Document:

exhibit10-9.htm - Generated by SEC Publisher for SEC Filing

  

EXHIBIT 10.9

  

June 22, 2004

  

Labatt Holding B.V.

Ceresstraat 19

4811 CA Breda

The Netherlands

  

Companhia de Bebidas das Américas -- AmBev

Rua Dr. Renato Paes de Barros 1017

04530-001, São Paulo, SP

Federative Republic of Brazil

Attn: Felipe Dutra

  

Re:  Termination of the Letter Agreement

  

Ladies and Gentleman:

  

Reference is hereby made to (i) the Letter Agreement, dated as of March 3, 2004 (the “Letter Agreement”), by and between Labatt Holding B.V., a corporation organized under the laws of the Netherlands (“Labatt Holdco”), and Interbrew International B.V., a corporation organized under the laws of the Netherlands (“IIBV”), and (ii) the Incorporação Agreement, dated as of March 3, 2004 (the “Incorporação Agreement”), by and among Companhia De Bebidas Das Américas - 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 (“Mergeco”), and Labatt Brewing Company Limited, a corporation organized under the federal laws of Canada (“Labatt”). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the lncorporação Agreement.

  

Upon the execution and delivery of this side letter by the parties hereto, you and we agree that the Letter Agreement shall be irrevocably and unconditionally terminated in all respects and be of no further force and effect as of the date first written above. Upon such termination, Labatt Holdco and IIBV shall be released and discharged, irrevocably and unconditionally, from any and all obligations and liabilities under the Letter Agreement.

  

Interbrew shall be a third-party beneficiary to this side letter.

  

This side letter may be executed in one or more separate 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 side letter 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.

      

    Arbitration.
      (a) All
      disputes arising out of or in connection with this side letter shall be finally
      settled under the Rules of Arbitration of 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 side
      letter may assert a cross-claim against any other party to the dispute based
      on
      any breach of the Incorporação 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
      lncorporação 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 Incorporação Agreement or this side
      letter 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 the Incorporação Agreement or this side letter 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 side letter or the Incorporação 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.

      

    (e)
      The
      place of arbitration shall be Paris, France. The language of the arbitration
      shall be English.

      

    (f)
      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 side letter.

      

    
      
        
         

      

      
        -2-

        
          

        

      

         

      

    

      

    (g)
      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.

      

    This
      side
      letter shall be governed by and construed in accordance with the internal laws
      of the State of New York applicable to agreements made and to be performed
      entirely within such State, without regard to the conflicts of law principles
      of
      such State.

      

    
      
        
         

      

      
        -3-

        
          

        

      

  

           If you acknowledge, accept and agree to the foregoing, please so indicate by signing and returning to the undersigned the duplicate copies of this side letter enclosed herewith whereupon this will become a valid and binding agreement between us. 

  

  

	

   Very truly yours,

     

   INTERBREW INTERNATIONAL B.V.

     

     

     

	

   By:
	

   /s/ Philip Goris

	  	

   Name: Philip Goris

	  	

   Title: Director

	  	  
	  	  
	

   By:
	

   /s/ Myriam Beatove

	  	

   Name: Myriam Beatove

	  	

   Title: Director

	

   ACKNOWLEDGED AND AGREED

     

   LABATT HOLDING B.V.

     

     

     

	

   By:
	

   /s/ Philip Goris

	  	

   Name: Philip Goris

	  	

   Title: Director

	  	  
	  	  
	

   By:
	  
	  	  
	  	  

  

If you acknowledge, accept and agree to the foregoing, please so indicate by signing and returning to the undersigned the duplicate copies of this side letter enclosed herewith whereupon this will become a valid and binding agreement between us.

  

  

	

   Very truly yours,

     

   INTERBREW INTERNATIONAL B.V.

     

     

	

   By:
	  
	  	

   Name:

	  	

   Title:

	  	  
	  	  
	

   By:
	  
	  	

   Name:

	  	

   Title:

	

   ACKNOWLEDGED AND AGREED

     

   LABATT HOLDING B.V.

     

     

     

	

   By:
	  
	  	

   Name:

	  	

   Title:

	  	  
	  	  
	

   By:
	

   /s/ J.H.M. van Erve

	  	

   Name: J.H.M. van Erve

	  	

   Title: Directorexhibit10-10.htm - Generated by SEC Publisher for SEC Filing

EXHIBIT 10.10

  

Execution Copy

  

  

InBev S.A.

