being referred to in this Agreement as the "Labatt Intellectual Property") and
all Technology owned or used by or licensed to Labatt and the Labatt
Subsidiaries (the "Labatt Technology"), but excluding Labatt Intellectual
Property and Labatt Technology, the use of which is licensed to Labatt and the
Labatt Subsidiaries by a third party, (i) all such Labatt Intellectual
Property has been duly registered in, filed in or issued by the appropriate
Governmental Entity where such registration, filing or issuance is necessary
or appropriate for the conduct of the business of Labatt and the Labatt
Subsidiaries as presently conducted, (ii) Labatt or a Labatt Subsidiary is the
sole and exclusive owner (free and clear of all Liens) of, and Labatt or one
of the Labatt Subsidiaries has the right to use, execute, reproduce, display,
perform, modify, enhance, distribute and prepare derivative works of, without
payment to any other person, all Labatt Intellectual Property and all Labatt
Technology, and the consummation of the Incorporacao and the other
Transactions does not and will not conflict with, alter or impair any such
rights, except for rights the absence of which, individually or in the
aggregate, would not be material to the conduct of the business of Labatt and
the Labatt Subsidiaries and (iii) during the past three years, none of
Interbrew, Mergeco, Labatt and their respective subsidiaries has received any
written communication from any person asserting any ownership interest in any
Labatt Intellectual Property or Labatt Technology, or alleging that Labatt or
any of the Labatt Subsidiaries violated any rights relating to Intellectual
Property or Technology of any person. Any Labatt Intellectual Property or
Labatt Technology being used by Labatt or any of the Labatt Subsidiaries of
which Labatt is not the sole and exclusive owner is being used with the
consent of or license from the owner of such Labatt Intellectual Property or
Labatt Technology all of which such consents or licenses are in full force and
effect and no default exists on the part of Labatt or any of the Labatt
Subsidiaries or, to the knowledge of Labatt and the Labatt Subsidiaries, on
the part of any other parties thereto.
(b) Except as disclosed in Schedule 4.09, (i) all Labatt
Intellectual Property is in full force and effect and has not been used or
enforced or failed to be used or enforced in a manner that would result in its
abandonment, cancellation or unenforceability and (ii) all Labatt Intellectual
Property consisting of issued registrations,
23
or in the case of inventions, issued patents, is valid and enforceable. The
conduct of the business of Labatt and the Labatt Subsidiaries as presently
conducted does not violate, conflict with or infringe the Intellectual
Property of any other person, except as would not, individually or in the
aggregate, reasonably be expected to have a Labatt Material Adverse Effect.
(c) Except as set forth in Schedule 4.09, no claims are pending or,
to the knowledge of Interbrew and Labatt, threatened, as of the date of this
Agreement against Labatt or any of its subsidiaries by any person with respect
to the ownership, validity, enforceability, effectiveness or use in the
business of Labatt and the Labatt Subsidiaries of any Intellectual Property
and or Technology.
(d) All material Labatt Technology has been maintained in confidence
in all material respects in accordance with protection procedures reasonably
designed to protect its confidence.
(e) None of the claims listed in Schedule 4.09 as to which there is
a reasonable possibility of adverse determination would, if so determined,
individually or in the aggregate, reasonably be expected to have a Labatt
Material Adverse Effect.
SECTION 4.10. Contracts. (a) Except as set forth in Schedule 4.10,
neither Labatt nor any of the Labatt Subsidiaries (other than ELH and its
subsidiaries, which shall be deemed not to be Labatt Subsidiaries for purposes
of this Section 4.10) is bound by or subject to any:
(i) covenant in favor of a third party not to compete or other
covenant restricting the right of Labatt or any of the Labatt
Subsidiaries to engage in any type of business or with any person or in
any geographic area or during any period of time, except for such
agreements as may not be disclosed to AmBev by their terms and which do
not contain any terms that would, after the consummation of the
Transactions, restrict the right of AmBev to engage in any type of
business or with any person in the Americas;
(ii) Contract (other than this Agreement) with any current or former
officer, director or employee of Labatt, a Labatt Subsidiary, Interbrew
or any affiliate of Interbrew or any collective bargaining agreement with
respect to the employees of Labatt and the Labatt Subsidiaries;
(iii) lease, sublease or similar Contract with any person (other
than Labatt or a Labatt Subsidiary) under which Labatt or a Labatt
Subsidiary is a lessee or lessor (or sublessor), in any such case that
has an aggregate future liability or receivable, as the case may be, in
excess of C$15,000,000 per year for any single such Contract or
C$75,000,000 per year in the aggregate for all such Contracts and that is
not terminable by Labatt or such Labatt Subsidiary by notice of not more
than 60 days;
(iv) Contract with suppliers, advertisers, consultants, advisors,
sales representatives, distributors or dealers, in any such case which
has an aggregate
24
future liability to any person (other than Labatt or a
Labatt Subsidiary) in excess of C$15,000,000 for any single Contract or
C$75,000,000 in the aggregate for all such Contracts and is not
terminable by Labatt or a Labatt Subsidiary by notice of not more than 60
days without payment or penalty;
(v) material license, sublicense, option or other agreement relating
in whole or in part to Labatt Intellectual Property (including any
license or other agreement under which Labatt or a Labatt Subsidiary is
licensee or licensor of any Intellectual Property) or to any Labatt
Technology;
(vi) Contract under which Labatt or any Labatt Subsidiary has (A)
outstanding indebtedness, obligations or liabilities for borrowed money
(including guarantees) in excess of C$15,000,000 for any single Contract
or C$75,000,000 in the aggregate for all such Contracts, (B) made or is
obligated to make any advance, loan, extension of credit or capital
contribution to, or other investment in, any person in excess of
C$15,000,000 for any single Contract or C$75,000,000 in the aggregate for
all such Contracts or (C) entered into any arrangements for currency
exchange, interest rate exchange, commodity exchange or any other similar
arrangement under which the net obligations or liabilities of Labatt or
such Labatt Subsidiary are in excess of C$15,000,000 for any single
arrangement or C$75,000,000 in the aggregate for all such arrangements;
(vii) Contract granting a material Lien upon any Labatt Property or
any other asset;
(viii) Contract providing for indemnification of any person with
respect to material liabilities relating to any current or former
business of Labatt, a Labatt Subsidiary or any predecessor person;
(ix) confidentiality agreement that would prevent Labatt or any
Labatt Subsidiary from operating its business in substantially the same
manner as heretofore conducted;
(x) Contract with any customer of Labatt or a Labatt Subsidiary that
would be among Labatt's and the Labatt Subsidiaries' top five customers
after giving effect to the Restructuring, based on the amount of sales to
such customer during Labatt's fiscal year ended December 31, 2003;
(xi) Contract for the sale of any asset of Labatt or a Labatt
Subsidiary entered into in the last four years (other than inventory
sales in the ordinary course of business) or the grant of any
preferential rights to purchase any such asset or requiring the consent
of any party to the transfer thereof, other than any such Contract
entered into in the ordinary course of business after the date of this
Agreement and not in violation of this Agreement;
(xii) Contract for any joint venture, partnership or similar
arrangement; or
25
(xiii) any other Contract that has an aggregate future liability
(whether absolute or contingent) to any person (other than Labatt or a
Labatt Subsidiary) in excess of C$15,000,000 for any single Contract or
C$75,000,000 in the aggregate for all such Contracts and is not
terminable by Labatt or a Labatt Subsidiary by notice of not more than 60
days for a cost of less than C$15,000,000 for any single Contract or
C$75,000,000 in the aggregate for all such Contracts (other than purchase
orders and sales orders).
(b) Except as set forth in Schedule 4.10, all Contracts required to
be listed in Schedule 4.10 (the "Labatt Contracts") are valid, binding and in
full force and effect and are enforceable by Labatt or the applicable Labatt
Subsidiary in accordance with their terms. Except as set forth in Schedule
4.10, Labatt or the applicable Labatt Subsidiary has performed all obligations
required to be performed by it to date under the Labatt Contracts, and it is
not (with or without the lapse of time or the giving of notice, or both) in
breach or default in any respect thereunder and, to the knowledge of Interbrew
and Labatt, no other party to any Labatt Contract is (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
respect thereunder, except as, individually or in the aggregate, have not had
and would not reasonably be expected to have a Labatt Material Adverse Effect.
Except as set forth in Schedule 4.10, none of Interbrew, Mergeco, Labatt and
its subsidiaries has received any notice of the intention of any party to
terminate any Labatt Contract. Except as set forth on Schedule 4.10, complete
and correct copies of all Labatt Contracts, together with all modifications
and amendments thereto, have been made available to AmBev.
SECTION 4.11. Labatt Permits. (a) Except as set forth in Schedule
4.11, (i) all material certificates, licenses, permits, authorizations and
approvals ("Labatt Permits") issued or granted to Labatt or a Labatt
Subsidiary or required in the conduct of the Acquired Business after giving
effect to the Restructuring are validly held by Labatt or a Labatt Subsidiary,
and Labatt or the applicable Labatt Subsidiary has complied in all material
respects with all terms and conditions thereof, (ii) during the past five
years, none of Interbrew, Mergeco, Labatt and its subsidiaries has received
written notice of any suit, action or proceeding (a "Proceeding") relating to
the suspension, revocation, modification or nonrenewal of any such Labatt
Permits the loss of which, individually or in the aggregate, has had or would
reasonably be expected to have a Labatt Material Adverse Effect, and (iii)
none of such Labatt Permits will be subject to suspension, modification,
revocation or nonrenewal as a result of the execution and delivery of this
Agreement or the consummation of the Transactions.
(b) Labatt and the Labatt Subsidiaries possess or have applied for
all Labatt Permits to own or hold under lease and operate their respective
assets and to conduct their business as currently conducted, other than such
Labatt Permits the absence of which, individually or in the aggregate, has not
had and would not reasonably be expected to have a Labatt Material Adverse
Effect.
SECTION 4.12. Insurance. Except as set forth in Schedule 4.12,
Labatt and the Labatt Subsidiaries maintain or are covered under policies of
fire and casualty, liability and other forms of insurance in such amounts,
with such deductibles and against
26
such risks and losses as are, in Labatt's judgment, reasonable for the
business and assets of Labatt and the Labatt Subsidiaries.
SECTION 4.13. Taxes. Except as set forth in Schedule 4.13:
(a) (i) Labatt and each of the Labatt Subsidiaries has filed or
caused to be filed in a timely manner (within any applicable extension
periods) all Tax Returns required to be filed by the Act or by applicable
provincial, local or foreign tax laws and has duly, completely and correctly
reported or caused to be reported all income and all other amounts and
information required to be reported thereon, (ii) all Taxes with respect to
taxable periods covered by such Tax Returns, and all other Taxes for which
Labatt or any of the Labatt Subsidiaries is or might otherwise be liable have
been timely paid in full or will be timely paid in full by the due date
thereof and the most recent audited Labatt Financial Statements for Labatt
reflect an adequate reserve for all Taxes payable by Labatt and the Labatt
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements, and (iii) no material liens for Taxes exist with
respect to any of the assets or properties of Labatt or any of the Labatt
Subsidiaries.
(b) Labatt has made available to AmBev documents relating to the
most recent audits or examinations of Labatt and the Labatt Subsidiaries by
any Taxing Authority in respect of Federal, foreign and material provincial
and local Taxes for all taxable periods for which the relevant period in which
any Taxing Authority may assess or otherwise impose any Tax (referred to
herein as the "statute of limitations") has not yet expired.
(c) Each material deficiency resulting from any audit or examination
relating to Taxes by any Taxing Authority has been timely paid. No material
issues relating to Taxes have been raised by the relevant Taxing Authority in
any audit or examination which have not yet been resolved. The normal
reassessment period has expired or the relevant statute of limitations is
closed with respect to the Federal income Tax Returns of Labatt and the Labatt
Subsidiaries for all years through 1996, with respect to Ontario income Tax
Returns of Labatt and the Labatt Subsidiaries for all years through 1996, and
with respect to Quebec income Tax Returns of Labatt and the Labatt
Subsidiaries for all years through 1995.
(d) Neither Labatt nor any of the Labatt Subsidiaries is party to or
bound by any material tax sharing agreement, tax indemnity obligation in favor
of any person other than Labatt or a Labatt Subsidiary or similar agreement in
favor of any person other than Labatt or a Labatt Subsidiary with respect to
Taxes (including any advance pricing agreement, closing agreement or other
similar material agreement relating to Taxes with any Taxing Authority).
(e) Neither Labatt nor any of the Labatt Subsidiaries shall be
required to include in a taxable period ending after the Closing Date a
material amount of net taxable income (after taking into account deductions
claimed for such a period that relate to a prior period) attributable to
income that accrued in a prior taxable period but that was not included in
taxable income for a prior taxable period.
27
(f) (i) There are no material outstanding agreements or waivers
extending, or having the effect of extending, the statutory period of
limitation applicable to any material Tax returns required to be filed with
respect to Labatt or any of the Labatt Subsidiaries, (ii) neither Labatt nor
any of the Labatt Subsidiaries has requested any extension of time within
which to file any material Tax return, which return has not yet been filed,
and (iii) no power of attorney with respect to any Taxes has been executed or
filed with any Taxing Authority by or on behalf of Labatt or any of the Labatt
Subsidiaries. Labatt has made available to AmBev all material elections,
designations and similar filings relating to Taxes that have effect for any
period ending after the Closing Date.
(g) Labatt has made available to AmBev for inspection (i) complete
and correct copies of all material Tax Returns of Labatt and the Labatt
Subsidiaries relating to Taxes for all taxable periods for which the
applicable statute of limitations has not yet expired and (ii) complete and
correct copies of all material tax rulings, revenue agent reports, information
document requests, notices of proposed deficiencies, deficiency notices,
protests, petitions, closing agreements, settlement agreements, pending ruling
requests, and any similar documents in the possession of Labatt and the Labatt
Subsidiaries, submitted by, received by or agreed to by or on behalf of Labatt
or any of the Labatt Subsidiaries relating to Taxes for all taxable periods
for which the statute of limitations has not yet expired.
