Document:

exhibit10-7.htm - Generated by SEC Publisher for SEC Filing

EXHIBIT 10.7

 

SHAREHOLDERS’ AGREEMENT

 

BETWEEN:

 

1.                                     The STICHTING ADMINISTRATIEKANTOOR INBEV organized under the laws of The Netherlands, with registered office at Hofplein 20, 3032 Rotterdam, The Netherlands,

 

hereinafter “the Administratiekantoor”,  

 

represented by                                              ;

 

AND:

 

2.                                     The FONDS INBEV BAILLET LATOUR, a private limited liability company (société privée à responsabilité limitée) with a socially-inspired purpose with registered office at Grand’Place 1, B-1000 Brussels, registered with the Register of Legal Entities (Brussels) under number 0.474.073.840,

 

hereinafter the “IBL Fund”, 

 

represented by                                              ;

 

AND:

 

3.                                     The FONDS PRESIDENT VERHELST, a private limited liability company (société privée à responsabilité limitée) with a socially-inspired purpose, with registered office at Brouwerijplein 1, B-3000 Leuven, registered with the Register of Legal Entities (Louvain) under number 0.410.892.691,

 

hereinafter the “V Fund”, 

 

represented by                                              ;

 

Parties 2 and 3 together being referred to as the “Funds”, 

 

WHEREAS

 

The Parties are shareholders of the company limited by shares InBev S.A. organized under the laws of Belgium with registered office at Grand’Place 1, B-1000 Brussels (hereinafter, the “Company”). 

 

The Administratiekantoor has been constituted in order to reinforce and perpetuate the control over the Company, in particular with a view to pursue an industrial strategy of long-term growth in the interest of the Company and of its shareholders.

 

The Funds support this growth objective and, in order to enhance the efforts of the Administratiekantoor in a stable and lasting manner, wish to participate in the control of the shareholders’ meeting of the Company.

 

 

 

THE PARTIES AGREE AS FOLLOWS:

 

1 - Consultation

 

1.1                               The Parties will consult each other in good faith in order to determine by common agreement the direction in which they will exercise the votes attached to the securities of the Company which they hold or would come to hold in the future, for each item listed on the agenda of any shareholders’ meeting of the Company.

 

1.2                               Within five (5) working days following the first publication in the press of the convening notice to a shareholders’ meeting, each Party will communicate in writing to the other Parties its voting intentions for each item listed on the agenda of that shareholders’ meeting.

 

1.3                               If the three Parties share the same voting intentions with regard to each item listed on the agenda, the Administratiekantoor will confirm this in writing to the Funds.

 

1.4                               If the Parties do not share the same voting intentions, the Administratiekantoor will promptly convene their representatives to a consultation meeting during which they will endeavour to bring out common voting intentions. If, following this consultation, the Parties agree on the direction of the vote, the Administratiekantoor will confirm this in writing to the Funds.

 

If, following this consultation, and at the latest on the seventh (7) working day preceding the day of the shareholders’ meeting, the Parties can not agree on the direction of the vote with regard to certain items, the Funds hereby agree to align themselves on the direction determined by the Administratiekantoor.

 

1.5.                            If a Fund does not communicate its voting intentions in accordance with paragraph 1.2, or abstains from participating in the consultation referred to in paragraph 1.4, it will be irrevocably presumed to approve the voting intentions notified by the Administratiekantoor.

 

1.6                               Each Party irrevocably undertakes (i) to exercise the voting rights attached to these shares in accordance with the direction resulting from the application of paragraphs 1.3, 1.4 or 1.5, (ii) to carry out the legal and statutory formalities in order to participate in the shareholders’ meeting and in the vote with all the securities with voting rights which it holds and (iii) to be present or represented at this shareholders’ meeting in order to exercise the said voting rights.

 

1.7                               A Fund will however not be required to follow the voting instructions notified by the Administratiekantoor if this Fund demonstrates that this voting instruction is clearly contrary to its own corporate purpose. However, only those reasons expressly set out by the Fund in the initial communication of its voting intentions in accordance with paragraph 1.2 or at the consultation meeting referred to in paragraph 1.4, will be admitted as sound reasons in this respect.

 

2 — Duration

 

This agreement is entered into for a duration of eight (8) years beginning at the signature of this agreement.

 

 

 

3 — Transfer of securities of the Company

 

3.1                               With a view to achieving, in particular, the stabilisation objective of the Company’s shareholding set out in the recitals, the Funds commit themselves, for the duration of this agreement and except for what is provided in articles 3.2 to 3.5, not to transfer the securities of the Company which they hold, be it free of charge or against payment, by sale, company contribution, merger of otherwise.