Brouwerijplein 1

3000, Leuven

Belgium

March 4, 2005

 

Companhia de Bebidas das Américas — AmBev

Rua Dr. Renato Paes de Barros 1017

04530-001, São Paulo, SP

Federative Republic of Brazil

Attn: Mr. Pedro Mariani

  

Labatt Brewing Company Limited

207 Queen’s Quay West, Suite #299

Toronto, ON M5J 1A7

Canada

Attn: Mr. James V. West

Dear Sirs and Mesdames:

Re: Labatt Tax Reassessment

     Reference is made to Section 8.01(a)(iii) of the Incorporação Agreement dated as of March 3, 2004 (the “Incorporação Agreement”) among Companhia de Bebidas das Americas — AmBev (“AmBev”), InBev S.A. (formerly, Interbrew S.A.; “InBev”), Labatt Brewing Company Limited (“LBCL”) and Labatt Brewing Canada Holding Ltd. That Section requires, in part, that InBev shall indemnify the AmBev Indemnitees (including LBCL) against AmBev Losses incurred in respect of certain liabilities of LBCL for Canadian federal and provincial income taxes (and related interest and penalties, if any) as a result of certain reassessments that might be issued to LBCL on the

  

                 

              

            

            

            basis
              that any portion of the interest expense incurred by LBCL on inter-company
              debt
              owing by LBCL to one or more related non-resident persons was not deductible
              in
              full in computing LBCL’s income for the year in which the expense was
              incurred.

            

                 Capitalized
              terms used in this Letter Agreement and not defined herein shall have
              the
              meanings ascribed thereto in the Incorporação Agreement.

              

                 On
              December
              2, 2004, the Canada Revenue Agency (“CRA”) issued a notice of reassessment to
              LBCL in respect of its 1998 taxation year, disallowing a portion of
              the
              deduction claimed by LBCL in that year in respect of interest expense
              incurred
              by LBCL on certain of its inter-company participating subordinated
              debt. The
              parties hereto acknowledge and agree that this notice of reassessment
              falls
              within the scope of the above-referenced indemnification
              obligation.

              

                 The
              parties
              further acknowledge and agree that Canadian provincial notices of reassessment
              are expected to be issued in respect of the same matter for 1998, that
              further
              Canadian federal and provincial notices of reassessment may be issued
              to LBCL in
              respect of the same matter for subsequent taxation years ending prior
              to
              Closing, and that all such reassessments also shall fall within the
              scope of the
              above-referenced indemnification obligation to the extent such reassessments
              make similar adjustments. All such potential reassessments, together
              with the
              1998 reassessment described above, are referred to herein, collectively,
              as the
“LBCL
              Reassessments”.

              

                 The
              parties
              hereto acknowledge that all of the LBCL Reassessments shall constitute
“Third
              Party Claims” for purposes of the Incorporação Agreement and that, accordingly,
              the provisions of Section 8.04 of the Incorporação Agreement apply thereto. As
              contemplated by Subsection 8.04(b) of the Incorporação Agreement, InBev intends
              to contest the LBCL Reassessments at its own expense, with counsel
              selected by
              it. AmBev has the right to participate in the defense of the LBCL Reassessments
              and, in connection with such participation, to retain its own counsel
              (not
              reasonably objected to by InBev) (“AmBev
              Counsel”)
              at its
              own expense, it being understood, however, that InBev shall have control
              of the
              matter.

              

                 As
              is further
              provided by Subsection 8.04(b), given that InBev has so elected to
              contest the
              LBCL Reassessments at its own expense, InBev is not liable to LBCL
              for any legal
              expenses LBCL might subsequently incur in the matter on its own behalf.
              Notwithstanding the foregoing, LBCL specifically acknowledges its obligations
              under the Incorporação Agreement with regard to Third Party Claims, including
              its notice obligations under Subsection 8.04(a) thereof, and acknowledges
              and
              confirms to and in favour of InBev that it will perform the same with
              respect to
              the LBCL Reassessments.

              

                 The
              parties
              hereto agree that, following receipt of each LBCL Reassessment, LBCL
              shall pay
              to the applicable tax authority the full amount of tax, interest and
              penalty (if
              any) payable thereunder (collectively, “Remittances”),
              and
              that such amounts shall be paid promptly following receipt of the applicable
              LBCL Reassessment.