(h) Schedule 4.13 sets forth the amounts that would have been
Labatt's (or the applicable Labatt Subsidiary's) adjusted cost base for
purposes of the Act of the shares of Femsa Cerveza and ELH (which owns Labatt
USA) had there been no dividends or other distributions received by Labatt (or
a Labatt Subsidiary) in respect of such shares.
(i) None of Sections 78, 80, 80.01, 80.02, 80.03 or 80.04 of the
Act, or any equivalent provision of the Tax legislation of any province or any
other jurisdiction, have applied or will apply to Labatt or any of the Labatt
Subsidiaries at any time up to and including the Closing Date.
(j) None of Labatt or any of the Labatt Subsidiaries has acquired
property from a non-arm's length person, within the meaning of the Act, for
consideration, the value of which is less than the fair market value of the
property acquired in circumstances which could subject it to a liability under
Section 160 of the Act.
(k) Each of Labatt and the Labatt Subsidiaries that are required to
be registered under subdivision (d) of Division V of Part IX of the Excise Tax
Act (Canada) with respect to the goods and services tax and harmonized sales
tax and under Division I of Chapter VIII of Title I of the Quebec Sales Tax
Act with respect to the Quebec sales tax, are so duly registered.
SECTION 4.14. Proceedings. Schedule 4.14 sets forth a list as of the
date of this Agreement of each pending or, to the knowledge of Interbrew and
Labatt, threatened Proceeding or claim with respect to which Interbrew,
Mergeco, Labatt or any
28
of their respective subsidiaries has been contacted in writing by a
Governmental Entity (other than a Taxing Authority) or counsel for the
plaintiff or claimant or against or affecting Labatt or any of the Labatt
Subsidiaries and that (a) relates to or involves more than C$15,000,000 for
any single Proceeding or C$75,000,000 in the aggregate for any group of
related Proceedings, (b) seeks any material injunctive relief, (c) relates to
the Transactions or (d) relates to the Femsa Cerveza Interest. Except as set
forth in Schedule 4.14, none of the Proceedings or claims listed in Schedule
4.14 as to which there is a reasonable possibility of adverse determination
would, if so determined, individually or in the aggregate, reasonably be
expected to have a Labatt Material Adverse Effect. To the knowledge of
Interbrew and Labatt, except as set forth in Schedule 4.14, neither Labatt nor
any Labatt Subsidiary is a party or subject to or in default under any
material Judgment. Except as set forth in Schedule 4.14, there is not any
Proceeding or claim by Labatt or any of the Labatt Subsidiaries pending, or
which Labatt or any of the Labatt Subsidiaries intends to initiate, against
any other person that (a) relates to or involves more than C$15,000,000 for
any single Proceeding or C$75,000,000 in the aggregate for any group of
related Proceedings or (b) seeks any material injunctive relief. Except as set
forth in Schedule 4.14, to the knowledge of Interbrew and Labatt, there is no
investigation pending or threatened in writing of or affecting Labatt or any
Labatt Subsidiary by any Governmental Entity.
SECTION 4.15. Compensation and Benefit Plans. (a) Schedule 4.15
contains a list or brief description of each bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock appreciation, restricted stock, stock option, phantom stock,
performance, retirement, thrift, savings, stock bonus, cafeteria, paid time
off, perquisite, fringe benefit, vacation, severance, disability, death
benefit, hospitalization, medical or other welfare benefit or other material
plan, program, policy, practice or arrangement, whether oral or written,
formal or informal, funded or unfunded, insured or uninsured, registered or
unregistered, to which Labatt or any Labatt Subsidiary is a party to or bound
by or under which Labatt or any Labatt Subsidiary has any liability (whether
present or future, absolute or contingent) with respect to any present or
former officers, employees, agents, directors or independent contractors of
Labatt or any Labatt Subsidiary (each a "Participant") or their spouses,
dependants, survivors or beneficiaries (collectively, "Beneficiaries"),
whether or not subject to any Applicable Law (all of the foregoing being
herein called "Benefit Plans", except that the term "Benefit Plans" will not
include any statutory plans which Labatt or the Labatt Subsidiaries are
required to participate in or comply with, including the Canadian and Quebec
Pension Plans and plans administered pursuant to applicable health tax,
workplace safety insurance and employment insurance legislation). Labatt has
delivered to AmBev true, complete and correct copies of each Benefit Plan as
amended to date (or, in the case of any unwritten Benefit Plans, descriptions
thereof), together with (i) all documents establishing, creating or amending
each of the Benefit Plans, (ii) all financial statements, accounting
statements and/or reports for each of the last three years, (iii) the three
most recent information returns or material correspondence relating to
compliance filed with or delivered to any Governmental Entity within the last
three years with respect to each Benefit Plan, (iv) the most recent summary
plan description (or similar document) for each Benefit Plan for which such a
summary plan description is required by Applicable Law or was otherwise
provided to Participants or Beneficiaries,
29
(v) each trust agreement and insurance or annuity contract or other funding or
financing arrangement relating to any Benefit Plan, (vi) where the Benefit
Plan is intended to be, or is required to be, registered or qualified under
any Applicable Law, a copy of the most recent letter(s) received from
applicable Governmental Entities confirming registration or qualification of
such Benefit Plan and any applicable amendments to such Benefit Plan, and
(vii) the two most recent actuarial valuation reports, if any, for each
Benefit Plan. To the knowledge of Interbrew and Labatt, each item described in
the immediately preceding clauses (ii) through (iv) was as of its date and is
true, complete and correct in all material respects. The information supplied
to the plan actuary by Labatt and any Labatt Subsidiary from its own books and
records and, to the knowledge of Interbrew and Labatt, from third parties, for
use in preparing the actuarial valuation reports described in the immediately
preceding clause (vii) was complete and accurate in all material respects.
None of Interbrew, Mergeco and Labatt has any reason to believe that the
conclusions expressed in the actuarial valuation reports described in clause
(vii) are incorrect. Except as set forth in Schedule 4.15, Labatt and the
Labatt Subsidiaries have no formal plan and have made no promise or
commitment, whether legally binding or not, to create any additional Benefit
Plan or to improve or change the benefits provided under any Benefit Plan.
(b) Labatt and the Labatt Subsidiaries have complied with all of
their obligations in respect of the Benefit Plans. Each Benefit Plan is and
has been established, registered (where required), qualified, administered and
invested in all material respects in compliance with the terms thereof, all
applicable collective bargaining agreements and Applicable Law. All reports,
returns and similar documents with respect to the Benefit Plans required to be
filed with any Governmental Entity or distributed to any Benefit Plan
participant have been duly and timely filed or distributed and, to the
knowledge of Interbrew and Labatt, all reports, returns and similar documents
actually filed or distributed were true, complete and correct in all material
respects. There are no pending, or to the knowledge of Interbrew and Labatt,
threatened, investigations by any Governmental Entity, termination proceedings
or other claims (except routine claims for benefits payable under the Benefit
Plans) or Proceedings against or involving any Benefit Plan or asserting any
rights to or claims for benefits under any Benefit Plan that could give rise
to any material liability, and there are not any facts or circumstances that
could give rise to any material liability in the event of any such
investigation, claim or Proceeding.
(c) Except as set forth in Schedule 4.15, (i) all contributions,
premiums and payments required to be paid or remitted to or in respect of each
Benefit Plan have been paid or remitted in a timely fashion in accordance with
the terms of the Benefit Plans, any applicable collective bargaining agreement
and all Applicable Law and no Taxes, penalties or fees are owing or eligible
under any Benefit Plan, (ii) there are no going concern unfunded actuarial
liabilities, past service unfunded liabilities or solvency deficiencies
respecting any of the Benefit Plans, (iii) any withdrawals or transfers of
assets from any Benefit Plan which were not made with the consent of any
applicable Participant, have been made in accordance with the valid terms of
such Benefit Plan, any applicable collective bargaining agreements and all
Applicable Law and occurred with the consent of any applicable Governmental
Entity (where required), (iv) no distributions,
30
transfers or other payments (including payments of fees and expenses) have
been made from the assets of the Benefit Plans to any person in breach of the
terms of the Benefit Plan, any applicable collective bargaining agreement or
Applicable Law and (v) none of the Benefit Plans, or any insurance contract
relating thereto, requires or permits a retroactive increase in premiums or
payments, or require additional premiums or payments on termination of the
Benefit Plan, or any insurance contract relating thereto. All contributions,
premiums and payments required to be paid or remitted to or in respect of and
payments from, the Benefit Plans, for any period ending before the Closing
Date that are not yet, but will be, required to be made, will be properly
accrued and reflected in the Labatt Financial Statements.
(d) Each Benefit Plan required to have been approved by any
Governmental Entity has been so approved or timely submitted for approval; no
such approval has been revoked, and, to the knowledge of Interbrew and Labatt,
revocation has not been threatened and no event has occurred and no
circumstances exist that would adversely affect the tax-qualification of such
Benefit Plan, materially increase its cost or require security therefor.
(e) None of Labatt, any Labatt Subsidiary or, to the knowledge of
Interbrew and Labatt, any trustee, administrator or other fiduciary of any
Benefit Plan or any agent of any of the foregoing has engaged in any
transaction or acted in a manner that could, or has failed to act so as to,
subject Labatt, any Labatt Subsidiary or any trustee, administrator or other
fiduciary to any liability for material breach of fiduciary duty under
Applicable Law.
(f) None of the Benefit Plans is a multi-employer or multi-unit plan
as defined by Applicable Law and Labatt and the Labatt Subsidiaries are the
only employers which sponsor or participate in the Benefit Plans.
(g) Except with respect to Benefit Plans that provide severance or
vacation benefits, Schedule 4.15 discloses whether each Benefit Plan that is a
non-pension/group insurance plan (a "Labatt Welfare Plan") is (i) unfunded,
(ii) funded or (iii) insured. Each such Labatt Welfare Plan may be amended or
terminated without material liability to Labatt at any time after the Closing
Date. Except as disclosed in Schedule 4.15, no Labatt Welfare Plan provides
benefits after termination of employment except where the cost thereof is
borne entirely by the former Participant (or his or her eligible
Beneficiaries) or as required by Applicable Law.
(h) No Participant will be entitled to any additional compensation,
severance or other benefits or any acceleration of the time of payment or
vesting of any compensation or benefits under any Benefit Plan or Contract as
a result of the execution of this Agreement or the consummation of the
Transactions (alone or in combination with any other event) or any
compensation or benefits under any Benefit Plan or Contract the value of which
will be calculated on the basis of any of the Transactions (alone or in
31
combination with any other event), except as expressly provided in this
Agreement or as disclosed in Schedule 4.15. Except as disclosed in Schedule
4.15, the execution and delivery of this Agreement and the consummation of the
Transactions (alone or in combination with any other event) and compliance
with the provisions of this Agreement do not and will not require, or result
in the acceleration of, the funding (whether through a grantor trust or
otherwise) of, or increase the cost of, any Benefit Plan, Contract or any
other employment arrangement.
(i) Neither Labatt nor any Labatt Subsidiary has any material
liability or obligations, including under or on account of a Benefit Plan or
Contract, arising out of the hiring of persons to provide services to Labatt
or any Labatt Subsidiary and treating such persons as consultants or
independent contractors and not as employees of Labatt or any Labatt
Subsidiary.
(j) During the period beginning on the end of the plan year covered
by the most recent actuarial report required to be provided under Section
4.15(a)(vii) and ending on the date of this Agreement, there has been no
material change (i) in any actuarial or other assumption used to calculate
funding obligations with respect to any Benefit Plan, except as required by
Applicable Law or as recommended by Labatt's Benefit Plan actuary, or (ii) in
the manner in which contributions to any Benefit Plan are made or the basis on
which such contributions are determined.
(k) Except as disclosed in Schedule 4.15, no Benefit Plan, or the
funding medium in respect thereof, has been merged with any other benefit plan
or received a transfer of assets from another plan and no conditions have been
imposed by a Governmental Entity and no undertakings or commitments have been
given to any Participant or to any Governmental Entity concerning the use of
assets relating to any Benefit Plan or any related funding medium.
(l) All Participant data necessary to administer each Benefit Plan
is in the possession of Labatt or a Labatt Subsidiary and is in a form which
is sufficient for the proper administration of the Benefit Plan in accordance
with its terms and all Applicable Law and such data is, to the knowledge of
Interbrew and Labatt, complete and correct in all material respects.
(m) There does not exist as of the date of this Agreement, nor do
any circumstances exist as of the date of this Agreement that are reasonably
expected to result in, any Employee Benefits Liability at or after the
Closing, whether under any Benefit Plan or otherwise. "Employee Benefits
Liability" means any liability of Labatt, or any entity required to be treated
as a single employer under Section 414(b), (c), (m) or (o) of the Code with
Labatt, under (i) Sections 302, 405, 409 or Title IV of ERISA, (ii) Section
412, 4971 or 4975 of the Code or (iii) Sections 601 et. seq. and 701 et seq.
of ERISA and Section 4980B and Sections 9801 et seq. of the Code.
(n) ELH and its subsidiaries shall be deemed not to be Labatt
Subsidiaries for purposes of this Section 4.15.
SECTION 4.16. Absence of Changes or Events. Except as disclosed in
the Labatt Financial Statements, as contemplated in the Restructuring Plan or
as set forth in Schedule 4.16, since December 31, 2003, Labatt and the Labatt
Subsidiaries have
32
conducted their business only in the ordinary course
consistent with past practice, and there has not been:
(a) any event, change, effect or development that, individually or
in the aggregate, has had or would reasonably be expected to have a
Labatt Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to
any Labatt Capital Stock, or any repurchase for value by Labatt of any
Labatt Capital Stock or Rights of Labatt;
(c) any issuance, split, combination or reclassification of any
Labatt Capital Stock; or
(d) any change in accounting methods, principles or practices by
Labatt or any of its subsidiaries materially affecting the consolidated
assets, liabilities or results of operations of Labatt, except insofar as
may have been required by an applicable change in Canadian GAAP or
Applicable Law.