 

3.2                               Each Fund will however be allowed to freely transfer all or part of the securities it holds in the Company to a company which it directly controls, provided that, prior to the transfer,  this company undertakes in writing vis-à-vis the other Parties to respect all the provisions of this agreement. The transferor Fund will remain guarantor of the execution of these provisions by the transferee company. The latter may itself only transfer the shares to another company it controls with the prior consent of the Administratiekantoor and following the adaptation of this agreement to reflect this new situation.

 

3.3                               If a third party offers to a Fund to purchase, against payment in cash, all or a part of (i) the securities of the Company it holds directly, or (ii) the securities of a company controlled by the Fund and which directly holds securities of the Company, this Fund may sell them to such third party, provided the following procedure be followed:

 

a.                                      the Fund wishing to transfer all or part of its securities informs the Administratiekantoor thereof in writing, indicating (i) the identity of the candidate transferee, (ii) the number of securities to be transferred and (iii) the price offered by the candidate transferee, certifying in writing that the candidate purchaser has made a good faith offer and by annexing to this notification a copy of the offer of the candidate purchaser;

 

b.                                     each Fund hereby grants to the Administratiekantoor a pre-emption right on all or part of the securities that the third party proposes to acquire, and which may be exercised at the price offered by the third party, within 21 days as from the receipt of the notification referred to in point a. The Administratiekantoor may transfer this pre-emption right to one or several third parties which it will appoint and which will exercise it, as the case may be, for their own account;

 

c.                                      the securities for which the pre-emption right is not exercised may be freely transferred to the third party, at a price equal to or higher than the price indicated in the notification referred to in point a., provided that this transfer be made at the latest 30 days as from the expiry of the 21-days period provided in point b. If the transfer does not take place before the expiry of such period, the procedure provided for in this paragraph should be started over.

 

3.4                               If a Fund wishes to sell all or part of the securities it holds in the stock market, it may only do so in accordance with the following procedure:

 

a.                                           the Fund wishing to sell these securities informs the Administratiekantoor thereof in writing, indicating the number of securities it proposes to transfer;

 

b.                                     each Fund hereby grants to the Administratiekantoor a pre-emption right in respect of all or part of the securities which the Fund proposes to sell in the stock market, and 

 

 

 

which may be exercised within 21 days as from the receipt of the notification referred to in point a., at a price per share equal to the average stock market price of the last thirty stock market days preceding the date on which the notification referred to in point a. has been sent. The Administratiekantoor may transfer this pre-emption right to one or several third parties which it will appoint and which will exercise it, as the case may be, for their own account;

 

c.                                      the securities for which the pre-emption right is not exercised may be freely transferred on the stock market, provided that this transfer occurs at the latest 30 days as from the expiry of the 21-days period provided in point b. If the transfer does not take place before the expiry of such period, the procedure provided in this paragraph should be started over. If the number of securities that the Fund proposes to sell in the stock market is such that a simultaneous sale is likely to disrupt the stock market price of the share, the Fund hereby undertakes to transfer the securities in a well-ordered manner, in order to prevent such a disruption. In such case, the 30-days period is extended to 4 months, and the Fund will make sure it keeps the Administratiekantoor informed of the accomplished sales.

 

3.5                               If the securities concerned by the offer of the third party referred to in paragraph 3.3, or of which the sale in the stock market is envisaged as set out in paragraph 3.4, are held by a company directly controlled by a Fund and bound under this agreement as set out in paragraph 3.2, this company is required to comply with the pre-emption rights referred to in paragraphs 3.3 or 3.4.

 

4 — Absorption of the Company

 

In case of absorption of the Company by another company, this agreement will automatically be applicable to the securities of the absorbing Company issued to the Parties in exchange for their securities of the Company. In such case, the term “Company” used in this agreement will refer to the absorbing company.

 

5 — Information of the public and declarations of participation

 

The Parties will consult each other to define the content of each communication they would be required to make with respect to the existence or the content of this agreement, in particular in a public offer prospectus or for declarations of significant participations required by the articles of association and by the Belgian law of 2 May 2007 on the disclosure of significant participations in issuers whose shares are admitted to trading on a regulated market and laying down miscellaneous provisions.