              

                 LBCL
              shall
              maintain a separate notional account (the “Account”)
              in
              which it shall record any and all Remittances made by it, plus any
              and all costs
              and expenses (including, without limitation, legal and accounting costs
              and the
              cost of expert consultants or witnesses, together with any non-refundable
              goods
              and services tax payable in respect thereof) incurred by it (on an
              after-tax
              basis) at InBev’s direction for the purpose of contesting the LBCL Reassessments
              (such costs and 

              

            
              
                
                 

              

              
                -2-

                
                  

                

              

                 

              

                

              expenses
                being referred to herein collectively as the “InBev
                Dispute Costs”
                which,
                for the avoidance of doubt, shall not include the fees or disbursements
                of AmBev
                Counsel) plus any consequential expenses (including any increased
                interest
                expense as a result of LBCL’s leverage ratio increasing) resulting from the
                funding of Remittances by LBCL. There shall be calculated on the
                first business
                day of each month an amount (each, an “Interest
                Amount”)
                equal
                to the balance in the Account multiplied by a percentage equal to
                a margin of 50
                basis points above the 30-day Canadian bankers’ acceptance rate then in effect,
                and then divided by 12; provided that (x) for any quarter in which
                the LBCL
                leverage ratio exceeds 2.0 to 1.0, but is less than 2.5 to 1.0, the
                said margin
                shall be 65 basis points, (y) for any quarter in which the LBCL leverage
                ratio
                is greater than or equal to 2.5 to 1.0, but less than 3.0 to 1.0,
                the margin
                shall be 80 basis points, and (z) for any quarter in which the LBCL
                leverage
                ratio is greater than or equal to 3.0 to 1.0, the margin shall be
                95 basis
                points. The Interest Amounts shall be added to the balance in the
                Account on an
                annual basis at the end of each year. For this purpose, the LBCL
                leverage ratio
                for a quarter means the ratio of (i) LBCL’s consolidated debt as shown on its
                audited financial statements for the quarter to (ii) LBCL’s net income before
                interest, taxes and depreciation and amortization, as shown on its
                audited
                financial statements for the quarter. Upon receipt by LBCL of an
                indemnification
                payment from InBev, the balance in the Account shall be reduced by
                the amount
                thereof.

            

              

                 Within
              sixty
              (60) days
              following the date the last outstanding LBCL Reassessment has been
              Finally
              Resolved (as defined below), InBev shall deliver payment to or at the
              direction
              of LBCL, in full satisfaction of its indemnification obligations as
              described
              herein, in an amount determined in accordance with the following
              formula:

              

            A + B + C - D + E,

            

            where:

            

            A
              equals
              the total Remittances paid by LBCL from and after Closing;

            

            B
              equals
              the total InBev Dispute Costs incurred by LBCL from and after
              Closing;

              

            C
              equals
              the aggregate of all Interest Amounts;

            

            D
              equals
              the after-tax amount of any and all refunds (or credits) of tax and
              interest
              received by LBCL in connection with the resolution of the LBCL Reassessments;
              and

            

            E
              equals
              the total amount of any consequential expenses (including any increased
              interest
              expense as a result of LBCL’s leverage ratio increasing) resulting from the
              funding of Remittances by LBCL.

            

                 An
              LBCL
              Reassessment shall be considered to have been “Finally
              Resolved”
              where
              (A) no objection is filed in respect of such LBCL Reassessment by the
              due date
              therefor, or (B) an objection is filed with a taxation authority in
              respect of
              such LBCL Reassessment by the due date therefor, and either (x) the
              taxation
              authority allows the objection in its entirety; (y) the taxation authority
              denies the objection, in whole or in part, and no appeal is filed in
              response
              thereto by the due date therefor; or (z) the objection is denied, an
              appeal is
              subsequently filed, and (i) the Tax Court of Canada (or other applicable
              court,
              including an appellate court, if applicable) issues a final determination
              from
              which no appeal is available or from which no appeal is taken by the
              due date
              therefor, or (ii) the appeal is abandoned.

              

            
              
                
                 

              

              
                -3-

                
                  

                

              

                 

              

            

              

                 On
              an annual
              basis, no later than 120 days after the end of each calendar year,
              LBCL shall
              deliver to InBev and AmBev a detailed calculation showing the balance
              in the
              Account at the end of the year and all additions to and deductions
              from the
              Account during the year. If InBev makes any indemnification payment
              to LBCL in
              respect of items previously added to the Account, the balance in the
              Account
              shall be reduced by the amount of such payment immediately following
              receipt of
              such payment.