SECTION 4.17. Compliance with Applicable Laws. (a) Except as set
forth in Schedule 4.17, Labatt and the Labatt Subsidiaries are in compliance
with all Applicable Laws, including those relating to occupational health and
safety, except for instances of noncompliance that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Labatt
Material Adverse Effect. Except as set forth in Schedule 4.17, none of
Interbrew, Mergeco, Labatt or any of their respective subsidiaries has
received any written communication or notice during the past three years, from
any person that alleges that Labatt or a Labatt Subsidiary is not in
compliance in any material respect with any Applicable Law. To the knowledge
of Interbrew and Labatt, the current use by Labatt and the Labatt Subsidiaries
of the plants, offices and other facilities located on Labatt Properties does
not violate any local zoning or similar land use or government regulations in
any material respect. This Section 4.17(a) does not relate to matters with
respect to Taxes, which are the subject of Section 4.13, or to environmental
matters, which are the subject of Section 4.17(b).
(b) Except as set forth in Schedule 4.17, (i) none of Interbrew,
Mergeco and Labatt and its subsidiaries has received any written communication
from any person that alleges that Labatt or any Labatt Subsidiary is not in
compliance in any material respect with any Environmental Law or subject to
material liability under any Environmental Law, the substance of which
communication has not been materially resolved, (ii) Labatt and the Labatt
Subsidiaries hold, and are in compliance in all material respects with, all
material Labatt Permits required for Labatt and the Labatt Subsidiaries to
conduct their respective businesses under Environmental Laws as currently
conducted, and are in material compliance with all Environmental Laws, and no
material expenditures are expected in order to maintain compliance with
Environmental Laws or any proposed amendments thereto, (iii) neither Labatt
nor any of the Labatt Subsidiaries has any material contingent liabilities
including any assumed, whether by
33
contract or operation of law, liabilities or obligations, in connection with
any Hazardous Materials (including exposure to asbestos-containing material)
or arising under any Environmental Laws in connection with their respective
businesses or any formerly owned or operated divisions, subsidiaries, or
companies, and (iv) to the knowledge of Interbrew and Labatt, there have been
no Releases of Hazardous Materials on, at or under any of Labatt Properties or
any other property or facility formerly owned, leased or operated by Labatt,
any of the Labatt Subsidiaries or any of their respective predecessors that
would reasonably be expected to result in any material liability.
(c) (i) The occupancies and uses of the Labatt Properties, as well
as the development, construction, management, maintenance, servicing and
operation of the Labatt Properties, comply with all Applicable Laws and are
not in violation of any thereof, and all certificates of occupancy and all
other Labatt Permits required by Applicable Law for the proper use and
operation of the Labatt Properties are in full force and effect, (ii) all
approvals, consents, Labatt Permits, utility installations and connections
required for the development, construction, maintenance, operation and
servicing of the Labatt Properties have been granted, effected, or performed
and completed (as the case may be), and all fees and charges therefor have
been fully paid and (iii) none of Interbrew, Mergeco and Labatt and its
subsidiaries has received written notice of, or otherwise has knowledge of,
any violations, Proceedings or Judgments relating to zoning, building use and
occupancy, traffic, fire, health, sanitation, air pollution, ecological,
environmental or other laws or regulations, against, or with respect to, the
Labatt Properties, except in the case of each of clauses (i), (ii) and (iii),
individually or in the aggregate, as are not and would not reasonably likely
to be material to the conduct of the business of Labatt and the Labatt
Subsidiaries.
SECTION 4.18. Employee and Labor Matters. Except as set forth in
Schedule 4.18: (i) there is not any, and during the past five years there has
not been any, labor strike, dispute, work stoppage, work disruption or lockout
pending, or, to the knowledge of Interbrew and Labatt, threatened, against or
affecting Labatt or any Labatt Subsidiary; (ii) to the knowledge of Interbrew
and Labatt, no union organizational campaign is in progress with respect to
the employees of Labatt or any Labatt Subsidiary and no question or dispute
concerning representation by a union of such employees exists, including any
pending or, to the knowledge of Interbrew and Labatt, threatened applications
for certification of a union; (iii) neither Labatt nor any Labatt Subsidiary
is engaged in any unfair labor practice; (iv) there are not any unfair labor
practice charges or complaints against Labatt or any of the Labatt
Subsidiaries pending, or, to the knowledge of Interbrew and Labatt,
threatened, before a labor relations board or other tribunal; (v) there are
not any pending, or, to the knowledge of Interbrew and Labatt, threatened,
union grievances against Labatt or any Labatt Subsidiary as to which there is
a reasonable possibility of adverse determination and that, if so determined,
individually or in the aggregate, could reasonably be expected to result in
material liability to Labatt or a Labatt Subsidiary; (vi) there are not any
pending, or, to the knowledge of Interbrew and Labatt, threatened, charges
against Labatt or any of the Labatt Subsidiaries or any of their current or
former employees before any Governmental Entity responsible for the prevention
of unlawful employment practices; (vii) none of Interbrew, Mergeco and Labatt
and its subsidiaries has received written communication during the past five
years
34
of the intent of any Governmental Entity responsible for the enforcement
of labor or employment laws to conduct an investigation of or affecting Labatt
or any of the Labatt Subsidiaries and, to the knowledge of Interbrew and
Labatt, no such investigation is in progress; (viii) all current assessments
under applicable workers' compensation legislation have been paid or accrued
by Labatt or any Labatt Subsidiary and such entities have not been and are not
subject to any special or penalty assessment under such legislation which has
not been paid, and (ix) none of Labatt or the Labatt Subsidiaries has entered
into any covenant or undertaking with any Governmental Entity restricting the
right of Labatt or any Labatt Subsidiary to terminate the employment of its
employees, except, in the case of each of clauses (iii), (iv), (v), (vi) and
(vii), individually or in the aggregate, as are not and would not reasonably
likely to be material to the conduct of the business of Labatt and the Labatt
Subsidiaries.
SECTION 4.19. Sufficiency of Assets. Following the Closing, neither
Interbrew nor any subsidiary of Interbrew (other than Labatt or a Labatt
Subsidiary) will own any of the assets that are primarily related to the
conduct of the Acquired Business in substantially the same manner as
heretofore conducted and the assets owned by Labatt or the Labatt Subsidiaries
will be sufficient for the conduct of the Acquired Business immediately
following the Closing in substantially the same manner as heretofore
conducted.
SECTION 4.20. Private Offering. None of Interbrew, Mergeco, Labatt,
their respective affiliates and their respective representatives has issued,
sold or offered any security of Labatt to any person under circumstances that
would cause the sale of the Labatt Shares, as contemplated by this Agreement,
to be subject to the registration requirements of the Securities Act. None of
Interbrew, Mergeco, Labatt Holdco, Labatt, their respective affiliates and
their respective representatives will offer the Labatt Shares or any part
thereof or any similar securities for issuance or sale to, or solicit any
offer to acquire any of the same from, anyone so as to make the issuance and
sale of the Labatt Shares subject to the registration requirements of Section
5 of the Securities Act. Assuming the representations of AmBev contained in
Section 2.07 are true and correct, the sale and delivery of the Labatt Shares
hereunder are exempt from the registration and prospectus delivery
requirements of the Securities Act.
ARTICLE V
Covenants
SECTION 5.01. Covenants Relating to Conduct of Business of AmBev,
Interbrew and Mergeco. (a) AmBev shall not, and shall not permit any of its
wholly owned subsidiaries to, and Interbrew shall not, and shall not permit
Mergeco, Labatt Holdco, Labatt and its subsidiaries, and the other wholly
owned subsidiaries of Interbrew to, take any action that would, or that could
reasonably be expected to, result in any of the conditions set forth in
Article VI not being satisfied.
(b) Prior to the Closing, Mergeco shall not (i) engage in any
business or activity other than the ownership of the Labatt Holdco Shares and
any activities
35
incidental thereto, in accordance with this Agreement and the Operative
Agreements, (ii) create, incur or permit to exist any debt or other monetary
liability to third parties or any Liens upon any of its assets or (iii)
liquidate or dissolve, or merge into or consolidate with, or sell or otherwise
transfer any of its assets to, any other person, other than as contemplated by
this Agreement (including the Restructuring).
(c) Interbrew, Labatt and AmBev shall use their respective
commercially reasonable efforts to negotiate in good faith and agree prior to
the Closing one or more new intercompany agreements between Labatt and the
Labatt Subsidiaries, on the one hand, and Interbrew and its subsidiaries, on
the other hand, or enter into modifications or amendments to any such existing
intercompany agreements, as may be necessary or advisable, in each case on
mutually agreeable terms, provided that Labatt shall have the unconditional
right to terminate the agreements listed as Items 1 and 2 in Schedule
4.10(a)(xiii) after the Closing at no cost to it.
(d) Prior to the Closing, Interbrew and AmBev shall use their
respective commercially reasonable efforts to negotiate in good faith a
management agreement on mutually agreeable terms pursuant to which Interbrew
would manage Labatt USA following the Closing.
(e) As soon as practicable following the Closing Date, Interbrew and
AmBev shall, and shall cause their subsidiaries to, use their respective
commercially reasonable efforts to negotiate in good faith licensing
agreements between them as may be necessary or desirable, on terms to be
mutually agreed.
(f) After the Closing Date, to the extent Interbrew continues to own
a majority of the equity interests in Labatt USA or Cerbuco, at AmBev's
request, Interbrew shall offer AmBev the opportunity to make a minority
investment in Labatt USA or make an investment in, or acquire, Cerbuco, each
on terms to be mutually agreed.
SECTION 5.02. Covenants Relating to Conduct of Business of Labatt.
(a) Except as otherwise expressly permitted or required by the terms of this
Agreement (including the Restructuring Plan) and the Operative Agreements,
from the date of this Agreement to the Closing, Interbrew shall cause the
business of Labatt and the business of its subsidiaries to be conducted in the
usual, regular and ordinary course in substantially the same manner as
previously conducted (including with respect to research and development
efforts, advertising, promotions, capital expenditures and inventory levels)
and use all commercially reasonable efforts to keep intact their respective
businesses, keep available the services of their current employees and
preserve their relationships with customers, suppliers, licensors, licensees,
distributors and others with whom they deal to the end that their respective
businesses shall be unimpaired at the Closing, provided that Labatt shall be
permitted to, and shall use its commercially reasonable efforts in
consultation with AmBev to, conduct the business of Labatt and the Labatt
Subsidiaries in a manner such that such businesses do not provide
"transportation services" or "financial services" (as such terms are defined
for purposes of Section 14.1(5) of the Investment Canada Act) to third parties
and are not a "cultural business" (as such term is defined for purposes of
Section 14.1(5) of the Investment
36
Canada Act). In addition (and without limiting the generality of the
foregoing), except as otherwise expressly permitted or required by the terms
of this Agreement (including pursuant to the Restructuring Plan and as set
forth on Schedule 5.02 and subject to Section 5.06, as necessary to comply
with the Antitrust Laws), from the date of this Agreement to the Closing,
Labatt shall not, and shall not permit any of the Labatt Subsidiaries to, and
Interbrew shall not, and shall not permit any of Labatt and the Labatt
Subsidiaries to, do any of the following without the prior written consent of
AmBev:
(i) amend its charter documents or by-laws;
(ii) declare or pay any dividend or make any other distribution to
its shareholders whether or not upon or in respect of any shares of its
capital stock; provided, however, that dividends and distributions may
continue to be made by subsidiaries to their parents or to other
subsidiaries in amounts and at times consistent with past practice;
(iii) redeem or otherwise acquire any shares of its capital stock or
issue any shares of its capital stock or any option, warrant or right
relating thereto or any securities convertible into or exchangeable for
any shares of capital stock;
(iv) except as otherwise contemplated by this Agreement or as
required to ensure that any Benefit Plan is not then out of compliance
with Applicable Law or to comply with any Contract or Benefit Plan
entered into prior to the date hereof, (A) adopt, enter into, terminate
or amend (I) any collective bargaining agreement or Benefit Plan or (II)
any Contract (including an employment or severance agreement) or other
agreement, plan or policy involving Labatt or any Labatt Subsidiary and
one or more Participants, (B) increase in any manner the compensation,
bonus, including any incentive or performance award, or fringe or other
benefits of, or pay any bonus, including any incentive or performance
award, of any kind or amount whatsoever to, any current Participant,
except for any planned salary increases and payment of bonuses, each as
described in Schedule 5.02(a)(iv), (C) pay any benefit or amount not
required under any Benefit Plan, Contract or collective bargaining
agreement as in effect on the date of this Agreement, other than as
contemplated in clause (B), (D) grant or pay any severance or termination
pay or increase in any manner the severance or termination pay of any
Participant, (E) grant any awards under any bonus, incentive, performance
or other Benefit Plan, other than as contemplated in clause (B), (F) take
any action to fund or in any other way secure the payment of compensation
or benefits under any Benefit Plan or Contract, (G) take any action to
accelerate the vesting or payment of any compensation or benefit under
any Benefit Plan or Contract, except as required under the terms of such
Benefit Plan or Contract or (H) materially change any actuarial or other
assumption used to calculate funding obligations with respect to any
Benefit Plan, except as recommended by Labatt's Benefit Plan actuary, or
change the manner in which contributions to any Benefit Plan are made or
the basis on which such contributions are determined;
37
(v) incur or assume any liabilities, obligations or indebtedness for
borrowed money or guarantee any such liabilities, obligations or
indebtedness, other than (A) in the ordinary course of business and
consistent with past practice, (B) liabilities and obligations incurred
in connection with the restructuring or refinancing (including the
Restructuring) of existing indebtedness for borrowed money (provided the
aggregate principal amount thereof is not increased by any material
amount) and (C) as, individually or in the aggregate, would not be
material to Labatt and the Labatt Subsidiaries, taken as a whole;
(vi) permit, allow or suffer any of its assets to become subjected
to any material Lien of any nature;
(vii) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value owed to, or
held by, Labatt or the Labatt Subsidiaries;
(viii) pay, loan or advance any amount to, or sell, transfer or
lease any of its assets to, or enter into any agreement or arrangement
with any of its affiliates, except for (A) intercompany transactions
between Labatt and its subsidiaries and between such subsidiaries, and
(B) dividends and distributions permitted under clause (ii) above;
(ix) make any change in any method of accounting or accounting
practice or policy other than (A) those required by Canadian GAAP or
Applicable Law and (B) a closing of the books of Labatt and its
subsidiaries immediately before the Closing;
(x) acquire by amalgamating, merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or
other business organization or division thereof;
(xi) make or incur any capital expenditures, including the
acquisition of material assets (but excluding purchases of inventory in
the ordinary course of business), that is in the aggregate in excess of
C$75,000,000;
(xii) sell, lease, license or otherwise dispose of any of its assets
that are material, individually or in the aggregate, to Labatt and the
Labatt Subsidiaries, taken as a whole, except inventory and obsolete or
excess equipment sold in the ordinary course of business consistent with
past practice;
(xiii) authorize any of, or commit or agree to take, whether in
writing or otherwise, to do any of, the foregoing actions; or
(xiv) (A) make or change any material tax election or tax accounting
method or (B) settle or compromise any material tax claim or assessment
(other than, in the case of clause (B), in respect of any matter
disclosed in Schedule 4.13).