 

6 — Notifications

 

6.1                               Each notification or communication to be made in the framework of this agreement will be validly made by registered post or by express courier (delivered by a courier company of international reputation) sent to the below-mentioned addresses:

 

 

 

Administratiekantoor

Zarf Trust Corporation

Hofplein 20

3032 Rotterdam

The Netherlands

 

Fonds IBL

Grand’ Place 1

1000 Brussels

Belgium

Attention: the President

 

Fonds V

Brouwerijplein 1

3000 Leuven

Belgium

Attention: the President

 

A change in the above contact details will only be effective vis-à-vis the other Parties if this change has been notified to them beforehand in the way provided for in this article 6.

 

7 — Belgian law — Competent jurisdiction

 

This agreement is governed by Belgian law. Any dispute relating to the entering into, the validity or the execution of this agreement will be subject to the exclusive jurisdiction of the courts of Brussels.

 

 

 

Made in three original signed copies, each Party acknowledging receipt of its own copy.

 

For the ADMINISTRATIEKANTOOR

 

 

	

   /s/ Arnoud de Pret
	

    

	

   Name: Arnoud de Pret
	

    

	

   Title: Class ‘A’ Director
	

    

	

   Date: 17 October 2008
	

    

 

 

	

   /s/ Roberto Thompson
	

    

	

   Name: Roberto Thompson
	

    

	

   Title: Class ‘B’ Director
	

    

	

   Date: 16 October 2008
	

    

 

 

 

For the IBL Fund

 

 

	

   /s/ Alain De Waele
	

    

	

   Name: Alain De Waele
	

    

	

   Title: Secretaire-General / Gerant
	

    

	

   Date: 16 October 2008
	

    

 

 

	

   /s/ Philippe de Schoutheete de Tervarent
	

    

	

   Name: Philippe de Schoutheete de Tervarent
	

    

	

   Title: President / Gerant
	

    

	

   Date: 16 October 2008
	

    

 

 

 

For the V Fund

 

 

	

   /s/ Benoit Loore
	

    

	

   Name: Benoit Loore
	

    

	

   Title: Gerant
	

    

	

   Date: 17 October 2008
	

    

 

 

	

   /s/ Marc Croonen
	

    

	

   Name: Marc Croonen
	

    

	

   Title: Gerant
	

    

	

   Date: 17 October 2008exhibit10-8.htm - Generated by SEC Publisher for SEC Filing

  

 

                                                                 EXHIBIT 10.8

 

 

                                                                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 Hart-Scott-Rodino 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) Goldman Sachs 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

 

 

 

 

 

 

                                                                           
44

 

 

                   
section 102 of the Competition Act (Canada) (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.

                          
Vaartstraat 94

    
                      B-3000 Leuven

                          
Belgium

                              
Attention of Corporate Secretary

                              
Fax:  +32 16 31 54 46

 

         
with copies to:

 

                          
Sullivan & Cromwell LLP

                          
125 Broad Street

                          
New York, New York  10004

                          
U.S.A.

                              
Attention of George White, Esq.

                                           
John Evangelakos, Esq.

                              
Fax:  +1 212 558 3588

 

                          
and

 

 

 

 

 

 

 

                                                                           
57

 

 

                          
Machado, Meyer, Sendacz e Opice

  
                        Rua Da Consolacao, 247

                          
4th Floor

                          
01301-903
Sao Paulo, SP

                          
Federative Republic of Brazil

                              
Attention of Jose Roberto Opice, Esq.

                                           
Carlos Jose
Rolim de Mello, Esq.

                              
Fax: 
+55 11 3150 7071

 

                          
and

 

                          
Blake, Cassels & Graydon LLP

                          
199 Bay Street

                          
Box 25, Commerce Court West

                          
Toronto,
Ontario, Canada M5L 1A9

                              
Attention
of Jeffrey Trossman, Esq.

                                           
Craig C. Thorburn, Esq.

                              
Fax:  +1 416 863 2653

 

                          
and

 

                          
Linklaters de Bandt

                          
Brederode 13

                          
B-1000 Brussels, Belgium

                         
     Attention of Francois De Bauw

                              
Fax:  +32 2 501 92 05

 

         
(b) if to AmBev or, after the Closing, Labatt:

 

                          
Companhia de
Bebidas das Americas - AmBev

                          
Rua Dr. Renato Paes de Barros 1017

                          
04530-001,
Sao Paulo, SP

                          
Federative Republic of Brazil

                              
Attention of Felipe Dutra

                              
Fax: +55 11 2122 1523

 

             
    with copies to:

 

                          
Cravath, Swaine & Moore LLP

                          
Worldwide Plaza

                          
825 Eighth Avenue

                          
New York, New York 10019

                              
Attention of David Mercado, Esq.