              

                 Each
              of
              InBev, AmBev and LBCL shall from time to time execute or procure such
              documents
              and other assurances as may be reasonable or advisable to give effect
              to the
              provisions of this letter agreement. In addition, each of InBev and
              LBCL shall
              cause its affiliates to do all such things and to execute or procure
              all such
              documents and other assurances as may be necessary or desirable to
              give effect
              to the provisions hereof.

              

                 Notwithstanding
              any
              other term of this letter agreement: (a) the total balance in the Account
              shall
              not under any circumstances exceed $40 million. If at any time LBCL
              reasonably
              anticipates that the total balance in the Account would otherwise exceed
              $40
              million, LBCL shall so notify InBev in writing, and, unless the parties
              otherwise agree, InBev shall make an indemnification payment to LBCL
              to the
              extent necessary to reduce the balance in the Account to no more than
              $40
              million; and (b) LBCL shall have the right at any time, and from time
              to time,
              on 120
              days’
              written
              notice to InBev, to require InBev to make an indemnification payment
              to LBCL in
              an amount equal to the balance in the Account at that time.

              

                 If
              InBev has
              made one or more indemnification payments hereunder to LBCL before
              the date on
              which the last outstanding LBCL Reassessment has been Finally Resolved,
              the
              after-tax amount of any amount subsequently refunded or credited by
              a taxing
              authority to LBCL as a consequence of an objection or appeal in respect
              of an
              LBCL Reassessment shall (x) to the extent of the balance in the Account,
              be
              applied to reduce the balance in the Account, and (y) to the extent
              it exceeds
              the balance in the Account, be paid forthwith by LBCL, to InBev as
              an adjustment
              to the amount of such indemnification payment or payments previously
              made.

              

                 If
              the
              arrangements contemplated hereunder result in LBCL incurring an increased
              liability for capital tax, InBev shall indemnify LBCL and hold LBCL
              harmless, on
              an after-tax basis, from and against the full amount of such increased
              capital
              tax.

              

                 No
              modification of or amendment to this letter agreement shall be effective,
              valid
              or binding unless made in writing and signed by all parties.

              

                 This
              letter
              agreement shall be governed by and construed in accordance with, and
              the rights
              of the parties shall be governed by, the laws of the State of New York
              and the
              parties hereby consent to the exclusive jurisdiction of the courts
              of the State
              of New York to hear and determine any and all disputes, actions and
              proceedings
              arising out of this confirmation letter.

              

                 All
              dollar
              amounts referred to in this letter agreement are references to Canadian
              dollars.

              

            
              
                
                 

              

              
                -4-

                
                  

                

              

                 

              

            

              

                 Please
              indicate your acknowledgement, acceptance and agreement of and to the
              foregoing
              by signing and returning to the undersigned the duplicate copies of
              this
              confirmation letter enclosed herewith. Upon execution by all parties
              this
              confirmation letter will become a valid and binding agreement between
              us. This
              confirmation letter may be executed in separate counterparts, each
              of which
              shall be considered an original and which, taken together, shall constitute
              a
              single agreement.

              

              

            

              
                	
                        Very
                          truly yours,

                          

                      
	
                        INBEV
                          S.A.,

                          

                      
	
                        By:________________________________________________

                      
	
                        Name:  

                      
	
                        Title:  

                      
	  	  
	
                        
                          By:________________________________________________

                        

                      
	
                        Name:
                          

                      
	
                        Title:
                          

                      

              

            

          

        

      

    

      

      

    
      
        Acknowledged
          and agreed to by:

          

        
          
            	
                    
                      COMPANHIA
                        DE BEBIDAS DAS AMÉRICAS — AMBEV

                        

                    

                  
	
                    By:___________________________________

                  
	
                    Name:

                  
	
                    Title:  

                  
	  	  
	
                    
                      By:___________________________________

                    

                  
	
                    Name:
                      

                  
	
                    Title:
                      

                  

          

        

        

          
            	
                    LABATT
                      BREWING COMPANY LIMITED.

                      

                  
	
                    By:
                         
                      /s/                    
                                 
                                                               
                      

                  
	
                    Name:

                  
	
                    Title:
                      V.P. Finance

                  
	  	  
	
                    
                      By:    
                        /s/ James
                        West           
                                                                
                        

                    

                  
	
                    Name: 
                      James West

                  
	
                    Title:   
                      V.P. General Counsel -
                      Canada

                  

          

        

      

    

      

      

    
      
        
         

      

      
        -5-

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