38
(b) Consultation. To the extent permitted by Applicable Law, in
connection with the continuing operation of the business of AmBev, on the one
hand, and Interbrew, Labatt and the Labatt Subsidiaries, on the other hand,
between the date of this Agreement and the Closing, AmBev and Interbrew shall
use their respective commercially reasonable efforts to consult in good faith
on a bi-weekly basis with the representatives of the other to report material
operational developments and the general status of ongoing operations pursuant
to procedures agreed by Interbrew and AmBev. Each of AmBev and Interbrew
acknowledges that any such consultation shall not constitute a waiver by it of
any rights it may have under this Agreement or any Operative Agreement, and
that it shall not have any liability or responsibility for any actions of the
other or any of the other's officers or directors with respect to matters that
are the subject of such consultations unless such person expressly consents to
such action in writing.
SECTION 5.03. No Solicitation. (a) Each of Interbrew and Labatt
agrees that for the period beginning on the date hereof and ending on (x) if
the Closing is completed in accordance herewith, the Closing Date or (y) if
the Closing is not completed in accordance herewith, the second anniversary of
the termination of this Agreement in accordance with its terms, neither it nor
any of its affiliates nor any officer, director or employee of it or its
affiliates or any investment banker, attorney, accountant or other
representative of Interbrew (the "Interbrew Representatives"), acting alone or
as part of a group, will, directly or indirectly (i) solicit, initiate or
encourage any Other Labatt Bid, (ii) enter into any agreement with respect to
any Other Labatt Bid, (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take
any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Other Labatt
Bid or (iv) disclose any intention or plan inconsistent with the foregoing.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any Interbrew
Representative, whether or not such person is purporting to act on behalf of
Interbrew or Labatt or otherwise, shall be deemed to be a breach of this
agreement by Interbrew and Labatt. Interbrew shall promptly advise AmBev
orally and in writing of any Other Labatt Bid or any inquiry with respect to
or which could lead to any Other Labatt Bid and the identity of the person
making any such Other Labatt Bid or inquiry. The term "Other Labatt Bid" shall
mean any proposal for an amalgamation, merger or other business combination,
sale of securities, sale of substantial assets, joint venture or similar
transaction involving Labatt or any of its subsidiaries.
(b) AmBev agrees that for the period beginning on the date hereof
and ending on (x) if the Closing is completed in accordance herewith, the
Closing Date or (y) if the Closing is not completed in accordance herewith,
the second anniversary of the termination of this Agreement in accordance with
its terms, neither it nor any of its affiliates nor any officer, director or
employee of it or its affiliates or any investment banker, attorney,
accountant or other representative of AmBev (the "AmBev Representatives"),
acting alone or as part of a group, will, directly or indirectly, (i) acquire
or offer or agree to acquire, directly or indirectly, by purchase or
otherwise, any equity securities or securities convertible into equity
securities of Interbrew or any of its affiliates or subsidiaries, (ii) propose
to enter into, directly or indirectly, any merger or
39
business combination involving Interbrew or any of its subsidiaries, (iii)
otherwise seek to influence or control, in any manner whatsoever (including
proxy solicitation or otherwise), the management or policies of Interbrew or
any of its Subsidiaries, (iv) solicit, initiate or encourage any AmBev Bid,
(v) enter into any agreement with respect to any AmBev Bid, (vi) participate
in any discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any AmBev Bid, (vii) assist, advise or encourage
(including by knowingly providing or arranging financing for that purpose) any
other person in doing any of the foregoing, or (viii) disclose any intention
or plan inconsistent with the foregoing. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any AmBev Representative, whether or not such person is purporting
to act on behalf of AmBev or otherwise, shall be deemed to be a breach of this
Agreement by AmBev. AmBev shall promptly advise Interbrew orally and in
writing of any AmBev Bid or any inquiry with respect to, or which could lead
to, any AmBev Bid and the identity of the person making any such AmBev Bid or
inquiry. The term "AmBev Bid" shall mean any proposal for an amalgamation,
merger or other business combination, sale of securities, sale of substantial
assets, joint venture, or similar transaction involving AmBev.
SECTION 5.04. Access to Information. (a) After the date hereof until
the Closing, upon reasonable notice and (i) subject to (x) Applicable Law and
(y) any confidentiality obligation or undertaking binding on a person or (ii)
except where disclosure would undermine or void applicable legal privilege,
Interbrew shall, and shall cause Labatt and its subsidiaries to, afford to
AmBev and its officers, employees, accountants, financial advisors, counsel
and other representatives such access throughout the period prior to the
Closing, to the books, records, offices, properties, personnel and Tax Returns
of Labatt and its subsidiaries and to such other information as AmBev and its
representatives may reasonably request, and, during such period shall furnish
promptly to AmBev any information concerning Labatt or any of its subsidiaries
as AmBev or its representatives may reasonably request.
(b) After the date hereof until the Closing, upon reasonable notice
and (i) subject to (x) Applicable Law and (y) any confidentiality obligation
or undertaking binding on a person or (ii) except where disclosure would
undermine or void applicable legal privilege, AmBev shall afford to Interbrew,
Labatt and their respective officers, employees, accountants, financial
advisors, counsel and other representatives such access throughout the period
prior to the Closing, to the books, records, offices, properties, personnel
and Tax Returns of AmBev and its subsidiaries and to such other information as
Interbrew or Labatt and their respective representatives may reasonably
request, and, during such period shall furnish promptly to Interbrew and
Labatt any information concerning AmBev or any of its subsidiaries as
Interbrew, Labatt or their respective representatives may reasonably request.
SECTION 5.05. Confidentiality. (a) Each of AmBev and Interbrew
acknowledges that the information being provided to it in connection with the
Transactions is subject to the terms of a confidentiality agreement between
AmBev and
40
Interbrew (the "Confidentiality Agreement"), the terms of which are
incorporated herein by reference. Effective upon, and only upon, the Closing,
the Confidentiality Agreement shall terminate with respect to information
relating solely to Labatt and the Labatt Subsidiaries; provided, however, that
each of AmBev and Interbrew acknowledges that any and all other information
provided to it by the other party or its representatives concerning such other
party shall remain subject to the terms and conditions of the Confidentiality
Agreement after the Closing Date.
(b) Interbrew hereby assigns, effective at the Closing Date, to
AmBev its rights under all confidentiality agreements entered into by
Interbrew within the prior two years with any person in connection with the
proposed sale of Labatt to the extent such rights relate to Labatt and the
Labatt Subsidiaries, in each case, subject to Applicable Law and to the extent
permitted under each such agreement.
SECTION 5.06. Reasonable Best Efforts; Post-Closing Cooperation. (a)
On the terms and subject to the conditions of this Agreement and Section
5.06(b), each party shall use its reasonable best efforts to cause the Closing
to occur, including taking all reasonable actions necessary to comply promptly
with all legal requirements that may be imposed on it or any of its affiliates
with respect to the Closing.
(b) AmBev and Interbrew shall, as promptly as practicable, but in no
event later than fifteen Business Days following the execution and delivery of
this Agreement (other than with respect to any supplemental information
requested after an initial filing or submission), if necessary, make the
necessary filings and submissions with the applicable antitrust authorities
(the "Antitrust Authorities") under the Antitrust Laws required for the
Transactions and any supplemental information requested in connection
therewith pursuant to the Antitrust Laws. Any such filings and submissions and
supplemental information shall be in substantial compliance with the
requirements of the Antitrust Laws. Subject to Applicable Law, AmBev and
Interbrew shall furnish to the other such information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission that is necessary under the Antitrust Laws. AmBev and
Interbrew (i) shall keep each other apprised of the status of any
communications with, and any inquiries or requests for additional information
from, the Antitrust Authorities, (ii) shall comply promptly with any such
inquiry or request and (iii) shall promptly provide any supplemental
information requested in connection with the filings made hereunder pursuant
to the Antitrust Laws. Any such supplemental information shall be in
substantial compliance with the requirements of the Antitrust Laws. AmBev and
Interbrew shall use their reasonable best efforts to obtain any clearance
required under the Antitrust Laws for the consummation of the Closing subject
to Section 6.04.
(c) Each party shall, and shall cause its affiliates to, use its
reasonable best efforts (at its own expense) to obtain as soon as practicable,
and to cooperate in obtaining as soon as practicable, all consents from third
parties and Governmental Entities necessary or appropriate to permit the
consummation of the Closing or, in the case of the Investment Canada Act, to
complete any required filing, and, if necessary, to obtain any
41
required approval after the Closing within the time period prescribed by the
Investment Canada Act.
(d) On and after the date hereof, subject to Applicable Law,
Interbrew shall use its reasonable best efforts to furnish to AmBev (at
AmBev's expense) in a timely manner such financial statements (audited or
unaudited, as applicable, and whether or not reconciled to U.S. GAAP), and
such other information and reasonable assistance as AmBev may reasonably
request in connection with its preparation of the filing of any AmBev SEC
Reports or any other reports, schedules, forms, statements and other documents
AmBev is required to file with a Governmental Entity.
SECTION 5.07. Expenses; Transfer Taxes. (a) Subject to Sections 2.11
and 3.10 of this Agreement, whether or not the Closing takes place, and except
as set forth in paragraph (b) below or in Article IX or as otherwise agreed to
in writing by Interbrew and AmBev, all costs and expenses incurred in
connection with this Agreement and the Operative Agreements and the
Transactions, including all costs and expenses incurred pursuant to Section
5.06, shall be paid by the party incurring such expense, provided that all
expenses incurred by Mergeco, Labatt Holdco and Labatt shall be paid by
Interbrew (unless otherwise agreed in writing by Interbrew and AmBev).
(b) All taxes, duties, contributions and fees applicable to the
issuance and registration of the AmBev Shares, including the Brazilian (CPMF)
banking tax triggered as a result of the registration of the Incorporacao and
the issuance of the AmBev Shares with the Brazilian Central Bank, shall be
paid by AmBev, and all taxes and fees applicable to the issuance and
registration of the Labatt Shares shall be paid by Interbrew or Labatt. Each
party shall use its commercially reasonable efforts to avail itself of any
available exemptions from any such taxes, duties, contributions or fees, and
to cooperate with the other parties in providing any information and
documentation that may be necessary to obtain such exemptions.
SECTION 5.08. Publicity. From the date hereof through the Closing
Date, no public release or announcement concerning the Transactions shall be
issued by any party or its affiliates without the prior consent of the other
parties (which consent shall not be unreasonably delayed or withheld), except
as such release or announcement may be required by Applicable Law or the rules
of any securities exchange or supervisory authority thereof, in which case the
party required to make the release or announcement shall use commercially
reasonable efforts to allow the other party reasonable time to comment on such
release or announcement in advance of such issuance; provided, however, that
each party may make internal announcements to its respective employees that
are consistent with the parties' prior public disclosures regarding the
Transactions after reasonable prior notice to and consultation with the other.
SECTION 5.09. Further Assurances. From time to time, as and when
requested by any party, each party shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions (subject to Section
5.06), as such other party may reasonably
42
deem necessary or desirable to consummate the Transactions or to comply with
Applicable Law arising in connection therewith.
SECTION 5.10. Transfer Restrictions. Interbrew shall not sell,
transfer, pledge, assign or otherwise dispose of (including by gift) or permit
any Lien to exist on (collectively, "Transfer"), or consent to or permit any
Transfer of, any of the Labatt Shares or any interest therein, or enter into
any Contract, option or other arrangement with respect to the Transfer
(including any profit sharing or other derivative arrangement) of any of the
Labatt Shares or any interest therein, except in compliance with the
provisions of this Agreement.
SECTION 5.11. Letter Agreement. From and after the Closing, (i)
Labatt hereby unconditionally and irrevocably guarantees the due and punctual
payment, performance and observance by Labatt Holdco, of all Labatt Holdco's
agreements, covenants and obligations to, in favor of or with IIBV under (x)
that certain letter agreement, dated as of March 3, 2004 (the "Letter
Agreement"), by and between Labatt Holdco and IIBV, (y) the promissory note to
be entered into in connection with the Letter Agreement, in substantially the
form (with such changes as may be made, subject to compliance with the last
sentence of this Section 5.11, prior to the execution thereof) set forth as
Exhibit A to the Letter Agreement (the "Femsa Cerveza Promissory Note"), and
(z) the promissory note to be entered into in connection with the Letter
Agreement, in substantially the form (with such changes as may be made,
subject to compliance with the last sentence of this Section 5.11, prior to
the execution thereof) set forth as Exhibit B to the Letter Agreement (the
"Labatt USA Promissory Note" and, together with the Femsa Cerveza Promissory
Note, the "Promissory Notes") and (ii) Interbrew hereby unconditionally and
irrevocably guarantees the due and punctual payment, performance and
observance by IIBV of all IIBV's agreements, covenants and obligations to, in
favor of or with Labatt Holdco under the Letter Agreement. Interbrew agrees
not to, and agrees to not permit Labatt Holdco to, amend or waive any terms or
rights under the Letter Agreement without the prior written consent of AmBev.