                              
Fax: +1 212 474
3700

 

                          
and

 

 

 

 

 

 

                                                                           
58

 

 

                          
Barbosa, Mussnich & Aragao Advogados

                          
Av. Pres. Juscelino Kubitschek, 50

                          
04503-000, Sao Paulo, SP

                          
Federative
Republic of Brazil

                              
Attention of  Paulo Aragao, Esq.

                   
           Fax:  +55 11 3365 4598

 

                          
and

 

                          
Osler, Hoskin & Harcourt LLP

                          
280 Park Avenue - 30W

                          
New York, New York 10017

                              
Attention of Stephen P. Sigurdson, Esq.

                              
Fax: +1 212 867 5802

 

                          
and

 

                          
Stibbe

                          
Rue Henry Wafelaertsstraat 47-51

                          
1060 Brussels

                          
Belgium

                              
Attention of  Marc Fyon, Esq.

                              
Fax: + 32 2 533 52 12

 

         
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/ Claudio Braz Ferro

                                   
--------------------------------------------

                                   
Name:  Claudio Braz Ferro

                                   
Title: 
Industrial Officer

 

 

               
                    by 

                                   
/s/ Jose Adilson Miguel

                                   
--------------------------------------------

                                   
Name:  Jose Adilson Miguel

                            
       Title:  Resales Officer

 

 

 

WITNESSES:

 

 

/s/
Karine de Toledo Pereira

---------------------------------

Name: 
Karine de Toledo Pereira

R.G.: 
18984698-7

CPF: 
287.037.138-14

 

 

/s/
Celia Regina Baldo Correa

---------------------------------

Name: 
Celia Regina Baldo Correa

R.G.: 
7350876

CPF: 
130.469.398-84

 

 

 

 

 

 

 

 

                                                                           
68

 

 

                                           
INTERBREW S.A.,

 

 

                                           
by

 

                                           
/s/ John F. Brock

                                           
------------------------------------

                                           
Name:  John F. Brock

                                           
Title:  Director

 

 

                                           
by

 

                                           
/s/ Francois Jaclot

                                           
------------------------------------

                                           
Name:  Francois Jaclot

                                           
Title:  Chief Financial Officer

 

 

WITNESSES:

 

 

/s/
Jean Louis Van de Perre

---------------------------------

Name: 
Jean Louis Van de Perre

ID
Card: 161 0029528 54

 

 

 

/s/
Catherine Noirfalisse

---------------------------------

Name: 
Catherine Noirfalisse

ID
Card:  161 0019803 29

 

 

 

 

 

 

 

 

 

                                                                           
69

 

 

                                           
LABATT BREWING CANADA HOLDING LTD.,

 

 

                                           
by

 

                                           
/s/ John F. Brock

                                           
------------------------------------

                                           
Name:  John F. Brock

                                           
Title:  Director

 

 

                                           
by

 

                                           
/s/ Francois Jaclot

                                           
------------------------------------

                                           
Name:  Francois Jaclot

                                           
Title:  Authorized Representative

 

 

WITNESSES:

 

 

/s/
Jean Louis Van de Perre

---------------------------------

Name: 
Jean Louis Van de Perre

ID
Card: 161 0029528 54

 

 

 

/s/
Catherine Noirfalisse

---------------------------------

Name: 
Catherine Noirfalisse

ID
Card:  161 0019803 29

 

 

 

 

 

 

 

 

                                                                           
70

 

 

 

              
                             LABATT BREWING COMPANY LIMITED,

 

 

                                           
by

 

                                           
/s/ Bryan Glinton

                                           
------------------------------------

 
                                          Welwyn Limited, Director

                                           
Name:  Bryan Glinton

                                           
Its:  Vice President

 

 

                                           
by

 

        
                                   /s/ Bryan Glinton

                                           
------------------------------------

                                           
Rosencrantz Limited

                                           
Name:  Bryan Glinton

                                           
Its:  Vice President

 

 

WITNESSES:

 

 

/s/
Michelle E. Neville-Clarke

---------------------------------

Name: 
Michelle E. Neville-Clarke

Driver
License I.D.:  46422

 

 

/s/
Antonia Smith

---------------------------------

Name: 
/s/ Antonia Smith

Driver
License I.D.:  45352

 

</TEXT>

</DOCUMENT>

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