SECTION 5.12. Net Debt as of Closing. Interbrew shall cause Labatt
and the Labatt Subsidiaries to have, as of the Effective Time, after giving
effect to the Restructuring, regardless of whether a Femsa Cerveza Exclusion
or Labatt USA Restructuring shall have occurred, Net Debt not exceeding
C$1,300,000,000. "Net Debt" means the amount by which (i) the indebtedness,
obligations or liabilities of Labatt and the Labatt Subsidiaries to third
parties for borrowed money (excluding Interbrew and its subsidiaries and
affiliates), which, for the avoidance of doubt, does not include the
Promissory Notes, exceeds (ii) the aggregate "cash and short-term investments"
(as such term is defined in Note 1(e) to the Labatt Financial Statements) of
Labatt and the Labatt Subsidiaries. To the extent Net Debt exceeds
C$1,300,000,000, Interbrew shall promptly reimburse AmBev or Labatt on an
after-Tax basis for the amount of such excess. ELH and its subsidiaries shall
be deemed not to be Labatt Subsidiaries for purposes of this Section 5.12.
SECTION 5.13. Inactive Subsidiaries. On and after the date of this
Agreement and prior to the time the Restructuring is consummated, unless AmBev
43
requests otherwise in writing, Labatt shall cause each of the subsidiaries of
Labatt listed on Schedule 5.13 to be sold to Interbrew or a subsidiary of
Interbrew (other than Labatt or a Labatt Subsidiary) at a price equal to the
applicable fair market value of such subsidiaries that have been sold, in
which case any such subsidiaries that have been sold to Interbrew or a
subsidiary of Interbrew shall not be deemed to be "Labatt Subsidiaries" for
purposes of this Agreement.
SECTION 5.14. Modification of Economic Value Appraisal. AmBev shall
not permit the Economic Value Appraisal to be amended or modified without the
written consent of Interbrew.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to each Party's Obligation. The obligations
of Interbrew, Mergeco and AmBev to consummate the Incorporacao are subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Governmental Approvals. All Consents (including, without
limitation, the authorizations required pursuant to the Antitrust Laws)
of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity necessary for the consummation of the
Transactions shall have been obtained or filed or shall have occurred.
(b) No Injunctions or Restraints. No Applicable Law or injunction
enacted, entered, promulgated, enforced or issued by any Governmental
Entity or other legal restraint or prohibition preventing the
consummation of the Transactions shall be in effect.
(c) Contribution and Subscription. The Contribution and Subscription
shall have been consummated prior to the Effective Time.
(d) Brazilian Central Bank Approval. AmBev shall have obtained the
Brazilian Central Bank Approval.
(e) Appraisal Reports. The Economic Valuation Report and the Net
Worth Appraisal shall have been issued and delivered.
(f) Canadian Competition Act Approval. Canadian Competition Act
Approval shall have been obtained.
For purposes of this Agreement, "Canadian Competition Act Approval"
means:
(A) the Commissioner of Competition (the "Commissioner")
appointed under the Competition Act (Canada) shall have
issued an advance ruling certificate ("ARC") pursuant to
▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ (▇▇▇▇▇▇) (the "Canadian
Competition Act") to the effect that she is satisfied that
she would not have sufficient grounds upon which to apply
to the Competition Tribunal for an order under section 92
of the Canadian Competition Act with respect to the
Transactions, or
(B) the Commissioner shall have waived under section 113(c) of
the Canadian Competition Act the obligation to notify the
Commissioner and supply information because substantially
similar information was previously supplied in relation to
a request for an ARC, or the waiting period under section
123 of the Canadian Competition Act shall have expired,
and in either case AmBev shall have been advised in
writing by the Commissioner that the Commissioner has
determined not to make an application for an order under
section 92 of the Canadian Competition Act in respect of
the Transactions and any terms and conditions attached to
any such advice shall not be a Burdensome Condition.
SECTION 6.02. Conditions to Obligation of Interbrew and Mergeco. The
obligations of Interbrew and Mergeco to consummate the Incorporacao is subject
to the satisfaction of (or waiver by Interbrew and Mergeco), on or prior to
the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of AmBev made in this Agreement shall be true and correct in
all respects as of the Closing Date as though made on the Closing Date,
except to the extent such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties
shall be true and correct in all respects on and as of such earlier
date), with only such exceptions (disregarding the words "material",
"materially" or any modification or qualification based on such terms or
based on the defined term "AmBev Material Adverse Effect" set forth in
such representations and warranties) as would not reasonably be expected
to have, individually or in the aggregate, an AmBev Material Adverse
Effect, other than the representations and warranties set forth in
Sections 2.04, 2.05, 2.09 and 2.10, which shall be subject to the
standard set forth in Section 6.02(c) (disregarding the words "material",
"materially" or any modification or qualification based on such terms or
based on the defined term "AmBev Material Adverse Effect" set forth in
such representations and warranties), and Interbrew shall have received a
certificate signed by an authorized officer of AmBev to such effect.
(b) Performance of Obligations of AmBev. AmBev shall have performed
or complied in all material respects with all obligations and covenants
required by this Agreement and the Operative Agreements to which it is a
party to be performed or complied with by it on or prior to Closing Date,
and Interbrew shall
have received a certificate signed by an authorized officer of AmBev to
such effect.
(c) No Material Adverse Change. Since the date hereof, there shall
not have been any event, change, effect or development that, individually
or in the aggregate, has had or would reasonably be expected to have a
material adverse effect on the assets or properties of AmBev and its
subsidiaries, taken as a whole, other than any such event, change, effect
or development arising in whole or in part as a result of (i) general
economic or capital or financial markets conditions, (ii) political,
governmental or regulatory changes or actions (other than war, moratorium
or the nationalization or expropriation of assets), (iii) changes in the
beer, soft drinks, beverage or consumer products markets, (iv) changes or
developments in monetary policy (including currency devaluations) or
inflation in the Federative Republic of Brazil or any of the other
jurisdictions in which AmBev and its subsidiaries conduct business or (v)
the announcement of the Transactions.
SECTION 6.03. Conditions to Obligation of AmBev. The obligation of
AmBev to consummate the Incorporacao is subject to the satisfaction (or waiver
by AmBev) on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Interbrew, Mergeco and Labatt made in this Agreement shall
be true and correct in all respects as of the Closing Date as though made
on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct in all respects
on and as of such earlier date), with only such exceptions (disregarding
the words "material", "materially" or any modification or qualification
based on such terms or based on the defined terms "Interbrew Material
Adverse Effect" or "Labatt Material Adverse Effect" set forth in such
representations and warranties) as would not reasonably be expected to
have, individually or in the aggregate, an Interbrew Material Adverse
Effect or a Labatt Material Adverse Effect, other than the
representations and warranties set forth in Sections 3.04, 3.05, 4.04 and
4.05 through 4.19 (inclusive), which shall be subject to the standard set
forth in Section 6.03(c) (disregarding the words "material", "materially"
or any modification or qualification based on such terms or based on the
defined terms "Interbrew Material Adverse Effect" or "Labatt Material
Adverse Effect" set forth in such representations and warranties), and
AmBev shall have received a certificate signed by an authorized officer
of Interbrew to such effect.
(b) Performance of Obligations of Interbrew and Mergeco. Interbrew,
Mergeco and Labatt shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement
and the Operative Agreements to be performed or complied with by
Interbrew, Mergeco and Labatt on or prior to the Closing Date, and AmBev
shall have received a certificate signed by an authorized officer of
Interbrew to such effect.
46
(c) No Material Adverse Change. Since the date hereof, there shall
not have been any event, change, effect or development that, individually
or in the aggregate, has had or would reasonably be expected to have a
material adverse effect on the assets or properties of Labatt and the
Labatt Subsidiaries, taken as a whole, other than any such event, change,
effect or development arising in whole or in part as a result of (i)
general economic or capital or financial markets conditions, (ii)
political, governmental or regulatory changes or actions (other than war,
moratorium or the nationalization or expropriation of assets), (iii)
changes in the beer, soft drinks, beverage or consumer products markets,
(iv) changes or developments in monetary policy (including currency
devaluations) or inflation in Canada or any of the other jurisdictions in
which Labatt and the Labatt Subsidiaries conduct business or (v) the
announcement of the Transactions.
SECTION 6.04. Postponement of Closing. Each of AmBev and Interbrew
shall have the right to postpone the Closing if in such party's reasonable
opinion, (a) compliance with any conditions to approval required by any
Governmental Entity or Antitrust Authority pursuant to Applicable Laws would
be burdensome or unduly expensive, or (b) any Governmental Entity or Antitrust
Authority shall have expressed its intention or threatened to take action to
impose remedies pursuant to Applicable Laws, which remedies, if imposed, would
be burdensome or unduly expensive. In the event of any such postponement, the
parties shall, as promptly as practicable, jointly use their reasonable best
efforts to negotiate a mutually acceptable arrangement with such Governmental
Entity or Antitrust Authority or a mutually acceptable restructuring of the
Transactions so as to satisfy such conditions or avoid the imposition of such
remedies. For purposes of this Section 6.04, a condition required by the
Governmental Entity or Antitrust Authority shall be burdensome or unduly
expensive (a "Burdensome Condition") only if such condition seeks (i) (A) to
prohibit or limit the ownership or operation by AmBev or any of its
subsidiaries of any material portion of the business or assets of AmBev and
its subsidiaries, taken as a whole (as if the Transactions had been
completed), or to compel AmBev or any of its subsidiaries to dispose of or
hold separate any material portion of the business or assets thereof, taken as
a whole (as if the Transactions had been completed), (B) to prohibit Interbrew
or any of its subsidiaries from effectively controlling in any material
respect the business or operations of AmBev and its subsidiaries, taken as a
whole (as if the Transactions had been completed) or (C) to prohibit or limit
the ownership or operation by Interbrew or any of its subsidiaries of any
material portion of the business or assets thereof, or to compel Interbrew or
any of its subsidiaries to dispose of or hold separate any material portion of
the business or assets thereof, taken as a whole (as if the Transactions had
been completed), (ii) in the case of AmBev, to impose limitations on the
ability of AmBev to acquire or hold, or exercise full rights of ownership of,
the Labatt Holdco Shares, including the right to vote on all matters properly
presented to the shareholders of Labatt Holdco, and (iii) in the case of
Interbrew, to impose limitations on the ability of Interbrew to acquire or
hold, or exercise full rights of ownership of, the AmBev Shares, including the
right to vote on all matters properly presented to the shareholders of AmBev.
47
SECTION 6.05. Frustration of Closing Conditions. Neither Interbrew,
Mergeco nor AmBev may rely on the failure of any condition set forth in this
Article V to be satisfied if such failure was caused by such party's failure
to act in good faith or to use its reasonable best efforts to cause the
Closing to occur as required by Section 5.06.
ARTICLE VII.
Termination, Amendment and Waiver
SECTION 7.01. Termination. (a) Notwithstanding anything to the
contrary in this Agreement, this Agreement may be terminated and the
Transactions abandoned at any time prior to the Closing:
(i) by mutual written consent of AmBev and Interbrew; and
(ii) by AmBev or Interbrew if, at any time prior to the Closing, the
Contribution and Subscription Agreement is terminated in accordance with
its terms;
provided, however that the party seeking termination pursuant to
clause (ii) is not then in material breach of its representations,
warranties, covenants or agreements contained in this Agreement.
(b) In the event of termination pursuant to this Section 7.01,
written notice thereof shall forthwith be given to the other and the
Transactions shall be terminated. If this Agreement is terminated as
provided herein:
(i) each party shall return to the sender all documents and other
material received from such party relating to the Transactions, whether
so obtained before or after the execution hereof; and
(ii) all confidential information received by Interbrew with respect
to the business of AmBev and its subsidiaries or by AmBev with respect to
the business of Interbrew or Labatt and their subsidiaries shall be
treated in accordance with the Confidentiality Agreements, which shall
remain in full force and effect for a period of three years from the date
of termination notwithstanding the termination of this Agreement.
SECTION 7.02. Effect of Termination. If this Agreement is terminated
and the Transactions are abandoned as described in Section 7.01, this
Agreement shall become void and be of no further force or effect, except for
the provisions of (a) Section 5.07 relating to certain expenses, (b) Section
2.12 and 3.10 relating to finder's fees and broker's fees, (c) Section 7.01
and this Section 7.02, (d) Section 5.03 and Section 5.08 relating to
non-solicitation and publicity and (e) Articles VIII and IX. Nothing in this
Section 7.02 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or to
impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement.
48
SECTION 7.03. Amendments and Waivers. (a) This Agreement may not be
amended except by an instrument in writing signed by each of the parties
hereto. By an instrument in writing, Interbrew, on the one hand, or AmBev, on
the other hand, may waive compliance by the other with any term or provision
of this Agreement that such other party was or is obligated to comply with or
perform.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or future exercise thereof or
the exercise of any other right, power or privilege.
ARTICLE VIII
Indemnification
SECTION 8.01. Indemnification of AmBev Indemnitees. (a) From and
after the Closing, Interbrew shall indemnify AmBev, its affiliates (including
Labatt Holdco, Labatt and its other subsidiaries) and each of their respective
officers, directors, employees, stockholders, agents and representatives (the
"AmBev Indemnitees") against and hold it harmless from, any loss, liability,
claim, damage or expense including reasonable legal fees and expenses
(collectively, "AmBev Losses"), suffered or incurred by such AmBev Indemnitee
arising from, relating to or otherwise in respect of:
(i) any breach of any representation or warranty relating to Labatt
contained in this Agreement, in any Operative Agreement or in any
certificate delivered pursuant hereto;
(ii) any breach of (A) any covenant of Interbrew or (B) any covenant
of Mergeco or Labatt to be performed prior to the Closing relating to
Labatt contained in this Agreement;
(iii) the matter set forth in Schedule 8.01(a)(iii); and
(iv) any Taxes or other expenses incurred directly or indirectly
(whether or not under Brazilian law) in respect of or as a result of (A)
the Restructuring (including, for greater certainty, any step or
transaction that is part of the Restructuring), other than Taxes and
other expenses paid by Labatt prior to the Closing with the proceeds from
the divestment of certain of its subsidiaries specifically contemplated
by the Restructuring and (B) the sales contemplated by Section 5.13.
(b) Other than with respect to AmBev Losses resulting from breaches
or alleged breaches by Interbrew, Mergeco or Labatt of representations and
warranties set forth in the first sentence of Section 3.01, Sections 3.02,
3.03, 3.06, the first sentence of Section 4.01, Section 4.02 or 4.03,
Interbrew shall not be required to indemnify the AmBev Indemnitees and shall
not have any liability:
49
(i) under clause (i) of Section 8.01(a) unless the aggregate amount
of all AmBev Losses for which Interbrew would, but for this clause (i),
be liable exceeds on a cumulative basis an amount equal to C$200,000,000,
in which case Interbrew shall have liability for the aggregate amount of
all such AmBev Losses;
(ii) under clause (i) of Section 8.01(a) for any AmBev Loss relating
to an individual item that is less than C$15,000,000 (provided that the
amounts of any individual items which are substantially similar or
substantially related shall be aggregated for purposes of satisfying such
C$15,000,000 threshold), in which case such items shall not be aggregated
for purposes of clause (i) of this Section 8.01(b); and
(iii) under clause (i) of Section 8.01(a) in excess of
C$7,700,000,000 in the aggregate.
(c) In computing the amount of any AmBev Loss due to a breach of
representation or warranty, no effect shall be given to the words "materially"
or "material" or any modification or qualification based on such terms or
based on the defined terms "Interbrew Material Adverse Effect" or "Labatt
Material Adverse Effect".
(d) Except as otherwise specifically provided in this Agreement or
any Operative Agreement, AmBev acknowledges that the sole and exclusive
monetary remedy of the AmBev Indemnitees after the Closing with respect to any
and all AmBev Losses incurred or suffered by such AmBev Indemnitee arising out
of, related to or in connection with breaches of any representations or
warranties of Interbrew, Mergeco or Labatt contained in this Agreement, or the
failure to perform any covenant of Interbrew, Labatt or AmBev shall be
pursuant to the indemnification provisions set forth in this Article VIII.
(e) Notwithstanding anything to the contrary herein or in any
Operative Agreement, from and after the Closing Date, none of Mergeco, Labatt
Holdco, Labatt and the Labatt Subsidiaries shall be held liable for any
obligations hereunder and none of Interbrew or its subsidiaries shall have any
right or claim of contribution against Mergeco, Labatt Holdco, Labatt or any
Labatt Subsidiary in respect of an AmBev Loss. Interbrew hereby waives any
such right or claim against Mergeco, Labatt Holdco, Labatt or any Labatt
Subsidiary.
SECTION 8.02. Calculation of Losses. The amount of any AmBev Loss
for which indemnification is provided under this Article VIII shall be net of
any amounts actually recovered by the AmBev Indemnitees under insurance
policies with respect to such AmBev Loss and any indemnity, contribution or
other similar payment actually recovered by any AmBev Indemnitee from a third
party with respect thereto and shall be (i) increased to take account of any
net Tax cost actually incurred by an AmBev Indemnitee arising from the receipt
of indemnity payments hereunder (grossed up for such increase) and (ii)
reduced to take account of any net Tax benefit actually realized by an AmBev
Indemnitee arising from the incurrence or payment of any such AmBev Loss. In
computing the amount of any such Tax cost or Tax benefit, an AmBev Indemnitee
50
shall be deemed to recognize all other items of income, gain, loss, deduction
or credit before recognizing any item arising from the receipt of any
indemnity payment hereunder or the incurrence or payment of any indemnified
AmBev Loss.
SECTION 8.03. Termination of Indemnification. The obligations to
indemnify and hold harmless the AmBev Indemnitees (i) pursuant to Section
8.01(i) shall terminate when the applicable representation or warranty
terminates pursuant to Section 8.09, and (ii) pursuant to Section 8.01(ii)
shall terminate when the applicable covenant terminates pursuant to Section
8.09; provided, however, that such obligations to indemnify and hold harmless
shall not terminate with respect to any item as to which any AmBev Indemnitee
shall have, before the expiration of the applicable period, previously made a
claim by delivering a notice of such claim (stating in reasonable detail the
basis of such claim) pursuant to Section 8.04 to Interbrew.
SECTION 8.04. Procedures. (a) Third Party Claims. In order for a
person (the "indemnified party") to be entitled to any indemnification
provided for under Section 8.01 in respect of, arising out of or involving a
claim made by any person against any AmBev Indemnitee (an "AmBev Third Party
Claim"), such indemnified party must notify Interbrew in writing (and in
reasonable detail) of the AmBev Third Party Claim within 10 Business Days
after receipt by such indemnified party of written notice of the AmBev Third
Party Claim; provided, however, that failure to give such notification shall
not affect the indemnification provided hereunder except to the extent
Interbrew shall have been actually and materially prejudiced as a result of
such failure (except that Interbrew shall not be liable for any expenses
incurred during the period in which the AmBev Indemnitee failed to give such
notice). Thereafter, the applicable AmBev Indemnitee shall deliver to
Interbrew, within five Business Days' time after such AmBev Indemnitee's
receipt thereof, copies of all notices and documents (including court papers
or notices of reassessment) received by such AmBev Indemnitee relating to the
AmBev Third Party Claim.
(b) Assumption. If an AmBev Third Party Claim is made against an
indemnified party, Interbrew shall be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with counsel
selected by Interbrew; provided, however, that such counsel is not reasonably
objected to by AmBev. Should Interbrew so elect to assume the defense of an
AmBev Third Party Claim, Interbrew shall not be liable to the applicable AmBev
Indemnitee for any legal expenses subsequently incurred by such AmBev
Indemnitee in connection with the defense thereof. If Interbrew assumes such
defense, AmBev shall have the right to participate in the defense thereof and
to employ counsel (not reasonably objected to by Interbrew), at its own
expense, separate from the counsel employed by Interbrew, it being understood
that Interbrew shall control such defense. Interbrew shall be liable for the
fees and expenses of counsel employed by AmBev for any period during which
Interbrew has not assumed the defense thereof (other than during any period in
which an AmBev Indemnitee shall have failed to give notice of the AmBev Third
Party Claim as provided above). If Interbrew chooses to defend or prosecute an
AmBev Third Party Claim, all the indemnified parties shall cooperate in the
defense or prosecution thereof. Such cooperation shall include the retention
and (upon Interbrew's request) the provision to Interbrew of records and
51
information that are reasonably relevant to such AmBev Third Party Claim, and
making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Whether or not Interbrew assumes the defense of an AmBev Third Party Claim, no
AmBev Indemnitee shall admit any liability with respect to, or settle,
compromise or discharge, any AmBev Third Party Claim without Interbrew's prior
written consent (which consent shall not be unreasonably withheld). If
Interbrew assumes the defense of an AmBev Third Party Claim, the applicable
AmBev Indemnitee shall agree to any settlement, compromise or discharge of
such AmBev Third Party Claim that Interbrew may recommend and that by its
terms obligates Interbrew to pay the full amount of the liability in
connection with such AmBev Third Party Claim, which releases AmBev completely
in connection with such AmBev Third Party Claim and that could not otherwise
adversely affect AmBev. Notwithstanding the foregoing, Interbrew shall not be
entitled to assume the defense of any AmBev Third Party Claim (and shall be
liable for the reasonable fees and expenses of counsel incurred by any AmBev
Indemnitee in defending such AmBev Third Party Claim) if the AmBev Third Party
Claim seeks an order, injunction or other equitable relief or relief for other
than money damages against an AmBev Indemnitee that AmBev reasonably
determines, after conferring with its outside counsel, cannot be separated
from any related claim for money damages. If such equitable relief or other
relief portion of the AmBev Third Party Claim can be so separated from that
for money damages, Interbrew shall be entitled to assume the defense of the
portion relating to money damages.
(c) Other Claims. In the event an AmBev Indemnitee should have a
claim against any indemnifying party under Section 8.01 that does not involve
an AmBev Third Party Claim being asserted against or sought to be collected
from such indemnified party, such AmBev Indemnitee shall deliver notice of
such claim with reasonable promptness to Interbrew. Subject to Sections 8.03
and 8.09, the failure by an AmBev Indemnitee so to notify Interbrew shall not
relieve Interbrew from any liability that it may have to such indemnified
party under Section 8.01, except to the extent that Interbrew has been
prejudiced by such failure.
(d) Mitigation. AmBev, Interbrew, Labatt shall cooperate with each
other with respect to resolving any claim or liability with respect to which
Interbrew or Labatt is obligated to indemnify an AmBev Indemnitee hereunder,
including by making commercially reasonable efforts to mitigate or resolve any
such claim or liability.
SECTION 8.05. Indemnification of Interbrew Indemnitees. (a) From and
after the Closing, AmBev shall indemnify Interbrew, its affiliates (including
its subsidiaries) and each of their respective officers, directors, employees,
stockholders, agents and representatives (the "Interbrew Indemnitees") against
and hold it harmless from, any loss, liability, claim, damage or expense
including reasonable legal fees and expenses (collectively, "Interbrew
Losses"), suffered or incurred by such Interbrew Indemnitee arising from,
relating to or otherwise in respect of:
52
(i) any breach of any representation or warranty relating to AmBev
contained in this Agreement, in any Operative Agreement or in any
certificate delivered pursuant hereto; and
(ii) any breach of any covenant of AmBev contained in this
Agreement.
(b) Other than with respect to Interbrew Losses resulting from
breaches or alleged breaches by AmBev of its representations and warranties
set forth in Sections 2.01, 2.02, 2.03 and 2.06, AmBev shall not be required
to indemnify the Interbrew Indemnitees and shall not have any liability:
(i) under clause (i) of Section 8.05(a) unless the aggregate amount
of all Interbrew Losses for which AmBev would, but for this clause (i),
be liable exceeds on a cumulative basis an amount equal to C$200,000,000,
in which case AmBev shall have liability for the aggregate amount of all
such Interbrew Losses;
(ii) under clause (i) of Section 8.05(a) for any Interbrew Loss
relating to an individual item that is less than C$15,000,000 (provided
that the amounts of any individual items which are substantially similar
or substantially related shall be aggregated for purposes of satisfying
such C$15,000,000 threshold), in which case such items shall not be
aggregated for purposes of clause (i) of this Section 8.05(b); and
(iii) under clause (i) of Section 8.05(a) in excess of
C$7,700,000,000 in the aggregate.
(c) In computing the amount of any Interbrew Loss due to a breach of
a representation or warranty, no effect shall be given to the words
"materially" or "material" or any modification or qualification based on such
terms or based on the defined term "AmBev Material Adverse Effect".
(d) Except as otherwise specifically provided in this Agreement,
Interbrew acknowledges that the sole and exclusive monetary remedy of the
Interbrew Indemnitees after the Closing with respect to any and all Interbrew
Losses incurred or suffered by such Interbrew Indemnitee arising out of,
related to or in connection with breaches of any representations or warranties
of AmBev or the failure to perform any covenants of AmBev contained in this
Agreement, shall be pursuant to the indemnification provisions set forth in
this Article VIII.
SECTION 8.06. Calculation of Losses. The amount of any Interbrew
Loss for which indemnification is provided under this Article VIII shall be
net of any amounts actually recovered by the Interbrew Indemnitee under
insurance policies with respect to such Interbrew Loss and any contribution or
similar payment actually recovered by any Interbrew Indemnitee from a third
party with respect thereto and Interbrew Loss and shall be (i) increased to
take account of any net Tax cost actually incurred by Interbrew arising from
the receipt of indemnity payments hereunder (grossed up for such increase) and
(ii) reduced to take account of any net Tax benefit actually realized by
Interbrew Indemnitee arising from the incurrence or payment of any such
53
Interbrew Loss. In computing the amount of any such Tax cost or Tax benefit,
an Interbrew Indemnitee shall be deemed to recognize all other items of
income, gain, loss deduction or credit before recognizing any item arising
from the receipt of any indemnity payment hereunder or the incurrence or
payment of any indemnified Interbrew Loss.
SECTION 8.07. Termination of Indemnification. The obligations to
indemnify and hold harmless the Interbrew Indemnitees (i) pursuant to Section
8.05(a)(i) shall terminate when the applicable representation or warranty
terminates pursuant to Section 8.09, and (ii) pursuant to Section 8.05(a)(ii)
shall terminate when the applicable covenant terminates pursuant to Section
8.09; provided, however, that such obligations to indemnify and hold harmless
shall not terminate with respect to any item as to which any Interbrew
Indemnitee shall have, before the expiration of the applicable period,
previously made a claim by delivering a notice of such claim (stating in
reasonable detail the basis of such claim) pursuant to Section 8.08 to AmBev.
SECTION 8.08. Procedures. (a) Third Party Claims. In order for a
person (the "indemnified party") to be entitled to any indemnification
provided for under Section 8.05 in respect of, arising out of or involving a
claim made by any person against any Interbrew Indemnitee (an "Interbrew Third
Party Claim"), such indemnified party must notify AmBev in writing (and in
reasonable detail) of the Interbrew Third Party Claim within 10 Business Days
after receipt by such indemnified party of written notice of the Interbrew
Third Party Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent
AmBev shall have been actually and materially prejudiced as a result of such
failure (except that AmBev shall not be liable for any expenses incurred
during the period in which the Interbrew Indemnitee failed to give such
notice). Thereafter, an Interbrew Indemnitee shall deliver to AmBev, within
five Business Days' time after an Interbrew Indemnitee's receipt thereof,
copies of all notices and documents (including court papers or notices of
reassessment) received by the Interbrew Indemnitee relating to the Interbrew
Third Party Claim.
(b) Assumption. If an Interbrew Third Party Claim is made against an
indemnified party, AmBev shall be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with counsel
selected by AmBev; provided, however, that such counsel is not reasonably
objected to by Interbrew. Should AmBev so elect to assume the defense of an
Interbrew Third Party Claim, AmBev shall not be liable to the applicable
Interbrew Indemnitee for any legal expenses subsequently incurred by such
Interbrew Indemnitee in connection with the defense thereof. If AmBev assumes
such defense, Interbrew shall have the right to participate in the defense
thereof and to employ counsel (not reasonably objected to by AmBev), at its
own expense, separate from the counsel employed by AmBev, it being understood
that AmBev shall control such defense. AmBev shall be liable for the fees and
expenses of counsel employed by Interbrew for any period during which AmBev
has not assumed the defense thereof (other than during any period in which an
Interbrew Indemnitee shall have failed to give notice of the Interbrew Third
Party Claim as provided above). If AmBev chooses to defend or prosecute an
Interbrew Third Party Claim, all the indemnified parties shall cooperate in
the defense or prosecution thereof. Such cooperation shall include the
54
retention and (upon AmBev's request) the provision to AmBev of records and
information that are reasonably relevant to such Interbrew Third Party Claim,
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Whether or not AmBev assumes the defense of an Interbrew Third Party Claim, no
Interbrew Indemnitee shall admit any liability with respect to, or settle,
compromise or discharge, any Interbrew Third Party Claim without AmBev's prior
written consent (which consent shall not be unreasonably withheld). If AmBev
assumes the defense of an Interbrew Third Party Claim, the applicable
Interbrew Indemnitee shall agree to any settlement, compromise or discharge of
such Interbrew Third Party Claim that AmBev may recommend and that by its
terms obligates AmBev to pay the full amount of the liability in connection
with such Interbrew Third Party Claim, which releases Interbrew completely in
connection with such Interbrew Third Party Claim and that could not otherwise
adversely affect Interbrew. Notwithstanding the foregoing, AmBev shall not be
entitled to assume the defense of any Interbrew Third Party Claim (and shall
be liable for the reasonable fees and expenses of counsel incurred by an
Interbrew Indemnitee in defending such Interbrew Third Party Claim) if the
Interbrew Third Party Claim seeks an order, injunction or other equitable
relief or relief for other than money damages against an Interbrew Indemnitee
that Interbrew reasonably determines, after conferring with its outside
counsel, cannot be separated from any related claim for money damages. If such
equitable relief or other relief portion of the Interbrew Third Party Claim
can be so separated from that for money damages, AmBev shall be entitled to
assume the defense of the portion relating to money damages.
(c) Other Claims. In the event an Interbrew Indemnitee should have a
claim against any indemnifying party under Section 8.05 that does not involve
an Interbrew Third Party Claim being asserted against or sought to be
collected from such indemnified party, such Interbrew Indemnitee shall deliver
notice of such claim with reasonable promptness to AmBev. Subject to Sections
8.07 and 8.09, the failure by an Interbrew Indemnitee so to notify AmBev shall
not relieve AmBev from any liability that it may have to such indemnified
party under Section 8.05, except to the extent that AmBev has been prejudiced
by such failure.
(d) Mitigation. AmBev and Interbrew shall cooperate with each other
with respect to resolving any claim or liability with respect to which AmBev
is obligated to indemnify an Interbrew Indemnittee hereunder, including by
making commercially reasonable efforts to mitigate or resolve any such claim
or liability.
SECTION 8.09. Survival. (a) The representations, warranties,
covenants and agreements of Interbrew, Mergeco and Labatt contained in this
Agreement, any Operative Agreement and in any document delivered in connection
herewith shall survive the Closing solely for purposes of this Article VIII as
follows: (i) subject to clause (iii) below, the representations and warranties
set forth in Article III (other than Sections 3.02, 3.06 and 3.07) and in
Article IV (other than Sections 4.01, 4.02, 4.03, 4.15 and 4.20) shall survive
for one year following the Closing; (ii) the representations and warranties in
Section 4.15 shall survive for two years following the Closing; (iii) the
representations and warranties relating to Tax matters set out in Section 4.13
and the representations and
55
warranties relating to Tax matters set forth in any Operative Agreement,
arising in or in respect of a particular period ending on, before, or
including the Closing Date shall survive for a period of 90 days after the
relevant authorities shall no longer be entitled to assess liability against
Labatt or the Labatt Subsidiaries for that particular period, having regard,
without limitation, to any waivers given by Labatt or any of the Labatt
Subsidiaries in respect of any taxation year; (iv) the representations and
warranties in Section 4.20 shall survive until the expiration of the
applicable statute of limitations; and (v) all other provisions of this
Agreement shall survive indefinitely.
(b) The rights of each AmBev Indemnitee under Section 8.01(a)(i)
after the Closing shall not be affected by any knowledge at or prior to the
execution of this Agreement or at or prior to the Closing of any breach of
representation or warranty, whether such knowledge came from Interbrew,
Mergeco, Labatt or any other person, or any waiver of Section 6.03.
(c) The representations, warranties, covenants and agreements of
AmBev contained in this Agreement, any Operative Agreement and in any document
delivered in connection herewith shall survive the Closing solely for purposes
of this Article VIII as follows: (i) the representations and warranties set
forth in Article II (other than Sections 2.02, 2.06 and 2.08) shall survive
for one year following the Closing; (ii) the representations and warranties in
Section 2.08 shall survive until the expiration of the applicable statute of
limitations; and (iv) all other provisions of this Agreement shall survive
indefinitely.
(d) The rights of each Interbrew Indemnitee under Section 8.05(a)(i)
after the Closing shall not be affected by any knowledge at or prior to the
execution of this Agreement or at or prior to the Closing of any breach of
representation or warranty, whether such knowledge came from AmBev or any
other person, or any waiver of Section 6.02.
SECTION 8.10. Pension Exclusions. None of Interbrew, Labatt or
Mergeco shall be responsible for any AmBev Losses to the extent relating to
any increased liability resulting from a requirement to distribute surplus
from a Benefit Plan that is partially wound-up as a result of the
discontinuance, reorganization or disposition of all or a portion of the
manufacturing businesses of Labatt or a Labatt Subsidiary at one or more
specific locations during the period from 1988 up to and including May 9,
1996.
ARTICLE IX
General Provisions
SECTION 9.01. Assignment. This Agreement and the rights and
obligations hereunder shall not be assignable or transferable by any party
(including by operation of law in connection with a merger or consolidation of
such party) without the prior written consent of the other parties hereto.
Notwithstanding the foregoing, (i) Interbrew may assign its right to
consummate the Incorporacao to an affiliate of Interbrew without the prior
written consent of AmBev, (ii) AmBev may assign its right to
56
consummate the Incorporacao to an affiliate of AmBev without the prior written
consent of Interbrew, Mergeco or Labatt and (iii) Mergeco may assign its right
to consummate the Incorporacao to an affiliate of Mergeco without the written
consent of AmBev; provided, however, that no such assignment shall limit or
affect Interbrew's, Mergeco's, Labatt's and AmBev's obligations hereunder, as
applicable. Any attempted assignment in violation of this Section shall be
void.
SECTION 9.02. No Third-Party Beneficiaries. This Agreement is for
the sole benefit of the parties hereto and their permitted assigns and nothing
herein expressed or implied shall give or be construed to give to any person,
other than the parties hereto and such assigns, any legal or equitable rights
hereunder.
SECTION 9.03. Attorney Fees. A party in breach of this Agreement
shall, on demand, indemnify and hold harmless the other party for and against
all reasonable out-of-pocket expenses, including legal fees, incurred by such
other party by reason of the enforcement and protection of its rights under
this Agreement. The payment of such expenses is in addition to any other
relief to which such other party may be entitled.
SECTION 9.04. Notices. All notices or other communications required
or permitted to be given hereunder shall be in writing and shall be delivered
by hand or sent by fax or sent, postage prepaid, by registered, certified or
express mail or overnight courier service and shall be deemed given when so
delivered by hand or fax, or if mailed, three days after mailing (one Business
Day in the case of express mail or overnight courier service), as follows:
(a) if to Interbrew or, until the Closing, Labatt or Mergeco,
Interbrew S.A.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇-▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Attention of Corporate Secretary
Fax: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇
with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Attention of ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
and
57
Machado, Meyer, Sendacz e Opice
▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇-▇▇▇ ▇▇▇ Paulo, SP
Federative Republic of Brazil
Attention of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, Esq.
Fax: ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
and
Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Box 25, Commerce Court West
Toronto, Ontario, Canada M5L 1A9
Attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
and
Linklaters de ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇
▇-▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Attention of ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
Fax: ▇▇▇ ▇ ▇▇▇ ▇▇ ▇▇
(b) if to AmBev or, after the Closing, Labatt:
Companhia de Bebidas das Americas - AmBev
Rua ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ 1017
04530-001, Sao Paulo, SP
Federative Republic of Brazil
Attention of ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
with copies to:
Cravath, Swaine & ▇▇▇▇▇ LLP
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
and
58
▇▇▇▇▇▇▇, Mussnich & Aragao Advogados
Av. Pres. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, 50
04503-000, Sao Paulo, SP
Federative Republic of Brazil
Attention of ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
and
Osler, ▇▇▇▇▇▇ & Harcourt LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
and
Stibbe
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇-▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Attention of Marc Fyon, Esq.
Fax: + ▇▇ ▇ ▇▇▇ ▇▇ ▇▇
SECTION 9.05. Interpretation; Exhibits; Disclosure Schedules and
Schedules; Certain Definitions. (a) The headings contained in this Agreement,
in any Exhibit or Schedule hereto and in the table of contents to this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. All Exhibits and Schedules
(including, for the avoidance of doubt, the Restructuring Plan and the
schedules forming the Disclosure Schedules dated as of even date herewith)
annexed hereto or referred to herein are hereby incorporated in and made a
part of this Agreement as if set forth in full herein. Any capitalized terms
used in any Schedule or Exhibit but not otherwise defined therein, shall have
the meaning assigned thereto in this Agreement. When a reference is made in
this Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.
(b) For all purposes hereof:
"Acquired Business" means (i) the Canadian-based operations and
assets of Labatt and its subsidiaries and (ii) if a Femsa Cerveza Exclusion
has not been consummated prior to the Closing, the Femsa Cerveza Interest and
(iii) if a Labatt USA Restructuring has not been consummated prior to the
Closing, Labatt USA.
"Act" means the Income Tax Act (Canada).
"affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
59
"AmBev Material Adverse Effect" means a material adverse effect on
(a) the business, assets, financial condition, results of operations or
properties of AmBev and its subsidiaries, taken as a whole, (b) the ability of
AmBev to perform in all material respects its obligations under this Agreement
and the other Operative Agreements to which it is, or is specified to be, a
party or (c) the ability of AmBev to consummate in all material respects the
Transactions to which it is, or is specified to be, a party.
"Bahamas Corporate Law" means the Corporate Law of the Bahamas.
"Base Plan Excerpt" means the excerpt of the base plan provided by
Labatt to AmBev, a copy of which is set forth in Schedule 4.06(d).
"Brazilian Corporate Law" means Law No. 6,404 of December 15, 1976
of the Federative Republic of Brazil.
"Business Day" means any week day other than one on which banks are
authorized or permitted to close pursuant to Applicable Law in Toronto,
Brussels, New York City or Sao Paulo.
"Code" means the Internal Revenue Code of 1986, as amended.
"Environmental Laws" means any and all Applicable Laws, Judgments
and Labatt Permits issued, promulgated or entered into by or with any
Governmental Entity, relating to the environment, preservation or reclamation
of natural resources, or to the protection of human health as it relates to
the environment or to the management, Release or threatened Release of
Hazardous Materials.
"ERISA" means the United States Employee Retirement Income Security
Act of 1974, as amended from time to time.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"Femsa" means Fomento Economico Mexicano, S.A. de C.V. (FEMSA), a
sociedad anonima de capital variable organized under the laws of the United
Mexican States.
"Femsa Cerveza" means Femsa Cerveza S.A. de C.V., a sociedad anonima
de capital variable organized under the laws of the United Mexican States.
"Femsa Cerveza Interest" means the 535,205,425 Series D shares owned
by Labatt and the 851,153,316 Series D Shares owned by Stellamerica Holdings
Limited, a corporation organized under the federal laws of Canada and a
subsidiary of Labatt, in Femsa Cerveza.
"Hazardous Materials" means any and all wastes, materials, chemicals
or substances regulated pursuant to any Environmental Law.
60
"including" means including, without limitation.
"Interbrew Material Adverse Effect" means a material adverse effect
on (a) the business, assets, financial condition, results of operations or
properties of Interbrew and its subsidiaries (including Mergeco), taken as a
whole, (b) the ability of Interbrew to perform in all material respects its
obligations under this Agreement and the other Operative Agreements to which
it is, or is specified to be, a party or (c) the ability of Interbrew to
consummate in all material respects the Transactions to which it is, or is
specified to be, a party.
"Intellectual Property" means any patent (including all reissues,
divisions, continuations and extensions thereof), patent application, patent
right, trademark, trademark registration, trademark application, servicemark,
trade name, business name, brand name, copyright, copyright registration,
design, design registration, domain name or any right to any of the foregoing.
"Labatt Holdco" means Labatt Holding B.V., a corporation organized
under the laws of the Netherlands.
"Labatt Material Adverse Effect" means a material adverse effect on
(a) the business, assets, financial condition, results of operations or
properties of Labatt and the Labatt Subsidiaries constituting the Acquired
Business, taken as a whole, (b) the ability of Labatt to perform in all
material respects its obligations under this Agreement and the other Operative
Agreements to which it is, or is specified to be, a party or (c) the ability
of Labatt to consummate in all material respects the Transactions to which it
is, or is specified to be, a party.
"Labatt Permitted Liens" means (a) construction, mechanics',
carriers', workmen's, repairmen's or other like Liens arising or incurred in
the ordinary course of business, Liens arising under original purchase price
conditional sales contracts and equipment leases with third parties entered
into in the ordinary course of business and liens for Taxes that are not due
and payable or that may thereafter be paid without penalty, (b) easements,
covenants, rights-of-way and other similar restrictions of record, (c) any
conditions that may be shown by a current, accurate survey or physical
inspection of any Labatt Property made prior to the Closing, (d) (i) zoning,
building and other similar restrictions, (ii) Liens that have been placed by
any developer, landlord or other third party on property over which Labatt or
any of the Labatt Subsidiaries has easement rights or on any Labatt Leased
Property and subordination or similar agreements relating thereto and (iii)
unrecorded easements, covenants, rights-of-way and other similar restrictions,
and (e) other imperfections of title or encumbrances, if any, that,
individually or in the aggregate, do not materially impair and would not
reasonably be expected to materially impair the continued use and operation of
the assets to which they relate in the conduct of the business of Labatt and
the Labatt Subsidiaries as presently conducted.
"Labatt USA" means LF Holdings I L.L.C., a Delaware limited
liability company, and LF Holdings II L.L.C., a Delaware limited liability
company, which together own 70% of the membership interests in Labatt U.S.A.,
L.L.C., a Delaware
61
limited liability company, and Latrobe Brewing Company, L.L.C., a
Delaware limited liability company.
"person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, Governmental Entity or other
entity.
"Quinsa SEC Documents" means the reports, schedules, forms,
statements and other documents filed by Quilmes Industrial (Quinsa) Societe
Anonyme with the SEC pursuant to Sections 13(a) and 15(d) of the Exchange Act.
"Release" means any spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching, dumping, pouring, emanation
or migration of any Hazardous Material in, into, onto, or through the
environment or within any building, structure, facility or fixture.
"SEC" means the United States Securities and Exchange Commission.
"subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such
first person or by another subsidiary of such first person, it being agreed
that, notwithstanding the foregoing, that none of the persons set forth in
Schedule 9.05 shall be deemed subsidiaries of Interbrew, Mergeco, Labatt or
any of their respective direct or indirect subsidiaries to the extent set
forth.
"Tax" or "Taxes" means all Federal, provincial, local, municipal,
foreign and other taxes, assessments, duties or similar charges of any kind
whatsoever, including all corporate, franchise, income, sales, use, ad
valorem, receipts, value added, profits, license, withholding, payroll,
employment, excise, premium, property, customs, net worth, capital gains,
transfer, stamp, documentary, social security, environmental, alternative
minimum, occupation, recapture, territorial, goods and services, harmonized
sales, capital, employer health taxes, health taxes, social services taxes,
education taxes, all employment insurance, health insurance, all surtaxes, all
customs duties and import and export taxes, countervail and anti-dumping
taxes, all license, franchise and registration fees, and other taxes, and
including all interest, penalties and additions imposed with respect to such
amounts, and all amounts payable pursuant to any agreement or arrangement with
respect to Taxes.
"Taxing Authority" means any domestic, foreign, federal, national,
provincial, county or municipal or other local government, any subdivision,
agency, commission or authority thereof, or any quasi-governmental body
exercising tax regulatory authority.
"Tax Return" or "Tax Returns" means all returns, declarations of
estimated tax payments, reports, estimates, information returns and
statements, including any related or supporting information with respect to
any of the foregoing, filed or to be
62
filed with any Taxing Authority in connection with the determination,
assessment, collection or administration of any Taxes.
"Technology" means all trade secrets, confidential information,
inventions, know-how, formulae, processes, procedures, research records,
records of inventions, test information, market surveys and marketing
know-how.
"U.S. GAAP" means the generally accepted accounting principles of
the United States of America.
The following terms are defined in the Section set forth opposite
the term:
Terms Section
----- -------
Agreement preamble
AmBev preamble
AmBev Bid 5.03(b)
AmBev Common Shares 1.01(a)(ii)
AmBev Preferred Shares 1.01(a)(ii)
AmBev Capital Stock 2.02
AmBev Indemnitees 8.01(a)
AmBev Losses 8.01(a)
AmBev Representatives 5.03(b)
AmBev SEC Documents 2.09(a)
AmBev SEC Financial Statements 2.09(b)
AmBev Shares 1.01(a)(ii)
AmBev Third Party Claim 8.04(a)
AmBev 2003 Financial Statements 2.09(b)
Antitrust Authorities 5.06(b)
Antitrust Laws 2.05
Applicable Law 2.04
ARC 6.03(f)(A)
Beneficiaries 4.15(a)
Benefit Plans 4.15(a)
Brazilian GAAP 2.09(b)
Brazilian Central Bank Approval 1.01(b)(viii)
Brazil Merger Documentation 1.01(b)(i)
Burdensome Condition 6.04
Canadian Competition Act 6.01(f)
Canadian Competition Act Approval 6.01(f)
CBB 1.04(b)(i)
Canadian GAAP 4.06(a)
Cerbuco 4.06(f)
Closing 1.03
Closing Date 1.03
Commissioner 6.01(f)
Confidentiality Agreement 5.05(a)
63
Terms Section
----- -------
Consent 2.05
Contract 2.04
Contribution and Subscription Agreement preamble
CVM 1.01(b)(vi)
Economic Valuation Report 1.01(b)(iii)
Effective Time 1.01(a)(ii)
ELH 4.06(d)
Employee Benefits Liability 4.15(m)
Femsa Cerveza Exclusion 1.05(a)
Femsa Cerveza Price 1.05(a)
Femsa Cerveza Promissory Note 5.11
Femsa Party 1.05(a)
First Extraordinary Shareholders Meeting 1.01(b)(iv)
Governmental Entity 2.05
ICC 9.09
IIBV 1.01(b)(ii)
Incorporacao 1.01(a)
Interbrew preamble
Interbrew Indemnitees 8.05(a)
Interbrew Losses 8.05(a)
Interbrew Representatives 5.03(a)
Interbrew Third Party Claim 8.08(a)
Issima 4.06(f)
Judgment 2.04
Labatt preamble
Labatt Capital Stock 4.02(a)
Labatt Contracts 4.10(b)
Labatt Financial Statements 4.06(a)
Labatt Holdco Capital Stock 3.02(b)
Labatt Holdco Shares 3.02(d)
Labatt Intellectual Property 4.09
Labatt Leased Property 4.08
Labatt Owned Property 4.08
Labatt Permits 4.11(a)
Labatt Property 4.08
Labatt Shares 3.02(c)
Labatt Subsidiaries 4.01(a)
Labatt Technology 4.09
Labatt USA Promissory Note 5.11
Labatt USA Restructuring 1.05(a)
Labatt Welfare Plan 4.15(g)
Letter Agreement 5.11
Liens 2.04
Mergeco Preamble
Mergeco Capital Stock 3.02(a)
64
Terms Section
----- -------
Mergeco Shares 1.01(b)(ii)
Net Debt 5.12
Net Worth Appraisal 1.01(b)(iii)
Operative Agreements 2.03
Other Labatt Bid 5.03(a)
Participants 4.15(a)
Proceeding 4.11(a)
Pro Forma Balance Sheet 4.06(f)
Pro Forma Income Statement 4.06(f)
Promissory Notes 5.11
Proposta 1.01(b)(i)
Protocol of Incorporacao 1.01(b)(i)
Reference Date 1.01(a)(ii)
Remaining Share 3.02(d)
Restructuring 1.02(a)
Restructuring Plan 1.02(a)
Rights 2.02
Second Extraordinary Shareholders Meeting 1.04(a)(i)
Securities Act 2.07
Transfer 5.10
Transactions 2.03
Voting AmBev Debt 2.02
Voting Labatt Debt 4.02(a)
Voting Labatt Holdco Debt 3.02(b)
Voting Mergeco Debt 3.02(a)
SECTION 9.06. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other parties. An
executed counterpart of this Agreement delivered by fax or other means of
electronic transmission shall be deemed to be an original and shall be as
effective for all purposes as delivery of a manually executed counterpart.
SECTION 9.07. Entire Agreement. This Agreement and the Operative
Agreements contain the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings relating to such subject matter. None of the
parties shall be liable or bound to any other party in any manner by any
representations, warranties or covenants relating to such subject matter
except as specifically set forth herein or in the Operative Agreements.
SECTION 9.08. Severability. If any provision of this Agreement (or
any portion thereof) or the application of any such provision (or any portion
thereof) to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not
65
affect any other provision hereof (or the remaining portion thereof) or the
application of such provision to any other persons or circumstances.
SECTION 9.09. Arbitration.
(a) All disputes arising out of or in connection with this Agreement
shall be finally settled under the Rules of Arbitration of the International
Chamber of Commerce (the "ICC"). Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
(b) The number of arbitrators shall be three, one appointed by the
plaintiff party or parties, one by the respondent party or parties and a
chairman appointed jointly by the first two arbitrators. In the event that, in
multiple party proceedings, the plaintiff parties or the respondent parties
are not able to reach consensus on the appointment of their arbitrator, such
(and only such) arbitrator shall be appointed by the International Chamber of
Commerce (Article 10, paragraph 2, ICC Rules, Edition 1998).
(c) Any party to the dispute submitted to arbitration in connection
with this Agreement may assert a cross-claim against any other party to the
dispute based on any breach of this Agreement, the Contribution and
Subscription Agreement, the LST Lock-Up Agreement or the EPS Lock-Up
Agreement. Any party to the dispute shall have access to all documents filed
by any other party.
(d) Any party to the dispute submitted to arbitration may request
that any party to the Contribution and Subscription Agreement, the LST Lock-Up
Agreement or the EPS Lock-Up Agreement which was not initially named as a
party to the proceedings be joined as a party to the proceedings, provided
that the basis asserted for such joinder is substantially related to the
subject matter of the dispute in arbitration. Any party to the abovementioned
agreements which is not involved in the proceeding may request to join the
existing proceeding, provided that the basis asserted for such intervention is
substantially related to the subject matter of the dispute in arbitration. The
parties to those abovementioned agreements have agreed to these procedures.
Any joined or intervening party shall be bound by any award rendered by the
arbitral tribunal even if it chooses not to participate in the arbitral
proceedings.
(e) The parties agree that the ICC Court of Arbitration shall fix
separate advances on costs in respect of each claim, counterclaim or
cross-claim.
(f) The parties agree that if a dispute raises issues which are the
same as or substantially connected with issues raised in a related dispute
arising in connection with this contract or the Contribution and Subscription
Agreement or the LST Lock-Up Agreement or the EPS Lock-Up Agreement, such
dispute and such related dispute shall be finally settled by the first
appointed arbitral tribunal, provided a joinder of proceedings is requested by
at least one party to any of the disputes.
(g) The place of arbitration shall be Paris, France. The language of
the arbitration shall be English.
66
(h) The arbitrators will have no authority to award punitive damages
or any other damages not measured by the prevailing party's actual damages,
and may not, in any event, make any ruling, finding or award that does not
conform to the terms and conditions of this Agreement.
(i) Any party may make an application to the arbitrators seeking
injunctive relief to maintain the status quo until such time as the
arbitration award is rendered or the controversy is otherwise resolved. Any
party may apply to any court having jurisdiction hereof to seek injunctive
relief in order to maintain the status quo until such time as the arbitration
award is rendered or the controversy is otherwise resolved.
SECTION 9.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York,
provided, however, that the Incorporacao and any corporate action required to
complete the Incorporacao as contemplated by this Agreement shall be governed
by the laws of the Federative Republic of Brazil.
67
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first written above.
COMPANHIA DE BEBIDAS DAS AMERICAS - AMBEV
by
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇ Ferro
Title: Industrial Officer
by
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Resales Officer
WITNESSES:
/s/ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇.: 18984698-7
CPF: ▇▇▇.▇▇▇.▇▇▇-▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇.: 7350876
CPF: ▇▇▇.▇▇▇.▇▇▇-▇▇
68
INTERBREW S.A.,
by
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
by
/s/ Francois Jaclot
------------------------------------
Name: Francois Jaclot
Title: Chief Financial Officer
WITNESSES:
/s/ ▇▇▇▇ ▇▇▇▇▇ Van de Perre
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇ Van ▇▇ ▇▇▇▇▇
ID Card: 161 0029528 54
/s/ ▇▇▇▇▇▇▇▇▇ Noirfalisse
---------------------------------
Name: ▇▇▇▇▇▇▇▇▇ Noirfalisse
ID Card: 161 0019803 29
69
LABATT BREWING CANADA HOLDING LTD.,
by
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
by
/s/ Francois Jaclot
------------------------------------
Name: Francois Jaclot
Title: Authorized Representative
WITNESSES:
/s/ ▇▇▇▇ ▇▇▇▇▇ Van de Perre
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇ Van ▇▇ ▇▇▇▇▇
ID Card: 161 0029528 54
/s/ ▇▇▇▇▇▇▇▇▇ Noirfalisse
---------------------------------
Name: ▇▇▇▇▇▇▇▇▇ Noirfalisse
ID Card: 161 0019803 29
70
LABATT BREWING COMPANY LIMITED,
by
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Welwyn Limited, Director
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
by
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Rosencrantz Limited
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
WITNESSES:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇
Driver License I.D.: 46422
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Driver License I.D.: 45352